II 

109TH CONGRESS 

2D SESSION S. 3607 

To amend title IV of the Social Security Act to ensure funding for grants 

to promote responsible fatherhood and strengthen low-income families, 

and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JUNE 29, 2006 

Mr. BAYH (for himself and Mr. OBAMA) introduced the following bill; which 

was read twice and referred to the Committee on Finance 

A BILL 

To amend title IV of the Social Security Act to ensure 

funding for grants to promote responsible fatherhood 

and strengthen low-income families, and for other purposes. 

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

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

5 ‘‘Responsible Fatherhood and Healthy Families Act of 

6 2006’’. 

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

8 this Act is as follows: 


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Sec. 1. Short title; table of contents. 

Sec. 2. Findings. 

TITLE I—PROMOTING RESPONSIBLE FATHERHOOD AND 

STRENGTHENING LOW-INCOME FAMILIES 

Sec. 101. Healthy marriage promotion and responsible fatherhood programs. 

Sec. 102. Grants to healthy family partnerships for domestic violence prevention, for services for families and individuals affected by domestic violence, and for developing and implementing best 

practices. 

Sec. 103. Elimination of separate TANF work participation rate for 2-PARENT families. 

Sec. 104. Ban on Recovery of Medicaid Costs for Births. 

Sec. 105. Improved collection and distribution of child support. 

Sec. 106. Grants to States to conduct demonstration projects to promote economic opportunity for low-income parents. 

Sec. 107. State assessments of barriers to employment and financial support of 

children. 

Sec. 108. Collection of child support under the food stamp program. 

TITLE II—REVENUE PROVISIONS 

Sec. 201. Modifications to the earned income tax credit. 

Sec. 202. Tax treatment of inverted entities. 

Sec. 203. Tax treatment of controlled foreign corporations established in tax 

havens. 

Sec. 204. Taxation of income of controlled foreign corporations attributable to 

imported property. 

1 SEC. 2. FINDINGS. 

2 Congress makes the following findings: 

3 (1) The most important factor in a child’s up4 bringing is whether the child is brought up in a lov5 ing, healthy, supportive environment. 

6 (2) Children who grow up with both parents are 

7 more likely to finish high school, be economically 

8 self-sufficient, and to have a healthier lifestyle than 

9 their peers who grow up in single-parent homes. 

10 (3) Father-child interaction has been shown to 

11 promote the positive physical, social, emotional, and 

12 mental development of children. 


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1 (4) Children typically live without both parents 

2 when their parents are divorced or did not marry. 

More than 1 3 ⁄3 of all first marriages end in divorce, 

4 and 60 percent of divorcing couples have children. 

More than 1 5 ⁄3 of all births are to unmarried women. 

6 (5) More than 1 in 4 families with children 

7 have only 1 parent present, and more than 1 in 3 

8 children live absent their biological father. 

9 (6) Recent studies demonstrate that most 

10 unwed fathers in urban areas are highly involved 

11 with the mother of their child before and after the 

12 child’s birth, with 80 percent involved during the 

13 mother’s pregnancy, and 50 percent living with the 

14 child’s mother at the time of the child’s birth. How15 ever, the relationship between the parents often does 

16 not last, and fathers do not maintain contact with 

17 their children as the children grow up. 

18 (7) An estimated 40 percent of the children 

19 who live in households without their father have not 

20 seen their fathers in at least 1 year. 

21 (8) The inability of parents to sustain a healthy 

22 relationship with their child’s other parent and re23 main involved in their child’s life can have severe 

24 negative consequences for the parents, the child, 

25 their community, and taxpayers. 


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1 (9) Single-parent families are 5 times as likely 

2 to be poor as married-couple families. 

3 (10) Children raised in single-parent families 

4 are more likely than children raised in 2-parent fam5 ilies to do poorly in school, have emotional and be6 havioral problems, become teenage parents, commit 

7 crimes, smoke cigarettes, abuse drugs and alcohol, 

8 and have poverty-level incomes as adults. 

9 (11) Male unemployment and low wages are 

10 primary reasons why parents do not marry, why 2- 

11 parent families break up, and why fathers fail to re12 main involved with their children. In 2004, half of 

13 African-American young men lacked jobs. 

14 (12) Domestic violence is also a significant 

15 problem leading to the non-formation or break-up of 

16 2-parent families. 

17 (13) A history of incarceration is a major bar18 rier to employment. 60 percent of African-American 

19 men who dropped out of high school have served 

20 time. When these men leave prison, they often have 

21 difficulty finding a job and supporting their children. 

(14) Over 1 22 ⁄2 of State prison inmates are par23 ents. When parents go to prison, their child support 

24 obligations continue, even though they have little 

25 ability to pay the support. When these parents leave 


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1 prison, they typically owe more than $20,000 in 

2 child support debt. Parents leaving prison often re3 enter the underground economy because of financial 

4 pressures or to avoid the child support system, mak5 ing it less likely that they will successfully rejoin so6 ciety and reunite with their families. 

7 (15) Children should receive the child support 

8 paid by their parents, and the government should 

9 not keep the money to recover welfare costs. Regular 

10 child support income appears to have a greater posi11 tive impact on children dollar for dollar than other 

12 types of income. Researchers in Wisconsin found 

13 that when monthly child support was passed through 

14 to families receiving assistance under the Temporary 

15 Assistance for Needy Families program established 

16 under part A of title IV of the Social Security Act 

17 (TANF) and disregarded 100 percent in determining 

18 assistance for the families, fathers paid more child 

19 support, established their legal relationship with 

20 their children more quickly, and worked less in the 

21 underground economy. Moreover, the State costs of 

22 a full pass-through and disregard of child support 

23 were fully offset by increased payments by fathers 

24 and decreased public assistance use by families. 


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1 (16) Current law permits States to apply the 

2 cost of passing through child support to families re3 ceiving assistance under the TANF program toward 

4 their maintenance of effort (MOE) requirements, 

5 but only to the extent that the State disregards the 

6 child support payments in determining the amount 

7 and type of TANF assistance. 

8 (17) Programs that increase employment oppor9 tunity and reduce barriers by increasing employment 

10 opportunity and reducing recidivism will benefit chil11 dren and families. 

12 (18) Transitional jobs programs have shown 

13 promise in reducing unemployment among chron14 ically unemployed or underemployed population 

15 groups, including formerly incarcerated individuals, 

16 the homeless, and young African-American men. 

17 (19) To strengthen families it is important to 

18 improve the upward economic mobility of the custo19 dial and noncustodial parent wage-earners, as well 

20 as youth at risk of early fatherhood or incarceration, 

21 by providing the skills and experience necessary to 

22 access jobs with family-sustaining wages and bene23 fits. In families in which all the members do not live 

24 together, this is important to enable the prompt and 

25 consistent payment of adequate child support. 


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1 (20) It is important and useful to foster local 

2 and regional economic development and job advance3 ment for workers, especially young custodial and 

4 noncustodial parents, by funding local collaborations 

5 among business, education, and the community in 

6 the development of pathways for preparing disadvan7 taged citizens to meet the workforce needs of the 

8 local and regional economy. 

9 (21) Employers benefit from working with and 

10 being supported by the local education, post-sec11 ondary and workforce systems in identifying the aca12 demic and occupational skill sets needed to fill the 

13 skilled jobs in the changing economy. Local eco14 nomic and community development is enhanced 

15 when residents have access to higher wage employ16 ment, thus increasing the tax base, fueling the econ17 omy, and contributing to greater family economic se18 curity. 

19 (22) Public-private career pathways partner20 ships are an important tool for linking employers 

21 and workers with the workforce education services 

22 they need and for integrating community economic 

23 development and workforce education services. Tran24 sitional jobs programs can serve as the first step in 

25 a career pathway by giving unemployed individuals 


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1 with multiple barriers to employment, valuable work 

2 experience and related services. 

3 (23) The purpose of child support is to provide 

4 necessary income support for and increase the well5 being of children living apart from a parent. To im6 prove the ability of low-income fathers to provide 

7 long-term support and care for their children 

8 throughout their entire childhood, it is important 

9 that child support polices support parental efforts to 

10 pursue education and employment and to stay in11 volved with their children 

12 (24) Responsible fatherhood includes active par13 ticipation in financial support and child-rearing, as 

14 well as the formation and maintenance of a positive, 

15 healthy, and nonviolent relationship between father 

16 and child and a cooperative, healthy, and nonviolent 

17 relationship between parents. 

18 (25) States should be encouraged to implement 

19 voluntary programs that provide support for respon20 sible parenting, including by increasing the employ21 ment, financial security, and parental involvement of 

22 noncustodial parents. 

23 (26) Promoting responsible fatherhood saves 

24 the government money by reducing the need for pub25 lic assistance, increasing the educational attainment 


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1 of children, juvenile delinquency and crime, reducing 

2 substance abuse, and lowering rates of unemploy3 ment. 

4 (27) Responsible fatherhood programs should 

5 promote and provide support services for— 

6 (A) fostering loving and healthy relation7 ships between parents and children; 

8 (B) increasing responsibility of noncusto9 dial parents for the long-term care and finan10 cial well-being of their children; 

11 (C) increasing employment of low-income, 

12 noncustodial parents and improving compliance 

13 with child support obligations; and 

14 (D) reducing barriers to active 2-parent in15 volvement and cooperative parenting. 

16 (28) The promotion of responsible fatherhood 

17 should not denigrate the standing or parenting ef18 forts of single mothers or other caregivers, lessen the 

19 protection of children from abusive parents, or com20 promise the safety or health of the custodial or non21 custodial parent, but should increase the chance that 

22 children will have 2 caring parents to help them 

23 grow up healthy and secure. 


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1 TITLE I—PROMOTING RESPON2 SIBLE FATHERHOOD AND 

3 STRENGTHENING LOW-IN4 COME FAMILIES 

5 SEC. 101. HEALTHY MARRIAGE PROMOTION AND RESPON6 SIBLE FATHERHOOD PROGRAMS. 

7 (a) ENSURING FUNDING FOR RESPONSIBLE FA8 THERHOOD PROGRAMS.—Section 403(a)(2)(C) of the So9 cial Security Act (42 U.S.C. 603(a)(2)(C)) is amended— 

10 (1) in the subparagraph heading, by striking 

11 ‘‘LIMITATION ON USE OF’’ and inserting ‘‘REQUIRE12 MENT TO USE CERTAIN’’; and 

13 (2) in clause (i), by striking ‘‘may not award 

14 more than $50,000,000’’ and inserting ‘‘shall award 

15 at least $100,000,000’’. 

16 (b) REQUIREMENTS TO ENSURE PROCEDURES TO

17 ADDRESS DOMESTIC VIOLENCE PREVENTION.— 

18 (1) IN GENERAL.—Section 403(a)(2) of the So19 cial Security Act (42 U.S.C. 603(a)(2)) is amend20 ed— 

21 (A) by redesignating subparagraph (D) as 

22 subparagraph (G); and 

23 (B) by inserting after subparagraph (C) 

24 the following new subparagraphs: 


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1 ‘‘(D) REQUIREMENTS FOR RECEIPT OF

2 FUNDS.—An entity may not be awarded a grant 

3 under this paragraph unless the entity, as a 

4 condition of receiving funds under such a 

5 grant— 

6 ‘‘(i) consults with domestic violence 

7 organizations that have demonstrated ex8 pertise working with survivors of domestic 

9 violence in developing policies, procedures, 

10 programs and training necessary to appro11 priately address domestic violence in fami12 lies served by programs and activities 

13 funded under such grant; 

14 ‘‘(ii) describes in the application for a 

15 grant under this paragraph— 

16 ‘‘(I) how the programs or activi17 ties proposed to be conducted will ap18 propriately address issues of domestic 

19 violence; and 

20 ‘‘(II) what the entity will do, to 

21 the extent relevant, to ensure that 

22 participation in such programs or ac23 tivities is voluntary, and to inform po24 tential participants that their involve25 ment is voluntary; 


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1 ‘‘(iii) establishes a written protocol for 

2 providers and administrators of programs 

3 and activities relevant to the grant that— 

4 ‘‘(I) provides for helping identify 

5 instances or risks of domestic violence; 

6 and 

7 ‘‘(II) specifies the procedures for 

8 making service referrals and providing 

9 protections and appropriate assistance 

10 for identified individuals and families; 

11 and 

12 ‘‘(iv) submits the annual reports re13 quired under subparagraph (E). 

14 ‘‘(E) ANNUAL REPORTS TO THE SEC15 RETARY.—Each entity awarded a grant under 

16 this paragraph shall submit to the Secretary an 

17 annual report on the programs and activities 

18 funded under the grant that includes the fol19 lowing: 

20 ‘‘(i) A description of the written pro21 tocols developed in accordance with the re22 quirements of subparagraph (D)(iii) for 

23 each program or activity funded under the 

24 grant and how such protocols are used, in25 cluding specific policies and procedures for 


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1 addressing domestic violence issues within 

2 each program or activity funded under the 

3 grant and how confidentiality issues are 

4 addressed. 

5 ‘‘(ii) The name of each individual, or6 ganization, or entity that was consulted in 

7 the development of such protocols. 

8 ‘‘(iii) A description of each individual, 

9 organization, or entity (if any) that pro10 vided training on domestic violence for the 

11 entity or for any subgrantees. 

12 ‘‘(iv) A description of any implemen13 tation issues identified with respect to do14 mestic violence and how such issues were 

15 addressed. 

16 ‘‘(F) DOMESTIC VIOLENCE DEFINED.—In 

17 this paragraph, the term ‘domestic violence’ has 

18 the meaning given that term in section 

19 402(a)(7)(B).’’. 

20 (2) CONFORMING AMENDMENTS.—Section 

21 403(a)(2) of such Act (42 U.S.C. 603(a)(2)) is 

22 amended— 

23 (A) in subparagraph (A)(i)— 

24 (i) by striking ‘‘(B) and (C)’’ and in25 serting ‘‘(B), (C), (D), and (E)’’; and 


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1 (ii) by striking ‘‘subparagraph (D)’’ 

2 and inserting ‘‘subparagraph (G)’’; 

3 (B) in subparagraphs (B)(i) and (C)(i), by 

4 striking ‘‘(D)’’ each place it appears and insert5 ing ‘‘(G)’’; and 

6 (C) in subparagraph (G) (as redesignated 

7 by paragraph (1)(A)), by striking 

8 ‘‘$150,000,000 for each of fiscal years 2006 

9 through 2010’’ and inserting ‘‘$150,000,000 

10 for fiscal year 2006 and $200,000,000 for each 

11 of fiscal years 2007 through 2010’’. 

12 (c) ASSURANCE OF VOLUNTARY PARTICIPATION.— 

13 Section 403(a)(2)(A)(ii)(II) of the Social Security Act (42 

14 U.S.C. 603(a)(2)(A)(ii)(II)) is amended— 

15 (1) in item (aa), by striking ‘‘and’’ at the end; 

16 (2) in item (bb), by striking the period at the 

17 end and inserting a semicolon; and 

18 (3) by adding at the end the following new 

19 items: 

20 ‘‘(cc) to not condition the re21 ceipt of assistance under the pro22 gram funded under this part, 

23 under a program funded with 

24 qualified State expenditures (as 

25 defined in section 


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1 409(a)(7)(B)(i)), or under any 

2 other program funded under this 

3 title on enrollment in any such 

4 programs or activities; and 

5 ‘‘(dd) to permit any indi6 vidual who has begun to partici7 pate in a particular program or 

8 activity funded under this para9 graph, including an individual 

10 whose participation is specified in 

11 the individual responsibility plan 

12 developed for the individual in 

13 accordance with section 408(b), 

14 to transfer to another such pro15 gram or activity funded under 

16 this paragraph upon notification 

17 to the entity and the State agen18 cy responsible for administering 

19 the State program funded under 

20 this part.’’. 

21 (d) ACTIVITIES PROMOTING RESPONSIBLE FATHER22 HOOD.—Section 403(a)(2)(C)(ii) of the Social Security 

23 Act (42 U.S.C. 603(a)(2)(C)(ii)) is amended— 

24 (1) in subclause (I), by striking ‘‘marriage or 

25 sustain marriage’’ and insert ‘‘healthy relationships 


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1 and marriages or to sustain healthy relationships or 

2 marriages’’; 

3 (2) in subclause (II), by inserting ‘‘educating 

4 youth who are not yet parents about the economic, 

5 social, and family consequences of early parenting, 

6 helping participants in fatherhood programs work 

7 with their own children to break the cycle of early 

8 parenthood,’’ after ‘‘child support payments,’’; and 

9 (3) in subclause (III), by striking ‘‘fathers’’ and 

10 inserting ‘‘low-income fathers and other low-income 

11 noncustodial parents whom are not eligible for as12 sistance under the State program funded under this 

13 part’’. 

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

15 this section shall take effect on October 1, 2006. 

16 SEC. 102. GRANTS TO HEALTHY FAMILY PARTNERSHIPS 

17 FOR DOMESTIC VIOLENCE PREVENTION, FOR 

18 SERVICES FOR FAMILIES AND INDIVIDUALS 

19 AFFECTED BY DOMESTIC VIOLENCE, AND 

20 FOR DEVELOPING AND IMPLEMENTING BEST 

21 PRACTICES. 

22 Section 403(a) of the Social Security Act (42 U.S.C. 

23 603(a)) is amended by adding at the end the following 

24 new paragraph: 


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1 ‘‘(6) GRANTS TO HEALTHY FAMILY PARTNER2 SHIPS FOR DOMESTIC VIOLENCE PREVENTION, FOR

3 SERVICES FOR FAMILIES AND INDIVIDUALS AF4 FECTED BY DOMESTIC VIOLENCE, AND FOR DEVEL5 OPING AND IMPLEMENTING BEST PRACTICES.— 

6 ‘‘(A) IN GENERAL.—The Secretary shall 

7 award grants on a competitive basis to healthy 

8 family partnerships to— 

9 ‘‘(i) conduct programs and activities 

10 that are designed to prevent domestic vio11 lence; 

12 ‘‘(ii) provide services for victims of do13 mestic violence; and 

14 ‘‘(iii) develop and implement best 

15 practices for preventing domestic violence, 

16 particularly as a barrier to economic secu17 rity, and for providing services to families 

18 and individuals affected by such violence 

19 including through caseworker training and 

20 the provision of technical assistance. 

21 ‘‘(B) EDUCATION SERVICES.—In awarding 

22 grants under subparagraph (A), the Secretary 

23 shall ensure that 10 percent of the funds made 

24 available under such grants are used for high 

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1 tions and institutions of higher education to 

2 provide education services on the value of 

3 healthy relationships, responsible parenting, 

4 and healthy marriages characterized by mutual 

5 respect and non-violence, and the importance of 

6 building relationships skills such as communica7 tion, conflict resolution, and budgeting. 

8 ‘‘(C) APPLICATION.—The respective entity 

9 and organization of a healthy family partner10 ship entered into for purposes of receiving a 

11 grant under this paragraph shall submit a joint 

12 application to the Secretary, at such time and 

13 in such manner as the Secretary shall specify, 

14 containing— 

15 ‘‘(i) a description of how the partner16 ship intends to carry out the activities de17 scribed in subparagraph (A); 

18 ‘‘(ii) an assurance that funds made 

19 available under the grant shall be used to 

20 supplement, and not supplant, other funds 

21 used by the entity or organization to carry 

22 out programs, activities, or services de23 scribed in subparagraph (A) or (B); and 

24 ‘‘(iii) such other information as the 

25 Secretary may require. 


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1 ‘‘(D) GENERAL RULES GOVERNING USE OF

2 FUNDS.—The rules of section 404, other than 

3 subsection (b) of that section, shall not apply to 

4 a grant made under this paragraph. 

5 ‘‘(E) DEFINITIONS.—In this paragraph: 

6 ‘‘(i) DOMESTIC VIOLENCE.—The term 

7 ‘domestic violence’ has the meaning given 

8 that term in section 402(a)(7)(B). 

9 ‘‘(ii) HEALTHY FAMILY PARTNER10 SHIP.—The term ‘healthy family partner11 ship’ means a partnership between— 

12 ‘‘(I) an entity receiving funds 

13 under a grant made under paragraph 

14 (2) to promote healthy marriage or re15 sponsible fatherhood; and 

16 ‘‘(II) an organization described 

17 in paragraph (2)(D)(i). 

18 ‘‘(F) APPROPRIATION.—Out of any money 

19 in the Treasury of the United States not other20 wise appropriated, there are appropriated for 

21 each of fiscal years 2007 through 2010, 

22 $25,000,000 for purposes of awarding grants to 

23 healthy family partnerships under this para24 graph.’’. 


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1 SEC. 103. ELIMINATION OF SEPARATE TANF WORK PAR2 TICIPATION RATE FOR 2-PARENT FAMILIES. 

3 (a) IN GENERAL.—Section 407 of the Social Security 

4 Act (42 U.S.C. 607) is amended— 

5 (1) in subsection (a)— 

6 (A) beginning in the heading, by striking 

7 ‘‘PARTICIPATION RATE REQUIREMENTS’’ and 

8 all that follows through ‘‘A State’’ in paragraph 

9 (1) and inserting ‘‘PARTICIPATION RATE RE10 QUIREMENTS.—A State’’; and 

11 (B) by striking paragraph (2); 

12 (2) in subsection (b)— 

13 (A) in paragraph (1)(A), by striking ‘‘sub14 section (a)(1)’’ and inserting ‘‘subsection (a)’’; 

15 (B) in paragraph (2), by striking the para16 graph heading and all that follows through ‘‘A 

17 family’’ and inserting ‘‘SPECIAL RULE.—A fam18 ily’’; 

19 (C) in paragraph (4), by striking ‘‘para20 graphs (1)(B) and (2)(B)’’ and inserting ‘‘de21 termining monthly participation rates under 

22 paragraph (1)(B)’’; and 

23 (D) in paragraph (5), by striking ‘‘rates’’ 

24 and inserting ‘‘rate’’; and 

25 (3) in subsection (c)— 


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1 (A) in paragraph (1)(B), in the matter 

2 preceding clause (i), by striking ‘‘subsection 

3 (b)(2)(B)’’ and inserting ‘‘subsection 

4 (b)(1)(B)(i)’’; and 

5 (B) in paragraph (2)(D)— 

6 (i) by striking ‘‘paragraphs (1)(B)(i) 

7 and (2)(B) of subsection (b)’’ and insert8 ing ‘‘subsection (b)(1)(B)(i)’’; and 

9 (ii) by striking ‘‘and in 2-parent fami10 lies, respectively,’’. 

11 (b) EFFECTIVE DATE.— 

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

13 subsection (a) shall take effect on the date of enact14 ment of this Act and shall apply to the determina15 tion of minimum participation rates for months be16 ginning on or after that date. 

17 (2) LIMITATION ON PENALTY IMPOSITION.— 

18 Notwithstanding section 409(a)(3) of the Social Se19 curity Act, the Secretary of Health and Human 

20 Services shall not impose a penalty against a State 

21 under that section on the basis of the State’s failure 

22 to satisfy the participation rate required for fiscal 

23 year 2006 if the State demonstrates that the State 

24 would have met such requirement if, with respect to 

25 those months of fiscal year 2006 that began prior to 


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1 or on the date of enactment of this Act, the State 

2 were permitted to count 2-parent families that met 

3 the requirements of section 407(c)(1)(A) of the So4 cial Security Act (42 U.S.C. 607(c)(1)(A)) in the de5 termination of monthly participation rates under 

6 section 407(b)(1)(B)(i) of such Act (42 U.S.C. 

7 607(b)(1)(B)(i)). 

8 SEC. 104. BAN ON RECOVERY OF MEDICAID COSTS FOR 

9 BIRTHS. 

10 (a) BAN ON RECOVERY.— 

11 (1) IN GENERAL.—Section 454 of the Social 

12 Security Act (42 U.S.C. 654), as amended by sec13 tion 7301(B)(1)(C) of the Deficit Reduction Act of 

14 2005 (Public Law 109–171), is amended— 

15 (A) by striking ‘‘and’’ at the end of para16 graph (33); 

17 (B) by striking the period at the end of 

18 paragraph (34) and inserting ‘‘; and’’; and 

19 (C) by inserting after paragraph (34) the 

20 following: 

21 ‘‘(35) provide that, except as provided in sec22 tion 1902(a)(25)(F)(ii), the State shall not use the 

23 State program operated under this part to collect 

24 any amount owed to the State by reason of costs in25 curred under the State plan approved under title 


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1 XIX for the birth of a child for whom support rights 

2 have been assigned pursuant to section 471(a)(17) 

3 or 1912.’’. 

4 (2) RULE OF CONSTRUCTION.—Nothing in sec5 tion 454(35) of the Social Security Act (42 U.S.C. 

6 654(35)), as added by paragraph (1), shall be con7 strued as affecting the application of section 

8 1902(a)(25) of such Act (42 U.S.C. 1396a(a)(25)) 

9 with respect to a State (relating to the State Med10 icaid plan requirement for the State to take all rea11 sonable measures to ascertain the legal liability of 

12 third parties to pay for care and services available 

13 under the plan). 

14 (b) CLARIFICATION THAT BAN ON RECOVERY DOES

15 NOT APPLY WITH RESPECT TO INSURANCE OF A PARENT

16 WITH AN OBLIGATION TO PAY CHILD SUPPORT.—Sec17 tion 1902(a)(25)(F) of the Social Security Act (42 U.S.C. 

18 1396a(a)(25)(F)) is amended— 

19 (1) in clause (i), by adding ‘‘add’’ after the 

20 semicolon; and 

21 (2) in clause (ii), by inserting ‘‘only if such 

22 third-party liability is derived through insurance,’’ 

23 before ‘‘seek’’. 

24 (c) EFFECTIVE DATE.— 


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

3 take effect on October 1, 2006. 

4 (2) EXTENSION OF EFFECTIVE DATE FOR

5 STATE LAW AMENDMENT.—In the case of a State 

6 plan under title XIX of the Social Security Act (42 

7 U.S.C. 1396 et seq.) which the Secretary of Health 

8 and Human Services determines requires State legis9 lation in order for the plan to meet the additional 

10 requirements imposed by the amendments made by 

11 this section, the State plan shall not be regarded as 

12 failing to comply with the requirements of such title 

13 solely on the basis of its failure to meet these addi14 tional requirements before the first day of the first 

15 calendar quarter beginning after the close of the 

16 first regular session of the State legislature that be17 gins after the date of enactment of this Act. For 

18 purposes of the previous sentence, in the case of a 

19 State that has a 2-year legislative session, each year 

20 of the session is considered to be a separate regular 

21 session of the State legislature. 

22 SEC. 105. IMPROVED COLLECTION AND DISTRIBUTION OF 

23 CHILD SUPPORT. 

24 (a) DISTRIBUTION OF CHILD SUPPORT.— 


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1 (1) FULL DISTRIBUTION OF CHILD SUPPORT

2 COLLECTED; REFORM OF RULES FOR DISTRIBUTION

3 OF CHILD SUPPORT COLLECTED ON BEHALF OF

4 CHILDREN IN FOSTER CARE.— 

5 (A) IN GENERAL.—Section 457 of the So6 cial Security Act (42 U.S.C. 657) is amended— 

7 (i) by striking subsection (a) and in8 serting the following: 

9 ‘‘(a) FULL DISTRIBUTION OF AMOUNTS COLLECTED

10 ON BEHALF OF ANY FAMILY.—Subject to subsection (c), 

11 the entire amount collected on behalf of any family as sup12 port by a State pursuant to a plan approved under this 

13 part shall be paid by the State to the family.’’; and 

14 (ii) by striking subsections (c) 

15 through (e) and inserting the following: 

16 ‘‘(c) AMOUNTS COLLECTED FOR CHILD FOR WHOM

17 FOSTER CARE MAINTENANCE PAYMENTS ARE MADE.— 

18 Notwithstanding the preceding provisions of this section, 

19 amounts collected by a State as child support for months 

20 in any period on behalf of a child for whom a public agen21 cy is making foster care maintenance payments under part 

22 E shall be paid to the public agency responsible for super23 vising the placement of the child, which may use the pay24 ments in the manner it determines will serve the best in25 terests of the child, including setting such payments aside 


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1 for the child’s future needs, depositing the funds in a child 

2 asset account, or making all or a part thereof available 

3 to the person responsible for meeting the child’s day-to4 day needs.’’. 

5 (B) FOSTER CARE STATE PLAN AMEND6 MENT.—Section 471(a)(17) of the Social Secu7 rity Act (42 U.S.C. 671(a)(17)) is amended— 

8 (i) by inserting ‘‘and consistent with 

9 the child’s case plan’’ after ‘‘where appro10 priate’’; and 

11 (ii) by striking ‘‘secure an assignment 

12 to the State of any rights to support’’ and 

13 inserting ‘‘establish and enforce child sup14 port obligations’’. 

15 (2) CONFORMING AMENDMENTS.— 

16 (A) Section 409(a)(7)(B)(i)(I)(aa) of such 

17 Act (42 U.S.C. 609(a)(7)(B)(i)(I)(aa)) is 

18 amended by striking ‘‘457(a)(1)(B)’’ and in19 serting ‘‘457(a)’’. 

20 (B) Section 454(5) of such Act (42 U.S.C. 

21 654(5)) is amended by striking ‘‘(A) in any 

22 case’’ and all that follows through ‘‘(B)’’. 

23 (C) Paragraphs (1)(B) and (2)(B) of sec24 tion 457(b) of such Act (42 U.S.C. 657(b)), as 

25 amended by section 7301(c) of the Deficit ReVerDate Aug 31 2005 02:26 Jul 04, 2006 Jkt 049200 PO 00000 Frm 00026 Fmt 6652 Sfmt 6201 E:\BILLS\S3607.IS S3607

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1 duction Act of 2005 (Public Law 109–171; 120 

2 Stat. 141), is amended by striking ‘‘in accord3 ance with subsection (a)(4)’’ each place it ap4 pears. 

5 (D) Section 466(a)(3)(B) of such Act (42 

6 U.S.C. 666(a)(3)(B)) is amended by striking 

7 ‘‘408(a)(3) or’’. 

8 (3) REPEAL OF CERTAIN DRA AMENDMENTS.— 

9 Effective on the date of enactment of this Act, sub10 sections (a) and (b) of section 7301 of the Deficit 

11 Reduction Act of 2005 (Public Law 109–171; 120 

12 Stat. 141) are repealed and parts A and D of title 

13 IV of the Social Security Act shall be applied as if 

14 the amendments made by such subsections had not 

15 been enacted. 

16 (b) PROHIBITION ON CONDITIONING RECEIPT OF

17 TANF ON ASSIGNMENT OF SUPPORT.—Section 408(a)(3) 

18 of the Social Security Act (42 U.S.C. 608(a)(3)) is amend19 ed— 

20 (1) in the paragraph heading, by striking ‘‘NO

21 ASSISTANCE FOR FAMILIES NOT’’ and inserting 

22 ‘‘PROHIBITION ON CONDITIONING ASSISTANCE FOR

23 FAMILIES ON’’; 

24 (2) by inserting ‘‘not’’ after ‘‘shall’’; 


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1 (3) by inserting ‘‘or under a program funded 

2 with qualified State expenditures (as defined in sec3 tion 409(a)(7)(B)(i))’’ after ‘‘this part’’; and 

4 (4) by striking ‘‘, not exceeding the total 

5 amount of assistance so paid to the family,’’. 

6 (c) REQUIREMENT TO DISREGARD PERCENTAGE OF

7 CHILD SUPPORT COLLECTED IN DETERMINING AMOUNT

8 AND TYPE OF TANF ASSISTANCE.—Section 408(a) of the 

9 Social Security Act (42 U.S.C. 608(a)) is amended by add10 ing at the end the following new paragraph: 

11 ‘‘(12) REQUIREMENT TO DISREGARD PERCENT12 AGE OF CHILD SUPPORT COLLECTED IN DETER13 MINING AMOUNT AND TYPE OF TANF ASSISTANCE.— 

14 A State to which a grant is made under section 403 

15 shall disregard at least the same percentage of 

16 amounts collected as support on behalf of a family 

17 as the percentage of earned income that the State 

18 disregards in determining the amount or type of as19 sistance provided to the family under the State pro20 gram funded under this part or under a program 

21 funded with qualified State expenditures (as defined 

22 in section 409(a)(7)(B)(i)).’’. 

23 (d) RESTORATION OF FEDERAL FUNDING.—Effec24 tive on the date of enactment of this Act, section 7309 

25 of the Deficit Reduction Act of 2005 (Public Law 109– 


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1 171; 120 Stat. 147) is repealed and part D of title IV 

2 of the Social Security Act shall be applied as if the amend3 ment made by subsection (a) of that section had not been 

4 enacted. 

5 (e) REPEAL OF MANDATORY FEE FOR CHILD SUP6 PORT COLLECTION.—Effective on the date of enactment 

7 of this Act, section 7310 of the Deficit Reduction Act of 

8 2005 (Public Law 109–171; 120 Stat. 147) is repealed 

9 and part D of title IV of the Social Security Act shall 

10 be applied as if the amendments made by that section had 

11 not been enacted. 

12 (f) PROHIBITION ON CONSIDERING A PERIOD OF IN13 CARCERATION VOLUNTARY UNEMPLOYMENT.—Section 

14 466(a) of the Social Security Act (42 U.S.C. 666(a)) is 

15 amended by inserting after paragraph (19) the following 

16 new paragraph: 

17 ‘‘(20) PROCEDURES RELATING TO PERIODS OF

18 INCARCERATION OF NONCUSTODIAL PARENTS.— 

19 ‘‘(A) IN GENERAL.—Procedures which re20 quire that, in determining or modifying the 

21 amount of, or terms and conditions of, any sup22 port obligation of a noncustodial parent, the 

23 State— 

24 ‘‘(i) shall not consider any period of 

25 incarceration of such parent as a period of 


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1 voluntary employment that disqualifies the 

2 parent from obtaining a review and adjust3 ment, if appropriate, of the support obliga4 tion; and 

5 ‘‘(ii) subject to subparagraph (B) in 

6 the case of an incarcerated parent, shall— 

7 ‘‘(I) temporarily suspend any 

8 support obligation on the parent and 

9 the enforcement of any support obli10 gation of the parent existing prior to 

11 the period of incarceration; and 

12 ‘‘(II) temporarily prohibit the ac13 crual of any interest on any support 

14 obligation of the parent existing prior 

15 to the period of incarceration during 

16 any such period. 

17 ‘‘(B) NOTICE AND OPPORTUNITY TO CHAL18 LENGE SUSPENSION.—Such procedures shall re19 quire the State to provide a custodial parent 

20 with— 

21 ‘‘(i) notice of any suspension of re22 view, adjustment, or enforcement of a sup23 port obligation and of any prohibition on 

24 interest accrual on such obligation that is 


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1 imposed in accordance with subparagraph 

2 (A)(ii); and 

3 ‘‘(ii) an opportunity to request that 

4 the suspension or prohibition be termi5 nated or modified on the basis that the 

6 noncustodial parent has sufficient income 

7 or resources to continue payment of the 

8 support obligation during the noncustodial 

9 parent’s period of incarceration.’’. 

10 (g) FORGIVING OR OTHER MODIFICATION OF CHILD

11 SUPPORT ARREARAGES ASSIGNED TO THE STATE.—Sec12 tion 466(a)(9) of the Social Security Act (42 U.S.C. 

13 666(a)(9)) is amended in the flush matter following sub14 paragraph (C), by inserting the following new sentence at 

15 the end: ‘‘Nothing in this paragraph shall be construed 

16 as prohibiting a State from forgiving, compromising, re17 ducing or waiving arrearages permanently assigned to the 

18 State under part A or E of this title or under title XIX.’’. 

19 (h) REVIEW AND ADJUSTMENT OF CHILD SUPPORT

20 ARREARAGES UPON REQUEST.—Section 466(a)(10) of 

21 the Social Security Act (42 U.S.C. 666(a)(10)) is amend22 ed by adding at the end the following new subparagraph: 

23 ‘‘(D) REVIEW AND ADJUSTMENT OF AR24 REARAGES.—Procedures which require the 

25 State to review, and if appropriate, reduce the 


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•S 3607 IS

1 balance of arrearages permanently assigned to 

2 the State under part A or E of this title, or 

3 under title XIX , pursuant to standards and 

4 procedures established by the State, in cases 

5 where the obligor lacks sufficient ability to pay 

6 the arrears, adjustment will promote timely 

7 payment of current support, or barriers, such 

8 as incarceration, may have limited the ability of 

9 the obligor to timely seek a modification of the 

10 order, and it is in the best interests of the child 

11 to make such reduction. Nothing in the pre12 ceding sentence shall be construed as affecting 

13 arrearages that have not been permanently as14 signed to the State under such part or title.’’. 

15 (i) STUDY AND REPORT.—Not later than October 1, 

16 2007, the Secretary of Health and Human Services shall 

17 study and submit a report to Congress regarding the fol18 lowing: 

19 (1) The effect of age eligibility restrictions for 

20 the earned income tax credit established under sec21 tion 32 of the Internal Revenue Code of 1986 for in22 dividuals without qualifying children on— 

23 (A) the ability of young parents to pay 

24 child support; 


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1 (B) compliance with child support orders; 

2 and 

3 (C) the relationship between young non4 custodial parents and their children. 

5 (2) The impact of State earned income tax 

6 credit programs, especially such programs with tar7 geted benefits for noncustodial parents, on— 

8 (A) the ability of noncustodial parents to 

9 pay child support; 

10 (B) compliance with child support orders; 

11 and 

12 (C) the relationship between noncustodial 

13 parents and their children. 

14 (3) The challenges faced by legal immigrants 

15 and individuals for whom English is not their pri16 mary language in fulfilling child support and other 

17 noncustodial parenting obligations. 

18 (j) EFFECTIVE DATE.— 

19 (1) IN GENERAL.—Except as otherwise pro20 vided in this section, the amendments made by this 

21 section shall take effect on October 1, 2009, and 

22 shall apply to payments under parts A and D of title 

23 IV of the Social Security Act for calendar quarters 

24 beginning on or after that date, and without regard 


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1 to whether regulations to implement the amend2 ments are promulgated by such date. 

3 (2) STATE OPTION TO ACCELERATE EFFECTIVE

4 DATE.—Notwithstanding paragraph (1), a State 

5 may elect to have the amendments made by the pre6 ceding provisions of this section apply to the State 

7 and to amounts collected by the State (and to pay8 ments under parts A and D of title IV of such Act), 

9 on and after such date as the State may select that 

10 is not earlier than October 1, 2006, and not later 

11 than September 30, 2009. 

12 SEC. 106. GRANTS TO STATES TO CONDUCT DEMONSTRA13 TION PROJECTS TO PROMOTE ECONOMIC OP14 PORTUNITY FOR LOW-INCOME PARENTS. 

15 (a) AUTHORITY TO AWARD GRANTS.—The Secretary 

16 of Health and Human Services, in consultation with the 

17 Secretary of Labor, shall award grants to States to con18 duct demonstration projects to carry out one or more of 

19 the purposes described in subsection (b). 

20 (b) PURPOSES DESCRIBED.—For purposes of sub21 section (a), the purposes described in this subsection are 

22 the following: 

23 (1) COURT-SUPERVISED OR IV–D AGENCY-SU24 PERVISED EMPLOYMENT PROGRAMS FOR NONCUSTO25 DIAL PARENTS.— 


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1 (A) IN GENERAL.—To establish, in coordi2 nation with counties and other local or tribal 

3 governments, court-supervised or IV–D agency 

4 supervised-employment programs for noncusto5 dial parents who have barriers to employment 

6 and a history of nonpayment of child support 

7 obligations, as determined by a court or the IV– 

8 D agency, and who are determined by the court 

9 or agency to be in need of employment services 

10 or placement in order to pay such child support 

11 obligations. A noncustodial parent described in 

12 the preceding sentence who is an ex-offender 

13 shall be eligible to participate in a program es14 tablished to carry out this purpose. 

15 (B) REQUIREMENTS.— 

16 (i) OPTION TO PARTICIPATE PRIOR TO

17 CONTEMPT FINDING.—A State shall not be 

18 eligible to receive a grant under this sec19 tion to carry out this purpose unless any 

20 program established with funds made 

21 available under the grant provides non22 custodial parents described in subpara23 graph (A) with an option to participate in 

24 the program prior to the court or agency 

25 entering a finding that the noncustodial 


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•S 3607 IS

1 parent is in contempt for failure to pay a 

2 child support obligation and, potentially 

3 subject to criminal penalties. 

4 (ii) PROGRAM GOALS.—An employ5 ment program established with funds made 

6 available under a grant awarded under this 

7 section to carry out this purpose shall be 

8 designed to do the following: 

9 (I) To assist noncustodial par10 ents described in subparagraph (A) 

11 obtain and maintain unsubsidized em12 ployment. 

13 (II) To increase the amount of fi14 nancial support received by children. 

15 (III) To help noncustodial par16 ents described in subparagraph (A) 

17 improve relationships with their chil18 dren and their children’s custodial 

19 parent. 

20 (iii) 6 MONTHS OF CONTINUOUS, 

21 TIMELY PAYMENTS.—An employment pro22 gram established with funds made avail23 able under this section to carry out this 

24 purpose shall not permit a noncustodial 

25 parent placed in the program to graduate 


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•S 3607 IS

1 from the program and avoid penalties for 

2 failure to pay a child support obligation 

3 until the noncustodial parent completes at 

4 least 6 months of continuous, timely pay5 ment of the parent’s child support obliga6 tions. 

7 (iv) USE OF FUNDS.—Services pro8 vided under an employment program estab9 lished with funds made available under a 

10 grant made to carry out this purpose may 

11 include one or more of the following: 

12 (I) Job development. 

13 (II) Supervised job search. 

14 (III) Job placement. 

15 (IV) Case management. 

16 (V) Court liaison services. 

17 (VI) Educational assessment. 

18 (VII) Remedial education services 

19 or educational referral. 

20 (VIII) Vocational assessment or 

21 services. 

22 (IX) Counseling on responsible 

23 fatherhood. 


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1 (X) Support funds for services 

2 such as transportation or short-term 

3 training. 

4 (XI) Referral for support serv5 ices. 

6 (XII) Employment retention 

7 services. 

8 (XIII) Transitional jobs pro9 grams. 

10 (XIV) Public-private career path11 way partnerships established in ac12 cordance with paragraph (3). 

13 (v) ADMINISTRATION.—A State that 

14 receives a grant under this section to carry 

15 out this purpose may contract with a pub16 lic or private nonprofit organization, in17 cluding a faith-based or community-based 

18 organization, to administer (in conjunction 

19 with the court of jurisdiction or the IV–D 

20 agency) the court-supervised or IV–D 

21 agency-supervised employment program. 

22 (2) TRANSITIONAL JOBS GRANTS.— 

23 (A) IN GENERAL.—To establish and ex24 pand transitional jobs programs for eligible in25 dividuals, including such programs conducted 


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•S 3607 IS

1 by local governments, State employment agen2 cies, nonprofit organizations, and faith-based or 

3 community-based organizations or inter4 mediaries, that— 

5 (i) combine time-limited employment 

6 in transitional jobs that may be subsidized 

7 with public funds, with activities that pro8 mote skill development and remove barriers 

9 to employment, such as case management 

10 services and education, training, child sup11 port-related services, and other activities, 

12 pursuant to individual plans; and 

13 (ii) provide such individuals with— 

14 (I) transitional jobs placements 

15 and job placement assistance, to help 

16 the individuals make the transition 

17 from subsidized employment in transi18 tional jobs to stable unsubsidized em19 ployment; and 

20 (II) retention services after the 

21 transition to unsubsidized employ22 ment. 

23 (B) ELIGIBLE INDIVIDUALS.—For pur24 poses of this paragraph, the term ‘‘eligible indi25 viduals’’ means individuals within any of the 


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•S 3607 IS

1 following categories of disproportionately chron2 ically unemployed individuals: 

3 (i) Individuals who have attained age 

4 16, but not attained age 36, and who have 

5 documented barriers to employment, par6 ticularly such individuals who are parents 

7 or expectant parents. 

8 (ii) Formerly incarcerated individuals. 

9 (iii) Homeless or formerly homeless 

10 individuals. 

11 (iv) Individuals with disabilities. 

12 (v) Individuals designated by a court 

13 or the IV–D agency to participate in tran14 sitional jobs programs. 

15 (C) LIMITATIONS ON USE OF FUNDS.— 

16 (i) ALLOWABLE ACTIVITIES.—A State 

17 that receives a grant to carry out this pur18 pose (or a subgrantee of such State) (re19 ferred to in this paragraph as the ‘‘pro20 gram operator’’) shall use the funds made 

21 available under the grant to operate a 

22 transitional jobs program for eligible indi23 viduals consistent with the following re24 quirements: 


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•S 3607 IS

1 (I) JOBS.—The program oper2 ator shall place eligible individuals in 

3 temporary jobs, the incomes from 

4 which may be subsidized in whole or 

5 in part with public funds. An eligible 

6 individual placed in such a job (re7 ferred to in this paragraph as ‘‘a par8 ticipant’’) shall perform work directly 

9 for the program operator or another 

10 public, nonprofit, or private sector or11 ganization (which operator or organi12 zation may be referred to in this para13 graph as a ‘‘worksite employer’’) with14 in the community involved. 

15 (II) HOURS.— 

16 (aa) IN GENERAL.—Subject 

17 to item (bb), the transitional jobs 

18 program shall provide a partici19 pant with not less than 30, and 

20 not more than 40, hours per 

21 week of a combination of paid 

22 employment and the services de23 scribed in subclauses (III), (IV), 

24 and (V). 


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1 (bb) ACCOMMODATION OF

2 SPECIAL CIRCUMSTANCES.—The 

3 number of hours per week re4 quired under item (aa) may be 

5 adjusted in the case of a partici6 pant who requires a modified 

7 work week to accommodate spe8 cial circumstances. 

9 (III) JOB PREPARATION AND

10 SERVICES.—The program operator 

11 shall— 

12 (aa) develop an individual 

13 plan for each participant, which 

14 shall contain a goal that focuses 

15 on preparation of the participant 

16 for unsubsidized jobs in demand 

17 in the local economy that offer 

18 the potential for advancement 

19 and growth (including increases 

20 in wages and benefits); 

21 (bb) develop transitional 

22 jobs placements for participants 

23 that will best prepare them for 

24 jobs described in item (aa) or 

25 participation in the public-private 


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1 career pathway partnerships es2 tablished in accordance with 

3 paragraph (3); and 

4 (cc) provide case manage5 ment services and ensure that 

6 appropriate education, training, 

7 and other activities are available 

8 to participants, consistent with 

9 each participant’s individual 

10 plan. 

11 (IV) JOB PLACEMENT ASSIST12 ANCE AND RETENTION SERVICES.— 

13 The program operator shall provide 

14 job placement assistance to help par15 ticipants obtain unsubsidized employ16 ment and shall provide retention serv17 ices to the participants for a minimum 

18 of 6 months after entry into the un19 subsidized employment. 

20 (V) EDUCATION OR TRAINING.— 

21 In any workweek in which a partici22 pant is scheduled to work at least 30 

23 hours in the program, not less than 

24 20 percent of the scheduled hours and 

25 not more than 50 percent of the 


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1 scheduled hours shall involve partici2 pation in— 

3 (aa) education or training 

4 activities designed to improve the 

5 participant’s employability and 

6 potential earnings; 

7 (bb) other activities designed 

8 to reduce or eliminate any bar9 riers that may impede the par10 ticipant’s ability to secure and 

11 advance in unsubsidized employ12 ment; or 

13 (cc) activities designed to 

14 promote financial literacy and the 

15 use of products and services that 

16 increase personal savings and 

17 build financial assets for family 

18 support, education, homeowner19 ship, and retirement. 

20 (VI) DURATION.— 

21 (aa) IN GENERAL.—Subject 

22 to item (bb), the duration of any 

23 placement in the program shall 

24 be for a period of 6 consecutive 

25 months. 


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1 (bb) 3 MONTH EXTEN2 SION.—A program placement 

3 may be extended on a one-time 

4 basis for an additional period of 

5 3 consecutive months upon the 

6 conclusion of the original 6- 

7 month placement period if such 

8 extension would be consistent 

9 with the individual’s plan for 

10 transition to unsubsidized em11 ployment. 

12 (VII) SUPERVISION.—The work13 site employer or program operator 

14 shall supervise program participants, 

15 consistent with the goal of addressing 

16 the limited work experience and skills 

17 of the participants. 

18 (D) REPORTS.—Not later than 120 days 

19 after the end of the grant period, the program 

20 operator shall submit a report to the Secretary 

21 of Health and Human Services and the Sec22 retary of Labor that contains information on 

23 the number of participants in the program who 

24 have entered unsubsidized employment, rates of 

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1 pants, demographic information regarding the 

2 participants, and information regarding the 

3 wages and benefits received by the participants. 

4 (E) TECHNICAL ASSISTANCE.—The Sec5 retary of Health and Human Services, in con6 sultation with the Secretary of Labor, shall 

7 enter into contracts with entities with dem8 onstrated experience in the provision of transi9 tional jobs to provide technical assistance to the 

10 program operators and worksite employers for 

11 the programs assisted under this paragraph. 

12 (3) PUBLIC-PRIVATE CAREER PATHWAYS PART13 NERSHIPS.— 

14 (A) IN GENERAL.—To allow workforce 

15 education providers representing career path16 way partnerships— 

17 (i) to create or expand career path18 ways with specific employers for disadvan19 taged workers, which may include any mix 

20 of such employers’ existing lower wage em21 ployees, new hires or potential hires; or 

22 (ii) to fill in gaps in career pathways 

23 in particular localities or regions as needed 

24 to ensure that career pathways are acces25 sible to unemployed disadvantaged workers 


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•S 3607 IS

1 and at risk youth who have lower skills or 

2 limited English proficiency, including 

3 through the creation of workforce edu4 cation services, such as ‘‘bridge’’ programs 

5 that contextualize basic skills, English lan6 guage, or college remedial education serv7 ices to specific career pathways, and ef8 forts to create opportunities for gaining 

9 work experience in a career pathway. 

10 (B) USE OF FUNDS.—Funds made avail11 able under a grant under this section to carry 

12 out this purpose may be used by career path13 ways partnerships for any expense reasonably 

14 related to the accomplishment of the specific 

15 objectives of the partnership and the purpose 

16 described in this paragraph, including any of 

17 the activities described in paragraph (1)(B)(iv). 

18 (C) LIMITATIONS.— 

19 (i) IN GENERAL.—Of the funds made 

20 available to a career pathway partnership 

21 to carry out the purpose described in this 

22 paragraph— 

23 (I) not more than 30 percent of 

24 such funds may be used to pay or 

25 subsidize wages during a period of 


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•S 3607 IS

1 work experience or internship, not to 

2 exceed 90 days; and 

3 (II) not more than 10 percent of 

4 such funds may be used for adminis5 trative purposes. 

6 (ii) PROHIBITION ON SUBSIDIZING

7 WAGES OF CURRENT EMPLOYEES.—No 

8 funds made available to carry out this 

9 paragraph shall be used to subsidize the 

10 wages of any individual who, as of the date 

11 of the establishment of the career pathway 

12 partnership, is an employee of any em13 ployer participating in the partnership. 

14 (D) REQUIREMENTS FOR AWARDING OF

15 SUBGRANTS.— 

16 (i) IN GENERAL.—Funds shall be 

17 made available to career pathway partner18 ships to carry out the purpose described in 

19 this paragraph based on a performance20 based accountability system that includes 

21 the following measures of performance: 

22 (I) The number of individuals to 

23 be trained. 

24 (II) The percentage of such indi25 viduals who complete the program. 


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1 (III) The percentage of such in2 dividuals who enter or advance in em3 ployment. 

4 (IV) The wage and benefit gains 

5 of individuals who complete the pro6 gram before and within 6 months 

7 after their program completion, in8 cluding the extent to which the indi9 viduals achieved economic self-suffi10 ciency. 

11 (V) The percentage of individuals 

12 who complete the program and are 

13 placed in jobs who retain employment 

14 for at least 6 months. 

15 (VI) The percentage of individ16 uals who owe child support and com17 plete the program who improve in 

18 their payment of child support within 

19 6 months after their program comple20 tion. 

21 In establishing goals for such measures, 

22 due consideration shall be given to the edu23 cation, work experience, and job readiness 

24 of the individuals expected to participate in 

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1 uals to employment, and the local job mar2 ket. 

3 (ii) CONSIDERATIONS FOR FUNDING

4 RENEWALS.—A subgrantee’s level of suc5 cess in achieving employment, advance6 ment, wage, and employment retention 

7 goals shall be a primary consideration for 

8 determining whether to renew a grant 

9 made to such entity and the funding level 

10 for such grant. 

11 (iii) PRIORITIES FOR AWARDS OF SUB12 GRANTS.—In awarding subgrants to carry 

13 out this purpose, a State shall give priority 

14 to applications that— 

15 (I) propose to serve areas of high 

16 poverty, high youth unemployment, 

17 high drop out rates, or high rates of 

18 low-income single-parent families; 

19 (II) include a substantial cash or 

20 in-kind match by all employers, in21 cluding joint labor-management pro22 grams where applicable, in the part23 nerships, such as paid release time for 

24 employed workforce education partici25 pants; 


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1 (III) use instructional materials 

2 and instructors directly used in the 

3 specific business or industry sectors of 

4 the partnership employers; 

5 (IV) link successful completion of 

6 workforce education services to wage 

7 increases, promotions or job hires; 

8 (V) will result in attainment of 

9 employer-recognized occupational and 

10 educational credentials; 

11 (VI) address career guidance and 

12 adult basic education and English lan13 guage needs as well as job-specific 

14 skills; 

15 (VII) demonstrate a blending of 

16 resources from partner agencies in the 

17 workforce system and other sectors 

18 and Federal programs, including su19 perior procedures for coordinating re20 sponsible fatherhood promotion activi21 ties, where appropriate, to support the 

22 development of high quality pathways; 

23 (VIII) identify how the sub24 grantee will maximize services to un25 employed disadvantaged workers who 


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1 also face other barriers in the labor 

2 market, such as high school dropout, 

3 offender status, aging out of foster 

4 care, low basic skill level, including 

5 limited English proficiency, learning 

6 disabilities, physical, emotional or be7 havior disabilities, or substance abuse 

8 recovery, which may be through direct 

9 relationships with local providers of 

10 transitional jobs programs under 

11 which in appropriate circumstances 

12 transitional jobs participants may ac13 cess career pathways programs upon 

14 completion of the transitional jobs 

15 program; and 

16 (IX) support collaboration, as ap17 propriate, between employers and 

18 labor organizations and other work19 force development professionals, in20 cluding joint labor management train21 ing and education programs where ap22 propriate. 

23 (E) DEFINITIONS.—In this paragraph: 

24 (i) ADULT EDUCATION.—The term 

25 ‘‘adult education’’ has the meaning given 


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1 that term in section 203 of the Workforce 

2 Investment Act of 1998 (20 U.S.C. 9202). 

3 (ii) CAREER PATHWAY.—The term 

4 ‘‘career pathway’’ means a linked set of 

5 workforce education and job opportunities 

6 within a specific business or industry sec7 tor, or for an occupational sector that cuts 

8 across multiple business and industry sec9 tors, which begins at the lowest skill and 

10 English language levels, and extends 

11 through for-credit college opportunities 

12 such as earning relevant associate or bach13 elor’s degrees, and prepares individuals for 

14 advancement in jobs in demand in the local 

15 or regional labor market. 

16 (iii) COMMUNITY-BASED PROVIDER.— 

17 The term ‘‘community-based provider’’ 

18 means a not-for-profit organization, with 

19 local boards of directors, that directly pro20 vides workforce education services. 

21 (iv) INSTITUTION OF HIGHER EDU22 CATION.—The term ‘‘institution of higher 

23 education’’ has the meaning given that 

24 term in section 101 of the Higher Edu25 cation Act of 1965 (20 U.S.C. 1001). 


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1 (v) CHARTER SCHOOL.—The term 

2 ‘‘charter school’’ has the meaning given 

3 that term in section 5210 of the Elemen4 tary and Secondary Education Act of 1965 

5 (20 U.S.C. 7221i). 

6 (vi) AREA VOCATIONAL EDUCATION

7 SCHOOL.—The term ‘‘area vocational and 

8 technical education school’’ has the mean9 ing given that term in section 3 of the Carl 

10 D. Perkins Vocational and Technical Edu11 cation Act of 1998 (20 U.S.C. 2302). 

12 (vii) DISADVANTAGED WORKERS.— 

13 The term ‘‘disadvantaged workers’’ means 

14 unemployed individuals in households 

15 whose income is at or below the lower liv16 ing standard or employed individuals with 

wages at or below 2 17 ⁄3 of the median wage 

18 for the State or region applying for the 

19 grant or the partnership applying for a 

20 subgrant. 

21 (viii) CAREER PATHWAY PARTNER22 SHIP.—The term ‘‘career pathway partner23 ship’’ means collaborations of 1 or more 

24 workforce education providers, 1 or more 

25 employers, 1 or more labor organizations, 


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1 where applicable, as a result of such orga2 nization’s representation of employees at 

3 the worksite who have skills in which the 

4 training or employment programs are pro5 posed, and may include optional additional 

6 entities as needed to provide a comprehen7 sive range of workforce education and an8 cillary support services. 

9 (ix) WORKFORCE EDUCATION.—The 

10 term ‘‘workforce education’’ means a set of 

11 career guidance and exploration, adult edu12 cation, job training, registered apprentice13 ship programs, and for-credit postsec14 ondary education services aimed at pre15 paring individuals to enter and sustain em16 ployment in specific occupations and to 

17 have the sufficient skills to respond to 

18 shifting employment opportunities. 

19 (x) WORKFORCE EDUCATION PRO20 VIDER.—The term ‘‘workforce education 

21 provider’’ means community-based pro22 viders, institutions of higher education, 

23 area vocational and technical education 

24 schools, charter schools, and other public 


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1 nonprofit entities that provide workforce 

2 education. 

3 (c) MATCHING REQUIREMENT.— 

4 (1) IN GENERAL.—The Secretary of Health and 

5 Human Services may not award a grant to a State 

6 under this section unless the State agrees that, with 

7 respect to the costs to be incurred by the State in 

8 conducting a demonstration project with funds pro9 vided under the grant, the State will make available 

10 non-Federal contributions in an amount equal to 10 

11 percent of the amount of Federal funds paid to the 

12 State under such grant. 

13 (2) NON-FEDERAL CONTRIBUTIONS.—In this 

14 subsection, the term ‘‘non-Federal contributions’’ in15 cludes contributions by the State and by public and 

16 private entities that may be in cash or in kind, but 

17 does not include any amounts provided by the Fed18 eral Government, or services assisted or subsidized 

19 to any significant extent by the Federal Government, 

20 or any amount expended by a State before October 

21 1, 2006. 

22 (d) WORKER PROTECTIONS AND LABOR STAND23 ARDS.— 

24 (1) RATE OF PAY; BENEFITS AND WORKING

25 CONDITIONS.— 


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1 (A) IN GENERAL.—A worksite employer of 

2 a participant in a program or activity funded 

3 under this section shall pay the participant at 

4 the rate paid to employees of the worksite em5 ployer who are not participants in such pro6 gram or activity and who perform comparable 

7 work at the worksite, including periodic in8 creases where appropriate. If no other employ9 ees of the worksite employer perform com10 parable work at the worksite, the worksite em11 ployer shall pay the participant not less than 

12 the applicable Federal or State minium wage, 

13 whichever is higher. 

14 (B) BENEFITS AND CONDITIONS.—An in15 dividual employed through participation in a 

16 program or activity funded under this section 

17 shall be provided with benefits and working 

18 conditions at the same level and to the same ex19 tent as such benefits and conditions are pro20 vided to other employees of the employer of the 

21 individual who have worked a similar length of 

22 time and perform the same work 

23 (2) NONDUPLICATION.— 

24 (A) IN GENERAL.—Funds provided 

25 through a grant made under this paragraph 


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1 shall be used only for a program or activity that 

2 does not duplicate, and is in addition to, a pro3 gram or activity otherwise available in the local4 ity of the program or activity funded under this 

5 section. 

6 (B) PRIVATE, NONPROFIT ENTITY.—Funds 

7 provided through a grant made under this sec8 tion shall not be provided to a private nonprofit 

9 entity to conduct programs or activities that are 

10 the same as or substantially equivalent to ac11 tivities provided by a State or local government 

12 agency in the area in which such entity is lo13 cated, unless the requirements of paragraph (3) 

14 are met. 

15 (3) NONDISPLACEMENT.— 

16 (A) IN GENERAL.—A worksite employer 

17 shall not displace an employee or position (in18 cluding partial displacement such as reduction 

19 in hours, wages, or employment benefits) or im20 pair contracts for services or collective bar21 gaining agreements, as a result of the use by 

22 such employer of a participant in a program or 

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1 signed to fill any established unfilled position 

2 vacancy. 

3 (B) JOB OPPORTUNITIES.—A job oppor4 tunity shall not be created under this paragraph 

5 that will infringe in any manner on the pro6 motional opportunity of an employed individual. 

7 (C) LIMITATION ON SERVICES.— 

8 (i) SUPPLANTATION OF HIRING.—A 

9 participant in any program or activity 

10 funded under this section shall not perform 

11 any services or duties, or engage in activi12 ties, that will supplant the hiring of em13 ployees that are not participants in the 

14 program or activity. 

15 (ii) DUTIES FORMERLY PERFORMED

16 BY ANOTHER EMPLOYEE.—A participant 

17 in any program or activity funded under 

18 this section shall not perform services or 

19 duties, or engage in activities, that are 

20 services, duties, or activities that had been 

21 performed by or were assigned to any em22 ployee who recently resigned or was dis23 charged, who is subject to a reduction in 

24 force, who has recall rights pursuant to a 

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1 ble personnel procedures, who is on leave 

2 (such as terminal, temporary, vacation, 

3 emergency, or sick leave), who is on strike, 

4 or who is being locked out. 

5 (D) CONCURRENCE OF LOCAL LABOR OR6 GANIZATION.—No placement shall be made 

7 under a program or activity funded under this 

8 section until the entity conducting the program 

9 or activity has obtained the written concurrence 

10 of any local labor organization representing em11 ployees who are engaged in the same or sub12 stantially similar work as that proposed to be 

13 carried out for the worksite employer with 

14 whom a participant is to be placed under the 

15 program or activity. 

16 (4) NO IMPACT ON UNION ORGANIZING.—A 

17 State conducting a demonstration project funded 

18 under this section and any entity conducting a pro19 gram or activity funded under this section shall pro20 vide the Secretary with a certified assurance that 

21 none of such funds shall be used to assist or deter 

22 union organizing. 

23 (5) ACCOUNTABILITY.— 

24 (A) IN GENERAL.—Funds provided under 

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1 ing or employment with an employer that has 

2 a demonstrable record of noncompliance with 

3 Federal labor, civil rights, workplace safety, or 

4 related laws. 

5 (B) CERTIFIED SATISFACTORY RECORD.— 

6 Employers who receive training or wage sub7 sidies under programs or activities funded 

8 under this section shall have a satisfactory 

9 record in labor relations and employment prac10 tices, as certified by the Secretary of Labor. 

11 (C) APPLICATION OF WORKER PROTEC12 TION LAWS.—A participant in a program or ac13 tivity funded under this section shall be consid14 ered to be an employee of any employer that 

15 the participant is placed with for all purposes 

16 under Federal and State law, including laws re17 lating to health and safety, civil rights, and 

18 worker’s compensation. 

19 (6) GRIEVANCE PROCEDURE.—An entity con20 ducting a program or activity funded under this sec21 tion shall establish and maintain a procedure for the 

22 filing and adjudication of grievances by employees of 

23 worksite employers who are not participants in the 

24 program, or such employees’ representatives, or by 

25 participants in such a program or activity alleging a 


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1 violation of a provision of this subsection that is 

2 similar to the grievance procedure established by a 

3 State for purposes of section 407(f)(3) of the Social 

4 Security Act (42 U.S.C. 607(f)(3)). 

5 (7) NONPREEMPTION OF STATE LAW.—The 

6 provisions of this subsection shall not be construed 

7 to preempt any provision of State law that affords 

8 greater protections to employees or participants than 

9 are afforded by this subsection. 

10 (8) TREATMENT OF AMOUNTS PAID TO PAR11 TICIPANTS.—Amounts paid to a participant in a 

12 program or activity funded under this section shall 

13 be— 

14 (A) considered earned income for purpose 

15 of determining the participant’s eligibility for 

16 the child tax credit established under section 24 

17 of the Internal Revenue Code of 1986, the 

18 earned income tax credit established under sec19 tion 32 of such Code, and any other tax benefit 

20 established under such Code the eligibility for 

21 which is based on earned income; and 

22 (B) disregarded for purposes of deter23 mining the participant’s, the participant’s fam24 ily’s, or the participant’s household’s eligibility 

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1 vided under any means-tested program funded 

2 in whole or in part with Federal funds. 

3 (e) APPLICATION.— 

4 (1) REQUIREMENTS FOR ALL APPLICATIONS.— 

5 (A) IN GENERAL.—A State desiring to re6 ceive a grant to conduct a demonstration 

7 project under this section to carry out one or 

8 more of the purposes described in subsection 

9 (b) shall submit an application to the Secretary 

10 of Health and Human Services at such time, in 

11 such manner, and containing such information 

12 or assurances as the Secretary may require. 

13 (B) COMPLIANCE WITH WORKER PROTEC14 TIONS AND LABOR STANDARDS.—The applica15 tion shall include an assurance that the State 

16 and any entity conducting a program or activity 

17 under the project shall comply with the worker 

18 protections and labor standards established in 

19 accordance with such protections under sub20 section (d), 

21 (C) NONDISCRIMINATION.—The applica22 tion shall include an assurance that the State 

23 and any entity conducting a program or activity 

24 under the demonstration project shall comply 

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1 ment Act of 1998 (29 U.S.C. 2938(a)(2)) to 

2 the same extent that such section would apply 

3 to the entity if the program or activity con4 ducted under the demonstration project was 

5 considered to be funded or otherwise financially 

6 assisted under that Act. 

7 (D) ASSURANCE GRANT WILL SUPPLE8 MENT, NOT SUPPLANT, OTHER STATE FUND9 ING.—The application shall include an assur10 ance from the chief executive officer of the 

11 State that funds made available under the 

12 grant will supplement, and not supplant, other 

13 funds used by the State to establish or support 

14 employment placements for low-income parents. 

15 (2) SPECIFIC DEMONSTRATION PROJECT RE16 QUIREMENTS.— 

17 (A) COURT-SUPERVISED OR IV–D AGENCY18 SUPERVISED EMPLOYMENT PROGRAMS FOR

19 NONCUSTODIAL PARENTS.—In order to conduct 

20 a demonstration project described in paragraph 

21 (1) of subsection (b), a State shall include in 

22 the application submitted to the Secretary of 

23 Health and Human Services, the following: 

24 (i) Evidence of an agreement between 

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1 lish an employment program that meets 

2 the requirements of subsection (b)(2). 

3 (ii) The number of potential noncusto4 dial parents to be served by the program. 

5 (iii) The purposes specific to that 

6 State’s program. 

7 (iv) The median income of the target 

8 population. 

9 (B) PUBLIC-PRIVATE CAREER PATHWAYS

10 PARTNERSHIPS.—In order to conduct a dem11 onstration project described in paragraph (3) of 

12 subsection (b), a State shall include in the ap13 plication submitted to the Secretary of Health 

14 and Human Services a description of— 

15 (i) the number, characteristics, and 

16 employment and earnings status of dis17 advantaged individuals in the State or ap18 plicable region where the program is to be 

19 conducted; 

20 (ii) which business and industry sec21 tors, or occupational clusters that cut 

22 across sectors, will be targeted by the ca23 reer pathways partnership, based on over24 all economic benefit to the community, the 

25 current and future demand for workers, 


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1 the advancement opportunities for workers, 

2 the wages at each step of the career path3 way, and availability of worker benefits; 

4 (iii) the interventions that will be put 

5 in place to address any educational deficits 

6 or learning disabilities of individuals who 

7 participate in the program and to ensure 

8 that such individuals have the academic, 

9 technical, communications, and other job 

10 skills to function in the jobs targeted by 

11 the partnership; 

12 (iv) how the members of the partner13 ship will collaborate on the development of 

14 curriculum and delivery of training that 

15 will provide the necessary occupational, 

16 academic and other work-related skills and 

17 credentialing needed for the specific labor 

18 market areas; 

19 (v) the supports that will be used to 

20 provide counseling, mentoring or other 

21 support to individuals while in training or 

22 to assist them in navigating in complicated 

23 work environments; 

24 (vi) the set of career exposure activi25 ties that will be put in place to provide 


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1 hands-on experience such as work experi2 ence, on the job training, internships, or 

3 work-study; 

4 (vii) the agreements that are in place 

5 with employers, industry groups, and labor 

6 organizations, where applicable, to ensure 

7 access to jobs and advancement opportuni8 ties in the targeted businesses, industry or 

9 occupations; 

10 (viii) how the workforce education 

11 providers in the partnership will assess the 

12 employment barriers and needs of local 

13 disadvantaged individuals who participate 

14 in the program and will identify resources 

15 for meeting those needs; 

16 (ix) how the workforce education pro17 viders will work with partnership employ18 ers, business and industry groups, labor 

19 organizations, where applicable, and local 

20 economic development organizations to 

21 identify the priority workforce needs of the 

22 local industry; 

23 (x) how the partnerships will ensure 

24 that the appropriate program delivery 

25 models and formal agreements are in place 


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1 to ensure maximum benefits to the individ2 uals receiving career pathway partnership 

3 services and to the employers and labor or4 ganizations, where applicable, in the part5 nership and the industries or businesses 

6 they represent; and 

7 (xi) how partnership employers and 

8 labor organizations, where applicable, will 

9 be actively involved in identifying specific 

10 workforce education needs, planning the 

11 curriculum, assisting in training activities, 

12 providing job opportunities, and coordi13 nating job retention for individuals hired 

14 after training through the program and 

15 follow-up support. 

16 (3) APPLICATIONS BY INDIAN TRIBES OR TRIB17 AL ORGANIZATIONS.—The Secretary of Health and 

18 Human Services may exempt an Indian tribe or trib19 al organization from any requirement of this section 

20 that the Secretary determines would be inappro21 priate to apply to the Indian tribe or tribal organiza22 tion, taking into account the resources, needs, and 

23 other circumstances of the Indian tribe or tribal or24 ganization. 


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1 (f) PRIORITIES AND REQUIREMENTS FOR AWARDING

2 GRANTS.— 

3 (1) IN GENERAL.—Subject to paragraphs (2) 

4 and (3), the Secretary of Health and Human Serv5 ices, in consultation with the Secretary of Labor, 

6 shall give priority to making grants to carry out the 

7 purposes described in subsection (b) to entities 

8 that— 

9 (A) demonstrate a plan for implementing 

10 measures to track their performance with re11 spect to meeting the goals of quality job place12 ment, long-term unsubsidized job retention, in13 creasing child support payments, decreasing un14 paid child support arrearages, and increasing 

15 the involvement of low-income noncustodial par16 ents with their children; and 

17 (B) coordinate with, and link individuals 

18 to, other public and private benefits and em19 ployment services for low-income, noncustodial 

20 parents among the different systems or pro21 grams in which such parents are involved, in22 cluding the criminal justice system, the State 

23 programs funded under each part of title IV of 

24 the Social Security Act (42 U.S.C. 601 et seq.) 

25 (including programs and activities funded under 


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1 section 403(a)(2) of the Social Security Act (42 

2 U.S.C. 603(a)(2)), educational assistance pro3 grams, and job training or employment pro4 grams, including State employment agencies. 

5 (2) REFLECTIVE OF TARGET POPULATIONS.— 

6 In making grants to carry out these purposes, the 

7 Secretary of Health and Human Services, in con8 sultation with the Secretary of Labor, shall give pri9 ority to States with proposed demonstration projects 

10 that are designed to target low-income parents, in11 cluding custodial and noncustodial parents, and low12 income married couples. 

13 (3) SUBSTANTIAL FUNDING FOR EACH OF THE

14 PURPOSES.—In making grants under this section, 

15 the Secretary of Health and Human Services, in 

16 consultation with the Secretary of Labor, shall en17 sure that a substantial share of the amount appro18 priated under subsection (i) for a fiscal year is used 

19 for carrying out each of the purposes described in 

20 subsection (b). 

21 (g) EVALUATION.—The Secretary of Health and 

22 Human Services, in consultation with the Secretary of 

23 Labor, shall provide for an independent and rigorous eval24 uation of the demonstration projects conducted under this 

25 section that includes, to the maximum extent feasible, ranVerDate Aug 31 2005 02:26 Jul 04, 2006 Jkt 049200 PO 00000 Frm 00070 Fmt 6652 Sfmt 6201 E:\BILLS\S3607.IS S3607

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1 dom assignment or other appropriate statistical tech2 niques, in order to assess the effectiveness of the projects. 

3 (h) GENERAL DEFINITIONS.—In this section: 

4 (1) STATE.—The term ‘‘State’’ means each of 

5 the 50 States, the District of Columbia, the Com6 monwealth of Puerto Rico, the United States Virgin 

7 Islands, Guam, American Samoa, and includes an 

8 Indian tribe or tribal organization. 

9 (2) IV-D AGENCY.—The term ‘‘IV–D agency’’ 

10 means the State or local agency responsible for ad11 ministering the State program established under 

12 part D of title IV of the Social Security Act (42 

13 U.S.C. 651 et seq.). 

14 (3) INDIAN TRIBE; TRIBAL ORGANIZATION.— 

15 The terms ‘‘Indian tribe’’ and ‘‘tribal organization’’ 

16 have the meaning given such terms in section 4 of 

17 the Indian Self-Determination and Education Assist18 ance Act (25 U.S.C. 450b). 

19 (i) APPROPRIATION.—Out of any money in the 

20 Treasury of the United States not otherwise appropriated, 

21 there are appropriated to carry out this section, 

22 $50,000,000 for each of fiscal years 2007 through 2009. 


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1 SEC. 107. STATE ASSESSMENTS OF BARRIERS TO EMPLOY2 MENT AND FINANCIAL SUPPORT OF CHIL3 DREN. 

4 (a) STATE ASSESSMENTS AND REPORTS.—As a con5 dition of the continued approval of a State plan under part 

6 D of title IV of the Social Security Act (42 U.S.C. 651 

7 et. seq.), each State with an approved such plan, acting 

8 through the appropriate State agencies, shall assess the 

9 State policies with respect to the issues described in sub10 section (b) and submit a report to the Secretary of Health 

11 and Human Services on the results of such assessment 

12 not later than March 15, 2008. 

13 (b) ISSUES DESCRIBED.—For purposes of subsection 

14 (a), the issues described in this subsection are the fol15 lowing: 

16 (1) The process of setting and modifying child 

17 support obligations, particularly with respect to low18 income parents, including— 

19 (A) the role and criteria for using imputed 

20 income in determining child support obligations; 

21 (B) the process of modifying obligations; 

22 (C) the consideration of income and em23 ployment status, including efforts to identify 

24 unreported income; 

25 (D) the consideration of incarceration; 

26 (E) the consideration of disability; 


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1 (F) the treatment of arrearages, including 

2 interest charged, and laws or procedures that 

3 interfere with forgiveness, adjustment, waiver, 

4 or compromise of arrears owed to the State by 

5 low-income noncustodial parents who lack suffi6 cient ability to pay such arrearages; 

7 (G) the procedures related to retroactive 

8 support; and 

9 (H) State pass-through and disregard poli10 cies for recipients of means tested public bene11 fits. 

12 (2) The impact of state criminal laws and law 

13 enforcement practices on the employment acquisi14 tion, retention, and advancement prospects of indi15 viduals following arrest, conviction, or incarceration, 

16 including— 

17 (A) any efforts, including counseling or 

18 employment support, to assist ex-prisoners with 

19 reentry to a community and successful reunifi20 cation with their families; and 

21 (B) an assessment of any efforts to seal or 

22 expunge arrest and conviction records and any 

23 efforts to grant certificates or other acknowl24 edgments of rehabilitation to ex-prisoners, and 


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1 to examine State occupational licensing and cer2 tification procedures. 

3 (3) Identification of any other barriers to 

4 healthy family formation or sustainable economic op5 portunity for custodial and noncustodial parents that 

6 are created or exacerbated by Federal or State laws, 

7 policies, or procedures, including an examination of 

8 the rules of Federal and State means-tested pro9 grams, the operation of the State workforce system, 

10 the availability of financial education services, and 

11 the availability of domestic violence services and 

12 child support procedures to help victims of domestic 

13 violence stay safe and obtain the child support they 

14 are owed. 

15 (c) GRANTS TO STATES FOR COMMISSIONS ON STATE

16 LAW IMPROVEMENTS IN THE BEST INTEREST OF CHIL17 DREN AND FAMILIES.—The Secretary of Health and 

18 Human Services shall award grants to States to establish 

19 or support commissions to review the State assessment 

20 conducted in accordance with subsection (a) and to make 

21 recommendations on ways to improve State law in the best 

22 interest of children and families. 

23 (d) APPROPRIATIONS.—Out of any money in the 

24 Treasury of the United States not otherwise appropriated, 

25 there are appropriated to the Secretary of Health and 


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1 Human Services for the period of fiscal years 2007 

2 through 2008, $3,000,000, to remain available until ex3 pended, for the purpose of making— 

4 (1) payments to States to offset all or a portion 

5 of the costs of conducting the State assessments and 

6 reports required under subsection (a); and 

7 (2) grants to States under subsection (c). 

8 SEC. 108. COLLECTION OF CHILD SUPPORT UNDER THE 

9 FOOD STAMP PROGRAM. 

10 (a) ENCOURAGEMENT OF COLLECTION OF CHILD

11 SUPPORT.—Section 5 of the Food Stamp Act of 1977 (7 

12 U.S.C. 2014) is amended— 

13 (1) in subsection (e)— 

14 (A) by redesignating paragraphs (5) and 

15 (6) as paragraphs (6) and (7), respectively; 

16 (B) in paragraph (4)(B), by striking 

17 ‘‘paragraph (6)’’ and inserting ‘‘paragraph 

18 (7)’’; and 

19 (C) by inserting after paragraph (4) the 

20 following: 

21 ‘‘(5) DEDUCTION FOR CHILD SUPPORT RE22 CEIVED.— 

23 ‘‘(A) IN GENERAL.—A household shall be 

24 allowed a deduction of 20 percent of all legally 

25 obligated child support payments received from 


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1 an identified or putative parent of a child in the 

2 household if that parent is not a household 

3 member. 

4 ‘‘(B) ORDER OF DETERMINING DEDUC5 TIONS.—A deduction under this paragraph shall 

6 be determined before the computation of the ex7 cess shelter deduction under paragraph (7).’’; 

8 and 

9 (2) in subsection (k)(4)(B), by striking ‘‘sub10 section (e)(6)’’ and inserting ‘‘subsection (e)(7)’’; 

11 (b) SIMPLIFIED VERIFICATION OF CHILD SUPPORT

12 PAYMENTS.—Section 5(n) of the Food Stamp Act of 1977 

13 (7 U.S.C. 2014(n)) is amended— 

14 (1) in the subsection heading, by striking 

15 ‘‘STATE OPTIONS TO SIMPLIFY’’, and inserting 

16 ‘‘SIMPLIFIED’’; and 

17 (2) by striking ‘‘Regardless of whether’’ and in18 serting the following: 

19 ‘‘(1) IN GENERAL.—A household that is paying 

20 legally obligated child support through the program 

21 under part D of title IV of the Social Security Act 

22 (42 U.S.C. 651 et seq.) shall receive— 

23 ‘‘(A) a deduction under subsection (e)(4); 

24 or 


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1 ‘‘(B) an exclusion for paid child support 

2 under subsection (d)(3). 

3 ‘‘(2) STATE OPTIONS.—Regardless of whether’’. 

4 (c) INCLUSION OF ECONOMIC OPPORTUNITIES PRO5 GRAMS IN DEFINITION OF WORK PROGRAM.—Section 

6 6(o)(2) of the Food Stamp Act of 1977 (7 U.S.C. 

7 2015(o)(2)) is amended— 

8 (1) in subparagraph (C), by striking ‘‘or’’ at 

9 the end; 

10 (2) in subparagraph (D), by striking the period 

11 at the end and inserting ‘‘; or’’; and 

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

13 ‘‘(E) participate in and comply with the re14 quirements of a demonstration project under 

15 section 106 of the Responsible Fatherhood and 

16 Healthy Families Act of 2006;’’. 

17 (d) EFFECTIVE DATE.— 

18 (1) IN GENERAL.—This section and the amend19 ments made by this section take effect on October 

20 1, 2007. 

21 (2) STATE OPTION.—A State may implement 

22 the amendments made by subsections (a) and (b) for 

23 participating households at the first recertification of 

24 the households that occurs on or after October 1, 

25 2007. 


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1 TITLE II—REVENUE PROVISIONS 

2 SEC. 201. MODIFICATIONS TO THE EARNED INCOME TAX 

3 CREDIT. 

4 (a) INCREASE IN PHASEOUT AMOUNT FOR WORKERS

5 WITH NO QUALIFYING CHILDREN.— 

6 (1) IN GENERAL.—The table under section 

7 32(b)(2)(A) of the Internal Revenue Code of 1986 

8 is amended by striking ‘‘$5,280’’ and inserting 

9 ‘‘$10,712’’. 

10 (2) INFLATION ADJUSTMENT.— 

11 (A) IN GENERAL.—Subsection (j) of sec12 tion 32 of such Code is amended by redesig13 nating paragraph (2) as paragraph (3) and by 

14 inserting after paragraph (1) the following new 

15 paragraph: 

16 ‘‘(2) PHASEOUT AMOUNT FOR INDIVIDUALS

17 WITH NO QUALIFYING CHILDREN.—In the case of 

18 any taxable year beginning after calendar year 2007, 

19 the ‘$10,712’ dollar amount in section (b)(2)(A) 

20 shall be increased by an amount equal to— 

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

22 ‘‘(B) the cost-of-living adjustment deter23 mined under section 1(f)(3) for the calendar 

24 year in which the taxable year begins, deter25 mined by substituting ‘calendar year 2006’ for 


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1 ‘calendar year 1992’ in subparagraph (B) 

2 thereof.’’. 

3 (B) CONFORMING AMENDMENT.—Clause 

4 (i) of section 32(j)(1)(B) of such Code is 

5 amended by inserting ‘‘(other than the amount 

6 described in paragraph (2))’’ after ‘‘subsections 

7 (b)(2)(A)’’. 

8 (3) EFFECTIVE DATE.—The amendments made 

9 by this subsection shall apply to taxable years end10 ing after December 31, 2005. 

11 (b) ENHANCED CREDIT FOR CERTAIN WORKERS

12 WITH NO QUALIFYING CHILDREN.— 

13 (1) IN GENERAL.—Section 32 of the Internal 

14 Revenue Code of 1986 is amended by adding at the 

15 end the following new subsection: 

16 ‘‘(n) ADDITIONAL CREDIT FOR CERTAIN WORK17 ERS.— 

18 ‘‘(1) IN GENERAL.—In the case of a qualified 

19 individual, the credit allowed under subsection (a) 

20 shall be increased by an amount equal to 100 per21 cent of the amount of the credit allowed under this 

22 section (without regard to this subsection). 

23 ‘‘(2) QUALIFIED INDIVIDUAL.—For purposes of 

24 this subsection, the term ‘qualified individual’ means 

25 an eligible individual who— 


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1 ‘‘(A) is described in clause (ii) of sub2 section (c)(1)(A), 

3 ‘‘(B) is the parent of a child who meets the 

4 age requirements of section 152(c)(3) before 

5 the end of the taxable year of the eligible indi6 vidual, 

7 ‘‘(C) is required to make child support 

8 payments with respect to such child— 

9 ‘‘(i) pursuant to an order which is in 

10 effect for not less than one-half of the tax11 able year of such individual, and 

12 ‘‘(ii) through a State agency respon13 sible for administering the State plan 

14 under part D of title IV of the Social Secu15 rity Act, and 

16 ‘‘(D) has paid child support during the 

17 taxable year in an amount not less than the 

18 amount of child support due during the taxable 

19 year for every order requiring the individual to 

20 make child support payments. 

21 ‘‘(3) REGULATIONS.—The Secretary shall es22 tablish regulations to carry out the purposes of this 

23 subsection, including regulations which provide for 

24 the verification of the payment of child support in 

25 accordance with paragraph (2)(D).’’. 


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1 (2) VERIFICATION OF PAYMENT.— 

2 (A) IN GENERAL.—The Secretary of 

3 Health and Human Services, in consultation 

4 with the Secretary of the Treasury, shall in5 clude in the Federal Case Registry of Child 

6 Support Orders established under section 

7 453(h) of the Social Security Act (42 U.S.C. 

8 653(h)) such information as the Secretary of 

9 the Treasury determines necessary to allow for 

10 verification of the status of individuals as quali11 fied individuals (as defined under section 32(n) 

12 of the Internal Revenue Code of 1986, as added 

13 by paragraph (1)). 

14 (B) ADDITIONAL FEDERAL PROCE15 DURES.—In addition to the authority provided 

16 under subparagraph (A), the Secretary of 

17 Health and Human Services and the Secretary 

18 of the Treasury may establish such additional 

19 procedures as are appropriate to ensure that 

20 the Secretary of the Treasury has the informa21 tion that the Secretary of the Treasury needs to 

22 verify payment of child support obligations in a 

23 timely fashion. 

24 (C) STATE PROCEDURES.—The Secretary 

25 of Health and Human States, in consultation 


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1 with the States, shall establish procedures for 

2 informing a noncustodial parent in a timely 

3 fashion when the parent has paid the amount of 

4 child support owed by the parent for a taxable 

5 year so that the parent may determine the ex6 tent to which the parent is a qualified indi7 vidual for purposes of qualifying for the addi8 tional credit established under section 32(n) of 

9 the Internal Revenue Code of 1986, as added 

10 by paragraph (1). 

11 (3) EFFECTIVE DATE.—The amendment made 

12 by paragraph (1) shall apply to taxable years begin13 ning after December 31, 2007. 

14 (c) MARRIAGE PENALTY RELIEF.— 

15 (1) IN GENERAL.—Subparagraph (B) of section 

16 32(b)(2) of the Internal Revenue Code of 1986 is 

17 amended— 

18 (A) in clause (ii), by striking ‘‘, 2006, and 

19 2007, and’’ and inserting ‘‘and 2006’’, 

20 (B) in clause (iii) by striking ‘‘after 2007.’’ 

21 and inserting ‘‘in 2007, and’’, and 

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

23 clause: 

24 ‘‘(iv) $4,000 in the case of taxable 

25 years beginning after 2007.’’. 


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1 (2) INFLATION ADJUSTMENT.—Clause (ii) of 

2 section 32(j)(1)(B) of such Code is amended— 

3 (A) by striking ‘‘$3,000’’ and inserting 

4 ‘‘$4,000’’, and 

5 (B) by striking ‘‘subsection (b)(2)(B)(iii)’’ 

6 and inserting ‘‘subsection (b)(2)(B)(iv)’’. 

7 (3) EFFECTIVE DATE.—The amendments made 

8 by this subsection shall apply to taxable years begin9 ning after December 31, 2005. 

10 SEC. 202. TAX TREATMENT OF INVERTED ENTITIES. 

11 (a) IN GENERAL.—Section 7874 of the Internal Rev12 enue Code of 1986 is amended— 

13 (1) by striking ‘‘March 4, 2003’’ in subsection 

14 (a)(2)(B)(i) and in the matter following subsection 

15 (a)(2)(B)(iii) and inserting ‘‘March 20, 2002’’, 

16 (2) by striking ‘‘at least 60 percent’’ in sub17 section (a)(2)(B)(ii) and inserting ‘‘more than 50 

18 percent’’, 

19 (3) by striking ‘‘80 percent’’ in subsection (b) 

20 and inserting ‘‘at least 80 percent’’, 

21 (4) by striking ‘‘60 percent’’ in subsection (b) 

22 and inserting ‘‘more than 50 percent’’, 

23 (5) by adding at the end of subsection (a)(2) 

24 the following new sentence: ‘‘Except as provided in 

25 regulations, an acquisition of properties of a domesVerDate Aug 31 2005 02:26 Jul 04, 2006 Jkt 049200 PO 00000 Frm 00083 Fmt 6652 Sfmt 6201 E:\BILLS\S3607.IS S3607

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1 tic corporation shall not be treated as described in 

2 subparagraph (B) if none of the corporation’s stock 

3 was readily tradeable on an established securities 

4 market at any time during the 4-year period ending 

5 on the date of the acquisition.’’, and 

6 (6) by redesignating subsection (g) as sub7 section (h) and by inserting after subsection (f) the 

8 following new subsection: 

9 ‘‘(g) SPECIAL RULES APPLICABLE TO EXPATRIATED

10 ENTITIES.— 

11 ‘‘(1) INCREASES IN ACCURACY-RELATED PEN12 ALTIES.—In the case of any underpayment of tax of 

13 an expatriated entity— 

14 ‘‘(A) section 6662(a) shall be applied with 

15 respect to such underpayment by substituting 

16 ‘30 percent’ for ‘20 percent’, and 

17 ‘‘(B) if such underpayment is attributable 

18 to one or more gross valuation understate19 ments, the increase in the rate of penalty under 

20 section 6662(h) shall be to 50 percent rather 

21 than 40 percent. 

22 ‘‘(2) MODIFICATIONS OF LIMITATION ON INTER23 EST DEDUCTION.—In the case of an expatriated en24 tity, section 163(j) shall be applied— 


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1 ‘‘(A) without regard to paragraph 

2 (2)(A)(ii) thereof, and 

3 ‘‘(B) by substituting ‘25 percent’ for ‘50 

4 percent’ each place it appears in paragraph 

5 (2)(B) thereof.’’. 

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

7 this section shall apply to taxable years ending after 

8 March 20, 2002. 

9 SEC. 203. TAX TREATMENT OF CONTROLLED FOREIGN COR10 PORATIONS ESTABLISHED IN TAX HAVENS. 

11 (a) IN GENERAL.—Subchapter C of chapter 80 of the 

12 Internal Revenue Code of 1986 (relating to provisions af13 fecting more than one subtitle) is amended by adding at 

14 the end the following new section: 

15 ‘‘SEC. 7875. CONTROLLED FOREIGN CORPORATIONS IN TAX 

16 HAVENS TREATED AS DOMESTIC CORPORA17 TIONS. 

18 ‘‘(a) GENERAL RULE.—If a controlled foreign cor19 poration is a tax-haven CFC, then, notwithstanding sec20 tion 7701(a)(4), such corporation shall be treated for pur21 poses of this title as a domestic corporation. 

22 ‘‘(b) TAX-HAVEN CFC.—For purposes of this sec23 tion— 


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1 ‘‘(1) IN GENERAL.—The term ‘tax-haven CFC’ 

2 means, with respect to any taxable year, a foreign 

3 corporation which— 

4 ‘‘(A) was created or organized under the 

5 laws of a tax-haven country, and 

6 ‘‘(B) is a controlled foreign corporation 

7 (determined without regard to this section) for 

8 an uninterrupted period of 30 days or more 

9 during the taxable year. 

10 ‘‘(2) EXCEPTION.—The term ‘tax-haven CFC’ 

11 does not include a foreign corporation for any tax12 able year if substantially all of its income for the 

13 taxable year is derived from the active conduct of 

14 trades or businesses within the country under the 

15 laws of which the corporation was created or orga16 nized. 

17 ‘‘(c) TAX-HAVEN COUNTRY.—For purposes of this 

18 section— 

19 ‘‘(1) IN GENERAL.—The term ‘tax-haven coun20 try’ means any of the following: 

‘‘Andorra Guernsey Panama 

Anguilla Isle of Man Samoa 

Antigua and Barbuda Jersey San Marino 

Aruba Liberia Federation of 

Commonwealth of the Principality of Saint ChristBahamas Liechtenstein opher

Bahrain Republic of the and Nevis 

Barbados Maldives Saint Lucia 

Belize Malta Saint Vincent 

Bermuda Republic of the and the 

British Virgin Islands Marshall Islands Grenadines 

Cayman Islands Mauritius Republic of the 

Cook Islands Principality of Monaco Seychelles 


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Cyprus Montserrat Tonga 

Commonwealth of the Republic of Nauru Turks and Caicos 

Dominica Netherlands Republic of 

Gibraltar Antilles Vanuatu 

Grenada Niue 

1 ‘‘(2) SECRETARIAL AUTHORITY.—The Secretary 

2 may remove or add a foreign jurisdiction from the 

3 list of tax-haven countries under paragraph (1) if 

4 the Secretary determines such removal or addition is 

5 consistent with the purposes of this section.’’. 

6 (b) CONFORMING AMENDMENT.—The table of sec7 tions for subchapter C of chapter 80 of such Code is 

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

‘‘Sec. 7875. Controlled foreign corporations in tax havens treated as domestic 

corporations.’’. 

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

10 this section shall apply to taxable years beginning after 

11 December 31, 2007. 

12 SEC. 204. TAXATION OF INCOME OF CONTROLLED FOREIGN 

13 CORPORATIONS ATTRIBUTABLE TO IM14 PORTED PROPERTY. 

15 (a) GENERAL RULE.—Subsection (a) of section 954 

16 of the Internal Revenue Code of 1986 (defining foreign 

17 base company income) is amended by striking ‘‘and’’ at 

18 the end of paragraph (4), by striking the period at the 

19 end of paragraph (5) and inserting ‘‘, and’’, and by adding 

20 at the end the following new paragraph: 


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1 ‘‘(6) imported property income for the taxable 

2 year (determined under subsection (j) and reduced 

3 as provided in subsection (b)(5)).’’. 

4 (b) DEFINITION OF IMPORTED PROPERTY IN5 COME.—Section 954 of the Internal Revenue Code of 1986 

6 is amended by adding at the end the following new sub7 section: 

8 ‘‘(j) IMPORTED PROPERTY INCOME.— 

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

10 (a)(6), the term ‘imported property income’ means 

11 income (whether in the form of profits, commissions, 

12 fees, or otherwise) derived in connection with— 

13 ‘‘(A) manufacturing, producing, growing, 

14 or extracting imported property; 

15 ‘‘(B) the sale, exchange, or other disposi16 tion of imported property; or 

17 ‘‘(C) the lease, rental, or licensing of im18 ported property. 

19 Such term shall not include any foreign oil and gas 

20 extraction income (within the meaning of section 

21 907(c)) or any foreign oil related income (within the 

22 meaning of section 907(c)). 

23 ‘‘(2) IMPORTED PROPERTY.—For purposes of 

24 this subsection— 


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1 ‘‘(A) IN GENERAL.—Except as otherwise 

2 provided in this paragraph, the term ‘imported 

3 property’ means property which is imported 

4 into the United States by the controlled foreign 

5 corporation or a related person. 

6 ‘‘(B) IMPORTED PROPERTY INCLUDES CER7 TAIN PROPERTY IMPORTED BY UNRELATED

8 PERSONS.—The term ‘imported property’ in9 cludes any property imported into the United 

10 States by an unrelated person if, when such 

11 property was sold to the unrelated person by 

12 the controlled foreign corporation (or a related 

13 person), it was reasonable to expect that— 

14 ‘‘(i) such property would be imported 

15 into the United States; or 

16 ‘‘(ii) such property would be used as 

17 a component in other property which would 

18 be imported into the United States. 

19 ‘‘(C) EXCEPTION FOR PROPERTY SUBSE20 QUENTLY EXPORTED.—The term ‘imported 

21 property’ does not include any property which is 

22 imported into the United States and which— 

23 ‘‘(i) before substantial use in the 

24 United States, is sold, leased, or rented by 

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1 lated person for direct use, consumption, 

2 or disposition outside the United States; or 

3 ‘‘(ii) is used by the controlled foreign 

4 corporation or a related person as a com5 ponent in other property which is so sold, 

6 leased, or rented. 

7 ‘‘(3) DEFINITIONS AND SPECIAL RULES.— 

8 ‘‘(A) IMPORT.—For purposes of this sub9 section, the term ‘import’ means entering, or 

10 withdrawal from warehouse, for consumption or 

11 use. Such term includes any grant of the right 

12 to use intangible property (as defined in section 

13 936(h)(3)(B)) in the United States. 

14 ‘‘(B) UNITED STATES.—For purposes of 

15 this subsection, the term ‘United States’ in16 cludes the Commonwealth of Puerto Rico, the 

17 Virgin Islands of the United States, Guam, 

18 American Samoa, and the Commonwealth of 

19 the Northern Mariana Islands. 

20 ‘‘(C) UNRELATED PERSON.—For purposes 

21 of this subsection, the term ‘unrelated person’ 

22 means any person who is not a related person 

23 with respect to the controlled foreign corpora24 tion. 


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1 ‘‘(D) COORDINATION WITH FOREIGN BASE

2 COMPANY SALES INCOME.—For purposes of this 

3 section, the term ‘foreign base company sales 

4 income’ shall not include any imported property 

5 income.’’. 

6 (c) SEPARATE APPLICATION OF LIMITATIONS ON

7 FOREIGN TAX CREDIT FOR IMPORTED PROPERTY IN8 COME.— 

9 (1) BEFORE 2007.— 

10 (A) IN GENERAL.—Paragraph (1) of sec11 tion 904(d) of the Internal Revenue Code of 

12 1986 (relating to separate application of section 

13 with respect to certain categories of income), as 

14 in effect for taxable years beginning before Jan15 uary 1, 2007, is amended by striking ‘‘and’’ at 

16 the end of subparagraph (H), by redesignating 

17 subparagraph (I) as subparagraph (J), and by 

18 inserting after subparagraph (H) the following 

19 new subparagraph: 

20 ‘‘(I) imported property income, and’’. 

21 (B) IMPORTED PROPERTY INCOME DE22 FINED.—Paragraph (2) of section 904(d) of 

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1 ing after subparagraph (G) the following new 

2 subparagraph: 

3 ‘‘(H) IMPORTED PROPERTY INCOME.—The 

4 term ‘imported property income’ means any in5 come received or accrued by any person which 

6 is of a kind which would be imported property 

7 income (as defined in section 954(j)).’’. 

8 (C) LOOK-THRU RULES TO APPLY.—Sub9 paragraph (F) of section 904(d)(3) of such 

10 Code, as so in effect, is amended by striking 

11 ‘‘or (D)’’ and inserting ‘‘(D), or (I)’’. 

12 (2) AFTER 2006.— 

13 (A) IN GENERAL.—Paragraph (1) of sec14 tion 904(d) of the Internal Revenue Code of 

15 1986 (relating to separate application of section 

16 with respect to certain categories of income), as 

17 in effect for taxable years beginning after De18 cember 31, 2006, is amended by striking ‘‘and’’ 

19 at the end of subparagraph (A), by redesig20 nating subparagraph (B) as subparagraph (C), 

21 and by inserting after subparagraph (A) the fol22 lowing new subparagraph: 

23 ‘‘(B) imported property income, and’’. 

24 (B) IMPORTED PROPERTY INCOME DE25 FINED.—Paragraph (2) of section 904(d) of 


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1 such Code, as so in effect, is amended by redes2 ignating subparagraphs (J) and (K) as sub3 paragraphs (K) and (L), respectively, and by 

4 inserting after subparagraph (I) the following 

5 new subparagraph: 

6 ‘‘(J) IMPORTED PROPERTY INCOME.—The 

7 term ‘imported property income’ means any in8 come received or accrued by any person which 

9 is of a kind which would be imported property 

10 income (as defined in section 954(j)).’’. 

11 (C) CONFORMING AMENDMENT.—Clause 

12 (ii) of section 904(d)(2)(A) of such Code, as so 

13 in effect, is amended by inserting ‘‘or imported 

14 property income’’ after ‘‘passive category in15 come’’. 

16 (d) TECHNICAL AMENDMENTS.— 

17 (1) Clause (iii) of section 952(c)(1)(B) of such 

18 Code (relating to certain prior year deficits may be 

19 taken into account) is amended— 

20 (A) by redesignating subclauses (II), (III), 

21 (IV), and (V) as subclauses (III), (IV), (V), and 

22 (VI), and 

23 (B) by inserting after subclause (I) the fol24 lowing new subclause: 


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1 ‘‘(II) imported property in2 come,’’. 

3 (2) Paragraph (5) of section 954(b) of such 

4 Code (relating to deductions to be taken into ac5 count) is amended by striking ‘‘and the foreign base 

6 company oil related income’’ and inserting ‘‘the for7 eign base company oil related income, and the im8 ported property income’’. 

9 (e) EFFECTIVE DATES.— 

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

12 shall apply to taxable years of foreign corporations 

13 beginning after the date of the enactment of this 

14 Act, and to taxable years of United States share15 holders within which or with which such taxable 

16 years of such foreign corporations end. 

17 (2) SUBSECTION (c).—The amendments made 

18 by subsection (c)(1) shall apply to taxable years be19 ginning after the date of the enactment of this Act 

20 and before January 1, 2007, and the amendments 

21 made by subsection (c)(2) shall apply to taxable 

22 years beginning after December 31, 2006. 

Æ 


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