II 

112TH CONGRESS 

1ST SESSION S. 727 

To amend the Internal Revenue Code of 1986 to make the Federal income 

tax system simpler, fairer, and more fiscally responsible, and for other 

purposes. 

IN THE SENATE OF THE UNITED STATES 

APRIL 5, 2011 

Mr. WYDEN (for himself, Mr. COATS, and Mr. BEGICH) introduced the 

following bill; which was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to make 

the Federal income tax system simpler, fairer, and more 

fiscally responsible, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

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

4 TABLE OF CONTENTS. 

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

6 ‘‘Bipartisan Tax Fairness and Simplification Act of 

7 2011’’. 

8 (b) AMENDMENT OF 1986 CODE.—Except as other9 wise expressly provided, whenever in this Act an amendVerDate Mar 15 2010 02:52 Apr 07, 2011 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S727.IS S727

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1 ment or repeal is expressed in terms of an amendment 

2 to, or repeal of, a section or other provision, the reference 

3 shall be considered to be made to a section or other provi4 sion of the Internal Revenue Code of 1986. 

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

6 this Act is as follows: 

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

Sec. 2. Purpose. 

TITLE I—INDIVIDUAL INCOME TAX REFORMS 

Sec. 101. Three progressive individual income tax rates. 

Sec. 102. Increase in basic standard deduction. 

Sec. 103. Permanent extension of expansion of earned income credit. 

Sec. 104. Permanent extension of expansion of dependent care credit. 

Sec. 105. Permanent extension of child tax credit. 

Sec. 106. Permanent repeal of limitations on personal exemptions and itemized 

deductions. 

Sec. 107. Elimination of individual miscellaneous itemized deductions. 

Sec. 108. Treatment of capital gains and dividends as ordinary income. 

Sec. 109. Partial exclusion of capital gains. 

Sec. 110. Partial exclusion of dividends received by individuals. 

Sec. 111. Nonrefundable personal credit for interest on State and local bonds. 

Sec. 112. Retirement savings accounts. 

Sec. 113. American Dream Accounts. 

Sec. 114. Consolidation of tax credits and deductions for education expenses. 

Sec. 115. Termination of various exclusions, exemptions, deductions, and credits. 

Sec. 116. Simplified tax return preparation. 

TITLE II—CORPORATE AND BUSINESS INCOME TAX REFORMS 

Sec. 201. Corporate flat tax. 

Sec. 202. Treatment of travel on corporate aircraft. 

Sec. 203. Unlimited expensing of depreciable assets and inventories for certain 

small businesses. 

Sec. 204. Termination of various preferential treatments. 

Sec. 205. Pass-through business entity transparency. 

Sec. 206. Modification of effective date of leasing provisions of the American 

Jobs Creation Act of 2004. 

Sec. 207. Modifications of foreign tax credit rules applicable to large integrated 

oil companies which are dual capacity taxpayers. 

Sec. 208. Repeal of lower of cost or market value of inventory rule. 

Sec. 209. Reinstitution of per country foreign tax credit. 

Sec. 210. Application of rules treating inverted corporations as domestic corporations to certain transactions occurring after March 20, 

2002. 

Sec. 211. Indexing corporate interest deduction for inflation. 

Sec. 212. Prohibition of advance refunding of bonds. 


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Sec. 213. CBO study on government spending on businesses. 

TITLE III—REPEAL OF ALTERNATIVE MINIMUM TAX 

Sec. 301. Repeal of alternative minimum tax. 

TITLE IV—IMPROVEMENTS IN TAX COMPLIANCE 

Sec. 401. Increase in information return penalties. 

Sec. 402. E-filing requirement for certain large organizations. 

Sec. 403. Implementation of standards clarifying when employee leasing companies can be held liable for their clients’ Federal employment 

taxes. 

Sec. 404. Expansion of IRS access to information in National Directory of New 

Hires for tax administration purposes. 

Sec. 405. Modification of criminal penalties for willful failures involving tax 

payments and filing requirements. 

Sec. 406. Penalties for failure to file certain returns electronically. 

Sec. 407. Reporting on identification of beneficial owners of certain foreign financial accounts. 

TITLE V—MISCELLANEOUS PROVISIONS 

Sec. 501. Allowance of deduction for dividends received from controlled foreign 

corporations for 2011. 

Sec. 502. Denial of deduction for punitive damages. 

Sec. 503. Application of Medicare payroll tax to all State and local government 

employees. 

Sec. 504. Corrections for CPI overstatement in cost-of-living indexation. 

TITLE VI—TECHNICAL AND CONFORMING AMENDMENTS 

Sec. 601. Technical and conforming amendments. 

1 SEC. 2. PURPOSE. 

2 The purpose of this Act is to amend the Internal Rev3 enue Code of 1986— 

4 (1) to make the Federal individual income tax 

5 system simpler, fairer, and more transparent by, 

6 among other reforms— 

7 (A) repealing the individual alternative 

8 minimum tax, 

9 (B) increasing the basic standard deduc10 tion and maintaining itemized deductions for 


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1 mortgage interest and charitable contributions, 

2 and 

3 (C) reducing the number of exclusions, ex4 emptions, deductions, and credits, 

5 (2) to make the Federal corporate income tax 

6 rate a flat 24 percent, repeal the corporate alter7 native minimum tax, and eliminate special tax pref8 erences that favor particular types of businesses or 

9 activities, and 

10 (3) to partially offset the Federal budget deficit 

11 through the increased fiscal responsibility resulting 

12 from these reforms. 

13 TITLE I—INDIVIDUAL INCOME 

14 TAX REFORMS 

15 SEC. 101. THREE PROGRESSIVE INDIVIDUAL INCOME TAX 

16 RATES. 

17 (a) MARRIED INDIVIDUALS FILING JOINT RETURNS

18 AND SURVIVING SPOUSES.—The table contained in sec19 tion 1(a) is amended to read as follows: 

‘‘If taxable income is: The tax is: 

Not over $75,000 .......................... 15% of taxable income. 

Over $75,000 but not over 

$140,000.

$11,250, plus 25% of the excess over 

$75,000. 

Over $140,000 ............................... $27,500, plus 35% of the excess over 

$140,000’’. 

20 (b) HEADS OF HOUSEHOLDS.—The table contained 

21 in section 1(b) is amended to read as follows: 

‘‘If taxable income is: The tax is: 

Not over $56,250 .......................... 15% of taxable income. 


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‘‘If taxable income is: The tax is: 

Over $56,250 but not over 

$105,000.

$8,437.50, plus 25% of the excess 

over $56,250. 

Over $105,000 ............................... $20,625, plus 35% of the excess over 

$105,000’’. 

1 (c) UNMARRIED INDIVIDUALS (OTHER THAN SUR2 VIVING SPOUSES AND HEADS OF HOUSEHOLDS).—The 

3 table contained in section 1(c) is amended to read as fol4 lows: 

‘‘If taxable income is: The tax is: 

Not over $37,500 .......................... 15% of taxable income. 

Over $37,500 but not over 

$70,000.

$5,625, plus 25% of the excess over 

$37,500. 

Over $70,000 ................................. $13,750, plus 35% of the excess over 

$70,000’’. 

5 (d) MARRIED INDIVIDUALS FILING SEPARATE RE6 TURNS.—The table contained in section 1(d) is amended 

7 to read as follows: 

‘‘If taxable income is: The tax is: 

Not over $37,500 .......................... 15% of taxable income. 

Over $37,500 but not over 

$70,000.

$5,625, plus 25% of the excess over 

$37,500. 

Over $70,000 ................................. $13,750, plus 35% of the excess over 

$70,000’’. 

8 (e) REPEAL OF EGTRRA SUNSET.— 

9 (1) IN GENERAL.—Title IX of the Economic 

10 Growth and Tax Relief Reconciliation Act of 2001 

11 shall not apply to section 101 (relating to income 

12 tax rates for individuals) and section 302 (relating 

13 to 15 percent bracket) of such Act. 

14 (2) CONFORMING AMENDMENTS.— 

15 (A) Section 1 is amended by striking sub16 section (i). 


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1 (B) Section 1(g)(7)(B)(ii)(II) is amended 

2 by striking ‘‘10 percent’’ and inserting ‘‘15 per3 cent’’. 

4 (C) Section 3402(p)(1)(B) is amended by 

5 striking ‘‘3 lowest’’. 

6 (D) Section 3402(p)(2) is amended by 

7 striking ‘‘10 percent’’ and inserting ‘‘15 per8 cent’’. 

9 (E) Section 3402(q)(1) is amended by 

10 striking ‘‘third’’ and inserting ‘‘second’’. 

11 (F) Section 3402(r)(3) is amended by 

12 striking ‘‘fourth’’ and inserting ‘‘second’’. 

13 (G) Section 3406(a)(1) is amended by 

14 striking ‘‘fourth’’ and inserting ‘‘second’’. 

15 (H) Section 13273 of the Revenue Rec16 onciliation Act of 1993 is amended by striking 

17 ‘‘third’’ and inserting ‘‘second’’. 

18 (f) CONFORMING AMENDMENTS TO INFLATION AD19 JUSTMENT.— 

20 (1) Section 1(f) is amended— 

21 (A) by striking ‘‘1993’’ in paragraph (1) 

22 and inserting ‘‘2012’’, 

23 (B) by striking ‘‘except as provided in 

24 paragraph (8)’’ in paragraph (2)(A), 


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1 (C) by striking ‘‘1992’’ in paragraph 

2 (3)(B) and inserting ‘‘2011’’, 

3 (D) by striking paragraphs (7) and (8), 

4 and 

5 (E) by striking ‘‘PHASEOUT OF MARRIAGE

6 PENALTY IN 15-PERCENT BRACKET;’’ in the 

7 heading thereof. 

8 (2) The Internal Revenue Code of 1986 is 

9 amended by striking ‘‘calendar year 1992’’ each 

10 place it appears and inserting ‘‘calendar year 2011’’. 

11 (g) EFFECTIVE DATES.— 

12 (1) IN GENERAL.—Except as provided in para13 graph (2), the amendments made by this section 

14 shall apply to taxable years beginning after Decem15 ber 31, 2011. 

16 (2) AMENDMENTS TO WITHHOLDING PROVI17 SIONS.—The amendments made by subparagraphs 

18 (C) through (H) of subsection (e)(2) shall apply to 

19 amounts paid after the 60th day after the date of 

20 the enactment of this Act. 

21 SEC. 102. INCREASE IN BASIC STANDARD DEDUCTION. 

22 (a) IN GENERAL.—Paragraph (2) of section 63(c) is 

23 amended to read as follows: 


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1 ‘‘(2) BASIC STANDARD DEDUCTION.—For pur2 poses of paragraph (1), the basic standard deduction 

3 is— 

4 ‘‘(A) 200 percent of the dollar amount in 

5 effect under subparagraph (C) for the taxable 

6 year in the case of— 

7 ‘‘(i) a joint return, or 

8 ‘‘(ii) a surviving spouse (as defined in 

9 section 2(a)), 

10 ‘‘(B) $22,500 in the case of a head of 

11 household (as defined in section 2(b)), or 

12 ‘‘(C) $15,000 in any other case, reduced 

13 by any deduction allowed under section 

14 62(a)(22) for such taxable year.’’. 

15 (b) CONFORMING AMENDMENT TO INFLATION AD16 JUSTMENT.—Section 63(c)(4)(B)(i) is amended by strik17 ing ‘‘(2)(B), (2)(C), or’’. 

18 (c) REPEAL OF EGTRRA SUNSET.—Title IX of the 

19 Economic Growth and Tax Relief Reconciliation Act of 

20 2001 shall not apply to section 301 of such Act (relating 

21 to standard deduction). 

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

23 this section shall apply to taxable years beginning after 

24 December 31, 2011. 


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1 SEC. 103. PERMANENT EXTENSION OF EXPANSION OF 

2 EARNED INCOME CREDIT. 

3 (a) REPEAL OF EGTRRA SUNSET.—Title IX of the 

4 Economic Growth and Tax Relief Reconciliation Act of 

5 2001 shall not apply to section 303 of such Act (relating 

6 to earned income tax credit). 

7 (b) EFFECTIVE DATE.—Subsection (a) shall apply to 

8 taxable years beginning after December 31, 2011. 

9 SEC. 104. PERMANENT EXTENSION OF EXPANSION OF DE10 PENDENT CARE CREDIT. 

11 (a) REPEAL OF EGTRRA SUNSET.—Title IX of the 

12 Economic Growth and Tax Relief Reconciliation Act of 

13 2001 shall not apply to section 204 of such Act (relating 

14 to dependent care credit). 

15 (b) EFFECTIVE DATE.—Subsection (a) shall apply to 

16 taxable years beginning after December 31, 2011. 

17 SEC. 105. PERMANENT EXTENSION OF CHILD TAX CREDIT. 

18 (a) REPEAL OF EGTRRA SUNSET.—Title IX of the 

19 Economic Growth and Tax Relief Reconciliation Act of 

20 2001 shall not apply to section 201 (relating to modifica21 tions to child tax credit) and section 203 (relating to re22 funds disregarded in the administration of Federal pro23 grams and federally assisted programs) of such Act. 

24 (b) EFFECTIVE DATE.—Subsection (a) shall apply to 

25 taxable years beginning after December 31, 2011. 


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1 SEC. 106. PERMANENT REPEAL OF LIMITATIONS ON PER2 SONAL EXEMPTIONS AND ITEMIZED DEDUC3 TIONS. 

4 (a) REPEAL OF EGTRRA SUNSET.—Title IX of the 

5 Economic Growth and Tax Relief Reconciliation Act of 

6 2001 shall not apply to section 102 (relating to repeal of 

7 phaseout of personal exemptions) and 103 (relating to 

8 phaseout of overall limitation on itemized deductions) of 

9 such Act. 

10 (b) EFFECTIVE DATE.—Subsection (a) shall apply to 

11 taxable years beginning after December 31, 2011. 

12 SEC. 107. ELIMINATION OF INDIVIDUAL MISCELLANEOUS 

13 ITEMIZED DEDUCTIONS. 

14 (a) IN GENERAL.—Subsection (a) of section 67 is 

15 amended to read as follows: 

16 ‘‘(a) GENERAL RULE.—In the case of an individual, 

17 miscellaneous deductions shall not be allowed for any tax18 able year beginning after December 31, 2011.’’. 

19 (b) CONFORMING AMENDMENTS.— 

20 (1) The heading for section 67 is amended by 

21 striking ‘‘2-PERCENT FLOOR ON’’ and inserting 

22 ‘‘TREATMENT OF’’. 

23 (2) The item relating to section 67 in the table 

24 of sections for part I of subchapter B of chapter 1 

25 is amended by striking ‘‘2-percent floor on’’ and in26 serting ‘‘Treatment of’’. 


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

2 this section shall apply to taxable years beginning after 

3 December 31, 2011. 

4 SEC. 108. TREATMENT OF CAPITAL GAINS AND DIVIDENDS 

5 AS ORDINARY INCOME. 

6 (a) ACCELERATION OF JGTRRA SUNSET.—Section 

7 303 of the Jobs and Growth Tax Relief Reconciliation Act 

8 of 2003, as amended by section 102(a) of the Tax Relief, 

9 Unemployment Insurance Reauthorization, and Job Cre10 ation Act of 2010, is amended by striking ‘‘December 31, 

11 2012’’ and inserting ‘‘December 31, 2011’’. 

12 (b) TREATMENT OF CAPITAL GAINS AND DIVIDENDS

13 AS ORDINARY INCOME.—Section 1(h), after the applica14 tion of subsection (a), is amended by adding at the end 

15 the following new paragraph: 

16 ‘‘(11) TERMINATION.—This subsection shall not 

17 apply to taxable years beginning after December 31, 

18 2011.’’. 

19 SEC. 109. PARTIAL EXCLUSION OF CAPITAL GAINS. 

20 (a) PARTIAL EXCLUSION.—Part III of subchapter B 

21 of chapter 1 is amended by inserting before section 140 

22 the following new section: 

23 ‘‘SEC. 139F. CAPITAL GAINS PARTIAL EXCLUSION. 

24 ‘‘For any taxable year, gross income shall not in25 clude— 


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1 ‘‘(1) 35 percent of so much of any gain from 

2 the sale or exchange during such taxable year of 

3 capital assets held for more than 6 months but not 

4 more than 1 year as does not exceed $500,000, plus 

5 ‘‘(2) 35 percent of any long-term capital gain 

6 for such taxable year (determined after the applica7 tion of section 1202).’’. 

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

9 for part III of subchapter B of chapter 1 is amended by 

10 inserting before the item relating to section 140 the fol11 lowing new item: 

‘‘Sec. 139F. Capital gains partial exclusion.’’. 

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

13 this section shall apply to taxable years beginning after 

14 December 31, 2011. 

15 SEC. 110. PARTIAL EXCLUSION OF DIVIDENDS RECEIVED 

16 BY INDIVIDUALS. 

17 (a) GENERAL RULE.—Part III of subchapter B of 

18 chapter 1 is amended by inserting after section 115 the 

19 following new section: 

20 ‘‘SEC. 116. PARTIAL EXCLUSION OF DIVIDENDS RECEIVED 

21 BY INDIVIDUALS. 

22 ‘‘(a) EXCLUSION FROM GROSS INCOME.—Gross in23 come does not include 35 percent of the qualified dividend 

24 income received during the taxable year by an individual. 


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1 ‘‘(b) QUALIFIED DIVIDEND INCOME.—For purposes 

2 of this subsection— 

3 ‘‘(1) IN GENERAL.—The term ‘qualified divi4 dend income’ means dividends received with respect 

5 to any share of stock of— 

6 ‘‘(A) any domestic corporation, or 

7 ‘‘(B) any foreign corporation but only if 

8 such share of stock is readily tradable on an es9 tablished securities market. 

10 ‘‘(2) CERTAIN DIVIDENDS EXCLUDED.—Such 

11 term shall not include— 

12 ‘‘(A) any dividend from a corporation 

13 which for the taxable year of the corporation in 

14 which the distribution is made, or the preceding 

15 taxable year, is a corporation exempt from tax 

16 under section 501 or 521, 

17 ‘‘(B) any amount allowed as a deduction 

18 under section 591 (relating to deduction for 

19 dividends paid by mutual savings banks, etc.), 

20 and 

21 ‘‘(C) any dividend described in section 

22 404(k). 

23 ‘‘(3) EXCLUSION OF DIVIDENDS OF CERTAIN

24 FOREIGN CORPORATIONS.—Such term shall not in25 clude any dividend from a foreign corporation which 


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1 for the taxable year of the corporation in which the 

2 distribution was made, or the preceding taxable 

3 year, is a foreign personal holding company (as de4 fined in section 552), a foreign investment company 

5 (as defined in section 1246(b)), or a passive foreign 

6 investment company (as defined in section 1297). 

7 ‘‘(4) COORDINATION WITH SECTION 246(c).— 

8 Such term shall not include any dividend on any 

9 share of stock— 

10 ‘‘(A) with respect to which the holding pe11 riod requirements of section 246(c) are not met, 

12 or 

13 ‘‘(B) to the extent that the taxpayer is 

14 under an obligation (whether pursuant to a 

15 short sale or otherwise) to make related pay16 ments with respect to positions in substantially 

17 similar or related property. 

18 ‘‘(c) SPECIAL RULES.— 

19 ‘‘(1) AMOUNTS TAKEN INTO ACCOUNT AS IN20 VESTMENT INCOME.—Qualified dividend income 

21 shall not include any amount which the taxpayer 

22 takes into account as investment income under sec23 tion 163(d)(4)(B). 

24 ‘‘(2) COORDINATION WITH FOREIGN TAX CRED25 IT AND DEDUCTION.—No credit shall be allowed 


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1 under section 901, and no deduction shall be allowed 

2 under this chapter, for any taxes paid or accrued 

3 with respect to any income excludable under this 

4 section. 

5 ‘‘(3) EXTRAORDINARY DIVIDENDS.—If an indi6 vidual receives, with respect to any share of stock, 

7 qualified dividend income from 1 or more dividends 

8 which are extraordinary dividends (within the mean9 ing of section 1059(c)), any loss on the sale or ex10 change of such share shall, to the extent of such 

11 dividends, be treated as long-term capital loss. 

12 ‘‘(4) CERTAIN NONRESIDENT ALIENS INELI13 GIBLE FOR EXCLUSION.—In the case of a non14 resident alien individual, subsection (a) shall apply 

15 only in determining the tax imposed for the taxable 

16 year by sections 871(b)(1) and 877(b). 

17 ‘‘(5) EXCLUSION DISREGARDED IN DETER18 MINING INCOME FOR CERTAIN PURPOSES.—Sub19 section (a) shall not apply for purposes of deter20 mining amounts of income under sections 32(i), 

21 86(b), 135(b), 137(b), 219(g), 221(b), 408A(c)(3), 

22 469(i), and 530(c), or subpart A of part IV of sub23 chapter A. 

24 ‘‘(6) TREATMENT OF DIVIDENDS FROM REGU25 LATED INVESTMENT COMPANIES AND REAL ESTATE


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1 INVESTMENT TRUSTS.—A dividend from a regulated 

2 investment company or real estate investment trust 

3 shall be subject to the limitations prescribed in sec4 tions 854 and 857.’’. 

5 (b) EXCLUSION OF DIVIDENDS FROM INVESTMENT

6 INCOME.—The last sentence of subparagraph (B) of sec7 tion 163(d)(4) is amended to read as follows: 

8 ‘‘Such term shall include qualified dividend income 

9 (as defined in section 116(b)) only to the extent the tax10 payer elects to treat such income as investment income 

11 for purposes of this subsection.’’. 

12 (c) TREATMENT OF DIVIDENDS FROM REGULATED

13 INVESTMENT COMPANIES.— 

14 (1) Subsection (a) of section 854 is amended by 

15 inserting ‘‘section 116 (relating to partial exclusion 

16 of dividends received by individuals) and’’ after ‘‘For 

17 purposes of’’. 

18 (2) Paragraph (1) of section 854(b) is amended 

19 by redesignating subparagraph (B) as subparagraph 

20 (C) and by inserting after subparagraph (A) the fol21 lowing new subparagraph: 

22 ‘‘(B) EXCLUSION UNDER SECTION 116.— 

23 ‘‘(i) IN GENERAL.—If the aggregate 

24 dividends received by a regulated invest25 ment company during any taxable year are 


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1 less than 95 percent of its gross income, 

2 then, in computing the exclusion under 

3 section 116, rules similar to the rules of 

4 subparagraph (A) shall apply. 

5 ‘‘(ii) GROSS INCOME.—For purposes 

6 of clause (i), in the case of 1 or more sales 

7 or other dispositions of stock or securities, 

8 the term ‘gross income’ includes only the 

9 excess of— 

10 ‘‘(I) the net short-term capital 

11 gain from such sales or dispositions, 

12 over 

13 ‘‘(II) the net long-term capital 

14 loss from such sales or dispositions.’’. 

15 (3) Subparagraph (C) of section 854(b)(1), as 

16 redesignated by paragraph (2), is amended by strik17 ing ‘‘subparagraph (A)’’ and inserting ‘‘subpara18 graph (A) or (B)’’. 

19 (4) Paragraph (2) of section 854(b) is amended 

20 by inserting ‘‘the exclusion under section 116 and’’ 

21 after ‘‘for purposes of’’. 

22 (5) Subsection (b) of section 854 is amended by 

23 adding at the end the following new paragraph: 

24 ‘‘(5) COORDINATION WITH SECTION 116.—For 

25 purposes of paragraph (1)(B), an amount shall be 


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1 treated as a dividend only if the amount is qualified 

2 dividend income (within the meaning of section 

3 116(b)).’’. 

4 (d) TREATMENT OF DIVIDENDS RECEIVED FROM

5 REAL ESTATE INVESTMENT TRUSTS.—Section 857(c) is 

6 amended to read as follows: 

7 ‘‘(c) RESTRICTIONS APPLICABLE TO DIVIDENDS RE8 CEIVED FROM REAL ESTATE INVESTMENT TRUSTS.— 

9 ‘‘(1) SECTION 243.—For purposes of section 

10 243 (relating to deductions for dividends received by 

11 corporations), a dividend received from a real estate 

12 investment trust which meets the requirements of 

13 this part shall not be considered a dividend. 

14 ‘‘(2) SECTION 116.—For purposes of section 

15 116 (relating to exclusion of dividends), rules similar 

16 to the rules of section 854(b)(1)(B) shall apply to 

17 dividends received from a real estate trust which 

18 meets the requirements of this part.’’. 

19 (e) CONFORMING AMENDMENTS.— 

20 (1) Subsection (f) of section 301 is amended 

21 adding at the end the following new paragraph: 

22 ‘‘(4) For partial exclusion from gross income of 

23 dividends received by individuals, see section 116.’’. 


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1 (2) Paragraph (1) of section 306(a) is amended 

2 by adding at the end the following new subpara3 graph: 

4 ‘‘(D) TREATMENT AS DIVIDEND.—For 

5 purposes of section 116, any amount treated as 

6 ordinary income under this paragraph shall be 

7 treated as a dividend received from the corpora8 tion.’’. 

9 (3)(A) Subpart C of part II of subchapter C of 

10 chapter 1 is repealed. 

11 (B)(i) Section 338(h) is amended by striking 

12 paragraph (14). 

13 (ii) Sections 467(c)(5)(C), 1255(b)(2), and 

14 1257(d) are each amended by striking ‘‘, 

15 341(e)(12),’’. 

16 (iii) The table of subparts for part II of sub17 chapter C of chapter 1 is amended by striking the 

18 item related to subpart C. 

19 (4) Section 531(a) is amended by inserting ‘‘90 

20 percent (80 percent in the case of taxable years be21 ginning after 2007) of’’ after ‘‘equal to’’. 

22 (5) Section 541(a) is amended by inserting ‘‘90 

23 percent (80 percent in the case of taxable years be24 ginning after 2007) of’’ after ‘‘equal to’’. 


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1 (6) Section 584(c) is amended by adding at the 

2 end the following new flush sentence: 

3 ‘‘The proportionate share of each participant in the 

4 amount of dividends received by the common trust fund 

5 and to which section 116 applies shall be considered for 

6 purposes of such paragraph as having been received by 

7 such participant.’’. 

8 (7) Section 643(a) is amended by redesignating 

9 paragraph (7) as paragraph (8) and by inserting 

10 after paragraph (6) the following new paragraph: 

11 ‘‘(7) EXCLUDED DIVIDENDS.—There shall be 

12 included the amount of any dividends excluded from 

13 gross income under section 116 (relating to partial 

14 exclusion of dividends).’’. 

15 (8) Paragraph (5) of section 702(a) is amended 

16 to read as follows: 

17 ‘‘(5) dividends with respect to which section 

18 116 or part VII of subchapter B applies,’’. 

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

20 this section shall apply to taxable years beginning after 

21 December 31, 2011. 


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1 SEC. 111. NONREFUNDABLE PERSONAL CREDIT FOR INTER2 EST ON STATE AND LOCAL BONDS. 

3 (a) IN GENERAL.—Subpart A of part IV of sub4 chapter A of chapter 1 is amended by adding at the end 

5 the following new section: 

6 ‘‘SEC. 25E. INTEREST ON STATE AND LOCAL BONDS. 

7 ‘‘(a) IN GENERAL.—If a taxpayer other than a cor8 poration holds a State or local bond on one or more inter9 est payment dates of the bond during any taxable year, 

10 there shall be allowed as a credit against the tax imposed 

11 by this chapter for the taxable year an amount equal to 

12 the sum of the credits determined under subsection (b) 

13 with respect to such dates. 

14 ‘‘(b) AMOUNT OF CREDIT.—The amount of the credit 

15 determined under this subsection with respect to any in16 terest payment date for a State or local bond is 25 percent 

17 of the amount of interest payable by the issuer with re18 spect to such date. 

19 ‘‘(c) STATE OR LOCAL BOND.— 

20 ‘‘(1) IN GENERAL.—For purposes of this sec21 tion, the term ‘State or local bond’ means any bond 

22 issued as part of an issue if the interest on such 

23 bond would (but for this section) be excludable from 

24 gross income under section 103. 

25 ‘‘(2) APPLICABLE RULES.—For purposes of ap26 plying paragraph (1)— 


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1 ‘‘(A) for purposes of section 149(b), a 

2 State or local bond shall not be treated as fed3 erally guaranteed by reason of the credit al4 lowed under subsection (a), and 

5 ‘‘(B) for purposes of section 148, the yield 

6 on a State or local bond shall be determined 

7 without regard to the credit allowed under sub8 section (a). 

9 ‘‘(d) INTEREST PAYMENT DATE.—For purposes of 

10 this section, the term ‘interest payment date’ means any 

11 date on which the holder of record of the State or local 

12 bond is entitled to a payment of interest under such bond. 

13 ‘‘(e) SPECIAL RULES.— 

14 ‘‘(1) INTEREST ON STATE OR LOCAL BONDS IN15 CLUDIBLE IN GROSS INCOME FOR FEDERAL INCOME

16 TAX PURPOSES.—For purposes of this title, interest 

17 on any State or local bond shall be includible in 

18 gross income. 

19 ‘‘(2) APPLICATION OF CERTAIN RULES.—Rules 

20 similar to the rules of subsections (f), (g), (h), and 

21 (i) of section 54A shall apply for purposes of the 

22 credit allowed under subsection (a). 

23 ‘‘(f) REGULATIONS.—The Secretary may prescribe 

24 such regulations and other guidance as may be necessary 

25 or appropriate to carry out this section.’’. 


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1 (b) CONFORMING AMENDMENTS.— 

2 (1) Section 103(b) is amended by adding at the 

3 end the following new paragraph: 

4 ‘‘(4) INTEREST FOR WHICH CREDIT IS ALLOW5 ABLE.—The interest on any State or local bond for 

6 which a credit under seciton 25E is allowable.’’. 

7 (2) The table of sections for subpart A of part 

8 IV of subchapter A of chapter 1 is amended by add9 ing at the end the following new item: 

‘‘Sec. 25E. Interest on State and local bonds.’’. 

10 (c) TRANSITIONAL COORDINATION WITH STATE

11 LAW.—Except as otherwise provided by a State after the 

12 date of the enactment of this Act, the interest on any 

13 State or local bond (as defined in section 25E of the Inter14 nal Revenue Code of 1986, as added by this section) and 

15 the amount of any credit determined under such section 

16 with respect to such bond shall be treated for purposes 

17 of the income tax laws of such State as being exempt from 

18 Federal income tax. 

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

20 this section shall apply to obligations issued after Decem21 ber 31, 2011. 

22 SEC. 112. RETIREMENT SAVINGS ACCOUNTS. 

23 (a) IN GENERAL.—Section 408A is amended to read 

24 as follows: 


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1 ‘‘SEC. 408A. RETIREMENT SAVINGS ACCOUNTS. 

2 ‘‘(a) IN GENERAL.—Except as provided in this sec3 tion, a retirement savings account shall be treated for pur4 poses of this title in the same manner as an individual 

5 retirement plan. 

6 ‘‘(b) RETIREMENT SAVINGS ACCOUNT.—For pur7 poses of this title, the term ‘retirement savings account’ 

8 means an individual retirement plan (as defined in section 

9 7701(a)(37)) which— 

10 ‘‘(1) is designated (in such manner as the Sec11 retary may prescribe) at the time of establishment 

12 of the plan as a retirement savings account, and 

13 ‘‘(2) does not accept any contribution (other 

14 than a qualified rollover contribution) which is not 

15 in cash. 

16 ‘‘(c) TREATMENT OF CONTRIBUTIONS.— 

17 ‘‘(1) CONTRIBUTION LIMIT.—Notwithstanding 

18 subsections (a)(1) and (b)(2)(A) of section 408, the 

19 aggregate amount of contributions for any taxable 

20 year to all retirement savings accounts maintained 

21 for the benefit of an individual shall not exceed the 

22 lesser of— 

23 ‘‘(A) $5,000, or 

24 ‘‘(B) the amount of compensation includ25 ible in the individual’s gross income for such 

26 taxable year. 


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1 ‘‘(2) SPECIAL RULE FOR CERTAIN MARRIED IN2 DIVIDUALS.—In the case of any individual who files 

3 a joint return for the taxable year, the amount taken 

4 into account under paragraph (1)(B) shall be in5 creased by the excess (if any) of— 

6 ‘‘(A) the compensation includible in the 

7 gross income of such individual’s spouse for the 

8 taxable year, over 

9 ‘‘(B) the aggregate amount of contribu10 tions for the taxable year to all retirement sav11 ings accounts maintained for the benefit of such 

12 spouse. 

13 ‘‘(3) CONTRIBUTIONS PERMITTED AFTER AGE

701 14 ⁄2.—Contributions to a retirement savings ac15 count may be made even after the individual for 

16 whom the account is maintained has attained age 

701 17 ⁄2. 

18 ‘‘(4) MANDATORY DISTRIBUTION RULES NOT

19 TO APPLY BEFORE DEATH.—Notwithstanding sub20 sections (a)(6) and (b)(3) of section 408 (relating to 

21 required distributions), the following provisions shall 

22 not apply to any retirement savings account: 

23 ‘‘(A) Section 401(a)(9)(A). 

24 ‘‘(B) The incidental death benefit require25 ments of section 401(a). 


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1 ‘‘(5) ROLLOVER CONTRIBUTIONS.— 

2 ‘‘(A) IN GENERAL.—No rollover contribu3 tion may be made to a retirement savings ac4 count unless it is a qualified rollover contribu5 tion. 

6 ‘‘(B) COORDINATION WITH LIMIT.—A 

7 qualified rollover contribution shall not be taken 

8 into account for purposes of paragraph (1). 

9 ‘‘(6) ROLLOVERS FROM PLANS WITH TAXABLE

10 DISTRIBUTIONS.— 

11 ‘‘(A) IN GENERAL.—Notwithstanding sec12 tions 402(c), 403(a)(4), 403(b)(8), 408(d)(3), 

13 and 457(e)(16), in the case of any contribution 

14 to which this paragraph applies— 

15 ‘‘(i) there shall be included in gross 

16 income any amount which would be includ17 ible were it not part of a qualified rollover 

18 contribution, 

19 ‘‘(ii) section 72(t) shall not apply, and 

20 ‘‘(iii) unless the taxpayer elects not to 

21 have this clause apply for any taxable year, 

22 any amount required to be included in 

23 gross income for such taxable year by rea24 son of this paragraph for any contribution 

25 before January 1, 2012, shall be so inVerDate Mar 15 2010 02:52 Apr 07, 2011 Jkt 099200 PO 00000 Frm 00026 Fmt 6652 Sfmt 6201 E:\BILLS\S727.IS S727

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1 cluded ratably over the 4-taxable year pe2 riod beginning with such taxable year. 

3 Any election under clause (iii) for any contribu4 tions during a taxable year may not be changed 

5 after the due date (including extensions of 

6 time) for filing the taxpayer’s return for such 

7 taxable year. 

8 ‘‘(B) CONTRIBUTIONS TO WHICH PARA9 GRAPH APPLIES.—This paragraph shall apply 

10 to any qualified rollover contribution to a retire11 ment savings account (other than a rollover 

12 contribution from another such account). 

13 ‘‘(C) CONVERSIONS OF IRAS.—The conver14 sion of an individual retirement plan (other 

15 than a retirement savings account) to a retire16 ment savings account shall be treated for pur17 poses of this paragraph as a contribution to 

18 which this paragraph applies. 

19 ‘‘(D) ADDITIONAL REPORTING REQUIRE20 MENTS.—Trustees and plan administrators of 

21 eligible retirement plans (as defined in section 

22 402(c)(8)(B)) and retirement savings accounts 

23 shall report such information as the Secretary 

24 may require to ensure that amounts required to 

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1 graph (A) are so included. Such reports shall be 

2 made at such time and in such form and man3 ner as the Secretary may require. The Sec4 retary may provide that such information be in5 cluded as additional information in reports re6 quired under section 408(i) or 6047. 

7 ‘‘(E) SPECIAL RULES FOR CONTRIBUTIONS

8 TO WHICH A 4-YEAR AVERAGING APPLIES.—In 

9 the case of a qualified rollover contribution to 

10 which subparagraph (A)(iii) applied, the fol11 lowing rules shall apply: 

12 ‘‘(i) ACCELERATION OF INCLUSION.— 

13 ‘‘(I) IN GENERAL.—The amount 

14 required to be included in gross in15 come for each of the first 3 taxable 

16 years in the 4-year period under sub17 paragraph (A)(iii) shall be increased 

18 by the aggregate distributions from 

19 retirement savings accounts for such 

20 taxable year which are allocable under 

21 subsection (d)(3) to the portion of 

22 such qualified rollover contribution re23 quired to be included in gross income 

24 under subparagraph (A)(i). 


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1 ‘‘(II) LIMITATION ON AGGRE2 GATE AMOUNT INCLUDED.—The 

3 amount required to be included in 

4 gross income for any taxable year 

5 under subparagraph (A)(iii) shall not 

6 exceed the aggregate amount required 

7 to be included in gross income under 

8 subparagraph (A)(iii) for all taxable 

9 years in the 4-year period (without re10 gard to subclause (I)) reduced by 

11 amounts included for all preceding 

12 taxable years. 

13 ‘‘(ii) DEATH OF DISTRIBUTEE.— 

14 ‘‘(I) IN GENERAL.—If the indi15 vidual required to include amounts in 

16 gross income under such subpara17 graph dies before all of such amounts 

18 are included, all remaining amounts 

19 shall be included in gross income for 

20 the taxable year which includes the 

21 date of death. 

22 ‘‘(II) SPECIAL RULE FOR SUR23 VIVING SPOUSE.—If the spouse of the 

24 individual described in subclause (I) 

25 acquires the individual’s entire interVerDate Mar 15 2010 02:52 Apr 07, 2011 Jkt 099200 PO 00000 Frm 00029 Fmt 6652 Sfmt 6201 E:\BILLS\S727.IS S727

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1 est in any retirement savings account 

2 to which such qualified rollover con3 tribution is properly allocable, the 

4 spouse may elect to treat the remain5 ing amounts described in subclause 

6 (I) as includible in the spouse’s gross 

7 income in the taxable years of the 

8 spouse ending with or within the tax9 able years of such individual in which 

10 such amounts would otherwise have 

11 been includible. Any such election may 

12 not be made or changed after the due 

13 date (including extensions of time) for 

14 filing the spouse’s return for the tax15 able year which includes the date of 

16 death. 

17 ‘‘(F) 5-YEAR HOLDING PERIOD RULES.— 

18 If— 

19 ‘‘(i) any portion of a distribution from 

20 a retirement savings account is properly al21 locable to a qualified rollover contribution 

22 with respect to which an amount is includ23 ible in gross income under subparagraph 

24 (A)(i), 


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1 ‘‘(ii) such distribution is made during 

2 the 5-taxable year period beginning with 

3 the taxable year for which such contribu4 tion was made, and 

5 ‘‘(iii) such distribution is not de6 scribed in clause (i), (ii), or (iii) of sub7 section (d)(2)(A), 

8 then section 72(t) shall be applied as if such 

9 portion were includible in gross income. 

10 ‘‘(7) TIME WHEN CONTRIBUTIONS MADE.—For 

11 purposes of this section, a taxpayer shall be deemed 

12 to have made a contribution to a retirement savings 

13 account on the last day of the preceding taxable year 

14 if the contribution is made on account of such tax15 able year and is made not later than the time pre16 scribed by law for filing the return for such taxable 

17 year (not including extensions thereof). 

18 ‘‘(8) COST-OF-LIVING ADJUSTMENT.— 

19 ‘‘(A) IN GENERAL.—In the case of any 

20 taxable year beginning in a calendar year after 

21 2012, the $5,000 amount under paragraph 

22 (1)(A) shall be increased by an amount equal 

23 to— 

24 ‘‘(i) such dollar amount, multiplied by 


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1 ‘‘(ii) the cost-of-living adjustment de2 termined under section 1(f)(3) for the cal3 endar year in which the taxable year be4 gins. 

5 ‘‘(B) ROUNDING RULES.—If any amount 

6 after adjustment under subparagraph (A) is not 

7 a multiple of $500, such amount shall be 

8 rounded to the next lower multiple of $500. 

9 ‘‘(d) DISTRIBUTION RULES.—For purposes of this 

10 title— 

11 ‘‘(1) EXCLUSION.—Any qualified distribution 

12 from a retirement savings account shall not be in13 cludible in gross income. 

14 ‘‘(2) QUALIFIED DISTRIBUTION.—For purposes 

15 of this subsection— 

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

17 distribution’ means any payment or distribu18 tion— 

19 ‘‘(i) made on or after the date on 

20 which the individual attains age 58, 

21 ‘‘(ii) made to a beneficiary (or to the 

22 estate of the individual) on or after the 

23 death of the individual, 


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1 ‘‘(iii) attributable to the individual’s 

2 being disabled (within the meaning of sec3 tion 72(m)(7)), or 

4 ‘‘(iv) to which section 72(t)(2)(F) ap5 plies (if such payment or distribution is 

6 made before January 1, 2015). 

7 ‘‘(B) DISTRIBUTIONS OF EXCESS CON8 TRIBUTIONS AND EARNINGS.—The term ‘quali9 fied distribution’ shall not include any distribu10 tion of any contribution described in section 

11 408(d)(4) and any net income allocable to the 

12 contribution. 

13 ‘‘(3) ORDERING RULES.—For purposes of ap14 plying this section and section 72 to any distribution 

15 from a retirement savings account, such distribution 

16 shall be treated as made— 

17 ‘‘(A) from contributions to the extent that 

18 the amount of such distribution, when added to 

19 all previous distributions from the retirement 

20 savings account, does not exceed the aggregate 

21 contributions to the retirement savings account, 

22 and 

23 ‘‘(B) from such contributions in the fol24 lowing order: 


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•S 727 IS

1 ‘‘(i) Contributions other than qualified 

2 rollover contributions with respect to which 

3 an amount is includible in gross income 

4 under subsection (c)(6)(A)(i). 

5 ‘‘(ii) Qualified rollover contributions 

6 with respect to which an amount is includ7 ible in gross income under subsection 

8 (c)(6)(A)(i) on a first-in, first-out basis. 

9 Any distribution allocated to a qualified rollover con10 tribution under subparagraph (B)(ii) shall be allo11 cated first to the portion of such contribution re12 quired to be included in gross income. 

13 ‘‘(4) AGGREGATION RULES.—Section 408(d)(2) 

14 shall be applied separately with respect to retirement 

15 savings accounts and other individual retirement 

16 plans. 

17 ‘‘(e) QUALIFIED ROLLOVER CONTRIBUTION.— 

18 ‘‘(1) IN GENERAL.—For purposes of this sec19 tion, the term ‘qualified rollover contribution’ 

20 means— 

21 ‘‘(A) a rollover contribution to a retirement 

22 savings account of an individual from another 

23 such account of such individual or such individ24 ual’s spouse, or from an individual retirement 

25 plan of such individual, but only if such rollover 


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1 contribution meets the requirements of section 

2 408(d)(3), and 

3 ‘‘(B) a rollover contribution described in 

4 section 402(c), 402A(c)(3)(A), 403(a)(4), 

5 403(b)(8), or 457(e)(16). 

6 ‘‘(2) COORDINATION WITH LIMITATION ON IRA

7 ROLLOVERS.—For purposes of section 408(d)(3)(B), 

8 there shall be disregarded any qualified rollover con9 tribution from an individual retirement plan (other 

10 than a retirement savings account) to a retirement 

11 savings account. 

12 ‘‘(f) INDIVIDUAL RETIREMENT PLAN.—For purposes 

13 of this section— 

14 ‘‘(1) a simplified employee pension or a simple 

15 retirement account may not be designated as a re16 tirement savings account, and 

17 ‘‘(2) contributions to any such pension or ac18 count shall not be taken into account for purposes 

19 of subsection (c)(1). 

20 ‘‘(g) COMPENSATION.—For purposes of this section, 

21 the term ‘compensation’ includes earned income (as de22 fined in section 401(c)(2)). Such term does not include 

23 any amount received as a pension or annuity and does not 

24 include any amount received as deferred compensation. 

25 Such term shall include any amount includible in the indiVerDate Mar 15 2010 02:52 Apr 07, 2011 Jkt 099200 PO 00000 Frm 00035 Fmt 6652 Sfmt 6201 E:\BILLS\S727.IS S727

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1 vidual’s gross income under section 71 with respect to a 

2 divorce or separation instrument described in section 

3 71(b)(2)(A). For purposes of this subsection, section 

4 401(c)(2) shall be applied as if the term trade or business 

5 for purposes of section 1402 included service described in 

6 section 1402(c)(6).’’. 

7 (b) ROTH IRAS TREATED AS RETIREMENT SAVINGS

8 ACCOUNTS.—In the case of any taxable year beginning 

9 after December 31, 2011, any Roth IRA (as defined in 

10 section 408A(b) of the Internal Revenue Code of 1986, 

11 as in effect on the day before the date of the enactment 

12 of this Act) shall be treated for purposes of such Code 

13 as having been designated at the time of the establishment 

14 of the plan as a retirement savings account under section 

15 408A(b) of such Code (as amended by this section). 

16 (c) CONTRIBUTIONS TO OTHER INDIVIDUAL RETIRE17 MENT PLANS PROHIBITED.— 

18 (1) INDIVIDUAL RETIREMENT ACCOUNTS.— 

19 Paragraph (1) of section 408(a) is amended to read 

20 as follows: 

21 ‘‘(1) Except in the case of a simplified employee 

22 pension, a simple retirement account, or a rollover 

23 contribution described in subsection (d)(3) or in sec24 tion 402(c), 403(a)(4), 403(b)(8), or 457(e)(16), no 

25 contribution will be accepted on behalf of any indiVerDate Mar 15 2010 02:52 Apr 07, 2011 Jkt 099200 PO 00000 Frm 00036 Fmt 6652 Sfmt 6201 E:\BILLS\S727.IS S727

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1 vidual for any taxable year beginning after Decem2 ber 31, 2011. In the case of any simplified employee 

3 pension or simple retirement account, no contribu4 tion will be accepted unless it is in cash and con5 tributions will not be accepted for the taxable year 

6 on behalf of any individual in excess of— 

7 ‘‘(A) in the case of a simplified employee 

8 pension, the amount of the limitation in effect 

9 under section 415(c)(1)(A), and 

10 ‘‘(B) in the case of a simple retirement ac11 count, the sum of the dollar amount in effect 

12 under subsection (p)(2)(A)(ii) and the employer 

13 contribution required under subparagraph 

14 (A)(iii) or (B)(i) of subsection (p)(2).’’. 

15 (2) INDIVIDUAL RETIREMENT ANNUITIES.— 

16 Paragraph (2) of section 408(b) is amended— 

17 (A) by redesignating subparagraphs (A), 

18 (B), and (C) as subparagraphs (B), (C), and 

19 (D), respectively, and by inserting before sub20 paragraph (B), as so redesignated, the following 

21 new subparagraph: 

22 ‘‘(A) except in the case of a simplified em23 ployee pension, a simple retirement account, or 

24 a rollover contribution described in subsection 

25 (d)(3) or in section 402(c), 403(a)(4), 


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1 403(b)(8), or 457(e)(16), a premium shall not 

2 be accepted on behalf of any individual for any 

3 taxable year beginning after December 31, 

4 2011,’’, and 

5 (B) by amending subparagraph (C), as re6 designated by subparagraph (A), to read as fol7 lows: 

8 ‘‘(C) the annual premium on behalf of any 

9 individual will not exceed— 

10 ‘‘(i) in the case of a simplified em11 ployee pension, the amount of the limita12 tion in effect under section 415(c)(1)(A), 

13 and 

14 ‘‘(ii) in the case of a simple retire15 ment account, the sum of the dollar 

16 amount in effect under subsection 

17 (p)(2)(A)(ii) and the employer contribution 

18 required under subparagraph (A)(iii) or 

19 (B)(i) of subsection (p)(2), and’’. 

20 (d) CONFORMING AMENDMENTS.— 

21 (1)(A) Section 219 is amended to read as fol22 lows: 


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•S 727 IS

1 ‘‘SEC. 219. CONTRIBUTIONS TO CERTAIN RETIREMENT 

2 PLANS ALLOWING ONLY EMPLOYEE CON3 TRIBUTIONS. 

4 ‘‘(a) ALLOWANCE OF DEDUCTION.—In the case of an 

5 individual, there shall be allowed as a deduction the 

6 amount contributed on behalf of such individual to a plan 

7 described in section 501(c)(18). 

8 ‘‘(b) MAXIMUM AMOUNT OF DEDUCTION.—The 

9 amount allowable as a deduction under subsection (a) to 

10 any individual for any taxable year shall not exceed the 

11 lesser of— 

12 ‘‘(1) $7,000, or 

13 ‘‘(2) an amount equal to 25 percent of the com14 pensation (as defined in section 415(c)(3)) includible 

15 in the individual’s gross income for such taxable 

16 year. 

‘‘(c) BENEFICIARY MUST BE UNDER AGE 701 17 ⁄2.— 

18 No deduction shall be allowed under this section with re19 spect to any contribution on behalf of an individual if such 

individual has attained age 701 20 ⁄2 before the close of such 

21 individual’s taxable year for which the contribution was 

22 made. 

23 ‘‘(d) SPECIAL RULES.— 

24 ‘‘(1) MARRIED INDIVIDUALS.—The maximum 

25 deduction under subsection (b) shall be computed 

26 separately for each individual, and this section shall 


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1 be applied without regard to any community prop2 erty laws. 

3 ‘‘(2) REPORTS.—The Secretary shall prescribe 

4 regulations which prescribe the time and the manner 

5 in which reports to the Secretary and plan partici6 pants shall be made by the plan administrator of a 

7 qualified employer or government plan receiving 

8 qualified voluntary employee contributions. 

9 ‘‘(e) CROSS REFERENCE.—For failure to provide re10 quired reports, see section 6652(g).’’. 

11 (B) Section 25B(d) is amended— 

12 (i) in paragraph (1)(A), by striking ‘‘(as 

13 defined in section 219(e))’’, and 

14 (ii) by adding at the end the following new 

15 paragraph: 

16 ‘‘(3) QUALIFIED RETIREMENT CONTRIBU17 TION.—The term ‘qualified retirement contribution’ 

18 means— 

19 ‘‘(A) any amount paid in cash for the tax20 able year by or on behalf of an individual to an 

21 individual retirement plan for such individual’s 

22 benefit, and 

23 ‘‘(B) any amount contributed on behalf of 

24 any individual to a plan described in section 

25 501(c)(18).’’. 


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1 (C) Section 86(f)(3) is amended by striking 

2 ‘‘section 219(f)(1)’’ and inserting ‘‘section 408A(g)’’. 

3 (D) Section 132(m)(3) is amended by inserting 

4 ‘‘(as in effect on the day before the date of the en5 actment of the Retirement Savings Account Act)’’ 

6 after ‘‘section 219(g)(5)’’. 

7 (E) Subparagraphs (A), (B), and (C) of section 

8 220(d)(4) are each amended by inserting ‘‘, as in ef9 fect on the day before the date of the enactment of 

10 the Retirement Savings Account Act’’ at the end. 

11 (F) Section 408(b) is amended in the last sen12 tence by striking ‘‘section 219(b)(1)(A)’’ and insert13 ing ‘‘paragraph (2)(C)’’. 

14 (G) Section 408(p)(2)(D)(ii) is amended by in15 serting ‘‘(as in effect on the day before the date of 

16 the enactment of the Retirement Savings Account 

17 Act)’’ after ‘‘section 219(g)(5)’’. 

18 (H) Section 409A(d)(2) is amended by insert19 ing ‘‘(as in effect on the day before the date of the 

20 enactment of the Retirement Savings Account Act)’’ 

21 after ‘‘subparagraph (A)(iii))’’. 

22 (I) Section 501(c)(18)(D)(i) is amended by 

23 striking ‘‘section 219(b)(3)’’ and inserting ‘‘section 

24 219(b)’’. 


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•S 727 IS

1 (J) Section 6652(g) is amended by striking 

2 ‘‘section 219(f)(4)’’ and inserting ‘‘section 

3 219(d)(2)’’. 

4 (K) The table of sections for part VII of sub5 chapter B of chapter 1 is amended by striking the 

6 item relating to section 219 and inserting the fol7 lowing new item: 

‘‘Sec. 219. Contributions to certain retirement plans allowing only employee 

contributions.’’. 

8 (2)(A) Section 408(d)(4)(B) is amended to read 

9 as follows: 

10 ‘‘(B) no amount is excludable from gross 

11 income under subsection (h) or (k) of section 

12 402 with respect to such contribution, and’’. 

13 (B) Section 408(d)(5)(A) is amended to read as 

14 follows: 

15 ‘‘(A) IN GENERAL.—In the case of any in16 dividual, if the aggregate contributions (other 

17 than rollover contributions) paid for any taxable 

18 year to an individual retirement account or for 

19 an individual retirement annuity do not exceed 

20 the dollar amount in effect under subsection 

21 (a)(1) or (b)(2)(C), as the case may be, para22 graph (1) shall not apply to the distribution of 

23 any such contribution to the extent that such 

24 contribution exceeds the amount which is exVerDate Mar 15 2010 02:52 Apr 07, 2011 Jkt 099200 PO 00000 Frm 00042 Fmt 6652 Sfmt 6201 E:\BILLS\S727.IS S727

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•S 727 IS

1 cludable from gross income under subsection 

2 (h) or (k) of section 402, as the case may be, 

3 for the taxable year for which the contribution 

4 was paid— 

5 ‘‘(i) if such distribution is received 

6 after the date described in paragraph (4), 

7 ‘‘(ii) but only to the extent that such 

8 excess contribution has not been excluded 

9 from gross income under subsection (h) or 

10 (k) of section 402.’’. 

11 (C) Section 408(d)(5) is amended by striking 

12 the last sentence. 

13 (D) Section 408(d)(7) is amended to read as 

14 follows: 

15 ‘‘(7) CERTAIN TRANSFERS FROM SIMPLIFIED

16 EMPLOYEE PENSIONS PROHIBITED UNTIL DEFERRAL

17 TEST MET.—Notwithstanding any other provision of 

18 this subsection or section 72(t), paragraph (1) and 

19 section 72(t)(1) shall apply to the transfer or dis20 tribution from a simplified employee pension of any 

21 contribution under a salary reduction arrangement 

22 described in subsection (k)(6) (or any income allo23 cable thereto) before a determination as to whether 

24 the requirements of subsection (k)(6)(A)(iii) are met 

25 with respect to such contribution.’’. 


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1 (E) Section 408 is amended by striking sub2 section (j). 

3 (F)(i) Section 408 is amended by striking sub4 section (o). 

5 (ii) Section 6693 is amended by striking sub6 section (b) and by redesignating subsections (c) and 

7 (d) as subsections (b) and (c), respectively. 

8 (G) Section 408(p) is amended by striking 

9 paragraph (8) and by redesignating paragraphs (9) 

10 and (10) as paragraphs (8) and (9), respectively. 

11 (3)(A) Section 4973(a)(1) is amended to read 

12 as follows: 

13 ‘‘(1) an individual retirement plan,’’. 

14 (B) Section 4973(b) is amended to read as fol15 lows: 

16 ‘‘(b) EXCESS CONTRIBUTIONS TO SIMPLIFIED EM17 PLOYEE PENSIONS AND SIMPLE RETIREMENT AC18 COUNTS.—For purposes of this section, in the case of sim19 plified employee pensions or simple retirement accounts, 

20 the term ‘excess contributions’ means the sum of— 

21 ‘‘(1) the excess (if any) of— 

22 ‘‘(A) the amount contributed for the tax23 able year to the pension or account, over 


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1 ‘‘(B) the amount applicable to the pension 

2 or account under subsection (a)(1) or (b)(2) of 

3 section 408, and 

4 ‘‘(2) the amount determined under this sub5 section for the preceding taxable year, reduced by 

6 the sum of— 

7 ‘‘(A) the distributions out of the account 

8 for the taxable year which were included in the 

9 gross income of the payee under section 

10 408(d)(1), 

11 ‘‘(B) the distributions out of the account 

12 for the taxable year to which section 408(d)(5) 

13 applies, and 

14 ‘‘(C) the excess (if any) of the maximum 

15 amount excludable from gross income for the 

16 taxable year under subsection (h) or (k) of sec17 tion 402 over the amount contributed to the 

18 pension or account for the taxable year. 

19 For purposes of this subsection, any contribution which 

20 is distributed from a simplified employee pension or simple 

21 retirement account in a distribution to which section 

22 408(d)(4) applies shall be treated as an amount not con23 tributed.’’. 

24 (C) Section 4973 is amended by adding at the 

25 end the following new subsection: 


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1 ‘‘(h) EXCESS CONTRIBUTIONS TO CERTAIN INDI2 VIDUAL RETIREMENT PLANS.—For purposes of this sec3 tion, in the case of individual retirement plans (other than 

4 retirement savings accounts, simplified employee pensions, 

5 and simple retirement accounts), the term ‘excess con6 tribution’ means the sum of— 

7 ‘‘(1) the aggregate amount contributed for the 

8 taxable year to the individual retirement plans, and 

9 ‘‘(2) the amount determined under this sub10 section for the preceding taxable year, reduced by 

11 the sum of— 

12 ‘‘(A) the distributions out of the plans 

13 which were included in gross income under sec14 tion 408(d)(1), and 

15 ‘‘(B) the distributions out of the plans for 

16 the taxable year to which section 408(d)(5) ap17 plies. 

18 For purposes of this subsection, any contribution which 

19 is distributed from the plan in a distribution to which sec20 tion 408(d)(4) applies shall be treated as an amount not 

21 contributed.’’. 

22 (4)(A) Sections 402(c)(8)(B), 

23 402A(c)(3)(A)(ii), 1361(c)(2)(A), 3405(e)(1)(B), 

24 and 4973(f) are each amended by striking ‘‘Roth 


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1 IRA’’ each place it appears and inserting ‘‘retire2 ment savings account’’. 

3 (B) Section 4973(f)(1)(A) is amended by strik4 ing ‘‘Roth IRAs’’ and inserting ‘‘retirement savings 

5 accounts’’. 

6 (C) Paragraphs (1)(B) and (2)(B) of section 

7 4973(f) are each amended by striking ‘‘sections 

8 408A(c)(2) and (c)(3)’’ and inserting ‘‘section 

9 408A(c)(1)’’. 

10 (D) Subsection (f) of section 4973 is amended 

11 in the heading by striking ‘‘ROTH IRAS’’ and insert12 ing ‘‘RETIREMENT SAVINGS ACCOUNTS’’. 

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

14 this section shall apply to taxable years beginning after 

15 December 31, 2011. 

16 SEC. 113. AMERICAN DREAM ACCOUNTS. 

17 (a) IN GENERAL.—Subchapter F of Chapter 1 is 

18 amended by adding at the end the following new part: 

19 ‘‘PART IX—AMERICAN DREAM ACCOUNTS 

20 ‘‘SEC. 530A. AMERICAN DREAM ACCOUNTS. 

21 ‘‘(a) GENERAL RULE.—An American Dream Account 

22 shall be exempt from taxation under this subtitle. Not23 withstanding the preceding sentence, such account shall 

24 be subject to the taxes imposed by section 511 (relating 


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1 to imposition of tax on unrelated business income of chari2 table organizations). 

3 ‘‘(b) AMERICAN DREAM ACCOUNT.—For purposes of 

4 this section, the term ‘American Dream Account’ means 

5 a trust created or organized in the United States for the 

6 exclusive benefit of an individual or his beneficiaries and 

7 which is designated (in such manner as the Secretary shall 

8 prescribe) at the time of the establishment of the trust 

9 as an American Dream Account, but only if the written 

10 governing instrument creating the trust meets the fol11 lowing requirements: 

12 ‘‘(1) Except in the case of a qualified rollover 

13 contribution described in subsection (d)— 

14 ‘‘(A) no contribution will be accepted un15 less it is in cash, and 

16 ‘‘(B) contributions will not be accepted for 

17 the calendar year in excess of the contribution 

18 limit specified in subsection (c)(1). 

19 ‘‘(2) The trustee is a bank (as defined in sec20 tion 408(n)) or another person who demonstrates to 

21 the satisfaction of the Secretary that the manner in 

22 which that person will administer the trust will be 

23 consistent with the requirements of this section or 

24 who has so demonstrated with respect to any indi25 vidual retirement plan. 


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1 ‘‘(3) No part of the trust assets will be invested 

2 in life insurance contracts. 

3 ‘‘(4) The interest of an individual in the bal4 ance of his account is nonforfeitable. 

5 ‘‘(5) The assets of the trust shall not be com6 mingled with other property except in a common 

7 trust fund or common investment fund. 

8 ‘‘(c) TREATMENT OF CONTRIBUTIONS AND DIS9 TRIBUTIONS.— 

10 ‘‘(1) CONTRIBUTION LIMIT.— 

11 ‘‘(A) IN GENERAL.—The aggregate 

12 amount of contributions (other than qualified 

13 rollover contributions described in subsection 

14 (d)) for any calendar year to all American 

15 Dream Accounts maintained for the benefit of 

16 an individual shall not exceed $2,000. 

17 ‘‘(B) COST-OF-LIVING ADJUSTMENT.— 

18 ‘‘(i) IN GENERAL.—In the case of any 

19 calendar year after 2012, the $2,000 

20 amount under subparagraph (A) shall be 

21 increased by an amount equal to— 

22 ‘‘(I) such dollar amount, multi23 plied by 


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1 ‘‘(II) the cost-of-living adjust2 ment determined under section 1(f)(3) 

3 for the calendar year. 

4 ‘‘(ii) ROUNDING RULES.—If any 

5 amount after adjustment under clause (i) 

6 is not a multiple of $500, such amount 

7 shall be rounded to the next lower multiple 

8 of $500. 

9 ‘‘(2) DISTRIBUTIONS.—Any distribution from 

10 an American Dream Account shall not be includible 

11 in gross income. 

12 ‘‘(d) QUALIFIED ROLLOVER CONTRIBUTION.—For 

13 purposes of this section, the term ‘qualified rollover con14 tribution’ means a contribution to an American Dream 

15 Account— 

16 ‘‘(1) from another such account of the same 

17 beneficiary, but only if such amount is contributed 

18 not later than the 60th day after the distribution 

19 from such other account, 

20 ‘‘(2) from an American Dream Account of a 

21 spouse of the beneficiary of the account to which the 

22 contribution is made, but only if such amount is 

23 contributed not later than the 60th day after the 

24 distribution from such other account, and 

25 ‘‘(3) before January 1, 2012, from— 


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1 ‘‘(A) a qualified tuition program pursuant 

2 to section 529(c)(3)(E), or 

3 ‘‘(B) a Coverdell education savings account 

4 pursuant to section 530(d)(9). 

5 ‘‘(e) LOSS OF TAXATION EXEMPTION OF ACCOUNT

6 WHERE BENEFICIARY ENGAGES IN PROHIBITED TRANS7 ACTION.—Rules similar to the rules of paragraph (2) of 

8 section 408(e) shall apply to any American Dream Ac9 count. 

10 ‘‘(f) CUSTODIAL ACCOUNTS.—For purposes of this 

11 section, a custodial account or an annuity contract issued 

12 by an insurance company qualified to do business in a 

13 State shall be treated as a trust under this section if— 

14 ‘‘(1) the custodial account or annuity contract 

15 would, except for the fact that it is not a trust, con16 stitute a trust which meets the requirements of sub17 section (b), and 

18 ‘‘(2) in the case of a custodial account, the as19 sets of such account are held by a bank (as defined 

20 in section 408(n)) or another person who dem21 onstrates, to the satisfaction of the Secretary, that 

22 the manner in which he will administer the account 

23 will be consistent with the requirements of this sec24 tion. 


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1 For purposes of this title, in the case of a custodial ac2 count or annuity contract treated as a trust by reason of 

3 the preceding sentence, the person holding the assets of 

4 such account or holding such annuity contract shall be 

5 treated as the trustee thereof. 

6 ‘‘(g) REPORTS.—The trustee of an American Dream 

7 Account shall make such reports regarding such account 

8 to the Secretary and to the beneficiary of the account with 

9 respect to contributions, distributions, and such other 

10 matters as the Secretary may require. The reports re11 quired by this subsection shall be filed at such time and 

12 in such manner and furnished to such individuals at such 

13 time and in such manner as may be required.’’. 

14 (b) TAX ON EXCESS CONTRIBUTIONS.— 

15 (1) IN GENERAL.—Subsection (a) of section 

16 4973 is amended by striking ‘‘or’’ at the end of 

17 paragraph (4), by inserting ‘‘or’’ at the end of para18 graph (5), and by inserting after paragraph (5) the 

19 following new paragraph: 

20 ‘‘(6) an American Dream Account (as defined 

21 in section 530A),’’. 

22 (2) EXCESS CONTRIBUTION.—Section 4973 is 

23 amended by adding at the end the following new 

24 subsection: 


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1 ‘‘(h) EXCESS CONTRIBUTIONS TO AMERICAN DREAM

2 ACCOUNTS.—For purposes of this section— 

3 ‘‘(1) IN GENERAL.—In the case of American 

4 Dream Accounts (within the meaning of section 

5 530A), the term ‘excess contributions’ means the 

6 sum of— 

7 ‘‘(A) the amount by which the amount con8 tributed for the calendar year to such accounts 

9 (other than qualified rollover contributions (as 

10 defined in section 530A(d))) exceeds the con11 tribution limit under section 530A(c)(1), and 

12 ‘‘(B) the amount determined under this 

13 subsection for the preceding calendar year, re14 duced by the excess (if any) of the maximum 

15 amount allowable as a contribution under sec16 tion 530A(c)(1) for the calendar year over the 

17 amount contributed to the accounts for the cal18 endar year. 

19 ‘‘(2) SPECIAL RULE.—A contribution shall not 

20 be taken into account under paragraph (1) if such 

21 contribution (together with the amount of net in22 come attributable to such contribution) is returned 

23 to the beneficiary before July 1 of the year following 

24 the year in which the contribution is made.’’. 


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1 (c) FAILURE TO PROVIDE REPORTS ON AMERICAN

2 DREAM ACCOUNTS.—Paragraph (2) of section 6693(a) is 

3 amended by striking ‘‘and’’ at the end of subparagraph 

4 (D), by striking the period at the end of subparagraph 

5 (E) and inserting ‘‘, and’’, and by adding at the end the 

6 following new subparagraph: 

7 ‘‘(F) section 530A(g) (relating to Amer8 ican Dream Accounts).’’. 

9 (d) ROLLOVERS FROM CERTAIN OTHER TAX-FREE

10 ACCOUNTS.— 

11 (1) QUALIFIED STATE TUITION PLANS.—Para12 graph (3) of section 529(c) is amended by adding at 

13 the end the following new subparagraph: 

14 ‘‘(E) ROLLOVERS TO AMERICAN DREAM

15 ACCOUNTS.— 

16 ‘‘(i) IN GENERAL.—Subparagraph (A) 

17 shall not apply to the qualified portion of 

18 any distribution which, before January 1, 

19 2013, and within 60 days of such distribu20 tion, is transferred to an American Dream 

21 Account (within the meaning of section 

22 530A) of the designated beneficiary. This 

23 subparagraph shall only apply to distribu24 tions in accordance with the previous sen25 tence from an account which was in existVerDate Mar 15 2010 02:52 Apr 07, 2011 Jkt 099200 PO 00000 Frm 00054 Fmt 6652 Sfmt 6201 E:\BILLS\S727.IS S727

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1 ence with respect to such designated bene2 ficiary on December 31, 2010. 

3 ‘‘(ii) QUALIFIED PORTION.—For pur4 poses of this subparagraph, the term 

5 ‘qualified portion’ means the amount equal 

6 to the sum of— 

7 ‘‘(I) the lesser of $50,000 or the 

8 amount which is in the account of the 

9 designated beneficiary on December 

10 31, 2010, 

11 ‘‘(II) any contributions to such 

12 account for the taxable year beginning 

13 after December 31, 2010, and before 

14 January 1, 2012, and 

15 ‘‘(III) any earnings of such ac16 count for such year. 

17 ‘‘(iii) LIMITATION.—The sum of the 

18 amounts taken into account under clause 

19 (ii)(II) with respect to all accounts of the 

20 designated beneficiary plus any amounts 

21 with respect to such designated beneficiary 

22 taken into account under section 

23 530(d)(9)(B)(ii) shall not exceed the sum 

24 of $2,000 plus the earnings attributable to 

25 such amounts.’’. 


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1 (2) COVERDELL EDUCATION SAVINGS AC2 COUNTS.—Subsection (d) of section 530 is amended 

3 by inserting at the end the following new paragraph: 

4 ‘‘(10) ROLLOVERS TO AMERICAN DREAM AC5 COUNTS.— 

6 ‘‘(A) IN GENERAL.—Paragraph (1) shall 

7 not apply to the qualified portion of any 

8 amount paid or distributed from a Coverdell 

9 education savings account to the extent that the 

10 amount received is paid, before January 1, 

11 2013, and not later than the 60th day after the 

12 date of such payment or distribution, into an 

13 American Dream Account (within the meaning 

14 of section 530A) for the benefit of the same 

15 beneficiary. This paragraph shall only apply to 

16 amounts paid or distributed in accordance with 

17 the preceding sentence from an account which 

18 was in existence with respect to such bene19 ficiary on December 31, 2010. 

20 ‘‘(B) QUALIFIED PORTION.—For purposes 

21 of this paragraph, the term ‘qualified portion’ 

22 means the amount equal to the sum of— 

23 ‘‘(i) the amount which is in the ac24 count of the beneficiary on December 31, 

25 2010, 


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1 ‘‘(ii) any contributions to such ac2 count for the taxable year beginning after 

3 December 31, 2010, and before January 1, 

4 2012, and 

5 ‘‘(iii) any earnings of such account for 

6 such year. 

7 ‘‘(C) LIMITATION.—The sum of the 

8 amounts taken into account under subpara9 graph (B)(ii) with respect to all accounts of the 

10 beneficiary plus any amounts with respect to 

11 such beneficiary taken into account under sec12 tion 529(c)(3)(E)(ii)(II) shall not exceed the 

13 sum of $2,000 plus the earnings attributable to 

14 such amounts.’’. 

15 (e) CONFORMING AMENDMENT.—The table of parts 

16 for subchapter F of chapter 1 is amended by adding at 

17 the end the following new item: 

‘‘PART IX. AMERICAN DREAM ACCOUNTS’’. 

18 (f) EFFECTIVE DATE.—The amendments made by 

19 this section shall apply to taxable years beginning after 

20 December 31, 2011. 

21 SEC. 114. CONSOLIDATION OF TAX CREDITS AND DEDUC22 TIONS FOR EDUCATION EXPENSES. 

23 (a) IN GENERAL.—Section 25A of the Internal Rev24 enue Code of 1986, after the application of section 901 


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1 of the Economic Growth and Tax Relief Reconciliation Act 

2 of 2001, is amended to read as follows: 

3 ‘‘SEC. 25A. QUALIFIED TUITION AND RELATED EXPENSES 

4 CREDIT. 

5 ‘‘(a) ALLOWANCE OF CREDIT.— 

6 ‘‘(1) IN GENERAL.—In the case of any eligible 

7 individual for whom an election is in effect under 

8 this section, there shall be allowed as a credit 

9 against the tax imposed by this chapter for the tax10 able year an amount equal to the applicable percent11 age of so much of the qualified tuition and related 

12 expenses paid by the taxpayer during the taxable 

13 year (for education furnished to the eligible indi14 vidual during any academic period beginning in such 

15 taxable year) as does not exceed $10,000. 

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

17 of subsection (a), the applicable percentage is— 

18 ‘‘(A) for the first 2 taxable years such an 

19 election is in effect with respect to an eligible 

20 individual, 20 percent, 

21 ‘‘(B) for the next 2 such taxable years, 15 

22 percent, and 

23 ‘‘(C) notwithstanding subparagraph (A), 

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1 tends or is enrolled in only one academic period, 

2 15 percent. 

3 ‘‘(b) LIMITATIONS.— 

4 ‘‘(1) MODIFIED ADJUSTED GROSS INCOME LIMI5 TATION.— 

6 ‘‘(A) IN GENERAL.—The amount which 

7 would (but for this paragraph) be taken into ac8 count under subsection (a) for the taxable year 

9 shall be reduced (but not below zero) by the 

10 amount determined under paragraph (2). 

11 ‘‘(B) AMOUNT OF REDUCTION.—The 

12 amount determined under this paragraph is the 

13 amount which bears the same ratio to the 

14 amount which would be so taken into account 

15 as— 

16 ‘‘(i) the excess of— 

17 ‘‘(I) the taxpayer’s modified ad18 justed gross income for such taxable 

19 year, over 

20 ‘‘(II) $50,000 (twice such 

21 amount in the case of a joint return), 

22 bears to 

23 ‘‘(ii) $40,000 (twice such amount in 

24 the case of a joint return). 


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1 ‘‘(C) MODIFIED ADJUSTED GROSS IN2 COME.—The term ‘modified adjusted gross in3 come’ means the adjusted gross income of the 

4 taxpayer for the taxable year increased by any 

5 amount excluded from gross income under sec6 tion 911, 931, or 933. 

7 ‘‘(2) CREDIT ALLOWED FOR ONLY 4 TAXABLE

8 YEARS.—An election to have this section apply with 

9 respect to any eligible individual may not be made 

10 for any taxable year if such an election (by the tax11 payer or any other individual) is in effect with re12 spect to such individual for any 4 prior taxable 

13 years. 

14 ‘‘(c) DEFINITIONS.—For purposes of this section— 

15 ‘‘(1) ELIGIBLE INDIVIDUAL.—The term ‘eligible 

16 individual’ means any individual described in para17 graph (2). 

18 ‘‘(2) QUALIFIED TUITION AND RELATED EX19 PENSES.— 

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

21 tuition and related expenses’ means tuition and 

22 fees required for the enrollment or attendance 

23 of— 

24 ‘‘(i) taxpayer, 

25 ‘‘(ii) the taxpayer’s spouse, or 


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1 ‘‘(iii) any dependent of the taxpayer 

2 with respect to whom the taxpayer is al3 lowed a deduction under section 151, 

4 at an eligible educational institution for courses 

5 of instruction of such individual at such institu6 tion. 

7 ‘‘(B) STUDENT LOAN INTEREST.— 

8 ‘‘(i) IN GENERAL.—Such term shall 

9 include so much of the interest paid on any 

10 qualified education loan of such individual 

11 as does not exceed $2,500, reduced by any 

12 amount taken into account under this sec13 tion for any preceding taxable year. 

14 ‘‘(ii) QUALIFIED EDUCATION LOAN.— 

15 For purposes of clause (i), the term ‘quali16 fied education loan’ means any indebted17 ness incurred by the taxpayer solely to pay 

18 qualified tuition and related expenses— 

19 ‘‘(I) which are incurred on behalf 

20 of an eligible individual as of the time 

21 the indebtedness was incurred, 

22 ‘‘(II) which are paid or incurred 

23 within a reasonable period of time be24 fore or after the indebtedness is in25 curred, and 


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1 ‘‘(III) which are attributable to 

2 education furnished during a period 

3 during which the recipient was an eli4 gible individual. 

5 Such term includes indebtedness used to 

6 refinance indebtedness which qualifies as a 

7 qualified education loan. Such term shall 

8 not include any indebtedness owed to a 

9 person who is related (within the meaning 

10 of section 267(b) or 707(b)(1)) to the eligi11 ble individual or to any person by reason 

12 of a loan under any qualified employer 

13 plan (as defined in section 72(p)(4)) or 

14 under any contract referred to in section 

15 72(p)(5). 

16 ‘‘(C) BOOKS.—Such term shall include 

17 books required for such individual’s academic 

18 courses of instruction at the eligible educational 

19 institution. 

20 ‘‘(D) EXCEPTION FOR EDUCATION INVOLV21 ING SPORTS, ETC.—Such term does not include 

22 expenses with respect to any course or other 

23 education involving sports, games, or hobbies, 

24 unless such course or other education is part of 

25 the individual’s degree program. 


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1 ‘‘(E) EXCEPTION FOR NONACADEMIC

2 FEES.—Such term does not include student ac3 tivity fees, athletic fees, insurance expenses, or 

4 other expenses unrelated to an individual’s aca5 demic course of instruction. 

6 ‘‘(3) ELIGIBLE EDUCATIONAL INSTITUTION.— 

7 The term ‘eligible educational institution’ means an 

8 institution— 

9 ‘‘(A) which is described in section 481 of 

10 the Higher Education Act of 1965, as in effect 

11 on the date of the enactment of the Taxpayer 

12 Relief Act of 1997, and 

13 ‘‘(B) which is eligible to participate in a 

14 program under title IV of the Higher Education 

15 Act of 1965. 

16 ‘‘(d) SPECIAL RULES.— 

17 ‘‘(1) IDENTIFICATION REQUIREMENT.—No 

18 credit shall be allowed under subsection (a) to a tax19 payer with respect to an eligible student unless the 

20 taxpayer includes the name and taxpayer identifica21 tion number of such student on the return of tax for 

22 the taxable year. 

23 ‘‘(2) ADJUSTMENT FOR CERTAIN SCHOLAR24 SHIPS.—The amount of qualified tuition and related 

25 expenses otherwise taken into account under subVerDate Mar 15 2010 02:52 Apr 07, 2011 Jkt 099200 PO 00000 Frm 00063 Fmt 6652 Sfmt 6201 E:\BILLS\S727.IS S727

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1 section (a) with respect to an individual for an aca2 demic period shall be reduced (before the application 

3 of subsections (a) and (b)) by the sum of any 

4 amounts paid for the benefit of such individual 

5 which are allocable to such period as— 

6 ‘‘(A) a qualified scholarship which is ex7 cludable from gross income under section 117, 

8 ‘‘(B) an educational assistance allowance 

9 under chapter 30, 31, 32, 34, or 35 of title 38, 

10 United States Code, or under chapter 1606 of 

11 title 10, United States Code, and 

12 ‘‘(C) a payment (other than a gift, be13 quest, devise, or inheritance within the meaning 

14 of section 102(a)) for such student’s edu15 cational expenses, or attributable to such indi16 vidual’s enrollment at an eligible educational in17 stitution, which is excludable from gross income 

18 under any law of the United States. 

19 ‘‘(3) TREATMENT OF EXPENSES PAID BY DE20 PENDENT.—If a deduction under section 151 with 

21 respect to an individual is allowed to another tax22 payer for a taxable year beginning in the calendar 

23 year in which such individual’s taxable year begins— 


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1 ‘‘(A) no credit shall be allowed under sub2 section (a) to such individual for such individ3 ual’s taxable year, and 

4 ‘‘(B) qualified tuition and related expenses 

5 paid by such individual during such individual’s 

6 taxable year shall be treated for purposes of 

7 this section as paid by such other taxpayer. 

8 ‘‘(4) TREATMENT OF CERTAIN PREPAY9 MENTS.—If qualified tuition and related expenses 

10 are paid by the taxpayer during a taxable year for 

11 an academic period which begins during the first 3 

12 months following such taxable year, such academic 

13 period shall be treated for purposes of this section 

14 as beginning during such taxable year. 

15 ‘‘(5) DENIAL OF DOUBLE BENEFIT.—No credit 

16 shall be allowed under this section for any expense 

17 for which deduction is allowed under any other pro18 vision of this chapter. 

19 ‘‘(6) NO CREDIT FOR MARRIED INDIVIDUALS

20 FILING SEPARATE RETURNS.—If the taxpayer is a 

21 married individual (within the meaning of section 

22 7703), this section shall apply only if the taxpayer 

23 and the taxpayer’s spouse file a joint return for the 

24 taxable year. 


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1 ‘‘(7) NONRESIDENT ALIENS.—If the taxpayer is 

2 a nonresident alien individual for any portion of the 

3 taxable year, this section shall apply only if such in4 dividual is treated as a resident alien of the United 

5 States for purposes of this chapter by reason of an 

6 election under subsection (g) or (h) of section 6013. 

7 ‘‘(e) INFLATION ADJUSTMENT.— 

8 ‘‘(1) IN GENERAL.—In the case of any taxable 

9 year beginning after 2012, the $50,000 amount in 

10 subsection (b)(1)(B)(i)(II) shall be increased by an 

11 amount equal to— 

12 ‘‘(A) such dollar amount, multiplied by 

13 ‘‘(B) the cost-of-living adjustment deter14 mined under section 1(f)(3) for the calendar 

15 year in which the taxable year begins. 

16 ‘‘(2) ROUNDING.—If any amount as adjusted 

17 under paragraph (1) is not a multiple of $1,000, 

18 such amount shall be rounded to the next lowest 

19 multiple of $1,000. 

20 ‘‘(f) REGULATIONS.—The Secretary may prescribe 

21 such regulations as may be necessary or appropriate to 

22 carry out this section, including regulations providing for 

23 a recapture of the credit allowed under this section in 

24 cases where there is a refund in a subsequent taxable year 


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1 of any expense which was taken into account in deter2 mining the amount of such credit.’’. 

3 (b) REPEAL OF DEDUCTION FOR INTEREST ON EDU4 CATION LOANS.—Part VII of subchapter B of chapter 1 

5 is amended by striking section 221. 

6 (c) CONFORMING AMENDMENTS.— 

7 (1) Section 62(a) is amended by striking para8 graph (17). 

9 (2) Subparagraph (A) of section 86(b)(2) is 

10 amended by striking ‘‘, 221’’. 

11 (3) Subparagraph (B) of section 72(t)(7) is 

12 amended by striking ‘‘section 25A(g)(2)’’ and insert13 ing ‘‘section 25A(d)(2)’’. 

14 (4) Subparagraph (A) of section 135(c)(4) is 

15 amended by striking ‘‘, 221’’. 

16 (5) Subparagraph (A) of section 137(b)(3) is 

17 amended by striking ‘‘, 221’’. 

18 (6) Paragraph (2) of section 163(h) is amended 

19 by adding ‘‘and’’ at the end of subparagraph (D), by 

20 striking ‘‘, and’’ at the end of subparagraph (E) and 

21 inserting a period, and by striking subparagraph 

22 (F). 

23 (7) Subparagraph (A) of section 199(d)(2) is 

24 amended by striking ‘‘, 221’’. 


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1 (8) Clause (ii) of section 219(g)(3)(A) is 

2 amended by striking ‘‘, 221’’. 

3 (9) Clause (iii) of section 469(i)(3)(F) is 

4 amended by striking ‘‘, 221’’. 

5 (10) Subclause (I) of section 529(c)(3)(B)(v) is 

6 amended by striking ‘‘section 25A(g)(2)’’ and insert7 ing ‘‘section 25A(d)(2)’’. 

8 (11) Paragraph (3) of section 529(e) is amend9 ed— 

10 (A) by striking ‘‘(as defined in section 

11 25A(b)(3))’’ in subparagraph (A), and 

12 (B) by adding at the end the following new 

13 subparagraph: 

14 ‘‘(C) ELIGIBLE STUDENT.—For purposes 

15 of this paragraph, the term ‘eligible student’ 

16 means, with respect to any academic period, a 

17 student who— 

18 ‘‘(i) meets the requirements of section 

19 484(a)(1) of the Higher Education Act of 

20 1965 (20 U.S.C. 1091(a)(1)), as in effect 

21 on the date of the enactment of the Tax22 payer Relief Act of 1997, and 

‘‘(ii) is carrying at least 1 23 ⁄2 the normal 

24 full-time workload for the course of study 

25 the student is pursuing.’’. 


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1 (12) Clause (iii) of section 530(d)(4)(B) is 

2 amended by striking ‘‘section 25A(g)(2)’’ and insert3 ing ‘‘section 25A(d)(2)’’. 

4 (13) Section 1400O is amended by adding at 

5 the end the following flush sentence: 

6 ‘‘For purposes of this section, any reference to section 25A 

7 shall be treated as a reference to such section as in effect 

8 on the day before the date of the enactment of this sen9 tence.’’. 

10 (14) Subparagraph (J) of section 6213(g)(2) is 

11 amended by striking ‘‘section 25A(g)(1)’’ and insert12 ing ‘‘section 25A(d)(1)’’. 

13 (15) Subsection (e) of section 6050S is amend14 ed by inserting ‘‘(as in effect before the date of the 

15 enactment of the Bipartisan Tax Fairness and Sim16 plification Act of 2011)’’ before the end period. 

17 (d) CLERICAL AMENDMENTS.— 

18 (1) The table of sections for subpart A of part 

19 IV of subchapter A of chapter 1 is amended by 

20 striking the item relating to section 25A and insert21 ing the following: 

‘‘25A. Qualified tuition and related expenses credit.’’. 

22 (2) The table of sections for part VII of sub23 chapter B of chapter 1 is amended by striking the 

24 item relating to section 221. 


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

2 this section shall apply to expenses paid after December 

3 31, 2011, for education furnished in academic periods be4 ginning after such date. 

5 SEC. 115. TERMINATION OF VARIOUS EXCLUSIONS, EXEMP6 TIONS, DEDUCTIONS, AND CREDITS. 

7 (a) IN GENERAL.—Subchapter C of chapter 90 is 

8 amended by adding at the end the following new section: 

9 ‘‘SEC. 7875. TERMINATION OF CERTAIN PROVISIONS. 

10 ‘‘The following provisions shall not apply to taxable 

11 years beginning after December 31, 2011: 

12 ‘‘(1) Section 74(c) (relating to exclusion of cer13 tain employee achievement awards). 

14 ‘‘(2) Section 79 (relating to exclusion of group15 term life insurance purchased for employees). 

16 ‘‘(3) Section 119 (relating to exclusion of meals 

17 or lodging furnished for the convenience of the em18 ployer). 

19 ‘‘(4) Section 125 (relating to exclusion of cafe20 teria plan benefits). 

21 ‘‘(5) Section 132 (relating to certain fringe ben22 efits), except with respect to subsection (a)(5) there23 of (relating to exclusion of qualified transportation 

24 fringe). 


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1 ‘‘(6) Section 217 (relating to deduction for 

2 moving expenses). 

3 ‘‘(7) Section 454 (relating to deferral of tax on 

4 obligations issued at discount). 

5 ‘‘(8) Section 501(c)(9) (relating to tax-exempt 

6 status of voluntary employees’ beneficiary associa7 tions). 

8 ‘‘(9) Section 911 (relating to exclusion of 

9 earned income of citizens or residents of the United 

10 States living abroad). 

11 ‘‘(10) Section 912 (relating to exemption for 

12 certain allowances).’’. 

13 (b) CONFORMING AMENDMENT.—The table of sec14 tions for subchapter C of chapter 90 is amended by adding 

15 at the end the following new item: 

‘‘Sec. 7875. Termination of certain provisions.’’. 

16 SEC. 116. SIMPLIFIED TAX RETURN PREPARATION. 

17 Beginning on January 1, 2012, the Internal Revenue 

18 Service shall provide to any taxpayer who requests it a 

19 simplified ‘‘Easyfile’’ pre-prepared income tax return, on 

20 paper, compact disc, or through the Internet, based on 

21 data the Internal Revenue Service receives with respect 

22 to such taxpayer (including wages, self-employment in23 come, and dividend, capital gains, and interest income). 

24 The Internal Revenue Service shall provide with every 

25 ‘‘Easyfile’’ a one-page summary of how the most recently 


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1 available fiscal year’s tax revenue was spent, including 

2 spending on Social Security, Medicare, Medicaid, defense, 

3 and interest on the Federal debt. 

4 TITLE II—CORPORATE AND 

5 BUSINESS INCOME TAX RE6 FORMS 

7 SEC. 201. CORPORATE FLAT TAX. 

8 (a) IN GENERAL.—Subsection (b) of section 11 is 

9 amended to read as follows: 

10 ‘‘(b) AMOUNT OF TAX.—The amount of tax imposed 

11 by subsection (a) shall be equal to 24 percent of the tax12 able income.’’. 

13 (b) CONFORMING AMENDMENTS.— 

14 (1) Section 280C(c)(3)(B)(ii)(II) is amended by 

15 striking ‘‘maximum rate of tax under section 

16 11(b)(1)’’ and inserting ‘‘rate of tax under section 

17 11(b)’’. 

18 (2) Sections 860E(e)(2)(B), 860E(e)(6)(A)(ii), 

19 860K(d)(2)(A)(ii), 860K(e)(1)(B)(ii), 

20 1446(b)(2)(B), and 7874(e)(1)(B) are each amended 

21 by striking ‘‘highest rate of tax specified in section 

22 11(b)(1)’’ and inserting ‘‘rate of tax specified in sec23 tion 11(b)’’. 


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1 (3) Section 904(b)(3)(D)(ii) is amended by 

2 striking ‘‘(determined without regard to the last sen3 tence of section 11(b)(1))’’. 

4 (4) Section 962 is amended by striking sub5 section (c) and by redesignating subsection (d) as 

6 subsection (c). 

7 (5) Section 1561(a) is amended— 

8 (A) by striking paragraph (1) and by re9 designating paragraphs (2), (3), and (4) as 

10 paragraphs (1), (2), and (3), respectively, 

11 (B) by striking ‘‘The amounts specified in 

12 paragraph (1), the’’ and inserting ‘‘The’’, 

13 (C) by striking ‘‘paragraph (2)’’ and in14 serting ‘‘paragraph (1)’’, 

15 (D) by striking ‘‘paragraph (3)’’ both 

16 places it appears and inserting ‘‘paragraph 

17 (2)’’, 

18 (E) by striking ‘‘paragraph (4)’’ and in19 serting ‘‘paragraph (3)’’, and 

20 (F) by striking the fourth sentence. 

21 (6) Subsection (b) of section 1561 is amended 

22 to read as follows: 

23 ‘‘(b) CERTAIN SHORT TAXABLE YEARS.—If a cor24 poration has a short taxable year which does not include 

25 a December 31 and is a component member of a controlled 


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1 group of corporations with respect to such taxable year, 

2 then for purposes of this subtitle, the amount to be used 

3 in computing the accumulated earnings credit under sec4 tion 535(c) (2) and (3) of such corporation for such tax5 able year shall be the amount specified in subsection 

6 (a)(1) divided by the number of corporations which are 

7 component members of such group on the last day of such 

8 taxable year. For purposes of the preceding sentence, sec9 tion 1563(b) shall be applied as if such last day were sub10 stituted for December 31.’’. 

11 (c) TREATMENT OF CAPITAL GAINS AS ORDINARY

12 INCOME.— 

13 (1) IN GENERAL.—Section 1201 is amended by 

14 adding at the end the following new subsection: 

15 ‘‘(d) TERMINATION.—This section shall not apply to 

16 taxable years beginning after December 31, 2011.’’. 

17 (2) CONFORMING AMENDMENTS.— 

18 (A) Section 527(b)(2) is amended by add19 ing at the end the following new flush sentence: 

20 ‘‘This paragraph shall not apply to taxable years be21 ginning after December 31, 2011.’’. 

22 (B) Section 801(a)(2) is amended by add23 ing at the end the following new subparagraph: 


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1 ‘‘(D) TERMINATION.—This paragraph 

2 shall not apply to taxable years beginning after 

3 December 31, 2011.’’. 

4 (C) Section 852(b)(3)(A) is amended by 

5 adding at the end the following new sentence: 

6 ‘‘This subparagraph shall not apply to taxable 

7 years beginning after December 31, 2011.’’. 

8 (D) Section 857(b)(3)(A) is amended by 

9 adding at the end the following new flush sen10 tence: 

11 ‘‘This subparagraph shall not apply to taxable years 

12 beginning after December 31, 2011.’’. 

13 (E) Section 904(b)(2)(B) is amended by 

14 adding at the end the following new flush sen15 tence: 

16 ‘‘This subparagraph shall not apply to taxable years 

17 beginning after December 31, 2011.’’. 

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

19 this section shall apply to taxable years beginning after 

20 December 31, 2011. 

21 SEC. 202. TREATMENT OF TRAVEL ON CORPORATE AIR22 CRAFT. 

23 (a) IN GENERAL.—Section 162 is amended by redes24 ignating subsection (q) as subsection (r) and by inserting 

25 after subsection (p) the following new subsection: 


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1 ‘‘(q) TREATMENT OF TRAVEL ON CORPORATE AIR2 CRAFT.—The rate at which an amount allowable as a de3 duction under this chapter for the use of an aircraft owned 

4 by the taxpayer is determined shall not exceed the rate 

5 at which an amount paid or included in income by an em6 ployee of such taxpayer for the personal use of such air7 craft is determined.’’. 

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

9 this section shall apply to taxable years beginning after 

10 December 31, 2011. 

11 SEC. 203. UNLIMITED EXPENSING OF DEPRECIABLE ASSETS 

12 AND INVENTORIES FOR CERTAIN SMALL 

13 BUSINESSES. 

14 (a) UNLIMITED EXPENSING.—Section 179 is amend15 ed by adding at the end the following new subsection: 

16 ‘‘(g) UNLIMITED EXPENSING FOR CERTAIN SMALL

17 BUSINESS TAXPAYERS.— 

18 ‘‘(1) IN GENERAL.—In the case of any eligible 

19 taxpayer, this section shall be applied with respect to 

20 any taxable year without regard to subsection (b). 

21 ‘‘(2) ELIGIBLE TAXPAYER.—For purposes of 

22 this subsection, a taxpayer is an eligible taxpayer 

23 with respect to any taxable year if for all prior tax24 able years beginning after December 31, 2011, the 

25 taxpayer (or any predecessor) met the gross receipts 


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1 test of section 448(c) (determined by substituting 

2 ‘$1,000,000’ for ‘$5,000,000’ each place it ap3 pears).’’. 

4 (b) CLARIFICATION OF INVENTORY RULES FOR

5 SMALL BUSINESS.—Section 471 is amended by redesig6 nating subsection (c) as subsection (d) and by inserting 

7 after subsection (b) the following new subsection: 

8 ‘‘(c) SMALL BUSINESS TAXPAYERS NOT REQUIRED

9 TO USE INVENTORIES.— 

10 ‘‘(1) IN GENERAL.—An eligible taxpayer (as de11 termined under section 179(g)(2)) shall not be re12 quired to use inventories under this section for a 

13 taxable year. 

14 ‘‘(2) TREATMENT OF TAXPAYERS NOT USING

15 INVENTORIES.—If an eligible taxpayer does not use 

16 inventories with respect to any property for any tax17 able year beginning after December 31, 2011, such 

18 property shall be treated as a material or supply 

19 which is not incidental.’’. 

20 (c) EFFECTIVE DATE AND SPECIAL RULES.— 

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

22 this section shall apply to taxable years beginning 

23 after December 31, 2011. 

24 (2) CHANGE IN METHOD OF ACCOUNTING.—In 

25 the case of any taxpayer changing the taxpayer’s 


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1 method of accounting for any taxable year under the 

2 amendments made by this section— 

3 (A) such change shall be treated as initi4 ated by the taxpayer, 

5 (B) such change shall be treated as made 

6 with the consent of the Secretary of the Treas7 ury, and 

8 (C) the net amount of the adjustments re9 quired to be taken into account by the taxpayer 

10 under section 481 of the Internal Revenue Code 

11 of 1986 shall be taken into account over a pe12 riod (not greater than 4 taxable years) begin13 ning with such taxable year. 

14 SEC. 204. TERMINATION OF VARIOUS PREFERENTIAL 

15 TREATMENTS. 

16 (a) IN GENERAL.—Section 7875, as added by this 

17 Act, is amended— 

18 (1) by inserting ‘‘(or transactions in the case of 

19 sections referred to in paragraphs (13), (14), (15), 

20 (16), and (19))’’ after ‘‘taxable years beginning’’, 

21 and 

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

23 paragraphs: 

24 ‘‘(11) Section 43 (relating to enhanced oil re25 covery credit). 


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1 ‘‘(12) Section 199 (relating to income attrib2 utable to domestic production activities). 

3 ‘‘(13) Section 382(l)(5) (relating to exception 

4 from net operating loss limitations for corporations 

5 in bankruptcy proceeding). 

6 ‘‘(14) Section 451(i) (relating to special rules 

7 for sales or dispositions to implement Federal En8 ergy Regulatory Commission or State electric re9 structuring policy). 

10 ‘‘(15) Section 453A (relating to special rules for 

11 nondealers), but only with respect to the dollar limi12 tation under subsection (b)(1) thereof and sub13 section (b)(3) thereof (relating to exception for per14 sonal use and farm property). 

15 ‘‘(16) Section 460(e)(1) (relating to special 

16 rules for long-term home construction contracts or 

17 other short-term construction contracts). 

18 ‘‘(17) Section 613A (relating to percentage de19 pletion in case of oil and gas wells). 

20 ‘‘(18) Section 616 (relating to development 

21 costs). 

22 ‘‘(19) Sections 861(a)(6), 862(a)(6), 863(b)(2), 

23 863(b)(3), and 865(b) (relating to inventory prop24 erty sales source rule exception).’’. 


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1 (b) FULL TAX RATE ON NUCLEAR DECOMMIS2 SIONING RESERVE FUND.—Subparagraph (B) of section 

3 468A(e)(2) is amended to read as follows: 

4 ‘‘(B) RATE OF TAX.—For purposes of sub5 paragraph (A), the rate set forth in this sub6 paragraph is 25 percent.’’. 

7 (c) DEFERRAL OF ACTIVE INCOME OF CONTROLLED

8 FOREIGN CORPORATIONS.—Section 952 is amended by 

9 adding at the end the following new subsection: 

10 ‘‘(d) SPECIAL APPLICATION OF SUBPART.— 

11 ‘‘(1) IN GENERAL.—For taxable years begin12 ning after December 31, 2011, notwithstanding any 

13 other provision of this subpart, the term ‘subpart F 

14 income’ means, in the case of any controlled foreign 

15 corporation, the income of such corporation derived 

16 from any foreign country. 

17 ‘‘(2) APPLICABLE RULES.—Rules similar to the 

18 rules under the last sentence of subsection (a) and 

19 subsection (d) shall apply to this subsection.’’. 

20 (d) DEPRECIATION ON TANGIBLE PROPERTY IN EX21 CESS OF ALTERNATIVE DEPRECIATION SYSTEM.—Section 

22 168(g)(1) is amended by striking ‘‘and’’ at the end of sub23 paragraph (D), by adding ‘‘and’’ at the end of subpara24 graph (E), and by inserting after subparagraph (E) the 

25 following new subparagraph: 


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1 ‘‘(F) notwithstanding subsection (a), any 

2 tangible property placed in service after Decem3 ber 31, 2011,’’. 

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

5 subsections (b) and (c) shall apply to taxable years begin6 ning after December 31, 2011. 

7 SEC. 205. PASS-THROUGH BUSINESS ENTITY TRANS8 PARENCY. 

9 Not later than 90 days after the date of the enact10 ment of this Act, the Secretary of the Treasury shall re11 port to the Committee on Finance of the Senate and the 

12 Committee on Ways and Means of the House of Rep13 resentatives regarding the implementation of additional 

14 reporting requirements with respect to any pass-through 

15 entity with the goal of the reduction of tax avoidance 

16 through the use of such entities. In addition, the Secretary 

17 shall develop procedures to share such report data with 

18 State revenue agencies under the disclosure requirements 

19 of section 6103(d) of the Internal Revenue Code of 1986. 

20 SEC. 206. MODIFICATION OF EFFECTIVE DATE OF LEASING 

21 PROVISIONS OF THE AMERICAN JOBS CRE22 ATION ACT OF 2004. 

23 (a) LEASES TO FOREIGN ENTITIES.—Section 849(b) 

24 of the American Jobs Creation Act of 2004 is amended 

25 by adding at the end the following new paragraph: 


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1 ‘‘(5) LEASES TO FOREIGN ENTITIES.—In the 

2 case of tax-exempt use property leased to a tax-ex3 empt entity which is a foreign person or entity, the 

4 amendments made by this part shall apply to taxable 

5 years beginning after December 31, 2011, with re6 spect to leases entered into on or before March 12, 

7 2004.’’. 

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

9 this section shall take effect as if included in the enact10 ment of the American Jobs Creation Act of 2004. 

11 SEC. 207. MODIFICATIONS OF FOREIGN TAX CREDIT RULES 

12 APPLICABLE TO LARGE INTEGRATED OIL 

13 COMPANIES WHICH ARE DUAL CAPACITY 

14 TAXPAYERS. 

15 (a) IN GENERAL.—Section 901 is amended by redes16 ignating subsection (n) as subsection (o) and by inserting 

17 after subsection (m) the following new subsection: 

18 ‘‘(n) SPECIAL RULES RELATING TO LARGE INTE19 GRATED OIL COMPANIES WHICH ARE DUAL CAPACITY

20 TAXPAYERS.— 

21 ‘‘(1) GENERAL RULE.—Notwithstanding any 

22 other provision of this chapter, any amount paid or 

23 accrued by a dual capacity taxpayer which is a large 

24 integrated oil company to a foreign country or posVerDate Mar 15 2010 02:52 Apr 07, 2011 Jkt 099200 PO 00000 Frm 00082 Fmt 6652 Sfmt 6201 E:\BILLS\S727.IS S727

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1 session of the United States for any period shall not 

2 be considered a tax— 

3 ‘‘(A) if, for such period, the foreign coun4 try or possession does not impose a generally 

5 applicable income tax, or 

6 ‘‘(B) to the extent such amount exceeds 

7 the amount (determined in accordance with reg8 ulations) which— 

9 ‘‘(i) is paid by such dual capacity tax10 payer pursuant to the generally applicable 

11 income tax imposed by the country or pos12 session, or 

13 ‘‘(ii) would be paid if the generally ap14 plicable income tax imposed by the country 

15 or possession were applicable to such dual 

16 capacity taxpayer. 

17 Nothing in this paragraph shall be construed to 

18 imply the proper treatment of any such amount 

19 not in excess of the amount determined under 

20 subparagraph (B). 

21 ‘‘(2) DUAL CAPACITY TAXPAYER.—For pur22 poses of this subsection, the term ‘dual capacity tax23 payer’ means, with respect to any foreign country or 

24 possession of the United States, a person who— 


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1 ‘‘(A) is subject to a levy of such country or 

2 possession, and 

3 ‘‘(B) receives (or will receive) directly or 

4 indirectly a specific economic benefit (as deter5 mined in accordance with regulations) from 

6 such country or possession. 

7 ‘‘(3) GENERALLY APPLICABLE INCOME TAX.— 

8 For purposes of this subsection— 

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

10 applicable income tax’ means an income tax (or 

11 a series of income taxes) which is generally im12 posed under the laws of a foreign country or 

13 possession on income derived from the conduct 

14 of a trade or business within such country or 

15 possession. 

16 ‘‘(B) EXCEPTIONS.—Such term shall not 

17 include a tax unless it has substantial applica18 tion, by its terms and in practice, to— 

19 ‘‘(i) persons who are not dual capacity 

20 taxpayers, and 

21 ‘‘(ii) persons who are citizens or resi22 dents of the foreign country or possession. 

23 ‘‘(4) LARGE INTEGRATED OIL COMPANY.—For 

24 purposes of this subsection, the term ‘large inte25 grated oil company’ means, with respect to any taxVerDate Mar 15 2010 02:52 Apr 07, 2011 Jkt 099200 PO 00000 Frm 00084 Fmt 6652 Sfmt 6201 E:\BILLS\S727.IS S727

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1 able year, an integrated oil company (as defined in 

2 section 291(b)(4)) which— 

3 ‘‘(A) had gross receipts in excess of 

4 $1,000,000,000 for such taxable year, and 

5 ‘‘(B) has an average daily worldwide pro6 duction of crude oil of at least 500,000 barrels 

7 for such taxable year.’’. 

8 (b) EFFECTIVE DATE.— 

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

10 this section shall apply to taxes paid or accrued in 

11 taxable years beginning after the date of the enact12 ment of this Act. 

13 (2) CONTRARY TREATY OBLIGATIONS

14 UPHELD.—The amendments made by this section 

15 shall not apply to the extent contrary to any treaty 

16 obligation of the United States. 

17 SEC. 208. REPEAL OF LOWER OF COST OR MARKET VALUE 

18 OF INVENTORY RULE. 

19 (a) IN GENERAL.—Subsection (a) of section 471 is 

20 amended to read as follows: 

21 ‘‘(a) GENERAL RULE.—Whenever in the opinion of 

22 the Secretary the use of inventories is necessary in order 

23 clearly to determine the income of the taxpayer, inven24 tories shall be valued at cost.’’. 


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

2 this section shall apply to taxable years beginning after 

3 the date of the enactment of this Act. 

4 SEC. 209. REINSTITUTION OF PER COUNTRY FOREIGN TAX 

5 CREDIT. 

6 (a) IN GENERAL.—Subsection (a) of section 904 is 

7 amended to read as follows: 

8 ‘‘(a) LIMITATION.—The amount of the credit in re9 spect of the tax paid or accrued to any foreign country 

10 or possession of the United States shall not exceed the 

11 same proportion of the tax against which such credit is 

12 taken which the taxpayer’s taxable income from sources 

13 within such country or possession (but not in excess of 

14 the taxpayer’s entire taxable income) bears to such tax15 payer’s entire taxable income for the same taxable year.’’. 

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

17 this section shall apply to taxable years beginning after 

18 December 31, 2011. 

19 SEC. 210. APPLICATION OF RULES TREATING INVERTED 

20 CORPORATIONS AS DOMESTIC CORPORA21 TIONS TO CERTAIN TRANSACTIONS OCCUR22 RING AFTER MARCH 20, 2002. 

23 (a) IN GENERAL.—Section 7874(b) is amended to 

24 read as follows: 


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1 ‘‘(b) INVERTED CORPORATIONS TREATED AS DO2 MESTIC CORPORATIONS.— 

3 ‘‘(1) IN GENERAL.—Notwithstanding section 

4 7701(a)(4), a foreign corporation shall be treated for 

5 purposes of this title as a domestic corporation if 

6 such corporation would be a surrogate foreign cor7 poration if subsection (a)(2) were applied by sub8 stituting ‘80 percent’ for ‘60 percent’. 

9 ‘‘(2) SPECIAL RULE FOR CERTAIN TRANS10 ACTIONS OCCURRING AFTER MARCH 20, 2002.— 

11 ‘‘(A) IN GENERAL.—If— 

12 ‘‘(i) paragraph (1) does not apply to 

13 a foreign corporation, but 

14 ‘‘(ii) paragraph (1) would apply to 

15 such corporation if, in addition to the sub16 stitution under paragraph (1), subsection 

17 (a)(2) were applied by substituting ‘March 

18 20, 2002’ for ‘March 4, 2003’ each place 

19 it appears, 

20 then paragraph (1) shall apply to such corpora21 tion but only with respect to taxable years of 

22 such corporation beginning after December 31, 

23 2011. 

24 ‘‘(B) SPECIAL RULES.—Subject to such 

25 rules as the Secretary may prescribe, in the 


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1 case of a corporation to which paragraph (1) 

2 applies by reason of this paragraph— 

3 ‘‘(i) the corporation shall be treated, 

4 as of the close of its last taxable year be5 ginning before January 1, 2012, as having 

6 transferred all of its assets, liabilities, and 

7 earnings and profits to a domestic corpora8 tion in a transaction with respect to which 

9 no tax is imposed under this title, 

10 ‘‘(ii) the bases of the assets trans11 ferred in the transaction to the domestic 

12 corporation shall be the same as the bases 

13 of the assets in the hands of the foreign 

14 corporation, subject to any adjustments 

15 under this title for built-in losses, 

16 ‘‘(iii) the basis of the stock of any 

17 shareholder in the domestic corporation 

18 shall be the same as the basis of the stock 

19 of the shareholder in the foreign corpora20 tion for which it is treated as exchanged, 

21 and 

22 ‘‘(iv) the transfer of any earnings and 

23 profits by reason of clause (i) shall be dis24 regarded in determining any deemed divi25 dend or foreign tax creditable to the doVerDate Mar 15 2010 02:52 Apr 07, 2011 Jkt 099200 PO 00000 Frm 00088 Fmt 6652 Sfmt 6201 E:\BILLS\S727.IS S727

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1 mestic corporation with respect to such 

2 transfer. 

3 ‘‘(C) REGULATIONS.—The Secretary may 

4 prescribe such regulations as may be necessary 

5 or appropriate to carry out this paragraph, in6 cluding regulations to prevent the avoidance of 

7 the purposes of this paragraph.’’. 

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

9 this section shall apply to taxable years beginning after 

10 December 31, 2011. 

11 SEC. 211. INDEXING CORPORATE INTEREST DEDUCTION 

12 FOR INFLATION. 

13 (a) IN GENERAL.—Section 163 is amended by redes14 ignating subsection (n) as subsection (o) and by inserting 

15 after subsection (m) the following new subsection: 

16 ‘‘(n) INDEXING CORPORATE INTEREST DEDUCTION

17 FOR INFLATION.— 

18 ‘‘(1) IN GENERAL.—In the case of a corpora19 tion, the deduction allowed under this chapter for in20 terest paid for any taxable year with respect to any 

21 obligation shall be adjusted by multiplying the 

22 amount otherwise so allowed by 1 minus the frac23 tional exclusion rate for such taxable year. 


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1 ‘‘(2) FRACTIONAL EXCLUSION RATE.—For any 

2 taxable year, the Secretary shall determine the frac3 tional exclusion rate using— 

4 ‘‘(A) a fraction— 

5 ‘‘(i) the numerator of which is the 

6 cost-of-living adjustment determined under 

7 section 1(f)(3) for the calendar year in 

8 which the taxable year begins by sub9 stituting ‘the second preceding calendar 

10 year’ for ‘calendar year 2011’ in subpara11 graph (B) thereof, and 

12 ‘‘(ii) the denominator of which is the 

13 nominal interest rate for such obligation, 

14 and 

15 ‘‘(B) a constant real before tax rate of re16 turn of 6 percent.’’. 

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

18 this section shall apply to taxable years beginning after 

19 December 31, 2011. 

20 SEC. 212. PROHIBITION OF ADVANCE REFUNDING OF 

21 BONDS. 

22 (a) IN GENERAL.—Subsection (d) of section 149 is 

23 amended— 

24 (1) by striking paragraphs (1), (2), (3), (4), 

25 and (6), 


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1 (2) by redesignating paragraphs (5) and (7) as 

2 paragraphs (2) and (3), respectively, and 

3 (3) by inserting before paragraph (2) (as redes4 ignated by paragraph (2) the following new para5 graph: 

6 ‘‘(1) PROHIBITION.—Nothing in section 103(a) 

7 or in any other provision of law shall be construed 

8 to provide an exemption from Federal income tax for 

9 interest on any bond issued as part of an issue to 

10 advance refund a bond.’’. 

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

12 this section shall apply to refunding bonds issued on or 

13 after the date of the enactment of this Act. 

14 SEC. 213. CBO STUDY ON GOVERNMENT SPENDING ON 

15 BUSINESSES. 

16 (a) STUDY.—The Congressional Budget Office shall 

17 identify the Federal Government’s direct and indirect 

18 spending on businesses, using among other sources, the 

19 corporate welfare lists produced by the Cato Institute and 

20 the Bureau of Economic Analysis of the Department of 

21 Commerce, and, from that pool of spending, identify the 

22 least economically justifiable and suggest options for how 

23 Congress could potentially reduce Federal spending on the 

24 least justifiable programs by at least $230,000,000,000 

25 during a 10-year period. 


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1 (b) REPORT.—The Congressional Budget Office shall 

2 report not later than one year after the date of the enact3 ment of this Act on the results of the study required under 

4 subsection (a) and shall submit such report for the pur5 pose of hearing by the Committee on the Budget of the 

6 House of Representatives and the Committee on the 

7 Budget of the Senate. 

8 TITLE III—REPEAL OF 

9 ALTERNATIVE MINIMUM TAX 

10 SEC. 301. REPEAL OF ALTERNATIVE MINIMUM TAX. 

11 (a) IN GENERAL.—Section 55(a) is amended by add12 ing at the end the following new flush sentence: 

13 ‘‘For purposes of this title, the tentative minimum tax on 

14 any taxpayer for any taxable year beginning after Decem15 ber 31, 2011, shall be zero.’’. 

16 (b) MODIFICATION OF LIMITATION ON USE OF

17 CREDIT FOR PRIOR YEAR MINIMUM TAX LIABILITY.— 

18 Subsection (c) of section 53 is amended to read as follows: 

19 ‘‘(c) LIMITATION.— 

20 ‘‘(1) IN GENERAL.—Except as provided in para21 graph (2), the credit allowable under subsection (a) 

22 for any taxable year shall not exceed the excess (if 

23 any) of— 

24 ‘‘(A) the regular tax liability of the tax25 payer for such taxable year reduced by the sum 


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1 of the credits allowable under subparts A, B, D, 

2 E, and F of this part, over 

3 ‘‘(B) the tentative minimum tax for the 

4 taxable year. 

5 ‘‘(2) TAXABLE YEARS BEGINNING AFTER

6 2011.—In the case of any taxable year beginning 

7 after December 31, 2011, the credit allowable under 

8 subsection (a) to a taxpayer other than a corpora9 tion for any taxable year shall not exceed 90 percent 

10 of the regular tax liability of the taxpayer for such 

11 taxable year reduced by the sum of the credits allow12 able under subparts A, B, D, E, and F of this 

13 part.’’. 

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

15 this section shall apply to taxable years beginning after 

16 December 31, 2011. 

17 TITLE IV—IMPROVEMENTS IN 

18 TAX COMPLIANCE 

19 SEC. 401. INCREASE IN INFORMATION RETURN PENALTIES. 

20 (a) FAILURE TO FILE CORRECT INFORMATION RE21 TURNS.— 

22 (1) IN GENERAL.—Section 6721(a)(1) is 

23 amended— 

24 (A) by striking ‘‘$100’’ and inserting 

25 ‘‘$250’’, and 


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1 (B) by striking ‘‘$1,500,000’’ and insert2 ing ‘‘$3,000,000’’. 

3 (2) REDUCTION WHERE CORRECTION IN SPECI4 FIED PERIOD.— 

5 (A) CORRECTION WITHIN 30 DAYS.—Sec6 tion 6721(b)(1) is amended— 

7 (i) by striking ‘‘$30’’ and inserting 

8 ‘‘$50’’, 

9 (ii) by striking ‘‘$100’’ and inserting 

10 ‘‘$250’’, and 

11 (iii) by striking ‘‘$250,000’’ and in12 serting ‘‘$500,000’’. 

13 (B) FAILURES CORRECTED ON OR BEFORE

14 AUGUST 1.—Section 6721(b)(2) is amended— 

15 (i) by striking ‘‘$100’’ and inserting 

16 ‘‘$250’’, 

17 (ii) by striking ‘‘$60’’ and inserting 

18 ‘‘$100’’, and 

19 (iii) by striking ‘‘$500,000’’ and in20 serting ‘‘$1,500,000’’. 

21 (3) LOWER LIMITATION FOR PERSONS WITH

22 GROSS RECEIPTS OF NOT MORE THAN $5,000,000.— 

23 Section 6721(d)(1) is amended— 

24 (A) in subparagraph (A)— 


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1 (i) by striking ‘‘$500,000’’ and insert2 ing ‘‘$1,000,000’’, and 

3 (ii) by striking ‘‘$1,500,000’’ and in4 serting ‘‘$3,000,000’’, 

5 (B) in subparagraph (B)— 

6 (i) by striking ‘‘$75,000’’ and insert7 ing ‘‘$175,000’’, and 

8 (ii) by striking ‘‘$250,000’’ and in9 serting ‘‘$500,000’’, and 

10 (C) in subparagraph (C)— 

11 (i) by striking ‘‘$500,000’’ and insert12 ing ‘‘$1,500,000’’, and 

13 (ii) by striking ‘‘$200,000’’ and in14 serting ‘‘$500,000’’. 

15 (4) PENALTY IN CASE OF INTENTIONAL DIS16 REGARD.—Section 6721(e) is amended— 

17 (A) by striking ‘‘$250’’ in paragraph (2) 

18 and inserting ‘‘$500’’, and 

19 (B) by striking ‘‘$1,500,000’’ in paragraph 

20 (3)(A) and inserting ‘‘$3,000,000’’. 

21 (b) FAILURE TO FURNISH CORRECT PAYEE STATE22 MENTS.— 

23 (1) IN GENERAL.—Section 6722(a)(1) is 

24 amended by striking ‘‘$100’’ and inserting ‘‘$250’’. 


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1 (2) REDUCTION WHERE CORRECTION IN SPECI2 FIED PERIOD.—Section 6722(b) is amended— 

3 (A) in paragraph (1)(A)— 

4 (i) by striking ‘‘$30’’ and inserting 

5 ‘‘$60’’, and 

6 (ii) by striking ‘‘$100’’ and inserting 

7 ‘‘$250’’, 

8 (B) by striking ‘‘$250,000’’ in paragraph 

9 (1)(B) and inserting ‘‘$500,000’’, 

10 (C) in paragraph (2)(A)— 

11 (i) by striking ‘‘$60’’ and inserting 

12 ‘‘$100’’, and 

13 (ii) by striking ‘‘$100’’ and inserting 

14 ‘‘$250’’, and 

15 (D) by striking ‘‘$500,000’’ in paragraph 

16 (2)(B) and inserting ‘‘$1,500,000’’. 

17 (3) LOWER LIMITATIONS.—Section 6722(d)(1) 

18 is amended— 

19 (A) in subparagraph (B)— 

20 (i) by striking ‘‘$250,000’’ and insert21 ing ‘‘$500,000’’, and 

22 (ii) by striking ‘‘$75,000’’ and insert23 ing ‘‘$250,000’’, and 

24 (B) in subparagraph (C)— 


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1 (i) by striking ‘‘$500,000’’ and insert2 ing ‘‘$1,500,000’’, and 

3 (ii) by striking ‘‘$200,000’’ and in4 serting ‘‘$500,000’’. 

5 (4) PENALTY IN CASE OF INTENTIONAL DIS6 REGARD.—Section 6722(e(2)) is amended by strik7 ing ‘‘$250’’ and inserting ‘‘$500’’. 

8 (c) FAILURE TO COMPLY WITH OTHER INFORMA9 TION REPORTING REQUIREMENTS.—Section 6723 is 

10 amended— 

11 (1) by striking ‘‘$50’’ and inserting ‘‘$250’’, 

12 and 

13 (2) by striking ‘‘$100,000’’ and inserting 

14 ‘‘$1,000,000’’. 

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

16 this section shall apply with respect to information returns 

17 required to be filed on or after January 1, 2012. 

18 SEC. 402. E-FILING REQUIREMENT FOR CERTAIN LARGE 

19 ORGANIZATIONS. 

20 (a) IN GENERAL.—The first sentence of section 

21 6011(e)(2) is amended to read as follows: ‘‘In prescribing 

22 regulations under paragraph (1), the Secretary shall take 

23 into account (among other relevant factors) the ability of 

24 the taxpayer to comply at reasonable cost with the require25 ments of such regulations.’’. 


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1 (b) CONFORMING AMENDMENT.—Section 6724 is 

2 amended by striking subsection (c). 

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

4 this section shall apply to taxable years ending on or after 

5 December 31, 2011. 

6 SEC. 403. IMPLEMENTATION OF STANDARDS CLARIFYING 

7 WHEN EMPLOYEE LEASING COMPANIES CAN 

8 BE HELD LIABLE FOR THEIR CLIENTS’ FED9 ERAL EMPLOYMENT TAXES. 

10 With respect to employment tax returns required to 

11 be filed with respect to wages paid on or after January 

12 1, 2012, the Secretary of the Treasury shall issue regula13 tions establishing— 

14 (1) standards for holding employee leasing com15 panies jointly and severally liable with their clients 

16 for Federal employment taxes under chapters 21, 

17 22, 23, and 24 of the Internal Revenue Code of 

18 1986, and 

19 (2) standards for holding such companies solely 

20 liable for such taxes. 


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1 SEC. 404. EXPANSION OF IRS ACCESS TO INFORMATION IN 

2 NATIONAL DIRECTORY OF NEW HIRES FOR 

3 TAX ADMINISTRATION PURPOSES. 

4 (a) IN GENERAL.—Paragraph (3) of section 453(i) 

5 of the Social Security Act (42 U.S.C. 653(i)) is amended 

6 to read as follows: 

7 ‘‘(3) ADMINISTRATION OF FEDERAL TAX

8 LAWS.—The Secretary of the Treasury shall have 

9 access to the information in the National Directory 

10 of New Hires for purposes of administering the In11 ternal Revenue Code of 1986.’’. 

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

13 this section shall take effect on the date of the enactment 

14 of this Act. 

15 SEC. 405. MODIFICATION OF CRIMINAL PENALTIES FOR 

16 WILLFUL FAILURES INVOLVING TAX PAY17 MENTS AND FILING REQUIREMENTS. 

18 (a) INCREASE IN PENALTY FOR ATTEMPT TO EVADE

19 OR DEFEAT TAX.—Section 7201 is amended— 

20 (1) by striking ‘‘$500,000’’ and inserting 

21 ‘‘$1,000,000’’, 

22 (2) by striking ‘‘$100,000’’ and inserting 

23 ‘‘$500,000’’, and 

24 (3) by striking ‘‘5 years’’ and inserting ‘‘10 

25 years’’. 


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1 (b) MODIFICATION OF PENALTIES FOR WILLFUL

2 FAILURE TO FILE RETURN, SUPPLY INFORMATION, OR

3 PAY TAX.— 

4 (1) IN GENERAL.—Section 7203 is amended— 

5 (A) in the first sentence— 

6 (i) by striking ‘‘Any person’’ and in7 serting the following: 

8 ‘‘(a) IN GENERAL.—Any person’’, and 

9 (ii) by striking ‘‘$25,000’’ and insert10 ing ‘‘$50,000’’, 

11 (B) in the third sentence, by striking ‘‘sec12 tion’’ and inserting ‘‘subsection’’, and 

13 (C) by adding at the end the following new 

14 subsection: 

15 ‘‘(b) AGGRAVATED FAILURE TO FILE.— 

16 ‘‘(1) IN GENERAL.—In the case of any failure 

17 described in paragraph (2), the first sentence of sub18 section (a) shall be applied by substituting— 

19 ‘‘(A) ‘felony’ for ‘misdemeanor’, 

20 ‘‘(B) ‘$250,000 ($500,000’ for ‘$50,000 

21 ($100,000’, and 

22 ‘‘(C) ‘5 years’ for ‘1 year’. 

23 ‘‘(2) FAILURE DESCRIBED.—A failure described 

24 in this paragraph is— 


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1 ‘‘(A) a failure to make a return described 

2 in subsection (a) for any 3 taxable years occur3 ring during any period of 5 consecutive taxable 

4 years if the aggregate tax liability for such pe5 riod is not less than $50,000, or 

6 ‘‘(B) a failure to make a return if the tax 

7 liability giving rise to the requirement to make 

8 such return is attributable to an activity which 

9 is a felony under any State or Federal law.’’. 

10 (2) PENALTY MAY BE APPLIED IN ADDITION TO

11 OTHER PENALTIES.—Section 7204 is amended by 

12 striking ‘‘the penalty provided in section 6674’’ and 

13 inserting ‘‘the penalties provided in sections 6674 

14 and 7203(b)’’. 

15 (c) FRAUD AND FALSE STATEMENTS.—Section 7206 

16 is amended— 

17 (1) by striking ‘‘$100,000’’ and inserting 

18 ‘‘$500,000’’, 

19 (2) by striking ‘‘$500,000’’ and inserting 

20 ‘‘$1,000,000’’, and 

21 (3) by striking ‘‘3 years’’ and inserting ‘‘5 

22 years’’. 

23 (d) INCREASE IN MONETARY LIMITATION FOR UN24 DERPAYMENT OR OVERPAYMENT OF TAX DUE TO


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1 FRAUD.—Section 7206, as amended by subsection (c), is 

2 amended— 

3 (1) by striking ‘‘Any person who—’’ and insert4 ing ‘‘(a) IN GENERAL.—Any person who—’’, and 

5 (2) by adding at the end the following new sub6 section: 

7 ‘‘(b) INCREASE IN MONETARY LIMITATION FOR UN8 DERPAYMENT OR OVERPAYMENT OF TAX DUE TO

9 FRAUD.—If any portion of any underpayment (as defined 

10 in section 6664(a)) or overpayment (as defined in section 

11 6401(a)) of tax required to be shown on a return is attrib12 utable to fraudulent action described in subsection (a), the 

13 applicable dollar amount under subsection (a) shall in no 

14 event be less than an amount equal to such portion. A 

15 rule similar to the rule under section 6663(b) shall apply 

16 for purposes of determining the portion so attributable.’’. 

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

18 this section shall apply to actions, and failures to act, oc19 curring after the date of the enactment of this Act. 

20 SEC. 406. PENALTIES FOR FAILURE TO FILE CERTAIN RE21 TURNS ELECTRONICALLY. 

22 (a) IN GENERAL.—Part I of subchapter A of chapter 

23 68 is amended by inserting after section 6652 the fol24 lowing new section: 


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1 ‘‘SEC. 6652A. FAILURE TO FILE CERTAIN RETURNS ELEC2 TRONICALLY. 

3 ‘‘(a) IN GENERAL.—If a person fails to file a return 

4 described in section 6651 or 6652(c)(1) in electronic form 

5 as required under section 6011(e)— 

6 ‘‘(1) such failure shall be treated as a failure to 

7 file such return (even if filed in a form other than 

8 electronic form), and 

9 ‘‘(2) the penalty imposed under section 6651 or 

10 6652(c), whichever is appropriate, shall be equal to 

11 the greater of— 

12 ‘‘(A) the amount of the penalty under such 

13 section, determined without regard to this sec14 tion, or 

15 ‘‘(B) the amount determined under sub16 section (b). 

17 ‘‘(b) AMOUNT OF PENALTY.— 

18 ‘‘(1) IN GENERAL.—Except as provided in para19 graphs (2) and (3), the penalty determined under 

20 this subsection is equal to $40 for each day during 

21 which a failure described under subsection (a) con22 tinues. The maximum penalty under this paragraph 

23 on failures with respect to any 1 return shall not ex24 ceed the lesser of $20,000 or 10 percent of the gross 

25 receipts of the taxpayer for the year. 


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1 ‘‘(2) INCREASED PENALTIES FOR TAXPAYERS

2 WITH GROSS RECEIPTS BETWEEN $1,000,000 AND

3 $100,000,000.— 

4 ‘‘(A) TAXPAYERS WITH GROSS RECEIPTS

5 BETWEEN $1,000,000 AND $25,000,000.—In the 

6 case of a taxpayer having gross receipts exceed7 ing $1,000,000 but not exceeding $25,000,000 

8 for any year— 

9 ‘‘(i) the first sentence of paragraph 

10 (1) shall be applied by substituting ‘$200’ 

11 for ‘$40’, and 

12 ‘‘(ii) in lieu of applying the second 

13 sentence of paragraph (1), the maximum 

14 penalty under paragraph (1) shall not ex15 ceed $100,000. 

16 ‘‘(B) TAXPAYERS WITH GROSS RECEIPTS

17 OVER $25,000,000.—Except as provided in para18 graph (3), in the case of a taxpayer having 

19 gross receipts exceeding $25,000,000 for any 

20 year— 

21 ‘‘(i) the first sentence of paragraph 

22 (1) shall be applied by substituting ‘$500’ 

23 for ‘$40’, and 

24 ‘‘(ii) in lieu of applying the second 

25 sentence of paragraph (1), the maximum 


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1 penalty under paragraph (1) shall not ex2 ceed $250,000. 

3 ‘‘(3) INCREASED PENALTIES FOR CERTAIN TAX4 PAYERS WITH GROSS RECEIPTS EXCEEDING

5 $100,000,000.—In the case of a return described in 

6 section 6651— 

7 ‘‘(A) TAXPAYERS WITH GROSS RECEIPTS

8 BETWEEN $100,000,000 AND $250,000,000.—In the 

9 case of a taxpayer having gross receipts exceed10 ing $100,000,000 but not exceeding 

11 $250,000,000 for any year— 

12 ‘‘(i) the amount of the penalty deter13 mined under this subsection shall equal the 

14 sum of— 

15 ‘‘(I) $50,000, plus 

16 ‘‘(II) $1,000 for each day during 

17 which such failure continues (twice 

18 such amount for each day such failure 

19 continues after the first such 60 

20 days), and 

21 ‘‘(ii) the maximum amount under 

22 clause (i)(II) on failures with respect to 

23 any 1 return shall not exceed $200,000. 

24 ‘‘(B) TAXPAYERS WITH GROSS RECEIPTS

25 OVER $250,000,000.—In the case of a taxpayer 


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1 having gross receipts exceeding $250,000,000 

2 for any year— 

3 ‘‘(i) the amount of the penalty deter4 mined under this subsection shall equal the 

5 sum of— 

6 ‘‘(I) $250,000, plus 

7 ‘‘(II) $2,500 for each day during 

8 which such failure continues (twice 

9 such amount for each day such failure 

10 continues after the first such 60 

11 days), and 

12 ‘‘(ii) the maximum amount under 

13 clause (i)(II) on failures with respect to 

14 any 1 return shall not exceed $250,000. 

15 ‘‘(C) EXCEPTION FOR CERTAIN RE16 TURNS.—Subparagraphs (A) and (B) shall not 

17 apply to any return of tax imposed under sec18 tion 511.’’. 

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

20 for part I of subchapter A of chapter 68 is amended by 

21 inserting after the item relating to section 6652 the fol22 lowing new item: 

‘‘Sec. 6652A. Failure to file certain returns electronically.’’. 

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

24 this section shall apply to returns required to be filed on 

25 or after January 1, 2012. 


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1 SEC. 407. REPORTING ON IDENTIFICATION OF BENEFICIAL 

2 OWNERS OF CERTAIN FOREIGN FINANCIAL 

3 ACCOUNTS. 

4 (a) IN GENERAL.—Subchapter A of chapter 3 is 

5 amended by adding at the end the following new section: 

6 ‘‘SEC. 1447. WITHHOLDABLE PAYMENTS TO CERTAIN FOR7 EIGN FINANCIAL ACCOUNTS. 

8 ‘‘(a) IN GENERAL.—In the case of any withholdable 

9 payment to a foreign financial account, the withholding 

10 agent with respect to such payment shall deduct and with11 hold from such payment a tax equal to 30 percent of the 

12 amount of such payment if such agent does not meet the 

13 reporting requirements under subsection (b) with respect 

14 to such payment. 

15 ‘‘(b) REPORTING REQUIREMENTS.—The require16 ments of this subsection are met with respect to any 

17 withholdable payment to a foreign financial account if the 

18 withholding agent with respect to such payment— 

19 ‘‘(1) identifies— 

20 ‘‘(A) the beneficial owner or owners of 

21 such account by name, address, TIN (if any), 

22 and 

23 ‘‘(B) the account number, 

24 ‘‘(2) obtains evidence of the nationality of such 

25 owner or owners, 


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1 ‘‘(3) complies with such verification and due 

2 diligence procedures as the Secretary may require 

3 with respect to such identification and obtaining of 

4 such evidence, and 

5 ‘‘(4) reports such identification and evidence to 

6 the Secretary in such manner as the Secretary re7 quires. 

8 ‘‘(c) DEFINITIONS.—For purposes of this section— 

9 ‘‘(1) WITHHOLDABLE PAYMENT.—Except as 

10 otherwise provided by the Secretary, the term 

11 ‘withholdable payment’ means— 

12 ‘‘(A) any payment of interest (including 

13 any original issue discount), dividends, rents, 

14 and other fixed or determinable annual or peri15 odical gains and profits, if such payment is 

16 from sources within the United States, and 

17 ‘‘(B) any gross proceeds from the sale or 

18 other disposition of any property of a type 

19 which can produce interest or dividends from 

20 sources within the United States. 

21 ‘‘(2) WITHHOLDING AGENT.—The term ‘with22 holding agent’ means all persons, in whatever capac23 ity acting, having the control, receipt, custody, dis24 posal, or payment of any withholdable payment. 

25 ‘‘(3) FOREIGN FINANCIAL ACCOUNT.— 


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1 ‘‘(A) IN GENERAL.—The term ‘foreign fi2 nancial account’ means any financial account 

3 maintained by a foreign financial institution. 

4 ‘‘(B) FINANCIAL ACCOUNT.—Except as 

5 otherwise provided by the Secretary, the term 

6 ‘financial account’ means, with respect to any 

7 foreign financial institution— 

8 ‘‘(i) any depository account main9 tained by such financial institution, and 

10 ‘‘(ii) any custodial account maintained 

11 by such financial institution. 

12 ‘‘(4) FOREIGN FINANCIAL INSTITUTION.— 

13 ‘‘(A) IN GENERAL.—The term ‘foreign fi14 nancial institution’ means any financial institu15 tion which is a foreign entity. Except as other16 wise provided by the Secretary, such term shall 

17 not include a financial institution which is orga18 nized under the laws of any possession of the 

19 United States. 

20 ‘‘(B) FINANCIAL INSTITUTION.—Except as 

21 otherwise provided by the Secretary, the term 

22 ‘financial institution’ means any entity that— 

23 ‘‘(i) accepts deposits in the ordinary 

24 course of a banking or similar business, 


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1 ‘‘(ii) is engaged primarily in the busi2 ness of holding financial assets for the ac3 count of others, or 

4 ‘‘(iii) is engaged (or holding itself out 

5 as being engaged) primarily in the business 

6 of investing, reinvesting, or trading in se7 curities (as defined in section 475(c)(2) 

8 without regard to the last sentence there9 of), partnership interests, commodities (as 

10 defined in section 475(e)(2)), or any inter11 est (including a futures or forward con12 tract or option) in such securities, partner13 ship interests, or commodities. 

14 ‘‘(C) FOREIGN ENTITY.—The term ‘foreign 

15 entity’ means any entity which is not a United 

16 States person. 

17 ‘‘(d) EXCEPTION FOR CERTAIN PAYMENTS.—Sub18 section (a) shall not apply to any payment to the extent 

19 that the beneficial owner of such payment is— 

20 ‘‘(1) any foreign government, any political sub21 division of a foreign government, or any wholly 

22 owned agency or instrumentality of any one or more 

23 of the foregoing, 

24 ‘‘(2) any international organization or any 

25 wholly owned agency or instrumentality thereof, 


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1 ‘‘(3) any foreign central bank of issue, or 

2 ‘‘(4) any other class of persons identified by the 

3 Secretary for purposes of this subsection as posing 

4 a low risk of tax evasion. 

5 ‘‘(e) CONFIDENTIALITY OF INFORMATION.—For pur6 poses of this section, rules similar to the rules of section 

7 3406(f) shall apply. 

8 ‘‘(f) COORDINATION WITH OTHER WITHHOLDING

9 PROVISIONS.—The Secretary shall provide for the coordi10 nation of this section with other withholding provisions 

11 under this title, including providing for the proper cred12 iting of amounts deducted and withheld under this section 

13 against amounts required to be deducted and withheld 

14 under such other provisions. 

15 ‘‘(g) REGULATIONS.—The Secretary shall prescribe 

16 such regulations or other guidance as may be necessary 

17 or appropriate to carry out the purposes of, and prevent 

18 the avoidance of, this section.’’. 

19 (b) CONFORMING AMENDMENT.—The table of sec20 tions for subchapter A of chapter 3 is amended by adding 

21 at the end the following new item: 

‘‘Sec. 1447. Withholdable payments to certain foreign financial accounts.’’. 

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

23 this section shall apply to payments made after December 

24 31, 2011. 


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1 TITLE V—MISCELLANEOUS 

2 PROVISIONS 

3 SEC. 501. ALLOWANCE OF DEDUCTION FOR DIVIDENDS RE4 CEIVED FROM CONTROLLED FOREIGN COR5 PORATIONS FOR 2011. 

6 (a) IN GENERAL.—Section 965 of the Internal Rev7 enue Code of 1986 is amended by adding at the end the 

8 following new subsection: 

9 ‘‘(g) ALLOWANCE FOR DEDUCTION FOR AN ADDI10 TIONAL YEAR.— 

11 ‘‘(1) IN GENERAL.—In the case of an election 

12 under this subsection, subsection (f)(1) shall be ap13 plied by substituting ‘January 1, 2011,’ for ‘the date 

14 of the enactment of this section’. 

15 ‘‘(2) SPECIAL RULES.—For purposes of para16 graph (1)— 

17 ‘‘(A) EXTRAORDINARY DIVIDENDS.—Sub18 section (b)(2) shall be applied by substituting 

19 ‘June 30, 2010’ for ‘June 30, 2003’. 

20 ‘‘(B) DETERMINATIONS RELATING TO RE21 LATED PARTY INDEBTEDNESS.—Subsection 

22 (b)(3)(B) shall be applied by substituting ‘Octo23 ber 3, 2011’ for ‘October 3, 2004’. 

24 ‘‘(C) APPLICABLE FINANCIAL STATE25 MENT.—Subsection (c)(1) shall be applied by 


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1 substituting ‘June 30, 2010’ for ‘June 30, 

2 2003’ each place it occurs. 

3 ‘‘(D) DETERMINATIONS RELATING TO

4 BASE PERIOD.—Subsection (c)(2) shall be ap5 plied by substituting ‘June 30, 2010’ for ‘June 

6 30, 2003’. 

7 ‘‘(E) REQUIREMENTS FOR INVESTMENT IN

8 UNITED STATES.—Subsection (b)(4) shall be 

9 applied— 

10 ‘‘(i) by inserting ‘deposited in 1 or 

11 more United States financial institutions 

12 and’ after ‘amount of the dividend’, and 

13 ‘‘(ii) by striking subparagraph (B) 

14 thereof and inserting the following: 

15 ‘‘ ‘(B) provides for the reinvestment of 

16 such dividend in the United States (other than 

17 as payment for executive compensation) as a 

18 source of funding for only 1 or more of the fol19 lowing purposes: 

20 ‘‘ ‘(i) worker hiring and training, 

21 ‘‘ ‘(ii) research and development, 

22 ‘‘ ‘(iii) capital improvements, 

23 ‘‘ ‘(iv) acquisitions of business entities 

24 for the purpose of retaining or creating 

25 jobs in the United States, and 


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1 ‘‘ ‘(v) clean energy initiatives (such as 

2 clean energy research and development, en3 ergy efficiency, clean energy start ups, and 

4 clean energy jobs). 

5 For any purpose described in clause (i), (ii), or 

6 (iii), funding shall qualify for purposes of this 

7 paragraph only if such funding supplements but 

8 does not supplant otherwise scheduled funding 

9 for either taxable year described in subsection 

10 (f) by the taxpayer for such purpose. Such 

11 scheduled funding shall be certified by the indi12 vidual and entity approving the domestic rein13 vestment plan.’. 

14 ‘‘(3) AUDIT.—Not later than 2 years after the 

15 date of the election under this subsection, the Inter16 nal Revenue Service shall conduct an audit of the 

17 taxpayer with respect to any reinvestment trans18 action arising from such election.’’. 

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

20 subsection (a) shall apply to taxable years ending on or 

21 after January 1, 2011. 

22 SEC. 502. DENIAL OF DEDUCTION FOR PUNITIVE DAMAGES. 

23 (a) DISALLOWANCE OF DEDUCTION.— 

24 (1) IN GENERAL.—Section 162(g) is amend25 ed— 


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1 (A) by redesignating paragraphs (1) and 

2 (2) as subparagraphs (A) and (B), respectively, 

3 (B) by striking ‘‘If’’ and inserting: 

4 ‘‘(1) TREBLE DAMAGES.—If’’, and 

5 (C) by adding at the end the following new 

6 paragraph: 

7 ‘‘(2) PUNITIVE DAMAGES.—No deduction shall 

8 be allowed under this chapter for any amount paid 

9 or incurred for punitive damages in connection with 

10 any judgment in, or settlement of, any action. This 

11 paragraph shall not apply to punitive damages de12 scribed in section 104(c).’’. 

13 (2) CONFORMING AMENDMENT.—The heading 

14 for section 162(g) is amended by inserting ‘‘OR PU15 NITIVE DAMAGES’’ after ‘‘LAWS’’. 

16 (b) INCLUSION IN INCOME OF PUNITIVE DAMAGES

17 PAID BY INSURER OR OTHERWISE.— 

18 (1) IN GENERAL.—Part II of subchapter B of 

19 chapter 1 is amended by adding at the end the fol20 lowing new section: 

21 ‘‘SEC. 91. PUNITIVE DAMAGES COMPENSATED BY INSUR22 ANCE OR OTHERWISE. 

23 ‘‘Gross income shall include any amount paid to or 

24 on behalf of a taxpayer as insurance or otherwise by reaVerDate Mar 15 2010 02:52 Apr 07, 2011 Jkt 099200 PO 00000 Frm 00115 Fmt 6652 Sfmt 6201 E:\BILLS\S727.IS S727

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1 son of the taxpayer’s liability (or agreement) to pay puni2 tive damages.’’. 

3 (2) REPORTING REQUIREMENTS.—Section 6041 

4 is amended by adding at the end the following new 

5 subsection: 

6 ‘‘(h) SECTION TO APPLY TO PUNITIVE DAMAGES

7 COMPENSATION.—This section shall apply to payments by 

8 a person to or on behalf of another person as insurance 

9 or otherwise by reason of the other person’s liability (or 

10 agreement) to pay punitive damages.’’. 

11 (3) CONFORMING AMENDMENT.—The table of 

12 sections for part II of subchapter B of chapter 1 is 

13 amended by adding at the end the following new 

14 item: 

‘‘Sec. 91. Punitive damages compensated by insurance or otherwise.’’. 

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

16 this section shall apply to damages paid or incurred on 

17 or after the date of the enactment of this Act. 

18 SEC. 503. APPLICATION OF MEDICARE PAYROLL TAX TO 

19 ALL STATE AND LOCAL GOVERNMENT EM20 PLOYEES. 

21 (a) IN GENERAL.—Paragraph (2) of section 3121(u) 

22 is amended— 

23 (1) by striking ‘‘subparagraphs (B) and (C)’’ in 

24 subparagraph (A) and inserting ‘‘subparagraph 

25 (B)’’, and 


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1 (2) by striking subparagraphs (C) and (D). 

2 (b) ENTITLEMENT TO HOSPITAL INSURANCE BENE3 FITS.—Subsection (p) of section 210 of the Social Security 

4 Act is amended— 

5 (1) by striking ‘‘paragraphs (2) and (3)’’ in 

6 paragraph (1)(B) and inserting ‘‘paragraph (2)’’, 

7 and 

8 (2) by striking paragraphs (3) and (4). 

9 (c) CONFORMING AMENDMENT.—Paragraph (2) of 

10 section 218(v) of the Social Security Act is amended to 

11 read as follows: 

12 ‘‘(2) This subsection shall apply only with re13 spect to employees who are not otherwise covered 

14 under the State’s agreement under this section.’’. 

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

16 this section shall apply to services performed after the 

17 date of the enactment of this Act. 

18 SEC. 504. CORRECTIONS FOR CPI OVERSTATEMENT IN 

19 COST-OF-LIVING INDEXATION. 

20 (a) IN GENERAL.—Paragraph (3) of section 1(f), as 

21 amended by this Act, is amended to read as follows: 

22 ‘‘(3) COST-OF-LIVING ADJUSTMENT.— 

23 ‘‘(A) IN GENERAL.—For purposes of para24 graph (2), the cost-of-living adjustment for any 

25 calendar year is the product of— 


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1 ‘‘(i) the CPI fraction for calendar 

2 years before 2014, multiplied by 

3 ‘‘(ii) the Chained CPI fraction for cal4 endar years after 2013, 

5 reduced by 1. 

6 ‘‘(B) CPI FRACTION FOR CALENDAR

7 YEARS BEFORE 2014.—The CPI fraction for cal8 endar years before 2014 is the fraction— 

9 ‘‘(i) the numerator of which is the 

10 CPI for the calendar year 2012, and 

11 ‘‘(ii) the denominator of which is the 

12 CPI for the calendar year 2011. 

13 ‘‘(C) CHAINED CPI FRACTION FOR CAL14 ENDAR YEARS AFTER 2013.—The Chained CPI 

15 fraction for calendar years after 2013 is the 

16 fraction— 

17 ‘‘(i) the numerator of which is the 

18 Chained CPI for the preceding calendar 

19 year, and 

20 ‘‘(ii) the denominator of which is the 

21 Chained CPI for the calendar year 2012.’’. 

22 (b) CONFORMING AMENDMENTS.— 

23 (1) Paragraph (4) of section 1(f) is amended to 

24 read as follows: 


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1 ‘‘(4) CPI AND CHAINED CPI FOR ANY CAL2 ENDAR YEAR.—For purposes of paragraph (3)— 

3 ‘‘(A) CPI.—The CPI for any calendar year 

4 is the average of the Consumer Price Index as 

5 of the close of the 12-month period ending on 

6 August 31 of such calendar year. 

7 ‘‘(B) CHAINED CPI.—The Chained CPI for 

8 any calendar year is the average of the Chained 

9 Consumer Price Index as of the close of the 12- 

10 month period ending on August 31 of such cal11 endar year.’’. 

12 (2) Paragraph (5) of section 1(f) is amended to 

13 read as follows: 

14 ‘‘(5) CONSUMER PRICE INDEX AND CHAINED

15 CONSUMER PRICE INDEX.—For purposes of para16 graph (4)— 

17 ‘‘(A) CONSUMER PRICE INDEX.—The term 

18 ‘Consumer Price Index’ means the last Con19 sumer Price Index for all-urban consumers pub20 lished by the Department of Labor. For pur21 poses of the preceding sentence, the revision of 

22 the Consumer Price Index which is most con23 sistent with the Consumer Price Index for cal24 endar year 1986 shall be used. 


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1 ‘‘(B) CHAINED CONSUMER PRICE INDEX.— 

2 The term ‘Chained Consumer Price Index’ 

3 means the initial Chained Consumer Price 

4 Index for all-urban consumers published by the 

5 Department of Labor.’’. 

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

7 this section shall apply to taxable years beginning after 

8 December 31, 2013. 

9 TITLE VI—TECHNICAL AND 

10 CONFORMING AMENDMENTS 

11 SEC. 601. TECHNICAL AND CONFORMING AMENDMENTS. 

12 The Secretary of the Treasury or the Secretary’s del13 egate shall not later than 90 days after the date of the 

14 enactment of this Act, submit to the Committee on Ways 

15 and Means of the House of Representatives and the Com16 mittee on Finance of the Senate a draft of any technical 

17 and conforming changes in the Internal Revenue Code of 

18 1986 which are necessary to reflect throughout such Code 

19 the purposes of the provisions of, and amendments made 

20 by, this Act. 

Æ 


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