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In the House of Representatives, U. S., 

May 28, 2010. 

Resolved, That the House agree to the amendment of the 

Senate to the bill (H.R. 4213) entitled ‘‘An Act to amend the 

Internal Revenue Code of 1986 to extend certain expiring 

provisions, and for other purposes.’’, with the following 

HOUSE AMENDMENT TO SENATE AMENDMENT: 

In lieu of the matter proposed to be inserted by the 

amendment of the Senate, insert the following: 

1 SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; 

2 TABLE OF CONTENTS. 

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

4 ‘‘American Jobs and Closing Tax Loopholes Act of 2010’’. 

5 (b) AMENDMENT OF 1986 CODE.—Except as otherwise 

6 expressly provided, whenever in titles I, II, and IV of this 

7 Act an amendment or repeal is expressed in terms of an 

8 amendment to, or repeal of, a section or other provision, 

9 the reference shall be considered to be made to a section or 

10 other provision of the Internal Revenue Code of 1986. 

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

12 this Act is as follows: 

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

TITLE I—INFRASTRUCTURE INCENTIVES 

Sec. 101. Extension of Build America Bonds. 

Sec. 102. Exempt-facility bonds for sewage and water supply facilities. 
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Sec. 103. Extension of exemption from alternative minimum tax treatment for 

certain tax-exempt bonds. 

Sec. 104. Extension and additional allocations of recovery zone bond authority. 

Sec. 105. Allowance of new markets tax credit against alternative minimum tax. 

Sec. 106. Extension of tax-exempt eligibility for loans guaranteed by Federal 

home loan banks. 

Sec. 107. Extension of temporary small issuer rules for allocation of tax-exempt 

interest expense by financial institutions. 

TITLE II—EXTENSION OF EXPIRING PROVISIONS 

Subtitle A—Energy 

Sec. 201. Alternative motor vehicle credit for new qualified hybrid motor vehicles 

other than passenger automobiles and light trucks. 

Sec. 202. Incentives for biodiesel and renewable diesel. 

Sec. 203. Credit for electricity produced at certain open-loop biomass facilities. 

Sec. 204. Extension and modification of credit for steel industry fuel. 

Sec. 205. Credit for producing fuel from coke or coke gas. 

Sec. 206. New energy efficient home credit. 

Sec. 207. Excise tax credits and outlay payments for alternative fuel and alternative fuel mixtures. 

Sec. 208. Special rule for sales or dispositions to implement FERC or State electric restructuring policy for qualified electric utilities. 

Sec. 209. Suspension of limitation on percentage depletion for oil and gas from 

marginal wells. 

Sec. 210. Direct payment of energy efficient appliances tax credit. 

Sec. 211. Modification of standards for windows, doors, and skylights with respect 

to the credit for nonbusiness energy property. 

Subtitle B—Individual Tax Relief 

PART I—MISCELLANEOUS PROVISIONS

Sec. 221. Deduction for certain expenses of elementary and secondary school 

teachers. 

Sec. 222. Additional standard deduction for State and local real property taxes. 

Sec. 223. Deduction of State and local sales taxes. 

Sec. 224. Contributions of capital gain real property made for conservation purposes. 

Sec. 225. Above-the-line deduction for qualified tuition and related expenses. 

Sec. 226. Tax-free distributions from individual retirement plans for charitable 

purposes. 

Sec. 227. Look-thru of certain regulated investment company stock in determining gross estate of nonresidents. 

PART II—LOW-INCOME HOUSING CREDITS

Sec. 231. Election for direct payment of low-income housing credit for 2010. 

Subtitle C—Business Tax Relief 

Sec. 241. Research credit. 

Sec. 242. Indian employment tax credit. 

Sec. 243. New markets tax credit. 

Sec. 244. Railroad track maintenance credit. 

Sec. 245. Mine rescue team training credit. 
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Sec. 246. Employer wage credit for employees who are active duty members of the 

uniformed services. 

Sec. 247. 5-year depreciation for farming business machinery and equipment. 

Sec. 248. 15-year straight-line cost recovery for qualified leasehold improvements, 

qualified restaurant buildings and improvements, and qualified 

retail improvements. 

Sec. 249. 7-year recovery period for motorsports entertainment complexes. 

Sec. 250. Accelerated depreciation for business property on an Indian reservation. 

Sec. 251. Enhanced charitable deduction for contributions of food inventory. 

Sec. 252. Enhanced charitable deduction for contributions of book inventories to 

public schools. 

Sec. 253. Enhanced charitable deduction for corporate contributions of computer 

inventory for educational purposes. 

Sec. 254. Election to expense mine safety equipment. 

Sec. 255. Special expensing rules for certain film and television productions. 

Sec. 256. Expensing of environmental remediation costs. 

Sec. 257. Deduction allowable with respect to income attributable to domestic production activities in Puerto Rico. 

Sec. 258. Modification of tax treatment of certain payments to controlling exempt 

organizations. 

Sec. 259. Exclusion of gain or loss on sale or exchange of certain brownfield sites 

from unrelated business income. 

Sec. 260. Timber REIT modernization. 

Sec. 261. Treatment of certain dividends of regulated investment companies. 

Sec. 262. RIC qualified investment entity treatment under FIRPTA. 

Sec. 263. Exceptions for active financing income. 

Sec. 264. Look-thru treatment of payments between related controlled foreign corporations under foreign personal holding company rules. 

Sec. 265. Basis adjustment to stock of S corps making charitable contributions 

of property. 

Sec. 266. Empowerment zone tax incentives. 

Sec. 267. Tax incentives for investment in the District of Columbia. 

Sec. 268. Renewal community tax incentives. 

Sec. 269. Temporary increase in limit on cover over of rum excise taxes to Puerto 

Rico and the Virgin Islands. 

Sec. 270. Payment to American Samoa in lieu of extension of economic development credit. 

Sec. 271. Election to temporarily utilize unused AMT credits determined by domestic investment. 

Sec. 272. Study of extended tax expenditures. 

Subtitle D—Temporary Disaster Relief Provisions 

PART I—NATIONAL DISASTER RELIEF

Sec. 281. Waiver of certain mortgage revenue bond requirements. 

Sec. 282. Losses attributable to federally declared disasters. 

Sec. 283. Special depreciation allowance for qualified disaster property. 

Sec. 284. Net operating losses attributable to federally declared disasters. 

Sec. 285. Expensing of qualified disaster expenses. 
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PART II—REGIONAL PROVISIONS

SUBPART A—NEW YORK LIBERTY ZONE

Sec. 291. Special depreciation allowance for nonresidential and residential real 

property. 

Sec. 292. Tax-exempt bond financing. 

SUBPART B—GO ZONE

Sec. 295. Increase in rehabilitation credit. 

Sec. 296. Work opportunity tax credit with respect to certain individuals affected 

by Hurricane Katrina for employers inside disaster areas. 

Sec. 297. Extension of low-income housing credit rules for buildings in GO zones. 

TITLE III—PENSION PROVISIONS 

Subtitle A—Pension Funding Relief 

PART 1—SINGLE-EMPLOYER PLANS

Sec. 301. Extended period for single-employer defined benefit plans to amortize 

certain shortfall amortization bases. 

Sec. 302. Application of extended amortization period to plans subject to prior 

law funding rules. 

Sec. 303. Suspension of certain funding level limitations. 

Sec. 304. Lookback for credit balance rule. 

Sec. 305. Information reporting. 

Sec. 306. Rollover of amounts received in airline carrier bankruptcy. 

PART 2—MULTIEMPLOYER PLANS

Sec. 311. Optional use of 30-year amortization periods. 

Sec. 312. Optional longer recovery periods for multiemployer plans in endangered 

or critical status. 

Sec. 313. Modification of certain amortization extensions under prior law. 

Sec. 314. Alternative default schedule for plans in endangered or critical status. 

Sec. 315. Transition rule for certifications of plan status. 

Subtitle B—Fee Disclosure 

Sec. 321. Short title of subtitle. 

Sec. 322. Amendments to the Employee Retirement Income Security Act of 1974. 

Sec. 323. Amendments to the Internal Revenue Code of 1986. 

Sec. 324. Regulatory authority and coordination. 

Sec. 325. Effective date of subtitle. 

TITLE IV—REVENUE OFFSETS 

Subtitle A—Foreign Provisions 

Sec. 401. Rules to prevent splitting foreign tax credits from the income to which 

they relate. 

Sec. 402. Denial of foreign tax credit with respect to foreign income not subject 

to United States taxation by reason of covered asset acquisitions. 

Sec. 403. Separate application of foreign tax credit limitation, etc., to items 

resourced under treaties. 
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Sec. 404. Limitation on the amount of foreign taxes deemed paid with respect to 

section 956 inclusions. 

Sec. 405. Special rule with respect to certain redemptions by foreign subsidiaries. 

Sec. 406. Modification of affiliation rules for purposes of rules allocating interest 

expense. 

Sec. 407. Termination of special rules for interest and dividends received from 

persons meeting the 80-percent foreign business requirements. 

Sec. 408. Source rules for income on guarantees. 

Sec. 409. Limitation on extension of statute of limitations for failure to notify 

Secretary of certain foreign transfers. 

Subtitle B—Personal Service Income Earned in Pass-thru Entities 

Sec. 411. Partnership interests transferred in connection with performance of 

services. 

Sec. 412. Income of partners for performing investment management services 

treated as ordinary income received for performance of services. 

Sec. 413. Employment tax treatment of professional service businesses. 

Subtitle C—Corporate Provisions 

Sec. 421. Treatment of securities of a controlled corporation exchanged for assets 

in certain reorganizations. 

Sec. 422. Taxation of boot received in reorganizations. 

Subtitle D—Other Provisions 

Sec. 431. Modifications with respect to Oil Spill Liability Trust Fund. 

Sec. 432. Time for payment of corporate estimated taxes. 

TITLE V—UNEMPLOYMENT, HEALTH, AND OTHER ASSISTANCE 

Subtitle A—Unemployment Insurance and Other Assistance 

Sec. 501. Extension of unemployment insurance provisions. 

Sec. 502. Coordination of emergency unemployment compensation with regular 

compensation. 

Sec. 503. Extension of the Emergency Contingency Fund. 

Subtitle B—Health Provisions 

Sec. 511. Extension of section 508 reclassifications. 

Sec. 512. Repeal of delay of RUG-IV. 

Sec. 513. Limitation on reasonable costs payments for certain clinical diagnostic 

laboratory tests furnished to hospital patients in certain rural 

areas. 

Sec. 514. Funding for claims reprocessing. 

Sec. 515. Medicaid and CHIP technical corrections. 

Sec. 516. Addition of inpatient drug discount program to 340B drug discount 

program. 

Sec. 517. Continued inclusion of orphan drugs in definition of covered outpatient 

drugs with respect to children’s hospitals under the 340B drug 

discount program. 

Sec. 518. Conforming amendment related to waiver of coinsurance for preventive 

services. 

Sec. 519. Establish a CMS–IRS data match to identify fraudulent providers. 

Sec. 520. Clarification of effective date of part B special enrollment period for 

disabled TRICARE beneficiaries. 
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Sec. 521. Physician payment update. 

Sec. 522. Adjustment to Medicare payment localities. 

Sec. 523. Clarification of 3-day payment window. 

TITLE VI—OTHER PROVISIONS 

Sec. 601. Extension of national flood insurance program. 

Sec. 602. Allocation of geothermal receipts. 

Sec. 603. Small business loan guarantee enhancement extensions. 

Sec. 604. Emergency agricultural disaster assistance. 

Sec. 605. Summer employment for youth. 

Sec. 606. Housing Trust Fund. 

Sec. 607. The Individual Indian Money Account Litigation Settlement Act of 

2010. 

Sec. 608. Appropriation of funds for final settlement of claims from In re Black 

Farmers Discrimination Litigation. 

Sec. 609. Expansion of eligibility for concurrent receipt of military retired pay 

and veterans’ disability compensation to include all chapter 61 

disability retirees regardless of disability rating percentage or 

years of service. 

Sec. 610. Extension of use of 2009 poverty guidelines. 

Sec. 611. Refunds disregarded in the administration of Federal programs and 

federally assisted programs. 

Sec. 612. State court improvement program. 

Sec. 613. Qualifying timber contract options. 

Sec. 614. Extension and flexibility for certain allocated surface transportation 

programs. 

Sec. 615. Community College and Career Training Grant Program. 

Sec. 616. Extensions of duty suspensions on cotton shirting fabrics and related 

provisions. 

Sec. 617. Modification of Wool Apparel Manufacturers Trust Fund. 

Sec. 618. Department of Commerce Study. 

Sec. 619. ARRA planning and reporting. 

TITLE VII—BUDGETARY PROVISIONS 

Sec. 701. Budgetary provisions. 

1 TITLE I—INFRASTRUCTURE 

2 INCENTIVES 

3 SEC. 101. EXTENSION OF BUILD AMERICA BONDS. 

4 (a) IN GENERAL.—Subparagraph (B) of section 

5 54AA(d)(1) is amended by striking ‘‘January 1, 2011’’ and 

6 inserting ‘‘January 1, 2013’’. 

7 (b) EXTENSION OF PAYMENTS TO ISSUERS.— 

8 (1) IN GENERAL.—Section 6431 is amended— 
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1 (A) by striking ‘‘January 1, 2011’’ in sub2 section (a) and inserting ‘‘January 1, 2013’’; 

3 and 

4 (B) by striking ‘‘January 1, 2011’’ in sub5 section (f)(1)(B) and inserting ‘‘a particular 

6 date’’. 

7 (2) CONFORMING AMENDMENTS.—Subsection (g) 

8 of section 54AA is amended— 

9 (A) by striking ‘‘January 1, 2011’’ and in10 serting ‘‘January 1, 2013’’; and 

11 (B) by striking ‘‘QUALIFIED BONDS ISSUED

12 BEFORE 2011’’ in the heading and inserting 

13 ‘‘CERTAIN QUALIFIED BONDS’’. 

14 (c) REDUCTION IN PERCENTAGE OF PAYMENTS TO

15 ISSUERS.—Subsection (b) of section 6431 is amended— 

16 (1) by striking ‘‘The Secretary’’ and inserting 

17 the following: 

18 ‘‘(1) IN GENERAL.—The Secretary’’; 

19 (2) by striking ‘‘35 percent’’ and inserting ‘‘the 

20 applicable percentage’’; and 

21 (3) by adding at the end the following new para22 graph: 

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

24 of this subsection, the term ‘applicable percentage’ 
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1 means the percentage determined in accordance with 

2 the following table: 

‘‘In the case of a qualified bond issued during calendar year: The applicable percentage 

is: 

2009 or 2010 .................................................................. 35 percent 

2011 ................................................................................ 32 percent 

2012 ................................................................................ 30 percent.’’. 

3 (d) CURRENT REFUNDINGS PERMITTED.—Subsection 

4 (g) of section 54AA is amended by adding at the end the 

5 following new paragraph: 

6 ‘‘(3) TREATMENT OF CURRENT REFUNDING

7 BONDS.— 

8 ‘‘(A) IN GENERAL.—For purposes of this 

9 subsection, the term ‘qualified bond’ includes any 

10 bond (or series of bonds) issued to refund a 

11 qualified bond if— 

12 ‘‘(i) the average maturity date of the 

13 issue of which the refunding bond is a part 

14 is not later than the average maturity date 

15 of the bonds to be refunded by such issue, 

16 ‘‘(ii) the amount of the refunding bond 

17 does not exceed the outstanding amount of 

18 the refunded bond, and 

19 ‘‘(iii) the refunded bond is redeemed 

20 not later than 90 days after the date of the 

21 issuance of the refunding bond. 
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1 ‘‘(B) APPLICABLE PERCENTAGE.—In the 

2 case of a refunding bond referred to in subpara3 graph (A), the applicable percentage with respect 

4 to such bond under section 6431(b) shall be the 

5 lowest percentage specified in paragraph (2) of 

6 such section. 

7 ‘‘(C) DETERMINATION OF AVERAGE MATU8 RITY.—For purposes of subparagraph (A)(i), av9 erage maturity shall be determined in accord10 ance with section 147(b)(2)(A).’’. 

11 (e) CLARIFICATION RELATED TO LEVEES AND FLOOD

12 CONTROL PROJECTS.—Subparagraph (A) of section 

13 54AA(g)(2) is amended by inserting ‘‘(including capital ex14 penditures for levees and other flood control projects)’’ after 

15 ‘‘capital expenditures’’. 

16 SEC. 102. EXEMPT-FACILITY BONDS FOR SEWAGE AND 

17 WATER SUPPLY FACILITIES. 

18 (a) BONDS FOR WATER AND SEWAGE FACILITIES EX19 EMPT FROM VOLUME CAP ON PRIVATE ACTIVITY BONDS.— 

20 (1) IN GENERAL.—Paragraph (3) of section 

21 146(g) is amended by inserting ‘‘(4), (5),’’ after 

22 ‘‘(2),’’. 

23 (2) CONFORMING AMENDMENT.—Paragraphs (2) 

24 and (3)(B) of section 146(k) are both amended by 

25 striking ‘‘(4), (5), (6),’’ and inserting ‘‘(6)’’. 
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1 (b) TAX-EXEMPT ISSUANCE BY INDIAN TRIBAL GOV2 ERNMENTS.— 

3 (1) IN GENERAL.—Subsection (c) of section 7871 

4 is amended by adding at the end the following new 

5 paragraph: 

6 ‘‘(4) EXCEPTION FOR BONDS FOR WATER AND

7 SEWAGE FACILITIES.—Paragraph (2) shall not apply 

8 to an exempt facility bond 95 percent or more of the 

9 net proceeds (as defined in section 150(a)(3)) of which 

10 are to be used to provide facilities described in para11 graph (4) or (5) of section 142(a).’’. 

12 (2) CONFORMING AMENDMENT.—Paragraph (2) 

13 of section 7871(c) is amended by striking ‘‘paragraph 

14 (3)’’ and inserting ‘‘paragraphs (3) and (4)’’. 

15 (c) EFFECTIVE DATE.—The amendments made by this 

16 section shall apply to obligations issued after the date of 

17 the enactment of this Act. 

18 SEC. 103. EXTENSION OF EXEMPTION FROM ALTERNATIVE 

19 MINIMUM TAX TREATMENT FOR CERTAIN 

20 TAX-EXEMPT BONDS. 

21 (a) IN GENERAL.—Clause (vi) of section 57(a)(5)(C) 

22 is amended— 

23 (1) by striking ‘‘January 1, 2011’’ in subclause 

24 (I) and inserting ‘‘January 1, 2012’’; and 
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1 (2) by striking ‘‘AND 2010’’ in the heading and 

2 inserting ‘‘, 2010, AND 2011’’. 

3 (b) ADJUSTED CURRENT EARNINGS.—Clause (iv) of 

4 section 56(g)(4)(B) is amended— 

5 (1) by striking ‘‘January 1, 2011’’ in subclause 

6 (I) and inserting ‘‘January 1, 2012’’; and 

7 (2) by striking ‘‘AND 2010’’ in the heading and 

8 inserting ‘‘, 2010, AND 2011’’. 

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

10 section shall apply to obligations issued after December 31, 

11 2010. 

12 SEC. 104. EXTENSION AND ADDITIONAL ALLOCATIONS OF 

13 RECOVERY ZONE BOND AUTHORITY. 

14 (a) EXTENSION OF RECOVERY ZONE BOND AUTHOR15 ITY.—Section 1400U–2(b)(1) and section 1400U– 

16 3(b)(1)(B) are each amended by striking ‘‘January 1, 

17 2011’’ and inserting ‘‘January 1, 2012’’. 

18 (b) ADDITIONAL ALLOCATIONS OF RECOVERY ZONE

19 BOND AUTHORITY BASED ON UNEMPLOYMENT.—Section 

20 1400U–1 is amended by adding at the end the following 

21 new subsection: 

22 ‘‘(c) ALLOCATION OF 2010 RECOVERY ZONE BOND

23 LIMITATIONS BASED ON UNEMPLOYMENT.— 

24 ‘‘(1) IN GENERAL.—The Secretary shall allocate 

25 the 2010 national recovery zone economic development 
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1 bond limitation and the 2010 national recovery zone 

2 facility bond limitation among the States in the pro3 portion that each such State’s 2009 unemployment 

4 number bears to the aggregate of the 2009 unemploy5 ment numbers for all of the States. 

6 ‘‘(2) MINIMUM ALLOCATION.—The Secretary 

7 shall adjust the allocations under paragraph (1) for 

8 each State to the extent necessary to ensure that no 

9 State (prior to any reduction under paragraph (3)) 

10 receives less than 0.9 percent of the 2010 national re11 covery zone economic development bond limitation 

12 and 0.9 percent of the 2010 national recovery zone fa13 cility bond limitation. 

14 ‘‘(3) ALLOCATIONS BY STATES.— 

15 ‘‘(A) IN GENERAL.—Each State with respect 

16 to which an allocation is made under paragraph 

17 (1) shall reallocate such allocation among the 

18 counties and large municipalities (as defined in 

19 subsection (a)(3)(B)) in such State in the pro20 portion that each such county’s or municipality’s 

21 2009 unemployment number bears to the aggre22 gate of the 2009 unemployment numbers for all 

23 the counties and large municipalities (as so de24 fined) in such State. 
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1 ‘‘(B) 2010 ALLOCATION REDUCED BY

2 AMOUNT OF PREVIOUS ALLOCATION.—Each State 

3 shall reduce (but not below zero)— 

4 ‘‘(i) the amount of the 2010 national 

5 recovery zone economic development bond 

6 limitation allocated to each county or large 

7 municipality (as so defined) in such State 

8 by the amount of the national recovery zone 

9 economic development bond limitation allo10 cated to such county or large municipality 

11 under subsection (a)(3)(A) (determined 

12 without regard to any waiver thereof), and 

13 ‘‘(ii) the amount of the 2010 national 

14 recovery zone facility bond limitation allo15 cated to each county or large municipality 

16 (as so defined) in such State by the amount 

17 of the national recovery zone facility bond 

18 limitation allocated to such county or large 

19 municipality under subsection (a)(3)(A) 

20 (determined without regard to any waiver 

21 thereof). 

22 ‘‘(C) WAIVER OF SUBALLOCATIONS.—A 

23 county or municipality may waive any portion 

24 of an allocation made under this paragraph. A 

25 county or municipality shall be treated as hav-
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1 ing waived any portion of an allocation made 

2 under this paragraph which has not been allo3 cated to a bond issued before May 1, 2011. Any 

4 allocation waived (or treated as waived) under 

5 this subparagraph may be used or reallocated by 

6 the State. 

7 ‘‘(D) SPECIAL RULE FOR A MUNICIPALITY

8 IN A COUNTY.—In the case of any large munici9 pality any portion of which is in a county, such 

10 portion shall be treated as part of such munici11 pality and not part of such county. 

12 ‘‘(4) 2009 UNEMPLOYMENT NUMBER.—For pur13 poses of this subsection, the term ‘2009 unemployment 

14 number’ means, with respect to any State, county or 

15 municipality, the number of individuals in such 

16 State, county, or municipality who were determined 

17 to be unemployed by the Bureau of Labor Statistics 

18 for December 2009. 

19 ‘‘(5) 2010 NATIONAL LIMITATIONS.— 

20 ‘‘(A) RECOVERY ZONE ECONOMIC DEVELOP21 MENT BONDS.—The 2010 national recovery zone 

22 economic development bond limitation is 

23 $10,000,000,000. Any allocation of such limita24 tion under this subsection shall be treated for 

25 purposes of section 1400U–2 in the same manner 
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1 as an allocation of national recovery zone eco2 nomic development bond limitation. 

3 ‘‘(B) RECOVERY ZONE FACILITY BONDS.— 

4 The 2010 national recovery zone facility bond 

5 limitation is $15,000,000,000. Any allocation of 

6 such limitation under this subsection shall be 

7 treated for purposes of section 1400U–3 in the 

8 same manner as an allocation of national recov9 ery zone facility bond limitation.’’. 

10 (c) AUTHORITY OF STATE TO WAIVE CERTAIN 2009 

11 ALLOCATIONS.—Subparagraph (A) of section 1400U– 

12 1(a)(3) is amended by adding at the end the following: ‘‘A 

13 county or municipality shall be treated as having waived 

14 any portion of an allocation made under this subparagraph 

15 which has not been allocated to a bond issued before May 

16 1, 2011. Any allocation waived (or treated as waived) under 

17 this subparagraph may be used or reallocated by the 

18 State.’’. 

19 SEC. 105. ALLOWANCE OF NEW MARKETS TAX CREDIT 

20 AGAINST ALTERNATIVE MINIMUM TAX. 

21 (a) IN GENERAL.—Subparagraph (B) of section 

22 38(c)(4), as amended by the Patient Protection and Afford23 able Care Act, is amended by redesignating clauses (v) 

24 through (ix) as clauses (vi) through (x), respectively, and 

25 by inserting after clause (iv) the following new clause: 
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1 ‘‘(v) the credit determined under sec2 tion 45D, but only with respect to credits 

3 determined with respect to qualified equity 

4 investments (as defined in section 45D(b)) 

5 initially made before January 1, 2012,’’. 

6 (b) EFFECTIVE DATE.—The amendments made by this 

7 section shall apply to credits determined with respect to 

8 qualified equity investments (as defined in section 45D(b) 

9 of the Internal Revenue Code of 1986) initially made after 

10 March 15, 2010. 

11 SEC. 106. EXTENSION OF TAX-EXEMPT ELIGIBILITY FOR 

12 LOANS GUARANTEED BY FEDERAL HOME 

13 LOAN BANKS. 

14 Clause (iv) of section 149(b)(3)(A) is amended by 

15 striking ‘‘December 31, 2010’’ and inserting ‘‘December 31, 

16 2011’’. 

17 SEC. 107. EXTENSION OF TEMPORARY SMALL ISSUER 

18 RULES FOR ALLOCATION OF TAX-EXEMPT IN19 TEREST EXPENSE BY FINANCIAL INSTITU20 TIONS. 

21 (a) IN GENERAL.—Clauses (i), (ii), and (iii) of section 

22 265(b)(3)(G) are each amended by striking ‘‘or 2010’’ and 

23 inserting ‘‘, 2010, or 2011’’. 
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1 (b) CONFORMING AMENDMENT.—Subparagraph (G) of 

2 section 265(b)(3) is amended by striking ‘‘AND 2010’’ in the 

3 heading and inserting ‘‘, 2010, AND 2011’’. 

4 (c) EFFECTIVE DATE.—The amendments made by this 

5 section shall apply to obligations issued after December 31, 

6 2010. 

7 TITLE II—EXTENSION OF 

8 EXPIRING PROVISIONS 

9 Subtitle A—Energy 

10 SEC. 201. ALTERNATIVE MOTOR VEHICLE CREDIT FOR NEW 

11 QUALIFIED HYBRID MOTOR VEHICLES OTHER 

12 THAN PASSENGER AUTOMOBILES AND LIGHT 

13 TRUCKS. 

14 (a) IN GENERAL.—Paragraph (3) of section 30B(k) is 

15 amended by striking ‘‘December 31, 2009’’ and inserting 

16 ‘‘December 31, 2010’’. 

17 (b) EFFECTIVE DATE.—The amendment made by this 

18 section shall apply to property purchased after December 

19 31, 2009. 

20 SEC. 202. INCENTIVES FOR BIODIESEL AND RENEWABLE 

21 DIESEL. 

22 (a) CREDITS FOR BIODIESEL AND RENEWABLE DIE23 SEL USED AS FUEL.—Subsection (g) of section 40A is 

24 amended by striking ‘‘December 31, 2009’’ and inserting 

25 ‘‘December 31, 2010’’. 
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1 (b) EXCISE TAX CREDITS AND OUTLAY PAYMENTS FOR

2 BIODIESEL AND RENEWABLE DIESEL FUEL MIXTURES.— 

3 (1) Paragraph (6) of section 6426(c) is amended 

4 by striking ‘‘December 31, 2009’’ and inserting ‘‘De5 cember 31, 2010’’. 

6 (2) Subparagraph (B) of section 6427(e)(6) is 

7 amended by striking ‘‘December 31, 2009’’ and insert8 ing ‘‘December 31, 2010’’. 

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

10 section shall apply to fuel sold or used after December 31, 

11 2009. 

12 SEC. 203. CREDIT FOR ELECTRICITY PRODUCED AT CER13 TAIN OPEN-LOOP BIOMASS FACILITIES. 

14 (a) IN GENERAL.—Clause (ii) of section 45(b)(4)(B) 

15 is amended— 

16 (1) by striking ‘‘5-year period’’ and inserting 

17 ‘‘6-year period’’; and 

18 (2) by adding at the end the following: ‘‘In the 

19 case of the last year of the 6-year period described in 

20 the preceding sentence, the credit determined under 

21 subsection (a) with respect to electricity produced 

22 during such year shall not exceed 80 percent of such 

23 credit determined without regard to this sentence.’’. 
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1 (b) EFFECTIVE DATE.—The amendment made by this 

2 section shall apply to electricity produced and sold after 

3 December 31, 2009. 

4 SEC. 204. EXTENSION AND MODIFICATION OF CREDIT FOR 

5 STEEL INDUSTRY FUEL. 

6 (a) CREDIT PERIOD.— 

7 (1) IN GENERAL.—Subclause (II) of section 

8 45(e)(8)(D)(ii) is amended to read as follows: 

9 ‘‘(II) CREDIT PERIOD.—In lieu of 

10 the 10-year period referred to in 

11 clauses (i) and (ii)(II) of subpara12 graph (A), the credit period shall be 

13 the period beginning on the date that 

14 the facility first produces steel industry 

15 fuel that is sold to an unrelated person 

16 after September 30, 2008, and ending 

17 2 years after such date.’’. 

18 (2) CONFORMING AMENDMENT.—Section 

19 45(e)(8)(D) is amended by striking clause (iii) and 

20 by redesignating clause (iv) as clause (iii). 

21 (b) EXTENSION OF PLACED-IN-SERVICE DATE.—Sub22 paragraph (A) of section 45(d)(8) is amended— 

23 (1) by striking ‘‘(or any modification to a facil24 ity)’’; and 

25 (2) by striking ‘‘2010’’ and inserting ‘‘2011’’. 
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1 (c) CLARIFICATIONS.— 

2 (1) STEEL INDUSTRY FUEL.—Subclause (I) of 

3 section 45(c)(7)(C)(i) is amended by inserting ‘‘, a 

4 blend of coal and petroleum coke, or other coke feed5 stock’’ after ‘‘on coal’’. 

6 (2) OWNERSHIP INTEREST.—Section 45(d)(8) is 

7 amended by adding at the end the following new flush 

8 sentence: 

9 ‘‘With respect to a facility producing steel industry 

10 fuel, no person (including a ground lessor, customer, 

11 supplier, or technology licensor) shall be treated as 

12 having an ownership interest in the facility or as oth13 erwise entitled to the credit allowable under sub14 section (a) with respect to such facility if such per15 son’s rent, license fee, or other entitlement to net pay16 ments from the owner of such facility is measured by 

17 a fixed dollar amount or a fixed amount per ton, or 

18 otherwise determined without regard to the profit or 

19 loss of such facility.’’. 

20 (3) PRODUCTION AND SALE.—Subparagraph (D) 

21 of section 45(e)(8), as amended by subsection (a)(2), 

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

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

24 clause: 
21 

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1 ‘‘(iii) PRODUCTION AND SALE.—The 

2 owner of a facility producing steel industry 

3 fuel shall be treated as producing and sell4 ing steel industry fuel where that owner 

5 manufactures such steel industry fuel from 

6 coal, a blend of coal and petroleum coke, or 

7 other coke feedstock to which it has title. 

8 The sale of such steel industry fuel by the 

9 owner of the facility to a person who is not 

10 the owner of the facility shall not fail to 

11 qualify as a sale to an unrelated person 

12 solely because such purchaser may also be a 

13 ground lessor, supplier, or customer.’’. 

14 (d) SPECIFIED CREDIT FOR PURPOSES OF ALTER15 NATIVE MINIMUM TAX EXCLUSION.—Subclause (II) of sec16 tion 38(c)(4)(B)(iii) is amended by inserting ‘‘(in the case 

17 of a refined coal production facility producing steel indus18 try fuel, during the credit period set forth in section 

19 45(e)(8)(D)(ii)(II))’’ after ‘‘service’’. 

20 (e) EFFECTIVE DATES.— 

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

22 subsections (a), (b), and (d) shall take effect on the 

23 date of the enactment of this Act. 

24 (2) CLARIFICATIONS.—The amendments made by 

25 subsection (c) shall take effect as if included in the 
22 

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1 amendments made by the Energy Improvement and 

2 Extension Act of 2008. 

3 SEC. 205. CREDIT FOR PRODUCING FUEL FROM COKE OR 

4 COKE GAS. 

5 (a) IN GENERAL.—Paragraph (1) of section 45K(g) is 

6 amended by striking ‘‘January 1, 2010’’ and inserting 

7 ‘‘January 1, 2011’’. 

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

9 section shall apply to facilities placed in service after De10 cember 31, 2009. 

11 SEC. 206. NEW ENERGY EFFICIENT HOME CREDIT. 

12 (a) IN GENERAL.—Subsection (g) of section 45L is 

13 amended by striking ‘‘December 31, 2009’’ and inserting 

14 ‘‘December 31, 2010’’. 

15 (b) EFFECTIVE DATE.—The amendment made by this 

16 section shall apply to homes acquired after December 31, 

17 2009. 

18 SEC. 207. EXCISE TAX CREDITS AND OUTLAY PAYMENTS 

19 FOR ALTERNATIVE FUEL AND ALTERNATIVE 

20 FUEL MIXTURES. 

21 (a) ALTERNATIVE FUEL CREDIT.—Paragraph (5) of 

22 section 6426(d) is amended by striking ‘‘after December 31, 

23 2009’’ and all that follows and inserting ‘‘after— 

24 ‘‘(A) September 30, 2014, in the case of liq25 uefied hydrogen, 
23 

•HR 4213 EAH1S 

1 ‘‘(B) December 31, 2010, in the case of fuels 

2 described in subparagraph (A), (C), (F), or (G) 

3 of paragraph (2), and 

4 ‘‘(C) December 31, 2009, in any other 

5 case.’’. 

6 (b) ALTERNATIVE FUEL MIXTURE CREDIT.—Para7 graph (3) of section 6426(e) is amended by striking ‘‘after 

8 December 31, 2009’’ and all that follows and inserting 

9 ‘‘after— 

10 ‘‘(A) September 30, 2014, in the case of liq11 uefied hydrogen, 

12 ‘‘(B) December 31, 2010, in the case of fuels 

13 described in subparagraph (A), (C), (F), or (G) 

14 of subsection (d)(2), and 

15 ‘‘(C) December 31, 2009, in any other 

16 case.’’. 

17 (c) PAYMENT AUTHORITY.— 

18 (1) IN GENERAL.—Paragraph (6) of section 

19 6427(e) is amended by striking ‘‘and’’ at the end of 

20 subparagraph (C), by striking the period at the end 

21 of subparagraph (D) and inserting ‘‘, and’’, and by 

22 adding at the end the following new subparagraph: 

23 ‘‘(E) any alternative fuel or alternative fuel 

24 mixture (as so defined) involving fuel described 

25 in subparagraph (A), (C), (F), or (G) of section 
24 

•HR 4213 EAH1S 

1 6426(d)(2) sold or used after December 31, 

2 2010.’’. 

3 (2) CONFORMING AMENDMENT.—Subparagraph 

4 (C) of section 6427(e)(6) is amended by inserting ‘‘or 

5 (E)’’ after ‘‘subparagraph (D)’’. 

6 (d) EXCLUSION OF BLACK LIQUOR FROM CREDIT ELI7 GIBILITY.—The last sentence of section 6426(d)(2) is 

8 amended by striking ‘‘or biodiesel’’ and inserting ‘‘biodiesel, 

9 or any fuel (including lignin, wood residues, or spent 

10 pulping liquors) derived from the production of paper or 

11 pulp’’. 

12 (e) EFFECTIVE DATE.—The amendments made by this 

13 section shall apply to fuel sold or used after December 31, 

14 2009. 

15 SEC. 208. SPECIAL RULE FOR SALES OR DISPOSITIONS TO 

16 IMPLEMENT FERC OR STATE ELECTRIC RE17 STRUCTURING POLICY FOR QUALIFIED ELEC18 TRIC UTILITIES. 

19 (a) IN GENERAL.—Paragraph (3) of section 451(i) is 

20 amended by striking ‘‘January 1, 2010’’ and inserting 

21 ‘‘January 1, 2011’’. 

22 (b) MODIFICATION OF DEFINITION OF INDEPENDENT

23 TRANSMISSION COMPANY.— 

24 (1) IN GENERAL.—Clause (i) of section 

25 451(i)(4)(B) is amended to read as follows: 
25 

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1 ‘‘(i) who the Federal Energy Regu2 latory Commission determines in its au3 thorization of the transaction under section 

4 203 of the Federal Power Act (16 U.S.C. 

5 824b) or by declaratory order— 

6 ‘‘(I) is not itself a market partici7 pant as determined by the Commis8 sion, and also is not controlled by any 

9 such market participant, or 

10 ‘‘(II) to be independent from mar11 ket participants or to be an inde12 pendent transmission company within 

13 the meaning of such Commission’s 

14 rules applicable to independent trans15 mission providers, and’’. 

16 (2) RELATED PERSONS.—Paragraph (4) of sec17 tion 451(i) is amended by adding at the end the fol18 lowing flush sentence: 

19 ‘‘For purposes of subparagraph (B)(i)(I), a person 

20 shall be treated as controlled by another person if 

21 such persons would be treated as a single employer 

22 under section 52.’’. 

23 (c) EFFECTIVE DATE.— 
26 

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1 (1) IN GENERAL.—The amendment made by sub2 section (a) shall apply to dispositions after December 

3 31, 2009. 

4 (2) MODIFICATIONS.—The amendments made by 

5 subsection (b) shall apply to dispositions after the 

6 date of the enactment of this Act. 

7 SEC. 209. SUSPENSION OF LIMITATION ON PERCENTAGE 

8 DEPLETION FOR OIL AND GAS FROM MAR9 GINAL WELLS. 

10 (a) IN GENERAL.—Clause (ii) of section 

11 613A(c)(6)(H) is amended by striking ‘‘January 1, 2010’’ 

12 and inserting ‘‘January 1, 2011’’. 

13 (b) EFFECTIVE DATE.—The amendment made by this 

14 section shall apply to taxable years beginning after Decem15 ber 31, 2009. 

16 SEC. 210. DIRECT PAYMENT OF ENERGY EFFICIENT APPLI17 ANCES TAX CREDIT. 

18 In the case of any taxable year which includes the last 

19 day of calendar year 2009 or calendar year 2010, a tax20 payer who elects to waive the credit which would otherwise 

21 be determined with respect to the taxpayer under section 

22 45M of the Internal Revenue Code of 1986 for such taxable 

23 year shall be treated as making a payment against the tax 

24 imposed under subtitle A of such Code for such taxable year 

25 in an amount equal to 85 percent of the amount of the cred-
27 

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1 it which would otherwise be so determined. Such payment 

2 shall be treated as made on the later of the due date of the 

3 return of such tax or the date on which such return is filed. 

4 Elections under this section may be made separately for 

5 2009 and 2010, but once made shall be irrevocable. No 

6 amount shall be includible in gross income or alternative 

7 minimum taxable income by reason of this section. 

8 SEC. 211. MODIFICATION OF STANDARDS FOR WINDOWS, 

9 DOORS, AND SKYLIGHTS WITH RESPECT TO 

10 THE CREDIT FOR NONBUSINESS ENERGY 

11 PROPERTY. 

12 (a) IN GENERAL.—Paragraph (4) of section 25C(c) is 

13 amended by striking ‘‘unless’’ and all that follows and in14 serting ‘‘unless— 

15 ‘‘(A) in the case of any component placed in 

16 service after the date which is 90 days after the 

17 date of the enactment of the American Jobs and 

18 Closing Tax Loopholes Act of 2010, such compo19 nent meets the criteria for such components es20 tablished by the 2010 Energy Star Program Re21 quirements for Residential Windows, Doors, and 

22 Skylights, Version 5.0 (or any subsequent version 

23 of such requirements which is in effect after Jan24 uary 4, 2010), 
28 

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1 ‘‘(B) in the case of any component placed 

2 in service after the date of the enactment of the 

3 American Jobs and Closing Tax Loopholes Act of 

4 2010 and on or before the date which is 90 days 

5 after such date, such component meets the cri6 teria described in subparagraph (A) or is equal 

7 to or below a U factor of 0.30 and SHGC of 

8 0.30, and 

9 ‘‘(C) in the case of any component which is 

10 a garage door, such component is equal to or 

11 below a U factor of 0.30 and SHGC of 0.30.’’. 

12 (b) EFFECTIVE DATE.—The amendment made by this 

13 section shall apply to property placed in service after the 

14 date of the enactment of this Act. 

15 Subtitle B—Individual Tax Relief 

16 PART I—MISCELLANEOUS PROVISIONS 

17 SEC. 221. DEDUCTION FOR CERTAIN EXPENSES OF ELEMEN18 TARY AND SECONDARY SCHOOL TEACHERS. 

19 (a) IN GENERAL.—Subparagraph (D) of section 

20 62(a)(2) is amended by striking ‘‘or 2009’’ and inserting 

21 ‘‘2009, or 2010’’. 

22 (b) EFFECTIVE DATE.—The amendment made by this 

23 section shall apply to taxable years beginning after Decem24 ber 31, 2009. 
29 

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1 SEC. 222. ADDITIONAL STANDARD DEDUCTION FOR STATE 

2 AND LOCAL REAL PROPERTY TAXES. 

3 (a) IN GENERAL.—Subparagraph (C) of section 

4 63(c)(1) is amended by striking ‘‘or 2009’’ and inserting 

5 ‘‘2009, or 2010’’. 

6 (b) EFFECTIVE DATE.—The amendment made by this 

7 section shall apply to taxable years beginning after Decem8 ber 31, 2009. 

9 SEC. 223. DEDUCTION OF STATE AND LOCAL SALES TAXES. 

10 (a) IN GENERAL.—Subparagraph (I) of section 

11 164(b)(5) is amended by striking ‘‘January 1, 2010’’ and 

12 inserting ‘‘January 1, 2011’’. 

13 (b) EFFECTIVE DATE.—The amendment made by this 

14 section shall apply to taxable years beginning after Decem15 ber 31, 2009. 

16 SEC. 224. CONTRIBUTIONS OF CAPITAL GAIN REAL PROP17 ERTY MADE FOR CONSERVATION PURPOSES. 

18 (a) IN GENERAL.—Clause (vi) of section 170(b)(1)(E) 

19 is amended by striking ‘‘December 31, 2009’’ and inserting 

20 ‘‘December 31, 2010’’. 

21 (b) CONTRIBUTIONS BY CERTAIN CORPORATE FARM22 ERS AND RANCHERS.—Clause (iii) of section 170(b)(2)(B) 

23 is amended by striking ‘‘December 31, 2009’’ and inserting 

24 ‘‘December 31, 2010’’. 
30 

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

2 section shall apply to contributions made in taxable years 

3 beginning after December 31, 2009. 

4 SEC. 225. ABOVE-THE-LINE DEDUCTION FOR QUALIFIED 

5 TUITION AND RELATED EXPENSES. 

6 (a) IN GENERAL.—Subsection (e) of section 222 is 

7 amended by striking ‘‘December 31, 2009’’ and inserting 

8 ‘‘December 31, 2010’’. 

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

10 section shall apply to taxable years beginning after Decem11 ber 31, 2009. 

12 (c) TEMPORARY COORDINATION WITH HOPE AND

13 LIFETIME LEARNING CREDITS.—In the case of any tax14 payer for any taxable year beginning in 2010, no deduction 

15 shall be allowed under section 222 of the Internal Revenue 

16 Code of 1986 if— 

17 (1) the taxpayer’s net Federal income tax reduc18 tion which would be attributable to such deduction for 

19 such taxable year, is less than 

20 (2) the credit which would be allowed to the tax21 payer for such taxable year under section 25A of such 

22 Code (determined without regard to sections 25A(e) 

23 and 26 of such Code). 
31 

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1 SEC. 226. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RE2 TIREMENT PLANS FOR CHARITABLE PUR3 POSES. 

4 (a) IN GENERAL.—Subparagraph (F) of section 

5 408(d)(8) is amended by striking ‘‘December 31, 2009’’ and 

6 inserting ‘‘December 31, 2010’’. 

7 (b) EFFECTIVE DATE.—The amendment made by this 

8 section shall apply to distributions made in taxable years 

9 beginning after December 31, 2009. 

10 SEC. 227. LOOK-THRU OF CERTAIN REGULATED INVEST11 MENT COMPANY STOCK IN DETERMINING 

12 GROSS ESTATE OF NONRESIDENTS. 

13 (a) IN GENERAL.—Paragraph (3) of section 2105(d) 

14 is amended by striking ‘‘December 31, 2009’’ and inserting 

15 ‘‘December 31, 2010’’. 

16 (b) EFFECTIVE DATE.—The amendment made by this 

17 section shall apply to estates of decedents dying after De18 cember 31, 2009. 

19 PART II—LOW-INCOME HOUSING CREDITS 

20 SEC. 231. ELECTION FOR DIRECT PAYMENT OF LOW-INCOME 

21 HOUSING CREDIT FOR 2010. 

22 (a) IN GENERAL.—Section 42 is amended by redesig23 nating subsection (n) as subsection (o) and by inserting 

24 after subsection (m) the following new subsection: 

25 ‘‘(n) ELECTION FOR DIRECT PAYMENT OF CREDIT.— 
32 

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1 ‘‘(1) IN GENERAL.—The housing credit agency of 

2 each State shall be allowed a credit in an amount 

3 equal to such State’s 2010 low-income housing refund4 able credit election amount, which shall be payable by 

5 the Secretary as provided in paragraph (5). 

6 ‘‘(2) 2010 LOW-INCOME HOUSING REFUNDABLE

7 CREDIT ELECTION AMOUNT.—For purposes of this 

8 subsection, the term ‘2010 low-income housing refund9 able credit election amount’ means, with respect to 

10 any State, such amount as the State may elect which 

11 does not exceed 85 percent of the product of— 

12 ‘‘(A) the sum of— 

13 ‘‘(i) 100 percent of the State housing 

14 credit ceiling for 2010 which is attributable 

15 to amounts described in clauses (i) and (iii) 

16 of subsection (h)(3)(C), and 

17 ‘‘(ii) 40 percent of the State housing 

18 credit ceiling for 2010 which is attributable 

19 to amounts described in clauses (ii) and 

20 (iv) of such subsection, multiplied by 

21 ‘‘(B) 10. 

22 ‘‘(3) COORDINATION WITH NON-REFUNDABLE

23 CREDIT.—For purposes of this section, the amounts 

24 described in clauses (i) through (iv) of subsection 

25 (h)(3)(C) with respect to any State for 2010 shall 
33 

•HR 4213 EAH1S 

1 each be reduced by so much of such amount as is 

2 taken into account in determining the amount of the 

3 credit allowed with respect to such State under para4 graph (1). 

5 ‘‘(4) SPECIAL RULE FOR BASIS.—Basis of a 

6 qualified low-income building shall not be reduced by 

7 the amount of any payment made under this sub8 section. 

9 ‘‘(5) PAYMENT OF CREDIT; USE TO FINANCE

10 LOW-INCOME BUILDINGS.—The Secretary shall pay to 

11 the housing credit agency of each State an amount 

12 equal to the credit allowed under paragraph (1). 

13 Rules similar to the rules of subsections (c) and (d) 

14 of section 1602 of the American Recovery and Rein15 vestment Tax Act of 2009 shall apply with respect to 

16 any payment made under this paragraph, except that 

17 such subsection (d) shall be applied by substituting 

18 ‘January 1, 2012’ for ‘January 1, 2011’.’’. 

19 (b) CONFORMING AMENDMENT.—Section 1324(b)(2) of 

20 title 31, United States Code, is amended by inserting 

21 ‘‘42(n),’’ after ‘‘36C,’’. 
34 

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1 Subtitle C—Business Tax Relief 

2 SEC. 241. RESEARCH CREDIT. 

3 (a) IN GENERAL.—Subparagraph (B) of section 

4 41(h)(1) is amended by striking ‘‘December 31, 2009’’ and 

5 inserting ‘‘December 31, 2010’’. 

6 (b) CONFORMING AMENDMENT.—Subparagraph (D) of 

7 section 45C(b)(1) is amended by striking ‘‘December 31, 

8 2009’’ and inserting ‘‘December 31, 2010’’. 

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

10 section shall apply to amounts paid or incurred after De11 cember 31, 2009. 

12 SEC. 242. INDIAN EMPLOYMENT TAX CREDIT. 

13 (a) IN GENERAL.—Subsection (f) of section 45A is 

14 amended by striking ‘‘December 31, 2009’’ and inserting 

15 ‘‘December 31, 2010’’. 

16 (b) EFFECTIVE DATE.—The amendment made by this 

17 section shall apply to taxable years beginning after Decem18 ber 31, 2009. 

19 SEC. 243. NEW MARKETS TAX CREDIT. 

20 (a) IN GENERAL.—Subparagraph (F) of section 

21 45D(f)(1) is amended by inserting ‘‘and 2010’’ after 

22 ‘‘2009’’. 

23 (b) CONFORMING AMENDMENT.—Paragraph (3) of sec24 tion 45D(f) is amended by striking ‘‘2014’’ and inserting 

25 ‘‘2015’’. 
35 

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

2 section shall apply to calendar years beginning after 2009. 

3 SEC. 244. RAILROAD TRACK MAINTENANCE CREDIT. 

4 (a) IN GENERAL.—Subsection (f) of section 45G is 

5 amended by striking ‘‘January 1, 2010’’ and inserting 

6 ‘‘January 1, 2011’’. 

7 (b) EFFECTIVE DATE.—The amendment made by this 

8 section shall apply to expenditures paid or incurred in tax9 able years beginning after December 31, 2009. 

10 SEC. 245. MINE RESCUE TEAM TRAINING CREDIT. 

11 (a) IN GENERAL.—Subsection (e) of section 45N is 

12 amended by striking ‘‘December 31, 2009’’ and inserting 

13 ‘‘December 31, 2010’’. 

14 (b) CREDIT ALLOWABLE AGAINST AMT.—Subpara15 graph (B) of section 38(c)(4), as amended by section 105, 

16 is amended— 

17 (1) by redesignating clauses (vii) through (x) as 

18 clauses (viii) through (xi), respectively; and 

19 (2) by inserting after clause (vi) the following 

20 new clause: 

21 ‘‘(vii) the credit determined under sec22 tion 45N,’’. 

23 (c) EFFECTIVE DATE.— 

24 (1) IN GENERAL.—Except as provided in para25 graph (2), the amendments made by this section shall 
36 

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1 apply to taxable years beginning after December 31, 

2 2009. 

3 (2) ALLOWANCE AGAINST AMT.—The amend4 ments made by subsection (b) shall apply to credits 

5 determined for taxable years beginning after Decem6 ber 31, 2009, and to carrybacks of such credits. 

7 SEC. 246. EMPLOYER WAGE CREDIT FOR EMPLOYEES WHO 

8 ARE ACTIVE DUTY MEMBERS OF THE UNI9 FORMED SERVICES. 

10 (a) IN GENERAL.—Subsection (f) of section 45P is 

11 amended by striking ‘‘December 31, 2009’’ and inserting 

12 ‘‘December 31, 2010’’. 

13 (b) EFFECTIVE DATE.—The amendment made by this 

14 section shall apply to payments made after December 31, 

15 2009. 

16 SEC. 247. 5-YEAR DEPRECIATION FOR FARMING BUSINESS 

17 MACHINERY AND EQUIPMENT. 

18 (a) IN GENERAL.—Clause (vii) of section 168(e)(3)(B) 

19 is amended by striking ‘‘January 1, 2010’’ and inserting 

20 ‘‘January 1, 2011’’. 

21 (b) EFFECTIVE DATE.—The amendment made by this 

22 section shall apply to property placed in service after De23 cember 31, 2009. 
37 

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1 SEC. 248. 15-YEAR STRAIGHT-LINE COST RECOVERY FOR 

2 QUALIFIED LEASEHOLD IMPROVEMENTS, 

3 QUALIFIED RESTAURANT BUILDINGS AND IM4 PROVEMENTS, AND QUALIFIED RETAIL IM5 PROVEMENTS. 

6 (a) IN GENERAL.—Clauses (iv), (v), and (ix) of section 

7 168(e)(3)(E) are each amended by striking ‘‘January 1, 

8 2010’’ and inserting ‘‘January 1, 2011’’. 

9 (b) CONFORMING AMENDMENTS.— 

10 (1) Clause (i) of section 168(e)(7)(A) is amended 

11 by striking ‘‘if such building is placed in service after 

12 December 31, 2008, and before January 1, 2010,’’. 

13 (2) Paragraph (8) of section 168(e) is amended 

14 by striking subparagraph (E). 

15 (c) EFFECTIVE DATE.—The amendments made by this 

16 section shall apply to property placed in service after De17 cember 31, 2009. 

18 SEC. 249. 7-YEAR RECOVERY PERIOD FOR MOTORSPORTS 

19 ENTERTAINMENT COMPLEXES. 

20 (a) IN GENERAL.—Subparagraph (D) of section 

21 168(i)(15) is amended by striking ‘‘December 31, 2009’’ and 

22 inserting ‘‘December 31, 2010’’. 

23 (b) EFFECTIVE DATE.—The amendment made by this 

24 section shall apply to property placed in service after De25 cember 31, 2009. 
38 

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1 SEC. 250. ACCELERATED DEPRECIATION FOR BUSINESS 

2 PROPERTY ON AN INDIAN RESERVATION. 

3 (a) IN GENERAL.—Paragraph (8) of section 168(j) is 

4 amended by striking ‘‘December 31, 2009’’ and inserting 

5 ‘‘December 31, 2010’’. 

6 (b) EFFECTIVE DATE.—The amendment made by this 

7 section shall apply to property placed in service after De8 cember 31, 2009. 

9 SEC. 251. ENHANCED CHARITABLE DEDUCTION FOR CON10 TRIBUTIONS OF FOOD INVENTORY. 

11 (a) IN GENERAL.—Clause (iv) of section 170(e)(3)(C) 

12 is amended by striking ‘‘December 31, 2009’’ and inserting 

13 ‘‘December 31, 2010’’. 

14 (b) EFFECTIVE DATE.—The amendment made by this 

15 section shall apply to contributions made after December 

16 31, 2009. 

17 SEC. 252. ENHANCED CHARITABLE DEDUCTION FOR CON18 TRIBUTIONS OF BOOK INVENTORIES TO PUB19 LIC SCHOOLS. 

20 (a) IN GENERAL.—Clause (iv) of section 170(e)(3)(D) 

21 is amended by striking ‘‘December 31, 2009’’ and inserting 

22 ‘‘December 31, 2010’’. 

23 (b) EFFECTIVE DATE.—The amendment made by this 

24 section shall apply to contributions made after December 

25 31, 2009. 
39 

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1 SEC. 253. ENHANCED CHARITABLE DEDUCTION FOR COR2 PORATE CONTRIBUTIONS OF COMPUTER IN3 VENTORY FOR EDUCATIONAL PURPOSES. 

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

5 170(e)(6) is amended by striking ‘‘December 31, 2009’’ and 

6 inserting ‘‘December 31, 2010’’. 

7 (b) EFFECTIVE DATE.—The amendment made by this 

8 section shall apply to contributions made in taxable years 

9 beginning after December 31, 2009. 

10 SEC. 254. ELECTION TO EXPENSE MINE SAFETY EQUIP11 MENT. 

12 (a) IN GENERAL.—Subsection (g) of section 179E is 

13 amended by striking ‘‘December 31, 2009’’ and inserting 

14 ‘‘December 31, 2010’’. 

15 (b) EFFECTIVE DATE.—The amendment made by this 

16 section shall apply to property placed in service after De17 cember 31, 2009. 

18 SEC. 255. SPECIAL EXPENSING RULES FOR CERTAIN FILM 

19 AND TELEVISION PRODUCTIONS. 

20 (a) IN GENERAL.—Subsection (f) of section 181 is 

21 amended by striking ‘‘December 31, 2009’’ and inserting 

22 ‘‘December 31, 2010’’. 

23 (b) EFFECTIVE DATE.—The amendment made by this 

24 section shall apply to productions commencing after Decem25 ber 31, 2009. 
40 

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1 SEC. 256. EXPENSING OF ENVIRONMENTAL REMEDIATION 

2 COSTS. 

3 (a) IN GENERAL.—Subsection (h) of section 198 is 

4 amended by striking ‘‘December 31, 2009’’ and inserting 

5 ‘‘December 31, 2010’’. 

6 (b) EFFECTIVE DATE.—The amendment made by this 

7 section shall apply to expenditures paid or incurred after 

8 December 31, 2009. 

9 SEC. 257. DEDUCTION ALLOWABLE WITH RESPECT TO IN10 COME ATTRIBUTABLE TO DOMESTIC PRODUC11 TION ACTIVITIES IN PUERTO RICO. 

12 (a) IN GENERAL.—Subparagraph (C) of section 

13 199(d)(8) is amended— 

14 (1) by striking ‘‘first 4 taxable years’’ and in15 serting ‘‘first 5 taxable years’’; and 

16 (2) by striking ‘‘January 1, 2010’’ and inserting 

17 ‘‘January 1, 2011’’. 

18 (b) EFFECTIVE DATE.—The amendments made by this 

19 section shall apply to taxable years beginning after Decem20 ber 31, 2009. 

21 SEC. 258. MODIFICATION OF TAX TREATMENT OF CERTAIN 

22 PAYMENTS TO CONTROLLING EXEMPT ORGA23 NIZATIONS. 

24 (a) IN GENERAL.—Clause (iv) of section 512(b)(13)(E) 

25 is amended by striking ‘‘December 31, 2009’’ and inserting 

26 ‘‘December 31, 2010’’. 
41 

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1 (b) EFFECTIVE DATE.—The amendment made by this 

2 section shall apply to payments received or accrued after 

3 December 31, 2009. 

4 SEC. 259. EXCLUSION OF GAIN OR LOSS ON SALE OR EX5 CHANGE OF CERTAIN BROWNFIELD SITES 

6 FROM UNRELATED BUSINESS INCOME. 

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

8 512(b)(19) is amended by striking ‘‘December 31, 2009’’ 

9 and inserting ‘‘December 31, 2010’’. 

10 (b) EFFECTIVE DATE.—The amendment made by this 

11 section shall apply to property acquired after December 31, 

12 2009. 

13 SEC. 260. TIMBER REIT MODERNIZATION. 

14 (a) IN GENERAL.—Paragraph (8) of section 856(c) is 

15 amended by striking ‘‘means’’ and all that follows and in16 serting ‘‘means December 31, 2010.’’. 

17 (b) CONFORMING AMENDMENTS.— 

18 (1) Subparagraph (I) of section 856(c)(2) is 

19 amended by striking ‘‘the first taxable year beginning 

20 after the date of the enactment of this subparagraph’’ 

21 and inserting ‘‘a taxable year beginning on or before 

22 the termination date’’. 

23 (2) Clause (iii) of section 856(c)(5)(H) is 

24 amended by inserting ‘‘in taxable years beginning’’ 

25 after ‘‘dispositions’’. 
42 

•HR 4213 EAH1S 

1 (3) Clause (v) of section 857(b)(6)(D) is amended 

2 by inserting ‘‘in a taxable year beginning’’ after 

3 ‘‘sale’’. 

4 (4) Subparagraph (G) of section 857(b)(6) is 

5 amended by inserting ‘‘in a taxable year beginning’’ 

6 after ‘‘In the case of a sale’’. 

7 (c) EFFECTIVE DATE.—The amendments made by this 

8 section shall apply to taxable years ending after May 22, 

9 2009. 

10 SEC. 261. TREATMENT OF CERTAIN DIVIDENDS OF REGU11 LATED INVESTMENT COMPANIES. 

12 (a) IN GENERAL.—Paragraphs (1)(C) and (2)(C) of 

13 section 871(k) are each amended by striking ‘‘December 31, 

14 2009’’ and inserting ‘‘December 31, 2010’’. 

15 (b) EFFECTIVE DATE.—The amendments made by this 

16 section shall apply to taxable years beginning after Decem17 ber 31, 2009. 

18 SEC. 262. RIC QUALIFIED INVESTMENT ENTITY TREATMENT 

19 UNDER FIRPTA. 

20 (a) IN GENERAL.—Clause (ii) of section 897(h)(4)(A) 

21 is amended by striking ‘‘December 31, 2009’’ and inserting 

22 ‘‘December 31, 2010’’. 

23 (b) EFFECTIVE DATE.— 

24 (1) IN GENERAL.—The amendment made by sub25 section (a) shall take effect on January 1, 2010. Not-
43 

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1 withstanding the preceding sentence, such amendment 

2 shall not apply with respect to the withholding re3 quirement under section 1445 of the Internal Revenue 

4 Code of 1986 for any payment made before the date 

5 of the enactment of this Act. 

6 (2) AMOUNTS WITHHELD ON OR BEFORE DATE

7 OF ENACTMENT.—In the case of a regulated invest8 ment company— 

9 (A) which makes a distribution after De10 cember 31, 2009, and before the date of the enact11 ment of this Act; and 

12 (B) which would (but for the second sen13 tence of paragraph (1)) have been required to 

14 withhold with respect to such distribution under 

15 section 1445 of such Code, 

16 such investment company shall not be liable to any 

17 person to whom such distribution was made for any 

18 amount so withheld and paid over to the Secretary of 

19 the Treasury. 

20 SEC. 263. EXCEPTIONS FOR ACTIVE FINANCING INCOME. 

21 (a) IN GENERAL.—Sections 953(e)(10) and 954(h)(9) 

22 are each amended by striking ‘‘January 1, 2010’’ and in23 serting ‘‘January 1, 2011’’. 
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1 (b) CONFORMING AMENDMENT.—Section 953(e)(10) is 

2 amended by striking ‘‘December 31, 2009’’ and inserting 

3 ‘‘December 31, 2010’’. 

4 (c) EFFECTIVE DATE.—The amendments made by this 

5 section shall apply to taxable years of foreign corporations 

6 beginning after December 31, 2009, and to taxable years 

7 of United States shareholders with or within which any 

8 such taxable year of such foreign corporation ends. 

9 SEC. 264. LOOK-THRU TREATMENT OF PAYMENTS BETWEEN 

10 RELATED CONTROLLED FOREIGN CORPORA11 TIONS UNDER FOREIGN PERSONAL HOLDING 

12 COMPANY RULES. 

13 (a) IN GENERAL.—Subparagraph (C) of section 

14 954(c)(6) is amended by striking ‘‘January 1, 2010’’ and 

15 inserting ‘‘January 1, 2011’’. 

16 (b) EFFECTIVE DATE.—The amendment made by this 

17 section shall apply to taxable years of foreign corporations 

18 beginning after December 31, 2009, and to taxable years 

19 of United States shareholders with or within which any 

20 such taxable year of such foreign corporation ends. 
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1 SEC. 265. BASIS ADJUSTMENT TO STOCK OF S CORPS MAK2 ING CHARITABLE CONTRIBUTIONS OF PROP3 ERTY. 

4 (a) IN GENERAL.—Paragraph (2) of section 1367(a) 

5 is amended by striking ‘‘December 31, 2009’’ and inserting 

6 ‘‘December 31, 2010’’. 

7 (b) EFFECTIVE DATE.—The amendment made by this 

8 section shall apply to contributions made in taxable years 

9 beginning after December 31, 2009. 

10 SEC. 266. EMPOWERMENT ZONE TAX INCENTIVES. 

11 (a) IN GENERAL.—Section 1391 is amended— 

12 (1) by striking ‘‘December 31, 2009’’ in sub13 section (d)(1)(A)(i) and inserting ‘‘December 31, 

14 2010’’; and 

15 (2) by striking the last sentence of subsection 

16 (h)(2). 

17 (b) INCREASED EXCLUSION OF GAIN ON STOCK OF EM18 POWERMENT ZONE BUSINESSES.—Subparagraph (C) of 

19 section 1202(a)(2) is amended— 

20 (1) by striking ‘‘December 31, 2014’’ and insert21 ing ‘‘December 31, 2015’’; and 

22 (2) by striking ‘‘2014’’ in the heading and insert23 ing ‘‘2015’’. 

24 (c) TREATMENT OF CERTAIN TERMINATION DATES

25 SPECIFIED IN NOMINATIONS.—In the case of a designation 

26 of an empowerment zone the nomination for which included 
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1 a termination date which is contemporaneous with the date 

2 specified in subparagraph (A)(i) of section 1391(d)(1) of 

3 the Internal Revenue Code of 1986 (as in effect before the 

4 enactment of this Act), subparagraph (B) of such section 

5 shall not apply with respect to such designation unless, 

6 after the date of the enactment of this section, the entity 

7 which made such nomination reconfirms such termination 

8 date, or amends the nomination to provide for a new termi9 nation date, in such manner as the Secretary of the Treas10 ury (or the Secretary’s designee) may provide. 

11 (d) EFFECTIVE DATE.—The amendments made by this 

12 section shall apply to periods after December 31, 2009. 

13 SEC. 267. TAX INCENTIVES FOR INVESTMENT IN THE DIS14 TRICT OF COLUMBIA. 

15 (a) IN GENERAL.—Subsection (f) of section 1400 is 

16 amended by striking ‘‘December 31, 2009’’ each place it ap17 pears and inserting ‘‘December 31, 2010’’. 

18 (b) TAX-EXEMPT DC EMPOWERMENT ZONE BONDS.— 

19 Subsection (b) of section 1400A is amended by striking ‘‘De20 cember 31, 2009’’ and inserting ‘‘December 31, 2010’’. 

21 (c) ZERO-PERCENT CAPITAL GAINS RATE.— 

22 (1) ACQUISITION DATE.—Paragraphs (2)(A)(i), 

23 (3)(A), (4)(A)(i), and (4)(B)(i)(I) of section 1400B(b) 

24 are each amended by striking ‘‘January 1, 2010’’ and 

25 inserting ‘‘January 1, 2011’’. 
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1 (2) LIMITATION ON PERIOD OF GAINS.— 

2 (A) IN GENERAL.—Paragraph (2) of section 

3 1400B(e) is amended— 

4 (i) by striking ‘‘December 31, 2014’’ 

5 and inserting ‘‘December 31, 2015’’; and 

6 (ii) by striking ‘‘2014’’ in the heading 

7 and inserting ‘‘2015’’. 

8 (B) PARTNERSHIPS AND S-CORPS.—Para9 graph (2) of section 1400B(g) is amended by 

10 striking ‘‘December 31, 2014’’ and inserting ‘‘De11 cember 31, 2015’’. 

12 (d) FIRST-TIME HOMEBUYER CREDIT.—Subsection (i) 

13 of section 1400C is amended by striking ‘‘January 1, 2010’’ 

14 and inserting ‘‘January 1, 2011’’. 

15 (e) EFFECTIVE DATES.— 

16 (1) IN GENERAL.—Except as otherwise provided 

17 in this subsection, the amendments made by this sec18 tion shall apply to periods after December 31, 2009. 

19 (2) TAX-EXEMPT DC EMPOWERMENT ZONE

20 BONDS.—The amendment made by subsection (b) 

21 shall apply to bonds issued after December 31, 2009. 

22 (3) ACQUISITION DATES FOR ZERO-PERCENT

23 CAPITAL GAINS RATE.—The amendments made by 

24 subsection (c) shall apply to property acquired or sub25 stantially improved after December 31, 2009. 
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1 (4) HOMEBUYER CREDIT.—The amendment 

2 made by subsection (d) shall apply to homes pur3 chased after December 31, 2009. 

4 SEC. 268. RENEWAL COMMUNITY TAX INCENTIVES. 

5 (a) IN GENERAL.—Subsection (b) of section 1400E is 

6 amended— 

7 (1) by striking ‘‘December 31, 2009’’ in para8 graphs (1)(A) and (3) and inserting ‘‘December 31, 

9 2010’’; and 

10 (2) by striking ‘‘January 1, 2010’’ in paragraph 

11 (3) and inserting ‘‘January 1, 2011’’. 

12 (b) ZERO-PERCENT CAPITAL GAINS RATE.— 

13 (1) ACQUISITION DATE.—Paragraphs (2)(A)(i), 

14 (3)(A), (4)(A)(i), and (4)(B)(i) of section 1400F(b) 

15 are each amended by striking ‘‘January 1, 2010’’ and 

16 inserting ‘‘January 1, 2011’’. 

17 (2) LIMITATION ON PERIOD OF GAINS.—Para18 graph (2) of section 1400F(c) is amended— 

19 (A) by striking ‘‘December 31, 2014’’ and 

20 inserting ‘‘December 31, 2015’’; and 

21 (B) by striking ‘‘2014’’ in the heading and 

22 inserting ‘‘2015’’. 

23 (3) CLERICAL AMENDMENT.—Subsection (d) of 

24 section 1400F is amended by striking ‘‘and ‘December 

25 31, 2014’ for ‘December 31, 2014’ ’’. 
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1 (c) COMMERCIAL REVITALIZATION DEDUCTION.— 

2 (1) IN GENERAL.—Subsection (g) of section 

3 1400I is amended by striking ‘‘December 31, 2009’’ 

4 and inserting ‘‘December 31, 2010’’. 

5 (2) CONFORMING AMENDMENT.—Subparagraph 

6 (A) of section 1400I(d)(2) is amended by striking 

7 ‘‘after 2001 and before 2010’’ and inserting ‘‘which 

8 begins after 2001 and before the date referred to in 

9 subsection (g)’’. 

10 (d) INCREASED EXPENSING UNDER SECTION 179.— 

11 Subparagraph (A) of section 1400J(b)(1) is amended by 

12 striking ‘‘January 1, 2010’’ and inserting ‘‘January 1, 

13 2011’’. 

14 (e) TREATMENT OF CERTAIN TERMINATION DATES

15 SPECIFIED IN NOMINATIONS.—In the case of a designation 

16 of a renewal community the nomination for which included 

17 a termination date which is contemporaneous with the date 

18 specified in subparagraph (A) of section 1400E(b)(1) of the 

19 Internal Revenue Code of 1986 (as in effect before the enact20 ment of this Act), subparagraph (B) of such section shall 

21 not apply with respect to such designation unless, after the 

22 date of the enactment of this section, the entity which made 

23 such nomination reconfirms such termination date, or 

24 amends the nomination to provide for a new termination 
50 

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1 date, in such manner as the Secretary of the Treasury (or 

2 the Secretary’s designee) may provide. 

3 (f) EFFECTIVE DATES.— 

4 (1) IN GENERAL.—Except as otherwise provided 

5 in this subsection, the amendments made by this sec6 tion shall apply to periods after December 31, 2009. 

7 (2) ACQUISITIONS.—The amendments made by 

8 subsections (b)(1) and (d) shall apply to acquisitions 

9 after December 31, 2009. 

10 (3) COMMERCIAL REVITALIZATION DEDUCTION.— 

11 (A) IN GENERAL.—The amendment made 

12 by subsection (c)(1) shall apply to buildings 

13 placed in service after December 31, 2009. 

14 (B) CONFORMING AMENDMENT.—The 

15 amendment made by subsection (c)(2) shall 

16 apply to calendar years beginning after Decem17 ber 31, 2009. 

18 SEC. 269. TEMPORARY INCREASE IN LIMIT ON COVER OVER 

19 OF RUM EXCISE TAXES TO PUERTO RICO AND 

20 THE VIRGIN ISLANDS. 

21 (a) IN GENERAL.—Paragraph (1) of section 7652(f) is 

22 amended by striking ‘‘January 1, 2010’’ and inserting 

23 ‘‘January 1, 2011’’. 
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1 (b) EFFECTIVE DATE.—The amendment made by this 

2 section shall apply to distilled spirits brought into the 

3 United States after December 31, 2009. 

4 SEC. 270. PAYMENT TO AMERICAN SAMOA IN LIEU OF EX5 TENSION OF ECONOMIC DEVELOPMENT 

6 CREDIT. 

7 The Secretary of the Treasury (or his designee) shall 

8 pay $18,000,000 to the Government of American Samoa for 

9 purposes of economic development. The payment made 

10 under the preceding sentence shall be treated for purposes 

11 of section 1324 of title 31, United States Code, as a refund 

12 of internal revenue collections to which such section applies. 

13 SEC. 271. ELECTION TO TEMPORARILY UTILIZE UNUSED 

14 AMT CREDITS DETERMINED BY DOMESTIC IN15 VESTMENT. 

16 (a) IN GENERAL.—Section 53 is amended by adding 

17 at the end the following new subsection: 

18 ‘‘(g) ELECTION FOR CORPORATIONS WITH NEW DO19 MESTIC INVESTMENTS.— 

20 ‘‘(1) IN GENERAL.—If a corporation elects to 

21 have this subsection apply for its first taxable year 

22 beginning after December 31, 2009, the limitation im23 posed by subsection (c) for such taxable year shall be 

24 increased by the AMT credit adjustment amount. 
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1 ‘‘(2) AMT CREDIT ADJUSTMENT AMOUNT.—For 

2 purposes of paragraph (1), the term ‘AMT credit ad3 justment amount’ means, the lesser of— 

4 ‘‘(A) 50 percent of a corporation’s min5 imum tax credit for its first taxable year begin6 ning after December 31, 2009, determined under 

7 subsection (b), or 

8 ‘‘(B) 10 percent of new domestic invest9 ments made during such taxable year. 

10 ‘‘(3) NEW DOMESTIC INVESTMENTS.—For pur11 poses of this subsection, the term ‘new domestic in12 vestments’ means the cost of qualified property (as de13 fined in section 168(k)(2)(A)(i))— 

14 ‘‘(A) the original use of which commences 

15 with the taxpayer during the taxable year, and 

16 ‘‘(B) which is placed in service in the 

17 United States by the taxpayer during such tax18 able year. 

19 ‘‘(4) CREDIT REFUNDABLE.—For purposes of 

20 subsection (b) of section 6401, the aggregate increase 

21 in the credits allowable under this part for any tax22 able year resulting from the application of this sub23 section shall be treated as allowed under subpart C 

24 (and not under any other subpart). For purposes of 

25 section 6425, any amount treated as so allowed shall 
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1 be treated as a payment of estimated income tax for 

2 the taxable year. 

3 ‘‘(5) ELECTION.—An election under this sub4 section shall be made at such time and in such man5 ner as prescribed by the Secretary, and once made, 

6 may be revoked only with the consent of the Sec7 retary. Not later than 90 days after the date of the 

8 enactment of this subsection, the Secretary shall issue 

9 guidance specifying such time and manner. 

10 ‘‘(6) TREATMENT OF CERTAIN PARTNERSHIP IN11 VESTMENTS.—For purposes of this subsection, a cor12 poration shall take into account its allocable share of 

13 any new domestic investments by a partnership for 

14 any taxable year if, and only if, more than 90 per15 cent of the capital and profits interests in such part16 nership are owned by such corporation (directly or 

17 indirectly) at all times during such taxable year. 

18 ‘‘(7) NO DOUBLE BENEFIT.— 

19 ‘‘(A) IN GENERAL.—A corporation making 

20 an election under this subsection may not make 

21 an election under subparagraph (H) of section 

22 172(b)(1). 

23 ‘‘(B) SPECIAL RULES WITH RESPECT TO

24 TAXPAYERS PREVIOUSLY ELECTING APPLICABLE

25 NET OPERATING LOSSES.— In the case of a cor-
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1 poration which made an election under subpara2 graph (H) of section 172(b)(1) and elects the ap3 plication of this subsection— 

4 ‘‘(i) ELECTION OF APPLICABLE NET

5 OPERATING LOSS TREATED AS REVOKED.— 

6 The election under such subparagraph (H) 

7 shall (notwithstanding clause (iii)(II) of 

8 such subparagraph) be treated as having 

9 been revoked by the taxpayer. 

10 ‘‘(ii) COORDINATION WITH PROVISION

11 FOR EXPEDITED REFUND.—The amount 

12 otherwise treated as a payment of estimated 

13 income tax under the last sentence of para14 graph (4) shall be reduced (but not below 

15 zero) by the aggregate increase in unpaid 

16 tax liability determined under this chapter 

17 by reason of the revocation of the election 

18 under clause (i). 

19 ‘‘(iii) APPLICATION OF STATUTE OF

20 LIMITATIONS.—With respect to the revoca21 tion of an election under clause (i)— 

22 ‘‘(I) the statutory period for the 

23 assessment of any deficiency attrib24 utable to such revocation shall not ex25 pire before the end of the 3-year period 
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1 beginning on the date of the election to 

2 have this subsection apply, and 

3 ‘‘(II) such deficiency may be as4 sessed before the expiration of such 3- 

5 year period notwithstanding the provi6 sions of any other law or rule of law 

7 which would otherwise prevent such as8 sessment. 

9 ‘‘(C) EXCEPTION FOR ELIGIBLE SMALL

10 BUSINESSES.—Subparagraphs (A) and (B) shall 

11 not apply to an eligible small business as defined 

12 in section 172(b)(1)(H)(v)(II). 

13 ‘‘(8) REGULATIONS.—The Secretary may issue 

14 such regulations or other guidance as may be nec15 essary or appropriate to carry out the purposes of 

16 this subsection, including to prevent fraud and abuse 

17 under this subsection.’’. 

18 (b) CONFORMING AMENDMENTS.— 

19 (1) Section 6211(b)(4)(A) is amended by insert20 ing ‘‘53(g),’’ after ‘‘53(e),’’. 

21 (2) Section 1324(b)(2) of title 31, United States 

22 Code, is amended by inserting ‘‘53(g),’’ after ‘‘53(e),’’. 

23 (c) EFFECTIVE DATE.—The amendments made by this 

24 section shall apply to taxable years beginning after Decem25 ber 31, 2009. 
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1 SEC. 272. STUDY OF EXTENDED TAX EXPENDITURES. 

2 (a) FINDINGS.—Congress finds the following: 

3 (1) Currently, the aggregate cost of Federal tax 

4 expenditures rivals, or even exceeds, the amount of 

5 total Federal discretionary spending. 

6 (2) Given the escalating public debt, a critical 

7 examination of this use of taxpayer dollars is essen8 tial. 

9 (3) Additionally, tax expenditures can com10 plicate the Internal Revenue Code of 1986 for tax11 payers and complicate tax administration for the In12 ternal Revenue Service. 

13 (4) To facilitate a better understanding of tax 

14 expenditures in the future, it is constructive for legis15 lation extending these provisions to include a study of 

16 such provisions.

17 (b) REQUIREMENT TO REPORT.—Not later than No18 vember 30, 2010, the Chief of Staff of the Joint Committee 

19 on Taxation, in consultation with the Comptroller General 

20 of the United States, shall submit to the Committee on Ways 

21 and Means of the House of Representatives and the Com22 mittee on Finance of the Senate a report on each tax ex23 penditure (as defined in section 3(3) of the Congressional 

24 Budget Impoundment Control Act of 1974 (2 U.S.C. 

25 622(3)) extended by this title. 
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1 (c) ROLLING SUBMISSION OF REPORTS.—The Chief of 

2 Staff of the Joint Committee on Taxation shall initially 

3 submit the reports for each such tax expenditure enacted 

4 in this subtitle (relating to business tax relief) and subtitle 

5 A (relating to energy) in order of the tax expenditure incur6 ring the least aggregate cost to the greatest aggregate cost 

7 (determined by reference to the cost estimate of this Act by 

8 the Joint Committee on Taxation). Thereafter, such reports 

9 may be submitted in such order as the Chief of Staff deter10 mines appropriate. 

11 (d) CONTENTS OF REPORT.—Such reports shall con12 tain the following: 

13 (1) An explanation of the tax expenditure and 

14 any relevant economic, social, or other context under 

15 which it was first enacted. 

16 (2) A description of the intended purpose of the 

17 tax expenditure. 

18 (3) An analysis of the overall success of the tax 

19 expenditure in achieving such purpose, and evidence 

20 supporting such analysis. 

21 (4) An analysis of the extent to which further ex22 tending the tax expenditure, or making it permanent, 

23 would contribute to achieving such purpose. 
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1 (5) A description of the direct and indirect bene2 ficiaries of the tax expenditure, including identifying 

3 any unintended beneficiaries. 

4 (6) An analysis of whether the tax expenditure 

5 is the most cost-effective method for achieving the pur6 pose for which it was intended, and a description of 

7 any more cost-effective methods through which such 

8 purpose could be accomplished. 

9 (7) A description of any unintended effects of the 

10 tax expenditure that are useful in understanding the 

11 tax expenditure’s overall value. 

12 (8) An analysis of how the tax expenditure could 

13 be modified to better achieve its original purpose. 

14 (9) A brief description of any interactions (ac15 tual or potential) with other tax expenditures or di16 rect spending programs in the same or related budget 

17 function worthy of further study. 

18 (10) A description of any unavailable informa19 tion the staff of the Joint Committee on Taxation 

20 may need to complete a more thorough examination 

21 and analysis of the tax expenditure, and what must 

22 be done to make such information available. 

23 (e) MINIMUM ANALYSIS BY DEADLINE.—In the event 

24 the Chief of Staff of the Joint Committee on Taxation con25 cludes it will not be feasible to complete all reports by the 
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1 date specified in subsection (a), at a minimum, the reports 

2 for each tax expenditure enacted in this subtitle (relating 

3 to business tax relief) and subtitle A (relating to energy) 

4 shall be completed by such date. 

5 Subtitle D—Temporary Disaster 

6 Relief Provisions 

7 PART I—NATIONAL DISASTER RELIEF 

8 SEC. 281. WAIVER OF CERTAIN MORTGAGE REVENUE BOND 

9 REQUIREMENTS. 

10 (a) IN GENERAL.—Paragraph (11) of section 143(k) 

11 is amended by striking ‘‘January 1, 2010’’ and inserting 

12 ‘‘January 1, 2011’’. 

13 (b) SPECIAL RULE FOR RESIDENCES DESTROYED IN

14 FEDERALLY DECLARED DISASTERS.—Paragraph (13) of 

15 section 143(k), as redesignated by subsection (c), is amended 

16 by striking ‘‘January 1, 2010’’ in subparagraphs (A)(i) and 

17 (B)(i) and inserting ‘‘January 1, 2011’’. 

18 (c) TECHNICAL AMENDMENT.—Subsection (k) of sec19 tion 143 is amended by redesignating the second paragraph 

20 (12) (relating to special rules for residences destroyed in 

21 federally declared disasters) as paragraph (13). 

22 (d) EFFECTIVE DATES.— 

23 (1) IN GENERAL.—Except as otherwise provided 

24 in this subsection, the amendment made by this sec-
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1 tion shall apply to bonds issued after December 31, 

2 2009. 

3 (2) RESIDENCES DESTROYED IN FEDERALLY DE4 CLARED DISASTERS.—The amendments made by sub5 section (b) shall apply with respect to disasters occur6 ring after December 31, 2009. 

7 (3) TECHNICAL AMENDMENT.—The amendment 

8 made by subsection (c) shall take effect as if included 

9 in section 709 of the Tax Extenders and Alternative 

10 Minimum Tax Relief Act of 2008. 

11 SEC. 282. LOSSES ATTRIBUTABLE TO FEDERALLY DE12 CLARED DISASTERS. 

13 (a) IN GENERAL.—Subclause (I) of section 

14 165(h)(3)(B)(i) is amended by striking ‘‘January 1, 2010’’ 

15 and inserting ‘‘January 1, 2011’’. 

16 (b) $500 LIMITATION.—Paragraph (1) of section 

17 165(h) is amended by striking ‘‘December 31, 2009’’ and 

18 inserting ‘‘December 31, 2010’’. 

19 (c) EFFECTIVE DATE.— 

20 (1) IN GENERAL.—The amendment made by sub21 section (a) shall apply to federally declared disasters 

22 occurring after December 31, 2009. 

23 (2) $500 LIMITATION.—The amendment made by 

24 subsection (b) shall apply to taxable years beginning 

25 after December 31, 2009. 
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1 SEC. 283. SPECIAL DEPRECIATION ALLOWANCE FOR QUALI2 FIED DISASTER PROPERTY. 

3 (a) IN GENERAL.—Subclause (I) of section 

4 168(n)(2)(A)(ii) is amended by striking ‘‘January 1, 2010’’ 

5 and inserting ‘‘January 1, 2011’’. 

6 (b) EFFECTIVE DATE.—The amendment made by this 

7 section shall apply to disasters occurring after December 31, 

8 2009. 

9 SEC. 284. NET OPERATING LOSSES ATTRIBUTABLE TO FED10 ERALLY DECLARED DISASTERS. 

11 (a) IN GENERAL.—Subclause (I) of section 

12 172(j)(1)(A)(i) is amended by striking ‘‘January 1, 2010’’ 

13 and inserting ‘‘January 1, 2011’’. 

14 (b) EFFECTIVE DATE.—The amendment made by this 

15 section shall apply to losses attributable to disasters occur16 ring after December 31, 2009. 

17 SEC. 285. EXPENSING OF QUALIFIED DISASTER EXPENSES. 

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

19 198A(b)(2) is amended by striking ‘‘January 1, 2010’’ and 

20 inserting ‘‘January 1, 2011’’. 

21 (b) EFFECTIVE DATE.—The amendment made by this 

22 section shall apply to expenditures on account of disasters 

23 occurring after December 31, 2009. 
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1 PART II—REGIONAL PROVISIONS 

2 Subpart A—New York Liberty Zone 

3 SEC. 291. SPECIAL DEPRECIATION ALLOWANCE FOR NON4 RESIDENTIAL AND RESIDENTIAL REAL PROP5 ERTY. 

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

7 1400L(b)(2) is amended by striking ‘‘December 31, 2009’’ 

8 and inserting ‘‘December 31, 2010’’. 

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

10 section shall apply to property placed in service after De11 cember 31, 2009. 

12 SEC. 292. TAX-EXEMPT BOND FINANCING. 

13 (a) IN GENERAL.—Subparagraph (D) of section 

14 1400L(d)(2) is amended by striking ‘‘January 1, 2010’’ and 

15 inserting ‘‘January 1, 2011’’. 

16 (b) EFFECTIVE DATE.—The amendment made by this 

17 section shall apply to bonds issued after December 31, 2009. 

18 Subpart B—GO Zone 

19 SEC. 295. INCREASE IN REHABILITATION CREDIT. 

20 (a) IN GENERAL.—Subsection (h) of section 1400N is 

21 amended by striking ‘‘December 31, 2009’’ and inserting 

22 ‘‘December 31, 2010’’. 

23 (b) EFFECTIVE DATE.—The amendment made by this 

24 section shall apply to amounts paid or incurred after De25 cember 31, 2009. 
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1 SEC. 296. WORK OPPORTUNITY TAX CREDIT WITH RESPECT 

2 TO CERTAIN INDIVIDUALS AFFECTED BY 

3 HURRICANE KATRINA FOR EMPLOYERS IN4 SIDE DISASTER AREAS. 

5 (a) IN GENERAL.—Paragraph (1) of section 201(b) of 

6 the Katrina Emergency Tax Relief Act of 2005 is amended 

7 by striking ‘‘4-year’’ and inserting ‘‘5-year’’. 

8 (b) EFFECTIVE DATE.—The amendment made by sub9 section (a) shall apply to individuals hired after August 

10 27, 2009. 

11 SEC. 297. EXTENSION OF LOW-INCOME HOUSING CREDIT 

12 RULES FOR BUILDINGS IN GO ZONES. 

13 Section 1400N(c)(5) is amended by striking ‘‘January 

14 1, 2011’’ and inserting ‘‘January 1, 2013’’. 

15 TITLE III—PENSION PROVISIONS 

16 Subtitle A—Pension Funding Relief 

17 PART 1—SINGLE-EMPLOYER PLANS 

18 SEC. 301. EXTENDED PERIOD FOR SINGLE-EMPLOYER DE19 FINED BENEFIT PLANS TO AMORTIZE CER20 TAIN SHORTFALL AMORTIZATION BASES. 

21 (a) ERISA AMENDMENTS.— 

22 (1) IN GENERAL.—Section 303(c)(2) of the Em23 ployee Retirement Income Security Act of 1974 (29 

24 U.S.C. 1083(c)(2)) is amended by adding at the end 

25 the following subparagraphs: 

26 ‘‘(D) SPECIAL RULE.— 
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1 ‘‘(i) IN GENERAL.—In the case of the 

2 shortfall amortization base of a plan for 

3 any applicable plan year, the shortfall am4 ortization installments are the amounts de5 scribed in clause (ii) or (iii), if made appli6 cable by an election under clause (iv). In 

7 the absence of a timely election, such in8 stallments shall be determined without re9 gard to this subparagraph. 

10 ‘‘(ii) 2 PLUS 7 AMORTIZATION SCHED11 ULE.—The shortfall amortization install12 ments described in this clause are— 

13 ‘‘(I) in the case of the first 2 plan 

14 years in the 9-plan-year period begin15 ning with the applicable plan year, in16 terest on the shortfall amortization 

17 base (determined by using the effective 

18 interest rate for the applicable plan 

19 year), and 

20 ‘‘(II) in the case of the last 7 plan 

21 years in such 9-plan-year period, the 

22 amounts necessary to amortize the bal23 ance of such shortfall amortization 

24 base in level annual installments over 

25 such last 7 plan years (determined 
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1 using the segment rates determined 

2 under subparagraph (C) of subsection 

3 (h)(2) for the applicable plan year, ap4 plied under rules similar to the rules of 

5 subparagraph (B) of subsection (h)(2)). 

6 ‘‘(iii) 15-YEAR AMORTIZATION.—The 

7 shortfall amortization installments de8 scribed in this clause are the amounts under 

9 subparagraphs (A) and (B) determined by 

10 substituting ‘15 plan-year period’ for ‘7- 

11 plan-year period’. 

12 ‘‘(iv) ELECTION.— 

13 ‘‘(I) IN GENERAL.—The plan 

14 sponsor may, with respect to a plan, 

15 elect, with respect to any of not more 

16 than 2 applicable plan years, to deter17 mine shortfall amortization install18 ments under this subparagraph. An 

19 election under either clause (ii) or 

20 clause (iii) may be made with respect 

21 to either of such applicable plan years. 

22 ‘‘(II) ELIGIBILITY FOR ELEC23 TION.—An election may be made to de24 termine shortfall amortization install25 ments under this subparagraph with 
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1 respect to a plan only if, as of the date 

2 of the election— 

3 ‘‘(aa) the plan sponsor is not 

4 a debtor in a case under title 11, 

5 United States Code, or similar 

6 Federal or State law, 

7 ‘‘(bb) there are no unpaid 

8 minimum required contributions 

9 with respect to the plan for pur10 poses of section 4971 of the Inter11 nal Revenue Code of 1986, 

12 ‘‘(cc) there is no lien in favor 

13 of the plan under subsection (k) or 

14 under section 430(k) of such Code, 

15 and 

16 ‘‘(dd) a distress termination 

17 has not been initiated for the plan 

18 under section 4041(c). 

19 ‘‘(III) RULES RELATING TO ELEC20 TION.—Such election shall be made at 

21 such times, and in such form and 

22 manner, as shall be prescribed by the 

23 Secretary of the Treasury and shall be 

24 irrevocable, except under such limited 

25 circumstances, and subject to such con-
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•HR 4213 EAH1S 

1 ditions, as such Secretary may pre2 scribe. 

3 ‘‘(E) APPLICABLE PLAN YEAR.— 

4 ‘‘(i) IN GENERAL.—For purposes of 

5 this paragraph, the term ‘applicable plan 

6 year’ means, subject to the election of the 

7 plan sponsor under subparagraph (D)(iv), 

8 each of not more than 2 of the plan years 

9 beginning in 2008, 2009, 2010, or 2011. 

10 ‘‘(ii) SPECIAL RULE RELATING TO

11 2008.—A plan year may be elected as an ap12 plicable plan year pursuant to this sub13 paragraph only if the due date under sub14 section (j)(1) for the payment of the min15 imum required contribution for such plan 

16 year occurs on or after March 10, 2010. 

17 ‘‘(F) INCREASES IN SHORTFALL AMORTIZA18 TION INSTALLMENTS IN CASES OF EXCESS COM19 PENSATION OR CERTAIN DIVIDENDS OR STOCK

20 REDEMPTIONS.— 

21 ‘‘(i) IN GENERAL.—If, with respect to 

22 an election for an applicable plan year 

23 under subparagraph (D), there is an in24 stallment acceleration amount with respect 

25 to a plan for any plan year in the restric-
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•HR 4213 EAH1S 

1 tion period (or if there is an installment ac2 celeration amount carried forward to a 

3 plan year not in the restriction period), 

4 then the shortfall amortization installment 

5 otherwise determined and payable under 

6 this paragraph for such plan year shall be 

7 increased by such amount. 

8 ‘‘(ii) BACK-END ADJUSTMENT TO AM9 ORTIZATION SCHEDULE.—Subject to rules 

10 prescribed by the Secretary of the Treasury, 

11 if a shortfall amortization installment with 

12 respect to any shortfall amortization base 

13 for an applicable plan year is required to 

14 be increased for any plan year under clause 

15 (i), subsequent shortfall amortization in16 stallments with respect to such base shall be 

17 reduced, in reverse order of the otherwise re18 quired installments beginning with the final 

19 scheduled installment, to the extent nec20 essary to limit the present value of such 

21 subsequent shortfall amortization install22 ments (after application of this subpara23 graph) to the present value of the remaining 

24 unamortized shortfall amortization base. 
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1 ‘‘(iii) INSTALLMENT ACCELERATION

2 AMOUNT.—For purposes of this subpara3 graph— 

4 ‘‘(I) IN GENERAL.—The term ‘in5 stallment acceleration amount’ means, 

6 with respect to any plan year in a re7 striction period with respect to an ap8 plicable plan year, the sum of— 

9 ‘‘(aa) the aggregate amount 

10 of excess employee compensation 

11 determined under clause (iv) for 

12 the plan year, plus 

13 ‘‘(bb) the dividend and re14 demption amount determined 

15 under clause (v) for the plan year. 

16 ‘‘(II) CUMULATIVE LIMITATION.— 

17 The installment acceleration amount 

18 for any plan year shall not exceed the 

19 excess (if any) of— 

20 ‘‘(aa) the sum of the shortfall 

21 amortization installments for the 

22 plan year and all preceding plan 

23 years in the amortization period 

24 elected under subparagraph (D) 

25 with respect to the shortfall amor-
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•HR 4213 EAH1S 

1 tization base with respect to an 

2 applicable year, determined with3 out regard to subparagraph (D) 

4 and this subparagraph, over 

5 ‘‘(bb) the sum of the shortfall 

6 amortization installments for such 

7 plan year and all such preceding 

8 plan years, determined after ap9 plication of subparagraph (D) 

10 (and in the case of any preceding 

11 plan year, after application of 

12 this subparagraph). 

13 ‘‘(III) CARRYOVER OF EXCESS IN14 STALLMENT ACCELERATION

15 AMOUNTS.— 

16 ‘‘(aa) IN GENERAL.—If the 

17 installment acceleration amount 

18 for any plan year (determined 

19 without regard to subclause (II)) 

20 exceeds the limitation under sub21 clause (II), then, subject to item 

22 (bb), such excess shall be treated 

23 as an installment acceleration 

24 amount for the succeeding plan 

25 year. 
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•HR 4213 EAH1S 

1 ‘‘(bb) CAP TO APPLY.—If any 

2 amount treated as an installment 

3 acceleration amount under item 

4 (aa) or this item with respect any 

5 succeeding plan year, when added 

6 to other installment acceleration 

7 amounts (determined without re8 gard to subclause (II)) with re9 spect to the plan year, exceeds the 

10 limitation under subclause (II), 

11 the portion of such amount rep12 resenting such excess shall be 

13 treated as an installment accelera14 tion amount with respect to the 

15 next succeeding plan year. 

16 ‘‘(cc) LIMITATION ON YEARS

17 TO WHICH AMOUNTS CARRIED

18 FORWARD.—No amount shall be 

19 carried forward under item (aa) 

20 or (bb) to a plan year which be21 gins after the last plan year in 

22 the restriction period (or after the 

23 second plan year following such 

24 last plan year in the case of an 

25 election year with respect to which 
72 

•HR 4213 EAH1S 

1 15-year amortization was elected 

2 under subparagraph (D)(iii)). 

3 ‘‘(dd) ORDERING RULES.— 

4 For purposes of applying item 

5 (bb), installment acceleration 

6 amounts for the plan year (deter7 mined without regard to any car8 ryover under this clause) shall be 

9 applied first against the limita10 tion under subclause (II) and then 

11 carryovers to such plan year shall 

12 be applied against such limitation 

13 on a first-in, first-out basis. 

14 ‘‘(iv) EXCESS EMPLOYEE COMPENSA15 TION.— 

16 ‘‘(I) IN GENERAL.—For purposes 

17 of this paragraph, the term ‘excess em18 ployee compensation’ means the sum 

19 of— 

20 ‘‘(aa) with respect to any 

21 employee, for any plan year, the 

22 excess (if any) of— 

23 ‘‘(AA) the aggregate 

24 amount includible in income 

25 under chapter 1 of the Inter-
73 

•HR 4213 EAH1S 

1 nal Revenue Code of 1986 for 

2 remuneration during the cal3 endar year in which such 

4 plan year begins for services 

5 performed by the employee 

6 for the plan sponsor (whether 

7 or not performed during such 

8 calendar year), over 

9 ‘‘(BB) $1,000,000, plus 

10 ‘‘(bb) the amount of assets set 

11 aside or reserved (directly or indi12 rectly) in a trust (or other ar13 rangement as determined by the 

14 Secretary of the Treasury), or 

15 transferred to such a trust or 

16 other arrangement, during the 

17 calendar year by a plan sponsor 

18 for purposes of paying deferred 

19 compensation of an employee 

20 under a nonqualified deferred 

21 compensation plan (as defined in 

22 section 409A of such Code) of the 

23 plan sponsor. 
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1 ‘‘(II) NO DOUBLE COUNTING.—No 

2 amount shall be taken into account 

3 under subclause (I) more than once. 

4 ‘‘(III) EMPLOYEE; REMUNERA5 TION.—For purposes of this clause, the 

6 term ‘employee’ includes, with respect 

7 to a calendar year, a self-employed in8 dividual who is treated as an employee 

9 under section 401(c) of the Internal 

10 Revenue Code of 1986 for the taxable 

11 year ending during such calendar 

12 year, and the term ‘remuneration’ 

13 shall include earned income of such an 

14 individual. 

15 ‘‘(IV) CERTAIN PAYMENTS UNDER

16 EXISTING CONTRACTS.—There shall not 

17 be taken into account under subclause 

18 (I)(aa) any remuneration consisting of 

19 nonqualified deferred compensation, re20 stricted stock (or restricted stock units), 

21 stock options, or stock appreciation 

22 rights payable or granted under a 

23 written binding contract that was in 

24 effect on March 1, 2010, and which 
75 

•HR 4213 EAH1S 

1 was not modified in any material re2 spect before such remuneration is paid. 

3 ‘‘(V) ONLY REMUNERATION FOR

4 POST-2009 SERVICES COUNTED.—Remu5 neration shall be taken into account 

6 under subclause (I)(aa) only to the ex7 tent attributable to services performed 

8 by the employee for the plan sponsor 

9 after December 31, 2009. 

10 ‘‘(VI) COMMISSIONS.— 

11 ‘‘(aa) IN GENERAL.—There 

12 shall not be taken into account 

13 under subclause (I)(aa) any re14 muneration payable on a commis15 sion basis solely on account of in16 come directly generated by the in17 dividual performance of the indi18 vidual to whom such remunera19 tion is payable. 

20 ‘‘(bb) SPECIFIED EMPLOY21 EES.—Item (aa) shall not apply 

22 in the case of any specified em23 ployee (within the meaning of sec24 tion 409A(a)(2)(B)(i) of the Inter25 nal Revenue Code of 1986) or any 
76 

•HR 4213 EAH1S 

1 employee who would be such a 

2 specified employee if the plan 

3 sponsor were a corporation de4 scribed in such section. 

5 ‘‘(VII) INDEXING OF AMOUNT.—In 

6 the case of any calendar year begin7 ning after 2010, the dollar amount 

8 under subclause (I)(aa)(BB) shall be 

9 increased by an amount equal to— 

10 ‘‘(aa) such dollar amount, 

11 multiplied by 

12 ‘‘(bb) the cost-of-living ad13 justment determined under section 

14 1(f)(3) of the Internal Revenue 

15 Code of 1986 for the calendar 

16 year, determined by substituting 

17 ‘calendar year 2009’ for ‘calendar 

18 year 1992’ in subparagraph (B) 

19 thereof. 

20 If the amount of any increase under 

21 clause (i) is not a multiple of $20,000, 

22 such increase shall be rounded to the 

23 next lowest multiple of $20,000. 

24 ‘‘(v) CERTAIN DIVIDENDS AND RE25 DEMPTIONS.— 
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•HR 4213 EAH1S 

1 ‘‘(I) IN GENERAL.—The dividend 

2 and redemption amount determined 

3 under this clause for any plan year is 

4 the lesser of— 

5 ‘‘(aa) the excess of— 

6 ‘‘(AA) the sum of the 

7 dividends paid during the 

8 plan year by the plan spon9 sor, plus the amounts paid 

10 for the redemption of stock of 

11 the plan sponsor redeemed 

12 during the plan year, over 

13 ‘‘(BB) an amount equal 

14 to the average of adjusted an15 nual net income of the plan 

16 sponsor for the last 5 fiscal 

17 years of the plan sponsor 

18 ending before such plan year, 

19 or 

20 ‘‘(bb) the sum of— 

21 ‘‘(AA) the amounts paid 

22 for the redemption of stock of 

23 the plan sponsor redeemed 

24 during the plan year, plus 
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•HR 4213 EAH1S 

1 ‘‘(BB) the excess of divi2 dends paid during the plan 

3 year by the plan sponsor over 

4 the dividend base amount. 

5 ‘‘(II) DEFINITIONS.— 

6 ‘‘(aa) ADJUSTED ANNUAL

7 NET INCOME.—For purposes of 

8 subclause (I)(aa)(BB), the term 

9 ‘adjusted annual net income’ with 

10 respect to any fiscal year means 

11 annual net income, determined in 

12 accordance with generally accept13 ed accounting principles (before 

14 after-tax gain or loss on any sale 

15 of assets), but without regard to 

16 any reduction by reason of depre17 ciation or amortization, except 

18 that in no event shall adjusted an19 nual net income for any fiscal 

20 year be less than zero. 

21 ‘‘(bb) DIVIDEND BASE

22 AMOUNT.—For purposes of this 

23 clause, the term ‘dividend base 

24 amount’ means, with respect to a 
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•HR 4213 EAH1S 

1 plan year, an amount equal to the 

2 greater of— 

3 ‘‘(AA) the median of the 

4 amounts of the dividends 

5 paid during each of the last 

6 5 fiscal years of the plan 

7 sponsor ending before such 

8 plan year, or 

9 ‘‘(BB) the amount of 

10 dividends paid during such 

11 plan year on preferred stock 

12 that was issued on or before 

13 May 21, 2010, or that is re14 placement stock for such pre15 ferred stock. 

16 ‘‘(III) ONLY CERTAIN POST-2009

17 DIVIDENDS AND REDEMPTIONS COUNT18 ED.—For purposes of subclause (I) 

19 (other than for purposes of calculating 

20 the dividend base amount), there shall 

21 only be taken into account dividends 

22 declared, and redemptions occurring, 

23 after February 28, 2010. 

24 ‘‘(IV) EXCEPTION FOR INTRA25 GROUP DIVIDENDS.—Dividends paid 
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•HR 4213 EAH1S 

1 by one member of a controlled group 

2 (as defined in section 302(d)(3)) to an3 other member of such group shall not 

4 be taken into account under subclause 

5 (I). 

6 ‘‘(V) EXCEPTION FOR STOCK DIVI7 DENDS.—Any distribution by the plan 

8 sponsor to its shareholders of stock 

9 issued by the plan sponsor shall not be 

10 taken into account under subclause (I). 

11 ‘‘(VI) EXCEPTION FOR CERTAIN

12 REDEMPTIONS.—The following shall 

13 not be taken into account under sub14 clause (I): 

15 ‘‘(aa) Redemptions of securi16 ties which, at the time of redemp17 tion, are not listed on an estab18 lished securities market and— 

19 ‘‘(AA) are made pursu20 ant to a pension plan that is 

21 qualified under section 401 

22 of the Internal Revenue Code 

23 of 1986 or a shareholder-ap24 proved program, or 
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•HR 4213 EAH1S 

1 ‘‘(BB) are made on ac2 count of an employee’s termi3 nation of employment with 

4 the plan sponsor, or the 

5 death or disability of a 

6 shareholder. 

7 ‘‘(bb) Redemptions of securi8 ties which are not, immediately 

9 after issuance, listed on an estab10 lished securities market and are, 

11 or had previously been— 

12 ‘‘(AA) held, directly or 

13 indirectly, by, or for the ben14 efit of, the Federal Govern15 ment or a Federal reserve 

16 bank, or 

17 ‘‘(BB) held by a na18 tional government (or a gov19 ernment-related entity of 

20 such a government) or an 

21 employee benefit plan if such 

22 shares are substantially iden23 tical to shares described in 

24 subitem (AA). 
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•HR 4213 EAH1S 

1 ‘‘(vi) OTHER DEFINITIONS AND

2 RULES.—For purposes of this subpara3 graph— 

4 ‘‘(I) PLAN SPONSOR.—The term 

5 ‘plan sponsor’ includes any member of 

6 the plan sponsor’s controlled group (as 

7 defined in section 302(d)(3)). 

8 ‘‘(II) RESTRICTION PERIOD.—The 

9 term ‘restriction period’ means, with 

10 respect to any applicable plan year 

11 with respect to which an election is 

12 made under subparagraph (D)— 

13 ‘‘(aa) except as provided in 

14 item (bb), the 3-year period begin15 ning with the applicable plan 

16 year (or, if later, the first plan 

17 year beginning after December 31, 

18 2009), or 

19 ‘‘(bb) if the plan sponsor 

20 elects 15-year amortization for the 

21 shortfall amortization base for the 

22 applicable plan year, the 5-year 

23 period beginning with such plan 

24 year (or, if later, the first plan 
83 

•HR 4213 EAH1S 

1 year beginning after December 31, 

2 2009). 

3 ‘‘(III) ELECTIONS FOR MULTIPLE

4 PLANS.—If a plan sponsor makes elec5 tions under subparagraph (D) with re6 spect to 2 or more plans, the Secretary 

7 of the Treasury shall provide rules for 

8 the application of this subparagraph to 

9 such plans, including rules for the rat10 able allocation of any installment ac11 celeration amount among such plans 

12 on the basis of each plan’s relative re13 duction in the plan’s shortfall amorti14 zation installment for the first plan 

15 year in the amortization period de16 scribed in clause (i) (determined with17 out regard to this subparagraph). 

18 ‘‘(G) MERGERS AND ACQUISITIONS.—The 

19 Secretary of the Treasury shall prescribe rules 

20 for the application of subparagraphs (D) and 

21 (F) in any case where there is a merger or ac22 quisition involving a plan sponsor making the 

23 election under subparagraph (D). 

24 ‘‘(H) REGULATIONS AND GUIDANCE.—The 

25 Secretary of the Treasury may prescribe such 
84 

•HR 4213 EAH1S 

1 regulations and other guidance of general appli2 cability as such Secretary may determine nec3 essary to achieve the purposes of subparagraphs 

4 (D) and (F).’’. 

5 (2) NOTICE REQUIREMENT.—Section 204 of such 

6 Act (29 U.S.C. 1054) is amended— 

7 (A) by redesignating subsection (k) as sub8 section (l); and 

9 (B) by inserting after subsection (j) the fol10 lowing new subsection: 

11 ‘‘(k) NOTICE IN CONNECTION WITH SHORTFALL AM12 ORTIZATION ELECTION.— 

13 ‘‘(1) IN GENERAL.—Not later 30 days after the 

14 date of an election under clause (iv) of section 

15 303(c)(2)(D) in connection with a single-employer 

16 plan, the plan administrator shall provide notice of 

17 such election in accordance with this subsection to 

18 each plan participant and beneficiary, each labor or19 ganization representing such participants and bene20 ficiaries, and the Pension Benefit Guaranty Corpora21 tion. 

22 ‘‘(2) MATTERS INCLUDED IN NOTICE.—Each no23 tice provided pursuant to this subsection shall set 

24 forth— 
85 

•HR 4213 EAH1S 

1 ‘‘(A) a statement that recently enacted legis2 lation permits employers to delay pension fund3 ing; 

4 ‘‘(B) with respect to required contribu5 tions— 

6 ‘‘(i) the amount of contributions that 

7 would have been required had the election 

8 not been made; 

9 ‘‘(ii) the amount of the reduction in re10 quired contributions for the applicable plan 

11 year that occurs on account of the election; 

12 and 

13 ‘‘(iii) the number of plan years to 

14 which such reduction will apply; 

15 ‘‘(C) with respect to a plan’s funding status 

16 as of the end of the plan year preceding the ap17 plicable plan year— 

18 ‘‘(i) the liabilities determined under 

19 section 4010(d)(1)(A); and 

20 ‘‘(ii) the market value of assets of the 

21 plan; and 

22 ‘‘(D) with respect to installment accelera23 tion amounts (as defined in section 

24 303(c)(2)(F)(iii)(I))— 
86 

•HR 4213 EAH1S 

1 ‘‘(i) an explanation of section 

2 303(c)(2)(F) (relating to increases in short3 fall amortization installments in cases of 

4 excess compensation or certain dividends or 

5 stock redemptions); and 

6 ‘‘(ii) a statement that increases in re7 quired contributions may occur in the event 

8 of future payments of excess employee com9 pensation or certain share repurchasing or 

10 dividend activity and that subsequent no11 tices of any such payments or activity will 

12 be provided in the annual funding notice 

13 provided pursuant to section 101(f). 

14 ‘‘(3) OTHER REQUIREMENTS.— 

15 ‘‘(A) FORM.—The notice required by para16 graph (1) shall be written in a manner cal17 culated to be understood by the average plan 

18 participant. The Secretary of the Treasury shall 

19 prescribe a model notice that a plan adminis20 trator may use to satisfy the requirements of 

21 paragraph (1). 

22 ‘‘(B) PROVISION TO DESIGNATED PER23 SONS.—Any notice under paragraph (1) may be 

24 provided to a person designated, in writing, by 
87 

•HR 4213 EAH1S 

1 the person to which it would otherwise be pro2 vided. 

3 ‘‘(4) EFFECT OF EGREGIOUS FAILURE.— 

4 ‘‘(A) IN GENERAL.—In the case of any egre5 gious failure to meet any requirement of this 

6 subsection with respect to any election, such elec7 tion shall be treated as having not been made. 

8 ‘‘(B) EGREGIOUS FAILURE.—For purposes 

9 of subparagraph (A), there is an egregious fail10 ure to meet the requirements of this subsection if 

11 such failure is in the control of the plan sponsor 

12 and is— 

13 ‘‘(i) an intentional failure (including 

14 any failure to promptly provide the re15 quired notice or information after the plan 

16 administrator discovers an unintentional 

17 failure to meet the requirements of this sub18 section), 

19 ‘‘(ii) a failure to provide most of the 

20 participants and beneficiaries with most of 

21 the information they are entitled to receive 

22 under this subsection, or 

23 ‘‘(iii) a failure which is determined to 

24 be egregious under regulations prescribed by 

25 the Secretary of the Treasury. 
88 

•HR 4213 EAH1S 

1 ‘‘(5) USE OF NEW TECHNOLOGIES.—The Sec2 retary of the Treasury may, in consultation with the 

3 Secretary, by regulations or other guidance of general 

4 applicability, allow any notice under this subsection 

5 to be provided using new technologies.’’. 

6 (C) SUBSEQUENT SUPPLEMENTAL NO7 TICES.—Section 101(f)(2)(C) of such Act (29 

8 U.S.C. 1021(f)(2)(C)) is amended— 

9 (i) by striking ‘‘and’’ at the end of 

10 clause (i); 

11 (ii) by redesignating clause (ii) as 

12 clause (iii); and 

13 (iii) by inserting after clause (i) the 

14 following new clause: 

15 ‘‘(ii) any excess employee compensation 

16 amounts and any dividends and redemp17 tions amounts determined under section 

18 303(c)(2)(F) for the preceding plan year 

19 with respect to the plan, and’’. 

20 (3) DISREGARD OF INSTALLMENT ACCELERATION

21 AMOUNTS IN DETERMINING QUARTERLY CONTRIBU22 TIONS.—Section 303(j)(3) of such Act (29 U.S.C. 

23 1083(j)(3)) is amended by adding at the end the fol24 lowing new subparagraph: 
89 

•HR 4213 EAH1S 

1 ‘‘(F) DISREGARD OF INSTALLMENT ACCEL2 ERATION AMOUNTS.—Subparagraph (D) shall be 

3 applied without regard to any increase under 

4 subsection (c)(2)(F).’’. 

5 (4) CONFORMING AMENDMENT.—Section 

6 303(c)(1) of such Act (29 U.S.C. 1083(c)(1)) is 

7 amended by striking ‘‘the shortfall amortization bases 

8 for such plan year and each of the 6 preceding plan 

9 years’’ and inserting ‘‘any shortfall amortization base 

10 which has not been fully amortized under this sub11 section’’. 

12 (b) IRC AMENDMENTS.— 

13 (1) IN GENERAL.—Section 430(c)(2) of the Inter14 nal Revenue Code of 1986 is amended by adding at 

15 the end the following subparagraphs: 

16 ‘‘(D) SPECIAL RULE.— 

17 ‘‘(i) IN GENERAL.—In the case of the 

18 shortfall amortization base of a plan for 

19 any applicable plan year, the shortfall am20 ortization installments are the amounts de21 scribed in clause (ii) or (iii), if made appli22 cable by an election under clause (iv). In 

23 the absence of a timely election, such in24 stallments shall be determined without re25 gard to this subparagraph. 
90 

•HR 4213 EAH1S 

1 ‘‘(ii) 2 PLUS 7 AMORTIZATION SCHED2 ULE.—The shortfall amortization install3 ments described in this clause are— 

4 ‘‘(I) in the case of the first 2 plan 

5 years in the 9-plan-year period begin6 ning with the applicable plan year, in7 terest on the shortfall amortization 

8 base (determined by using the effective 

9 interest rate for the applicable plan 

10 year), and 

11 ‘‘(II) in the case of the last 7 plan 

12 years in such 9-plan-year period, the 

13 amounts necessary to amortize the bal14 ance of such shortfall amortization 

15 base in level annual installments over 

16 such last 7 plan years (determined 

17 using the segment rates determined 

18 under subparagraph (C) of subsection 

19 (h)(2) for the applicable plan year, ap20 plied under rules similar to the rules of 

21 subparagraph (B) of subsection (h)(2)). 

22 ‘‘(iii) 15-YEAR AMORTIZATION.—The 

23 shortfall amortization installments de24 scribed in this clause are the amounts under 

25 subparagraphs (A) and (B) determined by 
91 

•HR 4213 EAH1S 

1 substituting ‘15 plan-year period’ for ‘7- 

2 plan-year period’. 

3 ‘‘(iv) ELECTION.— 

4 ‘‘(I) IN GENERAL.—The plan 

5 sponsor may, with respect to a plan, 

6 elect, with respect to any of not more 

7 than 2 applicable plan years, to deter8 mine shortfall amortization install9 ments under this subparagraph. An 

10 election under either clause (ii) or 

11 clause (iii) may be made with respect 

12 to either of such applicable plan years. 

13 ‘‘(II) ELIGIBILITY FOR ELEC14 TION.—An election may be made to de15 termine shortfall amortization install16 ments under this subparagraph with 

17 respect to a plan only if, as of the date 

18 of the election— 

19 ‘‘(aa) the plan sponsor is not 

20 a debtor in a case under title 11, 

21 United States Code, or similar 

22 Federal or State law, 

23 ‘‘(bb) there are no unpaid 

24 minimum required contributions 
92 

•HR 4213 EAH1S 

1 with respect to the plan for pur2 poses of section 4971, 

3 ‘‘(cc) there is no lien in favor 

4 of the plan under subsection (k) or 

5 under section 303(k) of the Em6 ployee Retirement Income Secu7 rity Act of 1974, and 

8 ‘‘(dd) a distress termination 

9 has not been initiated for the plan 

10 under section 4041(c) of such Act. 

11 ‘‘(III) RULES RELATING TO ELEC12 TION.—Such election shall be made at 

13 such times, and in such form and 

14 manner, as shall be prescribed by the 

15 Secretary and shall be irrevocable, ex16 cept under such limited circumstances, 

17 and subject to such conditions, as the 

18 Secretary may prescribe. 

19 ‘‘(E) APPLICABLE PLAN YEAR.— 

20 ‘‘(i) IN GENERAL.—For purposes of 

21 this paragraph, the term ‘applicable plan 

22 year’ means, subject to the election of the 

23 plan sponsor under subparagraph (D)(iv), 

24 each of not more than 2 of the plan years 

25 beginning in 2008, 2009, 2010, or 2011. 
93 

•HR 4213 EAH1S 

1 ‘‘(ii) SPECIAL RULE RELATING TO

2 2008.—A plan year may be elected as an ap3 plicable plan year pursuant to this sub4 paragraph only if the due date under sub5 section (j)(1) for the payment of the min6 imum required contribution for such plan 

7 year occurs on or after March 10, 2010. 

8 ‘‘(F) INCREASES IN SHORTFALL AMORTIZA9 TION INSTALLMENTS IN CASES OF EXCESS COM10 PENSATION OR CERTAIN DIVIDENDS OR STOCK

11 REDEMPTIONS.— 

12 ‘‘(i) IN GENERAL.—If, with respect to 

13 an election for an applicable plan year 

14 under subparagraph (D), there is an in15 stallment acceleration amount with respect 

16 to a plan for any plan year in the restric17 tion period (or if there is an installment ac18 celeration amount carried forward to a 

19 plan year not in the restriction period), 

20 then the shortfall amortization installment 

21 otherwise determined and payable under 

22 this paragraph for such plan year shall be 

23 increased by such amount. 

24 ‘‘(ii) BACK-END ADJUSTMENT TO AM25 ORTIZATION SCHEDULE.—Subject to rules 
94 

•HR 4213 EAH1S 

1 prescribed by the Secretary, if a shortfall 

2 amortization installment with respect to 

3 any shortfall amortization base for an ap4 plicable plan year is required to be in5 creased for any plan year under clause (i), 

6 subsequent shortfall amortization install7 ments with respect to such base shall be re8 duced, in reverse order of the otherwise re9 quired installments beginning with the final 

10 scheduled installment, to the extent nec11 essary to limit the present value of such 

12 subsequent shortfall amortization install13 ments (after application of this subpara14 graph) to the present value of the remaining 

15 unamortized shortfall amortization base. 

16 ‘‘(iii) INSTALLMENT ACCELERATION

17 AMOUNT.—For purposes of this subpara18 graph— 

19 ‘‘(I) IN GENERAL.—The term ‘in20 stallment acceleration amount’ means, 

21 with respect to any plan year in a re22 striction period with respect to an ap23 plicable plan year, the sum of— 

24 ‘‘(aa) the aggregate amount 

25 of excess employee compensation 
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1 determined under clause (iv) for 

2 the plan year, plus 

3 ‘‘(bb) the dividend and re4 demption amount determined 

5 under clause (v) for the plan year. 

6 ‘‘(II) CUMULATIVE LIMITATION.— 

7 The installment acceleration amount 

8 for any plan year shall not exceed the 

9 excess (if any) of— 

10 ‘‘(aa) the sum of the shortfall 

11 amortization installments for the 

12 plan year and all preceding plan 

13 years in the amortization period 

14 elected under subparagraph (D) 

15 with respect to the shortfall amor16 tization base with respect to an 

17 applicable year, determined with18 out regard to subparagraph (D) 

19 and this subparagraph, over 

20 ‘‘(bb) the sum of the shortfall 

21 amortization installments for such 

22 plan year and all such preceding 

23 plan years, determined after ap24 plication of subparagraph (D) 

25 (and in the case of any preceding 
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1 plan year, after application of 

2 this subparagraph). 

3 ‘‘(III) CARRYOVER OF EXCESS IN4 STALLMENT ACCELERATION

5 AMOUNTS.— 

6 ‘‘(aa) IN GENERAL.—If the 

7 installment acceleration amount 

8 for any plan year (determined 

9 without regard to subclause (II)) 

10 exceeds the limitation under sub11 clause (II), then, subject to item 

12 (bb), such excess shall be treated 

13 as an installment acceleration 

14 amount for the succeeding plan 

15 year. 

16 ‘‘(bb) CAP TO APPLY.—If any 

17 amount treated as an installment 

18 acceleration amount under item 

19 (aa) or this item with respect any 

20 succeeding plan year, when added 

21 to other installment acceleration 

22 amounts (determined without re23 gard to subclause (II)) with re24 spect to the plan year, exceeds the 

25 limitation under subclause (II), 
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1 the portion of such amount rep2 resenting such excess shall be 

3 treated as an installment accelera4 tion amount with respect to the 

5 next succeeding plan year. 

6 ‘‘(cc) LIMITATION ON YEARS

7 TO WHICH AMOUNTS CARRIED

8 FORWARD.—No amount shall be 

9 carried forward under item (aa) 

10 or (bb) to a plan year which be11 gins after the last plan year in 

12 the restriction period (or after the 

13 second plan year following such 

14 last plan year in the case of an 

15 election year with respect to which 

16 15-year amortization was elected 

17 under subparagraph (D)(iii)). 

18 ‘‘(dd) ORDERING RULES.— 

19 For purposes of applying item 

20 (bb), installment acceleration 

21 amounts for the plan year (deter22 mined without regard to any car23 ryover under this clause) shall be 

24 applied first against the limita25 tion under subclause (II) and then 
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1 carryovers to such plan year shall 

2 be applied against such limitation 

3 on a first-in, first-out basis. 

4 ‘‘(iv) EXCESS EMPLOYEE COMPENSA5 TION.— 

6 ‘‘(I) IN GENERAL.—For purposes 

7 of this paragraph, the term ‘excess em8 ployee compensation’ means the sum 

9 of— 

10 ‘‘(aa) with respect to any 

11 employee, for any plan year, the 

12 excess (if any) of— 

13 ‘‘(AA) the aggregate 

14 amount includible in income 

15 under chapter 1 for remu16 neration during the calendar 

17 year in which such plan year 

18 begins for services performed 

19 by the employee for the plan 

20 sponsor (whether or not per21 formed during such calendar 

22 year), over 

23 ‘‘(BB) $1,000,000, plus 

24 ‘‘(bb) the amount of assets set 

25 aside or reserved (directly or indi-
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1 rectly) in a trust (or other ar2 rangement as determined by the 

3 Secretary), or transferred to such 

4 a trust or other arrangement, dur5 ing the calendar year by a plan 

6 sponsor for purposes of paying de7 ferred compensation of an em8 ployee under a nonqualified de9 ferred compensation plan (as de10 fined in section 409A) of the plan 

11 sponsor. 

12 ‘‘(II) NO DOUBLE COUNTING.—No 

13 amount shall be taken into account 

14 under subclause (I) more than once. 

15 ‘‘(III) EMPLOYEE; REMUNERA16 TION.—For purposes of this clause, the 

17 term ‘employee’ includes, with respect 

18 to a calendar year, a self-employed in19 dividual who is treated as an employee 

20 under section 401(c) for the taxable 

21 year ending during such calendar 

22 year, and the term ‘remuneration’ 

23 shall include earned income of such an 

24 individual. 
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1 ‘‘(IV) CERTAIN PAYMENTS UNDER

2 EXISTING CONTRACTS.—There shall not 

3 be taken into account under subclause 

4 (I) any remuneration consisting of 

5 nonqualified deferred compensation, re6 stricted stock (or restricted stock units), 

7 stock options, or stock appreciation 

8 rights payable or granted under a 

9 written binding contract that was in 

10 effect on March 1, 2010, and which 

11 was not modified in any material re12 spect before such remuneration is paid. 

13 ‘‘(V) ONLY REMUNERATION FOR

14 POST-2009 SERVICES COUNTED.—Remu15 neration shall be taken into account 

16 under subclause (I)(aa) only to the ex17 tent attributable to services performed 

18 by the employee for the plan sponsor 

19 after December 31, 2009. 

20 ‘‘(VI) COMMISSIONS.— 

21 ‘‘(aa) IN GENERAL.—There 

22 shall not be taken into account 

23 under subclause (I)(aa) any re24 muneration payable on a commis25 sion basis solely on account of in-
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1 come directly generated by the in2 dividual performance of the indi3 vidual to whom such remunera4 tion is payable. 

5 ‘‘(bb) SPECIFIED EMPLOY6 EES.—Item (aa) shall not apply 

7 in the case of any specified em8 ployee (within the meaning of sec9 tion 409A(a)(2)(B)(i)) or any em10 ployee who would be such a speci11 fied employee if the plan sponsor 

12 were a corporation described in 

13 such section. 

14 ‘‘(VII) INDEXING OF AMOUNT.—In 

15 the case of any calendar year begin16 ning after 2010, the dollar amount 

17 under subclause (I)(aa)(BB) shall be 

18 increased by an amount equal to— 

19 ‘‘(aa) such dollar amount, 

20 multiplied by 

21 ‘‘(bb) the cost-of-living ad22 justment determined under section 

23 1(f)(3) for the calendar year, de24 termined by substituting ‘calendar 

25 year 2009’ for ‘calendar year 
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1 1992’ in subparagraph (B) there2 of. 

3 If the amount of any increase under 

4 clause (i) is not a multiple of $20,000, 

5 such increase shall be rounded to the 

6 next lowest multiple of $20,000. 

7 ‘‘(v) CERTAIN DIVIDENDS AND RE8 DEMPTIONS.— 

9 ‘‘(I) IN GENERAL.—The dividend 

10 and redemption amount determined 

11 under this clause for any plan year is 

12 the lesser of— 

13 ‘‘(aa) the excess of— 

14 ‘‘(AA) the sum of the 

15 dividends paid during the 

16 plan year by the plan spon17 sor, plus the amounts paid 

18 for the redemption of stock of 

19 the plan sponsor redeemed 

20 during the plan year, over 

21 ‘‘(BB) an amount equal 

22 to the average of adjusted an23 nual net income of the plan 

24 sponsor for the last 5 fiscal 

25 years of the plan sponsor 
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1 ending before such plan year, 

2 or 

3 ‘‘(bb) the sum of— 

4 ‘‘(AA) the amounts paid 

5 for the redemption of stock of 

6 the plan sponsor redeemed 

7 during the plan year, plus 

8 ‘‘(BB) the excess of divi9 dends paid during the plan 

10 year by the plan sponsor over 

11 the dividend base amount. 

12 ‘‘(II) DEFINITIONS.— 

13 ‘‘(aa) ADJUSTED ANNUAL

14 NET INCOME.—For purposes of 

15 subclause (I)(aa)(BB), the term 

16 ‘adjusted annual net income’ with 

17 respect to any fiscal year means 

18 annual net income, determined in 

19 accordance with generally accept20 ed accounting principles (before 

21 after-tax gain or loss on any sale 

22 of assets), but without regard to 

23 any reduction by reason of depre24 ciation or amortization, except 

25 that in no event shall adjusted an-
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1 nual net income for any fiscal 

2 year be less than zero. 

3 ‘‘(bb) DIVIDEND BASE

4 AMOUNT.—For purposes of this 

5 clause, the term ‘dividend base 

6 amount’ means, with respect to a 

7 plan year, an amount equal to the 

8 greater of— 

9 ‘‘(AA) the median of the 

10 amounts of the dividends 

11 paid during each of the last 

12 5 fiscal years of the plan 

13 sponsor ending before such 

14 plan year, or 

15 ‘‘(BB) the amount of 

16 dividends paid during such 

17 plan year on preferred stock 

18 that was issued on or before 

19 May 21, 2010, or that is re20 placement stock for such pre21 ferred stock. 

22 ‘‘(III) ONLY CERTAIN POST-2009

23 DIVIDENDS AND REDEMPTIONS COUNT24 ED.—For purposes of subclause (I) 

25 (other than for purposes of calculating 
105 

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1 the dividend base amount), there shall 

2 only be taken into account dividends 

3 declared, and redemptions occurring, 

4 after February 28, 2010. 

5 ‘‘(IV) EXCEPTION FOR INTRA6 GROUP DIVIDENDS.—Dividends paid 

7 by one member of a controlled group 

8 (as defined in section 412(d)(3)) to an9 other member of such group shall not 

10 be taken into account under subclause 

11 (I). 

12 ‘‘(V) EXCEPTION FOR STOCK DIVI13 DENDS.—Any distribution by the plan 

14 sponsor to its shareholders of stock 

15 issued by the plan sponsor shall not be 

16 taken into account under subclause (I). 

17 ‘‘(VI) EXCEPTION FOR CERTAIN

18 REDEMPTIONS.—The following shall 

19 not be taken into account under sub20 clause (I): 

21 ‘‘(aa) Redemptions of securi22 ties which, at the time of redemp23 tion, are not listed on an estab24 lished securities market and— 
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1 ‘‘(AA) are made pursu2 ant to a pension plan that is 

3 qualified under section 401 

4 or a shareholder-approved 

5 program, or 

6 ‘‘(BB) are made on ac7 count of an employee’s termi8 nation of employment with 

9 the plan sponsor, or the 

10 death or disability of a 

11 shareholder. 

12 ‘‘(bb) Redemptions of securi13 ties which are not, immediately 

14 after issuance, listed on an estab15 lished securities market and are, 

16 or had previously been— 

17 ‘‘(AA) held, directly or 

18 indirectly, by, or for the ben19 efit of, the Federal Govern20 ment or a Federal reserve 

21 bank, or 

22 ‘‘(BB) held by a na23 tional government (or a gov24 ernment-related entity of 

25 such a government) or an 
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1 employee benefit plan if such 

2 shares are substantially iden3 tical to shares described in 

4 subitem (AA). 

5 ‘‘(vi) OTHER DEFINITIONS AND

6 RULES.—For purposes of this subpara7 graph— 

8 ‘‘(I) PLAN SPONSOR.—The term 

9 ‘plan sponsor’ includes any group of 

10 which the plan sponsor is a member 

11 and which is treated as a single em12 ployer under subsection (b), (c), (m), 

13 or (o) of section 414. 

14 ‘‘(II) RESTRICTION PERIOD.—The 

15 term ‘restriction period’ means, with 

16 respect to any applicable plan year 

17 with respect to which an election is 

18 made under subparagraph (D)— 

19 ‘‘(aa) except as provided in 

20 item (bb), the 3-year period begin21 ning with the applicable plan 

22 year (or, if later, the first plan 

23 year beginning after December 31, 

24 2009), or 
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1 ‘‘(bb) if the plan sponsor 

2 elects 15-year amortization for the 

3 shortfall amortization base for the 

4 applicable plan year, the 5-year 

5 period beginning with such plan 

6 year (or, if later, the first plan 

7 year beginning after December 31, 

8 2009). 

9 ‘‘(III) ELECTIONS FOR MULTIPLE

10 PLANS.—If a plan sponsor makes elec11 tions under subparagraph (D) with re12 spect to 2 or more plans, the Secretary 

13 shall provide rules for the application 

14 of this subparagraph to such plans, in15 cluding rules for the ratable allocation 

16 of any installment acceleration amount 

17 among such plans on the basis of each 

18 plan’s relative reduction in the plan’s 

19 shortfall amortization installment for 

20 the first plan year in the amortization 

21 period described in clause (i) (deter22 mined without regard to this subpara23 graph). 

24 ‘‘(G) MERGERS AND ACQUISITIONS.—The 

25 Secretary shall prescribe rules for the applica-
109 

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1 tion of subparagraphs (D) and (F) in any case 

2 where there is a merger or acquisition involving 

3 a plan sponsor making the election under sub4 paragraph (D). 

5 ‘‘(H) REGULATIONS AND GUIDANCE.—The 

6 Secretary may prescribe such regulations and 

7 other guidance of general applicability as the 

8 Secretary may determine necessary to achieve 

9 the purposes of subparagraphs (D) and (F).’’. 

10 (2) NOTICE REQUIREMENT.— 

11 (A) IN GENERAL.—Section 4980F of such 

12 Code is amended— 

13 (i) by striking ‘‘subsection (e)’’ each 

14 place it appears in subsection (a) and para15 graphs (1) and (3) of subsection (c) and in16 serting ‘‘subsections (e) and (f)’’; 

17 (ii) by striking ‘‘subsection (e)’’ in sub18 section (c)(2)(A) and inserting ‘‘subsection 

19 (e), (f), or both, as the case may be’’; and 

20 (iii) by redesignating subsection (f) as 

21 subsection (g) and by inserting after sub22 section (e) the following new subsection: 

23 ‘‘(f) NOTICE IN CONNECTION WITH SHORTFALL AMOR24 TIZATION ELECTION.— 
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1 ‘‘(1) IN GENERAL.—Not later 30 days after the 

2 date of an election under clause (iv) of section 

3 430(c)(2)(D) in connection with a plan, the plan ad4 ministrator shall provide notice of such election in ac5 cordance with this subsection to each plan partici6 pant and beneficiary, each labor organization rep7 resenting such participants and beneficiaries, and the 

8 Pension Benefit Guaranty Corporation. 

9 ‘‘(2) MATTERS INCLUDED IN NOTICE.—Each no10 tice provided pursuant to this subsection shall set 

11 forth— 

12 ‘‘(A) a statement that recently enacted legis13 lation permits employers to delay pension fund14 ing; 

15 ‘‘(B) with respect to required contribu16 tions— 

17 ‘‘(i) the amount of contributions that 

18 would have been required had the election 

19 not been made; 

20 ‘‘(ii) the amount of the reduction in re21 quired contributions for the applicable plan 

22 year that occurs on account of the election; 

23 and 

24 ‘‘(iii) the number of plan years to 

25 which such reduction will apply; 
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1 ‘‘(C) with respect to a plan’s funding status 

2 as of the end of the plan year preceding the ap3 plicable plan year— 

4 ‘‘(i) the liabilities determined under 

5 section 4010(d)(1)(A) of the Employee Re6 tirement Income Security Act of 1974; and 

7 ‘‘(ii) the market value of assets of the 

8 plan; and 

9 ‘‘(D) with respect to installment accelera10 tion amounts (as defined in section 

11 430(c)(2)(F)(iii)(I))— 

12 ‘‘(i) an explanation of section 

13 430(c)(2)(F) (relating to increases in short14 fall amortization installments in cases of 

15 excess compensation or certain dividends or 

16 stock redemptions); and 

17 ‘‘(ii) a statement that increases in re18 quired contributions may occur in the event 

19 of future payments of excess employee com20 pensation or certain share repurchasing or 

21 dividend activity and that subsequent no22 tices of any such payments or activity will 

23 be provided in the annual funding notice 

24 provided pursuant to section 101(f) of the 
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1 Employee Retirement Income Security Act 

2 of 1974. 

3 ‘‘(3) OTHER REQUIREMENTS.— 

4 ‘‘(A) FORM.—The notice required by para5 graph (1) shall be written in a manner cal6 culated to be understood by the average plan 

7 participant and shall provide sufficient informa8 tion (as determined in accordance with regula9 tions or other guidance of general applicability 

10 prescribed by the Secretary) to allow plan par11 ticipants and beneficiaries to understand the ef12 fect of the election. The Secretary shall prescribe 

13 a model notice that a plan administrator may 

14 use to satisfy the requirements of paragraph (1). 

15 ‘‘(B) PROVISION TO DESIGNATED PER16 SONS.—Any notice under paragraph (1) may be 

17 provided to a person designated, in writing, by 

18 the person to which it would otherwise be pro19 vided.’’. 

20 (B) CONFORMING AMENDMENT.—Subsection 

21 (g) of section 4980F of such Code is amended by 

22 inserting ‘‘or (f)’’ after ‘‘subsection (e)’’. 

23 (3) DISREGARD OF INSTALLMENT ACCELERATION

24 AMOUNTS IN DETERMINING QUARTERLY CONTRIBU-
113 

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1 TIONS.—Section 430(j)(3) of such Code is amended by 

2 adding at the end the following new subparagraph: 

3 ‘‘(F) DISREGARD OF INSTALLMENT ACCEL4 ERATION AMOUNTS.—Subparagraph (D) shall be 

5 applied without regard to any increase under 

6 subsection (c)(2)(F).’’. 

7 (4) CONFORMING AMENDMENT.—Paragraph (1) 

8 of section 430(c) of such Code is amended by striking 

9 ‘‘the shortfall amortization bases for such plan year 

10 and each of the 6 preceding plan years’’ and inserting 

11 ‘‘any shortfall amortization base which has not been 

12 fully amortized under this subsection’’. 

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

14 section shall apply to plan years beginning after December 

15 31, 2007. 

16 SEC. 302. APPLICATION OF EXTENDED AMORTIZATION PE17 RIOD TO PLANS SUBJECT TO PRIOR LAW 

18 FUNDING RULES. 

19 (a) IN GENERAL.—Title I of the Pension Protection 

20 Act of 2006 is amended by redesignating section 107 as sec21 tion 108 and by inserting the following after section 106: 

22 ‘‘SEC. 107. APPLICATION OF FUNDING RELIEF TO PLANS 

23 WITH DELAYED EFFECTIVE DATE. 

24 ‘‘(a) ALTERNATIVE ELECTIONS.— 
114 

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1 ‘‘(1) IN GENERAL.—Subject to this section, a 

2 plan sponsor of a plan to which section 104, 105, or 

3 106 of this Act applies may either elect the applica4 tion of subsection (b) with respect to the plan for not 

5 more than 2 applicable plan years or elect the appli6 cation of subsection (c) with respect to the plan for 

7 1 applicable plan year. 

8 ‘‘(2) ELIGIBILITY FOR ELECTIONS.—An election 

9 may be made by a plan sponsor under paragraph (1) 

10 with respect to a plan only if at the time of the elec11 tion— 

12 ‘‘(A) the plan sponsor is not a debtor in a 

13 case under title 11, United States Code, or simi14 lar Federal or State law, 

15 ‘‘(B) there are no accumulated funding defi16 ciencies (as defined in section 302(a)(2) of the 

17 Employee Retirement Income Security Act of 

18 1974 (as in effect immediately before the enact19 ment of this Act) or in section 412(a) of the In20 ternal Revenue Code of 1986 (as so in effect)) 

21 with respect to the plan, 

22 ‘‘(C) there is no lien in favor of the plan 

23 under section 302(d) (as so in effect) or under 

24 section 412(n) of such Code (as so in effect), and 
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1 ‘‘(D) a distress termination has not been 

2 initiated for the plan under section 4041(c) of 

3 the Employee Retirement Income Security Act of 

4 1974. 

5 ‘‘(b) ALTERNATIVE ADDITIONAL FUNDING CHARGE.— 

6 If the plan sponsor elects the application of this subsection 

7 with respect to the plan, for purposes of applying section 

8 302(d) of the Employee Retirement Income Security Act of 

9 1974 (as in effect before the amendments made by this sub10 title and subtitle B) and section 412(l) of the Internal Rev11 enue Code of 1986 (as so in effect)— 

12 ‘‘(1) the deficit reduction contribution under 

13 paragraph (2) of such section 302(d) and paragraph 

14 (2) of such section 412(l) for such plan for any appli15 cable plan year, shall be zero, and 

16 ‘‘(2) the additional funding charge under para17 graph (1) of such section 302(d) and paragraph (1) 

18 of such section 412(l) for such plan for any applicable 

19 plan year shall be increased by an amount equal to 

20 the installment acceleration amount (as defined in 

21 sections 303(c)(2)(F)(iii)(I) of such Act (as amended 

22 by the American Jobs and Closing Tax Loopholes Act 

23 of 2010) and 430(c)(2)(F)(iii)(I) of such Code (as so 

24 amended)) with respect to the plan sponsor for such 

25 plan year, determined by treating the later of such 
116 

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1 plan year or the first plan year beginning after De2 cember 31, 2009, as the restriction period. 

3 ‘‘(c) APPLICATION OF 15-YEAR AMORTIZATION.—If the 

4 plan sponsor elects the application of this subsection with 

5 respect to the plan, for purposes of applying section 302(d) 

6 of such Act (as in effect before the amendments made by 

7 this subtitle and subtitle B) and section 412(l) of such Code 

8 (as so in effect)— 

9 ‘‘(1) in the case of the increased unfunded new 

10 liability of the plan, the applicable percentage de11 scribed in paragraph (4)(C) of such section 302(d) 

12 and paragraph (4)(C) of such section 412(l) for any 

13 pre-effective date plan year beginning with or after 

14 the applicable plan year shall be the ratio of— 

15 ‘‘(A) the annual installments payable in 

16 each plan year if the increased unfunded new li17 ability for such plan year were amortized in 

18 equal installments over the period beginning 

19 with such plan year and ending with the last 

20 plan year in the period of 15 plan years begin21 ning with the applicable plan year, using an in22 terest rate equal to the third segment rate de23 scribed in sections 104(b), 105(b), and 106(b) of 

24 this Act, to 
117 

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1 ‘‘(B) the increased unfunded new liability 

2 for such plan year, 

3 ‘‘(2) in the case of the excess of the unfunded new 

4 liability over the increased unfunded new liability, 

5 such applicable percentage shall be determined with6 out regard to this section, and 

7 ‘‘(3) the additional funding charge with respect 

8 to the plan for a plan year shall be increased by an 

9 amount equal to the installment acceleration amount 

10 (as defined in section 303(c)(2)(F)(iii) of such Act (as 

11 amended by the American Jobs and Closing Tax 

12 Loopholes Act of 2010 and section 430(c)(2)(F)(iii) of 

13 such Code (as so amended)) with respect to the plan 

14 sponsor for such plan year, determined without re15 gard to subclause (II) of such sections 

16 303(c)(2)(F)(iii) and 430(c)(2)(F)(iii). 

17 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur18 poses of this section— 

19 ‘‘(1) APPLICABLE PLAN YEAR.— 

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

21 plan year’ with respect to a plan means, subject 

22 to the election of the plan sponsor under sub23 section (a), a plan year beginning in 2009, 2010, 

24 or 2011. 

25 ‘‘(B) ELECTION.— 
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1 ‘‘(i) IN GENERAL.—The election de2 scribed in subsection (a) shall be made at 

3 such times, and in such form and manner, 

4 as shall be prescribed by the Secretary of the 

5 Treasury. 

6 ‘‘(ii) REDUCTION IN YEARS WHICH MAY

7 BE ELECTED.—The number of applicable 

8 plan years for which an election may be 

9 made under section 303(c)(2)(D) of the Em10 ployee Retirement Income Security Act of 

11 1974 (as amended by the American Jobs 

12 and Closing Tax Loopholes Act of 2010) or 

13 section 430(c)(2)(D) of the Internal Revenue 

14 Code of 1986 (as so amended) shall be re15 duced by the number of applicable plan 

16 years for which an election under this sec17 tion is made. 

18 ‘‘(C) ALLOCATION OF INSTALLMENT ACCEL19 ERATION AMOUNT FOR MULTIPLE PLAN ELEC20 TION.—In the case of an election under this sec21 tion with respect to 2 or more plans by the same 

22 plan sponsor, the installment acceleration 

23 amount shall be apportioned ratably with respect 

24 to such plans in proportion to the deficit reduc-
119 

•HR 4213 EAH1S 

1 tion contributions of the plans determined with2 out regard to subsection (b)(1). 

3 ‘‘(2) PLAN SPONSOR.—The term ‘plan sponsor’ 

4 shall have the meaning provided such term in section 

5 303(c)(2)(F)(vi)(I) of the Employee Retirement In6 come Security Act of 1974 (as amended by the Amer7 ican Jobs and Closing Tax Loopholes Act of 2010) 

8 and section 430(c)(2)(F)(vi)(I) of the Internal Rev9 enue Code of 1986 (as so amended). 

10 ‘‘(3) PRE-EFFECTIVE DATE PLAN YEAR.—The 

11 term ‘pre-effective date plan year’ means, with respect 

12 to a plan, any plan year prior to the first year in 

13 which the amendments made by this subtitle and sub14 title B apply to the plan. 

15 ‘‘(4) INCREASED UNFUNDED NEW LIABILITY.— 

16 The term ‘increased unfunded new liability’ means, 

17 with respect to a year, the excess (if any) of the un18 funded new liability over the amount of unfunded 

19 new liability determined as if the value of the plan’s 

20 assets determined under subsection 302(c)(2) of such 

21 Act (as in effect before the amendments made by this 

22 subtitle and subtitle B) and section 412(c)(2) of such 

23 Code (as so in effect) equaled the product of the cur24 rent liability of the plan for the year multiplied by 

25 the funded current liability percentage (as defined in 
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1 section 302(d)(8)(B) of such Act (as so in effect) and 

2 412(l)(8)(B) of such Code (as so in effect)) of the plan 

3 for the second plan year preceding the first applicable 

4 plan year of such plan for which an election under 

5 this section is made. 

6 ‘‘(5) OTHER DEFINITIONS.—The terms ‘unfunded 

7 new liability’ and ‘current liability’ shall have the 

8 meanings set forth in section 302(d) of such Act (as 

9 so in effect) and section 412(l) of such Code (as so in 

10 effect). 

11 ‘‘(6) ADDITIONAL FUNDING CHARGE INCREASE

12 NOT TO EXCEED RELIEF.— 

13 ‘‘(A) ELECTION UNDER SUBSECTION (B).— 

14 In the case of an election under subsection (b), 

15 an increase resulting from the application of 

16 subsection (b)(2) in the additional funding 

17 charge with respect to a plan for a plan year 

18 shall not exceed the excess (if any) of— 

19 ‘‘(i) the deficit reduction contribution 

20 under section 302(d)(2) of such Act (as so 

21 in effect) and section 412(l)(2) of such Code 

22 (as so in effect) for such plan year, deter23 mined as if the election had not been made, 

24 over 
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1 ‘‘(ii) the deficit reduction contribution 

2 under such sections for such plan (deter3 mined without regard to any increase under 

4 subsection (b)(2)). 

5 ‘‘(B) ELECTION UNDER SUBSECTION (C).— 

6 An increase resulting from the application of 

7 subsection (c)(3) in the additional funding 

8 charge with respect to a plan for a plan year 

9 shall not exceed the excess (if any) of— 

10 ‘‘(i) the sum of the deficit reduction 

11 contributions under section 302(d)(2) of 

12 such Act (as so in effect) and section 

13 412(l)(2) of such Code (as so in effect) for 

14 such plan for such plan year and for all 

15 preceding plan years beginning with or 

16 after the applicable plan year, determined 

17 as if the election had not been made, over 

18 ‘‘(ii) the sum of the deficit reduction 

19 contributions under such sections for such 

20 plan years (determined without regard to 

21 any increase under subsection (c)(3)). 

22 ‘‘(e) NOTICE.—Not later 30 days after the date of an 

23 election under subsection (a) in connection with a plan, the 

24 plan administrator shall provide notice pursuant to, and 

25 subject to, rules similar to the rules of sections 204(k) of 
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1 the Employee Retirement Income Security Act of 1974 (as 

2 amended by the American Jobs and Closing Tax Loopholes 

3 Act of 2010) and 4980F(f) of the Internal Revenue Code 

4 of 1986 (as so amended).’’. 

5 (b) ELIGIBLE CHARITY PLANS.—Section 104 of such 

6 Act is amended— 

7 (1) by striking ‘‘eligible cooperative plan’’ wher8 ever it appears in subsections (a) and (b) and insert9 ing ‘‘eligible cooperative plan or an eligible charity 

10 plan’’; and 

11 (2) by adding at the end the following new sub12 section: 

13 ‘‘(d) ELIGIBLE CHARITY PLAN DEFINED.—For pur14 poses of this section, a plan shall be treated as an eligible 

15 charity plan for a plan year if— 

16 ‘‘(1) the plan is maintained by one or more em17 ployers employing employees who are accruing bene18 fits based on service for the plan year, 

19 ‘‘(2) such employees are employed in at least 20 

20 States, 

21 ‘‘(3) each such employee (other than a de mini22 mis number of employees) is employed by an em23 ployer described in section 501(c)(3) of such Code and 

24 the primary exempt purpose of each such employer is 

25 to provide services with respect to children, and 
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1 ‘‘(4) the plan sponsor elects (at such time and in 

2 such form and manner as shall be prescribed by the 

3 Secretary of the Treasury) to be so treated. 

4 Any election under this subsection may be revoked only with 

5 the consent of the Secretary of the Treasury.’’. 

6 (c) REGULATIONS.—The Secretary of the Treasury 

7 may prescribe such regulations as may be necessary to 

8 carry out the purposes of the amendments made by this sec9 tion. 

10 (d) EFFECTIVE DATE.— 

11 (1) IN GENERAL.—The amendment made by sub12 section (a) shall apply to plan years beginning on or 

13 after January 1, 2009. 

14 (2) ELIGIBLE CHARITY PLANS.—The amend15 ments made by subsection (b) shall apply to plan 

16 years beginning after December 31, 2009. 

17 SEC. 303. SUSPENSION OF CERTAIN FUNDING LEVEL LIMI18 TATIONS. 

19 (a) LIMITATIONS ON BENEFIT ACCRUALS.—Section 

20 203 of the Worker, Retiree, and Employer Recovery Act of 

21 2008 (Public Law 110–458; 122 Stat. 5118) is amended— 

22 (1) by striking ‘‘the first plan year beginning 

23 during the period beginning on October 1, 2008, and 

24 ending on September 30, 2009’’ and inserting ‘‘any 
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1 plan year beginning during the period beginning on 

2 October 1, 2008, and ending on December 31, 2011’’; 

3 (2) by striking ‘‘substituting’’ and all that fol4 lows through ‘‘for such plan year’’ and inserting 

5 ‘‘substituting for such percentage the plan’s adjusted 

6 funding target attainment percentage for the last plan 

7 year ending before September 30, 2009,’’; and 

8 (3) by striking ‘‘for the preceding plan year is 

9 greater’’ and inserting ‘‘for such last plan year is 

10 greater’’. 

11 (b) SOCIAL SECURITY LEVEL-INCOME OPTIONS.— 

12 (1) ERISA AMENDMENT.—Section 206(g)(3)(E) 

13 of the Employee Retirement Income Security Act of 

14 1974 is amended by adding at the end the following 

15 new sentence: ‘‘For purposes of applying clause (i) in 

16 the case of payments the annuity starting date for 

17 which occurs on or before December 31, 2011, pay18 ments under a social security leveling option shall be 

19 treated as not in excess of the monthly amount paid 

20 under a single life annuity (plus an amount not in 

21 excess of a social security supplement described in the 

22 last sentence of section 204(b)(1)(G)).’’. 

23 (2) IRC AMENDMENT.—Section 436(d)(5) of the 

24 Internal Revenue Code of 1986 is amended by adding 

25 at the end the following new sentence: ‘‘For purposes 
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1 of applying subparagraph (A) in the case of pay2 ments the annuity starting date for which occurs on 

3 or before December 31, 2011, payments under a social 

4 security leveling option shall be treated as not in ex5 cess of the monthly amount paid under a single life 

6 annuity (plus an amount not in excess of a social se7 curity supplement described in the last sentence of 

8 section 411(a)(9)).’’. 

9 (3) EFFECTIVE DATE.— 

10 (A) IN GENERAL.—The amendments made 

11 by this subsection shall apply to annuity pay12 ments the annuity starting date for which occurs 

13 on or after January 1, 2011. 

14 (B) PERMITTED APPLICATION.—A plan 

15 shall not be treated as failing to meet the re16 quirements of sections 206(g) of the Employee 

17 Retirement Income Security Act of 1974 (as 

18 amended by this subsection) and section 436(d) 

19 of the Internal Revenue Code of 1986 (as so 

20 amended) if the plan sponsor elects to apply the 

21 amendments made by this subsection to pay22 ments the annuity starting date for which occurs 

23 on or after the date of the enactment of this Act 

24 and before January 1, 2011. 
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1 (c) APPLICATION OF CREDIT BALANCE WITH RESPECT

2 TO LIMITATIONS ON SHUTDOWN BENEFITS AND UNPRE3 DICTABLE CONTINGENT EVENT BENEFITS.—With respect to 

4 plan years beginning on or before December 31, 2011, in 

5 applying paragraph (5)(C) of subsection (g) of section 206 

6 of the Employee Retirement Income Security Act of 1974 

7 and subsection (f)(3) of section 436 of the Internal Revenue 

8 Code of 1986 in the case of unpredictable contingent events 

9 (within the meaning of section 206(g)(1)(C) of such Act and 

10 section 436(b)(3) of such Code) occurring on or after Janu11 ary 1, 2010, the references, in clause (i) of such paragraph 

12 (5)(C) and subparagraph (A) of such subsection (f)(3), to 

13 paragraph (1)(B) of such subsection (g) and subsection 

14 (b)(2) of such section 436 shall be disregarded. 

15 SEC. 304. LOOKBACK FOR CREDIT BALANCE RULE. 

16 (a) AMENDMENT TO ERISA.—Paragraph (3) of section 

17 303(f) of the Employee Retirement Income Security Act of 

18 1974 is amended by adding the following at the end thereof: 

19 ‘‘(D) SPECIAL RULE FOR CERTAIN PLAN

20 YEARS.— 

21 ‘‘(i) IN GENERAL.—For purposes of ap22 plying subparagraph (C) for plan years be23 ginning after June 30, 2009, and on or be24 fore December 31, 2011, the ratio deter-
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1 mined under such subparagraph for the pre2 ceding plan year shall be the greater of— 

3 ‘‘(I) such ratio, as determined 

4 without regard to this subparagraph, 

5 or 

6 ‘‘(II) the ratio for such plan for 

7 the plan year beginning after June 30, 

8 2007, and on or before June 30, 2008, 

9 as determined under rules prescribed 

10 by the Secretary of the Treasury. 

11 ‘‘(ii) SPECIAL RULE.—In the case of a 

12 plan for which the valuation date is not the 

13 first day of the plan year— 

14 ‘‘(I) clause (i) shall apply to plan 

15 years beginning after December 31, 

16 2008, and on or before December 31, 

17 2010, and 

18 ‘‘(II) clause (i)(II) shall apply 

19 based on the last plan year beginning 

20 before July 1, 2007, as determined 

21 under rules prescribed by the Secretary 

22 of the Treasury.’’. 

23 (b) AMENDMENT TO INTERNAL REVENUE CODE OF

24 1986.—Paragraph (3) of section 430(f) of the Internal Rev-
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1 enue Code of 1986 is amended by adding the following at 

2 the end thereof: 

3 ‘‘(D) SPECIAL RULE FOR CERTAIN PLAN

4 YEARS.— 

5 ‘‘(i) IN GENERAL.—For purposes of ap6 plying subparagraph (C) for plan years be7 ginning after June 30, 2009, and on or be8 fore December 31, 2011, the ratio deter9 mined under such subparagraph for the pre10 ceding plan year shall be the greater of— 

11 ‘‘(I) such ratio, as determined 

12 without regard to this subparagraph, 

13 or 

14 ‘‘(II) the ratio for such plan for 

15 the plan year beginning after June 30, 

16 2007, and on or before June 30, 2008, 

17 as determined under rules prescribed 

18 by the Secretary. 

19 ‘‘(ii) SPECIAL RULE.—In the case of a 

20 plan for which the valuation date is not the 

21 first day of the plan year— 

22 ‘‘(I) clause (i) shall apply to plan 

23 years beginning after December 31, 

24 2008, and on or before December 31, 

25 2010, and 
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1 ‘‘(II) clause (i)(II) shall apply 

2 based on the last plan year beginning 

3 before July 1, 2007, as determined 

4 under rules prescribed by the Sec5 retary.’’. 

6 SEC. 305. INFORMATION REPORTING. 

7 (a) IN GENERAL.—Section 4010(b) of the Employee 

8 Retirement Security Act of 1974 (29 U.S.C. 1310(b)) is 

9 amended by striking paragraph (1) and inserting the fol10 lowing: 

11 ‘‘(1) either of the following requirements are met: 

12 ‘‘(A) the funding target attainment percent13 age (as defined in subsection (d)(2)(B)) at the 

14 end of the preceding plan year of a plan main15 tained by the contributing sponsor or any mem16 ber of its controlled group is less than 80 per17 cent; or 

18 ‘‘(B) the aggregate unfunded vested benefits 

19 (as determined under section 4006(a)(3)(E)(iii)) 

20 of plans maintained by the contributing sponsor 

21 and the members of its controlled group exceed 

22 $75,000,000 (disregarding plans with no un23 funded vested benefits);’’. 

24 (b) EFFECTIVE DATE.—The amendment made by this 

25 section shall apply to years beginning after 2009. 
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1 SEC. 306. ROLLOVER OF AMOUNTS RECEIVED IN AIRLINE 

2 CARRIER BANKRUPTCY. 

3 (a) GENERAL RULES.— 

4 (1) ROLLOVER OF AIRLINE PAYMENT AMOUNT.— 

5 If a qualified airline employee receives any airline 

6 payment amount and transfers any portion of such 

7 amount to a traditional IRA within 180 days of re8 ceipt of such amount (or, if later, within 180 days of 

9 the date of the enactment of this Act), then such 

10 amount (to the extent so transferred) shall be treated 

11 as a rollover contribution described in section 402(c) 

12 of the Internal Revenue Code of 1986. A qualified air13 line employee making such a transfer may exclude 

14 from gross income the amount transferred, in the tax15 able year in which the airline payment amount was 

16 paid to the qualified airline employee by the commer17 cial passenger airline carrier. 

18 (2) TRANSFER OF AMOUNTS ATTRIBUTABLE TO

19 AIRLINE PAYMENT AMOUNT FOLLOWING ROLLOVER TO

20 ROTH IRA.—A qualified airline employee who has 

21 contributed an airline payment amount to a Roth 

22 IRA that is treated as a qualified rollover contribu23 tion pursuant to section 125 of the Worker, Retiree, 

24 and Employer Recovery Act of 2008 may transfer to 

25 a traditional IRA, in a trustee-to-trustee transfer, all 

26 or any part of the contribution (together with any net 
131 

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1 income allocable to such contribution), and the trans2 fer to the traditional IRA will be deemed to have been 

3 made at the time of the rollover to the Roth IRA, if 

4 such transfer is made within 180 days of the date of 

5 the enactment of this Act. A qualified airline em6 ployee making such a transfer may exclude from gross 

7 income the airline payment amount previously rolled 

8 over to the Roth IRA, to the extent an amount attrib9 utable to the previous rollover was transferred to a 

10 traditional IRA, in the taxable year in which the air11 line payment amount was paid to the qualified air12 line employee by the commercial passenger airline 

13 carrier. No amount so transferred to a traditional 

14 IRA may be treated as a qualified rollover contribu15 tion with respect to a Roth IRA within the 5-taxable 

16 year period beginning with the taxable year in which 

17 such transfer was made. 

18 (3) EXTENSION OF TIME TO FILE CLAIM FOR RE19 FUND.—A qualified airline employee who excludes an 

20 amount from gross income in a prior taxable year 

21 under paragraph (1) or (2) may reflect such exclusion 

22 in a claim for refund filed within the period of limi23 tation under section 6511(a) (or, if later, April 15, 

24 2011). 
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1 (b) TREATMENT OF AIRLINE PAYMENT AMOUNTS AND

2 TRANSFERS FOR EMPLOYMENT TAXES.—For purposes of 

3 chapter 21 of the Internal Revenue Code of 1986 and section 

4 209 of the Social Security Act, an airline payment amount 

5 shall not fail to be treated as a payment of wages by the 

6 commercial passenger airline carrier to the qualified airline 

7 employee in the taxable year of payment because such 

8 amount is excluded from the qualified airline employee’s 

9 gross income under subsection (a). 

10 (c) DEFINITIONS AND SPECIAL RULES.—For purposes 

11 of this section— 

12 (1) AIRLINE PAYMENT AMOUNT.— 

13 (A) IN GENERAL.—The term ‘‘airline pay14 ment amount’’ means any payment of any 

15 money or other property which is payable by a 

16 commercial passenger airline carrier to a quali17 fied airline employee— 

18 (i) under the approval of an order of 

19 a Federal bankruptcy court in a case filed 

20 after September 11, 2001, and before Janu21 ary 1, 2007; and 

22 (ii) in respect of the qualified airline 

23 employee’s interest in a bankruptcy claim 

24 against the carrier, any note of the carrier 

25 (or amount paid in lieu of a note being 
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1 issued), or any other fixed obligation of the 

2 carrier to pay a lump sum amount. 

3 The amount of such payment shall be determined 

4 without regard to any requirement to deduct and 

5 withhold tax from such payment under sections 

6 3102(a) and 3402(a). 

7 (B) EXCEPTION.—An airline payment 

8 amount shall not include any amount payable 

9 on the basis of the carrier’s future earnings or 

10 profits. 

11 (2) QUALIFIED AIRLINE EMPLOYEE.—The term 

12 ‘‘qualified airline employee’’ means an employee or 

13 former employee of a commercial passenger airline 

14 carrier who was a participant in a defined benefit 

15 plan maintained by the carrier which— 

16 (A) is a plan described in section 401(a) of 

17 the Internal Revenue Code of 1986 which in18 cludes a trust exempt from tax under section 

19 501(a) of such Code; and 

20 (B) was terminated or became subject to the 

21 restrictions contained in paragraphs (2) and (3) 

22 of section 402(b) of the Pension Protection Act of 

23 2006. 

24 (3) TRADITIONAL IRA.—The term ‘‘traditional 

25 IRA’’ means an individual retirement plan (as de-
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1 fined in section 7701(a)(37) of the Internal Revenue 

2 Code of 1986) which is not a Roth IRA. 

3 (4) ROTH IRA.—The term ‘‘Roth IRA’’ has the 

4 meaning given such term by section 408A(b) of such 

5 Code. 

6 (d) SURVIVING SPOUSE.—If a qualified airline em7 ployee died after receiving an airline payment amount, or 

8 if an airline payment amount was paid to the surviving 

9 spouse of a qualified airline employee in respect of the 

10 qualified airline employee, the surviving spouse of the 

11 qualified airline employee may take all actions permitted 

12 under section 125 of the Worker, Retiree and Employer Re13 covery Act of 2008, or under this section, to the same extent 

14 that the qualified airline employee could have done had the 

15 qualified airline employee survived. 

16 (e) EFFECTIVE DATE.—This section shall apply to 

17 transfers made after the date of the enactment of this Act 

18 with respect to airline payment amounts paid before, on, 

19 or after such date. 

20 PART 2—MULTIEMPLOYER PLANS 

21 SEC. 311. OPTIONAL USE OF 30-YEAR AMORTIZATION PERI22 ODS. 

23 (a) ELECTIVE SPECIAL RELIEF RULES.— 

24 (1) ERISA AMENDMENT.—Section 304(b) of the 

25 Employee Retirement Income Security Act of 1974 is 
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1 amended by adding at the end the following new 

2 paragraph: 

3 ‘‘(8) ELECTIVE SPECIAL RELIEF RULES.—Not4 withstanding any other provision of this subsection— 

5 ‘‘(A) AMORTIZATION OF NET INVESTMENT

6 LOSSES.— 

7 ‘‘(i) IN GENERAL.—The plan sponsor 

8 of a multiemployer plan with respect to 

9 which the solvency test under subparagraph 

10 (B) is met may elect to treat the portion of 

11 any experience loss or gain for a plan year 

12 that is attributable to the allocable portion 

13 of the net investment losses incurred in ei14 ther or both of the first two plan years end15 ing on or after June 30, 2008, as an experi16 ence loss separate from other experience 

17 losses or gains to be amortized in equal an18 nual installments (until fully amortized) 

19 over the period— 

20 ‘‘(I) beginning with the plan year 

21 for which the allocable portion is deter22 mined, and 

23 ‘‘(II) ending with the last plan 

24 year in the 30-plan year period begin25 ning with the plan year following the 
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1 plan year in which such net invest2 ment loss was incurred. 

3 ‘‘(ii) COORDINATION WITH EXTEN4 SIONS.—If an election is made under clause 

5 (i) for any plan year— 

6 ‘‘(I) no extension of the amortiza7 tion period under clause (i) shall be al8 lowed under subsection (d), and 

9 ‘‘(II) if an extension was granted 

10 under subsection (d) for any plan year 

11 before the plan year for which the elec12 tion under this subparagraph is made, 

13 such extension shall not result in such 

14 amortization period exceeding 30 

15 years. 

16 ‘‘(iii) DEFINITIONS AND RULES.—For 

17 purposes of this subparagraph— 

18 ‘‘(I) NET INVESTMENT LOSSES.— 

19 ‘‘(aa) IN GENERAL.—The net 

20 investment loss incurred by a 

21 plan in a plan year is equal to 

22 the excess of— 

23 ‘‘(AA) the expected value 

24 of the assets as of the end of 

25 the plan year, over 
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1 ‘‘(BB) the market value 

2 of the assets as of the end of 

3 the plan year, 

4 including any difference attrib5 utable to a criminally fraudulent 

6 investment arrangement. 

7 ‘‘(bb) EXPECTED VALUE.— 

8 For purposes of item (aa), the ex9 pected value of the assets as of the 

10 end of a plan year is the excess 

11 of— 

12 ‘‘(AA) the market value 

13 of the assets at the beginning 

14 of the plan year plus con15 tributions made during the 

16 plan year, over 

17 ‘‘(BB) disbursements 

18 made during the plan year. 

19 The amounts described in 

20 subitems (AA) and (BB) shall be 

21 adjusted with interest at the valu22 ation rate to the end of the plan 

23 year. 

24 ‘‘(II) CRIMINALLY FRAUDULENT

25 INVESTMENT ARRANGEMENTS.—The de-
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1 termination as to whether an arrange2 ment is a criminally fraudulent invest3 ment arrangement shall be made under 

4 rules substantially similar to the rules 

5 prescribed by the Secretary of the 

6 Treasury for purposes of section 165 of 

7 the Internal Revenue Code of 1986. 

8 ‘‘(III) AMOUNT ATTRIBUTABLE TO

9 ALLOCABLE PORTION OF NET INVEST10 MENT LOSS.—The amount attributable 

11 to the allocable portion of the net in12 vestment loss for a plan year shall be 

13 an amount equal to the allocable por14 tion of net investment loss for the plan 

15 year under subclauses (IV) and (V), in16 creased with interest at the valuation 

17 rate determined from the plan year 

18 after the plan year in which the net 

19 investment loss was incurred. 

20 ‘‘(IV) ALLOCABLE PORTION OF

21 NET INVESTMENT LOSSES.—Except as 

22 provided in subclause (V), the net in23 vestment loss incurred in a plan year 

24 shall be allocated among the 5 plan 

25 years following the plan year in which 
139 

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1 the investment loss is incurred in ac2 cordance with the following table: 

‘‘Plan year after the plan year in 

which the net investment loss Allocable portion of net 

was incurred investment loss 

1st ............................................................................................ 1⁄2

2nd ........................................................................................... 0 

3rd ........................................................................................... 1⁄6

4th ............................................................................................ 1⁄6

5th ............................................................................................ 1⁄6

3 ‘‘(V) SPECIAL RULE FOR PLANS

4 THAT ADOPT LONGER SMOOTHER PE5 RIOD.—If a plan sponsor elects an ex6 tended smoothing period for its asset 

7 valuation method under subsection 

8 (c)(2)(B), then the allocable portion of 

9 net investment loss for the first two 

10 plan years following the plan year the 

11 investment loss is incurred is the same 

12 as determined under subclause (IV), 

but the remaining 1 13 ⁄2 of the net invest14 ment loss is allocated ratably over the 

15 period beginning with the third plan 

16 year following the plan year the net 

17 investment loss is incurred and ending 

18 with the last plan year in the extended 

19 smoothing period. 

20 ‘‘(VI) SPECIAL RULE FOR OVER21 STATEMENT OF LOSS.—If, for a plan 

22 year, there is an experience loss for the 
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1 plan and the amount described in sub2 clause (III) exceeds the total amount of 

3 the experience loss for the plan year, 

4 then the excess shall be treated as an 

5 experience gain. 

6 ‘‘(VII) SPECIAL RULE IN YEARS

7 FOR WHICH OVERALL EXPERIENCE IS

8 GAIN.—If, for a plan year, there is no 

9 experience loss for the plan, then, in 

10 addition to amortization of net invest11 ment losses under clause (i), the 

12 amount described in subclause (III) 

13 shall be treated as an experience gain 

14 in addition to any other experience 

15 gain. 

16 ‘‘(B) SOLVENCY TEST.— 

17 ‘‘(i) IN GENERAL.—An election may be 

18 made under this paragraph if the election 

19 includes certification by the plan actuary 

20 in connection with the election that the plan 

21 is projected to have a funded percentage at 

22 the end of the first 15 plan years that is not 

23 less than 100 percent of the funded percent24 age for the plan year of the election. 
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1 ‘‘(ii) FUNDED PERCENTAGE.— For 

2 purposes of clause (i), the term ‘funded per3 centage’ has the meaning provided in sec4 tion 305(i)(2), except that the value of the 

5 plan’s assets referred to in section 

6 305(i)(2)(A) shall be the market value of 

7 such assets. 

8 ‘‘(iii) ACTUARIAL ASSUMPTIONS.—In 

9 making any certification under this sub10 paragraph, the plan actuary shall use the 

11 same actuarial estimates, assumptions, and 

12 methods as those applicable for the most re13 cent certification under section 305, except 

14 that the plan actuary may take into ac15 count benefit reductions and increases in 

16 contribution rates, under either funding im17 provement plans adopted under section 

18 305(c) or under section 432(c) of the Inter19 nal Revenue Code of 1986 or rehabilitation 

20 plans adopted under section 305(e) or under 

21 section 432(e) of such Code, that the plan 

22 actuary reasonably anticipates will occur 

23 without regard to any change in status of 

24 the plan resulting from the election. 
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1 ‘‘(C) ADDITIONAL RESTRICTION ON BENEFIT

2 INCREASES.—If an election is made under sub3 paragraph (A), then, in addition to any other 

4 applicable restrictions on benefit increases, a 

5 plan amendment which is adopted on or after 

6 March 10, 2010, and which increases benefits 

7 may not go into effect during the period begin8 ning on such date and ending with the second 

9 plan year beginning after such date unless— 

10 ‘‘(i) the plan actuary certifies that— 

11 ‘‘(I) any such increase is paid for 

12 out of additional contributions not al13 located to the plan immediately before 

14 the election to have this paragraph 

15 apply to the plan, and 

16 ‘‘(II) the plan’s funded percentage 

17 and projected credit balances for the 

18 first 3 plan years ending on or after 

19 such date are reasonably expected to be 

20 at least as high as such percentage and 

21 balances would have been if the benefit 

22 increase had not been adopted, or 

23 ‘‘(ii) the amendment is required as a 

24 condition of qualification under part I of 

25 subchapter D of chapter 1 of the Internal 
143 

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1 Revenue Code of 1986 or to comply with 

2 other applicable law. 

3 ‘‘(D) TIME, FORM, AND MANNER OF ELEC4 TION.—An election under this paragraph shall be 

5 made not later than June 30, 2011, and shall be 

6 made in such form and manner as the Secretary 

7 of the Treasury may prescribe. 

8 ‘‘(E) REPORTING.—A plan sponsor of a 

9 plan to which this paragraph applies shall— 

10 ‘‘(i) give notice of such election to par11 ticipants and beneficiaries of the plan, and 

12 ‘‘(ii) inform the Pension Benefit Guar13 anty Corporation of such election in such 

14 form and manner as the Pension Benefit 

15 Guaranty Corporation may prescribe.’’. 

16 (2) IRC AMENDMENT.—Section 431(b) of the In17 ternal Revenue Code of 1986 is amended by adding 

18 at the end the following new paragraph: 

19 ‘‘(8) ELECTIVE SPECIAL RELIEF RULES.—Not20 withstanding any other provision of this subsection— 

21 ‘‘(A) AMORTIZATION OF NET INVESTMENT

22 LOSSES.— 

23 ‘‘(i) IN GENERAL.—The plan sponsor 

24 of a multiemployer plan with respect to 

25 which the solvency test under subparagraph 
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•HR 4213 EAH1S 

1 (B) is met may elect to treat the portion of 

2 any experience loss or gain for a plan year 

3 that is attributable to the allocable portion 

4 of the net investment losses incurred in ei5 ther or both of the first two plan years end6 ing on or after June 30, 2008, as an experi7 ence loss separate from other experience 

8 losses and gains to be amortized in equal 

9 annual installments (until fully amortized) 

10 over the period— 

11 ‘‘(I) beginning with the plan year 

12 for which the allocable portion is deter13 mined, and 

14 ‘‘(II) ending with the last plan 

15 year in the 30-plan year period begin16 ning with the plan year following the 

17 plan year in which such net invest18 ment loss was incurred. 

19 ‘‘(ii) COORDINATION WITH EXTEN20 SIONS.—If an election is made under clause 

21 (i) for any plan year— 

22 ‘‘(I) no extension of the amortiza23 tion period under clause (i) shall be al24 lowed under subsection (d), and 
145 

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1 ‘‘(II) if an extension was granted 

2 under subsection (d) for any plan year 

3 before the plan year for which the elec4 tion under this subparagraph is made, 

5 such extension shall not result in such 

6 amortization period exceeding 30 

7 years. 

8 ‘‘(iii) DEFINITIONS AND RULES.—For 

9 purposes of this subparagraph— 

10 ‘‘(I) NET INVESTMENT LOSSES.— 

11 ‘‘(aa) IN GENERAL.—The net 

12 investment loss incurred by a 

13 plan in a plan year is equal to 

14 the excess of— 

15 ‘‘(AA) the expected value 

16 of the assets as of the end of 

17 the plan year, over 

18 ‘‘(BB) the market value 

19 of the assets as of the end of 

20 the plan year, 

21 including any difference attrib22 utable to a criminally fraudulent 

23 investment arrangement. 

24 ‘‘(bb) EXPECTED VALUE.— 

25 For purposes of item (aa), the ex-
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1 pected value of the assets as of the 

2 end of a plan year is the excess 

3 of— 

4 ‘‘(AA) the market value 

5 of the assets at the beginning 

6 of the plan year plus con7 tributions made during the 

8 plan year, over 

9 ‘‘(BB) disbursements 

10 made during the plan year. 

11 The amounts described in 

12 subitems (AA) and (BB) shall be 

13 adjusted with interest at the valu14 ation rate to the end of the plan 

15 year. 

16 ‘‘(II) CRIMINALLY FRAUDULENT

17 INVESTMENT ARRANGEMENTS.—The de18 termination as to whether an arrange19 ment is a criminally fraudulent invest20 ment arrangement shall be made under 

21 rules substantially similar to the rules 

22 prescribed by the Secretary for pur23 poses of section 165. 

24 ‘‘(III) AMOUNT ATTRIBUTABLE TO

25 ALLOCABLE PORTION OF NET INVEST-
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1 MENT LOSS.—The amount attributable 

2 to the allocable portion of the net in3 vestment loss for a plan year shall be 

4 an amount equal to the allocable por5 tion of net investment loss for the plan 

6 year under subclauses (IV) and (V), in7 creased with interest at the valuation 

8 rate determined from the plan year 

9 after the plan year in which the net 

10 investment loss was incurred. 

11 ‘‘(IV) ALLOCABLE PORTION OF

12 NET INVESTMENT LOSSES.—Except as 

13 provided in subclause (V), the net in14 vestment loss incurred in a plan year 

15 shall be allocated among the 5 plan 

16 years following the plan year in which 

17 the investment loss is incurred in ac18 cordance with the following table: 

‘‘Plan year after the plan year in 

which the net investment loss Allocable portion of net 

was incurred investment loss 

1st ............................................................................................ 1⁄2

2nd ........................................................................................... 0 

3rd ........................................................................................... 1⁄6

4th ............................................................................................ 1⁄6

5th ............................................................................................ 1⁄6

19 ‘‘(V) SPECIAL RULE FOR PLANS

20 THAT ADOPT LONGER SMOOTHER PE21 RIOD.—If a plan sponsor elects an ex22 tended smoothing period for its asset 
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1 valuation method under subsection 

2 (c)(2)(B), then the allocable portion of 

3 net investment loss for the first two 

4 plan years following the plan year the 

5 investment loss is incurred is the same 

6 as determined under subclause (IV), 

but the remaining 1 7 ⁄2 of the net invest8 ment loss is allocated ratably over the 

9 period beginning with the third plan 

10 year following the plan year the net 

11 investment loss is incurred and ending 

12 with the last plan year in the extended 

13 smoothing period. 

14 ‘‘(VI) SPECIAL RULE FOR OVER15 STATEMENT OF LOSS.—If, for a plan 

16 year, there is an experience loss for the 

17 plan and the amount described in sub18 clause (III) exceeds the total amount of 

19 the experience loss for the plan year, 

20 then the excess shall be treated as an 

21 experience gain. 

22 ‘‘(VII) SPECIAL RULE IN YEARS

23 FOR WHICH OVERALL EXPERIENCE IS

24 GAIN.—If, for a plan year, there is no 

25 experience loss for the plan, then, in 
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1 addition to amortization of net invest2 ment losses under clause (i), the 

3 amount described in subclause (III) 

4 shall be treated as an experience gain 

5 in addition to any other experience 

6 gain. 

7 ‘‘(B) SOLVENCY TEST.— 

8 ‘‘(i) IN GENERAL.—An election may be 

9 made under this paragraph if the election 

10 includes certification by the plan actuary 

11 in connection with the election that the plan 

12 is projected to have a funded percentage at 

13 the end of the first 15 plan years that is not 

14 less than 100 percent of the funded percent15 age for the plan year of the election. 

16 ‘‘(ii) FUNDED PERCENTAGE.— For 

17 purposes of clause (i), the term ‘funded per18 centage’ has the meaning provided in sec19 tion 432(i)(2), except that the value of the 

20 plan’s assets referred to in section 

21 432(i)(2)(A) shall be the market value of 

22 such assets. 

23 ‘‘(iii) ACTUARIAL ASSUMPTIONS.—In 

24 making any certification under this sub25 paragraph, the plan actuary shall use the 
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1 same actuarial estimates, assumptions, and 

2 methods as those applicable for the most re3 cent certification under section 432, except 

4 that the plan actuary may take into ac5 count benefit reductions and increases in 

6 contribution rates, under either funding im7 provement plans adopted under section 

8 432(c) or under section 305(c) of the Em9 ployee Retirement Income Security Act of 

10 1974 or rehabilitation plans adopted under 

11 section 432(e) or under section 305(e) of 

12 such Act, that the plan actuary reasonably 

13 anticipates will occur without regard to any 

14 change in status of the plan resulting from 

15 the election. 

16 ‘‘(C) ADDITIONAL RESTRICTION ON BENEFIT

17 INCREASES.—If an election is made under sub18 paragraph (A), then, in addition to any other 

19 applicable restrictions on benefit increases, a 

20 plan amendment which is adopted on or after 

21 March 10, 2010, and which increases benefits 

22 may not go into effect during the period begin23 ning on such date and ending with the second 

24 plan year beginning after such date unless— 

25 ‘‘(i) the plan actuary certifies that— 
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1 ‘‘(I) any such increase is paid for 

2 out of additional contributions not al3 located to the plan immediately before 

4 the election to have this paragraph 

5 apply to the plan, and 

6 ‘‘(II) the plan’s funded percentage 

7 and projected credit balances for the 

8 first 3 plan years ending on or after 

9 such date are reasonably expected to be 

10 at least as high as such percentage and 

11 balances would have been if the benefit 

12 increase had not been adopted, or 

13 ‘‘(ii) the amendment is required as a 

14 condition of qualification under part I or to 

15 comply with other applicable law. 

16 ‘‘(D) TIME, FORM, AND MANNER OF ELEC17 TION.—An election under this paragraph shall be 

18 made not later than June 30, 2011, and shall be 

19 made in such form and manner as the Secretary 

20 may prescribe. 

21 ‘‘(E) REPORTING.—A plan sponsor of a 

22 plan to which this paragraph applies shall— 

23 ‘‘(i) give notice of such election to par24 ticipants and beneficiaries of the plan, and 
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1 ‘‘(ii) inform the Pension Benefit Guar2 anty Corporation of such election in such 

3 form and manner as the Pension Benefit 

4 Guaranty Corporation may prescribe.’’. 

5 (b) ASSET SMOOTHING FOR MULTIEMPLOYER

6 PLANS.— 

7 (1) ERISA AMENDMENT.—Section 304(c)(2) of 

8 the Employee Retirement Income Security Act of 

9 1974 (29 U.S.C. 1084(c)(2)) is amended— 

10 (A) by redesignating subparagraph (B) as 

11 subparagraph (C); and 

12 (B) by inserting after subparagraph (A) the 

13 following new subparagraph: 

14 ‘‘(B) EXTENDED ASSET SMOOTHING PERIOD

15 FOR CERTAIN INVESTMENT LOSSES.—The Sec16 retary of the Treasury shall not treat the asset 

17 valuation method of a multiemployer plan as 

18 unreasonable solely because such method spreads 

19 the difference between expected and actual re20 turns for either or both of the first 2 plan years 

21 ending on or after June 30, 2008, over a period 

22 of not more than 10 years. Any change in valu23 ation method to so spread such difference shall be 

24 treated as approved, but only if, in the case that 

25 the plan sponsor has made an election under 
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1 subsection (b)(8), any resulting change in asset 

2 value is treated for purposes of amortization as 

3 a net experience loss or gain.’’. 

4 (2) IRC AMENDMENT.—Section 431(c)(2) of the 

5 Internal Revenue Code of 1986 is amended— 

6 (A) by redesignating subparagraph (B) as 

7 subparagraph (C); and 

8 (B) by inserting after subparagraph (A) the 

9 following new subparagraph: 

10 ‘‘(B) EXTENDED ASSET SMOOTHING PERIOD

11 FOR CERTAIN INVESTMENT LOSSES.—The Sec12 retary shall not treat the asset valuation method 

13 of a multiemployer plan as unreasonable solely 

14 because such method spreads the difference be15 tween expected and actual returns for either or 

16 both of the first 2 plan years ending on or after 

17 June 30, 2008, over a period of not more than 

18 10 years. Any change in valuation method to so 

19 spread such difference shall be treated as ap20 proved, but only if, in the case that the plan 

21 sponsor has made an election under subsection 

22 (b)(8), any resulting change in asset value is 

23 treated for purposes of amortization as a net ex24 perience loss or gain.’’. 

25 (c) EFFECTIVE DATE AND SPECIAL RULES.— 
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1 (1) EFFECTIVE DATE.—The amendments made 

2 by this section shall take effect as of the first day of 

3 the first plan year beginning after June 30, 2008, ex4 cept that any election a plan sponsor makes pursuant 

5 to this section or the amendments made thereby that 

6 affects the plan’s funding standard account for any 

7 plan year beginning before October 1, 2009, shall be 

8 disregarded for purposes of applying the provisions of 

9 section 305 of the Employee Retirement Income Secu10 rity Act of 1974 and section 432 of the Internal Rev11 enue Code of 1986 to that plan year. 

12 (2) DEEMED APPROVAL FOR CERTAIN FUNDING

13 METHOD CHANGES.—In the case of a multiemployer 

14 plan with respect to which an election has been made 

15 under section 304(b)(8) of the Employee Retirement 

16 Income Security Act of 1974 (as amended by this sec17 tion) or section 431(b)(8) of the Internal Revenue 

18 Code of 1986 (as so amended)— 

19 (A) any change in the plan’s funding meth20 od for a plan year beginning on or after July 1, 

21 2008, and on or before December 31, 2010, from 

22 a method that does not establish a base for expe23 rience gains and losses to one that does establish 

24 such a base shall be treated as approved by the 

25 Secretary of the Treasury; and 
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1 (B) any resulting funding method change 

2 base shall be treated for purposes of amortization 

3 as a net experience loss or gain. 

4 SEC. 312. OPTIONAL LONGER RECOVERY PERIODS FOR 

5 MULTIEMPLOYER PLANS IN ENDANGERED OR 

6 CRITICAL STATUS. 

7 (a) ERISA AMENDMENTS.— 

8 (1) FUNDING IMPROVEMENT PERIOD.—Section 

9 305(c)(4) of the Employee Retirement Income Secu10 rity Act of 1974 is amended— 

11 (A) by redesignating subparagraphs (C) 

12 and (D) as subparagraphs (D) and (E), respec13 tively; and 

14 (B) by inserting after subparagraph (B) the 

15 following new subparagraph: 

16 ‘‘(C) ELECTION TO EXTEND PERIOD.—The 

17 plan sponsor of an endangered or seriously en18 dangered plan may elect to extend the applicable 

19 funding improvement period by up to 5 years, 

20 reduced by any extension of the period pre21 viously elected pursuant to section 205 of the 

22 Worker, Retiree and Employer Relief Act of 

23 2008. Such an election shall be made not later 

24 than June 30, 2011, and in such form and man-
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1 ner as the Secretary of the Treasury may pre2 scribe.’’. 

3 (2) REHABILITATION PERIOD.—Section 305(e)(4) 

4 of such Act is amended— 

5 (A) by redesignating subparagraph (B) as 

6 subparagraph (C); 

7 (B) in last sentence of subparagraph (A), by 

8 striking ‘‘subparagraph (B)’’ each place it ap9 pears and inserting ‘‘subparagraph (C)’’; and 

10 (C) by inserting after subparagraph (A) the 

11 following new subparagraph: 

12 ‘‘(B) ELECTION TO EXTEND PERIOD.—The 

13 plan sponsor of a plan in critical status may 

14 elect to extend the rehabilitation period by up to 

15 five years, reduced by any extension of the period 

16 previously elected pursuant to section 205 of the 

17 Worker, Retiree and Employer Relief Act of 

18 2008. Such an election shall be made not later 

19 than June 30, 2011, and in such form and man20 ner as the Secretary of the Treasury may pre21 scribe.’’. 

22 (b) IRC AMENDMENTS.— 

23 (1) FUNDING IMPROVEMENT PERIOD.—Section 

24 432(c)(4) of the Internal Revenue Code of 1986 is 

25 amended— 
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1 (A) by redesignating subparagraphs (C) 

2 and (D) as subparagraphs (D) and (E), respec3 tively; and 

4 (B) by inserting after subparagraph (B) the 

5 following new subparagraph: 

6 ‘‘(C) ELECTION TO EXTEND PERIOD.—The 

7 plan sponsor of an endangered or seriously en8 dangered plan may elect to extend the applicable 

9 funding improvement period by up to 5 years, 

10 reduced by any extension of the period pre11 viously elected pursuant to section 205 of the 

12 Worker, Retiree and Employer Relief Act of 

13 2008. Such an election shall be made not later 

14 than June 30, 2011, and in such form and man15 ner as the Secretary may prescribe.’’. 

16 (2) REHABILITATION PERIOD.—Section 432(e)(4) 

17 of such Code is amended— 

18 (A) by redesignating subparagraph (B) as 

19 subparagraph (C); 

20 (B) in last sentence of subparagraph (A), by 

21 striking ‘‘subparagraph (B)’’ each place it ap22 pears and inserting ‘‘subparagraph (C)’’; and 

23 (C) by inserting after subparagraph (A) the 

24 following new subparagraph: 
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1 ‘‘(B) ELECTION TO EXTEND PERIOD.—The 

2 plan sponsor of a plan in critical status may 

3 elect to extend the rehabilitation period by up to 

4 five years, reduced by any extension of the period 

5 previously elected pursuant to section 205 of the 

6 Worker, Retiree and Employer Relief Act of 

7 2008. Such an election shall be made not later 

8 than June 30, 2011, and in such form and man9 ner as the Secretary may prescribe.’’. 

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

11 section shall apply with respect to funding improvement pe12 riods and rehabilitation periods in connection with funding 

13 improvement plans and rehabilitation plans adopted or up14 dated on or after the date of the enactment of this Act. 

15 SEC. 313. MODIFICATION OF CERTAIN AMORTIZATION EX16 TENSIONS UNDER PRIOR LAW. 

17 (a) IN GENERAL.—In the case of an amortization ex18 tension that was granted to a multiemployer plan under 

19 the terms of section 304 of the Employee Retirement Income 

20 Security Act of 1974 (as in effect immediately prior to en21 actment of the Pension Protection Act of 2006) or section 

22 412(e) of the Internal Revenue Code (as so in effect), the 

23 determination of whether any financial condition on the 

24 amortization extension is satisfied shall be made by assum25 ing that for any plan year that contains some or all of 
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1 the period beginning June 30, 2008, and ending October 

2 31, 2008, the actual rate of return on the plan assets was 

3 equal to the interest rate used for purposes of charging or 

4 crediting the funding standard account in such plan year, 

5 unless the plan sponsor elects otherwise in such form and 

6 manner as shall be prescribed by the Secretary of Treasury. 

7 (b) REVOCATION OF AMORTIZATION EXTENSIONS.— 

8 The plan sponsor of a multiemployer plan may, in such 

9 form and manner and after such notice as may be pre10 scribed by the Secretary, revoke any amortization extension 

11 described in subsection (a), effective for plan years following 

12 the date of the revocation. 

13 SEC. 314. ALTERNATIVE DEFAULT SCHEDULE FOR PLANS IN 

14 ENDANGERED OR CRITICAL STATUS. 

15 (a) ERISA AMENDMENTS.— 

16 (1) ENDANGERED STATUS.—Section 305(c)(7) of 

17 the Employee Retirement Income Security Act of 

18 1974 (29 U.S.C. 1085(c)(7)) is amended by adding at 

19 the end the following new subparagraph: 

20 ‘‘(D) ALTERNATIVE DEFAULT SCHEDULE.— 

21 ‘‘(i) IN GENERAL.—A plan sponsor 

22 may, for purposes of this paragraph, des23 ignate an alternative schedule of contribu24 tion rates and related benefit changes meet25 ing the requirements of clause (ii) as the de-
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1 fault schedule, in lieu of the default schedule 

2 referred to in subparagraph (A). 

3 ‘‘(ii) REQUIREMENTS.—An alternative 

4 schedule designated pursuant to clause (i) 

5 meets the requirements of this clause if such 

6 schedule has been adopted in collective bar7 gaining agreements covering at least 75 per8 cent of the active participants as of the date 

9 of the designation.’’. 

10 (2) CRITICAL STATUS.—Section 305(e)(3) of such 

11 Act (29 U.S.C. 1085(e)(3)) is amended by adding at 

12 the end the following new subparagraph: 

13 ‘‘(D) ALTERNATIVE DEFAULT SCHEDULE.— 

14 ‘‘(i) IN GENERAL.—A plan sponsor 

15 may, for purposes of subparagraph (C), des16 ignate an alternative schedule of contribu17 tion rates and related benefit changes meet18 ing the requirements of clause (ii) as the de19 fault schedule, in lieu of the default schedule 

20 referred to in subparagraph (C)(i). 

21 ‘‘(ii) REQUIREMENTS.—An alternative 

22 schedule designated pursuant to clause (i) 

23 meets the requirements of this clause if such 

24 schedule has been adopted in collective bar25 gaining agreements covering at least 75 per-
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1 cent of the active participants as of the date 

2 of the designation.’’. 

3 (b) INTERNAL REVENUE CODE AMENDMENTS.— 

4 (1) ENDANGERED STATUS.—Section 432(c)(7) of 

5 the Internal Revenue Code of 1986 is amended by 

6 adding at the end the following new subparagraph: 

7 ‘‘(C) ALTERNATIVE DEFAULT SCHEDULE.— 

8 ‘‘(i) IN GENERAL.—A plan sponsor 

9 may, for purposes of this paragraph, des10 ignate an alternative schedule of contribu11 tion rates and related benefit changes meet12 ing the requirements of clause (ii) as the de13 fault schedule, in lieu of the default schedule 

14 referred to in subparagraph (A). 

15 ‘‘(ii) REQUIREMENTS.—An alternative 

16 schedule designated pursuant to clause (i) 

17 meets the requirements of this clause if such 

18 schedule has been adopted in collective bar19 gaining agreements covering at least 75 per20 cent of the active participants as of the date 

21 of the designation.’’. 

22 (2) CRITICAL STATUS.—Section 432(e)(3) of such 

23 Code is amended by adding at the end the following 

24 new subparagraph: 

25 ‘‘(D) ALTERNATIVE DEFAULT SCHEDULE.— 
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1 ‘‘(i) IN GENERAL.—A plan sponsor 

2 may, for purposes of subparagraph (C), des3 ignate an alternative schedule of contribu4 tion rates and related benefit changes meet5 ing the requirements of clause (ii) as the de6 fault schedule, in lieu of the default schedule 

7 referred to in subparagraph (C)(i). 

8 ‘‘(ii) REQUIREMENTS.—An alternative 

9 schedule designated pursuant to clause (i) 

10 meets the requirements of this clause if such 

11 schedule has been adopted in collective bar12 gaining agreements covering at least 75 per13 cent of the active participants as of the date 

14 of the designation.’’. 

15 (c) EFFECTIVE DATE.—The amendments made by this 

16 section shall apply to designations of default schedules by 

17 plan sponsors on or after the date of the enactment of this 

18 Act. 

19 (d) CROSS-REFERENCE.—For sunset of the amend20 ments made by this section, see section 221(c) of the Pension 

21 Protection Act of 2006. 

22 SEC. 315. TRANSITION RULE FOR CERTIFICATIONS OF PLAN 

23 STATUS. 

24 (a) IN GENERAL.—A plan actuary shall not be treated 

25 as failing to meet the requirements of section 305(b)(3)(A) 
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1 of the Employee Retirement Income Security Act of 1974 

2 and section 432(b)(3)(A) of the Internal Revenue Code of 

3 1986 in connection with a certification required under such 

4 sections the deadline for which is after the date of the enact5 ment of this Act if the plan actuary makes such certification 

6 at any time earlier than 75 days after the date of the enact7 ment of this Act. 

8 (b) REVISION OF PRIOR CERTIFICATION.— 

9 (1) IN GENERAL.—If— 

10 (A) a plan sponsor makes an election under 

11 section 304(b)(8) of the Employee Retirement In12 come Security Act of 1974 and section 431(b)(8) 

13 of the Internal Revenue Code of 1986, or under 

14 section 304(c)(2)(B) of such Act and section 

15 432(c)(2)(B) such Code, with respect to a plan 

16 for a plan year beginning on or after October 1, 

17 2009; and 

18 (B) the plan actuary’s certification of the 

19 plan status for such plan year (hereinafter in 

20 this subsection referred to as ‘‘original certifi21 cation’’) did not take into account any election 

22 so made, 

23 then the plan sponsor may direct the plan actuary to 

24 make a new certification with respect to the plan for 

25 the plan year which takes into account such election 
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1 (hereinafter in this subsection referred to as ‘‘new cer2 tification’’) if the plan’s status under section 305 of 

3 such Act and section 432 of such Code would change 

4 as a result of such election. Any such new certifi5 cation shall be treated as the most recent certification 

6 referred to in section 304(b)(3)(B)(iii) of such Act 

7 and section 431(b)(8)(B)(iii) of such Code. 

8 (2) DUE DATE FOR NEW CERTIFICATION.—Any 

9 such new certification shall be made pursuant to sec10 tion 305(b)(3) of such Act and section 432(b)(3) of 

11 such Code; except that any such new certification 

12 shall be made not later than 75 days after the date 

13 of the enactment of this Act. 

14 (3) NOTICE.— 

15 (A) IN GENERAL.—Except as provided in 

16 subparagraph (B), any such new certification 

17 shall be treated as the original certification for 

18 purposes of section 305(b)(3)(D) of such Act and 

19 section 432(b)(3)(D) of such Code. 

20 (B) NOTICE ALREADY PROVIDED.—In any 

21 case in which notice has been provided under 

22 such sections with respect to the original certifi23 cation, not later than 30 days after the new cer24 tification is made, the plan sponsor shall provide 
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1 notice of any change in status under rules simi2 lar to the rules such sections. 

3 (4) EFFECT OF CHANGE IN STATUS.—If a plan 

4 ceases to be in critical status pursuant to the new cer5 tification, then the plan shall, not later than 30 days 

6 after the due date described in paragraph (2), cease 

7 any restriction of benefit payments, and imposition of 

8 contribution surcharges, under section 305 of such Act 

9 and section 432 of such Code by reason of the original 

10 certification. 

11 Subtitle B—Fee Disclosure 

12 SEC. 321. SHORT TITLE OF SUBTITLE. 

13 This subtitle may be cited as the ‘‘Defined Contribu14 tion Fee Disclosure Act of 2010’’. 

15 SEC. 322. AMENDMENTS TO THE EMPLOYEE RETIREMENT 

16 INCOME SECURITY ACT OF 1974. 

17 (a) REQUIREMENTS RELATING TO SERVICE PRO18 VIDERS AND PLAN ADMINISTRATORS OF INDIVIDUAL AC19 COUNT PLANS.— 

20 (1) IN GENERAL.—Part 1 of subtitle B of title I 

21 of the Employee Retirement Income Security Act of 

22 1974 is amended— 

23 (A) by redesignating section 111 (29 U.S.C. 

24 1031) as section 113; and 
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1 (B) by inserting after section 110 (29 

2 U.S.C. 1030) the following new sections: 

3 ‘‘SEC. 111. REQUIREMENT TO PROVIDE NOTICE OF PLAN 

4 FEE INFORMATION TO PLAN ADMINISTRA5 TORS. 

6 ‘‘(a) INITIAL STATEMENT OF SERVICES PROVIDED AND

7 REVENUES RECEIVED.— 

8 ‘‘(1) IN GENERAL.—In any case in which a serv9 ice provider enters into a contract or arrangement to 

10 provide services to an individual account plan, the 

11 service provider shall, before entering into such con12 tract or arrangement, provide to the plan adminis13 trator a single written statement which includes, with 

14 respect to the first plan year covered under such con15 tract or arrangement, the following information: 

16 ‘‘(A) A detailed description of the services 

17 which will be provided to the plan by the service 

18 provider, the amount of total expected annual 

19 revenue with respect to such services, the manner 

20 in which such revenue will be collected, and the 

21 extent to which such revenue varies between spe22 cific investment options. 

23 ‘‘(B)(i) In the case of a service provider who 

24 is providing recordkeeping services with respect 

25 to any investment option, such information as is 
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1 necessary for the plan administrator to satisfy 

2 the requirements of subparagraphs (B)(ii)(IV) 

3 and (C) of section 105(a)(2) and paragraphs (1) 

4 and (3) of section 112(a) with respect to such op5 tion, including specifying the method used by the 

6 service provider in disclosing or estimating ex7 penses under subparagraphs (C)(iv) and (E) of 

8 section 105(a)(2). 

9 ‘‘(ii) To the extent provided in regulations 

10 issued by the Secretary, clause (i) shall not 

11 apply in the case of a service provider described 

12 in such clause if the service provider receives a 

13 written notification from the plan administrator 

14 that the information described in such clause in 

15 connection with the investment option is pro16 vided by another service provider pursuant to a 

17 contract or arrangement to provide services to 

18 the plan. 

19 ‘‘(C) A statement indicating— 

20 ‘‘(i) the identity of any investment op21 tions offered under the plan with respect to 

22 which the service provider provides substan23 tial investment, trustee, custodial, or ad24 ministrative services, and 
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1 ‘‘(ii) in the case of any investment op2 tion, whether the service provider expects to 

3 receive any component of total expected an4 nual revenue described in paragraph 

5 (2)(A)(ii)(II) with respect to such option 

6 and the amount of any such component. 

7 ‘‘(D) The portion of total expected annual 

8 revenue which is properly allocable to each of the 

9 following: 

10 ‘‘(i) Administration and recordkeeping. 

11 ‘‘(ii) Investment management. 

12 ‘‘(iii) Other services or amounts not 

13 described in clause (i) or (ii). 

14 ‘‘(2) DEFINITION OF TOTAL EXPECTED ANNUAL

15 REVENUE.—For purposes of this section— 

16 ‘‘(A) IN GENERAL.—The term ‘total expected 

17 annual revenue’ means, with respect to any plan 

18 year— 

19 ‘‘(i) any amount expected to be re20 ceived during such plan year from the plan 

21 (including amounts paid from participant 

22 accounts), any participant or beneficiary, 

23 or any plan sponsor in connection with the 

24 contract or arrangement referred to in 

25 paragraph (1), and 
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1 ‘‘(ii) any amount not taken into ac2 count under clause (i) which is expected to 

3 be received during such plan year by the 

4 service provider in connection with— 

5 ‘‘(I) plan administration, record6 keeping, consulting, management, or 

7 investment or other service activities 

8 undertaken by the service provider 

9 with respect to the plan, or 

10 ‘‘(II) plan administration, record11 keeping, consulting, management, or 

12 investment or other service activities 

13 undertaken by any other person with 

14 respect to the plan. 

15 ‘‘(B) EXPRESSED AS DOLLAR AMOUNT OR

16 PERCENTAGE OF ASSETS.—Total expected an17 nual revenue and any amount indicated under 

18 paragraph (1)(C)(ii) may be expressed as a dol19 lar amount or as a percentage of assets (or a 

20 combination thereof), as appropriate. To the ex21 tent that total expected annual revenue is ex22 pressed as a percentage of assets, such percentage 

23 shall be properly allocated among clauses (i), 

24 (ii), and (iii) of paragraph (1)(D). 
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1 ‘‘(C) PROVISION OF FEE SCHEDULE FOR

2 CERTAIN PARTICIPANT INITIATED TRANS3 ACTIONS.—In the case of amounts expected to be 

4 received from participants or beneficiaries under 

5 the plan (or from an account of a participant or 

6 beneficiary) as a fee or charge in connection 

7 with a transaction initiated by the participant 

8 (other than loads, commissions, brokerage fees, 

9 and other investment related transactions)— 

10 ‘‘(i) such amounts shall not be taken 

11 into account in determining total expected 

12 annual revenue, and 

13 ‘‘(ii) the service provider shall provide 

14 to the plan administrator, as part of the 

15 statement referred to in paragraph (1), a fee 

16 schedule which describes each such fee or 

17 charge, the amount thereof, and the manner 

18 in which such amount is collected. 

19 ‘‘(D) ESTIMATIONS.—In determining under 

20 this subsection any amount which is expected to 

21 be received by the service provider, the service 

22 provider shall provide a reasonable estimate of 

23 such amount and shall indicate in the statement 

24 referred to in paragraph (1) whether such 

25 amount disclosed is an estimate. Any such esti-
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1 mate shall be based on reasonable assumptions 

2 specified in such statement. 

3 ‘‘(3) ALLOCATION RULES.—The Secretary shall 

4 provide rules for defining total expected annual rev5 enue and for the appropriate and consistent alloca6 tion of total expected annual revenue among clauses 

7 (i), (ii), and (iii) of paragraph (1)(D), except that the 

8 entire amount of such revenue shall be allocated 

9 among such clauses and no amount may be taken into 

10 account under more than one clause. 

11 ‘‘(4) DISCLOSURE OF DIFFERENT PRICING OF IN12 VESTMENT OPTIONS.—In the case of investment op13 tions with more than one share class or price level, 

14 the Secretary shall prescribe regulations for the disclo15 sure of the different share classes or price levels avail16 able as part of the statement in paragraph (1). Such 

17 regulations shall provide guidance with respect to the 

18 disclosure of the basis for qualifying for such share 

19 classes or price levels, which may include amounts in20 vested, number of participants, or other factors. 

21 ‘‘(5) DISCLOSURE OF INVESTMENT TRANSACTION

22 COSTS.—To the extent provided in regulations issued 

23 by the Secretary, a service provider shall separately 

24 disclose the transaction costs (including sales commis25 sions) for each investment option for the preceding 
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1 year or the plan’s allocable share of such costs for the 

2 preceding year. 

3 ‘‘(b) ANNUAL STATEMENTS.—With respect to each 

4 plan year after the plan year covered by the statement de5 scribed in subsection (a), the service provider shall provide 

6 the plan administrator a single written statement which in7 cludes the information described in subsection (a) with re8 spect to such subsequent plan year. 

9 ‘‘(c) MATERIAL CHANGE STATEMENTS.—In the case of 

10 any event or other change during a plan year which causes 

11 the information included in any statement described in sub12 section (a) or (b) with respect to such plan year to become 

13 materially incorrect, the service provider shall provide the 

14 plan administrator a written statement providing the cor15 rected information not later than 30 days after the service 

16 provider knows, or exercising reasonable diligence would 

17 have known, of such event or other change. 

18 ‘‘(d) TIME AND MANNER OF PROVIDING STATEMENT

19 AND OTHER MATERIALS.—The statement referred to in sub20 sections (a)(1) and (b) shall be made at such time and in 

21 such manner as the Secretary may provide. Other materials 

22 required to be provided under this section shall be provided 

23 in such manner as the Secretary may provide. All informa24 tion included in such statements and other materials shall 
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1 be presented in a manner which is easily understood by 

2 the typical plan administrator. 

3 ‘‘(e) EXCEPTION FOR SMALL SERVICE PROVIDERS.— 

4 The requirements of this section shall not apply with respect 

5 to any contract or arrangement for services provided with 

6 respect to an individual account plan for any plan year 

7 if— 

8 ‘‘(1) the total annual revenue expected by the 

9 service provider to be received with respect to the plan 

10 for such plan year is less than $5,000, and 

11 ‘‘(2) the service provider provides a written 

12 statement to the plan administrator that the total an13 nual revenue expected by the service provider to be re14 ceived with respect to the plan is less than $5,000. 

15 Service providers who expect to receive de minimis annual 

16 revenue from the plan need not provide the written state17 ment described in paragraph (2). The Secretary may by 

18 regulation or other guidance adjust the dollar amount speci19 fied in this subsection. 

20 ‘‘(f) DEFINITION OF SERVICE PROVIDER.—For pur21 poses of this section— 

22 ‘‘(1) IN GENERAL.—The term ‘service provider’ 

23 includes any person providing administration, rec24 ordkeeping, consulting, investment management serv-
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1 ices, or investment advice to an individual account 

2 plan under a contract or arrangement. 

3 ‘‘(2) CONTROLLED GROUPS TREATED AS ONE

4 SERVICE PROVIDER.—All persons which would be 

5 treated as a single employer under subsection (b) or 

6 (c) of section 414 of the Internal Revenue Code of 

7 1986 if section 1563(a)(1) of such Code were ap8 plied— 

9 ‘‘(A) except as provided by subparagraph 

10 (B), by substituting ‘more than 50 percent’ for 

11 ‘at least 80 percent’ each place it appears there12 in, or 

13 ‘‘(B) for purposes of subsection (a)(1)(C)(i), 

14 by substituting ‘at least 20 percent’ for ‘at least 

15 80 percent’ each place it appears therein, 

16 shall be treated as one person for purposes of this sec17 tion. 

18 ‘‘SEC. 112. REQUIREMENT TO PROVIDE NOTICE TO PARTICI19 PANTS OF PLAN FEE INFORMATION. 

20 ‘‘(a) DISCLOSURES TO PARTICIPANTS AND BENE21 FICIARIES.— 

22 ‘‘(1) ADVANCE NOTICE OF AVAILABLE INVEST23 MENT OPTIONS.— 

24 ‘‘(A) IN GENERAL.—The plan administrator 

25 of an applicable individual account plan shall 
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1 provide to the participant or beneficiary notice 

2 of the investment options available under the 

3 plan before— 

4 ‘‘(i) the earliest date provided for 

5 under the plan for the participant’s initial 

6 investment of any contribution made on be7 half of such participant, and 

8 ‘‘(ii) the effective date of any change in 

9 the list of investment options available 

10 under the plan, unless such advance notice 

11 is impracticable, and in such case, as soon 

12 as is practicable. 

13 ‘‘(B) INFORMATION INCLUDED IN NOTICE.— 

14 The notice required under subparagraph (A) 

15 shall— 

16 ‘‘(i) set forth, with respect to each 

17 available investment option— 

18 ‘‘(I) the name of the option, 

19 ‘‘(II) a general description of the 

20 option’s investment objectives and 

21 principal investment strategies, prin22 cipal risk and return characteristics, 

23 and the name of the option’s invest24 ment manager, 
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1 ‘‘(III) whether the investment op2 tion is designed to be a comprehensive, 

3 stand-alone investment for retirement 

4 that provides varying degrees of long5 term appreciation and capital preser6 vation through a mix of equity and 

7 fixed income exposures, 

8 ‘‘(IV) the extent to which the in9 vestment option is actively managed or 

10 passively managed in relation to an 

11 index and the difference between active 

12 management and passive management, 

13 ‘‘(V) where, and the manner in 

14 which, additional plan-specific, option15 specific, and generally available invest16 ment information may be obtained, 

17 and 

18 ‘‘(VI) a statement explaining that 

19 investment options should not be evalu20 ated solely on the basis of the charges 

21 for each option but should also be 

22 based on consideration of other key fac23 tors, including the risk level of the op24 tion, the investment objectives of the 

25 option, historical returns of the option, 
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1 and the participant’s personal invest2 ment objectives, 

3 ‘‘(ii) include a statement of the right 

4 under paragraph (2) of participants and 

5 beneficiaries to request, and a description of 

6 how a participant or beneficiary may re7 quest, a copy of the statements received by 

8 the plan administrator under section 111 

9 with respect to the plan, and 

10 ‘‘(iii) include the plan fee comparison 

11 chart described in subparagraph (C). 

12 ‘‘(C) PLAN FEE COMPARISON CHART.— 

13 ‘‘(i) IN GENERAL.— 

14 ‘‘(I) IN GENERAL.—The notice 

15 provided under this paragraph shall 

16 include a plan fee comparison chart 

17 consisting of a comparison of the serv18 ice and investment charges that will or 

19 could be assessed against the account of 

20 the participant or beneficiary with re21 spect to the plan year. 

22 ‘‘(II) EXPRESSED AS DOLLAR

23 AMOUNT OR FORMULA.—For purposes 

24 of this subparagraph, such charges 

25 shall be provided in the form of a dol-
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1 lar amount or as a formula (such as a 

2 percentage of assets), as appropriate. 

3 ‘‘(ii) CATEGORIZATION OF CHARGES.— 

4 The plan fee comparison chart shall provide 

5 information in relation to the following cat6 egories of charges that will or could be as7 sessed against the account of the participant 

8 or beneficiary: 

9 ‘‘(I) ASSET-BASED CHARGES SPE10 CIFIC TO INVESTMENT.—Charges that 

11 vary depending on the investment op12 tions selected by the participant or 

13 beneficiary, including the annual oper14 ating expenses of the investment option 

15 and investment-specific asset-based 

16 charges (such as loads, commissions, 

17 brokerage fees, exchange fees, redemp18 tion fees, and surrender charges). Ex19 cept as provided by the Secretary in 

20 regulations under this section, the in21 formation relating to such charges 

22 shall include a statement noting any 

23 charges for 1 or more investment op24 tions which pay for services other than 

25 investment management. 
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1 ‘‘(II) RECURRING ASSET-BASED

2 CHARGES NOT SPECIFIC TO INVEST3 MENT.—Charges that are assessed as a 

4 percentage of the total assets in the ac5 count of the participant or beneficiary, 

6 regardless of the investment option se7 lected. 

8 ‘‘(III) ADMINISTRATIVE AND

9 TRANSACTION-BASED CHARGES.—Ad10 ministration and transaction-based 

11 charges, including fees charged to par12 ticipants to cover plan administration, 

13 compliance, and recordkeeping costs, 

14 plan loan origination fees, possible re15 demption fees, and possible surrender 

16 charges, that are not assessed as a per17 centage of the total assets in the ac18 count and are either automatically de19 ducted each year or result from certain 

20 transactions engaged in by the partici21 pant or beneficiary. 

22 ‘‘(IV) OTHER CHARGES.—Any 

23 other charges which may be deducted 

24 from participants’ or beneficiaries’ ac-
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1 counts and which are not described in 

2 subclauses (I), (II), and (III). 

3 ‘‘(iii) FEES AND HISTORICAL RE4 TURNS.—The plan fee comparison chart 

5 shall include— 

6 ‘‘(I) the historical returns, net of 

7 fees and expenses, for the previous 

8 year, 5 years, and 10 years (or for the 

9 period since inception, if shorter) with 

10 respect to such investment option, and 

11 ‘‘(II) the historical returns of an 

12 appropriate benchmark, index, or other 

13 point of comparison for each such pe14 riod. 

15 ‘‘(D) MODEL NOTICES.—The Secretary shall 

16 prescribe one or more model notices that may be 

17 used for purposes of satisfying the requirements 

18 of this paragraph, including model plan fee com19 parison charts. 

20 ‘‘(E) ESTIMATIONS.—For purposes of pro21 viding the notice required under this paragraph, 

22 the plan administrator may provide a reasonable 

23 and representative estimate for any charges or 

24 percentages disclosed under subparagraph (B) or 

25 (C) and shall indicate whether the amount of 
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1 any such charges or percentages disclosed is an 

2 estimate. 

3 ‘‘(2) DISCLOSURE OF SERVICE PROVIDER STATE4 MENTS.—The plan administrator shall provide to any 

5 participant or beneficiary a copy of any statement re6 ceived pursuant to section 111 within 30 days after 

7 receipt of a request for such a statement. 

8 ‘‘(3) NOTICE OF MATERIAL CHANGES.—In the 

9 case of any event or other change which causes the in10 formation included in any notice described in para11 graph (1) to become materially incorrect, the plan ad12 ministrator shall provide participants and bene13 ficiaries a written statement providing the corrected 

14 information not later than 30 days after the plan ad15 ministrator knows, or exercising reasonable diligence 

16 would have known, of such event or other change. 

17 ‘‘(4) TIME AND MANNER OF PROVIDING NOTICES

18 AND DISCLOSURES.— 

19 ‘‘(A) IN GENERAL.—The notices described in 

20 paragraph (1) shall be provided at such times 

21 and in such manner as the Secretary may pro22 vide. Other notices and materials required to be 

23 provided under this subsection shall be provided 

24 in such manner as the Secretary may provide. 

25 ‘‘(B) MANNER OF PRESENTATION.— 
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1 ‘‘(i) IN GENERAL.—All information in2 cluded in such notices or explanations shall 

3 be presented in a manner which is easily 

4 understood by the typical participant. 

5 ‘‘(ii) GENERIC EXAMPLE OF OPER6 ATING EXPENSES OF INVESTMENT OP7 TIONS.—The information described in para8 graph (1)(C)(ii)(I) shall include a generic 

9 example describing the charges that would 

10 apply during an annual period with respect 

11 to a $10,000 investment in the investment 

12 option. 

13 ‘‘(b) APPLICABLE INDIVIDUAL ACCOUNT PLAN.—For 

14 purposes of this section, the term ‘applicable individual ac15 count plan’ means the portion of any individual account 

16 plan which permits a participant or beneficiary to exercise 

17 control over assets in his or her account. 

18 ‘‘(c) REGULATIONS.—The Secretary shall prescribe 

19 such regulations or other guidance as may be necessary or 

20 appropriate to carry out the purposes of this section, in21 cluding regulations or other guidance which— 

22 ‘‘(1) provide a later deadline for providing the 

23 notice of investment menu changes described in sub24 section (a)(3) in appropriate circumstances, and 
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1 ‘‘(2) provide guidelines, and a safe harbor, for 

2 the selection of an appropriate benchmark, index, or 

3 other point of comparison for an investment option 

4 under subsection (a)(1)(C)(iii)(II).’’. 

5 (2) CLERICAL AMENDMENT.—The table of con6 tents in section 1 of such Act is amended by striking 

7 the item relating to section 111 and inserting the fol8 lowing new items: 

‘‘Sec. 111. Requirement to provide notice of plan fee information to plan administrators. 

‘‘Sec. 112. Requirement to provide notice to participants of plan fee information. 

‘‘Sec. 113. Repeal and effective date.’’. 

9 (b) QUARTERLY BENEFIT STATEMENTS.—Section 105 

10 of such Act (29 U.S.C. 1025) is amended— 

11 (1) in subsection (a)(2)— 

12 (A) by redesignating subparagraph (C) as 

13 subparagraph (G); 

14 (B) in subparagraph (B)(ii)— 

15 (i) in subclause (II), by striking ‘‘di16 versified, and’’ and inserting ‘‘diversified,’’; 

17 (ii) in subclause (III) by striking the 

18 period and inserting ‘‘, and’’; and 

19 (iii) by adding after subclause (III) the 

20 following new subclause: 

21 ‘‘(IV) with respect to the portion 

22 of a participant’s account for which 

23 the participant has the right to direct 
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1 the investment of assets, the informa2 tion described in subparagraph (C).’’; 

3 and 

4 (C) by inserting after subparagraph (B) the 

5 following new subparagraphs: 

6 ‘‘(C) QUARTERLY BENEFIT STATEMENTS.— 

7 The plan administrator shall provide to each 

8 participant and beneficiary, at least once each 

9 calendar quarter, an explanation describing the 

10 investment options in which the participant’s or 

11 beneficiary’s account is invested as of the last 

12 day of the preceding quarter. Such explanation 

13 shall provide, to the extent applicable, the fol14 lowing for the preceding quarter: 

15 ‘‘(i) As of the last day of the quarter, 

16 a statement of the different asset classes that 

17 the participant’s or beneficiary’s account is 

18 invested in and the percentage of the ac19 count allocated to each asset class. 

20 ‘‘(ii) A statement of the starting and 

21 ending balance of the participant’s or bene22 ficiary’s account for such quarter. 

23 ‘‘(iii) A statement of the total contribu24 tions made to the participant’s or bene-
185 

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1 ficiary’s account during the quarter and a 

2 separate statement of— 

3 ‘‘(I) the amount of such contribu4 tions, and the total amount of any re5 storative payments, which were made 

6 by the employer during the quarter, 

7 and 

8 ‘‘(II) the amount of such contribu9 tions which were made by the em10 ployee. 

11 ‘‘(iv) A statement of the total fees and 

12 expenses which were directly deducted from 

13 the participant’s or beneficiary’s account 

14 during the quarter and an itemization of 

15 such fees and expenses. 

16 ‘‘(v) A statement of the net returns for 

17 the year to date, expressed as a percentage, 

18 and a statement as to whether the net re19 turns include amounts described in clause 

20 (iv). 

21 ‘‘(vi) With respect to each investment 

22 option in which the participant or bene23 ficiary was invested as of the last day of the 

24 quarter, the following: 
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1 ‘‘(I) A statement of the percentage 

2 of the participant’s or beneficiary’s ac3 count that is invested in such option as 

4 of the last day of such quarter. 

5 ‘‘(II) A statement of the starting 

6 and ending balance of the participant’s 

7 or beneficiary’s account that is in8 vested in such option for such quarter. 

9 ‘‘(III) A statement of the annual 

10 operating expenses of the investment 

11 option. 

12 ‘‘(IV) A statement of whether the 

13 disclosure described in clause (iv) in14 cludes the annual operating expenses of 

15 the investment options of the partici16 pant or beneficiary. 

17 ‘‘(vii) The statement described in sec18 tion 112(a)(1)(B)(i)(VI). 

19 ‘‘(viii) A statement regarding how a 

20 participant or beneficiary may access the 

21 information required to be disclosed under 

22 section 112(a)(1). 

23 ‘‘(D) MODEL EXPLANATIONS.—The Sec24 retary shall prescribe one or more model expla-
187 

•HR 4213 EAH1S 

1 nations that may be used for purposes of satis2 fying the requirements of subparagraph (C). 

3 ‘‘(E) DETERMINATION OF EXPENSES.—For 

4 purposes of subparagraph (C)(vi)(III)— 

5 ‘‘(i) Expenses may be expressed as a 

6 dollar amount or as a percentage of assets 

7 (or a combination thereof). 

8 ‘‘(ii) The plan administrator may pro9 vide disclosure of the expenses for the quar10 ter or may provide a reasonable and rep11 resentative estimate of such expenses and 

12 shall indicate any such estimate as being an 

13 estimate. Any such estimate shall be based 

14 on reasonable assumptions stated together 

15 with such estimate. 

16 ‘‘(iii) To the extent that estimated ex17 penses are expressed as a percentage of as18 sets, the disclosure shall also include one of 

19 the following, stated in dollar amounts: 

20 ‘‘(I) an estimate of the expenses 

21 for the quarter based on the amount 

22 invested in the option; or 

23 ‘‘(II) an example describing the 

24 expenses that would apply during the 
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1 quarter with respect to a hypothetical 

2 $10,000 investment in the option. 

3 ‘‘(F) ANNUAL COMPLIANCE FOR SMALL

4 PLANS.—A plan that has fewer than 100 partici5 pants and beneficiaries as of the first day of the 

6 plan year may provide the explanation described 

7 in subparagraph (C) on an annual rather than 

8 a quarterly basis.’’. 

9 (c) ASSISTANCE FROM THE DEPARTMENT OF

10 LABOR.—Section 105 of such Act (29 U.S.C. 1025) is 

11 amended by adding at the end the following new sub12 sections: 

13 ‘‘(d) ASSISTANCE TO SMALL EMPLOYERS.—The Sec14 retary shall make available to employers with 100 or fewer 

15 employees— 

16 ‘‘(1) educational and compliance materials de17 signed to assist such employers in selecting and moni18 toring service providers for individual account plans 

19 which permit a participant or beneficiary to exercise 

20 control over the assets in the account of the partici21 pant or beneficiary, investment options under such 

22 plans, and charges relating to such options, and 

23 ‘‘(2) services designed to assist such employers in 

24 finding and understanding affordable investment op25 tions for such plans and in comparing the investment 
189 

•HR 4213 EAH1S 

1 performance of, and charges for, such options on an 

2 ongoing basis against appropriate benchmarks or 

3 other appropriate measures. 

4 ‘‘(e) ASSISTANCE TO PLAN SPONSORS AND PLAN PAR5 TICIPANTS AND BENEFICIARIES.—The Secretary shall pro6 vide plan administrators and plan sponsors of individual 

7 account plans and participants and beneficiaries under 

8 such plans assistance with any questions or problems re9 garding compliance with the requirements of subparagraphs 

10 (B)(ii)(IV) and (C) of subsection (a)(2) and section 112.’’. 

11 (d) ENFORCEMENT.— 

12 (1) PENALTIES.—Section 502 of such Act (29 

13 U.S.C. 1132) is amended— 

14 (A) in subsection (a)(6), by striking ‘‘under 

15 paragraph (2)’’ and all that follows through 

16 ‘‘subsection (c)’’ and inserting ‘‘under paragraph 

17 (2), (4), (5), (6), (7), (8), (9), (10), (11), or (12) 

18 of subsection (c)’’; and 

19 (B) in subsection (c), by redesignating the 

20 second paragraph (10) as paragraph (13), and 

21 by inserting after the first paragraph (10) the 

22 following new paragraphs: 

23 ‘‘(11)(A) In the case of any failure by a service pro24 vider (as defined in section 111(f)(1)) to provide a state25 ment in violation of section 111, the service provider may 
190 

•HR 4213 EAH1S 

1 be assessed by the Secretary a civil penalty of up to $1,000 

2 for each day in the noncompliance period. 

3 ‘‘(B) For purposes of subparagraph (A), the non4 compliance period with respect to the failure to provide any 

5 statement is the period beginning on the date that such 

6 statement was required to be provided and ending on the 

7 date that such statement is provided or the failure is other8 wise corrected. 

9 ‘‘(C)(i) The total amount of a penalty assessed under 

10 this paragraph on any service provider with respect to any 

11 individual account plan for any plan year shall not exceed 

12 an amount equal to the lesser of— 

13 ‘‘(I) 10 percent of the assets of the plan, deter14 mined as of the first day of such plan year, or 

15 ‘‘(II) $1,000,000. 

16 ‘‘(ii) No penalty shall be imposed by subparagraph (A) 

17 on any failure if— 

18 ‘‘(I) the service provider subject to liability for 

19 the penalty under subparagraph (A) exercised reason20 able diligence to meet the requirement with respect to 

21 which the failure relates, and 

22 ‘‘(II) such service provider provides the informa23 tion required under section 111 during the 30-day pe24 riod beginning on the date such person knew, or exer-
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•HR 4213 EAH1S 

1 cising reasonable diligence would have known, that 

2 such failure existed. 

3 ‘‘(iii) In the case of a failure which is due to reasonable 

4 cause and not to willful neglect, the Secretary may waive 

5 part or all of the penalty under subparagraph (A) to the 

6 extent that the payment of such penalty would be excessive 

7 or otherwise inequitable relative to the failure involved. 

8 ‘‘(D) The penalty imposed under this paragraph with 

9 respect to any failure shall be reduced by the amount of 

10 any tax imposed on such person with respect to such failure 

11 under section 4980J of the Internal Revenue Code of 1986. 

12 ‘‘(12)(A) Any plan administrator with respect to a 

13 plan who fails or refuses to provide a notice, explanation, 

14 or statement to participants and beneficiaries in accord15 ance with subparagraphs (B)(ii)(IV) and (C) of section 

16 105(a)(2) and section 112 may be assessed by the Secretary 

17 a civil penalty of up to $110 for each day in the noncompli18 ance period. 

19 ‘‘(B) For purposes of subparagraph (A), the non20 compliance period with respect to the failure to provide any 

21 notice, explanation, or statement referred to in subpara22 graph (B)(ii)(IV) or (C) of section 105(a)(2) or section 112 

23 with respect to any participant or beneficiary is the period 

24 beginning on the date that such notice, explanation, or 

25 statement was required to be provided and ending on the 
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1 date that such notice, explanation, or statement is provided 

2 or the failure is otherwise corrected. 

3 ‘‘(C)(i) The total amount of penalty assessed under this 

4 paragraph with respect to any plan for any plan year shall 

5 not exceed an amount equal to the lesser of— 

6 ‘‘(I) 10 percent of the assets of the plan, deter7 mined as of the first day of such plan year, or 

8 ‘‘(II) $500,000. 

9 ‘‘(ii) No penalty shall be imposed under subparagraph 

10 (A) on any failure to meet the requirements of subpara11 graphs (B)(ii)(IV) and (C) of section 105(a)(2) and section 

12 112 if— 

13 ‘‘(I) any person subject to liability for the pen14 alty under subparagraph (A) exercised reasonable 

15 diligence to meet such requirements, and 

16 ‘‘(II) such person provides the notice, expla17 nation, or statement to which the failure relates dur18 ing the 30-day period beginning on the date such per19 son knew, or exercising reasonable diligence would 

20 have known, that such failure existed. 

21 ‘‘(iii) In the case of a failure which is due to reasonable 

22 cause and not to willful neglect, the Secretary shall waive 

23 part or all of the penalty under subparagraph (A) to the 

24 extent that the payment of such penalty would be excessive 

25 or otherwise inequitable relative to the failure involved. 
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1 ‘‘(iv) The penalty imposed under this paragraph with 

2 respect to any failure shall be reduced by the amount of 

3 any tax imposed on such person with respect to such failure 

4 under section 4980K of the Internal Revenue Code of 

5 1986.’’. 

6 (2) ENFORCEMENT COORDINATION AND REVIEW

7 BY THE DEPARTMENT OF LABOR.—Section 502 of 

8 such Act (29 U.S.C. 1132) is amended by adding at 

9 the end the following new subsection: 

10 ‘‘(n) ENFORCEMENT COORDINATION OF CERTAIN DIS11 CLOSURE REQUIREMENTS RELATING TO INDIVIDUAL AC12 COUNT PLANS AND REVIEW BY THE DEPARTMENT OF

13 LABOR.— 

14 ‘‘(1) NOTIFICATION AND ACTION RELATING TO

15 SERVICE PROVIDERS.—The Secretary shall notify the 

16 applicable regulatory authority in any case in which 

17 the Secretary determines that a service provider is en18 gaged in a pattern or practice that precludes compli19 ance by plan administrators with subparagraphs 

20 (B)(ii)(IV) and (C) of section 105(a)(2) and section 

21 112. The Secretary shall, in consultation with the ap22 plicable authority, take such timely enforcement ac23 tion under this title as is necessary to assure that 

24 such pattern or practice ceases and desists and assess 

25 any appropriate penalties. 
194 

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1 ‘‘(2) ANNUAL AUDIT OF REPRESENTATIVE SAM2 PLING OF INDIVIDUAL ACCOUNT PLANS.—The Sec3 retary shall annually audit a representative sampling 

4 of individual account plans covered by this title to de5 termine compliance with the requirements of subpara6 graphs (B)(ii)(IV) and (C) of section 105(a)(2), sec7 tion 111, and section 112. The Secretary shall annu8 ally report the results of such audit and any related 

9 recommendations of the Secretary to the Committee 

10 on Education and Labor of the House of Representa11 tives and the Committee on Health, Education, 

12 Labor, and Pensions of the Senate.’’. 

13 (e) REVIEW AND REPORT TO THE CONGRESS BY SEC14 RETARY OF LABOR RELATING TO REPORTING AND DISCLO15 SURE REQUIREMENTS.— 

16 (1) STUDY.—As soon as practicable after the 

17 date of the enactment of this Act, the Secretary of 

18 Labor shall review the reporting and disclosure re19 quirements of part 1 of subtitle B of title I of the Em20 ployee Retirement Income Security Act of 1974 and 

21 related provisions of the Pension Protection Act of 

22 2006. 

23 (2) REPORT.—Not later than 18 months after the 

24 date of the enactment of this Act, the Secretary of 

25 Labor, in consultation with the Secretary of the 
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1 Treasury, shall make such recommendations as the 

2 Secretary of Labor considers appropriate to the ap3 propriate committees of the Congress to consolidate, 

4 simplify, standardize, and improve the applicable re5 porting and disclosure requirements so as to simplify 

6 reporting for employee pension benefit plans and en7 sure that needed understandable information is pro8 vided to participants and beneficiaries of such plans. 

9 SEC. 323. AMENDMENTS TO THE INTERNAL REVENUE CODE 

10 OF 1986. 

11 (a) IN GENERAL.—Chapter 43 of the Internal Revenue 

12 Code of 1986 (relating to qualified pension, etc. plans) is 

13 amended by adding at the end the following new sections: 

14 ‘‘SEC. 4980J. FAILURE TO PROVIDE NOTICE OF PLAN FEE IN15 FORMATION TO PLAN ADMINISTRATORS. 

16 ‘‘(a) IMPOSITION OF TAX.— 

17 ‘‘(1) IN GENERAL.—There is hereby imposed a 

18 tax on each failure of a service provider to meet the 

19 requirements of paragraph (2) with respect to any 

20 applicable defined contribution plan. 

21 ‘‘(2) FAILURES DESCRIBED.—The failures de22 scribed in this paragraph are— 

23 ‘‘(A) any failure to provide an initial state24 ment described in subsection (d), 
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1 ‘‘(B) any failure to provide an annual 

2 statement described in subsection (e), and 

3 ‘‘(C) any failure to provide a material 

4 change statement described in subsection (f). 

5 ‘‘(b) AMOUNT OF TAX.— 

6 ‘‘(1) IN GENERAL.—The amount of the tax im7 posed by subsection (a) on any failure shall be $1,000 

8 for each day in the noncompliance period. 

9 ‘‘(2) NONCOMPLIANCE PERIOD.—For purposes of 

10 paragraph (1), the noncompliance period with respect 

11 to the failure to provide any statement is the period 

12 beginning on the date that such statement was re13 quired to be provided and ending on the date that 

14 such statement is provided or the failure is otherwise 

15 corrected. 

16 ‘‘(c) LIMITATIONS.— 

17 ‘‘(1) AGGREGATE LIMITATION.—The total 

18 amount of tax imposed by this section on any service 

19 provider with respect to any applicable defined con20 tribution plan for any plan year shall not exceed an 

21 amount equal to the lesser of— 

22 ‘‘(A) 10 percent of the assets of the plan, de23 termined as of the first day of such plan year, 

24 or 

25 ‘‘(B) $1,000,000. 
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1 ‘‘(2) TAX NOT TO APPLY TO FAILURES COR2 RECTED WITHIN 30 DAYS.—No tax shall be imposed 

3 by subsection (a) on any failure if— 

4 ‘‘(A) the service provider subject to liability 

5 for the tax under subsection (a) exercised reason6 able diligence to meet the requirement with re7 spect to which the failure relates, and 

8 ‘‘(B) such service provider provides the in9 formation required under subsection (a) during 

10 the 30-day period beginning on the date such 

11 person knew, or exercising reasonable diligence 

12 would have known, that such failure existed. 

13 ‘‘(3) WAIVER BY SECRETARY.—In the case of a 

14 failure which is due to reasonable cause and not to 

15 willful neglect, the Secretary may waive part or all 

16 of the tax imposed by subsection (a) to the extent that 

17 the payment of such tax would be excessive or other18 wise inequitable relative to the failure involved. 

19 ‘‘(d) INITIAL STATEMENT OF SERVICES PROVIDED AND

20 REVENUES RECEIVED.— 

21 ‘‘(1) IN GENERAL.—Before entering into any 

22 contract or arrangement to provide services to an ap23 plicable defined contribution plan, the service pro24 vider shall provide to the plan administrator a single 

25 written statement which includes, with respect to the 
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1 first plan year covered under such contract or ar2 rangement, the following: 

3 ‘‘(A) A detailed description of the services 

4 which will be provided to the plan by the service 

5 provider, the amount of total expected annual 

6 revenue with respect to such services, the manner 

7 in which such revenue will be collected, and the 

8 extent to which such revenue varies between spe9 cific investment options. 

10 ‘‘(B)(i) In the case of a service provider who 

11 is providing recordkeeping services with respect 

12 to any investment option, such information as is 

13 necessary for the plan administrator to satisfy 

14 the requirements of paragraphs (1), (2) and (4) 

15 of section 4980K(e) with respect to such option, 

16 including specifying the method used by the serv17 ice provider in disclosing or estimating expenses 

18 under subparagraphs (A)(iv) and (C) of such 

19 paragraph (2). 

20 ‘‘(ii) To the extent provided in regulations 

21 issued by the Secretary of Labor, clause (i) shall 

22 not apply in the case of a service provider de23 scribed in such clause if the service provider re24 ceives a written notification from the plan ad25 ministrator that the information described in 
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1 such clause in connection with the investment 

2 option is provided by another service provider 

3 pursuant to a contract or arrangement to pro4 vide services to the plan. 

5 ‘‘(C) A statement indicating— 

6 ‘‘(i) the identity of any investment op7 tions offered under the plan with respect to 

8 which the service provider provides substan9 tial investment, trustee, custodial, or ad10 ministrative services, and 

11 ‘‘(ii) in the case of any investment op12 tion, whether the service provider expects to 

13 receive any component of total expected an14 nual revenue described in paragraph 

15 (2)(A)(ii)(II) with respect to such option 

16 and the amount of any such component. 

17 ‘‘(D) The portion of total expected annual 

18 revenue which is properly allocable to each of the 

19 following: 

20 ‘‘(i) Administration and recordkeeping. 

21 ‘‘(ii) Investment management. 

22 ‘‘(iii) Other services or amounts not 

23 described in clause (i) or (ii). 

24 ‘‘(2) DEFINITION OF TOTAL EXPECTED ANNUAL

25 REVENUE.—For purposes of this section— 
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1 ‘‘(A) IN GENERAL.—The term ‘total expected 

2 annual revenue’ means, with respect to any plan 

3 year— 

4 ‘‘(i) any amount expected to be re5 ceived during such plan year from the plan 

6 (including amounts paid from participant 

7 accounts), any participant or beneficiary, 

8 or any plan sponsor in connection with the 

9 contract or arrangement referred to in 

10 paragraph (1), and 

11 ‘‘(ii) any amount not taken into ac12 count under clause (i) which is expected to 

13 be received during such plan year by the 

14 service provider in connection with— 

15 ‘‘(I) plan administration, record16 keeping, consulting, management, or 

17 investment or other service activities 

18 undertaken by the service provider 

19 with respect to the plan, or 

20 ‘‘(II) plan administration, record21 keeping, consulting, management, or 

22 investment or other service activities 

23 undertaken by any other person with 

24 respect to the plan. 
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1 ‘‘(B) EXPRESSED AS DOLLAR AMOUNT OR

2 PERCENTAGE OF ASSETS.—Total expected an3 nual revenue and any amount indicated under 

4 paragraph (1)(C)(ii) may be expressed as a dol5 lar amount or as a percentage of assets (or a 

6 combination thereof), as appropriate. To the ex7 tent that total expected annual revenue is ex8 pressed as a percentage of assets, such percentage 

9 shall be properly allocated among clauses (i), 

10 (ii), and (iii) of paragraph (1)(D). 

11 ‘‘(C) PROVISION OF FEE SCHEDULE FOR

12 CERTAIN PARTICIPANT INITIATED TRANS13 ACTIONS.—In the case of amounts expected to be 

14 received from participants or beneficiaries under 

15 the plan (or from the account of a participant 

16 or beneficiary) as a fee or charge in connection 

17 with a transaction initiated by the participant 

18 (other than loads, commissions, brokerage fees, 

19 and other investment related transactions)— 

20 ‘‘(i) such amounts shall not be taken 

21 into account in determining total expected 

22 annual revenue, and 

23 ‘‘(ii) the service provider shall provide 

24 to the plan administrator, as part of the 

25 statement referred to in paragraph (1), a fee 
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1 schedule which describes each such fee or 

2 charge, the amount thereof, and the manner 

3 in which such amount is collected. 

4 ‘‘(D) ESTIMATIONS.—In determining under 

5 this subsection any amount which is expected to 

6 be received by the service provider, the service 

7 provider shall provide a reasonable estimate of 

8 such amount and shall indicate in the statement 

9 referred to in paragraph (1) whether such 

10 amount disclosed is an estimate. Any such esti11 mate shall be based on reasonable assumptions 

12 specified in such statement. 

13 ‘‘(3) ALLOCATION RULES.—The Secretary of 

14 Labor shall provide rules for defining total expected 

15 annual revenue and for the appropriate and con16 sistent allocation of total expected annual revenue 

17 among clauses (i), (ii), and (iii) of paragraph (1)(D), 

18 except that the entire amount of such revenue shall be 

19 allocated among such clauses and no amount may be 

20 taken into account under more than one clause. 

21 ‘‘(4) DISCLOSURE OF DIFFERENT PRICING OF IN22 VESTMENT OPTIONS.—In the case of investment op23 tions with more than one share class or price level, 

24 the Secretary of Labor shall prescribe regulations for 

25 the disclosure of the different share classes or price 
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1 levels available as part of the statement in paragraph 

2 (1). Such regulations shall provide guidance with re3 spect to the disclosure of the basis for qualifying for 

4 such share classes or price levels, which may include 

5 amounts invested, number of participants, or other 

6 factors. 

7 ‘‘(5) DISCLOSURE OF INVESTMENT TRANSACTION

8 COSTS.—To the extent provided in regulations issued 

9 by the Secretary of Labor, a service provider shall 

10 separately disclose the transaction costs (including 

11 sales commissions) for each investment option for the 

12 preceding year or the plan’s allocable share of such 

13 costs for the preceding year. 

14 ‘‘(e) ANNUAL STATEMENTS.—With respect to each plan 

15 year after the plan year covered by the statement described 

16 in subsection (d), the service provider shall provide the plan 

17 administrator a single written statement which includes the 

18 information described in subsection (d) with respect to such 

19 subsequent plan year. 

20 ‘‘(f) MATERIAL CHANGE STATEMENTS.—In the case of 

21 any event or other change during a plan year which causes 

22 the information included in any statement described in sub23 section (d) or (e) with respect to such plan year to become 

24 materially incorrect, the service provider shall provide the 

25 plan administrator a written statement providing the cor-
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1 rected information not later than 30 days after the service 

2 provider knows, or exercising reasonable diligence would 

3 have known, of such event or other change. 

4 ‘‘(g) TIME AND MANNER OF PROVIDING STATEMENT

5 AND OTHER MATERIALS.—The statement referred to in sub6 sections (d)(1) and (e) shall be made at such time and in 

7 such manner as the Secretary of Labor may provide. Other 

8 materials required to be provided under this section shall 

9 be provided in such manner as such Secretary may provide. 

10 All information included in such statements and other ma11 terials shall be presented in a manner which is easily un12 derstood by the typical plan administrator. 

13 ‘‘(h) EXCEPTION FOR SMALL SERVICE PROVIDERS.— 

14 The requirements of this section shall not apply with respect 

15 to any contract or arrangement for services provided with 

16 respect to an individual account plan for any plan year 

17 if— 

18 ‘‘(1) the total annual revenue expected by the 

19 service provider to be received with respect to the plan 

20 for such plan year is less than $5,000, and 

21 ‘‘(2) the service provider provides a written 

22 statement to the plan administrator that the total an23 nual revenue expected by the service provider to be re24 ceived with respect to the plan is less than $5,000. 
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1 Service providers who expect to receive de minimis annual 

2 revenue from the plan need not provide the written state3 ment described in paragraph (2). The Secretary of Labor 

4 may by regulation or other guidance adjust the dollar 

5 amount specified in this subsection. 

6 ‘‘(i) DEFINITIONS.—For purposes of this section— 

7 ‘‘(1) SERVICE PROVIDER.— 

8 ‘‘(A) IN GENERAL.—The term ‘service pro9 vider’ includes any person providing adminis10 tration, recordkeeping, consulting, investment 

11 management services, or investment advice to an 

12 applicable defined contribution plan under a 

13 contract or arrangement. 

14 ‘‘(B) CONTROLLED GROUPS TREATED AS

15 ONE SERVICE PROVIDER.—All persons which 

16 would be treated as a single employer under sub17 section (b) or (c) of section 414 if section 

18 1563(a)(1) were applied— 

19 ‘‘(i) except as provided by subpara20 graph (B), by substituting ‘more than 50 

21 percent’ for ‘at least 80 percent’ each place 

22 it appears therein, or 

23 ‘‘(ii) for purposes of subsection 

24 (d)(1)(C)(i), by substituting ‘at least 20 
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1 percent’ for ‘at least 80 percent’ each place 

2 it appears therein, 

3 shall be treated as one person for purposes of this 

4 section. 

5 ‘‘(2) APPLICABLE DEFINED CONTRIBUTION

6 PLAN.—The term ‘applicable defined contribution 

7 plan’ means any defined contribution plan described 

8 in clauses (iii) through (vi) of section 402(c)(8)(B). 

9 ‘‘(3) PLAN ADMINISTRATOR.—The term ‘plan ad10 ministrator’ has the meaning given such term by sec11 tion 414(g). 

12 ‘‘SEC. 4980K. FAILURE TO PROVIDE NOTICE TO PARTICI13 PANTS OF PLAN FEE INFORMATION. 

14 ‘‘(a) IMPOSITION OF TAX.— 

15 ‘‘(1) IN GENERAL.—There is hereby imposed a 

16 tax on each failure of a plan administrator of an ap17 plicable defined contribution plan to meet the require18 ments of paragraph (2) with respect to any partici19 pant or beneficiary. 

20 ‘‘(2) FAILURES DESCRIBED.—The failures de21 scribed in this paragraph are— 

22 ‘‘(A) any failure to provide an advance no23 tice of available investment options described in 

24 subsection (e)(1), 
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1 ‘‘(B) any failure to provide an account ex2 planation described in subsection (e)(2), 

3 ‘‘(C) any failure to provide a service pro4 vider statement referred to in subsection (e)(3), 

5 and 

6 ‘‘(D) any failure to provide a notice of ma7 terial change described in subsection (e)(4). 

8 ‘‘(b) AMOUNT OF TAX.— 

9 ‘‘(1) IN GENERAL.—The amount of the tax im10 posed by subsection (a) on any failure with respect to 

11 any participant or beneficiary shall be $100 for each 

12 day in the noncompliance period. 

13 ‘‘(2) NONCOMPLIANCE PERIOD.—For purposes of 

14 paragraph (1), the noncompliance period with respect 

15 to the failure to provide any notice, explanation, or 

16 statement referred to in subsection (a)(2) with respect 

17 to any participant or beneficiary is the period begin18 ning on the date that such notice, explanation, or 

19 statement was required to be provided and ending on 

20 the date that such notice, explanation, or statement is 

21 provided or the failure is otherwise corrected. 

22 ‘‘(c) LIMITATIONS ON AMOUNT OF TAX.— 

23 ‘‘(1) AGGREGATE LIMITATION.—The total 

24 amount of tax imposed by this section with respect to 
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1 any plan for any plan year shall not exceed an 

2 amount equal to the lesser of— 

3 ‘‘(A) 10 percent of the assets of the plan, de4 termined as of the first day of such plan year, 

5 or 

6 ‘‘(B) $500,000. 

7 ‘‘(2) TAX NOT TO APPLY TO FAILURES COR8 RECTED WITHIN 30 DAYS.—No tax shall be imposed 

9 by subsection (a) on any failure if— 

10 ‘‘(A) any person subject to liability for the 

11 tax under subsection (a) exercised reasonable 

12 diligence to meet the requirements of subsection 

13 (e), and 

14 ‘‘(B) such person provides the notice, expla15 nation, or statement to which the failure relates 

16 during the 30-day period beginning on the date 

17 such person knew, or exercising reasonable dili18 gence would have known, that such failure ex19 isted. 

20 ‘‘(3) WAIVER BY SECRETARY.—In the case of a 

21 failure which is due to reasonable cause and not to 

22 willful neglect, the Secretary shall waive part or all 

23 of the tax imposed by subsection (a) to the extent that 

24 the payment of such tax would be excessive or other25 wise inequitable relative to the failure involved. 
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1 ‘‘(d) LIABILITY FOR TAX.—The plan administrator 

2 shall be liable for the tax imposed by subsection (a). 

3 ‘‘(e) DISCLOSURES TO PARTICIPANTS AND BENE4 FICIARIES.— 

5 ‘‘(1) ADVANCE NOTICE OF AVAILABLE INVEST6 MENT OPTIONS.— 

7 ‘‘(A) IN GENERAL.—The plan administrator 

8 of an applicable defined contribution plan shall 

9 provide to the participant or beneficiary notice 

10 of the investment options available under the 

11 plan before— 

12 ‘‘(i) the earliest date provided for 

13 under the plan for the participant’s initial 

14 investment of any contribution made on be15 half of such participant, and 

16 ‘‘(ii) the effective date of any change in 

17 the list of investment options available 

18 under the plan, unless such advance notice 

19 is impracticable, and in such case, as soon 

20 as is practicable. 

21 ‘‘(B) INFORMATION INCLUDED IN NOTICE.— 

22 The notice required under subparagraph (A) 

23 shall— 

24 ‘‘(i) set forth, with respect to each 

25 available investment option— 
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1 ‘‘(I) the name of the option, 

2 ‘‘(II) a general description of the 

3 option’s investment objectives and 

4 principal investment strategies, prin5 cipal risk and return characteristics, 

6 and the name of the option’s invest7 ment manager, 

8 ‘‘(III) whether the investment op9 tion is designed to be a comprehensive, 

10 stand-alone investment for retirement 

11 that provides varying degrees of long12 term appreciation and capital preser13 vation through a mix of equity and 

14 fixed income exposures, 

15 ‘‘(IV) the extent to which the in16 vestment option is actively managed or 

17 passively managed in relation to an 

18 index and the difference between active 

19 management and passive management, 

20 ‘‘(V) where, and the manner in 

21 which, additional plan-specific, option22 specific, and generally available invest23 ment information may be obtained, 

24 and 
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1 ‘‘(VI) a statement explaining that 

2 investment options should not be evalu3 ated solely on the basis of the charges 

4 for each option but should also be 

5 based on consideration of other key fac6 tors, including the risk level of the op7 tion, the investment objectives of the 

8 option, historical returns of the option, 

9 and the participant’s personal invest10 ment objectives, 

11 ‘‘(ii) include a statement of the right 

12 under paragraph (3) of participants and 

13 beneficiaries to request, and a description of 

14 how participant or beneficiary may request, 

15 a copy of the statements received by the 

16 plan administrator under section 4980J 

17 with respect to the plan, and 

18 ‘‘(iii) include the plan fee comparison 

19 chart described in subparagraph (C). 

20 ‘‘(C) PLAN FEE COMPARISON CHART.— 

21 ‘‘(i) IN GENERAL.— 

22 ‘‘(I) IN GENERAL.—The notice 

23 provided under this paragraph shall 

24 include a plan fee comparison chart 

25 consisting of a comparison of the serv-
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1 ice and investment charges that will or 

2 could be assessed against the account of 

3 the participant or beneficiary with re4 spect to the plan year. 

5 ‘‘(II) EXPRESSED AS DOLLAR

6 AMOUNT OR FORMULA.—For purposes 

7 of this subparagraph, such charges 

8 shall be provided in the form of a dol9 lar amount or as a formula (such as a 

10 percentage of assets), as appropriate. 

11 ‘‘(ii) CATEGORIZATION OF CHARGES.— 

12 The plan fee comparison chart shall provide 

13 information in relation to the following cat14 egories of charges that will or could be as15 sessed against the account of the participant 

16 or beneficiary: 

17 ‘‘(I) ASSET-BASED CHARGES SPE18 CIFIC TO INVESTMENT.—Charges that 

19 vary depending on the investment op20 tions selected by the participant or 

21 beneficiary, including the annual oper22 ating expenses of the investment option 

23 and investment-specific asset-based 

24 charges (such as loads, commissions, 

25 brokerage fees, exchange fees, redemp-
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•HR 4213 EAH1S 

1 tion fees, and surrender charges). Ex2 cept as provided by the Secretary of 

3 Labor in regulations under this sec4 tion, the information relating to such 

5 charges shall include a statement not6 ing any charges for 1 or more invest7 ment options which pay for services 

8 other than investment management. 

9 ‘‘(II) RECURRING ASSET-BASED

10 CHARGES NOT SPECIFIC TO INVEST11 MENT.—Charges that are assessed as a 

12 percentage of the total assets in the ac13 count of the participant or beneficiary, 

14 regardless of the investment option se15 lected. 

16 ‘‘(III) ADMINISTRATIVE AND

17 TRANSACTION-BASED CHARGES.—Ad18 ministration and transaction-based 

19 charges, including fees charged to par20 ticipants to cover plan administration, 

21 compliance, and recordkeeping costs, 

22 plan loan origination fees, possible re23 demption fees, and possible surrender 

24 charges, that are not assessed as a per25 centage of the total assets in the ac-
214 

•HR 4213 EAH1S 

1 count and are either automatically de2 ducted each year or result from certain 

3 transactions engaged in by the partici4 pant or beneficiary. 

5 ‘‘(IV) OTHER CHARGES.—Any 

6 other charges which may be deducted 

7 from participants’ or beneficiaries’ ac8 counts and which are not described in 

9 subclauses (I), (II), and (III). 

10 ‘‘(iii) FEES AND HISTORICAL RE11 TURNS.—The plan fee comparison chart 

12 shall include— 

13 ‘‘(I) the historical returns, net of 

14 fees and expenses, for the previous 

15 year, 5 years, and 10 years (or for the 

16 period since inception, if shorter) with 

17 respect to such investment option, and 

18 ‘‘(II) the historical returns of an 

19 appropriate benchmark, index, or other 

20 point of comparison for each such pe21 riod. 

22 ‘‘(D) MODEL NOTICES.—The Secretary of 

23 Labor shall prescribe one or more model notices 

24 that may be used for purposes of satisfying the 
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•HR 4213 EAH1S 

1 requirements of this paragraph, including model 

2 plan fee comparison charts. 

3 ‘‘(E) ESTIMATIONS.—For purposes of pro4 viding the notice required under this paragraph, 

5 the plan administrator may provide a reasonable 

6 and representative estimate for any charges or 

7 percentages disclosed under subparagraph (B) or 

8 (C) and shall indicate whether the amount of 

9 any such charges or percentages disclosed is an 

10 estimate. 

11 ‘‘(2) QUARTERLY BENEFIT STATEMENT.— 

12 ‘‘(A) REQUIREMENTS.—The plan adminis13 trator shall provide to each participant and ben14 eficiary, at least once each calendar quarter, an 

15 explanation describing the investment options in 

16 which the participant’s or beneficiary’s account 

17 is invested as of the last day of the preceding 

18 quarter. Such explanation shall provide, to the 

19 extent applicable, the following for the preceding 

20 quarter: 

21 ‘‘(i) As of the last day of the quarter, 

22 a statement of the different asset classes that 

23 the participant’s or beneficiary’s account is 

24 invested in and the percentage of the ac25 count allocated to each asset class. 
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1 ‘‘(ii) A statement of the starting and 

2 ending balance of the participant’s or bene3 ficiary’s account for such quarter. 

4 ‘‘(iii) A statement of the total contribu5 tions made to the participant’s or bene6 ficiary’s account during the quarter and a 

7 separate statement of— 

8 ‘‘(I) the amount of such contribu9 tions, and the total amount of any re10 storative payments, which were made 

11 by the employer during the quarter, 

12 and 

13 ‘‘(II) the amount of such contribu14 tions which were made by the em15 ployee. 

16 ‘‘(iv) A statement of the total fees and 

17 expenses which were directly deducted from 

18 the participant’s or beneficiary’s account 

19 during the quarter and an itemization of 

20 such fees and expenses. 

21 ‘‘(v) A statement of the net returns for 

22 the year to date, expressed as a percentage, 

23 and a statement as to whether the net re24 turns include amounts described in clause 

25 (iv). 
217 

•HR 4213 EAH1S 

1 ‘‘(vi) With respect to each investment 

2 option in which the participant or bene3 ficiary was invested as of the last day of the 

4 quarter, the following: 

5 ‘‘(I) A statement of the percentage 

6 of the participant’s or beneficiary’s ac7 count that is invested in such option as 

8 of the last day of such quarter. 

9 ‘‘(II) A statement of the starting 

10 and ending balance of the participant’s 

11 or beneficiary’s account that is in12 vested in such option for such quarter. 

13 ‘‘(III) A statement of the annual 

14 operating expenses of the investment 

15 option. 

16 ‘‘(IV) A statement of whether the 

17 disclosure described in clause (iv) in18 cludes the annual operating expenses of 

19 the investment options of the partici20 pant or beneficiary. 

21 ‘‘(vii) The statement described in para22 graph (1)(B)(i)(VI). 

23 ‘‘(viii) A statement regarding how a 

24 participant or beneficiary may access the 
218 

•HR 4213 EAH1S 

1 information required to be disclosed under 

2 paragraph (1). 

3 ‘‘(B) MODEL EXPLANATIONS.—The Sec4 retary of Labor shall prescribe one or more 

5 model explanations that may be used for pur6 poses of satisfying the requirements of this para7 graph. 

8 ‘‘(C) DETERMINATION OF EXPENSES.—For 

9 purposes of subparagraph (A)(vi)(III)— 

10 ‘‘(i) Expenses may be expressed as a 

11 dollar amount or as a percentage of assets 

12 (or a combination thereof). 

13 ‘‘(ii) The plan administrator may pro14 vide disclosure of the expenses for the quar15 ter or may provide a reasonable and rep16 resentative estimate of such expenses and 

17 shall indicate any such estimate as being an 

18 estimate. Any such estimate shall be based 

19 on reasonable assumptions stated together 

20 with such estimate. 

21 ‘‘(iii) To the extent that estimated ex22 penses are expressed as a percentage of as23 sets, the disclosure shall also include one of 

24 the following, stated in dollar amounts: 
219 

•HR 4213 EAH1S 

1 ‘‘(I) an estimate of the expenses 

2 for the quarter based on the amount 

3 invested in the option; or 

4 ‘‘(II) an example describing the 

5 expenses that would apply during the 

6 quarter with respect to a hypothetical 

7 $10,000 investment in the option. 

8 ‘‘(3) DISCLOSURE OF SERVICE PROVIDER STATE9 MENTS.—The plan administrator shall provide to any 

10 participant or beneficiary a copy of any statement re11 ceived pursuant to section 4980J within 30 days after 

12 receipt of a request for such a statement. 

13 ‘‘(4) NOTICE OF MATERIAL CHANGES.—In the 

14 case of any event or other change which causes the in15 formation included in any notice described in para16 graph (1) to become materially incorrect, the plan ad17 ministrator shall provide participants and bene18 ficiaries a written statement providing the corrected 

19 information not later than 30 days after the plan ad20 ministrator knows, or exercising reasonable diligence 

21 would have known, of such event or other change. 

22 ‘‘(5) TIME AND MANNER OF PROVIDING NOTICES

23 AND DISCLOSURES.— 

24 ‘‘(A) IN GENERAL.—The notices described in 

25 paragraph (1) shall be provided at such times 
220 

•HR 4213 EAH1S 

1 and in such manner as the Secretary of Labor 

2 may provide. Other notices and materials re3 quired to be provided under this subsection shall 

4 be provided in such manner as such Secretary 

5 may provide. 

6 ‘‘(B) MANNER OF PRESENTATION.— 

7 ‘‘(i) IN GENERAL.—All information in8 cluded in such notices or explanations shall 

9 be presented in a manner which is easily 

10 understood by the typical participant. 

11 ‘‘(ii) GENERIC EXAMPLE OF OPER12 ATING EXPENSES OF INVESTMENT OP13 TIONS.—The information described in para14 graphs (1)(C)(ii)(I) shall include a generic 

15 example describing the charges that would 

16 apply during an annual period with respect 

17 to a $10,000 investment in the investment 

18 option. 

19 ‘‘(C) ANNUAL COMPLIANCE FOR SMALL

20 PLANS.—A plan that has fewer than 100 partici21 pants and beneficiaries as of the first day of the 

22 plan year may provide the explanation described 

23 in paragraph (2) on an annual rather than a 

24 quarterly basis. 

25 ‘‘(f) DEFINITIONS.— 
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1 ‘‘(1) APPLICABLE DEFINED CONTRIBUTION

2 PLAN.—The term ‘applicable defined contribution 

3 plan’ means the portion of any defined contribution 

4 plan which— 

5 ‘‘(A) permits a participant or beneficiary to 

6 exercise control over assets in his or her account, 

7 and 

8 ‘‘(B) is described in clauses (iii) through 

9 (vi) of section 402(c)(8)(B). 

10 ‘‘(2) PLAN ADMINISTRATOR.—The term ‘plan ad11 ministrator’ has the meaning given such term by sec12 tion 414(g). 

13 ‘‘(g) REGULATIONS.—The Secretary of Labor shall 

14 prescribe such regulations or other guidance as may be nec15 essary or appropriate to carry out the purposes of this sec16 tion, including regulations or other guidance which— 

17 ‘‘(1) provide a later deadline for providing the 

18 notice of investment menu changes described in sub19 section (e)(4) in appropriate circumstances, and 

20 ‘‘(2) provide guidelines, and a safe harbor, for 

21 the selection of an appropriate benchmark, index, or 

22 other point of comparison for an investment option 

23 under subsection (e)(1)(C)(iii)(II).’’. 
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1 (b) CLERICAL AMENDMENT.—The table of sections for 

2 chapter 43 of such Code is amended by adding at the end 

3 the following new items: 

‘‘Sec. 4980J. Failure to provide notice of plan fee information to plan administrators. 

‘‘Sec. 4980K. Failure to provide notice to participants of plan fee information.’’. 

4 SEC. 324. REGULATORY AUTHORITY AND COORDINATION. 

5 (a) REGULATORY AUTHORITY.—The Secretary of 

6 Labor shall prescribe regulations or other guidance to the 

7 extent the Secretary determines necessary or appropriate to 

8 carry out the purposes of sections 105, 111, and 112 of the 

9 Employee Retirement Income Security Act of 1974 and sec10 tions 4980J and 4980K of the Internal Revenue Code of 

11 1986, including regulations or other guidance which— 

12 (1) provide safe harbor and simplified methods 

13 for making the allocations described in subsection 

14 (a)(1)(D) of such section 111 and subsection (d)(1)(D) 

15 of such section 4980J; and 

16 (2) provide special rules for the application of 

17 such sections to— 

18 (A) investments with a guaranteed rate of 

19 return; 

20 (B) investments with an insurance compo21 nent; and 

22 (C) employer sponsored retirement plans 

23 funded through an individual retirement ac24 count. 
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•HR 4213 EAH1S 

1 (3) address notices with respect to investments 

2 provided through participant directed brokerage trad3 ing; 

4 (4) address the disclosure of information that is 

5 not proprietary to the service provider; and 

6 (5) provide rules to allow service providers to 

7 consolidate information to satisfy the requirements of 

8 such sections with respect to all such service pro9 viders. 

10 (b) CERTAIN ELECTRONIC DISCLOSURES PER11 MITTED.—Any disclosure required under section 112 of the 

12 Employee Retirement Income Security Act of 1974 or sec13 tion 4980K of the Internal Revenue Code of 1986 may be 

14 provided through an electronic medium under such rules 

15 as shall be prescribed under such section by the Secretary 

16 of Labor not later than 1 year after the date of the enact17 ment of this Act. Such rules shall be similar to those appli18 cable under the Internal Revenue Code of 1986 with respect 

19 to notices to participants in pension plans. Such Secretary 

20 shall regularly modify such rules as appropriate to take 

21 into account new developments, including new forms of elec22 tronic media, and to fairly take into consideration the in23 terests of plan sponsors, service providers, and participants. 

24 The rules prescribed by such Secretary pursuant to this sub25 section shall provide for a method for the typical partici-
224 

•HR 4213 EAH1S 

1 pant or beneficiary to obtain without undue burden any 

2 such disclosure in writing on paper in lieu of receipt 

3 through an electronic medium. 

4 SEC. 325. EFFECTIVE DATE OF SUBTITLE. 

5 (a) IN GENERAL.—The amendments made by this sub6 title shall apply to plan years beginning after December 

7 31, 2011. 

8 (b) APPLICATION OF SERVICE PROVIDER DISCLO9 SURES TO EXISTING CONTRACTS AND ARRANGEMENTS.— 

10 For purposes of section 111 of the Employee Retirement In11 come Security Act of 1974 and section 4980J of the Internal 

12 Revenue Code of 1986, any contract or arrangement to pro13 vide services to a plan which is in effect on January 1, 

14 2012, shall be treated as a new contract or arrangement 

15 entered into on such date. 

16 (c) SPECIAL RULE FOR COMPLIANCE WITH SUB17 TITLE.—Until 12 months after final regulations are issued 

18 by the Secretary of Labor pursuant to the amendments 

19 made by this subtitle, a service provider or plan adminis20 trator shall be treated as having complied with such amend21 ments if such service provider or plan administrator com22 plies with a reasonable good faith interpretation of such 

23 amendments. 
225 

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1 TITLE IV—REVENUE OFFSETS 

2 Subtitle A—Foreign Provisions 

3 SEC. 401. RULES TO PREVENT SPLITTING FOREIGN TAX 

4 CREDITS FROM THE INCOME TO WHICH THEY 

5 RELATE. 

6 (a) IN GENERAL.—Subpart A of part III of subchapter 

7 N of chapter 1 is amended by adding at the end the fol8 lowing new section: 

9 ‘‘SEC. 909. SUSPENSION OF TAXES AND CREDITS UNTIL RE10 LATED INCOME TAKEN INTO ACCOUNT. 

11 ‘‘(a) IN GENERAL.—If there is a foreign tax credit 

12 splitting event with respect to a foreign income tax paid 

13 or accrued by the taxpayer, such tax shall not be taken into 

14 account for purposes of this title before the taxable year in 

15 which the related income is taken into account under this 

16 chapter by the taxpayer. 

17 ‘‘(b) SPECIAL RULES WITH RESPECT TO SECTION 902 

18 CORPORATIONS.—If there is a foreign tax credit splitting 

19 event with respect to a foreign income tax paid or accrued 

20 by a section 902 corporation, such tax shall not be taken 

21 into account— 

22 ‘‘(1) for purposes of section 902 or 960, or 

23 ‘‘(2) for purposes of determining earnings and 

24 profits under section 964(a), 
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1 before the taxable year in which the related income is taken 

2 into account under this chapter by such section 902 cor3 poration or a domestic corporation which meets the owner4 ship requirements of subsection (a) or (b) of section 902 

5 with respect to such section 902 corporation. 

6 ‘‘(c) SPECIAL RULES.—For purposes of this section— 

7 ‘‘(1) APPLICATION TO PARTNERSHIPS, ETC.—In 

8 the case of a partnership, subsections (a) and (b) shall 

9 be applied at the partner level. Except as otherwise 

10 provided by the Secretary, a rule similar to the rule 

11 of the preceding sentence shall apply in the case of 

12 any S corporation or trust. 

13 ‘‘(2) TREATMENT OF FOREIGN TAXES AFTER

14 SUSPENSION.—In the case of any foreign income tax 

15 not taken into account by reason of subsection (a) or 

16 (b), except as otherwise provided by the Secretary, 

17 such tax shall be so taken into account in the taxable 

18 year referred to in such subsection (other than for 

19 purposes of section 986(a)) as a foreign income tax 

20 paid or accrued in such taxable year. 

21 ‘‘(d) DEFINITIONS.—For purposes of this section— 

22 ‘‘(1) FOREIGN TAX CREDIT SPLITTING EVENT.— 

23 There is a foreign tax credit splitting event with re24 spect to a foreign income tax if the related income is 
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1 (or will be) taken into account under this chapter by 

2 a covered person. 

3 ‘‘(2) FOREIGN INCOME TAX.—The term ‘foreign 

4 income tax’ means any income, war profits, or excess 

5 profits tax paid or accrued to any foreign country or 

6 to any possession of the United States. 

7 ‘‘(3) RELATED INCOME.—The term ‘related in8 come’ means, with respect to any portion of any for9 eign income tax, the income (or, as appropriate, earn10 ings and profits) to which such portion of foreign in11 come tax relates. 

12 ‘‘(4) COVERED PERSON.—The term ‘covered per13 son’ means, with respect to any person who pays or 

14 accrues a foreign income tax (hereafter in this para15 graph referred to as the ‘payor’)— 

16 ‘‘(A) any entity in which the payor holds, 

17 directly or indirectly, at least a 10 percent own18 ership interest (determined by vote or value), 

19 ‘‘(B) any person which holds, directly or in20 directly, at least a 10 percent ownership interest 

21 (determined by vote or value) in the payor, 

22 ‘‘(C) any person which bears a relationship 

23 to the payor described in section 267(b) or 

24 707(b), and 
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1 ‘‘(D) any other person specified by the Sec2 retary for purposes of this paragraph. 

3 ‘‘(5) SECTION 902 CORPORATION.—The term ‘sec4 tion 902 corporation’ means any foreign corporation 

5 with respect to which one or more domestic corpora6 tions meets the ownership requirements of subsection 

7 (a) or (b) of section 902. 

8 ‘‘(e) REGULATIONS.—The Secretary may issue such 

9 regulations or other guidance as is necessary or appropriate 

10 to carry out the purposes of this section, including regula11 tions or other guidance which provides— 

12 ‘‘(1) appropriate exceptions from the provisions 

13 of this section, and 

14 ‘‘(2) for the proper application of this section 

15 with respect to hybrid instruments.’’. 

16 (b) CLERICAL AMENDMENT.—The table of sections for 

17 subpart A of part III of subchapter N of chapter 1 is 

18 amended by adding at the end the following new item: 

‘‘Sec. 909. Suspension of taxes and credits until related income taken into account.’’. 

19 (c) EFFECTIVE DATE.—The amendments made by this 

20 section shall apply to— 

21 (1) foreign income taxes (as defined in section 

22 909(d) of the Internal Revenue Code of 1986, as 

23 added by this section) paid or accrued after May 20, 

24 2010; and 
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1 (2) foreign income taxes (as so defined) paid or 

2 accrued by a section 902 corporation (as so defined) 

3 on or before such date (and not deemed paid under 

4 section 902(a) or 960 of such Code on or before such 

5 date), but only for purposes of applying sections 902 

6 and 960 with respect to periods after such date. 

7 Section 909(b)(2) of the Internal Revenue Code of 1986, as 

8 added by this section, shall not apply to foreign income 

9 taxes described in paragraph (2). 

10 SEC. 402. DENIAL OF FOREIGN TAX CREDIT WITH RESPECT 

11 TO FOREIGN INCOME NOT SUBJECT TO 

12 UNITED STATES TAXATION BY REASON OF 

13 COVERED ASSET ACQUISITIONS. 

14 (a) IN GENERAL.—Section 901 is amended by redesig15 nating subsection (m) as subsection (n) and by inserting 

16 after subsection (l) the following new subsection: 

17 ‘‘(m) DENIAL OF FOREIGN TAX CREDIT WITH RE18 SPECT TO FOREIGN INCOME NOT SUBJECT TO UNITED

19 STATES TAXATION BY REASON OF COVERED ASSET ACQUI20 SITIONS.— 

21 ‘‘(1) IN GENERAL.—In the case of a covered asset 

22 acquisition, the disqualified portion of any foreign in23 come tax determined with respect to the income or 

24 gain attributable to the relevant foreign assets— 
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1 ‘‘(A) shall not be taken into account in de2 termining the credit allowed under subsection 

3 (a), and 

4 ‘‘(B) in the case of a foreign income tax 

5 paid by a section 902 corporation (as defined in 

6 section 909(d)(5)), shall not be taken into ac7 count for purposes of section 902 or 960. 

8 ‘‘(2) COVERED ASSET ACQUISITION.—For pur9 poses of this section, the term ‘covered asset acquisi10 tion’ means— 

11 ‘‘(A) a qualified stock purchase (as defined 

12 in section 338(d)(3)) to which section 338(a) ap13 plies, 

14 ‘‘(B) any transaction which— 

15 ‘‘(i) is treated as an acquisition of as16 sets for purposes of this chapter, and 

17 ‘‘(ii) is treated as the acquisition of 

18 stock of a corporation (or is disregarded) for 

19 purposes of the foreign income taxes of the 

20 relevant jurisdiction, 

21 ‘‘(C) any acquisition of an interest in a 

22 partnership which has an election in effect under 

23 section 754, and 

24 ‘‘(D) to the extent provided by the Sec25 retary, any other similar transaction. 
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1 ‘‘(3) DISQUALIFIED PORTION.—For purposes of 

2 this section— 

3 ‘‘(A) IN GENERAL.—The term ‘disqualified 

4 portion’ means, with respect to any covered asset 

5 acquisition, for any taxable year, the ratio (ex6 pressed as a percentage) of— 

7 ‘‘(i) the aggregate basis differences (but 

8 not below zero) allocable to such taxable 

9 year under subparagraph (B) with respect 

10 to all relevant foreign assets, divided by 

11 ‘‘(ii) the income on which the foreign 

12 income tax referred to in paragraph (1) is 

13 determined (or, if the taxpayer fails to sub14 stantiate such income to the satisfaction of 

15 the Secretary, such income shall be deter16 mined by dividing the amount of such for17 eign income tax by the highest marginal tax 

18 rate applicable to such income in the rel19 evant jurisdiction). 

20 ‘‘(B) ALLOCATION OF BASIS DIFFERENCE.— 

21 For purposes of subparagraph (A)(i)— 

22 ‘‘(i) IN GENERAL.—The basis difference 

23 with respect to any relevant foreign asset 

24 shall be allocated to taxable years using the 
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1 applicable cost recovery method under this 

2 chapter. 

3 ‘‘(ii) SPECIAL RULE FOR DISPOSITION

4 OF ASSETS.—Except as otherwise provided 

5 by the Secretary, in the case of the disposi6 tion of any relevant foreign asset— 

7 ‘‘(I) the basis difference allocated 

8 to the taxable year which includes the 

9 date of such disposition shall be the ex10 cess of the basis difference with respect 

11 to such asset over the aggregate basis 

12 difference with respect to such asset 

13 which has been allocated under clause 

14 (i) to all prior taxable years, and 

15 ‘‘(II) no basis difference with re16 spect to such asset shall be allocated 

17 under clause (i) to any taxable year 

18 thereafter. 

19 ‘‘(C) BASIS DIFFERENCE.— 

20 ‘‘(i) IN GENERAL.—The term ‘basis dif21 ference’ means, with respect to any relevant 

22 foreign asset, the excess of— 

23 ‘‘(I) the adjusted basis of such 

24 asset immediately after the covered 

25 asset acquisition, over 
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1 ‘‘(II) the adjusted basis of such 

2 asset immediately before the covered 

3 asset acquisition. 

4 ‘‘(ii) BUILT-IN LOSS ASSETS.—In the 

5 case of a relevant foreign asset with respect 

6 to which the amount described in clause 

7 (i)(II) exceeds the amount described in 

8 clause (i)(I), such excess shall be taken into 

9 account under this subsection as a basis dif10 ference of a negative amount. 

11 ‘‘(iii) SPECIAL RULE FOR SECTION 338

12 ELECTIONS.—In the case of a covered asset 

13 acquisition described in paragraph (2)(A), 

14 the covered asset acquisition shall be treated 

15 for purposes of this subparagraph as occur16 ring at the close of the acquisition date (as 

17 defined in section 338(h)(2)). 

18 ‘‘(4) RELEVANT FOREIGN ASSETS.—For purposes 

19 of this section, the term ‘relevant foreign asset’ means, 

20 with respect to any covered asset acquisition, any 

21 asset (including any goodwill, going concern value, or 

22 other intangible) with respect to such acquisition if 

23 income, deduction, gain, or loss attributable to such 

24 asset is taken into account in determining the foreign 

25 income tax referred to in paragraph (1). 
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1 ‘‘(5) FOREIGN INCOME TAX.—For purposes of 

2 this section, the term ‘foreign income tax’ means any 

3 income, war profits, or excess profits tax paid or ac4 crued to any foreign country or to any possession of 

5 the United States. 

6 ‘‘(6) TAXES ALLOWED AS A DEDUCTION, ETC.— 

7 Sections 275 and 78 shall not apply to any tax which 

8 is not allowable as a credit under subsection (a) by 

9 reason of this subsection. 

10 ‘‘(7) REGULATIONS.—The Secretary may issue 

11 such regulations or other guidance as is necessary or 

12 appropriate to carry out the purposes of this sub13 section, including to exempt from the application of 

14 this subsection certain covered asset acquisitions, and 

15 relevant foreign assets with respect to which the basis 

16 difference is de minimis.’’. 

17 (b) EFFECTIVE DATE.— 

18 (1) IN GENERAL.—Except as provided in para19 graph (2), the amendments made by this section shall 

20 apply to covered asset acquisitions (as defined in sec21 tion 901(m)(2) of the Internal Revenue Code of 1986, 

22 as added by this section) after— 

23 (A) May 20, 2010, if the transferor and the 

24 transferee are related; and 
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1 (B) the date of the enactment of this Act in 

2 any other case. 

3 (2) TRANSITION RULE.—The amendments made 

4 by this section shall not apply to any covered asset 

5 acquisition (as so defined) with respect to which the 

6 transferor and the transferee are not related if such 

7 acquisition is— 

8 (A) made pursuant to a written agreement 

9 which was binding on May 20, 2010, and at all 

10 times thereafter, 

11 (B) described in a ruling request submitted 

12 to the Internal Revenue Service on or before such 

13 date; or 

14 (C) described on or before such date in a 

15 public announcement or in a filing with the Se16 curities and Exchange Commission. 

17 (3) RELATED PERSONS.—For purposes of this 

18 subsection, a person shall be treated as related to an19 other person if the relationship between such persons 

20 is described in section 267 or 707(b) of the Internal 

21 Revenue Code of 1986. 
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1 SEC. 403. SEPARATE APPLICATION OF FOREIGN TAX CRED2 IT LIMITATION, ETC., TO ITEMS RESOURCED 

3 UNDER TREATIES. 

4 (a) IN GENERAL.—Subsection (d) of section 904 is 

5 amended by redesignating paragraph (6) as paragraph (7) 

6 and by inserting after paragraph (5) the following new 

7 paragraph: 

8 ‘‘(6) SEPARATE APPLICATION TO ITEMS

9 RESOURCED UNDER TREATIES.— 

10 ‘‘(A) IN GENERAL.—If— 

11 ‘‘(i) without regard to any treaty obli12 gation of the United States, any item of in13 come would be treated as derived from 

14 sources within the United States, 

15 ‘‘(ii) under a treaty obligation of the 

16 United States, such item would be treated 

17 as arising from sources outside the United 

18 States, and 

19 ‘‘(iii) the taxpayer chooses the benefits 

20 of such treaty obligation, 

21 subsections (a), (b), and (c) of this section and 

22 sections 902, 907, and 960 shall be applied sepa23 rately with respect to each such item. 

24 ‘‘(B) COORDINATION WITH OTHER PROVI25 SIONS.—This paragraph shall not apply to any 
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1 item of income to which subsection (h)(10) or 

2 section 865(h) applies. 

3 ‘‘(C) REGULATIONS.—The Secretary may 

4 issue such regulations or other guidance as is 

5 necessary or appropriate to carry out the pur6 poses of this paragraph, including regulations or 

7 other guidance which provides that related items 

8 of income may be aggregated for purposes of this 

9 paragraph.’’. 

10 (b) EFFECTIVE DATE.—The amendments made by this 

11 section shall apply to taxable years beginning after the date 

12 of the enactment of this Act. 

13 SEC. 404. LIMITATION ON THE AMOUNT OF FOREIGN TAXES 

14 DEEMED PAID WITH RESPECT TO SECTION 

15 956 INCLUSIONS. 

16 (a) IN GENERAL.—Section 960 is amended by adding 

17 at the end the following new subsection: 

18 ‘‘(c) LIMITATION WITH RESPECT TO SECTION 956 IN19 CLUSIONS.— 

20 ‘‘(1) IN GENERAL.—If there is included under 

21 section 951(a)(1)(B) in the gross income of a domestic 

22 corporation any amount attributable to the earnings 

23 and profits of a foreign corporation which is a mem24 ber of a qualified group (as defined in section 902(b)) 

25 with respect to the domestic corporation, the amount 
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1 of any foreign income taxes deemed to have been paid 

2 during the taxable year by such domestic corporation 

3 under section 902 by reason of subsection (a) with re4 spect to such inclusion in gross income shall not ex5 ceed the amount of the foreign income taxes which 

6 would have been deemed to have been paid during the 

7 taxable year by such domestic corporation if cash in 

8 an amount equal to the amount of such inclusion in 

9 gross income were distributed as a series of distribu10 tions (determined without regard to any foreign taxes 

11 which would be imposed on an actual distribution) 

12 through the chain of ownership which begins with 

13 such foreign corporation and ends with such domestic 

14 corporation. 

15 ‘‘(2) AUTHORITY TO PREVENT ABUSE.—The Sec16 retary shall issue such regulations or other guidance 

17 as is necessary or appropriate to carry out the pur18 poses of this subsection, including regulations or other 

19 guidance which prevent the inappropriate use of the 

20 foreign corporation’s foreign income taxes not deemed 

21 paid by reason of paragraph (1).’’. 

22 (b) EFFECTIVE DATE.—The amendment made by this 

23 section shall apply to acquisitions of United States property 

24 (as defined in section 956(c) of the Internal Revenue Code 

25 of 1986) after May 20, 2010. 
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1 SEC. 405. SPECIAL RULE WITH RESPECT TO CERTAIN RE2 DEMPTIONS BY FOREIGN SUBSIDIARIES. 

3 (a) IN GENERAL.—Paragraph (5) of section 304(b) is 

4 amended by redesignating subparagraph (B) as subpara5 graph (C) and by inserting after subparagraph (A) the fol6 lowing new subparagraph: 

7 ‘‘(B) SPECIAL RULE IN CASE OF FOREIGN

8 ACQUIRING CORPORATION.—In the case of any 

9 acquisition to which subsection (a) applies in 

10 which the acquiring corporation is a foreign cor11 poration, no earnings and profits shall be taken 

12 into account under paragraph (2)(A) (and sub13 paragraph (A) shall not apply) if more than 50 

14 percent of the dividends arising from such acqui15 sition (determined without regard to this sub16 paragraph) would not— 

17 ‘‘(i) be subject to tax under this chap18 ter for the taxable year in which the divi19 dends arise, or 

20 ‘‘(ii) be includible in the earnings and 

21 profits of a controlled foreign corporation 

22 (as defined in section 957 and without re23 gard to section 953(c)).’’. 

24 (b) EFFECTIVE DATE.—The amendments made by this 

25 section shall apply to acquisitions after May 20, 2010. 
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1 SEC. 406. MODIFICATION OF AFFILIATION RULES FOR PUR2 POSES OF RULES ALLOCATING INTEREST EX3 PENSE. 

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

5 864(e)(5) is amended by adding at the end the following: 

6 ‘‘Notwithstanding the preceding sentence, a foreign corpora7 tion shall be treated as a member of the affiliated group 

8 if— 

9 ‘‘(i) more than 50 percent of the gross 

10 income of such foreign corporation for the 

11 taxable year is effectively connected with the 

12 conduct of a trade or business within the 

13 United States, and 

14 ‘‘(ii) at least 80 percent of either the 

15 vote or value of all outstanding stock of such 

16 foreign corporation is owned directly or in17 directly by members of the affiliated group 

18 (determined with regard to this sentence).’’. 

19 (b) EFFECTIVE DATE.—The amendment made by this 

20 section shall apply to taxable years beginning after the date 

21 of the enactment of this Act. 
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1 SEC. 407. TERMINATION OF SPECIAL RULES FOR INTEREST 

2 AND DIVIDENDS RECEIVED FROM PERSONS 

3 MEETING THE 80-PERCENT FOREIGN BUSI4 NESS REQUIREMENTS. 

5 (a) IN GENERAL.—Paragraph (1) of section 861(a) is 

6 amended by striking subparagraph (A) and by redesig7 nating subparagraphs (B) and (C) as subparagraphs (A) 

8 and (B), respectively. 

9 (b) GRANDFATHER RULE WITH RESPECT TO WITH10 HOLDING ON INTEREST AND DIVIDENDS RECEIVED FROM

11 PERSONS MEETING THE 80-PERCENT FOREIGN BUSINESS

12 REQUIREMENTS.— 

13 (1) IN GENERAL.—Subparagraph (B) of section 

14 871(i)(2) is amended to read as follows: 

15 ‘‘(B) The active foreign business percentage 

16 of— 

17 ‘‘(i) any dividend paid by an existing 

18 80/20 company, and 

19 ‘‘(ii) any interest paid by an existing 

20 80/20 company.’’. 

21 (2) DEFINITIONS AND SPECIAL RULES.—Section 

22 871 is amended by redesignating subsections (l) and 

23 (m) as subsections (m) and (n), respectively, and by 

24 inserting after subsection (k) the following new sub25 section: 
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1 ‘‘(l) RULES RELATING TO EXISTING 80/20 COMPA2 NIES.—For purposes of this subsection and subsection 

3 (i)(2)(B)— 

4 ‘‘(1) EXISTING 80/20 COMPANY.— 

5 ‘‘(A) IN GENERAL.—The term ‘existing 80/ 

6 20 company’ means any corporation if— 

7 ‘‘(i) such corporation met the 80-per8 cent foreign business requirements of section 

9 861(c)(1) (as in effect before the enactment 

10 of this subsection) for such corporation’s 

11 last taxable year beginning before January 

12 1, 2011, 

13 ‘‘(ii) such corporation meets the 80- 

14 percent foreign business requirements of 

15 subparagraph (B) with respect to each tax16 able year after the taxable year referred to 

17 in clause (i), and 

18 ‘‘(iii) there has not been an addition of 

19 a substantial line of business with respect to 

20 such corporation after the date of the enact21 ment of this subsection. 

22 ‘‘(B) FOREIGN BUSINESS REQUIREMENTS.— 

23 ‘‘(i) IN GENERAL.—A corporation 

24 meets the 80-percent foreign business re25 quirements of this subparagraph if it is 
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1 shown to the satisfaction of the Secretary 

2 that at least 80 percent of the gross income 

3 from all sources of such corporation for the 

4 testing period is active foreign business in5 come. 

6 ‘‘(ii) ACTIVE FOREIGN BUSINESS IN7 COME.—For purposes of clause (i), the term 

8 ‘active foreign business income’ means gross 

9 income which— 

10 ‘‘(I) is derived from sources out11 side the United States (as determined 

12 under this subchapter), and 

13 ‘‘(II) is attributable to the active 

14 conduct of a trade or business in a for15 eign country or possession of the 

16 United States. 

17 ‘‘(iii) TESTING PERIOD.—For purposes 

18 of this subsection, the term ‘testing period’ 

19 means the 3-year period ending with the 

20 close of the taxable year of the corporation 

21 preceding the payment (or such part of such 

22 period as may be applicable). If the cor23 poration has no gross income for such 3- 

24 year period (or part thereof), the testing pe-
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1 riod shall be the taxable year in which the 

2 payment is made. 

3 ‘‘(2) ACTIVE FOREIGN BUSINESS PERCENTAGE.— 

4 The term ‘active foreign business percentage’ means, 

5 with respect to any existing 80/20 company, the per6 centage which— 

7 ‘‘(A) the active foreign business income of 

8 such company for the testing period, is of 

9 ‘‘(B) the gross income of such company for 

10 the testing period from all sources. 

11 ‘‘(3) AGGREGATION RULES.—For purposes of ap12 plying paragraph (1) (other than subparagraph 

13 (A)(i) thereof) and paragraph (2)— 

14 ‘‘(A) IN GENERAL.—The corporation re15 ferred to in paragraph (1)(A) and all of such 

16 corporation’s subsidiaries shall be treated as one 

17 corporation. 

18 ‘‘(B) SUBSIDIARIES.—For purposes of sub19 paragraph (A), the term ‘subsidiary’ means any 

20 corporation in which the corporation referred to 

21 in subparagraph (A) owns (directly or indi22 rectly) stock meeting the requirements of section 

23 1504(a)(2) (determined by substituting ‘50 per24 cent’ for ‘80 percent’ each place it appears and 

25 without regard to section 1504(b)(3)). 
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1 ‘‘(4) REGULATIONS.—The Secretary may issue 

2 such regulations or other guidance as is necessary or 

3 appropriate to carry out the purposes of this section, 

4 including regulations or other guidance which provide 

5 for the proper application of the aggregation rules de6 scribed in paragraph (3).’’. 

7 (c) CONFORMING AMENDMENTS.— 

8 (1) Section 861 is amended by striking sub9 section (c) and by redesignating subsections (d), (e), 

10 and (f) as subsections (c), (d), and (e), respectively. 

11 (2) Paragraph (9) of section 904(h) is amended 

12 to read as follows: 

13 ‘‘(9) TREATMENT OF CERTAIN DOMESTIC COR14 PORATIONS.—In the case of any dividend treated as 

15 not from sources within the United States under sec16 tion 861(a)(2)(A), the corporation paying such divi17 dend shall be treated for purposes of this subsection 

18 as a United States-owned foreign corporation.’’. 

19 (3) Subsection (c) of section 2104 is amended in 

20 the last sentence by striking ‘‘or to a debt obligation 

21 of a domestic corporation’’ and all that follows and 

22 inserting a period. 

23 (d) EFFECTIVE DATE.— 

24 (1) IN GENERAL.—Except as provided in para25 graph (2), the amendments made by this section shall 
246 

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1 apply to taxable years beginning after December 31, 

2 2010. 

3 (2) GRANDFATHER RULE FOR OUTSTANDING

4 DEBT OBLIGATIONS.— 

5 (A) IN GENERAL.—The amendments made 

6 by this section shall not apply to payments of 

7 interest on obligations issued before the date of 

8 the enactment of this Act. 

9 (B) EXCEPTION FOR RELATED PARTY

10 DEBT.—Subparagraph (A) shall not apply to 

11 any interest which is payable to a related person 

12 (determined under rules similar to the rules of 

13 section 954(d)(3)). 

14 (C) SIGNIFICANT MODIFICATIONS TREATED

15 AS NEW ISSUES.—For purposes of subparagraph 

16 (A), a significant modification of the terms of 

17 any obligation (including any extension of the 

18 term of such obligation) shall be treated as a new 

19 issue. 

20 SEC. 408. SOURCE RULES FOR INCOME ON GUARANTEES. 

21 (a) AMOUNTS SOURCED WITHIN THE UNITED

22 STATES.—Subsection (a) of section 861 is amended by add23 ing at the end the following new paragraph: 

24 ‘‘(9) GUARANTEES.—Amounts— 
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1 ‘‘(A) received from noncorporate residents 

2 or domestic corporations with respect to guaran3 tees, and 

4 ‘‘(B) paid by any foreign person with re5 spect to guarantees if such amount is connected 

6 with income which is effectively connected (or 

7 treated as effectively connected) with the conduct 

8 of a trade or business in the United States.’’. 

9 (b) AMOUNTS SOURCED WITHOUT THE UNITED

10 STATES.—Subsection (a) of section 862 is amended by 

11 striking ‘‘and’’ at the end of paragraph (7), by striking the 

12 period at the end of paragraph (8) and inserting ‘‘; and’’, 

13 and by adding at the end the following new paragraph: 

14 ‘‘(9) amounts received with respect to guarantees 

15 other than those derived from sources within the 

16 United States as provided in section 861(a)(9).’’. 

17 (c) CONFORMING AMENDMENT.—Clause (ii) of section 

18 864(c)(4)(B) is amended by striking ‘‘dividends or interest’’ 

19 and inserting ‘‘dividends, interest, or amounts with respect 

20 to guarantees’’. 

21 (d) EFFECTIVE DATE.—The amendments made by this 

22 section shall apply to guarantees issued after the date of 

23 the enactment of this Act. 
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1 SEC. 409. LIMITATION ON EXTENSION OF STATUTE OF LIMI2 TATIONS FOR FAILURE TO NOTIFY SEC3 RETARY OF CERTAIN FOREIGN TRANSFERS. 

4 (a) IN GENERAL.—Paragraph (8) of section 6501(c) 

5 is amended— 

6 (1) by striking ‘‘In the case of any information’’ 

7 and inserting the following: 

8 ‘‘(A) IN GENERAL.—In the case of any in9 formation’’; and 

10 (2) by adding at the end the following: 

11 ‘‘(B) APPLICATION TO FAILURES DUE TO

12 REASONABLE CAUSE.—If the failure to furnish 

13 the information referred to in subparagraph (A) 

14 is due to reasonable cause and not willful ne15 glect, subparagraph (A) shall apply only to the 

16 item or items related to such failure.’’. 

17 (b) EFFECTIVE DATE.—The amendments made by this 

18 section shall take effect as if included in section 513 of the 

19 Hiring Incentives to Restore Employment Act. 

20 Subtitle B—Personal Service In21 come Earned in Pass-thru Enti22 ties 

23 SEC. 411. PARTNERSHIP INTERESTS TRANSFERRED IN CON24 NECTION WITH PERFORMANCE OF SERVICES. 

25 (a) MODIFICATION TO ELECTION TO INCLUDE PART26 NERSHIP INTEREST IN GROSS INCOME IN YEAR OF TRANS-
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1 FER.—Subsection (c) of section 83 is amended by redesig2 nating paragraph (4) as paragraph (5) and by inserting 

3 after paragraph (3) the following new paragraph: 

4 ‘‘(4) PARTNERSHIP INTERESTS.—Except as pro5 vided by the Secretary, in the case of any transfer of 

6 an interest in a partnership in connection with the 

7 provision of services to (or for the benefit of) such 

8 partnership— 

9 ‘‘(A) the fair market value of such interest 

10 shall be treated for purposes of this section as 

11 being equal to the amount of the distribution 

12 which the partner would receive if the partner13 ship sold (at the time of the transfer) all of its 

14 assets at fair market value and distributed the 

15 proceeds of such sale (reduced by the liabilities of 

16 the partnership) to its partners in liquidation of 

17 the partnership, and 

18 ‘‘(B) the person receiving such interest shall 

19 be treated as having made the election under 

20 subsection (b)(1) unless such person makes an 

21 election under this paragraph to have such sub22 section not apply.’’. 

23 (b) CONFORMING AMENDMENT.—Paragraph (2) of sec24 tion 83(b) is amended by inserting ‘‘or subsection 

25 (c)(4)(B)’’ after ‘‘paragraph (1)’’. 
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1 (c) EFFECTIVE DATE.—The amendments made by this 

2 section shall apply to interests in partnerships transferred 

3 after the date of the enactment of this Act. 

4 SEC. 412. INCOME OF PARTNERS FOR PERFORMING INVEST5 MENT MANAGEMENT SERVICES TREATED AS 

6 ORDINARY INCOME RECEIVED FOR PERFORM7 ANCE OF SERVICES. 

8 (a) IN GENERAL.—Part I of subchapter K of chapter 

9 1 is amended by adding at the end the following new sec10 tion: 

11 ‘‘SEC. 710. SPECIAL RULES FOR PARTNERS PROVIDING IN12 VESTMENT MANAGEMENT SERVICES TO 

13 PARTNERSHIP. 

14 ‘‘(a) TREATMENT OF DISTRIBUTIVE SHARE OF PART15 NERSHIP ITEMS.—For purposes of this title, in the case of 

16 an investment services partnership interest— 

17 ‘‘(1) IN GENERAL.—Notwithstanding section 

18 702(b)— 

19 ‘‘(A) any net income with respect to such 

20 interest for any partnership taxable year shall be 

21 treated as ordinary income, and 

22 ‘‘(B) any net loss with respect to such inter23 est for such year, to the extent not disallowed 

24 under paragraph (2) for such year, shall be 

25 treated as an ordinary loss. 
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1 All items of income, gain, deduction, and loss which 

2 are taken into account in computing net income or 

3 net loss shall be treated as ordinary income or ordi4 nary loss (as the case may be). 

5 ‘‘(2) TREATMENT OF LOSSES.— 

6 ‘‘(A) LIMITATION.—Any net loss with re7 spect to such interest shall be allowed for any 

8 partnership taxable year only to the extent that 

9 such loss does not exceed the excess (if any) of— 

10 ‘‘(i) the aggregate net income with re11 spect to such interest for all prior partner12 ship taxable years, over 

13 ‘‘(ii) the aggregate net loss with respect 

14 to such interest not disallowed under this 

15 subparagraph for all prior partnership tax16 able years. 

17 ‘‘(B) CARRYFORWARD.—Any net loss for 

18 any partnership taxable year which is not al19 lowed by reason of subparagraph (A) shall be 

20 treated as an item of loss with respect to such 

21 partnership interest for the succeeding partner22 ship taxable year. 

23 ‘‘(C) BASIS ADJUSTMENT.—No adjustment 

24 to the basis of a partnership interest shall be 
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1 made on account of any net loss which is not al2 lowed by reason of subparagraph (A). 

3 ‘‘(D) PRIOR PARTNERSHIP YEARS.—Any 

4 reference in this paragraph to prior partnership 

5 taxable years shall only include prior partner6 ship taxable years to which this section applies. 

7 ‘‘(3) NET INCOME AND LOSS.—For purposes of 

8 this section— 

9 ‘‘(A) NET INCOME.—The term ‘net income’ 

10 means, with respect to any investment services 

11 partnership interest for any partnership taxable 

12 year, the excess (if any) of— 

13 ‘‘(i) all items of income and gain taken 

14 into account by the holder of such interest 

15 under section 702 with respect to such in16 terest for such year, over 

17 ‘‘(ii) all items of deduction and loss so 

18 taken into account. 

19 ‘‘(B) NET LOSS.—The term ‘net loss’ means, 

20 with respect to such interest for such year, the 

21 excess (if any) of the amount described in sub22 paragraph (A)(ii) over the amount described in 

23 subparagraph (A)(i). 

24 ‘‘(4) SPECIAL RULE FOR DIVIDENDS.—Any divi25 dend taken into account in determining net income or 
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1 net loss for purposes of paragraph (1) shall not be 

2 treated as qualified dividend income for purposes of 

3 section 1(h). 

4 ‘‘(b) DISPOSITIONS OF PARTNERSHIP INTERESTS.— 

5 ‘‘(1) GAIN.—Any gain on the disposition of an 

6 investment services partnership interest shall be— 

7 ‘‘(A) treated as ordinary income, and 

8 ‘‘(B) recognized notwithstanding any other 

9 provision of this subtitle. 

10 ‘‘(2) LOSS.—Any loss on the disposition of an 

11 investment services partnership interest shall be treat12 ed as an ordinary loss to the extent of the excess (if 

13 any) of— 

14 ‘‘(A) the aggregate net income with respect 

15 to such interest for all partnership taxable years 

16 to which this section applies, over 

17 ‘‘(B) the aggregate net loss with respect to 

18 such interest allowed under subsection (a)(2) for 

19 all partnership taxable years to which this sec20 tion applies. 

21 ‘‘(3) EXCEPTION FOR THE DISPOSITION OF AN

22 INTEREST IN A PUBLICLY TRADED PARTNERSHIP BY

23 AN INDIVIDUAL.—Paragraphs (1) and (2) shall not 

24 apply in the case of the disposition by an individual 

25 of an investment services partnership interest which 
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1 is an interest in a publicly traded partnership (as de2 fined in section 7704) if neither such individual nor 

3 any member of such individual’s family (within the 

4 meaning of section 318(a)(1)) has (at any time) pro5 vided any of the services described in subsection (c)(1) 

6 with respect to assets held (directly or indirectly) by 

7 such publicly traded partnership. 

8 ‘‘(4) ELECTION WITH RESPECT TO CERTAIN EX9 CHANGES.—Paragraph (1)(B) shall not apply to the 

10 contribution of an investment services partnership in11 terest to a partnership in exchange for an interest in 

12 such partnership if— 

13 ‘‘(A) the taxpayer makes an irrevocable elec14 tion to treat the partnership interest received in 

15 the exchange as an investment services partner16 ship interest, and 

17 ‘‘(B) the taxpayer agrees to comply with 

18 such reporting and recordkeeping requirements 

19 as the Secretary may prescribe. 

20 ‘‘(5) DISPOSITION OF PORTION OF INTEREST.— 

21 In the case of any disposition of an investment serv22 ices partnership interest, the amount of net loss which 

23 otherwise would have (but for subsection (a)(2)(C)) 

24 applied to reduce the basis of such interest shall be 
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1 disregarded for purposes of this section for all suc2 ceeding partnership taxable years. 

3 ‘‘(6) DISTRIBUTIONS OF PARTNERSHIP PROP4 ERTY.—In the case of any distribution of property by 

5 a partnership with respect to any investment services 

6 partnership interest held by a partner— 

7 ‘‘(A) the excess (if any) of— 

8 ‘‘(i) the fair market value of such prop9 erty at the time of such distribution, over 

10 ‘‘(ii) the adjusted basis of such prop11 erty in the hands of the partnership, 

12 shall be taken into account as an increase in 

13 such partner’s distributive share of the taxable 

14 income of the partnership (except to the extent 

15 such excess is otherwise taken into account in de16 termining the taxable income of the partnership), 

17 ‘‘(B) such property shall be treated for pur18 poses of subpart B of part II as money distrib19 uted to such partner in an amount equal to such 

20 fair market value, and 

21 ‘‘(C) the basis of such property in the hands 

22 of such partner shall be such fair market value. 

23 Subsection (b) of section 734 shall be applied without 

24 regard to the preceding sentence. In the case of a tax25 payer which satisfies requirements similar to the re-
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1 quirements of subparagraphs (A) and (B) of para2 graph (4), this paragraph and paragraph (1)(B) shall 

3 not apply to the distribution of a partnership interest 

4 if such distribution is in connection with a contribu5 tion (or deemed contribution) of any property of the 

6 partnership to which section 721 applies pursuant to 

7 a transaction described in paragraph (1)(B) or (2) of 

8 section 708(b). 

9 ‘‘(7) APPLICATION OF SECTION 751.—In applying 

10 section 751, an investment services partnership inter11 est shall be treated as an inventory item. 

12 ‘‘(c) INVESTMENT SERVICES PARTNERSHIP INTER13 EST.—For purposes of this section— 

14 ‘‘(1) IN GENERAL.—The term ‘investment serv15 ices partnership interest’ means any interest in a 

16 partnership which is held (directly or indirectly) by 

17 any person if it was reasonably expected (at the time 

18 that such person acquired such interest) that such 

19 person (or any person related to such person) would 

20 provide (directly or indirectly) a substantial quantity 

21 of any of the following services with respect to assets 

22 held (directly or indirectly) by the partnership: 

23 ‘‘(A) Advising as to the advisability of in24 vesting in, purchasing, or selling any specified 

25 asset. 
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1 ‘‘(B) Managing, acquiring, or disposing of 

2 any specified asset. 

3 ‘‘(C) Arranging financing with respect to 

4 acquiring specified assets. 

5 ‘‘(D) Any activity in support of any service 

6 described in subparagraphs (A) through (C). 

7 ‘‘(2) SPECIFIED ASSET.—The term ‘specified 

8 asset’ means securities (as defined in section 475(c)(2) 

9 without regard to the last sentence thereof), real estate 

10 held for rental or investment, interests in partner11 ships, commodities (as defined in section 475(e)(2)), 

12 or options or derivative contracts with respect to any 

13 of the foregoing. 

14 ‘‘(3) EXCEPTION FOR FAMILY FARMS.—The term 

15 ‘specified asset’ shall not include any farm used for 

16 farming purposes if such farm is held by a partner17 ship all of the interests in which are held (directly or 

18 indirectly) by members of the same family. Terms 

19 used in the preceding sentence which are also used in 

20 section 2032A shall have the same meaning as when 

21 used in such section. 

22 ‘‘(4) RELATED PERSONS.—A person shall be 

23 treated as related to another person if the relationship 

24 between such persons is described in section 267 or 

25 707(b). 
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1 ‘‘(d) EXCEPTION FOR CERTAIN CAPITAL INTERESTS.— 

2 ‘‘(1) IN GENERAL.—In the case of any portion of 

3 an investment services partnership interest which is 

4 a qualified capital interest, all items of income, gain, 

5 loss, and deduction which are allocated to such quali6 fied capital interest shall not be taken into account 

7 under subsection (a) if— 

8 ‘‘(A) allocations of items are made by the 

9 partnership to such qualified capital interest in 

10 the same manner as such allocations are made to 

11 other qualified capital interests held by partners 

12 who do not provide any services described in 

13 subsection (c)(1) and who are not related to the 

14 partner holding the qualified capital interest, 

15 and 

16 ‘‘(B) the allocations made to such other in17 terests are significant compared to the alloca18 tions made to such qualified capital interest. 

19 ‘‘(2) AUTHORITY TO PROVIDE EXCEPTIONS TO

20 ALLOCATION REQUIREMENTS.—To the extent provided 

21 by the Secretary in regulations or other guidance— 

22 ‘‘(A) ALLOCATIONS TO PORTION OF QUALI23 FIED CAPITAL INTEREST.—Paragraph (1) may 

24 be applied separately with respect to a portion 

25 of a qualified capital interest. 
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1 ‘‘(B) NO OR INSIGNIFICANT ALLOCATIONS

2 TO NONSERVICE PROVIDERS.—In any case in 

3 which the requirements of paragraph (1)(B) are 

4 not satisfied, items of income, gain, loss, and de5 duction shall not be taken into account under 

6 subsection (a) to the extent that such items are 

7 properly allocable under such regulations or 

8 other guidance to qualified capital interests. 

9 ‘‘(C) ALLOCATIONS TO SERVICE PROVIDERS’ 

10 QUALIFIED CAPITAL INTERESTS WHICH ARE

11 LESS THAN OTHER ALLOCATIONS.—Allocations 

12 shall not be treated as failing to meet the re13 quirement of paragraph (1)(A) merely because 

14 the allocations to the qualified capital interest 

15 represent a lower return than the allocations 

16 made to the other qualified capital interests re17 ferred to in such paragraph. 

18 ‘‘(3) SPECIAL RULE FOR CHANGES IN SERV19 ICES.—In the case of an interest in a partnership 

20 which is not an investment services partnership inter21 est and which, by reason of a change in the services 

22 with respect to assets held (directly or indirectly) by 

23 the partnership, would (without regard to the reason24 able expectation exception of subsection (c)(1)) have 

25 become such an interest— 
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1 ‘‘(A) notwithstanding subsection (c)(1), such 

2 interest shall be treated as an investment services 

3 partnership interest as of the time of such 

4 change, and 

5 ‘‘(B) for purposes of this subsection, the 

6 qualified capital interest of the holder of such 

7 partnership interest immediately after such 

8 change shall not be less than the fair market 

9 value of such interest (determined immediately 

10 before such change). 

11 ‘‘(4) SPECIAL RULE FOR TIERED PARTNER12 SHIPS.—Except as otherwise provided by the Sec13 retary, in the case of tiered partnerships, all items 

14 which are allocated in a manner which meets the re15 quirements of paragraph (1) to qualified capital in16 terests in a lower-tier partnership shall retain such 

17 character to the extent allocated on the basis of quali18 fied capital interests in any upper-tier partnership. 

19 ‘‘(5) EXCEPTION FOR NO-SELF-CHARGED CARRY

20 AND MANAGEMENT FEE PROVISIONS.—Except as oth21 erwise provided by the Secretary, an interest shall not 

22 fail to be treated as satisfying the requirement of 

23 paragraph (1)(A) merely because the allocations made 

24 by the partnership to such interest do not reflect the 

25 cost of services described in subsection (c)(1) which 
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1 are provided (directly or indirectly) to the partner2 ship by the holder of such interest (or a related per3 son). 

4 ‘‘(6) SPECIAL RULE FOR DISPOSITIONS.—In the 

5 case of any investment services partnership interest 

6 any portion of which is a qualified capital interest, 

7 subsection (b) shall not apply to so much of any gain 

8 or loss as bears the same proportion to the entire 

9 amount of such gain or loss as— 

10 ‘‘(A) the distributive share of gain or loss 

11 that would have been allocated to the qualified 

12 capital interest (consistent with the requirements 

13 of paragraph (1)) if the partnership had sold all 

14 of its assets at fair market value immediately be15 fore the disposition, bears to 

16 ‘‘(B) the distributive share of gain or loss 

17 that would have been so allocated to the invest18 ment services partnership interest of which such 

19 qualified capital interest is a part. 

20 ‘‘(7) QUALIFIED CAPITAL INTEREST.—For pur21 poses of this subsection— 

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

23 capital interest’ means so much of a partner’s 

24 interest in the capital of the partnership as is 

25 attributable to— 
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1 ‘‘(i) the fair market value of any 

2 money or other property contributed to the 

3 partnership in exchange for such interest 

4 (determined without regard to section 

5 752(a)), 

6 ‘‘(ii) any amounts which have been in7 cluded in gross income under section 83 

8 with respect to the transfer of such interest, 

9 and 

10 ‘‘(iii) the excess (if any) of— 

11 ‘‘(I) any items of income and 

12 gain taken into account under section 

13 702 with respect to such interest, over 

14 ‘‘(II) any items of deduction and 

15 loss so taken into account. 

16 ‘‘(B) ADJUSTMENT TO QUALIFIED CAPITAL

17 INTEREST.— 

18 ‘‘(i) DISTRIBUTIONS AND LOSSES.— 

19 The qualified capital interest shall be re20 duced by distributions from the partnership 

21 with respect to such interest and by the ex22 cess (if any) of the amount described in sub23 paragraph (A)(iii)(II) over the amount de24 scribed in subparagraph (A)(iii)(I). 
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1 ‘‘(ii) SPECIAL RULE FOR CONTRIBU2 TIONS OF PROPERTY.—In the case of any 

3 contribution of property described in sub4 paragraph (A)(i) with respect to which the 

5 fair market value of such property is not 

6 equal to the adjusted basis of such property 

7 immediately before such contribution, prop8 er adjustments shall be made to the quali9 fied capital interest to take into account 

10 such difference consistent with such regula11 tions or other guidance as the Secretary 

12 may provide. 

13 ‘‘(8) TREATMENT OF CERTAIN LOANS.— 

14 ‘‘(A) PROCEEDS OF PARTNERSHIP LOANS

15 NOT TREATED AS QUALIFIED CAPITAL INTEREST

16 OF SERVICE PROVIDING PARTNERS.—For pur17 poses of this subsection, an investment services 

18 partnership interest shall not be treated as a 

19 qualified capital interest to the extent that such 

20 interest is acquired in connection with the pro21 ceeds of any loan or other advance made or 

22 guaranteed, directly or indirectly, by any other 

23 partner or the partnership (or any person re24 lated to any such other partner or the partner25 ship). 
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1 ‘‘(B) REDUCTION IN ALLOCATIONS TO

2 QUALIFIED CAPITAL INTERESTS FOR LOANS

3 FROM NONSERVICE PROVIDING PARTNERS TO

4 THE PARTNERSHIP.—For purposes of this sub5 section, any loan or other advance to the part6 nership made or guaranteed, directly or indi7 rectly, by a partner not providing services de8 scribed in subsection (c)(1) to the partnership (or 

9 any person related to such partner) shall be 

10 taken into account in determining the qualified 

11 capital interests of the partners in the partner12 ship. 

13 ‘‘(e) OTHER INCOME AND GAIN IN CONNECTION WITH

14 INVESTMENT MANAGEMENT SERVICES.— 

15 ‘‘(1) IN GENERAL.—If— 

16 ‘‘(A) a person performs (directly or indi17 rectly) investment management services for any 

18 entity, 

19 ‘‘(B) such person holds (directly or indi20 rectly) a disqualified interest with respect to 

21 such entity, and 

22 ‘‘(C) the value of such interest (or payments 

23 thereunder) is substantially related to the 

24 amount of income or gain (whether or not real-
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1 ized) from the assets with respect to which the 

2 investment management services are performed, 

3 any income or gain with respect to such interest shall 

4 be treated as ordinary income. Rules similar to the 

5 rules of subsections (a)(4) and (d) shall apply for 

6 purposes of this subsection. 

7 ‘‘(2) DEFINITIONS.—For purposes of this sub8 section— 

9 ‘‘(A) DISQUALIFIED INTEREST.— 

10 ‘‘(i) IN GENERAL.—The term ‘disquali11 fied interest’ means, with respect to any en12 tity— 

13 ‘‘(I) any interest in such entity 

14 other than indebtedness, 

15 ‘‘(II) convertible or contingent 

16 debt of such entity, 

17 ‘‘(III) any option or other right to 

18 acquire property described in subclause 

19 (I) or (II), and 

20 ‘‘(IV) any derivative instrument 

21 entered into (directly or indirectly) 

22 with such entity or any investor in 

23 such entity. 

24 ‘‘(ii) EXCEPTIONS.—Such term shall 

25 not include— 
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1 ‘‘(I) a partnership interest, 

2 ‘‘(II) except as provided by the 

3 Secretary, any interest in a taxable 

4 corporation, and 

5 ‘‘(III) except as provided by the 

6 Secretary, stock in an S corporation. 

7 ‘‘(B) TAXABLE CORPORATION.—The term 

8 ‘taxable corporation’ means— 

9 ‘‘(i) a domestic C corporation, or 

10 ‘‘(ii) a foreign corporation substan11 tially all of the income of which is— 

12 ‘‘(I) effectively connected with the 

13 conduct of a trade or business in the 

14 United States, or 

15 ‘‘(II) subject to a comprehensive 

16 foreign income tax (as defined in sec17 tion 457A(d)(2)). 

18 ‘‘(C) INVESTMENT MANAGEMENT SERV19 ICES.—The term ‘investment management serv20 ices’ means a substantial quantity of any of the 

21 services described in subsection (c)(1). 

22 ‘‘(f) REGULATIONS.—The Secretary shall prescribe 

23 such regulations or other guidance as is necessary or appro24 priate to carry out the purposes of this section, including 

25 regulations or other guidance to— 
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1 ‘‘(1) provide modifications to the application of 

2 this section (including treating related persons as not 

3 related to one another) to the extent such modification 

4 is consistent with the purposes of this section, 

5 ‘‘(2) prevent the avoidance of the purposes of this 

6 section, and 

7 ‘‘(3) coordinate this section with the other provi8 sions of this title. 

9 ‘‘(g) SPECIAL RULES FOR INDIVIDUALS.—In the case 

10 of an individual— 

11 ‘‘(1) IN GENERAL.—Subsection (a)(1) shall apply 

12 only to the applicable percentage of the net income or 

13 net loss referred to in such subsection. 

14 ‘‘(2) DISPOSITIONS, ETC.—The amount which 

15 (but for this paragraph) would be treated as ordinary 

16 income by reason of subsection (b) or (e) shall be the 

17 applicable percentage of such amount. 

18 ‘‘(3) PRO RATA ALLOCATION TO ITEMS.—For 

19 purposes of applying subsections (a) and (e) the ag20 gregate amount treated as ordinary income for any 

21 such taxable year shall be allocated ratably among the 

22 items of income, gain, loss, and deduction taken into 

23 account in determining such amount. 

24 ‘‘(4) SPECIAL RULE FOR RECOGNITION OF

25 GAIN.—Gain which (but for this section) would not be 
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1 recognized shall be recognized by reason of subsection 

2 (b) only to the extent that such gain is treated as or3 dinary income after application of paragraph (2). 

4 ‘‘(5) COORDINATION WITH LIMITATION ON

5 LOSSES.—For purposes of applying paragraph (2) of 

6 subsection (a) with respect to any net loss for any 

7 taxable year— 

8 ‘‘(A) such paragraph shall only apply with 

9 respect to the applicable percentage of such net 

10 loss for such taxable year, 

11 ‘‘(B) in the case of a prior partnership tax12 able year referred to in clause (i) or (ii) of sub13 paragraph (A) of such paragraph, only the ap14 plicable percentage (as in effect for such prior 

15 taxable year) of net income or net loss for such 

16 prior partnership taxable year shall be taken 

17 into account, and 

18 ‘‘(C) any net loss carried forward to the 

19 succeeding partnership taxable year under sub20 paragraph (B) of such paragraph shall— 

21 ‘‘(i) be taken into account in such suc22 ceeding year without reduction under this 

23 subsection, and 
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1 ‘‘(ii) in lieu of being taken into ac2 count as an item of loss in such succeeding 

3 year, shall be taken into account— 

4 ‘‘(I) as an increase in net loss or 

5 as a reduction in net income (includ6 ing below zero), as the case may be, 

7 and 

8 ‘‘(II) after any reduction in the 

9 amount of such net loss or net income 

10 under this subsection. 

11 A rule similar to the rule of the preceding sentence 

12 shall apply for purposes of subsection (b)(2)(A). 

13 ‘‘(6) COORDINATION WITH TREATMENT OF DIVI14 DENDS.—Subsection (a)(4) shall only apply to the 

15 applicable percentage of dividends described therein. 

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

17 of this subsection, the term ‘applicable percentage’ 

18 means 75 percent (50 percent in the case of any tax19 able year beginning before January 1, 2013). 

20 ‘‘(h) CROSS REFERENCE.—For 40 percent penalty on 

21 certain underpayments due to the avoidance of this section, 

22 see section 6662.’’. 

23 (b) TREATMENT FOR PURPOSES OF SECTION 7704.— 

24 Subsection (d) of section 7704 is amended by adding at the 

25 end the following new paragraph: 
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1 ‘‘(6) INCOME FROM INVESTMENT SERVICES PART2 NERSHIP INTERESTS NOT QUALIFIED.— 

3 ‘‘(A) IN GENERAL.—Items of income and 

4 gain shall not be treated as qualifying income if 

5 such items are treated as ordinary income by 

6 reason of the application of section 710 (relating 

7 to special rules for partners providing invest8 ment management services to partnership). The 

9 preceding sentence shall not apply to any item 

10 described in paragraph (1)(E) (or so much of 

11 paragraph (1)(F) as relates to paragraph 

12 (1)(E)). 

13 ‘‘(B) SPECIAL RULES FOR CERTAIN PART14 NERSHIPS.— 

15 ‘‘(i) CERTAIN PARTNERSHIPS OWNED

16 BY REAL ESTATE INVESTMENT TRUSTS.— 

17 Subparagraph (A) shall not apply in the 

18 case of a partnership which meets each of 

19 the following requirements: 

20 ‘‘(I) Such partnership is treated 

21 as publicly traded under this section 

22 solely by reason of interests in such 

23 partnership being convertible into in24 terests in a real estate investment trust 

25 which is publicly traded. 
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1 ‘‘(II) 50 percent or more of the 

2 capital and profits interests of such 

3 partnership are owned, directly or in4 directly, at all times during the taxable 

5 year by such real estate investment 

6 trust (determined with the application 

7 of section 267(c)). 

8 ‘‘(III) Such partnership meets the 

9 requirements of paragraphs (2), (3), 

10 and (4) of section 856(c). 

11 ‘‘(ii) CERTAIN PARTNERSHIPS OWNING

12 OTHER PUBLICLY TRADED PARTNER13 SHIPS.—Subparagraph (A) shall not apply 

14 in the case of a partnership which meets 

15 each of the following requirements: 

16 ‘‘(I) Substantially all of the assets 

17 of such partnership consist of interests 

18 in one or more publicly traded part19 nerships (determined without regard to 

20 subsection (b)(2)). 

21 ‘‘(II) Substantially all of the in22 come of such partnership is ordinary 

23 income or section 1231 gain (as de24 fined in section 1231(a)(3)). 
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1 ‘‘(C) TRANSITIONAL RULE.—Subparagraph 

2 (A) shall not apply to any taxable year of the 

3 partnership beginning before the date which is 

4 10 years after the date of the enactment of this 

5 paragraph.’’. 

6 (c) IMPOSITION OF PENALTY ON UNDERPAYMENTS.— 

7 (1) IN GENERAL.—Subsection (b) of section 6662 

8 is amended by inserting after paragraph (7) the fol9 lowing new paragraph: 

10 ‘‘(8) The application of subsection (e) of section 

11 710 or the regulations prescribed under section 710(f) 

12 to prevent the avoidance of the purposes of section 

13 710.’’. 

14 (2) AMOUNT OF PENALTY.— 

15 (A) IN GENERAL.—Section 6662 is amended 

16 by adding at the end the following new sub17 section: 

18 ‘‘(k) INCREASE IN PENALTY IN CASE OF PROPERTY

19 TRANSFERRED FOR INVESTMENT MANAGEMENT SERV20 ICES.—In the case of any portion of an underpayment to 

21 which this section applies by reason of subsection (b)(8), 

22 subsection (a) shall be applied with respect to such portion 

23 by substituting ‘40 percent’ for ‘20 percent’.’’. 
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1 (B) CONFORMING AMENDMENT.—Subpara2 graph (B) of section 6662A(e)(2) is amended by 

3 striking ‘‘or (i)’’ and inserting ‘‘, (i), or (k)’’. 

4 (3) SPECIAL RULES FOR APPLICATION OF REA5 SONABLE CAUSE EXCEPTION.—Subsection (c) of sec6 tion 6664 is amended— 

7 (A) by redesignating paragraphs (3) and 

8 (4) as paragraphs (4) and (5), respectively; 

9 (B) by striking ‘‘paragraph (3)’’ in para10 graph (5)(A), as so redesignated, and inserting 

11 ‘‘paragraph (4)’’; and 

12 (C) by inserting after paragraph (2) the fol13 lowing new paragraph: 

14 ‘‘(3) SPECIAL RULE FOR UNDERPAYMENTS AT15 TRIBUTABLE TO INVESTMENT MANAGEMENT SERV16 ICES.— 

17 ‘‘(A) IN GENERAL.—Paragraph (1) shall 

18 not apply to any portion of an underpayment to 

19 which this section applies by reason of subsection 

20 (b)(8) unless— 

21 ‘‘(i) the relevant facts affecting the tax 

22 treatment of the item are adequately dis23 closed, 

24 ‘‘(ii) there is or was substantial au25 thority for such treatment, and 
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1 ‘‘(iii) the taxpayer reasonably believed 

2 that such treatment was more likely than 

3 not the proper treatment. 

4 ‘‘(B) RULES RELATING TO REASONABLE BE5 LIEF.—Rules similar to the rules of subsection 

6 (d)(3) shall apply for purposes of subparagraph 

7 (A)(iii).’’. 

8 (d) INCOME AND LOSS FROM INVESTMENT SERVICES

9 PARTNERSHIP INTERESTS TAKEN INTO ACCOUNT IN DE10 TERMINING NET EARNINGS FROM SELF-EMPLOYMENT.— 

11 (1) INTERNAL REVENUE CODE.—Section 1402(a) 

12 is amended by striking ‘‘and’’ at the end of para13 graph (16), by striking the period at the end of para14 graph (17) and inserting ‘‘; and’’, and by inserting 

15 after paragraph (17) the following new paragraph: 

16 ‘‘(18) notwithstanding the preceding provisions 

17 of this subsection, in the case of any individual en18 gaged in the trade or business of providing services 

19 described in section 710(c)(1) with respect to any en20 tity, any amount treated as ordinary income or ordi21 nary loss of such individual under section 710 with 

22 respect to such entity shall be taken into account in 

23 determining the net earnings from self-employment of 

24 such individual.’’. 
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1 (2) SOCIAL SECURITY ACT.—Section 211(a) of 

2 the Social Security Act is amended by striking ‘‘and’’ 

3 at the end of paragraph (15), by striking the period 

4 at the end of paragraph (16) and inserting ‘‘; and’’, 

5 and by inserting after paragraph (16) the following 

6 new paragraph: 

7 ‘‘(17) Notwithstanding the preceding provisions 

8 of this subsection, in the case of any individual en9 gaged in the trade or business of providing services 

10 described in section 710(c)(1) of the Internal Revenue 

11 Code of 1986 with respect to any entity, any amount 

12 treated as ordinary income or ordinary loss of such 

13 individual under section 710 of such Code with re14 spect to such entity shall be taken into account in de15 termining the net earnings from self-employment of 

16 such individual.’’. 

17 (e) CONFORMING AMENDMENTS.— 

18 (1) Subsection (d) of section 731 is amended by 

19 inserting ‘‘section 710(b)(4) (relating to distributions 

20 of partnership property),’’ after ‘‘to the extent other21 wise provided by’’. 

22 (2) Section 741 is amended by inserting ‘‘or sec23 tion 710 (relating to special rules for partners pro24 viding investment management services to partner25 ship)’’ before the period at the end. 
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1 (3) The table of sections for part I of subchapter 

2 K of chapter 1 is amended by adding at the end the 

3 following new item: 

‘‘Sec. 710. Special rules for partners providing investment management services 

to partnership.’’. 

4 (f) EFFECTIVE DATE.— 

5 (1) IN GENERAL.—Except as otherwise provided 

6 in this subsection, the amendments made by this sec7 tion shall apply to taxable years ending after Decem8 ber 31, 2010. 

9 (2) PARTNERSHIP TAXABLE YEARS WHICH IN10 CLUDE EFFECTIVE DATE.—In applying section 710(a) 

11 of the Internal Revenue Code of 1986 (as added by 

12 this section) in the case of any partnership taxable 

13 year which includes December 31, 2010, the amount 

14 of the net income referred to in such section shall be 

15 treated as being the lesser of the net income for the 

16 entire partnership taxable year or the net income de17 termined by only taking into account items attrib18 utable to the portion of the partnership taxable year 

19 which is after such date. 

20 (3) DISPOSITIONS OF PARTNERSHIP INTER21 ESTS.—Section 710(b) of the Internal Revenue Code 

22 of 1986 (as added by this section) shall apply to dis23 positions and distributions after December 31, 2010. 
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1 (4) OTHER INCOME AND GAIN IN CONNECTION

2 WITH INVESTMENT MANAGEMENT SERVICES.—Section 

3 710(e) of such Code (as added by this section) shall 

4 take effect on December 31, 2010. 

5 SEC. 413. EMPLOYMENT TAX TREATMENT OF PROFES6 SIONAL SERVICE BUSINESSES. 

7 (a) IN GENERAL.—Section 1402 is amended by adding 

8 at the end the following new subsection: 

9 ‘‘(m) SPECIAL RULES FOR PROFESSIONAL SERVICE

10 BUSINESSES.— 

11 ‘‘(1) SHAREHOLDERS PROVIDING SERVICES TO

12 DISQUALIFIED S CORPORATIONS.— 

13 ‘‘(A) IN GENERAL.—In the case of any dis14 qualified S corporation, each shareholder of such 

15 disqualified S corporation who provides substan16 tial services with respect to the professional serv17 ice business referred to in subparagraph (C) 

18 shall take into account such shareholder’s pro 

19 rata share of all items of income or loss described 

20 in section 1366 which are attributable to such 

21 business in determining the shareholder’s net 

22 earnings from self-employment. 

23 ‘‘(B) TREATMENT OF FAMILY MEMBERS.— 

24 Except as otherwise provided by the Secretary, 

25 the shareholder’s pro rata share of items referred 
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1 to in subparagraph (A) shall be increased by the 

2 pro rata share of such items of each member of 

3 such shareholder’s family (within the meaning of 

4 section 318(a)(1)) who does not provide substan5 tial services with respect to such professional 

6 service business. 

7 ‘‘(C) DISQUALIFIED S CORPORATION.—For 

8 purposes of this subsection, the term ‘disqualified 

9 S corporation’ means— 

10 ‘‘(i) any S corporation which is a 

11 partner in a partnership which is engaged 

12 in a professional service business if substan13 tially all of the activities of such S corpora14 tion are performed in connection with such 

15 partnership, and 

16 ‘‘(ii) any other S corporation which is 

17 engaged in a professional service business if 

18 the principal asset of such business is the 

19 reputation and skill of 3 or fewer employees. 

20 ‘‘(2) PARTNERS.—In the case of any partnership 

21 which is engaged in a professional service business, 

22 subsection (a)(13) shall not apply to any partner who 

23 provides substantial services with respect to such pro24 fessional service business. 
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1 ‘‘(3) PROFESSIONAL SERVICE BUSINESS.—For 

2 purposes of this subsection, the term ‘professional 

3 service business’ means any trade or business if sub4 stantially all of the activities of such trade or business 

5 involve providing services in the fields of health, law, 

6 lobbying, engineering, architecture, accounting, actu7 arial science, performing arts, consulting, athletics, 

8 investment advice or management, or brokerage serv9 ices. 

10 ‘‘(4) REGULATIONS.—The Secretary shall pre11 scribe such regulations as may be necessary or appro12 priate to carry out the purposes of this subsection, in13 cluding regulations which prevent the avoidance of 

14 the purposes of this subsection through tiered entities 

15 or otherwise. 

16 ‘‘(5) CROSS REFERENCE.—For employment tax 

17 treatment of wages paid to shareholders of S corpora18 tions, see subtitle C.’’. 

19 (b) CONFORMING AMENDMENT.—Section 211 of the So20 cial Security Act is amended by adding at the end the fol21 lowing new subsection: 

22 ‘‘(l) SPECIAL RULES FOR PROFESSIONAL SERVICE

23 BUSINESSES.— 

24 ‘‘(1) SHAREHOLDERS PROVIDING SERVICES TO

25 DISQUALIFIED S CORPORATIONS.— 
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1 ‘‘(A) IN GENERAL.—In the case of any dis2 qualified S corporation, each shareholder of such 

3 disqualified S corporation who provides substan4 tial services with respect to the professional serv5 ice business referred to in subparagraph (C) 

6 shall take into account such shareholder’s pro 

7 rata share of all items of income or loss described 

8 in section 1366 of the Internal Revenue Code of 

9 1986 which are attributable to such business in 

10 determining the shareholder’s net earnings from 

11 self-employment. 

12 ‘‘(B) TREATMENT OF FAMILY MEMBERS.— 

13 Except as otherwise provided by the Secretary of 

14 the Treasury, the shareholder’s pro rata share of 

15 items referred to in subparagraph (A) shall be 

16 increased by the pro rata share of such items of 

17 each member of such shareholder’s family (within 

18 the meaning of section 318(a)(1) of the Internal 

19 Revenue Code of 1986) who does not provide sub20 stantial services with respect to such professional 

21 service business. 

22 ‘‘(C) DISQUALIFIED S CORPORATION.—For 

23 purposes of this subsection, the term ‘disqualified 

24 S corporation’ means— 
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1 ‘‘(i) any S corporation which is a 

2 partner in a partnership which is engaged 

3 in a professional service business if substan4 tially all of the activities of such S corpora5 tion are performed in connection with such 

6 partnership, and 

7 ‘‘(ii) any other S corporation which is 

8 engaged in a professional service business if 

9 the principal asset of such business is the 

10 reputation and skill of 3 or fewer employees. 

11 ‘‘(2) PARTNERS.—In the case of any partnership 

12 which is engaged in a professional service business, 

13 subsection (a)(12) shall not apply to any partner who 

14 provides substantial services with respect to such pro15 fessional service business. 

16 ‘‘(3) PROFESSIONAL SERVICE BUSINESS.—For 

17 purposes of this subsection, the term ‘professional 

18 service business’ means any trade or business if sub19 stantially all of the activities of such trade or business 

20 involve providing services in the fields of health, law, 

21 lobbying, engineering, architecture, accounting, actu22 arial science, performing arts, consulting, athletics, 

23 investment advice or management, or brokerage serv24 ices.’’. 
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1 (c) EFFECTIVE DATE.—The amendments made by this 

2 section shall apply to taxable years beginning after Decem3 ber 31, 2010. 

4 Subtitle C—Corporate Provisions 

5 SEC. 421. TREATMENT OF SECURITIES OF A CONTROLLED 

6 CORPORATION EXCHANGED FOR ASSETS IN 

7 CERTAIN REORGANIZATIONS. 

8 (a) IN GENERAL.—Section 361 (relating to non9 recognition of gain or loss to corporations; treatment of dis10 tributions) is amended by adding at the end the following 

11 new subsection: 

12 ‘‘(d) SPECIAL RULES FOR TRANSACTIONS INVOLVING

13 SECTION 355 DISTRIBUTIONS.—In the case of a reorganiza14 tion described in section 368(a)(1)(D) with respect to which 

15 stock or securities of the corporation to which the assets are 

16 transferred are distributed in a transaction which qualifies 

17 under section 355— 

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

19 ‘stock other than nonqualified preferred stock (as de20 fined in section 351(g)(2))’ for ‘stock or securities’ in 

21 subsections (a) and (b)(1), and 

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

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

24 and the fair market value of the other property trans25 ferred to such creditors does not exceed the adjusted 
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1 bases of such assets transferred (reduced by the 

2 amount of the liabilities assumed (within the mean3 ing of section 357(c))).’’. 

4 (b) CONFORMING AMENDMENT.—Paragraph (3) of sec5 tion 361(b) is amended by striking the last sentence. 

6 (c) EFFECTIVE DATE.— 

7 (1) IN GENERAL.—Except as provided in para8 graph (2), the amendments made by this section shall 

9 apply to exchanges after the date of the enactment of 

10 this Act. 

11 (2) TRANSITION RULE.—The amendments made 

12 by this section shall not apply to any exchange pursu13 ant to a transaction which is— 

14 (A) made pursuant to a written agreement 

15 which was binding on March 15, 2010, and at 

16 all times thereafter; 

17 (B) described in a ruling request submitted 

18 to the Internal Revenue Service on or before such 

19 date; or 

20 (C) described on or before such date in a 

21 public announcement or in a filing with the Se22 curities and Exchange Commission. 
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1 SEC. 422. TAXATION OF BOOT RECEIVED IN REORGANIZA2 TIONS. 

3 (a) IN GENERAL.—Paragraph (2) of section 356(a) is 

4 amended— 

5 (1) by striking ‘‘If an exchange’’ and inserting 

6 ‘‘Except as otherwise provided by the Secretary— 

7 ‘‘(A) IN GENERAL.—If an exchange’’; 

8 (2) by striking ‘‘then there shall be’’ and all that 

9 follows through ‘‘February 28, 1913’’ and inserting 

10 ‘‘then the amount of other property or money shall be 

11 treated as a dividend to the extent of the earnings and 

12 profits of the corporation’’; and 

13 (3) by adding at the end the following new sub14 paragraph: 

15 ‘‘(B) CERTAIN REORGANIZATIONS.—In the 

16 case of a reorganization described in section 

17 368(a)(1)(D) to which section 354(b)(1) applies 

18 or any other reorganization specified by the Sec19 retary, in applying subparagraph (A)— 

20 ‘‘(i) the earnings and profits of each 

21 corporation which is a party to the reorga22 nization shall be taken into account, and 

23 ‘‘(ii) the amount which is a dividend 

24 (and source thereof) shall be determined 

25 under rules similar to the rules of para26 graphs (2) and (5) of section 304(b).’’. 
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1 (b) EARNINGS AND PROFITS.—Paragraph (7) of sec2 tion 312(n) is amended by adding at the end the following: 

3 ‘‘A similar rule shall apply to an exchange to which section 

4 356(a)(1) applies.’’. 

5 (c) CONFORMING AMENDMENT.—Paragraph (1) of sec6 tion 356(a) is amended by striking ‘‘then the gain’’ and 

7 inserting ‘‘then (except as provided in paragraph (2)) the 

8 gain’’. 

9 (d) EFFECTIVE DATE.— 

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

12 apply to exchanges after the date of the enactment of 

13 this Act. 

14 (2) TRANSITION RULE.—The amendments made 

15 by this section shall not apply to any exchange be16 tween unrelated persons pursuant to a transaction 

17 which is— 

18 (A) made pursuant to a written agreement 

19 which was binding on May 20, 2010, and at all 

20 times thereafter; 

21 (B) described in a ruling request submitted 

22 to the Internal Revenue Service on or before such 

23 date; or 
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1 (C) described in a public announcement or 

2 filing with the Securities and Exchange Commis3 sion on or before such date. 

4 (3) RELATED PERSONS.—For purposes of this 

5 subsection, a person shall be treated as related to an6 other person if the relationship between such persons 

7 is described in section 267 or 707(b) of the Internal 

8 Revenue Code of 1986. 

9 Subtitle D—Other Provisions 

10 SEC. 431. MODIFICATIONS WITH RESPECT TO OIL SPILL LI11 ABILITY TRUST FUND. 

12 (a) EXTENSION OF APPLICATION OF OIL SPILL LI13 ABILITY TRUST FUND FINANCING RATE.—Paragraph (2) of 

14 section 4611(f) is amended by striking ‘‘December 31, 2017’’ 

15 and inserting ‘‘December 31, 2020’’. 

16 (b) INCREASE IN OIL SPILL LIABILITY TRUST FUND

17 FINANCING RATE.—Subparagraph (B) of section 4611(c)(2) 

18 is amended to read as follows: 

19 ‘‘(B) the Oil Spill Liability Trust Fund fi20 nancing rate is 34 cents a barrel.’’. 

21 (c) INCREASE IN PER INCIDENT LIMITATIONS ON EX22 PENDITURES.—Subparagraph (A) of section 9509(c)(2) is 

23 amended— 

24 (1) by striking ‘‘$1,000,000,000’’ in clause (i) 

25 and inserting ‘‘$5,000,000,000’’; 
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1 (2) by striking ‘‘$500,000,000’’ in clause (ii) and 

2 inserting ‘‘$2,500,000,000’’; and 

3 (3) by striking ‘‘$1,000,000,000 PER INCIDENT, 

4 ETC’’ in the heading and inserting ‘‘PER INCIDENT

5 LIMITATIONS’’. 

6 (d) EFFECTIVE DATE.— 

7 (1) EXTENSION OF FINANCING RATE.—Except as 

8 provided in paragraph (2), the amendments made by 

9 this section shall take effect on the date of the enact10 ment of this Act. 

11 (2) INCREASE IN FINANCING RATE.—The amend12 ment made by subsection (b) shall apply to crude oil 

13 received and petroleum products entered during cal14 endar quarters beginning more than 60 days after the 

15 date of the enactment of this Act. 

16 SEC. 432. TIME FOR PAYMENT OF CORPORATE ESTIMATED 

17 TAXES. 

18 The percentage under paragraph (2) of section 561 of 

19 the Hiring Incentives to Restore Employment Act in effect 

20 on the date of the enactment of this Act is increased by 

21 36 percentage points. 
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1 TITLE V—UNEMPLOYMENT, 

2 HEALTH, AND OTHER ASSIST3 ANCE 

4 Subtitle A—Unemployment 

5 Insurance and Other Assistance 

6 SEC. 501. EXTENSION OF UNEMPLOYMENT INSURANCE 

7 PROVISIONS. 

8 (a) IN GENERAL.—(1) Section 4007 of the Supple9 mental Appropriations Act, 2008 (Public Law 110–252; 26 

10 U.S.C. 3304 note) is amended— 

11 (A) by striking ‘‘June 2, 2010’’ each place it ap12 pears and inserting ‘‘November 30, 2010’’; 

13 (B) in the heading for subsection (b)(2), by strik14 ing ‘‘JUNE 2, 2010’’ and inserting ‘‘NOVEMBER 30, 

15 2010’’; and 

16 (C) in subsection (b)(3), by striking ‘‘November 

17 6, 2010’’ and inserting ‘‘April 30, 2011’’. 

18 (2) Section 2002(e) of the Assistance for Unemployed 

19 Workers and Struggling Families Act, as contained in Pub20 lic Law 111–5 (26 U.S.C. 3304 note; 123 Stat. 438), is 

21 amended— 

22 (A) in paragraph (1)(B), by striking ‘‘June 2, 

23 2010’’ and inserting ‘‘November 30, 2010’’; 
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1 (B) in the heading for paragraph (2), by strik2 ing ‘‘JUNE 2, 2010’’ and inserting ‘‘NOVEMBER 30, 

3 2010’’; and 

4 (C) in paragraph (3), by striking ‘‘December 7, 

5 2010’’ and inserting ‘‘May 31, 2011’’. 

6 (3) Section 2005 of the Assistance for Unemployed 

7 Workers and Struggling Families Act, as contained in Pub8 lic Law 111–5 (26 U.S.C. 3304 note; 123 Stat. 444), is 

9 amended— 

10 (A) by striking ‘‘June 2, 2010’’ each place it ap11 pears and inserting ‘‘December 1, 2010’’; and 

12 (B) in subsection (c), by striking ‘‘November 6, 

13 2010’’ and inserting ‘‘May 1, 2011’’. 

14 (4) Section 5 of the Unemployment Compensation Ex15 tension Act of 2008 (Public Law 110–449; 26 U.S.C. 3304 

16 note) is amended by striking ‘‘November 6, 2010’’ and in17 serting ‘‘April 30, 2011’’. 

18 (b) FUNDING.—Section 4004(e)(1) of the Supplemental 

19 Appropriations Act, 2008 (Public Law 110–252; 26 U.S.C. 

20 3304 note) is amended— 

21 (1) in subparagraph (D), by striking ‘‘and’’ at 

22 the end; and 

23 (2) by inserting after subparagraph (E) the fol24 lowing: 
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1 ‘‘(F) the amendments made by section 

2 501(a)(1) of the American Jobs and Closing Tax 

3 Loopholes Act of 2010; and’’. 

4 (c) CONDITIONS FOR RECEIVING EMERGENCY UNEM5 PLOYMENT COMPENSATION.—Section 4001(d)(2) of the 

6 Supplemental Appropriations Act, 2008 (Public Law 110– 

7 252; 26 U.S.C. 3304 note) is amended, in the matter pre8 ceding subparagraph (A), by inserting before ‘‘shall apply’’ 

9 the following: ‘‘(including terms and conditions relating to 

10 availability for work, active search for work, and refusal 

11 to accept work)’’. 

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

13 section shall take effect as if included in the enactment of 

14 the Continuing Extension Act of 2010 (Public Law 111– 

15 157). 

16 SEC. 502. COORDINATION OF EMERGENCY UNEMPLOYMENT 

17 COMPENSATION WITH REGULAR COMPENSA18 TION. 

19 (a) CERTAIN INDIVIDUALS NOT INELIGIBLE BY REA20 SON OF NEW ENTITLEMENT TO REGULAR BENEFITS.—Sec21 tion 4002 of the Supplemental Appropriations Act, 2008 

22 (Public Law 110–252; 26 U.S.C. 3304 note) is amended by 

23 adding at the end the following: 

24 ‘‘(g) COORDINATION OF EMERGENCY UNEMPLOYMENT

25 COMPENSATION WITH REGULAR COMPENSATION.— 
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1 ‘‘(1) If— 

2 ‘‘(A) an individual has been determined to 

3 be entitled to emergency unemployment com4 pensation with respect to a benefit year, 

5 ‘‘(B) that benefit year has expired, 

6 ‘‘(C) that individual has remaining entitle7 ment to emergency unemployment compensation 

8 with respect to that benefit year, and 

9 ‘‘(D) that individual would qualify for a 

10 new benefit year in which the weekly benefit 

11 amount of regular compensation is at least either 

12 $100 or 25 percent less than the individual’s 

13 weekly benefit amount in the benefit year re14 ferred to in subparagraph (A), 

15 then the State shall determine eligibility for com16 pensation as provided in paragraph (2). 

17 ‘‘(2) For individuals described in paragraph (1), 

18 the State shall determine whether the individual is to 

19 be paid emergency unemployment compensation or 

20 regular compensation for a week of unemployment 

21 using one of the following methods: 

22 ‘‘(A) The State shall, if permitted by State 

23 law, establish a new benefit year, but defer the 

24 payment of regular compensation with respect to 

25 that new benefit year until exhaustion of all 
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1 emergency unemployment compensation payable 

2 with respect to the benefit year referred to in 

3 paragraph (1)(A); 

4 ‘‘(B) The State shall, if permitted by State 

5 law, defer the establishment of a new benefit year 

6 (which uses all the wages and employment which 

7 would have been used to establish a benefit year 

8 but for the application of this paragraph), until 

9 exhaustion of all emergency unemployment com10 pensation payable with respect to the benefit 

11 year referred to in paragraph(1)(A); 

12 ‘‘(C) The State shall pay, if permitted by 

13 State law— 

14 ‘‘(i) regular compensation equal to the 

15 weekly benefit amount established under the 

16 new benefit year, and 

17 ‘‘(ii) emergency unemployment com18 pensation equal to the difference between 

19 that weekly benefit amount and the weekly 

20 benefit amount for the expired benefit year; 

21 or 

22 ‘‘(D) The State shall determine rights to 

23 emergency unemployment compensation without 

24 regard to any rights to regular compensation if 
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1 the individual elects to not file a claim for reg2 ular compensation under the new benefit year.’’. 

3 (b) EFFECTIVE DATE.—The amendment made by this 

4 section shall apply to individuals whose benefit years, as 

5 described in section 4002(g)(1)(B) the Supplemental Appro6 priations Act, 2008 (Public Law 110–252; 26 U.S.C. 3304 

7 note), as amended by this section, expire after the date of 

8 enactment of this Act. 

9 SEC. 503. EXTENSION OF THE EMERGENCY CONTINGENCY 

10 FUND. 

11 (a) IN GENERAL.—Section 403(c) of the Social Secu12 rity Act (42 U.S.C. 603(c)) is amended— 

13 (1) in paragraph (2)(A), by inserting ‘‘, and for 

14 fiscal year 2011, $2,500,000,000’’ before ‘‘for pay15 ment’’; 

16 (2) by striking paragraph (2)(B) and inserting 

17 the following: 

18 ‘‘(B) AVAILABILITY AND USE OF FUNDS.— 

19 ‘‘(i) FISCAL YEARS 2009 AND 2010.—The 

20 amounts appropriated to the Emergency 

21 Fund under subparagraph (A) for fiscal 

22 year 2009 shall remain available through 

23 fiscal year 2010 and shall be used to make 

24 grants to States in each of fiscal years 2009 

25 and 2010 in accordance with paragraph 
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1 (3), except that the amounts shall remain 

2 available through fiscal year 2011 to make 

3 grants and payments to States in accord4 ance with paragraph (3)(C) to cover ex5 penditures to subsidize employment posi6 tions held by individuals placed in the posi7 tions before fiscal year 2011. 

8 ‘‘(ii) FISCAL YEAR 2011.—Subject to 

9 clause (iii), the amounts appropriated to 

10 the Emergency Fund under subparagraph 

11 (A) for fiscal year 2011 shall remain avail12 able through fiscal year 2012 and shall be 

13 used to make grants to States based on ex14 penditures in fiscal year 2011 for benefits 

15 and services provided in fiscal year 2011 in 

16 accordance with the requirements of para17 graph (3). 

18 ‘‘(iii) RESERVATION OF FUNDS.—Of 

19 the amounts appropriated to the Emergency 

20 Fund under subparagraph (A) for fiscal 

21 year 2011, $500,000 shall be placed in re22 serve for use in fiscal year 2012, and shall 

23 be used to award grants for any expendi24 tures described in this subsection incurred 

25 by States after September 30, 2011.’’; 
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1 (3) in paragraph (2)(C), by striking ‘‘2010’’ and 

2 inserting ‘‘2012’’; 

3 (4) in paragraph (3)— 

4 (A) in clause (i) of each of subparagraphs 

5 (A), (B), and (C)— 

6 (i) by striking ‘‘year 2009 or 2010’’ 

7 and inserting ‘‘years 2009 through 2011’’; 

8 (ii) by striking ‘‘and’’ at the end of 

9 subclause (I); 

10 (iii) by striking the period at the end 

11 of subclause (II) and inserting ‘‘; and’’; and 

12 (iv) by adding at the end the following: 

13 ‘‘(III) if the quarter is in fiscal 

14 year 2011, has provided the Secretary 

15 with such information as the Secretary 

16 may find necessary in order to make 

17 the determinations, or take any other 

18 action, described in paragraph 

19 (5)(C).’’; and 

20 (B) in subparagraph (C), by adding at the 

21 end the following: 

22 ‘‘(iv) LIMITATION ON EXPENDITURES

23 FOR SUBSIDIZED EMPLOYMENT.—An ex24 penditure for subsidized employment shall 

25 be taken into account under clause (ii) only 
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1 if the expenditure is used to subsidize em2 ployment for— 

3 ‘‘(I) a member of a needy family 

4 (without regard to whether the family 

5 is receiving assistance under the State 

6 program funded under this part); or 

7 ‘‘(II) an individual who has ex8 hausted (or, within 60 days, will ex9 haust) all rights to receive unemploy10 ment compensation under Federal and 

11 State law, and who is a member of a 

12 needy family.’’; 

13 (5) by striking paragraph (5) and inserting the 

14 following: 

15 ‘‘(5) LIMITATIONS ON PAYMENTS; ADJUSTMENT

16 AUTHORITY.— 

17 ‘‘(A) FISCAL YEARS 2009 AND 2010.—The 

18 total amount payable to a single State under 

19 subsection (b) and this subsection for fiscal years 

20 2009 and 2010 combined shall not exceed 50 per21 cent of the annual State family assistance grant. 

22 ‘‘(B) FISCAL YEAR 2011.—Subject to sub23 paragraph (C), the total amount payable to a 

24 single State under subsection (b) and this sub25 section for fiscal year 2011 shall not exceed 30 
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1 percent of the annual State family assistance 

2 grant. 

3 ‘‘(C) ADJUSTMENT AUTHORITY.—If the Sec4 retary determines that the Emergency Fund is at 

5 risk of being depleted before September 30, 2011, 

6 or that funds are available to accommodate addi7 tional State requests under this subsection, the 

8 Secretary may, through program instructions 

9 issued without regard to the requirements of sec10 tion 553 of title 5, United States Code— 

11 ‘‘(i) specify priority criteria for 

12 awarding grants to States during fiscal 

13 year 2011; and 

14 ‘‘(ii) adjust the percentage limitation 

15 applicable under subparagraph (B) with re16 spect to the total amount payable to a sin17 gle State for fiscal year 2011.’’; and 

18 (6) in paragraph (6), by inserting ‘‘or for ex19 penditures described in paragraph (3)(C)(iv)’’ before 

20 the period. 

21 (b) CONFORMING AMENDMENTS.—Section 2101 of di22 vision B of the American Recovery and Reinvestment Act 

23 of 2009 (Public Law 111–5) is amended— 

24 (1) in subsection (a)(2)— 
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1 (A) by striking ‘‘2010’’ and inserting 

2 ‘‘2011’’; and 

3 (B) by striking all that follows ‘‘repealed’’ 

4 and inserting a period; and 

5 (2) in subsection (d)(1), by striking ‘‘2010’’ and 

6 inserting ‘‘2011’’. 

7 (c) PROGRAM GUIDANCE.—The Secretary of Health 

8 and Human Services shall issue program guidance, without 

9 regard to the requirements of section 553 of title 5, United 

10 States Code, which ensures that the funds provided under 

11 the amendments made by this section to a jurisdiction for 

12 subsidized employment do not support any subsidized em13 ployment position the annual salary of which is greater 

14 than, at State option— 

15 (1) 200 percent of the poverty line (within the 

16 meaning of section 673(2) of the Omnibus Budget 

17 Reconciliation Act of 1981, including any revision re18 quired by such section 673(2)) for a family of 4; or 

19 (2) the median wage in the jurisdiction. 

20 Subtitle B—Health Provisions 

21 SEC. 511. EXTENSION OF SECTION 508 RECLASSIFICATIONS. 

22 (a) IN GENERAL.—Section 106(a) of division B of the 

23 Tax Relief and Health Care Act of 2006 (42 U.S.C. 1395 

24 note), as amended by section 117 of the Medicare, Medicaid, 

25 and SCHIP Extension Act of 2007 (Public Law 110–173), 
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1 section 124 of the Medicare Improvements for Patients and 

2 Providers Act of 2008 (Public Law 110–275), and sections 

3 3137(a) and 10317 of Public Law 111–148, is amended by 

4 striking ‘‘September 30, 2010’’ and inserting ‘‘September 

5 30, 2011’’. 

6 (b) APPLICATION.—For fiscal year 2011, the Secretary 

7 of Health and Human Services may implement the amend8 ment made by subsection (a) by posting on the Internet 

9 website of the Centers for Medicare & Medicaid Services a 

10 list of the areas and the hospitals whose reclassifications 

11 will be extended pursuant to such amendment. Hospitals 

12 located in or reclassified to labor market areas that are af13 fected by such extension may terminate or withdraw their 

14 reclassifications by following the procedures included in sec15 tion 412.273 of title 42, Code of Federal Regulations, except 

16 that any request for such termination or withdrawal must 

17 be received by the Medicare Geographic Classification Re18 view Board not later than the date that is 5 business days 

19 after the day of such posting on the Internet website of the 

20 Centers for Medicare & Medicaid Services or June 18, 2010, 

21 whichever date is later. 

22 (c) CONFORMING AMENDMENT.—Section 117(a)(3) of 

23 the Medicare, Medicaid, and SCHIP Extension Act of 2007 

24 (Public Law 110–173)), is amended by inserting ‘‘in fiscal 
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1 years 2008 and 2009’’ after ‘‘For purposes of implementa2 tion of this subsection’’. 

3 SEC. 512. REPEAL OF DELAY OF RUG-IV. 

4 Effective as if included in the enactment of Public Law 

5 111–148, section 10325 of such Act is repealed. 

6 SEC. 513. LIMITATION ON REASONABLE COSTS PAYMENTS 

7 FOR CERTAIN CLINICAL DIAGNOSTIC LAB8 ORATORY TESTS FURNISHED TO HOSPITAL 

9 PATIENTS IN CERTAIN RURAL AREAS. 

10 Section 3122 of Public Law 111–148 is repealed and 

11 the provision of law amended by such section is restored 

12 as if such section had not been enacted. 

13 SEC. 514. FUNDING FOR CLAIMS REPROCESSING. 

14 For purposes of carrying out the provisions of, and 

15 amendments made by, this Act that relate to title XVIII 

16 of the Social Security Act, and other provisions of such title 

17 that involve reprocessing of claims, there are appropriated 

18 to the Secretary of Health and Human Services for the Cen19 ters for Medicare & Medicaid Services Program Manage20 ment Account, from amounts in the general fund of the 

21 Treasury not otherwise appropriated, $175,000,000. 

22 Amounts appropriated under the preceding sentence shall 

23 remain available until expended. 
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1 SEC. 515. MEDICAID AND CHIP TECHNICAL CORRECTIONS. 

2 (a) REPEAL OF EXCLUSION OF CERTAIN INDIVIDUALS

3 AND ENTITIES FROM MEDICAID.—Section 6502 of Public 

4 Law 111–148 is repealed and the provisions of law amend5 ed by such section are restored as if such section had never 

6 been enacted. Nothing in the previous sentence shall affect 

7 the execution or placement of the insertion made by section 

8 6503 of such Act. 

9 (b) INCOME LEVEL FOR CERTAIN CHILDREN UNDER

10 MEDICAID.—Effective as if included in the enactment of 

11 Public Law 111–148, section 2001(a)(5)(B) of such Act is 

12 amended by striking all that follows ‘‘is amended’’ and in13 serting the following: ‘‘by inserting after ‘100 percent’ the 

14 following: ‘(or, beginning January 1, 2014, 133 percent)’.’’. 

15 (c) CALCULATION AND PUBLICATION OF PAYMENT

16 ERROR RATE MEASUREMENT FOR CERTAIN YEARS.—Sec17 tion 601(b) of the Children’s Health Insurance Program Re18 authorization Act of 2009 (Public Law 111–3) is amended 

19 by adding at the end the following: ‘‘The Secretary is not 

20 required under this subsection to calculate or publish a na21 tional or a State-specific error rate for fiscal year 2009 or 

22 fiscal year 2010.’’. 

23 (d) CORRECTIONS TO EXCEPTIONS TO EXCLUSION OF

24 CHILDREN OF CERTAIN EMPLOYEES.—Section 2110(b)(6) 

25 of the Social Security Act (42 U.S.C. 1397jj(b)(6)) is 

26 amended— 
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1 (1) in subparagraph (B)— 

2 (A) by striking ‘‘PER PERSON’’ in the head3 ing; and 

4 (B) by striking ‘‘each employee’’ and insert5 ing ‘‘employees’’; and 

6 (2) in subparagraph (C), by striking ‘‘, on a 

7 case-by-case basis,’’. 

8 (e) ELECTRONIC HEALTH RECORDS.—Effective as if 

9 included in the enactment of section 4201(a)(2) of the 

10 American Recovery and Reinvestment Act of 2009 (Public 

11 Law 111–5), section 1903(t) of the Social Security Act (42 

12 U.S.C. 1396b(t)) is amended— 

13 (1) in paragraph (3)(E), by striking ‘‘reduced by 

14 any payment that is made to such Medicaid provider 

15 from any other source (other than under this sub16 section or by a State or local government)’’ and in17 serting ‘‘reduced by the average payment the Sec18 retary estimates will be made to such Medicaid pro19 viders (determined on a percentage or other basis for 

20 such classes or types of providers as the Secretary 

21 may specify) from other sources (other than under 

22 this subsection, or by the Federal government or a 

23 State or local government)’’; and 

24 (2) in paragraph (6)(B), by inserting before the 

25 period the following: ‘‘and shall be determined to have 
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1 met such responsibility to the extent that the payment 

2 to the Medicaid provider is not in excess of 85 percent 

3 of the net average allowable cost’’. 

4 (f) CORRECTIONS OF DESIGNATIONS.— 

5 (1) Section 1902 of the Social Security Act (42 

6 U.S.C. 1396a) is amended— 

7 (A) in subsection (a)(10), in the matter fol8 lowing subparagraph (G), by striking ‘‘and’’ be9 fore ‘‘(XVI) the medical’’ and by striking ‘‘(XVI) 

10 if’’ and inserting ‘‘(XVII) if’’; and 

11 (B) in subsection (ii)(2), by striking ‘‘(XV)’’ 

12 and inserting ‘‘(XVI)’’. 

13 (2) Section 2107(e)(1) of the Social Security Act 

14 (42 U.S.C. 1397gg(e)(1)) is amended by redesignating 

15 the subparagraph (N) of that section added by 

16 2101(e) of Public Law 111–148 as subparagraph (O). 

17 SEC. 516. ADDITION OF INPATIENT DRUG DISCOUNT PRO18 GRAM TO 340B DRUG DISCOUNT PROGRAM. 

19 (a) ADDITION OF INPATIENT DRUG DISCOUNT.—Title 

20 III of the Public Health Service Act is amended by insert21 ing after section 340B (42 U.S.C. 256b) the following: 
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1 ‘‘SEC. 340B–1. DISCOUNT INPATIENT DRUGS FOR INDIVID2 UALS WITHOUT PRESCRIPTION DRUG COV3 ERAGE. 

4 ‘‘(a) REQUIREMENTS FOR AGREEMENTS WITH THE

5 SECRETARY.— 

6 ‘‘(1) IN GENERAL.— 

7 ‘‘(A) AGREEMENT.—The Secretary shall 

8 enter into an agreement with each manufacturer 

9 of covered inpatient drugs under which the 

10 amount required to be paid (taking into account 

11 any rebate or discount, as provided by the Sec12 retary) to the manufacturer for covered inpatient 

13 drugs (other than drugs described in paragraph 

14 (3)) purchased by a covered entity on or after 

15 January 1, 2011, does not exceed an amount 

16 equal to the average manufacturer price for the 

17 drug under title XIX of the Social Security Act 

18 in the preceding calendar quarter, reduced by the 

19 rebate percentage described in paragraph (2). 

20 For a covered inpatient drug that also is a cov21 ered outpatient drug under section 340B, the 

22 amount required to be paid under the preceding 

23 sentence shall be equal to the amount required to 

24 be paid under section 340B(a)(1) for such drug. 

25 The agreement with a manufacturer under this 

26 subparagraph may, at the discretion of the Sec-
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1 retary, be included in the agreement with the 

2 same manufacturer under section 340B. 

3 ‘‘(B) CEILING PRICE.—Each such agreement 

4 shall require that the manufacturer furnish the 

5 Secretary with reports, on a quarterly basis, of 

6 the price for each covered inpatient drug subject 

7 to the agreement that, according to the manufac8 turer, represents the maximum price that covered 

9 entities may permissibly be required to pay for 

10 the drug (referred to in this section as the ‘ceil11 ing price’), and shall require that the manufac12 turer offer each covered entity covered inpatient 

13 drugs for purchase at or below the applicable 

14 ceiling price if such drug is made available to 

15 any other purchaser at any price. 

16 ‘‘(C) ALLOCATION METHOD.—Each such 

17 agreement shall require that, if the supply of a 

18 covered inpatient drug is insufficient to meet de19 mand, then the manufacturer may use an alloca20 tion method that is reported in writing to, and 

21 approved by, the Secretary and does not dis22 criminate on the basis of the price paid by cov23 ered entities or on any other basis related to the 

24 participation of an entity in the program under 

25 this section. 
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1 ‘‘(2) REBATE PERCENTAGE DEFINED.— 

2 ‘‘(A) IN GENERAL.—For a covered inpatient 

3 drug purchased in a calendar quarter, the ‘rebate 

4 percentage’ is the amount (expressed as a per5 centage) equal to— 

6 ‘‘(i) the average total rebate required 

7 under section 1927(c) of the Social Security 

8 Act (or the average total rebate that would 

9 be required if the drug were a covered out10 patient drug under such section) with re11 spect to the drug (for a unit of the dosage 

12 form and strength involved) during the pre13 ceding calendar quarter; divided by 

14 ‘‘(ii) the average manufacturer price 

15 for such a unit of the drug during such 

16 quarter. 

17 ‘‘(B) OVER THE COUNTER DRUGS.— 

18 ‘‘(i) IN GENERAL.—For purposes of 

19 subparagraph (A), in the case of over the 

20 counter drugs, the ‘rebate percentage’ shall 

21 be determined as if the rebate required 

22 under section 1927(c) of the Social Security 

23 Act is based on the applicable percentage 

24 provided under section 1927(c)(3) of such 

25 Act. 
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1 ‘‘(ii) DEFINITION.—The term ‘over the 

2 counter drug’ means a drug that may be 

3 sold without a prescription and which is 

4 prescribed by a physician (or other persons 

5 authorized to prescribe such drug under 

6 State law). 

7 ‘‘(3) DRUGS PROVIDED UNDER STATE MEDICAID

8 PLANS.—Drugs described in this paragraph are drugs 

9 purchased by the entity for which payment is made 

10 by the State under the State plan for medical assist11 ance under title XIX of the Social Security Act. 

12 ‘‘(4) REQUIREMENTS FOR COVERED ENTITIES.— 

13 ‘‘(A) PROHIBITING DUPLICATE DISCOUNTS

14 OR REBATES.— 

15 ‘‘(i) IN GENERAL.—A covered entity 

16 shall not request payment under title XIX 

17 of the Social Security Act for medical as18 sistance described in section 1905(a)(12) of 

19 such Act with respect to a drug that is sub20 ject to an agreement under this section if 

21 the drug is subject to the payment of a re22 bate to the State under section 1927 of such 

23 Act. 

24 ‘‘(ii) ESTABLISHMENT OF MECHA25 NISM.—The Secretary shall establish a 
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1 mechanism to ensure that covered entities 

2 comply with clause (i). If the Secretary does 

3 not establish a mechanism under the pre4 vious sentence within 12 months of the en5 actment of this section, the requirements of 

6 section 1927(a)(5)(C) of the Social Security 

7 Act shall apply. 

8 ‘‘(iii) PROHIBITING DISCLOSURE TO

9 GROUP PURCHASING ORGANIZATIONS.—In 

10 the event that a covered entity is a member 

11 of a group purchasing organization, such 

12 entity shall not disclose the price or any 

13 other information pertaining to any pur14 chases under this section directly or indi15 rectly to such group purchasing organiza16 tion. 

17 ‘‘(B) PROHIBITING RESALE, DISPENSING, 

18 OR ADMINISTRATION OF DRUGS EXCEPT TO CER19 TAIN PATIENTS.—With respect to any covered in20 patient drug that is subject to an agreement 

21 under this subsection, a covered entity shall not 

22 dispense, administer, resell, or otherwise transfer 

23 the covered inpatient drug to a person unless— 

24 ‘‘(i) such person is a patient of the en25 tity; and 
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1 ‘‘(ii) such person does not have health 

2 plan coverage (as defined in subsection 

3 (c)(3)) that provides prescription drug cov4 erage in the inpatient setting with respect 

5 to such covered inpatient drug. 

6 For purposes of clause (ii), a person shall be 

7 treated as having health plan coverage (as de8 fined in subsection (c)(3)) with respect to a cov9 ered inpatient drug if benefits are not payable 

10 under such coverage with respect to such drug for 

11 reasons such as the application of a deductible or 

12 cost sharing or the use of utilization manage13 ment. 

14 ‘‘(C) AUDITING.—A covered entity shall per15 mit the Secretary and the manufacturer of a cov16 ered inpatient drug that is subject to an agree17 ment under this subsection with the entity (act18 ing in accordance with procedures established by 

19 the Secretary relating to the number, duration, 

20 and scope of audits) to audit at the Secretary’s 

21 or the manufacturer’s expense the records of the 

22 entity that directly pertain to the entity’s com23 pliance with the requirements described in sub24 paragraph (A) or (B) with respect to drugs of 

25 the manufacturer. The use or disclosure of infor-
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1 mation for performance of such an audit shall be 

2 treated as a use or disclosure required by law for 

3 purposes of section 164.512(a) of title 45, Code 

4 of Federal Regulations. 

5 ‘‘(D) ADDITIONAL SANCTION FOR NON6 COMPLIANCE.—If the Secretary finds, after no7 tice and hearing, that a covered entity is in vio8 lation of a requirement described in subpara9 graph (A) or (B), the covered entity shall be lia10 ble to the manufacturer of the covered inpatient 

11 drug that is the subject of the violation in an 

12 amount equal to the reduction in the price of the 

13 drug (as described in subparagraph (A)) pro14 vided under the agreement between the Secretary 

15 and the manufacturer under this subsection. 

16 ‘‘(E) MAINTENANCE OF RECORDS.— 

17 ‘‘(i) IN GENERAL.—A covered entity 

18 shall establish and maintain an effective 

19 recordkeeping system to comply with this 

20 section and shall certify to the Secretary 

21 that such entity is in compliance with sub22 paragraphs (A) and (B). The Secretary 

23 shall require that hospitals that purchase 

24 covered inpatient drugs for inpatient dis25 pensing or administration under this sub-
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1 section appropriately segregate inventory of 

2 such covered inpatient drugs, either phys3 ically or electronically, from drugs for out4 patient use, as well as from drugs for inpa5 tient dispensing or administration to indi6 viduals who have (for purposes of subpara7 graph (B)) health plan coverage described 

8 in clause (ii) of such subparagraph. 

9 ‘‘(ii) CERTIFICATION OF NO THIRD10 PARTY PAYER.—A covered entity shall 

11 maintain records that contain certification 

12 by the covered entity that no third party 

13 payment was received for any covered inpa14 tient drug that is subject to an agreement 

15 under this subsection and that was dis16 pensed to an inpatient. 

17 ‘‘(5) TREATMENT OF DISTINCT UNITS OF HOS18 PITALS.—In the case of a covered entity that is a dis19 tinct part of a hospital, the distinct part of the hos20 pital shall not be considered a covered entity under 

21 this subsection unless the hospital is otherwise a cov22 ered entity under this subsection. 

23 ‘‘(6) NOTICE TO MANUFACTURERS.—The Sec24 retary shall notify manufacturers of covered inpatient 

25 drugs and single State agencies under section 
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1 1902(a)(5) of the Social Security Act of the identities 

2 of covered entities under this subsection, and of enti3 ties that no longer meet the requirements of para4 graph (4), by means of timely updates of the Internet 

5 website supported by the Department of Health and 

6 Human Services relating to this section. 

7 ‘‘(7) NO PROHIBITION ON LARGER DISCOUNT.— 

8 Nothing in this subsection shall prohibit a manufac9 turer from charging a price for a drug that is lower 

10 than the maximum price that may be charged under 

11 paragraph (1). 

12 ‘‘(b) COVERED ENTITY DEFINED.—In this section, the 

13 term ‘covered entity’ means an entity that meets the re14 quirements described in subsection (a)(4) and is one of the 

15 following: 

16 ‘‘(1) A subsection (d) hospital (as defined in sec17 tion 1886(d)(1)(B) of the Social Security Act) that— 

18 ‘‘(A) is owned or operated by a unit of 

19 State or local government, is a public or private 

20 non-profit corporation which is formally granted 

21 governmental powers by a unit of State or local 

22 government, or is a private nonprofit hospital 

23 which has a contract with a State or local gov24 ernment to provide health care services to low in25 come individuals who are not entitled to benefits 
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1 under title XVIII of the Social Security Act or 

2 eligible for assistance under the State plan for 

3 medical assistance under title XIX of such Act; 

4 and 

5 ‘‘(B) for the most recent cost reporting pe6 riod that ended before the calendar quarter in7 volved, had a disproportionate share adjustment 

8 percentage (as determined using the methodology 

9 under section 1886(d)(5)(F) of the Social Secu10 rity Act as in effect on the date of enactment of 

11 this section) greater than 20.20 percent or was 

12 described in section 1886(d)(5)(F)(i)(II) of such 

13 Act (as so in effect on the date of enactment of 

14 this section). 

15 ‘‘(2) A children’s hospital excluded from the 

16 Medicare prospective payment system pursuant to 

17 section 1886(d)(1)(B)(iii) of the Social Security Act 

18 that would meet the requirements of paragraph (1), 

19 including the disproportionate share adjustment per20 centage requirement under subparagraph (B) of such 

21 paragraph, if the hospital were a subsection (d) hos22 pital as defined by section 1886(d)(1)(B) of the Social 

23 Security Act. 

24 ‘‘(3) A free-standing cancer hospital excluded 

25 from the Medicare prospective payment system pursu-
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1 ant to section 1886(d)(1)(B)(v) of the Social Security 

2 Act that would meet the requirements of paragraph 

3 (1), including the disproportionate share adjustment 

4 percentage requirement under subparagraph (B) of 

5 such paragraph, if the hospital were a subsection (d) 

6 hospital as defined by section 1886(d)(1)(B) of the 

7 Social Security Act. 

8 ‘‘(4) An entity that is a critical access hospital 

9 (as determined under section 1820(c)(2) of the Social 

10 Security Act), and that meets the requirements of 

11 paragraph (1)(A). 

12 ‘‘(5) An entity that is a rural referral center, as 

13 defined by section 1886(d)(5)(C)(i) of the Social Secu14 rity Act, or a sole community hospital, as defined by 

15 section 1886(d)(5)(C)(iii) of such Act, and that both 

16 meets the requirements of paragraph (1)(A) and has 

17 a disproportionate share adjustment percentage equal 

18 to or greater than 8 percent. 

19 ‘‘(c) OTHER DEFINITIONS.—In this section: 

20 ‘‘(1) AVERAGE MANUFACTURER PRICE.— 

21 ‘‘(A) IN GENERAL.—The term ‘average 

22 manufacturer price’— 

23 ‘‘(i) has the meaning given such term 

24 in section 1927(k) of the Social Security 

25 Act, except that such term shall be applied 
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1 under this section with respect to covered 

2 inpatient drugs in the same manner (as ap3 plicable) as such term is applied under such 

4 section 1927(k) with respect to covered out5 patient drugs (as defined in such section); 

6 and 

7 ‘‘(ii) with respect to a covered inpa8 tient drug for which there is no average 

9 manufacturer price (as defined in clause 

10 (i)), shall be the amount determined under 

11 regulations promulgated by the Secretary 

12 under subparagraph (B). 

13 ‘‘(B) RULEMAKING.—The Secretary shall by 

14 regulation, in consultation with the Adminis15 trator of the Centers for Medicare & Medicaid 

16 Services, establish a method for determining the 

17 average manufacturer price for covered inpatient 

18 drugs for which there is no average manufacturer 

19 price (as defined in subparagraph (A)(i)). Regu20 lations promulgated with respect to covered in21 patient drugs under the preceding sentence shall 

22 provide for the application of methods for deter23 mining the average manufacturer price that are 

24 the same as the methods used to determine such 

25 price in calculating rebates required for such 
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1 drugs under an agreement between a manufac2 turer and a State that satisfies the requirements 

3 of section 1927(b) of the Social Security Act, as 

4 applicable. 

5 ‘‘(2) COVERED INPATIENT DRUG.—The term ‘cov6 ered inpatient drug’ means a drug— 

7 ‘‘(A) that is described in section 1927(k)(2) 

8 of the Social Security Act; 

9 ‘‘(B) that, notwithstanding paragraph 

10 (3)(A) of section 1927(k) of such Act, is used in 

11 connection with an inpatient service provided by 

12 a covered entity that is enrolled to participate in 

13 the drug discount program under this section; 

14 and 

15 ‘‘(C) that is not purchased by the covered 

16 entity through or under contract with a group 

17 purchasing organization. 

18 ‘‘(3) HEALTH PLAN COVERAGE.—The term 

19 ‘health plan coverage’ means— 

20 ‘‘(A) health insurance coverage (as defined 

21 in section 2791, and including coverage under a 

22 State health benefits risk pool); 

23 ‘‘(B) coverage under a group health plan 

24 (as defined in such section, and including cov-
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1 erage under a church plan, a governmental plan, 

2 or a collectively bargained plan); 

3 ‘‘(C) coverage under a Federal health care 

4 program (as defined by section 1128B(f) of the 

5 Social Security Act); or 

6 ‘‘(D) such other health benefits coverage as 

7 the Secretary recognizes for purposes of this sec8 tion. 

9 ‘‘(4) MANUFACTURER.—The term ‘manufacturer’ 

10 has the meaning given such term in section 1927(k) 

11 of the Social Security Act. 

12 ‘‘(d) PROGRAM INTEGRITY.— 

13 ‘‘(1) MANUFACTURER COMPLIANCE.— 

14 ‘‘(A) IN GENERAL.—From amounts appro15 priated under subsection (f), the Secretary shall 

16 provide for improvements in compliance by 

17 manufacturers with the requirements of this sec18 tion in order to prevent overcharges and other 

19 violations of the discounted pricing requirements 

20 specified in this section. 

21 ‘‘(B) IMPROVEMENTS.—The improvements 

22 described in subparagraph (A) shall include the 

23 following: 

24 ‘‘(i) The establishment of a process to 

25 enable the Secretary to verify the accuracy 
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1 of ceiling prices calculated by manufactur2 ers under subsection (a)(1) and charged to 

3 covered entities, which shall include the fol4 lowing: 

5 ‘‘(I) Developing and publishing 

6 through an appropriate policy or regu7 latory issuance, precisely defined 

8 standards and methodology for the cal9 culation of ceiling prices under such 

10 subsection. 

11 ‘‘(II) Comparing regularly the 

12 ceiling prices calculated by the Sec13 retary with the quarterly pricing data 

14 that is reported by manufacturers to 

15 the Secretary. 

16 ‘‘(III) Conducting periodic moni17 toring of sales transactions by covered 

18 entities. 

19 ‘‘(IV) Inquiring into any discrep20 ancies between ceiling prices and man21 ufacturer pricing data that may be 

22 identified and taking, or requiring 

23 manufacturers to take, corrective ac24 tion in response to such discrepancies, 

25 including the issuance of refunds pur-
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1 suant to the procedures set forth in 

2 clause (ii). 

3 ‘‘(ii) The establishment of procedures 

4 for manufacturers to issue refunds to cov5 ered entities in the event that there is an 

6 overcharge by the manufacturers, including 

7 the following: 

8 ‘‘(I) Providing the Secretary with 

9 an explanation of why and how the 

10 overcharge occurred, how the refunds 

11 will be calculated, and to whom the re12 funds will be issued. 

13 ‘‘(II) Oversight by the Secretary 

14 to ensure that the refunds are issued 

15 accurately and within a reasonable pe16 riod of time. 

17 ‘‘(iii) The provision of access through 

18 the Internet website supported by the De19 partment of Health and Human Services to 

20 the applicable ceiling prices for covered in21 patient drugs as calculated and verified by 

22 the Secretary in accordance with this sec23 tion, in a manner (such as through the use 

24 of password protection) that limits such ac25 cess to covered entities and adequately 
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1 assures security and protection of privileged 

2 pricing data from unauthorized re-disclo3 sure. 

4 ‘‘(iv) The development of a mechanism 

5 by which— 

6 ‘‘(I) rebates, discounts, or other 

7 price concessions provided by manufac8 turers to other purchasers subsequent to 

9 the sale of covered inpatient drugs to 

10 covered entities are reported to the Sec11 retary; and 

12 ‘‘(II) appropriate credits and re13 funds are issued to covered entities if 

14 such discounts, rebates, or other price 

15 concessions have the effect of lowering 

16 the applicable ceiling price for the rel17 evant quarter for the drugs involved. 

18 ‘‘(v) Selective auditing of manufactur19 ers and wholesalers to ensure the integrity 

20 of the drug discount program under this 

21 section. 

22 ‘‘(vi) The establishment of a require23 ment that manufacturers and wholesalers 

24 use the identification system developed by 

25 the Secretary for purposes of facilitating the 
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1 ordering, purchasing, and delivery of cov2 ered inpatient drugs under this section, in3 cluding the processing of chargebacks for 

4 such drugs. 

5 ‘‘(vii) The imposition of sanctions in 

6 the form of civil monetary penalties, 

7 which— 

8 ‘‘(I) shall be assessed according to 

9 standards and procedures established 

10 in regulations to be promulgated by the 

11 Secretary not later than January 1, 

12 2011; 

13 ‘‘(II) shall not exceed $10,000 per 

14 single dosage form of a covered inpa15 tient drug purchased by a covered enti16 ty where a manufacturer knowingly 

17 charges such covered entity a price for 

18 such drug that exceeds the ceiling price 

19 under subsection (a)(1); and 

20 ‘‘(III) shall not exceed $100,000 

21 for each instance where a manufac22 turer withholds or provides materially 

23 false information to the Secretary or to 

24 covered entities under this section or 

25 knowingly violates any provision of 
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1 this section (other than subsection 

2 (a)(1)). 

3 ‘‘(2) COVERED ENTITY COMPLIANCE.— 

4 ‘‘(A) IN GENERAL.—From amounts appro5 priated under subsection (f), the Secretary shall 

6 provide for improvements in compliance by cov7 ered entities with the requirements of this section 

8 in order to prevent diversion and violations of 

9 the duplicate discount provision and other re10 quirements specified under subsection (a)(4). 

11 ‘‘(B) IMPROVEMENTS.—The improvements 

12 described in subparagraph (A) shall include the 

13 following: 

14 ‘‘(i) The development of procedures to 

15 enable and require covered entities to up16 date at least annually the information on 

17 the Internet website supported by the De18 partment of Health and Human Services 

19 relating to this section. 

20 ‘‘(ii) The development of procedures for 

21 the Secretary to verify the accuracy of in22 formation regarding covered entities that is 

23 listed on the website described in clause (i). 

24 ‘‘(iii) The development of more detailed 

25 guidance describing methodologies and op-
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1 tions available to covered entities for billing 

2 covered inpatient drugs to State Medicaid 

3 agencies in a manner that avoids duplicate 

4 discounts pursuant to subsection (a)(4)(A). 

5 ‘‘(iv) The establishment of a single, 

6 universal, and standardized identification 

7 system by which each covered entity site 

8 and each covered entity’s purchasing status 

9 under sections 340B and this section can be 

10 identified by manufacturers, distributors, 

11 covered entities, and the Secretary for pur12 poses of facilitating the ordering, pur13 chasing, and delivery of covered inpatient 

14 drugs under this section, including the proc15 essing of chargebacks for such drugs. 

16 ‘‘(v) The imposition of sanctions in the 

17 form of civil monetary penalties, which— 

18 ‘‘(I) shall be assessed according to 

19 standards and procedures established 

20 in regulations promulgated by the Sec21 retary; and 

22 ‘‘(II) shall not exceed $10,000 for 

23 each instance where a covered entity 

24 knowingly violates subsection (a)(4)(B) 
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1 or knowingly violates any other provi2 sion of this section. 

3 ‘‘(vi) The termination of a covered en4 tity’s participation in the program under 

5 this section, for a period of time to be deter6 mined by the Secretary, in cases in which 

7 the Secretary determines, in accordance 

8 with standards and procedures established 

9 by regulation, that— 

10 ‘‘(I) the violation by a covered en11 tity of a requirement of this section 

12 was repeated and knowing; and 

13 ‘‘(II) imposition of a monetary 

14 penalty would be insufficient to rea15 sonably ensure compliance with the re16 quirements of this section. 

17 ‘‘(vii) The referral of matters, as ap18 propriate, to the Food and Drug Adminis19 tration, the Office of the Inspector General 

20 of the Department of Health and Human 

21 Services, or other Federal or State agencies. 

22 ‘‘(3) ADMINISTRATIVE DISPUTE RESOLUTION

23 PROCESS.—From amounts appropriated under sub24 section (f), the Secretary may establish and imple-
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1 ment an administrative process for the resolution of 

2 the following: 

3 ‘‘(A) Claims by covered entities that manu4 facturers have violated the terms of their agree5 ment with the Secretary under subsection (a)(1). 

6 ‘‘(B) Claims by manufacturers that covered 

7 entities have violated subsection (a)(4)(A) or 

8 (a)(4)(B). 

9 ‘‘(e) AUDIT AND SANCTIONS.— 

10 ‘‘(1) AUDIT.—From amounts appropriated 

11 under subsection (f), the Inspector General of the De12 partment of Health and Human Services (referred to 

13 in this subsection as the ‘Inspector General’) shall 

14 audit covered entities under this section to verify 

15 compliance with criteria for eligibility and participa16 tion under this section, including the antidiversion 

17 prohibitions under subsection (a)(4)(B), and take en18 forcement action or provide information to the Sec19 retary who shall take action to ensure program com20 pliance, as appropriate. A covered entity shall pro21 vide to the Inspector General, upon request, records 

22 relevant to such audits. 

23 ‘‘(2) REPORT.—For each audit conducted under 

24 paragraph (1), the Inspector General shall prepare 
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1 and publish in a timely manner a report which shall 

2 include findings and recommendations regarding— 

3 ‘‘(A) the appropriateness of covered entity 

4 eligibility determinations and, as applicable, cer5 tifications; 

6 ‘‘(B) the effectiveness of antidiversion prohi7 bitions; and 

8 ‘‘(C) the effectiveness of restrictions on in9 patient dispensing and administration. 

10 ‘‘(f) AUTHORIZATION OF APPROPRIATIONS.—There are 

11 authorized to be appropriated to carry out this section such 

12 sums as may be necessary for fiscal year 2011 and each 

13 succeeding fiscal year.’’. 

14 (b) RULEMAKING.—Not later than January 1, 2011, 

15 the Secretary shall promulgate regulations implementing 

16 section 340B–1 of the Public Health Service Act (as added 

17 by subsection (a)). 

18 (c) CONFORMING AMENDMENT TO SECTION 340B.— 

19 Paragraph (1) of section 340B(a) of the Public Health Serv20 ice Act (42 U.S.C. 256b(a)) is amended by adding at the 

21 end the following: ‘‘Such agreement shall further require 

22 that, if the supply of a covered outpatient drug is insuffi23 cient to meet demand, then the manufacturer may use an 

24 allocation method that is reported in writing to, and ap25 proved by, the Secretary and does not discriminate on the 
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1 basis of the price paid by covered entities or on any other 

2 basis related to the participation of an entity in the pro3 gram under this section. The agreement with a manufac4 turer under this paragraph may, at the discretion of the 

5 Secretary, be included in the agreement with the same man6 ufacturer under section 340B–1.’’. 

7 (d) CONFORMING AMENDMENTS TO MEDICAID.—Sec8 tion 1927 of the Social Security Act (42 U.S.C. 1396r–8) 

9 is amended— 

10 (1) in subsection (a)— 

11 (A) in paragraph (1), in the first sentence, 

12 by striking ‘‘and paragraph (6)’’ and inserting 

13 ‘‘, paragraph (6), and paragraph (8)’’; and 

14 (B) by adding at the end the following new 

15 paragraph: 

16 ‘‘(8) LIMITATION ON PRICES OF DRUGS PUR17 CHASED BY 340B–1-COVERED ENTITIES.— 

18 ‘‘(A) AGREEMENT WITH SECRETARY.—A 

19 manufacturer meets the requirements of this 

20 paragraph if the manufacturer has entered into 

21 an agreement with the Secretary that meets the 

22 requirements of section 340B–1 of the Public 

23 Health Service Act with respect to covered inpa24 tient drugs (as defined in such section) pur-
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1 chased by a 340B–1-covered entity on or after 

2 January 1, 2011. 

3 ‘‘(B) 340B–1-COVERED ENTITY DEFINED.— 

4 In this subsection, the term ‘340B–1-covered en5 tity’ means an entity described in section 340B– 

6 1(b) of the Public Health Service Act.’’; and 

7 (2) in subsection (c)(1)(C)(i)(I)— 

8 (A) by striking ‘‘or’’ before ‘‘a covered enti9 ty’’; and 

10 (B) by inserting before the semicolon the fol11 lowing: ‘‘, or a covered entity for a covered inpa12 tient drug (as such terms are defined in section 

13 340B–1of the Public Health Service Act)’’. 

14 SEC. 517. CONTINUED INCLUSION OF ORPHAN DRUGS IN 

15 DEFINITION OF COVERED OUTPATIENT 

16 DRUGS WITH RESPECT TO CHILDREN’S HOS17 PITALS UNDER THE 340B DRUG DISCOUNT 

18 PROGRAM. 

19 (a) DEFINITION OF COVERED OUTPATIENT DRUG.— 

20 (1) AMENDMENT.—Subsection (e) of section 

21 340B of the Public Health Service Act (42 U.S.C. 

22 256b) is amended by striking ‘‘covered entities de23 scribed in subparagraph (M)’’and inserting ‘‘covered 

24 entities described in subparagraph (M) (other than a 

25 children’s hospital described in subparagraph (M))’’. 
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1 (2) EFFECTIVE DATE.—The amendment made by 

2 paragraph (1) shall take effect as if included in the 

3 enactment of section 2302 of the Health Care and 

4 Education Reconciliation Act of 2010 (Public Law 

5 111–152). 

6 (b) TECHNICAL AMENDMENT.—Subparagraph (B) of 

7 section 1927(a)(5) of the Social Security Act (42 U.S.C. 

8 1396r–8(a)(5)) is amended by striking ‘‘and a children’s 

9 hospital’’ and all that follows through the end of the sub10 paragraph and inserting a period. 

11 SEC. 518. CONFORMING AMENDMENT RELATED TO WAIVER 

12 OF COINSURANCE FOR PREVENTIVE SERV13 ICES. 

14 Effective as if included in section 10501(i)(2)(A) of 

15 Public Law 111–148, section 1833(a)(3)(A) of the Social 

16 Security Act (42 U.S.C. 1395l(a)(3)(A)) is amended by 

17 striking ‘‘section 1861(s)(10)(A)’’ and inserting ‘‘section 

18 1861(ddd)(3)’’. 

19 SEC. 519. ESTABLISH A CMS–IRS DATA MATCH TO IDENTIFY 

20 FRAUDULENT PROVIDERS. 

21 (a) AUTHORITY TO DISCLOSE RETURN INFORMATION

22 CONCERNING OUTSTANDING TAX DEBTS FOR PURPOSES OF

23 ENHANCING MEDICARE PROGRAM INTEGRITY.— 
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1 (1) IN GENERAL.—Section 6103(l) of the Inter2 nal Revenue Code of 1986 is amended by adding at 

3 the end the following new paragraph: 

4 ‘‘(22) DISCLOSURE OF RETURN INFORMATION TO

5 DEPARTMENT OF HEALTH AND HUMAN SERVICES FOR

6 PURPOSES OF ENHANCING MEDICARE PROGRAM IN7 TEGRITY.— 

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

9 upon written request from the Secretary of 

10 Health and Human Services, disclose to officers 

11 and employees of the Department of Health and 

12 Human Services return information with respect 

13 to a taxpayer who has applied to enroll, or re14 enroll, as a provider of services or supplier under 

15 the Medicare program under title XVIII of the 

16 Social Security Act. Such return information 

17 shall be limited to— 

18 ‘‘(i) the taxpayer identity information 

19 with respect to such taxpayer; 

20 ‘‘(ii) the amount of the delinquent tax 

21 debt owed by that taxpayer; and 

22 ‘‘(iii) the taxable year to which the de23 linquent tax debt pertains. 

24 ‘‘(B) RESTRICTION ON DISCLOSURE.—Re25 turn information disclosed under subparagraph 
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1 (A) may be used by officers and employees of the 

2 Department of Health and Human Services for 

3 the purposes of, and to the extent necessary in, 

4 establishing the taxpayer’s eligibility for enroll5 ment or reenrollment in the Medicare program, 

6 or in any administrative or judicial proceeding 

7 relating to, or arising from, a denial of such en8 rollment or reenrollment, or in determining the 

9 level of enhanced oversight to be applied with re10 spect to such taxpayer pursuant to section 

11 1866(j)(3) of the Social Security Act. 

12 ‘‘(C) DELINQUENT TAX DEBT.—For pur13 poses of this paragraph, the term ‘delinquent tax 

14 debt’ means an outstanding debt under this title 

15 for which a notice of lien has been filed pursuant 

16 to section 6323, but the term does not include a 

17 debt that is being paid in a timely manner pur18 suant to an agreement under section 6159 or 

19 7122, or a debt with respect to which a collection 

20 due process hearing under section 6330 is re21 quested, pending, or completed and no payment 

22 is required.’’. 

23 (2) CONFORMING AMENDMENTS.—Section 

24 6103(p)(4) of such Code, as amended by sections 1414 

25 and 3308 of Public Law 111–148, in the matter pre-
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1 ceding subparagraph (A) and in subparagraph 

2 (F)(ii), is amended by striking ‘‘or (17)’’ and insert3 ing ‘‘(17), or (22)’’ each place it appears. 

4 (b) SECRETARY’S AUTHORITY TO USE INFORMATION

5 FROM THE DEPARTMENT OF TREASURY IN MEDICARE EN6 ROLLMENTS AND REENROLLMENTS.—Section 1866(j)(2) of 

7 the Social Security Act (42 U.S.C. 1395cc(j)), as inserted 

8 by section 6401(a) of Public Law 111–148, is further 

9 amended— 

10 (1) by redesignating subparagraph (E) as sub11 paragraph (F); and 

12 (2) by inserting after subparagraph (D) the fol13 lowing new subparagraph: 

14 ‘‘(E) USE OF INFORMATION FROM THE DE15 PARTMENT OF TREASURY CONCERNING TAX

16 DEBTS.—In reviewing the application of a pro17 vider of services or supplier to enroll or reenroll 

18 under the program under this title, the Secretary 

19 shall take into account the information supplied 

20 by the Secretary of the Treasury pursuant to sec21 tion 6103(l)(22) of the Internal Revenue Code of 

22 1986, in determining whether to deny such ap23 plication or to apply enhanced oversight to such 

24 provider of services or supplier pursuant to 

25 paragraph (3) if the Secretary determines such 
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1 provider of services or supplier owes such a 

2 debt.’’. 

3 (c) AUTHORITY TO ADJUST PAYMENTS OF PROVIDERS

4 OF SERVICES AND SUPPLIERS WITH THE SAME TAX IDEN5 TIFICATION NUMBER FOR MEDICARE OBLIGATIONS.—Sec6 tion 1866(j)(5) of the Social Security Act (42 U.S.C. 

7 1395cc(j)(5)), as inserted by section 6401(a) of Public Law 

8 111–148, is amended— 

9 (1) in the paragraph heading, by striking ‘‘PAST10 DUE’’ and inserting ‘‘MEDICARE’’; 

11 (2) in subparagraph (A), by striking ‘‘past-due 

12 obligations described in subparagraph (B)(ii) of an’’ 

13 and inserting ‘‘amount described in subparagraph 

14 (B)(ii) due from such’’; and 

15 (3) in subparagraph (B)(ii), by striking ‘‘a past16 due obligation’’ and inserting ‘‘an amount that is 

17 more than the amount required to be paid’’. 

18 SEC. 520. CLARIFICATION OF EFFECTIVE DATE OF PART B 

19 SPECIAL ENROLLMENT PERIOD FOR DIS20 ABLED TRICARE BENEFICIARIES. 

21 Effective as if included in the enactment of Public Law 

22 111–148, section 3110(a)(2) of such Act is amended to read 

23 as follows: 
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1 ‘‘(2) EFFECTIVE DATE.—The amendment made 

2 by paragraph (1) shall apply to elections made after 

3 the date of the enactment of this Act.’’. 

4 SEC. 521. PHYSICIAN PAYMENT UPDATE. 

5 (a) IN GENERAL.—Section 1848(d) of the Social Secu6 rity Act (42 U.S.C. 1395w–4(d)) is amended— 

7 (1) in paragraph (10), in the heading, by strik8 ing ‘‘PORTION’’ and inserting ‘‘THE FIRST 5 MONTHS

9 ’’; and 

10 (2) by adding at the end the following new para11 graphs: 

12 ‘‘(11) UPDATE FOR THE LAST 7 MONTHS OF

13 2010.— 

14 ‘‘(A) IN GENERAL.—Subject to paragraphs 

15 (7)(B), (8)(B), (9)(B), and (10)(B), in lieu of the 

16 update to the single conversion factor established 

17 in paragraph (1)(C) that would otherwise apply 

18 for 2010 for the period beginning on June 1, 

19 2010, and ending on December 31, 2010, the up20 date to the single conversion factor shall be 2.2 

21 percent. 

22 ‘‘(B) NO EFFECT ON COMPUTATION OF CON23 VERSION FACTOR FOR 2011 AND SUBSEQUENT

24 YEARS.—The conversion factor under this sub25 section shall be computed under paragraph 
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1 (1)(A) for 2011 and subsequent years as if sub2 paragraph (A) had never applied. 

3 ‘‘(12) UPDATE FOR 2011.— 

4 ‘‘(A) IN GENERAL.—Subject to paragraphs 

5 (7)(B), (8)(B), (9)(B), (10)(B), and (11)(B), in 

6 lieu of the update to the single conversion factor 

7 established in paragraph (1)(C) that would oth8 erwise apply for 2011, the update to the single 

9 conversion factor shall be 1.0 percent. 

10 ‘‘(B) NO EFFECT ON COMPUTATION OF CON11 VERSION FACTOR FOR 2012 AND SUBSEQUENT

12 YEARS.—The conversion factor under this sub13 section shall be computed under paragraph 

14 (1)(A) for 2012 and subsequent years as if sub15 paragraph (A) had never applied.’’. 

16 (b) STATUTORY PAYGO.—The budgetary effects of this 

17 Act, for the purpose of complying with the Statutory Pay18 As-You-Go Act of 2010, shall be determined by reference to 

19 the latest statement titled ‘‘Budgetary Effects of PAYGO 

20 Legislation’’ for this Act, jointly submitted for printing in 

21 the Congressional Record by the Chairmen of the House and 

22 Senate Budget Committees, provided that such statement 

23 has been submitted prior to the vote on passage in the House 

24 acting first on this conference report or amendment between 

25 the Houses. 
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1 SEC. 522. ADJUSTMENT TO MEDICARE PAYMENT LOCAL2 ITIES. 

3 (a) IN GENERAL.—Section 1848(e) of the Social Secu4 rity Act (42 U.S.C.1395w–4(e)) is amended by adding at 

5 the end the following new paragraph: 

6 ‘‘(6) TRANSITION TO USE OF MSAS AS FEE

7 SCHEDULE AREAS IN CALIFORNIA.— 

8 ‘‘(A) IN GENERAL.— 

9 ‘‘(i) REVISION.—Subject to clause (ii) 

10 and notwithstanding the previous provi11 sions of this subsection, for services fur12 nished on or after January 1, 2012, the 

13 Secretary shall revise the fee schedule areas 

14 used for payment under this section appli15 cable to the State of California using the 

16 Metropolitan Statistical Area (MSA) 

17 iterative Geographic Adjustment Factor 

18 methodology as follows: 

19 ‘‘(I) The Secretary shall configure 

20 the physician fee schedule areas using 

21 the Metropolitan Statistical Areas 

22 (each in this paragraph referred to as 

23 an ‘MSA’), as defined by the Director 

24 of the Office of Management and Budg25 et as of the date of the enactment of 
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1 this paragraph, as the basis for the fee 

2 schedule areas. 

3 ‘‘(II) For purposes of this clause, 

4 the Secretary shall treat all areas not 

5 included in an MSA as a single rest6 of-State MSA and any reference in this 

7 paragraph to an MSA shall be deemed 

8 to include a reference to such rest-of9 State MSA. 

10 ‘‘(III) The Secretary shall list all 

11 MSAs within the State by Geographic 

12 Adjustment Factor described in para13 graph (2) (in this paragraph referred 

14 to as a ‘GAF’) in descending order. 

15 ‘‘(IV) In the first iteration, the 

16 Secretary shall compare the GAF of the 

17 highest cost MSA in the State to the 

18 weighted-average GAF of all the re19 maining MSAs in the State. If the 

20 ratio of the GAF of the highest cost 

21 MSA to the weighted-average of the 

22 GAF of remaining lower cost MSAs is 

23 1.05 or greater, the highest cost MSA 

24 shall be a separate fee schedule area. 
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1 ‘‘(V) In the next iteration, the 

2 Secretary shall compare the GAF of the 

3 MSA with the second-highest GAF to 

4 the weighted-average GAF of the all the 

5 remaining MSAs (excluding MSAs that 

6 become separate fee schedule areas). If 

7 the ratio of the second-highest MSA’s 

8 GAF to the weighted-average of the re9 maining lower cost MSAs is 1.05 or 

10 greater, the second-highest MSA shall 

11 be a separate fee schedule area. 

12 ‘‘(VI) The iterative process shall 

13 continue until the ratio of the GAF of 

14 the MSA with highest remaining GAF 

15 to the weighted-average of the remain16 ing MSAs with lower GAFs is less 

17 than 1.05, and the remaining group of 

18 MSAs with lower GAFs shall be treated 

19 as a single rest-of-State fee schedule 

20 area. 

21 ‘‘(VII) For purposes of the 

22 iterative process described in this 

23 clause, if two MSAs have identical 

24 GAFs, they shall be combined. 
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1 ‘‘(ii) TRANSITION.—For services fur2 nished on or after January 1, 2012, and be3 fore January 1, 2017, in the State of Cali4 fornia, after calculating the work, practice 

5 expense, and malpractice geographic indices 

6 that would otherwise be determined under 

7 clauses (i), (ii), and (iii) of paragraph 

8 (1)(A) for a fee schedule area determined 

9 under clause (i), if the index for a county 

10 within a fee schedule area is less than the 

11 index that would otherwise be in effect for 

12 such county, the Secretary shall instead 

13 apply the index that would otherwise be in 

14 effect for such county. 

15 ‘‘(B) SUBSEQUENT REVISIONS.—After the 

16 transition described in subparagraph (A)(ii), not 

17 less than every 3 years the Secretary shall review 

18 and update the fee schedule areas using the 

19 methodology described in subparagraph (A)(i) 

20 and any updated MSAs as defined by the Direc21 tor of the Office of Management and Budget. The 

22 Secretary shall review and make any changes 

23 pursuant to such reviews concurrent with the ap24 plication of the periodic review of the adjustment 
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1 factors required under paragraph (1)(C) for 

2 California. 

3 ‘‘(C) REFERENCES TO FEE SCHEDULE

4 AREAS.—Effective for services furnished on or 

5 after January 1, 2012, for the State of Cali6 fornia, any reference in this section to a fee 

7 schedule area shall be deemed a reference to a fee 

8 schedule area established in accordance with this 

9 paragraph.’’. 

10 (b) CONFORMING AMENDMENT TO DEFINITION OF FEE

11 SCHEDULE AREA.—Section 1848(j)(2) of the Social Secu12 rity Act (42 U.S.C. 1395w(j)(2)) is amended by striking 

13 ‘‘The term’’ and inserting ‘‘Except as provided in sub14 section (e)(6)(C), the term’’. 

15 SEC. 523. CLARIFICATION OF 3-DAY PAYMENT WINDOW. 

16 (a) IN GENERAL.—Section 1886 of the Social Security 

17 Act (42 U.S.C. 1395ww) is amended— 

18 (1) by adding at the end of subsection (a)(4) the 

19 following new sentence: ‘‘In applying the first sen20 tence of this paragraph, the term ‘other services re21 lated to the admission’ includes all services that are 

22 not diagnostic services (other than ambulance and 

23 maintenance renal dialysis services) for which pay24 ment may be made under this title that are provided 
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1 by a hospital (or an entity wholly owned or operated 

2 by the hospital) to a patient— 

3 ‘‘(A) on the date of the patient’s inpatient 

4 admission; or 

5 ‘‘(B) during the 3 days (or, in the case of 

6 a hospital that is not a subsection (d) hospital, 

7 during the 1 day) immediately preceding the 

8 date of such admission unless the hospital dem9 onstrates (in a form and manner, and at a time, 

10 specified by the Secretary) that such services are 

11 not related (as determined by the Secretary) to 

12 such admission.’’; and 

13 (2) in subsection (d)(7)— 

14 (A) in subparagraph (A), by striking ‘‘and’’ 

15 at the end; 

16 (B) in subparagraph (B), by striking the 

17 period and inserting ‘‘, and’’; and 

18 (C) by adding at the end the following new 

19 subparagraph: 

20 ‘‘(C) the determination of whether services 

21 provided prior to a patient’s inpatient admis22 sion are related to the admission (as described in 

23 subsection (a)(4)).’’. 
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1 (b) EFFECTIVE DATE.—The amendments made by sub2 section (a) shall apply to services furnished on or after the 

3 date of the enactment of this Act. 

4 (c) NO REOPENING OF PREVIOUSLY BUNDLED

5 CLAIMS.— 

6 (1) IN GENERAL.—The Secretary of Health and 

7 Human Services may not reopen a claim, adjust a 

8 claim, or make a payment pursuant to any request 

9 for payment under title XVIII of the Social Security 

10 Act, submitted by an entity (including a hospital or 

11 an entity wholly owned or operated by the hospital) 

12 for services described in paragraph (2) for purposes of 

13 treating, as unrelated to a patient’s inpatient admis14 sion, services provided during the 3 days (or, in the 

15 case of a hospital that is not a subsection (d) hospital, 

16 during the 1 day) immediately preceding the date of 

17 the patient’s inpatient admission. 

18 (2) SERVICES DESCRIBED.—For purposes of 

19 paragraph (1), the services described in this para20 graph are other services related to the admission (as 

21 described in section 1886(a)(4) of the Social Security 

22 Act (42 U.S.C. 1395ww(a)(4)), as amended by sub23 section (a)) which were previously included on a 

24 claim or request for payment submitted under part A 

25 of title XVIII of such Act for which a reopening, ad-
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1 justment, or request for payment under part B of 

2 such title, was not submitted prior to the date of the 

3 enactment of this Act. 

4 (d) IMPLEMENTATION.—Notwithstanding any other 

5 provision of law, the Secretary of Health and Human Serv6 ices may implement the provisions of this section (and 

7 amendments made by this section) by program instruction 

8 or otherwise. 

9 (e) RULE OF CONSTRUCTION.—Nothing in the amend10 ments made by this section shall be construed as changing 

11 the policy described in section 1886(a)(4) of the Social Se12 curity Act (42 U.S.C. 1395ww(a)(4)), as applied by the 

13 Secretary of Health and Human Services before the date 

14 of the enactment of this Act, with respect to diagnostic serv15 ices. 

16 TITLE VI—OTHER PROVISIONS 

17 SEC. 601. EXTENSION OF NATIONAL FLOOD INSURANCE 

18 PROGRAM. 

19 (a) EXTENSION.—Section 129 of the Continuing Ap20 propriations Resolution, 2010 (Public Law 111–68), as 

21 amended by section 7(a) of Public Law 111–157, is amend22 ed by striking ‘‘by substituting’’ and all that follows through 

23 the period at the end, and inserting ‘‘by substituting De24 cember 31, 2010, for the date specified in each such sec25 tion.’’. 
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1 (b) EFFECTIVE DATE.—The amendments made by sub2 section (a) shall be considered to have taken effect on May 

3 31, 2010. 

4 SEC. 602. ALLOCATION OF GEOTHERMAL RECEIPTS. 

5 Notwithstanding any other provision of law, for fiscal 

6 year 2010 only, all funds received from sales, bonuses, roy7 alties, and rentals under the Geothermal Steam Act of 1970 

8 (30 U.S.C. 1001 et seq.) shall be deposited in the Treasury, 

9 of which— 

10 (1) 50 percent shall be used by the Secretary of 

11 the Treasury to make payments to States within the 

12 boundaries of which the leased land and geothermal 

13 resources are located; 

14 (2) 25 percent shall be used by the Secretary of 

15 the Treasury to make payments to the counties within 

16 the boundaries of which the leased land or geothermal 

17 resources are located; and 

18 (3) 25 percent shall be deposited in miscellaneous 

19 receipts. 

20 SEC. 603. SMALL BUSINESS LOAN GUARANTEE ENHANCE21 MENT EXTENSIONS. 

22 (a) APPROPRIATION.—There is appropriated, out of 

23 any funds in the Treasury not otherwise appropriated, for 

24 an additional amount for ‘‘Small Business Administra25 tion—Business Loans Program Account’’, $505,000,000, to 
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1 remain available through December 31, 2010, for the cost 

2 of— 

3 (1) fee reductions and eliminations under section 

4 501 of division A of the American Recovery and Re5 investment Act of 2009 (Public Law 111–5; 123 Stat. 

6 151), as amended by this section; and 

7 (2) loan guarantees under section 502 of division 

8 A of the American Recovery and Reinvestment Act of 

9 2009 (Public Law 111–5; 123 Stat. 152), as amended 

10 by this section. 

11 Such costs, including the cost of modifying such loans, shall 

12 be as defined in section 502 of the Congressional Budget 

13 Act of 1974. 

14 (b) EXTENSION OF PROGRAMS.— 

15 (1) FEES.—Section 501 of division A of the 

16 American Recovery and Reinvestment Act of 2009 

17 (Public Law 111–5; 123 Stat. 151) is amended by 

18 striking ‘‘September 30, 2010’’ each place it appears 

19 and inserting ‘‘December 31, 2010’’. 

20 (2) LOAN GUARANTEES.—Section 502(f) of divi21 sion A of the American Recovery and Reinvestment 

22 Act of 2009 (Public Law 111–5; 123 Stat. 153) is 

23 amended by striking ‘‘May 31, 2010’’ and inserting 

24 ‘‘December 31, 2010’’. 
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1 (c) APPROPRIATION.—There is appropriated for an 

2 additional amount, out of any funds in the Treasury not 

3 otherwise appropriated, for administrative expenses to 

4 carry out sections 501 and 502 of division A of the Amer5 ican Recovery and Reinvestment Act of 2009 (Public Law 

6 111–5), $5,000,000, to remain available until expended, 

7 which may be transferred and merged with the appropria8 tion for ‘‘Small Business Administration—Salaries and 

9 Expenses’’. 

10 SEC. 604. EMERGENCY AGRICULTURAL DISASTER ASSIST11 ANCE. 

12 (a) DEFINITIONS.—Except as otherwise provided in 

13 this section, in this section: 

14 (1) DISASTER COUNTY.— 

15 (A) IN GENERAL.—The term ‘‘disaster coun16 ty’’ means a county included in the geographic 

17 area covered by a qualifying natural disaster 

18 declaration for the 2009 crop year. 

19 (B) EXCLUSION.—The term ‘‘disaster coun20 ty’’ does not include a contiguous county. 

21 (2) ELIGIBLE AQUACULTURE PRODUCER.—The 

22 term ‘‘eligible aquaculture producer’’ means an aqua23 culture producer that during the 2009 calendar year, 

24 as determined by the Secretary— 
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1 (A) produced an aquaculture species for 

2 which feed costs represented a substantial per3 centage of the input costs of the aquaculture op4 eration; and 

5 (B) experienced a substantial price increase 

6 of feed costs above the previous 5-year average. 

7 (3) ELIGIBLE PRODUCER.—The term ‘‘eligible 

8 producer’’ means an agricultural producer in a dis9 aster county. 

10 (4) ELIGIBLE SPECIALTY CROP PRODUCER.—The 

11 term ‘‘eligible specialty crop producer’’ means an ag12 ricultural producer that, for the 2009 crop year, as 

13 determined by the Secretary— 

14 (A) produced, or was prevented from plant15 ing, a specialty crop; and 

16 (B) experienced specialty crop losses in a 

17 disaster county due to drought, excessive rainfall, 

18 or a related condition. 

19 (5) QUALIFYING NATURAL DISASTER DECLARA20 TION.—The term ‘‘qualifying natural disaster dec21 laration’’ means a natural disaster declared by the 

22 Secretary for production losses under section 321(a) 

23 of the Consolidated Farm and Rural Development Act 

24 (7 U.S.C. 1961(a)). 
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1 (6) SECRETARY.—The term ‘‘Secretary’’ means 

2 the Secretary of Agriculture. 

3 (7) SPECIALTY CROP.—The term ‘‘specialty 

4 crop’’ has the meaning given the term in section 3 of 

5 the Specialty Crops Competitiveness Act of 2004 

6 (Public Law 108–465; 7 U.S.C. 1621 note). 

7 (b) SUPPLEMENTAL DIRECT PAYMENT.— 

8 (1) IN GENERAL.—Of the funds of the Com9 modity Credit Corporation, the Secretary shall use 

10 such sums as are necessary to make supplemental 

11 payments under sections 1103 and 1303 of the Food, 

12 Conservation, and Energy Act of 2008 (7 U.S.C. 

13 8713, 8753) to eligible producers on farms located in 

14 disaster counties that had at least 1 crop of economic 

15 significance (other than specialty crops or crops in16 tended for grazing) suffer at least a 5-percent crop 

17 loss on a farm due to a natural disaster, including 

18 quality losses, as determined by the Secretary, in an 

19 amount equal to 90 percent of the direct payment the 

20 eligible producers received for the 2009 crop year on 

21 the farm. 

22 (2) ACRE PROGRAM.—Eligible producers that 

23 received direct payments under section 1105 of the 

24 Food, Conservation, and Energy Act of 2008 (7 

25 U.S.C. 8715) for the 2009 crop year and that other-
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1 wise meet the requirements of paragraph (1) shall be 

2 eligible to receive supplemental payments under that 

3 paragraph in an amount equal to 112.5 percent of the 

4 reduced direct payment the eligible producers received 

5 for the 2009 crop year under section 1103 or 1303 of 

6 the Food, Conservation, and Energy Act of 2008 (7 

7 U.S.C. 8713, 8753). 

8 (3) RELATIONSHIP TO OTHER LAW.—Assistance 

9 received under this subsection shall be included in the 

10 calculation of farm revenue for the 2009 crop year 

11 under section 531(b)(4)(A) of the Federal Crop Insur12 ance Act (7 U.S.C. 1531(b)(4)(A)) and section 

13 901(b)(4)(A) of the Trade Act of 1974 (19 U.S.C. 

14 2497(b)(4)(A)). 

15 (c) SPECIALTY CROP ASSISTANCE.— 

16 (1) IN GENERAL.—Of the funds of the Com17 modity Credit Corporation, the Secretary shall use 

18 not more than $300,000,000, to remain available 

19 until September 30, 2011, to carry out a program of 

20 grants to States to assist eligible specialty crop pro21 ducers for losses due to a natural disaster affecting 

22 the 2009 crops, of which not more than— 

23 (A) $150,000,000 shall be used to assist eli24 gible specialty crop producers in counties that 
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1 have been declared a disaster as the result of 

2 drought; and 

3 (B) $150,000,000 shall be used to assist eli4 gible specialty crop producers in counties that 

5 have been declared a disaster as the result of ex6 cessive rainfall or a related condition. 

7 (2) NOTIFICATION.—Not later than 45 days after 

8 the date of enactment of this Act, the Secretary shall 

9 notify the State department of agriculture (or similar 

10 entity) in each State of the availability of funds to 

11 assist eligible specialty crop producers, including such 

12 terms as are determined by the Secretary to be nec13 essary for the equitable treatment of eligible specialty 

14 crop producers. 

15 (3) PROVISION OF GRANTS.— 

16 (A) IN GENERAL.—The Secretary shall 

17 make grants to States for disaster counties on a 

18 pro rata basis based on the value of specialty 

19 crop losses in those counties during the 2009 cal20 endar year, as determined by the Secretary. 

21 (B) ADMINISTRATIVE COSTS.—State Sec22 retary of Agriculture may not use more than five 

23 percent of the funds provided for costs associated 

24 with the administration of the grants provided 

25 in paragraph (1). 
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1 (C) ADMINISTRATION OF GRANTS.—State 

2 Secretary of Agriculture may enter into a con3 tract with the Department of Agriculture to ad4 minister the grants provided in paragraph (1). 

5 (D) TIMING.—Not later than 90 days after 

6 the date of enactment of this Act, the Secretary 

7 shall make grants to States to provide assistance 

8 under this subsection. 

9 (E) MAXIMUM GRANT.—The maximum 

10 amount of a grant made to a State for counties 

11 described in paragraph (1)(B) may not exceed 

12 $40,000,000. 

13 (4) REQUIREMENTS.—The Secretary shall make 

14 grants under this subsection only to States that dem15 onstrate to the satisfaction of the Secretary that the 

16 State will— 

17 (A) use grant funds to issue payments to el18 igible specialty crop producers; 

19 (B) provide assistance to eligible specialty 

20 crop producers not later than 60 days after the 

21 date on which the State receives grant funds; 

22 and 

23 (C) not later than 30 days after the date on 

24 which the State provides assistance to eligible 
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1 specialty crop producers, submit to the Secretary 

2 a report that describes— 

3 (i) the manner in which the State pro4 vided assistance; 

5 (ii) the amounts of assistance provided 

6 by type of specialty crop; and 

7 (iii) the process by which the State de8 termined the levels of assistance to eligible 

9 specialty crop producers. 

10 (D) RELATION TO OTHER LAW.—Assistance 

11 received under this subsection shall be included 

12 in the calculation of farm revenue for the 2009 

13 crop year under section 531(b)(4)(A) of the Fed14 eral Crop Insurance Act (7 U.S.C. 

15 1531(b)(4)(A)) and section 901(b)(4)(A) of the 

16 Trade Act of 1974 (19 U.S.C. 2497(b)(4)(A)). 

17 (d) COTTONSEED ASSISTANCE.— 

18 (1) IN GENERAL.—Of the funds of the Com19 modity Credit Corporation, the Secretary shall use 

20 not more than $42,000,000 to provide supplemental 

21 assistance to eligible producers and first-handlers of 

22 the 2009 crop of cottonseed in a disaster county. 

23 (2) GENERAL TERMS.—Except as otherwise pro24 vided in this subsection, the Secretary shall provide 

25 disaster assistance under this subsection under the 
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1 same terms and conditions as assistance provided 

2 under section 3015 of the Emergency Agricultural 

3 Disaster Assistance Act of 2006 (title III of Public 

4 Law 109–234; 120 Stat. 477). 

5 (3) DISTRIBUTION OF ASSISTANCE.—The Sec6 retary shall distribute assistance to first handlers for 

7 the benefit of eligible producers in a disaster county 

8 in an amount equal to the product obtained by multi9 plying— 

10 (A) the payment rate, as determined under 

11 paragraph (4); and 

12 (B) the county-eligible production, as deter13 mined under paragraph (5). 

14 (4) PAYMENT RATE.—The payment rate shall be 

15 equal to the quotient obtained by dividing— 

16 (A) the total funds made available to carry 

17 out this subsection; by 

18 (B) the sum of the county-eligible produc19 tion, as determined under paragraph (5). 

20 (5) COUNTY-ELIGIBLE PRODUCTION.—The coun21 ty-eligible production shall be equal to the product ob22 tained by multiplying— 

23 (A) the number of acres planted to cotton in 

24 the disaster county, as reported to the Secretary 

25 by first handlers; 
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1 (B) the expected cotton lint yield for the dis2 aster county, as determined by the Secretary 

3 based on the best available information; and 

4 (C) the national average seed-to-lint ratio, 

5 as determined by the Secretary based on the best 

6 available information for the 5 crop years imme7 diately preceding the 2009 crop, excluding the 

8 year in which the average ratio was the highest 

9 and the year in which the average ratio was the 

10 lowest in such period. 

11 (e) AQUACULTURE ASSISTANCE.— 

12 (1) IN GENERAL.—Of the funds of the Com13 modity Credit Corporation, the Secretary shall use 

14 not more than $25,000,000, to remain available until 

15 September 30, 2011, to carry out a program of grants 

16 to States to assist eligible aquaculture producers for 

17 losses associated with high feed input costs during the 

18 2009 calendar year. 

19 (2) NOTIFICATION.—Not later than 45 days after 

20 the date of enactment of this Act, the Secretary shall 

21 notify the State department of agriculture (or similar 

22 entity) in each State of the availability of funds to 

23 assist eligible aquaculture producers, including such 

24 terms as are determined by the Secretary to be nec-
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1 essary for the equitable treatment of eligible aqua2 culture producers. 

3 (3) PROVISION OF GRANTS.— 

4 (A) IN GENERAL.—The Secretary shall 

5 make grants to States under this subsection on 

6 a pro rata basis based on the amount of aqua7 culture feed used in each State during the 2009 

8 calendar year, as determined by the Secretary. 

9 (B) TIMING.—Not later than 90 days after 

10 the date of enactment of this Act, the Secretary 

11 shall make grants to States to provide assistance 

12 under this subsection. 

13 (4) REQUIREMENTS.—The Secretary shall make 

14 grants under this subsection only to States that dem15 onstrate to the satisfaction of the Secretary that the 

16 State will— 

17 (A) use grant funds to assist eligible aqua18 culture producers; 

19 (B) provide assistance to eligible aqua20 culture producers not later than 60 days after 

21 the date on which the State receives grant funds; 

22 and 

23 (C) not later than 30 days after the date on 

24 which the State provides assistance to eligible 
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1 aquaculture producers, submit to the Secretary a 

2 report that describes— 

3 (i) the manner in which the State pro4 vided assistance; 

5 (ii) the amounts of assistance provided 

6 per species of aquaculture; and 

7 (iii) the process by which the State de8 termined the levels of assistance to eligible 

9 aquaculture producers. 

10 (5) REDUCTION IN PAYMENTS.—An eligible 

11 aquaculture producer that receives assistance under 

12 this subsection shall not be eligible to receive any 

13 other assistance under the supplemental agricultural 

14 disaster assistance program established under section 

15 531 of the Federal Crop Insurance Act (7 U.S.C. 

16 1531) and section 901 of the Trade Act of 1974 (19 

17 U.S.C. 2497) for any losses in 2009 relating to the 

18 same species of aquaculture. 

19 (6) REPORT TO CONGRESS.—Not later than 240 

20 days after the date of enactment of this Act, the Sec21 retary shall submit to the appropriate committees of 

22 Congress a report that— 

23 (A) describes in detail the manner in which 

24 this subsection has been carried out; and 
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1 (B) includes the information reported to the 

2 Secretary under paragraph (4)(C). 

3 (f) HAWAII TRANSPORTATION COOPERATIVE.—Not4 withstanding any other provision of law, the Secretary shall 

5 use $21,000,000 of funds of the Commodity Credit Corpora6 tion to make a payment to an agricultural transportation 

7 cooperative in the State of Hawaii, the members of which 

8 are eligible to participate in the commodity loan program 

9 of the Farm Service Agency, for assistance to maintain and 

10 develop employment. 

11 (g) LIVESTOCK FORAGE DISASTER PROGRAM.— 

12 (1) DEFINITION OF DISASTER COUNTY.—In this 

13 subsection: 

14 (A) IN GENERAL.—The term ‘‘disaster coun15 ty’’ means a county included in the geographic 

16 area covered by a qualifying natural disaster 

17 declaration announced by the Secretary in cal18 endar year 2009. 

19 (B) INCLUSION.—The term ‘‘disaster coun20 ty’’ includes a contiguous county. 

21 (2) PAYMENTS.—Of the funds of the Commodity 

22 Credit Corporation, the Secretary shall use not more 

23 than $50,000,000 to carry out a program to make 

24 payments to eligible producers that had grazing losses 

25 in disaster counties in calendar year 2009. 
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1 (3) CRITERIA.— 

2 (A) IN GENERAL.—Except as provided in 

3 subparagraph (B), assistance under this sub4 section shall be determined under the same cri5 teria as are used to carry out the programs 

6 under section 531(d) of the Federal Crop Insur7 ance Act (7 U.S.C. 1531(d)) and section 901(d) 

8 of the Trade Act of 1974 (19 U.S.C. 2497(d)). 

9 (B) DROUGHT INTENSITY.—For purposes of 

10 this subsection, an eligible producer shall not be 

11 required to meet the drought intensity require12 ments of section 531(d)(3)(D)(ii) of the Federal 

13 Crop Insurance Act (7 U.S.C. 1531(d)(3)(D)(ii)) 

14 and section 901(d)(3)(D)(ii) of the Trade Act of 

15 1974 (19 U.S.C. 2497(d)(3)(D)(ii)). 

16 (4) AMOUNT.—Assistance under this subsection 

17 shall be in an amount equal to 1 monthly payment 

18 using the monthly payment rate under section 

19 531(d)(3)(B) of the Federal Crop Insurance Act (7 

20 U.S.C. 1531(d)(3)(B)) and section 901(d)(3)(B) of the 

21 Trade Act of 1974 (19 U.S.C. 2497(d)(3)(B)). 

22 (5) RELATION TO OTHER LAW.—An eligible pro23 ducer that receives assistance under this subsection 

24 shall be ineligible to receive assistance for 2009 graz25 ing losses under the program carried out under sec-
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1 tion 531(d) of the Federal Crop Insurance Act (7 

2 U.S.C. 1531(d)) and section 901(d) of the Trade Act 

3 of 1974 (19 U.S.C. 2497(d)). 

4 (h) EMERGENCY LOANS FOR POULTRY PRODUCERS.— 

5 (1) DEFINITIONS.—In this subsection: 

6 (A) ANNOUNCEMENT DATE.—The term ‘‘an7 nouncement date’’ means the date on which the 

8 Secretary announces the emergency loan pro9 gram under this subsection. 

10 (B) POULTRY INTEGRATOR.—The term 

11 ‘‘poultry integrator’’ means a poultry integrator 

12 that filed proceedings under chapter 11 of title 

13 11, United States Code, in United States Bank14 ruptcy Court during the 30-day period begin15 ning on December 1, 2008. 

16 (2) LOAN PROGRAM.— 

17 (A) IN GENERAL.—Of the funds of the Com18 modity Credit Corporation, the Secretary shall 

19 use not more than $75,000,000, to remain avail20 able until expended, for the cost of making no21 interest emergency loans available to poultry 

22 producers that meet the requirements of this sub23 section. 

24 (B) TERMS AND CONDITIONS.—Except as 

25 otherwise provided in this subsection, emergency 
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1 loans under this subsection shall be subject to 

2 such terms and conditions as are determined by 

3 the Secretary. 

4 (3) LOANS.— 

5 (A) IN GENERAL.—An emergency loan made 

6 to a poultry producer under this subsection shall 

7 be for the purpose of providing financing to the 

8 poultry producer in response to financial losses 

9 associated with the termination or nonrenewal of 

10 any contract between the poultry producer and a 

11 poultry integrator. 

12 (B) ELIGIBILITY.— 

13 (i) IN GENERAL.—To be eligible for an 

14 emergency loan under this subsection, not 

15 later than 90 days after the announcement 

16 date, a poultry producer shall submit to the 

17 Secretary evidence that— 

18 (I) the contract of the poultry pro19 ducer described in subparagraph (A) 

20 was not continued; and 

21 (II) no similar contract has been 

22 awarded subsequently to the poultry 

23 producer. 

24 (ii) REQUIREMENT TO OFFER

25 LOANS.—Notwithstanding any other provi-
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1 sion of law, if a poultry producer meets the 

2 eligibility requirements described in clause 

3 (i), subject to the availability of funds 

4 under paragraph (2)(A), the Secretary shall 

5 offer to make a loan under this subsection 

6 to the poultry producer with a minimum 

7 term of 2 years. 

8 (4) ADDITIONAL REQUIREMENTS.— 

9 (A) IN GENERAL.—A poultry producer that 

10 receives an emergency loan under this subsection 

11 may use the emergency loan proceeds only to 

12 repay the amount that the poultry producer owes 

13 to any lender for the purchase, improvement, or 

14 operation of the poultry farm. 

15 (B) CONVERSION OF THE LOAN.—A poultry 

16 producer that receives an emergency loan under 

17 this subsection shall be eligible to have the bal18 ance of the emergency loan converted, but not re19 financed, to a loan that has the same terms and 

20 conditions as an operating loan under subtitle B 

21 of the Consolidated Farm and Rural Develop22 ment Act (7 U.S.C. 1941 et seq.). 

23 (i) STATE AND LOCAL GOVERNMENTS.—Section 

24 1001(f)(6)(A) of the Food Security Act of 1985 (7 U.S.C. 

25 1308(f)(6)(A)) is amended by inserting ‘‘(other than the 
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1 conservation reserve program established under subchapter 

2 B of chapter 1 of subtitle D of title XII of this Act)’’ before 

3 the period at the end. 

4 (j) ADMINISTRATION.— 

5 (1) REGULATIONS.— 

6 (A) IN GENERAL.—As soon as practicable 

7 after the date of enactment of this Act, the Sec8 retary shall promulgate such regulations as are 

9 necessary to implement this section and the 

10 amendment made by this section. 

11 (B) PROCEDURE.—The promulgation of the 

12 regulations and administration of this section 

13 and the amendment made by this section shall be 

14 made without regard to— 

15 (i) the notice and comment provisions 

16 of section 553 of title 5, United States Code; 

17 (ii) the Statement of Policy of the Sec18 retary of Agriculture effective July 24, 1971 

19 (36 Fed. Reg. 13804), relating to notices of 

20 proposed rulemaking and public participa21 tion in rulemaking; and 

22 (iii) chapter 35 of title 44, United 

23 States Code (commonly known as the ‘‘Pa24 perwork Reduction Act’’). 
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1 (C) CONGRESSIONAL REVIEW OF AGENCY

2 RULEMAKING.—In carrying out this paragraph, 

3 the Secretary shall use the authority provided 

4 under section 808 of title 5, United States Code. 

5 (2) ADMINISTRATIVE COSTS.—Of the funds of the 

6 Commodity Credit Corporation, the Secretary may 

7 use up to $10,000,000 to pay administrative costs in8 curred by the Secretary that are directly related to 

9 carrying out this Act. 

10 (3) PROHIBITION.—None of the funds of the Ag11 ricultural Disaster Relief Trust Fund established 

12 under section 902 of the Trade Act of 1974 (19 U.S.C. 

13 2497a) may be used to carry out this Act. 

14 SEC. 605. SUMMER EMPLOYMENT FOR YOUTH. 

15 There is appropriated, out of any funds in the Treas16 ury not otherwise appropriated, for an additional amount 

17 for ‘‘Department of Labor—Employment and Training Ad18 ministration—Training and Employment Services’’ for ac19 tivities under the Workforce Investment Act of 1998 

20 (‘‘WIA’’), $1,000,000,000 shall be available for obligation 

21 on the date of enactment of this Act for grants to States 

22 for youth activities, including summer employment for 

23 youth: Provided, That no portion of such funds shall be re24 served to carry out section 127(b)(1)(A) of the WIA: Pro25 vided further, That for purposes of section 127(b)(1)(C)(iv) 
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1 of the WIA, funds available for youth activities shall be al2 lotted as if the total amount available for youth activities 

3 in the fiscal year does not exceed $1,000,000,000: Provided 

4 further, That with respect to the youth activities provided 

5 with such funds, section 101(13)(A) of the WIA shall be ap6 plied by substituting ‘‘age 24’’ for ‘‘age 21’’: Provided fur7 ther, That the work readiness performance indicator de8 scribed in section 136(b)(2)(A)(ii)(I) of the WIA shall be 

9 the only measure of performance used to assess the effective10 ness of summer employment for youth provided with such 

11 funds: Provided further, That an amount that is not more 

12 than 1 percent of such amount may be used for the adminis13 tration, management, and oversight of the programs, activi14 ties, and grants carried out with such funds, including the 

15 evaluation of the use of such funds: Provided further, That 

16 funds available under the preceding proviso, together with 

17 funds described in section 801(a) of division A of the Amer18 ican Recovery and reinvestment Act of 2009 (Public Law 

19 111–5), and funds provided in such Act under the heading 

20 ‘‘Department of Labor–Departmental Management–Sala21 ries and Expenses’’, shall remain available for obligation 

22 through September 30, 2011. 

23 SEC. 606. HOUSING TRUST FUND. 

24 (a) FUNDING.—There is hereby appropriated for the 

25 Housing Trust Fund established pursuant to section 1338 
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1 of the Federal Housing Enterprises Financial Safety and 

2 Soundness Act of 1992 (12 U.S.C. 4568), $1,065,000,000, 

3 for use under such section: Provided, That of the total 

4 amount provided under this heading, $65,000,000 shall be 

5 available to the Secretary of Housing and Urban Develop6 ment only for incremental project-based voucher assistance 

7 to be allocated to States to be used solely in conjunction 

8 with grant funds awarded under such section 1338, pursu9 ant to the formula established under section 1338 and tak10 ing into account different per unit subsidy needs among 

11 states, as determined by the Secretary. 

12 (b) AMENDMENTS.—Section 1338 of the Federal Hous13 ing Enterprises Financial Safety and Soundness Act of 

14 1992 (12 U.S.C. 4568) is amended— 

15 (1) in subsection (c)— 

16 (A) in paragraph (4)(A) by inserting after 

17 the period at the end the following: ‘‘Notwith18 standing any other provision of law, for the fis19 cal year following enactment of this sentence and 

20 thereafter, the Secretary may make such notice 

21 available only on the Internet at the appropriate 

22 government website or websites or through other 

23 electronic media, as determined by the Sec24 retary.’’; 
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1 (B) in paragraph (5)(C), by striking ‘‘(8)’’ 

2 and inserting ‘‘(9)’’; and 

3 (C) in paragraph (7)(A)— 

4 (i) by striking ‘‘section 1335(a)(2)(B)’’ 

5 and inserting ‘‘section 1335(a)(1)(B)’’; and 

6 (ii) by inserting ‘‘the units funded 

7 under’’ after ‘‘75 percent of’’; and 

8 (2) by adding at the end the following new sub9 section: 

10 ‘‘(k) ENVIRONMENTAL REVIEW.—For the purpose of 

11 environmental compliance review, funds awarded under 

12 this section shall be subject to section 288 of the HOME 

13 Investment Partnerships Act (12 U.S.C. 12838) and shall 

14 be treated as funds under the program established by such 

15 Act.’’. 

16 SEC. 607. THE INDIVIDUAL INDIAN MONEY ACCOUNT LITI17 GATION SETTLEMENT ACT OF 2010. 

18 (a) SHORT TITLE.—This section may be cited as the 

19 ‘‘Individual Indian Money Account Litigation Settlement 

20 Act of 2010’’. 

21 (b) DEFINITIONS.—In this section: 

22 (1) AMENDED COMPLAINT.—The term ‘‘Amended 

23 Complaint’’ means the Amended Complaint attached 

24 to the Settlement. 
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1 (2) LAND CONSOLIDATION PROGRAM.—The term 

2 ‘‘Land Consolidation Program’’ means a program 

3 conducted in accordance with the Settlement and the 

4 Indian Land Consolidation Act (25 U.S.C. 2201 et 

5 seq.) under which the Secretary may purchase frac6 tional interests in trust or restricted land. 

7 (3) LITIGATION.—The term ‘‘Litigation’’ means 

8 the case entitled Elouise Cobell et al. v. Ken Salazar 

9 et al., United States District Court, District of Co10 lumbia, Civil Action No. 96–1285 (JR). 

11 (4) PLAINTIFF.—The term ‘‘Plaintiff’’ means a 

12 member of any class certified in the Litigation. 

13 (5) SECRETARY.—The term ‘‘Secretary’’ means 

14 the Secretary of the Interior. 

15 (6) SETTLEMENT.—The term ‘‘Settlement’’ 

16 means the Class Action Settlement Agreement dated 

17 December 7, 2009, in the Litigation, as modified by 

18 the parties to the Litigation. 

19 (7) TRUST ADMINISTRATION CLASS.—The term 

20 ‘‘Trust Administration Class’’ means the Trust Ad21 ministration Class as defined in the Settlement. 

22 (c) PURPOSE.—The purpose of this section is to au23 thorize the Settlement. 

24 (d) AUTHORIZATION.—The Settlement is authorized, 

25 ratified, and confirmed. 
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1 (e) JURISDICTIONAL PROVISIONS.— 

2 (1) IN GENERAL.—Notwithstanding the limita3 tion of jurisdiction of district courts contained in sec4 tion 1346(a)(2) of title 28, United States Code, the 

5 United States District Court for the District of Co6 lumbia shall have jurisdiction over the claims asserted 

7 in the Amended Complaint for purposes of the Settle8 ment. 

9 (2) CERTIFICATION OF TRUST ADMINISTRATION

10 CLASS.— 

11 (A) IN GENERAL.—Notwithstanding the re12 quirements of the Federal Rules of Civil Proce13 dure, the court overseeing the Litigation may 

14 certify the Trust Administration Class. 

15 (B) TREATMENT.—On certification under 

16 subparagraph (A), the Trust Administration 

17 Class shall be treated as a class under Federal 

18 Rule of Civil Procedure 23(b)(3) for purposes of 

19 the Settlement. 

20 (f) TRUST LAND CONSOLIDATION.— 

21 (1) TRUST LAND CONSOLIDATION FUND.— 

22 (A) ESTABLISHMENT.—On final approval 

23 (as defined in the Settlement) of the Settlement, 

24 there shall be established in the Treasury of the 
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1 United States a fund, to be known as the ‘‘Trust 

2 Land Consolidation Fund’’. 

3 (B) AVAILABILITY OF AMOUNTS.—Amounts 

4 in the Trust Land Consolidation Fund shall be 

5 made available to the Secretary during the 10- 

6 year period beginning on the date of final ap7 proval of the Settlement— 

8 (i) to conduct the Land Consolidation 

9 Program; and 

10 (ii) for other costs specified in the Set11 tlement. 

12 (C) DEPOSITS.— 

13 (i) IN GENERAL.—On final approval 

14 (as defined in the Settlement) of the Settle15 ment, the Secretary of the Treasury shall 

16 deposit in the Trust Land Consolidation 

17 Fund $2,000,000,000 of the amounts appro18 priated by section 1304 of title 31, United 

19 States Code. 

20 (ii) CONDITIONS MET.—The conditions 

21 described in section 1304 of title 31, United 

22 States Code, shall be considered to be met 

23 for purposes of clause (i). 

24 (D) TRANSFERS.—In a manner designed to 

25 encourage participation in the Land Consolida-
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1 tion Program, the Secretary may transfer, at the 

2 discretion of the Secretary, not more than 

3 $60,000,000 of amounts in the Trust Land Con4 solidation Fund to the Indian Education Schol5 arship Holding Fund established under para6 graph 2. 

7 (2) INDIAN EDUCATION SCHOLARSHIP HOLDING

8 FUND.— 

9 (A) ESTABLISHMENT.—On the final ap10 proval (as defined in the Settlement) of the Set11 tlement, there shall be established in the Treas12 ury of the United States a fund, to be known as 

13 the ‘‘Indian Education Scholarship Holding 

14 Fund’’. 

15 (B) AVAILABILITY.—Notwithstanding any 

16 other provision of law governing competition, 

17 public notification, or Federal procurement or 

18 assistance, amounts in the Indian Education 

19 Scholarship Holding Fund shall be made avail20 able, without further appropriation, to the Sec21 retary to contribute to an Indian Education 

22 Scholarship Fund, as described in the Settle23 ment, to provide scholarships for Native Ameri24 cans. 
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1 (3) ACQUISITION OF TRUST OR RESTRICTED

2 LAND.—The Secretary may acquire, at the discretion 

3 of the Secretary and in accordance with the Land 

4 Consolidation Program, any fractional interest in 

5 trust or restricted land. 

6 (4) TREATMENT OF UNLOCATABLE PLAIN7 TIFFS.—A Plaintiff the whereabouts of whom are un8 known and who, after reasonable efforts by the Sec9 retary, cannot be located during the 5 year period be10 ginning on the date of final approval (as defined in 

11 the Settlement) of the Settlement shall be considered 

12 to have accepted an offer made pursuant to the Land 

13 Consolidation Program. 

14 (g) TAXATION AND OTHER BENEFITS.— 

15 (1) INTERNAL REVENUE CODE.—For purposes of 

16 the Internal Revenue Code of 1986, amounts received 

17 by an individual Indian as a lump sum or a periodic 

18 payment pursuant to the Settlement— 

19 (A) shall not be included in gross income; 

20 and 

21 (B) shall not be taken into consideration for 

22 purposes of applying any provision of the Inter23 nal Revenue Code of 1986 that takes into ac24 count excludible income in computing adjusted 

25 gross income or modified adjusted gross income, 
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1 including section 86 of that Code (relating to So2 cial Security and tier 1 railroad retirement ben3 efits). 

4 (2) OTHER BENEFITS.—Notwithstanding any 

5 other provision of law, for purposes of determining 

6 initial eligibility, ongoing eligibility, or level of bene7 fits under any Federal or federally assisted program, 

8 amounts received by an individual Indian as a lump 

9 sum or a periodic payment pursuant to the Settle10 ment shall not be treated for any household member, 

11 during the 1-year period beginning on the date of re12 ceipt— 

13 (A) as income for the month during which 

14 the amounts were received; or 

15 (B) as a resource. 

16 SEC. 608. APPROPRIATION OF FUNDS FOR FINAL SETTLE17 MENT OF CLAIMS FROM IN RE BLACK FARM18 ERS DISCRIMINATION LITIGATION. 

19 (a) DEFINITIONS.—In this section: 

20 (1) SETTLEMENT AGREEMENT.—The term ‘‘Set21 tlement Agreement’’ means the settlement agreement 

22 dated February 18, 2010 (including any modifica23 tions agreed to by the parties and approved by the 

24 court under that agreement) between certain plain25 tiffs, by and through their counsel, and the Secretary 
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1 of Agriculture to resolve, fully and forever, the claims 

2 raised or that could have been raised in the cases con3 solidated in In re Black Farmers Discrimination 

4 Litigation, No. 08–511 (D.D.C.), including Pigford 

5 claims asserted under section 14012 of the Food, Con6 servation, and Energy Act of 2008 (Public Law 110– 

7 246; 122 Stat. 2209). 

8 (2) PIGFORD CLAIM.—The term ‘‘Pigford claim’’ 

9 has the meaning given that term in section 

10 14012(a)(3) of the Food, Conservation, and Energy 

11 Act of 2008 (Public Law 110–246; 122 Stat. 2210). 

12 (b) APPROPRIATION OF FUNDS.—There is hereby ap13 propriated to the Secretary of Agriculture $1,150,000,000, 

14 to remain available until expended, to carry out the terms 

15 of the Settlement Agreement if the Settlement Agreement is 

16 approved by a court order that is or becomes final and non17 appealable. The funds appropriated by this subsection are 

18 in addition to the $100,000,000 of funds of the Commodity 

19 Credit Corporation made available by section 14012(i) of 

20 the Food, Conservation, and Energy Act of 2008 (Public 

21 Law 110–246; 122 Stat. 2212) and shall be available for 

22 obligation only after those Commodity Credit Corporation 

23 funds are fully obligated. If the Settlement Agreement is not 

24 approved as provided in this subsection, the $100,000,000 

25 of funds of the Commodity Credit Corporation made avail-
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1 able by section 14012(i) of the Food, Conservation, and En2 ergy Act of 2008 shall be the sole funding available for 

3 Pigford claims. 

4 (c) USE OF FUNDS.—The use of the funds appro5 priated by subsection (b) shall be subject to the express terms 

6 of the Settlement Agreement. 

7 (d) TREATMENT OF REMAINING FUNDS.—If any of the 

8 funds appropriated by subsection (b) are not obligated and 

9 expended to carry out the Settlement Agreement, the Sec10 retary of Agriculture shall return the unused funds to the 

11 Treasury and may not make the unused funds available for 

12 any purpose related to section 14012 of the Food, Conserva13 tion, and Energy Act of 2008, for any other settlement 

14 agreement executed in In re Black Farmers Discrimination 

15 Litigation, No. 08–511 (D.D.C.), or for any other purpose. 

16 (e) RULES OF CONSTRUCTION.—Nothing in this sec17 tion shall be construed as requiring the United States, any 

18 of its officers or agencies, or any other party to enter into 

19 the Settlement Agreement or any other settlement agree20 ment. Nothing in this section shall be construed as creating 

21 the basis for a Pigford claim. 

22 (f) CONFORMING AMENDMENTS.—Section 14012 of the 

23 Food, Conservation, and Energy Act of 2008 (Public Law 

24 110–246; 122 Stat. 2209) is amended— 

25 (1) in subsection (c)(1)— 
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1 (A) by striking ‘‘subsection (h)’’ and insert2 ing ‘‘subsection (g)’’; and 

3 (B) by striking ‘‘subsection (i)’’ and insert4 ing ‘‘subsection (h)’’; 

5 (2) by striking subsection (e); 

6 (3) in subsection (g), by striking ‘‘subsection (f)’’ 

7 and inserting ‘‘subsection (e)’’; 

8 (4) in subsection (i)— 

9 (A) by striking ‘‘(1) IN GENERAL.—Of the 

10 funds’’ and inserting ‘‘Of the funds’’; and 

11 (B) by striking paragraph (2); 

12 (5) by striking subsection (j); and 

13 (6) by redesignating subsections (f), (g), (h), (i), 

14 and (k) as subsections (e), (f), (g), (h), and (i), respec15 tively. 

16 SEC. 609. EXPANSION OF ELIGIBILITY FOR CONCURRENT 

17 RECEIPT OF MILITARY RETIRED PAY AND 

18 VETERANS’ DISABILITY COMPENSATION TO 

19 INCLUDE ALL CHAPTER 61 DISABILITY RETIR20 EES REGARDLESS OF DISABILITY RATING 

21 PERCENTAGE OR YEARS OF SERVICE. 

22 (a) PHASED EXPANSION CONCURRENT RECEIPT.— 

23 Subsection (a) of section 1414 of title 10, United States 

24 Code, is amended to read as follows: 
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1 ‘‘(a) PAYMENT OF BOTH RETIRED PAY AND DIS2 ABILITY COMPENSATION.— 

3 ‘‘(1) PAYMENT OF BOTH REQUIRED.— 

4 ‘‘(A) IN GENERAL.—Subject to subsection 

5 (b), a member or former member of the uni6 formed services who is entitled for any month to 

7 retired pay and who is also entitled for that 

8 month to veterans’ disability compensation for a 

9 qualifying service-connected disability (in this 

10 section referred to as a ‘qualified retiree’) is enti11 tled to be paid both for that month without re12 gard to sections 5304 and 5305 of title 38. 

13 ‘‘(B) APPLICABILITY OF FULL CONCURRENT

14 RECEIPT PHASE-IN REQUIREMENT.—During the 

15 period beginning on January 1, 2004, and end16 ing on December 31, 2013, payment of retired 

17 pay to a qualified retiree is subject to subsection 

18 (c). 

19 ‘‘(C) PHASE-IN EXCEPTION FOR 100 PER20 CENT DISABLED RETIREES.—The payment of re21 tired pay is subject to subsection (c) only during 

22 the period beginning on January 1, 2004, and 

23 ending on December 31, 2004, in the case of the 

24 following qualified retirees: 
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1 ‘‘(i) A qualified retiree receiving vet2 erans’ disability compensation for a dis3 ability rated as 100 percent. 

4 ‘‘(ii) A qualified retiree receiving vet5 erans’ disability compensation at the rate 

6 payable for a 100 percent disability by rea7 son of a determination of individual 

8 unemployability. 

9 ‘‘(D) TEMPORARY PHASE-IN EXCEPTION FOR

10 CERTAIN CHAPTER 61 DISABILITY RETIREES; 

11 TERMINATION.—Subject to subsection (b), during 

12 the period beginning on January 1, 2011, and 

13 ending on September 30, 2012, subsection (c) 

14 shall not apply to a qualified retiree described in 

15 subparagraph (B) or (C) of paragraph (2). 

16 ‘‘(2) QUALIFYING SERVICE-CONNECTED DIS17 ABILITY DEFINED.—In this section: 

18 ‘‘(A) 50 PERCENT RATING THRESHOLD.—In 

19 the case of a member or former member receiving 

20 retired pay under any provision of law other 

21 than chapter 61 of this title, or under chapter 61 

22 with 20 years or more of service otherwise cred23 itable under section 1405 or computed under sec24 tion 12732 of this title, the term ‘qualifying serv25 ice-connected disability’ means a service-con-
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1 nected disability or combination of service-con2 nected disabilities that is rated as not less than 

3 50 percent disabling by the Secretary of Veterans 

4 Affairs. However, during the period specified in 

5 paragraph (1)(D), members or former members 

6 receiving retired pay under chapter 61 with 20 

7 years or more of creditable service computed 

8 under section 12732 of this title, but not other9 wise entitled to retired pay under any other pro10 vision of this title, shall qualify in accordance 

11 with subparagraphs (B) and (C). 

12 ‘‘(B) INCLUSION OF MEMBERS NOT OTHER13 WISE ENTITLED TO RETIRED PAY.—In the case of 

14 a member or former member receiving retired 

15 pay under chapter 61 of this title, but who is not 

16 otherwise entitled to retired pay under any other 

17 provision of this title, the term ‘qualifying serv18 ice-connected disability’ means a service-con19 nected disability or combination of service-con20 nected disabilities that is rated by the Secretary 

21 of Veterans Affairs at the disabling level specified 

22 in one of the following clauses (which, subject to 

23 paragraph (3), is effective on or after the date 

24 specified in the applicable clause): 
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1 ‘‘(i) January 1, 2011, rated 100 per2 cent, or a rate payable at 100 percent by 

3 reason of individual unemployability or 

4 rated 90 percent. 

5 ‘‘(ii) January 1, 2012, rated 80 per6 cent or 70 percent. 

7 ‘‘(iii) January 1, 2013, rated 60 per8 cent or 50 percent. 

9 ‘‘(C) ELIMINATION OF RATING THRESH10 OLD.—In the case of a member or former mem11 ber receiving retired pay under chapter 61 re12 gardless of being otherwise eligible for retirement, 

13 the term ‘qualifying service-connected disability’ 

14 means a service-connected disability or combina15 tion of service-connected disabilities that is rated 

16 by the Secretary of Veterans Affairs at the dis17 abling level specified in one of the following 

18 clauses (which, subject to paragraph (3), is effec19 tive on or after the date specified in the applica20 ble clause): 

21 ‘‘(i) January 1, 2014, rated 40 percent 

22 or 30 percent. 

23 ‘‘(ii) January 1, 2015, any rating. 
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1 ‘‘(3) LIMITED DURATION.—Notwithstanding the 

2 effective date specified in each clause of subpara3 graphs (B) and (C) of paragraph (2), the clause— 

4 ‘‘(A) shall apply only if the termination 

5 date specified in paragraph (1)(D) would occur 

6 during or after the calendar year specified in the 

7 clause; and 

8 ‘‘(B) shall not apply beyond the termi9 nation date specified in paragraph (1)(D).’’. 

10 (b) CONFORMING AMENDMENT TO SPECIAL RULES FOR

11 CHAPTER 61 DISABILITY RETIREES.—Subsection (b) of 

12 such section is amended to read as follows: 

13 ‘‘(b) SPECIAL RULES FOR CHAPTER 61 DISABILITY

14 RETIREES WHEN ELIGIBILITY HAS BEEN ESTABLISHED

15 FOR SUCH RETIREES.— 

16 ‘‘(1) GENERAL REDUCTION RULE.—The retired 

17 pay of a member retired under chapter 61 of this title 

18 is subject to reduction under sections 5304 and 5305 

19 of title 38, but only to the extent that the amount of 

20 the members retired pay under chapter 61 of this title 

21 exceeds the amount of retired pay to which the mem22 ber would have been entitled under any other provi23 sion of law based upon the member’s service in the 

24 uniformed services if the member had not been retired 

25 under chapter 61 of this title. 
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1 ‘‘(2) CHAPTER 61 RETIREES NOT OTHERWISE EN2 TITLED TO RETIRED PAY.— 

3 ‘‘(A) BEFORE TERMINATION DATE.—If a 

4 member with a qualifying service-connected dis5 ability (as defined in subsection (a)(2)) is retired 

6 under chapter 61 of this title, but is not other7 wise entitled to retired pay under any other pro8 vision of this title, and the termination date 

9 specified in subsection (a)(1)(D) has not oc10 curred, the retired pay of the member is subject 

11 to reduction under sections 5304 and 5305 of 

12 title 38, but only to the extent that the amount 

13 of the member’s retired pay under chapter 61 of 

this title exceeds the amount equal to 21 14 ⁄2 percent 

15 of the member’s years of creditable service multi16 plied by the member’s retired pay base under sec17 tion 1406(b)(1) or 1407 of this title, whichever is 

18 applicable to the member. 

19 ‘‘(B) AFTER TERMINATION DATE.—Sub20 section (a) does not apply to a member described 

21 in subparagraph (A) if the termination date 

22 specified in subsection (a)(1)(D) has occurred.’’. 

23 (c) CONFORMING AMENDMENT TO FULL CONCURRENT

24 RECEIPT PHASE-IN.—Subsection (c) of such section is 

25 amended by striking ‘‘the second sentence of’’. 
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1 (d) CLERICAL AMENDMENTS.— 

2 (1) SECTION HEADING.—The heading of such sec3 tion is amended to read as follows: 

4 ‘‘§ 1414. Concurrent receipt of retired pay and vet5 erans’ disability compensation’’. 

6 (2) TABLE OF SECTIONS.—The table of sections 

7 at the beginning of chapter 71 of such title is amend8 ed by striking the item related to section 1414 and in9 serting the following new item: 

‘‘1414. Concurrent receipt of retired pay and veterans’ disability compensation.’’. 

10 (e) EFFECTIVE DATE.—The amendments made by this 

11 section shall take effect on January 1, 2011. 

12 SEC. 610. EXTENSION OF USE OF 2009 POVERTY GUIDE13 LINES. 

14 Section 1012 of the Department of Defense Appropria15 tions Act, 2010 (Public Law 111–118), as amended by sec16 tion 6 of the Continuing Extension Act of 2010 (Public Law 

17 111–157), is amended— 

18 (1) by striking ‘‘before May 31, 2010’’; and 

19 (2) by inserting ‘‘for 2011’’ after ‘‘until updated 

20 poverty guidelines’’. 
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1 SEC. 611. REFUNDS DISREGARDED IN THE ADMINISTRA2 TION OF FEDERAL PROGRAMS AND FEDER3 ALLY ASSISTED PROGRAMS. 

4 (a) IN GENERAL.—Subchapter A of chapter 65 of the 

5 Internal Revenue Code of 1986 is amended by adding at 

6 the end the following new section: 

7 ‘‘SEC. 6409. REFUNDS DISREGARDED IN THE ADMINISTRA8 TION OF FEDERAL PROGRAMS AND FEDER9 ALLY ASSISTED PROGRAMS. 

10 ‘‘(a) IN GENERAL.—Notwithstanding any other provi11 sion of law, any refund (or advance payment with respect 

12 to a refundable credit) made to any individual under this 

13 title shall not be taken into account as income, and shall 

14 not be taken into account as resources for a period of 12 

15 months from receipt, for purposes of determining the eligi16 bility of such individual (or any other individual) for bene17 fits or assistance (or the amount or extent of benefits or 

18 assistance) under any Federal program or under any State 

19 or local program financed in whole or in part with Federal 

20 funds. 

21 ‘‘(b) TERMINATION.—Subsection (a) shall not apply to 

22 any amount received after December 31, 2010.’’. 

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

24 such subchapter is amended by adding at the end the fol25 lowing new item: 
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‘‘Sec. 6409. Refunds disregarded in the administration of Federal programs and 

federally assisted programs.’’. 

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

2 section shall apply to amounts received after December 31, 

3 2009. 

4 SEC. 612. STATE COURT IMPROVEMENT PROGRAM. 

5 Section 438 of the Social Security Act (42 U.S.C. 

6 629h) is amended— 

7 (1) in subsection (c)(2)(A), by striking ‘‘2010’’ 

8 and inserting ‘‘2011’’; and 

9 (2) in subsection (e), by striking ‘‘2010’’ and in10 serting ‘‘2011’’. 

11 SEC. 613. QUALIFYING TIMBER CONTRACT OPTIONS. 

12 (a) DEFINITIONS.—In this section: 

13 (1) QUALIFYING CONTRACT.—The term ‘‘quali14 fying contract’’ means a contract that has not been 

15 terminated by the Bureau of Land Management for 

16 the sale of timber on lands administered by the Bu17 reau of Land Management that meets all of the fol18 lowing criteria: 

19 (A) The contract was awarded during the 

20 period beginning on January 1, 2005, and end21 ing on December 31, 2008. 

22 (B) There is unharvested volume remaining 

23 for the contract. 

24 (C) The contract is not a salvage sale. 
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1 (D) The Secretary determined there is not 

2 an urgent need to harvest under the contract due 

3 to deteriorating timber conditions that developed 

4 after the award of the contract. 

5 (2) SECRETARY.—The term ‘‘Secretary’’ means 

6 the Secretary of the Interior, acting through the Di7 rector of Bureau of Land Management. 

8 (3) TIMBER PURCHASER.—The term ‘‘timber 

9 purchaser’’ means the party to the qualifying contract 

10 for the sale of timber from lands administered by the 

11 Bureau of Land Management. 

12 (b) MARKET-RELATED CONTRACT EXTENSION OP13 TION.—Upon a timber purchaser’s written request, the Sec14 retary may make a one-time modification to the qualifying 

15 contract to add 3 years to the contract expiration date if 

16 the written request— 

17 (1) is received by the Secretary not later than 90 

18 days after the date of enactment of this Act; and 

19 (2) contains a provision releasing the United 

20 States from all liability, including further consider21 ation or compensation, resulting from the modifica22 tion under this subsection of the term of a qualifying 

23 contract. 

24 (c) REPORTING.—Not later than 6 months after the 

25 date of the enactment of this Act, the Secretary shall submit 
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1 to Congress a report detailing a plan and timeline to pro2 mulgate new regulations authorizing the Bureau of Land 

3 Management to extend timber contracts due to changes in 

4 market conditions. 

5 (d) REGULATIONS.—Not later than 2 years after the 

6 date of the enactment of this Act, the Secretary shall pro7 mulgate new regulations authorizing the Bureau of Land 

8 Management to extend timber contracts due to changes in 

9 market conditions. 

10 (e) NO SURRENDER OF CLAIMS.—This section shall 

11 not have the effect of surrendering any claim by the United 

12 States against any timber purchaser that arose under a 

13 timber sale contract, including a qualifying contract, before 

14 the date on which the Secretary adjusts the contract term 

15 under subsection (b). 

16 SEC. 614. EXTENSION AND FLEXIBILITY FOR CERTAIN AL17 LOCATED SURFACE TRANSPORTATION PRO18 GRAMS. 

19 (a) MODIFICATION OF ALLOCATION RULES.—Section 

20 411(d) of the Surface Transportation Extension Act of 2010 

21 (Public Law 111–147; 124 Stat. 80) is amended— 

22 (1) in paragraph (1)— 

23 (A) in the matter preceding subparagraph 

24 (A)— 

25 (i) by striking ‘‘1301, 1302,’’; and 
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1 (ii) by striking ‘‘1198, 1204,’’; and 

2 (B) in subparagraph (A)— 

3 (i) in the matter preceding clause (i) 

4 by striking ‘‘apportioned under sections 

5 104(b) and 144 of title 23, United States 

6 Code,’’ and inserting ‘‘specified in section 

7 105(a)(2) of title 23, United States Code 

8 (except the high priority projects pro9 gram),’’; and 

10 (ii) in clause (ii) by striking ‘‘appor11 tioned under such sections of such Code’’ 

12 and inserting ‘‘specified in such section 

13 105(a)(2) (except the high priority projects 

14 program)’’; 

15 (2) in paragraph (2)— 

16 (A) in the matter preceding subparagraph 

17 (A)— 

18 (i) by striking ‘‘1301, 1302,’’; and 

19 (ii) by striking ‘‘1198, 1204,’’; and 

20 (B) in subparagraph (A)— 

21 (i) in the matter preceding clause (i) 

22 by striking ‘‘apportioned under sections 

23 104(b) and 144 of title 23, United States 

24 Code,’’ and inserting ‘‘specified in section 

25 105(a)(2) of title 23, United States Code 
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1 (except the high priority projects pro2 gram),’’; and 

3 (ii) in clause (ii) by striking ‘‘appor4 tioned under such sections of such Code’’ 

5 and inserting ‘‘specified in such section 

6 105(a)(2) (except the high priority projects 

7 program)’’; and 

8 (3) by adding at the end the following: 

9 ‘‘(5) PROJECTS OF NATIONAL AND REGIONAL SIG10 NIFICANCE AND NATIONAL CORRIDOR INFRASTRUC11 TURE IMPROVEMENT PROGRAMS.— 

12 ‘‘(A) REDISTRIBUTION AMONG STATES.— 

13 Notwithstanding sections 1301(m) and 1302(e) of 

14 SAFETEA–LU (119 Stat. 1202 and 1205), the 

15 Secretary shall apportion funds authorized to be 

16 appropriated under subsection (b) for the 

17 projects of national and regional significance 

18 program and the national corridor infrastruc19 ture improvement program among all States 

20 such that each State’s share of the funds so ap21 portioned is equal to the State’s share for fiscal 

22 year 2009 of funds apportioned or allocated for 

23 the programs specified in section 105(a)(2) of 

24 title 23, United States Code. 
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1 ‘‘(B) DISTRIBUTION AMONG PROGRAMS.— 

2 Funds apportioned to a State pursuant to sub3 paragraph (A) shall be— 

4 ‘‘(i) made available to the State for the 

5 programs specified in section 105(a)(2) of 

6 title 23, United States Code (except the high 

7 priority projects program), and in the same 

8 proportion for each such program that— 

9 ‘‘(I) the amount apportioned to 

10 the State for that program for fiscal 

11 year 2009; bears to 

12 ‘‘(II) the amount apportioned to 

13 the State for fiscal year 2009 for all 

14 such programs; and 

15 ‘‘(ii) administered in the same manner 

16 and with the same period of availability as 

17 funding is administered under programs 

18 identified in clause (i).’’. 

19 (b) EXPENDITURE AUTHORITY FROM HIGHWAY TRUST

20 FUND.—Paragraph (1) of section 9503(c) of the Internal 

21 Revenue Code of 1986 is amended by striking ‘‘Surface 

22 Transportation Extension Act of 2010’’ and inserting 

23 ‘‘American Jobs and Closing Tax Loopholes Act of 2010’’. 

24 (c) EFFECTIVE DATE.—The amendments made by this 

25 section shall take effect upon the date of enactment of the 
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1 Surface Transportation Extension Act of 2010 (Public Law 

2 111–147; 124 Stat. 78 et seq.) and shall be treated as being 

3 included in that Act at the time of the enactment of that 

4 Act. 

5 (d) SAVINGS CLAUSE.— 

6 (1) IN GENERAL.—For fiscal year 2010 and for 

7 the period beginning on October 1, 2010, and ending 

8 on December 31, 2010, the amount of funds appor9 tioned to each State under section 411(d) of the Sur10 face Transportation Extension Act of 2010 (Public 

11 Law 111–147) that is determined by the amount that 

12 the State received or was authorized to receive for fis13 cal year 2009 to carry out the projects of national 

14 and regional significance program and national cor15 ridor infrastructure improvement program shall be 

16 the greater of— 

17 (A) the amount that the State was author18 ized to receive under section 411(d) of the Sur19 face Transportation Extension Act of 2010 with 

20 respect to each such program according to the 

21 provisions of that Act, as in effect on the day be22 fore the date of enactment of this Act; or 

23 (B) the amount that the State is authorized 

24 to receive under section 411(d) of the Surface 

25 Transportation Extension Act of 2010 with re-
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1 spect to each such program pursuant to the pro2 visions of that Act, as amended by the amend3 ments made by this section. 

4 (2) OBLIGATION AUTHORITY.—For fiscal year 

5 2010, the amount of obligation authority distributed 

6 to each State shall be the greater of— 

7 (A) the amount that the State was author8 ized to receive pursuant to section 120(a)(4)(A) 

9 (as it pertains to the Appalachian Development 

10 Highway System program) of title I of division 

11 A of the Consolidated Appropriations Act, 2010 

12 (Public Law 111–117) and sections 120(a)(4)(B) 

13 and 120(a)(6) of such title, as of the day before 

14 the date of enactment of this Act; or 

15 (B) the amount that the State is authorized 

16 to receive pursuant to section 120(a)(4)(A) (as it 

17 pertains to the Appalachian Development High18 way System program) of title I of division A of 

19 the Consolidated Appropriations Act, 2010 (Pub20 lic Law 111–117) and sections 120(a)(4)(B) and 

21 120(a)(6) of such title, as of the date of enact22 ment of this Act. 

23 (3) AUTHORIZATION OF APPROPRIATIONS.— 

24 There is authorized to be appropriated out of the 

25 Highway Trust Fund (other than the Mass Transit 
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1 Account) such sums as may be necessary to carry out 

2 this subsection. 

3 (4) INCREASE IN OBLIGATION LIMITATION.—The 

4 limitation under the heading ‘‘Federal-aid Highways 

5 (Limitation on Obligations) (Highway Trust Fund)’’ 

6 in Public Law 111–117 is increased by such sums as 

7 may be necessary to carry out this subsection. 

8 (5) CONTRACT AUTHORITY.—Funds made avail9 able to carry out this subsection shall be available for 

10 obligation and administered in the same manner as 

11 if such funds were apportioned under chapter 1 of 

12 title 23, United States Code. 

13 (6) AMOUNTS.—The dollar amount specified in 

14 section 105(d)(1) of title 23, United States Code, the 

15 dollar amount specified in section 120(a)(4)(B) of 

16 title I of division A of the Consolidated Appropria17 tions Act, 2010 (Public Law 111–117), and the dollar 

18 amount specified in section 120(b)(10) of such title 

19 shall each be increased as necessary to carry out this 

20 subsection. 

21 SEC. 615. COMMUNITY COLLEGE AND CAREER TRAINING 

22 GRANT PROGRAM. 

23 (a) IN GENERAL.—Section 278(a) of the Trade Act of 

24 1974 (19 U.S.C. 2372(a)) is amended by adding at the end 

25 the following: 
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1 ‘‘(3) RULE OF CONSTRUCTION.—For purposes of 

2 this section, any reference to ‘workers’, ‘workers eligi3 ble for training under section 236’, or any other ref4 erence to workers under this section shall be deemed 

5 to include individuals who are, or are likely to be6 come, eligible for unemployment compensation as de7 fined in section 85(b) of the Internal Revenue Code of 

8 1986, or who remain unemployed after exhausting all 

9 rights to such compensation.’’. 

10 (b) DEFINITION OF ELIGIBLE INSTITUTION.—Section 

11 278(b)(1) of the Trade Act of 1974 (19 U.S.C. 2372(b)(1)) 

12 is amended— 

13 (1) by striking ‘‘section 102’’ and inserting ‘‘sec14 tion 101(a)’’; and 

15 (2) by striking ‘‘1002’’ and inserting ‘‘1001(a)’’. 

16 (c) AUTHORIZATION OF APPROPRIATIONS.—Section 

17 279 of the Trade Act of 1974 (19 U.S.C. 2372a) is amend18 ed— 

19 (1) in subsection (a), by striking the last sen20 tence; and 

21 (2) by adding at the end the following: 

22 ‘‘(c) ADMINISTRATIVE AND RELATED COSTS.—The 

23 Secretary may retain not more than 5 percent of the funds 

24 appropriated under subsection (b) for each fiscal year to 

25 administer, evaluate, and establish reporting systems for the 
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1 Community College and Career Training Grant program 

2 under section 278. 

3 ‘‘(d) SUPPLEMENT NOT SUPPLANT.—Funds appro4 priated under subsection (b) shall be used to supplement 

5 and not supplant other Federal, State, and local public 

6 funds expended to support community college and career 

7 training programs. 

8 ‘‘(e) AVAILABILITY.—Funds appropriated under sub9 section (b) shall remain available for the fiscal year for 

10 which the funds are appropriated and the subsequent fiscal 

11 year.’’. 

12 SEC. 616. EXTENSIONS OF DUTY SUSPENSIONS ON COTTON 

13 SHIRTING FABRICS AND RELATED PROVI14 SIONS. 

15 (a) EXTENSIONS.—Each of the following headings of 

16 the Harmonized Tariff Schedule of the United States is 

17 amended by striking the date in the effective date column 

18 and inserting ‘‘12/31/2013’’: 

19 (1) Heading 9902.52.08 (relating to woven fab20 rics of cotton). 

21 (2) Heading 9902.52.09 (relating to woven fab22 rics of cotton). 

23 (3) Heading 9902.52.10 (relating to woven fab24 rics of cotton). 
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1 (4) Heading 9902.52.11 (relating to woven fab2 rics of cotton). 

3 (5) Heading 9902.52.12 (relating to woven fab4 rics of cotton). 

5 (6) Heading 9902.52.13 (relating to woven fab6 rics of cotton). 

7 (7) Heading 9902.52.14 (relating to woven fab8 rics of cotton). 

9 (8) Heading 9902.52.15 (relating to woven fab10 rics of cotton). 

11 (9) Heading 9902.52.16 (relating to woven fab12 rics of cotton). 

13 (10) Heading 9902.52.17 (relating to woven fab14 rics of cotton). 

15 (11) Heading 9902.52.18 (relating to woven fab16 rics of cotton). 

17 (12) Heading 9902.52.19 (relating to woven fab18 rics of cotton). 

19 (13) Heading 9902.52.20 (relating to woven fab20 rics of cotton). 

21 (14) Heading 9902.52.21 (relating to woven fab22 rics of cotton). 

23 (15) Heading 9902.52.22 (relating to woven fab24 rics of cotton). 
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1 (16) Heading 9902.52.23 (relating to woven fab2 rics of cotton). 

3 (17) Heading 9902.52.24 (relating to woven fab4 rics of cotton). 

5 (18) Heading 9902.52.25 (relating to woven fab6 rics of cotton). 

7 (19) Heading 9902.52.26 (relating to woven fab8 rics of cotton). 

9 (20) Heading 9902.52.27 (relating to woven fab10 rics of cotton). 

11 (21) Heading 9902.52.28 (relating to woven fab12 rics of cotton). 

13 (22) Heading 9902.52.29 (relating to woven fab14 rics of cotton). 

15 (23) Heading 9902.52.30 (relating to woven fab16 rics of cotton). 

17 (24) Heading 9902.52.31 (relating to woven fab18 rics of cotton). 

19 (b) EXTENSION OF DUTY REFUNDS AND PIMA COTTON

20 TRUST FUND; MODIFICATION OF AFFIDAVIT REQUIRE21 MENTS.—Section 407 of title IV of division C of the Tax 

22 Relief and Health Care Act of 2006 (Public Law 109–432; 

23 120 Stat. 3060) is amended— 

24 (1) in subsection (b)— 
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1 (A) in paragraph (1), by striking ‘‘amounts 

2 determined by the Secretary’’ and all that fol3 lows through ‘‘5208.59.80’’ and inserting 

4 ‘‘amounts received in the general fund that are 

5 attributable to duties received since January 1, 

6 2004, on articles classified under heading 5208’’; 

7 and 

8 (B) in paragraph (2), by striking ‘‘October 

9 1, 2008’’ and inserting ‘‘December 31, 2013’’; 

10 (2) in subsection (d)— 

11 (A) in the matter preceding paragraph (1), 

12 by inserting ‘‘annually’’ after ‘‘provided’’; and 

13 (B) in paragraph (1), by inserting ‘‘during 

14 the year in which the affidavit is filed and’’ after 

15 ‘‘imported cotton fabric’’; and 

16 (3) in subsection (f)— 

17 (A) in the matter preceding paragraph (1), 

18 by inserting ‘‘annually’’ after ‘‘provided’’; and 

19 (B) in paragraph (1), by inserting ‘‘during 

20 the year in which the affidavit is filed and’’ after 

21 ‘‘United States’’. 

22 (c) EFFECTIVE DATE.—The amendments made by this 

23 section shall take effect on the date of the enactment of this 

24 Act and apply with respect to affidavits filed on or after 

25 such date of enactment. 
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1 SEC. 617. MODIFICATION OF WOOL APPAREL MANUFACTUR2 ERS TRUST FUND. 

3 (a) IN GENERAL.—Section 4002(c)(2)(A) of the Mis4 cellaneous Trade and Technical Corrections Act of 2004 

5 (Public Law 108–429; 118 Stat. 2600) is amended by strik6 ing ‘‘chapter 51’’ and inserting ‘‘chapter 62’’. 

7 (b) FULL RESTORATION OF PAYMENT LEVELS IN FIS8 CAL YEAR 2010.— 

9 (1) TRANSFER OF AMOUNTS.— 

10 (A) IN GENERAL.—Not later than 30 days 

11 after the date of the enactment of this Act, the 

12 Secretary of the Treasury shall transfer to the 

13 Wool Apparel Manufacturers Trust Fund, out of 

14 the general fund of the Treasury of the United 

15 States, amounts determined by the Secretary of 

16 the Treasury to be equivalent to amounts re17 ceived in the general fund that are attributable 

18 to the duty received on articles classified under 

19 chapter 62 of the Harmonized Tariff Schedule of 

20 the United States, subject to the limitation in 

21 subparagraph (B). 

22 (B) LIMITATION.—The Secretary of the 

23 Treasury shall not transfer more than the 

24 amount determined by the Secretary to be nec25 essary for— 
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1 (i) U.S. Customs and Border Protec2 tion to make payments to eligible manufac3 turers under section 4002(c)(3) of the Mis4 cellaneous Trade and Technical Corrections 

5 Act of 2004 so that the amount of such pay6 ments, when added to any other payments 

7 made to eligible manufacturers under sec8 tion 4002(c)(3) of such Act for calendar 

9 year 2010, equal the total amount of pay10 ments authorized to be provided to eligible 

11 manufacturers under section 4002(c)(3) of 

12 such Act for calendar year 2010; and 

13 (ii) the Secretary of Commerce to pro14 vide grants to eligible manufacturers under 

15 section 4002(c)(6) of the Miscellaneous 

16 Trade and Technical Corrections Act of 

17 2004 so that the amounts of such grants, 

18 when added to any other grants made to eli19 gible manufacturers under section 

20 4002(c)(6) of such Act for calendar year 

21 2010, equal the total amount of grants au22 thorized to be provided to eligible manufac23 turers under section 4002(c)(6) of such Act 

24 for calendar year 2010. 
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1 (2) PAYMENT OF AMOUNTS.—U.S. Customs and 

2 Border Protection shall make payments described in 

3 paragraph (1) to eligible manufacturers not later 

4 than 30 days after such transfer of amounts from the 

5 general fund of the Treasury of the United States to 

6 the Wool Apparel Manufacturers Trust Fund. The 

7 Secretary of Commerce shall promptly provide grants 

8 described in paragraph (1) to eligible manufacturers 

9 after such transfer of amounts from the general fund 

10 of the Treasury of the United States to the Wool Ap11 parel Manufacturers Trust Fund. 

12 (c) RULE OF CONSTRUCTION.—The amendment made 

13 by subsection (a) shall not be construed to affect the avail14 ability of amounts transferred to the Wool Apparel Manu15 facturers Trust Fund before the date of the enactment of 

16 this Act. 

17 SEC. 618. DEPARTMENT OF COMMERCE STUDY. 

18 Not later than 180 days after the date of enactment 

19 of this Act, the Secretary of Commerce shall report to Con20 gress detailing— 

21 (1) the pattern of job loss in the New England, 

22 Mid-Atlantic, and Midwest States over the past 20 

23 years; 

24 (2) the role of the off-shoring of manufacturing 

25 jobs in overall job loss in the regions; and 
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1 (3) recommendations to attract industries and 

2 bring jobs to the region. 

3 SEC. 619. ARRA PLANNING AND REPORTING. 

4 Section 1512 of the American Recovery and Reinvest5 ment Act of 2009 (Public Law 111–5; 123 Stat. 287) is 

6 amended— 

7 (1) in subsection (d)— 

8 (A) in the subsection heading, by inserting 

9 ‘‘PLANS AND’’ after ‘‘AGENCY’’; 

10 (B) by striking ‘‘Not later than’’ and insert11 ing the following: 

12 ‘‘(1) DEFINITION.—In this subsection, the term 

13 ‘covered program’ means a program for which funds 

14 are appropriated under this division— 

15 ‘‘(A) in an amount that is— 

16 ‘‘(i) more than $2,000,000,000; and 

17 ‘‘(ii) more than 150 percent of the 

18 funds appropriated for the program for fis19 cal year 2008; or 

20 ‘‘(B) that did not exist before the date of en21 actment of this Act. 

22 ‘‘(2) PLANS.—Not later than July 1, 2010, the 

23 head of each agency that distributes recovery funds 

24 shall submit to Congress and make available on the 
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1 website of the agency a plan for each covered pro2 gram, which shall, at a minimum, contain— 

3 ‘‘(A) a description of the goals for the cov4 ered program using recovery funds; 

5 ‘‘(B) a discussion of how the goals described 

6 in subparagraph (A) relate to the goals for ongo7 ing activities of the covered program, if applica8 ble; 

9 ‘‘(C) a description of the activities that the 

10 agency will undertake to achieve the goals de11 scribed in subparagraph (A); 

12 ‘‘(D) a description of the total recovery 

13 funding for the covered program and the recov14 ery funding for each activity under the covered 

15 program, including identifying whether the ac16 tivity will be carried out using grants, contracts, 

17 or other types of funding mechanisms; 

18 ‘‘(E) a schedule of milestones for major 

19 phases of the activities under the covered pro20 gram, with planned delivery dates; 

21 ‘‘(F) performance measures the agency will 

22 use to track the progress of each of the activities 

23 under the covered program in meeting the goals 

24 described in subparagraph (A), including per25 formance targets, the frequency of measurement, 
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1 and a description of the methodology for each 

2 measure; 

3 ‘‘(G) a description of the process of the 

4 agency for the periodic review of the progress of 

5 the covered program towards meeting the goals 

6 described in subparagraph (A); and 

7 ‘‘(H) a description of how the agency will 

8 hold program managers accountable for achiev9 ing the goals described in subparagraph (A). 

10 ‘‘(3) REPORTS.— 

11 ‘‘(A) IN GENERAL.—Not later than’’; and 

12 (C) by adding at the end the following: 

13 ‘‘(B) REPORTS ON PLANS.—Not later than 

14 30 days after the end of the calendar quarter 

15 ending September 30, 2010, and every calendar 

16 quarter thereafter during which the agency obli17 gates or expends recovery funds, the head of each 

18 agency that developed a plan for a covered pro19 gram under paragraph (2) shall submit to Con20 gress and make available on a website of the 

21 agency a report for each covered program that— 

22 ‘‘(i) discusses the progress of the agency 

23 in implementing the plan; 
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1 ‘‘(ii) describes the progress towards 

2 achieving the goals described in paragraph 

3 (2)(A) for the covered program; 

4 ‘‘(iii) discusses the status of each activ5 ity carried out under the covered program, 

6 including whether the activity is completed; 

7 ‘‘(iv) details the unobligated and unex8 pired balances and total obligations and 

9 outlays under the covered program; 

10 ‘‘(v) discusses— 

11 ‘‘(I) whether the covered program 

12 has met the milestones for the covered 

13 program described in paragraph 

14 (2)(E); 

15 ‘‘(II) if the covered program has 

16 failed to meet the milestones, the rea17 sons why; and 

18 ‘‘(III) any changes in the mile19 stones for the covered program, includ20 ing the reasons for the change; 

21 ‘‘(vi) discusses the performance of the 

22 covered program, including— 

23 ‘‘(I) whether the covered program 

24 has met the performance measures for 
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1 the covered program described in para2 graph (2)(F); 

3 ‘‘(II) if the covered program has 

4 failed to meet the performance meas5 ures, the reasons why; and 

6 ‘‘(III) any trends in information 

7 relating to the performance of the cov8 ered program; and 

9 ‘‘(vii) evaluates the ability of the cov10 ered program to meet the goals of the cov11 ered program given the performance of the 

12 covered program.’’; 

13 (2) in subsection (f)— 

14 (A) by striking ‘‘Within 180 days’’ and in15 serting the following: 

16 ‘‘(1) IN GENERAL.—Within 180 days’’; and 

17 (B) by adding at the end the following: 

18 ‘‘(2) PENALTIES.— 

19 ‘‘(A) IN GENERAL.—Subject to subpara20 graphs (B), (C), and (D), the Attorney General 

21 may bring a civil action in an appropriate 

22 United States district court against a recipient 

23 of recovery funds from an agency that does not 

24 provide the information required under sub25 section (c) or knowingly provides information 
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1 under subsection (c) that contains a material 

2 omission or misstatement. In a civil action 

3 under this paragraph, the court may impose a 

4 civil penalty on a recipient of recovery funds in 

5 an amount not more than $250,000. Any 

6 amounts received from a civil penalty under this 

7 paragraph shall be deposited in the general fund 

8 of the Treasury. 

9 ‘‘(B) NOTIFICATION.— 

10 ‘‘(i) IN GENERAL.—The head of an 

11 agency shall provide a written notification 

12 to a recipient of recovery funds from the 

13 agency that fails to provide the information 

14 required under subsection (c). A notification 

15 under this subparagraph shall provide the 

16 recipient with information on how to com17 ply with the necessary reporting require18 ments and notice of the penalties for failing 

19 to do so. 

20 ‘‘(ii) LIMITATION.—A court may not 

21 impose a civil penalty under subparagraph 

22 (A) relating to the failure to provide infor23 mation required under subsection (c) if, not 

24 later than 31 days after the date of the noti-
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1 fication under clause (i), the recipient of the 

2 recovery funds provides the information. 

3 ‘‘(C) CONSIDERATIONS.—In determining the 

4 amount of a penalty under this paragraph for a 

5 recipient of recovery funds, a court shall con6 sider— 

7 ‘‘(i) the number of times the recipient 

8 has failed to provide the information re9 quired under subsection (c); 

10 ‘‘(ii) the amount of recovery funds pro11 vided to the recipient; 

12 ‘‘(iii) whether the recipient is a gov13 ernment, nonprofit entity, or educational 

14 institution; and 

15 ‘‘(iv) whether the recipient is a small 

16 business concern (as defined under section 3 

17 of the Small Business Act (15 U.S.C. 632)), 

18 with particular consideration given to busi19 nesses with not more than 50 employees. 

20 ‘‘(D) APPLICABILITY.—This paragraph 

21 shall apply to any report required to be sub22 mitted on or after the date of enactment of this 

23 paragraph. 

24 ‘‘(E) NONEXCLUSIVITY.—The imposition of 

25 a civil penalty under this subsection shall not 
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1 preclude any other criminal, civil, or adminis2 trative remedy available to the United States or 

3 any other person under Federal or State law. 

4 ‘‘(3) TECHNICAL ASSISTANCE.—Each agency dis5 tributing recovery funds shall provide technical assist6 ance, as necessary, to assist recipients of recovery 

7 funds in complying with the requirements to provide 

8 information under subsection (c), which shall include 

9 providing recipients with a reminder regarding each 

10 reporting requirement. 

11 ‘‘(4) PUBLIC LISTING.— 

12 ‘‘(A) IN GENERAL.—Not later than 45 days 

13 after the end of each calendar quarter, and sub14 ject to the notification requirements under para15 graph (2)(B), the Board shall make available on 

16 the website established under section 1526 a list 

17 of all recipients of recovery funds that did not 

18 provide the information required under sub19 section (c) for the calendar quarter. 

20 ‘‘(B) CONTENTS.—A list made available 

21 under subparagraph (A) shall, for each recipient 

22 of recovery funds on the list, include the name 

23 and address of the recipient, the identification 

24 number for the award, the amount of recovery 

25 funds awarded to the recipient, a description of 
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1 the activity for which the recovery funds were 

2 provided, and, to the extent known by the Board, 

3 the reason for noncompliance. 

4 ‘‘(5) REGULATIONS AND REPORTING.— 

5 ‘‘(A) REGULATIONS.—Not later than 90 

6 days after the date of enactment of this para7 graph, the Attorney General, in consultation 

8 with the Director of the Office of Management 

9 and Budget and the Chairperson, shall promul10 gate regulations regarding implementation of 

11 this section. 

12 ‘‘(B) REPORTING.— 

13 ‘‘(i) IN GENERAL.—Not later than July 

14 1, 2010, and every 3 months thereafter, the 

15 Director of the Office of Management and 

16 Budget, in consultation with the Chair17 person, shall submit to Congress a report on 

18 the extent of noncompliance by recipients of 

19 recovery funds with the reporting require20 ments under this section. 

21 ‘‘(ii) CONTENTS.—Each report sub22 mitted under clause (i) shall include— 

23 ‘‘(I) information, for the quarter 

24 and in total, regarding the number 

25 and amount of civil penalties imposed 
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1 and collected under this subsection, 

2 sorted by agency and program; 

3 ‘‘(II) information on the steps 

4 taken by the Federal Government to re5 duce the level of noncompliance; and 

6 ‘‘(III) any other information de7 termined appropriate by the Direc8 tor.’’; and 

9 (3) by adding at the end the following: 

10 ‘‘(i) TERMINATION.—The reporting requirements 

11 under this section shall terminate on September 30, 2013.’’. 

12 TITLE VII—BUDGETARY 

13 PROVISIONS 

14 SEC. 701. BUDGETARY PROVISIONS. 

15 (a) STATUTORY PAYGO.—The budgetary effects of this 

16 Act, for the purpose of complying with the Statutory Pay17 As-You-Go Act of 2010, shall be determined by reference to 

18 the latest statement titled ‘Budgetary Effects of PAYGO 

19 Legislation’ for this Act, jointly submitted for printing in 

20 the Congressional Record by the Chairmen of the House and 

21 Senate Budget Committees, provided that such statement 

22 has been submitted prior to the vote on passage in the House 

23 acting first on this conference report or amendment between 

24 the Houses. 
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1 (b) EMERGENCY DESIGNATIONS.—Sections 501, 511, 

2 and 516— 

3 (1) are designated as an emergency requirement 

4 pursuant to section 4(g) of the Statutory Pay-As-You5 Go Act of 2010 (Public Law 111–139; 2 U.S.C. 

6 933(g)); 

7 (2) in the House of Representatives, are des8 ignated as an emergency for purposes of pay-as-you9 go principles; and 

10 (3) in the Senate, are designated as an emer11 gency requirement pursuant to section 403(a) of S. 

12 Con. Res. 13 (111th Congress), the concurrent resolu13 tion on the budget for fiscal year 2010. 

Attest: 

Clerk. 
111TH CONGRESS 

2D SESSION H.R. 4213 

HOUSE AMENDMENT TO 

SENATE AMENDMENT