H. Res. 884 

In the House of Representatives, U. S., 

December 18, 2007. 

Resolved, That upon the adoption of this resolution the 

House shall be considered to have taken from the Speaker’s 

table the bill, H.R. 3997, with the Senate amendments thereto, and to have: (1) concurred in the Senate amendment to 

the title of the bill; and (2) concurred in the Senate amendment to the text of the bill with the following amendment: 

In lieu of the matter proposed to be inserted by the 

amendment of the Senate to the text of the bill, insert the 

following: 

1 SECTION 1. SHORT TITLE, ETC. 

2 (a) SHORT TITLE.—This Act may be cited as the ‘‘He3 roes Earnings Assistance and Relief Tax Act of 2007’’. 

4 (b) REFERENCE.—Except as otherwise expressly pro5 vided, whenever in this Act an amendment or repeal is ex6 pressed in terms of an amendment to, or repeal of, a section 

7 or other provision, the reference shall be considered to be 

8 made to a section or other provision of the Internal Revenue 

9 Code of 1986. 
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1 (c) TABLE OF CONTENTS.—The table of contents for 

2 this Act is as follows: 

Sec. 1. Short title, etc. 

TITLE I—BENEFITS FOR MILITARY AND VOLUNTEER 

FIREFIGHTERS 

Sec. 101. Election to include combat pay as earned income for purposes of earned 

income tax credit. 

Sec. 102. Modification of mortgage revenue bonds for veterans. 

Sec. 103. Survivor and disability payments with respect to qualified military 

service. 

Sec. 104. Treatment of differential military pay as wages. 

Sec. 105. Extension of exclusion from income for benefits provided to volunteer 

firefighters and emergency medical responders. 

Sec. 106. Special period of limitation when uniformed services retired pay is reduced as a result of award of disability compensation. 

Sec. 107. Distributions from retirement plans to individuals called to active duty. 

Sec. 108. Disclosure of return information relating to veterans programs made 

permanent. 

Sec. 109. Contributions of military death gratuities to Roth IRAs and Education 

Savings Accounts. 

Sec. 110. Suspension of 5-year period during service with the Peace Corps. 

Sec. 111. Credit for employer differential wage payments to employees who are 

active duty members of the uniformed services. 

Sec. 112. State payments to service members treated as qualified military benefits. 

Sec. 113. Permanent exclusion of gain from sale of a principal residence by certain employees of the intelligence community. 

Sec. 114. Special disposition rules for unused benefits in health flexible spending 

arrangements of individuals called to active duty. 

TITLE II—IMPROVEMENTS IN SUPPLEMENTAL SECURITY INCOME 

Sec. 201. Treatment of uniformed service cash remuneration as earned income. 

Sec. 202. State annuities for certain veterans to be disregarded in determining 

supplemental security income benefits. 

Sec. 203. Exclusion of AmeriCorps benefits for purposes of determining supplemental security income eligibility and benefit amounts. 

Sec. 204. Effective date. 

TITLE III—REVENUE PROVISIONS 

Sec. 301. Increase in penalty for failure to file partnership returns. 

Sec. 302. Increase in penalty for failure to file S corporation returns. 

Sec. 303. Increase in minimum penalty on failure to file a return of tax. 

Sec. 304. Increase in information return penalties. 

Sec. 305. Revision of tax rules on expatriation. 

TITLE IV—TAX TECHNICAL CORRECTIONS 

Sec. 401. Short title. 

Sec. 402. Amendment related to the Tax Relief and Health Care Act of 2006. 

Sec. 403. Amendments related to title XII of the Pension Protection Act of 2006. 
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Sec. 404. Amendments related to the Tax Increase Prevention and Reconciliation 

Act of 2005. 

Sec. 405. Amendments related to the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users. 

Sec. 406. Amendments related to the Energy Policy Act of 2005. 

Sec. 407. Amendments related to the American Jobs Creation Act of 2004. 

Sec. 408. Amendments related to the Economic Growth and Tax Relief Reconciliation Act of 2001. 

Sec. 409. Amendments related to the Tax Relief Extension Act of 1999. 

Sec. 410. Amendment related to the Internal Revenue Service Restructuring and 

Reform Act of 1998. 

Sec. 411. Clerical corrections. 

TITLE V—PARITY IN APPLICATION OF CERTAIN LIMITS TO MENTAL 

HEALTH BENEFITS 

Sec. 501. Parity in application of certain limits to mental health benefits. 

1 TITLE I—BENEFITS FOR MILI2 TARY AND VOLUNTEER FIRE3 FIGHTERS 

4 SEC. 101. ELECTION TO INCLUDE COMBAT PAY AS EARNED 

5 INCOME FOR PURPOSES OF EARNED INCOME 

6 TAX CREDIT. 

7 (a) IN GENERAL.—Clause (vi) of section 32(c)(2)(B) 

8 (defining earned income) is amended to read as follows: 

9 ‘‘(vi) a taxpayer may elect to treat 

10 amounts excluded from gross income by rea11 son of section 112 as earned income.’’. 

12 (b) SUNSET NOT APPLICABLE.—Section 105 of the 

13 Working Families Tax Relief Act of 2004 (relating to appli14 cation of EGTRRA sunset to this title) shall not apply to 

15 section 104(b) of such Act. 
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1 (c) EFFECTIVE DATE.—The amendment made by this 

2 section shall apply to taxable years ending after December 

3 31, 2007. 

4 SEC. 102. MODIFICATION OF MORTGAGE REVENUE BONDS 

5 FOR VETERANS. 

6 (a) QUALIFIED MORTGAGE BONDS USED TO FINANCE

7 RESIDENCES FOR VETERANS WITHOUT REGARD TO FIRST8 TIME HOMEBUYER REQUIREMENT.—Subparagraph (D) of 

9 section 143(d)(2) (relating to exceptions) is amended by 

10 striking ‘‘and before January 1, 2008’’. 

11 (b) INCREASE IN BOND LIMITATION FOR ALASKA, OR12 EGON, AND WISCONSIN.—Clause (ii) of section 143(l)(3)(B) 

13 (relating to State veterans limit) is amended by striking 

14 ‘‘$25,000,000’’ each place it appears and inserting 

15 ‘‘$100,000,000’’. 

16 (c) DEFINITION OF QUALIFIED VETERAN.—Paragraph 

17 (4) of section 143(l) (defining qualified veteran) is amended 

18 to read as follows: 

19 ‘‘(4) QUALIFIED VETERAN.—For purposes of this 

20 subsection, the term ‘qualified veteran’ means any 

21 veteran who— 

22 ‘‘(A) served on active duty, and 

23 ‘‘(B) applied for the financing before the 

24 date 25 years after the last date on which such 

25 veteran left active service.’’. 
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1 (d) EFFECTIVE DATE.—The amendments made by this 

2 section shall apply to bonds issued after December 31, 2007. 

3 SEC. 103. SURVIVOR AND DISABILITY PAYMENTS WITH RE4 SPECT TO QUALIFIED MILITARY SERVICE. 

5 (a) PLAN QUALIFICATION REQUIREMENT FOR DEATH

6 BENEFITS UNDER USERRA-QUALIFIED ACTIVE MILITARY

7 SERVICE.—Subsection (a) of section 401 (relating to re8 quirements for qualification) is amended by inserting after 

9 paragraph (36) the following new paragraph: 

10 ‘‘(37) DEATH BENEFITS UNDER USERRA-QUALI11 FIED ACTIVE MILITARY SERVICE.—A trust shall not 

12 constitute a qualified trust unless the plan provides 

13 that, in the case of a participant who dies while per14 forming qualified military service (as defined in sec15 tion 414(u)), the survivors of the participant are enti16 tled to any additional benefits (other than benefit ac17 cruals relating to the period of qualified military 

18 service) provided under the plan had the participant 

19 resumed and then terminated employment on account 

20 of death.’’. 

21 (b) TREATMENT IN THE CASE OF DEATH OR DIS22 ABILITY RESULTING FROM ACTIVE MILITARY SERVICE FOR

23 BENEFIT ACCRUAL PURPOSES.—Subsection (u) of section 

24 414 (relating to special rules relating to veterans’ reemploy25 ment rights under USERRA) is amended by redesignating 
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1 paragraphs (9) and (10) as paragraphs (10) and (11), re2 spectively, and by inserting after paragraph (8) the fol3 lowing new paragraph: 

4 ‘‘(9) TREATMENT IN THE CASE OF DEATH OR

5 DISABILITY RESULTING FROM ACTIVE MILITARY SERV6 ICE.— 

7 ‘‘(A) IN GENERAL.—For benefit accrual 

8 purposes, an employer sponsoring a retirement 

9 plan may treat an individual who dies or be10 comes disabled (as defined under the terms of the 

11 plan) while performing qualified military service 

12 with respect to the employer maintaining the 

13 plan as if the individual has resumed employ14 ment in accordance with the individual’s reem15 ployment rights under chapter 43 of title 38, 

16 United States Code, on the day preceding death 

17 or disability (as the case may be) and termi18 nated employment on the actual date of death or 

19 disability. In the case of any such treatment, 

20 and subject to subparagraphs (B) and (C), any 

21 full or partial compliance by such plan with re22 spect to the benefit accrual requirements of para23 graph (8) with respect to such individual shall 

24 be treated for purposes of paragraph (1) as if 
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1 such compliance were required under such chap2 ter 43. 

3 ‘‘(B) NONDISCRIMINATION REQUIREMENT.— 

4 Subparagraph (A) shall apply only if all indi5 viduals performing qualified military service 

6 with respect to the employer maintaining the 

7 plan (as determined under subsections (b), (c), 

8 (m), and (o)) who die or became disabled as a 

9 result of performing qualified military service 

10 prior to reemployment by the employer are cred11 ited with service and benefits on reasonably 

12 equivalent terms. 

13 ‘‘(C) DETERMINATION OF BENEFITS.—The 

14 amount of employee contributions and the 

15 amount of elective deferrals of an individual 

16 treated as reemployed under subparagraph (A) 

17 for purposes of applying paragraph (8)(C) shall 

18 be determined on the basis of the individual’s av19 erage actual employee contributions or elective 

20 deferrals for the lesser of— 

21 ‘‘(i) the 12-month period of service 

22 with the employer immediately prior to 

23 qualified military service, or 

24 ‘‘(ii) if service with the employer is less 

25 than such 12-month period, the actual 
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1 length of continuous service with the em2 ployer.’’. 

3 (c) CONFORMING AMENDMENTS.— 

4 (1) Section 404(a)(2) is amended by striking 

5 ‘‘and (31)’’ and inserting ‘‘(31), and (37)’’. 

6 (2) Section 403(b) is amended by adding at the 

7 end the following new paragraph: 

8 ‘‘(14) DEATH BENEFITS UNDER USERRA-QUALI9 FIED ACTIVE MILITARY SERVICE.—This subsection 

10 shall not apply to an annuity contract unless such 

11 contract meets the requirements of section 

12 401(a)(37).’’. 

13 (3) Section 457(g) is amended by adding at the 

14 end the following new paragraph: 

15 ‘‘(4) DEATH BENEFITS UNDER USERRA-QUALI16 FIED ACTIVE MILITARY SERVICE.—A plan described 

17 in paragraph (1) shall not be treated as an eligible 

18 deferred compensation plan unless such plan meets 

19 the requirements of section 401(a)(37).’’. 

20 (d) EFFECTIVE DATE.— 

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

22 this section shall apply with respect to deaths and 

23 disabilities occurring on or after January 1, 2007. 

24 (2) PROVISIONS RELATING TO PLAN AMEND25 MENTS.— 
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1 (A) IN GENERAL.—If this subparagraph ap2 plies to any plan or contract amendment, such 

3 plan or contract shall be treated as being oper4 ated in accordance with the terms of the plan 

5 during the period described in subparagraph 

6 (B)(iii). 

7 (B) AMENDMENTS TO WHICH SUBPARA8 GRAPH (A) APPLIES.— 

9 (i) IN GENERAL.—Subparagraph (A) 

10 shall apply to any amendment to any plan 

11 or annuity contract which is made— 

12 (I) pursuant to the amendments 

13 made by subsection (a) or pursuant to 

14 any regulation issued by the Secretary 

15 of the Treasury under subsection (a), 

16 and 

17 (II) on or before the last day of 

18 the first plan year beginning on or 

19 after January 1, 2009. 

20 In the case of a governmental plan (as de21 fined in section 414(d) of the Internal Rev22 enue Code of 1986), this clause shall be ap23 plied by substituting ‘‘2011’’ for ‘‘2009’’ in 

24 subclause (II). 
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1 (ii) CONDITIONS.—This paragraph 

2 shall not apply to any amendment unless— 

3 (I) the plan or contract is oper4 ated as if such plan or contract 

5 amendment were in effect for the pe6 riod described in clause (iii), and 

7 (II) such plan or contract amend8 ment applies retroactively for such pe9 riod. 

10 (iii) PERIOD DESCRIBED.—The period 

11 described in this clause is the period— 

12 (I) beginning on the effective date 

13 specified by the plan, and 

14 (II) ending on the date described 

15 in clause (i)(II) (or, if earlier, the date 

16 the plan or contract amendment is 

17 adopted). 

18 SEC. 104. TREATMENT OF DIFFERENTIAL MILITARY PAY AS 

19 WAGES. 

20 (a) INCOME TAX WITHHOLDING ON DIFFERENTIAL

21 WAGE PAYMENTS.— 

22 (1) IN GENERAL.—Section 3401 (relating to defi23 nitions) is amended by adding at the end the fol24 lowing new subsection: 
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1 ‘‘(h) DIFFERENTIAL WAGE PAYMENTS TO ACTIVE

2 DUTY MEMBERS OF THE UNIFORMED SERVICES.— 

3 ‘‘(1) IN GENERAL.—For purposes of subsection 

4 (a), any differential wage payment shall be treated as 

5 a payment of wages by the employer to the employee. 

6 ‘‘(2) DIFFERENTIAL WAGE PAYMENT.—For pur7 poses of paragraph (1), the term ‘differential wage 

8 payment’ means any payment which— 

9 ‘‘(A) is made by an employer to an indi10 vidual with respect to any period during which 

11 the individual is performing service in the uni12 formed services (as defined in chapter 43 of title 

13 38, United States Code) while on active duty for 

14 a period of more than 30 days, and 

15 ‘‘(B) represents all or a portion of the wages 

16 the individual would have received from the em17 ployer if the individual were performing service 

18 for the employer.’’. 

19 (2) EFFECTIVE DATE.—The amendment made by 

20 this subsection shall apply to remuneration paid after 

21 December 31, 2007. 

22 (b) TREATMENT OF DIFFERENTIAL WAGE PAYMENTS

23 FOR RETIREMENT PLAN PURPOSES.— 

24 (1) PENSION PLANS.— 
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1 (A) IN GENERAL.—Section 414(u) (relating 

2 to special rules relating to veterans’ reemploy3 ment rights under USERRA), as amended by 

4 section 103(b), is amended by adding at the end 

5 the following new paragraph: 

6 ‘‘(12) TREATMENT OF DIFFERENTIAL WAGE PAY7 MENTS.— 

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

9 this paragraph, for purposes of applying this 

10 title to a retirement plan to which this sub11 section applies— 

12 ‘‘(i) an individual receiving a differen13 tial wage payment shall be treated as an 

14 employee of the employer making the pay15 ment, 

16 ‘‘(ii) the differential wage payment 

17 shall be treated as compensation, and 

18 ‘‘(iii) the plan shall not be treated as 

19 failing to meet the requirements of any pro20 vision described in paragraph (1)(C) by 

21 reason of any contribution or benefit which 

22 is based on the differential wage payment. 

23 ‘‘(B) SPECIAL RULE FOR DISTRIBUTIONS.— 

24 ‘‘(i) IN GENERAL.—Notwithstanding 

25 subparagraph (A)(i), for purposes of section 
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1 401(k)(2)(B)(i)(I), 403(b)(7)(A)(ii), 

2 403(b)(11)(A), or 457(d)(1)(A)(ii), an indi3 vidual shall be treated as having been sev4 ered from employment during any period 

5 the individual is performing service in the 

6 uniformed services described in section 

7 3401(h)(2)(A). 

8 ‘‘(ii) LIMITATION.—If an individual 

9 elects to receive a distribution by reason of 

10 clause (i), the plan shall provide that the 

11 individual may not make an elective defer12 ral or employee contribution during the 6- 

13 month period beginning on the date of the 

14 distribution. 

15 ‘‘(C) NONDISCRIMINATION REQUIREMENT.— 

16 Subparagraph (A)(iii) shall apply only if all 

17 employees of an employer (as determined under 

18 subsections (b), (c), (m), and (o)) performing 

19 service in the uniformed services described in sec20 tion 3401(h)(2)(A) are entitled to receive dif21 ferential wage payments on reasonably equiva22 lent terms and, if eligible to participate in a re23 tirement plan maintained by the employer, to 

24 make contributions based on the payments on 

25 reasonably equivalent terms. For purposes of ap-
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1 plying this subparagraph, the provisions of 

2 paragraphs (3), (4), and (5) of section 410(b) 

3 shall apply. 

4 ‘‘(D) DIFFERENTIAL WAGE PAYMENT.—For 

5 purposes of this paragraph, the term ‘differential 

6 wage payment’ has the meaning given such term 

7 by section 3401(h)(2).’’. 

8 (B) CONFORMING AMENDMENT.—The head9 ing for section 414(u) is amended by inserting 

10 ‘‘AND TO DIFFERENTIAL WAGE PAYMENTS TO

11 MEMBERS ON ACTIVE DUTY’’ after ‘‘USERRA’’. 

12 (2) DIFFERENTIAL WAGE PAYMENTS TREATED AS

13 COMPENSATION FOR INDIVIDUAL RETIREMENT

14 PLANS.—Section 219(f)(1) (defining compensation) is 

15 amended by adding at the end the following new sen16 tence: ‘‘The term compensation includes any differen17 tial wage payment (as defined in section 

18 3401(h)(2)).’’. 

19 (3) EFFECTIVE DATE.—The amendments made 

20 by this subsection shall apply to years beginning after 

21 December 31, 2007. 

22 (c) PROVISIONS RELATING TO PLAN AMENDMENTS.— 

23 (1) IN GENERAL.—If this subsection applies to 

24 any plan or annuity contract amendment, such plan 

25 or contract shall be treated as being operated in ac-
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1 cordance with the terms of the plan or contract dur2 ing the period described in paragraph (2)(B)(i). 

3 (2) AMENDMENTS TO WHICH SECTION AP4 PLIES.— 

5 (A) IN GENERAL.—This subsection shall 

6 apply to any amendment to any plan or annu7 ity contract which is made— 

8 (i) pursuant to any amendment made 

9 by subsection (b)(1), and 

10 (ii) on or before the last day of the first 

11 plan year beginning on or after January 1, 

12 2009. 

13 In the case of a governmental plan (as defined 

14 in section 414(d) of the Internal Revenue Code 

15 of 1986), this subparagraph shall be applied by 

16 substituting ‘‘2011’’ for ‘‘2009’’ in clause (ii). 

17 (B) CONDITIONS.—This subsection shall not 

18 apply to any plan or annuity contract amend19 ment unless— 

20 (i) during the period beginning on the 

21 date the amendment described in subpara22 graph (A)(i) takes effect and ending on the 

23 date described in subparagraph (A)(ii) (or, 

24 if earlier, the date the plan or contract 

25 amendment is adopted), the plan or con-
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1 tract is operated as if such plan or contract 

2 amendment were in effect, and 

3 (ii) such plan or contract amendment 

4 applies retroactively for such period. 

5 SEC. 105. EXTENSION OF EXCLUSION FROM INCOME FOR 

6 BENEFITS PROVIDED TO VOLUNTEER FIRE7 FIGHTERS AND EMERGENCY MEDICAL RE8 SPONDERS. 

9 Subsection (d) of section 139B (relating to termi10 nation), as added to the Internal Revenue Code of 1986 by 

11 section 5 of the Mortgage Forgiveness Debt Relief Act of 

12 2007, is amended by striking ‘‘December 31, 2010’’ and in13 serting ‘‘December 31, 2015’’. 

14 SEC. 106. SPECIAL PERIOD OF LIMITATION WHEN UNI15 FORMED SERVICES RETIRED PAY IS RE16 DUCED AS A RESULT OF AWARD OF DIS17 ABILITY COMPENSATION. 

18 (a) IN GENERAL.—Subsection (d) of section 6511 (re19 lating to special rules applicable to income taxes) is amend20 ed by adding at the end the following new paragraph: 

21 ‘‘(8) SPECIAL RULES WHEN UNIFORMED SERV22 ICES RETIRED PAY IS REDUCED AS A RESULT OF

23 AWARD OF DISABILITY COMPENSATION.— 

24 ‘‘(A) PERIOD OF LIMITATION ON FILING

25 CLAIM.—If the claim for credit or refund relates 
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1 to an overpayment of tax imposed by subtitle A 

2 on account of— 

3 ‘‘(i) the reduction of uniformed services 

4 retired pay computed under section 1406 or 

5 1407 of title 10, United States Code, or 

6 ‘‘(ii) the waiver of such pay under sec7 tion 5305 of title 38 of such Code, 

8 as a result of an award of compensation under 

9 title 38 of such Code pursuant to a determina10 tion by the Secretary of Veterans Affairs, the 3- 

11 year period of limitation prescribed in subsection 

12 (a) shall be extended, for purposes of permitting 

13 a credit or refund based upon the amount of such 

14 reduction or waiver, until the end of the 1-year 

15 period beginning on the date of such determina16 tion. 

17 ‘‘(B) LIMITATION TO 5 TAXABLE YEARS.— 

18 Subparagraph (A) shall not apply with respect 

19 to any taxable year which began more than 5 

20 years before the date of such determination.’’. 

21 (b) EFFECTIVE DATE.—The amendment made by sub22 section (a) shall apply to claims for credit or refund filed 

23 after the date of the enactment of this Act. 

24 (c) TRANSITION RULES.—In the case of a determina25 tion described in paragraph (8) of section 6511(d) of the 
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1 Internal Revenue Code of 1986 (as added by this section) 

2 which is made by the Secretary of Veterans Affairs after 

3 December 31, 2000, and before the date of the enactment 

4 of this Act, such paragraph— 

5 (1) shall not apply with respect to any taxable 

6 year which began before January 1, 2001, and 

7 (2) shall be applied by substituting for ‘‘the date 

8 of such determination’’ in subparagraph (A) thereof. 

9 SEC. 107. DISTRIBUTIONS FROM RETIREMENT PLANS TO IN10 DIVIDUALS CALLED TO ACTIVE DUTY. 

11 (a) IN GENERAL.—Clause (iv) of section 72(t)(2)(G) 

12 is amended by striking ‘‘, and before December 31, 2007’’. 

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

14 section shall apply to individuals ordered or called to active 

15 duty on or after December 31, 2007. 

16 SEC. 108. DISCLOSURE OF RETURN INFORMATION RELAT17 ING TO VETERANS PROGRAMS MADE PERMA18 NENT. 

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

20 6103(l)(7) (relating to disclosure of return information to 

21 Federal, State, and local agencies administering certain 

22 programs under the Social Security Act, the Food Stamp 

23 Act of 1977, or title 38, United States Code or certain hous24 ing assistance programs) is amended by striking the last 

25 sentence. 
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1 (b) TECHNICAL AMENDMENT.—Section 

2 6103(l)(7)(D)(viii)(III) is amended by striking ‘‘sections 

3 1710(a)(1)(I), 1710(a)(2), 1710(b), and 1712(a)(2)(B)’’ and 

4 inserting ‘‘sections 1710(a)(2)(G), 1710(a)(3), and 

5 1710(b)’’. 

6 SEC. 109. CONTRIBUTIONS OF MILITARY DEATH GRATU7 ITIES TO ROTH IRAS AND EDUCATION SAV8 INGS ACCOUNTS. 

9 (a) PROVISION IN EFFECT BEFORE PENSION PROTEC10 TION ACT.—Subsection (e) of section 408A (relating to 

11 qualified rollover contribution), as in effect before the 

12 amendments made by section 824 of the Pension Protection 

13 Act of 2006, is amended to read as follows: 

14 ‘‘(e) QUALIFIED ROLLOVER CONTRIBUTION.—For pur15 poses of this section— 

16 ‘‘(1) IN GENERAL.—The term ‘qualified rollover 

17 contribution’ means a rollover contribution to a Roth 

18 IRA from another such account, or from an indi19 vidual retirement plan, but only if such rollover con20 tribution meets the requirements of section 408(d)(3). 

21 Such term includes a rollover contribution described 

22 in section 402A(c)(3)(A). For purposes of section 

23 408(d)(3)(B), there shall be disregarded any qualified 

24 rollover contribution from an individual retirement 

25 plan (other than a Roth IRA) to a Roth IRA. 
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1 ‘‘(2) MILITARY DEATH GRATUITY.— 

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

3 rollover contribution’ includes a contribution to 

4 a Roth IRA maintained for the benefit of an in5 dividual made before the end of the 1-year period 

6 beginning on the date on which such individual 

7 receives an amount under section 1477 of title 

8 10, United States Code, or section 1967 of title 

9 38 of such Code, with respect to a person, to the 

10 extent that such contribution does not exceed— 

11 ‘‘(i) the sum of the amounts received 

12 during such period by such individual 

13 under such sections with respect to such 

14 person, reduced by 

15 ‘‘(ii) the amounts so received which 

16 were contributed to a Coverdell education 

17 savings account under section 530(d)(9). 

18 ‘‘(B) ANNUAL LIMIT ON NUMBER OF ROLL19 OVERS NOT TO APPLY.—Section 408(d)(3)(B) 

20 shall not apply with respect to amounts treated 

21 as a rollover by subparagraph (A). 

22 ‘‘(C) APPLICATION OF SECTION 72.—For 

23 purposes of applying section 72 in the case of a 

24 distribution which is not a qualified distribu25 tion, the amount treated as a rollover by reason 
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1 of subparagraph (A) shall be treated as invest2 ment in the contract.’’. 

3 (b) PROVISION IN EFFECT AFTER PENSION PROTEC4 TION ACT.—Subsection (e) of section 408A, as in effect after 

5 the amendments made by section 824 of the Pension Protec6 tion Act of 2006, is amended to read as follows: 

7 ‘‘(e) QUALIFIED ROLLOVER CONTRIBUTION.—For pur8 poses of this section— 

9 ‘‘(1) IN GENERAL.—The term ‘qualified rollover 

10 contribution’ means a rollover contribution— 

11 ‘‘(A) to a Roth IRA from another such ac12 count, 

13 ‘‘(B) from an eligible retirement plan, but 

14 only if— 

15 ‘‘(i) in the case of an individual retire16 ment plan, such rollover contribution meets 

17 the requirements of section 408(d)(3), and 

18 ‘‘(ii) in the case of any eligible retire19 ment plan (as defined in section 

20 402(c)(8)(B) other than clauses (i) and (ii) 

21 thereof), such rollover contribution meets the 

22 requirements of section 402(c), 403(b)(8), or 

23 457(e)(16), as applicable. 

24 For purposes of section 408(d)(3)(B), there shall 

25 be disregarded any qualified rollover contribu-
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1 tion from an individual retirement plan (other 

2 than a Roth IRA) to a Roth IRA. 

3 ‘‘(2) MILITARY DEATH GRATUITY.— 

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

5 rollover contribution’ includes a contribution to 

6 a Roth IRA maintained for the benefit of an in7 dividual made before the end of the 1-year period 

8 beginning on the date on which such individual 

9 receives an amount under section 1477 of title 

10 10, United States Code, or section 1967 of title 

11 38 of such Code, with respect to a person, to the 

12 extent that such contribution does not exceed— 

13 ‘‘(i) the sum of the amounts received 

14 during such period by such individual 

15 under such sections with respect to such 

16 person, reduced by 

17 ‘‘(ii) the amounts so received which 

18 were contributed to a Coverdell education 

19 savings account under section 530(d)(9). 

20 ‘‘(B) ANNUAL LIMIT ON NUMBER OF ROLL21 OVERS NOT TO APPLY.—Section 408(d)(3)(B) 

22 shall not apply with respect to amounts treated 

23 as a rollover by the subparagraph (A). 

24 ‘‘(C) APPLICATION OF SECTION 72.—For 

25 purposes of applying section 72 in the case of a 
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1 distribution which is not a qualified distribu2 tion, the amount treated as a rollover by reason 

3 of subparagraph (A) shall be treated as invest4 ment in the contract.’’. 

5 (c) EDUCATION SAVINGS ACCOUNTS.—Subsection (d) 

6 of section 530 is amended by adding at the end the following 

7 new paragraph: 

8 ‘‘(9) MILITARY DEATH GRATUITY.— 

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

10 section, the term ‘rollover contribution’ includes 

11 a contribution to a Coverdell education savings 

12 account made before the end of the 1-year period 

13 beginning on the date on which the contributor 

14 receives an amount under section 1477 of title 

15 10, United States Code, or section 1967 of title 

16 38 of such Code, with respect to a person, to the 

17 extent that such contribution does not exceed— 

18 ‘‘(i) the sum of the amounts received 

19 during such period by such contributor 

20 under such sections with respect to such 

21 person, reduced by 

22 ‘‘(ii) the amounts so received which 

23 were contributed to a Roth IRA under sec24 tion 408A(e)(2) or to another Coverdell edu25 cation savings account. 
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1 ‘‘(B) ANNUAL LIMIT ON NUMBER OF ROLL2 OVERS NOT TO APPLY.—The last sentence of 

3 paragraph (5) shall not apply with respect to 

4 amounts treated as a rollover by the subpara5 graph (A). 

6 ‘‘(C) APPLICATION OF SECTION 72.—For 

7 purposes of applying section 72 in the case of a 

8 distribution which is includible in gross income 

9 under paragraph (1), the amount treated as a 

10 rollover by reason of subparagraph (A) shall be 

11 treated as investment in the contract.’’. 

12 (d) EFFECTIVE DATES.— 

13 (1) IN GENERAL.—Except as provided by para14 graphs (2) and (3), the amendments made by this sec15 tion shall apply with respect to deaths from injuries 

16 occurring on or after the date of the enactment of this 

17 Act. 

18 (2) APPLICATION OF AMENDMENTS TO DEATHS

19 FROM INJURIES OCCURRING ON OR AFTER OCTOBER 7, 

20 2001, AND BEFORE ENACTMENT.—The amendments 

21 made by this section shall apply to any contribution 

22 made pursuant to section 408A(e)(2) or 530(d)(5) of 

23 the Internal Revenue Code of 1986, as amended by 

24 this Act, with respect to amounts received under sec25 tion 1477 of title 10, United States Code, or under 
25 

•HRES 884 EH 

1 section 1967 of title 38 of such Code, for deaths from 

2 injuries occurring on or after October 7, 2001, and 

3 before the date of the enactment of this Act if such 

4 contribution is made not later than 1 year after the 

5 date of the enactment of this Act. 

6 (3) PENSION PROTECTION ACT CHANGES.—Sec7 tion 408A(e)(1) of the Internal Revenue Code of 1986 

8 (as in effect after the amendments made by subsection 

9 (b)) shall apply to taxable years beginning after De10 cember 31, 2007. 

11 SEC. 110. SUSPENSION OF 5-YEAR PERIOD DURING SERVICE 

12 WITH THE PEACE CORPS. 

13 (a) IN GENERAL.—Subsection (d) of section 121 (relat14 ing to special rules) is amended by adding at the end the 

15 following new paragraph: 

16 ‘‘(12) PEACE CORPS.— 

17 ‘‘(A) IN GENERAL.—At the election of an 

18 individual with respect to a property, the run19 ning of the 5-year period described in subsections 

20 (a) and (c)(1)(B) and paragraph (7) of this sub21 section with respect to such property shall be sus22 pended during any period that such individual 

23 or such individual’s spouse is serving outside the 

24 United States— 
26 

•HRES 884 EH 

1 ‘‘(i) on qualified official extended duty 

2 (as defined in paragraph (9)(C)) as an em3 ployee of the Peace Corps, or 

4 ‘‘(ii) as an enrolled volunteer or volun5 teer leader under section 5 or 6 (as the case 

6 may be) of the Peace Corps Act (22 U.S.C. 

7 2504, 2505). 

8 ‘‘(B) APPLICABLE RULES.—For purposes of 

9 subparagraph (A), rules similar to the rules of 

10 subparagraphs (B) and (D) shall apply.’’. 

11 (b) EFFECTIVE DATE.—The amendment made by sub12 section (a) shall apply to taxable years beginning after De13 cember 31, 2007. 

14 SEC. 111. CREDIT FOR EMPLOYER DIFFERENTIAL WAGE 

15 PAYMENTS TO EMPLOYEES WHO ARE ACTIVE 

16 DUTY MEMBERS OF THE UNIFORMED SERV17 ICES. 

18 (a) IN GENERAL.—Subpart D of part IV of subchapter 

19 A of chapter 1 (relating to business credits) is amended by 

20 adding at the end the following new section: 

21 ‘‘SEC. 45O. EMPLOYER WAGE CREDIT FOR EMPLOYEES WHO 

22 ARE ACTIVE DUTY MEMBERS OF THE UNI23 FORMED SERVICES. 

24 ‘‘(a) GENERAL RULE.—For purposes of section 38, in 

25 the case of an eligible small business employer, the differen-
27 

•HRES 884 EH 

1 tial wage payment credit for any taxable year is an amount 

2 equal to 20 percent of the sum of the eligible differential 

3 wage payments for each of the qualified employees of the 

4 taxpayer during such taxable year. 

5 ‘‘(b) DEFINITIONS.—For purposes of this section— 

6 ‘‘(1) ELIGIBLE DIFFERENTIAL WAGE PAY7 MENTS.—The term ‘eligible differential wage pay8 ments’ means, with respect to each qualified employee, 

9 so much of the differential wage payments (as defined 

10 in section 3401(h)(2)) paid to such employee for the 

11 taxable year as does not exceed $20,000. 

12 ‘‘(2) QUALIFIED EMPLOYEE.—The term ‘quali13 fied employee’ means a person who has been an em14 ployee of the taxpayer for the 91-day period imme15 diately preceding the period for which any differen16 tial wage payment is made. 

17 ‘‘(3) ELIGIBLE SMALL BUSINESS EMPLOYER.— 

18 ‘‘(A) IN GENERAL.—The term ‘eligible small 

19 business employer’ means, with respect to any 

20 taxable year, any employer which— 

21 ‘‘(i) employed an average of less than 

22 50 employees on business days during such 

23 taxable year, and 

24 ‘‘(ii) under a written plan of the em25 ployer, provides eligible differential wage 
28 

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1 payments to every qualified employee of the 

2 employer. 

3 ‘‘(B) CONTROLLED GROUPS.—For purposes 

4 of subparagraph (A), all persons treated as a 

5 single employer under subsection (b), (c), (m), or 

6 (o) of section 414 shall be treated as a single em7 ployer. 

8 ‘‘(c) COORDINATION WITH OTHER CREDITS.—The 

9 amount of credit otherwise allowable under this chapter 

10 with respect to compensation paid to any employee shall 

11 be reduced by the credit determined under this section with 

12 respect to such employee. 

13 ‘‘(d) DISALLOWANCE FOR FAILURE TO COMPLY WITH

14 EMPLOYMENT OR REEMPLOYMENT RIGHTS OF MEMBERS

15 OF THE RESERVE COMPONENTS OF THE ARMED FORCES

16 OF THE UNITED STATES.—No credit shall be allowed under 

17 subsection (a) to a taxpayer for— 

18 ‘‘(1) any taxable year, beginning after the date 

19 of the enactment of this section, in which the taxpayer 

20 is under a final order, judgment, or other process 

21 issued or required by a district court of the United 

22 States under section 4323 of title 38 of the United 

23 States Code with respect to a violation of chapter 43 

24 of such title, and 

25 ‘‘(2) the 2 succeeding taxable years. 
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1 ‘‘(e) CERTAIN RULES TO APPLY.—For purposes of this 

2 section, rules similar to the rules of subsections (c), (d), and 

3 (e) of section 52 shall apply. 

4 ‘‘(f) TERMINATION.—This section shall not apply to 

5 any payments made after December 31, 2009.’’. 

6 (b) CREDIT TREATED AS PART OF GENERAL BUSI7 NESS CREDIT.—Section 38(b) (relating to general business 

8 credit) is amended by striking ‘‘plus’’ at the end of para9 graph (30), by striking the period at the end of paragraph 

10 (31) and inserting ‘‘, plus’’, and by adding at the end of 

11 following new paragraph: 

12 ‘‘(32) the differential wage payment credit deter13 mined under section 45O(a).’’. 

14 (c) NO DEDUCTION FOR COMPENSATION TAKEN INTO

15 ACCOUNT FOR CREDIT.—Section 280C(a) (relating to rule 

16 for employment credits) is amended by inserting ‘‘45O(a),’’ 

17 after ‘‘45A(a),’’. 

18 (d) CLERICAL AMENDMENT.—The table of sections for 

19 subpart D of part IV of subchapter A of chapter 1 is amend20 ed by adding at the end the following new item: 

‘‘Sec. 45O. Employer wage credit for employees who are active duty members of 

the uniformed services.’’. 

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

22 section shall apply to amounts paid after the date of the 

23 enactment of this Act. 
30 

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1 SEC. 112. STATE PAYMENTS TO SERVICE MEMBERS TREAT2 ED AS QUALIFIED MILITARY BENEFITS. 

3 (a) IN GENERAL.—Section 134(b) (defining qualified 

4 military benefit) is amended by adding at the end the fol5 lowing new paragraph: 

6 ‘‘(6) CERTAIN STATE PAYMENTS.—The term 

7 ‘qualified military benefit’ includes any bonus pay8 ment by a State or political subdivision thereof to 

9 any member or former member of the uniformed serv10 ices of the United States or any dependent of such 

11 member only by reason of such member’s service in an 

12 combat zone (as defined in section 112(c)(2), deter13 mined without regard to the parenthetical).’’. 

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

15 section shall apply to payments made before, on, or after 

16 the date of the enactment of this Act. 

17 SEC. 113. PERMANENT EXCLUSION OF GAIN FROM SALE OF 

18 A PRINCIPAL RESIDENCE BY CERTAIN EM19 PLOYEES OF THE INTELLIGENCE COMMU20 NITY. 

21 (a) IN GENERAL.—Section 417(e) of division A of the 

22 Tax Relief and Health Care Act of 2006 is amended by 

23 striking ‘‘and before January 1, 2011’’. 

24 (b) DUTY STATION MAY BE INSIDE UNITED

25 STATES.—Section 121(d)(9)(C) (defining qualified official 

26 extended duty) is amended by striking clause (vi). 
31 

•HRES 884 EH 

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

2 section shall apply to sales or exchanges after December 31, 

3 2010. 

4 SEC. 114. SPECIAL DISPOSITION RULES FOR UNUSED BENE5 FITS IN HEALTH FLEXIBLE SPENDING AR6 RANGEMENTS OF INDIVIDUALS CALLED TO 

7 ACTIVE DUTY. 

8 (a) IN GENERAL.—Section 125 (relating to cafeteria 

9 plans) is amended by redesignating subsections (h) and (i) 

10 as subsection (i) and (j), respectively, and by inserting after 

11 subsection (g) the following new subsection: 

12 ‘‘(h) SPECIAL RULE FOR UNUSED BENEFITS IN

13 HEALTH FLEXIBLE SPENDING ARRANGEMENTS OF INDI14 VIDUALS CALLED TO ACTIVE DUTY.— 

15 ‘‘(1) IN GENERAL.—For purposes of this title, a 

16 plan or other arrangement shall not fail to be treated 

17 as a cafeteria plan or health flexible spending ar18 rangement merely because such arrangement provides 

19 for qualified reservist distributions. 

20 ‘‘(2) QUALIFIED RESERVIST DISTRIBUTION.—For 

21 purposes of this subsection, the term ‘qualified reserv22 ist distribution’ means, any distribution to an indi23 vidual of all or a portion of the balance in the em24 ployee’s account under such arrangement if— 
32 

•HRES 884 EH 

1 ‘‘(A) such individual was (by reason of 

2 being a member of a reserve component (as de3 fined in section 101 of title 37, United States 

4 Code)) ordered or called to active duty for a pe5 riod in excess of 179 days or for an indefinite 

6 period, and 

7 ‘‘(B) such distribution is made during the 

8 period beginning on the date of such order or 

9 call and ending on the last date that reimburse10 ments could otherwise be made under such ar11 rangement for the plan year which includes the 

12 date of such order or call.’’. 

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

14 section shall apply to distributions made after the date of 

15 the enactment of this Act. 

16 TITLE II—IMPROVEMENTS IN 

17 SUPPLEMENTAL SECURITY 

18 INCOME 

19 SEC. 201. TREATMENT OF UNIFORMED SERVICE CASH RE20 MUNERATION AS EARNED INCOME. 

21 (a) IN GENERAL.—Section 1612(a)(1)(A) of the Social 

22 Security Act (42 U.S.C. 1382a(a)(1)(A)) is amended by in23 serting ‘‘(and, in the case of cash remuneration paid for 

24 service as a member of a uniformed service (other than pay25 ments described in paragraph (2)(H) of this subsection or 
33 

•HRES 884 EH 

1 subsection (b)(20)), without regard to the limitations con2 tained in section 209(d))’’ before the semicolon. 

3 (b) CERTAIN HOUSING PAYMENTS TREATED AS IN4 KIND SUPPORT AND MAINTENANCE.—Section 1612(a)(2) of 

5 such Act (42 U.S.C. 1382a(a)(2)) is amended— 

6 (1) by striking ‘‘and’’ at the end of subpara7 graph (F); 

8 (2) by striking the period at the end of subpara9 graph (G) and inserting ‘‘; and’’; and 

10 (3) by adding at the end the following: 

11 ‘‘(H) payments to or on behalf of a member 

12 of a uniformed service for housing of the member 

13 (and his or her dependents, if any) on a facility 

14 of a uniformed service, including payments pro15 vided under section 403 of title 37, United States 

16 Code, for housing that is acquired or constructed 

17 under subchapter IV of chapter 169 of title 10 of 

18 such Code, or any related provision of law, and 

19 any such payments shall be treated as support 

20 and maintenance in kind subject to subpara21 graph (A) of this paragraph.’’. 
34 

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1 SEC. 202. STATE ANNUITIES FOR CERTAIN VETERANS TO BE 

2 DISREGARDED IN DETERMINING SUPPLE3 MENTAL SECURITY INCOME BENEFITS. 

4 (a) INCOME DISREGARD.—Section 1612(b) of the So5 cial Security Act (42 U.S.C. 1382a(b)) is amended— 

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

7 (22); 

8 (2) by striking the period at the end of para9 graph (23) and inserting ‘‘; and’’; and 

10 (3) by adding at the end the following: 

11 ‘‘(24) any annuity paid by a State to the indi12 vidual (or such spouse) on the basis of the individ13 ual’s being a veteran (as defined in section 101 of 

14 title 38, United States Code), and blind, disabled, or 

15 aged.’’. 

16 (b) RESOURCE DISREGARD.—Section 1613(a) of such 

17 Act (42 U.S.C. 1382b(a)) is amended— 

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

19 (14); 

20 (2) by striking the period at the end of para21 graph (15) and inserting ‘‘; and’’; and 

22 (3) by inserting after paragraph (15) the fol23 lowing: 

24 ‘‘(16) for the month of receipt and every month 

25 thereafter, any annuity paid by a State to the indi26 vidual (or such spouse) on the basis of the individ-
35 

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1 ual’s being a veteran (as defined in section 101 of 

2 title 38, United States Code), and blind, disabled, or 

3 aged.’’. 

4 SEC. 203. EXCLUSION OF AMERICORPS BENEFITS FOR PUR5 POSES OF DETERMINING SUPPLEMENTAL SE6 CURITY INCOME ELIGIBILITY AND BENEFIT 

7 AMOUNTS. 

8 Section 1612(b) of the Social Security Act (42 U.S.C. 

9 1382a(b)), as amended by section 202(a) of this Act, is 

10 amended— 

11 (1) in paragraph (23), by striking ‘‘and’’ at the 

12 end; 

13 (2) in paragraph (24), by striking the period 

14 and inserting ‘‘; and’’; and 

15 (3) by adding at the end the following: 

16 ‘‘(25) any benefit (whether cash or in-kind) con17 ferred upon (or paid on behalf of) a participant in 

18 an AmeriCorps position approved by the Corporation 

19 for National and Community Service under section 

20 123 of the National and Community Service Act of 

21 1990 (42 U.S.C. 12573).’’. 

22 SEC. 204. EFFECTIVE DATE. 

23 The amendments made by this title shall be effective 

24 with respect to benefits payable for months beginning after 

25 60 days after the date of the enactment of this Act. 
36 

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1 TITLE III—REVENUE 

2 PROVISIONS 

3 SEC. 301. INCREASE IN PENALTY FOR FAILURE TO FILE 

4 PARTNERSHIP RETURNS. 

5 (a) INCREASE IN PENALTY AMOUNT.—Paragraph (1) 

6 of section 6698(b) (relating to amount per month), as 

7 amended by section 8 of the Mortgage Forgiveness Debt Re8 lief Act of 2007, is amended by striking ‘‘$85’’ and inserting 

9 ‘‘$100’’. 

10 (b) EFFECTIVE DATE.—The amendment made by sub11 section (a) shall take effect as if included in the amendments 

12 made by section 8 of the Mortgage Forgiveness Debt Relief 

13 Act of 2007. 

14 SEC. 302. INCREASE IN PENALTY FOR FAILURE TO FILE S 

15 CORPORATION RETURNS. 

16 (a) IN GENERAL.—Paragraph (1) of section 6699(b) 

17 (relating to amount per month), as added to the Internal 

18 Revenue Code of 1986 by section 9 of the Mortgage Forgive19 ness Debt Relief Act of 2007, is amended by striking ‘‘$85’’ 

20 and inserting ‘‘$100’’. 

21 (b) EFFECTIVE DATE.—The amendment made by sub22 section (a) shall take effect as if included in the amendments 

23 made by section 9 of the Mortgage Forgiveness Debt Relief 

24 Act of 2007. 
37 

•HRES 884 EH 

1 SEC. 303. INCREASE IN MINIMUM PENALTY ON FAILURE TO 

2 FILE A RETURN OF TAX. 

3 (a) IN GENERAL.—Subsection (a) of section 6651 is 

4 amended by striking ‘‘$100’’ in the last sentence and insert5 ing ‘‘$225’’. 

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

7 section shall apply to returns the due date for the filing 

8 of which (including extensions) is after December 31, 2007. 

9 SEC. 304. INCREASE IN INFORMATION RETURN PENALTIES. 

10 (a) FAILURE TO FILE CORRECT INFORMATION RE11 TURNS.— 

12 (1) IN GENERAL.—Subsections (a)(1), (b)(1)(A), 

13 and (b)(2)(A) of section 6721 are each amended by 

14 striking ‘‘$50’’ and inserting ‘‘$100’’. 

15 (2) AGGREGATE ANNUAL LIMITATION.—Sub16 sections (a)(1), (d)(1)(A), and (e)(3)(A) of section 

17 6721 are each amended by striking ‘‘$250,000’’ and 

18 inserting ‘‘$1,500,000’’. 

19 (b) REDUCTION WHERE CORRECTION WITHIN 30 

20 DAYS.— 

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

22 6721(b)(1) is amended by striking ‘‘$15’’ and insert23 ing ‘‘$50’’. 

24 (2) AGGREGATE ANNUAL LIMITATION.—Sub25 sections (b)(1)(B) and (d)(1)(B) of section 6721 are 
38 

•HRES 884 EH 

1 each amended by striking ‘‘$75,000’’ and inserting 

2 ‘‘$500,000’’. 

3 (c) REDUCTION WHERE CORRECTION ON OR BEFORE

4 AUGUST 1.— 

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

6 6721(b)(2) is amended by striking ‘‘$30’’ and insert7 ing ‘‘$75’’. 

8 (2) AGGREGATE ANNUAL LIMITATION.—Sub9 sections (b)(2)(B) and (d)(1)(C) of section 6721are 

10 each amended by striking ‘‘$150,000’’ and inserting 

11 ‘‘$1,000,000’’. 

12 (d) AGGREGATE ANNUAL LIMITATIONS FOR PERSONS

13 WITH GROSS RECEIPTS OF NOT MORE THAN $5,000,000.— 

14 Paragraph (1) of section 6721(d) is amended— 

15 (1) by striking ‘‘$100,000’’ in subparagraph (A) 

16 and inserting ‘‘$500,000’’, 

17 (2) by striking ‘‘$25,000’’ in subparagraph (B) 

18 and inserting ‘‘$100,000’’, and 

19 (3) by striking ‘‘$50,000’’ in subparagraph (C) 

20 and inserting ‘‘$250,000’’. 

21 (e) PENALTY IN CASE OF INTENTIONAL DISREGARD.— 

22 Paragraph (2) of section 6721(e) is amended by striking 

23 ‘‘$100’’ and inserting ‘‘$250’’. 

24 (f) FAILURE TO FURNISH CORRECT PAYEE STATE25 MENTS.— 
39 

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1 (1) IN GENERAL.—Subsection (a) of section 6722 

2 is amended by striking ‘‘$50’’ and inserting ‘‘$100’’. 

3 (2) AGGREGATE ANNUAL LIMITATION.—Sub4 sections (a) and (c)(2)(A) of section 6722 are each 

5 amended by striking ‘‘$100,000’’ and inserting 

6 ‘‘$500,000’’. 

7 (3) PENALTY IN CASE OF INTENTIONAL DIS8 REGARD.—Paragraph (1) of section 6722(c) is 

9 amended by striking ‘‘$100’’ and inserting ‘‘$250’’. 

10 (g) FAILURE TO COMPLY WITH OTHER INFORMATION

11 REPORTING REQUIREMENTS.—Section 6723 is amended— 

12 (1) by striking ‘‘$50’’ and inserting ‘‘$100’’, and 

13 (2) by striking ‘‘$100,000’’ and inserting 

14 ‘‘$500,000’’. 

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

16 section shall apply with respect to information returns re17 quired to be filed on or after January 1, 2008. 

18 SEC. 305. REVISION OF TAX RULES ON EXPATRIATION. 

19 (a) IN GENERAL.—Subpart A of part II of subchapter 

20 N of chapter 1 is amended by inserting after section 877 

21 the following new section: 

22 ‘‘SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION. 

23 ‘‘(a) GENERAL RULES.—For purposes of this sub24 title— 
40 

•HRES 884 EH 

1 ‘‘(1) MARK TO MARKET.—All property of a cov2 ered expatriate shall be treated as sold on the day be3 fore the expatriation date for its fair market value. 

4 ‘‘(2) RECOGNITION OF GAIN OR LOSS.—In the 

5 case of any sale under paragraph (1)— 

6 ‘‘(A) notwithstanding any other provision of 

7 this title, any gain arising from such sale shall 

8 be taken into account for the taxable year of the 

9 sale, and 

10 ‘‘(B) any loss arising from such sale shall 

11 be taken into account for the taxable year of the 

12 sale to the extent otherwise provided by this title, 

13 except that section 1091 shall not apply to any 

14 such loss. 

15 Proper adjustment shall be made in the amount of 

16 any gain or loss subsequently realized for gain or loss 

17 taken into account under the preceding sentence, de18 termined without regard to paragraph (3). 

19 ‘‘(3) EXCLUSION FOR CERTAIN GAIN.— 

20 ‘‘(A) IN GENERAL.—The amount which 

21 would (but for this paragraph) be includible in 

22 the gross income of any individual by reason of 

23 paragraph (1) shall be reduced (but not below 

24 zero) by $600,000. 

25 ‘‘(B) ADJUSTMENT FOR INFLATION.— 
41 

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

2 taxable year beginning in a calendar year 

3 after 2008, the dollar amount in subpara4 graph (A) shall be increased by an amount 

5 equal to— 

6 ‘‘(I) such dollar amount, multi7 plied by 

8 ‘‘(II) the cost-of-living adjustment 

9 determined under section 1(f)(3) for 

10 the calendar year in which the taxable 

11 year begins, by substituting ‘calendar 

12 year 2007’ for ‘calendar year 1992’ in 

13 subparagraph (B) thereof. 

14 ‘‘(ii) ROUNDING.—If any amount as 

15 adjusted under clause (i) is not a multiple 

16 of $1,000, such amount shall be rounded to 

17 the nearest multiple of $1,000. 

18 ‘‘(b) ELECTION TO DEFER TAX.— 

19 ‘‘(1) IN GENERAL.—If the taxpayer elects the ap20 plication of this subsection with respect to any prop21 erty treated as sold by reason of subsection (a), the 

22 time for payment of the additional tax attributable to 

23 such property shall be extended until the due date of 

24 the return for the taxable year in which such property 

25 is disposed of (or, in the case of property disposed of 
42 

•HRES 884 EH 

1 in a transaction in which gain is not recognized in 

2 whole or in part, until such other date as the Sec3 retary may prescribe). 

4 ‘‘(2) DETERMINATION OF TAX WITH RESPECT TO

5 PROPERTY.—For purposes of paragraph (1), the addi6 tional tax attributable to any property is an amount 

7 which bears the same ratio to the additional tax im8 posed by this chapter for the taxable year solely by 

9 reason of subsection (a) as the gain taken into ac10 count under subsection (a) with respect to such prop11 erty bears to the total gain taken into account under 

12 subsection (a) with respect to all property to which 

13 subsection (a) applies. 

14 ‘‘(3) TERMINATION OF EXTENSION.—The due 

15 date for payment of tax may not be extended under 

16 this subsection later than the due date for the return 

17 of tax imposed by this chapter for the taxable year 

18 which includes the date of death of the expatriate (or, 

19 if earlier, the time that the security provided with re20 spect to the property fails to meet the requirements of 

21 paragraph (4), unless the taxpayer corrects such fail22 ure within the time specified by the Secretary). 

23 ‘‘(4) SECURITY.— 

24 ‘‘(A) IN GENERAL.—No election may be 

25 made under paragraph (1) with respect to any 
43 

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1 property unless adequate security is provided 

2 with respect to such property. 

3 ‘‘(B) ADEQUATE SECURITY.—For purposes 

4 of subparagraph (A), security with respect to 

5 any property shall be treated as adequate secu6 rity if— 

7 ‘‘(i) it is a bond which is furnished to, 

8 and accepted by, the Secretary, which is 

9 conditioned on the payment of tax (and in10 terest thereon), and which meets the require11 ments of section 6325, or 

12 ‘‘(ii) it is another form of security for 

13 such payment (including letters of credit) 

14 that meets such requirements as the Sec15 retary may prescribe. 

16 ‘‘(5) WAIVER OF CERTAIN RIGHTS.—No election 

17 may be made under paragraph (1) unless the tax18 payer makes an irrevocable waiver of any right under 

19 any treaty of the United States which would preclude 

20 assessment or collection of any tax imposed by reason 

21 of this section. 

22 ‘‘(6) ELECTIONS.—An election under paragraph 

23 (1) shall only apply to property described in the elec24 tion and, once made, is irrevocable. 
44 

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1 ‘‘(7) INTEREST.—For purposes of section 6601, 

2 the last date for the payment of tax shall be deter3 mined without regard to the election under this sub4 section. 

5 ‘‘(c) EXCEPTION FOR CERTAIN PROPERTY.—Sub6 section (a) shall not apply to— 

7 ‘‘(1) any deferred compensation item (as defined 

8 in subsection (d)(4)), 

9 ‘‘(2) any specified tax deferred account (as de10 fined in subsection (e)(2)), and 

11 ‘‘(3) any interest in a nongrantor trust (as de12 fined in subsection (f)(3)). 

13 ‘‘(d) TREATMENT OF DEFERRED COMPENSATION

14 ITEMS.— 

15 ‘‘(1) WITHHOLDING ON ELIGIBLE DEFERRED

16 COMPENSATION ITEMS.— 

17 ‘‘(A) IN GENERAL.—In the case of any eligi18 ble deferred compensation item, the payor shall 

19 deduct and withhold from any taxable payment 

20 to a covered expatriate with respect to such item 

21 a tax equal to 30 percent thereof. 

22 ‘‘(B) TAXABLE PAYMENT.—For purposes of 

23 subparagraph (A), the term ‘taxable payment’ 

24 means with respect to a covered expatriate any 

25 payment to the extent it would be includible in 
45 

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1 the gross income of the covered expatriate if such 

2 expatriate continued to be subject to tax as a cit3 izen or resident of the United States. A deferred 

4 compensation item shall be taken into account as 

5 a payment under the preceding sentence when 

6 such item would be so includible. 

7 ‘‘(2) OTHER DEFERRED COMPENSATION

8 ITEMS.—In the case of any deferred compensation 

9 item which is not an eligible deferred compensation 

10 item— 

11 ‘‘(A)(i) with respect to any deferred com12 pensation item to which clause (ii) does not 

13 apply, an amount equal to the present value of 

14 the covered expatriate’s accrued benefit shall be 

15 treated as having been received by such indi16 vidual on the day before the expatriation date as 

17 a distribution under the plan, and 

18 ‘‘(ii) with respect to any deferred compensa19 tion item referred to in paragraph (4)(D), the 

20 rights of the covered expatriate to such item shall 

21 be treated as becoming transferable and not sub22 ject to a substantial risk of forfeiture on the day 

23 before the expatriation date, 

24 ‘‘(B) no early distribution tax shall apply 

25 by reason of such treatment, and 
46 

•HRES 884 EH 

1 ‘‘(C) appropriate adjustments shall be made 

2 to subsequent distributions from the plan to re3 flect such treatment. 

4 ‘‘(3) ELIGIBLE DEFERRED COMPENSATION

5 ITEMS.—For purposes of this subsection, the term ‘eli6 gible deferred compensation item’ means any deferred 

7 compensation item with respect to which— 

8 ‘‘(A) the payor of such item is— 

9 ‘‘(i) a United States person, or 

10 ‘‘(ii) a person who is not a United 

11 States person but who elects to be treated as 

12 a United States person for purposes of 

13 paragraph (1) and meets such requirements 

14 as the Secretary may provide to ensure that 

15 the payor will meet the requirements of 

16 paragraph (1), and 

17 ‘‘(B) the covered expatriate— 

18 ‘‘(i) notifies the payor of his status as 

19 a covered expatriate, and 

20 ‘‘(ii) makes an irrevocable waiver of 

21 any right to claim any reduction under any 

22 treaty with the United States in with23 holding on such item. 
47 

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1 ‘‘(4) DEFERRED COMPENSATION ITEM.—For pur2 poses of this subsection, the term ‘deferred compensa3 tion item’ means— 

4 ‘‘(A) any interest in a plan or arrangement 

5 described in section 219(g)(5), 

6 ‘‘(B) any interest in a foreign pension plan 

7 or similar retirement arrangement or program, 

8 ‘‘(C) any item of deferred compensation, 

9 and 

10 ‘‘(D) any property, or right to property, 

11 which the individual is entitled to receive in con12 nection with the performance of services to the 

13 extent not previously taken into account under 

14 section 83 or in accordance with section 83. 

15 ‘‘(5) EXCEPTION.—Paragraphs (1) and (2) shall 

16 not apply to any deferred compensation item which 

17 is attributable to services performed outside the 

18 United States while the covered expatriate was not a 

19 citizen or resident of the United States. 

20 ‘‘(6) SPECIAL RULES.— 

21 ‘‘(A) APPLICATION OF WITHHOLDING

22 RULES.—Rules similar to the rules of subchapter 

23 B of chapter 3 shall apply for purposes of this 

24 subsection. 
48 

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1 ‘‘(B) APPLICATION OF TAX.—Any item sub2 ject to the withholding tax imposed under para3 graph (1) shall be subject to tax under section 

4 871. 

5 ‘‘(C) COORDINATION WITH OTHER WITH6 HOLDING REQUIREMENTS.—Any item subject to 

7 withholding under paragraph (1) shall not be 

8 subject to withholding under section 1441 or 

9 chapter 24. 

10 ‘‘(e) TREATMENT OF SPECIFIED TAX DEFERRED AC11 COUNTS.— 

12 ‘‘(1) ACCOUNT TREATED AS DISTRIBUTED.—In 

13 the case of any interest in a specified tax deferred ac14 count held by a covered expatriate on the day before 

15 the expatriation date— 

16 ‘‘(A) the covered expatriate shall be treated 

17 as receiving a distribution of his entire interest 

18 in such account on the day before the expatria19 tion date, 

20 ‘‘(B) no early distribution tax shall apply 

21 by reason of such treatment, and 

22 ‘‘(C) appropriate adjustments shall be made 

23 to subsequent distributions from the account to 

24 reflect such treatment. 
49 

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1 ‘‘(2) SPECIFIED TAX DEFERRED ACCOUNT.—For 

2 purposes of paragraph (1), the term ‘specified tax de3 ferred account’ means an individual retirement plan 

4 (as defined in section 7701(a)(37)) other than any ar5 rangement described in subsection (k) or (p) of section 

6 408, a qualified tuition program (as defined in sec7 tion 529), a Coverdell education savings account (as 

8 defined in section 530), a health savings account (as 

9 defined in section 223), and an Archer MSA (as de10 fined in section 220). 

11 ‘‘(f) SPECIAL RULES FOR NONGRANTOR TRUSTS.— 

12 ‘‘(1) IN GENERAL.—In the case of a distribution 

13 (directly or indirectly) of any property from a non14 grantor trust to a covered expatriate— 

15 ‘‘(A) the trustee shall deduct and withhold 

16 from such distribution an amount equal to 30 

17 percent of the taxable portion of the distribution, 

18 and 

19 ‘‘(B) if the fair market value of such prop20 erty exceeds its adjusted basis in the hands of the 

21 trust, gain shall be recognized to the trust as if 

22 such property were sold to the expatriate at its 

23 fair market value. 

24 ‘‘(2) TAXABLE PORTION.—For purposes of this 

25 subsection, the term ‘taxable portion’ means, with re-
50 

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1 spect to any distribution, that portion of the distribu2 tion which would be includible in the gross income of 

3 the covered expatriate if such expatriate continued to 

4 be subject to tax as a citizen or resident of the United 

5 States. 

6 ‘‘(3) NONGRANTOR TRUST.—For purposes of this 

7 subsection, the term ‘nongrantor trust’ means the por8 tion of any trust that the individual is not considered 

9 the owner of under subpart E of part I of subchapter 

10 J. The determination under the preceding sentence 

11 shall be made immediately before the expatriation 

12 date. 

13 ‘‘(4) SPECIAL RULES RELATING TO WITH14 HOLDING.—For purposes of this subsection— 

15 ‘‘(A) rules similar to the rules of subsection 

16 (d)(6) shall apply, and 

17 ‘‘(B) the covered expatriate shall be treated 

18 as having waived any right to claim any reduc19 tion under any treaty with the United States in 

20 withholding on any distribution to which para21 graph (1)(A) applies unless the covered expa22 triate agrees to such other treatment as the Sec23 retary determines appropriate. 

24 ‘‘(5) APPLICATION.—This subsection shall apply 

25 to a nongrantor trust only if the covered expatriate 
51 

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1 was a beneficiary of the trust on the day before the 

2 expatriation date. 

3 ‘‘(g) DEFINITIONS AND SPECIAL RULES RELATING TO

4 EXPATRIATION.—For purposes of this section— 

5 ‘‘(1) COVERED EXPATRIATE.— 

6 ‘‘(A) IN GENERAL.—The term ‘covered expa7 triate’ means an expatriate who meets the re8 quirements of subparagraph (A), (B), or (C) of 

9 section 877(a)(2). 

10 ‘‘(B) EXCEPTIONS.—An individual shall 

11 not be treated as meeting the requirements of 

12 subparagraph (A) or (B) of section 877(a)(2) 

13 if— 

14 ‘‘(i) the individual— 

15 ‘‘(I) became at birth a citizen of 

16 the United States and a citizen of an17 other country and, as of the expatria18 tion date, continues to be a citizen of, 

19 and is taxed as a resident of, such 

20 other country, and 

21 ‘‘(II) has been a resident of the 

22 United States (as defined in section 

23 7701(b)(1)(A)(ii)) for not more than 

24 10 taxable years during the 15-taxable 

25 year period ending with the taxable 
52 

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1 year during which the expatriation 

2 date occurs, or 

3 ‘‘(ii)(I) the individual’s relinquishment 

4 of United States citizenship occurs before 

such individual attains age 181 5 ⁄2, and 

6 ‘‘(II) the individual has been a resi7 dent of the United States (as so defined) for 

8 not more than 10 taxable years before the 

9 date of relinquishment. 

10 ‘‘(C) COVERED EXPATRIATES ALSO SUBJECT

11 TO TAX AS CITIZENS OR RESIDENTS.—In the 

12 case of any covered expatriate who is subject to 

13 tax as a citizen or resident of the United States 

14 for any period beginning after the expatriation 

15 date, such individual shall not be treated as a 

16 covered expatriate during such period for pur17 poses of subsections (d)(1) and (f) and section 

18 2801. 

19 ‘‘(2) EXPATRIATE.—The term ‘expatriate’ 

20 means— 

21 ‘‘(A) any United States citizen who relin22 quishes his citizenship, and 

23 ‘‘(B) any long-term resident of the United 

24 States who ceases to be a lawful permanent resi-
53 

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1 dent of the United States (within the meaning of 

2 section 7701(b)(6)). 

3 ‘‘(3) EXPATRIATION DATE.—The term ‘expatria4 tion date’ means— 

5 ‘‘(A) the date an individual relinquishes 

6 United States citizenship, or 

7 ‘‘(B) in the case of a long-term resident of 

8 the United States, the date on which the indi9 vidual ceases to be a lawful permanent resident 

10 of the United States (within the meaning of sec11 tion 7701(b)(6)). 

12 ‘‘(4) RELINQUISHMENT OF CITIZENSHIP.—A cit13 izen shall be treated as relinquishing his United 

14 States citizenship on the earliest of— 

15 ‘‘(A) the date the individual renounces his 

16 United States nationality before a diplomatic or 

17 consular officer of the United States pursuant to 

18 paragraph (5) of section 349(a) of the Immigra19 tion and Nationality Act (8 U.S.C. 1481(a)(5)), 

20 ‘‘(B) the date the individual furnishes to the 

21 United States Department of State a signed 

22 statement of voluntary relinquishment of United 

23 States nationality confirming the performance of 

24 an act of expatriation specified in paragraph 

25 (1), (2), (3), or (4) of section 349(a) of the Im-
54 

•HRES 884 EH 

1 migration and Nationality Act (8 U.S.C. 

2 1481(a)(1)–(4)), 

3 ‘‘(C) the date the United States Department 

4 of State issues to the individual a certificate of 

5 loss of nationality, or 

6 ‘‘(D) the date a court of the United States 

7 cancels a naturalized citizen’s certificate of natu8 ralization. 

9 Subparagraph (A) or (B) shall not apply to any in10 dividual unless the renunciation or voluntary relin11 quishment is subsequently approved by the issuance to 

12 the individual of a certificate of loss of nationality by 

13 the United States Department of State. 

14 ‘‘(5) LONG-TERM RESIDENT.—The term ‘long15 term resident’ has the meaning given to such term by 

16 section 877(e)(2). 

17 ‘‘(6) EARLY DISTRIBUTION TAX.—The term 

18 ‘early distribution tax’ means any increase in tax im19 posed under section 72(t), 220(e)(4), 223(f)(4), 

20 409A(a)(1)(B), 529(c)(6), or 530(d)(4). 

21 ‘‘(h) OTHER RULES.— 

22 ‘‘(1) TERMINATION OF DEFERRALS, ETC.—In the 

23 case of any covered expatriate, notwithstanding any 

24 other provision of this title— 
55 

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1 ‘‘(A) any time period for acquiring prop2 erty which would result in the reduction in the 

3 amount of gain recognized with respect to prop4 erty disposed of by the taxpayer shall terminate 

5 on the day before the expatriation date, and 

6 ‘‘(B) any extension of time for payment of 

7 tax shall cease to apply on the day before the ex8 patriation date and the unpaid portion of such 

9 tax shall be due and payable at the time and in 

10 the manner prescribed by the Secretary. 

11 ‘‘(2) STEP-UP IN BASIS.—Solely for purposes of 

12 determining any tax imposed by reason of subsection 

13 (a), property which was held by an individual on the 

14 date the individual first became a resident of the 

15 United States (within the meaning of section 7701(b)) 

16 shall be treated as having a basis on such date of not 

17 less than the fair market value of such property on 

18 such date. The preceding sentence shall not apply if 

19 the individual elects not to have such sentence apply. 

20 Such an election, once made, shall be irrevocable. 

21 ‘‘(3) COORDINATION WITH SECTION 684.—If the 

22 expatriation of any individual would result in the 

23 recognition of gain under section 684, this section 

24 shall be applied after the application of section 684. 
56 

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

2 such regulations as may be necessary or appropriate to 

3 carry out the purposes of this section.’’. 

4 (b) TAX ON GIFTS AND BEQUESTS RECEIVED BY

5 UNITED STATES CITIZENS AND RESIDENTS FROM EXPA6 TRIATES.— 

7 (1) IN GENERAL.—Subtitle B (relating to estate 

8 and gift taxes) is amended by inserting after chapter 

9 14 the following new chapter: 

10 ‘‘CHAPTER 15—GIFTS AND BEQUESTS 

11 FROM EXPATRIATES 

‘‘Sec. 2801. Imposition of tax. 

12 ‘‘SEC. 2801. IMPOSITION OF TAX. 

13 ‘‘(a) IN GENERAL.—If, during any calendar year, any 

14 United States citizen or resident receives any covered gift 

15 or bequest, there is hereby imposed a tax equal to the prod16 uct of— 

17 ‘‘(1) the highest rate of tax specified in the table 

18 contained in section 2001(c) as in effect on the date 

19 of such receipt (or, if greater, the highest rate of tax 

20 specified in the table applicable under section 2502(a) 

21 as in effect on the date), and 

22 ‘‘(2) the value of such covered gift or bequest. 
57 

•HRES 884 EH 

1 ‘‘(b) TAX TO BE PAID BY RECIPIENT.—The tax im2 posed by subsection (a) on any covered gift or bequest shall 

3 be paid by the person receiving such gift or bequest. 

4 ‘‘(c) EXCEPTION FOR CERTAIN GIFTS.—Subsection (a) 

5 shall apply only to the extent that the value of covered gifts 

6 and bequests received by any person during the calendar 

7 year exceeds the dollar amount in effect under section 

8 2503(b) for such calendar year. 

9 ‘‘(d) TAX REDUCED BY FOREIGN GIFT OR ESTATE

10 TAX.—The tax imposed by subsection (a) on any covered 

11 gift or bequest shall be reduced by the amount of any gift 

12 or estate tax paid to a foreign country with respect to such 

13 covered gift or bequest. 

14 ‘‘(e) COVERED GIFT OR BEQUEST.— 

15 ‘‘(1) IN GENERAL.—For purposes of this chapter, 

16 the term ‘covered gift or bequest’ means— 

17 ‘‘(A) any property acquired by gift directly 

18 or indirectly from an individual who, at the 

19 time of such acquisition, is a covered expatriate, 

20 and 

21 ‘‘(B) any property acquired directly or in22 directly by reason of the death of an individual 

23 who, immediately before such death, was a cov24 ered expatriate. 
58 

•HRES 884 EH 

1 ‘‘(2) EXCEPTIONS FOR TRANSFERS OTHERWISE

2 SUBJECT TO ESTATE OR GIFT TAX.—Such term shall 

3 not include— 

4 ‘‘(A) any property shown on a timely filed 

5 return of tax imposed by chapter 12 which is a 

6 taxable gift by the covered expatriate, and 

7 ‘‘(B) any property included in the gross es8 tate of the covered expatriate for purposes of 

9 chapter 11 and shown on a timely filed return 

10 of tax imposed by chapter 11 of the estate of the 

11 covered expatriate. 

12 ‘‘(3) EXCEPTIONS FOR TRANSFERS TO SPOUSE

13 OR CHARITY.—Such term shall not include any prop14 erty with respect to which a deduction would be al15 lowed under section 2055, 2056, 2522, or 2523, 

16 whichever is appropriate, if the decedent or donor 

17 were a United States person. 

18 ‘‘(4) TRANSFERS IN TRUST.— 

19 ‘‘(A) DOMESTIC TRUSTS.—In the case of a 

20 covered gift or bequest made to a domestic 

21 trust— 

22 ‘‘(i) subsection (a) shall apply in the 

23 same manner as if such trust were a United 

24 States citizen, and 
59 

•HRES 884 EH 

1 ‘‘(ii) the tax imposed by subsection (a) 

2 on such gift or bequest shall be paid by such 

3 trust. 

4 ‘‘(B) FOREIGN TRUSTS.— 

5 ‘‘(i) IN GENERAL.—In the case of a 

6 covered gift or bequest made to a foreign 

7 trust, subsection (a) shall apply to any dis8 tribution attributable to such gift or bequest 

9 from such trust (whether from income or 

10 corpus) to a United States citizen or resi11 dent in the same manner as if such dis12 tribution were a covered gift or bequest. 

13 ‘‘(ii) DEDUCTION FOR TAX PAID BY RE14 CIPIENT.—There shall be allowed as a de15 duction under section 164 the amount of tax 

16 imposed by this section which is paid or ac17 crued by a United States citizen or resident 

18 by reason of a distribution from a foreign 

19 trust, but only to the extent such tax is im20 posed on the portion of such distribution 

21 which is included in the gross income of 

22 such citizen or resident. 

23 ‘‘(iii) ELECTION TO BE TREATED AS

24 DOMESTIC TRUST.—Solely for purposes of 

25 this section, a foreign trust may elect to be 
60 

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1 treated as a domestic trust. Such an election 

2 may be revoked with the consent of the Sec3 retary. 

4 ‘‘(f) COVERED EXPATRIATE.—For purposes of this sec5 tion, the term ‘covered expatriate’ has the meaning given 

6 to such term by section 877A(g)(1).’’. 

7 (2) CLERICAL AMENDMENT.—The table of chap8 ters for subtitle B is amended by inserting after the 

9 item relating to chapter 14 the following new item: 

‘‘CHAPTER 15. GIFTS AND BEQUESTS FROM EXPATRIATES.’’. 

10 (c) DEFINITION OF TERMINATION OF UNITED STATES

11 CITIZENSHIP.— 

12 (1) IN GENERAL.—Section 7701(a) is amended 

13 by adding at the end the following new paragraph: 

14 ‘‘(50) TERMINATION OF UNITED STATES CITIZEN15 SHIP.— 

16 ‘‘(A) IN GENERAL.—An individual shall not 

17 cease to be treated as a United States citizen be18 fore the date on which the individual’s citizen19 ship is treated as relinquished under section 

20 877A(g)(4). 

21 ‘‘(B) DUAL CITIZENS.—Under regulations 

22 prescribed by the Secretary, subparagraph (A) 

23 shall not apply to an individual who became at 

24 birth a citizen of the United States and a citizen 

25 of another country.’’. 
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1 (2) CONFORMING AMENDMENTS.— 

2 (A) Paragraph (1) of section 877(e) is 

3 amended to read as follows: 

4 ‘‘(1) IN GENERAL.—Any long-term resident of 

5 the United States who ceases to be a lawful perma6 nent resident of the United States (within the mean7 ing of section 7701(b)(6)) shall be treated for purposes 

8 of this section and sections 2107, 2501, and 6039G in 

9 the same manner as if such resident were a citizen of 

10 the United States who lost United States citizenship 

11 on the date of such cessation or commencement.’’. 

12 (B) Paragraph (6) of section 7701(b) is 

13 amended by adding at the end the following flush 

14 sentence: 

15 ‘‘An individual shall cease to be treated as a lawful 

16 permanent resident of the United States if such indi17 vidual commences to be treated as a resident of a for18 eign country under the provisions of a tax treaty be19 tween the United States and the foreign country, does 

20 not waive the benefits of such treaty applicable to 

21 residents of the foreign country, and notifies the Sec22 retary of the commencement of such treatment.’’. 

23 (C) Section 7701 is amended by striking 

24 subsection (n) and by redesignating subsections 
62 

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1 (o) and (p) as subsections (n) and (o), respec2 tively. 

3 (d) INFORMATION RETURNS.—Section 6039G is 

4 amended— 

5 (1) by inserting ‘‘or 877A’’ after ‘‘section 877(b)’’ 

6 in subsection (a), and 

7 (2) by inserting ‘‘or 877A’’ after ‘‘section 

8 877(a)’’ in subsection (d). 

9 (e) CLERICAL AMENDMENT.—The table of sections for 

10 subpart A of part II of subchapter N of chapter 1 is amend11 ed by inserting after the item relating to section 877 the 

12 following new item: 

‘‘Sec. 877A. Tax responsibilities of expatriation.’’. 

13 (f) EFFECTIVE DATE.— 

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

15 subsection, the amendments made by this section shall 

16 apply to expatriates (as defined in section 877A(g) of 

17 the Internal Revenue Code of 1986, as added by this 

18 section) whose expatriation date (as so defined) is on 

19 or after the date of the enactment of this Act. 

20 (2) GIFTS AND BEQUESTS.—Chapter 15 of the 

21 Internal Revenue Code of 1986 (as added by sub22 section (b)) shall apply to covered gifts and bequests 

23 (as defined in section 2801 of such Code, as so added) 

24 received on or after the date of the enactment of this 
63 

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1 Act from transferors whose expatriation date is on or 

2 after such date of enactment. 

3 TITLE IV—TAX TECHNICAL 

4 CORRECTIONS 

5 SEC. 401. SHORT TITLE. 

6 This title may be cited as the ‘‘Tax Technical Correc7 tions Act of 2007’’. 

8 SEC. 402. AMENDMENT RELATED TO THE TAX RELIEF AND 

9 HEALTH CARE ACT OF 2006. 

10 (a) AMENDMENT RELATED TO SECTION 402 OF DIVI11 SION A OF THE ACT.—Subparagraph (A) of section 53(e)(2) 

12 is amended to read as follows: 

13 ‘‘(A) IN GENERAL.—The term ‘AMT refund14 able credit amount’ means, with respect to any 

15 taxable year, the amount (not in excess of the 

16 long-term unused minimum tax credit for such 

17 taxable year) equal to the greater of— 

18 ‘‘(i) $5,000, 

19 ‘‘(ii) 20 percent of the long-term un20 used minimum tax credit for such taxable 

21 year, or 

22 ‘‘(iii) the amount (if any) of the AMT 

23 refundable credit amount determined under 

24 this paragraph for the taxpayer’s preceding 
64 

•HRES 884 EH 

1 taxable year (as determined before any re2 duction under subparagraph (B)).’’. 

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

4 section shall take effect as if included in the provision of 

5 the Tax Relief and Health Care Act of 2006 to which it 

6 relates. 

7 SEC. 403. AMENDMENTS RELATED TO TITLE XII OF THE 

8 PENSION PROTECTION ACT OF 2006. 

9 (a) AMENDMENT RELATED TO SECTION 1201 OF THE

10 ACT.—Subparagraph (D) of section 408(d)(8) is amended 

11 by striking ‘‘all amounts distributed from all individual re12 tirement plans were treated as 1 contract under paragraph 

13 (2)(A) for purposes of determining the inclusion of such dis14 tribution under section 72’’ and inserting ‘‘all amounts in 

15 all individual retirement plans of the individual were dis16 tributed during such taxable year and all such plans were 

17 treated as 1 contract for purposes of determining under sec18 tion 72 the aggregate amount which would have been so in19 cludible’’. 

20 (b) AMENDMENT RELATED TO SECTION 1203 OF THE

21 ACT.—Subsection (d) of section 1366 is amended by adding 

22 at the end the following new paragraph: 

23 ‘‘(4) APPLICATION OF LIMITATION ON CHARI24 TABLE CONTRIBUTIONS.—In the case of any chari25 table contribution of property to which the second 
65 

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1 sentence of section 1367(a)(2) applies, paragraph (1) 

2 shall not apply to the extent of the excess (if any) 

3 of— 

4 ‘‘(A) the shareholder’s pro rata share of such 

5 contribution, over 

6 ‘‘(B) the shareholder’s pro rata share of the 

7 adjusted basis of such property.’’. 

8 (c) AMENDMENT RELATED TO SECTION 1215 OF THE

9 ACT.—Subclause (I) of section 170(e)(7)(D)(i) is amended 

10 by striking ‘‘related’’ and inserting ‘‘substantial and re11 lated’’. 

12 (d) AMENDMENTS RELATED TO SECTION 1218 OF THE

13 ACT.— 

14 (1) Section 2055 is amended by striking sub15 section (g) and by redesignating subsection (h) as sub16 section (g). 

17 (2) Subsection (e) of section 2522 is amended— 

18 (A) by striking paragraphs (2) and (4), 

19 (B) by redesignating paragraph (3) as 

20 paragraph (2), and 

21 (C) by adding at the end of paragraph (2), 

22 as so redesignated, the following new subpara23 graph: 

24 ‘‘(C) INITIAL FRACTIONAL CONTRIBUTION.— 

25 For purposes of this paragraph, the term ‘initial 
66 

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1 fractional contribution’ means, with respect to 

2 any donor, the first gift of an undivided portion 

3 of the donor’s entire interest in any tangible per4 sonal property for which a deduction is allowed 

5 under subsection (a) or (b).’’. 

6 (e) AMENDMENTS RELATED TO SECTION 1219 OF THE

7 ACT.— 

8 (1) Paragraph (2) of section 6695A(a) is amend9 ed by inserting ‘‘a substantial estate or gift tax valu10 ation understatement (within the meaning of section 

11 6662(g)),’’ before ‘‘or a gross valuation misstatement’’. 

12 (2) Paragraph (1) of section 6696(d) is amended 

13 by striking ‘‘or under section 6695’’ and inserting ‘‘, 

14 section 6695, or 6695A’’. 

15 (f) AMENDMENT RELATED TO SECTION 1221 OF THE

16 ACT.—Subparagraph (A) of section 4940(c)(4) is amended 

17 to read as follows: 

18 ‘‘(A) There shall not be taken into account 

19 any gain or loss from the sale or other disposi20 tion of property to the extent that such gain or 

21 loss is taken into account for purposes of com22 puting the tax imposed by section 511.’’. 

23 (g) AMENDMENT RELATED TO SECTION 1225 OF THE

24 ACT.— 

25 (1) Subsection (b) of section 6104 is amended— 
67 

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1 (A) by striking ‘‘INFORMATION’’ in the 

2 heading, and 

3 (B) by adding at the end the following: 

4 ‘‘Any annual return which is filed under section 

5 6011 by an organization described in section 

6 501(c)(3) and which relates to any tax imposed 

7 by section 511 (relating to imposition of tax on 

8 unrelated business income of charitable, etc., or9 ganizations) shall be treated for purposes of this 

10 subsection in the same manner as if furnished 

11 under section 6033.’’. 

12 (2) Clause (ii) of section 6104(d)(1)(A) is 

13 amended to read as follows: 

14 ‘‘(ii) any annual return which is filed 

15 under section 6011 by an organization de16 scribed in section 501(c)(3) and which re17 lates to any tax imposed by section 511 (re18 lating to imposition of tax on unrelated 

19 business income of charitable, etc., organiza20 tions),’’. 

21 (3) Paragraph (2) of section 6104(d) is amended 

22 by striking ‘‘section 6033’’ and inserting ‘‘section 

23 6011 or 6033’’. 
68 

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1 (h) AMENDMENT RELATED TO SECTION 1231 OF THE

2 ACT.—Subsection (b) of section 4962 is amended by strik3 ing ‘‘or D’’ and inserting ‘‘D, or G’’. 

4 (i) AMENDMENT RELATED TO SECTION 1242 OF THE

5 ACT.— 

6 (1) Subclause (II) of section 4958(c)(3)(A)(i) is 

7 amended by striking ‘‘paragraph (1), (2), or (4) of 

8 section 509(a)’’ and inserting ‘‘subparagraph 

9 (C)(ii)’’. 

10 (2) Clause (ii) of section 4958(c)(3)(C) is amend11 ed to read as follows: 

12 ‘‘(ii) EXCEPTION.—Such term shall not 

13 include— 

14 ‘‘(I) any organization described in 

15 paragraph (1), (2), or (4) of section 

16 509(a), and 

17 ‘‘(II) any organization which is 

18 treated as described in such paragraph 

19 (2) by reason of the last sentence of sec20 tion 509(a) and which is a supported 

21 organization (as defined in section 

22 509(f)(3)) of the organization to which 

23 subparagraph (A) applies.’’. 
69 

•HRES 884 EH 

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

2 section shall take effect as if included in the provisions of 

3 the Pension Protection Act of 2006 to which they relate. 

4 SEC. 404. AMENDMENTS RELATED TO THE TAX INCREASE 

5 PREVENTION AND RECONCILIATION ACT OF 

6 2005. 

7 (a) AMENDMENTS RELATED TO SECTION 103 OF THE

8 ACT.—Paragraph (6) of section 954(c) is amended by redes9 ignating subparagraph (B) as subparagraph (C) and in10 serting after subparagraph (A) the following new subpara11 graph: 

12 ‘‘(B) EXCEPTION.—Subparagraph (A) shall 

13 not apply in the case of any interest, rent, or 

14 royalty to the extent such interest, rent, or roy15 alty creates (or increases) a deficit which under 

16 section 952(c) may reduce the subpart F income 

17 of the payor or another controlled foreign cor18 poration.’’. 

19 (b) AMENDMENTS RELATED TO SECTION 202 OF THE

20 ACT.— 

21 (1) Subparagraph (A) of section 355(b)(2) is 

22 amended to read as follows: 

23 ‘‘(A) it is engaged in the active conduct of 

24 a trade or business,’’. 
70 

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1 (2) Paragraph (3) of section 355(b) is amended 

2 to read as follows: 

3 ‘‘(3) SPECIAL RULES FOR DETERMINING ACTIVE

4 CONDUCT IN THE CASE OF AFFILIATED GROUPS.— 

5 ‘‘(A) IN GENERAL.—For purposes of deter6 mining whether a corporation meets the require7 ments of paragraph (2)(A), all members of such 

8 corporation’s separate affiliated group shall be 

9 treated as one corporation. 

10 ‘‘(B) SEPARATE AFFILIATED GROUP.—For 

11 purposes of this paragraph, the term ‘separate 

12 affiliated group’ means, with respect to any cor13 poration, the affiliated group which would be de14 termined under section 1504(a) if such corpora15 tion were the common parent and section 

16 1504(b) did not apply. 

17 ‘‘(C) TREATMENT OF TRADE OR BUSINESS

18 CONDUCTED BY ACQUIRED MEMBER.—If a cor19 poration became a member of a separate affili20 ated group as a result of one or more trans21 actions in which gain or loss was recognized in 

22 whole or in part, any trade or business con23 ducted by such corporation (at the time that 

24 such corporation became such a member) shall be 

25 treated for purposes of paragraph (2) as ac-
71 

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1 quired in a transaction in which gain or loss 

2 was recognized in whole or in part. 

3 ‘‘(D) REGULATIONS.—The Secretary shall 

4 prescribe such regulations as are necessary or 

5 appropriate to carry out the purposes of this 

6 paragraph, including regulations which provide 

7 for the proper application of subparagraphs (B), 

8 (C), and (D) of paragraph (2), and modify the 

9 application of subsection (a)(3)(B), in connec10 tion with the application of this paragraph.’’. 

11 (3) The Internal Revenue Code of 1986 shall be 

12 applied and administered as if the amendments made 

13 by section 202 of the Tax Increase Prevention and 

14 Reconciliation Act of 2005 and by section 410 of divi15 sion A of the Tax Relief and Health Care Act of 2006 

16 had never been enacted. 

17 (c) AMENDMENT RELATED TO SECTION 515 OF THE

18 ACT.—Subsection (f) of section 911 is amended to read as 

19 follows: 

20 ‘‘(f) DETERMINATION OF TAX LIABILITY.— 

21 ‘‘(1) IN GENERAL.—If, for any taxable year, any 

22 amount is excluded from gross income of a taxpayer 

23 under subsection (a), then, notwithstanding sections 1 

24 and 55— 
72 

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1 ‘‘(A) if such taxpayer has taxable income 

2 for such taxable year, the tax imposed by section 

3 1 for such taxable year shall be equal to the ex4 cess (if any) of— 

5 ‘‘(i) the tax which would be imposed by 

6 section 1 for such taxable year if the tax7 payer’s taxable income were increased by 

8 the amount excluded under subsection (a) 

9 for such taxable year, over 

10 ‘‘(ii) the tax which would be imposed 

11 by section 1 for such taxable year if the tax12 payer’s taxable income were equal to the 

13 amount excluded under subsection (a) for 

14 such taxable year, and 

15 ‘‘(B) if such taxpayer has a taxable excess 

16 (as defined in section 55(b)(1)(A)(ii)) for such 

17 taxable year, the amount determined under the 

18 first sentence of section 55(b)(1)(A)(i) for such 

19 taxable year shall be equal to the excess (if any) 

20 of— 

21 ‘‘(i) the amount which would be deter22 mined under such sentence for such taxable 

23 year (subject to the limitation of section 

24 55(b)(3)) if the taxpayer’s taxable excess (as 

25 so defined) were increased by the amount 
73 

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1 excluded under subsection (a) for such tax2 able year, over 

3 ‘‘(ii) the amount which would be deter4 mined under such sentence for such taxable 

5 year if the taxpayer’s taxable excess (as so 

6 defined) were equal to the amount excluded 

7 under subsection (a) for such taxable year. 

8 ‘‘(2) SPECIAL RULES.— 

9 ‘‘(A) REGULAR TAX.—In applying section 

10 1(h) for purposes of determining the tax under 

11 paragraph (1)(A)(i) for any taxable year in 

12 which, without regard to this subsection, the tax13 payer’s net capital gain exceeds taxable income 

14 (hereafter in this subparagraph referred to as the 

15 capital gain excess)— 

16 ‘‘(i) the taxpayer’s net capital gain 

17 (determined without regard to section 

18 1(h)(11)) shall be reduced (but not below 

19 zero) by such capital gain excess, 

20 ‘‘(ii) the taxpayer’s qualified dividend 

21 income shall be reduced by so much of such 

22 capital gain excess as exceeds the taxpayer’s 

23 net capital gain (determined without regard 

24 to section 1(h)(11) and the reduction under 

25 clause (i)), and 
74 

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1 ‘‘(iii) adjusted net capital gain, 

2 unrecaptured section 1250 gain, and 28- 

3 percent rate gain shall each be determined 

4 after increasing the amount described in 

5 section 1(h)(4)(B) by such capital gain ex6 cess. 

7 ‘‘(B) ALTERNATIVE MINIMUM TAX.—In ap8 plying section 55(b)(3) for purposes of deter9 mining the tax under paragraph (1)(B)(i) for 

10 any taxable year in which, without regard to 

11 this subsection, the taxpayer’s net capital gain 

12 exceeds the taxable excess (as defined in section 

13 55(b)(1)(A)(ii))— 

14 ‘‘(i) the rules of subparagraph (A) 

15 shall apply, except that such subparagraph 

16 shall be applied by substituting ‘the taxable 

17 excess (as defined in section 

18 55(b)(1)(A)(ii))’ for ‘taxable income’, and 

19 ‘‘(ii) the reference in section 

20 55(b)(3)(B) to the excess described in section 

21 1(h)(1)(B) shall be treated as a reference to 

22 such excess as determined under the rules of 

23 subparagraph (A) for purposes of deter24 mining the tax under paragraph (1)(A)(i). 
75 

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1 ‘‘(C) DEFINITIONS.—Terms used in this 

2 paragraph which are also used in section 1(h) 

3 shall have the respective meanings given such 

4 terms by section 1(h), except that in applying 

5 subparagraph (B) the adjustments under part VI 

6 of subchapter A shall be taken into account.’’. 

7 (d) EFFECTIVE DATE.— 

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

9 in this subsection, the amendments made by this sec10 tion shall take effect as if included in the provisions 

11 of the Tax Increase Prevention and Reconciliation 

12 Act of 2005 to which they relate. 

13 (2) MODIFICATION OF ACTIVE BUSINESS DEFINI14 TION UNDER SECTION 355.— 

15 (A) IN GENERAL.—Except as otherwise pro16 vided in this paragraph, the amendments made 

17 by subsection (b) shall apply to distributions 

18 made after May 17, 2006. 

19 (B) TRANSITION RULE.—The amendments 

20 made by subsection (b) shall not apply to any 

21 distribution pursuant to a transaction which 

22 is— 

23 (i) made pursuant to an agreement 

24 which was binding on May 17, 2006, and 

25 at all times thereafter, 
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1 (ii) described in a ruling request sub2 mitted to the Internal Revenue Service on 

3 or before such date, or 

4 (iii) described on or before such date in 

5 a public announcement or in a filing with 

6 the Securities and Exchange Commission. 

7 (C) ELECTION OUT OF TRANSITION RULE.— 

8 Subparagraph (B) shall not apply if the distrib9 uting corporation elects not to have such sub10 paragraph apply to distributions of such cor11 poration. Any such election, once made, shall be 

12 irrevocable. 

13 (D) SPECIAL RULE FOR CERTAIN PRE-EN14 ACTMENT DISTRIBUTIONS.—For purposes of de15 termining the continued qualification under sec16 tion 355(b)(2)(A) of the Internal Revenue Code 

17 of 1986 of distributions made on or before May 

18 17, 2006, as a result of an acquisition, disposi19 tion, or other restructuring after such date, such 

20 distribution shall be treated as made on the date 

21 of such acquisition, disposition, or restructuring 

22 for purposes of applying subparagraphs (A) 

23 through (C) of this paragraph. The preceding 

24 sentence shall only apply with respect to the cor25 poration that undertakes such acquisition, dis-
77 

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1 position, or other restructuring, and only if such 

2 application results in continued qualification 

3 under section 355(b)(2)(A) of such Code. 

4 (3) AMENDMENT RELATED TO SECTION 515 OF

5 THE ACT.—The amendment made by subsection (c) 

6 shall apply to taxable years beginning after December 

7 31, 2006. 

8 SEC. 405. AMENDMENTS RELATED TO THE SAFE, ACCOUNT9 ABLE, FLEXIBLE, EFFICIENT TRANSPOR10 TATION EQUITY ACT: A LEGACY FOR USERS. 

11 (a) AMENDMENTS RELATED TO SECTION 11113 OF

12 THE ACT.— 

13 (1) Paragraph (3) of section 6427(i) is amend14 ed— 

15 (A) by inserting ‘‘or under subsection (e)(2) 

16 by any person with respect to an alternative fuel 

17 (as defined in section 6426(d)(2))’’ after ‘‘section 

18 6426’’ in subparagraph (A), 

19 (B) by inserting ‘‘or (e)(2)’’ after ‘‘sub20 section (e)(1)’’ in subparagraphs (A)(i) and (B), 

21 and 

22 (C) by striking ‘‘ALCOHOL FUEL AND BIO23 DIESEL MIXTURE CREDIT’’ and inserting ‘‘MIX24 TURE CREDITS AND THE ALTERNATIVE FUEL

25 CREDIT’’ in the heading thereof. 
78 

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1 (2) Subparagraph (F) of section 6426(d)(2) is 

2 amended by striking ‘‘hydrocarbons’’ and inserting 

3 ‘‘fuel’’. 

4 (3) Section 6426 is amended by adding at the 

5 end the following new subsection: 

6 ‘‘(h) DENIAL OF DOUBLE BENEFIT.—No credit shall 

7 be determined under subsection (d) or (e) with respect to 

8 any fuel with respect to which credit may be determined 

9 under subsection (b) or (c) or under section 40 or 40A.’’. 

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

11 section shall take effect as if included in the provisions of 

12 the SAFETEA–LU to which they relate. 

13 SEC. 406. AMENDMENTS RELATED TO THE ENERGY POLICY 

14 ACT OF 2005. 

15 (a) AMENDMENT RELATED TO SECTION 1306 OF THE

16 ACT.—Paragraph (2) of section 45J(b) is amended to read 

17 as follows: 

18 ‘‘(2) AMOUNT OF NATIONAL LIMITATION.—The 

19 aggregate amount of national megawatt capacity lim20 itation allocated by the Secretary under paragraph 

21 (3) shall not exceed 6,000 megawatts.’’. 

22 (b) AMENDMENTS RELATED TO SECTION 1342 OF THE

23 ACT.— 
79 

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1 (1) So much of subsection (b) of section 30C as 

2 precedes paragraph (1) thereof is amended to read as 

3 follows: 

4 ‘‘(b) LIMITATION.—The credit allowed under sub5 section (a) with respect to all qualified alternative fuel vehi6 cle refueling property placed in service by the taxpayer dur7 ing the taxable year at a location shall not 

8 exceed—’’. 

9 (2) Subsection (c) of section 30C is amended to 

10 read as follows: 

11 ‘‘(c) QUALIFIED ALTERNATIVE FUEL VEHICLE RE12 FUELING PROPERTY.—For purposes of this section, the term 

13 ‘qualified alternative fuel vehicle refueling property’ has the 

14 same meaning as the term ‘qualified clean-fuel vehicle re15 fueling property’ would have under section 179A if— 

16 ‘‘(1) paragraph (1) of section 179A(d) did not 

17 apply to property installed on property which is used 

18 as the principal residence (within the meaning of sec19 tion 121) of the taxpayer, and 

20 ‘‘(2) only the following were treated as clean21 burning fuels for purposes of section 179A(d): 

22 ‘‘(A) Any fuel at least 85 percent of the vol23 ume of which consists of one or more of the fol24 lowing: ethanol, natural gas, compressed natural 
80 

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1 gas, liquified natural gas, liquefied petroleum 

2 gas, or hydrogen. 

3 ‘‘(B) Any mixture— 

4 ‘‘(i) which consists of two or more of 

5 the following: biodiesel (as defined in section 

6 40A(d)(1)), diesel fuel (as defined in section 

7 4083(a)(3)), or kerosene, and 

8 ‘‘(ii) at least 20 percent of the volume 

9 of which consists of biodiesel (as so defined) 

10 determined without regard to any kerosene 

11 in such mixture.’’. 

12 (c) AMENDMENTS RELATED TO SECTION 1351 OF THE

13 ACT.— 

14 (1) Paragraph (3) of section 41(a) is amended 

15 by inserting ‘‘for energy research’’ before the period at 

16 the end. 

17 (2) Paragraph (6) of section 41(f) is amended by 

18 adding at the end the following new subparagraph: 

19 ‘‘(E) ENERGY RESEARCH.—The term ‘en20 ergy research’ does not include any research 

21 which is not qualified research.’’. 

22 (d) AMENDMENTS RELATED TO SECTION 1362 OF THE

23 ACT.— 

24 (1)(A) Paragraph (1) of section 4041(d) is 

25 amended by adding at the end the following new sen-
81 

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1 tence: ‘‘No tax shall be imposed under the preceding 

2 sentence on the sale or use of any liquid if tax was 

3 imposed with respect to such liquid under section 

4 4081 at the Leaking Underground Storage Tank 

5 Trust Fund financing rate.’’. 

6 (B) Paragraph (3) of section 4042(b) is amended 

7 to read as follows: 

8 ‘‘(3) EXCEPTION FOR FUEL ON WHICH LEAKING

9 UNDERGROUND STORAGE TANK TRUST FUND FINANC10 ING RATE SEPARATELY IMPOSED.—The Leaking Un11 derground Storage Tank Trust Fund financing rate 

12 under paragraph (2)(B) shall not apply to the use of 

13 any fuel if tax was imposed with respect to such fuel 

14 under section 4041(d) or 4081 at the Leaking Under15 ground Storage Tank Trust Fund financing rate.’’. 

16 (C) Notwithstanding section 6430 of the Internal 

17 Revenue Code of 1986, a refund, credit, or payment 

18 may be made under subchapter B of chapter 65 of 

19 such Code for taxes imposed with respect to any liq20 uid after September 30, 2005, and before the date of 

21 the enactment of this Act under section 4041(d)(1) or 

22 4042 of such Code at the Leaking Underground Stor23 age Tank Trust Fund financing rate to the extent 

24 that tax was imposed with respect to such liquid 
82 

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1 under section 4081 at the Leaking Underground Stor2 age Tank Trust Fund financing rate. 

3 (2)(A) Paragraph (5) of section 4041(d) is 

4 amended— 

5 (i) by striking ‘‘(other than with respect to 

6 any sale for export under paragraph (3) there7 of)’’, and 

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

9 sentence: ‘‘The preceding sentence shall not apply 

10 with respect to subsection (g)(3) and so much of 

11 subsection (g)(1) as relates to vessels (within the 

12 meaning of section 4221(d)(3)) employed in for13 eign trade or trade between the United States 

14 and any of its possessions.’’. 

15 (B) Section 4082 is amended— 

16 (i) by striking ‘‘(other than such tax at the 

17 Leaking Underground Storage Tank Trust Fund 

18 financing rate imposed in all cases other than 

19 for export)’’ in subsection (a), and 

20 (ii) by redesignating subsections (f) and (g) 

21 as subsections (g) and (h), respectively, and by 

22 inserting after subsection (e) the following new 

23 subsection: 

24 ‘‘(f) EXCEPTION FOR LEAKING UNDERGROUND STOR25 AGE TANK TRUST FUND FINANCING RATE.— 
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1 ‘‘(1) IN GENERAL.—Subsection (a) shall not 

2 apply to the tax imposed under section 4081 at the 

3 Leaking Underground Storage Tank Trust Fund fi4 nancing rate. 

5 ‘‘(2) EXCEPTION FOR EXPORT, ETC.—Paragraph 

6 (1) shall not apply with respect to any fuel if the Sec7 retary determines that such fuel is destined for export 

8 or for use by the purchaser as supplies for vessels 

9 (within the meaning of section 4221(d)(3)) employed 

10 in foreign trade or trade between the United States 

11 and any of its possessions.’’. 

12 (C) Subsection (e) of section 4082 is amended— 

13 (i) by striking ‘‘an aircraft, the rate of tax 

14 under section 4081(a)(2)(A)(iii) shall be zero.’’ 

15 and inserting ‘‘an aircraft— 

16 ‘‘(1) the rate of tax under section 

17 4081(a)(2)(A)(iii) shall be zero, and 

18 ‘‘(2) if such aircraft is employed in foreign trade 

19 or trade between the United States and any of its pos20 sessions, the increase in such rate under section 

21 4081(a)(2)(B) shall be zero.’’; and 

22 (ii) by moving the last sentence flush with 

23 the margin of such subsection (following the 

24 paragraph (2) added by clause (i)). 

25 (D) Section 6430 is amended to read as follows: 
84 

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1 ‘‘SEC. 6430. TREATMENT OF TAX IMPOSED AT LEAKING UN2 DERGROUND STORAGE TANK TRUST FUND FI3 NANCING RATE. 

4 ‘‘No refunds, credits, or payments shall be made under 

5 this subchapter for any tax imposed at the Leaking Under6 ground Storage Tank Trust Fund financing rate, except in 

7 the case of fuels— 

8 ‘‘(1) which are exempt from tax under section 

9 4081(a) by reason of section 4082(f)(2), 

10 ‘‘(2) which are exempt from tax under section 

11 4041(d) by reason of the last sentence of paragraph 

12 (5) thereof, or 

13 ‘‘(3) with respect to which the rate increase 

14 under section 4081(a)(2)(B) is zero by reason of sec15 tion 4082(e)(2).’’. 

16 (3) Paragraph (5) of section 4041(d) is amended 

17 by inserting ‘‘(b)(1)(A),’’ after ‘‘subsections’’. 

18 (e) EFFECTIVE DATE.— 

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

20 in this subsection, the amendments made by this sec21 tion shall take effect as if included in the provisions 

22 of the Energy Policy Act of 2005 to which they relate. 

23 (2) NONAPPLICATION OF EXEMPTION FOR OFF24 HIGHWAY BUSINESS USE.—The amendment made by 

25 subsection (d)(3) shall apply to fuel sold for use or 

26 used after the date of the enactment of this Act. 
85 

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1 (3) AMENDMENT MADE BY THE SAFETEA–LU.— 

2 The amendment made by subsection (d)(2)(C)(ii) 

3 shall take effect as if included in section 11161 of the 

4 SAFETEA–LU. 

5 SEC. 407. AMENDMENTS RELATED TO THE AMERICAN JOBS 

6 CREATION ACT OF 2004. 

7 (a) AMENDMENTS RELATED TO SECTION 339 OF THE

8 ACT.— 

9 (1)(A) Section 45H is amended by striking sub10 section (d) and by redesignating subsections (e), (f), 

11 and (g) as subsections (d), (e), and (f), respectively. 

12 (B) Subsection (d) of section 280C is amended to 

13 read as follows: 

14 ‘‘(d) CREDIT FOR LOW SULFUR DIESEL FUEL PRO15 DUCTION.—The deductions otherwise allowed under this 

16 chapter for the taxable year shall be reduced by the amount 

17 of the credit determined for the taxable year under section 

18 45H(a).’’. 

19 (C) Subsection (a) of section 1016 is amended by 

20 striking paragraph (31) and by redesignating para21 graphs (32) through (37) as paragraphs (31) through 

22 (36), respectively. 

23 (2)(A) Section 45H, as amended by paragraph 

24 (1), is amended by adding at the end the following 

25 new subsection: 
86 

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1 ‘‘(g) ELECTION TO NOT TAKE CREDIT.—No credit 

2 shall be determined under subsection (a) for the taxable year 

3 if the taxpayer elects not to have subsection (a) apply to 

4 such taxable year.’’. 

5 (B) Subsection (m) of section 6501 is amended 

6 by inserting ‘‘45H(g),’’ after ‘‘45C(d)(4),’’. 

7 (3)(A) Subsections (b)(1)(A), (c)(2), (e)(1), and 

8 (e)(2) of section 45H (as amended by paragraph (1)) 

9 and section 179B(a) are each amended by striking 

10 ‘‘qualified capital costs’’ and inserting ‘‘qualified 

11 costs’’. 

12 (B) The heading of paragraph (2) of section 

13 45H(c) is amended by striking ‘‘CAPITAL’’. 

14 (C) Subsection (a) of section 179B is amended 

15 by inserting ‘‘and which are properly chargeable to 

16 capital account’’ before the period at the end. 

17 (b) AMENDMENTS RELATED TO SECTION 710 OF THE

18 ACT.— 

19 (1) Clause (ii) of section 45(c)(3)(A) is amended 

20 by striking ‘‘which is segregated from other waste ma21 terials and’’. 

22 (2) Subparagraph (B) of section 45(d)(2) is 

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

24 by striking clause (ii), and by redesignating clause 

25 (iii) as clause (ii). 
87 

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1 (c) AMENDMENTS RELATED TO SECTION 848 OF THE

2 ACT.— 

3 (1) Paragraph (2) of section 470(c) is amended 

4 to read as follows: 

5 ‘‘(2) TAX-EXEMPT USE PROPERTY.— 

6 ‘‘(A) IN GENERAL.—The term ‘tax-exempt 

7 use property’ has the meaning given to such term 

8 by section 168(h), except that such section shall 

9 be applied— 

10 ‘‘(i) without regard to paragraphs 

11 (1)(C) and (3) thereof, and 

12 ‘‘(ii) as if section 197 intangible prop13 erty (as defined in section 197), and prop14 erty described in paragraph (1)(B) or (2) of 

15 section 167(f), were tangible property. 

16 ‘‘(B) EXCEPTION FOR PARTNERSHIPS.— 

17 Such term shall not include any property which 

18 would (but for this subparagraph) be tax-exempt 

19 use property solely by reason of section 

20 168(h)(6). 

21 ‘‘(C) CROSS REFERENCE.—For treatment of 

22 partnerships as leases to which section 168(h) 

23 applies, see section 7701(e).’’. 

24 (2) Subparagraph (A) of section 470(d)(1) is 

25 amended by striking ‘‘(at any time during the lease 
88 

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1 term)’’ and inserting ‘‘(at all times during the lease 

2 term)’’. 

3 (d) AMENDMENTS RELATED TO SECTION 888 OF THE

4 ACT.— 

5 (1) Subparagraph (A) of section 1092(a)(2) is 

6 amended by striking ‘‘and’’ at the end of clause (ii), 

7 by redesignating clause (iii) as clause (iv), and by in8 serting after clause (ii) the following new clause: 

9 ‘‘(iii) if the application of clause (ii) 

10 does not result in an increase in the basis 

11 of any offsetting position in the identified 

12 straddle, the basis of each of the offsetting 

13 positions in the identified straddle shall be 

14 increased in a manner which— 

15 ‘‘(I) is reasonable, consistent with 

16 the purposes of this paragraph, and 

17 consistently applied by the taxpayer, 

18 and 

19 ‘‘(II) results in an aggregate in20 crease in the basis of such offsetting po21 sitions which is equal to the loss de22 scribed in clause (ii), and’’. 

23 (2)(A) Subparagraph (B) of section 1092(a)(2) 

24 is amended by adding at the end the following flush 

25 sentence: 
89 

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1 ‘‘A straddle shall be treated as clearly identified 

2 for purposes of clause (i) only if such identifica3 tion includes an identification of the positions in 

4 the straddle which are offsetting with respect 

5 other positions in the straddle.’’. 

6 (B) Subparagraph (A) of section 1092(a)(2) is 

7 amended— 

8 (i) by striking ‘‘identified positions’’ in 

9 clause (i) and inserting ‘‘positions’’, 

10 (ii) by striking ‘‘identified position’’ in 

11 clause (ii) and inserting ‘‘position’’, and 

12 (iii) by striking ‘‘identified offsetting posi13 tions’’ in clause (ii) and inserting ‘‘offsetting po14 sitions’’. 

15 (C) Subparagraph (B) of section 1092(a)(3) is 

16 amended by striking ‘‘identified offsetting position’’ 

17 and inserting ‘‘offsetting position’’. 

18 (3) Paragraph (2) of section 1092(a) is amended 

19 by redesignating subparagraph (C) as subparagraph 

20 (D) and inserting after subparagraph (B) the fol21 lowing new subparagraph: 

22 ‘‘(C) APPLICATION TO LIABILITIES AND OB23 LIGATIONS.—Except as otherwise provided by the 

24 Secretary, rules similar to the rules of clauses 

25 (ii) and (iii) of subparagraph (A) shall apply 
90 

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1 for purposes of this paragraph with respect to 

2 any position which is, or has been, a liability or 

3 obligation.’’. 

4 (4) Subparagraph (D) of section 1092(a)(2), as 

5 redesignated by paragraph (3), is amended by insert6 ing ‘‘the rules for the application of this section to a 

7 position which is or has been a liability or obligation, 

8 methods of loss allocation which satisfy the require9 ments of subparagraph (A)(iii),’’ before ‘‘and the or10 dering rules’’. 

11 (e) EFFECTIVE DATE.— 

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

13 in this subsection, the amendments made by this sec14 tion shall take effect as if included in the provisions 

15 of the American Jobs Creation Act of 2004 to which 

16 they relate. 

17 (2) IDENTIFICATION REQUIREMENT OF AMEND18 MENT RELATED TO SECTION 888 OF THE AMERICAN

19 JOBS CREATION ACT OF 2004.—The amendment made 

20 by subsection (d)(2)(A) shall apply to straddles ac21 quired after the date of the enactment of this Act. 
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1 SEC. 408. AMENDMENTS RELATED TO THE ECONOMIC 

2 GROWTH AND TAX RELIEF RECONCILIATION 

3 ACT OF 2001. 

4 (a) AMENDMENTS RELATED TO SECTION 617 OF THE

5 ACT.— 

6 (1) Subclause (II) of section 402(g)(7)(A)(ii) is 

7 amended by striking ‘‘for prior taxable years’’ and 

8 inserting ‘‘permitted for prior taxable years by reason 

9 of this paragraph’’. 

10 (2) Subparagraph (A) of section 3121(v)(1) is 

11 amended by inserting ‘‘or consisting of designated 

12 Roth contributions (as defined in section 402A(c))’’ 

13 before the comma at the end. 

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

15 section shall take effect as if included in the provisions of 

16 the Economic Growth and Tax Relief Reconciliation Act 

17 of 2001 to which they relate. 

18 SEC. 409. AMENDMENTS RELATED TO THE TAX RELIEF EX19 TENSION ACT OF 1999. 

20 (a) AMENDMENT RELATED TO SECTION 507 OF THE

21 ACT.—Clause (i) of section 45(e)(7)(A) is amended by strik22 ing ‘‘placed in service by the taxpayer’’ and inserting 

23 ‘‘originally placed in service’’. 

24 (b) AMENDMENT RELATED TO SECTION 542 OF THE

25 ACT.—Clause (ii) of section 856(d)(9)(D) is amended to 

26 read as follows: 
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1 ‘‘(ii) LODGING FACILITY.—The term 

2 ‘lodging facility’ means a— 

3 ‘‘(I) hotel, 

4 ‘‘(II) motel, or 

5 ‘‘(III) other establishment more 

6 than one-half of the dwelling units in 

7 which are used on a transient basis.’’. 

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

9 section shall take effect as if included in the provisions of 

10 the Tax Relief Extension Act of 1999 to which they relate. 

11 SEC. 410. AMENDMENT RELATED TO THE INTERNAL REV12 ENUE SERVICE RESTRUCTURING AND RE13 FORM ACT OF 1998. 

14 (a) AMENDMENT RELATED TO SECTION 3509 OF THE

15 ACT.—Paragraph (3) of section 6110(i) is amended by in16 serting ‘‘and related background file documents’’ after 

17 ‘‘Chief Counsel advice’’ in the matter preceding subpara18 graph (A). 

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

20 section shall take effect as if included in the provision of 

21 the Internal Revenue Service Restructuring and Reform Act 

22 of 1998 to which it relates. 

23 SEC. 411. CLERICAL CORRECTIONS. 

24 (a) IN GENERAL.— 
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1 (1) Paragraph (5) of section 21(e) is amended by 

2 striking ‘‘section 152(e)(3)(A)’’ in the flush matter 

3 after subparagraph (B) and inserting ‘‘section 

4 152(e)(4)(A)’’. 

5 (2) Paragraph (3) of section 25C(c) is amended 

6 by striking ‘‘section 3280’’ and inserting ‘‘part 3280’’. 

7 (3) Paragraph (2) of section 26(b) is amended by 

8 redesignating subparagraphs (S) and (T) as subpara9 graphs (U) and (V), respectively, and by inserting 

10 after subparagraph (R) the following new subpara11 graphs: 

12 ‘‘(S) sections 106(e)(3)(A)(ii), 

13 223(b)(8)(B)(i)(II), and 408(d)(9)(D)(i)(II) (re14 lating to certain failures to maintain high de15 ductible health plan coverage), 

16 ‘‘(T) section 170(o)(3)(B) (relating to recap17 ture of certain deductions for fractional gifts),’’. 

18 (4) Subsection (a) of section 34 is amended— 

19 (A) in paragraph (1), by striking ‘‘with re20 spect to gasoline used during the taxable year on 

21 a farm for farming purposes’’, 

22 (B) in paragraph (2), by striking ‘‘with re23 spect to gasoline used during the taxable year 

24 (A) otherwise than as a fuel in a highway vehicle 

25 or (B) in vehicles while engaged in furnishing 
94 

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1 certain public passenger land transportation 

2 service’’, and 

3 (C) in paragraph (3), by striking ‘‘with re4 spect to fuels used for nontaxable purposes or re5 sold during the taxable year’’. 

6 (5) Paragraph (2) of section 35(d) is amended— 

7 (A) by striking ‘‘paragraph (2) or (4) of’’, 

8 and 

9 (B) by striking ‘‘(within the meaning of sec10 tion 152(e)(1))’’ and inserting ‘‘(as defined in 

11 section 152(e)(4)(A))’’. 

12 (6) Subsection (b) of section 38 is amended— 

13 (A) by striking ‘‘and’’ each place it appears 

14 at the end of any paragraph, 

15 (B) by striking ‘‘plus’’ each place it appears 

16 at the end of any paragraph, and 

17 (C) by inserting ‘‘plus’’ at the end of para18 graph (30). 

19 (7) Paragraphs (2) and (3) of section 45L(c) are 

20 each amended by striking ‘‘section 3280’’ and insert21 ing ‘‘part 3280’’. 

22 (8) Subsection (c) of section 48 is amended by 

23 striking ‘‘subsection’’ in the text preceding paragraph 

24 (1) and inserting ‘‘section’’. 
95 

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1 (9) Paragraphs (1)(B) and (2)(B) of section 

2 48(c) are each amended by striking ‘‘paragraph (1)’’ 

3 and inserting ‘‘subsection (a)’’. 

4 (10) Clause (ii) of section 48A(d)(4)(B) is 

5 amended by striking ‘‘subsection’’ both places it ap6 pears. 

7 (11) The last sentence of section 125(b)(2) is 

8 amended by striking ‘‘last sentence’’ and inserting 

9 ‘‘second sentence’’. 

10 (12) Subclause (II) of section 167(g)(8)(C)(ii) is 

11 amended by striking ‘‘section 263A(j)(2)’’ and insert12 ing ‘‘section 263A(i)(2)’’. 

13 (13)(A) Clause (vii) of section 170(b)(1)(A) is 

14 amended by striking ‘‘subparagraph (E)’’ and insert15 ing ‘‘subparagraph (F)’’. 

16 (B) Clause (ii) of section 170(e)(1)(B) is amend17 ed by striking ‘‘subsection (b)(1)(E)’’ and inserting 

18 ‘‘subsection (b)(1)(F)’’. 

19 (C) Clause (i) of section 1400S(a)(2)(A) is 

20 amended by striking ‘‘subparagraph (F)’’ and insert21 ing ‘‘subparagraph (G)’’. 

22 (D) Subparagraph (A) of section 4942(i)(1) is 

23 amended by striking ‘‘section 170(b)(1)(E)(ii)’’ and 

24 inserting ‘‘section 170(b)(1)(F)(ii)’’. 
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1 (14) Subclause (II) of section 170(e)(1)(B)(i) is 

2 amended by inserting ‘‘, but without regard to clause 

3 (ii) thereof’’ after ‘‘paragraph (7)(C)’’. 

4 (15)(A) Subparagraph (A) of section 170(o)(1) 

5 and subparagraph (A) of section 2522(e)(1) are each 

6 amended by striking ‘‘all interest in the property is’’ 

7 and inserting ‘‘all interests in the property are’’. 

8 (B) Section 170(o)(3)(A)(i), and section 

9 2522(e)(2)(A)(i) (as redesignated by section 

10 403(d)(2)), are each amended— 

11 (i) by striking ‘‘interest’’ and inserting ‘‘in12 terests’’, and 

13 (ii) by striking ‘‘before’’ and inserting ‘‘on 

14 or before’’. 

15 (16)(A) Subparagraph (C) of section 852(b)(4) is 

16 amended to read as follows: 

17 ‘‘(C) DETERMINATION OF HOLDING PERI18 ODS.—For purposes of this paragraph, in deter19 mining the period for which the taxpayer has 

20 held any share of stock— 

21 ‘‘(i) the rules of paragraphs (3) and 

22 (4) of section 246(c) shall apply, and 

23 ‘‘(ii) there shall not be taken into ac24 count any day which is more than 6 
97 

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1 months after the date on which such share 

2 becomes ex-dividend.’’. 

3 (B) Subparagraph (B) of section 857(b)(8) is 

4 amended to read as follows: 

5 ‘‘(B) DETERMINATION OF HOLDING PERI6 ODS.—For purposes of this paragraph, in deter7 mining the period for which the taxpayer has 

8 held any share of stock or beneficial interest— 

9 ‘‘(i) the rules of paragraphs (3) and 

10 (4) of section 246(c) shall apply, and 

11 ‘‘(ii) there shall not be taken into ac12 count any day which is more than 6 

13 months after the date on which such share 

14 or interest becomes ex-dividend.’’. 

15 (17) Paragraph (2) of section 856(l) is amended 

16 by striking the last sentence and inserting the fol17 lowing: ‘‘For purposes of subparagraph (B), securities 

18 described in subsection (m)(2)(A) shall not be taken 

19 into account.’’. 

20 (18) Subparagraph (F) of section 954(c)(1) is 

21 amended to read as follows: 

22 ‘‘(F) INCOME FROM NOTIONAL PRINCIPAL

23 CONTRACTS.— 

24 ‘‘(i) IN GENERAL.—Net income from 

25 notional principal contracts. 
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1 ‘‘(ii) COORDINATION WITH OTHER CAT2 EGORIES OF FOREIGN PERSONAL HOLDING

3 COMPANY INCOME.—Any item of income, 

4 gain, deduction, or loss from a notional 

5 principal contract entered into for purposes 

6 of hedging any item described in any pre7 ceding subparagraph shall not be taken into 

8 account for purposes of this subparagraph 

9 but shall be taken into account under such 

10 other subparagraph.’’. 

11 (19) Paragraph (1) of section 954(c) is amended 

12 by redesignating subparagraph (I) as subparagraph 

13 (H). 

14 (20) Paragraph (33) of section 1016(a), as redes15 ignated by section 407(a)(1)(C), is amended by strik16 ing ‘‘section 25C(e)’’ and inserting ‘‘section 25C(f)’’. 

17 (21) Paragraph (36) of section 1016(a), as redes18 ignated by section 407(a)(1)(C), is amended by strik19 ing ‘‘section 30C(f)’’ and inserting ‘‘section 

20 30C(e)(1)’’. 

21 (22) Subparagraph (G) of section 1260(c)(2) is 

22 amended by adding ‘‘and’’ at the end. 

23 (23)(A) Section 1297 is amended by striking 

24 subsection (d) and by redesignating subsections (e) 

25 and (f) as subsections (d) and (e), respectively. 
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1 (B) Subparagraph (G) of section 1260(c)(2) is 

2 amended by striking ‘‘subsection (e)’’ and inserting 

3 ‘‘subsection (d)’’. 

4 (C) Subparagraph (B) of section 1298(a)(2) is 

5 amended by striking ‘‘Section 1297(e)’’ and inserting 

6 ‘‘Section 1297(d)’’. 

7 (24) Paragraph (1) of section 1362(f) is amend8 ed— 

9 (A) by striking ‘‘, section 1361(b)(3)(B)(ii), 

10 or section 1361(c)(1)(A)(ii)’’ and inserting ‘‘or 

11 section 1361(b)(3)(B)(ii)’’, and 

12 (B) by striking ‘‘, section 1361(b)(3)(C), or 

13 section 1361(c)(1)(D)(iii)’’ in subparagraph (B) 

14 and inserting ‘‘or section 1361(b)(3)(C)’’. 

15 (25) Paragraph (2) of section 1400O is amended 

16 by striking ‘‘under of’’ and inserting ‘‘under’’. 

17 (26) The table of sections for part II of sub18 chapter Y of chapter 1 is amended by adding at the 

19 end the following new item: 

‘‘Sec. 1400T. Special rules for mortgage revenue bonds.’’. 

20 (27) Subsection (b) of section 4082 is amended 

21 to read as follows: 

22 ‘‘(b) NONTAXABLE USE.—For purposes of this section, 

23 the term ‘nontaxable use’ means— 
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1 ‘‘(1) any use which is exempt from the tax im2 posed by section 4041(a)(1) other than by reason of 

3 a prior imposition of tax, 

4 ‘‘(2) any use in a train, and 

5 ‘‘(3) any use described in section 

6 4041(a)(1)(C)(iii)(II). 

7 The term ‘nontaxable use’ does not include the use of ker8 osene in an aircraft and such term shall not include any 

9 use described in section 6421(e)(2)(C).’’. 

10 (28) Paragraph (4) of section 4101(a) (relating 

11 to registration in event of change of ownership) is re12 designated as paragraph (5). 

13 (29) Paragraph (6) of section 4965(c) is amend14 ed by striking ‘‘section 4457(e)(1)(A)’’ and inserting 

15 ‘‘section 457(e)(1)(A)’’. 

16 (30) Subpart C of part II of subchapter A of 

17 chapter 51 is amended by redesignating section 5432 

18 (relating to recordkeeping by wholesale dealers) as sec19 tion 5121. 

20 (31) Paragraph (2) of section 5732(c), as redes21 ignated by section 11125(b)(20)(A) of the SAFETEA– 

22 LU, is amended by striking ‘‘this subpart’’ and in23 serting ‘‘this subchapter’’. 

24 (32) Subsection (b) of section 6046 is amended— 
101 

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1 (A) by striking ‘‘subsection (a)(1)’’ and in2 serting ‘‘subsection (a)(1)(A)’’, and 

3 (B) by striking ‘‘paragraph (2) or (3) of 

4 subsection (a)’’ and inserting ‘‘subparagraph (B) 

5 or (C) of subsection (a)(1)’’. 

6 (33)(A) Subparagraph (A) of section 6103(b)(5) 

7 is amended by striking ‘‘the Canal Zone,’’. 

8 (B) Section 7651 is amended by striking para9 graph (4) and by redesignating paragraph (5) as 

10 paragraph (4). 

11 (34) Subparagraph (A) of section 6211(b)(4) is 

12 amended by striking ‘‘and 34’’ and inserting ‘‘34, 

13 and 35’’. 

14 (35) Subparagraphs (A) and (B) of section 

15 6230(a)(3) are each amended by striking ‘‘section 

16 6013(e)’’ and inserting ‘‘section 6015’’. 

17 (36) Paragraph (3) of section 6427(e) (relating 

18 to termination), as added by section 11113 of the 

19 SAFETEA–LU, is redesignated as paragraph (5) and 

20 moved after paragraph (4). 

21 (37) Clause (ii) of section 6427(l)(4)(A) is 

22 amended by striking ‘‘section 4081(a)(2)(iii)’’ and in23 serting ‘‘section 4081(a)(2)(A)(iii)’’. 

24 (38)(A) Section 6427, as amended by section 

25 1343(b)(1) of the Energy Policy Act of 2005, is 
102 

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1 amended by striking subsection (p) (relating to gas2 ohol used in noncommercial aviation) and redesig3 nating subsection (q) as subsection (p). 

4 (B) The Internal Revenue Code of 1986 shall be 

5 applied and administered as if the amendments made 

6 by paragraph (2) of section 11151(a) of the 

7 SAFETEA–LU had never been enacted. 

8 (39) Subsection (a) of section 6695A is amended 

9 by striking ‘‘then such person’’ in paragraph (2) and 

10 inserting the following: 

11 ‘‘then such person’’. 

12 (40) Subparagraph (C) of section 6707A(e)(2) is 

13 amended by striking ‘‘section 6662A(e)(2)(C)’’ and 

14 inserting ‘‘section 6662A(e)(2)(B)’’. 

15 (41)(A) Paragraph (3) of section 9002 is amend16 ed by striking ‘‘section 309(a)(1)’’ and inserting ‘‘sec17 tion 306(a)(1)’’. 

18 (B) Paragraph (1) of section 9004(a) is amended 

19 by striking ‘‘section 320(b)(1)(B)’’ and inserting ‘‘sec20 tion 315(b)(1)(B)’’. 

21 (C) Paragraph (3) of section 9032 is amended by 

22 striking ‘‘section 309(a)(1)’’ and inserting ‘‘section 

23 306(a)(1)’’. 
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1 (D) Subsection (b) of section 9034 is amended by 

2 striking ‘‘section 320(b)(1)(A)’’ and inserting ‘‘section 

3 315(b)(1)(A)’’. 

4 (42) Section 9006 is amended by striking 

5 ‘‘Comptroller General’’ each place it appears and in6 serting ‘‘Commission’’. 

7 (43) Subsection (c) of section 9503 is amended 

8 by redesignating paragraph (7) (relating to transfers 

9 from the trust fund for certain aviation fuels taxes) 

10 as paragraph (6). 

11 (44) Paragraph (1) of section 1301(g) of the En12 ergy Policy Act of 2005 is amended by striking ‘‘shall 

13 take effect of the date of the enactment’’ and inserting 

14 ‘‘shall take effect on the date of the enactment’’. 

15 (45) The Internal Revenue Code of 1986 shall be 

16 applied and administered as if the amendments made 

17 by section 1(a) of Public Law 109–433 had never 

18 been enacted. 

19 (b) CLERICAL AMENDMENTS RELATED TO THE TAX

20 RELIEF AND HEALTH CARE ACT OF 2006.— 

21 (1) AMENDMENT RELATED TO SECTION 209 OF

22 DIVISION A OF THE ACT.—Paragraph (3) of section 

23 168(l) is amended by striking ‘‘enzymatic’’. 

24 (2) AMENDMENTS RELATED TO SECTION 419 OF

25 DIVISION A OF THE ACT.— 
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1 (A) Clause (iv) of section 6724(d)(1)(B) is 

2 amended by inserting ‘‘or (h)(1)’’ after ‘‘section 

3 6050H(a)’’. 

4 (B) Subparagraph (K) of section 6724(d)(2) 

5 is amended by inserting ‘‘or (h)(2)’’ after ‘‘sec6 tion 6050H(d)’’. 

7 (3) EFFECTIVE DATE.—The amendments made 

8 by this subsection shall take effect as if included in 

9 the provision of the Tax Relief and Health Care Act 

10 of 2006 to which they relate. 

11 (c) CLERICAL AMENDMENTS RELATED TO THE GULF

12 OPPORTUNITY ZONE ACT OF 2005.— 

13 (1) AMENDMENTS RELATED TO SECTION 402 OF

14 THE ACT.—Subparagraph (B) of section 24(d)(1) is 

15 amended— 

16 (A) by striking ‘‘the excess (if any) of’’ in 

17 the matter preceding clause (i) and inserting 

18 ‘‘the greater of’’, and 

19 (B) by striking ‘‘section’’ in clause (ii)(II) 

20 and inserting ‘‘section 32’’. 

21 (2) EFFECTIVE DATE.—The amendments made 

22 by this subsection shall take effect as if included in 

23 the provisions of the Gulf Opportunity Zone Act of 

24 2005 to which they relate. 
105 

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1 (d) CLERICAL AMENDMENTS RELATED TO THE SAFE, 

2 ACCOUNTABLE, FLEXIBLE, EFFICIENT TRANSPORTATION

3 EQUITY ACT: A LEGACY FOR USERS.— 

4 (1) AMENDMENTS RELATED TO SECTION 11163 OF

5 THE ACT.—Subparagraph (C) of section 6416(a)(4) is 

6 amended— 

7 (A) by striking ‘‘ultimate vendor’’ and all 

8 that follows through ‘‘has certified’’ and insert9 ing ‘‘ultimate vendor or credit card issuer has 

10 certified’’, and 

11 (B) by striking ‘‘all ultimate purchasers of 

12 the vendor’’ and all that follows through ‘‘are 

13 certified’’ and inserting ‘‘all ultimate purchasers 

14 of the vendor or credit card issuer are certified’’. 

15 (2) EFFECTIVE DATE.—The amendments made 

16 by this subsection shall take effect as if included in 

17 the provisions of the Safe, Accountable, Flexible, Effi18 cient Transportation Equity Act: A Legacy for Users 

19 to which they relate. 

20 (e) CLERICAL AMENDMENTS RELATED TO THE EN21 ERGY POLICY ACT OF 2005.— 

22 (1) AMENDMENT RELATED TO SECTION 1344 OF

23 THE ACT.—Subparagraph (B) of section 6427(e)(5), 

24 as redesignated by subsection (a)(36), is amended by 

25 striking ‘‘2006’’ and inserting ‘‘2008’’. 
106 

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1 (2) AMENDMENTS RELATED TO SECTION 1351 OF

2 THE ACT.—Subparagraphs (A)(ii) and (B)(ii) of sec3 tion 41(f)(1) are each amended by striking ‘‘qualified 

4 research expenses and basic research payments’’ and 

5 inserting ‘‘qualified research expenses, basic research 

6 payments, and amounts paid or incurred to energy 

7 research consortiums,’’. 

8 (3) EFFECTIVE DATE.—The amendments made 

9 by this subsection shall take effect as if included in 

10 the provisions of the Energy Policy Act of 2005 to 

11 which they relate. 

12 (f) CLERICAL AMENDMENTS RELATED TO THE AMER13 ICAN JOBS CREATION ACT OF 2004.— 

14 (1) AMENDMENT RELATED TO SECTION 301 OF

15 THE ACT.—Section 9502 is amended by striking sub16 section (e) and redesignating subsection (f) as sub17 section (e). 

18 (2) AMENDMENT RELATED TO SECTION 413 OF

19 THE ACT.—Subsection (b) of section 1298 is amended 

20 by striking paragraph (7) and by redesignating para21 graphs (8) and (9) as paragraphs (7) and (8), respec22 tively. 

23 (3) AMENDMENT RELATED TO SECTION 895 OF

24 THE ACT.—Clause (iv) of section 904(f)(3)(D) is 
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1 amended by striking ‘‘a controlled group’’ and insert2 ing ‘‘an affiliated group’’. 

3 (4) EFFECTIVE DATE.—The amendments made 

4 by this subsection shall take effect as if included in 

5 the provisions of the American Jobs Creation Act of 

6 2004 to which they relate. 

7 (g) CLERICAL AMENDMENTS RELATED TO THE FSC 

8 REPEAL AND EXTRATERRITORIAL INCOME EXCLUSION ACT

9 OF 2000.— 

10 (1) Subclause (I) of section 56(g)(4)(C)(ii) is 

11 amended by striking ‘‘921’’ and inserting ‘‘921 (as in 

12 effect before its repeal by the FSC Repeal and 

13 Extraterritorial Income Exclusion Act of 2000)’’. 

14 (2) Clause (iv) of section 54(g)(4)(C) is amended 

15 by striking ‘‘a cooperative described in section 

16 927(a)(4)’’ and inserting ‘‘an organization to which 

17 part I of subchapter T (relating to tax treatment of 

18 cooperatives) applies which is engaged in the mar19 keting of agricultural or horticultural products’’. 

20 (3) Paragraph (4) of section 245(c) is amended 

21 by adding at the end the following new subparagraph: 

22 ‘‘(C) FSC.—The term ‘FSC’ has the mean23 ing given such term by section 922.’’. 

24 (4) Subsection (c) of section 245 is amended by 

25 inserting at the end the following new paragraph: 
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1 ‘‘(5) REFERENCES TO PRIOR LAW.—Any ref2 erence in this subsection to section 922, 923, or 927 

3 shall be treated as a reference to such section as in 

4 effect before its repeal by the FSC Repeal and 

5 Extraterritorial Income Exclusion Act of 2000.’’. 

6 (5) Paragraph (4) of section 275(a) is amended 

7 by striking ‘‘if’’ and all that follows and inserting ‘‘if 

8 the taxpayer chooses to take to any extent the benefits 

9 of section 901.’’. 

10 (6)(A) Subsection (a) of section 291 is amended 

11 by striking paragraph (4) and by redesignating para12 graph (5) as paragraph (4). 

13 (B) Paragraph (1) of section 291(c) is amended 

14 by striking ‘‘subsection (a)(5)’’ and inserting ‘‘sub15 section (a)(4)’’. 

16 (7)(A) Paragraph (4) of section 441(b) is amend17 ed by striking ‘‘FSC or’’. 

18 (B) Subsection (h) of section 441 is amended— 

19 (i) by striking ‘‘FSC or’’ each place it ap20 pears, and 

21 (ii) by striking ‘‘FSC’S AND’’ in the heading 

22 thereof. 

23 (8) Subparagraph (B) of section 884(d)(2) is 

24 amended by inserting before the comma ‘‘(as in effect 
109 

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1 before their repeal by the FSC Repeal and 

2 Extraterritorial Income Exclusion Act of 2000)’’. 

3 (9) Section 901 is amended by striking sub4 section (h). 

5 (10) Clause (v) of section 904(d)(2)(B) is amend6 ed— 

7 (A) by inserting ‘‘and’’ at the end of sub8 clause (I), by striking subclause (II), and by re9 designating subclause (III) as subclause (II), 

10 (B) by striking ‘‘a FSC (or a former FSC)’’ 

11 in subclause (II) (as so redesignated) and insert12 ing ‘‘a former FSC (as defined in section 922)’’, 

13 and 

14 (C) by adding at the end the following: 

15 ‘‘Any reference in subclause (II) to section 

16 922, 923, or 927 shall be treated as a ref17 erence to such section as in effect before its 

18 repeal by the FSC Repeal and 

19 Extraterritorial Income Exclusion Act of 

20 2000.’’. 

21 (11) Subsection (b) of section 906 is amended by 

22 striking paragraph (5) and redesignating paragraphs 

23 (6) and (7) as paragraphs (5) and (6), respectively. 

24 (12) Subparagraph (B) of section 936(f)(2) is 

25 amended by striking ‘‘FSC or’’. 
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1 (13) Section 951 is amended by striking sub2 section (c) and by redesignating subsection (d) as sub3 section (c). 

4 (14) Subsection (b) of section 952 is amended by 

5 striking the second sentence. 

6 (15)(A) Paragraph (2) of section 956(c) is 

7 amended— 

8 (i) by striking subparagraph (I) and by re9 designating subparagraphs (J) through (M) as 

10 subparagraphs (I) through (L), respectively, and 

11 (ii) by striking ‘‘subparagraphs (J), (K), 

12 and (L)’’ in the flush sentence at the end and in13 serting ‘‘subparagraphs (I), (J), and (K)’’. 

14 (B) Clause (ii) of section 954(c)(2)(C) is amend15 ed by striking ‘‘section 956(c)(2)(J)’’ and inserting 

16 ‘‘section 956(c)(2)(I)’’. 

17 (16) Paragraph (1) of section 992(a) is amended 

18 by striking subparagraph (E), by inserting ‘‘and’’ at 

19 the end of subparagraph (C), and by striking ‘‘, and’’ 

20 at the end of subparagraph (D) and inserting a pe21 riod. 

22 (17) Paragraph (5) of section 1248(d) is amend23 ed— 

24 (A) by inserting ‘‘(as defined in section 

25 922)’’ after ‘‘a FSC’’, and 
111 

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

2 sentence: ‘‘Any reference in this paragraph to 

3 section 922, 923, or 927 shall be treated as a ref4 erence to such section as in effect before its repeal 

5 by the FSC Repeal and Extraterritorial Income 

6 Exclusion Act of 2000.’’. 

7 (18) Subparagraph (D) of section 1297(b)(2) is 

8 amended by striking ‘‘foreign trade income of a FSC 

9 or’’. 

10 (19)(A) Paragraph (1) of section 6011(c) is 

11 amended by striking ‘‘or former DISC or a FSC or 

12 former FSC’’ and inserting ‘‘, former DISC, or 

13 former FSC (as defined in section 922 as in effect be14 fore its repeal by the FSC Repeal and 

15 Extraterritorial Income Exclusion Act of 2000)’’. 

16 (B) Subsection (c) of section 6011 is amended by 

17 striking ‘‘AND FSC’S’’ in the heading thereof. 

18 (20) Subsection (c) of section 6072 is amended 

19 by striking ‘‘a FSC or former FSC’’ and inserting ‘‘a 

20 former FSC (as defined in section 922 as in effect be21 fore its repeal by the FSC Repeal and 

22 Extraterritorial Income Exclusion Act of 2000)’’. 

23 (21) Section 6686 is amended by inserting 

24 ‘‘FORMER’’ before ‘‘FSC’’ in the heading thereof. 
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1 TITLE V—PARITY IN APPLICA2 TION OF CERTAIN LIMITS TO 

3 MENTAL HEALTH BENEFITS 

4 SEC. 501. PARITY IN APPLICATION OF CERTAIN LIMITS TO 

5 MENTAL HEALTH BENEFITS. 

6 (a) AMENDMENT TO THE INTERNAL REVENUE CODE

7 OF 1986.—Section 9812(f)(3) of the Internal Revenue Code 

8 of 1986 is amended by striking ‘‘2007’’ and inserting 

9 ‘‘2008’’. 

10 (b) AMENDMENT TO THE EMPLOYEE RETIREMENT IN11 COME SECURITY ACT OF 1974.—Section 712(f) of the Em12 ployee Retirement Income Security Act of 1974 (29 U.S.C. 

13 1185a(f)) is amended by striking ‘‘2007’’ and inserting 

14 ‘‘2008’’. 

15 (c) AMENDMENT TO THE PUBLIC HEALTH SERVICE

16 ACT.—Section 2705(f) of the Public Health Service Act (42 

17 U.S.C. 300gg-5(f)) is amended by striking ‘‘2007’’ and in18 serting ‘‘2008’’. 

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

20 section shall apply to benefits for services furnished after 

21 December 31, 2007. 

Attest: 

Clerk.