`[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1180 Enrolled Bill (ENR)]

        H.R.1180

                       One Hundred Sixth Congress

                                 of the

                        United States of America


                          AT THE FIRST SESSION

         Begun and held at the City of Washington on Wednesday,
   the sixth day of January, one thousand nine hundred and ninety-nine


                                 An Act


 
 To amend the Social Security Act to expand the availability of health 
care coverage for working individuals with disabilities, to establish a 
   Ticket to Work and Self-Sufficiency Program in the Social Security 
Administration to provide such individuals with meaningful opportunities 
                    to work, and for other purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Ticket to Work and 
Work Incentives Improvement Act of 1999''.
    (b) Table of Contents.--The table of contents is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings and purposes.

   TITLE I--TICKET TO WORK AND SELF-SUFFICIENCY AND RELATED PROVISIONS

             Subtitle A--Ticket to Work and Self-Sufficiency

Sec. 101. Establishment of the Ticket to Work and Self-Sufficiency 
          Program.

              Subtitle B--Elimination of Work Disincentives

Sec. 111. Work activity standard as a basis for review of an 
          individual's disabled status.
Sec. 112. Expedited reinstatement of disability benefits.

     Subtitle C--Work Incentives Planning, Assistance, and Outreach

Sec. 121. Work incentives outreach program.
Sec. 122. State grants for work incentives assistance to disabled 
          beneficiaries.

         TITLE II--EXPANDED AVAILABILITY OF HEALTH CARE SERVICES

Sec. 201. Expanding State options under the medicaid program for workers 
          with disabilities.
Sec. 202. Extending medicare coverage for OASDI disability benefit 
          recipients.
Sec. 203. Grants to develop and establish State infrastructures to 
          support working individuals with disabilities.
Sec. 204. Demonstration of coverage under the medicaid program of 
          workers with potentially severe disabilities.
Sec. 205. Election by disabled beneficiaries to suspend medigap 
          insurance when covered under a group health plan.

              TITLE III--DEMONSTRATION PROJECTS AND STUDIES

Sec. 301. Extension of disability insurance program demonstration 
          project authority.
Sec. 302. Demonstration projects providing for reductions in disability 
          insurance benefits based on earnings.
Sec. 303. Studies and reports.

            TITLE IV--MISCELLANEOUS AND TECHNICAL AMENDMENTS

Sec. 401. Technical amendments relating to drug addicts and alcoholics.
Sec. 402. Treatment of prisoners.
Sec. 403. Revocation by members of the clergy of exemption from social 
          security coverage.
Sec. 404. Additional technical amendment relating to cooperative 
          research or demonstration projects under titles II and XVI.
Sec. 405. Authorization for State to permit annual wage reports.
Sec. 406. Assessment on attorneys who receive their fees via the Social 
          Security Administration.
Sec. 407. Extension of authority of State medicaid fraud control units.
Sec. 408. Climate database modernization.
Sec. 409. Special allowance adjustment for student loans.
Sec. 410. Schedule for payments under SSI state supplementation 
          agreements.
Sec. 411. Bonus commodities.
Sec. 412. Simplification of definition of foster child under EIC.
Sec. 413. Delay of effective date of organ procurement and 
          transplantation network final rule.

                TITLE V--TAX RELIEF EXTENSION ACT OF 1999

Sec. 500. Short title of title.

                         Subtitle A--Extensions

Sec. 501. Allowance of nonrefundable personal credits against regular 
          and minimum tax liability.
Sec. 502. Research credit.
Sec. 503. Subpart F exemption for active financing income.
Sec. 504. Taxable income limit on percentage depletion for marginal 
          production.
Sec. 505. Work opportunity credit and welfare-to-work credit.
Sec. 506. Employer-provided educational assistance.
Sec. 507. Extension and modification of credit for producing electricity 
          from certain renewable resources.
Sec. 508. Extension of duty-free treatment under Generalized System of 
          Preferences.
Sec. 509. Extension of credit for holders of qualified zone academy 
          bonds.
Sec. 510. Extension of first-time homebuyer credit for District of 
          Columbia.
Sec. 511. Extension of expensing of environmental remediation costs.
Sec. 512. Temporary increase in amount of rum excise tax covered over to 
          Puerto Rico and Virgin Islands.

               Subtitle B--Other Time-Sensitive Provisions

Sec. 521. Advance pricing agreements treated as confidential taxpayer 
          information.
Sec. 522. Authority to postpone certain tax-related deadlines by reason 
          of Y2K 
          failures.
Sec. 523. Inclusion of certain vaccines against streptococcus pneumoniae 
          to list of taxable vaccines.
Sec. 524. Delay in effective date of requirement for approved diesel or 
          kerosene 
          terminals.
Sec. 525. Production flexibility contract payments.

                       Subtitle C--Revenue Offsets

                       Part I--General Provisions

Sec. 531. Modification of estimated tax safe harbor.
Sec. 532. Clarification of tax treatment of income and loss on 
          derivatives.
Sec. 533. Expansion of reporting of cancellation of indebtedness income.
Sec. 534. Limitation on conversion of character of income from 
          constructive ownership transactions.
Sec. 535. Treatment of excess pension assets used for retiree health 
          benefits.
Sec. 536. Modification of installment method and repeal of installment 
          method for accrual method taxpayers.
Sec. 537. Denial of charitable contribution deduction for transfers 
          associated with split-dollar insurance arrangements.
Sec. 538. Distributions by a partnership to a corporate partner of stock 
          in another corporation.

      Part II--Provisions Relating to Real Estate Investment Trusts


   SUBPART A--TREATMENT OF INCOME AND SERVICES PROVIDED BY TAXABLE REIT 
                              SUBSIDIARIES

Sec. 541. Modifications to asset diversification test.
Sec. 542. Treatment of income and services provided by taxable REIT 
          subsidiaries.
Sec. 543. Taxable REIT subsidiary.
Sec. 544. Limitation on earnings stripping.
Sec. 545. 100 percent tax on improperly allocated amounts.
Sec. 546. Effective date.
Sec. 547. Study relating to taxable REIT subsidiaries.


                       SUBPART B--HEALTH CARE REITS

Sec. 551. Health care REITs.


       SUBPART C--CONFORMITY WITH REGULATED INVESTMENT COMPANY RULES

Sec. 556. Conformity with regulated investment company rules.


     SUBPART D--CLARIFICATION OF EXCEPTION FROM IMPERMISSIBLE TENANT 
                             SERVICE INCOME

Sec. 561. Clarification of exception for independent operators.


           SUBPART E--MODIFICATION OF EARNINGS AND PROFITS RULES

Sec. 566. Modification of earnings and profits rules.


              SUBPART F--MODIFICATION OF ESTIMATED TAX RULES

Sec. 571. Modification of estimated tax rules for closely held real 
          estate investment trusts.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--The Congress makes the following findings:
        (1) It is the policy of the United States to provide assistance 
    to individuals with disabilities to lead productive work lives.
        (2) Health care is important to all Americans.
        (3) Health care is particularly important to individuals with 
    disabilities and special health care needs who often cannot afford 
    the insurance available to them through the private market, are 
    uninsurable by the plans available in the private sector, and are 
    at great risk of incurring very high and economically devastating 
    health care costs.
        (4) Americans with significant disabilities often are unable to 
    obtain health care insurance that provides coverage of the services 
    and supports that enable them to live independently and enter or 
    rejoin the workforce. Personal assistance services (such as 
    attendant services, personal assistance with transportation to and 
    from work, reader services, job coaches, and related assistance) 
    remove many of the barriers between significant disability and 
    work. Coverage for such services, as well as for prescription 
    drugs, durable medical equipment, and basic health care are 
    powerful and proven tools for individuals with significant 
    disabilities to obtain and retain employment.
        (5) For individuals with disabilities, the fear of losing 
    health care and related services is one of the greatest barriers 
    keeping the individuals from maximizing their employment, earning 
    potential, and independence.
        (6) Social Security Disability Insurance and Supplemental 
    Security Income beneficiaries risk losing medicare or medicaid 
    coverage that is linked to their cash benefits, a risk that is an 
    equal, or greater, work disincentive than the loss of cash benefits 
    associated with working.
        (7) Individuals with disabilities have greater opportunities 
    for employment than ever before, aided by important public policy 
    initiatives such as the Americans with Disabilities Act of 1990 (42 
    U.S.C. 12101 et seq.), advancements in public understanding of 
    disability, and innovations in assistive technology, medical 
    treatment, and rehabilitation.
        (8) Despite such historic opportunities and the desire of 
    millions of disability recipients to work and support themselves, 
    fewer than one-half of one percent of Social Security Disability 
    Insurance and Supplemental Security Income beneficiaries leave the 
    disability rolls and return to work.
        (9) In addition to the fear of loss of health care coverage, 
    beneficiaries cite financial disincentives to work and earn income 
    and lack of adequate employment training and placement services as 
    barriers to employment.
        (10) Eliminating such barriers to work by creating financial 
    incentives to work and by providing individuals with disabilities 
    real choice in obtaining the services and technology they need to 
    find, enter, and maintain employment can greatly improve their 
    short and long-term financial independence and personal well-being.
        (11) In addition to the enormous advantages such changes 
    promise for individuals with disabilities, redesigning government 
    programs to help individuals with disabilities return to work may 
    result in significant savings and extend the life of the Social 
    Security Disability Insurance Trust Fund.
        (12) If only an additional one-half of one percent of the 
    current Social Security Disability Insurance and Supplemental 
    Security Income recipients were to cease receiving benefits as a 
    result of employment, the savings to the Social Security Trust 
    Funds and to the Treasury in cash assistance would total 
    $3,500,000,000 over the worklife of such individuals, far exceeding 
    the cost of providing incentives and services needed to assist them 
    in entering work and achieving financial independence to the best 
    of their abilities.
    (b) Purposes.--The purposes of this Act are as follows:
        (1) To provide health care and employment preparation and 
    placement services to individuals with disabilities that will 
    enable those individuals to reduce their dependency on cash benefit 
    programs.
        (2) To encourage States to adopt the option of allowing 
    individuals with disabilities to purchase medicaid coverage that is 
    necessary to enable such individuals to maintain employment.
        (3) To provide individuals with disabilities the option of 
    maintaining medicare coverage while working.
        (4) To establish a return to work ticket program that will 
    allow individuals with disabilities to seek the services necessary 
    to obtain and retain employment and reduce their dependency on cash 
    benefit programs.

  TITLE I--TICKET TO WORK AND SELF-SUFFICIENCY AND RELATED PROVISIONS
            Subtitle A--Ticket to Work and Self-Sufficiency

SEC. 101. ESTABLISHMENT OF THE TICKET TO WORK AND SELF-SUFFICIENCY 
              PROGRAM.

    (a) In General.--Part A of title XI of the Social Security Act (42 
U.S.C. 1301 et seq.) is amended by adding at the end the following new 
section:


            ``the ticket to work and self-sufficiency program

    ``Sec. 1148. (a) In General.--The Commissioner shall establish a 
Ticket to Work and Self-Sufficiency Program, under which a disabled 
beneficiary may use a ticket to work and self-sufficiency issued by the 
Commissioner in accordance with this section to obtain employment 
services, vocational rehabilitation services, or other support services 
from an employment network which is of the beneficiary's choice and 
which is willing to provide such services to such beneficiary.
    ``(b) Ticket System.--
        ``(1) Distribution of tickets.--The Commissioner may issue a 
    ticket to work and self-sufficiency to disabled beneficiaries for 
    participation in the Program.
        ``(2) Assignment of tickets.--A disabled beneficiary holding a 
    ticket to work and self-sufficiency may assign the ticket to any 
    employment network of the beneficiary's choice which is serving 
    under the Program and is willing to accept the assignment.
        ``(3) Ticket terms.--A ticket issued under paragraph (1) shall 
    consist of a document which evidences the Commissioner's agreement 
    to pay (as provided in paragraph (4)) an employment network, which 
    is serving under the Program and to which such ticket is assigned 
    by the beneficiary, for such employment services, vocational 
    rehabilitation services, and other support services as the 
    employment network may provide to the beneficiary.
        ``(4) Payments to employment networks.--The Commissioner shall 
    pay an employment network under the Program in accordance with the 
    outcome payment system under subsection (h)(2) or under the 
    outcome-milestone payment system under subsection (h)(3) (whichever 
    is elected pursuant to subsection (h)(1)). An employment network 
    may not request or receive compensation for such services from the 
    beneficiary.
    ``(c) State Participation.--
        ``(1) In general.--Each State agency administering or 
    supervising the administration of the State plan approved under 
    title I of the Rehabilitation Act of 1973 (29 U.S.C. 720 et seq.) 
    may elect to participate in the Program as an employment network 
    with respect to a disabled beneficiary. If the State agency does 
    elect to participate in the Program, the State agency also shall 
    elect to be paid under the outcome payment system or the outcome-
    milestone payment system in accordance with subsection (h)(1). With 
    respect to a disabled beneficiary that the State agency does not 
    elect to have participate in the Program, the State agency shall be 
    paid for services provided to that beneficiary under the system for 
    payment applicable under section 222(d) and subsections (d) and (e) 
    of section 1615. The Commissioner shall provide for periodic 
    opportunities for exercising such elections.
        ``(2) Effect of participation by state agency.--
            ``(A) State agencies participating.--In any case in which a 
        State agency described in paragraph (1) elects under that 
        paragraph to participate in the Program, the employment 
        services, vocational rehabilitation services, and other support 
        services which, upon assignment of tickets to work and self-
        sufficiency, are provided to disabled beneficiaries by the 
        State agency acting as an employment network shall be governed 
        by plans for vocational rehabilitation services approved under 
        title I of the Rehabilitation Act of 1973 (29 U.S.C. 720 et 
        seq.).
            ``(B) State agencies administering maternal and child 
        health services programs.--Subparagraph (A) shall not apply 
        with respect to any State agency administering a program under 
        title V of this Act.
        ``(3) Agreements between state agencies and employment 
    networks.--State agencies and employment networks shall enter into 
    agreements regarding the conditions under which services will be 
    provided when an individual is referred by an employment network to 
    a State agency for services. The Commissioner shall establish by 
    regulations the timeframe within which such agreements must be 
    entered into and the mechanisms for dispute resolution between 
    State agencies and employment networks with respect to such 
    agreements.
    ``(d) Responsibilities of the Commissioner.--
        ``(1) Selection and qualifications of program managers.--The 
    Commissioner shall enter into agreements with 1 or more 
    organizations in the private or public sector for service as a 
    program manager to assist the Commissioner in administering the 
    Program. Any such program manager shall be selected by means of a 
    competitive bidding process, from among organizations in the 
    private or public sector with available expertise and experience in 
    the field of vocational rehabilitation or employment services.
        ``(2) Tenure, renewal, and early termination.--Each agreement 
    entered into under paragraph (1) shall provide for early 
    termination upon failure to meet performance standards which shall 
    be specified in the agreement and which shall be weighted to take 
    into account any performance in prior terms. Such performance 
    standards shall include--
            ``(A) measures for ease of access by beneficiaries to 
        services; and
            ``(B) measures for determining the extent to which failures 
        in obtaining services for beneficiaries fall within acceptable 
        parameters, as determined by the Commissioner.
        ``(3) Preclusion from direct participation in delivery of 
    services in own service area.--Agreements under paragraph (1) shall 
    preclude--
            ``(A) direct participation by a program manager in the 
        delivery of employment services, vocational rehabilitation 
        services, or other support services to beneficiaries in the 
        service area covered by the program manager's agreement; and
            ``(B) the holding by a program manager of a financial 
        interest in an employment network or service provider which 
        provides services in a geographic area covered under the 
        program manager's agreement.
        ``(4) Selection of employment networks.--
            ``(A) In general.--The Commissioner shall select and enter 
        into agreements with employment networks for service under the 
        Program. Such employment networks shall be in addition to State 
        agencies serving as employment networks pursuant to elections 
        under subsection (c).
            ``(B) Alternate participants.--In any State where the 
        Program is being implemented, the Commissioner shall enter into 
        an agreement with any alternate participant that is operating 
        under the authority of section 222(d)(2) in the State as of the 
        date of the enactment of this section and chooses to serve as 
        an employment network under the Program.
        ``(5) Termination of agreements with employment networks.--The 
    Commissioner shall terminate agreements with employment networks 
    for inadequate performance, as determined by the Commissioner.
        ``(6) Quality assurance.--The Commissioner shall provide for 
    such periodic reviews as are necessary to provide for effective 
    quality assurance in the provision of services by employment 
    networks. The Commissioner shall solicit and consider the views of 
    consumers and the program manager under which the employment 
    networks serve and shall consult with providers of services to 
    develop performance measurements. The Commissioner shall ensure 
    that the results of the periodic reviews are made available to 
    beneficiaries who are prospective service recipients as they select 
    employment networks. The Commissioner shall ensure that the 
    periodic surveys of beneficiaries receiving services under the 
    Program are designed to measure customer service satisfaction.
        ``(7) Dispute resolution.--The Commissioner shall provide for a 
    mechanism for resolving disputes between beneficiaries and 
    employment networks, between program managers and employment 
    networks, and between program managers and providers of services. 
    The Commissioner shall afford a party to such a dispute a 
    reasonable opportunity for a full and fair review of the matter in 
    dispute.
    ``(e) Program Managers.--
        ``(1) In general.--A program manager shall conduct tasks 
    appropriate to assist the Commissioner in carrying out the 
    Commissioner's duties in administering the Program.
        ``(2) Recruitment of employment networks.--A program manager 
    shall recruit, and recommend for selection by the Commissioner, 
    employment networks for service under the Program. The program 
    manager shall carry out such recruitment and provide such 
    recommendations, and shall monitor all employment networks serving 
    in the Program in the geographic area covered under the program 
    manager's agreement, to the extent necessary and appropriate to 
    ensure that adequate choices of services are made available to 
    beneficiaries. Employment networks may serve under the Program only 
    pursuant to an agreement entered into with the Commissioner under 
    the Program incorporating the applicable provisions of this section 
    and regulations thereunder, and the program manager shall provide 
    and maintain assurances to the Commissioner that payment by the 
    Commissioner to employment networks pursuant to this section is 
    warranted based on compliance by such employment networks with the 
    terms of such agreement and this section. The program manager shall 
    not impose numerical limits on the number of employment networks to 
    be recommended pursuant to this paragraph.
        ``(3) Facilitation of access by beneficiaries to employment 
    networks.--A program manager shall facilitate access by 
    beneficiaries to employment networks. The program manager shall 
    ensure that each beneficiary is allowed changes in employment 
    networks without being deemed to have rejected services under the 
    Program. When such a change occurs, the program manager shall 
    reassign the ticket based on the choice of the beneficiary. Upon 
    the request of the employment network, the program manager shall 
    make a determination of the allocation of the outcome or milestone-
    outcome payments based on the services provided by each employment 
    network. The program manager shall establish and maintain lists of 
    employment networks available to beneficiaries and shall make such 
    lists generally available to the public. The program manager shall 
    ensure that all information provided to disabled beneficiaries 
    pursuant to this paragraph is provided in accessible formats.
        ``(4) Ensuring availability of adequate services.--The program 
    manager shall ensure that employment services, vocational 
    rehabilitation services, and other support services are provided to 
    beneficiaries throughout the geographic area covered under the 
    program manager's agreement, including rural areas.
        ``(5) Reasonable access to services.--The program manager shall 
    take such measures as are necessary to ensure that sufficient 
    employment networks are available and that each beneficiary 
    receiving services under the Program has reasonable access to 
    employment services, vocational rehabilitation services, and other 
    support services. Services provided under the Program may include 
    case management, work incentives planning, supported employment, 
    career planning, career plan development, vocational assessment, 
    job training, placement, follow-up services, and such other 
    services as may be specified by the Commissioner under the Program. 
    The program manager shall ensure that such services are available 
    in each service area.
    ``(f) Employment Networks.--
        ``(1) Qualifications for employment networks.--
            ``(A) In general.--Each employment network serving under 
        the Program shall consist of an agency or instrumentality of a 
        State (or a political subdivision thereof) or a private entity, 
        that assumes responsibility for the coordination and delivery 
        of services under the Program to individuals assigning to the 
        employment network tickets to work and self-sufficiency issued 
        under subsection (b).
            ``(B) One-stop delivery systems.--An employment network 
        serving under the Program may consist of a one-stop delivery 
        system established under subtitle B of title I of the Workforce 
        Investment Act of 1998 (29 U.S.C. 2811 et seq.).
            ``(C) Compliance with selection criteria.--No employment 
        network may serve under the Program unless it meets and 
        maintains compliance with both general selection criteria (such 
        as professional and educational qualifications, where 
        applicable) and specific selection criteria (such as 
        substantial expertise and experience in providing relevant 
        employment services and supports).
            ``(D) Single or associated providers allowed.--An 
        employment network shall consist of either a single provider of 
        such services or of an association of such providers organized 
        so as to combine their resources into a single entity. An 
        employment network may meet the requirements of subsection 
        (e)(4) by providing services directly, or by entering into 
        agreements with other individuals or entities providing 
        appropriate employment services, vocational rehabilitation 
        services, or other support services.
        ``(2) Requirements relating to provision of services.--Each 
    employment network serving under the Program shall be required 
    under the terms of its agreement with the Commissioner to--
            ``(A) serve prescribed service areas; and
            ``(B) take such measures as are necessary to ensure that 
        employment services, vocational rehabilitation services, and 
        other support services provided under the Program by, or under 
        agreements entered into with, the employment network are 
        provided under appropriate individual work plans that meet the 
        requirements of subsection (g).
        ``(3) Annual financial reporting.--Each employment network 
    shall meet financial reporting requirements as prescribed by the 
    Commissioner.
        ``(4) Periodic outcomes reporting.--Each employment network 
    shall prepare periodic reports, on at least an annual basis, 
    itemizing for the covered period specific outcomes achieved with 
    respect to specific services provided by the employment network. 
    Such reports shall conform to a national model prescribed under 
    this section. Each employment network shall provide a copy of the 
    latest report issued by the employment network pursuant to this 
    paragraph to each beneficiary upon enrollment under the Program for 
    services to be received through such employment network. Upon 
    issuance of each report to each beneficiary, a copy of the report 
    shall be maintained in the files of the employment network. The 
    program manager shall ensure that copies of all such reports issued 
    under this paragraph are made available to the public under 
    reasonable terms.
    ``(g) Individual Work Plans.--
        ``(1) Requirements.--Each employment network shall--
            ``(A) take such measures as are necessary to ensure that 
        employment services, vocational rehabilitation services, and 
        other support services provided under the Program by, or under 
        agreements entered into with, the employment network are 
        provided under appropriate individual work plans that meet the 
        requirements of subparagraph (C);
            ``(B) develop and implement each such individual work plan, 
        in partnership with each beneficiary receiving such services, 
        in a manner that affords such beneficiary the opportunity to 
        exercise informed choice in selecting an employment goal and 
        specific services needed to achieve that employment goal;
            ``(C) ensure that each individual work plan includes at 
        least--
                ``(i) a statement of the vocational goal developed with 
            the beneficiary, including, as appropriate, goals for 
            earnings and job advancement;
                ``(ii) a statement of the services and supports that 
            have been deemed necessary for the beneficiary to 
            accomplish that goal;
                ``(iii) a statement of any terms and conditions related 
            to the provision of such services and supports; and
                ``(iv) a statement of understanding regarding the 
            beneficiary's rights under the Program (such as the right 
            to retrieve the ticket to work and self-sufficiency if the 
            beneficiary is dissatisfied with the services being 
            provided by the employment network) and remedies available 
            to the individual, including information on the 
            availability of advocacy services and assistance in 
            resolving disputes through the State grant program 
            authorized under section 1150;
            ``(D) provide a beneficiary the opportunity to amend the 
        individual work plan if a change in circumstances necessitates 
        a change in the plan; and
            ``(E) make each beneficiary's individual work plan 
        available to the beneficiary in, as appropriate, an accessible 
        format chosen by the beneficiary.
        ``(2) Effective upon written approval.--A beneficiary's 
    individual work plan shall take effect upon written approval by the 
    beneficiary or a representative of the beneficiary and a 
    representative of the employment network that, in providing such 
    written approval, acknowledges assignment of the beneficiary's 
    ticket to work and self-sufficiency.
    ``(h) Employment Network Payment Systems.--
        ``(1) Election of payment system by employment networks.--
            ``(A) In general.--The Program shall provide for payment 
        authorized by the Commissioner to employment networks under 
        either an outcome payment system or an outcome-milestone 
        payment system. Each employment network shall elect which 
        payment system will be utilized by the employment network, and, 
        for such period of time as such election remains in effect, the 
        payment system so elected shall be utilized exclusively in 
        connection with such employment network (except as provided in 
        subparagraph (B)).
            ``(B) No change in method of payment for beneficiaries with 
        tickets already assigned to the employment networks.--Any 
        election of a payment system by an employment network that 
        would result in a change in the method of payment to the 
        employment network for services provided to a beneficiary who 
        is receiving services from the employment network at the time 
        of the election shall not be effective with respect to payment 
        for services provided to that beneficiary and the method of 
        payment previously selected shall continue to apply with 
        respect to such services.
        ``(2) Outcome payment system.--
            ``(A) In general.--The outcome payment system shall consist 
        of a payment structure governing employment networks electing 
        such system under paragraph (1)(A) which meets the requirements 
        of this paragraph.
            ``(B) Payments made during outcome payment period.--The 
        outcome payment system shall provide for a schedule of payments 
        to an employment network, in connection with each individual 
        who is a beneficiary, for each month, during the individual's 
        outcome payment period, for which benefits (described in 
        paragraphs (3) and (4) of subsection (k)) are not payable to 
        such individual because of work or earnings.
            ``(C) Computation of payments to employment network.--The 
        payment schedule of the outcome payment system shall be 
        designed so that--
                ``(i) the payment for each month during the outcome 
            payment period for which benefits (described in paragraphs 
            (3) and (4) of subsection (k)) are not payable is equal to 
            a fixed percentage of the payment calculation base for the 
            calendar year in which such month occurs; and
                ``(ii) such fixed percentage is set at a percentage 
            which does not exceed 40 percent.
        ``(3) Outcome-milestone payment system.--
            ``(A) In general.--The outcome-milestone payment system 
        shall consist of a payment structure governing employment 
        networks electing such system under paragraph (1)(A) which 
        meets the requirements of this paragraph.
            ``(B) Early payments upon attainment of milestones in 
        advance of outcome payment periods.--The outcome-milestone 
        payment system shall provide for 1 or more milestones, with 
        respect to beneficiaries receiving services from an employment 
        network under the Program, that are directed toward the goal of 
        permanent employment. Such milestones shall form a part of a 
        payment structure that provides, in addition to payments made 
        during outcome payment periods, payments made prior to outcome 
        payment periods in amounts based on the attainment of such 
        milestones.
            ``(C) Limitation on total payments to employment network.--
        The payment schedule of the outcome milestone payment system 
        shall be designed so that the total of the payments to the 
        employment network with respect to each beneficiary is less 
        than, on a net present value basis (using an interest rate 
        determined by the Commissioner that appropriately reflects the 
        cost of funds faced by providers), the total amount to which 
        payments to the employment network with respect to the 
        beneficiary would be limited if the employment network were 
        paid under the outcome payment system.
        ``(4) Definitions.--In this subsection:
            ``(A) Payment calculation base.--The term `payment 
        calculation base' means, for any calendar year--
                ``(i) in connection with a title II disability 
            beneficiary, the average disability insurance benefit 
            payable under section 223 for all beneficiaries for months 
            during the preceding calendar year; and
                ``(ii) in connection with a title XVI disability 
            beneficiary (who is not concurrently a title II disability 
            beneficiary), the average payment of supplemental security 
            income benefits based on disability payable under title XVI 
            (excluding State supplementation) for months during the 
            preceding calendar year to all beneficiaries who have 
            attained 18 years of age but have not attained 65 years of 
            age.
            ``(B) Outcome payment period.--The term `outcome payment 
        period' means, in connection with any individual who had 
        assigned a ticket to work and self-sufficiency to an employment 
        network under the Program, a period--
                ``(i) beginning with the first month, ending after the 
            date on which such ticket was assigned to the employment 
            network, for which benefits (described in paragraphs (3) 
            and (4) of subsection (k)) are not payable to such 
            individual by reason of engagement in substantial gainful 
            activity or by reason of earnings from work activity; and
                ``(ii) ending with the 60th month (consecutive or 
            otherwise), ending after such date, for which such benefits 
            are not payable to such individual by reason of engagement 
            in substantial gainful activity or by reason of earnings 
            from work activity.
        ``(5) Periodic review and alterations of prescribed 
    schedules.--
            ``(A) Percentages and periods.--The Commissioner shall 
        periodically review the percentage specified in paragraph 
        (2)(C), the total payments permissible under paragraph (3)(C), 
        and the period of time specified in paragraph (4)(B) to 
        determine whether such percentages, such permissible payments, 
        and such period provide an adequate incentive for employment 
        networks to assist beneficiaries to enter the workforce, while 
        providing for appropriate economies. The Commissioner may alter 
        such percentage, such total permissible payments, or such 
        period of time to the extent that the Commissioner determines, 
        on the basis of the Commissioner's review under this paragraph, 
        that such an alteration would better provide the incentive and 
        economies described in the preceding sentence.
            ``(B) Number and amounts of milestone payments.--The 
        Commissioner shall periodically review the number and amounts 
        of milestone payments established by the Commissioner pursuant 
        to this section to determine whether they provide an adequate 
        incentive for employment networks to assist beneficiaries to 
        enter the workforce, taking into account information provided 
        to the Commissioner by program managers, the Ticket to Work and 
        Work Incentives Advisory Panel established by section 101(f) of 
        the Ticket to Work and Work Incentives Improvement Act of 1999, 
        and other reliable sources. The Commissioner may from time to 
        time alter the number and amounts of milestone payments 
        initially established by the Commissioner pursuant to this 
        section to the extent that the Commissioner determines that 
        such an alteration would allow an adequate incentive for 
        employment networks to assist beneficiaries to enter the 
        workforce. Such alteration shall be based on information 
        provided to the Commissioner by program managers, the Ticket to 
        Work and Work Incentives Advisory Panel established by section 
        101(f) of the Ticket to Work and Work Incentives Improvement 
        Act of 1999, or other reliable sources.
            ``(C) Report on the adequacy of incentives.--The 
        Commissioner shall submit to the Congress not later than 36 
        months after the date of the enactment of the Ticket to Work 
        and Work Incentives Improvement Act of 1999 a report with 
        recommendations for a method or methods to adjust payment rates 
        under subparagraphs (A) and (B), that would ensure adequate 
        incentives for the provision of services by employment networks 
        of--
                ``(i) individuals with a need for ongoing support and 
            services;
                ``(ii) individuals with a need for high-cost 
            accommodations;
                ``(iii) individuals who earn a subminimum wage; and
                ``(iv) individuals who work and receive partial cash 
            benefits.
        The Commissioner shall consult with the Ticket to Work and Work 
        Incentives Advisory Panel established under section 101(f) of 
        the Ticket to Work and Work Incentives Improvement Act of 1999 
        during the development and evaluation of the study. The 
        Commissioner shall implement the necessary adjusted payment 
        rates prior to full implementation of the Ticket to Work and 
        Self-Sufficiency Program.
    ``(i) Suspension of Disability Reviews.--During any period for 
which an individual is using, as defined by the Commissioner, a ticket 
to work and self-sufficiency issued under this section, the 
Commissioner (and any applicable State agency) may not initiate a 
continuing disability review or other review under section 221 of 
whether the individual is or is not under a disability or a review 
under title XVI similar to any such review under section 221.
    ``(j) Authorizations.--
        ``(1) Payments to employment networks.--
            ``(A) Title ii disability beneficiaries.--There are 
        authorized to be transferred from the Federal Old-Age and 
        Survivors Insurance Trust Fund and the Federal Disability 
        Insurance Trust Fund each fiscal year such sums as may be 
        necessary to make payments to employment networks under this 
        section. Money paid from the Trust Funds under this section 
        with respect to title II disability beneficiaries who are 
        entitled to benefits under section 223 or who are entitled to 
        benefits under section 202(d) on the basis of the wages and 
        self-employment income of such beneficiaries, shall be charged 
        to the Federal Disability Insurance Trust Fund, and all other 
        money paid from the Trust Funds under this section shall be 
        charged to the Federal Old-Age and Survivors Insurance Trust 
        Fund.
            ``(B) Title xvi disability beneficiaries.--Amounts 
        authorized to be appropriated to the Social Security 
        Administration under section 1601 (as in effect pursuant to the 
        amendments made by section 301 of the Social Security 
        Amendments of 1972) shall include amounts necessary to carry 
        out the provisions of this section with respect to title XVI 
        disability beneficiaries.
        ``(2) Administrative expenses.--The costs of administering this 
    section (other than payments to employment networks) shall be paid 
    from amounts made available for the administration of title II and 
    amounts made available for the administration of title XVI, and 
    shall be allocated among such amounts as appropriate.
    ``(k) Definitions.--In this section:
        ``(1) Commissioner.--The term `Commissioner' means the 
    Commissioner of Social Security.
        ``(2) Disabled beneficiary.--The term `disabled beneficiary' 
    means a title II disability beneficiary or a title XVI disability 
    beneficiary.
        ``(3) Title ii disability beneficiary.--The term `title II 
    disability beneficiary' means an individual entitled to disability 
    insurance benefits under section 223 or to monthly insurance 
    benefits under section 202 based on such individual's disability 
    (as defined in section 223(d)). An individual is a title II 
    disability beneficiary for each month for which such individual is 
    entitled to such benefits.
        ``(4) Title xvi disability beneficiary.--The term `title XVI 
    disability beneficiary' means an individual eligible for 
    supplemental security income benefits under title XVI on the basis 
    of blindness (within the meaning of section 1614(a)(2)) or 
    disability (within the meaning of section 1614(a)(3)). An 
    individual is a title XVI disability beneficiary for each month for 
    which such individual is eligible for such benefits.
        ``(5) Supplemental security income benefit.--The term 
    `supplemental security income benefit under title XVI' means a cash 
    benefit under section 1611 or 1619(a), and does not include a State 
    supplementary payment, administered federally or otherwise.
    ``(l) Regulations.--Not later than 1 year after the date of the 
enactment of the Ticket to Work and Work Incentives Improvement Act of 
1999, the Commissioner shall prescribe such regulations as are 
necessary to carry out the provisions of this section.''.
    (b) Conforming Amendments.--
        (1) Amendments to title ii.--
            (A) Section 221(i) of the Social Security Act (42 U.S.C. 
        421(i)) is amended by adding at the end the following new 
        paragraph:
    ``(5) For suspension of reviews under this subsection in the case 
of an individual using a ticket to work and self-sufficiency, see 
section 1148(i).''.
            (B) Section 222(a) of such Act (42 U.S.C. 422(a)) is 
        repealed.
            (C) Section 222(b) of such Act (42 U.S.C. 422(b)) is 
        repealed.
            (D) Section 225(b)(1) of such Act (42 U.S.C. 425(b)(1)) is 
        amended by striking ``a program of vocational rehabilitation 
        services'' and inserting ``a program consisting of the Ticket 
        to Work and Self-Sufficiency Program under section 1148 or 
        another program of vocational rehabilitation services, 
        employment services, or other support services''.
        (2) Amendments to title xvi.--
            (A) Section 1615(a) of such Act (42 U.S.C. 1382d(a)) is 
        amended to read as follows:
    ``Sec. 1615. (a) In the case of any blind or disabled individual 
who--
        ``(1) has not attained age 16; and
        ``(2) with respect to whom benefits are paid under this title,
the Commissioner of Social Security shall make provision for referral 
of such individual to the appropriate State agency administering the 
State program under title V.''.
            (B) Section 1615(c) of such Act (42 U.S.C. 1382d(c)) is 
        repealed.
            (C) Section 1631(a)(6)(A) of such Act (42 U.S.C. 
        1383(a)(6)(A)) is amended by striking ``a program of vocational 
        rehabilitation services'' and inserting ``a program consisting 
        of the Ticket to Work and Self-Sufficiency Program under 
        section 1148 or another program of vocational rehabilitation 
        services, employment services, or other support services''.
            (D) Section 1633(c) of such Act (42 U.S.C. 1383b(c)) is 
        amended--
                (i) by inserting ``(1)'' after ``(c)''; and
                (ii) by adding at the end the following new paragraph:
    ``(2) For suspension of continuing disability reviews and other 
reviews under this title similar to reviews under section 221 in the 
case of an individual using a ticket to work and self-sufficiency, see 
section 1148(i).''.
    (c) Effective Date.--Subject to subsection (d), the amendments made 
by subsections (a) and (b) shall take effect with the first month 
following 1 year after the date of the enactment of this Act.
    (d) Graduated Implementation of Program.--
        (1) In general.--Not later than 1 year after the date of the 
    enactment of this Act, the Commissioner of Social Security shall 
    commence implementation of the amendments made by this section 
    (other than paragraphs (1)(C) and (2)(B) of subsection (b)) in 
    graduated phases at phase-in sites selected by the Commissioner. 
    Such phase-in sites shall be selected so as to ensure, prior to 
    full implementation of the Ticket to Work and Self-Sufficiency 
    Program, the development and refinement of referral processes, 
    payment systems, computer linkages, management information systems, 
    and administrative processes necessary to provide for full 
    implementation of such amendments. Subsection (c) shall apply with 
    respect to paragraphs (1)(C) and (2)(B) of subsection (b) without 
    regard to this subsection.
        (2) Requirements.--Implementation of the Program at each phase-
    in site shall be carried out on a wide enough scale to permit a 
    thorough evaluation of the alternative methods under consideration, 
    so as to ensure that the most efficacious methods are determined 
    and in place for full implementation of the Program on a timely 
    basis.
        (3) Full implementation.--The Commissioner shall ensure that 
    ability to provide tickets and services to individuals under the 
    Program exists in every State as soon as practicable on or after 
    the effective date specified in subsection (c) but not later than 3 
    years after such date.
        (4) Ongoing evaluation of program.--
            (A) In general.--The Commissioner shall provide for 
        independent evaluations to assess the effectiveness of the 
        activities carried out under this section and the amendments 
        made thereby. Such evaluations shall address the cost-
        effectiveness of such activities, as well as the effects of 
        this section and the amendments made thereby on work outcomes 
        for beneficiaries receiving tickets to work and self-
        sufficiency under the Program.
            (B) Consultation.--Evaluations shall be conducted under 
        this paragraph after receiving relevant advice from experts in 
        the fields of disability, vocational rehabilitation, and 
        program evaluation and individuals using tickets to work and 
        self-sufficiency under the Program and in consultation with the 
        Ticket to Work and Work Incentives Advisory Panel established 
        under section 101(f) of this Act, the Comptroller General of 
        the United States, other agencies of the Federal Government, 
        and private organizations with appropriate expertise.
            (C) Methodology.--
                (i) Implementation.--The Commissioner, in consultation 
            with the Ticket to Work and Work Incentives Advisory Panel 
            established under section 101(f) of this Act, shall ensure 
            that plans for evaluations and data collection methods 
            under the Program are appropriately designed to obtain 
            detailed employment information.
                (ii) Specific matters to be addressed.--Each such 
            evaluation shall address (but is not limited to)--

                    (I) the annual cost (including net cost) of the 
                Program and the annual cost (including net cost) that 
                would have been incurred in the absence of the Program;
                    (II) the determinants of return to work, including 
                the characteristics of beneficiaries in receipt of 
                tickets under the Program;
                    (III) the types of employment services, vocational 
                rehabilitation services, and other support services 
                furnished to beneficiaries in receipt of tickets under 
                the Program who return to work and to those who do not 
                return to work;
                    (IV) the duration of employment services, 
                vocational rehabilitation services, and other support 
                services furnished to beneficiaries in receipt of 
                tickets under the Program who return to work and the 
                duration of such services furnished to those who do not 
                return to work and the cost to employment networks of 
                furnishing such services;
                    (V) the employment outcomes, including wages, 
                occupations, benefits, and hours worked, of 
                beneficiaries who return to work after receiving 
                tickets under the Program and those who return to work 
                without receiving such tickets;
                    (VI) the characteristics of individuals in 
                possession of tickets under the Program who are not 
                accepted for services and, to the extent reasonably 
                determinable, the reasons for which such beneficiaries 
                were not accepted for services;
                    (VII) the characteristics of providers whose 
                services are provided within an employment network 
                under the Program;
                    (VIII) the extent (if any) to which employment 
                networks display a greater willingness to provide 
                services to beneficiaries with a range of disabilities;
                    (IX) the characteristics (including employment 
                outcomes) of those beneficiaries who receive services 
                under the outcome payment system and of those 
                beneficiaries who receive services under the outcome-
                milestone payment system;
                    (X) measures of satisfaction among beneficiaries in 
                receipt of tickets under the Program; and
                    (XI) reasons for (including comments solicited from 
                beneficiaries regarding) their choice not to use their 
                tickets or their inability to return to work despite 
                the use of their tickets.

            (D) Periodic evaluation reports.--Following the close of 
        the third and fifth fiscal years ending after the effective 
        date under subsection (c), and prior to the close of the 
        seventh fiscal year ending after such date, the Commissioner 
        shall transmit to the Committee on Ways and Means of the House 
        of Representatives and the Committee on Finance of the Senate a 
        report containing the Commissioner's evaluation of the progress 
        of activities conducted under the provisions of this section 
        and the amendments made thereby. Each such report shall set 
        forth the Commissioner's evaluation of the extent to which the 
        Program has been successful and the Commissioner's conclusions 
        on whether or how the Program should be modified. Each such 
        report shall include such data, findings, materials, and 
        recommendations as the Commissioner may consider appropriate.
        (5) Extent of state's right of first refusal in advance of full 
    implementation of amendments in such state.--
            (A) In general.--In the case of any State in which the 
        amendments made by subsection (a) have not been fully 
        implemented pursuant to this subsection, the Commissioner shall 
        determine by regulation the extent to which--
                (i) the requirement under section 222(a) of the Social 
            Security Act (42 U.S.C. 422(a)) for prompt referrals to a 
            State agency; and
                (ii) the authority of the Commissioner under section 
            222(d)(2) of such Act (42 U.S.C. 422(d)(2)) to provide 
            vocational rehabilitation services in such State by 
            agreement or contract with other public or private 
            agencies, organizations, institutions, or individuals,
        shall apply in such State.
            (B) Existing agreements.--Nothing in subparagraph (A) or 
        the amendments made by subsection (a) shall be construed to 
        limit, impede, or otherwise affect any agreement entered into 
        pursuant to section 222(d)(2) of the Social Security Act (42 
        U.S.C. 422(d)(2)) before the date of the enactment of this Act 
        with respect to services provided pursuant to such agreement to 
        beneficiaries receiving services under such agreement as of 
        such date, except with respect to services (if any) to be 
        provided after 3 years after the effective date provided in 
        subsection (c).
    (e) Specific Regulations Required.--
        (1) In general.--The Commissioner of Social Security shall 
    prescribe such regulations as are necessary to implement the 
    amendments made by this section.
        (2) Specific matters to be included in regulations.--The 
    matters which shall be addressed in such regulations shall 
    include--
            (A) the form and manner in which tickets to work and self-
        sufficiency may be distributed to beneficiaries pursuant to 
        section 1148(b)(1) of the Social Security Act;
            (B) the format and wording of such tickets, which shall 
        incorporate by reference any contractual terms governing 
        service by employment networks under the Program;
            (C) the form and manner in which State agencies may elect 
        participation in the Ticket to Work and Self-Sufficiency 
        Program pursuant to section 1148(c)(1) of such Act and 
        provision for periodic opportunities for exercising such 
        elections;
            (D) the status of State agencies under section 1148(c)(1) 
        of such Act at the time that State agencies exercise elections 
        under that section;
            (E) the terms of agreements to be entered into with program 
        managers pursuant to section 1148(d) of such Act, including--
                (i) the terms by which program managers are precluded 
            from direct participation in the delivery of services 
            pursuant to section 1148(d)(3) of such Act;
                (ii) standards which must be met by quality assurance 
            measures referred to in paragraph (6) of section 1148(d) of 
            such Act and methods of recruitment of employment networks 
            utilized pursuant to paragraph (2) of section 1148(e) of 
            such Act; and
                (iii) the format under which dispute resolution will 
            operate under section 1148(d)(7) of such Act;
            (F) the terms of agreements to be entered into with 
        employment networks pursuant to section 1148(d)(4) of such Act, 
        including--
                (i) the manner in which service areas are specified 
            pursuant to section 1148(f)(2)(A) of such Act;
                (ii) the general selection criteria and the specific 
            selection criteria which are applicable to employment 
            networks under section 1148(f)(1)(C) of such Act in 
            selecting service providers;
                (iii) specific requirements relating to annual 
            financial reporting by employment networks pursuant to 
            section 1148(f)(3) of such Act; and
                (iv) the national model to which periodic outcomes 
            reporting by employment networks must conform under section 
            1148(f)(4) of such Act;
            (G) standards which must be met by individual work plans 
        pursuant to section 1148(g) of such Act;
            (H) standards which must be met by payment systems required 
        under section 1148(h) of such Act, including--
                (i) the form and manner in which elections by 
            employment networks of payment systems are to be exercised 
            pursuant to section 1148(h)(1)(A) of such Act;
                (ii) the terms which must be met by an outcome payment 
            system under section 1148(h)(2) of such Act;
                (iii) the terms which must be met by an outcome-
            milestone payment system under section 1148(h)(3) of such 
            Act;
                (iv) any revision of the percentage specified in 
            paragraph (2)(C) of section 1148(h) of such Act or the 
            period of time specified in paragraph (4)(B) of such 
            section 1148(h) of such Act; and
                (v) annual oversight procedures for such systems; and
            (I) procedures for effective oversight of the Program by 
        the Commissioner of Social Security, including periodic reviews 
        and reporting requirements.
    (f) The Ticket to Work and Work Incentives Advisory Panel.--
        (1) Establishment.--There is established within the Social 
    Security Administration a panel to be known as the ``Ticket to Work 
    and Work Incentives Advisory Panel'' (in this subsection referred 
    to as the ``Panel'').
        (2) Duties of panel.--It shall be the duty of the Panel to--
            (A) advise the President, the Congress, and the 
        Commissioner of Social Security on issues related to work 
        incentives programs, planning, and assistance for individuals 
        with disabilities, including work incentive provisions under 
        titles II, XI, XVI, XVIII, and XIX of the Social Security Act 
        (42 U.S.C. 401 et seq., 1301 et seq., 1381 et seq., 1395 et 
        seq., 1396 et seq.); and
            (B) with respect to the Ticket to Work and Self-Sufficiency 
        Program established under section 1148 of such Act--
                (i) advise the Commissioner of Social Security with 
            respect to establishing phase-in sites for such Program and 
            fully implementing the Program thereafter, the refinement 
            of access of disabled beneficiaries to employment networks, 
            payment systems, and management information systems, and 
            advise the Commissioner whether such measures are being 
            taken to the extent necessary to ensure the success of the 
            Program;
                (ii) advise the Commissioner regarding the most 
            effective designs for research and demonstration projects 
            associated with the Program or conducted pursuant to 
            section 302 of this Act;
                (iii) advise the Commissioner on the development of 
            performance measurements relating to quality assurance 
            under section 1148(d)(6) of the Social Security Act; and
                (iv) furnish progress reports on the Program to the 
            Commissioner and each House of Congress.
        (3) Membership.--
            (A) Number and appointment.--The Panel shall be composed of 
        12 members as follows:
                (i) four members appointed by the President, not more 
            than two of whom may be of the same political party;
                (ii) two members appointed by the Speaker of the House 
            of Representatives, in consultation with the Chairman of 
            the Committee on Ways and Means of the House of 
            Representatives;
                (iii) two members appointed by the minority leader of 
            the House of Representatives, in consultation with the 
            ranking member of the Committee on Ways and Means of the 
            House of Representatives;
                (iv) two members appointed by the majority leader of 
            the Senate, in consultation with the Chairman of the 
            Committee on Finance of the Senate; and
                (v) two members appointed by the minority leader of the 
            Senate, in consultation with the ranking member of the 
            Committee on Finance of the Senate.
            (B) Representation.--
                (i) In general.--The members appointed under 
            subparagraph (A) shall have experience or expert knowledge 
            as a recipient, provider, employer, or employee in the 
            fields of, or related to, employment services, vocational 
            rehabilitation services, and other support services.
                (ii) Requirement.--At least one-half of the members 
            appointed under subparagraph (A) shall be individuals with 
            disabilities, or representatives of individuals with 
            disabilities, with consideration given to current or former 
            title II disability beneficiaries or title XVI disability 
            beneficiaries (as such terms are defined in section 1148(k) 
            of the Social Security Act (as added by subsection (a)).
            (C) Terms.--
                (i) In general.--Each member shall be appointed for a 
            term of 4 years (or, if less, for the remaining life of the 
            Panel), except as provided in clauses (ii) and (iii). The 
            initial members shall be appointed not later than 90 days 
            after the date of the enactment of this Act.
                (ii) Terms of initial appointees.--Of the members first 
            appointed under each clause of subparagraph (A), as 
            designated by the appointing authority for each such 
            clause--

                    (I) one-half of such members shall be appointed for 
                a term of 2 years; and
                    (II) the remaining members shall be appointed for a 
                term of 4 years.

                (iii) Vacancies.--Any member appointed to fill a 
            vacancy occurring before the expiration of the term for 
            which the member's predecessor was appointed shall be 
            appointed only for the remainder of that term. A member may 
            serve after the expiration of that member's term until a 
            successor has taken office. A vacancy in the Panel shall be 
            filled in the manner in which the original appointment was 
            made.
            (D) Basic pay.--Members shall each be paid at a rate, and 
        in a manner, that is consistent with guidelines established 
        under section 7 of the Federal Advisory Committee Act (5 U.S.C. 
        App.).
            (E) Travel expenses.--Each member shall receive travel 
        expenses, including per diem in lieu of subsistence, in 
        accordance with sections 5702 and 5703 of title 5, United 
        States Code.
            (F) Quorum.--Eight members of the Panel shall constitute a 
        quorum but a lesser number may hold hearings.
            (G) Chairperson.--The Chairperson of the Panel shall be 
        designated by the President. The term of office of the 
        Chairperson shall be 4 years.
            (H) Meetings.--The Panel shall meet at least quarterly and 
        at other times at the call of the Chairperson or a majority of 
        its members.
        (4) Director and staff of panel; experts and consultants.--
            (A) Director.--The Panel shall have a Director who shall be 
        appointed by the Chairperson, and paid at a rate, and in a 
        manner, that is consistent with guidelines established under 
        section 7 of the Federal Advisory Committee Act (5 U.S.C. 
        App.).
            (B) Staff.--Subject to rules prescribed by the Commissioner 
        of Social Security, the Director may appoint and fix the pay of 
        additional personnel as the Director considers appropriate.
            (C) Experts and consultants.--Subject to rules prescribed 
        by the Commissioner of Social Security, the Director may 
        procure temporary and intermittent services under section 
        3109(b) of title 5, United States Code.
            (D) Staff of federal agencies.--Upon request of the Panel, 
        the head of any Federal department or agency may detail, on a 
        reimbursable basis, any of the personnel of that department or 
        agency to the Panel to assist it in carrying out its duties 
        under this Act.
        (5) Powers of panel.--
            (A) Hearings and sessions.--The Panel may, for the purpose 
        of carrying out its duties under this subsection, hold such 
        hearings, sit and act at such times and places, and take such 
        testimony and evidence as the Panel considers appropriate.
            (B) Powers of members and agents.--Any member or agent of 
        the Panel may, if authorized by the Panel, take any action 
        which the Panel is authorized to take by this section.
            (C) Mails.--The Panel may use the United States mails in 
        the same manner and under the same conditions as other 
        departments and agencies of the United States.
        (6) Reports.--
            (A) Interim reports.--The Panel shall submit to the 
        President and the Congress interim reports at least annually.
            (B) Final report.--The Panel shall transmit a final report 
        to the President and the Congress not later than eight years 
        after the date of the enactment of this Act. The final report 
        shall contain a detailed statement of the findings and 
        conclusions of the Panel, together with its recommendations for 
        legislation and administrative actions which the Panel 
        considers appropriate.
        (7) Termination.--The Panel shall terminate 30 days after the 
    date of the submission of its final report under paragraph (6)(B).
        (8) Authorization of appropriations.--There are authorized to 
    be appropriated from the Federal Old-Age and Survivors Insurance 
    Trust Fund, the Federal Disability Insurance Trust Fund, and the 
    general fund of the Treasury, as appropriate, such sums as are 
    necessary to carry out this subsection.

             Subtitle B--Elimination of Work Disincentives

SEC. 111. WORK ACTIVITY STANDARD AS A BASIS FOR REVIEW OF AN 
              INDIVIDUAL'S DISABLED STATUS.

    (a) In General.--Section 221 of the Social Security Act (42 U.S.C. 
421) is amended by adding at the end the following new subsection:
    ``(m)(1) In any case where an individual entitled to disability 
insurance benefits under section 223 or to monthly insurance benefits 
under section 202 based on such individual's disability (as defined in 
section 223(d)) has received such benefits for at least 24 months--
        ``(A) no continuing disability review conducted by the 
    Commissioner may be scheduled for the individual solely as a result 
    of the individual's work activity;
        ``(B) no work activity engaged in by the individual may be used 
    as evidence that the individual is no longer disabled; and
        ``(C) no cessation of work activity by the individual may give 
    rise to a presumption that the individual is unable to engage in 
    work.
    ``(2) An individual to which paragraph (1) applies shall continue 
to be subject to--
        ``(A) continuing disability reviews on a regularly scheduled 
    basis that is not triggered by work; and
        ``(B) termination of benefits under this title in the event 
    that the individual has earnings that exceed the level of earnings 
    established by the Commissioner to represent substantial gainful 
    activity.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect on January 1, 2002.

SEC. 112. EXPEDITED REINSTATEMENT OF DISABILITY BENEFITS.

    (a) OASDI Benefits.--Section 223 of the Social Security Act (42 
U.S.C. 423) is amended--
        (1) by redesignating subsection (i) as subsection (j); and
        (2) by inserting after subsection (h) the following new 
    subsection:

                     ``Reinstatement of Entitlement

    ``(i)(1)(A) Entitlement to benefits described in subparagraph 
(B)(i)(I) shall be reinstated in any case where the Commissioner 
determines that an individual described in subparagraph (B) has filed a 
request for reinstatement meeting the requirements of paragraph (2)(A) 
during the period prescribed in subparagraph (C). Reinstatement of such 
entitlement shall be in accordance with the terms of this subsection.
    ``(B) An individual is described in this subparagraph if--
        ``(i) prior to the month in which the individual files a 
    request for reinstatement--
            ``(I) the individual was entitled to benefits under this 
        section or section 202 on the basis of disability pursuant to 
        an application filed therefor; and
            ``(II) such entitlement terminated due to the performance 
        of substantial gainful activity;
        ``(ii) the individual is under a disability and the physical or 
    mental impairment that is the basis for the finding of disability 
    is the same as (or related to) the physical or mental impairment 
    that was the basis for the finding of disability that gave rise to 
    the entitlement described in clause (i); and
        ``(iii) the individual's disability renders the individual 
    unable to perform substantial gainful activity.
    ``(C)(i) Except as provided in clause (ii), the period prescribed 
in this subparagraph with respect to an individual is 60 consecutive 
months beginning with the month following the most recent month for 
which the individual was entitled to a benefit described in 
subparagraph (B)(i)(I) prior to the entitlement termination described 
in subparagraph (B)(i)(II).
    ``(ii) In the case of an individual who fails to file a 
reinstatement request within the period prescribed in clause (i), the 
Commissioner may extend the period if the Commissioner determines that 
the individual had good cause for the failure to so file.
    ``(2)(A)(i) A request for reinstatement shall be filed in such 
form, and containing such information, as the Commissioner may 
prescribe.
    ``(ii) A request for reinstatement shall include express 
declarations by the individual that the individual meets the 
requirements specified in clauses (ii) and (iii) of paragraph (1)(B).
    ``(B) A request for reinstatement filed in accordance with 
subparagraph (A) may constitute an application for benefits in the case 
of any individual who the Commissioner determines is not entitled to 
reinstated benefits under this subsection.
    ``(3) In determining whether an individual meets the requirements 
of paragraph (1)(B)(ii), the provisions of subsection (f) shall apply.
    ``(4)(A)(i) Subject to clause (ii), entitlement to benefits 
reinstated under this subsection shall commence with the benefit 
payable for the month in which a request for reinstatement is filed.
    ``(ii) An individual whose entitlement to a benefit for any month 
would have been reinstated under this subsection had the individual 
filed a request for reinstatement before the end of such month shall be 
entitled to such benefit for such month if such request for 
reinstatement is filed before the end of the twelfth month immediately 
succeeding such month.
    ``(B)(i) Subject to clauses (ii) and (iii), the amount of the 
benefit payable for any month pursuant to the reinstatement of 
entitlement under this subsection shall be determined in accordance 
with the provisions of this title.
    ``(ii) For purposes of computing the primary insurance amount of an 
individual whose entitlement to benefits under this section is 
reinstated under this subsection, the date of onset of the individual's 
disability shall be the date of onset used in determining the 
individual's most recent period of disability arising in connection 
with such benefits payable on the basis of an application.
    ``(iii) Benefits under this section or section 202 payable for any 
month pursuant to a request for reinstatement filed in accordance with 
paragraph (2) shall be reduced by the amount of any provisional benefit 
paid to such individual for such month under paragraph (7).
    ``(C) No benefit shall be payable pursuant to an entitlement 
reinstated under this subsection to an individual for any month in 
which the individual engages in substantial gainful activity.
    ``(D) The entitlement of any individual that is reinstated under 
this subsection shall end with the benefits payable for the month 
preceding whichever of the following months is the earliest:
        ``(i) The month in which the individual dies.
        ``(ii) The month in which the individual attains retirement 
    age.
        ``(iii) The third month following the month in which the 
    individual's disability ceases.
    ``(5) Whenever an individual's entitlement to benefits under this 
section is reinstated under this subsection, entitlement to benefits 
payable on the basis of such individual's wages and self-employment 
income may be reinstated with respect to any person previously entitled 
to such benefits on the basis of an application if the Commissioner 
determines that such person satisfies all the requirements for 
entitlement to such benefits except requirements related to the filing 
of an application. The provisions of paragraph (4) shall apply to the 
reinstated entitlement of any such person to the same extent that they 
apply to the reinstated entitlement of such individual.
    ``(6) An individual to whom benefits are payable under this section 
or section 202 pursuant to a reinstatement of entitlement under this 
subsection for 24 months (whether or not consecutive) shall, with 
respect to benefits so payable after such twenty-fourth month, be 
deemed for purposes of paragraph (1)(B)(i)(I) and the determination, if 
appropriate, of the termination month in accordance with subsection 
(a)(1) of this section, or subsection (d)(1), (e)(1), or (f)(1) of 
section 202, to be entitled to such benefits on the basis of an 
application filed therefor.
    ``(7)(A) An individual described in paragraph (1)(B) who files a 
request for reinstatement in accordance with the provisions of 
paragraph (2)(A) shall be entitled to provisional benefits payable in 
accordance with this paragraph, unless the Commissioner determines that 
the individual does not meet the requirements of paragraph (1)(B)(i) or 
that the individual's declaration under paragraph (2)(A)(ii) is false. 
Any such determination by the Commissioner shall be final and not 
subject to review under subsection (b) or (g) of section 205.
    ``(B) The amount of a provisional benefit for a month shall equal 
the amount of the last monthly benefit payable to the individual under 
this title on the basis of an application increased by an amount equal 
to the amount, if any, by which such last monthly benefit would have 
been increased as a result of the operation of section 215(i).
    ``(C)(i) Provisional benefits shall begin with the month in which a 
request for reinstatement is filed in accordance with paragraph (2)(A).
    ``(ii) Provisional benefits shall end with the earliest of--
        ``(I) the month in which the Commissioner makes a determination 
    regarding the individual's entitlement to reinstated benefits;
        ``(II) the fifth month following the month described in clause 
    (i);
        ``(III) the month in which the individual performs substantial 
    gainful activity; or
        ``(IV) the month in which the Commissioner determines that the 
    individual does not meet the requirements of paragraph (1)(B)(i) or 
    that the individual's declaration made in accordance with paragraph 
    (2)(A)(ii) is false.
    ``(D) In any case in which the Commissioner determines that an 
individual is not entitled to reinstated benefits, any provisional 
benefits paid to the individual under this paragraph shall not be 
subject to recovery as an overpayment unless the Commissioner 
determines that the individual knew or should have known that the 
individual did not meet the requirements of paragraph (1)(B).''.
    (b) SSI Benefits.--
        (1) In general.--Section 1631 of the Social Security Act (42 
    U.S.C. 1383) is amended by adding at the end the following new 
    subsection:

 ``Reinstatement of Eligibility on the Basis of Blindness or Disability

    ``(p)(1)(A) Eligibility for benefits under this title shall be 
reinstated in any case where the Commissioner determines that an 
individual described in subparagraph (B) has filed a request for 
reinstatement meeting the requirements of paragraph (2)(A) during the 
period prescribed in subparagraph (C). Reinstatement of eligibility 
shall be in accordance with the terms of this subsection.
    ``(B) An individual is described in this subparagraph if--
        ``(i) prior to the month in which the individual files a 
    request for reinstatement--
            ``(I) the individual was eligible for benefits under this 
        title on the basis of blindness or disability pursuant to an 
        application filed therefor; and
            ``(II) the individual thereafter was ineligible for such 
        benefits due to earned income (or earned and unearned income) 
        for a period of 12 or more consecutive months;
        ``(ii) the individual is blind or disabled and the physical or 
    mental impairment that is the basis for the finding of blindness or 
    disability is the same as (or related to) the physical or mental 
    impairment that was the basis for the finding of blindness or 
    disability that gave rise to the eligibility described in clause 
    (i);
        ``(iii) the individual's blindness or disability renders the 
    individual unable to perform substantial gainful activity; and
        ``(iv) the individual satisfies the nonmedical requirements for 
    eligibility for benefits under this title.
    ``(C)(i) Except as provided in clause (ii), the period prescribed 
in this subparagraph with respect to an individual is 60 consecutive 
months beginning with the month following the most recent month for 
which the individual was eligible for a benefit under this title 
(including section 1619) prior to the period of ineligibility described 
in subparagraph (B)(i)(II).
    ``(ii) In the case of an individual who fails to file a 
reinstatement request within the period prescribed in clause (i), the 
Commissioner may extend the period if the Commissioner determines that 
the individual had good cause for the failure to so file.
    ``(2)(A)(i) A request for reinstatement shall be filed in such 
form, and containing such information, as the Commissioner may 
prescribe.
    ``(ii) A request for reinstatement shall include express 
declarations by the individual that the individual meets the 
requirements specified in clauses (ii) through (iv) of paragraph 
(1)(B).
    ``(B) A request for reinstatement filed in accordance with 
subparagraph (A) may constitute an application for benefits in the case 
of any individual who the Commissioner determines is not eligible for 
reinstated benefits under this subsection.
    ``(3) In determining whether an individual meets the requirements 
of paragraph (1)(B)(ii), the provisions of section 1614(a)(4) shall 
apply.
    ``(4)(A) Eligibility for benefits reinstated under this subsection 
shall commence with the benefit payable for the month following the 
month in which a request for reinstatement is filed.
    ``(B)(i) Subject to clause (ii), the amount of the benefit payable 
for any month pursuant to the reinstatement of eligibility under this 
subsection shall be determined in accordance with the provisions of 
this title.
    ``(ii) The benefit under this title payable for any month pursuant 
to a request for reinstatement filed in accordance with paragraph (2) 
shall be reduced by the amount of any provisional benefit paid to such 
individual for such month under paragraph (7).
    ``(C) Except as otherwise provided in this subsection, eligibility 
for benefits under this title reinstated pursuant to a request filed 
under paragraph (2) shall be subject to the same terms and conditions 
as eligibility established pursuant to an application filed therefor.
    ``(5) Whenever an individual's eligibility for benefits under this 
title is reinstated under this subsection, eligibility for such 
benefits shall be reinstated with respect to the individual's spouse if 
such spouse was previously an eligible spouse of the individual under 
this title and the Commissioner determines that such spouse satisfies 
all the requirements for eligibility for such benefits except 
requirements related to the filing of an application. The provisions of 
paragraph (4) shall apply to the reinstated eligibility of the spouse 
to the same extent that they apply to the reinstated eligibility of 
such individual.
    ``(6) An individual to whom benefits are payable under this title 
pursuant to a reinstatement of eligibility under this subsection for 
twenty-four months (whether or not consecutive) shall, with respect to 
benefits so payable after such twenty-fourth month, be deemed for 
purposes of paragraph (1)(B)(i)(I) to be eligible for such benefits on 
the basis of an application filed therefor.
    ``(7)(A) An individual described in paragraph (1)(B) who files a 
request for reinstatement in accordance with the provisions of 
paragraph (2)(A) shall be eligible for provisional benefits payable in 
accordance with this paragraph, unless the Commissioner determines that 
the individual does not meet the requirements of paragraph (1)(B)(i) or 
that the individual's declaration under paragraph (2)(A)(ii) is false. 
Any such determination by the Commissioner shall be final and not 
subject to review under paragraph (1) or (3) of subsection (c).
    ``(B)(i) Except as otherwise provided in clause (ii), the amount of 
a provisional benefit for a month shall equal the amount of the monthly 
benefit that would be payable to an eligible individual under this 
title with the same kind and amount of income.
    ``(ii) If the individual has a spouse who was previously an 
eligible spouse of the individual under this title and the Commissioner 
determines that such spouse satisfies all the requirements of section 
1614(b) except requirements related to the filing of an application, 
the amount of a provisional benefit for a month shall equal the amount 
of the monthly benefit that would be payable to an eligible individual 
and eligible spouse under this title with the same kind and amount of 
income.
    ``(C)(i) Provisional benefits shall begin with the month following 
the month in which a request for reinstatement is filed in accordance 
with paragraph (2)(A).
    ``(ii) Provisional benefits shall end with the earliest of--
        ``(I) the month in which the Commissioner makes a determination 
    regarding the individual's eligibility for reinstated benefits;
        ``(II) the fifth month following the month for which 
    provisional benefits are first payable under clause (i); or
        ``(III) the month in which the Commissioner determines that the 
    individual does not meet the requirements of paragraph (1)(B)(i) or 
    that the individual's declaration made in accordance with paragraph 
    (2)(A)(ii) is false.
    ``(D) In any case in which the Commissioner determines that an 
individual is not eligible for reinstated benefits, any provisional 
benefits paid to the individual under this paragraph shall not be 
subject to recovery as an overpayment unless the Commissioner 
determines that the individual knew or should have known that the 
individual did not meet the requirements of paragraph (1)(B).
    ``(8) For purposes of this subsection other than paragraph (7), the 
term `benefits under this title' includes State supplementary payments 
made pursuant to an agreement under section 1616(a) of this Act or 
section 212(b) of Public Law 93-66.''.
        (2) Conforming amendments.--
            (A) Section 1631(j)(1) of such Act (42 U.S.C. 1383(j)(1)) 
        is amended by striking the period and inserting ``, or has 
        filed a request for reinstatement of eligibility under 
        subsection (p)(2) and been determined to be eligible for 
        reinstatement.''.
            (B) Section 1631(j)(2)(A)(i)(I) of such Act (42 U.S.C. 
        1383(j)(2)(A)(i)(I)) is amended by inserting ``(other than 
        pursuant to a request for reinstatement under subsection (p))'' 
        after ``eligible''.
    (c) Effective Date.--
        (1) In general.--The amendments made by this section shall take 
    effect on the first day of the thirteenth month beginning after the 
    date of the enactment of this Act.
        (2) Limitation.--No benefit shall be payable under title II or 
    XVI on the basis of a request for reinstatement filed under section 
    223(i) or 1631(p) of the Social Security Act (42 U.S.C. 423(i), 
    1383(p)) before the effective date described in paragraph (1).

     Subtitle C--Work Incentives Planning, Assistance, and Outreach

SEC. 121. WORK INCENTIVES OUTREACH PROGRAM.

    Part A of title XI of the Social Security Act (42 U.S.C. 1301 et 
seq.), as amended by section 101 of this Act, is amended by adding 
after section 1148 the following new section:


                    ``work incentives outreach program

    ``Sec. 1149. (a) Establishment.--
        ``(1) In general.--The Commissioner, in consultation with the 
    Ticket to Work and Work Incentives Advisory Panel established under 
    section 101(f) of the Ticket to Work and Work Incentives 
    Improvement Act of 1999, shall establish a community-based work 
    incentives planning and assistance program for the purpose of 
    disseminating accurate information to disabled beneficiaries on 
    work incentives programs and issues related to such programs.
        ``(2) Grants, cooperative agreements, contracts, and 
    outreach.--Under the program established under this section, the 
    Commissioner shall--
            ``(A) establish a competitive program of grants, 
        cooperative agreements, or contracts to provide benefits 
        planning and assistance, including information on the 
        availability of protection and advocacy services, to disabled 
        beneficiaries, including individuals participating in the 
        Ticket to Work and Self-Sufficiency Program established under 
        section 1148, the program established under section 1619, and 
        other programs that are designed to encourage disabled 
        beneficiaries to work;
            ``(B) conduct directly, or through grants, cooperative 
        agreements, or contracts, ongoing outreach efforts to disabled 
        beneficiaries (and to the families of such beneficiaries) who 
        are potentially eligible to participate in Federal or State 
        work incentive programs that are designed to assist disabled 
        beneficiaries to work, including--
                ``(i) preparing and disseminating information 
            explaining such programs; and
                ``(ii) working in cooperation with other Federal, 
            State, and private agencies and nonprofit organizations 
            that serve disabled beneficiaries, and with agencies and 
            organizations that focus on vocational rehabilitation and 
            work-related training and counseling;
            ``(C) establish a corps of trained, accessible, and 
        responsive work incentives specialists within the Social 
        Security Administration who will specialize in disability work 
        incentives under titles II and XVI for the purpose of 
        disseminating accurate information with respect to inquiries 
        and issues relating to work incentives to--
                ``(i) disabled beneficiaries;
                ``(ii) benefit applicants under titles II and XVI; and
                ``(iii) individuals or entities awarded grants under 
            subparagraphs (A) or (B); and
            ``(D) provide--
                ``(i) training for work incentives specialists and 
            individuals providing planning assistance described in 
            subparagraph (C); and
                ``(ii) technical assistance to organizations and 
            entities that are designed to encourage disabled 
            beneficiaries to return to work.
        ``(3) Coordination with other programs.--The responsibilities 
    of the Commissioner established under this section shall be 
    coordinated with other public and private programs that provide 
    information and assistance regarding rehabilitation services and 
    independent living supports and benefits planning for disabled 
    beneficiaries including the program under section 1619, the plans 
    for achieving self-support program (PASS), and any other Federal or 
    State work incentives programs that are designed to assist disabled 
    beneficiaries, including educational agencies that provide 
    information and assistance regarding rehabilitation, school-to-work 
    programs, transition services (as defined in, and provided in 
    accordance with, the Individuals with Disabilities Education Act 
    (20 U.S.C. 1400 et seq.)), a one-stop delivery system established 
    under subtitle B of title I of the Workforce Investment Act of 1998 
    (29 U.S.C. 2811 et seq.), and other services.
    ``(b) Conditions.--
        ``(1) Selection of entities.--
            ``(A) Application.--An entity shall submit an application 
        for a grant, cooperative agreement, or contract to provide 
        benefits planning and assistance to the Commissioner at such 
        time, in such manner, and containing such information as the 
        Commissioner may determine is necessary to meet the 
        requirements of this section.
            ``(B) Statewideness.--The Commissioner shall ensure that 
        the planning, assistance, and information described in 
        paragraph (2) shall be available on a statewide basis.
            ``(C) Eligibility of states and private organizations.--
                ``(i) In general.--The Commissioner may award a grant, 
            cooperative agreement, or contract under this section to a 
            State or a private agency or organization (other than 
            Social Security Administration Field Offices and the State 
            agency administering the State medicaid program under title 
            XIX, including any agency or entity described in clause 
            (ii), that the Commissioner determines is qualified to 
            provide the planning, assistance, and information described 
            in paragraph (2)).
                ``(ii) Agencies and entities described.--The agencies 
            and entities described in this clause are the following:

                    ``(I) Any public or private agency or organization 
                (including Centers for Independent Living established 
                under title VII of the Rehabilitation Act of 1973 (29 
                U.S.C. 796 et seq.), protection and advocacy 
                organizations, client assistance programs established 
                in accordance with section 112 of the Rehabilitation 
                Act of 1973 (29 U.S.C. 732), and State Developmental 
                Disabilities Councils established in accordance with 
                section 124 of the Developmental Disabilities 
                Assistance and Bill of Rights Act (42 U.S.C. 6024)) 
                that the Commissioner determines satisfies the 
                requirements of this section.
                    ``(II) The State agency administering the State 
                program funded under part A of title IV.

            ``(D) Exclusion for conflict of interest.--The Commissioner 
        may not award a grant, cooperative agreement, or contract under 
        this section to any entity that the Commissioner determines 
        would have a conflict of interest if the entity were to receive 
        a grant, cooperative agreement, or contract under this section.
        ``(2) Services provided.--A recipient of a grant, cooperative 
    agreement, or contract to provide benefits planning and assistance 
    shall select individuals who will act as planners and provide 
    information, guidance, and planning to disabled beneficiaries on 
    the--
            ``(A) availability and interrelation of any Federal or 
        State work incentives programs designed to assist disabled 
        beneficiaries that the individual may be eligible to 
        participate in;
            ``(B) adequacy of any health benefits coverage that may be 
        offered by an employer of the individual and the extent to 
        which other health benefits coverage may be available to the 
        individual; and
            ``(C) availability of protection and advocacy services for 
        disabled beneficiaries and how to access such services.
        ``(3) Amount of grants, cooperative agreements, or contracts.--
            ``(A) Based on population of disabled beneficiaries.--
        Subject to subparagraph (B), the Commissioner shall award a 
        grant, cooperative agreement, or contract under this section to 
        an entity based on the percentage of the population of the 
        State where the entity is located who are disabled 
        beneficiaries.
            ``(B) Limitations.--
                ``(i) Per grant.--No entity shall receive a grant, 
            cooperative agreement, or contract under this section for a 
            fiscal year that is less than $50,000 or more than 
            $300,000.
                ``(ii) Total amount for all grants, cooperative 
            agreements, and contracts.--The total amount of all grants, 
            cooperative agreements, and contracts awarded under this 
            section for a fiscal year may not exceed $23,000,000.
        ``(4) Allocation of costs.--The costs of carrying out this 
    section shall be paid from amounts made available for the 
    administration of title II and amounts made available for the 
    administration of title XVI, and shall be allocated among those 
    amounts as appropriate.
    ``(c) Definitions.--In this section:
        ``(1) Commissioner.--The term `Commissioner' means the 
    Commissioner of Social Security.
        ``(2) Disabled beneficiary.--The term `disabled beneficiary' 
    has the meaning given that term in section 1148(k)(2).
    ``(d) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section $23,000,000 for each of the 
fiscal years 2000 through 2004.''.

SEC. 122. STATE GRANTS FOR WORK INCENTIVES ASSISTANCE TO DISABLED 
              BENEFICIARIES.

    Part A of title XI of the Social Security Act (42 U.S.C. 1301 et 
seq.), as amended by section 121 of this Act, is amended by adding 
after section 1149 the following new section:


        ``state grants for work incentives assistance to disabled 
                             beneficiaries

    ``Sec. 1150. (a) In General.--Subject to subsection (c), the 
Commissioner may make payments in each State to the protection and 
advocacy system established pursuant to part C of title I of the 
Developmental Disabilities Assistance and Bill of Rights Act (42 U.S.C. 
6041 et seq.) for the purpose of providing services to disabled 
beneficiaries.
    ``(b) Services Provided.--Services provided to disabled 
beneficiaries pursuant to a payment made under this section may 
include--
        ``(1) information and advice about obtaining vocational 
    rehabilitation and employment services; and
        ``(2) advocacy or other services that a disabled beneficiary 
    may need to secure or regain gainful employment.
    ``(c) Application.--In order to receive payments under this 
section, a protection and advocacy system shall submit an application 
to the Commissioner, at such time, in such form and manner, and 
accompanied by such information and assurances as the Commissioner may 
require.
    ``(d) Amount of Payments.--
        ``(1) In general.--Subject to the amount appropriated for a 
    fiscal year for making payments under this section, a protection 
    and advocacy system shall not be paid an amount that is less than--
            ``(A) in the case of a protection and advocacy system 
        located in a State (including the District of Columbia and 
        Puerto Rico) other than Guam, American Samoa, the United States 
        Virgin Islands, and the Commonwealth of the Northern Mariana 
        Islands, the greater of--
                ``(i) $100,000; or
                ``(ii) \1/3\ of 1 percent of the amount available for 
            payments under this section; and
            ``(B) in the case of a protection and advocacy system 
        located in Guam, American Samoa, the United States Virgin 
        Islands, and the Commonwealth of the Northern Mariana Islands, 
        $50,000.
        ``(2) Inflation adjustment.--For each fiscal year in which the 
    total amount appropriated to carry out this section exceeds the 
    total amount appropriated to carry out this section in the 
    preceding fiscal year, the Commissioner shall increase each minimum 
    payment under subparagraphs (A) and (B) of paragraph (1) by a 
    percentage equal to the percentage increase in the total amount so 
    appropriated to carry out this section.
    ``(e) Annual Report.--Each protection and advocacy system that 
receives a payment under this section shall submit an annual report to 
the Commissioner and the Ticket to Work and Work Incentives Advisory 
Panel established under section 101(f) of the Ticket to Work and Work 
Incentives Improvement Act of 1999 on the services provided to 
individuals by the system.
    ``(f) Funding.--
        ``(1) Allocation of payments.--Payments under this section 
    shall be made from amounts made available for the administration of 
    title II and amounts made available for the administration of title 
    XVI, and shall be allocated among those amounts as appropriate.
        ``(2) Carryover.--Any amounts allotted for payment to a 
    protection and advocacy system under this section for a fiscal year 
    shall remain available for payment to or on behalf of the 
    protection and advocacy system until the end of the succeeding 
    fiscal year.
    ``(g) Definitions.--In this section:
        ``(1) Commissioner.--The term `Commissioner' means the 
    Commissioner of Social Security.
        ``(2) Disabled beneficiary.--The term `disabled beneficiary' 
    has the meaning given that term in section 1148(k)(2).
        ``(3) Protection and advocacy system.--The term `protection and 
    advocacy system' means a protection and advocacy system established 
    pursuant to part C of title I of the Developmental Disabilities 
    Assistance and Bill of Rights Act (42 U.S.C. 6041 et seq.).
    ``(h) Authorization of Appropriations.--There are authorized to be 
appropriated to carry out this section $7,000,000 for each of the 
fiscal years 2000 through 2004.''.

        TITLE II--EXPANDED AVAILABILITY OF HEALTH CARE SERVICES

SEC. 201. EXPANDING STATE OPTIONS UNDER THE MEDICAID PROGRAM FOR 
              WORKERS WITH DISABILITIES.

    (a) In General.--
        (1) State option to eliminate income, assets, and resource 
    limitations for workers with disabilities buying into medicaid.--
    Section 1902(a)(10)(A)(ii) of the Social Security Act (42 U.S.C. 
    1396a(a)(10)(A)(ii)) is amended--
            (A) in subclause (XIII), by striking ``or'' at the end;
            (B) in subclause (XIV), by adding ``or'' at the end; and
            (C) by adding at the end the following new subclause:

                    ``(XV) who, but for earnings in excess of the limit 
                established under section 1905(q)(2)(B), would be 
                considered to be receiving supplemental security 
                income, who is at least 16, but less than 65, years of 
                age, and whose assets, resources, and earned or 
                unearned income (or both) do not exceed such 
                limitations (if any) as the State may establish;''.

        (2) State option to provide opportunity for employed 
    individuals with a medically improved disability to buy into 
    medicaid.--
            (A) Eligibility.--Section 1902(a)(10) (A)(ii) of the Social 
        Security Act (42 U.S.C. 1396a(a)(10)(A)(ii)), as amended by 
        paragraph (1), is amended--
                (i) in subclause (XIV), by striking ``or'' at the end;
                (ii) in subclause (XV), by adding ``or'' at the end; 
            and
                (iii) by adding at the end the following new subclause:

                    ``(XVI) who are employed individuals with a 
                medically improved disability described in section 
                1905(v)(1) and whose assets, resources, and earned or 
                unearned income (or both) do not exceed such 
                limitations (if any) as the State may establish, but 
                only if the State provides medical assistance to 
                individuals described in subclause (XV);''.

            (B) Definition of employed individuals with a medically 
        improved disability.--Section 1905 of the Social Security Act 
        (42 U.S.C. 1396d) is amended by adding at the end the following 
        new subsection:
    ``(v)(1) The term `employed individual with a medically improved 
disability' means an individual who--
        ``(A) is at least 16, but less than 65, years of age;
        ``(B) is employed (as defined in paragraph (2));
        ``(C) ceases to be eligible for medical assistance under 
    section 1902(a)(10)(A)(ii)(XV) because the individual, by reason of 
    medical improvement, is determined at the time of a regularly 
    scheduled continuing disability review to no longer be eligible for 
    benefits under section 223(d) or 1614(a)(3); and
        ``(D) continues to have a severe medically determinable 
    impairment, as determined under regulations of the Secretary.
    ``(2) For purposes of paragraph (1), an individual is considered to 
be `employed' if the individual--
        ``(A) is earning at least the applicable minimum wage 
    requirement under section 6 of the Fair Labor Standards Act (29 
    U.S.C. 206) and working at least 40 hours per month; or
        ``(B) is engaged in a work effort that meets substantial and 
    reasonable threshold criteria for hours of work, wages, or other 
    measures, as defined by the State and approved by the Secretary.''.
            (C) Conforming amendment.--Section 1905(a) of such Act (42 
        U.S.C. 1396d(a)) is amended in the matter preceding paragraph 
        (1)--
                (i) in clause (x), by striking ``or'' at the end;
                (ii) in clause (xi), by adding ``or'' at the end; and
                (iii) by inserting after clause (xi), the following new 
            clause:
        ``(xii) employed individuals with a medically improved 
    disability (as defined in subsection (v)),''.
        (3) State authority to impose income-related premiums and cost-
    sharing.--Section 1916 of such Act (42 U.S.C. 1396o) is amended--
            (A) in subsection (a), by striking ``The State plan'' and 
        inserting ``Subject to subsection (g), the State plan''; and
            (B) by adding at the end the following new subsection:
    ``(g) With respect to individuals provided medical assistance only 
under subclause (XV) or (XVI) of section 1902(a)(10)(A)(ii)--
        ``(1) a State may (in a uniform manner for individuals 
    described in either such subclause)--
            ``(A) require such individuals to pay premiums or other 
        cost-sharing charges set on a sliding scale based on income 
        that the State may determine; and
            ``(B) require payment of 100 percent of such premiums for 
        such year in the case of such an individual who has income for 
        a year that exceeds 250 percent of the income official poverty 
        line (referred to in subsection (c)(1)) applicable to a family 
        of the size involved, except that in the case of such an 
        individual who has income for a year that does not exceed 450 
        percent of such poverty line, such requirement may only apply 
        to the extent such premiums do not exceed 7.5 percent of such 
        income; and
        ``(2) such State shall require payment of 100 percent of such 
    premiums for a year by such an individual whose adjusted gross 
    income (as defined in section 62 of the Internal Revenue Code of 
    1986) for such year exceeds $75,000, except that a State may choose 
    to subsidize such premiums by using State funds which may not be 
    federally matched under this title.
In the case of any calendar year beginning after 2000, the dollar 
amount specified in paragraph (2) shall be increased in accordance with 
the provisions of section 215(i)(2)(A)(ii).''.
        (4) Prohibition against supplantation of state funds and state 
    failure to maintain effort.--Section 1903(i) of such Act (42 U.S.C. 
    1396b(i)) is amended--
            (A) by striking the period at the end of paragraph (19) and 
        inserting ``; or''; and
            (B) by inserting after such paragraph the following new 
        paragraph:
        ``(20) with respect to amounts expended for medical assistance 
    provided to an individual described in subclause (XV) or (XVI) of 
    section 1902(a)(10)(A)(ii) for a fiscal year unless the State 
    demonstrates to the satisfaction of the Secretary that the level of 
    State funds expended for such fiscal year for programs to enable 
    working individuals with disabilities to work (other than for such 
    medical assistance) is not less than the level expended for such 
    programs during the most recent State fiscal year ending before the 
    date of the enactment of this paragraph.''.
    (b) Conforming Amendments.--Section 1903(f)(4) of the Social 
Security Act (42 U.S.C. 1396b(f)(4) is amended in the matter preceding 
subparagraph (A) by inserting ``1902(a)(10)(A)(ii)(XV), 
1902(a)(10)(A)(ii)(XVI),'' before ``1905(p)(1)''.
    (c) GAO Report.--Not later than 3 years after the date of the 
enactment of this Act, the Comptroller General of the United States 
shall submit a report to the Congress regarding the amendments made by 
this section that examines--
        (1) the extent to which higher health care costs for 
    individuals with disabilities at higher income levels deter 
    employment or progress in employment;
        (2) whether such individuals have health insurance coverage or 
    could benefit from the State option established under such 
    amendments to provide a medicaid buy-in; and
        (3) how the States are exercising such option, including--
            (A) how such States are exercising the flexibility afforded 
        them with regard to income disregards;
            (B) what income and premium levels have been set;
            (C) the degree to which States are subsidizing premiums 
        above the dollar amount specified in section 1916(g)(2) of the 
        Social Security Act (42 U.S.C. 1396o(g)(2)); and
            (D) the extent to which there exists any crowd-out effect.
    (d) Effective Date.--The amendments made by this section apply to 
medical assistance for items and services furnished on or after October 
1, 2000.

SEC. 202. EXTENDING MEDICARE COVERAGE FOR OASDI DISABILITY BENEFIT 
              RECIPIENTS.

    (a) In General.--The next to last sentence of section 226(b) of the 
Social Security Act (42 U.S.C. 426) is amended by striking ``24'' and 
inserting ``78''.
    (b) Effective Date.--The amendment made by subsection (a) shall be 
effective on and after October 1, 2000.
    (c) GAO Report.--Not later than 5 years after the date of the 
enactment of this Act, the Comptroller General of the United States 
shall submit a report to the Congress that--
        (1) examines the effectiveness and cost of the amendment made 
    by subsection (a);
        (2) examines the necessity and effectiveness of providing 
    continuation of medicare coverage under section 226(b) of the 
    Social Security Act (42 U.S.C. 426(b)) to individuals whose annual 
    income exceeds the contribution and benefit base (as determined 
    under section 230 of such Act (42 U.S.C. 430));
        (3) examines the viability of providing the continuation of 
    medicare coverage under such section 226(b) based on a sliding 
    scale premium for individuals whose annual income exceeds such 
    contribution and benefit base;
        (4) examines the viability of providing the continuation of 
    medicare coverage under such section 226(b) based on a premium buy-
    in by the beneficiary's employer in lieu of coverage under private 
    health insurance;
        (5) examines the interrelation between the use of the 
    continuation of medicare coverage under such section 226(b) and the 
    use of private health insurance coverage by individuals during the 
    extended period; and
        (6) recommends such legislative or administrative changes 
    relating to the continuation of medicare coverage for recipients of 
    social security disability benefits as the Comptroller General 
    determines are appropriate.

SEC. 203. GRANTS TO DEVELOP AND ESTABLISH STATE INFRASTRUCTURES TO 
              SUPPORT WORKING INDIVIDUALS WITH DISABILITIES.

    (a) Establishment.--
        (1) In general.--The Secretary of Health and Human Services (in 
    this section referred to as the ``Secretary'') shall award grants 
    described in subsection (b) to States to support the design, 
    establishment, and operation of State infrastructures that provide 
    items and services to support working individuals with 
    disabilities.
        (2) Application.--In order to be eligible for an award of a 
    grant under this section, a State shall submit an application to 
    the Secretary at such time, in such manner, and containing such 
    information as the Secretary shall require.
        (3) Definition of state.--In this section, the term ``State'' 
    means each of the 50 States, the District of Columbia, Puerto Rico, 
    Guam, the United States Virgin Islands, American Samoa, and the 
    Commonwealth of the Northern Mariana Islands.
    (b) Grants for Infrastructure and Outreach.--
        (1) In general.--Out of the funds appropriated under subsection 
    (e), the Secretary shall award grants to States to--
            (A) support the establishment, implementation, and 
        operation of the State infrastructures described in subsection 
        (a); and
            (B) conduct outreach campaigns regarding the existence of 
        such infrastructures.
        (2) Eligibility for grants.--
            (A) In general.--No State may receive a grant under this 
        subsection unless the State demonstrates to the satisfaction of 
        the Secretary that the State makes personal assistance services 
        available under the State plan under title XIX of the Social 
        Security Act (42 U.S.C. 1396 et seq.) to the extent necessary 
        to enable individuals with disabilities to remain employed, 
        including individuals described in section 
        1902(a)(10)(A)(ii)(XIII) of such Act (42 U.S.C. 
        1396a(a)(10)(A)(ii)(XIII)) if the State has elected to provide 
        medical assistance under such plan to such individuals.
            (B) Definitions.--In this section:
                (i) Employed.--The term ``employed'' means--

                    (I) earning at least the applicable minimum wage 
                requirement under section 6 of the Fair Labor Standards 
                Act (29 U.S.C. 206) and working at least 40 hours per 
                month; or
                    (II) being engaged in a work effort that meets 
                substantial and reasonable threshold criteria for hours 
                of work, wages, or other measures, as defined and 
                approved by the Secretary.

                (ii) Personal assistance services.--The term ``personal 
            assistance services'' means a range of services, provided 
            by 1 or more persons, designed to assist an individual with 
            a disability to perform daily activities on and off the job 
            that the individual would typically perform if the 
            individual did not have a disability. Such services shall 
            be designed to increase the individual's control in life 
            and ability to perform everyday activities on or off the 
            job.
        (3) Determination of awards.--
            (A) In general.--Subject to subparagraph (B), the Secretary 
        shall develop a methodology for awarding grants to States under 
        this section for a fiscal year in a manner that--
                 (i) rewards States for their efforts in encouraging 
            individuals described in paragraph (2)(A) to be employed; 
            and
                (ii) does not provide a State that has not elected to 
            provide medical assistance under title XIX of the Social 
            Security Act to individuals described in section 
            1902(a)(10)(A)(ii)(XIII) of that Act (42 U.S.C. 
            1396a(a)(10)(A)(ii)(XIII)) with proportionally more funds 
            for a fiscal year than a State that has exercised such 
            election.
            (B) Award limits.--
                (i) Minimum awards.--

                    (I) In general.--Subject to subclause (II), no 
                State with an approved application under this section 
                shall receive a grant for a fiscal year that is less 
                than $500,000.
                    (II) Pro rata reductions.--If the funds 
                appropriated under subsection (e) for a fiscal year are 
                not sufficient to pay each State with an application 
                approved under this section the minimum amount 
                described in subclause (I), the Secretary shall pay 
                each such State an amount equal to the pro rata share 
                of the amount made available.

                (ii) Maximum awards.--

                    (I) States that elected optional medicaid 
                eligibility.--No State that has an application that has 
                been approved under this section and that has elected 
                to provide medical assistance under title XIX of the 
                Social Security Act to individuals described in section 
                1902(a)(10)(A)(ii)(XIII) of such Act (42 U.S.C. 
                1396a(a)(10)(A)(ii)(XIII)) shall receive a grant for a 
                fiscal year that exceeds 10 percent of the total 
                expenditures by the State (including the reimbursed 
                Federal share of such expenditures) for medical 
                assistance provided under such title for such 
                individuals, as estimated by the State and approved by 
                the Secretary.
                    (II) Other states.--The Secretary shall determine, 
                consistent with the limit described in subclause (I), a 
                maximum award limit for a grant for a fiscal year for a 
                State that has an application that has been approved 
                under this section but that has not elected to provide 
                medical assistance under title XIX of the Social 
                Security Act to individuals described in section 
                1902(a)(10)(A)(ii)(XIII) of that Act (42 U.S.C. 
                1396a(a)(10)(A)(ii)(XIII)).

    (c) Availability of Funds.--
        (1) Funds awarded to states.--Funds awarded to a State under a 
    grant made under this section for a fiscal year shall remain 
    available until expended.
        (2) Funds not awarded to states.--Funds not awarded to States 
    in the fiscal year for which they are appropriated shall remain 
    available in succeeding fiscal years for awarding by the Secretary.
    (d) Annual Report.--A State that is awarded a grant under this 
section shall submit an annual report to the Secretary on the use of 
funds provided under the grant. Each report shall include the 
percentage increase in the number of title II disability beneficiaries, 
as defined in section 1148(k)(3) of the Social Security Act (as added 
by section 101(a) of this Act) in the State, and title XVI disability 
beneficiaries, as defined in section 1148(k)(4) of the Social Security 
Act (as so added) in the State who return to work.
    (e) Appropriation.--
        (1) In general.--Out of any funds in the Treasury not otherwise 
    appropriated, there is appropriated to make grants under this 
    section--
            (A) for fiscal year 2001, $20,000,000;
            (B) for fiscal year 2002, $25,000,000;
            (C) for fiscal year 2003, $30,000,000;
            (D) for fiscal year 2004, $35,000,000;
            (E) for fiscal year 2005, $40,000,000; and
            (F) for each of fiscal years 2006 through 2011, the amount 
        appropriated for the preceding fiscal year increased by the 
        percentage increase (if any) in the Consumer Price Index for 
        All Urban Consumers (United States city average) for the 
        preceding fiscal year.
        (2) Budget authority.--This subsection constitutes budget 
    authority in advance of appropriations Acts and represents the 
    obligation of the Federal Government to provide for the payment of 
    the amounts appropriated under paragraph (1).
    (f) Recommendation.--Not later than October 1, 2010, the Secretary, 
in consultation with the Ticket to Work and Work Incentives Advisory 
Panel established by section 101(f) of this Act, shall submit a 
recommendation to the Committee on Commerce of the House of 
Representatives and the Committee on Finance of the Senate regarding 
whether the grant program established under this section should be 
continued after fiscal year 2011.

SEC. 204. DEMONSTRATION OF COVERAGE UNDER THE MEDICAID PROGRAM OF 
              WORKERS WITH POTENTIALLY SEVERE DISABILITIES.

    (a) State Application.--A State may apply to the Secretary of 
Health and Human Services (in this section referred to as the 
``Secretary'') for approval of a demonstration project (in this section 
referred to as a ``demonstration project'') under which up to a 
specified maximum number of individuals who are workers with a 
potentially severe disability (as defined in subsection (b)(1)) are 
provided medical assistance equal to--
        (1) that provided under section 1905(a) of the Social Security 
    Act (42 U.S.C. 1396d(a)) to individuals described in section 
    1902(a)(10)(A)(ii)(XIII) of that Act (42 U.S.C. 
    1396a(a)(10)(A)(ii)(XIII)); or
        (2) in the case of a State that has not elected to provide 
    medical assistance under that section to such individuals, such 
    medical assistance as the Secretary determines is an appropriate 
    equivalent to the medical assistance described in paragraph (1).
    (b) Worker With a Potentially Severe Disability Defined.--For 
purposes of this section--
        (1) In general.--The term ``worker with a potentially severe 
    disability'' means, with respect to a demonstration project, an 
    individual who--
            (A) is at least 16, but less than 65, years of age;
            (B) has a specific physical or mental impairment that, as 
        defined by the State under the demonstration project, is 
        reasonably expected, but for the receipt of items and services 
        described in section 1905(a) of the Social Security Act (42 
        U.S.C. 1396d(a)), to become blind or disabled (as defined under 
        section 1614(a) of the Social Security Act (42 U.S.C. 
        1382c(a))); and
            (C) is employed (as defined in paragraph (2)).
        (2) Definition of employed.--An individual is considered to be 
    ``employed'' if the individual--
            (A) is earning at least the applicable minimum wage 
        requirement under section 6 of the Fair Labor Standards Act (29 
        U.S.C. 206) and working at least 40 hours per month; or
            (B) is engaged in a work effort that meets substantial and 
        reasonable threshold criteria for hours of work, wages, or 
        other measures, as defined under the demonstration project and 
        approved by the Secretary.
    (c) Approval of Demonstration Projects.--
        (1) In general.--Subject to paragraph (3), the Secretary shall 
    approve applications under subsection (a) that meet the 
    requirements of paragraph (2) and such additional terms and 
    conditions as the Secretary may require. The Secretary may waive 
    the requirement of section 1902(a)(1) of the Social Security Act 
    (42 U.S.C. 1396a(a)(1)) to allow for sub-State demonstrations.
        (2) Terms and conditions of demonstration projects.--The 
    Secretary may not approve a demonstration project under this 
    section unless the State provides assurances satisfactory to the 
    Secretary that the following conditions are or will be met:
            (A) Maintenance of state effort.--Federal funds paid to a 
        State pursuant to this section must be used to supplement, but 
        not supplant, the level of State funds expended for workers 
        with potentially severe disabilities under programs in effect 
        for such individuals at the time the demonstration project is 
        approved under this section.
            (B) Independent evaluation.--The State provides for an 
        independent evaluation of the project.
        (3) Limitations on federal funding.--
            (A) Appropriation.--
                (i) In general.--Out of any funds in the Treasury not 
            otherwise appropriated, there is appropriated to carry out 
            this section--

                    (I) $42,000,000 for each of fiscal years 2001 
                through 2004; and
                    (II) $41,000,000 for each of fiscal years 2005 and 
                2006.

                (ii) Budget authority.--Clause (i) constitutes budget 
            authority in advance of appropriations Acts and represents 
            the obligation of the Federal Government to provide for the 
            payment of the amounts appropriated under clause (i).
            (B) Limitation on payments.--In no case may--
                (i) the aggregate amount of payments made by the 
            Secretary to States under this section exceed $250,000,000;
                (ii) the aggregate amount of payments made by the 
            Secretary to States for administrative expenses relating to 
            annual reports required under subsection (d) exceed 
            $2,000,000 of such $250,000,000; or
                (iii) payments be provided by the Secretary for a 
            fiscal year after fiscal year 2009.
            (C) Funds allocated to states.--The Secretary shall 
        allocate funds to States based on their applications and the 
        availability of funds. Funds allocated to a State under a grant 
        made under this section for a fiscal year shall remain 
        available until expended.
            (D) Funds not allocated to states.--Funds not allocated to 
        States in the fiscal year for which they are appropriated shall 
        remain available in succeeding fiscal years for allocation by 
        the Secretary using the allocation formula established under 
        this section.
            (E) Payments to states.--The Secretary shall pay to each 
        State with a demonstration project approved under this section, 
        from its allocation under subparagraph (C), an amount for each 
        quarter equal to the Federal medical assistance percentage (as 
        defined in section 1905(b) of the Social Security Act (42 
        U.S.C. 1395d(b)) of expenditures in the quarter for medical 
        assistance provided to workers with a potentially severe 
        disability.
    (d) Annual Report.--A State with a demonstration project approved 
under this section shall submit an annual report to the Secretary on 
the use of funds provided under the grant. Each report shall include 
enrollment and financial statistics on--
        (1) the total population of workers with potentially severe 
    disabilities served by the demonstration project; and
        (2) each population of such workers with a specific physical or 
    mental impairment described in subsection (b)(1)(B) served by such 
    project.
    (e) Recommendation.--Not later than October 1, 2004, the Secretary 
shall submit a recommendation to the Committee on Commerce of the House 
of Representatives and the Committee on Finance of the Senate regarding 
whether the demonstration project established under this section should 
be continued after fiscal year 2006.
    (f) State Defined.--In this section, the term ``State'' has the 
meaning given such term for purposes of title XIX of the Social 
Security Act (42 U.S.C. 1396 et seq.).

SEC. 205. ELECTION BY DISABLED BENEFICIARIES TO SUSPEND MEDIGAP 
              INSURANCE WHEN COVERED UNDER A GROUP HEALTH PLAN.

    (a) In General.--Section 1882(q) of the Social Security Act (42 
U.S.C. 1395ss(q)) is amended--
        (1) in paragraph (5)(C), by inserting ``or paragraph (6)'' 
    after ``this paragraph''; and
        (2) by adding at the end the following new paragraph:
        ``(6) Each medicare supplemental policy shall provide that 
    benefits and premiums under the policy shall be suspended at the 
    request of the policyholder if the policyholder is entitled to 
    benefits under section 226(b) and is covered under a group health 
    plan (as defined in section 1862(b)(1)(A)(v)). If such suspension 
    occurs and if the policyholder or certificate holder loses coverage 
    under the group health plan, such policy shall be automatically 
    reinstituted (effective as of the date of such loss of coverage) 
    under terms described in subsection (n)(6)(A)(ii) as of the loss of 
    such coverage if the policyholder provides notice of loss of such 
    coverage within 90 days after the date of such loss.''.
    (b) Effective Date.--The amendments made by subsection (a) apply 
with respect to requests made after the date of the enactment of this 
Act.

             TITLE III--DEMONSTRATION PROJECTS AND STUDIES

SEC. 301. EXTENSION OF DISABILITY INSURANCE PROGRAM DEMONSTRATION 
              PROJECT AUTHORITY.

    (a) Extension of Authority.--Title II of the Social Security Act 
(42 U.S.C. 401 et seq.) is amended by adding at the end the following 
new section:


                    ``DEMONSTRATION PROJECT AUTHORITY

    ``Sec. 234. (a) Authority.--
        ``(1) In general.--The Commissioner of Social Security (in this 
    section referred to as the `Commissioner') shall develop and carry 
    out experiments and demonstration projects designed to determine 
    the relative advantages and disadvantages of--
            ``(A) various alternative methods of treating the work 
        activity of individuals entitled to disability insurance 
        benefits under section 223 or to monthly insurance benefits 
        under section 202 based on such individual's disability (as 
        defined in section 223(d)), including such methods as a 
        reduction in benefits based on earnings, designed to encourage 
        the return to work of such individuals;
            ``(B) altering other limitations and conditions applicable 
        to such individuals (including lengthening the trial work 
        period (as defined in section 222(c)), altering the 24-month 
        waiting period for hospital insurance benefits under section 
        226, altering the manner in which the program under this title 
        is administered, earlier referral of such individuals for 
        rehabilitation, and greater use of employers and others to 
        develop, perform, and otherwise stimulate new forms of 
        rehabilitation); and
            ``(C) implementing sliding scale benefit offsets using 
        variations in--
                ``(i) the amount of the offset as a proportion of 
            earned income;
                ``(ii) the duration of the offset period; and
                ``(iii) the method of determining the amount of income 
            earned by such individuals,
    to the end that savings will accrue to the Trust Funds, or to 
    otherwise promote the objectives or facilitate the administration 
    of this title.
        ``(2) Authority for expansion of scope.--The Commissioner may 
    expand the scope of any such experiment or demonstration project to 
    include any group of applicants for benefits under the program 
    established under this title with impairments that reasonably may 
    be presumed to be disabling for purposes of such demonstration 
    project, and may limit any such demonstration project to any such 
    group of applicants, subject to the terms of such demonstration 
    project which shall define the extent of any such presumption.
    ``(b) Requirements.--The experiments and demonstration projects 
developed under subsection (a) shall be of sufficient scope and shall 
be carried out on a wide enough scale to permit a thorough evaluation 
of the alternative methods under consideration while giving assurance 
that the results derived from the experiments and projects will obtain 
generally in the operation of the disability insurance program under 
this title without committing such program to the adoption of any 
particular system either locally or nationally.
    ``(c) Authority To Waive Compliance With Benefits Requirements.--In 
the case of any experiment or demonstration project conducted under 
subsection (a), the Commissioner may waive compliance with the benefit 
requirements of this title and the requirements of section 1148 as they 
relate to the program established under this title, and the Secretary 
may (upon the request of the Commissioner) waive compliance with the 
benefits requirements of title XVIII, insofar as is necessary for a 
thorough evaluation of the alternative methods under consideration. No 
such experiment or project shall be actually placed in operation unless 
at least 90 days prior thereto a written report, prepared for purposes 
of notification and information only and containing a full and complete 
description thereof, has been transmitted by the Commissioner to the 
Committee on Ways and Means of the House of Representatives and to the 
Committee on Finance of the Senate. Periodic reports on the progress of 
such experiments and demonstration projects shall be submitted by the 
Commissioner to such committees. When appropriate, such reports shall 
include detailed recommendations for changes in administration or law, 
or both, to carry out the objectives stated in subsection (a).
    ``(d) Reports.--
        ``(1) Interim reports.--On or before June 9 of each year, the 
    Commissioner shall submit to the Committee on Ways and Means of the 
    House of Representatives and to the Committee on Finance of the 
    Senate an annual interim report on the progress of the experiments 
    and demonstration projects carried out under this subsection 
    together with any related data and materials that the Commissioner 
    may consider appropriate.
        ``(2) Termination and final report.--The authority under the 
    preceding provisions of this section (including any waiver granted 
    pursuant to subsection (c)) shall terminate 5 years after the date 
    of the enactment of this Act. Not later than 90 days after the 
    termination of any experiment or demonstration project carried out 
    under this section, the Commissioner shall submit to the Committee 
    on Ways and Means of the House of Representatives and to the 
    Committee on Finance of the Senate a final report with respect to 
    that experiment or demonstration project.''.
    (b) Conforming Amendments; Transfer of Prior Authority.--
        (1) Conforming amendments.--
            (A) Repeal of prior authority.--Paragraphs (1) through (4) 
        of subsection (a) and subsection (c) of section 505 of the 
        Social Security Disability Amendments of 1980 (42 U.S.C. 1310 
        note) are repealed.
            (B) Conforming amendment regarding funding.--Section 201(k) 
        of the Social Security Act (42 U.S.C. 401(k)) is amended by 
        striking ``section 505(a) of the Social Security Disability 
        Amendments of 1980'' and inserting ``section 234''.
        (2) Transfer of prior authority.--With respect to any 
    experiment or demonstration project being conducted under section 
    505(a) of the Social Security Disability Amendments of 1980 (42 
    U.S.C. 1310 note) as of the date of the enactment of this Act, the 
    authority to conduct such experiment or demonstration project 
    (including the terms and conditions applicable to the experiment or 
    demonstration project) shall be treated as if that authority (and 
    such terms and conditions) had been established under section 234 
    of the Social Security Act, as added by subsection (a).

SEC. 302. DEMONSTRATION PROJECTS PROVIDING FOR REDUCTIONS IN DISABILITY 
              INSURANCE BENEFITS BASED ON EARNINGS.

    (a) Authority.--The Commissioner of Social Security shall conduct 
demonstration projects for the purpose of evaluating, through the 
collection of data, a program for title II disability beneficiaries (as 
defined in section 1148(k)(3) of the Social Security Act) under which 
benefits payable under section 223 of such Act, or under section 202 of 
such Act based on the beneficiary's disability, are reduced by $1 for 
each $2 of the beneficiary's earnings that is above a level to be 
determined by the Commissioner. Such projects shall be conducted at a 
number of localities which the Commissioner shall determine is 
sufficient to adequately evaluate the appropriateness of national 
implementation of such a program. Such projects shall identify 
reductions in Federal expenditures that may result from the permanent 
implementation of such a program.
    (b) Scope and Scale and Matters To Be Determined.--
        (1) In general.--The demonstration projects developed under 
    subsection (a) shall be of sufficient duration, shall be of 
    sufficient scope, and shall be carried out on a wide enough scale 
    to permit a thorough evaluation of the project to determine--
            (A) the effects, if any, of induced entry into the project 
        and reduced exit from the project;
            (B) the extent, if any, to which the project being tested 
        is affected by whether it is in operation in a locality within 
        an area under the administration of the Ticket to Work and 
        Self-Sufficiency Program established under section 1148 of the 
        Social Security Act; and
            (C) the savings that accrue to the Federal Old-Age and 
        Survivors Insurance Trust Fund, the Federal Disability 
        Insurance Trust Fund, and other Federal programs under the 
        project being tested.
    The Commissioner shall take into account advice provided by the 
    Ticket to Work and Work Incentives Advisory Panel pursuant to 
    section 101(f)(2)(B)(ii) of this Act.
        (2) Additional matters.--The Commissioner shall also determine 
    with respect to each project--
            (A) the annual cost (including net cost) of the project and 
        the annual cost (including net cost) that would have been 
        incurred in the absence of the project;
            (B) the determinants of return to work, including the 
        characteristics of the beneficiaries who participate in the 
        project; and
            (C) the employment outcomes, including wages, occupations, 
        benefits, and hours worked, of beneficiaries who return to work 
        as a result of participation in the project.
    The Commissioner may include within the matters evaluated under the 
    project the merits of trial work periods and periods of extended 
    eligibility.
    (c) Waivers.--The Commissioner may waive compliance with the 
benefit provisions of title II of the Social Security Act (42 U.S.C. 
401 et seq.), and the Secretary of Health and Human Services may waive 
compliance with the benefit requirements of title XVIII of such Act (42 
U.S.C. 1395 et seq.), insofar as is necessary for a thorough evaluation 
of the alternative methods under consideration. No such project shall 
be actually placed in operation unless at least 90 days prior thereto a 
written report, prepared for purposes of notification and information 
only and containing a full and complete description thereof, has been 
transmitted by the Commissioner to the Committee on Ways and Means of 
the House of Representatives and to the Committee on Finance of the 
Senate. Periodic reports on the progress of such projects shall be 
submitted by the Commissioner to such committees. When appropriate, 
such reports shall include detailed recommendations for changes in 
administration or law, or both, to carry out the objectives stated in 
subsection (a).
    (d) Interim Reports.--Not later than 2 years after the date of the 
enactment of this Act, and annually thereafter, the Commissioner of 
Social Security shall submit to the Congress an interim report on the 
progress of the demonstration projects carried out under this 
subsection together with any related data and materials that the 
Commissioner of Social Security may consider appropriate.
    (e) Final Report.--The Commissioner of Social Security shall submit 
to the Congress a final report with respect to all demonstration 
projects carried out under this section not later than 1 year after 
their completion.
    (f) Expenditures.--Expenditures made for demonstration projects 
under this section shall be made from the Federal Disability Insurance 
Trust Fund and the Federal Old-Age and Survivors Insurance Trust Fund, 
as determined appropriate by the Commissioner of Social Security, and 
from the Federal Hospital Insurance Trust Fund and the Federal 
Supplementary Medical Insurance Trust Fund, as determined appropriate 
by the Secretary of Health and Human Services, to the extent provided 
in advance in appropriation Acts.

SEC. 303. STUDIES AND REPORTS.

    (a) Study by General Accounting Office of Existing 
Disability-Related Employment Incentives.--
        (1) Study.--As soon as practicable after the date of the 
    enactment of this Act, the Comptroller General of the United States 
    shall undertake a study to assess existing tax credits and other 
    disability-related employment incentives under the Americans with 
    Disabilities Act of 1990 (42 U.S.C. 12101 et seq.) and other 
    Federal laws. In such study, the Comptroller General shall 
    specifically address the extent to which such credits and other 
    incentives would encourage employers to hire and retain individuals 
    with disabilities.
        (2) Report.--Not later than 3 years after the date of the 
    enactment of this Act, the Comptroller General shall transmit to 
    the Committee on Ways and Means of the House of Representatives and 
    the Committee on Finance of the Senate a written report presenting 
    the results of the Comptroller General's study conducted pursuant 
    to this subsection, together with such recommendations for 
    legislative or administrative changes as the Comptroller General 
    determines are appropriate.
    (b) Study by General Accounting Office of Existing Coordination of 
the DI and SSI Programs as They Relate to Individuals Entering or 
Leaving Concurrent Entitlement.--
        (1) Study.--As soon as practicable after the date of the 
    enactment of this Act, the Comptroller General of the United States 
    shall undertake a study to evaluate the coordination under current 
    law of the disability insurance program under title II of the 
    Social Security Act (42 U.S.C. 401 et seq.) and the supplemental 
    security income program under title XVI of such Act (42 U.S.C. 1381 
    et seq.), as such programs relate to individuals entering or 
    leaving concurrent entitlement under such programs. In such study, 
    the Comptroller General shall specifically address the 
    effectiveness of work incentives under such programs with respect 
    to such individuals and the effectiveness of coverage of such 
    individuals under titles XVIII and XIX of such Act (42 U.S.C. 1395 
    et seq., 1396 et seq.).
        (2) Report.--Not later than 3 years after the date of the 
    enactment of this Act, the Comptroller General shall transmit to 
    the Committee on Ways and Means of the House of Representatives and 
    the Committee on Finance of the Senate a written report presenting 
    the results of the Comptroller General's study conducted pursuant 
    to this subsection, together with such recommendations for 
    legislative or administrative changes as the Comptroller General 
    determines are appropriate.
    (c) Study by General Accounting Office of the Impact of the 
Substantial Gainful Activity Limit on Return to Work.--
        (1) Study.--As soon as practicable after the date of the 
    enactment of this Act, the Comptroller General of the United States 
    shall undertake a study of the substantial gainful activity level 
    applicable as of that date to recipients of benefits under section 
    223 of the Social Security Act (42 U.S.C. 423) and under section 
    202 of such Act (42 U.S.C. 402) on the basis of a recipient having 
    a disability, and the effect of such level as a disincentive for 
    those recipients to return to work. In the study, the Comptroller 
    General also shall address the merits of increasing the substantial 
    gainful activity level applicable to such recipients of benefits 
    and the rationale for not yearly indexing that level to inflation.
        (2) Report.--Not later than 2 years after the date of the 
    enactment of this Act, the Comptroller General shall transmit to 
    the Committee on Ways and Means of the House of Representatives and 
    the Committee on Finance of the Senate a written report presenting 
    the results of the Comptroller General's study conducted pursuant 
    to this subsection, together with such recommendations for 
    legislative or administrative changes as the Comptroller General 
    determines are appropriate.
    (d) Report on Disregards Under the DI and SSI Programs.--Not later 
than 90 days after the date of the enactment of this Act, the 
Commissioner of Social Security shall submit to the Committee on Ways 
and Means of the House of Representatives and the Committee on Finance 
of the Senate a report that--
        (1) identifies all income, assets, and resource disregards 
    (imposed under statutory or regulatory authority) that are 
    applicable to individuals receiving benefits under title II or XVI 
    of the Social Security Act (42 U.S.C. 401 et seq., 1381 et seq.);
        (2) with respect to each such disregard--
            (A) specifies the most recent statutory or regulatory 
        modification of the disregard; and
            (B) recommends whether further statutory or regulatory 
        modification of the disregard would be appropriate; and
        (3) with respect to the disregard described in section 
    1612(b)(7) of such Act (42 U.S.C. 1382a(b)(7)) (relating to grants, 
    scholarships, or fellowships received for use in paying the cost of 
    tuition and fees at any educational (including technical or 
    vocational education) institution)--
            (A) identifies the number of individuals receiving benefits 
        under title XVI of such Act (42 U.S.C. 1381 et seq.) who have 
        attained age 22 and have not had any portion of any grant, 
        scholarship, or fellowship received for use in paying the cost 
        of tuition and fees at any educational (including technical or 
        vocational education) institution excluded from their income in 
        accordance with that section;
            (B) recommends whether the age at which such grants, 
        scholarships, or fellowships are excluded from income for 
        purposes of determining eligibility under title XVI of such Act 
        (42 U.S.C. 1381 et seq.) should be increased to age 25; and
            (C) recommends whether such disregard should be expanded to 
        include any such grant, scholarship, or fellowship received for 
        use in paying the cost of room and board at any such 
        institution.
    (e) Study by the General Accounting Office of Social Security 
Administration's Disability Insurance Program Demonstration 
Authority.--
        (1) Study.--As soon as practicable after the date of the 
    enactment of this Act, the Comptroller General of the United States 
    shall undertake a study to assess the results of the Social 
    Security Administration's efforts to conduct disability 
    demonstrations authorized under prior law as well as under section 
    234 of the Social Security Act (as added by section 301 of this 
    Act).
        (2) Report.--Not later than 5 years after the date of the 
    enactment of this Act, the Comptroller General shall transmit to 
    the Committee on Ways and Means of the House of Representatives and 
    the Committee on Finance of the Senate a written report presenting 
    the results of the Comptroller General's study conducted pursuant 
    to this section, together with a recommendation as to whether the 
    demonstration authority authorized under section 234 of the Social 
    Security Act (as added by section 301 of this Act) should be made 
    permanent.

            TITLE IV--MISCELLANEOUS AND TECHNICAL AMENDMENTS

SEC. 401. TECHNICAL AMENDMENTS RELATING TO DRUG ADDICTS AND ALCOHOLICS.

    (a) Clarification Relating to the Effective Date of the Denial of 
Social Security Disability Benefits to Drug Addicts and Alcoholics.--
Section 105(a)(5) of the Contract with America Advancement Act of 1996 
(42 U.S.C. 405 note) is amended--
        (1) in subparagraph (A), by striking ``by the Commissioner of 
    Social Security'' and ``by the Commissioner''; and
        (2) by adding at the end the following new subparagraph:
            ``(D) For purposes of this paragraph, an individual's 
        claim, with respect to benefits under title II based on 
        disability, which has been denied in whole before the date of 
        the enactment of this Act, may not be considered to be finally 
        adjudicated before such date if, on or after such date--
                ``(i) there is pending a request for either 
            administrative or judicial review with respect to such 
            claim; or
                ``(ii) there is pending, with respect to such claim, a 
            readjudication by the Commissioner of Social Security 
            pursuant to relief in a class action or implementation by 
            the Commissioner of a court remand order.
            ``(E) Notwithstanding the provisions of this paragraph, 
        with respect to any individual for whom the Commissioner of 
        Social Security does not perform the entitlement 
        redetermination before the date prescribed in subparagraph (C), 
        the Commissioner shall perform such entitlement redetermination 
        in lieu of a continuing disability review whenever the 
        Commissioner determines that the individual's entitlement is 
        subject to redetermination based on the preceding provisions of 
        this paragraph, and the provisions of section 223(f) shall not 
        apply to such redetermination.''.
    (b) Correction to Effective Date of Provisions Concerning 
Representative Payees and Treatment Referrals of Social Security 
Beneficiaries Who Are Drug Addicts and Alcoholics.--Section 
105(a)(5)(B) of the Contract with America Advancement Act of 1996 (42 
U.S.C. 405 note) is amended to read as follows:
            ``(B) The amendments made by paragraphs (2) and (3) shall 
        take effect on July 1, 1996, with respect to any individual--
                ``(i) whose claim for benefits is finally adjudicated 
            on or after the date of the enactment of this Act; or
                ``(ii) whose entitlement to benefits is based upon an 
            entitlement redetermination made pursuant to subparagraph 
            (C).''.
    (c) Effective Dates.--The amendments made by this section shall 
take effect as if included in the enactment of section 105 of the 
Contract with America Advancement Act of 1996 (Public Law 104-121; 110 
Stat. 852 et seq.).

SEC. 402. TREATMENT OF PRISONERS.

    (a) Implementation of Prohibition Against Payment of Title II 
Benefits to Prisoners.--
        (1) In general.--Section 202(x)(3) of the Social Security Act 
    (42 U.S.C. 402(x)(3)) is amended--
            (A) by inserting ``(A)'' after ``(3)''; and
            (B) by adding at the end the following new subparagraph:
    ``(B)(i) The Commissioner shall enter into an agreement under this 
subparagraph with any interested State or local institution comprising 
a jail, prison, penal institution, or correctional facility, or 
comprising any other institution a purpose of which is to confine 
individuals as described in paragraph (1)(A)(ii). Under such 
agreement--
        ``(I) the institution shall provide to the Commissioner, on a 
    monthly basis and in a manner specified by the Commissioner, the 
    names, Social Security account numbers, dates of birth, confinement 
    commencement dates, and, to the extent available to the 
    institution, such other identifying information concerning the 
    individuals confined in the institution as the Commissioner may 
    require for the purpose of carrying out paragraph (1) and other 
    provisions of this title; and
        ``(II) the Commissioner shall pay to the institution, with 
    respect to information described in subclause (I) concerning each 
    individual who is confined therein as described in paragraph 
    (1)(A), who receives a benefit under this title for the month 
    preceding the first month of such confinement, and whose benefit 
    under this title is determined by the Commissioner to be not 
    payable by reason of confinement based on the information provided 
    by the institution, $400 (subject to reduction under clause (ii)) 
    if the institution furnishes the information to the Commissioner 
    within 30 days after the date such individual's confinement in such 
    institution begins, or $200 (subject to reduction under clause 
    (ii)) if the institution furnishes the information after 30 days 
    after such date but within 90 days after such date.
    ``(ii) The dollar amounts specified in clause (i)(II) shall be 
reduced by 50 percent if the Commissioner is also required to make a 
payment to the institution with respect to the same individual under an 
agreement entered into under section 1611(e)(1)(I).
    ``(iii) There are authorized to be transferred from the Federal 
Old-Age and Survivors Insurance Trust Fund and the Federal Disability 
Insurance Trust Fund, as appropriate, such sums as may be necessary to 
enable the Commissioner to make payments to institutions required by 
clause (i)(II).
    ``(iv) The Commissioner shall maintain, and shall provide on a 
reimbursable basis, information obtained pursuant to agreements entered 
into under this paragraph to any agency administering a Federal or 
federally-assisted cash, food, or medical assistance program for 
eligibility and other administrative purposes under such program.''.
        (2) Conforming amendments to the privacy act.--
    Section 552a(a)(8)(B) of title 5, United States Code, is amended--
            (A) in clause (vi), by striking ``or'' at the end;
            (B) in clause (vii), by adding ``or'' at the end; and
            (C) by adding at the end the following new clause:
                ``(viii) matches performed pursuant to section 
            202(x)(3) or 1611(e)(1) of the Social Security Act (42 
            U.S.C. 402(x)(3), 1382(e)(1));''.
        (3) Conforming amendments to title xvi.--
            (A) Section 1611(e)(1)(I)(i)(I) of the Social Security Act 
        (42 U.S.C. 1382(e)(1)(I)(i)(I)) is amended by striking ``; 
        and'' and inserting ``and the other provisions of this title; 
        and''.
            (B) Section 1611(e)(1)(I)(ii)(II) of such Act (42 U.S.C. 
        1382(e)(1)(I)(ii)(II)) is amended by striking ``is authorized 
        to provide, on a reimbursable basis,'' and inserting ``shall 
        maintain, and shall provide on a reimbursable basis,''.
        (4) Effective date.--The amendments made by this subsection 
    shall apply to individuals whose period of confinement in an 
    institution commences on or after the first day of the fourth month 
    beginning after the month in which this Act is enacted.
    (b) Elimination of Title II Requirement That Confinement Stem From 
Crime Punishable by Imprisonment for More Than 1 Year.--
        (1) In general.--Section 202(x)(1)(A) of the Social Security 
    Act (42 U.S.C. 402(x)(1)(A)) is amended--
            (A) in the matter preceding clause (i), by striking 
        ``during which'' and inserting ``ending with or during or 
        beginning with or during a period of more than 30 days 
        throughout all of which'';
            (B) in clause (i), by striking ``an offense punishable by 
        imprisonment for more than 1 year (regardless of the actual 
        sentence imposed)'' and inserting ``a criminal offense''; and
            (C) in clause (ii)(I), by striking ``an offense punishable 
        by imprisonment for more than 1 year'' and inserting ``a 
        criminal offense''.
        (2) Effective date.--The amendments made by this subsection 
    shall apply to individuals whose period of confinement in an 
    institution commences on or after the first day of the fourth month 
    beginning after the month in which this Act is enacted.
    (c) Conforming Title XVI Amendments.--
        (1) Fifty percent reduction in title xvi payment in case 
    involving comparable title ii payment.--Section 1611(e)(1)(I) of 
    the Social Security Act (42 U.S.C. 1382(e)(1)(I)) is amended--
            (A) in clause (i)(II), by inserting ``(subject to reduction 
        under clause (ii))'' after ``$400'' and after ``$200'';
            (B) by redesignating clauses (ii) and (iii) as clauses 
        (iii) and (iv) respectively; and
            (C) by inserting after clause (i) the following new clause:
    ``(ii) The dollar amounts specified in clause (i)(II) shall be 
reduced by 50 percent if the Commissioner is also required to make a 
payment to the institution with respect to the same individual under an 
agreement entered into under section 202(x)(3)(B).''.
        (2) Expansion of categories of institutions eligible to enter 
    into agreements with the commissioner.--Section 1611(e)(1)(I)(i) of 
    such Act (42 U.S.C. 1382(e)(1)(I)(i)) is amended in the matter 
    preceding subclause (I) by striking ``institution'' and all that 
    follows through ``section 202(x)(1)(A),'' and inserting 
    ``institution comprising a jail, prison, penal institution, or 
    correctional facility, or with any other interested State or local 
    institution a purpose of which is to confine individuals as 
    described in section 202(x)(1)(A)(ii),''.
        (3) Elimination of overly broad exemption.--Section 
    1611(e)(1)(I)(iii) of such Act (42 U.S.C. 1382(e)(1)(I)(iii)) (as 
    redesignated by paragraph (1)(B)) is amended further--
            (A) by striking ``(I) The provisions'' and all that follows 
        through ``(II)''; and
            (B) by striking ``eligibility purposes'' and inserting 
        ``eligibility and other administrative purposes under such 
        program''.
        (4) Effective date.--The amendments made by this subsection 
    shall take effect as if included in the enactment of section 203(a) 
    of the Personal Responsibility and Work Opportunity Reconciliation 
    Act of 1996 (Public Law 104-193; 110 Stat. 2186). The reference to 
    section 202(x)(1)(A)(ii) of the Social Security Act in section 
    1611(e)(1)(I)(i) of the Social Security Act, as amended by 
    paragraph (2) of this subsection, shall be deemed a reference to 
    such section 202(x)(1)(A)(ii) of such Act as amended by subsection 
    (b)(1)(C) of this section.
    (d) Continued Denial of Benefits to Sex Offenders Remaining 
Confined to Public Institutions Upon Completion of Prison Term.--
        (1) In general.--Section 202(x)(1)(A) of the Social Security 
    Act (42 U.S.C. 402(x)(1)(A)) is amended--
            (A) in clause (i), by striking ``or'' at the end;
            (B) in clause (ii)(IV), by striking the period and 
        inserting ``, or''; and
            (C) by adding at the end the following new clause:
        ``(iii) immediately upon completion of confinement as described 
    in clause (i) pursuant to conviction of a criminal offense an 
    element of which is sexual activity, is confined by court order in 
    an institution at public expense pursuant to a finding that the 
    individual is a sexually dangerous person or a sexual predator or a 
    similar finding.''.
        (2) Conforming amendment.--Section 202(x)(1)(B)(ii) of such Act 
    (42 U.S.C. 402(x)(1)(B)(ii)) is amended by striking ``clause (ii)'' 
    and inserting ``clauses (ii) and (iii)''.
        (3) Effective date.--The amendments made by this subsection 
    shall apply with respect to benefits for months ending after the 
    date of the enactment of this Act.

SEC. 403. REVOCATION BY MEMBERS OF THE CLERGY OF EXEMPTION FROM SOCIAL 
              SECURITY COVERAGE.

    (a) In General.--Notwithstanding section 1402(e)(4) of the Internal 
Revenue Code of 1986, any exemption which has been received under 
section 1402(e)(1) of such Code by a duly ordained, commissioned, or 
licensed minister of a church, a member of a religious order, or a 
Christian Science practitioner, and which is effective for the taxable 
year in which this Act is enacted, may be revoked by filing an 
application therefor (in such form and manner, and with such official, 
as may be prescribed by the Commissioner of Internal Revenue), if such 
application is filed no later than the due date of the Federal income 
tax return (including any extension thereof) for the applicant's second 
taxable year beginning after December 31, 1999. Any such revocation 
shall be effective (for purposes of chapter 2 of the Internal Revenue 
Code of 1986 and title II of the Social Security Act (42 U.S.C. 401 et 
seq.)), as specified in the application, either with respect to the 
applicant's first taxable year beginning after December 31, 1999, or 
with respect to the applicant's second taxable year beginning after 
such date, and for all succeeding taxable years; and the applicant for 
any such revocation may not thereafter again file application for an 
exemption under such section 1402(e)(1). If the application is filed 
after the due date of the applicant's Federal income tax return for a 
taxable year and is effective with respect to that taxable year, it 
shall include or be accompanied by payment in full of an amount equal 
to the total of the taxes that would have been imposed by section 1401 
of the Internal Revenue Code of 1986 with respect to all of the 
applicant's income derived in that taxable year which would have 
constituted net earnings from self-employment for purposes of chapter 2 
of such Code (notwithstanding paragraphs (4) and (5) of section 
1402(c)) except for the exemption under section 1402(e)(1) of such 
Code.
    (b) Effective Date.--Subsection (a) shall apply with respect to 
service performed (to the extent specified in such subsection) in 
taxable years beginning after December 31, 1999, and with respect to 
monthly insurance benefits payable under title II on the basis of the 
wages and self-employment income of any individual for months in or 
after the calendar year in which such individual's application for 
revocation (as described in such subsection) is effective (and lump-sum 
death payments payable under such title on the basis of such wages and 
self-employment income in the case of deaths occurring in or after such 
calendar year).

SEC. 404. ADDITIONAL TECHNICAL AMENDMENT RELATING TO COOPERATIVE 
              RESEARCH OR DEMONSTRATION PROJECTS UNDER TITLES II AND 
              XVI.

    (a) In General.--Section 1110(a)(3) of the Social Security Act (42 
U.S.C. 1310(a)(3)) is amended by striking ``title XVI'' and inserting 
``title II or XVI''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect as if included in the enactment of the Social Security 
Independence and Program Improvements Act of 1994 (Public Law 103-296; 
108 Stat. 1464).

SEC. 405. AUTHORIZATION FOR STATE TO PERMIT ANNUAL WAGE REPORTS.

    (a) In General.--Section 1137(a)(3) of the Social Security Act (42 
U.S.C. 1320b-7(a)(3)) is amended by inserting before the semicolon the 
following: ``, and except that in the case of wage reports with respect 
to domestic service employment, a State may permit employers (as so 
defined) that make returns with respect to such employment on a 
calendar year basis pursuant to section 3510 of the Internal Revenue 
Code of 1986 to make such reports on an annual basis''.
    (b) Technical Amendments.--Section 1137(a)(3) of the Social 
Security Act (42 U.S.C. 1320b-7(a)(3)) is amended--
        (1) by striking ``(as defined in section 453A(a)(2)(B)(iii))''; 
    and
        (2) by inserting ``(as defined in section 453A(a)(2)(B))'' 
    after ``employers'' .
    (c) Effective Date.--The amendments made by this section shall 
apply to wage reports required to be submitted on and after the date of 
the enactment of this Act.

SEC. 406. ASSESSMENT ON ATTORNEYS WHO RECEIVE THEIR FEES VIA THE SOCIAL 
              SECURITY ADMINISTRATION.

    (a) Assessment on Attorneys.--
        (1) In General.--Section 206 of the Social Security Act (42 
    U.S.C. 406) is amended by adding at the end the following new 
    subsection:
    ``(d) Assessment on Attorneys.--
        ``(1) In general.--Whenever a fee for services is required to 
    be certified for payment to an attorney from a claimant's past-due 
    benefits pursuant to subsection (a)(4) or (b)(1), the Commissioner 
    shall impose on the attorney an assessment calculated in accordance 
    with paragraph (2).
        ``(2) Amount.--
            ``(A) The amount of an assessment under paragraph (1) shall 
        be equal to the product obtained by multiplying the amount of 
        the representative's fee that would be required to be so 
        certified by subsection (a)(4) or (b)(1) before the application 
        of this subsection, by the percentage specified in subparagraph 
        (B).
            ``(B) The percentage specified in this subparagraph is--
                ``(i) for calendar years before 2001, 6.3 percent, and
                ``(ii) for calendar years after 2000, such percentage 
            rate as the Commissioner determines is necessary in order 
            to achieve full recovery of the costs of determining and 
            certifying fees to attorneys from the past-due benefits of 
            claimants, but not in excess of 6.3 percent.
        ``(3) Collection.--The Commissioner may collect the assessment 
    imposed on an attorney under paragraph (1) by offset from the 
    amount of the fee otherwise required by subsection (a)(4) or (b)(1) 
    to be certified for payment to the attorney from a claimant's past-
    due benefits.
        ``(4) Prohibition on claimant reimbursement.--An attorney 
    subject to an assessment under paragraph (1) may not, directly or 
    indirectly, request or otherwise obtain reimbursement for such 
    assessment from the claimant whose claim gave rise to the 
    assessment.
        ``(5) Disposition of assessments.--Assessments on attorneys 
    collected under this subsection shall be credited to the Federal 
    Old-Age and Survivors Insurance Trust Fund and the Federal 
    Disability Insurance Trust Fund, as appropriate.
        ``(6) Authorization of appropriations.--The assessments 
    authorized under this section shall be collected and available for 
    obligation only to the extent and in the amount provided in advance 
    in appropriations Acts. Amounts so appropriated are authorized to 
    remain available until expended, for administrative expenses in 
    carrying out this title and related laws.''.
        (2) Conforming amendments.--
            (A) Section 206(a)(4)(A) of such Act (42 U.S.C. 
        406(a)(4)(A)) is amended by inserting ``and subsection (d)'' 
        after ``subparagraph (B)''.
            (B) Section 206(b)(1)(A) of such Act (42 U.S.C. 
        406(b)(1)(A)) is amended by inserting ``, but subject to 
        subsection (d) of this section'' after ``section 205(i)''.
    (b) Elimination of 15-Day Waiting Period for Payment of Fees.--
Section 206(a)(4) of such Act (42 U.S.C. 406(a)(4)), as amended by 
subsection (a)(2)(A) of this section, is amended--
        (1) by striking ``(4)(A)'' and inserting ``(4)'';
        (2) by striking ``subparagraph (B) and''; and
        (3) by striking subparagraph (B).
    (c) GAO Study and Report.--
        (1) Study.--The Comptroller General of the United States shall 
    conduct a study that--
            (A) examines the costs incurred by the Social Security 
        Administration in administering the provisions of subsection 
        (a)(4) and (b)(1) of section 206 of the Social Security Act (42 
        U.S.C. 406) and itemizes the components of such costs, 
        including the costs of determining fees to attorneys from the 
        past-due benefits of claimants before the Commissioner of 
        Social Security and of certifying such fees;
            (B) identifies efficiencies that the Social Security 
        Administration could implement to reduce such costs;
            (C) examines the feasibility and advisability of linking 
        the payment of, or the amount of, the assessment under section 
        206(d) of the Social Security Act (42 U.S.C. 406(d)) to the 
        timeliness of the payment of the fee to the attorney as 
        certified by the Commissioner of Social Security pursuant to 
        subsection (a)(4) or (b)(1) of section 206 of such Act (42 
        U.S.C. 406);
            (D) determines whether the provisions of subsection (a)(4) 
        and (b)(1) of section 206 of such Act (42 U.S.C. 406) should be 
        applied to claimants under title XVI of such Act (42 U.S.C 1381 
        et seq.);
            (E) determines the feasibility and advisability of stating 
        fees under section 206(d) of such Act (42 U.S.C. 406(d)) in 
        terms of a fixed dollar amount as opposed to a percentage;
            (F) determines whether the dollar limit specified in 
        section 206(a)(2)(A)(ii)(II) of such Act (42 U.S.C. 
        406(a)(2)(A)(ii)(II)) should be raised; and
            (G) determines whether the assessment on attorneys required 
        under section 206(d) of such Act (42 U.S.C. 406(d)) (as added 
        by subsection (a)(1) of this section) impairs access to legal 
        representation for claimants.
        (2) Report.--Not later than 1 year after the date of the 
    enactment of this Act, the Comptroller General of the United States 
    shall submit a report to the Committee on Ways and Means of the 
    House of Representatives and the Committee on Finance of the Senate 
    on the study conducted under paragraph (1), together with any 
    recommendations for legislation that the Comptroller General 
    determines to be appropriate as a result of such study.
    (d) Effective Date.--The amendments made by this section shall 
apply in the case of any attorney with respect to whom a fee for 
services is required to be certified for payment from a claimant's 
past-due benefits pursuant to subsection (a)(4) or (b)(1) of section 
206 of the Social Security Act after the later of--
        (1) December 31, 1999, or
        (2) the last day of the first month beginning after the month 
    in which this Act is enacted.

SEC. 407. EXTENSION OF AUTHORITY OF STATE MEDICAID FRAUD CONTROL UNITS.

    (a) Extension of Authority To Investigate and Prosecute Fraud in 
Other Federal Health Care Programs.--Section 1903(q)(3) of the Social 
Security Act (42 U.S.C. 1396b(q)(3)) is amended--
        (1) by inserting ``(A)'' after ``in connection with''; and
        (2) by striking ``title.'' and inserting ``title; and (B) upon 
    the approval of the Inspector General of the relevant Federal 
    agency, any aspect of the provision of health care services and 
    activities of providers of such services under any Federal health 
    care program (as defined in section 1128B(f)(1)), if the suspected 
    fraud or violation of law in such case or investigation is 
    primarily related to the State plan under this title.''.
    (b) Recoupment of Funds.--Section 1903(q)(5) of such Act (42 U.S.C. 
1396b(q)(5)) is amended--
        (1) by inserting ``or under any Federal health care program (as 
    so defined)'' after ``plan''; and
        (2) by adding at the end the following: ``All funds collected 
    in accordance with this paragraph shall be credited exclusively to, 
    and available for expenditure under, the Federal health care 
    program (including the State plan under this title) that was 
    subject to the activity that was the basis for the collection.''.
    (c) Extension of Authority To Investigate and Prosecute Resident 
Abuse in Non-Medicaid Board and Care Facilities.--Section 1903(q)(4) of 
such Act (42 U.S.C. 1396b(q)(4)) is amended to read as follows:
        ``(4)(A) The entity has--
            ``(i) procedures for reviewing complaints of abuse or 
        neglect of patients in health care facilities which receive 
        payments under the State plan under this title;
            ``(ii) at the option of the entity, procedures for 
        reviewing complaints of abuse or neglect of patients residing 
        in board and care facilities; and
            ``(iii) procedures for acting upon such complaints under 
        the criminal laws of the State or for referring such complaints 
        to other State agencies for action.
        ``(B) For purposes of this paragraph, the term `board and care 
    facility' means a residential setting which receives payment 
    (regardless of whether such payment is made under the State plan 
    under this title) from or on behalf of two or more unrelated adults 
    who reside in such facility, and for whom one or both of the 
    following is provided:
            ``(i) Nursing care services provided by, or under the 
        supervision of, a registered nurse, licensed practical nurse, 
        or licensed nursing assistant.
            ``(ii) A substantial amount of personal care services that 
        assist residents with the activities of daily living, including 
        personal hygiene, dressing, bathing, eating, toileting, 
        ambulation, transfer, positioning, self-medication, body care, 
        travel to medical services, essential shopping, meal 
        preparation, laundry, and housework.''.
    (d) Effective Date.--The amendments made by this section take 
effect on the date of the enactment of this Act.

SEC. 408. CLIMATE DATABASE MODERNIZATION.

    Notwithstanding any other provision of law, the National Oceanic 
and Atmospheric Administration shall initiate a new competitive 
contract procurement for its multi-year program for key entry of 
valuable climate records, archive services, and database development in 
accordance with existing Federal procurement laws and regulations.

SEC. 409. SPECIAL ALLOWANCE ADJUSTMENT FOR STUDENT LOANS.

    (a) Amendment.--Section 438(b)(2) of the Higher Education Act of 
1965 (20 U.S.C. 1087-1(b)(2)) is amended--
        (1) in subparagraph (A), by striking ``(G), and (H)'' and 
    inserting ``(G), (H), and (I)'';
        (2) in subparagraph (B)(iv), by striking ``(G), or (H)'' and 
    inserting ``(G), (H), or (I)'';
        (3) in subparagraph (C)(ii), by striking ``(G) and (H)'' and 
    inserting ``(G), (H), and (I)'';
        (4) in the heading of subparagraph (H), by striking ``july 1, 
    2003'' and inserting ``january 1, 2000'';
        (5) in subparagraph (H), by striking ``July 1, 2003,'' each 
    place it appears and inserting ``January 1, 2000,''; and
        (6) by inserting after subparagraph (H) the following new 
    subparagraph:
            ``(I) Loans disbursed on or after january 1, 2000, and 
        before july 1, 2003.--
                ``(i) In general.--Notwithstanding subparagraphs (G) 
            and (H), but subject to paragraph (4) and clauses (ii), 
            (iii), and (iv) of this subparagraph, and except as 
            provided in subparagraph (B), the special allowance paid 
            pursuant to this subsection on loans for which the first 
            disbursement is made on or after January 1, 2000, and 
            before July 1, 2003, shall be computed--

                    ``(I) by determining the average of the bond 
                equivalent rates of the quotes of the 3-month 
                commercial paper (financial) rates in effect for each 
                of the days in such quarter as reported by the Federal 
                Reserve in Publication H-15 (or its successor) for such 
                3-month period;
                    ``(II) by subtracting the applicable interest rates 
                on such loans from such average bond equivalent rate;
                    ``(III) by adding 2.34 percent to the resultant 
                percent; and
                    ``(IV) by dividing the resultant percent by 4.

                ``(ii) In school and grace period.--In the case of any 
            loan for which the first disbursement is made on or after 
            January 1, 2000, and before July 1, 2003, and for which the 
            applicable rate of interest is described in section 
            427A(k)(2), clause (i)(III) of this subparagraph shall be 
            applied by substituting `1.74 percent' for `2.34 percent'.
                ``(iii) PLUS loans.--In the case of any loan for which 
            the first disbursement is made on or after January 1, 2000, 
            and before July 1, 2003, and for which the applicable rate 
            of interest is described in section 427A(k)(3), clause 
            (i)(III) of this subparagraph shall be applied by 
            substituting `2.64 percent' for `2.34 percent', subject to 
            clause (v) of this subparagraph.
                ``(iv) Consolidation loans.--In the case of any 
            consolidation loan for which the application is received by 
            an eligible lender on or after January 1, 2000, and before 
            July 1, 2003, and for which the applicable interest rate is 
            determined under section 427A(k)(4), clause (i)(III) of 
            this subparagraph shall be applied by substituting `2.64 
            percent' for `2.34 percent', subject to clause (vi) of this 
            subparagraph.
                ``(v) Limitation on special allowances for plus 
            loans.--In the case of PLUS loans made under section 428B 
            and first disbursed on or after January 1, 2000, and before 
            July 1, 2003, for which the interest rate is determined 
            under section 427A(k)(3), a special allowance shall not be 
            paid for such loan during any 12-month period beginning on 
            July 1 and ending on June 30 unless, on the June 1 
            preceding such July 1--

                    ``(I) the bond equivalent rate of 91-day Treasury 
                bills auctioned at the final auction held prior to such 
                June 1 (as determined by the Secretary for purposes of 
                such section); plus
                    ``(II) 3.1 percent,

            exceeds 9.0 percent.
                ``(vi) Limitation on special allowances for 
            consolidation loans.--In the case of consolidation loans 
            made under section 428C and for which the application is 
            received on or after January 1, 2000, and before July 1, 
            2003, for which the interest rate is determined under 
            section 427A(k)(4), a special allowance shall not be paid 
            for such loan during any 3-month period ending March 31, 
            June 30, September 30, or December 31 unless--

                    ``(I) the average of the bond equivalent rates of 
                the quotes of the 3-month commercial paper (financial) 
                rates in effect for each of the days in such quarter as 
                reported by the Federal Reserve in Publication H-15 (or 
                its successor) for such 3-month period; plus
                    ``(II) 2.64 percent,

            exceeds the rate determined under section 427A(k)(4).''.
    (b) Effective Date.--Subparagraph (I) of section 438(b)(2) of the 
Higher Education Act of 1965 (20 U.S.C. 1087-1(b)(2)) as added by 
subsection (a) of this section shall apply with respect to any payment 
pursuant to such section with respect to any 3-month period beginning 
on or after January 1, 2000, for loans for which the first disbursement 
is made after such date.

SEC. 410. SCHEDULE FOR PAYMENTS UNDER SSI STATE SUPPLEMENTATION 
              AGREEMENTS.

    (a) Schedule for SSI Supplementation Payments.--
        (1) In general.--Section 1616(d) of the Social Security Act (42 
    U.S.C. 1382e(d)) is amended--
            (A) in paragraph (1), by striking ``at such times and in 
        such installments as may be agreed upon between the 
        Commissioner of Social Security and such State'' and inserting 
        ``in accordance with paragraph (5)''; and
            (B) by adding at the end the following new paragraph:
    ``(5)(A)(i) Any State which has entered into an agreement with the 
Commissioner of Social Security under this section shall remit the 
payments and fees required under this subsection with respect to 
monthly benefits paid to individuals under this title no later than--
        ``(I) the business day preceding the date that the Commissioner 
    pays such monthly benefits; or
        ``(II) with respect to such monthly benefits paid for the month 
    that is the last month of the State's fiscal year, the fifth 
    business day following such date.
    ``(ii) The Commissioner may charge States a penalty in an amount 
equal to 5 percent of the payment and the fees due if the remittance is 
received after the date required by clause (i).
    ``(B) The Cash Management Improvement Act of 1990 shall not apply 
to any payments or fees required under this subsection that are paid by 
a State before the date required by subparagraph (A)(i).
    ``(C) Notwithstanding subparagraph (A)(i), the Commissioner may 
make supplementary payments on behalf of a State with funds 
appropriated for payment of benefits under this title, and subsequently 
to be reimbursed for such payments by the State at such times as the 
Commissioner and State may agree. Such authority may be exercised only 
if extraordinary circumstances affecting a State's ability to make 
payment when required by subparagraph (A)(i) are determined by the 
Commissioner to exist.''.
        (2) Amendment to section 212.--Section 212 of Public Law 93-66 
    (42 U.S.C. 1382 note) is amended--
            (A) in subsection (b)(3)(A), by striking ``at such times 
        and in such installments as may be agreed upon between the 
        Secretary and the State'' and inserting ``in accordance with 
        subparagraph (E)'';
            (B) by adding at the end of subsection (b)(3) the following 
        new subparagraph:
    ``(E)(i) Any State which has entered into an agreement with the 
Commissioner of Social Security under this section shall remit the 
payments and fees required under this paragraph with respect to monthly 
benefits paid to individuals under title XVI of the Social Security Act 
no later than--
        ``(I) the business day preceding the date that the Commissioner 
    pays such monthly benefits; or
        ``(II) with respect to such monthly benefits paid for the month 
    that is the last month of the State's fiscal year, the fifth 
    business day following such date.
    ``(ii) The Cash Management Improvement Act of 1990 shall not apply 
to any payments or fees required under this paragraph that are paid by 
a State before the date required by clause (i).
    ``(iii) Notwithstanding clause (i), the Commissioner may make 
supplementary payments on behalf of a State with funds appropriated for 
payment of supplemental security income benefits under title XVI of the 
Social Security Act, and subsequently to be reimbursed for such 
payments by the State at such times as the Commissioner and State may 
agree. Such authority may be exercised only if extraordinary 
circumstances affecting a State's ability to make payment when required 
by clause (i) are determined by the Commissioner to exist.''; and
            (C) by striking ``Secretary of Health, Education, and 
        Welfare'' and ``Secretary'' each place such term appear and 
        inserting ``Commissioner of Social Security''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to payments and fees arising under an agreement between a State 
and the Commissioner of Social Security under section 1616 of the 
Social Security Act (42 U.S.C. 1382e) or under section 212 of Public 
Law 93-66 (42 U.S.C. 1382 note) with respect to monthly benefits paid 
to individuals under title XVI of the Social Security Act for months 
after September 2009 (October 2009 in the case of a State with a fiscal 
year that coincides with the Federal fiscal year), without regard to 
whether the agreement has been modified to reflect such amendments or 
the Commissioner has promulgated regulations implementing such 
amendments.

SEC. 411. BONUS COMMODITIES.

    Section 6(e)(1) of the Richard B. Russell National School Lunch Act 
(42 U.S.C. 1755(e)(1)) is amended--
        (1) by striking ``in the form of commodity assistance'' and 
    inserting ``in the form of--
        ``(A) commodity assistance'';
        (2) by striking the period at the end and inserting ``; or''; 
    and
        (3) by adding at the end the following:
        ``(B) during the period beginning October 1, 2000, and ending 
    September 30, 2009, commodities provided by the Secretary under any 
    provision of law.''.

SEC. 412. SIMPLIFICATION OF DEFINITION OF FOSTER CHILD UNDER EIC.

    (a) In General.--Section 32(c)(3)(B)(iii) of the Internal Revenue 
Code of 1986 (defining eligible foster child) is amended by 
redesignating subclauses (I) and (II) as subclauses (II) and (III), 
respectively, and by inserting before subclause (II), as so 
redesignated, the following:

                    ``(I) is a brother, sister, stepbrother, or 
                stepsister of the taxpayer (or a descendant of any such 
                relative) or is placed with the taxpayer by an 
                authorized placement agency,''.

    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.

SEC. 413. DELAY OF EFFECTIVE DATE OF ORGAN PROCUREMENT AND 
              TRANSPLANTATION NETWORK FINAL RULE.

    (a) In General.--The final rule entitled ``Organ Procurement and 
Transplantation Network'', promulgated by the Secretary of Health and 
Human Services on April 2, 1998 (63 Fed. Reg. 16295 et seq.) (relating 
to part 121 of title 42, Code of Federal Regulations), together with 
the amendments to such rules promulgated on October 20, 1999 (64 Fed. 
Reg. 56649 et seq.) shall not become effective before the expiration of 
the 90-day period beginning on the date of the enactment of this Act.
    (b) Notice and Review.--For purposes of subsection (a):
        (1) Not later than 3 days after the date of the enactment of 
    this Act, the Secretary of Health and Human Services (referred to 
    in this subsection as the ``Secretary'') shall publish in the 
    Federal Register a notice providing that the period within which 
    comments on the final rule may be submitted to the Secretary is 60 
    days after the date of such publication of the notice.
        (2) Not later than 21 days after the expiration of such 60-day 
    period, the Secretary shall complete the review of the comments 
    submitted pursuant to paragraph (1) and shall amend the final rule 
    with any revisions appropriate according to the review by the 
    Secretary of such comments. The final rule may be in the form of 
    amendments to the rule referred to in subsection (a) that was 
    promulgated on April 2, 1998, and in the form of amendments to the 
    rule referred to in such subsection that was promulgated on October 
    20, 1999.

               TITLE V--TAX RELIEF EXTENSION ACT OF 1999

SEC. 500. SHORT TITLE OF TITLE.

    This title may be cited as the ``Tax Relief Extension Act of 
1999''.

                         Subtitle A--Extensions

SEC. 501. ALLOWANCE OF NONREFUNDABLE PERSONAL CREDITS AGAINST REGULAR 
              AND MINIMUM TAX LIABILITY.

    (a) In General.--Subsection (a) of section 26 of the Internal 
Revenue Code of 1986 (relating to limitation based on amount of tax) is 
amended to read as follows:
    ``(a) Limitation Based on Amount of Tax.--
        ``(1) In general.--The aggregate amount of credits allowed by 
    this subpart for the taxable year shall not exceed the excess (if 
    any) of--
            ``(A) the taxpayer's regular tax liability for the taxable 
        year, over
            ``(B) the tentative minimum tax for the taxable year 
        (determined without regard to the alternative minimum tax 
        foreign tax credit).
    For purposes of subparagraph (B), the taxpayer's tentative minimum 
    tax for any taxable year beginning during 1999 shall be treated as 
    being zero.''.
        ``(2) Special rule for 2000 and 2001.--For purposes of any 
    taxable year beginning during 2000 or 2001, the aggregate amount of 
    credits allowed by this subpart for the taxable year shall not 
    exceed the sum of--
            ``(A) the taxpayer's regular tax liability for the taxable 
        year reduced by the foreign tax credit allowable under section 
        27(a), and
            ``(B) the tax imposed by section 55(a) for the taxable 
        year.''.
    (b) Conforming Amendments.--
        (1) Section 24(d)(2) of such Code is amended by striking 
    ``1998'' and inserting ``2001''.
        (2) Section 904(h) of such Code is amended by adding at the end 
    the following: ``This subsection shall not apply to taxable years 
    beginning during 2000 or 2001.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1998.

SEC. 502. RESEARCH CREDIT.

    (a) Extension.--
        (1) In general.--Paragraph (1) of section 41(h) of the Internal 
    Revenue Code of 1986 (relating to termination) is amended--
            (A) by striking ``June 30, 1999'' and inserting ``June 30, 
        2004''; and
            (B) by striking the material following subparagraph (B).
        (2) Technical amendment.--Subparagraph (D) of section 45C(b)(1) 
    of such Code is amended by striking ``June 30, 1999'' and inserting 
    ``June 30, 2004''.
        (3) Effective date.--The amendments made by this subsection 
    shall apply to amounts paid or incurred after June 30, 1999.
    (b) Increase in Percentages Under Alternative Incremental Credit.--
        (1) In general.--Subparagraph (A) of section 41(c)(4) of such 
    Code is amended--
            (A) by striking ``1.65 percent'' and inserting ``2.65 
        percent'';
            (B) by striking ``2.2 percent'' and inserting ``3.2 
        percent''; and
            (C) by striking ``2.75 percent'' and inserting ``3.75 
        percent''.
        (2) Effective date.--The amendments made by this subsection 
    shall apply to taxable years beginning after June 30, 1999.
    (c) Extension of Research Credit to Research in Puerto Rico and the 
possessions of the United States.--
        (1) In general.--Subsections (c)(6) and (d)(4)(F) of section 41 
    of such Code (relating to foreign research) are each amended by 
    inserting ``, the Commonwealth of Puerto Rico, or any possession of 
    the United States'' after ``United States''.
        (2) Denial of double benefit.--Section 280C(c)(1) of such Code 
    is amended by inserting ``or credit'' after ``deduction'' each 
    place it appears.
        (3) Effective date.--The amendments made by this subsection 
    shall apply to amounts paid or incurred after June 30, 1999.
    (d) Special Rule.--
        (1) In general.--For purposes of the Internal Revenue Code of 
    1986, the credit determined under section 41 of such Code which is 
    otherwise allowable under such Code--
            (A) shall not be taken into account prior to October 1, 
        2000, to the extent such credit is attributable to the first 
        suspension period; and
            (B) shall not be taken into account prior to October 1, 
        2001, to the extent such credit is attributable to the second 
        suspension period.
    On or after the earliest date that an amount of credit may be taken 
    into account, such amount may be taken into account through the 
    filing of an amended return, an application for expedited refund, 
    an adjustment of estimated taxes, or other means allowed by such 
    Code.
        (2) Suspension periods.--For purposes of this subsection--
            (A) the first suspension period is the period beginning on 
        July 1, 1999, and ending on September 30, 2000; and
            (B) the second suspension period is the period beginning on 
        October 1, 2000, and ending on September 30, 2001.
        (3) Expedited refunds.--
            (A) In general.--If there is an overpayment of tax with 
        respect to a taxable year by reason of paragraph (1), the 
        taxpayer may file an application for a tentative refund of such 
        overpayment. Such application shall be in such manner and form, 
        and contain such information, as the Secretary may prescribe.
            (B) Deadline for applications.--Subparagraph (A) shall 
        apply only to an application filed before the date which is 1 
        year after the close of the suspension period to which the 
        application relates.
            (C) Allowance of adjustments.--Not later than 90 days after 
        the date on which an application is filed under this paragraph, 
        the Secretary shall--
                (i) review the application;
                (ii) determine the amount of the overpayment; and
                (iii) apply, credit, or refund such overpayment,
        in a manner similar to the manner provided in section 6411(b) 
        of such Code.
            (D) Consolidated returns.--The provisions of section 
        6411(c) of such Code shall apply to an adjustment under this 
        paragraph in such manner as the Secretary may provide.
        (4) Credit attributable to suspension period.--
            (A) In general.--For purposes of this subsection, in the 
        case of a taxable year which includes a portion of the 
        suspension period, the amount of credit determined under 
        section 41 of such Code for such taxable year which is 
        attributable to such period is the amount which bears the same 
        ratio to the amount of credit determined under such section 41 
        for such taxable year as the number of months in the suspension 
        period which are during such taxable year bears to the number 
        of months in such taxable year.
            (B) Waiver of estimated tax penalties.--No addition to tax 
        shall be made under section 6654 or 6655 of such Code for any 
        period before July 1, 1999, with respect to any underpayment of 
        tax imposed by such Code to the extent such underpayment was 
        created or increased by reason of subparagraph (A).
        (5) Secretary.--For purposes of this subsection, the term 
    ``Secretary'' means the Secretary of the Treasury (or such 
    Secretary's delegate).

SEC. 503. SUBPART F EXEMPTION FOR ACTIVE FINANCING INCOME.

    (a) In General.--Sections 953(e)(10) and 954(h)(9) of the Internal 
Revenue Code of 1986 (relating to application) are each amended--
        (1) by striking ``the first taxable year'' and inserting 
    ``taxable years'';
        (2) by striking ``January 1, 2000'' and inserting ``January 1, 
    2002''; and
        (3) by striking ``within which such'' and inserting ``within 
    which any such''.
    (b) Technical Amendment.--Paragraph (10) of section 953(e) of such 
Code is amended by adding at the end the following new sentence: ``If 
this subsection does not apply to a taxable year of a foreign 
corporation beginning after December 31, 2001 (and taxable years of 
United States shareholders ending with or within such taxable year), 
then, notwithstanding the preceding sentence, subsection (a) shall be 
applied to such taxable years in the same manner as it would if the 
taxable year of the foreign corporation began in 1998.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1999.

SEC. 504. TAXABLE INCOME LIMIT ON PERCENTAGE DEPLETION FOR MARGINAL 
              PRODUCTION.

    (a) In General.--Subparagraph (H) of section 613A(c)(6) of the 
Internal Revenue Code of 1986 (relating to temporary suspension of 
taxable limit with respect to marginal production) is amended by 
striking ``January 1, 2000'' and inserting ``January 1, 2002''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 1999.

SEC. 505. WORK OPPORTUNITY CREDIT AND WELFARE-TO-WORK CREDIT.

    (a) Temporary Extension.--Sections 51(c)(4)(B) and 51A(f) of the 
Internal Revenue Code of 1986 (relating to termination) are each 
amended by striking ``June 30, 1999'' and inserting ``December 31, 
2001''.
    (b) Clarification of First Year of Employment.--Paragraph (2) of 
section 51(i) of such Code is amended by striking ``during which he was 
not a member of a targeted group''.
    (c) Effective Date.--The amendments made by this section shall 
apply to individuals who begin work for the employer after June 30, 
1999.

SEC. 506. EMPLOYER-PROVIDED EDUCATIONAL ASSISTANCE.

    (a) In General.--Subsection (d) of section 127 of the Internal 
Revenue Code of 1986 (relating to termination) is amended by striking 
``May 31, 2000'' and inserting ``December 31, 2001''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to courses beginning after May 31, 2000.

SEC. 507. EXTENSION AND MODIFICATION OF CREDIT FOR PRODUCING 
              ELECTRICITY FROM CERTAIN RENEWABLE RESOURCES.

    (a) Extension and Modification of Placed-in-Service Rules.--
Paragraph (3) of section 45(c) of the Internal Revenue Code of 1986 is 
amended to read as follows:
        ``(3) Qualified facility.--
            ``(A) Wind facility.--In the case of a facility using wind 
        to produce electricity, the term `qualified facility' means any 
        facility owned by the taxpayer which is originally placed in 
        service after December 31, 1993, and before January 1, 2002.
            ``(B) Closed-loop biomass facility.--In the case of a 
        facility using closed-loop biomass to produce electricity, the 
        term `qualified facility' means any facility owned by the 
        taxpayer which is originally placed in service after December 
        31, 1992, and before January 1, 2002.
            ``(C) Poultry waste facility.--In the case of a facility 
        using poultry waste to produce electricity, the term `qualified 
        facility' means any facility of the taxpayer which is 
        originally placed in service after December 31, 1999, and 
        before January 1, 2002.''.
    (b) Expansion of Qualified Energy Resources.--
        (1) In general.--Section 45(c)(1) of such Code (defining 
    qualified energy resources) is amended by striking ``and'' at the 
    end of subparagraph (A), by striking the period at the end of 
    subparagraph (B) and inserting ``, and'', and by adding at the end 
    the following new subparagraph:
            ``(C) poultry waste.''.
        (2) Definition.--Section 45(c) of such Code is amended by 
    adding at the end the following new paragraph:
        ``(4) Poultry waste.--The term `poultry waste' means poultry 
    manure and litter, including wood shavings, straw, rice hulls, and 
    other bedding material for the disposition of manure.''.
    (c) Special Rules.--Section 45(d) of such Code (relating to 
definitions and special rules) is amended by adding at the end the 
following new paragraphs:
        ``(6) Credit eligibility in the case of government-owned 
    facilities using poultry waste.--In the case of a facility using 
    poultry waste to produce electricity and owned by a governmental 
    unit, the person eligible for the credit under subsection (a) is 
    the lessee or the operator of such facility.
        ``(7) Credit not to apply to electricity sold to utilities 
    under certain contracts.--
            ``(A) In general.--The credit determined under subsection 
        (a) shall not apply to electricity--
                ``(i) produced at a qualified facility described in 
            paragraph (3)(A) which is placed in service by the taxpayer 
            after June 30, 1999, and
                ``(ii) sold to a utility pursuant to a contract 
            originally entered into before January 1, 1987 (whether or 
            not amended or restated after that date).
            ``(B) Exception.--Subparagraph (A) shall not apply if--
                ``(i) the prices for energy and capacity from such 
            facility are established pursuant to an amendment to the 
            contract referred to in subparagraph (A)(ii),
                ``(ii) such amendment provides that the prices set 
            forth in the contract which exceed avoided cost prices 
            determined at the time of delivery shall apply only to 
            annual quantities of electricity (prorated for partial 
            years) which do not exceed the greater of--

                    ``(I) the average annual quantity of electricity 
                sold to the utility under the contract during calendar 
                years 1994, 1995, 1996, 1997, and 1998, or
                    ``(II) the estimate of the annual electricity 
                production set forth in the contract, or, if there is 
                no such estimate, the greatest annual quantity of 
                electricity sold to the utility under the contract in 
                any of the calendar years 1996, 1997, or 1998, and

                ``(iii) such amendment provides that energy and 
            capacity in excess of the limitation in clause (ii) may 
            be--

                    ``(I) sold to the utility only at prices that do 
                not exceed avoided cost prices determined at the time 
                of delivery, or
                    ``(II) sold to a third party subject to a mutually 
                agreed upon advance notice to the utility.

        For purposes of this subparagraph, avoided cost prices shall be 
        determined as provided for in 18 CFR 292.304(d)(1) or any 
        successor regulation.''.
    (d) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 508. EXTENSION OF DUTY-FREE TREATMENT UNDER GENERALIZED SYSTEM OF 
              PREFERENCES.

    (a) In General.--Section 505 of the Trade Act of 1974 (19 U.S.C. 
2465) is amended by striking ``June 30, 1999'' and inserting 
``September 30, 2001''.
    (b) Effective Date.--
        (1) In general.--The amendment made by this section applies to 
    articles entered on or after the date of the enactment of this Act.
        (2) Retroactive application for certain liquidations and 
    reliquidations.--
            (A) General rule.--Notwithstanding section 514 of the 
        Tariff Act of 1930 or any other provision of law, and subject 
        to paragraph (3), any entry--
                (i) of an article to which duty-free treatment under 
            title V of the Trade Act of 1974 would have applied if such 
            entry had been made on July 1, 1999, and such title had 
            been in effect on July 1, 1999; and
                (ii) that was made--

                    (I) after June 30, 1999; and
                    (II) before the date of the enactment of this Act,

        shall be liquidated or reliquidated as free of duty, and the 
        Secretary of the Treasury shall refund any duty paid with 
        respect to such entry.
            (B) Entry.--As used in this paragraph, the term ``entry'' 
        includes a withdrawal from warehouse for consumption.
        (3) Requests.--Liquidation or reliquidation may be made under 
    paragraph (2) with respect to an entry only if a request therefore 
    is filed with the Customs Service, within 180 days after the date 
    of the enactment of this Act, that contains sufficient information 
    to enable the Customs Service--
            (A) to locate the entry; or
            (B) to reconstruct the entry if it cannot be located.

SEC. 509. EXTENSION OF CREDIT FOR HOLDERS OF QUALIFIED ZONE ACADEMY 
              BONDS.

    (a) In General.--Section 1397E(e)(1) of the Internal Revenue Code 
of 1986 (relating to national limitation) is amended by striking ``and 
1999'' and inserting ``, 1999, 2000, and 2001''.
    (b) Limitation on Carryover Periods.--Paragraph (4) of section 
1397E(e) of such Code is amended by adding at the end the following 
flush sentences:
    ``Any carryforward of a limitation amount may be carried only to 
    the first 2 years (3 years for carryforwards from 1998 or 1999) 
    following the unused limitation year. For purposes of the preceding 
    sentence, a limitation amount shall be treated as used on a first-
    in first-out basis.''.

SEC. 510. EXTENSION OF FIRST-TIME HOMEBUYER CREDIT FOR DISTRICT OF 
              COLUMBIA.

    Section 1400C(i) of the Internal Revenue Code of 1986 is amended by 
striking ``2001'' and inserting ``2002''.

SEC. 511. EXTENSION OF EXPENSING OF ENVIRONMENTAL REMEDIATION COSTS.

    Section 198(h) of the Internal Revenue Code of 1986 is amended by 
striking ``2000'' and inserting ``2001''.

SEC. 512. TEMPORARY INCREASE IN AMOUNT OF RUM EXCISE TAX COVERED OVER 
              TO PUERTO RICO AND VIRGIN ISLANDS.

    (a) In General.--Section 7652(f)(1) of the Internal Revenue Code of 
1986 (relating to limitation on cover over of tax on distilled spirits) 
is amended to read as follows:
        ``(1) $10.50 ($13.25 in the case of distilled spirits brought 
    into the United States after June 30, 1999, and before January 1, 
    2002), or''.
    (b) Special Cover Over Transfer Rules.--Notwithstanding section 
7652 of the Internal Revenue Code of 1986, the following rules shall 
apply with respect to any transfer before October 1, 2000, of amounts 
relating to the increase in the cover over of taxes by reason of the 
amendment made by subsection (a):
        (1) Initial transfer of incremental increase in cover over.--
    The Secretary of the Treasury shall, within 15 days after the date 
    of the enactment of this Act, transfer an amount equal to the 
    lesser of--
            (A) the amount of such increase otherwise required to be 
        covered over after June 30, 1999, and before the date of the 
        enactment of this Act; or
            (B) $20,000,000.
        (2) Transfer of incremental increase for fiscal year 2001.--The 
    Secretary of the Treasury shall on October 1, 2000, transfer an 
    amount equal to the excess of--
            (A) the amount of such increase otherwise required to be 
        covered over after June 30, 1999, and before October 1, 2000, 
        over
            (B) the amount of the transfer described in paragraph (1).
    (c) Effective Date.--The amendment made by subsection (a) shall 
take effect on July 1, 1999.

              Subtitle B--Other Time-Sensitive Provisions

SEC. 521. ADVANCE PRICING AGREEMENTS TREATED AS CONFIDENTIAL TAXPAYER 
              INFORMATION.

    (a) In General.--
        (1) Treatment as return information.--Paragraph (2) of section 
    6103(b) of the Internal Revenue Code of 1986 (defining return 
    information) is amended by striking ``and'' at the end of 
    subparagraph (A), by inserting ``and'' at the end of subparagraph 
    (B), and by inserting after subparagraph (B) the following new 
    subparagraph:
            ``(C) any advance pricing agreement entered into by a 
        taxpayer and the Secretary and any background information 
        related to such agreement or any application for an advance 
        pricing agreement,''.
        (2) Exception from public inspection as written 
    determination.--Paragraph (1) of section 6110(b) of such Code 
    (defining written determination) is amended by adding at the end 
    the following new sentence: ``Such term shall not include any 
    advance pricing agreement entered into by a taxpayer and the 
    Secretary and any background information related to such agreement 
    or any application for an advance pricing agreement.''.
        (3) Effective date.--The amendments made by this subsection 
    shall take effect on the date of the enactment of this Act.
    (b) Annual Report Regarding Advance Pricing Agreements.--
        (1) In general.--Not later than 90 days after the end of each 
    calendar year, the Secretary of the Treasury shall prepare and 
    publish a report regarding advance pricing agreements.
        (2) Contents of report.--The report shall include the following 
    for the calendar year to which such report relates:
            (A) Information about the structure, composition, and 
        operation of the advance pricing agreement program office.
            (B) A copy of each model advance pricing agreement.
            (C) The number of--
                (i) applications filed during such calendar year for 
            advance pricing agreements;
                (ii) advance pricing agreements executed cumulatively 
            to date and during such calendar year;
                (iii) renewals of advance pricing agreements issued;
                (iv) pending requests for advance pricing agreements;
                (v) pending renewals of advance pricing agreements;
                (vi) for each of the items in clauses (ii) through (v), 
            the number that are unilateral, bilateral, and 
            multilateral, respectively;
                (vii) advance pricing agreements revoked or canceled, 
            and the number of withdrawals from the advance pricing 
            agreement program; and
                (viii) advance pricing agreements finalized or renewed 
            by industry.
            (D) General descriptions of--
                (i) the nature of the relationships between the related 
            organizations, trades, or businesses covered by advance 
            pricing agreements;
                (ii) the covered transactions and the business 
            functions performed and risks assumed by such 
            organizations, trades, or businesses;
                (iii) the related organizations, trades, or businesses 
            whose prices or results are tested to determine compliance 
            with transfer pricing methodologies prescribed in advance 
            pricing agreements;
                (iv) methodologies used to evaluate tested parties and 
            transactions and the circumstances leading to the use of 
            those methodologies;
                (v) critical assumptions made and sources of 
            comparables used;
                (vi) comparable selection criteria and the rationale 
            used in determining such criteria;
                (vii) the nature of adjustments to comparables or 
            tested parties;
                (viii) the nature of any ranges agreed to, including 
            information regarding when no range was used and why, when 
            interquartile ranges were used, and when there was a 
            statistical narrowing of the comparables;
                (ix) adjustment mechanisms provided to rectify results 
            that fall outside of the agreed upon advance pricing 
            agreement range;
                (x) the various term lengths for advance pricing 
            agreements, including rollback years, and the number of 
            advance pricing agreements with each such term length;
                (xi) the nature of documentation required; and
                (xii) approaches for sharing of currency or other 
            risks.
            (E) Statistics regarding the amount of time taken to 
        complete new and renewal advance pricing agreements.
            (F) A detailed description of the Secretary of the 
        Treasury's efforts to ensure compliance with existing advance 
        pricing agreements.
        (3) Confidentiality.--The reports required by this subsection 
    shall be treated as authorized by the Internal Revenue Code of 1986 
    for purposes of section 6103 of such Code, but the reports shall 
    not include information--
            (A) which would not be permitted to be disclosed under 
        section 6110(c) of such Code if such report were a written 
        determination as defined in section 6110 of such Code; or
            (B) which can be associated with, or otherwise identify, 
        directly or indirectly, a particular taxpayer.
        (4) First report.--The report for calendar year 1999 shall 
    include prior calendar years after 1990.
    (c) Regulations.--The Secretary of the Treasury or the Secretary's 
delegate shall prescribe such regulations as may be necessary or 
appropriate to carry out the purposes of section 6103(b)(2)(C), and the 
last sentence of section 6110(b)(1), of the Internal Revenue Code of 
1986, as added by this section.

SEC. 522. AUTHORITY TO POSTPONE CERTAIN TAX-RELATED DEADLINES BY REASON 
              OF Y2K FAILURES.

    (a) In General.--In the case of a taxpayer determined by the 
Secretary of the Treasury (or the Secretary's delegate) to be affected 
by a Y2K failure, the Secretary may disregard a period of up to 90 days 
in determining, under the internal revenue laws, in respect of any tax 
liability (including any interest, penalty, additional amount, or 
addition to the tax) of such taxpayer--
        (1) whether any of the acts described in paragraph (1) of 
    section 7508(a) of the Internal Revenue Code of 1986 (without 
    regard to the exceptions in parentheses in subparagraphs (A) and 
    (B)) were performed within the time prescribed therefor; and
        (2) the amount of any credit or refund.
    (b) Applicability of Certain Rules.--For purposes of this section, 
rules similar to the rules of subsections (b) and (e) of section 7508 
of the Internal Revenue Code of 1986 shall apply.

SEC. 523. INCLUSION OF CERTAIN VACCINES AGAINST STREPTOCOCCUS 
              PNEUMONIAE TO LIST OF TAXABLE VACCINES.

    (a) Inclusion of Vaccines.--
        (1) In general.--Section 4132(a)(1) of the Internal Revenue 
    Code of 1986 (defining taxable vaccine) is amended by adding at the 
    end the following new subparagraph:
            ``(L) Any conjugate vaccine against streptococcus 
        pneumoniae.''.
        (2) Effective date.--
            (A) Sales.--The amendment made by this subsection shall 
        apply to vaccine sales after the date of the enactment of this 
        Act, but shall not take effect if subsection (b) does not take 
        effect.
            (B) Deliveries.--For purposes of subparagraph (A), in the 
        case of sales on or before the date described in such 
        subparagraph for which delivery is made after such date, the 
        delivery date shall be considered the sale date.
    (b) Vaccine Tax and Trust Fund Amendments.--
        (1) Sections 1503 and 1504 of the Vaccine Injury Compensation 
    Program Modification Act (and the amendments made by such sections) 
    are hereby repealed.
        (2) Subparagraph (A) of section 9510(c)(1) of such Code is 
    amended by striking ``August 5, 1997'' and inserting ``December 31, 
    1999''.
        (3) The amendments made by this subsection shall take effect as 
    if included in the provisions of the Omnibus Consolidated and 
    Emergency Supplemental Appropriations Act, 1999 to which they 
    relate.
    (c) Report.--Not later than January 31, 2000, the Comptroller 
General of the United States shall prepare and submit a report to the 
Committee on Ways and Means of the House of Representatives and the 
Committee on Finance of the Senate on the operation of the Vaccine 
Injury Compensation Trust Fund and on the adequacy of such Fund to meet 
future claims made under the Vaccine Injury Compensation Program.

SEC. 524. DELAY IN EFFECTIVE DATE OF REQUIREMENT FOR APPROVED DIESEL OR 
              KEROSENE TERMINALS.

    Paragraph (2) of section 1032(f) of the Taxpayer Relief Act of 1997 
is amended by striking ``July 1, 2000'' and inserting ``January 1, 
2002''.

SEC. 525. PRODUCTION FLEXIBILITY CONTRACT PAYMENTS.

    Any option to accelerate the receipt of any payment under a 
production flexibility contract which is payable under the Federal 
Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 7200 et seq.), 
as in effect on the date of the enactment of this Act, shall be 
disregarded in determining the taxable year for which such payment is 
properly includible in gross income for purposes of the Internal 
Revenue Code of 1986.

                      Subtitle C--Revenue Offsets

                       PART I--GENERAL PROVISIONS

SEC. 531. MODIFICATION OF ESTIMATED TAX SAFE HARBOR.

    (a) In General.--The table contained in clause (i) of section 
6654(d)(1)(C) of the Internal Revenue Code of 1986 (relating to 
limitation on use of preceding year's tax) is amended by striking the 
items relating to 1999 and 2000 and inserting the following new items:

    ``1999....................................................


                                                                  108.6 

    2000......................................................


                                                                  110''.

    (b) Effective Date.--The amendment made by this section shall apply 
with respect to any installment payment for taxable years beginning 
after December 31, 1999.

SEC. 532. CLARIFICATION OF TAX TREATMENT OF INCOME AND LOSS ON 
              DERIVATIVES.

    (a) In General.--Section 1221 of the Internal Revenue Code of 1986 
(defining capital assets) is amended--
        (1) by striking ``For purposes'' and inserting the following:
    ``(a) In General.--For purposes'';
        (2) by striking the period at the end of paragraph (5) and 
    inserting a semicolon; and
        (3) by adding at the end the following:
        ``(6) any commodities derivative financial instrument held by a 
    commodities derivatives dealer, unless--
            ``(A) it is established to the satisfaction of the 
        Secretary that such instrument has no connection to the 
        activities of such dealer as a dealer, and
            ``(B) such instrument is clearly identified in such 
        dealer's records as being described in subparagraph (A) before 
        the close of the day on which it was acquired, originated, or 
        entered into (or such other time as the Secretary may by 
        regulations prescribe);
        ``(7) any hedging transaction which is clearly identified as 
    such before the close of the day on which it was acquired, 
    originated, or entered into (or such other time as the Secretary 
    may by regulations prescribe); or
        ``(8) supplies of a type regularly used or consumed by the 
    taxpayer in the ordinary course of a trade or business of the 
    taxpayer.
    ``(b) Definitions and Special Rules.--
        ``(1) Commodities derivative financial instruments.--For 
    purposes of subsection (a)(6)--
            ``(A) Commodities derivatives dealer.--The term 
        `commodities derivatives dealer' means a person which regularly 
        offers to enter into, assume, offset, assign, or terminate 
        positions in commodities derivative financial instruments with 
        customers in the ordinary course of a trade or business.
            ``(B) Commodities derivative financial instrument.--
                ``(i) In general.--The term `commodities derivative 
            financial instrument' means any contract or financial 
            instrument with respect to commodities (other than a share 
            of stock in a corporation, a beneficial interest in a 
            partnership or trust, a note, bond, debenture, or other 
            evidence of indebtedness, or a section 1256 contract (as 
            defined in section 1256(b)), the value or settlement price 
            of which is calculated by or determined by reference to a 
            specified index.
                ``(ii) Specified index.--The term `specified index' 
            means any one or more or any combination of--

                    ``(I) a fixed rate, price, or amount, or
                    ``(II) a variable rate, price, or amount,

            which is based on any current, objectively determinable 
            financial or economic information with respect to 
            commodities which is not within the control of any of the 
            parties to the contract or instrument and is not unique to 
            any of the parties' circumstances.
        ``(2) Hedging transaction.--
            ``(A) In general.--For purposes of this section, the term 
        `hedging transaction' means any transaction entered into by the 
        taxpayer in the normal course of the taxpayer's trade or 
        business primarily--
                ``(i) to manage risk of price changes or currency 
            fluctuations with respect to ordinary property which is 
            held or to be held by the taxpayer,
                ``(ii) to manage risk of interest rate or price changes 
            or currency fluctuations with respect to borrowings made or 
            to be made, or ordinary obligations incurred or to be 
            incurred, by the taxpayer, or
                ``(iii) to manage such other risks as the Secretary may 
            prescribe in regulations.
            ``(B) Treatment of nonidentification or improper 
        identification of hedging transactions.--Notwithstanding 
        subsection (a)(7), the Secretary shall prescribe regulations to 
        properly characterize any income, gain, expense, or loss 
        arising from a transaction--
                ``(i) which is a hedging transaction but which was not 
            identified as such in accordance with subsection (a)(7), or
                ``(ii) which was so identified but is not a hedging 
            transaction.
        ``(3) Regulations.--The Secretary shall prescribe such 
    regulations as are appropriate to carry out the purposes of 
    paragraph (6) and (7) of subsection (a) in the case of transactions 
    involving related parties.''.
    (b) Management of Risk.--
        (1) Section 475(c)(3) of such Code is amended by striking 
    ``reduces'' and inserting ``manages''.
        (2) Section 871(h)(4)(C)(iv) of such Code is amended by 
    striking ``to reduce'' and inserting ``to manage''.
        (3) Clauses (i) and (ii) of section 988(d)(2)(A) of such Code 
    are each amended by striking ``to reduce'' and inserting ``to 
    manage''.
        (4) Paragraph (2) of section 1256(e) of such Code is amended to 
    read as follows:
        ``(2) Definition of hedging transaction.--For purposes of this 
    subsection, the term `hedging transaction' means any hedging 
    transaction (as defined in section 1221(b)(2)(A)) if, before the 
    close of the day on which such transaction was entered into (or 
    such earlier time as the Secretary may prescribe by regulations), 
    the taxpayer clearly identifies such transaction as being a hedging 
    transaction.''.
    (c) Conforming Amendments.--
        (1) Each of the following sections of such Code are amended by 
    striking ``section 1221'' and inserting ``section 1221(a)'':
            (A) Section 170(e)(3)(A).
            (B) Section 170(e)(4)(B).
            (C) Section 367(a)(3)(B)(i).
            (D) Section 818(c)(3).
            (E) Section 865(i)(1).
            (F) Section 1092(a)(3)(B)(ii)(II).
            (G) Subparagraphs (C) and (D) of section 1231(b)(1).
            (H) Section 1234(a)(3)(A).
        (2) Each of the following sections of such Code are amended by 
    striking ``section 1221(1)'' and inserting ``section 1221(a)(1)'':
            (A) Section 198(c)(1)(A)(i).
            (B) Section 263A(b)(2)(A).
            (C) Clauses (i) and (iii) of section 267(f)(3)(B).
            (D) Section 341(d)(3).
            (E) Section 543(a)(1)(D)(i).
            (F) Section 751(d)(1).
            (G) Section 775(c).
            (H) Section 856(c)(2)(D).
            (I) Section 856(c)(3)(C).
            (J) Section 856(e)(1).
            (K) Section 856(j)(2)(B).
            (L) Section 857(b)(4)(B)(i).
            (M) Section 857(b)(6)(B)(iii).
            (N) Section 864(c)(4)(B)(iii).
            (O) Section 864(d)(3)(A).
            (P) Section 864(d)(6)(A).
            (Q) Section 954(c)(1)(B)(iii).
            (R) Section 995(b)(1)(C).
            (S) Section 1017(b)(3)(E)(i).
            (T) Section 1362(d)(3)(C)(ii).
            (U) Section 4662(c)(2)(C).
            (V) Section 7704(c)(3).
            (W) Section 7704(d)(1)(D).
            (X) Section 7704(d)(1)(G).
            (Y) Section 7704(d)(5).
        (3) Section 818(b)(2) of such Code is amended by striking 
    ``section 1221(2)'' and inserting ``section 1221(a)(2)''.
        (4) Section 1397B(e)(2) of such Code is amended by striking 
    ``section 1221(4)'' and inserting ``section 1221(a)(4)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to any instrument held, acquired, or entered into, any 
transaction entered into, and supplies held or acquired on or after the 
date of the enactment of this Act.

SEC. 533. EXPANSION OF REPORTING OF CANCELLATION OF INDEBTEDNESS 
              INCOME.

    (a) In General.--Paragraph (2) of section 6050P(c) of the Internal 
Revenue Code of 1986 (relating to definitions and special rules) is 
amended by striking ``and'' at the end of subparagraph (B), by striking 
the period at the end of subparagraph (C) and inserting ``, and'', and 
by inserting after subparagraph (C) the following new subparagraph:
            ``(D) any organization a significant trade or business of 
        which is the lending of money.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to discharges of indebtedness after December 31, 1999.

SEC. 534. LIMITATION ON CONVERSION OF CHARACTER OF INCOME FROM 
              CONSTRUCTIVE OWNERSHIP TRANSACTIONS.

    (a) In General.--Part IV of subchapter P of chapter 1 of the 
Internal Revenue Code of 1986 (relating to special rules for 
determining capital gains and losses) is amended by inserting after 
section 1259 the following new section:

``SEC. 1260. GAINS FROM CONSTRUCTIVE OWNERSHIP TRANSACTIONS.

    ``(a) In General.--If the taxpayer has gain from a constructive 
ownership transaction with respect to any financial asset and such gain 
would (without regard to this section) be treated as a long-term 
capital gain--
        ``(1) such gain shall be treated as ordinary income to the 
    extent that such gain exceeds the net underlying long-term capital 
    gain, and
        ``(2) to the extent such gain is treated as a long-term capital 
    gain after the application of paragraph (1), the determination of 
    the capital gain rate (or rates) applicable to such gain under 
    section 1(h) shall be determined on the basis of the respective 
    rate (or rates) that would have been applicable to the net 
    underlying long-term capital gain.
    ``(b) Interest Charge on Deferral of Gain Recognition.--
        ``(1) In general.--If any gain is treated as ordinary income 
    for any taxable year by reason of subsection (a)(1), the tax 
    imposed by this chapter for such taxable year shall be increased by 
    the amount of interest determined under paragraph (2) with respect 
    to each prior taxable year during any portion of which the 
    constructive ownership transaction was open. Any amount payable 
    under this paragraph shall be taken into account in computing the 
    amount of any deduction allowable to the taxpayer for interest paid 
    or accrued during such taxable year.
        ``(2) Amount of interest.--The amount of interest determined 
    under this paragraph with respect to a prior taxable year is the 
    amount of interest which would have been imposed under section 6601 
    on the underpayment of tax for such year which would have resulted 
    if the gain (which is treated as ordinary income by reason of 
    subsection (a)(1)) had been included in gross income in the taxable 
    years in which it accrued (determined by treating the income as 
    accruing at a constant rate equal to the applicable Federal rate as 
    in effect on the day the transaction closed). The period during 
    which such interest shall accrue shall end on the due date (without 
    extensions) for the return of tax imposed by this chapter for the 
    taxable year in which such transaction closed.
        ``(3) Applicable federal rate.--For purposes of paragraph (2), 
    the applicable Federal rate is the applicable Federal rate 
    determined under section 1274(d) (compounded semiannually) which 
    would apply to a debt instrument with a term equal to the period 
    the transaction was open.
        ``(4) No credits against increase in tax.--Any increase in tax 
    under paragraph (1) shall not be treated as tax imposed by this 
    chapter for purposes of determining--
            ``(A) the amount of any credit allowable under this 
        chapter, or
            ``(B) the amount of the tax imposed by section 55.
    ``(c) Financial Asset.--For purposes of this section--
        ``(1) In general.--The term `financial asset' means--
            ``(A) any equity interest in any pass-thru entity, and
            ``(B) to the extent provided in regulations--
                ``(i) any debt instrument, and
                ``(ii) any stock in a corporation which is not a pass-
            thru entity.
        ``(2) Pass-thru entity.--For purposes of paragraph (1), the 
    term `pass-thru entity' means--
            ``(A) a regulated investment company,
            ``(B) a real estate investment trust,
            ``(C) an S corporation,
            ``(D) a partnership,
            ``(E) a trust,
            ``(F) a common trust fund,
            ``(G) a passive foreign investment company (as defined in 
        section 1297 without regard to subsection (e) thereof),
            ``(H) a foreign personal holding company,
            ``(I) a foreign investment company (as defined in section 
        1246(b)), and
            ``(J) a REMIC.
    ``(d) Constructive Ownership Transaction.--For purposes of this 
section--
        ``(1) In general.--The taxpayer shall be treated as having 
    entered into a constructive ownership transaction with respect to 
    any financial asset if the taxpayer--
            ``(A) holds a long position under a notional principal 
        contract with respect to the financial asset,
            ``(B) enters into a forward or futures contract to acquire 
        the financial asset,
            ``(C) is the holder of a call option, and is the grantor of 
        a put option, with respect to the financial asset and such 
        options have substantially equal strike prices and 
        substantially contemporaneous maturity dates, or
            ``(D) to the extent provided in regulations prescribed by 
        the Secretary, enters into one or more other transactions (or 
        acquires one or more positions) that have substantially the 
        same effect as a transaction described in any of the preceding 
        subparagraphs.
        ``(2) Exception for positions which are marked to market.--This 
    section shall not apply to any constructive ownership transaction 
    if all of the positions which are part of such transaction are 
    marked to market under any provision of this title or the 
    regulations thereunder.
        ``(3) Long position under notional principal contract.--A 
    person shall be treated as holding a long position under a notional 
    principal contract with respect to any financial asset if such 
    person--
            ``(A) has the right to be paid (or receive credit for) all 
        or substantially all of the investment yield (including 
        appreciation) on such financial asset for a specified period, 
        and
            ``(B) is obligated to reimburse (or provide credit for) all 
        or substantially all of any decline in the value of such 
        financial asset.
        ``(4) Forward contract.--The term `forward contract' means any 
    contract to acquire in the future (or provide or receive credit for 
    the future value of) any financial asset.
    ``(e) Net Underlying Long-Term Capital Gain.--For purposes of this 
section, in the case of any constructive ownership transaction with 
respect to any financial asset, the term `net underlying long-term 
capital gain' means the aggregate net capital gain that the taxpayer 
would have had if--
        ``(1) the financial asset had been acquired for fair market 
    value on the date such transaction was opened and sold for fair 
    market value on the date such transaction was closed, and
        ``(2) only gains and losses that would have resulted from the 
    deemed ownership under paragraph (1) were taken into account.
The amount of the net underlying long-term capital gain with respect to 
any financial asset shall be treated as zero unless the amount thereof 
is established by clear and convincing evidence.
    ``(f) Special Rule Where Taxpayer Takes Delivery.--Except as 
provided in regulations prescribed by the Secretary, if a constructive 
ownership transaction is closed by reason of taking delivery, this 
section shall be applied as if the taxpayer had sold all the contracts, 
options, or other positions which are part of such transaction for fair 
market value on the closing date. The amount of gain recognized under 
the preceding sentence shall not exceed the amount of gain treated as 
ordinary income under subsection (a). Proper adjustments shall be made 
in the amount of any gain or loss subsequently realized for gain 
recognized and treated as ordinary income under this subsection.
    ``(g) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary or appropriate to carry out the purposes of this 
section, including regulations--
        ``(1) to permit taxpayers to mark to market constructive 
    ownership transactions in lieu of applying this section, and
        ``(2) to exclude certain forward contracts which do not convey 
    substantially all of the economic return with respect to a 
    financial asset.''.
    (b) Clerical Amendment.--The table of sections for part IV of 
subchapter P of chapter 1 of such Code is amended by adding at the end 
the following new item:

        ``Sec. 1260. Gains from constructive ownership transactions.''.

    (c) Effective Date.--The amendments made by this section shall 
apply to transactions entered into after July 11, 1999.

SEC. 535. TREATMENT OF EXCESS PENSION ASSETS USED FOR RETIREE HEALTH 
              BENEFITS.

    (a) Extension.--
        (1) In general.--Paragraph (5) of section 420(b) of the 
    Internal Revenue Code of 1986 (relating to expiration) is amended 
    by striking ``in any taxable year beginning after December 31, 
    2000'' and inserting ``made after December 31, 2005''.
        (2) Conforming amendments.--
            (A) Section 101(e)(3) of the Employee Retirement Income 
        Security Act of 1974 (29 U.S.C. 1021(e)(3)) is amended by 
        striking ``January 1, 1995'' and inserting ``the date of the 
        enactment of the Tax Relief Extension Act of 1999''.
            (B) Section 403(c)(1) of such Act (29 U.S.C. 1103(c)(1)) is 
        amended by striking ``January 1, 1995'' and inserting ``the 
        date of the enactment of the Tax Relief Extension Act of 
        1999''.
            (C) Paragraph (13) of section 408(b) of such Act (29 U.S.C. 
        1108(b)(13)) is amended--
                (i) by striking ``in a taxable year beginning before 
            January 1, 2001'' and inserting ``made before January 1, 
            2006''; and
                (ii) by striking ``January 1, 1995'' and inserting 
            ``the date of the enactment of the Tax Relief Extension Act 
            of 1999''.
    (b) Application of Minimum Cost Requirements.--
        (1) In general.--Paragraph (3) of section 420(c) of the 
    Internal Revenue Code of 1986 is amended to read as follows:
        ``(3) Minimum cost requirements.--
            ``(A) In general.--The requirements of this paragraph are 
        met if each group health plan or arrangement under which 
        applicable health benefits are provided provides that the 
        applicable employer cost for each taxable year during the cost 
        maintenance period shall not be less than the higher of the 
        applicable employer costs for each of the 2 taxable years 
        immediately preceding the taxable year of the qualified 
        transfer.
            ``(B) Applicable employer cost.--For purposes of this 
        paragraph, the term `applicable employer cost' means, with 
        respect to any taxable year, the amount determined by 
        dividing--
                ``(i) the qualified current retiree health liabilities 
            of the employer for such taxable year determined--

                    ``(I) without regard to any reduction under 
                subsection (e)(1)(B), and
                    ``(II) in the case of a taxable year in which there 
                was no qualified transfer, in the same manner as if 
                there had been such a transfer at the end of the 
                taxable year, by

                ``(ii) the number of individuals to whom coverage for 
            applicable health benefits was provided during such taxable 
            year.
            ``(C) Election to compute cost separately.--An employer may 
        elect to have this paragraph applied separately with respect to 
        individuals eligible for benefits under title XVIII of the 
        Social Security Act at any time during the taxable year and 
        with respect to individuals not so eligible.
            ``(D) Cost maintenance period.--For purposes of this 
        paragraph, the term `cost maintenance period' means the period 
        of 5 taxable years beginning with the taxable year in which the 
        qualified transfer occurs. If a taxable year is in two or more 
        overlapping cost maintenance periods, this paragraph shall be 
        applied by taking into account the highest applicable employer 
        cost required to be provided under subparagraph (A) for such 
        taxable year.
            ``(E) Regulations.--The Secretary shall prescribe such 
        regulations as may be necessary to prevent an employer who 
        significantly reduces retiree health coverage during the cost 
        maintenance period from being treated as satisfying the minimum 
        cost requirement of this subsection.''.
        (2) Conforming amendments.--
            (A) Clause (iii) of section 420(b)(1)(C) of such Code is 
        amended by striking ``benefits'' and inserting ``cost''.
            (B) Subparagraph (D) of section 420(e)(1) of such Code is 
        amended by striking ``and shall not be subject to the minimum 
        benefit requirements of subsection (c)(3)'' and inserting ``or 
        in calculating applicable employer cost under subsection 
        (c)(3)(B)''.
    (c) Effective Dates.--
        (1) In general.--The amendments made by this section shall 
    apply to qualified transfers occurring after the date of the 
    enactment of this Act.
        (2) Transition rule.--If the cost maintenance period for any 
    qualified transfer after the date of the enactment of this Act 
    includes any portion of a benefit maintenance period for any 
    qualified transfer on or before such date, the amendments made by 
    subsection (b) shall not apply to such portion of the cost 
    maintenance period (and such portion shall be treated as a benefit 
    maintenance period).

SEC. 536. MODIFICATION OF INSTALLMENT METHOD AND REPEAL OF INSTALLMENT 
              METHOD FOR ACCRUAL METHOD TAXPAYERS.

    (a) Repeal of Installment Method for Accrual Basis Taxpayers.--
        (1) In general.--Subsection (a) of section 453 of the Internal 
    Revenue Code of 1986 (relating to installment method) is amended to 
    read as follows:
    ``(a) Use of Installment Method.--
        ``(1) In general.--Except as otherwise provided in this 
    section, income from an installment sale shall be taken into 
    account for purposes of this title under the installment method.
        ``(2) Accrual method taxpayer.--The installment method shall 
    not apply to income from an installment sale if such income would 
    be reported under an accrual method of accounting without regard to 
    this section. The preceding sentence shall not apply to a 
    disposition described in subparagraph (A) or (B) of subsection 
    (l)(2).''.
        (2) Conforming amendments.--Sections 453(d)(1), 453(i)(1), and 
    453(k) of such Code are each amended by striking ``(a)'' each place 
    it appears and inserting ``(a)(1)''.
    (b) Modification of Pledge Rules.--Paragraph (4) of section 453A(d) 
of such Code (relating to pledges, etc., of installment obligations) is 
amended by adding at the end the following: ``A payment shall be 
treated as directly secured by an interest in an installment obligation 
to the extent an arrangement allows the taxpayer to satisfy all or a 
portion of the indebtedness with the installment obligation.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to sales or other dispositions occurring on or after the date of 
the enactment of this Act.

SEC. 537. DENIAL OF CHARITABLE CONTRIBUTION DEDUCTION FOR TRANSFERS 
              ASSOCIATED WITH SPLIT-DOLLAR INSURANCE ARRANGEMENTS.

    (a) In General.--Subsection (f) of section 170 of the Internal 
Revenue Code of 1986 (relating to disallowance of deduction in certain 
cases and special rules) is amended by adding at the end the following 
new paragraph:
        ``(10) Split-dollar life insurance, annuity, and endowment 
    contracts.--
            ``(A) In general.--Nothing in this section or in section 
        545(b)(2), 556(b)(2), 642(c), 2055, 2106(a)(2), or 2522 shall 
        be construed to allow a deduction, and no deduction shall be 
        allowed, for any transfer to or for the use of an organization 
        described in subsection (c) if in connection with such 
        transfer--
                ``(i) the organization directly or indirectly pays, or 
            has previously paid, any premium on any personal benefit 
            contract with respect to the transferor, or
                ``(ii) there is an understanding or expectation that 
            any person will directly or indirectly pay any premium on 
            any personal benefit contract with respect to the 
            transferor.
            ``(B) Personal benefit contract.--For purposes of 
        subparagraph (A), the term `personal benefit contract' means, 
        with respect to the transferor, any life insurance, annuity, or 
        endowment contract if any direct or indirect beneficiary under 
        such contract is the transferor, any member of the transferor's 
        family, or any other person (other than an organization 
        described in subsection (c)) designated by the transferor.
            ``(C) Application to charitable remainder trusts.--In the 
        case of a transfer to a trust referred to in subparagraph (E), 
        references in subparagraphs (A) and (F) to an organization 
        described in subsection (c) shall be treated as a reference to 
        such trust.
            ``(D) Exception for certain annuity contracts.--If, in 
        connection with a transfer to or for the use of an organization 
        described in subsection (c), such organization incurs an 
        obligation to pay a charitable gift annuity (as defined in 
        section 501(m)) and such organization purchases any annuity 
        contract to fund such obligation, persons receiving payments 
        under the charitable gift annuity shall not be treated for 
        purposes of subparagraph (B) as indirect beneficiaries under 
        such contract if--
                ``(i) such organization possesses all of the incidents 
            of ownership under such contract,
                ``(ii) such organization is entitled to all the 
            payments under such contract, and
                ``(iii) the timing and amount of payments under such 
            contract are substantially the same as the timing and 
            amount of payments to each such person under such 
            obligation (as such obligation is in effect at the time of 
            such transfer).
            ``(E) Exception for certain contracts held by charitable 
        remainder trusts.--A person shall not be treated for purposes 
        of subparagraph (B) as an indirect beneficiary under any life 
        insurance, annuity, or endowment contract held by a charitable 
        remainder annuity trust or a charitable remainder unitrust (as 
        defined in section 664(d)) solely by reason of being entitled 
        to any payment referred to in paragraph (1)(A) or (2)(A) of 
        section 664(d) if--
                ``(i) such trust possesses all of the incidents of 
            ownership under such contract, and
                ``(ii) such trust is entitled to all the payments under 
            such contract.
            ``(F) Excise tax on premiums paid.--
                ``(i) In general.--There is hereby imposed on any 
            organization described in subsection (c) an excise tax 
            equal to the premiums paid by such organization on any life 
            insurance, annuity, or endowment contract if the payment of 
            premiums on such contract is in connection with a transfer 
            for which a deduction is not allowable under subparagraph 
            (A), determined without regard to when such transfer is 
            made.
                ``(ii) Payments by other persons.--For purposes of 
            clause (i), payments made by any other person pursuant to 
            an understanding or expectation referred to in subparagraph 
            (A) shall be treated as made by the organization.
                ``(iii) Reporting.--Any organization on which tax is 
            imposed by clause (i) with respect to any premium shall 
            file an annual return which includes--

                    ``(I) the amount of such premiums paid during the 
                year and the name and TIN of each beneficiary under the 
                contract to which the premium relates, and
                    ``(II) such other information as the Secretary may 
                require.

            The penalties applicable to returns required under section 
            6033 shall apply to returns required under this clause. 
            Returns required under this clause shall be furnished at 
            such time and in such manner as the Secretary shall by 
            forms or regulations require.
                ``(iv) Certain rules to apply.--The tax imposed by this 
            subparagraph shall be treated as imposed by chapter 42 for 
            purposes of this title other than subchapter B of chapter 
            42.
            ``(G) Special rule where state requires specification of 
        charitable gift annuitant in contract.--In the case of an 
        obligation to pay a charitable gift annuity referred to in 
        subparagraph (D) which is entered into under the laws of a 
        State which requires, in order for the charitable gift annuity 
        to be exempt from insurance regulation by such State, that each 
        beneficiary under the charitable gift annuity be named as a 
        beneficiary under an annuity contract issued by an insurance 
        company authorized to transact business in such State, the 
        requirements of clauses (i) and (ii) of subparagraph (D) shall 
        be treated as met if--
                ``(i) such State law requirement was in effect on 
            February 8, 1999,
                ``(ii) each such beneficiary under the charitable gift 
            annuity is a bona fide resident of such State at the time 
            the obligation to pay a charitable gift annuity is entered 
            into, and
                ``(iii) the only persons entitled to payments under 
            such contract are persons entitled to payments as 
            beneficiaries under such obligation on the date such 
            obligation is entered into.
            ``(H) Member of family.--For purposes of this paragraph, an 
        individual's family consists of the individual's grandparents, 
        the grandparents of such individual's spouse, the lineal 
        descendants of such grandparents, and any spouse of such a 
        lineal descendant.
            ``(I) Regulations.--The Secretary shall prescribe such 
        regulations as may be necessary or appropriate to carry out the 
        purposes of this paragraph, including regulations to prevent 
        the avoidance of such purposes.''.
    (b) Effective Dates.--
        (1) In general.--Except as otherwise provided in this section, 
    the amendment made by this section shall apply to transfers made 
    after February 8, 1999.
        (2) Excise tax.--Except as provided in paragraph (3) of this 
    subsection, section 170(f)(10)(F) of the Internal Revenue Code of 
    1986 (as added by this section) shall apply to premiums paid after 
    the date of the enactment of this Act.
        (3) Reporting.--Clause (iii) of such section 170(f)(10)(F) 
    shall apply to premiums paid after February 8, 1999 (determined as 
    if the tax imposed by such section applies to premiums paid after 
    such date).

SEC. 538. DISTRIBUTIONS BY A PARTNERSHIP TO A CORPORATE PARTNER OF 
              STOCK IN ANOTHER CORPORATION.

    (a) In General.--Section 732 of the Internal Revenue Code of 1986 
(relating to basis of distributed property other than money) is amended 
by adding at the end the following new subsection:
    ``(f) Corresponding Adjustment to Basis of Assets of a Distributed 
Corporation Controlled by a Corporate Partner.--
        ``(1) In general.--If--
            ``(A) a corporation (hereafter in this subsection referred 
        to as the `corporate partner') receives a distribution from a 
        partnership of stock in another corporation (hereafter in this 
        subsection referred to as the `distributed corporation'),
            ``(B) the corporate partner has control of the distributed 
        corporation immediately after the distribution or at any time 
        thereafter, and
            ``(C) the partnership's adjusted basis in such stock 
        immediately before the distribution exceeded the corporate 
        partner's adjusted basis in such stock immediately after the 
        distribution,
    then an amount equal to such excess shall be applied to reduce (in 
    accordance with subsection (c)) the basis of property held by the 
    distributed corporation at such time (or, if the corporate partner 
    does not control the distributed corporation at such time, at the 
    time the corporate partner first has such control).
        ``(2) Exception for certain distributions before control 
    acquired.--Paragraph (1) shall not apply to any distribution of 
    stock in the distributed corporation if--
            ``(A) the corporate partner does not have control of such 
        corporation immediately after such distribution, and
            ``(B) the corporate partner establishes to the satisfaction 
        of the Secretary that such distribution was not part of a plan 
        or arrangement to acquire control of the distributed 
        corporation.
        ``(3) Limitations on basis reduction.--
            ``(A) In general.--The amount of the reduction under 
        paragraph (1) shall not exceed the amount by which the sum of 
        the aggregate adjusted bases of the property and the amount of 
        money of the distributed corporation exceeds the corporate 
        partner's adjusted basis in the stock of the distributed 
        corporation.
            ``(B) Reduction not to exceed adjusted basis of property.--
        No reduction under paragraph (1) in the basis of any property 
        shall exceed the adjusted basis of such property (determined 
        without regard to such reduction).
        ``(4) Gain recognition where reduction limited.--If the amount 
    of any reduction under paragraph (1) (determined after the 
    application of paragraph (3)(A)) exceeds the aggregate adjusted 
    bases of the property of the distributed corporation--
            ``(A) such excess shall be recognized by the corporate 
        partner as long-term capital gain, and
            ``(B) the corporate partner's adjusted basis in the stock 
        of the distributed corporation shall be increased by such 
        excess.
        ``(5) Control.--For purposes of this subsection, the term 
    `control' means ownership of stock meeting the requirements of 
    section 1504(a)(2).
        ``(6) Indirect distributions.--For purposes of paragraph (1), 
    if a corporation acquires (other than in a distribution from a 
    partnership) stock the basis of which is determined (by reason of 
    being distributed from a partnership) in whole or in part by 
    reference to subsection (a)(2) or (b), the corporation shall be 
    treated as receiving a distribution of such stock from a 
    partnership.
        ``(7) Special rule for stock in controlled corporation.--If the 
    property held by a distributed corporation is stock in a 
    corporation which the distributed corporation controls, this 
    subsection shall be applied to reduce the basis of the property of 
    such controlled corporation. This subsection shall be reapplied to 
    any property of any controlled corporation which is stock in a 
    corporation which it controls.
        ``(8) Regulations.--The Secretary shall prescribe such 
    regulations as may be necessary to carry out the purposes of this 
    subsection, including regulations to avoid double counting and to 
    prevent the abuse of such purposes.''.
    (b) Effective Dates.--
        (1) In general.--Except as provided in paragraph (2), the 
    amendment made by this section shall apply to distributions made 
    after July 14, 1999.
        (2) Partnerships in existence on July 14, 1999.--In the case of 
    a corporation which is a partner in a partnership as of July 14, 
    1999, the amendment made by this section shall apply to any 
    distribution made (or treated as made) to such partner from such 
    partnership after June 30, 2001, except that this paragraph shall 
    not apply to any distribution after the date of the enactment of 
    this Act unless the partner makes an election to have this 
    paragraph apply to such distribution on the partner's return of 
    Federal income tax for the taxable year in which such distribution 
    occurs.

     PART II--PROVISIONS RELATING TO REAL ESTATE INVESTMENT TRUSTS

 Subpart A--Treatment of Income and Services Provided by Taxable REIT 
                              Subsidiaries

SEC. 541. MODIFICATIONS TO ASSET DIVERSIFICATION TEST.

    (a) In General.--Subparagraph (B) of section 856(c)(4) of the 
Internal Revenue Code of 1986 is amended to read as follows:
            ``(B)(i) not more than 25 percent of the value of its total 
        assets is represented by securities (other than those 
        includible under subparagraph (A)),
            ``(ii) not more than 20 percent of the value of its total 
        assets is represented by securities of one or more taxable REIT 
        subsidiaries, and
            ``(iii) except with respect to a taxable REIT subsidiary 
        and securities includible under subparagraph (A)--
                ``(I) not more than 5 percent of the value of its total 
            assets is represented by securities of any one issuer,
                ``(II) the trust does not hold securities possessing 
            more than 10 percent of the total voting power of the 
            outstanding securities of any one issuer, and
                ``(III) the trust does not hold securities having a 
            value of more than 10 percent of the total value of the 
            outstanding securities of any one issuer.''.
    (b) Exception for Straight Debt Securities.--Subsection (c) of 
section 856 of such Code is amended by adding at the end the following 
new paragraph:
        ``(7) Straight debt safe harbor in applying paragraph (4).--
    Securities of an issuer which are straight debt (as defined in 
    section 1361(c)(5) without regard to subparagraph (B)(iii) thereof) 
    shall not be taken into account in applying paragraph 
    (4)(B)(ii)(III) if--
            ``(A) the issuer is an individual, or
            ``(B) the only securities of such issuer which are held by 
        the trust or a taxable REIT subsidiary of the trust are 
        straight debt (as so defined), or
            ``(C) the issuer is a partnership and the trust holds at 
        least a 20 percent profits interest in the partnership.''.

SEC. 542. TREATMENT OF INCOME AND SERVICES PROVIDED BY TAXABLE REIT 
              SUBSIDIARIES.

    (a) Income From Taxable REIT Subsidiaries Not Treated as 
Impermissible Tenant Service Income.--Clause (i) of section 
856(d)(7)(C) of the Internal Revenue Code of 1986 (relating to 
exceptions to impermissible tenant service income) is amended by 
inserting ``or through a taxable REIT subsidiary of such trust'' after 
``income''.
    (b) Certain Income From Taxable REIT Subsidiaries Not Excluded From 
Rents From Real Property.--
        (1) In general.--Subsection (d) of section 856 of such Code 
    (relating to rents from real property defined) is amended by adding 
    at the end the following new paragraphs:
        ``(8) Special rule for taxable reit subsidiaries.--For purposes 
    of this subsection, amounts paid to a real estate investment trust 
    by a taxable REIT subsidiary of such trust shall not be excluded 
    from rents from real property by reason of paragraph (2)(B) if the 
    requirements of either of the following subparagraphs are met:
            ``(A) Limited rental exception.--The requirements of this 
        subparagraph are met with respect to any property if at least 
        90 percent of the leased space of the property is rented to 
        persons other than taxable REIT subsidiaries of such trust and 
        other than persons described in section 856(d)(2)(B). The 
        preceding sentence shall apply only to the extent that the 
        amounts paid to the trust as rents from real property (as 
        defined in paragraph (1) without regard to paragraph (2)(B)) 
        from such property are substantially comparable to such rents 
        made by the other tenants of the trust's property for 
        comparable space.
            ``(B) Exception for certain lodging facilities.--The 
        requirements of this subparagraph are met with respect to an 
        interest in real property which is a qualified lodging facility 
        leased by the trust to a taxable REIT subsidiary of the trust 
        if the property is operated on behalf of such subsidiary by a 
        person who is an eligible independent contractor.
        ``(9) Eligible independent contractor.--For purposes of 
    paragraph (8)(B)--
            ``(A) In general.--The term `eligible independent 
        contractor' means, with respect to any qualified lodging 
        facility, any independent contractor if, at the time such 
        contractor enters into a management agreement or other similar 
        service contract with the taxable REIT subsidiary to operate 
        the facility, such contractor (or any related person) is 
        actively engaged in the trade or business of operating 
        qualified lodging facilities for any person who is not a 
        related person with respect to the real estate investment trust 
        or the taxable REIT subsidiary.
            ``(B) Special rules.--Solely for purposes of this paragraph 
        and paragraph (8)(B), a person shall not fail to be treated as 
        an independent contractor with respect to any qualified lodging 
        facility by reason of any of the following:
                ``(i) The taxable REIT subsidiary bears the expenses 
            for the operation of the facility pursuant to the 
            management agreement or other similar service contract.
                ``(ii) The taxable REIT subsidiary receives the 
            revenues from the operation of such facility, net of 
            expenses for such operation and fees payable to the 
            operator pursuant to such agreement or contract.
                ``(iii) The real estate investment trust receives 
            income from such person with respect to another property 
            that is attributable to a lease of such other property to 
            such person that was in effect as of the later of--

                    ``(I) January 1, 1999, or
                    ``(II) the earliest date that any taxable REIT 
                subsidiary of such trust entered into a management 
                agreement or other similar service contract with such 
                person with respect to such qualified lodging facility.

            ``(C) Renewals, etc., of existing leases.--For purposes of 
        subparagraph (B)(iii)--
                ``(i) a lease shall be treated as in effect on January 
            1, 1999, without regard to its renewal after such date, so 
            long as such renewal is pursuant to the terms of such lease 
            as in effect on whichever of the dates under subparagraph 
            (B)(iii) is the latest, and
                ``(ii) a lease of a property entered into after 
            whichever of the dates under subparagraph (B)(iii) is the 
            latest shall be treated as in effect on such date if--

                    ``(I) on such date, a lease of such property from 
                the trust was in effect, and
                    ``(II) under the terms of the new lease, such trust 
                receives a substantially similar or lesser benefit in 
                comparison to the lease referred to in subclause (I).

            ``(D) Qualified lodging facility.--For purposes of this 
        paragraph--
                ``(i) In general.--The term `qualified lodging 
            facility' means any lodging facility unless wagering 
            activities are conducted at or in connection with such 
            facility by any person who is engaged in the business of 
            accepting wagers and who is legally authorized to engage in 
            such business at or in connection with such facility.
                ``(ii) Lodging facility.--The term `lodging facility' 
            means a hotel, motel, or other establishment more than one-
            half of the dwelling units in which are used on a transient 
            basis.
                ``(iii) Customary amenities and facilities.--The term 
            `lodging facility' includes customary amenities and 
            facilities operated as part of, or associated with, the 
            lodging facility so long as such amenities and facilities 
            are customary for other properties of a comparable size and 
            class owned by other owners unrelated to such real estate 
            investment trust.
            ``(E) Operate includes manage.--References in this 
        paragraph to operating a property shall be treated as including 
        a reference to managing the property.
            ``(F) Related person.--Persons shall be treated as related 
        to each other if such persons are treated as a single employer 
        under subsection (a) or (b) of section 52.''.
        (2) Conforming amendment.--Subparagraph (B) of section 
    856(d)(2) of such Code is amended by inserting ``except as provided 
    in paragraph (8),'' after ``(B)''.
        (3) Determining rents from real property.--
            (A)(i) Paragraph (1) of section 856(d) of such Code is 
        amended by striking ``adjusted bases'' each place it occurs and 
        inserting ``fair market values''.
            (ii) The amendment made by this subparagraph shall apply to 
        taxable years beginning after December 31, 2000.
            (B)(i) Clause (i) of section 856(d)(2)(B) of such Code is 
        amended by striking ``number'' and inserting ``value''.
            (ii) The amendment made by this subparagraph shall apply to 
        amounts received or accrued in taxable years beginning after 
        December 31, 2000, except for amounts paid pursuant to leases 
        in effect on July 12, 1999, or pursuant to a binding contract 
        in effect on such date and at all times thereafter.

SEC. 543. TAXABLE REIT SUBSIDIARY.

    (a) In General.--Section 856 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subsection:
    ``(l) Taxable REIT Subsidiary.--For purposes of this part--
        ``(1) In general.--The term `taxable REIT subsidiary' means, 
    with respect to a real estate investment trust, a corporation 
    (other than a real estate investment trust) if--
            ``(A) such trust directly or indirectly owns stock in such 
        corporation, and
            ``(B) such trust and such corporation jointly elect that 
        such corporation shall be treated as a taxable REIT subsidiary 
        of such trust for purposes of this part.
    Such an election, once made, shall be irrevocable unless both such 
    trust and corporation consent to its revocation. Such election, and 
    any revocation thereof, may be made without the consent of the 
    Secretary.
        ``(2) Thirty-five percent ownership in another taxable reit 
    subsidiary.--The term `taxable REIT subsidiary' includes, with 
    respect to any real estate investment trust, any corporation (other 
    than a real estate investment trust) with respect to which a 
    taxable REIT subsidiary of such trust owns directly or indirectly--
            ``(A) securities possessing more than 35 percent of the 
        total voting power of the outstanding securities of such 
        corporation, or
            ``(B) securities having a value of more than 35 percent of 
        the total value of the outstanding securities of such 
        corporation.
    The preceding sentence shall not apply to a qualified REIT 
    subsidiary (as defined in subsection (i)(2)). The rule of section 
    856(c)(7) shall apply for purposes of subparagraph (B).
        ``(3) Exceptions.--The term `taxable REIT subsidiary' shall not 
    include--
            ``(A) any corporation which directly or indirectly operates 
        or manages a lodging facility or a health care facility, and
            ``(B) any corporation which directly or indirectly provides 
        to any other person (under a franchise, license, or otherwise) 
        rights to any brand name under which any lodging facility or 
        health care facility is operated.
    Subparagraph (B) shall not apply to rights provided to an eligible 
    independent contractor to operate or manage a lodging facility if 
    such rights are held by such corporation as a franchisee, licensee, 
    or in a similar capacity and such lodging facility is either owned 
    by such corporation or is leased to such corporation from the real 
    estate investment trust.
        ``(4) Definitions.--For purposes of paragraph (3)--
            ``(A) Lodging facility.--The term `lodging facility' has 
        the meaning given to such term by paragraph (9)(D)(ii).
            ``(B) Health care facility.--The term `health care 
        facility' has the meaning given to such term by subsection 
        (e)(6)(D)(ii).''.
    (b) Conforming Amendment.--Paragraph (2) of section 856(i) of such 
Code is amended by adding at the end the following new sentence: ``Such 
term shall not include a taxable REIT subsidiary.''.

SEC. 544. LIMITATION ON EARNINGS STRIPPING.

    Paragraph (3) of section 163(j) of the Internal Revenue Code of 
1986 (relating to limitation on deduction for interest on certain 
indebtedness) is amended by striking ``and'' at the end of subparagraph 
(A), by striking the period at the end of subparagraph (B) and 
inserting ``, and'', and by adding at the end the following new 
subparagraph:
            ``(C) any interest paid or accrued (directly or indirectly) 
        by a taxable REIT subsidiary (as defined in section 856(l)) of 
        a real estate investment trust to such trust.''.

SEC. 545. 100 PERCENT TAX ON IMPROPERLY ALLOCATED AMOUNTS.

    (a) In General.--Subsection (b) of section 857 of the Internal 
Revenue Code of 1986 (relating to method of taxation of real estate 
investment trusts and holders of shares or certificates of beneficial 
interest) is amended by redesignating paragraphs (7) and (8) as 
paragraphs (8) and (9), respectively, and by inserting after paragraph 
(6) the following new paragraph:
        ``(7) Income from redetermined rents, redetermined deductions, 
    and excess interest.--
            ``(A) Imposition of tax.--There is hereby imposed for each 
        taxable year of the real estate investment trust a tax equal to 
        100 percent of redetermined rents, redetermined deductions, and 
        excess interest.
            ``(B) Redetermined rents.--
                ``(i) In general.--The term `redetermined rents' means 
            rents from real property (as defined in subsection 856(d)) 
            the amount of which would (but for subparagraph (E)) be 
            reduced on distribution, apportionment, or allocation under 
            section 482 to clearly reflect income as a result of 
            services furnished or rendered by a taxable REIT subsidiary 
            of the real estate investment trust to a tenant of such 
            trust.
                ``(ii) Exception for certain services.--Clause (i) 
            shall not apply to amounts received directly or indirectly 
            by a real estate investment trust for services described in 
            paragraph (1)(B) or (7)(C)(i) of section 856(d).
                ``(iii) Exception for de minimis amounts.--Clause (i) 
            shall not apply to amounts described in section 
            856(d)(7)(A) with respect to a property to the extent such 
            amounts do not exceed the one percent threshold described 
            in section 856(d)(7)(B) with respect to such property.
                ``(iv) Exception for comparably priced services.--
            Clause (i) shall not apply to any service rendered by a 
            taxable REIT subsidiary of a real estate investment trust 
            to a tenant of such trust if--

                    ``(I) such subsidiary renders a significant amount 
                of similar services to persons other than such trust 
                and tenants of such trust who are unrelated (within the 
                meaning of section 856(d)(8)(F)) to such subsidiary, 
                trust, and tenants, but
                    ``(II) only to the extent the charge for such 
                service so rendered is substantially comparable to the 
                charge for the similar services rendered to persons 
                referred to in subclause (I).

                ``(v) Exception for certain separately charged 
            services.--Clause (i) shall not apply to any service 
            rendered by a taxable REIT subsidiary of a real estate 
            investment trust to a tenant of such trust if--

                    ``(I) the rents paid to the trust by tenants 
                (leasing at least 25 percent of the net leasable space 
                in the trust's property) who are not receiving such 
                service from such subsidiary are substantially 
                comparable to the rents paid by tenants leasing 
                comparable space who are receiving such service from 
                such subsidiary, and
                    ``(II) the charge for such service from such 
                subsidiary is separately stated.

                ``(vi) Exception for certain services based on 
            subsidiary's income from the services.--Clause (i) shall 
            not apply to any service rendered by a taxable REIT 
            subsidiary of a real estate investment trust to a tenant of 
            such trust if the gross income of such subsidiary from such 
            service is not less than 150 percent of such subsidiary's 
            direct cost in furnishing or rendering the service.
                ``(vii) Exceptions granted by secretary.--The Secretary 
            may waive the tax otherwise imposed by subparagraph (A) if 
            the trust establishes to the satisfaction of the Secretary 
            that rents charged to tenants were established on an arms' 
            length basis even though a taxable REIT subsidiary of the 
            trust provided services to such tenants.
            ``(C) Redetermined deductions.--The term `redetermined 
        deductions' means deductions (other than redetermined rents) of 
        a taxable REIT subsidiary of a real estate investment trust if 
        the amount of such deductions would (but for subparagraph (E)) 
        be decreased on distribution, apportionment, or allocation 
        under section 482 to clearly reflect income as between such 
        subsidiary and such trust.
            ``(D) Excess interest.--The term `excess interest' means 
        any deductions for interest payments by a taxable REIT 
        subsidiary of a real estate investment trust to such trust to 
        the extent that the interest payments are in excess of a rate 
        that is commercially reasonable.
            ``(E) Coordination with section 482.--The imposition of tax 
        under subparagraph (A) shall be in lieu of any distribution, 
        apportionment, or allocation under section 482.
            ``(F) Regulatory authority.--The Secretary shall prescribe 
        such regulations as may be necessary or appropriate to carry 
        out the purposes of this paragraph. Until the Secretary 
        prescribes such regulations, real estate investment trusts and 
        their taxable REIT subsidiaries may base their allocations on 
        any reasonable method.''.
    (b) Amount Subject to Tax Not Required To Be Distributed.--
Subparagraph (E) of section 857(b)(2) of such Code (relating to real 
estate investment trust taxable income) is amended by striking 
``paragraph (5)'' and inserting ``paragraphs (5) and (7)''.

SEC. 546. EFFECTIVE DATE.

    (a) In General.--The amendments made by this subpart shall apply to 
taxable years beginning after December 31, 2000.
    (b) Transitional Rules Related to Section 541.--
        (1) Existing arrangements.--
            (A) In general.--Except as otherwise provided in this 
        paragraph, the amendment made by section 541 shall not apply to 
        a real estate investment trust with respect to--
                (i) securities of a corporation held directly or 
            indirectly by such trust on July 12, 1999;
                (ii) securities of a corporation held by an entity on 
            July 12, 1999, if such trust acquires control of such 
            entity pursuant to a written binding contract in effect on 
            such date and at all times thereafter before such 
            acquisition;
                (iii) securities received by such trust (or a 
            successor) in exchange for, or with respect to, securities 
            described in clause (i) or (ii) in a transaction in which 
            gain or loss is not recognized; and
                (iv) securities acquired directly or indirectly by such 
            trust as part of a reorganization (as defined in section 
            368(a)(1) of the Internal Revenue Code of 1986) with 
            respect to such trust if such securities are described in 
            clause (i), (ii), or (iii) with respect to any other real 
            estate investment trust.
            (B) New trade or business or substantial new assets.--
        Subparagraph (A) shall cease to apply to securities of a 
        corporation as of the first day after July 12, 1999, on which 
        such corporation engages in a substantial new line of business, 
        or acquires any substantial asset, other than--
                (i) pursuant to a binding contract in effect on such 
            date and at all times thereafter before the acquisition of 
            such asset;
                (ii) in a transaction in which gain or loss is not 
            recognized by reason of section 1031 or 1033 of the 
            Internal Revenue Code of 1986; or
                (iii) in a reorganization (as so defined) with another 
            corporation the securities of which are described in 
            paragraph (1)(A) of this subsection.
            (C) Limitation on transition rules.--Subparagraph (A) shall 
        cease to apply to securities of a corporation held, acquired, 
        or received, directly or indirectly, by a real estate 
        investment trust as of the first day after July 12, 1999, on 
        which such trust acquires any additional securities of such 
        corporation other than--
                (i) pursuant to a binding contract in effect on July 
            12, 1999, and at all times thereafter; or
                (ii) in a reorganization (as so defined) with another 
            corporation the securities of which are described in 
            paragraph (1)(A) of this subsection.
        (2) Tax-free conversion.--If--
            (A) at the time of an election for a corporation to become 
        a taxable REIT subsidiary, the amendment made by section 541 
        does not apply to such corporation by reason of paragraph (1); 
        and
            (B) such election first takes effect before January 1, 
        2004,
    such election shall be treated as a reorganization qualifying under 
    section 368(a)(1)(A) of such Code.

SEC. 547. STUDY RELATING TO TAXABLE REIT SUBSIDIARIES.

    The Secretary of the Treasury shall conduct a study to determine 
how many taxable REIT subsidiaries are in existence and the aggregate 
amount of taxes paid by such subsidiaries. The Secretary shall submit a 
report to the Congress describing the results of such study.

                      Subpart B--Health Care REITs

SEC. 551. HEALTH CARE REITS.

    (a) Special Foreclosure Rule for Health Care Properties.--
Subsection (e) of section 856 of the Internal Revenue Code of 1986 
(relating to special rules for foreclosure property) is amended by 
adding at the end the following new paragraph:
        ``(6) Special rule for qualified health care properties.--For 
    purposes of this subsection--
            ``(A) Acquisition at expiration of lease.--The term 
        `foreclosure property' shall include any qualified health care 
        property acquired by a real estate investment trust as the 
        result of the termination of a lease of such property (other 
        than a termination by reason of a default, or the imminence of 
        a default, on the lease).
            ``(B) Grace period.--In the case of a qualified health care 
        property which is foreclosure property solely by reason of 
        subparagraph (A), in lieu of applying paragraphs (2) and (3)--
                ``(i) the qualified health care property shall cease to 
            be foreclosure property as of the close of the second 
            taxable year after the taxable year in which such trust 
            acquired such property, and
                ``(ii) if the real estate investment trust establishes 
            to the satisfaction of the Secretary that an extension of 
            the grace period in clause (i) is necessary to the orderly 
            leasing or liquidation of the trust's interest in such 
            qualified health care property, the Secretary may grant one 
            or more extensions of the grace period for such qualified 
            health care property.
        Any such extension shall not extend the grace period beyond the 
        close of the 6th year after the taxable year in which such 
        trust acquired such qualified health care property.
            ``(C) Income from independent contractors.--For purposes of 
        applying paragraph (4)(C) with respect to qualified health care 
        property which is foreclosure property by reason of 
        subparagraph (A) or paragraph (1), income derived or received 
        by the trust from an independent contractor shall be 
        disregarded to the extent such income is attributable to--
                ``(i) any lease of property in effect on the date the 
            real estate investment trust acquired the qualified health 
            care property (without regard to its renewal after such 
            date so long as such renewal is pursuant to the terms of 
            such lease as in effect on such date), or
                ``(ii) any lease of property entered into after such 
            date if--

                    ``(I) on such date, a lease of such property from 
                the trust was in effect, and
                    ``(II) under the terms of the new lease, such trust 
                receives a substantially similar or lesser benefit in 
                comparison to the lease referred to in subclause (I).

            ``(D) Qualified health care property.--
                ``(i) In general.--The term `qualified health care 
            property' means any real property (including interests 
            therein), and any personal property incident to such real 
            property, which--

                    ``(I) is a health care facility, or
                    ``(II) is necessary or incidental to the use of a 
                health care facility.

                ``(ii) Health care facility.--For purposes of clause 
            (i), the term `health care facility' means a hospital, 
            nursing facility, assisted living facility, congregate care 
            facility, qualified continuing care facility (as defined in 
            section 7872(g)(4)), or other licensed facility which 
            extends medical or nursing or ancillary services to 
            patients and which, immediately before the termination, 
            expiration, default, or breach of the lease of or mortgage 
            secured by such facility, was operated by a provider of 
            such services which was eligible for participation in the 
            medicare program under title XVIII of the Social Security 
            Act with respect to such facility.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2000.

     Subpart C--Conformity With Regulated Investment Company Rules

SEC. 556. CONFORMITY WITH REGULATED INVESTMENT COMPANY RULES.

    (a) Distribution Requirement.--Clauses (i) and (ii) of section 
857(a)(1)(A) of the Internal Revenue Code of 1986 (relating to 
requirements applicable to real estate investment trusts) are each 
amended by striking ``95 percent (90 percent for taxable years 
beginning before January 1, 1980)'' and inserting ``90 percent''.
    (b) Imposition of Tax.--Clause (i) of section 857(b)(5)(A) of such 
Code (relating to imposition of tax in case of failure to meet certain 
requirements) is amended by striking ``95 percent (90 percent in the 
case of taxable years beginning before January 1, 1980)'' and inserting 
``90 percent''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

Subpart D--Clarification of Exception From Impermissible Tenant Service 
                                 Income

SEC. 561. CLARIFICATION OF EXCEPTION FOR INDEPENDENT OPERATORS.

    (a) In General.--Paragraph (3) of section 856(d) of the Internal 
Revenue Code of 1986 (relating to independent contractor defined) is 
amended by adding at the end the following flush sentence:
    ``In the event that any class of stock of either the real estate 
    investment trust or such person is regularly traded on an 
    established securities market, only persons who own, directly or 
    indirectly, more than 5 percent of such class of stock shall be 
    taken into account as owning any of the stock of such class for 
    purposes of applying the 35 percent limitation set forth in 
    subparagraph (B) (but all of the outstanding stock of such class 
    shall be considered outstanding in order to compute the denominator 
    for purpose of determining the applicable percentage of 
    ownership).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2000.

         Subpart E--Modification of Earnings and Profits Rules

SEC. 566. MODIFICATION OF EARNINGS AND PROFITS RULES.

    (a) Rules for Determining Whether Regulated Investment Company Has 
Earnings and Profits From Non-RIC Year.--
        (1) In general.--Subsection (c) of section 852 of the Internal 
    Revenue Code of 1986 is amended by adding at the end the following 
    new paragraph:
        ``(3) Distributions to meet requirements of subsection 
    (a)(2)(B).--Any distribution which is made in order to comply with 
    the requirements of subsection (a)(2)(B)--
            ``(A) shall be treated for purposes of this subsection and 
        subsection (a)(2)(B) as made from earnings and profits which, 
        but for the distribution, would result in a failure to meet 
        such requirements (and allocated to such earnings on a first-
        in, first-out basis), and
            ``(B) to the extent treated under subparagraph (A) as made 
        from accumulated earnings and profits, shall not be treated as 
        a distribution for purposes of subsection (b)(2)(D) and section 
        855.''.
        (2) Conforming amendment.--Subparagraph (A) of section 
    857(d)(3) of such Code is amended to read as follows:
            ``(A) shall be treated for purposes of this subsection and 
        subsection (a)(2)(B) as made from earnings and profits which, 
        but for the distribution, would result in a failure to meet 
        such requirements (and allocated to such earnings on a first-
        in, first-out basis), and''.
    (b) Clarification of Application of REIT Spillover Dividend Rules 
to Distributions To Meet Qualification Requirement.--Subparagraph (B) 
of section 857(d)(3) of such Code is amended by inserting before the 
period ``and section 858''.
    (c) Application of Deficiency Dividend Procedures.--Paragraph (1) 
of section 852(e) of such Code is amended by adding at the end the 
following new sentence: ``If the determination under subparagraph (A) 
is solely as a result of the failure to meet the requirements of 
subsection (a)(2), the preceding sentence shall also apply for purposes 
of applying subsection (a)(2) to the non-RIC year and the amount 
referred to in paragraph (2)(A)(i) shall be the portion of the 
accumulated earnings and profits which resulted in such failure.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to distributions after December 31, 2000.

             Subpart F--Modification of Estimated Tax Rules

SEC. 571. MODIFICATION OF ESTIMATED TAX RULES FOR CLOSELY HELD REAL 
              ESTATE INVESTMENT TRUSTS.

    (a) In General.--Subsection (e) of section 6655 of the Internal 
Revenue Code of 1986 (relating to estimated tax by corporations) is 
amended by adding at the end the following new paragraph:
        ``(5) Treatment of certain reit dividends.--
            ``(A) In general.--Any dividend received from a closely 
        held real estate investment trust by any person which owns 
        (after application of subsections (d)(5) and (l)(3)(B) of 
        section 856) 10 percent or more (by vote or value) of the stock 
        or beneficial interests in the trust shall be taken into 
        account in computing annualized income installments under 
        paragraph (2) in a manner similar to the manner under which 
        partnership income inclusions are taken into account.
            ``(B) Closely held reit.--For purposes of subparagraph (A), 
        the term `closely held real estate investment trust' means a 
        real estate investment trust with respect to which 5 or fewer 
        persons own (after application of subsections (d)(5) and 
        (l)(3)(B) of section 856) 50 percent or more (by vote or value) 
        of the stock or beneficial interests in the trust.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to estimated tax payments due on or after December 15, 1999.

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.`