I

103D CONGRESS

1ST SESSION H. R. 2141

To provide for budget reconciliation with respect to revenue and spending

matters within the jurisdiction of the Committee on Ways and Means

for fiscal year 1994 and subsequent fiscal years.

IN THE HOUSE OF REPRESENTATIVES

MAY 18, 1993

Mr. ROSTENKOWSKI introduced the following bill; which was referred jointly

to the Committees on Ways and Means, Energy and Commerce, and Rules

A BILL

To provide for budget reconciliation with respect to revenue

and spending matters within the jurisdiction of the Committee on Ways and Means for fiscal year 1994 and

subsequent fiscal years.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 TITLE I—SHORT TITLE; REF2 ERENCES TO OMNIBUS BUDG3 ET RECONCILIATION ACT OF

4 1993

5 SEC. 101. SHORT TITLE.

6 This Act may be cited as the ‘‘Ways and Means

7 Budget Reconciliation Act of 1993’’.

8 SEC. 102. REFERENCES TO OMNIBUS BUDGET RECONCILI9 ATION ACT OF 1993.

10 Any reference in this Act (or in any amendment made

11 by this Act) to the Omnibus Budget Reconciliation Act

12 of 1993 shall be deemed to be a reference to this Act.

13 TITLES II-XII—[RESERVED]

14 TITLE XIII—COMMITTEE ON

15 WAYS AND MEANS—SAVINGS

16 Subtitle A—Old-Age, Survivors, and

17 Disability Insurance Program

TABLE OF CONTENTS OF SUBTITLE

Sec. 13001. Explicit requirements for maintenance of telephone access to local

offices of the Social Security Administration.

Sec. 13002. Expansion of State option to exclude service of election officials or

election workers from coverage.

Sec. 13003. Use of social security numbers by States and local governments

and Federal district courts for jury selection purposes.

Sec. 13004. Authorization for all States to extend coverage to State and local

policemen and firemen under existing coverage agreements.

Sec. 13005. Limited exemption for Canadian ministers from certain self-employment tax liability.

Sec. 13006. Exclusion of totalization benefits from the application of the windfall elimination provision.

Sec. 13007. Exclusion of military reservists from application of the government

pension offset and windfall elimination provisions.

Sec. 13008. Repeal of the facility-of-payment provision.

Sec. 13009. Maximum family benefits in guarantee cases.
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Sec. 13010. Authorization for disclosure by the Secretary of Health and

Human Services of information for purposes of public or private epidemiological and similar research.

Sec. 13011. Improvement and clarification of provisions prohibiting misuse of

symbols, emblems, or names in reference to social security programs and agencies.

Sec. 13012. Increased penalties for unauthorized disclosure of social security

information.

Sec. 13013. Simplification of employment taxes on domestic services.

Sec. 13014. Increase in authorized period for extension of time to file annual

earnings report.

Sec. 13015. Allocations to Federal Disability Insurance Trust Fund.

Sec. 13016. Extension of disability insurance program demonstration project

authority.

Sec. 13017. Technical and clerical amendments.

Sec. 13018. Cross-matching of social security account number information and

employer identification number information maintained by the

Department of Agriculture.

Sec. 13019. Prohibition of misuse of Department of the Treasury names, symbols, etc.

Sec. 13020. Availability and use of death information under the old-age, survivors, and disability insurance program.

1 SEC. 13001. EXPLICIT REQUIREMENTS FOR MAINTENANCE

2 OF TELEPHONE ACCESS TO LOCAL OFFICES

3 OF THE SOCIAL SECURITY ADMINISTRATION.

4 (a) MAINTENANCE OF SERVICE TO LOCAL OF5 FICES.—

6 (1) IN GENERAL.—Section 5110(a) of the Om7 nibus Budget Reconciliation Act of 1990 (104 Stat.

8 1388-272) is amended by adding at the end the fol9 lowing new sentence: ‘‘In carrying out the require10 ments of the preceding sentence, the Secretary shall

11 reestablish and maintain in service at least the same

12 number of telephone lines to each such local office

13 as was in place as of such date, including telephone

14 sets for connections to such lines.’’.
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1 (2) EFFECTIVE DATE.—The Secretary of

2 Health and Human Services shall ensure that the

3 requirements of the amendment made by paragraph

4 (1) are carried out no later than 90 days after the

5 date of the enactment of this Act.

6 (3) GAO REPORT.—The Comptroller General of

7 the United States shall make an independent deter8 mination of the number of telephone lines to each

9 local office of the Social Security Administration

10 which are in place as of 90 days after the enactment

11 of this Act and shall report his findings to the Com12 mittee on Ways and Means of the House of Rep13 resentatives and the Committee on Finance of the

14 Senate no later than 150 days after the date of the

15 enactment of this Act.

16 (b) MAINTENANCE OF TOLL-FREE TELEPHONE

17 NUMBER SERVICE.—The Secretary of Health and Human

18 Services shall ensure that toll-free telephone service pro19 vided by the Social Security Administration is maintained

20 at a level which is at least equal to that in effect on the

21 date of the enactment of this Act.
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1 SEC. 13002. EXPANSION OF STATE OPTION TO EXCLUDE

2 SERVICE OF ELECTION OFFICIALS OR ELEC3 TION WORKERS FROM COVERAGE.

4 (a) LIMITATION ON MANDATORY COVERAGE OF

5 STATE ELECTION OFFICIALS AND ELECTION WORKERS

6 WITHOUT STATE RETIREMENT SYSTEM.—

7 (1) AMENDMENT TO SOCIAL SECURITY ACT.—

8 Section 210(a)(7)(F)(iv) of the Social Security Act

9 (42 U.S.C. 410(a)(7)(F)(iv)) (as amended by section

10 11332(a) of the Omnibus Budget Reconciliation Act

11 of 1990) is amended by striking ‘‘$100’’ and insert12 ing ‘‘$1,000 with respect to service performed dur13 ing 1994, and the adjusted amount determined

14 under section 218(c)(8)(B) for any subsequent year

15 with respect to service performed during such subse16 quent year’’.

17 (2) AMENDMENT TO FICA.—Section

18 3121(b)(7)(F)(iv) of the Internal Revenue Code of

19 1986 (as amended by section 11332(b) of the Omni20 bus Budget Reconciliation Act of 1990) is amended

21 by striking ‘‘$100’’ and inserting ‘‘$1,000 with re22 spect to service performed during 1994, and the ad23 justed amount determined under section

24 218(c)(8)(B) of the Social Security Act for any sub25 sequent year with respect to service performed dur26 ing such subsequent year’’.
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1 (b) CONFORMING AMENDMENTS RELATING TO MED2 ICARE QUALIFIED GOVERNMENT EMPLOYMENT.—

3 (1) AMENDMENT TO SOCIAL SECURITY ACT.—

4 Section 210(p)(2)(E) of the Social Security Act (42

5 U.S.C. 410(p)(2)(E)) is amended by striking

6 ‘‘$100’’ and inserting ‘‘$1,000 with respect to serv7 ice performed during 1994, and the adjusted amount

8 determined under section 218(c)(8)(B) for any sub9 sequent year with respect to service performed dur10 ing such subsequent year’’.

11 (2) AMENDMENT TO FICA.—Section

12 3121(u)(2)(B)(ii)(V) of the Internal Revenue Code

13 of 1986 is amended by striking ‘‘$100’’ and insert14 ing ‘‘$1,000 with respect to service performed dur15 ing 1994, and the adjusted amount determined

16 under section 218(c)(8)(B) of the Social Security

17 Act for any subsequent year with respect to service

18 performed during such subsequent year’’.

19 (c) AUTHORITY FOR STATES TO MODIFY COVERAGE

20 AGREEMENTS WITH RESPECT TO ELECTION OFFICIALS

21 AND ELECTION WORKERS.—Section 218(c)(8) of the So22 cial Security Act (42 U.S.C. 418(c)(8)) is amended—

23 (1) by striking ‘‘on or after January 1, 1968,’’

24 and inserting ‘‘at any time’’;
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1 (2) by striking ‘‘$100’’ and inserting ‘‘$1,000

2 with respect to service performed during 1994, and

3 the adjusted amount determined under subpara4 graph (B) for any subsequent year with respect to

5 service performed during such subsequent year’’;

6 and

7 (3) by striking the last sentence and inserting

8 the following new sentence: ‘‘Any modification of an

9 agreement pursuant to this paragraph shall be effec10 tive with respect to services performed in and after

11 the calendar year in which the modification is mailed

12 or delivered by other means to the Secretary.’’.

13 (d) INDEXATION OF EXEMPT AMOUNT.—Section

14 218(c)(8) of such Act (as amended by subsection (c)) is

15 further amended—

16 (1) by inserting ‘‘(A)’’ after ‘‘(8)’’; and

17 (2) by adding at the end the following new sub18 paragraph:

19 ‘‘(B) For each year after 1994, the Secretary shall

20 adjust the amount referred to in subparagraph (A) at the

21 same time and in the same manner as is provided under

22 section 215(a)(1)(B)(ii) with respect to the amounts re23 ferred to in section 215(a)(1)(B)(i), except that—
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1 ‘‘(i) for purposes of this subparagraph, 1992

2 shall be substituted for the calendar year referred to

3 in section 215(a)(1)(B)(ii)(II), and

4 ‘‘(ii) such amount as so adjusted, if not a mul5 tiple of $100, shall be rounded to the next higher

6 multiple of $100 where such amount is a multiple of

7 $50 and to the nearest multiple of $100 in any other

8 case.

9 The Secretary shall determine and publish in the Federal

10 Register each adjusted amount determined under this sub11 paragraph not later than November 1 preceding the year

12 for which the adjustment is made.’’.

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

14 subsections (a), (b), and (c) shall apply with respect to

15 service performed on or after January 1, 1994.

16 SEC. 13003. USE OF SOCIAL SECURITY NUMBERS BY STATES

17 AND LOCAL GOVERNMENTS AND FEDERAL

18 DISTRICT COURTS FOR JURY SELECTION

19 PURPOSES.

20 (a) IN GENERAL.—Section 205(c)(2) of the Social

21 Security Act (42 U.S.C. 405(c)(2)) is amended—

22 (1) in subparagraph (B)(i), by striking ‘‘(E)’’ in

23 the matter preceding subclause (I) and inserting

24 ‘‘(F)’’;
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1 (2) by redesignating subparagraphs (E) and

2 (F) as subparagraphs (F) and (G), respectively; and

3 (3) by inserting after subparagraph (D) the fol4 lowing:

5 ‘‘(E)(i) It is the policy of the United States that—

6 ‘‘(I) any State (or any political subdivision of a

7 State) may utilize the social security account num8 bers issued by the Secretary for the additional pur9 poses described in clause (ii) if such numbers have

10 been collected and are otherwise utilized by such

11 State (or political subdivision) in accordance with

12 applicable law, and

13 ‘‘(II) any district court of the United States

14 may use, for such additional purposes, any such so15 cial security account numbers which have been so

16 collected and are so utilized by any State.

17 ‘‘(ii) The additional purposes described in this clause

18 are the following:

19 ‘‘(I) identifying duplicate names of individuals

20 on master lists used for jury selection purposes, and

21 ‘‘(II) identifying on such master lists those indi22 viduals who are ineligible to serve on a jury by rea23 son of their conviction of a felony.

24 ‘‘(iii) To the extent that any provision of Federal law

25 enacted before the date of the enactment of this subpara-
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1 graph is inconsistent with the policy set forth in clause

2 (i), such provision shall, on and after that date, be null,

3 void, and of no effect.

4 ‘‘(iv) For purposes of this subparagraph, the term

5 ‘State’ has the meaning such term has in subparagraph

6 (D).’’.

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

8 subsection (a) shall take effect on the date of the enact9 ment of this Act.

10 SEC. 13004. AUTHORIZATION FOR ALL STATES TO EXTEND

11 COVERAGE TO STATE AND LOCAL POLICE12 MEN AND FIREMEN UNDER EXISTING COV13 ERAGE AGREEMENTS.

14 (a) IN GENERAL.—Section 218(l) of the Social Secu15 rity Act (42 U.S.C. 418(l)) is amended—

16 (1) in paragraph (1), by striking ‘‘(1)’’ after

17 ‘‘(l)’’, and by striking ‘‘the State of’’ and all that fol18 lows through ‘‘prior to the date of enactment of this

19 subsection’’ and inserting ‘‘a State entered into pur20 suant to this section’’; and

21 (2) by striking paragraph (2).

22 (b) CONFORMING AMENDMENT.—Section

23 218(d)(8)(D) of such Act (42 U.S.C. 418(d)(8)(D)) is

24 amended by striking ‘‘agreements with the States named
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1 in’’ and inserting ‘‘State agreements modified as provided

2 in’’.

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

4 this section shall apply with respect to modifications filed

5 by States after the date of the enactment of this Act.

6 SEC. 13005. LIMITED EXEMPTION FOR CANADIAN MIN7 ISTERS FROM CERTAIN SELF-EMPLOYMENT

8 TAX LIABILITY.

9 (a) IN GENERAL.—Notwithstanding any other provi10 sion of law, if—

11 (1) an individual performed services described

12 in section 1402(c)(4) of the Internal Revenue Code

13 of 1986 which are subject to tax under section 1401

14 of such Code,

15 (2) such services were performed in Canada at

16 a time when no agreement between the United

17 States and Canada pursuant to section 233 of the

18 Social Security Act was in effect, and

19 (3) such individual was required to pay con20 tributions on the earnings from such services under

21 the social insurance system of Canada,

22 then such individual may file a certificate under this sec23 tion in such form and manner, and with such official, as

24 may be prescribed in regulations issued under chapter 2

25 of such Code. Upon the filing of such certificate, notwith-
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1 standing any judgment which has been entered to the con2 trary, such individual shall be exempt from payment of

3 such tax with respect to services described in paragraphs

4 (1) and (2) and from any penalties or interest for failure

5 to pay such tax or to file a self-employment tax return

6 as required under section 6017 of such Code.

7 (b) PERIOD FOR FILING.—A certificate referred to

8 in subsection (a) may be filed only during the 180-day

9 period commencing with the date on which the regulations

10 referred to in subsection (a) are issued.

11 (c) TAXABLE YEARS AFFECTED BY CERTIFICATE.—

12 A certificate referred to in subsection (a) shall be effective

13 for taxable years ending after December 31, 1978, and

14 before January 1, 1985.

15 (d) RESTRICTION ON CREDITING OF EXEMPT SELF16 EMPLOYMENT INCOME.—In any case in which an individ17 ual is exempt under this section from paying a tax im18 posed under section 1401 of the Internal Revenue Code

19 of 1986, any income on which such tax would have been

20 imposed but for such exemption shall not constitute self21 employment income under section 211(b) of the Social Se22 curity Act (42 U.S.C. 411(b)), and, if such individual’s

23 primary insurance amount has been determined under sec24 tion 215 of such Act (42 U.S.C. 415), notwithstanding

25 section 215(f)(1) of such Act, the Secretary of Health and
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1 Human Services shall recompute such primary insurance

2 amount so as to take into account the provisions of this

3 subsection. The recomputation under this subsection shall

4 be effective with respect to benefits for months following

5 approval of the certificate of exemption.

6 SEC. 13006. EXCLUSION OF TOTALIZATION BENEFITS FROM

7 THE APPLICATION OF THE WINDFALL ELIMI8 NATION PROVISION.

9 (a) IN GENERAL.—Section 215(a)(7) of the Social

10 Security Act (42 U.S.C. 415(a)(7)) is amended—

11 (1) in subparagraph (A), by striking ‘‘but ex12 cluding’’ and all that follows through ‘‘1937’’ and

13 inserting ‘‘but excluding (I) a payment under the

14 Railroad Retirement Act of 1974 or 1937, and (II)

15 a payment by a social security system of a foreign

16 country based on an agreement concluded between

17 the United States and such foreign country pursuant

18 to section 233’’; and

19 (2) in subparagraph (E), by inserting after ‘‘in

20 the case of an individual’’ the following: ‘‘whose eli21 gibility for old-age or disability insurance benefits is

22 based on an agreement concluded pursuant to sec23 tion 233 or an individual’’.

24 (b) CONFORMING AMENDMENT RELATING TO BENE25 FITS UNDER 1939 ACT.—Section 215(d)(3) of such Act
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1 (42 U.S.C. 415(d)(3)) is amended by striking ‘‘but exclud2 ing’’ and all that follows through ‘‘1937’’ and inserting

3 ‘‘but excluding (I) a payment under the Railroad Retire4 ment Act of 1974 or 1937, and (II) a payment by a social

5 security system of a foreign country based on an agree6 ment concluded between the United States and such for7 eign country pursuant to section 233’’.

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

9 this section shall apply (notwithstanding section 215(f)(1)

10 of the Social Security Act (42 U.S.C. 415(f)(1))) with re11 spect to benefits payable for months after October 1993.

12 SEC. 13007. EXCLUSION OF MILITARY RESERVISTS FROM

13 APPLICATION OF THE GOVERNMENT PEN14 SION OFFSET AND WINDFALL ELIMINATION

15 PROVISIONS.

16 (a) EXCLUSION FROM GOVERNMENT PENSION OFF17 SET PROVISIONS.—Subsections (b)(4), (c)(2), (e)(7),

18 (f)(2), and (g)(4) of section 202 of the Social Security Act

19 (42 U.S.C. 402 (b)(4), (c)(2), (e)(7), (f)(2), and (g)(4))

20 are each amended—

21 (1) in subparagraph (A)(ii), by striking ‘‘unless

22 subparagraph (B) applies.’’;

23 (2) in subparagraph (A), by striking ‘‘The’’ in

24 the matter following clause (ii) and inserting ‘‘unless

25 subparagraph (B) applies. The’’; and
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1 (3) in subparagraph (B), by redesignating the

2 existing matter as clause (ii), and by inserting before

3 such clause (ii) (as so redesignated) the following:

4 ‘‘(B)(i) Subparagraph (A)(i) shall not apply with re5 spect to monthly periodic benefits based wholly on service

6 as a member of a uniformed service (as defined in section

7 210(m)).’’.

8 (b) EXCLUSION FROM WINDFALL ELIMINATION

9 PROVISIONS.—Section 215(a)(7)(A) of such Act (as

10 amended by section 13006(a) of this Act) and section

11 215(d)(3) of such Act (as amended by section 13006(b)

12 of this Act) are each further amended—

13 (1) by striking ‘‘and’’ before ‘‘(II)’’; and

14 (2) by striking ‘‘section 233’’ and inserting

15 ‘‘section 233, and (III) a payment based wholly on

16 service as a member of a uniformed service (as de17 fined in section 210(m))’’.

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

19 this section shall apply (notwithstanding section 215(f) of

20 the Social Security Act) with respect to benefits payable

21 for months after October 1993.
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1 SEC. 13008. REPEAL OF THE FACILITY-OF-PAYMENT PROVI2 SION.

3 (a) REPEAL OF RULE PRECLUDING REDISTRIBUTION

4 UNDER FAMILY MAXIMUM.—Section 203(i) of the Social

5 Security Act (42 U.S.C. 403(i)) is repealed.

6 (b) COORDINATION UNDER FAMILY MAXIMUM OF

7 REDUCTION IN BENEFICIARY’S AUXILIARY BENEFITS

8 WITH SUSPENSION OF AUXILIARY BENEFITS OF OTHER

9 BENEFICIARY UNDER EARNINGS TEST.—Section

10 203(a)(4) of such Act (42 U.S.C. 403(a)(4)) is amended

11 by striking ‘‘section 222(b). Whenever’’ and inserting the

12 following: ‘‘section 222(b). Notwithstanding the preceding

13 sentence, any reduction under this subsection in the case

14 of an individual who is entitled to a benefit under sub15 section (b), (c), (d), (e), (f), (g), or (h) of section 202 for

16 any month on the basis of the same wages and self-em17 ployment income as another person—

18 ‘‘(A) who also is entitled to a benefit under sub19 section (b), (c), (d), (e), (f), (g), or (h) of section

20 202 for such month,

21 ‘‘(B) who does not live in the same household

22 as such individual, and

23 ‘‘(C) whose benefit for such month is suspended

24 (in whole or in part) pursuant to subsection (h)(3)

25 of this section,
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1 shall be made before the suspension under subsection

2 (h)(3). Whenever’’.

3 (c) CONFORMING AMENDMENT APPLYING EARNINGS

4 REPORTING REQUIREMENT DESPITE SUSPENSION OF

5 BENEFITS.—The third sentence of section 203(h)(1)(A)

6 of such Act (42 U.S.C. 403(h)(1)(A)) is amended by strik7 ing ‘‘Such report need not be made’’ and all that follows

8 through ‘‘The Secretary may grant’’ and inserting the fol9 lowing: ‘‘Such report need not be made for any taxable

10 year—

11 ‘‘(i) beginning with or after the month in which

12 such individual attained age 70, or

13 ‘‘(ii) if benefit payments for all months (in such

14 taxable year) in which such individual is under age

15 70 have been suspended under the provisions of the

16 first sentence of paragraph (3) of this subsection,

17 unless—

18 ‘‘(I) such individual is entitled to benefits

19 under subsection (b), (c), (d), (e), (f), (g), or

20 (h) of section 202,

21 ‘‘(II) such benefits are reduced under sub22 section (a) of this section for any month in such

23 taxable year, and

24 ‘‘(III) in any such month there is another

25 person who also is entitled to benefits under
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1 subsection (b), (c), (d), (e), (f), (g), or (h) of

2 section 202 on the basis of the same wages and

3 self-employment income and who does not live

4 in the same household as such individual.

5 The Secretary may grant’’.

6 (d) CONFORMING AMENDMENT DELETING SPECIAL

7 INCOME TAX TREATMENT OF BENEFITS NO LONGER RE8 QUIRED BY REASON OF REPEAL.—Section 86(d)(1) of the

9 Internal Revenue Code of 1986 (relating to income tax

10 on social security benefits) is amended by striking the last

11 sentence.

12 (e) EFFECTIVE DATES.—

13 (1) The amendments made by subsections (a),

14 (b), and (c) shall apply with respect to benefits pay15 able for months after December 1994.

16 (2) The amendment made by subsection (d)

17 shall apply with respect to benefits received after

18 December 31, 1994, in taxable years ending after

19 such date.

20 SEC. 13009. MAXIMUM FAMILY BENEFITS IN GUARANTEE

21 CASES.

22 (a) IN GENERAL.—Section 203(a) of the Social Secu23 rity Act (42 U.S.C. 403(a)) is amended by adding at the

24 end the following new paragraph:

25 ‘‘(10)(A) Subject to subparagraphs (B) and (C)—
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1 ‘‘(i) the total monthly benefits to which bene2 ficiaries may be entitled under sections 202 and 223

3 for a month on the basis of the wages and self-em4 ployment income of an individual whose primary in5 surance amount is computed under section

6 215(a)(2)(B)(i) shall equal the total monthly bene7 fits which were authorized by this section with re8 spect to such individual’s primary insurance amount

9 for the last month of his prior entitlement to disabil10 ity insurance benefits, increased for this purpose by

11 the general benefit increases and other increases

12 under section 215(i) that would have applied to such

13 total monthly benefits had the individual remained

14 entitled to disability insurance benefits until the

15 month in which he became entitled to old-age insur16 ance benefits or reentitled to disability insurance

17 benefits or died, and

18 ‘‘(ii) the total monthly benefits to which bene19 ficiaries may be entitled under sections 202 and 223

20 for a month on the basis of the wages and self-em21 ployment income of an individual whose primary in22 surance amount is computed under section

23 215(a)(2)(C) shall equal the total monthly benefits

24 which were authorized by this section with respect to

25 such individual’s primary insurance amount for the
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1 last month of his prior entitlement to disability in2 surance benefits.

3 ‘‘(B) In any case in which—

4 ‘‘(i) the total monthly benefits with respect to

5 such individual’s primary insurance amount for the

6 last month of his prior entitlement to disability in7 surance benefits was computed under paragraph (6),

8 and

9 ‘‘(ii) the individual’s primary insurance amount

10 is computed under subparagraph (B)(i) or (C) of

11 section 215(a)(2) by reason of the individual’s enti12 tlement to old-age insurance benefits or death,

13 the total monthly benefits shall equal the total monthly

14 benefits that would have been authorized with respect to

15 the primary insurance amount for the last month of his

16 prior entitlement to disability insurance benefits if such

17 total monthly benefits had been computed without regard

18 to paragraph (6).

19 ‘‘(C) This paragraph shall apply before the applica20 tion of paragraph (3)(A), and before the application of

21 section 203(a)(1) of this Act as in effect in December

22 1978.’’.

23 (b) CONFORMING AMENDMENT.—Section 203(a)(8)

24 of such Act (42 U.S.C. 403(a)(8)) is amended by striking

25 ‘‘Subject to paragraph (7),’’ and inserting ‘‘Subject to
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1 paragraph (7) and except as otherwise provided in para2 graph (10)(C),’’.

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

4 this section shall apply for the purpose of determining the

5 total monthly benefits to which beneficiaries may be enti6 tled under sections 202 and 223 of the Social Security

7 Act based on the wages and self-employment income of

8 an individual who—

9 (1) becomes entitled to an old-age insurance

10 benefit under section 202(a) of such Act,

11 (2) becomes reentitled to a disability insurance

12 benefit under section 223 of such Act, or

13 (3) dies,

14 after October 1993.

15 SEC. 13010. AUTHORIZATION FOR DISCLOSURE BY THE SEC16 RETARY OF HEALTH AND HUMAN SERVICES

17 OF INFORMATION FOR PURPOSES OF PUBLIC

18 OR PRIVATE EPIDEMIOLOGICAL AND SIMI19 LAR RESEARCH.

20 (a) IN GENERAL.—Section 1106 of the Social Secu21 rity Act (42 U.S.C. 1306) is amended—

22 (1) by redesignating subsections (d) and (e) as

23 subsections (e) and (f), respectively;
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1 (2) in subsection (f) (as so redesignated), by

2 striking ‘‘subsection (d)’’ and inserting ‘‘subsection

3 (e)’’; and

4 (3) by inserting after subsection (c) the follow5 ing new subsection:

6 ‘‘(d) Notwithstanding any other provision of this sec7 tion, in any case in which—

8 ‘‘(1) information regarding whether an individ9 ual is shown on the records of the Secretary as

10 being alive or deceased is requested from the Sec11 retary for purposes of epidemiological or similar re12 search which the Secretary finds may reasonably be

13 expected to contribute to a national health interest,

14 and

15 ‘‘(2) the requester agrees to reimburse the Sec16 retary for providing such information and to comply

17 with limitations on safeguarding and rerelease or

18 redisclosure of such information as may be specified

19 by the Secretary,

20 the Secretary shall comply with such request, except to

21 the extent that compliance with such request would con22 stitute a violation of the terms of any contract entered

23 into under section 205(r).’’.

24 (b) AVAILABILITY OF INFORMATION RETURNS RE25 GARDING WAGES PAID EMPLOYEES.—Section 6103(l)(5)
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1 of the Internal Revenue Code of 1986 (relating to disclo2 sure of returns and return information to the Department

3 of Health and Human Services for purposes other than

4 tax administration) is amended—

5 (1) by striking ‘‘for the purpose of’’ and insert6 ing ‘‘for the purpose of—’’;

7 (2) by striking ‘‘carrying out, in accordance

8 with an agreement’’ and inserting the following:

9 ‘‘(A) carrying out, in accordance with an

10 agreement’’;

11 (3) by striking ‘‘program.’’ and inserting ‘‘pro12 gram; or’’; and

13 (4) by adding at the end the following new sub14 paragraph:

15 ‘‘(B) providing information regarding the

16 mortality status of individuals for epidemiolog17 ical and similar research in accordance with

18 section 1106(d) of the Social Security Act.’’.

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

20 this section shall apply with respect to requests for infor21 mation made after the date of the enactment of this Act.
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1 SEC. 13011. IMPROVEMENT AND CLARIFICATION OF PROVI2 SIONS PROHIBITING MISUSE OF SYMBOLS,

3 EMBLEMS, OR NAMES IN REFERENCE TO SO4 CIAL SECURITY PROGRAMS AND AGENCIES.

5 (a) PROHIBITION OF UNAUTHORIZED REPRODUC6 TION, REPRINTING, OR DISTRIBUTION FOR FEE OF CER7 TAIN OFFICIAL PUBLICATIONS.—Section 1140(a) of the

8 Social Security Act (42 U.S.C. 1320b–10(a)) is amend9 ed—

10 (1) by redesignating paragraphs (1) and (2) as

11 subparagraphs (A) and (B), respectively;

12 (2) by inserting ‘‘(1)’’ after ‘‘(a)’’; and

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

14 paragraph:

15 ‘‘(2) No person may, for a fee, reproduce, reprint,

16 or distribute any item consisting of a form, application,

17 or other publication of the Social Security Administration

18 unless such person has obtained specific, written author19 ization for such activity in accordance with regulations

20 which the Secretary shall prescribe.’’.

21 (b) ADDITION TO PROHIBITED WORDS, LETTERS,

22 SYMBOLS, AND EMBLEMS.—Paragraph (1) of section

23 1140(a) of such Act (as redesignated by subsection (a))

24 is further amended—

25 (1) in subparagraph (A) (as redesignated), by

26 striking ‘‘Administration’, the letters ‘SSA’ or
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1 ‘HCFA’,’’ and inserting ‘‘Administration’, ‘Depart2 ment of Health and Human Services’, ‘Health and

3 Human Services’, ‘Supplemental Security Income

4 Program’, or ‘Medicaid’, the letters ‘SSA’, ‘HCFA’,

5 ‘DHHS’, ‘HHS’, or ‘SSI’,’’; and

6 (2) in subparagraph (B) (as redesignated), by

7 striking ‘‘Social Security Administration’’ each place

8 it appears and inserting ‘‘Social Security Adminis9 tration, Health Care Financing Administration, or

10 Department of Health and Human Services’’, and

11 by striking ‘‘or of the Health Care Financing Ad12 ministration’’.

13 (c) EXEMPTION FOR USE OF WORDS, LETTERS,

14 SYMBOLS, AND EMBLEMS OF STATE AND LOCAL GOV15 ERNMENT AGENCIES BY SUCH AGENCIES.—Paragraph

16 (1) of section 1140(a) of such Act (as redesignated by sub17 section (a)) is further amended by adding at the end the

18 following new sentence: ‘‘The preceding provisions of this

19 subsection shall not apply with respect to the use by any

20 agency or instrumentality of a State or political subdivi21 sion of a State of any words or letters which identify an

22 agency or instrumentality of such State or of a political

23 subdivision of such State or the use by any such agency

24 or instrumentality of any symbol or emblem of an agency
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1 or instrumentality of such State or a political subdivision

2 of such State.’’.

3 (d) INCLUSION OF REASONABLENESS STANDARD.—

4 Section 1140(a)(1) of such Act (as amended by the pre5 ceding provisions of this section) is further amended, in

6 the matter following subparagraph (B) (as redesignated),

7 by striking ‘‘convey’’ and inserting ‘‘convey, or in a man8 ner which reasonably could be interpreted or construed as

9 conveying,’’.

10 (e) INEFFECTIVENESS OF DISCLAIMERS.—Sub11 section (a) of section 1140 of such Act (as amended by

12 the preceding provisions of this section) is further amend13 ed by adding at the end the following new paragraph:

14 ‘‘(3) Any determination of whether the use of one or

15 more words, letters, symbols, or emblems (or any combina16 tion or variation thereof) in connection with an item de17 scribed in paragraph (1) or the reproduction, reprinting,

18 or distribution of an item described in paragraph (2) is

19 a violation of this subsection shall be made without regard

20 to any inclusion in such item (or any so reproduced, re21 printed, or distributed copy thereof) of a disclaimer of af22 filiation with the United States Government or any par23 ticular agency or instrumentality thereof.’’.

24 (f) VIOLATIONS WITH RESPECT TO INDIVIDUAL

25 ITEMS.—Section 1140(b)(1) of such Act (42 U.S.C.
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1 1320b–10(b)(1)) is amended by adding at the end the fol2 lowing new sentence: ‘‘In the case of any items referred

3 to in subsection (a)(1) consisting of pieces of mail, each

4 such piece of mail which contains one or more words, let5 ters, symbols, or emblems in violation of subsection (a)

6 shall represent a separate violation. In the case of any

7 item referred to in subsection (a)(2), the reproduction, re8 printing, or distribution of such item shall be treated as

9 a separate violation with respect to each copy thereof so

10 reproduced, reprinted, or distributed.’’.

11 (g) ELIMINATION OF CAP ON AGGREGATE LIABILITY

12 AMOUNT.—

13 (1) REPEAL.—Paragraph (2) of section 1140(b)

14 of such Act (42 U.S.C. 1320b–10(b)(2)) is repealed.

15 (2) CONFORMING AMENDMENTS.—Section

16 1140(b) of such Act is further amended—

17 (A) by striking ‘‘(1) Subject to paragraph

18 (2), the’’ and inserting ‘‘The’’;

19 (B) by redesignating subparagraphs (A)

20 and (B) as paragraphs (1) and (2), respectively;

21 and

22 (C) in paragraph (1) (as redesignated), by

23 striking ‘‘subparagraph (B)’’ and inserting

24 ‘‘paragraph (2)’’.
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1 (h) REMOVAL OF FORMAL DECLINATION REQUIRE2 MENT.—Section 1140(c)(1) of such Act (42 U.S.C.

3 1320b–10(c)(1)) is amended by inserting ‘‘and the first

4 sentence of subsection (c)’’ after ‘‘and (i)’’.

5 (i) PENALTIES RELATING TO SOCIAL SECURITY AD6 MINISTRATION DEPOSITED IN OASI TRUST FUND.—Sec7 tion 1140(c)(2) of such Act (42 U.S.C. 1320b–10(c)(2))

8 is amended in the second sentence by striking ‘‘United

9 States.’’ and inserting ‘‘United States, except that, to the

10 extent that such amounts are recovered under this section

11 as penalties imposed for misuse of words, letters, symbols,

12 or emblems relating to the Social Security Administration,

13 such amounts shall be deposited into the Federal Old-Age

14 and Survivor’s Insurance Trust Fund.’’.

15 (j) ENFORCEMENT.—Section 1140 of such Act (42

16 U.S.C. 1320b–10) is amended by adding at the end the

17 following new subsection:

18 ‘‘(d) The preceding provisions of this section shall be

19 enforced through the Office of Inspector General of the

20 Department of Health and Human Services.’’.

21 (k) ANNUAL REPORTS.—Section 1140 of such Act

22 (as amended by the preceding provisions of this section)

23 is further amended by adding at the end the following new

24 subsection:
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1 ‘‘(e) The Secretary shall include in the annual report

2 submitted pursuant to section 704 a report on the oper3 ation of this section during the year covered by such an4 nual report. Such report shall specify—

5 ‘‘(1) the number of complaints of violations of

6 this section received by the Social Security Adminis7 tration during the year,

8 ‘‘(2) the number of cases in which a notice of

9 violation of this section was sent by the Social Secu10 rity Administration during the year requesting that

11 an individual cease activities in violation of this sec12 tion,

13 ‘‘(3) the number of complaints of violations of

14 this section referred by the Social Security Adminis15 tration to the Inspector General in the Department

16 of Health and Human Services during the year,

17 ‘‘(4) the number of investigations of violations

18 of this section undertaken by the Inspector General

19 during the year,

20 ‘‘(5) the number of cases in which a demand

21 letter was sent during the year assessing a civil

22 money penalty under this section,

23 ‘‘(6) the total amount of civil money penalties

24 assessed under this section during the year,
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1 ‘‘(7) the number of requests for hearings filed

2 during the year pursuant to subsection (c)(1) of this

3 section and section 1128A(c)(2),

4 ‘‘(8) the disposition during such year of hear5 ings filed pursuant to sections 1140(c)(1) and

6 1128A(c)(2), and

7 ‘‘(9) the total amount of civil money penalties

8 under this section deposited into the Federal Old9 Age and Survivors Insurance Trust Fund during the

10 year.’’.

11 (l) EFFECTIVE DATE.—The amendments made by

12 this section shall apply with respect to violations occurring

13 after the date of the enactment of this Act.

14 SEC. 13012. INCREASED PENALTIES FOR UNAUTHORIZED

15 DISCLOSURE OF SOCIAL SECURITY INFORMA16 TION.

17 (a) UNAUTHORIZED DISCLOSURE.—Section 1106(a)

18 of the Social Security Act (42 U.S.C. 1306(a)) is amend19 ed—

20 (1) by striking ‘‘misdemeanor’’ and inserting

21 ‘‘felony’’;

22 (2) by striking ‘‘$1,000’’ and inserting

23 ‘‘$10,000 for each occurrence of a violation’’; and

24 (3) by striking ‘‘one year’’ and inserting ‘‘5

25 years’’.
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1 (b) UNAUTHORIZED DISCLOSURE BY FRAUD.—Sec2 tion 1107(b) of such Act (42 U.S.C. 1307(b)) is amend3 ed—

4 (1) by inserting ‘‘social security account num5 ber,’’ after ‘‘information as to the’’;

6 (2) by striking ‘‘misdemeanor’’ and inserting

7 ‘‘felony’’;

8 (3) by striking ‘‘$1,000’’ and inserting

9 ‘‘$10,000 for each occurrence of a violation’’; and

10 (4) by striking ‘‘one year’’ and inserting ‘‘5

11 years’’.

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

13 this section shall apply to violations occurring on or after

14 the date of the enactment of this Act.

15 SEC. 13013. SIMPLIFICATION OF EMPLOYMENT TAXES ON

16 DOMESTIC SERVICES.

17 (a) COORDINATION OF COLLECTION OF DOMESTIC

18 SERVICE EMPLOYMENT WITH COLLECTION OF INCOME

19 TAXES.—

20 (1) IN GENERAL.—Chapter 25 of the Internal

21 Revenue Code of 1986 (relating to general provi22 sions relating to employment taxes) is amended by

23 adding at the end thereof the following new section:
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1 ‘‘SEC. 3510. COORDINATION OF COLLECTION OF DOMESTIC

2 SERVICE EMPLOYMENT TAXES WITH COLLEC3 TION OF INCOME TAXES.

4 ‘‘(a) GENERAL RULE.—Except as otherwise provided

5 in this section—

6 ‘‘(1) returns with respect to domestic service

7 employment taxes shall be made on a calendar year

8 basis,

9 ‘‘(2) any such return for any calendar year

10 shall be filed on or before the 15th day of the fourth

11 month following the close of the employer’s taxable

12 year which begins in such calendar year, and

13 ‘‘(3) no requirement to make deposits (or to

14 pay installments under section 6157) shall apply

15 with respect to such taxes.

16 ‘‘(b) DOMESTIC SERVICE EMPLOYMENT TAXES SUB17 JECT TO ESTIMATED TAX PROVISIONS.—

18 ‘‘(1) IN GENERAL.—Solely for purposes of sec19 tion 6654, domestic service employment taxes im20 posed with respect to any calendar year shall be

21 treated as a tax imposed by chapter 2 for the tax22 able year of the employer which begins in such cal23 endar year.

24 ‘‘(2) ANNUALIZATION.—Under regulations pre25 scribed by the Secretary, appropriate adjustments

26 shall be made in the application of section
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1 6654(d)(2) in respect of the amount treated as tax

2 under paragraph (1).

3 ‘‘(3) TRANSITIONAL RULE.—For purposes of

4 applying section 6654 to a taxable year beginning in

5 1993, the amount referred to in clause (ii) of section

6 6654(d)(1)(B) shall be increased by 90 percent of

7 the amount treated as tax under paragraph (1) for

8 such taxable year.

9 ‘‘(c) DOMESTIC SERVICE EMPLOYMENT TAXES.—

10 For purposes of this section, the term ‘domestic service

11 employment taxes’ means—

12 ‘‘(1) any taxes imposed by chapter 21 or 23 on

13 remuneration paid for domestic service in a private

14 home of the employer, and

15 ‘‘(2) any amount withheld from such remunera16 tion pursuant to an agreement under section

17 3402(p).

18 For purposes of this subsection, the term ‘domestic service

19 in a private home of the employer’ does not include service

20 described in section 3121(g)(5).

21 ‘‘(d) EXCEPTION WHERE EMPLOYER LIABLE FOR

22 OTHER EMPLOYMENT TAXES.—To the extent provided in

23 regulations prescribed by the Secretary, this section shall

24 not apply to any employer for any calendar year if such

25 employer is liable for any tax under this subtitle with re-
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1 spect to remuneration for services other than domestic

2 service in a private home of the employer.

3 ‘‘(e) GENERAL REGULATORY AUTHORITY.—The Sec4 retary shall prescribe such regulations as may be nec5 essary or appropriate to carry out the purposes of this

6 section. Such regulations may treat domestic service em7 ployment taxes as taxes imposed by chapter 1 for purposes

8 of coordinating the assessment and collection of such em9 ployment taxes with the assessment and collection of do10 mestic employers’ income taxes.

11 ‘‘(f) AUTHORITY TO ENTER INTO AGREEMENTS TO

12 COLLECT STATE UNEMPLOYMENT TAXES.—

13 ‘‘(1) IN GENERAL.—The Secretary is hereby

14 authorized to enter into an agreement with any

15 State to collect, as the agent of such State, such

16 State’s unemployment taxes imposed on remunera17 tion paid for domestic service in a private home of

18 the employer. Any taxes to be collected by the Sec19 retary pursuant to such an agreement shall be treat20 ed as domestic service employment taxes for pur21 poses of this section.

22 ‘‘(2) TRANSFERS TO STATE ACCOUNT.—Any

23 amount collected under an agreement referred to in

24 paragraph (1) shall be transferred by the Secretary
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1 to the account of the State in the Unemployment

2 Trust Fund.

3 ‘‘(3) SUBTITLE F MADE APPLICABLE.—For

4 purposes of subtitle F, any amount required to be

5 collected under an agreement under paragraph (1)

6 shall be treated as a tax imposed by chapter 23.

7 ‘‘(4) STATE.—For purposes of this subsection,

8 the term ‘State’ has the meaning given such term by

9 section 3306(j)(1).’’

10 (2) CLERICAL AMENDMENT.—The table of sec11 tions for chapter 25 of such Code is amended by

12 adding at the end thereof the following:

‘‘Sec. 3510. Coordination of collection of domestic service employment taxes with collection of income taxes.’’

13 (3) EFFECTIVE DATE.—The amendments made

14 by this subsection shall apply to remuneration paid

15 in calendar years beginning after December 31,

16 1993.

17 (4) EXPANDED INFORMATION TO EMPLOY18 ERS.—The Secretary of the Treasury or his delegate

19 shall prepare and make available information on the

20 Federal tax obligations of employers with respect to

21 employees performing domestic service in a private

22 home of the employer. Such information shall also

23 include a statement that such employers may have

24 obligations with respect to such employees under
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1 State laws relating to unemployment insurance and

2 workers compensation.

3 (b) THRESHOLD REQUIREMENT FOR SOCIAL SECU4 RITY TAXES.—

5 (1) AMENDMENTS OF INTERNAL REVENUE

6 CODE.—

7 (A) Subparagraph (B) of section

8 3121(a)(7) of the Internal Revenue Code of

9 1986 (defining wages) is amended to read as

10 follows:

11 ‘‘(B) cash remuneration paid by an em12 ployer in any calendar year to an employee for

13 domestic service in a private home of the em14 ployer (within the meaning of subsection (y)), if

15 the cash remuneration paid in such year by the

16 employer to the employee for such service is less

17 than the applicable dollar threshold (as defined

18 in subsection (y)) for such year;’’.

19 (B) Section 3121 of such Code is amended

20 by adding at the end thereof the following new

21 subsection:

22 ‘‘(y) DOMESTIC SERVICE IN A PRIVATE HOME.—For

23 purposes of subsection (a)(7)(B)—

24 ‘‘(1) EXCLUSION FOR CERTAIN FARM SERV25 ICE.—The term ‘domestic service in a private home
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1 of the employer’ does not include service described

2 in subsection (g)(5).

3 ‘‘(2) APPLICABLE DOLLAR THRESHOLD.—The

4 term ‘applicable dollar threshold’ means $1,800. In

5 the case of calendar years after 1994, the Secretary

6 of Health and Human Services shall adjust such

7 $1,800 amount at the same time and in the same

8 manner as under section 215(a)(1)(B)(ii) of the So9 cial Security Act with respect to the amounts re10 ferred to in section 215(a)(1)(B)(i) of such Act, ex11 cept that, for purposes of this subparagraph, 1992

12 shall be substituted for the calendar year referred to

13 in section 215(a)(1)(B)(ii)(II) of such Act. If the

14 amount determined under the preceding sentence is

15 not a multiple of $50, such amount shall be rounded

16 to the nearest multiple of $50.’’

17 (C) The second sentence of section 3102(a)

18 of such Code is amended—

19 (i) by striking ‘‘calendar quarter’’

20 each place it appears and inserting ‘‘cal21 endar year’’, and

22 (ii) by striking ‘‘$50’’ and inserting

23 ‘‘the applicable dollar threshold (as defined

24 in section 3121(y)(2)) for such year’’.
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1 (2) AMENDMENT OF SOCIAL SECURITY ACT.—

2 Subparagraph (B) of section 209(a)(6) of the Social

3 Security Act (42 U.S.C. 409(a)(6)(B)) is amended

4 to read as follows:

5 ‘‘(B) Cash remuneration paid by an employer in

6 any calendar year to an employee for domestic serv7 ice in a private home of the employer, if the cash re8 muneration paid in such year by the employer to the

9 employee for such service is less than the applicable

10 dollar threshold (as defined in section 3121(y)(2) of

11 the Internal Revenue Code of 1986) for such year.

12 As used in this subparagraph, the term ‘domestic

13 service in a private home of the employer’ does not

14 include service described in section 210(f)(5).’’

15 (3) EFFECTIVE DATE.—The amendments made

16 by this subsection shall apply to remuneration paid

17 in calendar years beginning after December 31,

18 1993.

19 (4) RELIEF FROM LIABILITY FOR CERTAIN

20 UNDERPAYMENT AMOUNTS.—

21 (A) IN GENERAL.—On and after the date

22 of the enactment of this Act, an underpayment

23 to which this paragraph applies (and any pen24 alty, addition to tax, and interest with respect
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1 to such underpayment) shall not be assessed

2 (or, if assessed, shall not be collected).

3 (B) UNDERPAYMENTS TO WHICH PARA4 GRAPH APPLIES.—This paragraph shall apply

5 to an underpayment to the extent of the

6 amount thereof which would not be an

7 underpayment if—

8 (i) the amendments made by para9 graph (1) had applied to all calendar years

10 after 1950 and before 1994, and

11 (ii) the applicable dollar threshold for

12 any such calendar year were the amount

13 determined under the following table:
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In the case of The applicable

calendar year: dollar threshold is:

1951, 1952, or 1953 ..................................................... $ 200

1954, 1955, 1956, or 1957 ........................................... 250

1958, 1959, 1960, 1961, or 1962 ................................. 300

1963, 1964, 1965, or 1966 ........................................... 350

1967, 1968, 1969 .......................................................... 400

1970 .............................................................................. 450

1971, 1972, or 1973 ..................................................... 500

1974 or 1975 ................................................................ 600

1976 .............................................................................. 650

1977 .............................................................................. 700

1978 .............................................................................. 750

1979 .............................................................................. 800

1980 .............................................................................. 850

1981 .............................................................................. 900

1982 .............................................................................. 1,000

1983 .............................................................................. 1,100

1984 .............................................................................. 1,200

1985 .............................................................................. 1,250

1986 .............................................................................. 1,300

1987 .............................................................................. 1,350

1988 .............................................................................. 1,400

1989 .............................................................................. 1,500

1990 .............................................................................. 1,550

1991 .............................................................................. 1,600

1992 .............................................................................. 1,700

1993 .............................................................................. 1,750

1 SEC. 13014. INCREASE IN AUTHORIZED PERIOD FOR EXTEN2 SION OF TIME TO FILE ANNUAL EARNINGS

3 REPORT.

4 (a) IN GENERAL.—Section 203(h)(1)(A) of the Social

5 Security Act (42 U.S.C. 403(h)(1)(A)) is amended in the

6 last sentence by striking ‘‘three months’’ and inserting

7 ‘‘four months’’.

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

9 subsection (a) shall apply with respect to reports of earn10 ings for taxable years ending on or after December 31,

11 1993.
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1 SEC. 13015. ALLOCATIONS TO FEDERAL DISABILITY INSUR2 ANCE TRUST FUND.

3 (a) ALLOCATION WITH RESPECT TO WAGES.—Sec4 tion 201(b)(1) of the Social Security Act (42 U.S.C.

5 401(b)(1)) is amended to read as follows:

6 ‘‘(1) 1.75 percent of the wages (as defined in

7 section 3121 of the Internal Revenue Code of 1986)

8 paid after December 31, 1992, and reported to the

9 Secretary of the Treasury or his delegate pursuant

10 to subtitle F of the Internal Revenue Code of 1986,

11 which wages shall be certified by the Secretary of

12 Health and Human Services on the basis of the

13 records of wages established and maintained by such

14 Secretary in accordance with such reports; and’’.

15 (b) ALLOCATION WITH RESPECT TO SELF-EMPLOY16 MENT INCOME.—Section 201(b)(2) of such Act (42 U.S.C.

17 401(b)(2)) is amended to read as follows:

18 ‘‘(2) 1.75 percent of the self-employment in19 come (as defined in section 1402 of the Internal

20 Revenue Code of 1986) reported to the Secretary of

21 the Treasury or his delegate on tax returns under

22 subtitle F of the Internal Revenue Code of 1986 for

23 any taxable year beginning after December 31,

24 1992, which self-employment income shall be cer25 tified by the Secretary of Health and Human Serv26 ices on the basis of the records of self-employment
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1 income established and maintained by the Secretary

2 of Health and Human Services in accordance with

3 such returns.’’.

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

5 this section shall apply with respect to wages paid after

6 December 31, 1992, and self-employment income for tax7 able years beginning after such date.

8 (d) STUDY ON RISING COSTS OF DISABILITY BENE9 FITS.—

10 (1) IN GENERAL.—As soon as practicable after

11 the date of the enactment of this Act, the Secretary

12 of Health and Human Services shall conduct a com13 prehensive study of the reasons for rising costs pay14 able from the Federal Disability Insurance Trust

15 Fund.

16 (2) MATTERS TO BE INCLUDED IN STUDY.—In

17 conducting the study under this subsection, the Sec18 retary shall—

19 (A) determine the relative importance of

20 the following factors in increasing the costs

21 payable from the Trust Fund:

22 (i) increased numbers of applications

23 for benefits;

24 (ii) higher rates of benefit allowances;

25 and
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1 (iii) decreased rates of benefit termi2 nations; and

3 (B) identify, to the extent possible, under4 lying social, economic, demographic, pro5 grammatic, and other trends responsible for

6 changes in disability benefit applications, allow7 ances, and terminations.

8 (3) REPORT.—Not later than December 31,

9 1995, the Secretary shall transmit a report to the

10 Committee on Ways and Means of the House of

11 Representatives and the Committee on Finance of

12 the Senate setting forth the results of the study con13 ducted under this subsection, together with any rec14 ommendations for legislative changes which the Sec15 retary determines appropriate.

16 SEC. 13016. EXTENSION OF DISABILITY INSURANCE PRO17 GRAM DEMONSTRATION PROJECT AUTHOR18 ITY.

19 (a) IN GENERAL.—Section 505 of the Social Security

20 Disability Amendments of 1980 (Public Law 96–265), as

21 amended by section 12101 of the Consolidated Omnibus

22 Budget Reconciliation Act of 1985 (Public Law 99–272),

23 section 10103 of the Omnibus Budget Reconciliation Act

24 of 1989 (Public Law 101–239), and section 5120 of the
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1 Omnibus Budget Reconciliation Act of 1990 (Public Law

2 101–508) is further amended—

3 (1) in paragraph (3) of subsection (a), by strik4 ing ‘‘June 10, 1993’’ and inserting ‘‘June 10,

5 1996’’;

6 (2) in paragraph (4) of subsection (a), by strik7 ing ‘‘1992’’ and inserting ‘‘1995’’; and

8 (3) in subsection (c), by striking ‘‘October 1,

9 1993’’ and inserting ‘‘June 9, 1996’’.

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

11 this section shall take effect on the date of the enactment

12 of this Act.

13 SEC. 13017. TECHNICAL AND CLERICAL AMENDMENTS.

14 (a) AMENDMENTS TO TITLE II OF THE SOCIAL SE15 CURITY ACT.—

16 (1) Section 201(a) of the Social Security Act

17 (42 U.S.C. 401(a)) is amended, in the matter follow18 ing clause (4), by striking ‘‘and and’’ and inserting

19 ‘‘and’’.

20 (2) Section 202(d)(8)(D)(ii) of such Act (42

21 U.S.C. 402(d)(8)(D)(ii)) is amended by adding a pe22 riod at the end and by adjusting the left hand

23 margination thereof so as to align with section

24 202(d)(8)(D)(i) of such Act.
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1 (3) Section 202(q)(1)(A) of such Act (42

2 U.S.C. 402(q)(1)(A)) is amended by striking the

3 dash at the end.

4 (4) Section 202(q)(9) of such Act (42 U.S.C.

5 402(q)(9)) is amended, in the matter preceding sub6 paragraph (A), by striking ‘‘parargaph’’ and insert7 ing ‘‘paragraph’’.

8 (5) Section 202(t)(4)(D) of such Act (42

9 U.S.C. 402(t)(4)(D)) is amended by inserting ‘‘if

10 the’’ before ‘‘Secretary’’ the second and third places

11 it appears.

12 (6) Clauses (i) and (ii) of section 203(f)(5)(C)

13 of such Act (42 U.S.C. 403(f)(5)(C)) are amended

14 by adjusting the left-hand margination thereof so as

15 to align with clauses (i) and (ii) of section

16 203(f)(5)(B) of such Act.

17 (7) Paragraph (3)(A) and paragraph (3)(B) of

18 section 205(b) of such Act (42 U.S.C. 405(b)) are

19 amended by adjusting the left-hand margination

20 thereof so as to align with the matter following sec21 tion 205(b)(2)(C) of such Act.

22 (8) Section 205(c)(2)(B)(iii) of such Act (42

23 U.S.C. 405(c)(2)(B)(iii)) is amended by striking

24 ‘‘non-public’’ and inserting ‘‘nonpublic’’.
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1 (9) Section 205(c)(2)(C) of such Act (42 U.S.C.

2 405(c)(2)(C)) is amended—

3 (A) by striking the clause (vii) added by

4 section 2201(c) of Public Law 101–624; and

5 (B) by redesignating the clause (iii) added

6 by section 2201(b)(3) of Public Law 101–624,

7 clause (iv), clause (v), clause (vi), and the

8 clause (vii) added by section 1735(b) of Public

9 Law 101–624 as clause (iv), clause (v), clause

10 (vi), clause (vii), and clause (viii), respectively;

11 (C) in clause (v) (as redesignated), by

12 striking ‘‘subclause (I) of’’, and by striking

13 ‘‘subclause (II) of clause (i)’’ and inserting

14 ‘‘clause (ii)’’; and

15 (D) in clause (viii)(IV) (as redesignated),

16 by inserting ‘‘a social security account number

17 or’’ before ‘‘a request for’’.

18 (10) The heading for section 205(j) of such Act

19 (42 U.S.C. 405(j)) is amended to read as follows:

20 ‘‘Representative Payees’’.

21 (11) The heading for section 205(s) of such Act

22 (42 U.S.C. 405(s)) is amended to read as follows:
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•HR 2141 IH

1 ‘‘Notice Requirements’’.

2 (12) Section 208(c) of such Act (42 U.S.C.

3 408(c)) is amended by striking ‘‘subsection (g)’’ and

4 inserting ‘‘subsection (a)(7)’’.

5 (13) Section 210(a)(5)(B)(i)(V) of such Act (42

6 U.S.C. 410(a)(5)(B)(i)(V)) is amended by striking

7 ‘‘section 105(e)(2)’’ and inserting ‘‘section

8 104(e)(2)’’.

9 (14) Section 211(a) of such Act (42 U.S.C.

10 411(a)) is amended—

11 (A) in paragraph (13), by striking ‘‘and’’

12 at the end; and

13 (B) in paragraph (14), by striking the pe14 riod and inserting ‘‘; and’’.

15 (15) Section 213(c) of such Act (42 U.S.C.

16 413(c)) is amended by striking ‘‘section’’ the first

17 place it appears and inserting ‘‘sections’’.

18 (16) Section 215(a)(5)(B)(i) of such Act (42

19 U.S.C. 415(a)(5)(B)(i)) is amended by striking

20 ‘‘subsection’’ the second place it appears and insert21 ing ‘‘subsections’’.

22 (17) Section 215(f)(7) of such Act (42 U.S.C.

23 415(f)(7)) is amended by inserting a period after

24 ‘‘1990’’.
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1 (18) Subparagraph (F) of section 218(c)(6) of

2 such Act (42 U.S.C. 418(c)(6)) is amended by ad3 justing the left-hand margination thereof so as to

4 align with section 218(c)(6)(E) of such Act.

5 (19) Section 223(i) of such Act (42 U.S.C.

6 423(i)) is amended by adding at the beginning the

7 following heading:

8 ‘‘Limitation on Payments to Prisoners’’.

9 (b) RELATED AMENDMENTS.—

10 (1) Section 603(b)(5)(A) of Public Law 101–

11 649 (amending section 202(n)(1) of the Social Secu12 rity Act) (104 Stat. 5085) is amended by inserting

13 ‘‘under’’ before ‘‘paragraph (1),’’ and by striking

14 ‘‘(17), or (18)’’ and inserting ‘‘(17), (18), or (19)’’,

15 effective as if this paragraph were included in such

16 section 603(b)(5)(A).

17 (2) Section 10208(b)(1) of Public Law 101–

18 239 (amending section 230(b)(2)(A) of the Social

19 Security Act) (103 Stat. 2477) is amended by strik20 ing ‘‘230(b)(2)(A)’’ and ‘‘430(b)(2)(A)’’ and insert21 ing ‘‘230(b)(2)’’ and ‘‘430(b)(2)’’, respectively, effec22 tive as if this paragraph were included in such sec23 tion 10208(b)(1).

24 (c) CONFORMING, CLERICAL AMENDMENTS UPDAT25 ING, WITHOUT SUBSTANTIVE CHANGE, REFERENCES IN
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1 TITLE II OF THE SOCIAL SECURITY ACT TO THE INTER2 NAL REVENUE CODE.—

3 (1)(A) Section 201(a) of such Act (42 U.S.C.

4 401(a)) is amended—

5 (i) by striking clauses (1) and (2);

6 (ii) in clause (3), by striking ‘‘(3) the taxes

7 imposed’’ and all that follows through ‘‘Decem8 ber 31, 1954,’’ and inserting ‘‘(1) the taxes im9 posed by chapter 21 (other than sections

10 3101(b) and 3111(b)) of the Internal Revenue

11 Code of 1986 with respect to wages (as defined

12 in section 3121 of such Code) reported to the

13 Secretary of the Treasury or his delegate pur14 suant to subtitle F of such Code,’’, and by

15 striking ‘‘subchapter or’’;

16 (iii) in clause (4), by striking ‘‘(4) the

17 taxes imposed’’ and all that follows through

18 ‘‘such Code,’’ and inserting ‘‘(2) the taxes im19 posed by chapter 2 (other than section 1401(b))

20 of the Internal Revenue Code of 1986 with re21 spect to self-employment income (as defined in

22 section 1402 of such Code) reported to the Sec23 retary of the Treasury or his delegate on tax re24 turns under subtitle F of such Code,’’, and by
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1 striking ‘‘subchapter or chapter’’ and inserting

2 ‘‘chapter’’; and

3 (iv) in the matter following the clauses

4 amended by this subparagraph, by striking

5 ‘‘clauses (3) and (4)’’ each place it appears and

6 inserting ‘‘clauses (1) and (2)’’.

7 (B) The amendments made by subparagraph

8 (A) shall apply only with respect to taxes imposed

9 with respect to wages paid on or after January 1,

10 1993, or with respect to self-employment income for

11 taxable years beginning on or after such date.

12 (2)(A)(i) Section 201(g)(1) of such Act (42

13 U.S.C. 401(g)(1)) is amended—

14 (I) in subparagraph (A)(i), by striking

15 ‘‘and subchapter E’’ and all that follows

16 through ‘‘1954’’ and inserting ‘‘and chapters 2

17 and 21 of the Internal Revenue Code of 1986’’;

18 (II) in subparagraph (A)(ii), by striking

19 ‘‘1954’’ and inserting ‘‘1986’’;

20 (III) in the matter in subparagraph (A)

21 following clause (ii), by striking ‘‘subchapter E’’

22 and all that follows through ‘‘1954.’’ and in23 serting ‘‘chapters 2 and 21 of the Internal Rev24 enue Code of 1986.’’, and by striking ‘‘1954

25 other’’ and inserting ‘‘1986 other’’; and
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1 (IV) in subparagraph (B), by striking

2 ‘‘1954’’ each place it appears and inserting

3 ‘‘1986’’.

4 (ii) The amendments made by clause (i) shall

5 apply only with respect to periods beginning on or

6 after the date of the enactment of this Act.

7 (B)(i) Section 201(g)(2) of such Act (42 U.S.C.

8 401(g)(2)) is amended by striking ‘‘section 3101(a)’’

9 and all that follows through ‘‘1950.’’ and inserting

10 ‘‘section 3101(a) of the Internal Revenue Code of

11 1986 which are subject to refund under section

12 6413(c) of such Code with respect to wages (as de13 fined in section 3121 of such Code).’’, and by strik14 ing ‘‘wages reported’’ and all that follows through

15 ‘‘1954,’’ and inserting ‘‘wages reported to the Sec16 retary of the Treasury or his delegate pursuant to

17 subtitle F of such Code,’’.

18 (ii) The amendments made by clause (i) shall

19 apply only with respect to wages paid on or after

20 January 1, 1993.

21 (C) Section 201(g)(4) of such Act (42 U.S.C.

22 401(g)(4)) is amended—

23 (i) by striking ‘‘The Board of Trustees

24 shall prescribe before January 1, 1981, the

25 method’’ and inserting ‘‘If at any time or times
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•HR 2141 IH

1 the Boards of Trustees of such Trust Funds

2 deem such action advisable, they may modify

3 the method prescribed by such Boards’’;

4 (ii) by striking ‘‘1954’’ and inserting

5 ‘‘1986’’; and

6 (iii) by striking the last sentence.

7 (3) Section 202(v) of such Act (42 U.S.C.

8 402(v)) is amended—

9 (A) in paragraph (1), by striking ‘‘1954’’

10 and inserting ‘‘1986’’; and

11 (B) in paragraph (3)(A), by inserting ‘‘of

12 the Internal Revenue Code of 1986’’ after

13 ‘‘3127’’.

14 (4) Section 205(c)(5)(F)(i) of such Act (42

15 U.S.C. 405(c)(5)(F)(i)) is amended by inserting ‘‘or

16 the Internal Revenue Code of 1986’’ after ‘‘1954’’.

17 (5)(A) Section 208(a)(1) of such Act (42

18 U.S.C. 408(a)(1)) is amended—

19 (i) in the matter preceding subparagraph

20 (A), by striking ‘‘subchapter E’’ and all that

21 follows through ‘‘1954’’ and inserting ‘‘chapter

22 2 or 21 or subtitle F of the Internal Revenue

23 Code of 1986’’;

24 (ii) in subparagraph (A), by inserting ‘‘of

25 1986’’ after ‘‘Internal Revenue Code’’; and
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•HR 2141 IH

1 (iii) in subparagraph (B), by inserting ‘‘of

2 1986’’ after ‘‘Internal Revenue Code’’.

3 (B) The amendments made by subparagraph

4 (A) shall apply only with respect to violations occur5 ring on or after the date of the enactment of this

6 Act.

7 (6)(A) Section 209(a)(4)(A) of such Act (42

8 U.S.C. 409(a)(4)(A)) is amended by inserting ‘‘or

9 the Internal Revenue Code of 1986’’ after ‘‘Internal

10 Revenue Code of 1954’’.

11 (B) Section 209(a) of such Act (42 U.S.C.

12 409(a)) is amended—

13 (i) in subparagraphs (C) and (E) of para14 graph (4),

15 (ii) in paragraph (5)(A),

16 (iii) in subparagraphs (A) and (B) of para17 graph (14),

18 (iv) in paragraph (15),

19 (v) in paragraph (16), and

20 (vi) in paragraph (17),

21 by striking ‘‘1954’’ each place it appears and insert22 ing ‘‘1986’’.

23 (C) Subsections (b), (f), (g), (i)(1), and (j) of

24 section 209 of such Act (42 U.S.C. 409) are amend-
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•HR 2141 IH

1 ed by striking ‘‘1954’’ each place it appears and in2 serting ‘‘1986’’.

3 (7) Section 211(a)(15) of such Act (42 U.S.C.

4 411(a)(15)) is amended by inserting ‘‘of the Internal

5 Revenue Code of 1986’’ after ‘‘section 162(m)’’.

6 (8) Title II of such Act is further amended—

7 (A) in subsections (f)(5)(B)(ii) and (k) of

8 section 203 (42 U.S.C. 403),

9 (B) in section 205(c)(1)(D)(i) (42 U.S.C.

10 405(c)(1)(D)(i)),

11 (C) in the matter in section 210(a) (42

12 U.S.C. 410(a)) preceding paragraph (1) and in

13 paragraphs (8), (9), and (10) of section 210(a),

14 (D) in subsections (p)(4) and (q) of section

15 210 (42 U.S.C. 410),

16 (E) in the matter in section 211(a) (42

17 U.S.C. 411(a)) preceding paragraph (1) and in

18 paragraphs (3), (4), (6), (10), (11), and (12)

19 and clauses (iii) and (iv) of section 211(a),

20 (F) in the matter in section 211(c) (42

21 U.S.C. 411(c)) preceding paragraph (1), in

22 paragraphs (3) and (6) of section 211(c), and

23 in the matter following paragraph (6) of section

24 211(c),
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1 (G) in subsections (d), (e), and (h)(1)(B)

2 of section 211 (42 U.S.C. 411),

3 (H) in section 216(j) (42 U.S.C. 416(j)),

4 (I) in section 218(e)(3) (42 U.S.C.

5 418(e)(3)),

6 (J) in section 229(b) (42 U.S.C. 429(b)),

7 (K) in section 230(c) (42 U.S.C. 430(c)),

8 and

9 (L) in section 232 (42 U.S.C. 432),

10 by striking ‘‘1954’’ each place it appears and insert11 ing ‘‘1986’’.

12 (d) RULES OF CONSTRUCTION.—

13 (1) The preceding provisions of this section

14 shall be construed only as technical and clerical cor15 rections and as reflecting the original intent of the

16 provisions amended thereby.

17 (2) Any reference in title II of the Social Secu18 rity Act to the Internal Revenue Code of 1986 shall

19 be construed to include a reference to the Internal

20 Revenue Code of 1954 to the extent necessary to

21 carry out the provisions of paragraph (1).

22 (e) UTILIZATION OF NATIONAL AVERAGE WAGE

23 INDEX FOR WAGE-BASED ADJUSTMENTS.—
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1 (1) DEFINITION OF NATIONAL AVERAGE WAGE

2 INDEX.—Section 209(k) of the Social Security Act

3 (42 U.S.C. 409(k)) is amended—

4 (A) by redesignating paragraph (2) as

5 paragraph (3);

6 (B) in paragraph (3) (as redesignated), by

7 striking ‘‘paragraph (1)’’ and inserting ‘‘this

8 subsection’’; and

9 (C) by striking paragraph (1) and insert10 ing the following new paragraphs:

11 ‘‘(k)(1) For purposes of sections 203(f)(8)(B)(ii),

12 213(d)(2)(B), 215(a)(1)(B)(ii), 215(a)(1)(C)(ii),

13 215(a)(1)(D), 215(b)(3)(A)(ii), 215(i)(1)(E),

14 215(i)(2)(C)(ii), 224(f)(2)(B), and 230(b)(2) (and

15 230(b)(2) as in effect immediately prior to the enactment

16 of the Social Security Amendments of 1977), the term ‘na17 tional average wage index’ for any particular calendar year

18 means, subject to regulations of the Secretary under para19 graph (2), the average of the total wages for such particu20 lar calendar year.

21 ‘‘(2) The Secretary shall prescribe regulations under

22 which the national average wage index for any calendar

23 year shall be computed—
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1 ‘‘(A) on the basis of amounts reported to the

2 Secretary of the Treasury or his delegate for such

3 year,

4 ‘‘(B) by disregarding the limitation on wages

5 specified in subsection (a)(1),

6 ‘‘(C) with respect to calendar years after 1990,

7 by incorporating deferred compensation amounts

8 and factoring in for such years the rate of change

9 from year to year in such amounts, in a manner

10 consistent with the requirements of section 10208 of

11 the Omnibus Budget Reconciliation Act of 1989,

12 and

13 ‘‘(D) with respect to calendar years before

14 1978, in a manner consistent with the manner in

15 which the average of the total wages for each of

16 such calendar years was determined as provided by

17 applicable law as in effect for such years.’’.

18 (2) CONFORMING AMENDMENTS.—

19 (A) Section 203(f)(8)(B)(ii) of such Act

20 (42 U.S.C. 403(f)(8)(B)(ii)) is amended by

21 striking ‘‘deemed average total wages’’ each

22 place it appears and inserting ‘‘national average

23 wage index’’.

24 (B) Section 213(d)(2)(B) of such Act (42

25 U.S.C. 413(d)(2)(B)) is amended by striking
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1 ‘‘deemed average total wages’’ and inserting

2 ‘‘national average wage index’’, and by striking

3 ‘‘the average of the total wages’’ and all that

4 follows and inserting ‘‘the national average

5 wage index (as so defined) for 1976,’’.

6 (C) Section 215(a)(1)(B)(ii) of such Act

7 (42 U.S.C. 415(a)(1)(B)(ii)) is amended—

8 (i) in subclause (I), by striking

9 ‘‘deemed average total wages’’ and insert10 ing ‘‘national average wage index’’; and

11 (ii) in subclause (II), by striking ‘‘the

12 average of the total wages’’ and all that

13 follows and inserting ‘‘the national average

14 wage index (as so defined) for 1977.’’.

15 (D) Section 215(a)(1)(C)(ii) of such Act

16 (42 U.S.C. 415(a)(1)(C)(ii)) is amended by

17 striking ‘‘deemed average total wages’’ and in18 serting ‘‘national average wage index’’.

19 (E) Section 215(a)(1)(D) of such Act (42

20 U.S.C. 415(a)(1)(D)) is amended—

21 (i) by striking ‘‘after 1978’’;

22 (ii) by striking ‘‘and the average of

23 the total wages (as described in subpara24 graph (B)(ii)(I))’’ and inserting ‘‘and the
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1 national average wage index (as defined in

2 section 209(k)(1))’’; and

3 (iii) by striking the last sentence.

4 (F) Section 215(b)(3)(A)(ii) of such Act

5 (42 U.S.C. 415(b)(3)(A)(ii)) is amended by

6 striking ‘‘deemed average total wages’’ each

7 place it appears and inserting ‘‘national average

8 wage index’’.

9 (G) Section 215(i)(1) of such Act (42

10 U.S.C. 415(i)(1)) is amended—

11 (i) in subparagraph (E), by striking

12 ‘‘SSA average wage index’’ and inserting

13 ‘‘national average wage index (as defined

14 in section 209(k)(1))’’; and

15 (ii) by striking subparagraph (G) and

16 redesignating subparagraph (H) as sub17 paragraph (G).

18 (H) Section 215(i)(2)(C)(ii) of such Act

19 (42 U.S.C. 415(i)(1)(C)(ii)) is amended to read

20 as follows:

21 ‘‘(ii) The Secretary shall determine and promulgate

22 the OASDI fund ratio for the current calendar year on

23 or before November 1 of the current calendar year, based

24 upon the most recent data then available. The Secretary

25 shall include a statement of the fund ratio and the na-
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1 tional average wage index (as defined in section 209(k)(1))

2 and a statement of the effect such ratio and the level of

3 such index may have upon benefit increases under this

4 subsection in any notification made under clause (i) and

5 any determination published under subparagraph (D).’’.

6 (I) Section 224(f)(2) of such Act (42

7 U.S.C. 424a(f)(2)) is amended—

8 (i) in subparagraph (A), by adding

9 ‘‘and’’ at the end;

10 (ii) by striking subparagraph (C); and

11 (iii) by striking subparagraph (B) and

12 inserting the following:

13 ‘‘(B) the ratio of (i) the national average wage

14 index (as defined in section 209(k)(1)) for the cal15 endar year before the year in which such redeter16 mination is made to (ii) the national average wage

17 index (as so defined) for the calendar year before

18 the year in which the reduction was first computed

19 (but not counting any reduction made in benefits for

20 a previous period of disability).’’.

21 (J) Section 230(b)(2) of such Act (42

22 U.S.C. 430(b)(2)) is amended by striking

23 ‘‘deemed average total wages’’ each place it ap24 pears and inserting ‘‘national average wage

25 index’’.
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1 (K) Section 230(d) of such Act (42 U.S.C.

2 430(d)) is amended by striking ‘‘deemed aver3 age total wage’’ and inserting ‘‘national average

4 wage index’’.

5 SEC. 13018. CROSS-MATCHING OF SOCIAL SECURITY AC6 COUNT NUMBER INFORMATION AND EM7 PLOYER IDENTIFICATION NUMBER INFORMA8 TION MAINTAINED BY THE DEPARTMENT OF

9 AGRICULTURE.

10 (a) SOCIAL SECURITY ACCOUNT NUMBER INFORMA11 TION.—Clause (iii) of section 205(c)(2)(C) of the Social

12 Security Act (42 U.S.C. 405(c)(2)(C)) (as added by sec13 tion 1735(a)(3) of the Food, Agriculture, Conservation,

14 and Trade Act of 1990 (Public Law 101–624; 104 Stat.

15 3791)) is amended—

16 (1) by inserting ‘‘(I)’’ after ‘‘(iii)’’; and

17 (2) by striking ‘‘The Secretary of Agriculture

18 shall restrict’’ and all that follows and inserting the

19 following:

20 ‘‘(II) The Secretary of Agriculture may share any in21 formation contained in any list referred to in subclause

22 (I) with any other agency or instrumentality of the United

23 States which otherwise has access to social security ac24 count numbers in accordance with this subsection or other

25 applicable Federal law, except that the Secretary of Agri-
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1 culture may share such information only to the extent that

2 such Secretary determines such sharing would assist in

3 verifying and matching such information against informa4 tion maintained by such other agency or instrumentality.

5 Any such information shared pursuant to this subclause

6 may be used by such other agency or instrumentality only

7 for the purpose of effective administration and enforce8 ment of the Food Stamp Act of 1977 or for the purpose

9 of investigation of violations of other Federal laws or en10 forcement of such laws.

11 ‘‘(III) The Secretary of Agriculture, and the head of

12 any other agency or instrumentality referred to in this

13 subclause, shall restrict, to the satisfaction of the Sec14 retary of Health and Human Services, access to social se15 curity account numbers obtained pursuant to this clause

16 only to officers and employees of the United States whose

17 duties or responsibilities require access for the purposes

18 described in subclause (II).

19 ‘‘(IV) The Secretary of Agriculture, and the head of

20 any agency or instrumentality with which information is

21 shared pursuant to clause (II), shall provide such other

22 safeguards as the Secretary of Health and Human Serv23 ices determines to be necessary or appropriate to protect

24 the confidentiality of the social security account num25 bers.’’.
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1 (b) EMPLOYER IDENTIFICATION NUMBER INFORMA2 TION.—Subsection (f) of section 6109 of the Internal Rev3 enue Code of 1986 (as added by section 1735(c) of the

4 Food, Agriculture, Conservation, and Trade Act of 1990

5 (Public Law 101–624; 104 Stat. 3792)) (relating to access

6 to employer identification numbers by Secretary of Agri7 culture for purposes of Food Stamp Act of 1977) is

8 amended—

9 (1) by striking paragraph (2) and inserting the

10 following:

11 ‘‘(2) SHARING OF INFORMATION AND SAFE12 GUARDS.—

13 ‘‘(A) SHARING OF INFORMATION.—The

14 Secretary of Agriculture may share any infor15 mation contained in any list referred to in para16 graph (1) with any other agency or instrumen17 tality of the United States which otherwise has

18 access to employer identification numbers in ac19 cordance with this section or other applicable

20 Federal law, except that the Secretary of Agri21 culture may share such information only to the

22 extent that such Secretary determines such

23 sharing would assist in verifying and matching

24 such information against information main25 tained by such other agency or instrumentality.
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1 Any such information shared pursuant to this

2 subparagraph may be used by such other agen3 cy or instrumentality only for the purpose of ef4 fective administration and enforcement of the

5 Food Stamp Act of 1977 or for the purpose of

6 investigation of violations of other Federal laws

7 or enforcement of such laws.

8 ‘‘(B) SAFEGUARDS.—The Secretary of Ag9 riculture, and the head of any other agency or

10 instrumentality referred to in subparagraph

11 (A), shall restrict, to the satisfaction of the Sec12 retary of the Treasury, access to employer iden13 tification numbers obtained pursuant to this

14 subsection only to officers and employees of the

15 United States whose duties or responsibilities

16 require access for the purposes described in

17 subparagraph (A). The Secretary of Agri18 culture, and the head of any agency or instru19 mentality with which information is shared pur20 suant to subparagraph (A), shall provide such

21 other safeguards as the Secretary of the Treas22 ury determines to be necessary or appropriate

23 to protect the confidentiality of the employer

24 identification numbers.’’;
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1 (2) in paragraph (3), by striking ‘‘by the Sec2 retary of Agriculture pursuant to this subsection’’

3 and inserting ‘‘pursuant to this subsection by the

4 Secretary of Agriculture or the head of any agency

5 or instrumentality with which information is shared

6 pursuant to paragraph (2)’’, and by striking ‘‘social

7 security account numbers’’ and inserting ‘‘employer

8 identification numbers’’; and

9 (3) in paragraph (4), by striking ‘‘by the Sec10 retary of Agriculture pursuant to this subsection’’

11 and inserting ‘‘pursuant to this subsection by the

12 Secretary of Agriculture or any agency or instru13 mentality with which information is shared pursuant

14 to paragraph (2)’’.

15 SEC. 13019. PROHIBITION OF MISUSE OF DEPARTMENT OF

16 THE TREASURY NAMES, SYMBOLS, ETC.

17 (a) GENERAL RULE.—Subchapter II of chapter 3 of

18 title 31, United States Code, is amended by adding at the

19 end thereof the following new section:

20 ‘‘§ 333. Prohibition of misuse of Department of the

21 Treasury names, symbols, etc.

22 ‘‘(a) GENERAL RULE.—No person may use, in con23 nection with, or as a part of, any advertisement, solicita24 tion, business activity, or product, whether alone or with

25 other words, letters, symbols, or emblems—
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1 ‘‘(1) the words ‘Department of the Treasury’,

2 or the name of any service, bureau, office, or other

3 subdivision of the Department of the Treasury,

4 ‘‘(2) the titles ‘Secretary of the Treasury’ or

5 ‘Treasurer of the United States’ or the title of any

6 other officer or employee of the Department of the

7 Treasury,

8 ‘‘(3) the abbreviations or initials of any entity

9 referred to in paragraph (1),

10 ‘‘(4) the words ‘United States Savings Bond’ or

11 the name of any other obligation issued by the De12 partment of the Treasury,

13 ‘‘(5) any symbol or emblem of an entity re14 ferred to in paragraph (1) (including the design of

15 any envelope or stationary used by such an entity),

16 and

17 ‘‘(6) any colorable imitation of any such words,

18 titles, abbreviations, initials, symbols, or emblems,

19 in a manner which could reasonably be interpreted or con20 strued as conveying the false impression that such adver21 tisement, solicitation, business activity, or product is in

22 any manner approved, endorsed, sponsored, or authorized

23 by, or associated with, the Department of the Treasury

24 or any entity referred to in paragraph (1) or any officer

25 or employee thereof.
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1 ‘‘(b) TREATMENT OF DISCLAIMERS.—Any deter2 mination of whether a person has violated the provisions

3 of subsection (a) shall be made without regard to any use

4 of a disclaimer of affiliation with the United States Gov5 ernment or any particular agency or instrumentality there6 of.

7 ‘‘(c) CIVIL PENALTY.—

8 ‘‘(1) IN GENERAL.—The Secretary of the

9 Treasury may impose a civil penalty on any person

10 who violates the provisions of subsection (a).

11 ‘‘(2) AMOUNT OF PENALTY.—The amount of

12 the civil penalty imposed by paragraph (1) shall not

13 exceed $5,000 for each use of any material in viola14 tion of subsection (a). If such use is in a broadcast

15 or telecast, the preceding sentence shall be applied

16 by substituting ‘$25,000’ for ‘$5,000’.

17 ‘‘(3) TIME LIMITATIONS.—

18 ‘‘(A) ASSESSMENTS.—The Secretary of the

19 Treasury may assess any civil penalty under

20 paragraph (1) at any time before the end of the

21 3-year period beginning on the date of the vio22 lation with respect to which such penalty is im23 posed.

24 ‘‘(B) CIVIL ACTION.—The Secretary of the

25 Treasury may commence a civil action to re-
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1 cover any penalty imposed under this subsection

2 at any time before the end of the 2-year period

3 beginning on the date on which such penalty

4 was assessed.

5 ‘‘(4) COORDINATION WITH SUBSECTION (d).—

6 No penalty may be assessed under this subsection

7 with respect to any violation after a criminal pro8 ceeding with respect to such violation has been com9 menced under subsection (d).

10 ‘‘(d) CRIMINAL PENALTY.—

11 ‘‘(1) IN GENERAL.—If any person knowingly

12 violates subsection (a), such person shall, upon con13 viction thereof, be fined not more than $10,000 for

14 each such use or imprisoned not more than 1 year,

15 or both. If such use is in a broadcast or telecast, the

16 preceding sentence shall be applied by substituting

17 ‘$50,000’ for ‘$10,000’.

18 ‘‘(2) TIME LIMITATIONS.—No person may be

19 prosecuted, tried, or punished under paragraph (1)

20 for any violation of subsection (a) unless the indict21 ment is found or the information instituted during

22 the 3-year period beginning on the date of the viola23 tion.

24 ‘‘(3) COORDINATION WITH SUBSECTION (c).—

25 No criminal proceeding may be commenced under
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1 this subsection with respect to any violation if a civil

2 penalty has previously been assessed under sub3 section (c) with respect to such violation.’’

4 (b) CLERICAL AMENDMENT.—The analysis for chap5 ter 3 of title 31, United States Code, is amended by add6 ing after the item relating to section 332 the following

7 new item:

‘‘333. Prohibition of misuse of Department of the Treasury names, symbols,

etc.’’.

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

9 this section shall take effect on the date of the enactment

10 of this Act.

11 (d) REPORT.—Not later than May 1, 1995, the Sec12 retary of the Treasury shall submit a report to the Com13 mittee on Ways and Means of the House of Representa14 tives and the Committee on Finance of the Senate on the

15 implementation of the amendments made by this section.

16 Such report shall include the number of cases in which

17 the Secretary has notified persons of violations of section

18 333 of title 31, United States Code (as added by sub19 section (a)), the number of prosecutions commenced under

20 such section, and the total amount of the penalties col21 lected in such prosecutions.
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1 SEC. 13020. AVAILABILITY AND USE OF DEATH INFORMA2 TION UNDER THE OLD-AGE, SURVIVORS, AND

3 DISABILITY INSURANCE PROGRAM.

4 (a) IMPROVEMENTS IN PROGRAM FOR USE OF

5 DEATH CERTIFICATES TO CORRECT PROGRAM INFORMA6 TION.—

7 (1) ELIMINATION OF STATE RESTRICTIONS ON

8 USE OF INFORMATION.—Section 205(r)(1) of the So9 cial Security Act (42 U.S.C. 405(r)(1)) is amended

10 by adding at the end, after and below subparagraph

11 (B), the following new sentence:

12 ‘‘Any contract entered into pursuant to subparagraph (A)

13 shall not include any restriction on the use of information

14 obtained by the Secretary pursuant to such contract, ex15 cept to the extent that such use may be restricted under

16 paragraph (6).’’.

17 (2) INFORMATION PROVIDED TO STATE AGEN18 CIES FREE OF CHARGE.—

19 (A) IN GENERAL.—Section 205(r)(4) of

20 such Act (42 U.S.C. 405(r)(4)) is amended to

21 read as follows:

22 ‘‘(4)(A) In the case of individuals with respect to

23 whom federally funded benefits are provided by (or

24 through) a State agency other than under this Act, the

25 Secretary shall to the extent feasible provide such informa26 tion free of charge through a cooperative arrangement
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1 with such agency, for ensuring proper payment of those

2 benefits with respect to such individuals, if such arrange3 ment does not conflict with the duties of the Secretary

4 under paragraph (1).

5 ‘‘(B) The Secretary may enter into similar agree6 ments with States to provide information free of charge

7 for their use in programs wholly funded by the States if

8 such arrangement does not conflict with the duties of the

9 Secretary under paragraph (1).’’.

10 (B) CONFORMING AMENDMENT.—Section

11 205(r)(3) of such Act (42 U.S.C. 405(r)(3)) is

12 amended by striking ‘‘or State’’.

13 (3) USE BY STATES OF SOCIAL SECURITY AC14 COUNT NUMBERS CONTINGENT UPON PARTICIPATION

15 IN PROGRAM.—Section 205(r)(2) of such Act (42

16 U.S.C. 405(r)(2)) is amended—

17 (A) by inserting ‘‘(A)’’ after ‘‘(2)’’; and

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

19 subparagraph:

20 ‘‘(B) Notwithstanding section 7(a)(2)(B) of the Pri21 vacy Act of 1974 and clauses (i) and (v) of subsection

22 (c)(2)(C) of this section, any State which is not a party

23 to a contract with the Secretary meeting the requirements

24 of paragraph (1) (and any political subdivision thereof)

25 may not utilize an individual’s social security account
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1 number in the administration of any driver’s license or

2 motor vehicle registration law.’’.

3 (b) STUDY REGARDING IMPROVEMENTS IN GATHER4 ING AND REPORTING OF DEATH INFORMATION.

5 (1) IN GENERAL.—As soon as practicable after

6 the date of the enactment of this Act, the Secretary

7 of Health and Human Services shall conduct a study

8 of possible improvements in the current methods of

9 gathering and reporting death information by the

10 Federal, State, and local governments which would

11 result in more efficient and expeditious handling of

12 such information.

13 (2) SPECIFIC MATTERS TO BE STUDIED.—In

14 carrying out the study required under this sub15 section, the Secretary shall—

16 (A) ascertain the delays in the receipt of

17 death information which are currently encoun18 tered by the Social Security Administration and

19 other agencies in need of such information on

20 a regular basis,

21 (B) analyze the causes of such delays,

22 (C) develop alternative options for improv23 ing Federal, State, and local agency cooperation

24 in reducing such delays, and
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1 (D) evaluate the costs and benefits associ2 ated with the options referred to in subpara3 graph (C).

4 (3) REPORT.—Not later than June 1, 1994, the

5 Secretary shall submit a written report to the Com6 mittee on Ways and Means of the House of Rep7 resentatives and the Committee on Finance of the

8 Senate setting forth the results of the study con9 ducted pursuant to this subsection, together with

10 such administrative and legislative recommendations

11 as the Secretary may consider appropriate.

12 (c) EFFECTIVE DATE.—

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

14 subsection (a) shall take effect 1 year after the date

15 of the enactment of this Act.

16 (2) PROMOTION OF ENTRY INTO NEW CON17 TRACTS.—As soon as practicable after the date of

18 the enactment of this Act, the Secretary of Health

19 and Human Services shall take such actions as are

20 necessary and appropriate to promote entry into

21 contracts under section 205(r) of the Social Security

22 Act which are in compliance with the requirements

23 of the amendments made by subsection (a).
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1 Subtitle D—Customs and Trade

2 Provisions

3 SEC. 13601. CUSTOMS AND TRADE AGENCY AUTHORIZA4 TIONS FOR FISCAL YEARS 1994 AND 1995.

5 (a) UNITED STATES INTERNATIONAL TRADE COM6 MISSION.—Section 330(e)(2) of the Tariff Act of 1930 (19

7 U.S.C. 1330(e)(2)) is amended to read as follows:

8 ‘‘(2)(A) There are authorized to be appropriated to

9 the Commission for necessary expenses (including the

10 rental of conference rooms in the District of Columbia and

11 elsewhere) not to exceed the following:

12 ‘‘(i) $45,416,000 for fiscal year 1994.

13 ‘‘(ii) $45,974,000 for fiscal year 1995.

14 ‘‘(B) Not to exceed $2,500 of the amount authorized

15 to be appropriated for any fiscal year under subparagraph

16 (A) may be used, subject to the approval of the Chairman

17 of the Commission, for reception and entertainment ex18 penses.

19 ‘‘(C) No part of any sum that is appropriated under

20 the authority of subparagraph (A) may be used by the

21 Commission in the making of any special study, investiga22 tion, or report that is requested by any agency of the exec23 utive branch unless that agency reimburses the Commis24 sion for the cost thereof.’’.
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1 (b) UNITED STATES CUSTOMS SERVICE.—Section

2 301(b) of the Customs Procedural Reform and Simplifica3 tion Act of 1978 (19 U.S.C. 2075(b)) is amended to read

4 as follows:

5 ‘‘(b) AUTHORIZATION OF APPROPRIATIONS.—

6 ‘‘(1) FOR NONCOMMERCIAL OPERATIONS.—

7 There are authorized to be appropriated for the sala8 ries and expenses of the Customs Service that are

9 incurred in noncommercial operations not to exceed

10 the following:

11 ‘‘(A) $540,783,000 for fiscal year 1994.

12 ‘‘(B) $527,000,000 for fiscal year 1995.

13 ‘‘(2) FOR COMMERCIAL OPERATIONS.—(A)

14 There are authorized to be appropriated for the sala15 ries and expenses of the Customs Service that are

16 incurred in commercial operations not less than the

17 following:

18 ‘‘(i) $771,036,000 for fiscal year 1994.

19 ‘‘(ii) $748,000,000 for fiscal year 1995.

20 ‘‘(B) The monies authorized to be appropriated

21 under subparagraph (A) for any fiscal year, except

22 for such sums as may be necessary for the salaries

23 and expenses of the Customs Service that are in24 curred in connection with the processing of merchan25 dise that is exempt from the fees imposed under sec-
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1 tion 13031(a) (9) and (10) of the Consolidated Om2 nibus Budget Reconciliation Act of 1985, shall be

3 appropriated from the Customs User Fee Account.

4 ‘‘(3) FOR AIR AND MARINE INTERDICTION.—

5 There are authorized to be appropriated for the op6 eration (including salaries and expenses) and main7 tenance of the air and marine interdiction programs

8 of the Customs Service not to exceed the following:

9 ‘‘(A) $95,156,000 for fiscal year 1994.

10 ‘‘(B) $128,000,000 for fiscal year 1995.’’.

11 (c) OFFICE OF THE UNITED STATES TRADE REP12 RESENTATIVE.—Section 141(g)(1) of the Trade Act of

13 1974 (19 U.S.C. 2171(g)(1)) is amended to read as fol14 lows:

15 ‘‘(g)(1)(A) There are authorized to be appropriated

16 to the Office for the purposes of carrying out its functions

17 not to exceed the following:

18 ‘‘(i) $20,143,000 for fiscal year 1994.

19 ‘‘(ii) $20,419,000 for fiscal year 1995.

20 ‘‘(B) Of the amounts authorized to be appropriated

21 under subparagraph (A) for any fiscal year—

22 ‘‘(i) not to exceed $98,000 may be used for en23 tertainment and representation expenses of the Of24 fice; and
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1 ‘‘(ii) not to exceed $2,500,000 shall remain

2 available until expended.’’.

3 SEC. 13602. EXTENSION OF AUTHORITY TO LEVY CUSTOMS

4 USER FEES.

5 Section 13031(j)(3) of the Consolidated Omnibus

6 Budget Reconciliation Act of 1985 (19 U.S.C. 58c(j)(3))

7 is amended by striking out ‘‘1995’’ and inserting ‘‘1998’’.

8 SEC. 13603. GENERALIZED SYSTEM OF PREFERENCES.

9 (a) TREATMENT OF COUNTRIES FORMERLY WITHIN

10 THE UNION OF SOVIET SOCIALIST REPUBLICS.—The

11 table in section 502(b) of the Trade Act of 1974 (19

12 U.S.C. 2462(b)) is amended by striking out ‘‘Union of So13 viet Socialist Republics’’.

14 (b) EXTENSION OF DUTY-FREE TREATMENT UNDER

15 SYSTEM.—

16 (1) IN GENERAL.—Section 505(a) of the Trade

17 Act of 1974 (19 U.S.C. 2465(a)) is amended by

18 striking out ‘‘July 4, 1993’’ and inserting ‘‘Septem19 ber 30, 1994’’.

20 (2) RETROACTIVE APPLICATION FOR CERTAIN

21 LIQUIDATIONS AND RELIQUIDATIONS.—Notwith22 standing section 514 of the Tariff Act of 1930 or

23 any other provision of law, upon proper request filed

24 with the appropriate customs officer within 180 days
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1 after the date of the enactment of this Act, the

2 entry—

3 (A) of any article to which duty-free treat4 ment under title V of the Trade Act of 1974

5 would have applied if the entry had been made

6 on July 4, 1993, and

7 (B) that was made after July 4, 1993, and

8 before such date of enactment,

9 shall be liquidated or reliquidated as free of duty,

10 and the Secretary of the Treasury shall refund any

11 duty paid with respect to such entry. As used in this

12 paragraph, the term ‘‘entry’’ includes a withdrawal

13 from warehouse for consumption.

14 SEC. 13604. EXTENSION OF, AND AUTHORIZATION OF AP15 PROPRIATIONS FOR, THE WORKER TRADE

16 ADJUSTMENT ASSISTANCE PROGRAM.

17 (a) EXTENSION.—Section 285 of the Trade Act of

18 1974 (19 U.S.C. note preceding 2271) is amended—

19 (1) by striking out ‘‘No’’ and all that follows

20 thereafter down through ‘‘chapter 2, no’’ in sub21 section (b) and inserting ‘‘No’’; and

22 (2) by adding at the end the following new sub23 section:
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1 ‘‘(c) No assistance, vouchers, allowances, or other

2 payments may be provided under chapter 2 after Septem3 ber 30, 1996.’’.

4 (b) AUTHORIZATION OF APPROPRIATIONS.—Section

5 245 of the Trade Act of 1974 (19 U.S.C. 2317) is amend6 ed by striking out ‘‘and 1993,’’ and inserting ‘‘1993,

7 1994, 1995, and 1996,’’.

8 SEC. 13605. EXTENSION OF URUGUAY ROUND TRADE

9 AGREEMENT NEGOTIATING AND PROCLAMA10 TION AUTHORITY AND OF ‘‘FAST TRACK’’ PRO11 CEDURES TO IMPLEMENTING LEGISLATION.

12 Section 1102 of the Omnibus Trade and Competitive13 ness Act of 1988 (19 U.S.C. 2902) is amended by insert14 ing at the end the following new subsection:

15 ‘‘(e) SPECIAL PROVISIONS REGARDING URUGUAY

16 ROUND TRADE NEGOTIATIONS.—

17 ‘‘(1) IN GENERAL.—Notwithstanding the time

18 limitations in subsections (a) and (b), if the Uru19 guay Round of multilateral trade negotiations under

20 the auspices of the General Agreement on Tariffs

21 and Trade has not resulted in trade agreements by

22 May 31, 1993, the President may, during the period

23 after May 31, 1993, and before April 16, 1994,

24 enter into, under subsections (a) and (b), trade

25 agreements resulting from such negotiations.
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1 ‘‘(2) APPLICATION OF TARIFF PROCLAMATION

2 AUTHORITY.—No proclamation under subsection (a)

3 to carry out the provisions regarding tariff barriers

4 of a trade agreement that is entered into pursuant

5 to paragraph (1) may take effect before the effective

6 date of a bill that implements the provisions regard7 ing nontariff barriers of a trade agreement that is

8 entered into under such paragraph.

9 ‘‘(3) APPLICATION OF IMPLEMENTING AND

10 ‘FAST TRACK’ PROCEDURES.—Section 1103 applies

11 to any trade agreement negotiated under subsection

12 (b) pursuant to paragraph (1), except that—

13 ‘‘(A) in applying subsection (a)(1)(A) of

14 section 1103 to any such agreement, the phrase

15 ‘at least 120 calendar days before the day on

16 which he enters into the trade agreement (but

17 not later than December 15, 1993),’ shall be

18 substituted for the phrase ‘at least 90 calendar

19 days before the day on which he enters into the

20 trade agreement; and

21 ‘‘(B) no provision of subsection (b) of sec22 tion 1103 other than paragraph (1)(A) applies

23 to any such agreement and in applying such

24 paragraph, ‘April 16, 1994;’ shall be sub25 stituted for ‘June 1, 1991;’.
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1 ‘‘(4) ADVISORY COMMITTEE REPORTS.—The re2 port required under section 135(e)(1) of the Trade

3 Act of 1974 regarding any trade agreement provided

4 for under paragraph (1) shall be provided to the

5 President, the Congress, and the United States

6 Trade Representative not later than 30 days after

7 the date on which the President notifies the Con8 gress under section 1103(a)(1)(A) of his intention to

9 enter into the agreement (but before January 15,

10 1994).’’.

11 SEC. 13606. REPEAL OF EAST-WEST TRADE STATISTICS

12 MONITORING SYSTEM.

13 (a) REPEAL.—Section 410 of the Trade Act of 1974

14 (19 U.S.C. 2440) is repealed.

15 (b) CONFORMING AMENDMENT.—The table of con16 tents for such Act of 1974 is amended by striking out the

17 following:

‘‘Sec. 410. East-West Trade Statistics Monitoring System.’’.

18 Subtitle E—Customs Officer Pay

19 Reform

20 SEC. 13701. OVERTIME AND PREMIUM PAY FOR CUSTOMS

21 OFFICERS.

22 (a) IN GENERAL.—Section 5 of the Act of February

23 13, 1911 (19 U.S.C. 261 and 267) is amended to read

24 as follows:
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1 ‘‘SEC. 5. OVERTIME AND PREMIUM PAY FOR CUSTOMS OF2 FICERS.

3 ‘‘(a) OVERTIME PAY.—

4 ‘‘(1) IN GENERAL.—Subject to paragraph (2)

5 and subsection (c), a customs officer who is officially

6 assigned to perform work in excess of 40 hours in

7 the administrative workweek of the officer or in ex8 cess of 8 hours in a day shall be compensated for

9 that work at an hourly rate of pay that is equal to

10 2 times the hourly rate of the basic pay of the offi11 cer. For purposes of this paragraph, the hourly rate

12 of basic pay for a customs officer does not include

13 any premium pay provided for under subsection (b).

14 ‘‘(2) SPECIAL PROVISIONS RELATING TO OVER15 TIME WORK ON CALLBACK BASIS.—

16 ‘‘(A) MINIMUM DURATION.—Any work for

17 which compensation is authorized under para18 graph (1) and for which the customs officer is

19 required to return to the officer’s place of work

20 shall be treated as being not less than 2 hours

21 in duration; but only if such work begins at

22 least 1 hour after the end of any previous regu23 larly scheduled work assignment and ends at

24 least 1 hour before the beginning of the follow25 ing regularly scheduled work assignment.
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1 ‘‘(B) COMPENSATION FOR COMMUTING

2 TIME.—

3 ‘‘(i) IN GENERAL.—Except as pro4 vided in clause (ii), in addition to the com5 pensation authorized under paragraph (1)

6 for work to which subparagraph (A) ap7 plies, the customs officer is entitled to be

8 paid, as compensation for commuting time,

9 an amount equal to 3 times the hourly rate

10 of basic pay of the officer.

11 ‘‘(ii) EXCEPTION.—Compensation for

12 commuting time is not payable under

13 clause (i) if the work for which compensa14 tion is authorized under paragraph (1)—

15 ‘‘(I) does not commence within

16 16 hours of the customs officer’s last

17 regularly scheduled work assignment,

18 or

19 ‘‘(II) commences within 2 hours

20 of the next regularly scheduled work

21 assignment of the customs officer.

22 ‘‘(b) PREMIUM PAY FOR CUSTOMS OFFICERS.—

23 ‘‘(1) NIGHT WORK DIFFERENTIAL.—

24 ‘‘(A) 3 P.M. TO MIDNIGHT SHIFTWORK.—If

25 the majority of the hours of regularly scheduled
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1 work of a customs officer occur during the pe2 riod beginning at 3 p.m. and ending at 12 a.m.,

3 the officer is entitled to pay for work during

4 such period (except for work to which para5 graph (2) or (3) applies) at the officer’s hourly

6 rate of basic pay plus premium pay amounting

7 to 15 percent of that basic rate.

8 ‘‘(B) 11 P.M. TO 8 A.M. SHIFTWORK.—If

9 the majority of the hours of regularly scheduled

10 work of a customs officer occur during the pe11 riod beginning at 11 p.m. and ending at 8 a.m.,

12 the officer is entitled to pay for work during

13 such period (except for work to which para14 graph (2) or (3) applies) at the officer’s hourly

15 rate of basic pay plus premium pay amounting

16 to 20 percent of that basic rate.

17 ‘‘(C) 7:30 P.M. TO 3:30 A.M. SHIFTWORK.—

18 If the regularly scheduled work assignment of a

19 customs officer is 7:30 p.m. to 3:30 a.m., the

20 officer is entitled to pay for work during such

21 period (except for work to which paragraph (2)

22 or (3) applies) at the officer’s hourly rate of

23 basic pay plus premium pay amounting to 15

24 percent of that basic rate for the period from

25 7:30 p.m. to 11:30 p.m. and at the officer’s
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1 hourly rate of basic pay plus premium pay

2 amounting to 20 percent of that basic rate for

3 the period from 11:30 p.m. to 3:30 a.m.

4 ‘‘(2) SUNDAY DIFFERENTIAL.—A customs offi5 cer who performs any regularly scheduled work on a

6 Sunday that is not a holiday is entitled to pay for

7 that work at the officer’s hourly rate of basic pay

8 plus premium pay amounting to 50 percent of that

9 basic rate.

10 ‘‘(3) HOLIDAY DIFFERENTIAL.—A customs offi11 cer who performs any regularly scheduled work on a

12 holiday is entitled to pay for that work at the offi13 cer’s hourly rate of basic pay plus premium pay

14 amounting to 100 percent of that basic rate.

15 ‘‘(4) TREATMENT OF PREMIUM PAY.—Premium

16 pay provided for under this subsection may not be

17 treated as being overtime pay or compensation for

18 any purpose.

19 ‘‘(c) LIMITATIONS.—

20 ‘‘(1) FISCAL YEAR CAP.—The aggregate of

21 overtime pay under subsection (a) (including com22 muting compensation under subsection (a)(2)(B))

23 and premium pay under subsection (b) that a cus24 toms officer may be paid in any fiscal year may not

25 exceed $25,000; except that the Commissioner of
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1 Customs or his designee may waive this limitation in

2 individual cases in order to prevent excessive costs

3 or to meet emergency requirements of the Customs

4 Service.

5 ‘‘(2) EXCLUSIVITY OF PAY UNDER THIS SEC6 TION.—A customs officer who receives overtime pay

7 under subsection (a) or premium pay under sub8 section (b) for time worked may not receive pay or

9 other compensation for that work under any other

10 provision of law.

11 ‘‘(d) REGULATIONS.—The Secretary of the Treasury

12 shall prescribe such regulations as are necessary or appro13 priate to carry out this section, including regulations—

14 ‘‘(1) to ensure that callback work assignments

15 are commensurate with the overtime pay authorized

16 for such work; and

17 ‘‘(2) to prevent the disproportionate assignment

18 of overtime work to customs officers who are near

19 to retirement.

20 ‘‘(e) DEFINITIONS.—As used in this section:

21 ‘‘(1) The term ‘customs officer’ means an indi22 vidual performing those functions specified by regu23 lation by the Secretary of the Treasury for a cus24 toms inspector or canine enforcement officer. Such

25 functions shall be consistent with such applicable
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1 standards as may be promulgated by the Office of

2 Personnel Management.

3 ‘‘(2) The term ‘holiday’ means any day des4 ignated as a holiday under a Federal statute or Ex5 ecutive order.’’.

6 (b) CONFORMING AMENDMENTS.—

7 (1) Section 2 of the Act of June 3, 1944 (19

8 U.S.C. 1451a), is repealed.

9 (2) Section 450 of the Tariff Act of 1930 (19

10 U.S.C. 1450) is amended—

11 (A) by striking out ‘‘at night’’ in the sec12 tion heading and inserting ‘‘during overtime

13 hours’’;

14 (B) by striking out ‘‘at night’’ and insert15 ing ‘‘during overtime hours’’; and

16 (C) by inserting ‘‘aircraft,’’ immediately

17 before ‘‘vessel’’.

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

19 subsections (a) and (b) apply to customs inspectional serv20 ices provided on or after October 1, 1993.

21 SEC. 13702. FOREIGN LANGUAGE PROFICIENCY AWARDS

22 FOR CUSTOMS OFFICERS.

23 Cash awards for foreign language proficiency may,

24 under regulations prescribed by the Secretary of the

25 Treasury, be paid to customs officers (as referred to in
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1 section 5(e)(1) of the Act of February 13, 1911) to the

2 same extent and in the same manner as would be allowable

3 under subchapter III of chapter 45 of title 5, United

4 States Code, with respect to law enforcement officers (as

5 defined by section 4521 of such title).

6 SEC. 13703. APPROPRIATIONS REIMBURSEMENTS FROM

7 THE CUSTOMS USER FEE ACCOUNT.

8 Section 13031(f)(3) of the Consolidated Omnibus

9 Budget Reconciliation Act of 1985 (19 U.S.C. 58c(f)(3))

10 is amended—

11 (1) by amending clause (i) of subparagraph (A)

12 to read as follows: ‘‘(i) in—

13 ‘‘(I) paying overtime compensation under

14 section 5(a) of the Act of February 13, 1911,

15 ‘‘(II) paying premium pay under section

16 5(b) of the Act of February 13, 1911, but the

17 amount for which reimbursement may be made

18 under this subclause may not, for any fiscal

19 year, exceed the difference between the cost of

20 the premium pay for that year calculated under

21 such section 5(b) as amended by section 13701

22 of the Omnibus Budget Reconciliation Act of

23 1993 and the cost of such pay calculated under

24 subchapter V of chapter 55 of title 5, United

25 States Code,
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1 ‘‘(III) paying agency contributions to the

2 Civil Service Retirement and Disability Fund to

3 match deductions from the overtime compensa4 tion paid under subclause (I), and

5 ‘‘(IV) providing all preclearance services

6 for which the recipients of such services are not

7 required to reimburse the Secretary of the

8 Treasury, and’’;

9 (2) by inserting before the flush sentence ap10 pearing after clause (ii) of subparagraph (A) the fol11 lowing sentence: ‘‘The transfer of funds required

12 under subparagraph (C)(iii) has priority over reim13 bursements under this subparagraph to carry out

14 subclauses (II), (III), and (IV) of clause (i).’’;

15 (3) by striking out ‘‘except for costs described

16 in subparagraph (A)(i) (I) and (II),’’ in subpara17 graph (B)(i); and

18 (4) by amending subparagraph (C)—

19 (A) by striking out ‘‘to fully reimburse

20 inspectional overtime and preclearance costs’’ in

21 clause (i) and inserting ‘‘to reimburse costs de22 scribed in subparagraph (A)(i)’’; and

23 (B) by inserting after clause (ii) of sub24 paragraph (C) the following:
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1 ‘‘(iii) For each fiscal year, the Secretary of the

2 Treasury shall calculate the difference between—

3 ‘‘(I) the estimated cost for overtime com4 pensation that would have been incurred during

5 that fiscal year for inspectional services if sec6 tion 5 of the Act of February 13, 1911 (19

7 U.S.C. 261 and 267), as in effect before the en8 actment of section 13701 of the Omnibus

9 Budget Reconciliation Act of 1993, had gov10 erned such costs, and

11 ‘‘(II) the actual cost for overtime com12 pensation, premium pay, and agency retirement

13 contributions that is incurred during that fiscal

14 year in regard to such services under section 5

15 of the Act of February 13, 1991, as amended

16 by section 13701 of the Omnibus Budget Rec17 onciliation Act of 1993, and under section

18 8331(3) of title 5, United States Code, as

19 amended by section 13704 of such Act of 1993,

20 and shall transfer from the Customs User Fee Ac21 count to the General Fund of the Treasury an

22 amount equal to the difference calculated under this

23 clause, or $18,000,000, whichever amount is less.

24 Transfers shall be made under this clause at least

25 quarterly and on the basis of estimates to the same
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1 extent as are reimbursements under subparagraph

2 (B)(iii).’’.

3 SEC. 13704. TREATMENT OF CERTAIN PAY OF CUSTOMS OF4 FICERS FOR RETIREMENT PURPOSES.

5 (a) IN GENERAL.—Section 8331(3) of title 5, United

6 States Code, is amended—

7 (1) by striking out ‘‘and’’ at the end of sub8 paragraph (C);

9 (2) by striking out the semicolon at the end of

10 subparagraph (D) and inserting ‘‘; and’’;

11 (3) by adding after subparagraph (D) the fol12 lowing:

13 ‘‘(E) with respect to a customs officer (re14 ferred to in subsection (e)(1) of section 5 of the

15 Act of February 13, 1911), compensation for

16 overtime inspectional services provided for

17 under subsection (a) of such section 5, but not

18 to exceed 50 percent of any statutory maximum

19 in overtime pay for customs officers which is in

20 effect for the year involved;’’; and

21 (4) by striking out ‘‘subparagraphs (B), (C),

22 and (D) of this paragraph,’’ and inserting ‘‘subpara23 graphs (B), (C), (D), and (E) of this paragraph’’.

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

25 subsection (a) take effect on the date of the enactment
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1 of this Act and apply only with respect to service per2 formed on or after such date.

3 SEC. 13705. REPORTS.

4 (a) CUSTOMS USER FEE ACCOUNT REPORTS.—Sub5 paragraph (D) of section 13031(f)(3) of the Consolidated

6 Omnibus Budget Reconciliation Act of 1985 (19 U.S.C.

7 58c(f)(3)(D)) is amended to read as follows:

8 ‘‘(D) At the close of each fiscal year, the

9 Secretary of the Treasury shall submit a report

10 to the Committee on Finance of the Senate and

11 the Committee on Ways and Means of the

12 House of Representatives—

13 ‘‘(i) containing a detailed accounting

14 of all expenditures from the Customs User

15 Fee Account during such year, including a

16 summary of the expenditures, on a port-by17 port basis, for which reimbursement has

18 been provided under subparagraph (A)(ii);

19 ‘‘(ii) containing a listing of all call20 back assignments of customs officers for

21 which overtime compensation was paid

22 under section 5(a) of the Act of February

23 13, 1911, and that were less than 1 hour

24 in duration; and
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1 ‘‘(iii) containing a listing of all cus2 toms officers who were paid $25,000 or

3 more under subsections 5(a) and 5(b) of

4 the Act of February 13, 1911, including a

5 listing of the total compensation paid to

6 each of those customs officers under all

7 other statutory authority.’’.

8 (b) OTHER REPORTS.—

9 (1) GAO REPORT.—The Comptroller General of

10 the United States shall undertake—

11 (A) an evaluation of the appropriateness

12 and efficiency of the customs user fee laws for

13 financing the provision of customs inspectional

14 services; and

15 (B) a study to determine whether cost sav16 ings in the provision of overtime inspectional

17 services could be realized by the United States

18 Customs Service through the use of additional

19 inspectors as opposed to continuing the current

20 practice of relying on overtime pay.

21 The Comptroller General shall submit a report on

22 the evaluation and study required under this sub23 section to the Committees by no later than the 1st

24 anniversary of the date of the enactment of this Act.
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1 (2) TREASURY RECOMMENDATION.—On the day

2 that the President submits the budget for the Unit3 ed States Government for fiscal year 1995 to the

4 Congress under section 1105(a) of title 31, United

5 States Code, the Secretary of the Treasury shall

6 submit to the Committees recommended legislative

7 proposals for improving the operation of customs

8 user fee laws in financing the provision of customs

9 inspectional services.

10 (3) DEFINITION OF COMMITTEES.—For pur11 poses of this subsection, the term ‘‘Committees’’

12 means the Committee on Ways and Means of the

13 House of Representatives and the Committee on Fi14 nance of the Senate.

15 Subtitle E—Customs Officer Pay

16 Reform

17 SEC. 13701. OVERTIME AND PREMIUM PAY FOR CUSTOMS

18 OFFICERS.

19 (a) IN GENERAL.—Section 5 of the Act of February

20 13, 1911 (19 U.S.C. 261 and 267) is amended to read

21 as follows:

22 ‘‘SEC. 5. OVERTIME AND PREMIUM PAY FOR CUSTOMS OF23 FICERS.

24 ‘‘(a) OVERTIME PAY.—
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1 ‘‘(1) IN GENERAL.—Subject to paragraph (2)

2 and subsection (c), a customs officer who is officially

3 assigned to perform work in excess of 40 hours in

4 the administrative workweek of the officer or in ex5 cess of 8 hours in a day shall be compensated for

6 that work at an hourly rate of pay that is equal to

7 2 times the hourly rate of the basic pay of the offi8 cer. For purposes of this paragraph, the hourly rate

9 of basic pay for a customs officer does not include

10 any premium pay provided for under subsection (b).

11 ‘‘(2) SPECIAL PROVISIONS RELATING TO OVER12 TIME WORK ON CALLBACK BASIS.—

13 ‘‘(A) MINIMUM DURATION.—Any work for

14 which compensation is authorized under para15 graph (1) and for which the customs officer is

16 required to return to the officer’s place of work

17 shall be treated as being not less than 2 hours

18 in duration; but only if such work begins at

19 least 1 hour after the end of any previous regu20 larly scheduled work assignment and ends at

21 least 1 hour before the beginning of the follow22 ing regularly scheduled work assignment.

23 ‘‘(B) COMPENSATION FOR COMMUTING

24 TIME.—
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1 ‘‘(i) IN GENERAL.—Except as pro2 vided in clause (ii), in addition to the com3 pensation authorized under paragraph (1)

4 for work to which subparagraph (A) ap5 plies, the customs officer is entitled to be

6 paid, as compensation for commuting time,

7 an amount equal to 3 times the hourly rate

8 of basic pay of the officer.

9 ‘‘(ii) EXCEPTION.—Compensation for

10 commuting time is not payable under

11 clause (i) if the work for which compensa12 tion is authorized under paragraph (1)—

13 ‘‘(I) does not commence within

14 16 hours of the customs officer’s last

15 regularly scheduled work assignment,

16 or

17 ‘‘(II) commences within 2 hours

18 of the next regularly scheduled work

19 assignment of the customs officer.

20 ‘‘(b) PREMIUM PAY FOR CUSTOMS OFFICERS.—

21 ‘‘(1) NIGHT WORK DIFFERENTIAL.—

22 ‘‘(A) 3 P.M. TO MIDNIGHT SHIFTWORK.—If

23 the majority of the hours of regularly scheduled

24 work of a customs officer occur during the pe25 riod beginning at 3 p.m. and ending at 12 a.m.,
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1 the officer is entitled to pay for work during

2 such period (except for work to which para3 graph (2) or (3) applies) at the officer’s hourly

4 rate of basic pay plus premium pay amounting

5 to 15 percent of that basic rate.

6 ‘‘(B) 11 P.M. TO 8 A.M. SHIFTWORK.—If

7 the majority of the hours of regularly scheduled

8 work of a customs officer occur during the pe9 riod beginning at 11 p.m. and ending at 8 a.m.,

10 the officer is entitled to pay for work during

11 such period (except for work to which para12 graph (2) or (3) applies) at the officer’s hourly

13 rate of basic pay plus premium pay amounting

14 to 20 percent of that basic rate.

15 ‘‘(C) 7:30 P.M. TO 3:30 A.M. SHIFTWORK.—

16 If the regularly scheduled work assignment of a

17 customs officer is 7:30 p.m. to 3:30 a.m., the

18 officer is entitled to pay for work during such

19 period (except for work to which paragraph (2)

20 or (3) applies) at the officer’s hourly rate of

21 basic pay plus premium pay amounting to 15

22 percent of that basic rate for the period from

23 7:30 p.m. to 11:30 p.m. and at the officer’s

24 hourly rate of basic pay plus premium pay
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1 amounting to 20 percent of that basic rate for

2 the period from 11:30 p.m. to 3:30 a.m.

3 ‘‘(2) SUNDAY DIFFERENTIAL.—A customs offi4 cer who performs any regularly scheduled work on a

5 Sunday that is not a holiday is entitled to pay for

6 that work at the officer’s hourly rate of basic pay

7 plus premium pay amounting to 50 percent of that

8 basic rate.

9 ‘‘(3) HOLIDAY DIFFERENTIAL.—A customs offi10 cer who performs any regularly scheduled work on a

11 holiday is entitled to pay for that work at the offi12 cer’s hourly rate of basic pay plus premium pay

13 amounting to 100 percent of that basic rate.

14 ‘‘(4) TREATMENT OF PREMIUM PAY.—Premium

15 pay provided for under this subsection may not be

16 treated as being overtime pay or compensation for

17 any purpose.

18 ‘‘(c) LIMITATIONS.—

19 ‘‘(1) FISCAL YEAR CAP.—The aggregate of

20 overtime pay under subsection (a) (including com21 muting compensation under subsection (a)(2)(B))

22 and premium pay under subsection (b) that a cus23 toms officer may be paid in any fiscal year may not

24 exceed $25,000; except that the Commissioner of

25 Customs or his designee may waive this limitation in
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1 individual cases in order to prevent excessive costs

2 or to meet emergency requirements of the Customs

3 Service.

4 ‘‘(2) EXCLUSIVITY OF PAY UNDER THIS SEC5 TION.—A customs officer who receives overtime pay

6 under subsection (a) or premium pay under sub7 section (b) for time worked may not receive pay or

8 other compensation for that work under any other

9 provision of law.

10 ‘‘(d) REGULATIONS.—The Secretary of the Treasury

11 shall prescribe such regulations as are necessary or appro12 priate to carry out this section, including regulations—

13 ‘‘(1) to ensure that callback work assignments

14 are commensurate with the overtime pay authorized

15 for such work; and

16 ‘‘(2) to prevent the disproportionate assignment

17 of overtime work to customs officers who are near

18 to retirement.

19 ‘‘(e) DEFINITIONS.—As used in this section:

20 ‘‘(1) The term ‘customs officer’ means an indi21 vidual performing those functions specified by regu22 lation by the Secretary of the Treasury for a cus23 toms inspector or canine enforcement officer. Such

24 functions shall be consistent with such applicable
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1 standards as may be promulgated by the Office of

2 Personnel Management.

3 ‘‘(2) The term ‘holiday’ means any day des4 ignated as a holiday under a Federal statute or Ex5 ecutive order.’’.

6 (b) CONFORMING AMENDMENTS.—

7 (1) Section 2 of the Act of June 3, 1944 (19

8 U.S.C. 1451a), is repealed.

9 (2) Section 450 of the Tariff Act of 1930 (19

10 U.S.C. 1450) is amended—

11 (A) by striking out ‘‘at night’’ in the sec12 tion heading and inserting ‘‘during overtime

13 hours’’;

14 (B) by striking out ‘‘at night’’ and insert15 ing ‘‘during overtime hours’’; and

16 (C) by inserting ‘‘aircraft,’’ immediately

17 before ‘‘vessel’’.

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

19 subsections (a) and (b) apply to customs inspectional serv20 ices provided on or after October 1, 1993.

21 SEC. 13702. FOREIGN LANGUAGE PROFICIENCY AWARDS

22 FOR CUSTOMS OFFICERS.

23 Cash awards for foreign language proficiency may,

24 under regulations prescribed by the Secretary of the

25 Treasury, be paid to customs officers (as referred to in
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1 section 5(e)(1) of the Act of February 13, 1911) to the

2 same extent and in the same manner as would be allowable

3 under subchapter III of chapter 45 of title 5, United

4 States Code, with respect to law enforcement officers (as

5 defined by section 4521 of such title).

6 SEC. 13703. APPROPRIATIONS REIMBURSEMENTS FROM

7 THE CUSTOMS USER FEE ACCOUNT.

8 Section 13031(f)(3) of the Consolidated Omnibus

9 Budget Reconciliation Act of 1985 (19 U.S.C. 58c(f)(3))

10 is amended—

11 (1) by amending clause (i) of subparagraph (A)

12 to read as follows: ‘‘(i) in—

13 ‘‘(I) paying overtime compensation under

14 section 5(a) of the Act of February 13, 1911,

15 ‘‘(II) paying premium pay under section

16 5(b) of the Act of February 13, 1911, but the

17 amount for which reimbursement may be made

18 under this subclause may not, for any fiscal

19 year, exceed the difference between the cost of

20 the premium pay for that year calculated under

21 such section 5(b) as amended by section 13701

22 of the Omnibus Budget Reconciliation Act of

23 1993 and the cost of such pay calculated under

24 subchapter V of chapter 55 of title 5, United

25 States Code,
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1 ‘‘(III) paying agency contributions to the

2 Civil Service Retirement and Disability Fund to

3 match deductions from the overtime compensa4 tion paid under subclause (I), and

5 ‘‘(IV) providing all preclearance services

6 for which the recipients of such services are not

7 required to reimburse the Secretary of the

8 Treasury, and’’;

9 (2) by inserting before the flush sentence ap10 pearing after clause (ii) of subparagraph (A) the fol11 lowing sentence: ‘‘The transfer of funds required

12 under subparagraph (C)(iii) has priority over reim13 bursements under this subparagraph to carry out

14 subclauses (II), (III), and (IV) of clause (i).’’;

15 (3) by striking out ‘‘except for costs described

16 in subparagraph (A)(i) (I) and (II),’’ in subpara17 graph (B)(i); and

18 (4) by amending subparagraph (C)—

19 (A) by striking out ‘‘to fully reimburse

20 inspectional overtime and preclearance costs’’ in

21 clause (i) and inserting ‘‘to reimburse costs de22 scribed in subparagraph (A)(i)’’; and

23 (B) by inserting after clause (ii) of sub24 paragraph (C) the following:
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1 ‘‘(iii) For each fiscal year, the Secretary of the

2 Treasury shall calculate the difference between—

3 ‘‘(I) the estimated cost for overtime com4 pensation that would have been incurred during

5 that fiscal year for inspectional services if sec6 tion 5 of the Act of February 13, 1911 (19

7 U.S.C. 261 and 267), as in effect before the en8 actment of section 13701 of the Omnibus

9 Budget Reconciliation Act of 1993, had gov10 erned such costs, and

11 ‘‘(II) the actual cost for overtime com12 pensation, premium pay, and agency retirement

13 contributions that is incurred during that fiscal

14 year in regard to such services under section 5

15 of the Act of February 13, 1991, as amended

16 by section 13701 of the Omnibus Budget Rec17 onciliation Act of 1993, and under section

18 8331(3) of title 5, United States Code, as

19 amended by section 13704 of such Act of 1993,

20 and shall transfer from the Customs User Fee Ac21 count to the General Fund of the Treasury an

22 amount equal to the difference calculated under this

23 clause, or $18,000,000, whichever amount is less.

24 Transfers shall be made under this clause at least

25 quarterly and on the basis of estimates to the same
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1 extent as are reimbursements under subparagraph

2 (B)(iii).’’.

3 SEC. 13704. TREATMENT OF CERTAIN PAY OF CUSTOMS OF4 FICERS FOR RETIREMENT PURPOSES.

5 (a) IN GENERAL.—Section 8331(3) of title 5, United

6 States Code, is amended—

7 (1) by striking out ‘‘and’’ at the end of sub8 paragraph (C);

9 (2) by striking out the semicolon at the end of

10 subparagraph (D) and inserting ‘‘; and’’;

11 (3) by adding after subparagraph (D) the fol12 lowing:

13 ‘‘(E) with respect to a customs officer (re14 ferred to in subsection (e)(1) of section 5 of the

15 Act of February 13, 1911), compensation for

16 overtime inspectional services provided for

17 under subsection (a) of such section 5, but not

18 to exceed 50 percent of any statutory maximum

19 in overtime pay for customs officers which is in

20 effect for the year involved;’’; and

21 (4) by striking out ‘‘subparagraphs (B), (C),

22 and (D) of this paragraph,’’ and inserting ‘‘subpara23 graphs (B), (C), (D), and (E) of this paragraph’’.

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

25 subsection (a) take effect on the date of the enactment
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1 of this Act and apply only with respect to service per2 formed on or after such date.

3 SEC. 13705. REPORTS.

4 (a) CUSTOMS USER FEE ACCOUNT REPORTS.—Sub5 paragraph (D) of section 13031(f)(3) of the Consolidated

6 Omnibus Budget Reconciliation Act of 1985 (19 U.S.C.

7 58c(f)(3)(D)) is amended to read as follows:

8 ‘‘(D) At the close of each fiscal year, the

9 Secretary of the Treasury shall submit a report

10 to the Committee on Finance of the Senate and

11 the Committee on Ways and Means of the

12 House of Representatives—

13 ‘‘(i) containing a detailed accounting

14 of all expenditures from the Customs User

15 Fee Account during such year, including a

16 summary of the expenditures, on a port-by17 port basis, for which reimbursement has

18 been provided under subparagraph (A)(ii);

19 ‘‘(ii) containing a listing of all call20 back assignments of customs officers for

21 which overtime compensation was paid

22 under section 5(a) of the Act of February

23 13, 1911, and that were less than 1 hour

24 in duration; and
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1 ‘‘(iii) containing a listing of all cus2 toms officers who were paid $25,000 or

3 more under subsections 5(a) and 5(b) of

4 the Act of February 13, 1911, including a

5 listing of the total compensation paid to

6 each of those customs officers under all

7 other statutory authority.’’.

8 (b) OTHER REPORTS.—

9 (1) GAO REPORT.—The Comptroller General of

10 the United States shall undertake—

11 (A) an evaluation of the appropriateness

12 and efficiency of the customs user fee laws for

13 financing the provision of customs inspectional

14 services; and

15 (B) a study to determine whether cost sav16 ings in the provision of overtime inspectional

17 services could be realized by the United States

18 Customs Service through the use of additional

19 inspectors as opposed to continuing the current

20 practice of relying on overtime pay.

21 The Comptroller General shall submit a report on

22 the evaluation and study required under this sub23 section to the Committees by no later than the 1st

24 anniversary of the date of the enactment of this Act.
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1 (2) TREASURY RECOMMENDATION.—On the day

2 that the President submits the budget for the Unit3 ed States Government for fiscal year 1995 to the

4 Congress under section 1105(a) of title 31, United

5 States Code, the Secretary of the Treasury shall

6 submit to the Committees recommended legislative

7 proposals for improving the operation of customs

8 user fee laws in financing the provision of customs

9 inspectional services.

10 (3) DEFINITION OF COMMITTEES.—For pur11 poses of this subsection, the term ‘‘Committees’’

12 means the Committee on Ways and Means of the

13 House of Representatives and the Committee on Fi14 nance of the Senate.

15 Subtitle B—Human Resources

16 Amendments

17 SEC. 13201. TABLE OF CONTENTS.

18 The table of contents of this subtitle is as follows:

Subtitle B—Human Resources Amendments

Sec. 13201. Table of contents.

Sec. 13202. References.

CHAPTER 1—CHILD WELFARE SERVICES, FOSTER CARE, AND ADOPTION

ASSISTANCE

Sec. 13211. Entitlement funding for services designed to strengthen and preserve families.

Sec. 13212. Grants for State courts to assess and improve handling of proceedings relating to foster care and adoption.

Sec. 13213. Required protections for foster children.

Sec. 13214. States required to report on measures taken to comply with the Indian Child Welfare Act.

Sec. 13215. Child welfare traineeships.
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Sec. 13216. Dissolved adoptions.

Sec. 13217. Time frame for judicial determinations on voluntary placements.

Sec. 13218. Study of reasonable efforts.

Sec. 13219. Enhanced match for automated data systems.

Sec. 13220. Periodic reevaluation of foster care maintenance payments.

Sec. 13221. Dispositional hearing.

Sec. 13222. Health care plans for foster children.

Sec. 13223. Independent living.

Sec. 13224. Elimination of foster care ceilings and of authority to transfer unused foster care funds to child welfare services programs.

Sec. 13225. Training of agency staff and foster and adoptive parents.

Sec. 13226. On-site reviews and audits of State claims for foster care and

adoption assistance.

Sec. 13227. Conformity reviews.

Sec. 13228. Repeal of annual report on voluntary placement.

Sec. 13229. Demonstration projects.

Sec. 13230. Placement accountability.

Sec. 13231. Payments of State claims for foster care and adoption assistance.

Sec. 13232. Moratorium on collection of disallowances.

Sec. 13233. Border region child welfare worker training demonstration.

Sec. 13234. Effect of failure to carry out State plan.

CHAPTER 2—CHILD SUPPORT ENFORCEMENT

Sec. 13241. State paternity establishment programs.

Sec. 13242. Enforcement of health insurance support.

Sec. 13243. Reports to credit bureaus on persons delinquent in child support

payments.

CHAPTER 3—SUPPLEMENTAL SECURITY INCOME

Sec. 13251. Fees for Federal administration of State supplementary payments.

Sec. 13252. Exclusion from income of State relocation assistance.

Sec. 13253. Prevention of adverse effects on eligibility for, and amount of, benefits when spouse or parent of beneficiary is absent from the

household due to active military service.

Sec. 13254. Eligibility for children of Armed Forces personnel residing outside

the United States other than in foreign countries.

Sec. 13255. Definition of disability for children under age 18 applied to all individuals under age 18.

Sec. 13256. Valuation of certain in-kind support and maintenance when there

is a cost of living adjustment in benefits.

Sec. 13257. Exclusion from income of certain amounts received by Indians

from interests held in trust.

CHAPTER 4—AID TO FAMILIES WITH DEPENDENT CHILDREN

Sec. 13261. 50 percent Federal match of State administrative costs.

Sec. 13262. Delay in effective date of penalty for failure to meet required participation rate for unemployed parents in the JOBS program.

Sec. 13263. Report to the Congress with respect to performance standards in

the JOBS program.

Sec. 13264. Measurement and reporting of welfare participation.

Sec. 13265. New Hope demonstration project.

Sec. 13266. Delay in requirement that outlying areas operate an AFDC-UP

program.
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Sec. 13267. Adult in family or household allowed to attest to citizenship status

of family or household members.

Sec. 13268. Increase in stepparent income disregard.

Sec. 13269. Extension of New York State child support demonstration program.

Sec. 13270. Early childhood development projects.

CHAPTER 5—UNEMPLOYMENT INSURANCE

Sec. 13271. Treatment of short-time compensation programs.

Sec. 13272. Technical amendment to Unemployment Trust Fund.

Sec. 13273. Extension of reporting date for advisory council.

Sec. 13274. Clarification of emergency unemployment benefits provisions.

Sec. 13275. Modifications to extended unemployment program.

Sec. 13276. Extension of current Federal unemployment rate.

Sec. 13277. Disclosure of information to Railroad Retirement Board.

CHAPTER 6—TECHNICAL PROVISIONS

Sec. 13281. Corrections related to the income security and human resources

provisions of the Omnibus Budget Reconciliation Act of 1990.

Sec. 13282. Technical corrections related to the human resource and income security provisions of the Omnibus Budget Reconciliation Act of

1989.

Sec. 13283. Elimination of obsolete provisions relating to treatment of the

earned income tax credit.

Sec. 13284. Redesignation of certain provisions.

1 SEC. 13202. REFERENCES.

2 Except as otherwise expressly provided, wherever in

3 this subtitle an amendment or repeal is expressed in terms

4 of an amendment to, or repeal of, a section or other provi5 sion, the reference shall be considered to be made to a

6 section or other provision of the Social Security Act.
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1 CHAPTER 1—CHILD WELFARE SERVICES,

2 FOSTER CARE, AND ADOPTION ASSIST3 ANCE

4 SEC. 13211. ENTITLEMENT FUNDING FOR SERVICES DE5 SIGNED TO STRENGTHEN AND PRESERVE

6 FAMILIES.

7 (a) IN GENERAL.—Part B of title IV (42 U.S.C.

8 620–628) is amended—

9 (1) by striking the heading and inserting the

10 following:

11 ‘‘PART B—CHILD AND FAMILY SERVICES

12 ‘‘Subpart 1—Child Welfare Services’’; and

13 (2) by adding at the end the following:

14 ‘‘Subpart 2—Family Preservation and Support

15 Services

16 ‘‘SEC. 430. PURPOSES; LIMITATIONS ON AUTHORIZATIONS

17 OF APPROPRIATIONS; RESERVATION OF CER18 TAIN AMOUNTS.

19 ‘‘(a) PURPOSES; LIMITATIONS ON AUTHORIZATION

20 OF APPROPRIATIONS.—For the purpose of encouraging

21 and enabling each State to develop and establish, or ex22 pand, and to operate a program of family preservation

23 services and community-based family support services,

24 there are authorized to be appropriated to the Secretary—

25 ‘‘(1) $60,000,000 for fiscal year 1994;
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1 ‘‘(2) $135,000,000 for fiscal year 1995;

2 ‘‘(3) $240,000,000 for fiscal year 1996;

3 ‘‘(4) $360,000,000 for fiscal year 1997; and

4 ‘‘(5) $600,000,000 for fiscal year 1998.

5 ‘‘(b) RESERVATION OF CERTAIN AMOUNTS.—

6 ‘‘(1) EVALUATION, RESEARCH, TRAINING, AND

7 TECHNICAL ASSISTANCE.—The Secretary shall re8 serve 1 percent of the amount appropriated pursu9 ant to subsection (a) for each fiscal year, for expend10 iture by the Secretary for evaluation, research, train11 ing, and technical assistance related to the program

12 under this subpart.

13 ‘‘(2) STATE COURT ASSESSMENTS.—The Sec14 retary shall reserve $5,000,000 of the amount ap15 propriated pursuant to subsection (a) for fiscal year

16 1995, and $10,000,000 of the amount so appro17 priated for each of fiscal years 1996, 1997, and

18 1998, for grants under section 13212 of the Omni19 bus Budget Reconciliation Act of 1993.

20 ‘‘(3) INDIAN TRIBES.—The Secretary shall re21 serve 1 percent of the amount appropriated pursu22 ant to subsection (a) for each fiscal year, for allot23 ment to Indian tribes in accordance with section

24 433(a).
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1 ‘‘SEC. 431. DEFINITIONS.

2 ‘‘(a) IN GENERAL.—As used in this subpart:

3 ‘‘(1) FAMILY PRESERVATION SERVICES.—The

4 term ‘family preservation services’ means services

5 for children and families designed to help families

6 (including adoptive and extended families) at risk or

7 in crisis, including—

8 ‘‘(A) service programs designed to help

9 children—

10 ‘‘(i) where appropriate, return to fam11 ilies from which they have been removed;

12 or

13 ‘‘(ii) be placed for adoption, with a

14 legal guardian, or, if adoption or legal

15 guardianship is determined not to be ap16 propriate for a child, in some other

17 planned, permanent living arrangement;

18 ‘‘(B) preplacement preventive services pro19 grams, such as intensive family preservation

20 programs, designed to help children at risk of

21 foster care placement remain with their fami22 lies;

23 ‘‘(C) service programs designed to provide

24 followup care to families to whom a child has

25 been returned after a foster care placement;
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1 ‘‘(D) respite care of children to provide

2 temporary relief for parents and other

3 caregivers (including foster parents); and

4 ‘‘(E) services designed to improve

5 parenting skills (by reinforcing parents’ con6 fidence in their strengths, and helping them to

7 identify where improvement is needed and to

8 obtain assistance in improving those skills) with

9 respect to matters such as child development,

10 family budgeting, coping with stress, health,

11 and nutrition.

12 ‘‘(2) FAMILY SUPPORT SERVICES.—The term

13 ‘family support services’ means community-based

14 services to promote the well-being of children and

15 families designed to increase the strength and stabil16 ity of families (including adoptive, foster, and ex17 tended families), to increase parents’ confidence and

18 competence in their parenting abilities, to afford

19 children a stable and supportive family environment,

20 and otherwise to enhance child development, includ21 ing—

22 ‘‘(A) services described in paragraph

23 (1)(E);
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1 ‘‘(B) respite care of children to provide

2 temporary relief for parents and other

3 caregivers;

4 ‘‘(C) structured activities involving parents

5 and children to strengthen the parent-child re6 lationship;

7 ‘‘(D) drop-in centers to afford families op8 portunities for informal interaction with other

9 families and with program staff;

10 ‘‘(E) information and referral services to

11 afford families access to other community serv12 ices, including child care, health care, nutrition

13 programs, adult education and literacy pro14 grams, and counseling and mentoring services;

15 and

16 ‘‘(F) early developmental screening of chil17 dren to assess the needs of such children, and

18 assistance to families in securing specific serv19 ices to meet these needs.

20 ‘‘(3) STATE AGENCY.—The term ‘State agency’

21 means the State agency responsible for administer22 ing the program under subpart 1.

23 ‘‘(4) STATE.—The term ‘State’ includes an In24 dian tribe or tribal organization, in addition to the

25 meaning given such term for purposes of subpart 1.
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1 ‘‘(5) TRIBAL ORGANIZATION.—The term ‘tribal

2 organization’ means the recognized governing body

3 of any Indian tribe.

4 ‘‘(6) INDIAN TRIBE.—The term ‘Indian tribe’

5 means any Indian tribe (as defined in section

6 482(i)(5)) and any Alaska Native organization (as

7 defined in section 482(i)(7)(A)).

8 ‘‘(b) OTHER TERMS.—For other definitions of other

9 terms used in this subpart, see section 475.

10 ‘‘SEC. 432. STATE PLANS.

11 ‘‘(a) PLAN REQUIREMENTS.—A State plan meets the

12 requirements of this subsection if the plan—

13 ‘‘(1) provides that the State agency shall ad14 minister, or supervise the administration of, the

15 State program under this subpart;

16 ‘‘(2)(A)(i) sets forth the goals intended to be

17 accomplished under the plan by the end of the 5th

18 fiscal year in which the plan is in operation in the

19 State, and (ii) is updated periodically to set forth

20 the goals intended to be accomplished under the

21 plan by the end of each 5th fiscal year thereafter;

22 ‘‘(B) describes the methods to be used in meas23 uring progress toward accomplishment of the goals;

24 ‘‘(C) contains a commitment that the State—
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1 ‘‘(i) after the end of each of the 1st 4 fis2 cal years covered by a set of goals, will perform

3 an interim review of progress toward accom4 plishment of the goals, and on the basis of the

5 interim review will revise the statement of goals

6 in the plan, if necessary, to reflect changed cir7 cumstances; and

8 ‘‘(ii) after the end of the last fiscal year

9 covered by a set of goals, will perform a final

10 review of progress toward accomplishment of

11 the goals, and on the basis of the final review

12 (I) will prepare, transmit to the Secretary, and

13 make available to the public a final report on

14 progress toward accomplishment of the goals,

15 and (II) will develop (in consultation with the

16 entities required to be consulted pursuant to

17 subsection (b)) and add to the plan a statement

18 of the goals intended to be accomplished by the

19 end of the 5th succeeding fiscal year;

20 ‘‘(3) provides for coordination, to the extent

21 feasible and appropriate, of the provision of services

22 under the plan and the provision of services or bene23 fits under other Federal or federally assisted pro24 grams serving the same populations;
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1 ‘‘(4) contains assurances that not less than 90

2 percent of expenditures under the plan for any fiscal

3 year with respect to which the State is eligible for

4 payment under section 433 for the fiscal year shall

5 be for services for children and families, and that

6 significant portions of such 90 percent shall be ex7 pended—

8 ‘‘(A) for family preservation services; and

9 ‘‘(B) for community-based family support

10 services;

11 ‘‘(5) provides that, by the beginning of the 6th

12 fiscal year during which the plan is in effect, pro13 grams under the plan shall be available on a state14 wide basis, to the extent feasible and appropriate;

15 ‘‘(6) contains assurances that the State will—

16 ‘‘(A) annually prepare, furnish to the Sec17 retary, and make available to the public a de18 scription (including separate descriptions with

19 respect to family preservation services and com20 munity-based family support services) of—

21 ‘‘(i) the service programs to be made

22 available under the plan in the immediately

23 succeeding fiscal year;

24 ‘‘(ii) the populations which the pro25 grams will serve; and
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1 ‘‘(iii) the geographic areas in the

2 State in which the services will be avail3 able; and

4 ‘‘(B) perform the activities described in

5 subparagraph (A)—

6 ‘‘(i) in the case of the 1st fiscal year

7 under the plan, at the time the State sub8 mits its initial plan; and

9 ‘‘(ii) in the case of each succeeding

10 fiscal year, by the end of the 3rd quarter

11 of the immediately preceding fiscal year;

12 ‘‘(7) provides for such methods of administra13 tion as the Secretary finds to be necessary for the

14 proper and efficient operation of the plan;

15 ‘‘(8)(A) contains assurances that Federal funds

16 provided to the State under this subpart will not be

17 used to supplant Federal or non-Federal funds for

18 existing services and activities which promote the

19 purposes of this subpart; and

20 ‘‘(B) provides that the State will furnish re21 ports to the Secretary, at such times, in such for22 mat, and containing such information as the Sec23 retary may require, that demonstrate the State’s

24 compliance with the prohibition contained in sub25 paragraph (A); and
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1 ‘‘(9) provides that the State agency will furnish

2 such reports, containing such information, and par3 ticipate in such evaluations, as the Secretary may

4 require.

5 ‘‘(b) APPROVAL OF PLANS.—

6 ‘‘(1) IN GENERAL.—The Secretary shall ap7 prove a plan that meets the requirements of sub8 section (a) only if the plan was developed jointly by

9 the Secretary and the State, after consultation by

10 the State agency with appropriate public and non11 profit private agencies and community-based organi12 zations with experience in administering programs of

13 services for children and families (including family

14 preservation and family support services).

15 ‘‘(2) PLANS OF INDIAN TRIBES EXEMPTED

16 FROM INAPPROPRIATE REQUIREMENTS.—The Sec17 retary may exempt a plan submitted by an Indian

18 tribe from any requirement of this section that the

19 Secretary determines would be inappropriate to

20 apply to the Indian tribe, taking into account the re21 sources, needs, and other circumstances of the In22 dian tribe.

23 ‘‘SEC. 433. ALLOTMENTS TO STATES.

24 ‘‘(a) INDIAN TRIBES.—
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1 ‘‘(1) IN GENERAL.—From the amount reserved

2 pursuant to section 430(b)(3), the Secretary shall

3 allot to each Indian tribe with a plan approved

4 under this subpart (except as provided in paragraph

5 (2) of this subsection) an amount that bears the

6 same ratio to such reserved amount as the number

7 of children in the Indian tribe bears to the total

8 number of children in all Indian tribes with State

9 plans so approved, as determined by the Secretary

10 on the basis of the most current and reliable infor11 mation available to the Secretary.

12 ‘‘(2) SPECIAL RULE.—The Secretary may not

13 allot funds to an Indian tribe with a plan approved

14 under this subpart whose allotment (but for this

15 paragraph) would be less than $10,000 if allotments

16 were made under paragraph (1) to all Indian tribes

17 with plans approved under this subpart with the

18 same or larger numbers of children.

19 ‘‘(b) TERRITORIES.—From the amount appropriated

20 pursuant to section 430 that remains after applying sec21 tion 430(b) for each fiscal year, the Secretary shall allot

22 to each of the jurisdictions of Puerto Rico, Guam, the Vir23 gin Islands, the Northern Mariana Islands, and American

24 Samoa an amount determined in the same manner as the
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1 allotment to each of such jurisdictions is determined under

2 section 421.

3 ‘‘(c) OTHER STATES.—

4 ‘‘(1) IN GENERAL.—From the amount appro5 priated pursuant to section 430 that remains after

6 applying section 430(b) and subsection (b) of this

7 section for each fiscal year, the Secretary shall allot

8 to each State (other than an Indian tribe) which is

9 not specified in subsection (b) of this section an

10 amount equal to such remaining amount multiplied

11 by the food stamp percentage of the State for the

12 fiscal year.

13 ‘‘(2) FOOD STAMP PERCENTAGE DEFINED.—

14 ‘‘(A) IN GENERAL.—As used in paragraph

15 (1) of this subsection, the term ‘food stamp

16 percentage’ means, with respect to a State and

17 a fiscal year, the average monthly number of

18 children receiving food stamp benefits in the

19 State for months in the 3 fiscal years referred

20 to in subparagraph (B) of this paragraph, as

21 determined from sample surveys made under

22 section 16(c) of the Food Stamp Act of 1977,

23 expressed as a percentage of the average

24 monthly number of children receiving food

25 stamp benefits in the States described in such
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1 paragraph (1) for months in such 3 fiscal years,

2 as so determined.

3 ‘‘(B) FISCAL YEARS USED IN CALCULA4 TION.—For purposes of the calculation pursu5 ant to subparagraph (A), the Secretary shall

6 use data for the 3 most recent fiscal years, pre7 ceding the fiscal year for which the State’s al8 lotment is calculated under this subsection, for

9 which such data are available to the Secretary.

10 ‘‘SEC. 434. PAYMENTS TO STATES.

11 ‘‘(a) ENTITLEMENT.—

12 ‘‘(1) GENERAL RULE.—Except as provided in

13 paragraph (2) of this subsection, each State which

14 has a plan approved under this subpart shall be enti15 tled to payment of the lesser of—

16 ‘‘(A) 75 percent of the total cost of activi17 ties under the plan during the fiscal year or the

18 immediately succeeding fiscal year; or

19 ‘‘(B) the allotment of the State under sec20 tion 433 for the fiscal year.

21 ‘‘(2) SPECIAL RULE.—Upon submission by a

22 State to the Secretary during fiscal year 1994 of an

23 application in such form and containing such infor24 mation as the Secretary may require (including, if

25 the State is seeking payment of an amount pursuant
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1 to subparagraph (B) of this paragraph, a description

2 of the services to be provided with the amount), the

3 State shall be entitled to payment of an amount

4 equal to the sum of—

5 ‘‘(A) such amount not exceeding

6 $1,000,000 as the State may require to develop

7 and submit a plan for approval under section

8 432; and

9 ‘‘(B) an amount equal to the lesser of—

10 ‘‘(i) 75 percent of the cost of State

11 services to children and families provided

12 in accordance with section 432(a)(4); or

13 ‘‘(ii) the allotment of the State under

14 section 433 for fiscal year 1994, reduced

15 by any amount paid to the State pursuant

16 to subparagraph (A) of this paragraph.

17 ‘‘(b) PROHIBITIONS.—

18 ‘‘(1) NO USE OF OTHER FEDERAL FUNDS FOR

19 STATE MATCH.—Each State receiving an amount

20 paid under paragraph (1) or (2)(B) of subsection (a)

21 may not expend any Federal funds to meet the costs

22 of services described in this subpart not covered by

23 the amount so paid.

24 ‘‘(2) AVAILABILITY OF FUNDS.—
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1 ‘‘(A) IN GENERAL.—A State may not ex2 pend any amount paid under subsection (a)(1)

3 for any fiscal year after the end of the imme4 diately succeeding fiscal year.

5 ‘‘(B) PLAN DEVELOPMENT.—A State may

6 not expend any amount paid under subsection

7 (a)(2) after the end of fiscal year 1994.

8 ‘‘(c) DIRECT PAYMENTS TO TRIBAL ORGANIZATIONS

9 OF INDIAN TRIBES.—The Secretary shall pay any amount

10 to which an Indian tribe is entitled under this section di11 rectly to the tribal organization of the Indian tribe.

12 ‘‘SEC. 435. EVALUATIONS; REPORT.

13 ‘‘(a) EVALUATIONS.—

14 ‘‘(1) IN GENERAL.—The Secretary shall evalu15 ate the effectiveness of the programs carried out

16 pursuant to this subpart in accomplishing the pur17 poses of this subpart, in accordance with criteria es18 tablished in accordance with paragraph (2).

19 ‘‘(2) CRITERIA TO BE USED.—In developing the

20 criteria to be used in evaluations under paragraph

21 (1), the Secretary shall consult with appropriate par22 ties, such as—

23 ‘‘(A) State agencies administering pro24 grams under this part and part E;
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1 ‘‘(B) persons administering child and fam2 ily services programs (including family preser3 vation and family support programs) for pri4 vate, nonprofit organizations with an interest in

5 child welfare; and

6 ‘‘(C) other persons with recognized exper7 tise in the evaluation of child and family serv8 ices programs (including family preservation

9 and family support programs) or other related

10 programs.

11 ‘‘(b) REPORT TO THE CONGRESS.—Not later than

12 December 31, 1997, the Secretary shall submit to the

13 Congress a report containing findings with respect to the

14 evaluations required by subsection (a).

15 ‘‘(c) COORDINATION OF EVALUATIONS.—The Sec16 retary shall develop procedures to coordinate evaluations

17 under this section, to the extent feasible, with evaluations

18 by the States of the effectiveness of programs under this

19 subpart.’’.

20 (b) CONFORMING AMENDMENTS.—

21 (1) Section 422 (42 U.S.C. 622) is amended—

22 (A) in subsection (a), by striking ‘‘this

23 part’’ and inserting ‘‘this subpart’’;
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1 (B) in subsection (b), by striking ‘‘this

2 part’’ each place such term appears and insert3 ing ‘‘this subpart’’; and

4 (C) in subsection (b)(2), by inserting

5 ‘‘under the State plan approved under subpart

6 2 of this part,’’ after ‘‘part A of this title,’’.

7 (2) Section 423(a) (42 U.S.C. 623(a)) is

8 amended by striking ‘‘this part’’ and inserting ‘‘this

9 subpart’’.

10 (3) Section 428(a) (42 U.S.C. 628(a)) is

11 amended by striking ‘‘this part’’ each place such

12 term appears and inserting ‘‘this subpart’’.

13 (4) Section 471(a)(2) (42 U.S.C. 671(a)(2)) is

14 amended by inserting ‘‘subpart 1 of’’ before ‘‘part

15 B’’.

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

17 this section shall be effective with respect to calendar

18 quarters beginning on or after October 1, 1993.

19 SEC. 13212. GRANTS FOR STATE COURTS TO ASSESS AND

20 IMPROVE HANDLING OF PROCEEDINGS RE21 LATING TO FOSTER CARE AND ADOPTION.

22 (a) IN GENERAL.—The Secretary shall make grants,

23 in accordance with this section, to the highest State courts

24 in States participating in the program under part E of
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1 title IV of the Social Security Act, for the purpose of ena2 bling such courts—

3 (1) to conduct assessments, in accordance with

4 subsection (b), of the role, responsibilities, and effec5 tiveness of State courts in carrying out State laws

6 requiring proceedings (conducted by or under the su7 pervision of the courts)—

8 (A) to determine the advisability or appro9 priateness of foster care placement;

10 (B) to determine whether to terminate pa11 rental rights; and

12 (C) to legally recognize the adoption of a

13 child; and

14 (2) to implement changes deemed necessary as

15 a result of the assessments.

16 (b) ASSESSMENTS.—Each assessment conducted with

17 funds provided under this section shall—

18 (1) identify the requirements imposed on State

19 courts with respect to proceedings described in sub20 section (a), addressing separately—

21 (A) rules, standards, and criteria imposed

22 pursuant to State laws (including laws imple23 menting parts B and E of title IV of the Social

24 Security Act, laws relating to child abuse and

25 neglect, or any other laws on related matters)
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1 to be applied in determinations with respect to

2 placement of a child, or with respect to related

3 matters concerning the parent-child relationship

4 and the welfare of the child, including deter5 minations—

6 (i) whether to remove a child from or

7 return a child to the home of the child;

8 (ii) whether to place a child in foster

9 care or to continue a foster care place10 ment;

11 (iii) whether to terminate parental

12 rights;

13 (iv) whether to place a child for adop14 tion or in another permanent arrangement;

15 and

16 (v) whether to set aside or to finalize

17 an adoption; and

18 (B) rules and procedures, established by or

19 under State law or adopted by the State court

20 system on its own initiative, with respect to the

21 conduct of such proceedings, that address mat22 ters such as—

23 (i) whether a proceeding should be ju24 dicial or administrative;
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1 (ii) timetables for such proceedings,

2 and determinations of the priority of such

3 proceedings relative to other matters under

4 the jurisdiction of the State courts;

5 (iii) procedural safeguards of the

6 rights of parents (including foster and

7 adoptive parents), guardians, and children,

8 such as provisions for legal representation

9 and for guardians ad litem; and

10 (iv) rules for conduct of the proceed11 ing with respect to matters such as admis12 sible evidence, opportunity to present wit13 nesses, and time limits on the presentation

14 of evidence and the making of arguments;

15 (2) evaluate the performance of the State

16 courts in implementing the requirements identified

17 under paragraph (1), by assessing—

18 (A) the extent to which particular practices

19 or procedures have been successful in facilitat20 ing compliance with such requirements;

21 (B) the frequency of failures to comply

22 with any such requirements, and patterns with

23 respect to the circumstances of and factors con24 tributing to the failures; and
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1 (C) the extent to which caseload size and

2 resource limitations contribute to the failures

3 identified pursuant to subparagraph (B);

4 (3) determine the extent to which the rules and

5 practices identified under paragraph (1) or (2) are

6 in accord with recommended standards of national

7 organizations concerned with permanent placement

8 for foster children;

9 (4) determine, from the standpoint of the State

10 courts, the extent to which particular requirements

11 under paragraph (1)—

12 (A) are facilitating or impeding achieve13 ment of the purposes of such parts B and E,

14 including the goal of appropriate permanent

15 placement for each child; and

16 (B) are imposing significant administrative

17 burdens on the State court system; and

18 (5) make specific recommendations for improve19 ment, based on the conclusions reached as a result

20 of activities described in paragraphs (1) through (4),

21 including recommendations for—

22 (A) changes in Federal or State laws, reg23 ulations, or policies;

24 (B) changes in procedures and practices of

25 the State courts and of the State agencies ad-
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1 ministering foster care, adoption, child welfare,

2 and child protective services programs;

3 (C) additional education or training of

4 State court judges, or of personnel of the judi5 cial system or of the State agencies described in

6 subparagraph (B);

7 (D) collection or dissemination of addi8 tional data or information for purposes of in9 creasing the understanding of personnel of

10 State courts and State agencies of matters re11 lating to case review proceedings in general, or

12 to specific case review proceedings; and

13 (E) increases in manpower, reductions in

14 the number of case reviews, or other changes

15 needed to enable the State courts to better

16 manage their caseloads with respect to such

17 proceedings.

18 (c) APPLICATIONS.—In order to be eligible for a

19 grant under this section, a highest State court shall sub20 mit to the Secretary, at such time and in such form as

21 the Secretary may require, an application containing—

22 (1) a timetable for conducting and completing

23 the assessment;

24 (2) a budget for the assessment;
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1 (3) a description of the methods to be used to

2 select State courts for inclusion in, and to conduct,

3 the assessment;

4 (4) certifications by the head of the State agen5 cy administering the State program under such part

6 E, and by the State foster care citizen review board

7 or State organization of such review boards (if any),

8 that such entities have had an opportunity to review

9 and comment on a draft of the application before its

10 submission, and a copy of such comments;

11 (5) a description of the process to be used by

12 the court to consult with the entities referred to in

13 paragraph (4) of this subsection in conducting the

14 assessment under subsection (b);

15 (6) an assurance that, to the extent funds pro16 vided under this section are not necessary to com17 plete the assessment under subsection (b), the court

18 will use such funds to implement, to the extent fea19 sible, recommendations made pursuant to subsection

20 (b)(5);

21 (7) an assurance that funds provided under this

22 section will not be used to supplant State or local

23 funds which would otherwise be used for similar pur24 poses;

25 (8) a commitment to furnish to the Secretary—
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1 (A) an interim report following the end of

2 the 2nd year of assessment activities under this

3 section; and

4 (B) a final report following the completion

5 of the assessment; and

6 (9) any other information the Secretary may re7 quire.

8 (d) ALLOTMENTS.—

9 (1) IN GENERAL.—Each highest State court

10 which has an application approved under subsection

11 (c), and is conducting assessment activities in ac12 cordance with this section, shall be entitled to pay13 ment, for each of fiscal years 1995 through 1998,

14 from amounts reserved pursuant to section

15 430(b)(2) of the Social Security Act, of an amount

16 equal to the sum of—

17 (A) for fiscal year 1995, $75,000 plus the

18 amount described in paragraph (2) for fiscal

19 year 1995; and

20 (B) for each of fiscal years 1996 through

21 1998, $85,000 plus the amount described in

22 paragraph (2) for each of such fiscal years.

23 (2) FORMULA.—The amount described in this

24 paragraph for any fiscal year is the amount that

25 bears the same ratio to the amount reserved pursu-
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1 ant to section 430(b)(2) of the Social Security Act

2 for the fiscal year (reduced by the dollar amount

3 specified in paragraph (1) of this subsection for the

4 fiscal year) as the number of individuals in the State

5 who have not attained 21 years of age bears to the

6 total number of such individuals in all States the

7 highest State courts of which have approved applica8 tions under subsection (c).

9 (e) USE OF GRANT FUNDS.—Each highest State

10 court which receives funds paid under this section may

11 use such funds to pay—

12 (1) any or all costs of activities under this sec13 tion in fiscal year 1995; and

14 (2) not more than 75 percent of the cost of ac15 tivities under this section in each of fiscal years

16 1996, 1997, and 1998.

17 SEC. 13213. REQUIRED PROTECTIONS FOR FOSTER CHIL18 DREN.

19 (a) IN GENERAL.—Section 422(b) (42 U.S.C.

20 622(b)) is amended—

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

22 (7);

23 (2) by striking the period at the end of para24 graph (8) and inserting ‘‘; and’’; and

25 (3) by adding at the end the following:
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1 ‘‘(9) provide assurances that the State—

2 ‘‘(A) since June 17, 1980, has completed

3 an inventory of all children who, before the in4 ventory, had been in foster care under the re5 sponsibility of the State for 6 months or more,

6 which determined—

7 ‘‘(i) the appropriateness of, and neces8 sity for, the foster care placement;

9 ‘‘(ii) whether the child could or should

10 be returned to the parents of the child or

11 should be freed for adoption or other per12 manent placement; and

13 ‘‘(iii) the services necessary to facili14 tate the return of the child or the place15 ment of the child for adoption or legal

16 guardianship;

17 ‘‘(B) is operating, to the satisfaction of the

18 Secretary—

19 ‘‘(i) a statewide information system

20 from which can be readily determined the

21 status, demographic characteristics, loca22 tion, and goals for the placement of every

23 child who is (or, within the immediately

24 preceding 12 months, has been) in foster

25 care;
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1 ‘‘(ii) a case review system (as defined

2 in section 475(5)) for each child receiving

3 foster care under the supervision of the

4 State;

5 ‘‘(iii) a service program designed to

6 help children—

7 ‘‘(I) where appropriate, return to

8 families from which they have been

9 removed; or

10 ‘‘(II) be placed for adoption, with

11 a legal guardian, or, if adoption or

12 legal guardianship is determined not

13 to be appropriate for a child, in some

14 other planned, permanent living ar15 rangement; and

16 ‘‘(iv) a preplacement preventive serv17 ices program designed to help children at

18 risk of foster care placement remain with

19 their families; and

20 ‘‘(C)(i) has reviewed (or within 12 months

21 after the date of the enactment of this para22 graph will review) State laws and administra23 tive and judicial procedures in effect for chil24 dren abandoned at or shortly after birth (in-
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1 cluding laws and procedures providing for legal

2 representation of such children); and

3 ‘‘(ii) has enacted and is implementing (or

4 within 24 months after the date of the enact5 ment of this paragraph will enact and imple6 ment) such laws and procedures as the State

7 determines, on the basis of the review described

8 in clause (i), to be necessary to enable perma9 nent decisions to be made expeditiously with re10 spect to the placement of such children.’’.

11 (b) RESTRICTION ON REALLOTMENT.—Section 424

12 (42 U.S.C. 624) is amended—

13 (1) in the 1st sentence, by striking ‘‘The

14 amount’’ and inserting the following:

15 ‘‘(a) IN GENERAL.—Subject to subsection (b), the

16 amount’’; and

17 (2) by adding at the end the following:

18 ‘‘(b) EXCEPTION RELATING TO FOSTER CHILD PRO19 TECTIONS.—The Secretary shall not reallot under sub20 section (a) of this section any amount that is withheld or

21 recovered from a State due to the failure of the State to

22 comply with section 422(b)(9).’’.

23 (c) REPEAL.—Section 427 (42 U.S.C. 627) is hereby

24 repealed.

25 (d) CONFORMING AMENDMENTS.—
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1 (1) Section 423(a) (42 U.S.C. 623(a)) is

2 amended by striking ‘‘and in section 427’’.

3 (2) Section 425(a)(2) (42 U.S.C. 625(a)(2)) is

4 amended by striking ‘‘the statistical report required

5 by section’’ and inserting ‘‘with section 422(b)(9)

6 or’’.

7 (3) Section 472(d) (42 U.S.C. 672(d)) is

8 amended by striking ‘‘427(b)’’ and inserting

9 ‘‘422(b)(9)’’.

10 (e) EFFECTIVE DATE.—The amendments and repeal

11 made by this section shall be effective for fiscal years be12 ginning on or after October 1, 1994.

13 (f) CONSTRUCTION OF SECTION.—This section and

14 the amendments and repeal made by this section shall not

15 be construed to permit any State to interrupt the provision

16 of the foster care protections described in section 427 of

17 the Social Security Act, as in effect on the effective date

18 of such amendments and repeal.

19 SEC. 13214. STATES REQUIRED TO REPORT ON MEASURES

20 TAKEN TO COMPLY WITH THE INDIAN CHILD

21 WELFARE ACT.

22 (a) STATE PLAN REQUIREMENT.—Section 422(b)

23 (42 U.S.C. 622(b)), as amended by section 13213(a) of

24 this Act, is amended—
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1 (1) by striking ‘‘and’’ at the end of paragraph

2 (8);

3 (2) by striking the period at the end of para4 graph (9) and inserting ‘‘; and’’; and

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

6 ‘‘(10) contain a description, developed after

7 consultation with tribal organizations (as defined in

8 section 4 of the Indian Self-Determination and Edu9 cation Assistance Act) in the State, of the specific

10 measures taken by the State to comply with the In11 dian Child Welfare Act.’’.

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

13 subsection (a) shall be effective with respect to calendar

14 quarters beginning on or after October 1, 1994.

15 SEC. 13215. CHILD WELFARE TRAINEESHIPS.

16 (a) IN GENERAL.—Part B of title IV (42 U.S.C.

17 620–628) is amended by inserting after section 428 the

18 following:

19 ‘‘SEC. 429. CHILD WELFARE TRAINEESHIPS.

20 ‘‘The Secretary may approve an application for a

21 grant to a public or nonprofit institution for higher learn22 ing to provide traineeships with stipends under section

23 426(a)(1)(C) only if the application—

24 ‘‘(1) provides assurances that each individual

25 who receives a stipend with such traineeship (in this
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1 section referred to as a ‘recipient’) will enter into an

2 agreement with the institution under which the re3 cipient agrees—

4 ‘‘(A) to participate in training at a public

5 or private nonprofit child welfare agency on a

6 regular basis (as determined by the Secretary)

7 for the period of the traineeship;

8 ‘‘(B) to be employed for a period of years

9 equivalent to the period of the traineeship, in a

10 public or private nonprofit child welfare agency

11 in any State, within a period of time (deter12 mined by the Secretary in accordance with reg13 ulations) after completing the postsecondary

14 education for which the traineeship was award15 ed;

16 ‘‘(C) to furnish to the institution and the

17 Secretary evidence of compliance with subpara18 graphs (A) and (B); and

19 ‘‘(D) if the recipient fails to comply with

20 subparagraph (A) or (B) and does not qualify

21 for any exception to this subparagraph which

22 the Secretary may prescribe in regulations, to

23 repay to the Secretary all (or an appropriately

24 prorated part) of the amount of the stipend,

25 plus interest, and, if applicable, reasonable col-
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1 lection fees (in accordance with regulations pro2 mulgated by the Secretary);

3 ‘‘(2) provides assurances that the institution

4 will—

5 ‘‘(A) enter into agreements with child wel6 fare agencies for onsite training of recipients;

7 ‘‘(B) permit an individual who is employed

8 in the field of child welfare services to apply for

9 a traineeship with a stipend if the traineeship

10 furthers the progress of the individual toward

11 the completion of degree requirements; and

12 ‘‘(C) develop and implement a system that,

13 for the 3-year period that begins on the date

14 any student completes a child welfare services

15 program of study, tracks the employment

16 record of the student, for the purpose of deter17 mining the percentage of students who secure

18 employment in the field of child welfare services

19 and remain employed in the field.’’.

20 (b) CONFORMING AMENDMENT.—Section

21 426(a)(1)(C) (42 U.S.C. 626(a)(1)(C)) is amended by in22 serting ‘‘described in section 429’’ after ‘‘including

23 traineeships’’.
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1 (c) APPLICABILITY.—The amendments made by this

2 section shall apply to grants awarded on or after April

3 1, 1994.

4 SEC. 13216. DISSOLVED ADOPTIONS.

5 (a) ELIGIBILITY FOR FOSTER CARE MAINTENANCE

6 PAYMENTS.—Section 472 (42 U.S.C. 672) is amended—

7 (1) in subsection (b), by inserting ‘‘or (i)’’ after

8 ‘‘subsection (a)’’; and

9 (2) by adding at the end the following:

10 ‘‘(i) Any State with a plan approved under this part

11 may make foster care maintenance payments under this

12 part on behalf of a child—

13 ‘‘(1) with respect to whom such payments were

14 previously made;

15 ‘‘(2) whose adoption has been set aside by a

16 court;

17 ‘‘(3) who meets the requirements of paragraphs

18 (1), (2), and (3) of subsection (a); and

19 ‘‘(4) who fails to meet the requirements of sub20 section (a)(4) but would meet such requirements

21 if—

22 ‘‘(A) the child were treated as if the child

23 were in the same financial and other cir24 cumstances the child was in the last time the
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1 child was determined eligible for such pay2 ments; and

3 ‘‘(B) the adoption were treated as having

4 never occurred.’’.

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

6 this section shall apply to payments under part E of title

7 IV of the Social Security Act in fiscal years beginning on

8 or after October 1, 1995.

9 SEC. 13217. TIME FRAME FOR JUDICIAL DETERMINATIONS

10 ON VOLUNTARY PLACEMENTS.

11 (a) IN GENERAL.—Section 472(e) (42 U.S.C. 672(e))

12 is amended—

13 (1) by striking ‘‘No’’ and inserting ‘‘(1) Except

14 as provided in paragraph (2), no’’; and

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

16 ‘‘(2) If the judicial determination referred to in

17 paragraph (1) is made after the 180-day period de18 scribed therein, the payments referred to therein

19 may not be made for the period that begins at the

20 end of the 180-day period and ends 180 days after

21 the date of the judicial determination, but shall (un22 less otherwise prohibited) be made for periods there23 after.’’.

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

25 subsection (a) shall be effective with respect to foster care
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1 maintenance payments made, under State plans in fiscal

2 year 1996 and succeeding fiscal years, on behalf of chil3 dren placed in foster care on or after October 1, 1995.

4 SEC. 13218. STUDY OF REASONABLE EFFORTS.

5 (a) IN GENERAL.—The Secretary of Health and

6 Human Services shall conduct a study of the implementa7 tion by the States of section 471(a)(15) of the Social Secu8 rity Act, giving particular attention to—

9 (1) standards used by States in determining

10 what action to take, and whether and for how long

11 to continue efforts—

12 (A) before the placement of a child in fos13 ter care, to prevent or eliminate the need for re14 moval of the child from the home of the child;

15 and

16 (B) to return a child home rather than to

17 seek some other planned, permanent placement;

18 and

19 (2) the responses of the courts to the State ac20 tions described in paragraph (1) of this subsection,

21 including whether such responses facilitate or im22 pede the achievement by State agencies of the objec23 tives of such section 471(a)(15).

24 (b) REPORT AND RECOMMENDATIONS.—Within 18

25 months after the date of the enactment of this Act, the
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1 Secretary of Health and Human Services shall submit to

2 the Congress a report, with such recommendations as the

3 Secretary finds appropriate, based on the results of the

4 study required by subsection (a) of this section, which de5 scribes State practices that the Secretary has found effec6 tive in achieving the objectives of section 471(a)(15) of

7 the Social Security Act, and, if appropriate, shall set forth

8 model practices for consideration by the States.

9 SEC. 13219. ENHANCED MATCH FOR AUTOMATED DATA

10 SYSTEMS.

11 (a) PAYMENTS TO STATES.—

12 (1) IN GENERAL.—Section 474(a)(3) (42

13 U.S.C. 674(a)(3)) is amended—

14 (A) by striking ‘‘and’’ at the end of sub15 paragraph (B);

16 (B) by redesignating subparagraph (C) as

17 subparagraph (E); and

18 (C) by inserting after subparagraph (B)

19 the following:

20 ‘‘(C) 90 percent of so much of such ex21 penditures as are for the planning, design, de22 velopment, or installation of statewide mecha23 nized data collection and information retrieval

24 systems (including 90 percent of the full

25 amount of expenditures for hardware compo-
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1 nents for such systems) but only to the extent

2 that such systems—

3 ‘‘(i) meet the requirements imposed

4 by regulations promulgated pursuant to

5 section 479(b)(2);

6 ‘‘(ii) to the extent practicable, are ca7 pable of interfacing with the State data

8 collection system that collects information

9 relating to child abuse and neglect;

10 ‘‘(iii) to the extent practicable, have

11 the capability of interfacing with, and re12 trieving information from, the State data

13 collection system that collects information

14 relating to the eligibility of individuals

15 under part A (for the purposes of facilitat16 ing verification of eligibility of foster chil17 dren); and

18 ‘‘(iv) are determined by the Secretary

19 to be likely to provide more efficient, eco20 nomical, and effective administration of

21 the programs carried out under a State

22 plan approved under part B or this part;

23 and

24 ‘‘(D) 50 percent of so much of such ex25 penditures as are for the operation of the state-
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1 wide mechanized data collection and informa2 tion retrieval systems referred to in subpara3 graph (C); and’’.

4 (2) TREATMENT OF STATE EXPENDITURES FOR

5 DATA COLLECTION AND INFORMATION RETRIEVAL

6 SYSTEMS.—Section 474 (42 U.S.C. 674), as amend7 ed by section 13224 of this Act, is amended by add8 ing at the end the following:

9 ‘‘(c) AUTOMATED DATA COLLECTION EXPENDI10 TURES.—The Secretary shall treat as necessary for the

11 proper and efficient administration of the State plan all

12 expenditures of a State necessary in order for the State

13 to plan, design, develop, install, and operate data collec14 tion and information retrieval systems described in sub15 section (a)(3)(C), without regard to whether the systems

16 may be used with respect to foster or adoptive children

17 other than those on behalf of whom foster care mainte18 nance payments or adoption assistance payments may be

19 made under this part.’’.

20 (3) EFFECTIVE DATE.—The amendments made

21 by this subsection shall apply to expenditures during

22 fiscal years 1994, 1995, and 1996.

23 (b) TERMINATION OF ENHANCED MATCH.—

24 (1) IN GENERAL.—Section 474(a)(3)(C) (42

25 U.S.C. 674(a)(3)(C)), as amended by subsection (a)
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1 of this section, is amended by striking ‘‘90 percent’’

2 each place such term appears and inserting ‘‘50 per3 cent’’.

4 (2) EFFECTIVE DATE.—The amendment made

5 by paragraph (1) shall apply to expenditures during

6 fiscal years beginning on or after October 1, 1996.

7 SEC. 13220. PERIODIC REEVALUATION OF FOSTER CARE

8 MAINTENANCE PAYMENTS.

9 (a) IN GENERAL.—Section 471(a)(11) (42 U.S.C.

10 671(a)(11)) is amended—

11 (1) by inserting ‘‘(A)’’ after ‘‘(11)’’;

12 (2) by striking ‘‘and amounts paid as foster

13 care maintenance payments and adoption assist14 ance’’; and

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

16 ‘‘(B) provides that, at least once every 3 years,

17 the State agency will review the amount paid as fos18 ter care maintenance payments and adoption assist19 ance payments to ensure their continuing appro20 priateness, and will submit to the Secretary (and

21 make available to the public) a report on the results

22 of the review, in such form and manner as the Sec23 retary may by regulation require, which contains, at

24 a minimum—
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1 ‘‘(i) a statement of the manner in which

2 the foster care maintenance payment level is de3 termined, including information on the cost of

4 foster care with respect to which such payments

5 are made;

6 ‘‘(ii) information on the amount of the

7 basic foster care maintenance payment level,

8 and as to whether such payment level includes

9 an amount to cover the cost of clothing, and

10 whether such payment level varies by the type

11 of care or the special needs or age of the child,

12 and, if so, the payment levels for each special

13 needs, care, or age category;

14 ‘‘(iii) if such payments are not made at a

15 different rate for children who test positive for

16 human immunodeficiency virus, have acquired

17 immune deficiency syndrome, are addicted to

18 drugs, suffer from complications due to expo19 sure to drugs or alcohol, or have other severe

20 special needs, the reasons therefor; and

21 ‘‘(iv) information on any limitations im22 posed by the State on adoption assistance pay23 ment levels;’’.
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1 (b) EFFECTIVE DATE.—The amendment made by

2 this section shall be effective with respect to calendar

3 quarters beginning on or after October 1, 1994.

4 SEC. 13221. DISPOSITIONAL HEARING.

5 Section 475(5)(C) (42 U.S.C. 675(5)(C)) is amended

6 by striking ‘‘periodically’’ and inserting ‘‘not less fre7 quently than every 12 months’’.

8 SEC. 13222. HEALTH CARE PLANS FOR FOSTER CHILDREN.

9 (a) IN GENERAL.—Section 475(1)(C) (42 U.S.C.

10 675(1)(C)) is amended—

11 (1) in clause (vii), by striking ‘‘and’’; and

12 (2) by redesignating clause (viii) as clause (ix)

13 and inserting after clause (vii) the following:

14 ‘‘(viii) a record indicating that the child’s

15 foster care provider was advised (where appro16 priate) of the child’s eligibility for early and

17 periodic screening, diagnostic, and treatment

18 services under title XIX; and’’.

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

20 this section shall apply to case plans established or re21 viewed on or after January 1, 1994.

22 SEC. 13223. INDEPENDENT LIVING.

23 (a) TREATMENT OF ASSETS OF PARTICIPATING

24 YOUTHS.—Section 477 (42 U.S.C. 677) is amended—
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1 (1) by redesignating subsection (i) as subsection

2 (j); and

3 (2) by inserting after subsection (h) the follow4 ing:

5 ‘‘(i) Notwithstanding any other provision of this title,

6 with respect to a child who is included in a program estab7 lished by a State agency under subsection (a), an amount

8 of the assets of the child which would otherwise be re9 garded as resources for purposes of determining eligibility

10 for benefits under this title may be disregarded for the

11 purpose of allowing the child to establish a household, pur12 sue education, or otherwise complete the transition to

13 independent living. The amount disregarded may not ex14 ceed an amount determined by the State agency to be rea15 sonable for such purposes.’’.

16 (b) PERMANENT EXTENSION OF PROGRAM.—Section

17 477 (42 U.S.C. 677) is amended—

18 (1) in subsection (a)(1), by striking the 3rd

19 sentence;

20 (2) in subsection (c), by striking ‘‘of the fiscal

21 years 1988 through 1992’’ and inserting ‘‘succeed22 ing fiscal year’’;

23 (3) in subsection (e)(1)(A), by striking ‘‘each of

24 the fiscal years 1987 through 1992’’ and inserting

25 ‘‘fiscal year 1987 and any succeeding fiscal year’’;
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1 (4) in subsection (e)(1)(B), by striking ‘‘fiscal

2 years 1991 and 1992’’ and inserting ‘‘fiscal year

3 1991 and any succeeding fiscal year’’; and

4 (5) in subsection (e)(1)(C)(ii), by striking ‘‘fis5 cal year 1992’’ and inserting ‘‘any succeeding fiscal

6 year’’.

7 (c) EFFECTIVE DATES.—

8 (1) TREATMENT OF ASSETS OF PARTICIPATING

9 YOUTHS.—The amendments made by subsection (a)

10 shall apply to activities in fiscal years beginning on

11 or after October 1, 1995.

12 (2) PERMANENT EXTENSION OF PROGRAM.—

13 The amendments made by subsection (b) shall apply

14 to activities engaged in on or after October 1, 1992.

15 SEC. 13224. ELIMINATION OF FOSTER CARE CEILINGS AND

16 OF AUTHORITY TO TRANSFER UNUSED FOS17 TER CARE FUNDS TO CHILD WELFARE SERV18 ICES PROGRAMS.

19 (a) REPEAL.—Subsections (b) and (c) of section 474

20 (42 U.S.C. 674 (b) and (c)) are hereby repealed.

21 (b) CONFORMING AMENDMENTS.—Section 474 (42

22 U.S.C. 674) is amended—

23 (1) in subsection (d)(1)—

24 (A) by striking ‘‘subsections (a), (b), and

25 (c)’’ and inserting ‘‘subsection (a)’’; and
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1 (B) by striking ‘‘the provisions of such

2 subsections’’ and inserting ‘‘subsection (a)’’;

3 and

4 (2) by redesignating subsection (d) as sub5 section (b).

6 (c) EFFECTIVE DATE.—The amendments and repeal

7 made by this section shall apply to payments for calendar

8 quarters beginning on or after October 1, 1993.

9 SEC. 13225. TRAINING OF AGENCY STAFF AND FOSTER

10 AND ADOPTIVE PARENTS.

11 (a) IN GENERAL.—Section 8006(b) of the Omnibus

12 Budget Reconciliation Act of 1989 (42 U.S.C. 674 note)

13 is amended by striking ‘‘, and before October 1, 1992’’.

14 (b) RETROACTIVE APPLICABILITY.—The Social Secu15 rity Act shall be applied and administered as if the amend16 ment made by subsection (a) had been made on October

17 1, 1992.

18 SEC. 13226. ON-SITE REVIEWS AND AUDITS OF STATE

19 CLAIMS FOR FOSTER CARE AND ADOPTION

20 ASSISTANCE.

21 (a) ON-SITE REVIEWS AND AUDITS OF STATE

22 CLAIMS.—Section 474 (42 U.S.C. 674), as amended by

23 sections 13224 and 13219(a)(2) of this Act, is amended—

24 (1) by redesignating subsection (c) as sub25 section (d); and
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1 (2) by inserting after subsection (b) the follow2 ing:

3 ‘‘(c) ON-SITE REVIEWS AND AUDITS OF STATE

4 CLAIMS FOR PAYMENT.—

5 ‘‘(1) REGULATIONS SPECIFYING REVIEW

6 STANDARDS.—The Secretary shall promulgate regu7 lations applicable to on-site reviews and audits of

8 State expenditures for foster care maintenance pay9 ments and adoption assistance payments under this

10 part, which specify—

11 ‘‘(A) the criteria to be used to determine

12 the appropriateness of expenditures identified in

13 sampled case files;

14 ‘‘(B) the criteria to be used to determine

15 the appropriateness of expenditures for child

16 placement services and plan administration; and

17 ‘‘(C) the types of erroneous expenditures

18 which will be disregarded for purposes of deter19 mining the appropriateness of payments under

20 this part (including erroneous payments result21 ing from the State’s reliance upon and correct

22 use of formal written statements of Federal law

23 or policy provided to the State by the Sec24 retary).
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1 ‘‘(2) DEVELOPMENT AND PUBLICATION OF

2 WRITTEN STANDARDS AND PROCEDURES.—The Sec3 retary, after consultation with organizations rep4 resenting State and local governmental agencies with

5 responsibility for foster care and adoption services

6 and other relevant agencies and organizations, shall

7 develop and furnish to State agencies a written de8 scription of the methods and procedures to be used

9 in the on-site audits and reviews referred to in para10 graph (1), which specify—

11 ‘‘(A) the methods and procedures to be

12 used to select a sample of case files for review

13 or audit;

14 ‘‘(B) the procedures to be used in review15 ing or auditing sampled case files to determine

16 erroneous expenditures;

17 ‘‘(C) the procedures to be used to review or

18 audit State expenditures for child placement

19 services and plan administration; and

20 ‘‘(D) the methodology to be used to ex21 trapolate from review or audit findings to all

22 expenditures under the State plan.

23 ‘‘(3) ADVANCE NOTICE TO STATES.—The Sec24 retary shall not, in a review or audit of State ex25 penditures during a fiscal year, use any criterion
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1 specified pursuant to paragraph (1), or any proce2 dure or methodology specified pursuant to para3 graph (2), which was not published in final regula4 tions or furnished in writing to the State (as appli5 cable) at least 3 months before the beginning of the

6 fiscal year.’’.

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

8 subsection (a) shall apply to expenditures in fiscal years

9 beginning on or after October 1, 1994.

10 SEC. 13227. CONFORMITY REVIEWS.

11 (a) IN GENERAL.—Part A of title XI (42 U.S.C.

12 1301–1320b–13) is amended by inserting after section

13 1122 the following:

14 ‘‘SEC. 1123. REVIEWS OF CHILD AND FAMILY SERVICES

15 PROGRAMS, AND OF FOSTER CARE AND

16 ADOPTION ASSISTANCE PROGRAMS, FOR

17 COMPLIANCE WITH STATE PLAN REQUIRE18 MENTS.

19 ‘‘(a) IN GENERAL.—The Secretary shall not impose

20 a financial penalty on any State for any failure of the

21 State programs under parts B and E of title IV to comply

22 with any requirement of any State plan approved under

23 such part B or E, except pursuant to final regulations,

24 developed after consultation with State agencies admin-
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1 istering such programs, which meet the requirements of

2 this section.

3 ‘‘(b) ELEMENTS OF REVIEW SYSTEM.—The regula4 tions referred to in subsection (a) shall—

5 ‘‘(1) specify the timetable for compliance re6 views of State programs, which—

7 ‘‘(A) shall provide for annual reviews of

8 each State program during the 1st 2 years of

9 operation;

10 ‘‘(B) shall provide for review of a State

11 program not later than 1 year following a re12 view in which the State program was found not

13 to be in substantial compliance with plan re14 quirements; and

15 ‘‘(C) may provide for less frequent reviews

16 of State programs which have been found to be

17 in substantial compliance with plan require18 ments, but shall permit the Secretary to rein19 state more frequent reviews based on informa20 tion which indicates that the State program

21 may not be in compliance with plan require22 ments;

23 ‘‘(2) specify the plan requirements subject to

24 review, and the criteria to be used to measure com25 pliance with such requirements and to determine
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1 whether there is a substantial failure to comply with

2 a plan requirement;

3 ‘‘(3) specify the method to be used to determine

4 the financial penalty to be imposed (subject to para5 graph (4)) for a failure to comply with plan require6 ments, which ensures that—

7 ‘‘(A) a financial penalty will not be im8 posed with respect to a program, unless it is de9 termined that the program fails substantially to

10 so comply;

11 ‘‘(B) a financial penalty will not be im12 posed for a failure to so comply resulting from

13 the State’s reliance upon and correct use of for14 mal written statements of Federal law or policy

15 provided to the State by the Secretary; and

16 ‘‘(C) the amount of financial penalty is re17 lated to the extent of the noncompliance; and

18 ‘‘(4) require the Secretary, with respect to any

19 State found to have failed substantially to comply

20 with plan requirements—

21 ‘‘(A) to afford the State an opportunity to

22 adopt and implement a corrective action plan,

23 approved by the Secretary, designed to end the

24 noncompliance;
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1 ‘‘(B) to make technical assistance available

2 to the State to the extent necessary to enable

3 the State to develop and implement such a cor4 rective action plan;

5 ‘‘(C) to suspend the imposition of any pen6 alty under this section while such a corrective

7 action plan is in effect; and

8 ‘‘(D) to rescind any such penalty if the

9 noncompliance is ended by successful comple10 tion of such a corrective action plan.

11 ‘‘(c) PROVISIONS FOR ADMINISTRATIVE AND JUDI12 CIAL REVIEW.—The regulations referred to in subsection

13 (a) shall—

14 ‘‘(1) require the Secretary, not later than 10

15 days after a determination that a program of the

16 State is not in compliance with applicable plan re17 quirements, to notify the State of—

18 ‘‘(A) the basis for the determination; and

19 ‘‘(B) the amount of the financial penalty

20 (if any) imposed on the State;

21 ‘‘(2) afford the State an opportunity to appeal

22 the determination to the Departmental Appeals

23 Board within 60 days after receipt of the notice de24 scribed in paragraph (1) (or, if later, after failure to
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1 continue or to complete a corrective action plan);

2 and

3 ‘‘(3) afford the State an opportunity to obtain

4 judicial review of an adverse decision of the Board,

5 within 60 days after the State receives notice of the

6 decision of the Board, by appeal to the district court

7 of the United States for the judicial district in which

8 the principal or headquarters office of the agency re9 sponsible for administering the program is located.’’.

10 (b) CONFORMING AMENDMENT.—Section 471(b) (42

11 U.S.C. 671(b)) is amended by striking all that follows the

12 1st sentence.

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

14 subsections (a) and (b) shall take effect on the date of

15 the enactment of this Act.

16 (d) CONSTRUCTION.—This section shall not be con17 strued to prevent the Secretary, before the effective date

18 of final regulations meeting the requirements of section

19 1123 of the Social Security Act, from conducting compli20 ance reviews of State programs under parts B and E of

21 such Act for the purpose of providing information and

22 technical assistance to States concerning corrective actions

23 needed in order to comply with plan requirements applica24 ble to such programs.
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1 SEC. 13228. REPEAL OF ANNUAL REPORT ON VOLUNTARY

2 PLACEMENT.

3 Section 102(e) of the Adoption Assistance and Child

4 Welfare Act of 1980 (42 U.S.C. 672 note) is hereby re5 pealed.

6 SEC. 13229. DEMONSTRATION PROJECTS.

7 Part A of title XI (42 U.S.C. 1301–1320b–13) is

8 amended by inserting after section 1128B the following:

9 ‘‘SEC. 1129. DEMONSTRATION PROJECTS.

10 ‘‘(a) IN GENERAL.—The Secretary may authorize not

11 more than 10 States to conduct demonstration projects

12 pursuant to this section which the Secretary finds are like13 ly to promote the objectives of part B or E of title IV.

14 ‘‘(b) WAIVER AUTHORITY.—The Secretary may

15 waive compliance with any requirement of part B or E

16 of title IV which (if applied) would prevent a State from

17 carrying out a demonstration project under this section

18 or prevent the State from effectively achieving the purpose

19 of such a project, except that the Secretary may not

20 waive—

21 ‘‘(1) any provision of section 427 (as in effect

22 before October 1, 1994), section 422(b)(9) (as in ef23 fect after such date), or section 479; or

24 ‘‘(2) any provision of such part E, to the extent

25 that the waiver would impair the entitlement of any
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1 qualified child or family to benefits under a State

2 plan approved under such part E.

3 ‘‘(c) TREATMENT AS PROGRAM EXPENDITURES.—

4 For purposes of parts B and E of title IV, the Secretary

5 shall consider the expenditures of any State to conduct

6 a demonstration project under this section to be expendi7 tures under subpart 1 or 2 of such part B, or under such

8 part E, as the State may elect.

9 ‘‘(d) DURATION OF DEMONSTRATION.—A dem10 onstration project under this section may be conducted for

11 not more than 5 years.

12 ‘‘(e) APPLICATION.—Any State seeking to conduct a

13 demonstration project under this section shall submit to

14 the Secretary an application, in such form as the Sec15 retary may require, which includes—

16 ‘‘(1) a description of the proposed project, the

17 geographic area in which the proposed project would

18 be conducted, the children or families who would be

19 served by the proposed project, and the services

20 which would be provided by the proposed project

21 (which shall provide, where appropriate, for random

22 assignment of children and families to groups served

23 under the project and to control groups);

24 ‘‘(2) a statement of the period during which the

25 proposed project would be conducted;
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1 ‘‘(3) a discussion of the benefits that are ex2 pected from the proposed project (compared to a

3 continuation of activities under the approved plan or

4 plans of the State);

5 ‘‘(4) an estimate of the costs or savings of the

6 proposed project;

7 ‘‘(5) a statement of program requirements for

8 which waivers would be needed to permit the pro9 posed project to be conducted;

10 ‘‘(6) a description of the proposed evaluation

11 design; and

12 ‘‘(7) such additional information as the Sec13 retary may require.

14 ‘‘(f) EVALUATIONS; REPORT.—Each State authorized

15 to conduct a demonstration project under this section

16 shall—

17 ‘‘(1) obtain an evaluation by an independent

18 contractor of the effectiveness of the project, using

19 an evaluation design approved by the Secretary

20 which provides for—

21 ‘‘(A) comparison of methods of service de22 livery under the project, and such methods

23 under a State plan or plans, with respect to ef24 ficiency, economy, and any other appropriate

25 measures of program management;
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1 ‘‘(B) comparison of outcomes for children

2 and families (and groups of children and fami3 lies) under the project, and such outcomes

4 under a State plan or plans, for purposes of as5 sessing the effectiveness of the project in

6 achieving program goals; and

7 ‘‘(C) any other information that the Sec8 retary may require; and

9 ‘‘(2) provide interim and final evaluation re10 ports to the Secretary, at such times and in such

11 manner as the Secretary may require.

12 ‘‘(g) COST NEUTRALITY.—The Secretary may not

13 authorize a State to conduct a demonstration project

14 under this section unless the Secretary determines that

15 the total amount of Federal funds that will be expended

16 under (or by reason of) the project over its approved term

17 (or such portion thereof or other period as the Secretary

18 may find appropriate) will not exceed the amount of such

19 funds that would be expended by the State under the State

20 plans approved under parts B and E of title IV if the

21 project were not conducted.’’.

22 SEC. 13230. PLACEMENT ACCOUNTABILITY.

23 (a) CASE PLAN REQUIREMENTS.—Section 475(5)(A)

24 (42 U.S.C. 675(5)(A)) is amended by adding at the end

25 the following: ‘‘which—
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1 ‘‘(i) if the child has been placed in a

2 foster family home or child-care institution

3 a substantial distance from the home of

4 the parents of the child, or in a State dif5 ferent from the State in which the home is

6 located, sets forth the reasons why such

7 placement is in the best interests of the

8 child, and

9 ‘‘(ii) if the child has been placed in

10 foster care outside the State, requires that,

11 at least every 6 months, a caseworker on

12 the staff of the State agency of the State

13 in which the home of the parents of the

14 child is located, or of the State in which

15 the child has been placed, visit such child

16 in such home or institution and submit a

17 report on such visit to the State agency of

18 the State in which the home of the parents

19 of the child is located,’’.

20 (b) DISPOSITIONAL HEARING.—Section 475(5)(C)

21 (42 U.S.C. 675(5)(C)) is amended by inserting ‘‘and, in

22 the case of a child described in subparagraph (A)(ii),

23 whether the out-of-State placement continues to be appro24 priate and in the best interests of the child,’’ after ‘‘long25 term basis)’’.
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1 (c) DATA COLLECTION.—Section 479(c)(3)(C) (42

2 U.S.C. 679(c)(3)(C)) is amended—

3 (1) by striking ‘‘and’’ at the end of clause (i);

4 and

5 (2) by adding at the end the following:

6 ‘‘(iii) children placed in foster care

7 outside the State, and’’.

8 (d) EFFECTIVE DATES.—The amendments made by

9 subsections (a), (b), and (c) shall be effective with respect

10 to fiscal years beginning on and after October 1, 1994.

11 SEC. 13231. PAYMENTS OF STATE CLAIMS FOR FOSTER

12 CARE AND ADOPTION ASSISTANCE.

13 Section 474(b) (42 U.S.C. 674(b)), as so redesig14 nated by section 13239(b)(2) of this Act, is amended by

15 adding at the end the following:

16 ‘‘(4)(A) Within 60 days after receipt of a State claim

17 for expenditures pursuant to subsection (a), the Secretary

18 shall allow, disallow, or defer such claim.

19 ‘‘(B) Within 15 days after a decision to defer such

20 a State claim, the Secretary shall notify the State of the

21 reasons for the deferral and of the additional information

22 necessary to determine the allowability of the claim.

23 ‘‘(C) Within 90 days after receiving such necessary

24 information (in readily reviewable form), the Secretary

25 shall—
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1 ‘‘(i) disallow the claim, if able to complete the

2 review and determine that the claim is not allowable,

3 or

4 ‘‘(ii) in any other case, allow the claim, subject

5 to disallowance (as necessary)—

6 ‘‘(I) upon completion of the review, if it is

7 determined that the claim is not allowable; or

8 ‘‘(II) on the basis of findings of an audit

9 or financial management review.’’.

10 SEC. 13232. MORATORIUM ON COLLECTION OF DISALLOW11 ANCES.

12 The Secretary of Health and Human Services shall

13 not—

14 (1) before October 1, 1994, reduce any pay15 ment to, withhold any payment from, or seek any re16 payment from any State under part B or E of title

17 IV of the Social Security Act by reason of a deter18 mination made in connection with a review of State

19 compliance with section 427 of such Act for any

20 Federal fiscal year before fiscal year 1995; or

21 (2) reduce any payment to, withhold any pay22 ment from, or seek any repayment from any State

23 under such part E by reason of a determination

24 made in connection with any on-site Federal finan-
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1 cial review, or any audit conducted by the Inspector

2 General using similar methodologies.

3 SEC. 13233. BORDER REGION CHILD WELFARE WORKER

4 TRAINING DEMONSTRATION.

5 (a) IN GENERAL.—The Secretary shall make grants

6 to not more than 5 eligible institutions to train individuals

7 to deliver culturally sensitive and bilingual child welfare

8 services in areas of the United States that border on Mex9 ico, 1 of which grants shall be for training to deliver child

10 welfare services to historically unserved or underserved

11 populations in an urban center with a high concentration

12 of such populations.

13 (b) APPLICATIONS.—The Secretary shall approve an

14 application of an institution for a grant under this section

15 only if the application—

16 (1) demonstrates to the satisfaction of the Sec17 retary that the institution has a history of, or a plan

18 for, training students to deliver culturally sensitive

19 and bilingual child welfare services in a border coun20 ty;

21 (2) provides assurances that the institution will

22 develop and implement, in consultation with the

23 child welfare agency of the State in which the insti24 tution is located, a curriculum in the field of child

25 welfare services which—
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1 (A) is sensitive to the culture of—

2 (i) the areas of the United States that

3 border on Mexico; or

4 (ii) in the case of the institution which

5 receives the urban center grant described

6 in subsection (a), the historically unserved

7 or underserved populations in the urban

8 center; and

9 (B) includes training for identification of

10 health problems of children and their families

11 and of child abuse and neglect;

12 (3) provides assurances that each individual

13 who receives a stipend with such training will enter

14 into an agreement with the institution under which

15 the individual agrees—

16 (A) to be employed for a period of years

17 equivalent to the period of such training, in a

18 public or private nonprofit family assistance

19 agency that provides services directly to resi20 dents of—

21 (i) the border county in which the

22 agency is located; or

23 (ii) in the case of the institution which

24 receives the urban center grant described
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1 in subsection (a), the urban center in

2 which the agency is located; and

3 (B) if the individual fails to be so em4 ployed for such period, to repay to the Sec5 retary, in accordance with such conditions as

6 the Secretary may prescribe, all or part of the

7 amount of the stipend, plus interest, and, if ap8 plicable, reasonable collection fees; and

9 (4) provides that each agreement entered into

10 with an individual pursuant to paragraph (3) will

11 fully disclose the terms and conditions under which

12 the stipend is to be provided.

13 (c) EVALUATIONS.—Each institution that receives a

14 grant under this section shall develop and carry out a plan

15 for evaluating the effects of the training provided under

16 the grant, and shall submit to the Secretary a report on

17 the evaluation.

18 (d) DEFINITIONS.—As used in this section:

19 (1) FAMILY ASSISTANCE AGENCY.—The term

20 ‘‘family assistance agency’’ means a child welfare

21 agency, family planning agency, hospital, clinic, com22 munity mental health facility, or drug and alcohol

23 treatment program.

24 (2) ELIGIBLE INSTITUTION.—The term ‘‘eligi25 ble institution’’ means a public or private nonprofit
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1 institution of higher learning that is located in a

2 State that contains a border county.

3 (3) BORDER COUNTY.—The term ‘‘border coun4 ty’’ means—

5 (A) a United States county that borders on

6 Mexico; and

7 (B) a United States county that borders

8 on a county described in subparagraph (A).

9 (c) URBAN CENTER.—The term ‘‘urban center’’

10 means an area in a metropolitan statistical area, as

11 designated by the Office of Management and Budg12 et, which has a high incidence of individuals in his13 torically unserved or underserved populations who

14 are in need of social services, as determined by the

15 Secretary using the most recent and best available

16 information.

17 (5) HISTORICALLY UNSERVED OR UNDER18 SERVED POPULATIONS.—The term ‘‘historically

19 unserved or underserved populations’’ includes—

20 (A) socially and economically disadvan21 taged populations;

22 (B) persons with limited English pro23 ficiency;

24 (C) populations residing in urban areas

25 and exhibiting a high incidence of child abuse,
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1 neglect, or abandonment, as determined by the

2 Secretary;

3 (D) homeless persons (within the meaning

4 of section 103 of the Stewart B. McKinney

5 Homeless Assistance Act);

6 (E) persons who are, or are in danger of

7 becoming, infected with the human

8 immunodeficiency virus; and

9 (F) persons who abuse alcohol or drugs.

10 (6) SECRETARY.—The term ‘‘Secretary’’ means

11 the Secretary of Health and Human Services.

12 (e) AUTHORIZATION OF APPROPRIATIONS.—There

13 are authorized to be appropriated such sums as may be

14 necessary to carry out this section.

15 SEC. 13234. EFFECT OF FAILURE TO CARRY OUT STATE

16 PLAN.

17 (a) IN GENERAL.—Part A of title XI (42 U.S.C.

18 1301–1320b–13), as amended by section 13229 of this

19 Act, is amended by inserting after section 1129 the follow20 ing:

21 ‘‘SEC. 1130. EFFECT OF FAILURE TO CARRY OUT STATE

22 PLAN.

23 ‘‘In an action brought to enforce a provision of the

24 Social Security Act, such provision is not to be deemed

25 unenforceable because of its inclusion in a section of the
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1 Act requiring a State plan or specifying the required con2 tents of a State plan. This section is not intended to limit

3 or expand the grounds for determining the availability of

4 private actions to enforce State plan requirements other

5 than by overturning any such grounds applied in Suter

6 v. Artist M., 112 S. Ct. 1360 (1992), but not applied in

7 prior Supreme Court decisions respecting such enforce8 ability: Provided, however, That this section is not in9 tended to alter the holding in Suter v. Artist M. that sec10 tion 471(a)(15) of the Act is not enforceable in a private

11 right of action.’’.

12 (b) APPLICABILITY.—The amendment made by sub13 section (a) shall apply to actions pending on the date of

14 the enactment of this Act and to actions brought on or

15 after such date of enactment.

16 CHAPTER 2—CHILD SUPPORT

17 ENFORCEMENT

18 SEC. 13241. STATE PATERNITY ESTABLISHMENT PRO19 GRAMS.

20 (a) PERFORMANCE STANDARDS.—Section 452(g) (42

21 U.S.C. 652(g)) is amended—

22 (1) in paragraph (1)—

23 (A) by striking ‘‘1991’’ and inserting

24 ‘‘1994’’;
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1 (B) by inserting ‘‘is based on reliable data

2 and’’ before ‘‘equals or exceeds’’; and

3 (C) by striking subparagraphs (A), (B),

4 and (C) and inserting the following:

5 ‘‘(A) 75 percent;

6 ‘‘(B) for a State with a paternity establishment

7 percentage of not less than 50 percent but less than

8 75 percent for the fiscal year, the paternity estab9 lishment percentage of the State for the immediately

10 preceding year plus 3 percentage points; or

11 ‘‘(C) for a State with a paternity establishment

12 percentage of less than 50 percent for such fiscal

13 year, the paternity establishment percentage of the

14 State for the immediately preceding year plus 6 per15 centage points.’’; and

16 (2) in paragraph (2)—

17 (A) by striking ‘‘(or under all such plans)’’

18 each place such term appears;

19 (B) by inserting ‘‘or part E’’ after ‘‘under

20 part A’’ each place such term appears;

21 (C) by amending subparagraph (B) to read

22 as follows:

23 ‘‘(B) the term ‘reliable data’ means the

24 most recent data available which are found by
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1 the Secretary to be reliable for purposes of this

2 section.’’;

3 (D) by inserting ‘‘unless paternity is estab4 lished for such child’’ after ‘‘the death of a par5 ent’’;

6 (E) by striking ‘‘parent or’’ and inserting

7 ‘‘parent,’’; and

8 (F) by inserting ‘‘, or any child with re9 spect to whom the State agency administering

10 the plan under part E determines (as provided

11 in section 454(4)(B)) that it is against the best

12 interest of such child to do so’’ after ‘‘cooperate

13 under section 402(a)(26)’’.

14 (b) STATE PLAN REQUIREMENTS.—

15 (1) REQUIRED PROCEDURES.—Section 466(a)

16 (42 U.S.C. 666(a)) is amended—

17 (A) in paragraph (2)—

18 (i) by striking ‘‘at the option of the

19 State,’’; and

20 (ii) by inserting ‘‘and paternity estab21 lishment’’ after ‘‘support order issuance

22 and enforcement’’;

23 (B) in paragraph (5), by adding at the end

24 the following:
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1 ‘‘(C) Procedures for a simple civil process

2 for voluntarily acknowledging paternity under

3 which the State must explain the rights and re4 sponsibilities of acknowledging paternity, and

5 afford due process safeguards. Such procedures

6 must include (i) a hospital-based program for

7 the voluntary acknowledgment of paternity dur8 ing the period immediately before or after the

9 birth of a child, and (ii) the inclusion of signa10 ture lines on applications for official birth cer11 tificates which, once signed by the father and

12 the mother, are considered a voluntary acknowl13 edgment of paternity.

14 ‘‘(D) Procedures under which the vol15 untary acknowledgment of paternity of a child

16 by an individual in the manner described in

17 subparagraph (C)(ii) creates a rebuttable or, at

18 the option of the State, conclusive presumption

19 that the individual is the father of the child,

20 and under which such a voluntary acknowledg21 ment is admissible as evidence of paternity.

22 ‘‘(E) Procedures under which a voluntary

23 acknowledgment of paternity in the manner de24 scribed in subparagraph (C)(ii) must be recog25 nized as a basis for seeking a support order
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1 without first requiring any further proceedings

2 to establish paternity.

3 ‘‘(F) Procedures requiring that (i) any ob4 jection to genetic testing results be made in

5 writing within a specified number of days be6 fore any hearing at which such results may be

7 introduced into evidence, and (ii) if no objection

8 is made, the test results be admissible as evi9 dence of paternity without the need for founda10 tion testimony or other proof of authenticity or

11 accuracy.

12 ‘‘(G) Procedures which create a rebuttable

13 or, at the option of the State, conclusive pre14 sumption of paternity of a child, upon genetic

15 testing results indicating a threshold probability

16 of the alleged father being the father of the

17 child.

18 ‘‘(H) Procedures requiring a default order

19 to be entered in a paternity case upon a show20 ing that process has been served on the defend21 ant and any additional showing required by

22 State law.’’; and

23 (C) by inserting after paragraph (10) the

24 following:
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1 ‘‘(11) Procedures under which a State must

2 give full faith and credit to a determination of pater3 nity made by any other State, whether established

4 through voluntary acknowledgment or through ad5 ministrative or judicial processes.’’.

6 (2) FURNISHING OF SOCIAL SECURITY NUM7 BERS.—

8 (A) IN GENERAL.—Section 466(a) (42

9 U.S.C. 666(a)), as amended by paragraph

10 (1)(C) of this subsection, is amended by insert11 ing after paragraph (11) the following:

12 ‘‘(12)(A) Procedures under which, in the ad13 ministration of any law involving the issuance,

14 reissuance, or amendment of a birth certificate, the

15 State shall require each parent to furnish to the

16 State, or any agency or political subdivision thereof

17 having administrative responsibility for the law in18 volved, the social security account number (or num19 bers, if the parent has more than 1 such number)

20 issued to the parent, unless the State (in accordance

21 with regulations prescribed by the Secretary) finds

22 good cause for not requiring the furnishing of the

23 number.

24 ‘‘(B) Procedures under which any number fur25 nished under subparagraph (A) shall be made avail-
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1 able to the agency administering the State plan

2 under this part, in accordance with Federal or State

3 law or regulation.

4 ‘‘(C) Procedures under which—

5 ‘‘(i) any number furnished under subpara6 graph (A) shall not be recorded on the birth

7 certificate; and

8 ‘‘(ii) any social security account number,

9 obtained with respect to the issuance by the

10 State of any birth certificate, shall not be used

11 for other than child support purposes, unless

12 section 7(a) of the Privacy Act of 1974 does

13 not prohibit the State from requiring the disclo14 sure of the number, by reason of the State hav15 ing adopted, before January 1, 1975, a statute

16 or regulation requiring such disclosure.’’.

17 (B) CONFORMING AMENDMENTS.—Section

18 205(c)(2)(C)(ii) (42 U.S.C. 405(c)(2)(C)(ii)) is

19 amended—

20 (i) by striking ‘‘(ii) In the administra21 tion of any law involving the issuance’’ and

22 inserting ‘‘(ii) In the administration of any

23 law involving the issuance, reissuance, or

24 amendment’’; and
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1 (ii) by striking ‘‘any purpose other

2 than for the enforcement of child support

3 orders in effect in the State’’ and inserting

4 ‘‘other than child support purposes’’.

5 (c) CONFORMING REPEAL.—Section 468 (42 U.S.C.

6 668) is hereby repealed.

7 (d) EFFECTIVE DATE.—The amendments and repeal

8 made by this section shall become effective with respect

9 to a State—

10 (1) on October 1, 1993, or, if later

11 (2) upon enactment by the legislature of the

12 State of all laws required by such amendments,

13 but in no event later than the 1st day of the 1st calendar

14 quarter beginning after the close of the 1st regular session

15 of the State legislature that begins after the date of the

16 enactment of this Act. For purposes of the preceding sen17 tence, in the case of a State that has a 2-year legislative

18 session, each year of such session shall be deemed to be

19 a separate regular session of the State legislature.

20 SEC. 13242. ENFORCEMENT OF HEALTH INSURANCE SUP21 PORT.

22 (a) STATE PLAN REQUIREMENTS.—Section 454(a)

23 (42 U.S.C. 654(a)) is amended—

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

25 (23);
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1 (2) by striking the period at the end of para2 graph (24) and inserting ‘‘; and’’; and

3 (3) by inserting after paragraph (24) the fol4 lowing:

5 ‘‘(25) provide assurances satisfactory to the

6 Secretary that the State has in effect laws applicable

7 to health insurers and insurance policies or pro8 grams subject to the laws of the State that—

9 ‘‘(A) prohibit insurers’ consideration, in

10 determining an individual’s eligibility for or cov11 erage under any such policy or program, of

12 such individual’s eligibility for or coverage

13 under the plan of any State under title XIX;

14 ‘‘(B) provide that, where an individual as15 signs rights to any State in accordance with

16 section 1912, that State is subrogated, to the

17 extent of medical assistance furnished, to the

18 individual’s rights under any health insurance

19 policy or program;

20 ‘‘(C) prohibit insurers from applying, to

21 State agencies administering programs under

22 title XIX and acting as agents or subrogees (for

23 purposes of insurance policies or programs of

24 such insurers) of individuals receiving medical

25 assistance under such State programs, require-
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1 ments (with respect to deadlines for filing

2 claims or any other matters) different from re3 quirements applicable to any other applicant,

4 beneficiary, agent, or subrogee;

5 ‘‘(D) prohibit insurers from denying enroll6 ment of a child under the health insurance cov7 erage of the child’s parent on grounds that—

8 ‘‘(i) the child does not reside with the

9 parent, or

10 ‘‘(ii) the child was born out of wed11 lock;

12 ‘‘(E) in any case where a parent is re13 quired by court or administrative order to pro14 vide health insurance coverage for a child, re15 quire insurers, without regard to otherwise ap16 plicable enrollment season restrictions—

17 ‘‘(i) to permit such parent, upon ap18 plication, to enroll in family coverage (if

19 otherwise eligible and not already so en20 rolled), and to enroll such child under such

21 family coverage, and

22 ‘‘(ii) where such a parent who is en23 rolled in family coverage fails to make ap24 plication, to enroll such child under such

25 family coverage upon application by the
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1 child’s other parent or by the State agency

2 administering the program under this part

3 or title XIX; and

4 ‘‘(F) in any case where a child is covered

5 under the health insurance of a noncustodial

6 parent, require insurers—

7 ‘‘(i) to permit the custodial parent (or

8 service provider, with the custodial par9 ent’s approval), or any State agency ad10 ministering a program under title XIX, to

11 submit claims for covered services without

12 the approval of the noncustodial parent,

13 and

14 ‘‘(ii) to make payment on claims sub15 mitted in accordance with clause (i) di16 rectly to the custodial parent, service pro17 vider, or State agency submitting such

18 claim;

19 ‘‘(26) provide assurances satisfactory to the

20 Secretary that the State has in effect laws requiring

21 employers doing business in the State—

22 ‘‘(A) upon notice of a court or administra23 tive order requiring an employee to provide

24 health insurance coverage for the employee’s

25 child, and upon application by such employee
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1 (or, where such employee fails to make applica2 tion, by the child’s other parent or the State

3 agency administering the program under this

4 part or title XIX), to permit enrollment of such

5 child at any time as a dependent of the em6 ployee under the employer’s group health insur7 ance;

8 ‘‘(B) to permit disenrollment from such

9 group health insurance by such employee, or

10 elimination of coverage of such child, only upon

11 receipt of satisfactory evidence, in writing,

12 that—

13 ‘‘(i) such court or administrative

14 order is no longer in effect, or

15 ‘‘(ii) the employee has enrolled or will

16 enroll in alternative health insurance cover17 ing such child which will take effect imme18 diately upon the effective date of such

19 disenrollment; and

20 ‘‘(C) to withhold from such employee’s

21 compensation the employee’s share (if any) of

22 premiums for such health insurance, and to pay

23 such share of premiums to the insurer;

24 ‘‘(27) provide assurances satisfactory to the

25 Secretary that the State has in effect laws requiring
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1 the State agency to garnish the wages, salary, or

2 other employment income of, and to withhold

3 amounts from State tax refunds to, any person

4 who—

5 ‘‘(A) is required by court or administrative

6 order to provide coverage of the costs of medi7 cal services to an individual eligible for medical

8 assistance under title XIX,

9 ‘‘(B) has received payment from a third

10 party for the costs of medical services to such

11 individual, and

12 ‘‘(C) has not used such payments to reim13 burse, as appropriate, either such individual or

14 the provider of such services,

15 to the extent necessary to reimburse the State agen16 cy for expenditures for such costs under its plan

17 under title XIX, but any claims for current or past18 due child support shall take priority over any such

19 claims for the costs of medical services.’’.

20 (b) EFFECTIVE DATE.—

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

22 subsection (a) apply to calendar quarters beginning

23 on or after April 1, 1994, except as provided in

24 paragraph (2).
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1 (2) EXTENSION FOR STATE LAW AMEND2 MENT.—In the case of a State plan under part D of

3 title IV of the Social Security Act which the Sec4 retary of Health and Human Services determines re5 quires State legislation in order for the plan to meet

6 the additional requirements imposed by the amend7 ments made by subsection (a), the State plan shall

8 not be regarded as failing to comply with the re9 quirements of such title solely on the basis of its

10 failure to meet these additional requirements before

11 the 1st day of the 1st calendar quarter beginning

12 after the close of the 1st regular session of the State

13 legislature that begins after the date of enactment of

14 this Act. For purposes of the preceding sentence, in

15 the case of a State that has a 2-year legislative ses16 sion, each year of such session shall be deemed to

17 be a separate regular session of the State legislature.

18 SEC. 13243. REPORTS TO CREDIT BUREAUS ON PERSONS

19 DELINQUENT IN CHILD SUPPORT PAYMENTS.

20 (a) IN GENERAL.—Section 466(a)(7) (42 U.S.C.

21 666(a)(7)) is amended—

22 (1) by striking ‘‘upon the request of such agen23 cy’’ and inserting ‘‘, and procedures which require

24 the State to periodically report to any such agency

25 the name of any parent who owes overdue support
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1 and is at least 2 months delinquent in the payment

2 of such support and the amount of such delinquency

3 unless the agency requests not to receive such infor4 mation’’; and

5 (2) by striking ‘‘(C) a fee’’ and all that follows

6 through ‘‘by the State’’ and inserting ‘‘, and (C)

7 such information shall not be made available to (i)

8 a consumer reporting agency which the State deter9 mines does not have sufficient capability to system10 atically and timely make accurate use of such infor11 mation, or (ii) an entity which has not furnished evi12 dence satisfactory to the State that the entity is a

13 consumer reporting agency’’.

14 (b) EFFECTIVE DATE.—

15 (1) IN GENERAL.—Except as provided in para16 graph (2), the amendments made by subsection (a)

17 shall take effect on October 1, 1994.

18 (2) EXCEPTION.—If the Secretary of Health

19 and Human Services determines that a State is un20 able to comply with the amendments made by sub21 section (a), such State shall be exempt from compli22 ance with such amendments until the State estab23 lishes an automated data processing and information

24 retrieval system under section 454(24) of the Social
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1 Security Act, or October 1, 1995, whichever occurs

2 earlier.

3 CHAPTER 3—SUPPLEMENTAL SECURITY

4 INCOME

5 SEC. 13251. FEES FOR FEDERAL ADMINISTRATION OF

6 STATE SUPPLEMENTARY PAYMENTS.

7 (a) IN GENERAL.—

8 (1) OPTIONAL STATE SUPPLEMENTARY PAY9 MENTS.—Section 1616(d) (42 U.S.C. 1382e(d)) is

10 amended—

11 (A) by inserting ‘‘(1)’’ after ‘‘(d)’’;

12 (B) by inserting ‘‘, plus an administration

13 fee assessed in accordance with paragraph (2)

14 and any additional services fee charged in ac15 cordance with paragraph (3)’’ before the period;

16 and

17 (C) by adding after and below the end the

18 following:

19 ‘‘(2)(A) The Secretary shall assess each State an ad20 ministration fee in an amount equal to—

21 ‘‘(i) the number of supplementary payments

22 made by the Secretary on behalf of the State under

23 this section for any month in a fiscal year; multi24 plied by

25 ‘‘(ii) the applicable rate for the fiscal year.
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1 ‘‘(B) As used in subparagraph (A), the term ‘applica2 ble rate’ means—

3 ‘‘(i) for fiscal year 1994, $1.67;

4 ‘‘(ii) for fiscal year 1995, $3.33;

5 ‘‘(iii) for fiscal year 1996, $5.00; and

6 ‘‘(iv) for fiscal year 1997 and each succeeding

7 fiscal year, $5.00, or such different rate as the Sec8 retary determines pursuant to criteria established in

9 regulations is appropriate for the State, taking into

10 account the complexity of the State’s supplementary

11 payment program.

12 ‘‘(C) All fees collected pursuant to this paragraph

13 shall be transferred to the United States at the same time

14 that amounts for such supplementary payments are re15 quired to be so transferred.

16 ‘‘(3)(A) The Secretary shall charge a State an addi17 tional services fee if, at the request of the State, the Sec18 retary provides additional services beyond the level cus19 tomarily provided, in the administration of State supple20 mentary payments pursuant to this section.

21 ‘‘(B) The additional services fee shall be in an

22 amount that the Secretary determines is necessary to

23 cover all costs (including indirect costs) incurred by the

24 Federal Government in furnishing the additional services

25 referred to in subparagraph (A).
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1 ‘‘(C) The additional services fee shall be payable in

2 advance or by way of reimbursement.

3 ‘‘(4) All administration fees and additional services

4 fees collected pursuant to this subsection shall be depos5 ited in the general fund of the Treasury of the United

6 States as miscellaneous receipts.’’.

7 (2) MANDATORY STATE SUPPLEMENTARY PAY8 MENTS.—Section 212(b)(3) of Public Law 93–66

9 (42 U.S.C. 1382 note) is amended—

10 (A) by inserting ‘‘(A)’’ after ‘‘(3)’’;

11 (B) by inserting ‘‘, plus an administration

12 fee assessed in accordance with subparagraph

13 (B) and any additional services fee charged in

14 accordance with subparagraph (C)’’ before the

15 period; and

16 (C) by adding after and below the end the

17 following:

18 ‘‘(B)(i) The Secretary shall assess each State an ad19 ministration fee in an amount equal to—

20 ‘‘(I) the number of supplementary payments

21 made by the Secretary on behalf of the State under

22 this subsection for any month in a fiscal year; multi23 plied by

24 ‘‘(II) the applicable rate for the fiscal year.
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1 ‘‘(ii) As used in clause (i), the term ‘applicable rate’

2 means—

3 ‘‘(I) for fiscal year 1994, $1.67;

4 ‘‘(II) for fiscal year 1995, $3.33;

5 ‘‘(III) for fiscal year 1996, $5.00; and

6 ‘‘(IV) for fiscal year 1997 and each succeeding

7 fiscal year, $5.00, or such different rate as the Sec8 retary determines pursuant to regulations estab9 lished in regulations is appropriate for the State,

10 taking into account the complexity of the State’s

11 supplementary payment program.

12 ‘‘(iii) All fees collected pursuant to this subparagraph

13 shall be transferred to the United States at the same time

14 that amounts for such supplementary payments are re15 quired to be so transferred.

16 ‘‘(C)(i) The Secretary shall charge a State an addi17 tional services fee if, at the request of the State, the Sec18 retary provides additional services beyond the level cus19 tomarily provided, in the administration of State supple20 mentary payments pursuant to this subsection.

21 ‘‘(ii) The additional services fee shall be in an amount

22 that the Secretary determines is necessary to cover all

23 costs (including indirect costs) incurred by the Federal

24 Government in furnishing the additional services referred

25 to in clause (i).
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1 ‘‘(iii) The additional services fee shall be payable in

2 advance or by way of reimbursement.

3 ‘‘(D) All administration fees and additional services

4 fees collected pursuant to this paragraph shall be depos5 ited in the general fund of the Treasury of the United

6 States as miscellaneous receipts.’’.

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

8 this section shall apply to supplementary payments made

9 pursuant to section 1616(a) of the Social Security Act or

10 section 212(a) of Public Law 93–66 for any calendar

11 month beginning after September 30, 1993, and to serv12 ices furnished after such date, regardless of whether regu13 lations to implement such amendments have been promul14 gated by such date, or whether any agreement entered into

15 under such section 1616(a) or such section 212(a) has

16 been modified.

17 SEC. 13252. EXCLUSION FROM INCOME OF STATE RELOCA18 TION ASSISTANCE.

19 Section 5035(c) of the Omnibus Budget Reconcili20 ation Act of 1990 (42 U.S.C. 1382a note; 104 Stat. 1388–

21 225) is amended—

22 (1) by striking ‘‘The amendments made by this

23 section’’ and inserting ‘‘(1) The amendments made

24 by subsection (b)’’; and

25 (2) by adding at the end the following:
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1 ‘‘(2) The amendments made by subsection (a) shall

2 apply with respect to benefits for calendar months begin3 ning on or after May 1, 1991.’’.

4 SEC. 13253. PREVENTION OF ADVERSE EFFECTS ON ELIGI5 BILITY FOR, AND AMOUNT OF, BENEFITS

6 WHEN SPOUSE OR PARENT OF BENEFICIARY

7 IS ABSENT FROM THE HOUSEHOLD DUE TO

8 ACTIVE MILITARY SERVICE.

9 (a) ABSENT PERSON GENERALLY DEEMED TO BE

10 LIVING IN THE HOUSEHOLD.—Section 1614(f) (42

11 U.S.C. 1382c(f)) is amended by adding at the end the fol12 lowing:

13 ‘‘(4) For purposes of paragraphs (1) and (2), a

14 spouse or parent (or spouse of such a parent) who is ab15 sent from the household in which the individual lives due

16 solely to a duty assignment as a member of the Armed

17 Forces on active duty shall, in the absence of evidence to

18 the contrary, be deemed to be living in the same household

19 as the individual.’’.

20 (b) EXCLUSION FROM INCOME OF HAZARDOUS DUTY

21 PAY RECEIVED WHILE IN ACTIVE MILITARY SERVICE.—

22 Section 1612(b) (42 U.S.C. 1382a(b)) is amended—

23 (1) in paragraph (18), by striking ‘‘and’’ the

24 2nd place such term appears;
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1 (2) in paragraph (19), by striking the period

2 and inserting ‘‘; and’’; and

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

4 ‘‘(20) special pay received pursuant to section

5 310 of title 37, United States Code.’’.

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

7 this section shall take effect on the 1st day of the 2nd

8 month that begins after the date of the enactment of this

9 Act.

10 SEC. 13254. ELIGIBILITY FOR CHILDREN OF ARMED

11 FORCES PERSONNEL RESIDING OUTSIDE THE

12 UNITED STATES OTHER THAN IN FOREIGN

13 COUNTRIES.

14 (a) IN GENERAL.—Section 1614(a)(1)(B)(ii) (42

15 U.S.C. 1382c(a)(1)(B)(ii)) is amended by striking ‘‘the

16 District of Columbia’’ and all that follows to the period

17 and inserting ‘‘and who, for the month before the parent

18 reported for such assignment, received a benefit under this

19 title’’.

20 (b) EFFECTIVE DATE.—The amendment made by

21 subsection (a) shall take effect on October 1, 1993.
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1 SEC. 13255. DEFINITION OF DISABILITY FOR CHILDREN

2 UNDER AGE 18 APPLIED TO ALL INDIVIDUALS

3 UNDER AGE 18.

4 (a) IN GENERAL.—Section 1614(a)(3)(A) (42 U.S.C.

5 1382c(a)(3)(A)) is amended by striking ‘‘a child’’ and in6 serting ‘‘an individual’’.

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

8 subsection (a) shall apply to determinations made on or

9 after the date of the enactment of this Act.

10 SEC. 13256. VALUATION OF CERTAIN IN-KIND SUPPORT

11 AND MAINTENANCE WHEN THERE IS A COST

12 OF LIVING ADJUSTMENT IN BENEFITS.

13 (a) IN GENERAL.—Section 1611(c) (42 U.S.C.

14 1382(c)) is amended—

15 (1) in paragraph (1), by striking ‘‘and (5)’’ and

16 inserting ‘‘(5), and (6)’’; and

17 (2) by redesignating paragraphs (6) and (7) as

18 paragraphs (7) and (8), respectively; and

19 (3) by inserting after paragraph (5) the follow20 ing:

21 ‘‘(6) The dollar amount in effect under subsection (b)

22 as a result of any increase in benefits under this title by

23 reason of section 1617 shall be used to determine the value

24 of any in-kind support and maintenance required to be

25 taken into account in determining the benefit payable

26 under this title to an individual (and the eligible spouse,
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1 if any, of the individual) for the 1st 2 months for which

2 the increase in benefits applies.’’.

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

4 subsection (a) shall apply to benefits paid for months after

5 the calendar year 1993.

6 SEC. 13257. EXCLUSION FROM INCOME OF CERTAIN

7 AMOUNTS RECEIVED BY INDIANS FROM IN8 TERESTS HELD IN TRUST.

9 (a) IN GENERAL.—Section 8 of the Act of October

10 19, 1973, (25 U.S.C. 1408) is amended by inserting ‘‘,

11 and the first $2,000 per year of income received by indi12 vidual Indians that is derived from such interests shall not

13 be considered income,’’ after ‘‘resource’’.

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

15 this section shall take effect on January 1, 1993.

16 CHAPTER 4—AID TO FAMILIES WITH

17 DEPENDENT CHILDREN

18 SEC. 13261. 50 PERCENT FEDERAL MATCH OF STATE AD19 MINISTRATIVE COSTS.

20 (a) IN GENERAL.—Section 403(a)(3) (42 U.S.C.

21 603(a)(3)) is amended by striking ‘‘the sum of’’ and all

22 that follows through the end of subparagraph (D) and in23 serting ‘‘50 percent of the total amounts expended during

24 such quarter as the Secretary has found necessary for the

25 proper and efficient administration of the State plan (in-
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1 cluding any amounts expended by the State to carry out

2 initial evaluations under section 486(a)),’’.

3 (b) OPTIONAL USE OF CERTAIN PROCEDURES TO

4 VERIFY IMMIGRATION STATUS OF AFDC APPLICANTS.—

5 Section 1137(d) (42 U.S.C. 1320b–7(d)) is amended—

6 (1) in each of paragraphs (3) and (4)(B)(i), by

7 inserting ‘‘(or, in the case of the program specified

8 in subsection (b)(1), may)’’ after ‘‘shall’’; and

9 (2) in paragraph (4), by inserting ‘‘(if re10 quired)’’ after ‘‘verified’’.

11 (c) EFFECTIVE DATE.—

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

14 shall apply to payments made for calendar quarters

15 beginning on or after April 1, 1994.

16 (2) DELAYED APPLICABILITY TO CERTAIN

17 STATES.—

18 (A) IN GENERAL.—The Secretary of

19 Health and Human Services may delay the ap20 plicability to a qualified State of the amend21 ments made by subsection (a) until the 1st cal22 endar quarter that begins after the close of the

23 1st regular session of the State legislature that

24 begins after the date of the enactment of this

25 section.
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1 (B) QUALIFIED STATE DEFINED.—As used

2 in subparagraph (A), the term ‘‘qualified State’’

3 means a State that meets such criteria as the

4 Secretary shall establish and apply uniformly,

5 including whether the State legislature meets

6 biennially and does not have a regular session

7 scheduled in calendar year 1994.

8 SEC. 13262. DELAY IN EFFECTIVE DATE OF PENALTY FOR

9 FAILURE TO MEET REQUIRED PARTICIPA10 TION RATE FOR UNEMPLOYED PARENTS IN

11 THE JOBS PROGRAM.

12 Section 403(l)(4)(B) (42 U.S.C. 603(l)(4)(B)) is

13 amended—

14 (1) in clause (i), by striking ‘‘1994’’ and insert15 ing ‘‘1995’’;

16 (2) in clause (ii), by striking ‘‘1995’’ and in17 serting ‘‘1996’’;

18 (3) in clause (iii), by striking ‘‘1996’’ and in19 serting ‘‘1997’’; and

20 (4) in clause (iv), by striking ‘‘1997 and 1998’’

21 and inserting ‘‘1998 and 1999’’.

22 SEC. 13263. REPORT TO THE CONGRESS WITH RESPECT TO

23 PERFORMANCE STANDARDS IN THE JOBS

24 PROGRAM.

25 Section 487(a) (42 U.S.C. 687(a)) is amended—
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1 (1) by striking ‘‘3’’ and inserting ‘‘4’’;

2 (2) in paragraph (1), by inserting ‘‘criteria for’’

3 after ‘‘develop’’;

4 (3) in paragraph (2), by striking ‘‘for’’ and in5 serting ‘‘with respect to’’; and

6 (4) in the 2nd sentence, by striking ‘‘under this

7 subsection’’ and inserting ‘‘with respect to the pro8 gram under this part’’.

9 SEC. 13264. MEASUREMENT AND REPORTING OF WELFARE

10 PARTICIPATION.

11 (a) CONGRESSIONAL POLICY.—The Congress hereby

12 declares that—

13 (1) it is the policy and responsibility of the

14 Federal Government to reduce the rate at which,

15 and the degree to which, families depend on income

16 from welfare programs, and the duration of welfare

17 participation, to assist families toward self-suffi18 ciency, and to increase the living standards of low19 income families, consistent with other essential na20 tional goals;

21 (2) it is the policy of the United States to

22 strengthen families and improve the life prospects of

23 their children, to ensure that children grow up in

24 families that are economically self-sufficient, and to
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1 underscore the responsibility of parents to support

2 their children;

3 (3) the Federal Government should help welfare

4 recipients as well as individuals at risk of welfare

5 participation to improve their education and job

6 skills, to obtain access to high quality child care and

7 other necessary support services, and to take such

8 other steps as may assist them to meet their respon9 sibilities to become financially independent; and

10 (4) it is the purpose of this section to provide

11 the public with generally accepted measures of wel12 fare participation so that the public can track such

13 participation over time and determine whether

14 progress is being made in reducing the rate at

15 which, and the degree to which, families depend on

16 income from welfare programs, and the duration of

17 welfare participation.

18 (b) DEVELOPMENT OF WELFARE PARTICIPATION

19 MEASURES AND PREDICTORS.—

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

21 Human Services (in this section referred to as the

22 ‘‘Secretary’’) in consultation with the Secretary of

23 Agriculture shall develop—

24 (A) measures of—
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1 (i) the rate at which, and the degree

2 to which, families depend on income from

3 welfare programs; and

4 (ii) the duration of welfare participa5 tion; and

6 (B) predictors of welfare participation.

7 (2) INTERIM REPORT.—Not later than 2 years

8 after the date of the enactment of this section, the

9 Secretary shall provide an interim report containing

10 conclusions resulting from such development, to—

11 (A) the Committee on Ways and Means of

12 the House of Representatives;

13 (B) the Committee on Education and

14 Labor of the House of Representatives;

15 (C) the Committee on Agriculture of the

16 House of Representatives;

17 (D) the Committee on Energy and Com18 merce of the House of Representatives;

19 (E) the Committee on Finance of the Sen20 ate;

21 (F) the Committee on Labor and Human

22 Resources of the Senate; and

23 (G) the Committee on Agriculture, Nutri24 tion, and Forestry of the Senate.
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1 (c) ADVISORY BOARD ON WELFARE PARTICIPA2 TION.—

3 (1) ESTABLISHMENT.—There is established an

4 Advisory Board on Welfare Participation (in this

5 section referred to as the ‘‘Board’’).

6 (2) COMPOSITION.—The Board shall be com7 posed of 12 members with equal numbers to be ap8 pointed by the House of Representatives, the Senate,

9 and the President. The Board shall be composed of

10 experts in the fields of welfare research and statis11 tical methodology, representatives of State and local

12 welfare agencies, and organizations concerned with

13 welfare issues.

14 (3) VACANCIES.—Any vacancy occurring in the

15 membership of the Board shall be filled in the same

16 manner as the original appointment for the position

17 being vacated. The vacancy shall not affect the

18 power of the remaining members to execute the du19 ties of the Board.

20 (4) DUTIES.—Duties of the Board shall in21 clude—

22 (A) providing advice and recommendations

23 to the Secretary on the development of meas24 ures of the rate at which, and the degree to

25 which, families depend on income from welfare
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1 programs, and the duration of welfare partici2 pation; and

3 (B) providing advice on the development

4 and presentation of the report required by sub5 section (d).

6 (5) TRAVEL EXPENSES.—Members of the

7 Board shall not be compensated, but shall receive

8 travel expenses, including per diem in lieu of subsist9 ence, at rates authorized for employees of agencies

10 under subchapter I of chapter 57 of title 5, United

11 States Code, for each day the member is engaged in

12 the performance of duties away from the home or

13 regular place of business of the member.

14 (6) DETAIL OF FEDERAL EMPLOYEES.—The

15 Secretary shall detail, without reimbursement, any

16 of the personnel of the Department of Health and

17 Human Services to the Board to assist the Board in

18 carrying out its duties. Any detail shall not interrupt

19 or otherwise affect the civil service status or privi20 leges of the Federal employee.

21 (7) VOLUNTARY SERVICE.—Notwithstanding

22 section 1342 of title 31, United States Code, the

23 Board may accept the voluntary services provided by

24 a member of the Board.
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1 (8) TERMINATION OF BOARD.—The Board shall

2 be terminated at such time as the Secretary deter3 mines the duties described in subsection (c)(4) have

4 been completed, but in any case prior to the submis5 sion of the 1st report required by subsection (d).

6 (d) ANNUAL WELFARE PARTICIPATION REPORTS.—

7 (1) PREPARATION.—The Secretary shall pre8 pare annual reports on welfare participation in the

9 United States.

10 (2) COVERAGE.—The report shall include anal11 ysis of families and individuals receiving assistance

12 under means-tested benefit programs, including the

13 program of aid to families with dependent children

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

15 (42 U.S.C. 601 et seq.), the food stamp program

16 under the Food Stamp Act of 1977 (7 U.S.C. 2011

17 et seq.), and the supplemental security income pro18 gram under title XVI of the Social Security Act (42

19 U.S.C. 1381 et seq.), or as general assistance under

20 programs administered by State and local govern21 ments.

22 (3) CONTENTS.—Each such report shall set

23 forth, for each means-tested benefit program de24 scribed in paragraph (2)—

25 (A) measures of—
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1 (i) the rate at which, and the degree

2 to which, families depend on income from

3 welfare programs; and

4 (ii) the duration of welfare participa5 tion;

6 (B) trends in the measures;

7 (C) predictors of welfare participation;

8 (D) the causes of welfare participation;

9 (E) patterns of multiple program partici10 pation;

11 (F) such other information as the Sec12 retary deems relevant; and

13 (G) such recommendations for legislation,

14 which shall not include proposals to reduce eli15 gibility levels or impose barriers to program ac16 cess, as the Secretary may determine to be nec17 essary or desirable to reduce—

18 (i) the rate at which, and the degree

19 to which, families depend on income from

20 welfare programs; and

21 (ii) the duration of welfare participa22 tion.

23 (4) SUBMISSION.—The Secretary shall submit

24 such reports not later than 3 years after the date of

25 the enactment of this section, and annually there-
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1 after, to the committees specified in subsection

2 (b)(2). Each such report shall be transmitted during

3 the 1st 60 days of each regular session of the Con4 gress.

5 SEC. 13265. NEW HOPE DEMONSTRATION PROJECT.

6 (a) IN GENERAL.—The Secretary of Health and

7 Human Services (in this section referred to as the ‘‘Sec8 retary’’) shall provide for a demonstration project for a

9 qualified program to be conducted in Milwaukee, Wiscon10 sin, in accordance with this section.

11 (b) PAYMENTS.—For each calendar quarter in which

12 there is a qualified program approved under this sub13 section, the Secretary shall pay to the operator of the

14 qualified program, for no more than 20 calendar quarters,

15 an amount equal to the aggregate amount that would oth16 erwise have been payable to the State with respect to par17 ticipants in the program for such calendar quarter, in the

18 absence of the program, for cash assistance and child care

19 under part A of title IV of the Social Security Act and

20 for administrative expenses related to such assistance. In

21 calculating the amount of such payment, the expenses of

22 the program incurred in evaluating the effects of the pro23 gram may be treated as amounts necessary for the proper

24 and efficient administration of the program, for purposes

25 of part A of title IV of such Act.
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1 (c) DEMONSTRATION PROJECT DESCRIBED.—For

2 purposes of this section, the term ‘‘qualified program’’

3 means a program operated—

4 (1) by The New Hope Project, Inc., a private,

5 not-for-profit corporation incorporated under the

6 laws of the State of Wisconsin (in this section re7 ferred to as the ‘‘operator’’), which offers low-income

8 residents of Milwaukee, Wisconsin, employment,

9 wage supplements, child care, health care, and coun10 seling and training for job retention or advancement;

11 and

12 (2) in accordance with an application submitted

13 by the operator of the program and approved by the

14 Secretary based on the Secretary’s determination

15 that the application satisfies the requirements of

16 subsection (d).

17 (d) CONTENTS OF APPLICATION.—The operator of

18 the qualified program shall provide, in its application to

19 conduct a demonstration project for the program, that the

20 following terms and conditions will be met:

21 (1) The operator will develop and implement an

22 evaluation plan designed to provide reliable informa23 tion on the impact and implementation of the pro24 gram. The evaluation plan will include adequately
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1 sized groups of project participants and control

2 groups assigned at random.

3 (2) The operator will develop and implement a

4 plan addressing the services and assistance to be

5 provided by the program, the timing and determina6 tion of payments from the Secretary to the operator

7 of the program, and the roles and responsibilities of

8 the Secretary and the operator with respect to meet9 ing the requirements of this paragraph.

10 (3) The operator will specify a methodology for

11 determining expenditures to be paid to the operator

12 by the Secretary, with assistance from the Secretary

13 in calculating the amount that would otherwise have

14 been payable to the State in the absence of the pro15 gram, pursuant to subsection (b).

16 (4) The operator will issue an interim and final

17 report on the results of the evaluation described in

18 paragraph (1) to the Secretary at such times as re19 quired by the Secretary.

20 (e) EFFECTIVE DATE.—This section shall take effect

21 on the 1st day of the 1st calendar quarter that begins

22 after the date of enactment of this Act.
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1 SEC. 13266. DELAY IN REQUIREMENT THAT OUTLYING

2 AREAS OPERATE AN AFDC-UP PROGRAM.

3 Section 401(g)(2) of the Family Support Act of 1988

4 (42 U.S.C. 602 note; 102 Stat. 2396) is amended by strik5 ing ‘‘October 1, 1992’’ and inserting ‘‘the date of the re6 peal of the limitations contained in section 1108(a) of the

7 Social Security Act on payments to such jurisdictions for

8 purposes of making maintenance payments under parts A

9 and E of title IV of such Act’’.

10 SEC. 13267. ADULT IN FAMILY OR HOUSEHOLD ALLOWED

11 TO ATTEST TO CITIZENSHIP STATUS OF FAM12 ILY OR HOUSEHOLD MEMBERS.

13 (a) IN GENERAL.—Section 1137(d)(1)(A) (42 U.S.C.

14 1320b–7(d)(1)(A)) is amended—

15 (1) by inserting ‘‘(i)’’ after ‘‘(1)(A)’’;

16 (2) by inserting ‘‘(other than the aid to families

17 with dependent children program under part A of

18 title IV of this Act)’’ after ‘‘any program listed in

19 subsection (b)’’; and

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

21 ‘‘(ii) The State shall require, as a condition of

22 an individual’s eligibility for benefits under the aid

23 to families with dependent children program under

24 part A of title IV of this Act, a declaration in writ25 ing, under penalty of perjury—
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1 ‘‘(I) in the case of an individual who is an

2 adult member of a family or household applying

3 for or receiving such benefits, by such individ4 ual or another adult member of such family or

5 household on such individual’s behalf;

6 ‘‘(II) in the case of an individual who is a

7 child, by an adult on the individual’s behalf; or

8 ‘‘(III) in the case of an individual born

9 into a family or household receiving such bene10 fits, by an adult member of such individual’s

11 family or household on the individual’s behalf

12 no later than the next redetermination of eligi13 bility of such family or household following the

14 birth of such individual,

15 stating whether the individual is a citizen or national

16 of the United States, and, if that individual is not

17 a citizen or national of the United States, that the

18 individual is in a satisfactory immigration status.’’.

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

20 subsection (a) shall become effective with respect to bene21 fits provided on or after October 1, 1993.
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1 SEC. 13268. INCREASE IN STEPPARENT INCOME DIS2 REGARD.

3 (a) IN GENERAL.—Section 402(a)(31) (42 U.S.C.

4 602(a)(31)) is amended by striking ‘‘$75’’ and inserting

5 ‘‘$90’’.

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

7 subsection (a) shall take effect on October 1, 1993, and

8 shall apply to payments under part A of title IV of the

9 Social Security Act for fiscal year 1994 and such pay10 ments for succeeding fiscal years.

11 SEC. 13269. EXTENSION OF NEW YORK STATE CHILD SUP12 PORT DEMONSTRATION PROGRAM.

13 Section 9122(g)(1) of the Omnibus Budget Reconcili14 ation Act of 1987 (42 U.S.C. 602 note; 101 Stat. 1330–

15 312) is amended by striking ‘‘five’’ and inserting ‘‘10’’.

16 SEC. 13270. EARLY CHILDHOOD DEVELOPMENT PROJECTS.

17 Section 501(a) of the Family Support Act of 1988

18 (42 U.S.C. 1315 note; 102 Stat. 2400) is amended by add19 ing at the end the following:

20 ‘‘(4) For grants to States to conduct demonstration

21 projects under this subsection, there are authorized to be

22 appropriated not to exceed $3,000,000 for each of the fis23 cal years 1994 through 1998.’’.
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1 CHAPTER 5—UNEMPLOYMENT

2 INSURANCE

3 SEC. 13271. TREATMENT OF SHORT-TIME COMPENSATION

4 PROGRAMS.

5 (a) GENERAL RULE.—Section 3306 of the Internal

6 Revenue Code of 1986 is amended by adding at the end

7 thereof the following new subsection:

8 ‘‘(t) SHORT-TIME COMPENSATION PROGRAM.—For

9 purposes of this chapter, the term ‘short-time compensa10 tion program’ means a program under which—

11 ‘‘(1) individuals whose workweeks have been re12 duced by at least 10 percent are eligible for unem13 ployment compensation;

14 ‘‘(2) the amount of unemployment compensa15 tion payable to any such individual is a pro rata por16 tion of the unemployment compensation which would

17 be payable to the individual if the individual were to18 tally unemployed;

19 ‘‘(3) eligible employees are not required to meet

20 the availability for work or work search test require21 ments while collecting short-time compensation bene22 fits, but are required to be available for their normal

23 workweek;

24 ‘‘(4) eligible employees may participate in an

25 employer-sponsored training program to enhance
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1 jobs skills if such program has been approved by the

2 State agency;

3 ‘‘(5) there is a reduction in the number of

4 hours worked by employees in lieu of temporary lay5 offs;

6 ‘‘(6) there is a plan of an employer (or an em7 ployers association which is party to a collective bar8 gaining agreement) approved by the State agency

9 consisting of factors in this subsection or other fac10 tors as the Secretary of Labor may find relevant;

11 and

12 ‘‘(7) the employer continues to provide health

13 benefits and pension benefits under a pension plan

14 (as defined in section 3(35) of the Employee Retire15 ment Income Security Act of 1974) to any employee

16 whose workweek is reduced under such plan.

17 A short-time compensation program may also contain such

18 other factors as the Secretary of Labor finds relevant.’’

19 (b) CONFORMING AMENDMENTS.—

20 (1) Subparagraph (E) of section 3304(a)(4) of

21 such Code is amended to read as follows:

22 ‘‘(E) amounts may be withdrawn for the

23 payment of short-time compensation under a

24 short-time compensation program approved by

25 the Secretary of Labor:’’.
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1 (2) Paragraph (4) of section 3306(f) of such

2 Code is amended to read as follows:

3 ‘‘(4) amounts may be withdrawn for the pay4 ment of short-time compensation under a short-time

5 compensation program approved by the Secretary of

6 Labor.’’

7 (3) Section 303(a)(5) of the Social Security Act

8 is amended by striking ‘‘the payment of short-time

9 compensation under a plan approved by the Sec10 retary of Labor’’ and inserting ‘‘the payment of

11 short-time compensation under a short-time com12 pensation program (as defined in section 3306(t) of

13 the Internal Revenue Code of 1986) approved by the

14 Secretary of Labor’’.

15 SEC. 13272. TECHNICAL AMENDMENT TO UNEMPLOYMENT

16 TRUST FUND.

17 Paragraph (1) of section 905(b) of the Social Secu18 rity Act is amended to read as follows:

19 ‘‘(b)(1) Except as provided in paragraph (3), the Sec20 retary of the Treasury shall transfer (as of the close of

21 each month), from the employment security administra22 tion account to the extended unemployment compensation

23 account established by subsection (a), an amount equal to

24 20 percent of the amount by which—
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1 ‘‘(A) the transfers to such account pursuant to

2 section 901(b)(2) during such month, exceed

3 ‘‘(B) the payments during such month from the

4 employment security administration account pursu5 ant to section 901(b)(3) and (d).

6 If for any month the payments referred to in subpara7 graph (B) exceed the transfers referred to in subpara8 graph (A), proper adjustments shall be made in the

9 amounts subsequently transferred.’’

10 SEC. 13273. EXTENSION OF REPORTING DATE FOR ADVI11 SORY COUNCIL.

12 In the case of the first Advisory Council on Unem13 ployment Compensation established under section 908 of

14 the Social Security Act, subsection (f) of such section 908

15 shall be applied—

16 (1) by substituting ‘‘3rd year’’ for ‘‘2d year’’ in

17 paragraph (1), and

18 (2) by substituting ‘‘February 1, 1995’’ for

19 ‘‘February 1, 1994’’ in paragraph (2).

20 SEC. 13274. CLARIFICATION OF EMERGENCY UNEMPLOY21 MENT BENEFITS PROVISIONS.

22 (a) IN GENERAL.—Subclauses (II) and (III) of sec23 tion 102(b)(2)(A)(v) of the Emergency Unemployment

24 Compensation Act of 1991 are amended to read as follows:
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1 ‘‘(II) The requirements of this

2 subclause are met for any week if the

3 national rate of total unemployment

4 (seasonally adjusted) for each of the 2

5 most recent calendar months (not

6 averaged) for which data are pub7 lished before the close of such week is

8 less than 7 percent, and if the re9 quirements of subclause (III) are not

10 met for such week.

11 ‘‘(III) The requirements of this

12 subclause are met for any week if the

13 national rate of total unemployment

14 (seasonally adjusted) for each of the 2

15 most recent calendar months (not

16 averaged) for which data are pub17 lished before the close of such week is

18 less than 6.8 percent.’’

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

20 subsection (a) shall apply as if included in the amend21 ments made by section 101(b) of the Unemployment Com22 pensation Amendments of 1992.
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1 SEC. 13275. MODIFICATIONS TO EXTENDED UNEMPLOY2 MENT PROGRAM.

3 (a) INCREASE IN REIMBURSEMENT RATE.—Sub4 section (a) of section 204 of the Federal-State Extended

5 Unemployment Compensation Act of 1970 is amended by

6 striking ‘‘one-half’’ and inserting ‘‘75 percent’’.

7 (b) REPEAL OF SPECIAL ELIGIBILITY REQUIRE8 MENTS.—Subsection (a) of section 202 of such Act is

9 amended—

10 (1) by striking paragraphs (3), (4), and (7),

11 (2) by redesignating paragraphs (5) and (6) as

12 paragraphs (3) and (4), respectively, and

13 (3) by striking ‘‘paragraphs (3), (4), and (5)’’

14 in paragraph (4) (as redesignated by paragraph (1)

15 of this subsection) and inserting ‘‘paragraph (3)’’.

16 (c) EFFECTIVE DATE.—

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

18 this section shall apply to weeks beginning after Oc19 tober 2, 1993.

20 (2) SPECIAL RULE.—In the case of any State

21 the legislature of which has not been in session for

22 at least 30 calendar days (whether or not successive)

23 between the date of the enactment of this Act and

24 October 1, 1993, the amendment made by sub25 section (b) shall not be a requirement of the State

26 law of such State before the date 30 calendar days
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1 after the 1st day on which such legislature is in ses2 sion on or after October 1, 1993.

3 SEC. 13276. EXTENSION OF CURRENT FEDERAL UNEM4 PLOYMENT RATE.

5 Section 3301 of the Internal Revenue Code of 1986

6 is amended—

7 (1) by striking ‘‘1996’’ in paragraph (1) and in8 serting ‘‘1998’’, and

9 (2) by striking ‘‘1997’’ in paragraph (2) and in10 serting ‘‘1999’’.

11 SEC. 13277. DISCLOSURE OF INFORMATION TO RAILROAD

12 RETIREMENT BOARD.

13 Section 6103(l)(1)(C) of the Internal Revenue Code

14 of 1986 is amended to read as follows:

15 ‘‘(C) taxes imposed by chapters 22 and

16 23A, to the Railroad Retirement Board for pur17 poses of its administration of the Railroad Re18 tirement and Railroad Unemployment Insur19 ance Acts.’’.
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1 CHAPTER 6—TECHNICAL PROVISIONS

2 SEC. 13281. CORRECTIONS RELATED TO THE INCOME SE3 CURITY AND HUMAN RESOURCES PROVI4 SIONS OF THE OMNIBUS BUDGET RECONCILI5 ATION ACT OF 1990.

6 (a) AMENDMENT RELATED TO SECTION

7 5035(a)(2).—Section 5035(a)(2) of the Omnibus Budget

8 Reconciliation Act of 1990 (Public Law 101–508) is

9 amended by striking ‘‘a semicolon’’ and inserting ‘‘ ‘;

10 and’ ’’.

11 (b) REPEAL OF PROVISION INADVERTENTLY IN12 CLUDED.—Section 5057 of the Omnibus Budget Rec13 onciliation Act of 1990 (Public Law 101–508), and the

14 amendment made by such section, are hereby repealed,

15 and section 1139(d) of the Social Security Act shall be

16 applied and administered as if such section 5057 had

17 never been enacted.

18 (c) AMENDMENT RELATED TO SECTION

19 5105(d)(1)(B).—Section 5105(d)(1)(B) of the Omnibus

20 Budget Reconciliation Act of 1990 (Public Law 101–508;

21 104 Stat. 1388–266) is amended to read as follows:

22 ‘‘(B) TITLE XVI.—Section 1631(a)(2)(F)

23 (42 U.S.C. 1383(a)(2)(F)), as so redesignated

24 by subsection (c)(2) of this section, is amended

25 to read as follows:
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1 ‘‘ ‘(F) The Secretary shall include as a part of the

2 annual report required under section 704 information with

3 respect to the implementation of the preceding provisions

4 of this paragraph, including—

5 ‘‘ ‘(i) the number of cases in which the rep6 resentative payee was changed;

7 ‘‘ ‘(ii) the number of cases discovered where

8 there has been a misuse of funds;

9 ‘‘ ‘(iii) how any such cases were dealt with by

10 the Secretary;

11 ‘‘ ‘(iv) the final disposition of such cases (in12 cluding any criminal penalties imposed); and

13 ‘‘ ‘(v) such other information as the Secretary

14 determines to be appropriate.’.’’.

15 (d) AMENDMENT RELATED TO SECTION

16 5105(a)(1)(B).—The 2nd paragraph of section 1631(a)

17 (42 U.S.C. 1383(a)) is amended by striking ‘‘(A)(i) Pay18 ments’’ and inserting ‘‘(2)(A)(i) Payments’’.

19 (e) AMENDMENTS RELATED TO SECTION 5105(b).—

20 Section 1631(a)(2)(C) (42 U.S.C. 1383(a)(2)(C)) is

21 amended—

22 (1) by striking clause (ii);

23 (2) by redesignating clauses (iii), (iv), and (v)

24 as clauses (ii), (iii), and (iv), respectively; and
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1 (3) in clause (iv) (as so redesignated), by strik2 ing ‘‘(iii), and (iv)’’ and inserting ‘‘and (iii)’’.

3 (f) AMENDMENTS RELATED TO SECTION

4 5107(a)(2)(B).—Section 1631(c)(1)(B) (42 U.S.C.

5 1383(c)(1)(B)) is amended by striking ‘‘paragraph (1)’’

6 each place such term appears and inserting ‘‘subpara7 graph (A)’’.

8 (g) AMENDMENT RELATED TO SECTION

9 5109(a)(2).—Section 1631 (42 U.S.C. 1383) is amended

10 by redesignating the subsection (n) added by section

11 5109(a)(2) of the Omnibus Budget Reconciliation Act of

12 1990, as subsection (o).

13 (h) AMENDMENTS RELATED TO SECTION

14 11115(b)(2).—Section 11115(b)(2) of the Omnibus Budg15 et Reconciliation Act of 1990 (Public Law 101–508) is

16 amended—

17 (1) in subparagraph (A), by striking ‘‘para18 graph (8)’’ and inserting ‘‘paragraph (9)’’;

19 (2) in subparagraph (B), by striking ‘‘para20 graph (9)’’ and inserting ‘‘paragraph (10)’’; and

21 (3) in subparagraph (C), by redesignating the

22 new paragraph added thereby as paragraph (11).

23 (i) AMENDMENT RELATED TO SECTION

24 13101(d)(2).—Section 256(k)(2)(A) of the Balanced
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1 Budget and Emergency Deficit Control Act of 1985 is

2 amended—

3 (1) by striking ‘‘—’’ the 2nd place it appears

4 and all that follows through ‘‘(I)’’; and

5 (2) by striking ‘‘; or’’ and all that follows

6 through ‘‘(II)’’ and inserting ‘‘, except that a State

7 may not be allotted an amount under this subpara8 graph that exceeds’’.

9 (j) EFFECTIVE DATE.—Each amendment made by

10 this section shall take effect as if included in the provision

11 of the Omnibus Budget Reconciliation Act of 1990 to

12 which the amendment relates at the time such provision

13 became law.

14 SEC. 13282. TECHNICAL CORRECTIONS RELATED TO THE

15 HUMAN RESOURCE AND INCOME SECURITY

16 PROVISIONS OF THE OMNIBUS BUDGET REC17 ONCILIATION ACT OF 1989.

18 (a) AMENDMENT RELATING TO SECTION 8004(a).—

19 Section 408(m)(2)(A) (42 U.S.C. 608(m)(2)(A)) is

20 amended by striking ‘‘a fiscal’’ and inserting ‘‘the fiscal’’.

21 (b) AMENDMENT RELATING TO SECTION 8006(a).—

22 Section 473(a)(6)(B) (42 U.S.C. 673(a)(6)(B)) is amend23 ed by striking ‘‘474(a)(3)(B)’’ and inserting

24 ‘‘474(a)(3)(C)’’.
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1 (c) AMENDMENT RELATING TO SECTION

2 8007(b)(3).—Subparagraph (D) of section 475(5) (42

3 U.S.C. 675(5)(D)) is amended by moving such subpara4 graph 2 ems to the right so that the left margin of such

5 subparagraph is aligned with the left margin of subpara6 graph (C) of such section.

7 (d) EFFECTIVE DATE.—Each amendment made by

8 this section shall take effect as if the amendment had been

9 included in the provision of the Omnibus Budget Rec10 onciliation Act of 1989 to which the amendment relates,

11 at the time the provision became law.

12 SEC. 13283. ELIMINATION OF OBSOLETE PROVISIONS RE13 LATING TO TREATMENT OF THE EARNED IN14 COME TAX CREDIT.

15 (a) TREATMENT OF EITC AS EARNED INCOME.—

16 Section 1612(a)(1) (42 U.S.C. 1382a(a)(1)) is amended

17 by striking subparagraph (C) and by redesignating sub18 paragraphs (D) and (E) as subparagraphs (C) and (D),

19 respectively.

20 (b) ADJUSTMENT OF BENEFITS DUE TO TREAT21 MENT OF EITC AS EARNED INCOME.—Section 1631(b)

22 (42 U.S.C. 1383(b)) is amended by striking paragraph (3)

23 and by redesignating paragraphs (4) and (5) as para24 graphs (3) and (4), respectively.
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1 SEC. 13284. REDESIGNATION OF CERTAIN PROVISIONS.

2 Section 1631(e)(6) (42 U.S.C. 1383(e)(6)) is amend3 ed by redesignating subparagraphs (1) and (2) as sub4 paragraphs (A) and (B), respectively.

5 Subtitle C—Medicare Program

6 SEC. 13400. REFERENCES IN SUBTITLE; TABLE OF CON7 TENTS OF SUBTITLE.

8 (a) AMENDMENTS TO SOCIAL SECURITY ACT.—Ex9 cept as otherwise specifically provided, whenever in this

10 subtitle an amendment is expressed in terms of an amend11 ment to or repeal of a section or other provision, the ref12 erence shall be considered to be made to that section or

13 other provision of the Social Security Act.

14 (b) REFERENCES TO OBRA.—In this subtitle, the

15 terms ‘‘OBRA–1986’’, ‘‘OBRA–1987’’, ‘‘OBRA–1989’’,

16 and ‘‘OBRA–1990’’ refer to the Omnibus Budget Rec17 onciliation Act of 1986 (Public Law 99–509), the Omni18 bus Budget Reconciliation Act of 1987 (Public Law 100–

19 203), the Omnibus Budget Reconciliation Act of 1989

20 (Public Law 101–239), and the Omnibus Budget Rec21 onciliation Act of 1990 (Public Law 101–508), respec22 tively.

23 (c) TABLE OF CONTENTS OF SUBTITLE.—The table

24 of contents of this subtitle is as follows:

Sec. 13400. References in subtitle; table of contents of subtitle.

CHAPTER 1—PROVISIONS RELATING TO PART A
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SUBCHAPTER A—ELIMINATION OF INFLATION UPDATE FOR SERVICES

PROVIDED UNDER PART A

Sec. 13401. Inpatient hospital services and hospice care.

Sec. 13402. Limits on per diem routine service costs for extended care services.

SUBCHAPTER B—OTHER PROVISIONS RELATING TO PART A

Sec. 13411. Wage index provisions.

Sec. 13412. Transition for hospital outlier thresholds.

Sec. 13413. Essential access community hospital (EACH) amendments.

Sec. 13414. Rural health transition grant program extension.

Sec. 13415. Regional referral center extension.

Sec. 13416. Medicare-dependent, small rural hospital payment extension.

Sec. 13417. Extension of regional floor.

Sec. 13418. Extension of rural hospital demonstration.

Sec. 13419. Hemophilia pass-through extension.

Sec. 13420. State hospital payment programs.

Sec. 13421. Psychology services in hospitals.

Sec. 13422. Graduate medical education payments in hospital-owned community health centers.

Sec. 13423. Treatment of certain military facilities.

Sec. 13424. Epilepsy DRG.

Sec. 13425. Skilled nursing facility wage index.

Sec. 13426. Hospice notification to beneficiaries.

Sec. 13427. Reduction in part A premium for certain individuals with 30 or

more quarters of Social Security coverage.

Sec. 13428. Periodic updates to salary equivalency guidelines for physical therapy and respiratory therapy services.

Sec. 13429. Extension of deadline for application for geographic classification

for certain reclassified hospitals.

Sec. 13430. Clarification of DRG payment window expansion; miscellaneous

and technical corrections.

CHAPTER 2—PROVISIONS RELATING TO PART B

SUBCHAPTER A—ELIMINATION OF INFLATION UPDATE

Sec. 13431. Elimination of inflation update for physician and related professional services.

Sec. 13432. Elimination of cost-of-living adjustments for certain items and

services.

Sec. 13433. Ambulatory surgical center services.

Sec. 13434. Other items and services under part B.

SUBCHAPTER B—PHYSICIANS’ SERVICES

Sec. 13441. Reinstating separate payment for the interpretation of electrocardiograms (EKGs).

Sec. 13442. Payments for new physicians and practitioners.

Sec. 13443. Retaining payment for actual anesthesia time.

Sec. 13444. Geographic cost of practice index refinements.

Sec. 13445. Extra-billing.

Sec. 13446. Relative values for pediatric services.

Sec. 13447. Antigens under physician fee schedule.

Sec. 13448. Administration of claims relating to physicians’ services.

Sec. 13449. Miscellaneous and technical corrections.
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SUBCHAPTER C—AMBULATORY SURGICAL CENTER SERVICES

Sec. 13451. Designation of certain hospitals as eye or eye and ear hospitals.

Sec. 13452. Treatment of intraocular lenses.

Sec. 13453. Technical amendments.

SUBCHAPTER D—DURABLE MEDICAL EQUIPMENT

Sec. 13461. Certification of suppliers.

Sec. 13462. Prohibition against carrier forum shopping.

Sec. 13463. Restrictions on certain marketing and sales activities.

Sec. 13464. Anti-kickback clarification.

Sec. 13465. Limitations on beneficiary liability for noncovered services.

Sec. 13466. Adjustments for inherent reasonableness.

Sec. 13467. Treatment of nebulizers and aspirators.

Sec. 13468. Payment for ostomy supplies and other supplies.

Sec. 13469. Miscellaneous and technical corrections.

SUBCHAPTER E—OTHER PROVISIONS

Sec. 13471. Clarifying payments for medically directed certified registered

nurse anesthetist services.

Sec. 13472. Extension of Alzheimer’s disease demonstration projects.

Sec. 13473. Oral cancer drugs.

Sec. 13474. Part B premium for late enrollment.

Sec. 13475. Coverage of services of speech-language pathologists and

audiologists.

Sec. 13476. Extension of municipal health service demonstration projects.

Sec. 13477. Treatment of certain Indian health programs and facilities as Federally-qualified health centers.

Sec. 13478. Miscellaneous and technical corrections.

SUBCHAPTER F—PART B PREMIUM

Sec. 13481. Part B premium.

CHAPTER 3—PROVISIONS RELATING TO PARTS A AND B

SUBCHAPTER A—ELIMINATION OF UPDATES

Sec. 13501. Elimination of cost-of-living update in per resident amounts for direct medical education.

Sec. 13502. Elimination of inflation update in cost limits for home health services.

SUBCHAPTER B—MEDICARE SECONDARY PAYER PROVISIONS

Sec. 13511. Extension of transfer of data.

Sec. 13512. 3-year extension of medicare secondary payer to disabled beneficiaries.

Sec. 13513. 3-year extension of 18-month rule for ESRD beneficiaries.

Sec. 13514. Medicare secondary payer reforms.

SUBCHAPTER C—PHYSICIAN OWNERSHIP AND REFERRAL

Sec. 13521. Application of medicare ban on self-referrals to all payers.

Sec. 13522. Extension of self-referral ban to additional specified services.

Sec. 13523. Exceptions for both ownership and compensation arrangements.

Sec. 13524. Exceptions related only to ownership or investment.
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Sec. 13525. Exceptions related only to compensation arrangements.

Sec. 13526. Clarification concerning civil money penalty sanctions.

Sec. 13527. Requirements for group practice.

Sec. 13538. No Federal preemption of more restrictive State laws.

Sec. 13529. Miscellaneous provisions.

Sec. 13530. Effective dates.

SUBCHAPTER D—OTHER PROVISIONS

Sec. 13551. Direct graduate medical education.

Sec. 13552. Immunosuppressive drug therapy.

Sec. 13553. Reduction in payments for erythropoientin.

Sec. 13554. Qualified medicare beneficiary outreach.

Sec. 13555. Extension of social health maintenance organization demonstrations.

Sec. 13556. Hospice notification to home health beneficiaries.

Sec. 13557. Interest payments.

Sec. 13558. Peer review organizations.

Sec. 13559. Health maintenance organizations.

Sec. 13560. Medicare administration budget process.

Sec. 13561. Other provisions.

CHAPTER 4—MEDICARE SUPPLEMENTAL INSURANCE POLICIES

Sec. 13571. Standards for medicare supplemental insurance policies.

CHAPTER 5—TREATMENT OF CERTAIN STATE HEALTH CARE PROGRAMS

Sec. 13581. Treatment of certain State health care programs.

1 CHAPTER 1—PROVISIONS RELATING TO

2 PART A

3 Subchapter A—Elimination of Inflation

4 Update for Services Provided Under Part A

5 SEC. 13401. INPATIENT HOSPITAL SERVICES AND HOSPICE

6 CARE.

7 Section 1886(b)(3)(B)(iii) (42 U.S.C.

8 1395ww(b)(3)(B)(iii)) is amended—

9 (1) by striking ‘‘(iii) For purposes of this sub10 paragraph’’ and inserting ‘‘(iii)(I) Except as pro11 vided in subclause (II), for purposes of this subpara12 graph’’, and
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1 (2) by adding at the end the following new

2 subclause:

3 ‘‘(II) For purposes of this subparagraph and section

4 1814(i)(1)(C)(ii), the ‘market basket percentage increase’,

5 with respect to cost reporting periods and discharges oc6 curring in fiscal year 1994 or 1995, is 0 percent.’’.

7 SEC. 13402. LIMITS ON PER DIEM ROUTINE SERVICE COSTS

8 FOR EXTENDED CARE SERVICES.

9 The Secretary of Health and Human Services shall

10 not provide for any increase, on the basis of inflation or

11 changes in the cost of goods and services, in the limits

12 on per diem routine service costs for extended care services

13 under section 1888 of the Social Security Act for cost re14 porting periods beginning during fiscal year 1994 or fiscal

15 year 1995.

16 Subchapter B—Other Provisions Relating to

17 Part A

18 SEC. 13411. WAGE INDEX PROVISIONS.

19 (a) WAGE INDEX HOLD HARMLESS PROTECTION.—

20 (1) IN GENERAL.—Section 1886(d)(8)(C) (42

21 U.S.C. 1395ww(d)(8)(C)) is amended by adding at

22 the end the following new clause:

23 ‘‘(iv) The application of subparagraph (B) or a deci24 sion of the Medicare Geographic Classification Review
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1 Board or the Secretary under paragraph (1)) may not re2 sult in a reduction in an urban area’s wage index if—

3 ‘‘(I) the urban area has a wage index below the

4 wage index for rural areas in the State in which it

5 is located; or

6 ‘‘(II) the urban area is located in a State that

7 is composed of a single urban area.’’.

8 (2) NO STANDARDIZED AMOUNT ADJUST9 MENT.—The Secretary of Health and Human Serv10 ices shall not revise the fiscal year 1992 or fiscal

11 year 1993 standardized amounts pursuant to sub12 sections (d)(3)(B) and (d)(8)(D) of section 1886 of

13 the Social Security Act to account for the amend14 ment made by paragraph (1).

15 (3) EFFECTIVE DATE.—The amendment made

16 by paragraph (1) shall apply to discharges occur17 ring—

18 (A) on or after October 1, 1991, in the

19 case of hospitals located in an urban area de20 scribed in section 1886(d)(8)(C)(iv)(I) of the

21 Social Security Act (as added by paragraph

22 (1)); and

23 (B) on or after the date of the enactment

24 of this Act, in the case of hospitals located in

25 an urban area described in section
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1 1886(d)(8)(C)(iv)(II) of the Social Security Act

2 (as added by paragraph (1)).

3 (b) UPDATING STANDARDS FOR TREATING RURAL

4 COUNTIES AS URBAN COUNTIES BASED ON RATES OF

5 COMMUTATION.—

6 (1) IN GENERAL.—Section 1886(d)(8)(B) (42

7 U.S.C. 1395ww(d)(8)(B)) is amended—

8 (A) by striking ‘‘standards’’ each place it

9 appears and inserting ‘‘standards most recently

10 used’’, and

11 (B) by striking ‘‘published in the Federal

12 Register on January 3, 1980’’.

13 (2) HOLD HARMLESS FOR COUNTIES CUR14 RENTLY TREATED AS URBAN.—Any hospital that is

15 treated as being located in an urban metropolitan

16 statistical area pursuant to section 1886(d)(8)(B) of

17 the Social Security Act as of September 30, 1992,

18 shall continue to be so treated notwithstanding the

19 amendments made by paragraph (1).

20 (3) EFFECTIVE DATE.—The amendments made

21 by paragraph (1) shall be effective on October 1,

22 1993.

23 (c) USE OF OCCUPATIONAL MIX IN GUIDELINES.—

24 (1) IN GENERAL.—Section 1886(d)(10)(D)(i)(I)

25 (42 U.S.C. 1395ww(d)(10)(D)(i)(I)) is amended by
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1 inserting ‘‘(to the extent the Secretary determines

2 appropriate)’’ after ‘‘taking into account’’.

3 (2) EFFECTIVE DATE.—The amendment made

4 by paragraph (1) shall take effect as if included in

5 the enactment of OBRA–1989.

6 SEC. 13412. TRANSITION FOR HOSPITAL OUTLIER THRESH7 OLDS.

8 Section 1886(d)(5)(A) (42 U.S.C. 1395ww(d)(5)(A))

9 is amended—

10 (1) in clause (i), by striking ‘‘The Secretary’’

11 and inserting ‘‘For discharges occurring during fis12 cal years ending on or before September 30, 1997,

13 the Secretary’’; and

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

15 clauses:

16 ‘‘(v) The Secretary shall provide that—

17 ‘‘(I) the day outlier percentage for fiscal year

18 1995 shall be 75 percent of the day outlier percent19 age for fiscal year 1994;

20 ‘‘(II) the day outlier percentage for fiscal year

21 1996 shall be 50 percent of the day outlier percent22 age for fiscal year 1994; and

23 ‘‘(III) the day outlier percentage for fiscal year

24 1997 shall be 25 percent of the day outlier percent25 age for fiscal year 1994.
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1 ‘‘(vi) For purposes of this subparagraph, the term

2 ‘day outlier percentage’ means, for a fiscal year, the per3 centage of the total additional payments made by the Sec4 retary under this subparagraph for discharges in that fis5 cal year which are additional payments under clause (i).’’.

6 SEC. 13413. ESSENTIAL ACCESS COMMUNITY HOSPITAL

7 (EACH) AMENDMENTS.

8 (a) INCREASING NUMBER OF PARTICIPATING

9 STATES.—Section 1820(a)(1) (42 U.S.C. 1395i–4(a)(1))

10 is amended by striking ‘‘7’’ and inserting ‘‘9’’.

11 (b) TREATMENT OF INPATIENT HOSPITAL SERVICES

12 PROVIDED IN RURAL PRIMARY CARE HOSPITALS.—

13 (1) IN GENERAL.—Section 1820(f)(1)(F) (42

14 U.S.C. 1395i–4(f)(1)(F)) is amended to read as fol15 lows:

16 ‘‘(F) subject to paragraph (4), provides not

17 more than 6 inpatient beds (meeting such con18 ditions as the Secretary may establish) for pro19 viding inpatient care to patients requiring sta20 bilization before discharge or transfer to a hos21 pital, except that the facility may not provide

22 any inpatient hospital services—

23 ‘‘(i) to any patient whose attending

24 physician does not certify that the patient

25 may reasonably be expected to be dis-
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1 charged or transferred to a hospital within

2 72 hours of admission to the facility; or

3 ‘‘(ii) consisting of surgery or any

4 other service requiring the use of general

5 anesthesia (other than surgical procedures

6 specified by the Secretary under section

7 1833(i)(1)(A)), unless the attending physi8 cian certifies that the risk associated with

9 transferring the patient to a hospital for

10 such services outweighs the benefits of

11 transferring the patient to a hospital for

12 such services.’’.

13 (2) LIMITATION ON AVERAGE LENGTH OF

14 STAY.—Section 1820(f) (42 U.S.C. 1395i–4(f)) is

15 amended by adding at the end the following new

16 paragraph:

17 ‘‘(4) LIMITATION ON AVERAGE LENGTH OF IN18 PATIENT STAYS.—The Secretary may terminate a

19 designation of a rural primary care hospital under

20 paragraph (1) if the Secretary finds that the average

21 length of stay for inpatients at the facility during

22 the previous year in which the designation was in ef23 fect exceeded 72 hours. In determining the compli24 ance of a facility with the requirement of the pre25 vious sentence, there shall not be taken into account
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1 periods of stay of inpatients in excess of 72 hours

2 to the extent such periods exceed 72 hours because

3 transfer to a hospital is precluded because of inclem4 ent weather or other emergency conditions.’’.

5 (3) CONFORMING AMENDMENT.—Section

6 1814(a)(8) (42 U.S.C. 1395f(a)(8)) is amended by

7 striking ‘‘such services’’ and all that follows and in8 serting ‘‘the individual may reasonably be expected

9 to be discharged or transferred to a hospital within

10 72 hours after admission to the rural primary care

11 hospital.’’.

12 (4) GAO REPORTS.—Not later than 2 years

13 after the date of the enactment of this Act, the

14 Comptroller General shall submit reports to Con15 gress on—

16 (A) the application of the requirements

17 under section 1820(f) of the Social Security Act

18 (as amended by this subsection) that rural pri19 mary care hospitals provide inpatient care only

20 to those individuals whose attending physicians

21 certify may reasonably be expected to be dis22 charged within 72 hours after admission and

23 maintain an average length of inpatient stay

24 during a year that does not exceed 72 hours;

25 and
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1 (B) the extent to which such requirements

2 have resulted in such hospitals providing inpa3 tient care beyond their capabilities or have lim4 ited the ability of such hospitals to provide

5 needed services.

6 (c) DESIGNATION OF HOSPITALS.—

7 (1) PERMITTING DESIGNATION OF HOSPITALS

8 LOCATED IN URBAN AREAS.—

9 (A) IN GENERAL.—Section 1820 (42

10 U.S.C. 1395i–4) is amended—

11 (i) by striking paragraph (1) of sub12 section (e) and redesignating paragraphs

13 (2) through (6) as paragraphs (1) through

14 (5); and

15 (ii) in subsection (e)(1)(A) (as redes16 ignated by subparagraph (A))—

17 (I) by striking ‘‘is located’’ and

18 inserting ‘‘except in the case of a hos19 pital located in an urban area, is lo20 cated’’,

21 (II) by striking ‘‘, (ii)’’ and in22 serting ‘‘or (ii)’’,

23 (III) by striking ‘‘or (iii)’’ and all

24 that follows through ‘‘section,’’, and
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1 (IV) in subsection (i)(1)(B), by

2 striking ‘‘paragraph (3)’’ and insert3 ing ‘‘paragraph (2)’’.

4 (B) NO CHANGE IN MEDICARE PROSPEC5 TIVE PAYMENT.—Section 1886(d)(5)(D) (42

6 U.S.C. 1395ww(d)(5)(D)) is amended—

7 (i) in clause (iii)(III), by inserting ‘‘lo8 cated in a rural area and’’ after ‘‘that is’’,

9 and

10 (ii) in clause (v), by inserting ‘‘located

11 in a rural area and’’ after ‘‘in the case of

12 a hospital’’.

13 (2) PERMITTING HOSPITALS LOCATED IN AD14 JOINING STATES TO PARTICIPATE IN STATE PRO15 GRAM.—

16 (A) IN GENERAL.—Section 1820 (42

17 U.S.C. 1395i–4) is amended—

18 (i) by redesignating subsection (k) as

19 subsection (l); and

20 (ii) by inserting after subsection (j)

21 the following new subsection:

22 ‘‘(k) ELIGIBILITY OF HOSPITALS NOT LOCATED IN

23 PARTICIPATING STATES.—Notwithstanding any other

24 provision of this section—
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1 ‘‘(1) for purposes of including a hospital or fa2 cility as a member institution of a rural health net3 work, a State may designate a hospital or facility

4 that is not located in the State as an essential access

5 community hospital or a rural primary care hospital

6 if the hospital or facility is located in an adjoining

7 State and is otherwise eligible for designation as

8 such a hospital;

9 ‘‘(2) the Secretary may designate a hospital or

10 facility that is not located in a State receiving a

11 grant under subsection (a)(1) as an essential access

12 community hospital or a rural primary care hospital

13 if the hospital or facility is a member institution of

14 a rural health network of a State receiving a grant

15 under such subsection; and

16 ‘‘(3) a hospital or facility designated pursuant

17 to this subsection shall be eligible to receive a grant

18 under subsection (a)(2).’’.

19 (B) CONFORMING AMENDMENTS.—(i) Sec20 tion 1820(c)(1) (42 U.S.C. 1395i–4(c)(1)) is

21 amended by striking ‘‘paragraph (3)’’ and in22 serting ‘‘paragraph (3) or subsection (k)’’.

23 (ii) Paragraphs (1)(A) and (2)(A) of sec24 tion 1820(i) (42 U.S.C. 1395i–4(i)) are each

25 amended—
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1 (I) in clause (i), by striking ‘‘(a)(1)’’

2 and inserting ‘‘(a)(1) (except as provided

3 in subsection (k))’’, and

4 (II) in clause (ii), by striking ‘‘sub5 paragraph (B)’’ and inserting ‘‘subpara6 graph (B) or subsection (k)’’.

7 (d) SKILLED NURSING SERVICES IN RURAL PRIMARY

8 CARE HOSPITALS.—Section 1820(f)(3) (42 U.S.C. 1395i–

9 4(f)(3)) is amended by striking ‘‘because the facility’’ and

10 all that follows and inserting the following: ‘‘because, at

11 the time the facility applies to the State for designation

12 as a rural primary care hospital, there is in effect an

13 agreement between the facility and the Secretary under

14 section 1883 under which the facility’s inpatient hospital

15 facilities are used for the furnishing of extended care serv16 ices, except that the number of beds used for the furnish17 ing of such services may not exceed the total number of

18 licensed inpatient beds at the time the facility applies to

19 the State for such designation (minus the number of inpa20 tient beds used for providing inpatient care pursuant to

21 paragraph (1)(F)). For purposes of the previous sentence,

22 the number of beds of the facility used for the furnishing

23 of extended care services shall not include any beds of a

24 unit of the facility that is licensed as a distinct-part skilled
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1 nursing facility at the time the facility applies to the State

2 for designation as a rural primary care hospital.’’.

3 (e) PAYMENT FOR OUTPATIENT RURAL PRIMARY

4 CARE HOSPITAL SERVICES.—

5 (1) IMPLEMENTATION OF PROSPECTIVE PAY6 MENT SYSTEM.—Section 1834(g) (42 U.S.C.

7 1395m(g)) is amended—

8 (A) in paragraph (1), by striking ‘‘during

9 a year before 1993’’ and inserting ‘‘during a

10 year before the prospective payment system de11 scribed in paragraph (2) is in effect’’; and

12 (B) in paragraph (2), by striking ‘‘January

13 1, 1993,’’ and inserting ‘‘January 1, 1996,’’.

14 (2) NO USE OF CUSTOMARY CHARGE IN DETER15 MINING PAYMENT.—Section 1834(g)(1) (42 U.S.C.

16 1395m(g)(1)) is amended by adding at the end the

17 following:

18 ‘‘The amount of payment shall be determined under

19 either method without regard to the amount of the

20 customary or other charge.’’.

21 (f) CLARIFICATION OF PHYSICIAN STAFFING RE22 QUIREMENT FOR RURAL PRIMARY CARE HOSPITALS.—

23 Section 1820(f)(1)(H) (42 U.S.C. 1395i–4(f)(1)(H)) is

24 amended by striking the period and inserting the follow25 ing: ‘‘, except that in determining whether a facility meets
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1 the requirements of this subparagraph, subparagraphs (E)

2 and (F) of that paragraph shall be applied as if any ref3 erence to a ‘physician’ is a reference to a physician as de4 fined in section 1861(r)(1).’’.

5 (g) TECHNICAL AMENDMENTS RELATING TO PART

6 A DEDUCTIBLE, COINSURANCE, AND SPELL OF ILL7 NESS.—(1) Section 1812(a)(1) (42 U.S.C. 1395d(a)(1))

8 is amended—

9 (A) by striking ‘‘inpatient hospital services’’ the

10 first place it appears and inserting ‘‘inpatient hos11 pital services or inpatient rural primary care hos12 pital services’’;

13 (B) by striking ‘‘inpatient hospital services’’ the

14 second place it appears and inserting ‘‘such serv15 ices’’; and

16 (C) by striking ‘‘and inpatient rural primary

17 care hospital services’’.

18 (2) Sections 1813(a) and 1813(b)(3)(A) (42 U.S.C.

19 1395e(a), 1395e(b)(3)(A)) are each amended by striking

20 ‘‘inpatient hospital services’’ each place it appears and in21 serting ‘‘inpatient hospital services or inpatient rural pri22 mary care hospital services’’.

23 (3) Section 1813(b)(3)(B) (42 U.S.C.

24 1395e(b)(3)(B)) is amended by striking ‘‘inpatient hos-
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1 pital services’’ and inserting ‘‘inpatient hospital services,

2 inpatient rural primary care hospital services’’.

3 (4) Section 1861(a) (42 U.S.C. 1395x(a)) is amend4 ed—

5 (A) in paragraphs (1), by striking ‘‘inpatient

6 hospital services’’ and inserting ‘‘inpatient hospital

7 services, inpatient rural primary care hospital serv8 ices’’; and

9 (B) in paragraph (2), by striking ‘‘hospital’’

10 and inserting ‘‘hospital or rural primary care hos11 pital’’.

12 (h) AUTHORIZATION OF APPROPRIATIONS.—Section

13 1820(k) (42 U.S.C. 1395i–4(k)) is amended by striking

14 ‘‘1990, 1991, and 1992’’ and inserting ‘‘1990 through

15 1995’’.

16 (i) EFFECTIVE DATE.—The amendments made by

17 this section shall take effect on the date of the enactment

18 of this Act.

19 SEC. 13414. RURAL HEALTH TRANSITION GRANT PROGRAM

20 EXTENSION.

21 Section 4005(e)(9) of OBRA–1987 is amended—

22 (1) by striking ‘‘1989 and’’ and inserting

23 ‘‘1989,’’; and
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1 (2) by striking ‘‘1992’’ and inserting ‘‘1992

2 and $30,000,000 for each of fiscal years 1993

3 through 1997’’.

4 SEC. 13415. REGIONAL REFERRAL CENTER EXTENSION.

5 (a) EXTENSION OF CLASSIFICATION THROUGH FIS6 CAL YEAR 1994.—Effective on the date of the enactment

7 of this Act, section 6003(d) of such Act (42 U.S.C.

8 1395ww note) is amended by striking ‘‘October 1, 1992’’

9 and inserting ‘‘October 1, 1994’’.

10 (b) PERMITTING HOSPITALS TO DECLINE RECLASSI11 FICATION.—If any hospital fails to qualify as a rural refer12 ral center under section 1886(d)(5)(C) of the Social Secu13 rity Act as a result of a decision by the Medicare Geo14 graphic Classification Review Board under section

15 1886(d)(10) of such Act to reclassify the hospital as being

16 located in an urban area for fiscal year 1993 or fiscal year

17 1994, the Secretary of Health and Human Services

18 shall—

19 (1) notify such hospital of such failure to qual20 ify,

21 (2) provide an opportunity for such hospital to

22 decline such reclassification, and

23 (3) if the hospital declines such reclassification,

24 administer the Social Security Act (other than sec-
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1 tion 1886(d)(8)(D)) for such fiscal year as if the de2 cision by the Review Board had not occurred.

3 (c) REQUIRING LUMP-SUM RETROACTIVE PAYMENT

4 FOR HOSPITALS LOSING CLASSIFICATION.—

5 (1) IN GENERAL.—In the case of an affected

6 regional referral center (as described in paragraph

7 (2)), the Secretary of Health and Human Services

8 shall make a lump sum payment to the center equal

9 to the difference between the aggregate payment

10 made to the center under section 1886 of such Act

11 (excluding outlier payments under subsection

12 (d)(5)(A) of such section) during the period of appli13 cability described in paragraph (3) and the aggre14 gate payment that would have been made to the cen15 ter under such section if, during the period of appli16 cability, the center was classified a regional referral

17 center under section 1886(d)(5)(C) of such Act.

18 (2) AFFECTED CENTERS DESCRIBED.—In para19 graph (1), an ‘‘affected regional referral center’’ is

20 a hospital classified as regional referral center under

21 section 1886(d)(5)(C) of the Social Security Act as

22 of September 30, 1992, that was not classified as

23 such a center after such date but would have been

24 so classified if the reference in section 6003(d) of
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1 OBRA–1989 to ‘‘October 1, 1992,’’ had been

2 deemed a reference to ‘‘October 1, 1994,’’.

3 (3) PERIOD OF APPLICABILITY.—In paragraph

4 (1), the ‘‘period of applicability’’ is the period that

5 begins on October 1, 1992, and ends on the date of

6 the enactment of this Act.

7 SEC. 13416. MEDICARE-DEPENDENT, SMALL RURAL HOS8 PITAL PAYMENT EXTENSION.

9 (a) EXTENSION OF ADDITIONAL PAYMENTS.—Effec10 tive on the date of the enactment of this Act, section

11 1886(d)(5)(G) (42 U.S.C. 1395ww(d)(5)(G)) is amend12 ed—

13 (1) in clause (i) in the matter preceding

14 subclause (I)—

15 (A) by inserting ‘‘(or portion thereof)’’

16 after ‘‘cost reporting period’’, and

17 (B) by striking ‘‘March 31, 1993,’’ and all

18 that follows and inserting the following: ‘‘Sep19 tember 30, 1994, in the case of a subsection (d)

20 hospital which is a medicare-dependent, small

21 rural hospital, payment under paragraph (1)(A)

22 shall be equal to the sum of the amount deter23 mined under clause (ii) and the amount deter24 mined under paragraph (1)(A)(iii).’’;
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1 (2) by redesignating clauses (ii) and (iii) as

2 clauses (iii) and (iv); and

3 (3) by inserting after clause (i) the following

4 new clause:

5 ‘‘(ii) The amount determined under this clause is

6 ‘‘(I) for discharges occurring during the first 3

7 12-month cost reporting periods that begin on or

8 after April 1, 1990, the amount by which the hos9 pital’s target amount for the cost reporting period

10 (as defined in subsection (b)(3)(D)) exceeds the

11 amount determined under paragraph (1)(A)(iii); and

12 ‘‘(II) for discharges occurring during any subse13 quent cost reporting period (or portion thereof), 50

14 percent of the amount by which the hospital’s target

15 amount for the cost reporting period (as defined in

16 subsection (b)(3)(D)) exceeds the amount deter17 mined under paragraph (1)(A)(iii).’’.

18 (b) PERMITTING HOSPITALS TO DECLINE RECLASSI19 FICATION.—If any hospital fails to qualify as a medicare20 dependent, small rural hospital under section

21 1886(d)(5)(G)(i) of the Social Security Act as a result of

22 a decision by the Medicare Geographic Classification Re23 view Board under section 1886(d)(10) of such Act to re24 classify the hospital as being located in an urban area for
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1 fiscal year 1993 or fiscal year 1994, the Secretary of

2 Health and Human Services shall—

3 (1) notify such hospital of such failure to qual4 ify,

5 (2) provide an opportunity for such hospital to

6 decline such reclassification, and

7 (3) if the hospital declines such reclassification,

8 administer the Social Security Act (other than sec9 tion 1886(d)(8)(D)) for such fiscal year as if the de10 cision by the Review Board had not occurred.

11 (c) REQUIRING LUMP-SUM RETROACTIVE PAY12 MENT.—

13 (1) IN GENERAL.—In the case of a hospital

14 treated as a medicare dependent, small rural hos15 pital under section 1886(d)(5)(G) of the Social Se16 curity Act, the Secretary of Health and Human

17 Services shall make a lump sum payment to the hos18 pital equal to the difference between the aggregate

19 payment made to the hospital under section 1886 of

20 such Act (excluding outlier payments under sub21 section (d)(5)(A) of such section) during the period

22 of applicability described in paragraph (2) and the

23 aggregate payment that would have been made to

24 the hospital under such section if, during the period
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1 of applicability, section 1886(d)(5)(G) of such Act

2 had been applied as if—

3 (A) the reference in clause (i) to ‘‘March

4 31, 1993,’’ had been deemed a reference to

5 ‘‘September 30, 1994,’’; and

6 (B) the amendments made by subsection

7 (a) had been in effect.

8 (2) PERIOD OF APPLICABILITY.—In paragraph

9 (1), the ‘‘period of applicability’’ is, with respect to

10 a hospital, the period that begins on the first day of

11 the hospital’s first 12-month cost reporting period

12 that begins after April 1, 1992, and ends on the

13 date of the enactment of this Act.

14 SEC. 13417. EXTENSION OF REGIONAL FLOOR.

15 Section 1886(d)(1)(A)(iii) (42 U.S.C.

16 1395ww(d)(1)(A)(iii)) is amended by striking ‘‘September

17 30, 1993’’ and inserting ‘‘September 30, 1996’’.

18 SEC. 13418. EXTENSION OF RURAL HOSPITAL DEMONSTRA19 TION.

20 Section 4008(i)(1) of OBRA–1990 is amended by

21 adding at the end the following new sentence: ‘‘The Sec22 retary shall continue any such demonstration project until

23 at least December 31, 1995.’’.
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1 SEC. 13419. HEMOPHILIA PASS-THROUGH EXTENSION.

2 Effective as if included in the enactment of OBRA–

3 1989, section 6011(d) of such Act is amended by striking

4 ‘‘2 years after the date of enactment of this Act’’ and in5 serting ‘‘September 30, 1994’’.

6 SEC. 13420. STATE HOSPITAL PAYMENT PROGRAMS.

7 In the case of a State hospital reimbursement system

8 that meets the requirements of section 1814(b)(3) of the

9 Social Security Act, no other provision of law shall be con10 strued as preventing the system from providing that pay11 ment for services covered under the system be made on

12 the basis of rates provided for under the system.

13 SEC. 13421. PSYCHOLOGY SERVICES IN HOSPITALS.

14 Section 1861(e)(4) (42 U.S.C. 1395x(e)(4)) is

15 amended by striking ‘‘physician;’’ and inserting ‘‘physi16 cian, except that a patient receiving qualified psychologist

17 services (as defined in subsection (ii)) may be under the

18 care of a clinical psychologist with respect to such services

19 to the extent permitted under State law;’’.

20 SEC. 13422. GRADUATE MEDICAL EDUCATION PAYMENTS IN

21 HOSPITAL-OWNED COMMUNITY HEALTH CEN22 TERS.

23 Section 1886(d)(5)(B)(iv) (42 U.S.C.

24 1395ww(d)(5)(B)(iv)) is amended by inserting after ‘‘the

25 hospital’’ the following: ‘‘or providing services at any en26 tity receiving a grant under section 330 of the Public
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1 Health Service Act that is under the ownership or control

2 of the hospital (if the hospital incurs all, or substantially

3 all, of the costs of the services furnished to the hospital

4 by such interns and residents)’’.

5 SEC. 13423. TREATMENT OF CERTAIN MILITARY FACILI6 TIES.

7 (a) COVERAGE OF SERVICES PROVIDED IN CERTAIN

8 UNIFORMED SERVICES TREATMENT FACILITIES.—

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

10 Human Services may not take any recoupment ac11 tion to recover amounts that were paid by the Unit12 ed States under title XVIII of the Social Security

13 Act to the facilities described in paragraph (2) (or

14 to other individuals or entities with whom such fa15 cilities had entered into agreements to provide serv16 ices under such title) for services provided during

17 the period beginning October 1, 1986, and ending

18 December 31, 1989, except to the extent that funds

19 were obligated to the Uniformed Services Treatment

20 Facilities program to fulfill such an action pursuant

21 to title VI of the Department of Defense Appropria22 tions Act, 1993.

23 (2) FACILITIES DESCRIBED.—The facilities re24 ferred to in paragraph (1) are the hospitals de25 scribed in section 248c of title 42, United States
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1 Code, that are located in Boston, Massachusetts;

2 Baltimore, Maryland; and Seattle, Washington.

3 (b) STUDY OF JOINT MEDICAL FACILITIES.—

4 (1) STUDY.—The Secretary of Health and

5 Human Services, in consultation with the Secretary

6 of Defense and the Secretary of Veterans Affairs,

7 shall conduct a study of the feasibility and desirabil8 ity of establishing joint medical facilities among the

9 Department of Defense, the Department of Veter10 ans’ Affairs, and other public and private entities,

11 and shall include in such study an analysis of the

12 need to make changes in the medicare and medicaid

13 programs (including facility certification standards

14 under such programs) in order to facilitate the es15 tablishment of such joint medical facilities.

16 (2) REPORT.—Not later than October 1, 1993,

17 the Secretary of Health and Human Services shall

18 submit a report to Congress on the study conducted

19 under paragraph (1).

20 SEC. 13424. EPILEPSY DRG.

21 (a) IN GENERAL.—The Secretary of Health and

22 Human Services shall review the diagnosis-related groups

23 established pursuant to section 1886(d)(4) of the Social

24 Security Act that are assigned to discharges of patients

25 with intractable epilepsy, including patients whose admis-
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1 sions involve intensive neurodiagnostic monitoring, and

2 shall revise, for discharges occurring on or after October

3 1, 1994, the assignment of discharges to such groups as

4 the Secretary considers appropriate to account for the re5 source requirements of such patients.

6 (b) CONSULTATION REQUIREMENTS.—In carrying

7 out subsection (a), the Secretary shall consult with the

8 Prospective Payment Assessment Commission and na9 tional organizations representing individuals with epilepsy

10 or individuals and entities providing specialized medical

11 services to such individuals related to the treatment of epi12 lepsy.

13 SEC. 13425. SKILLED NURSING FACILITY WAGE INDEX.

14 (a) IN GENERAL.—Not later than 1 year after the

15 date of the enactment of this Act, the Secretary of Health

16 and Human Services shall begin to collect data on em17 ployee compensation and paid hours of employment in

18 skilled nursing facilities for the purpose of constructing

19 a skilled nursing facility wage index adjustment to the

20 routine service cost limits required under section

21 1888(a)(4) of the Social Security Act.

22 (b) PROPAC REPORT.—The Prospective Payment

23 Assessment Commission shall, by March 1, 1994, study

24 and report to the Congress on the impact of applying rou-
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1 tine per diem cost limits for skilled nursing facilities on

2 a regional basis.

3 SEC. 13426. HOSPICE NOTIFICATION TO BENEFICIARIES.

4 (a) HOSPITALS.—Section 1861(ee)(2)(D) (42 U.S.C.

5 1395x(ee)(2)(D)) is amended by inserting ‘‘, including

6 hospice services,’’ after ‘‘post-hospital services’’.

7 (b) NURSING FACILITIES.—Section 1819(c)(1)(B)

8 (42 U.S.C. 1395i–3(c)(1)(B)) is amended—

9 (1) by striking ‘‘and’’ at the end of clause (ii);

10 (2) by striking the period at the end of clause

11 (iii) and inserting ‘‘; and’’; and

12 (3) by inserting after clause (iii) the following

13 new clause:

14 ‘‘(iv) inform each resident who is enti15 tled to benefits under this title, orally and

16 in writing at the time of admission to the

17 facility, of the entitlement of individuals to

18 hospice care under section 1812(a)(4) (un19 less there is no hospice program providing

20 hospice care for which payment may be

21 made under this title within the geographic

22 area of the facility and it is not the com23 mon practice of the facility to refer pa24 tients to hospice programs located outside

25 such geographic area).’’.
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to services furnished on or after

3 the first day of the first month beginning more than one

4 year after the date of the enactment of this Act.

5 SEC. 13427. REDUCTION IN PART A PREMIUM FOR CERTAIN

6 INDIVIDUALS WITH 30 OR MORE QUARTERS

7 OF SOCIAL SECURITY COVERAGE.

8 (a) IN GENERAL.—Section 1818(d) (42 U.S.C.

9 1395i–2(d)) is amended—

10 (1) in the second sentence of paragraph (2), by

11 striking ‘‘Such amount’’ and inserting ‘‘Subject to

12 paragraph (4), the amount of an individual’s month13 ly premium under this section’’; and

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

15 paragraph:

16 ‘‘(4)(A) In the case of an individual described in sub17 paragraph (B), the monthly premium for a month shall

18 be reduced by the applicable reduction percent specified

19 in the following table:

The applicable reduction

‘‘For a month in: percent is:

1994 ......................................................................................... 25 percent

1995 ......................................................................................... 30 percent

1996 ......................................................................................... 35 percent

1997 ......................................................................................... 40 percent

1998 or subsequent year .......................................................... 45 percent.

20 ‘‘(B) An individual described in this subparagraph

21 with respect to a month is an individual who establishes
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1 to the satisfaction of the Secretary that, as of the last

2 day of the previous month, the individual—

3 ‘‘(i) had at least 30 quarters of coverage under

4 title II;

5 ‘‘(ii) was married (and had been married for

6 the previous 1 year period) to an individual who had

7 at least 30 quarters of coverage under such title;

8 ‘‘(iii) had been married to an individual for a

9 period of at least 1 year (at the time of the individ10 ual’s death) if at such time the individual had at

11 least 30 quarters of coverage under such title; and

12 ‘‘(iv) is divorced from an individual and had

13 been married to the individual for a period of at

14 least 10 years (at the time of the divorce) if at such

15 time the individual had at least 30 quarters of cov16 erage under such title.’’.

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

18 this section shall apply to monthly premiums under section

19 1818 of the Social Security Act for months beginning with

20 January 1, 1994.
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1 SEC. 13428. PERIODIC UPDATES TO SALARY EQUIVALENCY

2 GUIDELINES FOR PHYSICAL THERAPY AND

3 RESPIRATORY THERAPY SERVICES.

4 (a) IN GENERAL.—Section 1861(v)(5) (42 U.S.C.

5 1395x(v)(5)) is amended by adding at the end the follow6 ing new subparagraph:

7 ‘‘(C) Using the most recent available data, the Sec8 retary shall update, not less often than every 3 years, the

9 salary equivalency guidelines used under subparagraph

10 (A) with respect to physical therapy and respiratory ther11 apy services.’’.

12 (b) EFFECTIVE DATE.—The Secretary of Health and

13 Human Services shall first update the salary equivalency

14 guidelines, under the amendment made by subsection (a),

15 by not later than December 31, 1993. Such updated

16 guidelines shall apply to cost reporting periods beginning

17 on or after July 1, 1993.

18 SEC. 13429. EXTENSION OF DEADLINE FOR APPLICATION

19 FOR GEOGRAPHIC CLASSIFICATION FOR CER20 TAIN RECLASSIFIED HOSPITALS.

21 Notwithstanding section 1886(d)(10)(C)(ii) of the

22 Social Security Act, a hospital may submit an application

23 to the Medicare Geographic Classification Review Board

24 requesting a change in geographic classification for fiscal

25 year 1994 after the first day of fiscal year 1993 if—
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1 (1) the hospital’s geographic classification for

2 fiscal year 1994 was changed from urban to rural as

3 a result of the issuance of the Revised Statistical

4 Definitions for Metropolitan Areas established by

5 the Office of Management and Budget on December

6 28, 1992 (pursuant to OMB Bulletin No. 93-05);

7 and

8 (2) the hospital submits the application not

9 later than 60 days after the date of the enactment

10 of this Act.

11 SEC. 13430. CLARIFICATION OF DRG PAYMENT WINDOW EX12 PANSION; MISCELLANEOUS AND TECHNICAL

13 CORRECTIONS.

14 (a) CLARIFICATION OF DRG PAYMENT WINDOW EX15 PANSION.—The first sentence of section 1886(a)(4) (42

16 U.S.C. 1395ww(a)(4)) is further amended by striking

17 ‘‘and includes’’ and inserting ‘‘and (in the case of a sub18 section (d) hospital) includes’’.

19 (b) TECHNICAL CORRECTION RELATING TO RESI20 DENT ASSESSMENT IN NURSING HOMES.—Section

21 1819(b)(3)(C)(i)(I) (42 U.S.C. 1395i–3(b)(3)(C)(i)(I)) is

22 amended by striking ‘‘not later than’’ before ‘‘14 days’’.

23 (c) CLERICAL CORRECTIONS.—(1) Section

24 1814(i)(1)(C)(i) (42 U.S.C. 1395f(i)(1)(C)(i)) is amended

25 by striking ‘‘1990,,’’ and inserting ‘‘1990,’’.
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1 (2) Section 1816(f)(2)(A)(ii) (42 U.S.C.

2 1396h(f)(2)(A)(ii)) is amended by striking ‘‘such agency’’

3 and inserting ‘‘such agency’s’’.

4 (3) Section 1886(d)(1)(A)(iii) (42 U.S.C.

5 1395ww(d)(1)(A)(iii)) is amended by striking ‘‘, the sum

6 of’’ and inserting ‘‘is equal to the sum of’’.

7 CHAPTER 2—PROVISIONS RELATING TO

8 PART B

9 Subchapter A—Elimination of Inflation

10 Update

11 SEC. 13431. ELIMINATION OF INFLATION UPDATE FOR PHY12 SICIAN AND RELATED PROFESSIONAL SERV13 ICES.

14 (a) NO INCREASE IN INDEX.—Section 1848(d)(3)(A)

15 (42 U.S.C. 1395w–4(d)(3)(A)) is amended—

16 (1) in clause (i), by striking ‘‘clause (iii)’’ and

17 inserting ‘‘clauses (iii) and (iv)’’, and

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

19 clause:

20 ‘‘(iv) NO INCREASE IN INDEX FOR

21 1994 OR 1995.—In applying clause (i) for

22 services furnished on or after January 1,

23 1994, the percentage increase in the ap24 propriate update index for each of 1994

25 and 1995 shall be 0 per cent.’’.
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1 (b) NO INCREASE IN MEI FOR 1994 AND 1995.—

2 Section 1842(b)(4)(E) (42 U.S.C. 1395u(b)(4)(E)) is

3 amended by adding at the end the following new clause:

4 ‘‘(vi) For purposes of this part for items and services

5 furnished in 1994 or 1995, the percentage increase in the

6 MEI is 0 percent.’’.

7 SEC. 13432. ELIMINATION OF COST-OF-LIVING ADJUST8 MENTS FOR CERTAIN ITEMS AND SERVICES.

9 (a) CLINICAL LABORATORY SERVICES.—Section

10 1833(h)(2)(A)(ii) (42 U.S.C. 1395l(h)(2)(A)(ii)) is

11 amended—

12 (1) by striking ‘‘and’’ at the end of subclause

13 (II),

14 (2) by striking the period at the end of

15 subclause (III) and inserting ‘‘, and’’, and

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

17 subclause:

18 ‘‘(IV) the annual adjustment in the fee sched19 ules determined under clause (i) for each of the

20 years 1994 and 1995 shall be 0 percent.’’.

21 (b) DURABLE MEDICAL EQUIPMENT.—Section

22 1834(a)(14) (42 U.S.C. 1395m(a)(14)) is amended—

23 (1) in subparagraph (A), as amended by

24 13469(a), by striking ‘‘and’’ at the end;

25 (2) in subparagraph (B)—
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1 (A) by striking ‘‘a subsequent year’’ and

2 inserting ‘‘1993’’, and

3 (B) by striking ‘‘June of the previous

4 year.’’ and inserting ‘‘June 1992,’’; and

5 (3) by adding at the end the following new sub6 paragraphs:

7 ‘‘(C) for 1994 and 1995, no percentage

8 change, and

9 ‘‘(D) for a subsequent year, the percentage

10 increase in the consumer price index for all

11 urban consumers (U.S. city average) for the 12-

12 month period ending with June of the previous

13 year.’’.

14 (c) ORTHOTICS AND PROSTHETICS.—Section

15 1834(h)(4)(A) (42 U.S.C. 1395m(h)(4)(A)) is amended—

16 (1) in clause (i), by striking ‘‘and’’;

17 (2) in clause (ii), by striking ‘‘a subsequent

18 year’’ and inserting ‘‘1992 and 1993’’; and

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

20 clauses:

21 ‘‘(iii) for 1994 and 1995, 0 percent,

22 and

23 ‘‘(iv) for a subsequent year, the per24 centage increase in the consumer price

25 index for all urban consumers (United
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1 States city average) for the 12-month pe2 riod ending with June of the previous

3 year;’’.

4 (d) REASONABLE CHARGE LIMITS FOR ENTERAL

5 AND PARENTERAL NUTRIENTS, SUPPLIES AND EQUIP6 MENT.—In determining the amount of payment under

7 part B of title XVIII of the Social Security Act during

8 1994 and 1995, the charges determined to be reasonable

9 with respect to parenteral and enteral nutrients, supplies,

10 and equipment may not exceed the charges determined to

11 be reasonable with respect to such nutrients, supplies, and

12 equipment during 1993.

13 SEC. 13433. AMBULATORY SURGICAL CENTER SERVICES.

14 (a) ELIMINATION OF INFLATION UPDATE.—The Sec15 retary of Health and Human Services shall not provide

16 for any inflation update in the payment amounts under

17 subparagraphs (A) and (B) of section 1833(i)(2) of the

18 Social Security Act for fiscal year 1994 or for fiscal year

19 1995.

20 (b) CONFORMING AMENDMENT.—Section

21 1833(i)(2)(C) (42 U.S.C. 1395l(i)(2)(C)), as added by

22 section 13453(a)(2)(B), is amended by striking ‘‘fiscal

23 year 1995’’ and inserting ‘‘fiscal year 1996’’.
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1 SEC. 13434. OTHER ITEMS AND SERVICES UNDER PART B.

2 (a) RURAL HEALTH CLINIC SERVICES; FEDERALLY3 QUALIFIED HEALTH CENTER SERVICES; COMPREHEN4 SIVE OUTPATIENT REHABILITATION FACILITY SERV5 ICES.—In determining the amount of payment made for

6 rural health clinic services, Federally qualified health cen7 ter services, or comprehensive outpatient rehabilitation fa8 cility services furnished under part B of title XVIII of the

9 Social Security Act for services furnished on or after Jan10 uary 1, 1994, the Secretary of Health and Human Serv11 ices shall provide that any inflation update, in the applica12 ble limits used to determine the costs which are reasonable

13 and related to the cost of furnishing such services under

14 section 1833(a)(3) of such Act, that would otherwise have

15 applied for 1994 or for 1995 shall be deemed to be 0 per16 cent.

17 (b) DIALYSIS SERVICES.—In determining the amount

18 of payment made for dialysis services furnished under part

19 B of title XVIII of the Social Security Act on or after

20 January 1, 1994, the Secretary of Health and Human

21 Services shall provide that any inflation update, in the

22 payment amounts determined under section

23 1881(b)(2)(B) of such Act or the rates determined under

24 section 1881(b)(7) of such Act, that would otherwise have

25 applied for 1994 or for 1995 shall be deemed to be 0 per26 cent.
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1 (c) OTHER PART B ITEMS AND SERVICES.—In deter2 mining the amount of payment made for an item or service

3 furnished under part B of title XVIII of the Social Secu4 rity Act on or after January 1, 1994, other than an item

5 or service to which a preceding provision of (or amend6 ment made by) this subchapter applies, the Secretary of

7 Health and Human Services shall provide that any infla8 tion update in the fee schedule amount for the item or

9 service established under such part B of such title, or (if

10 applicable) any applicable limit used to determine the ac11 tual charge, reasonable charge, or reasonable cost for the

12 item or service under such part, that would otherwise have

13 applied for 1994 or for 1995 shall be deemed to be 0 per14 cent.

15 Subchapter B—Physicians’ Services

16 SEC. 13441. REINSTATING SEPARATE PAYMENT FOR THE

17 INTERPRETATION OF ELECTROCARDIO18 GRAMS (EKGS).

19 (a) IN GENERAL.—Paragraph (3) of section 1848(b)

20 (42 U.S.C. 1395w–4(b)) is amended to read as follows:

21 ‘‘(3) TREATMENT OF INTERPRETATION OF

22 ELECTROCARDIOGRAMS.—The Secretary—

23 ‘‘(A) shall make separate payment under

24 this section for the interpretation of electro25 cardiograms performed or ordered to be per-
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1 formed as part of or in conjunction with a visit

2 to or a consultation with a physician, and

3 ‘‘(B) shall adjust the relative values estab4 lished for visits and consultations under sub5 section (c) so as not to include relative value

6 units for interpretations of electrocardiograms

7 in the relative value for visits and consulta8 tions.’’.

9 (b) ASSURING BUDGET NEUTRALITY.—Section

10 1848(c)(2) (42 U.S.C. 1395w–4(c)(2)) is amended by add11 ing at the end the following new subparagraph:

12 ‘‘(E) BUDGET NEUTRALITY ADJUST13 MENTS.—The Secretary—

14 ‘‘(i) shall reduce the relative values

15 for all services (other than anesthesia serv16 ices) established under this paragraph

17 (and, in the case of anesthesia services, the

18 conversion factor established by the Sec19 retary for such services) by such percent20 age as the Secretary determines to be nec21 essary so that, beginning in 1996, the

22 amendment made by section 13441(a) of

23 the Omnibus Budget Reconciliation Act of

24 1993 would not result in expenditures

25 under this section that exceed the amount
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1 of such expenditures that would have been

2 made if such amendment had not been

3 made, and

4 ‘‘(ii) shall reduce the amounts deter5 mined under subsection (a)(2)(B)(i)(I) by

6 such percentage as the Secretary deter7 mines to be required to assure that, taking

8 into account the reductions made under

9 clause (i), the amendment made by section

10 13441(a) of the Omnibus Budget Rec11 onciliation Act of 1993 would not result in

12 expenditures under this section in 1993

13 that exceed the amount of such expendi14 tures that would have been made if such

15 amendment had not been made.’’.

16 (c) CONFORMING AMENDMENTS.—Section 1848 (42

17 U.S.C. 1395w–4) is amended—

18 (1) in subsection (a)(2)(B)(i)(I), by inserting

19 ‘‘and as adjusted under subsection (c)(2)(E)(ii)’’

20 after ‘‘for 1993’’;

21 (2) in subsection (c)(2)(A)(i), by adding at the

22 end the following: ‘‘Such relative values are subject

23 to adjustment under subparagraph (E)(i).’’; and
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1 (3) in subsection (i)(1)(B), by adding at the

2 end ‘‘including adjustments under subsection

3 (c)(2)(E),’’.

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

5 this section shall apply to services furnished on or after

6 January 1, 1994.

7 SEC. 13442. PAYMENTS FOR NEW PHYSICIANS AND PRACTI8 TIONERS.

9 (a) EQUAL TREATMENT OF NEW PHYSICIANS AND

10 PRACTITIONERS.—(1) Section 1848(a) (42 U.S.C.

11 1395w–4(a)) is amended by striking paragraph (4).

12 (2) Section 1842(b)(4) (42 U.S.C. 1395u(b)(4)) is

13 amended by striking subparagraph (F).

14 (b) BUDGET NEUTRALITY ADJUSTMENT.—Notwith15 standing any other provision of law, the Secretary of

16 Health and Human Services shall reduce the following val17 ues and amounts for 1993 (to be applied for that year

18 and subsequent years) by such uniform percentage as the

19 Secretary determines to be required to assure that the

20 amendments made by subsection (a) will not result in ex21 penditures under part B of title XVIII of the Social Secu22 rity Act in 1993 that exceed the amount of such expendi23 tures that would have been made if such amendments had

24 not been made:
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1 (1) The relative values established under section

2 1848(c) of such Act for services (other than anesthe3 sia services) and, in the case of anesthesia services,

4 the conversion factor established under section 1848

5 of such Act for such services.

6 (2) The amounts determined under section

7 1848(a)(2)(B)(i)(I) of such Act.

8 (3) The prevailing charges or fee schedule

9 amounts to be applied under such part for services

10 of a health care practitioner (as defined in section

11 1842(b)(4)(F)(ii)(I) of such Act, as in effect before

12 the date of the enactment of this Act).

13 (c) CONFORMING AMENDMENTS.—Section 1848 (42

14 U.S.C. 1395w–4), as amended by section 13441(c), is

15 amended—

16 (1) in subsection (a)(2)(B)(i)(I), by inserting

17 ‘‘and section 13442(b) of the Omnibus Budget Rec18 onciliation Act of 1993’’ after ‘‘(c)(2)(E)(ii)’’ after

19 ‘‘for 1993’’;

20 (2) in subsection (c)(2)(A)(i), by inserting ‘‘and

21 section 13442(b) of the Omnibus Budget Reconcili22 ation Act of 1993’’ after ‘‘under subparagraph

23 (E)(i)’’; and

24 (3) in subsection (i)(1)(B), by inserting ‘‘and

25 section 13442(b) of the Omnibus Budget Reconcili-
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1 ation Act of 1993’’ after ‘‘under subsection

2 (c)(2)(E)’’.

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

4 subsection (a) shall apply to services furnished on or after

5 January 1, 1994.

6 SEC. 13443. RETAINING PAYMENT FOR ACTUAL ANESTHE7 SIA TIME.

8 (a) PHYSICIANS’ SERVICES.—Section 1848(b)(2)(B)

9 (42 U.S.C. 1395w–4(b)(2)(B)) is amended by adding at

10 the end the following: ‘‘The Secretary may not modify the

11 methodology in effect as of January 1, 1992, for determin12 ing the amount of time that may be billed for such services

13 under this section.’’.

14 (b) SERVICES OF CERTIFIED REGISTERED NURSE

15 ANESTHETISTS.—Section 1833(l)(1)(B) (42 U.S.C.

16 1395l(l)(1)(B)) is amended by adding at the end the fol17 lowing: ‘‘The Secretary may not modify the methodology

18 in effect as of January 1, 1992, for determining the

19 amount of time that may be billed for such services under

20 this section.’’.

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

22 this section shall take apply to services furnished on or

23 after the date of the enactment of this Act.
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1 SEC. 13444. GEOGRAPHIC COST OF PRACTICE INDEX RE2 FINEMENTS.

3 (a) REQUIRING CONSULTATION WITH REPRESENTA4 TIVES OF PHYSICIANS IN REVIEWING GEOGRAPHIC AD5 JUSTMENT FACTORS.—Section 1848(e)(1)(C) (42 U.S.C.

6 1395w–4(e)(1)(C)) is amended by striking ‘‘shall review’’

7 and inserting ‘‘shall, in consultation with appropriate rep8 resentatives of physicians, review’’.

9 (b) USE OF MOST RECENT DATA IN GEOGRAPHIC

10 ADJUSTMENT.—Section 1848(e)(1) (42 U.S.C. 1395w–

11 4(e)(1)) is amended by adding at the end the following

12 new subparagraph:

13 ‘‘(D) USE OF RECENT DATA.—In estab14 lishing indices and index values under this

15 paragraph, the Secretary shall use the most re16 cent data available relating to practice ex17 penses, malpractice expenses, and physician

18 work effort in different fee schedule areas.’’.

19 (c) DEADLINE FOR INITIAL REVIEW AND REVI20 SION.—The Secretary of Health and Human Services

21 shall first review and revise geographic adjustment factors

22 under section 1848(e)(1)(C) of the Social Security Act by

23 not later than January 1, 1995. Not later than April 1,

24 1994, the Secretary shall study and report to the Commit25 tee on Finance of the Senate and the Committee on Ways

26 and Means and the Committee on Energy and Commerce
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1 of the House of Representatives on the construction of the

2 geographic cost of practice index under section

3 1848(e)(1)(A)(i) of such Act.

4 (d) REPORT ON REVIEW PROCESS.—Not later than

5 1 year after the date of the enactment of this Act, the

6 Secretary of Health and Human Services shall study and

7 report to the Committee on Finance of the Senate and

8 the Committee on Ways and Means and the Committee

9 on Energy and Commerce of the House of Representatives

10 on—

11 (1) the data necessary to review and revise the

12 indices established under section 1848(e)(1)(A) of

13 the Social Security Act, including—

14 (A) the shares allocated to physicians’

15 work effort, practice expenses (other than mal16 practice expenses), and malpractice expenses;

17 (B) the weights assigned to the input com18 ponents of such shares; and

19 (C) the index values assigned to such com20 ponents;

21 (2) any limitations on the availability of data

22 necessary to review and revise such indices at least

23 every three years;

24 (3) ways of addressing such limitations, with

25 particular attention to the development of alternative
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1 data sources for input components for which current

2 index values are based on data collected less fre3 quently than every three years; and

4 (4) the costs of developing more accurate and

5 timely data.

6 (e) DEVELOPMENT OF CRITERIA FOR USE IN DE7 TERMINING PAYMENT LOCALITIES.—The Physician Pay8 ment Review Commission shall conduct a study to develop

9 criteria that would be used to refine the fee schedule areas

10 that are used within States, in applying geographic adjust11 ment factors for computing payment amounts, under sec12 tion 1848 of the Social Security Act. The Commission

13 shall include a report on such study in its recommenda14 tions submitted to the Congress under section 1845(b) of

15 such Act in 1994.

16 SEC. 13445. EXTRA-BILLING.

17 (a) ENFORCEMENT AND UNIFORM APPLICATION.—

18 (1) ENFORCEMENT.—Paragraph (1) of section

19 1848(g) (42 U.S.C. 1395w–4(g)) is amended to read

20 as follows:

21 ‘‘(1) LIMITATION ON ACTUAL CHARGES.—

22 ‘‘(A) IN GENERAL.—In the case of a

23 nonparticipating physician or nonparticipating

24 supplier or other person (as defined in section

25 1842(i)(2)) who does not accept payment on an
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1 assignment-related basis for a physician’s serv2 ice furnished with respect to an individual en3 rolled under this part, the following rules apply:

4 ‘‘(i) APPLICATION OF LIMITING

5 CHARGE.—No person may bill or collect an

6 actual charge for the service in excess of

7 the limiting charge described in paragraph

8 (2) for such service.

9 ‘‘(ii) NO LIABILITY FOR EXCESS

10 CHARGES.—No person is liable for pay11 ment of any amounts billed for the service

12 in excess of such limiting charge.

13 ‘‘(iii) CORRECTION OF EXCESS

14 CHARGES.—If such a physician, supplier,

15 or other person bills, but does not collect,

16 an actual charge for a service in violation

17 of clause (i), the physician, supplier, or

18 other person shall reduce on a timely basis

19 the actual charge billed for the service to

20 an amount not to exceed the limiting

21 charge for the service.

22 ‘‘(iv) REFUND OF EXCESS COLLEC23 TIONS.—If such a physician, supplier, or

24 other person collects an actual charge for

25 a service in violation of clause (i), the phy-
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1 sician, supplier, or other person shall pro2 vide on a timely basis a refund to the indi3 vidual charged in the amount by which the

4 amount collected exceeded the limiting

5 charge for the service. The amount of such

6 a refund shall be reduced to the extent the

7 individual has an outstanding balance owed

8 by the individual to the physician.

9 ‘‘(B) SANCTIONS.—If a physician, supplier,

10 or other person—

11 ‘‘(i) knowingly and willfully bills or

12 collects for services in violation of subpara13 graph (A)(i) on a repeated basis, or

14 ‘‘(ii) fails to comply with clause (iii)

15 or (iv) of subparagraph (A) on a timely

16 basis,

17 the Secretary may apply sanctions against the

18 physician, supplier, or other person in accord19 ance with paragraph (2) of section 1842(j). In

20 applying this subparagraph, paragraph (4) of

21 such section applies in the same manner as

22 such paragraph applies to such section and any

23 reference in such section to a physician is

24 deemed also to include a reference to a supplier

25 or other person under this subparagraph.
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1 ‘‘(C) TIMELY BASIS.—For purposes of this

2 paragraph, a correction of a bill for an excess

3 charge or refund of an amount with respect to

4 a violation of subparagraph (A)(i) in the case of

5 a service is considered to be provided ‘on a

6 timely basis’, if the reduction or refund is made

7 not later than 30 days after the date the physi8 cian, supplier, or other person is notified by the

9 carrier under this part of such violation and of

10 the requirements of subparagraph (A).’’.

11 (2) UNIFORM APPLICATION OF EXTRA-BILLING

12 LIMITS TO PHYSICIANS’ SERVICES.—

13 (A) IN GENERAL.—Section 1848(g)(2)(C)

14 (42 U.S.C. 1395w–4(g)(2)(C)) is amended by

15 inserting ‘‘or for nonparticipating suppliers or

16 other persons’’ after ‘‘nonparticipating physi17 cians’’.

18 (B) CONFORMING DEFINITION.—Section

19 1842(i)(2) (42 U.S.C. 1395u(i)(2)) is amend20 ed—

21 (i) by striking ‘‘, and the term’’ and

22 inserting ‘‘; the term’’, and

23 (ii) by inserting before the period at

24 the end the following: ‘‘; and the term

25 ‘nonparticipating supplier or other person’
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1 means a supplier or other person (exclud2 ing a provider of services) that is not a

3 participating physician or supplier (as de4 fined in subsection (h)(1))’’.

5 (b) PRE-PAYMENT SCREENING OF CLAIMS.—Sub6 paragraph (G) of section 1842(b)(3) (42 U.S.C.

7 1395u(b)(3)) is amended to read as follows:

8 ‘‘(G) will, for a service that is furnished with

9 respect to an individual enrolled under this part,

10 that is not paid on an assignment-related basis, and

11 that is subject to a limiting charge under section

12 1848(g)—

13 ‘‘(i) determine, prior to making payment,

14 whether the amount billed for such service ex15 ceeds the limiting charge applicable under sec16 tion 1848(g)(2);

17 ‘‘(ii) notify the physician, supplier, or other

18 person periodically (but not less often than once

19 every 30 days) of determinations that amounts

20 billed exceeded such applicable limiting charges;

21 and

22 ‘‘(iii) provide for prompt response to in23 quiries of physicians, suppliers, and other per24 sons concerning the accuracy of such limiting

25 charges for their services;’’.
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1 (c) INFORMATION ON EXTRA-BILLING LIMITS.—

2 (1) PART OF EXPLANATION OF MEDICARE BEN3 EFITS.—Section 1842(h)(7) (42 U.S.C.

4 1395u(h)(7)) is amended—

5 (A) by striking ‘‘and’’ at the end of sub6 paragraph (B),

7 (B) in subparagraph (C), by striking ‘‘shall

8 include’’ and by striking the period at the end

9 and inserting ‘‘, and’’, and

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

11 subparagraph:

12 ‘‘(D) in the case of services for which the billed

13 amount exceeds the limiting charge imposed under

14 section 1848(g), information regarding such applica15 ble limiting charge (including information concern16 ing the right to a refund under section

17 1848(g)(1)(A)(iv)).’’.

18 (2) REPORT ON CHARGES IN EXCESS OF LIMIT19 ING CHARGE.—Section 1848(g)(6)(B) (42 U.S.C.

20 1395w–4(g)(6)(B)) is amended by inserting ‘‘the ex21 tent to which actual charges exceed limiting charges,

22 the number and types of services involved, and the

23 average amount of excess charges and’’ after ‘‘report

24 to the Congress’’.
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1 (d) APPLYING THE LIMITING CHARGE TO

2 NONPHYSICIAN SERVICES PROVIDED UNDER THE PHYSI3 CIAN FEE SCHEDULE.—Section 1848 (42 U.S.C. 1395w–

4 4) is amended—

5 (1) in subsection (a)(3), by inserting ‘‘AND SUP6 PLIERS’’ after ‘‘PHYSICIANS’’, and by inserting ‘‘or a

7 nonparticipating supplier or other person’’ after

8 ‘‘nonparticipating physician’’ and by adding at the

9 end the following: ‘‘In the case of physicians’ serv10 ices (including services which the Secretary excludes

11 pursuant to subsection (j)(3)) of a nonparticipating

12 physician, supplier, or other person for which pay13 ment is made under this part on a basis other than

14 the fee schedule amount, the payment shall be based

15 on 95 percent of the payment basis for such services

16 furnished by a participating physician, supplier, or

17 other person.’’;

18 (2) in subsection (g)(1)(A), as amended by sub19 section (a), in the matter before clause (i), by insert20 ing ‘‘(including services which the Secretary excludes

21 pursuant to subsection (j)(3))’’ after ‘‘a physician’s

22 service’’;

23 (3) in subsection (g)(2)(D), by inserting ‘‘(or, if

24 payment under this part is made on a basis other
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1 than the fee schedule under this section, 95 percent

2 of the other payment basis)’’ after ‘‘subsection (a)’’;

3 (4) in subsection (g)(3)(B)—

4 (A) by inserting after the first sentence the

5 following: ‘‘ No person is liable for payment of

6 any amounts billed for such a service in viola7 tion of the previous sentence.’’, and

8 (B) in the last sentence, by striking ‘‘pre9 vious sentence’’ and inserting ‘‘first sentence’’;

10 (5) in subsection (h)—

11 (A) by inserting ‘‘or nonparticipating sup12 plier or other person furnishing physicians’

13 services (as defined in section 1848(j)(3))’’

14 after ‘‘physician’’ the first place it appears,

15 (B) by inserting ‘‘, supplier, or other per16 son’’ after ‘‘physician’’ the second place it ap17 pears, and

18 (C) by inserting ‘‘, suppliers, and other

19 persons’’ after ‘‘physicians’’ the second place it

20 appears; and

21 (6) in subsection (j)(3), by inserting ‘‘, except

22 for purposes of subsections (a)(3), (g), and (h)’’

23 after ‘‘tests and’’.

24 (e) CLARIFICATION OF MANDATORY ASSIGNMENT

25 RULES FOR CERTAIN PRACTITIONERS.—
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1 (1) IN GENERAL.—Section 1842(b) (42 U.S.C.

2 1395u(b)) is amended by adding at the end the fol3 lowing new paragraph:

4 ‘‘(19)(A) Payment for any service furnished by a

5 practitioner described in subparagraph (C) and for which

6 payment may be made under this part on a reasonable

7 charge or fee schedule basis may only be made under this

8 part on an assignment-related basis.

9 ‘‘(B) A practitioner described in subparagraph (C) or

10 other person may not bill (or collect any amount from)

11 the individual or another person for any service described

12 in subparagraph (A), except for deductible and coinsur13 ance amounts applicable under this part. No person is lia14 ble for payment of any amounts billed for such a service

15 in violation of the previous sentence. If a practitioner or

16 other person knowingly and willfully bills (or collects an

17 amount) for such a service in violation of such sentence,

18 the Secretary may apply sanctions against the practitioner

19 or other person in the same manner as the Secretary may

20 apply sanctions against a physician in accordance with

21 section 1842(j)(2) in the same manner as such section ap22 plies with respect to a physician. Paragraph (4) of section

23 1842(j) shall apply in this subparagraph in the same man24 ner as such paragraph applies to such section.
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1 ‘‘(C) A practitioner described in this subparagraph

2 is any of the following:

3 ‘‘(i) A physician assistant, nurse practitioner, or

4 clinical nurse specialist (as defined in section

5 1861(aa)(5)).

6 ‘‘(ii) A certified registered nurse anesthetist (as

7 defined in section 1861(bb)(2)).

8 ‘‘(iii) A certified nurse-midwife (as defined in

9 section 1861(gg)(2)).

10 ‘‘(iv) A clinical social worker (as defined in sec11 tion 1861(hh)(1)).

12 ‘‘(v) A clinical psychologist (as defined by the

13 Secretary for purposes of section 1861(ii)).

14 ‘‘(D) For purposes of this paragraph, a service fur15 nished by a practitioner described in subparagraph (C) in16 cludes any services and supplies furnished as incident to

17 the service as would otherwise be covered under this part

18 if furnished by a physician or as incident to a physician’s

19 service.’’.

20 (2) CONFORMING AMENDMENTS.—

21 (A) Section 1833 (42 U.S.C. 1395l) is

22 amended—

23 (i) in subsection (l)(5), by striking

24 subparagraph (B) and redesignating sub25 paragraph (C) as subparagraph (B);
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1 (ii) by striking subsection (p); and

2 (iii) in subsection (r), by striking

3 paragraph (3) and redesignating para4 graph (4) as paragraph (3).

5 (B) Section 1842(b)(12) (42 U.S.C.

6 1395u(b)(12)) is amended by striking subpara7 graph (C).

8 (f) MISCELLANEOUS AND TECHNICAL AMEND9 MENTS.—Section 1833 (42 U.S.C. 1395l) is amended—

10 (1) in subsection (a)(1), as amended by section

11 13479(e)(2)—

12 (A) by striking ‘‘and’’ before ‘‘(O)’’, and

13 (B) by inserting before the semicolon at

14 the end the following: ‘‘, and (P) with respect

15 to services described in clauses (i), (ii) and (iv)

16 of section 1861(s)(2)(K), the amounts paid are

17 subject to the provisions of section

18 1842(b)(12)’’; and

19 (2) in subsection (h)(5)(D)—

20 (A) by striking ‘‘paragraphs (2) and (3)’’

21 and by inserting ‘‘paragraph (2)’’, and

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

23 ‘‘Paragraph (4) of such section shall apply in

24 this subparagraph in the same manner as such

25 paragraph applies to such section.’’.
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1 (g) EFFECTIVE DATES.—

2 (1) ENFORCEMENT AND UNIFORM APPLICA3 TION; MISCELLANEOUS AND TECHNICAL AMEND4 MENTS.—The amendments made by subsections (a),

5 (d), and (f) shall apply to services furnished on or

6 after the date of the enactment of this Act; except

7 that such amendments made by subsections (a) and

8 (d) shall not apply to services of a nonparticipating

9 supplier or other person furnished before January 1,

10 1994.

11 (2) CARRIER DETERMINATIONS.—The amend12 ments made by subsection (b) shall apply to con13 tracts as of January 1, 1994.

14 (3) EOMBS.—The amendments made by sub15 section (c)(1) shall apply to explanations of benefits

16 provided on or after January 1, 1994.

17 (4) REPORT.—The amendment made by sub18 section (c)(2) shall apply to reports for years begin19 ning with 1994.

20 (5) PRACTITIONERS.—The amendments made

21 by subsection (e) shall apply to services furnished on

22 or after January 1, 1994.

23 SEC. 13446. RELATIVE VALUES FOR PEDIATRIC SERVICES.

24 (a) IN GENERAL.—The Secretary of Health and

25 Human Services shall fully develop, by not later than July
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1 1, 1994, relative values for the full range of pediatric phy2 sicians’ services which are consistent with the relative val3 ues developed for other physicians’ services under section

4 1848(c) of the Social Security Act. In developing such val5 ues, the Secretary shall conduct such refinements as may

6 be necessary to produce appropriate estimates for such rel7 ative values.

8 (b) STUDY.—

9 (1) IN GENERAL.—The Secretary shall conduct

10 a study of the relative values for pediatric and other

11 services to determine whether there are significant

12 variations in the resources used in providing similar

13 services to different populations. In conducting such

14 study, the Secretary shall consult with appropriate

15 organizations representing pediatricians and other

16 physicians.

17 (2) REPORT.—Not later than July 1, 1994, the

18 Secretary shall submit to Congress a report on the

19 study conducted under paragraph (1). Such report

20 shall include any appropriate recommendations re21 garding needed changes in coding or other payment

22 policies to ensure that payments for pediatric serv23 ices appropriately reflect the resources required to

24 provide these services.
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1 SEC. 13447. ANTIGENS UNDER PHYSICIAN FEE SCHEDULE.

2 (a) IN GENERAL.—Section 1848(j)(3) (42 U.S.C.

3 1395w–4(j)(3)) is amended by inserting ‘‘(2)(G),’’ after

4 ‘‘(2)(D),’’.

5 (b) EFFECTIVE DATE.—The amendment made by

6 subsection (a) shall apply to services furnished on or after

7 January 1, 1995.

8 SEC. 13448. ADMINISTRATION OF CLAIMS RELATING TO

9 PHYSICIANS’ SERVICES.

10 (a) LIMITATION ON CARRIER USER FEES.—Section

11 1842(c) (42 U.S.C. 1395u(c)) is amended by adding at

12 the end the following new paragraph:

13 ‘‘(4) Neither a carrier nor the Secretary may impose

14 a fee under this title—

15 ‘‘(A) for the filing of claims related to physi16 cians’ services,

17 ‘‘(B) for an error in filing a claim relating to

18 physicians’ services or for such a claim which is de19 nied,

20 ‘‘(C) for any appeal under this title with respect

21 to physicians’ services,

22 ‘‘(D) for applying for (or obtaining) a unique

23 identifier under subsection (r), or

24 ‘‘(E) for responding to inquiries respecting phy25 sicians’ services or for providing information with re26 spect to medical review of such services.’’.
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1 (b) CLARIFICATION OF PERMISSIBLE SUBSTITUTE

2 BILLING ARRANGEMENTS.—

3 (1) IN GENERAL.—Clause (D) of section

4 1842(b)(6) (42 U.S.C. 1395u(b)(6)), as amended by

5 section 13449(f), is amended to read as follows:

6 ‘‘(D) payment may be made to a physician for physi7 cians’ services (and services furnished incident to

8 such services) furnished by a second physician to pa9 tients of the first physician if (i) the first physician

10 is unavailable to provide the services; (ii) the services

11 are furnished pursuant to an arrangement between

12 the two physicians that (I) is informal and recip13 rocal, or (II) involves per diem or other fee-for-time

14 compensation for such services; (iii) the services are

15 not provided by the second physician over a continu16 ous period of more than 60 days; and (iv) the claim

17 form submitted to the carrier for such services in18 cludes the second physician’s unique identifier (pro19 vided under the system established under subsection

20 (r)) and indicates that the claim meets the require21 ments of this clause for payment to the first physi22 cian’’.

23 (2) EFFECTIVE DATE.—The amendment made

24 by paragraph (1) shall apply to services furnished on

25 or after the first day of the first month beginning
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1 more than 60 days after the date of the enactment

2 of this Act.

3 SEC. 13449. MISCELLANEOUS AND TECHNICAL CORREC4 TIONS.

5 (a) OVERVALUED PROCEDURES (SECTION 4101 OF

6 OBRA–1990).—(1) Section 1842(b)(16)(B)(iii) (42

7 U.S.C. 1395u(b)(16)(B)(iii)) is amended—

8 (A) by striking ‘‘, simple and subcutaneous’’,

9 (B) by striking ‘‘; small’’ and inserting ‘‘and

10 small’’,

11 (C) by striking ‘‘treatments;’’ the first place it

12 appears and inserting ‘‘and’’,

13 (D) by striking ‘‘lobectomy;’’,

14 (E) by striking ‘‘enterectomy; colectomy; chole15 cystectomy;’’,

16 (F) by striking ‘‘; transurerethral resection’’

17 and inserting ‘‘and resection’’, and

18 (G) by striking ‘‘sacral laminectomy;’’.

19 (2) Section 4101(b)(2) of OBRA–1990 is amended—

20 (A) in the matter before subparagraph (A), by

21 striking ‘‘1842(b)(16)’’ and inserting

22 ‘‘1842(b)(16)(B)’’, and

23 (B) in subparagraph (B)—

24 (i) by striking ‘‘, simple and subcutane25 ous’’,
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1 (ii) by striking ‘‘(HCPCS codes 19160 and

2 19162)’’ and inserting ‘‘(HCPCS code 19160)’’,

3 and

4 (iii) by striking all that follows ‘‘(HCPCS

5 codes 92250’’ and inserting ‘‘and 92260).’’.

6 (b) RADIOLOGY SERVICES (SECTION 4102 OF

7 OBRA–1990).—(1) Section 1834(b)(4) (42 U.S.C.

8 1395m(b)(4)) is amended by redesignating subparagraphs

9 (E) and (F) as subparagraphs (F) and (G), respectively.

10 (2) Section 1834(b)(4)(D) (42 U.S.C.

11 1395m(b)(4)(D)) is amended—

12 (A) in the matter before clause (i), by striking

13 ‘‘shall be determined as follows:’’ and inserting

14 ‘‘shall, subject to clause (vii), be reduced to the ad15 justed conversion factor for the locality determined

16 as follows:’’,

17 (B) in clause (iv), by striking ‘‘LOCAL ADJUST18 MENT.—Subject to clause (vii), the conversion factor

19 to be applied to’’ and inserting ‘‘ADJUSTED CONVER20 SION FACTOR.—The adjusted conversion factor for’’,

21 (C) in clause (vii), by striking ‘‘under this sub22 paragraph’’, and

23 (D) in clause (vii), by inserting ‘‘reduced under

24 this subparagraph by’’ after ‘‘shall not be’’.
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1 (3) Section 4102(c)(2) of OBRA–1990 is amended

2 by striking ‘‘radiology services’’ and all that follows and

3 inserting ‘‘nuclear medicine services’’.

4 (4) Section 4102(d) of OBRA–1990 is amended by

5 striking ‘‘new paragraph’’ and inserting ‘‘new subpara6 graph’’.

7 (5) Section 1834(b)(4)(E) (42 U.S.C.

8 1395m(b)(4)(E)) is amended by inserting ‘‘RULE FOR

9 CERTAIN SCANNING SERVICES.—’’ after ‘‘(E)’’.

10 (6) Section 1848(a)(2)(D)(iii) (42 U.S.C. 1395w–

11 4(a)(2)(D)(iii)) is amended by striking ‘‘that are subject

12 to section 6105(b) of the Omnibus Budget Reconciliation

13 Act of 1989’’ and by striking ‘‘provided under such sec14 tion’’ and inserting ‘‘provided under section 6105(b) of the

15 Omnibus Budget Reconciliation Act of 1989’’.

16 (c) ANESTHESIA SERVICES (SECTION 4103 OF

17 OBRA–1990).—(1) Section 4103(a) of OBRA–1990 is

18 amended by striking ‘‘REDUCTION IN FEE SCHEDULE’’

19 and inserting ‘‘REDUCTION IN PREVAILING CHARGES’’.

20 (2) Section 1842(q)(1)(B) (42 U.S.C.

21 1395u(q)(1)(B)) is amended—

22 (A) in the matter before clause (i), by striking

23 ‘‘shall be determined as follows:’’ and inserting

24 ‘‘shall, subject to clause (iv), be reduced to the ad-
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1 justed prevailing charge conversion factor for the lo2 cality determined as follows:’’, and

3 (B) in clause (iii), by striking ‘‘Subject to

4 clause (iv), the prevailing charge conversion factor to

5 be applied in’’ and inserting ‘‘The adjusted prevail6 ing charge conversion factor for’’.

7 (d) ASSISTANTS AT SURGERY (SECTION 4107 OF

8 OBRA–1990).—(1) Section 4107(c) of OBRA–1990 is

9 amended by inserting ‘‘(a)(1)’’ after ‘‘subsection’’.

10 (2) Section 4107(a)(2) of OBRA–1990 is amended

11 by adding at the end the following: ‘‘In applying section

12 1848(g)(2)(D) of the Social Security Act for services of

13 an assistant-at-surgery furnished during 1991, the recog14 nized payment amount shall not exceed the maximum

15 amount specified under section 1848(i)(2)(A) of such Act

16 (as applied under this paragraph in such year).’’.

17 (e) TECHNICAL COMPONENTS OF DIAGNOSTIC SERV18 ICES (SECTION 4108 OF OBRA–1990).—Section 1842(b)

19 (42 U.S.C. 1395u(b)) is amended by redesignating para20 graph (18), as added by section 4108(a) of OBRA–1990,

21 as paragraph (17) and, in such paragraph, by inserting

22 ‘‘, tests specified in paragraph (14)(C)(i),’’ after ‘‘diag23 nostic laboratory tests’’.
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1 (f) RECIPROCAL BILLING ARRANGEMENTS (SECTION

2 4110 OF OBRA–1990).—Section 1842(b)(6)(D) (42

3 U.S.C. 1395u(b)(6)(D)) is amended—

4 (1) by striking ‘‘visit services (including emer5 gency visits and related services)’’ and inserting

6 ‘‘physicians’ services (and services furnished incident

7 to such services)’’;

8 (2) by striking ‘‘on an occasional, reciprocal

9 basis’’ and inserting ‘‘under an arrangement that is

10 informal and reciprocal or involves per diem or other

11 fee-for-time compensation for services’’;

12 (3) by striking ‘‘visit’’ in subclauses (i), (ii),

13 and (iv); and

14 (4) in subclause (iii), by striking ‘‘the claim’’

15 and all that follows through the comma at the end

16 and inserting ‘‘the claim meets the requirements of

17 this clause for payment to the first physician’’.

18 (g) STUDY OF AGGREGATION RULE FOR CLAIMS OF

19 SIMILAR PHYSICIAN SERVICES (SECTION 4113 OF

20 OBRA–1990).—Section 4113 of OBRA–1990 is amend21 ed—

22 (1) by inserting ‘‘of the Social Security Act’’

23 after ‘‘1869(b)(2)’’; and

24 (2) by striking ‘‘December 31, 1992’’ and in25 serting ‘‘December 31, 1993’’.
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1 (h) STATEWIDE FEE SCHEDULES (SECTION 4117 OF

2 OBRA–1990).—Section 4117 of OBRA–1990 is amend3 ed—

4 (1) in subsection (a)—

5 (A) by striking ‘‘IN GENERAL.—’’, and

6 (B) by striking ‘‘, if the’’ and all that fol7 lows through ‘‘1991, ’’; and

8 (2) by striking subsections (b), (c), and (d).

9 (i) OTHER MISCELLANEOUS AND TECHNICAL

10 AMENDMENTS.—(1) The heading of section 1834(f) (42

11 U.S.C. 1395m(f)) is amended by striking ‘‘FISCAL YEAR’’.

12 (2)(A) Section 4105(b) of OBRA–1990 is amended—

13 (i) in paragraph (2), by striking ‘‘amendments’’

14 and inserting ‘‘amendment’’, and

15 (ii) in paragraph (3), by striking ‘‘amendments

16 made by paragraphs (1) and (2)’’ and inserting

17 ‘‘amendment made by paragraph (1)’’.

18 (B) Section 1848(f)(2)(C) (42 U.S.C. 1395w–

19 4(f)(2)(C)) is amended by inserting ‘‘PERFORMANCE

20 STANDARD RATES OF INCREASE FOR FISCAL YEAR 1991.—

21 ’’ after ‘‘(C)’’.

22 (C) Section 4105(d) of OBRA–1990 is amended by

23 inserting ‘‘PUBLICATION OF PERFORMANCE STANDARD

24 RATES.—’’ after ‘‘(d)’’.
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1 (3) Section 1842(b)(4)(F) (42 U.S.C.

2 1395u(b)(4)(F)) is amended—

3 (A) in clause (i), by striking ‘‘prevailing

4 charge’’ the first place it appears and inserting

5 ‘‘customary charge’’; and

6 (B) in clause (ii)(III), by striking ‘‘second,

7 third, and fourth’’ and inserting ‘‘first, second, and

8 third’’.

9 (4) Section 1842(b)(4)(F)(ii)(I) (42 U.S.C.

10 1395u(b)(4)(F)(ii)(I)) is amended by striking ‘‘respiratory

11 therapist,’’.

12 (5) Section 4106(c) of OBRA–1990 is amended by

13 inserting ‘‘of the Social Security Act’’ after

14 ‘‘1848(d)(1)(B)’’.

15 (6) Section 4114 of OBRA–1990 is amended by

16 striking ‘‘patients’’ the second place it appears.

17 (7) Section 1848(e)(1)(C) (42 U.S.C. 1395w–

18 4(e)(1)(C)) is amended by inserting ‘‘date of the’’ after

19 ‘‘since the’’.

20 (8) Section 4118(f)(1)(D) of OBRA–1990 is amend21 ed by striking ‘‘is amended’’.

22 (9) Section 4118(f)(1)(N)(ii) of OBRA–1990 is

23 amended by striking ‘‘subsection (f)(5)(A)’’ and inserting

24 ‘‘subsection (f)(5)(A))’’.
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1 (10) Section 1845(e) (42 U.S.C. 1395w–1(e)) is

2 amended—

3 (A) by striking paragraph (2); and

4 (B) by redesignating paragraphs (3), (4), and

5 (5) as paragraphs (2), (3), and (4).

6 (11) Section 4118(j)(2) of OBRA–1990 is amended

7 by striking ‘‘In section’’ and inserting ‘‘Section’’.

8 (12)(A) Section 1848(i)(3) (42 U.S.C. 1395w–

9 4(i)(3)) is amended by striking the space before the period

10 at the end.

11 (B) Section 1834(a)(10)(B) (42 U.S.C.

12 1395m(a)(10)(B)) is amended—

13 (i) by striking ‘‘apply to’’ and inserting ‘‘would

14 otherwise apply to’’, and

15 (ii) by inserting before the period at the end

16 ‘‘but for the application of section 1848(i)(3)’’.

17 (j) EFFECTIVE DATE.—The amendments made by

18 this section and the provisions of this section shall take

19 effect as if included in the enactment of OBRA–1990.

20 Subchapter C—Ambulatory Surgical Center

21 Services

22 SEC. 13451. DESIGNATION OF CERTAIN HOSPITALS AS EYE

23 OR EYE AND EAR HOSPITALS.

24 (a) IN GENERAL.—Section 1833(i) (42 U.S.C.

25 1395l(i)) is amended—
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1 (1) in subparagraph (B)(ii)—

2 (A) by striking ‘‘the last sentence of this

3 clause’’ and inserting ‘‘paragraph (4)’’, and

4 (B) by striking the last sentence; and

5 (2) by inserting after paragraph (3) the follow6 ing new paragraph:

7 ‘‘(4)(A) In the case of a hospital that—

8 ‘‘(i) makes application to the Secretary and

9 demonstrates that it specializes in eye services or eye

10 and ear services (as determined by the Secretary),

11 ‘‘(ii) receives more than 30 percent of its total

12 revenues from outpatient services, and

13 ‘‘(iii) on October 1, 1987—

14 ‘‘(I) was an eye specialty hospital or an eye

15 and ear specialty hospital, or

16 ‘‘(II) was operated as an eye or eye and

17 ear unit (as defined in subparagraph (B)) of a

18 general acute care hospital which, on the date

19 of the application described in clause (i), oper20 ates less than 20 percent of the beds that the

21 hospital operated on October 1, 1987, and has

22 sold or otherwise disposed of a substantial por23 tion of the hospital’s other acute care oper24 ations,
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1 the cost proportion and ASC proportion in effect under

2 subclauses (I) and (II) of paragraph (2)(B)(ii) for cost

3 reporting periods beginning in fiscal year 1988 shall re4 main in effect for cost reporting periods beginning on or

5 after October 1, 1988, and before January 1, 1995.

6 ‘‘(B) For purposes of this subparagraph (A)(iii)(II),

7 the term ‘eye or eye and ear unit’ means a physically sepa8 rate or distinct unit containing separate surgical suites de9 voted solely to eye or eye and ear services.’’.

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

11 subsection (a) shall apply to portions of cost reporting pe12 riods beginning on or after January 1, 1994.

13 SEC. 13452. TREATMENT OF INTRAOCULAR LENSES.

14 (a) EXTENSION OF CAP ON PAYMENTS THROUGH

15 1994.—

16 (1) IN GENERAL.—Section 4151(c)(3) of

17 OBRA–1990 is amended by striking ‘‘December 31,

18 1992’’ and inserting ‘‘December 31, 1994’’.

19 (2) EFFECTIVE DATE.—The amendment made

20 by paragraph (1) this subsection shall be effective as

21 if included in the enactment of OBRA–1990.

22 (b) STUDY OF COSTS OF INTRAOCULAR LENSES.—

23 (1) STUDY.—The Secretary of Health and

24 Human Services shall conduct a study, based on re25 cent data, of the acquisition costs to providers of
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1 intraocular lenses provided to individuals enrolled

2 under part B of the medicare program and shall in3 clude in the study an analysis of the impact of the

4 availability of new technology lenses on such costs.

5 (2) REPORT.—Not later than 1 year after the

6 date of the enactment of this Act, the Secretary

7 shall submit a report on the study conducted under

8 paragraph (1) to the Committee on Finance of the

9 Senate and the Committees on Ways and Means and

10 Energy and Commerce of the House of Representa11 tives, and shall include in the report any rec12 ommendations the Secretary considers appropriate

13 regarding the determination of payment amounts for

14 intraocular lenses under part B of the medicare pro15 gram.

16 SEC. 13453. TECHNICAL AMENDMENTS.

17 (a) PAYMENT AMOUNTS FOR SERVICES FURNISHED

18 IN AMBULATORY SURGICAL CENTERS.—

19 (1) USE OF SURVEY TO DETERMINE INCURRED

20 COSTS.—Section 1833(i)(2)(A)(i) (42 U.S.C.

21 1395l(i)(2)(A)(i)) is amended by striking the comma

22 at the end and inserting the following: ‘‘, as deter23 mined in accordance with a survey (based upon a

24 representative sample of procedures and facilities)

25 taken not later than January 1, 1994, and every 5
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1 years thereafter, of the actual audited costs incurred

2 by such centers in providing such services,’’.

3 (2) AUTOMATIC APPLICATION OF INFLATION

4 ADJUSTMENT.—Section 1833(i)(2) (42 U.S.C.

5 1395l(i)(2)) is amended—

6 (A) in the second sentence of subpara7 graph (A) and the second sentence of subpara8 graph (B), by striking ‘‘and may be adjusted by

9 the Secretary, when appropriate,’’; and

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

11 subparagraph:

12 ‘‘(C) Notwithstanding the second sentence of sub13 paragraph (A) or the second sentence of subparagraph

14 (B), if the Secretary has not updated amounts established

15 under such subparagraphs with respect to facility services

16 furnished during a fiscal year (beginning with fiscal year

17 1995), such amounts shall be increased by the percentage

18 increase in the consumer price index for all urban consum19 ers (U.S. city average) for the 12-month period ending

20 with March of the preceding fiscal year.’’.

21 (3) CONSULTATION REQUIREMENT.—The sec22 ond sentence of section 1833(i)(1) (42 U.S.C.

23 1395l(i)(1)) is amended by striking the period and

24 inserting the following: ‘‘, in consultation with ap25 propriate trade and professional organizations.’’.
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1 (b) ADJUSTMENTS TO PAYMENT AMOUNTS FOR NEW

2 TECHNOLOGY INTRAOCULAR LENSES.—

3 (1) ESTABLISHMENT OF PROCESS FOR REVIEW

4 OF AMOUNTS.—Not later than 1 year after the date

5 of the enactment of this Act, the Secretary of

6 Health and Human Services (in this subsection re7 ferred to as the ‘‘Secretary’’) shall develop and im8 plement a process under which interested parties

9 may request review by the Secretary of the appro10 priateness of the reimbursement amount provided

11 under section 1833(i)(2)(A)(iii) of the Social Secu12 rity Act with respect to a class of new technology

13 intraocular lenses. For purposes of the preceding

14 sentence, an intraocular lens may not be treated as

15 a new technology lens unless it has been approved

16 by the Food and Drug Administration.

17 (2) FACTORS CONSIDERED.—In determining

18 whether to provide an adjustment of payment with

19 respect to a particular lens under paragraph (1), the

20 Secretary shall take into account whether use of the

21 lens is likely to result in reduced risk of

22 intraoperative or postoperative complication or trau23 ma, accelerated postoperative recovery, reduced in24 duced astigmatism, improved postoperative visual
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1 acuity, more stable postoperative vision, or other

2 comparable clinical advantages.

3 (3) NOTICE AND COMMENT.—The Secretary

4 shall publish notice in the Federal Register from

5 time to time (but no less often than once each year)

6 of a list of the requests that the Secretary has re7 ceived for review under this subsection, and shall

8 provide for a 30-day comment period on the lenses

9 that are the subjects of the requests contained in

10 such notice. The Secretary shall publish a notice of

11 his determinations with respect to intraocular lenses

12 listed in the notice within 90 days after the close of

13 the comment period.

14 (4) EFFECTIVE DATE OF ADJUSTMENT.—Any

15 adjustment of a payment amount (or payment limit)

16 made under this subsection shall become effective

17 not later than 30 days after the date on which the

18 notice with respect to the adjustment is published

19 under paragraph (3).

20 (c) TECHNICAL CORRECTION RELATING TO BLEND

21 AMOUNTS FOR AMBULATORY SURGICAL CENTER PAY22 MENTS.—

23 (1) IN GENERAL.—Subclauses (I) and (II) of

24 section 1833(i)(3)(B)(ii) (42 U.S.C.

25 1395l(i)(3)(B)(ii)) are each amended—
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1 (A) by striking ‘‘for reporting’’ and insert2 ing ‘‘for portions of cost reporting’’; and

3 (B) by striking ‘‘and on or before’’ and in4 serting ‘‘and ending on or before’’.

5 (2) EFFECTIVE DATE.—The amendments made

6 by paragraph (1) shall take effect as if included in

7 the enactment of OBRA–1990.

8 (d) TECHNICAL CORRECTION RELATED TO CATA9 RACT SURGERY.—Effective as if included in the enact10 ment of OBRA–1990, section 4151(c)(3) of such Act is

11 amended by striking ‘‘for the insertion of an intraocular

12 lens’’ and inserting ‘‘for an intraocular lens inserted’’.

13 Subchapter D—Durable Medical Equipment

14 SEC. 13461. CERTIFICATION OF SUPPLIERS.

15 (a) REQUIREMENTS.—

16 (1) IN GENERAL.—Section 1834 (42 U.S.C.

17 1395m) is amended by adding at the end the follow18 ing new subsection:

19 ‘‘(i) REQUIREMENTS FOR SUPPLIERS OF MEDICAL

20 EQUIPMENT AND SUPPLIES.—

21 ‘‘(1) ISSUANCE AND RENEWAL OF SUPPLIER

22 NUMBER.—

23 ‘‘(A) PAYMENT.—Except as provided in

24 subparagraph (C), no payment may be made

25 under this part after October 1, 1993, for items
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1 furnished by a supplier of medical equipment

2 and supplies unless such supplier obtains (and

3 renews at such intervals as the Secretary may

4 require) a supplier number.

5 ‘‘(B) STANDARDS FOR POSSESSING A SUP6 PLIER NUMBER.—A supplier may not obtain a

7 supplier number unless—

8 ‘‘(i) for medical equipment and sup9 plies furnished on or after October 1,

10 1993, and on or before December 31,

11 1994, the supplier meets standards pre12 scribed by the Secretary; and

13 ‘‘(ii) for medical equipment and sup14 plies furnished on or after January 1,

15 1995, the supplier meets revised standards

16 prescribed by the Secretary (in consulta17 tion with representatives of suppliers of

18 medical equipment and supplies, carriers,

19 and consumers) that shall include require20 ments that the supplier—

21 ‘‘(I) comply with all applicable

22 State and Federal licensure and regu23 latory requirements;

24 ‘‘(II) maintain a physical facility

25 on an appropriate site;
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1 ‘‘(III) have proof of appropriate

2 liability insurance; and

3 ‘‘(IV) meet such other require4 ments as the Secretary may specify.

5 ‘‘(C) EXCEPTION FOR ITEMS FURNISHED

6 AS INCIDENT TO A PHYSICIAN’S SERVICE.—

7 Subparagraph (A) shall not apply with respect

8 to medical equipment and supplies furnished as

9 an incident to a physician’s service.

10 ‘‘(D) PROHIBITION AGAINST MULTIPLE

11 SUPPLIER NUMBERS.—The Secretary may not

12 issue more than one supplier number to any

13 supplier of medical equipment and supplies un14 less the issuance of more than one number is

15 appropriate to identify subsidiary or regional

16 entities under the supplier’s ownership or con17 trol.

18 ‘‘(E) PROHIBITION AGAINST DELEGATION

19 OF SUPPLIER DETERMINATIONS.—The Sec20 retary may not delegate (other than by contract

21 under section 1842) the responsibility to deter22 mine whether suppliers meet the standards nec23 essary to obtain a supplier number.

24 ‘‘(2) CERTIFICATES OF MEDICAL NECESSITY.—
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1 ‘‘(A) STANDARDIZED CERTIFICATES.—Not

2 later than October 1, 1993, the Secretary shall,

3 in consultation with carriers under this part,

4 develop one or more standardized certificates of

5 medical necessity (as defined in subparagraph

6 (C)) for medical equipment and supplies for

7 which the Secretary determines that such a cer8 tificate is necessary.

9 ‘‘(B) PROHIBITION AGAINST DISTRIBUTION

10 BY SUPPLIERS OF CERTIFICATES OF MEDICAL

11 NECESSITY.—

12 ‘‘(i) IN GENERAL.—Except as pro13 vided in clause (ii), a supplier of medical

14 equipment and supplies may not distribute

15 to physicians or to individuals entitled to

16 benefits under this part for commercial

17 purposes any completed or partially com18 pleted certificates of medical necessity on

19 or after October 1, 1993.

20 ‘‘(ii) EXCEPTION FOR CERTAIN BILL21 ING INFORMATION.—Clause (i) shall not

22 apply with respect to a certificate of medi23 cal necessity for any item that is not con24 tained on the list of potentially overused

25 items developed by the Secretary under
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1 subsection (a)(15)(A) to the extent that

2 such certificate contains only information

3 completed by the supplier of medical equip4 ment and supplies identifying such supplier

5 and the beneficiary to whom such medical

6 equipment and supplies are furnished, a

7 description of such medical equipment and

8 supplies, any product code identifying such

9 medical equipment and supplies, and any

10 other administrative information (other

11 than information relating to the bene12 ficiary’s medical condition) identified by

13 the Secretary. In the event a supplier pro14 vides a certificate of medical necessity con15 taining information permitted under this

16 clause, such certificate shall also contain

17 the fee schedule amount and the supplier’s

18 charge for the medical equipment or sup19 plies being furnished prior to distribution

20 of such certificate to the physician.

21 ‘‘(iii) PENALTY.—Any supplier of

22 medical equipment and supplies who know23 ingly and willfully distributes a certificate

24 of medical necessity in violation of clause

25 (i) is subject to a civil money penalty in an
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1 amount not to exceed $1,000 for each such

2 certificate of medical necessity so distrib3 uted. The provisions of section 1128A

4 (other than subsections (a) and (b)) shall

5 apply to civil money penalties under this

6 subparagraph in the same manner as they

7 apply to a penalty or proceeding under sec8 tion 1128A(a).

9 ‘‘(C) DEFINITION.—For purposes of this

10 paragraph, the term ‘certificate of medical ne11 cessity’ means a form or other document con12 taining information required by the Secretary to

13 be submitted to show that a covered item is

14 reasonable and necessary for the diagnosis or

15 treatment of illness or injury or to improve the

16 functioning of a malformed body member.

17 ‘‘(3) COVERAGE AND REVIEW CRITERIA.—

18 ‘‘(A) DEVELOPMENT AND ESTABLISH19 MENT.—Not later than January 1, 1995, the

20 Secretary, in consultation with representatives

21 of suppliers of medical equipment and supplies,

22 individuals enrolled under this part, and appro23 priate medical specialty societies, shall develop

24 and establish uniform national coverage and

25 utilization review criteria for 200 items of medi-
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1 cal equipment and supplies selected in accord2 ance with the standards described in subpara3 graph (B). The Secretary shall publish the cri4 teria as part of the instructions provided to fis5 cal intermediaries and carriers under this part

6 and no further publication, including publica7 tion in the Federal Register, shall be required.

8 ‘‘(B) STANDARDS FOR SELECTING ITEMS

9 SUBJECT TO CRITERIA.—The Secretary may se10 lect an item for coverage under the criteria de11 veloped and established under subparagraph

12 (A) if the Secretary finds that—

13 ‘‘(i) the item is frequently purchased

14 or rented by beneficiaries;

15 ‘‘(ii) the item is frequently subject to

16 a determination that such item is not

17 medically necessary; or

18 ‘‘(iii) the coverage or utilization cri19 teria applied to the item (as of the date of

20 the enactment of this subsection) is not

21 consistent among carriers.

22 ‘‘(C) ANNUAL REVIEW AND EXPANSION OF

23 ITEMS SUBJECT TO CRITERIA.—The Secretary

24 shall annually review the coverage and utiliza25 tion of items of medical equipment and supplies
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1 to determine whether items not included among

2 the items selected under subparagraph (A)

3 should be made subject to uniform national cov4 erage and utilization review criteria, and, if ap5 propriate, shall develop and apply such criteria

6 to such additional items.

7 ‘‘(4) DEFINITION.—The term ‘medical equip8 ment and supplies’’ means—

9 ‘‘(A) durable medical equipment (as de10 fined in section 1861(n));

11 ‘‘(B) prosthetic devices (as described in

12 section 1861(s)(8));

13 ‘‘(C) orthotics and prosthetics (as de14 scribed in section 1861(s)(9));

15 ‘‘(D) surgical dressings (as described in

16 section 1861(s)(5));

17 ‘‘(E) such other items as the Secretary

18 may determine; and

19 ‘‘(F) for purposes of paragraphs (1) and

20 (3)—

21 ‘‘(i) home dialysis supplies and equip22 ment (as described in section

23 1861(s)(2)(F)), and

24 ‘‘(ii) immunosuppressive drugs (as de25 scribed in section 1861(s)(2)(J)).’’.
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1 (2) CONFORMING AMENDMENT.—Effective October

2 1, 1993, paragraph (16) of section 1834(a) (42 U.S.C.

3 1395m(a)) is repealed.

4 (b) REPORT ON EFFECT OF UNIFORM CRITERIA ON

5 UTILIZATION OF ITEMS.—Not later than July 1, 1995, the

6 Secretary shall submit a report to the Committee on Ways

7 and Means and the Committee on Energy and Commerce

8 of the House of Representatives and the Committee on

9 Finance of the Senate analyzing the impact of the uniform

10 criteria established under section 1834(i)(3)(A) of the So11 cial Security Act (as added by subsection (a)) on the utili12 zation of items of medical equipment and supplies by indi13 viduals enrolled under part B of the medicare program.

14 (c) USE OF COVERED ITEMS BY DISABLED BENE15 FICIARIES.—

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

17 Human Services in consultation with representatives

18 of suppliers of durable medical equipment under

19 part B of the medicare program and individuals en20 titled to benefits under such program on the basis

21 of disability, shall conduct a study of the effects of

22 the methodology for determining payments for items

23 of such equipment under such part on the ability of

24 such individuals to obtain items of such equipment,

25 including customized items.
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1 (2) REPORT.—Not later than May 1, 1994, the

2 Secretary shall submit a report to Congress on the

3 study conducted under paragraph (1), and shall in4 clude in the report such recommendations as the

5 Secretary considers appropriate to assure that dis6 abled medicare beneficiaries have access to items of

7 durable medical equipment.

8 (d) CRITERIA FOR TREATMENT OF ITEMS AS PROS9 THETICS DEVICES OR ORTHOTICS AND PROSTHETICS.—

10 Not later than July 1, 1994, the Secretary of Health and

11 Human Services shall submit a report to the Committees

12 on Ways and Means and Energy and Commerce of the

13 House of Representatives and the Committee on Finance

14 of the Senate describing prosthetic devices or orthotics

15 and prosthetics covered under part B of the medicare pro16 gram that do not require individualized or custom fitting

17 and adjustment to be used by a patient. Such report shall

18 include recommendations for an appropriate methodology

19 for determining the amount of payment for such items

20 under such program.

21 SEC. 13462. PROHIBITION AGAINST CARRIER FORUM SHOP22 PING.

23 (a) IN GENERAL.—Section 1834(a)(12) (42 U.S.C.

24 1395m(a)(12)) is amended to read as follows:
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1 ‘‘(12) USE OF CARRIERS TO PROCESS

2 CLAIMS.—

3 ‘‘(A) DESIGNATION OF REGIONAL CAR4 RIERS.—The Secretary may designate, by regu5 lation under section 1842, one carrier for one

6 or more entire regions to process all claims

7 within the region for covered items under this

8 section.

9 ‘‘(B) PROHIBITION AGAINST CARRIER

10 SHOPPING.—(i) No supplier of a covered item

11 may present or cause to be presented a claim

12 for payment under this part unless such claim

13 is presented to the appropriate regional carrier

14 (as designated by the Secretary).

15 ‘‘(ii) For purposes of clause (i), the term

16 ‘appropriate regional carrier’ means the carrier

17 having jurisdiction over the geographic area

18 that includes the permanent residence of the

19 patient to whom the item is furnished.’’.

20 (b) EFFECTIVE DATE.—The amendment made by

21 subsection (a) shall apply to items furnished on or after

22 October 1, 1993.

23 (c) CLARIFICATION OF AUTHORITY TO DESIGNATE

24 CARRIERS FOR OTHER ITEMS AND SERVICES.—Nothing

25 in this subsection or the amendment made by this sub-
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1 section may be construed to restrict the authority of the

2 Secretary of Health and Human Services to designate re3 gional carriers or modify claims jurisdiction rules with re4 spect to items or services under part B of the medicare

5 program that are not covered items under section 1834(a)

6 of the Social Security Act or prosthetic devices or orthotics

7 and prosthetics under section 1834(h) of such Act.

8 SEC. 13463. RESTRICTIONS ON CERTAIN MARKETING AND

9 SALES ACTIVITIES.

10 (a) PROHIBITING UNSOLICITED TELEPHONE CON11 TACTS FROM SUPPLIERS OF DURABLE MEDICAL EQUIP12 MENT TO MEDICARE BENEFICIARIES.—

13 (1) IN GENERAL.—Section 1834(a) (42 U.S.C.

14 1395m(a)) is amended by adding at the end the fol15 lowing new paragraph:

16 ‘‘(17) PROHIBITION AGAINST UNSOLICITED

17 TELEPHONE CONTACTS BY SUPPLIERS.—

18 ‘‘(A) IN GENERAL.—A supplier of a cov19 ered item under this subsection may not contact

20 an individual enrolled under this part by tele21 phone regarding the furnishing of a covered

22 item to the individual (other than a covered

23 item the supplier has already furnished to the

24 individual) unless—
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1 ‘‘(i) the individual gives permission to

2 the supplier to make contact by telephone

3 for such purpose; or

4 ‘‘(ii) the supplier has furnished a cov5 ered item under this subsection to the indi6 vidual during the 15-month period preced7 ing the date on which the supplier contacts

8 the individual for such purpose.

9 ‘‘(B) PROHIBITING PAYMENT FOR ITEMS

10 FURNISHED SUBSEQUENT TO UNSOLICITED

11 CONTACTS.—If a supplier knowingly contacts

12 an individual in violation of subparagraph (A),

13 no payment may be made under this part for

14 any item subsequently furnished to the individ15 ual by the supplier.

16 ‘‘(C) EXCLUSION FROM PROGRAM FOR

17 SUPPLIERS ENGAGING IN PATTERN OF UNSO18 LICITED CONTACTS.—If a supplier knowingly

19 contacts individuals in violation of subpara20 graph (A) to such an extent that the supplier’s

21 conduct establishes a pattern of contacts in vio22 lation of such subparagraph, the Secretary shall

23 exclude the supplier from participation in the

24 programs under this Act, in accordance with
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1 the procedures set forth in subsections (c), (f),

2 and (g) of section 1128.’’.

3 (2) REQUIRING REFUND OF AMOUNTS COL4 LECTED FOR DISALLOWED ITEMS.—Section 1834(a)

5 (42 U.S.C. 1395m(a)), as amended by paragraph

6 (1), is amended by adding at the end the following

7 new paragraph:

8 ‘‘(18) REFUND OF AMOUNTS COLLECTED FOR

9 CERTAIN DISALLOWED ITEMS.—

10 ‘‘(A) IN GENERAL.—If a nonparticipating

11 supplier furnishes to an individual enrolled

12 under this part a covered item for which no

13 payment may be made under this part by rea14 son of paragraph (17)(B), the supplier shall re15 fund on a timely basis to the patient (and shall

16 be liable to the patient for) any amounts col17 lected from the patient for the item, unless—

18 ‘‘(i) the supplier establishes that the

19 supplier did not know and could not rea20 sonably have been expected to know that

21 payment may not be made for the item by

22 reason of paragraph (17)(B), or

23 ‘‘(ii) before the item was furnished,

24 the patient was informed that payment

25 under this part may not be made for that
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1 item and the patient has agreed to pay for

2 that item.

3 ‘‘(B) SANCTIONS.—If a supplier knowingly

4 and willfully fails to make refunds in violation

5 of subparagraph (A), the Secretary may apply

6 sanctions against the supplier in accordance

7 with section 1842(j)(2).

8 ‘‘(C) NOTICE.—Each carrier with a con9 tract in effect under this part with respect to

10 suppliers of covered items shall send any notice

11 of denial of payment for covered items by rea12 son of paragraph (17)(B) and for which pay13 ment is not requested on an assignment-related

14 basis to the supplier and the patient involved.

15 ‘‘(D) TIMELY BASIS DEFINED.—A refund

16 under subparagraph (A) is considered to be on

17 a timely basis only if—

18 ‘‘(i) in the case of a supplier who does

19 not request reconsideration or seek appeal

20 on a timely basis, the refund is made with21 in 30 days after the date the supplier re22 ceives a denial notice under subparagraph

23 (C), or

24 ‘‘(ii) in the case in which such a re25 consideration or appeal is taken, the re-
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1 fund is made within 15 days after the date

2 the supplier receives notice of an adverse

3 determination on reconsideration or ap4 peal.’’.

5 (b) CONFORMING AMENDMENT.—Section 1834(h)(3)

6 (42 U.S.C. 1395m(h)(3)) is amended by striking ‘‘Para7 graph (12)’’ and inserting ‘‘Paragraphs (12) and (17)’’.

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

9 subsections (a) and (b) shall apply to items furnished after

10 the expiration of the 60-day period that begins on the date

11 of the enactment of this Act.

12 SEC. 13464. ANTI-KICKBACK CLARIFICATION.

13 (a) IN GENERAL.—Section 1128B(b)(3)(B) (42

14 U.S.C. 1320a–7b(b)(3)(B)) is amended by inserting be15 fore the semicolon ‘‘(except that in the case of a contract

16 supply arrangement between any entity and a supplier of

17 medical supplies and equipment (as defined in section

18 1834(i)(4), but not including items described in subpara19 graph (F) of such section), such employment shall not be

20 considered bona fide to the extent that it includes tasks

21 of a clerical and cataloging nature in transmitting to sup22 pliers assignment rights of individuals eligible for benefits

23 under part B of title XVIII, or performance of

24 warehousing or stock inventory functions)’’.
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1 (b) EFFECTIVE DATE.—The amendment made by

2 subsection (a) shall apply with respect to services fur3 nished on or after the first day of the first month that

4 begins after the expiration of the 60-day period beginning

5 on the date of the enactment of this Act.

6 SEC. 13465. LIMITATIONS ON BENEFICIARY LIABILITY FOR

7 NONCOVERED SERVICES.

8 (a) IN GENERAL.—Section 1834(i) (42 U.S.C.

9 1395m(i)), as added by section 13461(a)(1), is amended—

10 (1) by redesignating paragraph (4) as para11 graph (5), and

12 (2) by inserting after paragraph (3) the follow13 ing new paragraph:

14 ‘‘(4) LIMITATION ON PATIENT LIABILITY.—If a

15 supplier of medical equipment and supplies (as de16 fined in paragraph (5))—

17 ‘‘(A) furnishes an item or service to a ben18 eficiary for which no payment may be made by

19 reason of paragraph (1);

20 ‘‘(B) furnishes an item or service to a ben21 eficiary for which payment is denied in advance

22 under subsection (a)(15); or

23 ‘‘(C) furnishes an item or service to a ben24 eficiary for which payment is denied under sec25 tion 1862(a)(1);
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1 any expenses incurred for items and services fur2 nished to an individual by such a supplier not on an

3 assigned basis shall be the responsibility of such

4 supplier. The individual shall have no financial re5 sponsibility for such expenses and the supplier shall

6 refund on a timely basis to the individual (and shall

7 be liable to the individual for) any amounts collected

8 from the individual for such items or services. The

9 provisions of subsection (a)(18) shall apply to re10 funds required under the previous sentence in the

11 same manner as such provisions apply to refunds

12 under such subsection.’’.

13 (2) CONFORMING AMENDMENT.—Section

14 1128B(b)(3)(B) (42 U.S.C. 1320a–7b(b)(3)(B)), as

15 amended by section 13464(a), is amended by strik16 ing ‘‘1834(i)(4)’’ and inserting ‘‘1834(i)(5)’’.

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

18 subsection (a) shall apply to items or services furnished

19 on or after October 1, 1993.

20 SEC. 13466. ADJUSTMENTS FOR INHERENT REASONABLE21 NESS.

22 (a) ADJUSTMENTS MADE TO FINAL PAYMENT

23 AMOUNTS.—

24 (1) IN GENERAL.—Section 1834(a)(10)(B) (42

25 U.S.C. 1395m(a)(10)(B)) is amended by adding at
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1 the end the following: ‘‘In applying such provisions

2 to payments for an item under this subsection, the

3 Secretary shall make adjustments to the payment

4 basis for the item described in paragraph (1)(B) if

5 the Secretary determines (in accordance with such

6 provisions and on the basis of prices and costs appli7 cable at the time the item is furnished) that such

8 payment basis is not inherently reasonable.’’.

9 (2) EFFECTIVE DATE.—The amendment made

10 by paragraph (1) shall take effect on the date of the

11 enactment of this Act.

12 (b) ADJUSTMENT REQUIRED FOR CERTAIN ITEMS.—

13 (1) IN GENERAL.—In accordance with section

14 1834(a)(10)(B) of the Social Security Act (as

15 amended by subsection (a)), the Secretary of Health

16 and Human Services shall determine whether the

17 payment amounts for the items described in para18 graph (2) are not inherently reasonable, and shall

19 adjust such amounts in accordance with such section

20 if the amounts are not inherently reasonable.

21 (2) ITEMS DESCRIBED.—The items referred to

22 in paragraph (1) are decubitus care equipment,

23 transcutaneous electrical nerve stimulators, and any

24 other items considered appropriate by the Secretary.
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1 SEC. 13467. TREATMENT OF NEBULIZERS AND ASPIRATORS.

2 (a) IN GENERAL.—Section 1834(a)(3)(A) (42 U.S.C.

3 1395m(a)(3)(A)) is amended by striking ‘‘ventilators, as4 pirators, IPPB machines, and nebulizers’’ and inserting

5 ‘‘ventilators and IPPB machines’’.

6 (b) PAYMENT FOR ACCESSORIES RELATING TO

7 NEBULIZERS AND ASPIRATORS.—Section 1834(a)(2)(A)

8 (42 U.S.C. 1395m(a)) is amended—

9 (1) by striking ‘‘or’’ at the end of clause (i),

10 (2) by adding ‘‘or’’ at the end of clause (ii), and

11 (3) by inserting after clause (ii) the following

12 new clause:

13 ‘‘(iii) which is an accessory used in

14 conjunction with a nebulizer or aspirator,’’.

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

16 this section shall apply to items furnished on or after Jan17 uary 1, 1994.

18 SEC. 13468. PAYMENT FOR OSTOMY SUPPLIES AND OTHER

19 SUPPLIES.

20 (a) OSTOMY SUPPLIES, TRACHEOSTOMY SUPPLIES,

21 AND UROLOGICALS.—

22 (1) IN GENERAL.—Section 1834(h)(1) (42

23 U.S.C. 1395m(h)(1)) is amended by adding at the

24 end the following new subparagraph:

25 ‘‘(E) EXCEPTION FOR CERTAIN ITEMS.—

26 Payment for ostomy supplies, tracheostomy
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1 supplies, and urologicals shall be made in ac2 cordance with subparagraphs (B) and (C) of

3 section 1834(a)(2).’’.

4 (2) CONFORMING AMENDMENT.—Section

5 1834(h)(1)(B) (42 U.S.C. 1395m(h)(1)(B)) is

6 amended by striking ‘‘subparagraph (C),’’ and in7 serting ‘‘subparagraphs (C) and (E),’’.

8 (3) EFFECTIVE DATE.—The amendments made

9 by this subsection shall apply to items furnished on

10 or after January 1, 1994.

11 (b) SURGICAL DRESSINGS.—

12 (1) IN GENERAL.—Section 1834 (42 U.S.C.

13 1395m), as amended by section 13461(a), is amend14 ed by adding at the end the following new sub15 section:

16 ‘‘(j) PAYMENT FOR SURGICAL DRESSINGS.—

17 ‘‘(1) IN GENERAL.—Payment under this sub18 section for surgical dressings (described in section

19 1861(s)(5)) shall be made in a lump sum amount

20 for the purchase of the item in an amount equal to

21 80 percent of the lesser of—

22 ‘‘(A) the actual charge for the item; or

23 ‘‘(B) a payment amount determined in ac24 cordance with the methodology described in

25 subparagraphs (B) and (C) of subsection (a)(2)
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1 (except that in applying such methodology, the

2 national limited payment amount referred to in

3 such subparagraphs shall be initially computed

4 based on local payment amounts using average

5 reasonable charges for the 12-month period

6 ending December 31, 1992, increased by the

7 covered item updates described in such sub8 section for 1993 and 1994).

9 ‘‘(2) EXCEPTIONS.—Paragraph (1) shall not

10 apply to surgical dressings that are—

11 ‘‘(A) furnished as an incident to a physi12 cian’s professional service; or

13 ‘‘(B) furnished by a home health agency.’’.

14 (2) CONFORMING AMENDMENT.—Section

15 1833(a)(1) (42 U.S.C. 1395l(a)(1)), as amended by

16 sections 13478(e)(2) and 13445(e)(1), is amended—

17 (A) by striking ‘‘and’’ before ‘‘(P)’’, and

18 (B) by inserting before the semicolon at

19 the end the following: ‘‘, and (Q) with respect

20 to surgical dressings, the amounts paid shall be

21 the amounts determined under section

22 1834(j);’’.

23 (3) EFFECTIVE DATE.—The amendments made

24 by this subsection shall apply to items furnished on

25 or after January 1, 1994.
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1 (c) REDUCTION IN PAYMENTS FOR TENS DE2 VICES.—

3 (1) IN GENERAL.—Section 1834(a)(1)(D) (42

4 U.S.C. 1395m(a)(1)(D)) is amended by striking ‘‘15

5 percent’’ the second place it appears and inserting

6 ‘‘45 percent’’.

7 (2) EFFECTIVE DATE.—The amendment made

8 by paragraph (1) shall apply to items furnished on

9 or after January 1, 1994.

10 SEC. 13469. MISCELLANEOUS AND TECHNICAL CORREC11 TIONS.

12 (a) UPDATES TO PAYMENT AMOUNTS.—Subpara13 graph (A) of section 1834(a)(14) (42 U.S.C.

14 1395m(a)(14)) is amended to read as follows:

15 ‘‘(A) for 1991 and 1992, the percentage

16 increase in the consumer price index for all

17 urban consumers (U.S. city average) for the 12-

18 month period ending with June of the previous

19 year reduced by 1 percentage point; and’’.

20 (b) TREATMENT OF POTENTIALLY OVERUSED ITEMS

21 AND ADVANCED DETERMINATIONS OF COVERAGE.—

22 (1) IN GENERAL.—Effective on the date of the

23 enactment of this Act, section 1834(a)(15) (42

24 U.S.C. 1395m(a)(15)) is amended to read as fol25 lows:
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1 ‘‘(15) SPECIAL TREATMENT FOR POTENTIALLY

2 OVERUSED ITEMS.—

3 ‘‘(A) DEVELOPMENT OF LIST OF ITEMS BY

4 SECRETARY.—The Secretary shall develop and

5 periodically update a list of items for which

6 payment may be made under this subsection

7 that are potentially overused, and shall include

8 in such list seat-lift mechanisms, transcutane9 ous electrical nerve stimulators, motorized

10 scooters, decubitus care mattresses, and any

11 such other item determined by the Secretary to

12 be potentially overused on the basis of any of

13 the following criteria—

14 ‘‘(i) the item is marketed directly to

15 potential patients;

16 ‘‘(ii) the item is marketed with an

17 offer to potential patients to waive the

18 costs of coinsurance associated with the

19 item or is marketed as being available at

20 no cost to policyholders of a medicare sup21 plemental policy (as defined in section

22 1882(g)(1));

23 ‘‘(iii) the item has been subject to a

24 consistent pattern of overutilization; or
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1 ‘‘(iv) a high proportion of claims for

2 payment for such item under this part may

3 not be made because of the application of

4 section 1862(a)(1).

5 ‘‘(B) ITEMS SUBJECT TO SPECIAL CARRIER

6 SCRUTINY.—Payment may not be made under

7 this part for any item contained in the list de8 veloped by the Secretary under subparagraph

9 (A) unless the carrier has subjected the claim

10 for payment for the item to special scrutiny or

11 has followed the procedures described in para12 graph (11)(C) with respect to the item.’’.

13 (2) ADVANCE DETERMINATION BY CARRIERS.—Ef14 fective January 1, 1994, section 1834(a)(11) (42 U.S.C.

15 1395m(a)) is amended by adding at the end the following

16 new subparagraph:

17 ‘‘(C) CARRIER DETERMINATIONS FOR CER18 TAIN ITEMS IN ADVANCE.—A carrier shall de19 termine in advance whether payment for an

20 item may not be made under this subsection be21 cause of the application of section 1862(a)(1)

22 if—

23 ‘‘(i) the item is a customized item

24 (other than inexpensive items specified by

25 the Secretary); or
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1 ‘‘(ii) the item is a specified covered

2 item under subparagraph (B).’’.

3 (3) INCLUSION IN CARRIER PERFORMANCE EVALUA4 TIONS.—Effective for standards applied for contract years

5 beginning after the date of the enactment of this Act, sec6 tion 1842(c) (42 U.S.C. 1395u(c)), as amended by section

7 13448(a), is amended by adding at the end the following

8 new paragraph:

9 ‘‘(5) Each contract under this section which provides

10 for the disbursement of funds, as described in subsection

11 (a)(1)(B), shall require the carrier to meet criteria devel12 oped by the Secretary to measure the timeliness of carrier

13 responses to requests for payment of items described in

14 section 1834(a)(11)(C).’’.

15 (4) APPLICATION TO PROSTHETIC DEVICES AND

16 ORTHOTICS AND PROSTHETICS.—Section 1834(h)(3) (42

17 U.S.C. 1395m(h)(3)) is amended by striking ‘‘paragraph

18 (10) and paragraph (11)’’ and inserting ‘‘paragraphs (10)

19 and (11)’’.

20 (c) STUDY OF VARIATIONS IN DURABLE MEDICAL

21 EQUIPMENT SUPPLIER COSTS.—

22 (1) COLLECTION AND ANALYSIS OF SUPPLIER

23 COST DATA.—The Administration of the Health

24 Care Financing Administration shall, in consultation

25 with appropriate organizations, collect data on sup-
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1 plier costs of durable medical equipment for which

2 payment may be made under part B of the medicare

3 program, and shall analyze such data to determine

4 the proportions of such costs attributable to the

5 service and product components of furnishing such

6 equipment and the extent to which such proportions

7 vary by type of equipment and by the geographic re8 gion in which the supplier is located.

9 (2) DEVELOPMENT OF GEOGRAPHIC ADJUST10 MENT INDEX; REPORTS.—Not later than January 1,

11 1995—

12 (A) the Administrator shall submit a re13 port to the Committees on Energy and Com14 merce and Ways and Means of the House of

15 Representatives and the Committee on Finance

16 of the Senate on the data collected and the

17 analysis conducted under paragraph (1), and

18 shall include in such report the Administrator’s

19 recommendations for a geographic cost adjust20 ment index for suppliers of durable medical

21 equipment under the medicare program and an

22 analysis of the impact of such proposed index

23 on payments under the medicare program; and

24 (B) the Comptroller General shall submit a

25 report to the Committees on Energy and Com-
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1 merce and Ways and Means of the House of

2 Representatives and the Committee on Finance

3 of the Senate analyzing on a geographic basis

4 the supplier costs of durable medical equipment

5 under the medicare program.

6 (d) OXYGEN RETESTING.—Section 1834(a)(5)(E)

7 (42 U.S.C. 1395m(a)(5)(E)) is amended by striking ‘‘55’’

8 and inserting ‘‘56’’.

9 (e) OTHER MISCELLANEOUS AND TECHNICAL

10 AMENDMENTS.—(1) Section 4152(a)(3) of OBRA–1990

11 is amended by striking ‘‘amendment made by subsection

12 (a)’’ and inserting ‘‘amendments made by this sub13 section’’.

14 (2) Section 4152(c)(2) of OBRA–1990 is amended

15 by striking ‘‘1395m(a)(7)(A)’’ and inserting

16 ‘‘1395m(a)(7)’’.

17 (3) Section 1834(a)(7)(A)(iii)(II) (42 U.S.C.

18 1395m(a)(7)(A)(iii)(II)) is amended by striking ‘‘clause

19 (v)’’ and inserting ‘‘clause (vi)’’.

20 (4) Section 1834(a)(7)(C)(i) (42 U.S.C.

21 1395m(a)(7)(C)(i)) is amended by striking ‘‘or paragraph

22 (3)’’.

23 (5) Section 1834(a)(3) (42 U.S.C. 1395m(a)(3)) is

24 amended by striking subparagraph (D).
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1 (6) Section 4153(c)(1) of OBRA–1990 is amended

2 by striking ‘‘1834(a)’’ and inserting ‘‘1834(h)’’.

3 (7) Section 4153(d)(2) of OBRA–1990 is amended

4 by striking ‘‘Reconiliation’’ and inserting ‘‘Reconcili5 ation’’.

6 (8)(A) Section 1834(a) (42 U.S.C. 1395m(a)) is

7 amended by striking paragraph (6).

8 (B) Section 1834(a) (42 U.S.C. 1395m(a)) is amend9 ed—

10 (i) in subparagraphs (A) and (B) of paragraph

11 (1), by striking ‘‘(2) through (7)’’ each place it ap12 pears and inserting ‘‘(2) through (5) and (7)’’;

13 (ii) in paragraph (7), by striking ‘‘(2) through

14 (6)’’ and inserting ‘‘(2) through (5)’’;

15 (iii) in paragraph (8), by striking ‘‘paragraphs

16 (6) and (7)’’ each place it appears in the matter pre17 ceding subparagraph (A) and in subparagraph (C)

18 and inserting ‘‘paragraph (7)’’; and

19 (iv) in paragraph (8)(A)(i), by striking ‘‘de20 scribed—’’ and all that follows and inserting ‘‘de21 scribed in paragraph (7) equal to the average of the

22 purchase prices on the claims submitted on an as23 signment-related basis for the unused item supplied

24 during the 6-month period ending with December

25 1986.’’.
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1 (9) The amendments made by this subsection shall

2 take effect as if included in the enactment of OBRA–1990.

3 Subchapter E—Other Provisions

4 SEC. 13471. CLARIFYING PAYMENTS FOR MEDICALLY DI5 RECTED CERTIFIED REGISTERED NURSE AN6 ESTHETIST SERVICES.

7 (a) IN GENERAL.—Section 1833(l)(4)(B) (42 U.S.C.

8 1395l(l)(4)(B)) is amended to read as follows:

9 ‘‘(B) Except as provided in subparagraph (D), the

10 conversion factor used to determine the amount paid

11 under the fee schedule under this subsection for services

12 furnished by a certified registered nurse anesthetist who

13 is medically directed—

14 ‘‘(i) in a year after 1993 and before 1997, shall

15 be $10.75, or

16 ‘‘(ii) in a subsequent calendar year, shall be the

17 previous year’s conversion factor increased by the

18 update determined under section 1848(d)(3) for

19 physician anesthesia services for that year.’’.

20 (b) EFFECTIVE DATE.—The amendment made by

21 subsection (a) shall apply to services furnished on or after

22 January 1, 1994.
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1 SEC. 13472. EXTENSION OF ALZHEIMER’S DISEASE DEM2 ONSTRATION PROJECTS.

3 Section 9342 of OBRA–1986, as amended by section

4 4164(a)(2) of OBRA–1990, is amended—

5 (1) in subsection (c)(1), by striking ‘‘4 years’’

6 and inserting ‘‘5 years’’; and

7 (2) in subsection (f), —

8 (A) by striking ‘‘$55,000,000’’ and insert9 ing ‘‘$58,000,000’’, and

10 (B) by striking ‘‘$3,000,000’’ and insert11 ing ‘‘$5,000,000’’.

12 SEC. 13473. ORAL CANCER DRUGS.

13 (a) NEW COVERAGE OF CERTAIN SELF-ADMINIS14 TERED ANTICANCER DRUGS.—Section 1861(s)(2) (42

15 U.S.C. 1395(s)(2)), as amended by section

16 13478(f)(8)(B), is amended—

17 (1) by striking ‘‘and’’ at the end of subpara18 graph (N);

19 (2) by adding ‘‘and’’ at the end of subpara20 graph (O); and

21 (3) by adding at the end the following new sub22 paragraph:

23 ‘‘(P) an oral drug (which is approved by the

24 Federal Food and Drug Administration) prescribed

25 for use as an anticancer chemotherapeutic agent for

26 a given indication, and containing an active ingredi-
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1 ent (or ingredients), which is the same indication

2 and active ingredient (or ingredients) as a drug

3 which the carrier determines would be covered pur4 suant to subparagraph (A) or (B) if the drug could

5 not be self-administered;’’.

6 (b) UNIFORM COVERAGE OF ‘‘OFF-LABEL’’

7 ANTICANCER DRUGS.—Section 1861(t) (42 U.S.C.

8 1395x(t)) is amended—

9 (1) by inserting ‘‘(1)’’ after ‘‘(t)’’;

10 (2) by striking ‘‘(m)(5) of this section’’ and in11 serting ‘‘(m)(5) and paragraph (2)’’; and

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

13 paragraph:

14 ‘‘(2)(A) For purposes of paragraph (1), the term

15 ‘drugs’ also includes any drugs or biologicals used in an

16 anticancer chemotherapeutic regimen for a medically ac17 cepted indication (as described in subparagraph (B)).

18 ‘‘(B) In subparagraph (A), the term ‘medically ac19 cepted indication’, with respect to the use of a drug, in20 cludes any use which has been approved by the Food and

21 Drug Administration for the drug, and includes another

22 use of the drug if—

23 ‘‘(i) the drug has been approved by the Food

24 and Drug Administration, and
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1 ‘‘(ii) the carrier involved determines, based

2 upon guidance provided by the Secretary to carriers

3 for determining medically accepted uses of drugs,

4 that the use is medically accepted taking into ac5 count the uses of such drug which are—

6 ‘‘(I) included (or approved for inclusion) in

7 one or more of the following compendia: the

8 American Hospital Formulary Service-Drug In9 formation, the American Medical Association

10 Drug Evaluations, and the United States Phar11 macopoeia-Drug Information; or

12 ‘‘(II) supported by clinical evidence in peer

13 reviewed medical literature appearing in publi14 cations which have been specifically approved

15 for purposes of this paragraph by the Sec16 retary.’’.

17 (c) STUDY OF MEDICARE COVERAGE OF PATIENT

18 CARE COSTS ASSOCIATED WITH CLINICAL TRIALS OF

19 NEW CANCER THERAPIES.—

20 (1) STUDY.—The Secretary of Health and

21 Human Services shall conduct a study of the effects

22 of expressly covering under the medicare program

23 the patient care costs for beneficiaries enrolled in

24 clinical trials of new cancer therapies, where the pro25 tocol for the trial has been approved by the National
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1 Cancer Institute or meets similar scientific and ethi2 cal standards, including approval by an institutional

3 review board. The study shall include—

4 (A) an estimate of the cost of such cov5 erage, taking into account the extent to which

6 medicare currently pays for such patient care

7 costs in practice;

8 (B) an assessment of the extent to which

9 such clinical trials represent the best available

10 treatment for the patients involved and of the

11 effects of participation in the trials on the

12 health of such patients;

13 (C) an assessment of whether progress in

14 developing new anticancer therapies would be

15 assisted by medicare coverage of such patient

16 care costs; and

17 (D) an evaluation of whether there should

18 be special criteria for the admission of medicare

19 beneficiaries (on account of their age or phys20 ical condition) to clinical trials for which medi21 care would pay the patient care costs.

22 (2) REPORT.—Not later than 2 years after the

23 date of the enactment of this Act, the Secretary of

24 Health and Human Services shall submit a report

25 on the study conducted under paragraph (1) to the
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1 Committee on Ways and Means and the Committee

2 on Energy and Commerce of the House of Rep3 resentatives and the Committee on Finance of the

4 Senate. Such report shall include recommendations

5 as to the coverage under the medicare program of

6 patient care costs of beneficiaries enrolled in clinical

7 trials of new cancer therapies.

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

9 subsections (a) and (b) shall apply to items furnished on

10 or after January 1, 1994.

11 SEC. 13474. PART B PREMIUM PAYMENTS FOR LATE EN12 ROLLMENT.

13 (a) LIMITATION ON MEDICARE PART B LATE EN14 ROLLMENT PENALTY.—

15 (1) IN GENERAL.—Section 1839 (42 U.S.C.

16 1395r) is amended by adding at the end the follow17 ing new subsection:

18 ‘‘(g) The percent increase in premiums under sub19 section (b) due to late enrollment under this part shall

20 not exceed 25 percent in the case of an individual who

21 is an annuitant described in subparagraph (A) or (B) of

22 section 8901(3) of title 5, United States Code (including

23 an individual or survivor described in section

24 8906(g)(2)(A) of such title) for a month if—
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1 ‘‘(1) during the individual’s initial enrollment

2 period under section 1837(d)—

3 ‘‘(A) the individual was enrolled in a group

4 health plan (as defined in section

5 1862(b)(1)(A)(v)) that provided coverage of

6 items and services for which payment may be

7 made under this part, and

8 ‘‘(B) the individual elected not to enroll (or

9 to be deemed enrolled) under this section; and

10 ‘‘(2) due to a change of coverage under such

11 plan, there is no coverage during the month under

12 such plan with respect to items and services for

13 which payment may be made under this part unless

14 the individual is enrolled under this part.’’.

15 (2) EFFECTIVE DATE.—The amendment made

16 by paragraph (1) shall apply to premiums for

17 months beginning with January 1992.

18 (b) PAYMENT OF PART B PREMIUM LATE ENROLL19 MENT PENALTIES BY STATES.—Section 1839 (42 U.S.C.

20 1395r), as amended by subsection (a), is further amended

21 by adding at the end the following new subsection:

22 ‘‘(h)(1) Upon the request of a State, the Secretary

23 may enter into an agreement with the State under which

24 the State agrees to pay on a quarterly or other periodic

25 basis to the Secretary (to be deposited in the Treasury
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1 to the credit of the Federal Supplementary Medical Insur2 ance Trust Fund) an amount equal to the amount of the

3 part B late enrollment premium increases with respect to

4 the premiums for eligible individuals (as defined in para5 graph (3)(A)).

6 ‘‘(2) No part B late enrollment premium increase

7 shall apply to an eligible individual for premiums for

8 months for which the amount of such an increase is pay9 able under an agreement under paragraph (1).

10 ‘‘(3) In this subsection:

11 ‘‘(A) The term ‘eligible individual’ means an in12 dividual who is enrolled under this part B and who

13 is within a class of individuals specified in the agree14 ment under paragraph (1).

15 ‘‘(B) The term ‘part B late enrollment premium

16 increase’ means any increase in a premium as a re17 sult of the application of subsection (b).’’.

18 SEC. 13475. COVERAGE OF SERVICES OF SPEECH-LAN19 GUAGE PATHOLOGISTS AND AUDIOLOGISTS.

20 (a) SERVICES DEFINED.—Section 1861 (42 U.S.C.

21 1395x), as amended by section 13478(f)(8)(E), is amend22 ed by inserting after subsection (kk) the following new

23 subsection:
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1 ‘‘Speech-Language Pathology Services; Audiology

2 Services

3 ‘‘(ll)(1) The term ‘speech-language pathology serv4 ices’ means such speech, language, and related function

5 assessment and rehabilitation services furnished by a

6 qualified speech-language pathologist as the speech-lan7 guage pathologist is legally authorized to perform under

8 State law (or the State regulatory mechanism provided by

9 State law) as would otherwise be covered if furnished by

10 a physician.

11 ‘‘(2) The term ‘audiology services’ means such hear12 ing and balance assessment services furnished by a quali13 fied audiologist as the audiologist is legally authorized to

14 perform under State law (or the State regulatory mecha15 nism provided by State law).

16 ‘‘(3) In this subsection:

17 ‘‘(A) The term ‘qualified speech-language pa18 thologist’ means an individual with a master’s or

19 doctoral degree in speech-language pathology who

20 has performed not less than 9 months of supervised

21 full-time speech-language pathology services after

22 obtaining such degree and who—

23 ‘‘(i) is licensed (or is otherwise certified) as

24 a speech-language pathologist by the State in

25 which the individual furnishes such services, or
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1 ‘‘(ii) in the case of an individual who fur2 nishes services in a State which does not pro3 vide for the licensing (or other form of certifi4 cation) of speech-language pathologists, has

5 successfully completed a national clinical com6 petency examination in speech-language pathol7 ogy approved by the Secretary.

8 ‘‘(B) The term ‘qualified audiologist’ means an

9 individual with a master’s or doctoral degree in

10 audiology who has performed not less than 9 months

11 of supervised full-time audiology services after ob12 taining such degree and who—

13 ‘‘(i) is licensed (or is otherwise certified) as

14 an audiologist by the State in which the individ15 ual furnishes such services, or

16 ‘‘(ii) in the case of an individual who fur17 nishes services in a State which does not pro18 vide for the licensing (or other form of certifi19 cation) of audiologists, has successfully com20 pleted a national clinical competency examina21 tion in audiology approved by the Secretary.’’.

22 (b) CONFORMING AMENDMENTS RELATING TO MED23 ICARE TREATMENT OF SPEECH AND LANGUAGE SERV24 ICES.—
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1 (1) EXTENDED CARE SERVICES.—Section

2 1861(h)(3) (42 U.S.C. 1395x(h)(3)) is amended by

3 striking ‘‘, occupational, or speech therapy’’ and in4 serting ‘‘or occupational therapy or speech-language

5 pathology services’’.

6 (2) HOME HEALTH SERVICES.—Section

7 1861(m)(2) (42 U.S.C. 1395x(m)(2)) is amended by

8 striking ‘‘, occupational, or speech therapy’’ and in9 serting ‘‘or occupational therapy or speech-language

10 pathology services’’.

11 (3) OUTPATIENT PHYSICAL THERAPY SERV12 ICES.—The fourth sentence of section 1861(p) (42

13 U.S.C. 1395x(p)) is amended by striking ‘‘speech

14 pathology services’’ and inserting ‘‘speech-language

15 pathology services’’.

16 (4) COMPREHENSIVE OUTPATIENT REHABILITA17 TION FACILITY SERVICES.—Section 1861(cc)(1)(B)

18 (42 U.S.C. 1395x(cc)(1)(B)) is amended by striking

19 ‘‘speech pathology services’’ and inserting ‘‘speech20 language pathology services’’.

21 (5) HOSPICE CARE.—Section 1861(dd)(1)(B)

22 (42 U.S.C. 1395x(dd)(1)(B)) is amended by striking

23 ‘‘therapy or speech-language pathology’’ and insert24 ing ‘‘therapy, or speech-language pathology serv25 ices’’.
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall take effect on January 1, 1994.

3 SEC. 13476. EXTENSION OF MUNICIPAL HEALTH SERVICE

4 DEMONSTRATION PROJECTS.

5 Section 9215 of the Consolidated Omnibus Budget

6 Reconciliation Act of 1985, as amended by section 6135

7 of OBRA–1989, is amended—

8 (1) by striking ‘‘December 31, 1993’’ and in9 serting ‘‘December 31, 1997’’, and

10 (2) in the second sentence, by inserting after

11 ‘‘beneficiary costs,’’ the following: ‘‘costs to the med12 icaid program and other payers, access to care, out13 comes, beneficiary satisfaction, utilization differences

14 among the different populations served by the

15 projects,’’.

16 SEC. 13477. TREATMENT OF CERTAIN INDIAN HEALTH PRO17 GRAMS AND FACILITIES AS FEDERALLY18 QUALIFIED HEALTH CENTERS.

19 (a) IN GENERAL.—Section 1861(aa)(4) (42 U.S.C.

20 1395x(aa)(4)) is amended—

21 (1) by striking ‘‘or’’ at the end of subparagraph

22 (B);

23 (2) by striking the period at the end of sub24 paragraph (C) and inserting ‘‘; or’’; and
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1 (3) by adding at the end the following new sub2 paragraph:

3 ‘‘(D) is an outpatient health program or facility

4 operated by a tribe or tribal organization under the

5 Indian Self-Determination Act or by an urban In6 dian organization receiving funds under title V of

7 the Indian Health Care Improvement Act.’’.

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

9 subsection (a) shall apply to services furnished on or after

10 January 1, 1994.

11 SEC. 13478. MISCELLANEOUS AND TECHNICAL CORREC12 TIONS.

13 (a) REVISION OF INFORMATION ON PART B CLAIMS

14 FORMS.—Section 1833(q)(1) (42 U.S.C. 1395l(q)(1)) is

15 amended—

16 (1) by striking ‘‘provider number’’ and inserting

17 ‘‘unique physician identification number’’; and

18 (2) by striking ‘‘and indicate whether or not the

19 referring physician is an interested investor (within

20 the meaning of section 1877(h)(5))’’.

21 (b) CONSULTATION FOR SOCIAL WORKERS.—Effec22 tive with respect to services furnished on or after January

23 1, 1991, section 6113(c) of OBRA–1989 is amended—

24 (1) by inserting ‘‘and clinical social worker

25 services’’ after ‘‘psychologist services’’; and
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1 (2) by striking ‘‘psychologist’’ the second and

2 third place it appears and inserting ‘‘psychologist or

3 clinical social worker’’.

4 (c) REPORTS ON HOSPITAL OUTPATIENT PAY5 MENT.—(1) OBRA–1989 is amended by striking section

6 6137.

7 (2) Section 1135(d) (42 U.S.C. 1320b–5(d)) is

8 amended—

9 (A) by striking paragraph (6); and

10 (B) in paragraph (7)—

11 (i) by striking ‘‘systems’’ each place it ap12 pears and inserting ‘‘system’’; and

13 (ii) by striking ‘‘paragraphs (1) and (6)’’

14 and inserting ‘‘paragraph (1)’’.

15 (d) RADIOLOGY AND DIAGNOSTIC SERVICES PRO16 VIDED IN HOSPITAL OUTPATIENT DEPARTMENTS.—(1)

17 Effective as if included in the enactment of OBRA–1989,

18 section 1833(n)(1)(B)(i)(II) (42 U.S.C.

19 1395l(n)(1)(B)(i)(II)) is amended—

20 (A) by striking ‘‘1989’’ and inserting ‘‘1989

21 and for services described in subsection (a)(2)(E)(ii)

22 furnished on or after January 1, 1992’’; and

23 (B) by striking ‘‘1842(b)’’ and inserting

24 ‘‘1842(b) (or, in the case of services furnished on or

25 after January 1, 1992, under section 1848)’’.
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1 (2) Effective as if included in the enactment of

2 OBRA–1989, section 1833(n)(1)(B)(i)(II) (42 U.S.C.

3 1395l(n)(1)(B)(i)(II)) is amended by striking ‘‘January 1,

4 1989’’ and inserting ‘‘April 1, 1989’’.

5 (e) PAYMENTS TO NURSE PRACTITIONERS IN RURAL

6 AREAS (SECTION 4155 OF OBRA–1990).—(1) Section

7 1861(s)(2)(K)(iii) (42 U.S.C. 1395x(s)(2)(K)(iii)) is

8 amended—

9 (A) by striking ‘‘subsection (aa)(3)’’ and insert10 ing ‘‘subsection (aa)(5)’’; and

11 (B) by striking ‘‘subsection (aa)(4)’’ and insert12 ing ‘‘subsection (aa)(6)’’.

13 (2) Section 1833(a)(1) (42 U.S.C. 1395l(a)(1)) is

14 amended—

15 (A) by striking ‘‘and’’ before ‘‘(N)’’; and

16 (B) with respect to the matter inserted by sec17 tion 4155(b)(2)(B) of OBRA–1990—

18 (i) by striking ‘‘(M)’’ and inserting ‘‘, and

19 (O)’’, and

20 (ii) by transferring and inserting it (as

21 amended) immediately before the semicolon at

22 the end.

23 (3) Section 1833(r)(1) (42 U.S.C. 1395l(r)(1)) is

24 amended—
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1 (A) by striking ‘‘ambulatory’’ each place it ap2 pears and inserting ‘‘or ambulatory’’; and

3 (B) by striking ‘‘center,’’ and inserting ‘‘cen4 ter’’.

5 (4) Section 1833(r)(2)(A) (42 U.S.C. 1395l(r)(2)(A))

6 is amended by striking ‘‘subsection (a)(1)(M)’’ and insert7 ing ‘‘subsection (a)(1)(O)’’.

8 (5) Section 1861(b)(4) (42 U.S.C. 1395x(b)(4)) is

9 amended by striking ‘‘subsection (s)(2)(K)(i)’’ and insert10 ing ‘‘clauses (i) or (iii) of subsection (s)(2)(K)’’.

11 (6) Section 1861(aa)(5) (42 U.S.C. 1395x(aa)(5)) is

12 amended by striking ‘‘this Act’’ and inserting ‘‘this title’’.

13 (7) Section 1862(a)(14) (42 U.S.C. 1395y(a)(14)) is

14 amended by striking ‘‘1861(s)(2)(K)(i)’’ and inserting

15 ‘‘1861(s)(2)(K)(i) or 1861(s)(2)(K)(iii)’’.

16 (8) Section 1866(a)(1)(H) (42 U.S.C.

17 1395cc(a)(1)(H)) is amended by striking

18 ‘‘1861(s)(2)(K)(i)’’ and inserting ‘‘1861(s)(2)(K)(i) or

19 1861(s)(2)(K)(iii)’’.

20 (f) OTHER MISCELLANEOUS AND TECHNICAL

21 AMENDMENTS.—

22 (1) IMMEDIATE ENROLLMENT IN PART B BY IN23 DIVIDUALS COVERED BY AN EMPLOYMENT-BASED

24 PLAN.—(A) Subparagraphs (A) and (B) of section
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1 1837(i)(3) (42 U.S.C. 1395p(i)(3)) are each amend2 ed—

3 (i) by striking ‘‘beginning with the first

4 day of the first month in which the individual

5 is no longer enrolled’’ and inserting ‘‘including

6 each month during any part of which the indi7 vidual is enrolled’’; and

8 (ii) by striking ‘‘and ending seven months

9 later’’ and inserting ‘‘ending with the last day

10 of the eighth consecutive month in which the in11 dividual is at no time so enrolled’’.

12 (B) Paragraphs (1) and (2) of section 1838(e)

13 (42 U.S.C. 1395q(e)) are amended to read as fol14 lows:

15 ‘‘(1) in any month of the special enrollment pe16 riod in which the individual is at any time enrolled

17 in a plan (specified in subparagraph (A) or (B), as

18 applicable, of section 1837(i)(3)) or in the first

19 month following such a month, the coverage period

20 shall begin on the first day of the month in which

21 the individual so enrolls (or, at the option of the in22 dividual, on the first day of any of the following

23 three months), or

24 ‘‘(2) in any other month of the special enroll25 ment period, the coverage period shall begin on the
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1 first day of the month following the month in which

2 the individual so enrolls.’’.

3 (C) The amendments made by subparagraphs

4 (A) and (B) shall take effect on the first day of the

5 first month that begins after the expiration of the

6 120-day period that begins on the date of the enact7 ment of this Act.

8 (2) BLEND AMOUNTS FOR AMBULATORY SUR9 GICAL CENTER PAYMENTS.—Subclauses (I) and (II)

10 of section 1833(i)(3)(B)(ii) (42 U.S.C.

11 1395l(i)(3)(B)(ii)) are each amended—

12 (A) by striking ‘‘for reporting’’ and insert13 ing ‘‘for portions of cost reporting’’; and

14 (B) by striking ‘‘and on or before’’ and in15 serting ‘‘and ending on or before’’.

16 (3) CLINICAL DIAGNOSTIC LABORATORY TESTS

17 (SECTION 4154 OF OBRA–1990).—Section 4154(e)(5)

18 of OBRA–1990 is amended by striking ‘‘(1)(A)’’ and

19 inserting ‘‘(1)(A),’’.

20 (4) SEPARATE PAYMENT UNDER PART B FOR

21 CERTAIN SERVICES (SECTION 4157 OF OBRA–1990).—

22 Section 4157(a) of OBRA–1990 is amended by

23 striking ‘‘(a) SERVICES OF’’ and all that follows

24 through ‘‘Section’’ and inserting ‘‘(a) TREATMENT
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1 OF SERVICES OF CERTAIN HEALTH PRACTITION2 ERS.—Section’’.

3 (5) CERTIFIED REGISTERED NURSE ANES4 THETISTS (SECTION 4160 OF OBRA–1990).—Section

5 1833(l)(4)(B)(ii)(VII) (42 U.S.C.

6 1395l(l)(4)(B)(ii)(VII)) is amended by striking

7 ‘‘1997’’ and inserting ‘‘1996’’.

8 (6) COMMUNITY HEALTH CENTERS AND RURAL

9 HEALTH CLINICS (SECTION 4161 OF OBRA–1990).—

10 (A) The fourth sentence of section 1861(aa)(2) (42

11 U.S.C. 1395x(aa)(2)) is amended—

12 (i) by striking ‘‘certification’’ the first

13 place it appears and inserting ‘‘approval’’; and

14 (ii) by striking ‘‘the Secretary’s approval

15 or disapproval of the certification’’ and insert16 ing ‘‘Secretary’s approval or disapproval’’.

17 (B) Section 4161(a)(7)(B) of OBRA–1990 is

18 amended by inserting ‘‘and to the Committee on Fi19 nance of the Senate’’ after ‘‘Representatives’’.

20 (7) SCREENING MAMMOGRAPHY (SECTION 4163

21 OF OBRA–1990).—Section 4163 of OBRA–1990 is

22 amended—

23 (A) by adding at the end of subsection (d)

24 the following new paragraph:
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1 ‘‘(3) The amendment made by paragraph

2 (2)(A)(iv) shall apply to screening pap smears per3 formed on or after July 1, 1990.’’; and

4 (B) in subsection (e), by striking ‘‘The

5 amendments’’ and inserting ‘‘Except as pro6 vided in subsection (d)(3), the amendments.’’.

7 (8) INJECTABLE DRUGS FOR TREATMENT OF

8 OSTEOPOROSIS.—

9 (A) CLARIFICATION OF DRUGS COV10 ERED.—The section 1861(jj) (42 U.S.C.

11 1395x(jj)) inserted by section 4156(a)(2) of

12 OBRA–1990 is amended—

13 (i) in the matter preceding paragraph

14 (1), by striking ‘‘a bone fracture related

15 to’’; and

16 (ii) in paragraph (1), by striking ‘‘pa17 tient’’ and inserting ‘‘individual has suf18 fered a bone fracture related to post-meno19 pausal osteoporosis and that the individ20 ual’’.

21 (B) LIMITING COVERAGE TO DRUGS PRO22 VIDED BY HOME HEALTH AGENCIES.—(i) The

23 section 1861(jj) (42 U.S.C. 1395x(jj)) inserted

24 by section 4156(a)(2) of OBRA–1990 is
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1 amended by striking ‘‘if’’ and inserting ‘‘by a

2 home health agency if’’.

3 (ii) Section 1861(m)(5) (42 U.S.C.

4 1395x(m)(5)) is amended by striking ‘‘but ex5 cluding’’ and inserting ‘‘and a covered

6 osteoporosis drug (as defined in subsection

7 (kk), but excluding other’’.

8 (iii) Section 1861(s)(2) (42 U.S.C.

9 1395x(s)(2)) is amended—

10 (I) by adding ‘‘and’’ at the end of

11 subparagraph (N), and

12 (II) by striking subparagraph (O) and

13 redesignating subparagraph (P) as sub14 paragraph (O).

15 (C) PAYMENT BASED ON REASONABLE

16 COST.—Section 1833(a)(2) (42 U.S.C.

17 1395l(a)(2)) is amended—

18 (i) in subparagraph (A), by striking

19 ‘‘health services’’ and inserting ‘‘health

20 services (other than covered osteoporosis

21 drug (as defined in section 1861(kk)))’’;

22 (ii) by striking ‘‘and’’ at the end of

23 subparagraph (D);

24 (iii) by striking the semicolon at the

25 end and inserting ‘‘; and’’; and
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1 (iv) by adding at the end the following

2 new subparagraph:

3 ‘‘(F) with respect to covered osteoporosis

4 drug (as defined in section 1861(kk)) furnished

5 by a home health agency, 80 percent of the rea6 sonable cost of such service, as determined

7 under section 1861(v);’’.

8 (D) APPLICATION OF PART B DEDUCT9 IBLE.—Section 1833(b)(2) (42 U.S.C.

10 1395l(b)(2)) is amended by striking ‘‘services’’

11 and inserting ‘‘services (other than covered

12 osteoporosis drug (as defined in section

13 1861(kk)))’’.

14 (E) COVERED OSTEOPOROSIS DRUG (SEC15 TION 4156 OF OBRA–1990).—Section 1861 (42

16 U.S.C. 1395x) is amended, in the subsection

17 (jj) inserted by section 4156(a)(2) of OBRA–

18 1990, by striking ‘‘(jj) The term’’ and inserting

19 ‘‘(kk) The term’’.

20 (9) OTHER MISCELLANEOUS AND TECHNICAL

21 CORRECTIONS (SECTION 4164 OF OBRA–1990).—

22 (A) OWNERSHIP DISCLOSURE REQUIRE23 MENTS.—(i) Section 1124A(a)(2)(A) (42

24 U.S.C. 1320a–3a(a)(2)(A)) is amended by

25 striking ‘‘of the Social Security Act’’.
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1 (ii) Section 4164(b)(4) of OBRA–1990 is

2 amended by striking ‘‘paragraph’’ and inserting

3 ‘‘paragraphs’’.

4 (B) DIRECTORY OF UNIQUE PHYSICIAN

5 IDENTIFIER NUMBERS.—Section 4164(c) of

6 OBRA–1990 is amended by striking ‘‘publish’’

7 and inserting ‘‘publish, and shall periodically

8 update,’’.

9 (g) EFFECTIVE DATE.—Except as otherwise provided

10 in this section, the amendments made by this section shall

11 take effect as if included in the enactment of OBRA–1990.

12 Subchapter F—Part B Premium

13 SEC. 13481. PART B PREMIUM.

14 Section 1839(e) (42 U.S.C. 1395r(e)) is amended—

15 (1) in paragraph (1)(A), by inserting ‘‘and for

16 each month in 1996 and 1997’’ after ‘‘January

17 1991’’, and

18 (2) in paragraph (2), by striking ‘‘1991’’ and

19 inserting ‘‘1998’’.
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1 CHAPTER 3—PROVISIONS RELATING TO

2 PARTS A AND B

3 Subchapter A—Elimination of Updates

4 SEC. 13501. ELIMINATION OF COST-OF-LIVING UPDATE IN

5 PER RESIDENT AMOUNTS FOR DIRECT MEDI6 CAL EDUCATION.

7 Section 1886(h)(2)(D) (42 U.S.C. 1395ww(h)(2)(D))

8 is amended by inserting ‘‘(other than in the case of cost

9 reporting periods beginning during fiscal year 1994 or fis10 cal year 1995)’’ after ‘‘updated’’.

11 SEC. 13502. ELIMINATION OF INFLATION UPDATE IN COST

12 LIMITS FOR HOME HEALTH SERVICES.

13 The Secretary of Health and Human Services shall

14 not provide for any increase, on the basis of inflation or

15 changes in the cost of goods and services, in the per visit

16 cost limits for home health services under section

17 1861(v)(1)(L) of the Social Security Act for cost reporting

18 periods beginning during fiscal year 1994 or fiscal year

19 1995.

20 Subchapter B—Medicare Secondary Payer

21 Provisions

22 SEC. 13511. EXTENSION OF TRANSFER OF DATA.

23 (a) EXTENSION OF DATA MATCH PROGRAM.—
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1 (1) Section 1862(b)(5)(C)(iii) of the Social Se2 curity Act (42 U.S.C. 1395y(b)(5)(C)(iii)) is amend3 ed by striking ‘‘1995’’ and inserting ‘‘1998’’.

4 (2) Section 6103(l)(12)(F) of the Internal Rev5 enue Code of 1986 is amended—

6 (A) in clause (i), by striking ‘‘1995’’ and

7 inserting ‘‘1998’’,

8 (B) in clause (ii)(I), by striking ‘‘1994’’

9 and inserting ‘‘1997’’, and

10 (C) in clause (ii)(II), by striking ‘‘1995’’

11 and inserting ‘‘1998’’.

12 (b) SECONDARY PAYER EXEMPTION FOR MEMBERS

13 OF RELIGIOUS ORDERS.—Effective as if included in the

14 enactment of OBRA–1989, section 6202(e)(2) of such Act

15 is amended by adding at the end the following: ‘‘Such

16 amendment also shall apply to items and services fur17 nished before such date with respect to secondary payer

18 cases which the Secretary of Health and Human Services

19 had not identified as of such date.’’.

20 (c) PERMITTING THE USE OF MINIMUM INCOME

21 THRESHOLDS.—

22 (1) Section 6103(l)(12)(B)(i) of the Internal

23 Revenue Code of 1986 is amended by inserting ‘‘,

24 above an amount (if any) specified by the Secretary
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1 of Health and Human Services,’’ after ‘‘section

2 3401(a))’’.

3 (2) The matter in section 6103(l)(12)(B)(ii) of

4 such Code preceding subclause (I) is amended by in5 serting ‘‘, above an amount (if any) specified by the

6 Secretary of Health and Human Services,’’ after

7 ‘‘wages’’.

8 (3) The heading to section 6103(l)(12) of such

9 Code is amended by striking ‘‘TAXPAYER IDENTITY’’

10 and inserting ‘‘RETURN’’.

11 SEC. 13512. 3-YEAR EXTENSION OF MEDICARE SECONDARY

12 PAYER TO DISABLED BENEFICIARIES.

13 Section 1862(b)(1)(B)(iii) (42 U.S.C.

14 1395y(b)(1)(B)(iii)) is amended by striking ‘‘1995’’ and

15 inserting ‘‘1998’’.

16 SEC. 13513. 3-YEAR EXTENSION OF 18-MONTH RULE FOR

17 ESRD BENEFICIARIES.

18 Section 1862(b)(1)(C) (42 U.S.C. 1395y(b)(1)(C)) is

19 amended by striking ‘‘1996’’ and inserting ‘‘1999’’.

20 SEC. 13514. MEDICARE SECONDARY PAYER REFORMS.

21 (a) IMPROVING IDENTIFICATION OF MEDICARE SEC22 ONDARY PAYER SITUATIONS.—

23 (1) SURVEY OF BENEFICIARIES.—
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1 (A) IN GENERAL.—Section 1862(b)(5) (42

2 U.S.C. 1395y(b)(5)) is amended by adding at

3 the end the following new subparagraph:

4 ‘‘(D) OBTAINING INFORMATION FROM

5 BENEFICIARIES.—Before an individual applies

6 for benefits under part A or enrolls under part

7 B, the Administrator shall mail the individual a

8 questionnaire to obtain information on whether

9 the individual is covered under a primary plan

10 and the nature of the coverage provided under

11 the plan, including the name, address, and iden12 tifying number of the plan.’’.

13 (B) DISTRIBUTION OF QUESTIONNAIRE BY

14 CONTRACTOR.—The Secretary of Health and

15 Human Services shall enter into an agreement

16 with an entity not later than November 1,

17 1993, to distribute the questionnaire described

18 in section 1862(b)(5)(D) of the Social Security

19 Act (as added by subparagraph (A)).

20 (C) NO MEDICARE SECONDARY PAYER DE21 NIAL BASED ON FAILURE TO COMPLETE QUES22 TIONNAIRE.—Section 1862(b)(2) (42 U.S.C.

23 1395y(b)(2)) is amended by adding at the end

24 the following new subparagraph:
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1 ‘‘(C) TREATMENT OF QUESTIONNAIRES.—

2 The Secretary may not fail to make payment

3 under subparagraph (A) solely on the ground

4 that an individual failed to complete a question5 naire concerning the existence of a primary

6 plan.’’.

7 (2) MANDATORY SCREENING BY PROVIDERS

8 AND SUPPLIERS UNDER PART B.—

9 (A) IN GENERAL.—Section 1862(b) (42

10 U.S.C. 1395y(b)) is amended by adding at the

11 end the following new paragraph:

12 ‘‘(6) SCREENING REQUIREMENTS FOR PROVID13 ERS AND SUPPLIERS.—

14 ‘‘(A) IN GENERAL.—Notwithstanding any

15 other provision of this title, no payment may be

16 made for any item or service furnished under

17 part B unless the entity furnishing such item or

18 service completes (to the best of its knowledge

19 and on the basis of information obtained from

20 the individual to whom the item or service is

21 furnished) the portion of the claim form relat22 ing to the availability of other health benefit

23 plans.

24 ‘‘(B) PENALTIES.—An entity that know25 ingly, willfully, and repeatedly fails to complete
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1 a claim form in accordance with subparagraph

2 (A) or provides inaccurate information relating

3 to the availability of other health benefit plans

4 on a claim form under such subparagraph shall

5 be subject to a civil money penalty of not to ex6 ceed $2,000 for each such incident. The provi7 sions of section 1128A (other than subsections

8 (a) and (b)) shall apply to a civil money penalty

9 under the previous sentence in the same man10 ner as such provisions apply to a penalty or

11 proceeding under section 1128A(a).’’.

12 (B) EFFECTIVE DATE.—The amendment

13 made by subparagraph (A) shall apply with re14 spect to items and services furnished on or

15 after January 1, 1994.

16 (b) IMPROVEMENTS IN RECOVERY OF PAYMENTS

17 FROM PRIMARY PAYERS.—

18 (1) SUBMISSION OF REPORTS ON EFFORTS TO

19 RECOVER ERRONEOUS PAYMENTS.—

20 (A) FISCAL INTERMEDIARIES UNDER PART

21 A.—Section 1816 (42 U.S.C. 1396h) is amend22 ed by adding at the end the following new sub23 section:

24 ‘‘(k) An agreement with an agency or organization

25 under this section shall require that such agency or orga-
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1 nization submit an annual report to the Secretary describ2 ing the steps taken to recover payments made for items

3 or services for which payment has been or could be made

4 under a primary plan (as defined in section

5 1862(b)(2)(A)).’’.

6 (B) CARRIERS UNDER PART B.—Section

7 1842(b)(3) (42 U.S.C. 1395u(b)(3)) is amend8 ed—

9 (i) by striking ‘‘and’’ at the end of

10 subparagraph (H); and

11 (ii) by inserting after subparagraph

12 (H) the following new subparagraph:

13 ‘‘(I) will submit annual reports to the Secretary

14 describing the steps taken to recover payments made

15 under this part for items or services for which pay16 ment has been or could be made under a primary

17 plan (as defined in section 1862(b)(2)(A)).’’.

18 (2) REQUIREMENTS UNDER CARRIER PERFORM19 ANCE EVALUATION PROGRAM.—

20 (A) FISCAL INTERMEDIARIES UNDER PART

21 A.—Section 1816(f)(1)(A) (42 U.S.C.

22 1396h(f)(1)(A)) is amended by striking ‘‘proc23 essing’’ and inserting ‘‘processing (including the

24 agency’s or organization’s success in recovering

25 payments made under this title for services for
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1 which payment has been or could be made

2 under a primary plan (as defined in section

3 1862(b)(2)(A)))’’.

4 (B) CARRIERS UNDER PART B.—Section

5 1842(b)(2) (42 U.S.C. 1395u(b)(2)) is amended

6 by adding at the end the following new sub7 paragraph:

8 ‘‘(D) In addition to any other standards and criteria

9 established by the Secretary for evaluating carrier per10 formance under this paragraph relating to avoiding erro11 neous payments, the Secretary shall establish standards

12 and criteria relating to the carrier’s success in recovering

13 payments made under this part for items or services for

14 which payment has been or could be made under a pri15 mary plan (as defined in section 1862(b)(2)(A)).’’.

16 (3) DEADLINE FOR REIMBURSEMENT BY PRI17 MARY PLANS.—

18 (A) IN GENERAL.—Section

19 1862(b)(2)(B)(i) (42 U.S.C. 1395y(b)(2)(B)(i))

20 is amended by adding at the end the following

21 sentence: ‘‘If reimbursement is not made to the

22 appropriate Trust Fund before the expiration of

23 the 60-day period that begins on the date such

24 notice or other information is received, the Sec25 retary may charge interest (beginning with the
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1 date on which the notice or other information

2 is received) on the amount of the reimburse3 ment until reimbursement is made (at a rate

4 determined by the Secretary in accordance with

5 regulations of the Secretary of the Treasury ap6 plicable to charges for late payments).’’.

7 (B) CONFORMING AMENDMENT.—The

8 heading of clause (i) of section 1862(b)(2)(B) is

9 amended to read as follows: ‘‘REPAYMENT RE10 QUIRED.—’’.

11 (C) EFFECTIVE DATE.—The amendments

12 made by this paragraph shall apply to payments

13 for items and services furnished on or after the

14 date of the enactment of this Act.

15 (4) EFFECTIVE DATE.—The amendments made

16 by paragraphs (1) and (2) shall apply to contracts

17 with fiscal intermediaries and carriers under title

18 XVIII of the Social Security Act for years beginning

19 with 1994.

20 (c) APPLICATION OF AGGREGATION RULES.—

21 (1) WORKING AGED.—Section 1862(b)(1)(A)

22 (42 U.S.C. 1395y(b)(1)(A)) is amended by adding at

23 the end the following new clause:

24 ‘‘(vi) APPLICATION OF AGGREGATION

25 RULES.—All employers treated as a single
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1 employer under subsection (a) or (b) of

2 section 52 of the Internal Revenue Code of

3 1986 shall be treated as a single employer

4 for purposes of this subparagraph.’’.

5 (2) DISABLED INDIVIDUALS.—Section

6 5000(b)(2) of the Internal Revenue Code of 1986

7 (relating to large group health plans) is amended by

8 adding at the end the following: ‘‘All employers

9 treated as a single employer under subsection (a) or

10 (b) of section 52 shall be treated as a single em11 ployer for purposes of this paragraph.’’.

12 (3) EFFECTIVE DATE.—The amendments made

13 by this subsection shall take effect 90 days after the

14 date of the enactment of this Act.

15 (d) APPLICATION OF EXCISE TAX TO FAILURE TO

16 REIMBURSE FEDERAL GOVERNMENT.—

17 (1) IN GENERAL.—Section 5000(c) of the Inter18 nal Revenue Code of 1986 (relating to nonconform19 ing group health plans) is amended by striking ‘‘of

20 section 1862(b)(1)’’ and inserting ‘‘of paragraph (1),

21 or with the requirements of paragraph (2), of section

22 1862(b)’’.

23 (2) EFFECTIVE DATE.—The amendment made

24 by paragraph (1) shall apply to demands for repay-
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1 ment issued after the date of the enactment of this

2 Act.

3 (e) MISCELLANEOUS AND TECHNICAL CORREC4 TIONS.—

5 (1) The sentence in section 1862(b)(1)(C)

6 added by section 4203(c)(1)(B) of OBRA–1990 is

7 amended—

8 (A) by striking ‘‘on or before’’ and insert9 ing ‘‘before’’, and

10 (B) by striking ‘‘clauses (i) and (ii)’’ and

11 inserting ‘‘this subparagraph’’.

12 (2) Effective as if included in the enactment of

13 OBRA–1989, section 1862(b)(1) is amended—

14 (A) in subparagraphs (A)(v) and

15 (B)(iv)(II), by inserting ‘‘, without regard to

16 section 5000(d) of such Code’’ before the period

17 at the end of each subparagraph;

18 (B) in subparagraph (A)(iii), by striking

19 ‘‘current calendar year or the preceding cal20 endar year’’ and inserting ‘‘current calendar

21 year and the preceding calendar year’’; and

22 (C) in the matter in subparagraph (C)

23 after clause (ii), by striking ‘‘taking into ac24 count that’’ and inserting ‘‘paying benefits sec25 ondary to this title when’’.
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1 (3) Effective as if included in the enactment of

2 OBRA–1989, section 1862(b)(5)(C)(i) (42 U.S.C.

3 1395y(b)(5)(C)(i)) is amended by striking

4 ‘‘6103(l)(12)(D)(iii)’’ and inserting

5 ‘‘6103(l)(12)(E)(iii)’’.

6 (4) Section 4203(c)(2) of OBRA–1990 is

7 amended—

8 (A) by striking ‘‘the application of clause

9 (iii)’’ and inserting ‘‘the second sentence’’;

10 (B) by striking ‘‘on individuals’’ and all

11 that follows through ‘‘section 226A of such

12 Act’’;

13 (C) in clause (ii), by striking ‘‘clause’’ and

14 inserting ‘‘sentence’’;

15 (D) in clause (v), by adding ‘‘and’’ at the

16 end; and

17 (E) in clause (vi)—

18 (i) by inserting ‘‘of such Act’’ after

19 ‘‘1862(b)(1)(C)’’, and

20 (ii) by striking the period at the end

21 and inserting the following: ‘‘, without re22 gard to the number of employees covered

23 by such plans.’’.
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1 (5) Section 4203(d) of OBRA–1990 is amended

2 by striking ‘‘this subsection’’ and inserting ‘‘this sec3 tion’’.

4 (6) Except as provided in paragraphs (2) and

5 (3), the amendments made by this subsection shall

6 be effective as if included in the enactment of

7 OBRA–1990.

8 Subchapter C—Physician Ownership and

9 Referral

10 SEC. 13521. APPLICATION OF MEDICARE BAN ON SELF-RE11 FERRALS TO ALL PAYERS.

12 (a) IN GENERAL.—Section 1877 (42 U.S.C. 1395nn)

13 is amended—

14 (1) in subsection (a)—

15 (A) in paragraph (1)(A), by striking ‘‘for

16 which payment otherwise may be made under

17 this title’’ and inserting ‘‘for which a charge is

18 imposed’’, and

19 (B) in paragraph (1)(B), by striking

20 ‘‘under this title’’;

21 (2) by amending paragraph (1) of subsection

22 (g) to read as follows:

23 ‘‘(1) DENIAL OF PAYMENT.—No payment may

24 be made under this title, under another Federal

25 health care program, or under a State health care
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1 program (as defined in section 1128(h)) for a des2 ignated health service for which a claim is presented

3 in violation of subsection (a)(1)(B). No individual,

4 third party payer, or other entity is liable for pay5 ment for designated health services for which a

6 claim is presented in violation of such subsection.’’;

7 and

8 (3) in subsection (g)(3), by striking ‘‘for which

9 payment may not be made under paragraph (1)’’

10 and inserting ‘‘for which such a claim may not be

11 presented under subsection (a)(1)’’.

12 (b) CONFORMING AMENDMENT TO REPORTING RE13 QUIREMENT.—Section 1877(f) (42 U.S.C. 1395nn(f)) is

14 amended—

15 (1) by striking ‘‘for which payment may be

16 made under this title’’ each place it appears and in17 serting ‘‘for which a charge is imposed’’, and

18 (2) by striking the third sentence.

19 SEC. 13522. EXTENSION OF SELF-REFERRAL BAN TO ADDI20 TIONAL SPECIFIED SERVICES.

21 Section 1877 (42 U.S.C. 1395nn) is amended—

22 (1) by striking ‘‘clinical laboratory service’’,

23 ‘‘clinical laboratory services’’, and ‘‘CLINICAL LAB24 ORATORY SERVICES’’ and inserting ‘‘designated

25 health service’’, ‘‘designated health services’’, and
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1 ‘‘DESIGNATED HEALTH SERVICES’’, respectively,

2 each place each appears in subsections (a)(1),

3 (b)(2)(A)(ii), (b)(4), (d)(1), (d)(2), (d)(3), (f),

4 (g)(1), and (h)(7)(B); and

5 (2) by adding at the end the following new sub6 section:

7 ‘‘(i) DESIGNATED HEALTH SERVICES DEFINED.—In

8 this section, the term ‘designated health services’ means

9 any of the following items or services:

10 ‘‘(1) clinical laboratory services;

11 ‘‘(2) physical and occupational therapy services;

12 ‘‘(3) radiology services, including magnetic reso13 nance imaging, computerized axial tomography

14 scans, and ultrasound services;

15 ‘‘(4) radiation therapy services;

16 ‘‘(5) durable medical equipment;

17 ‘‘(6) parenteral and enteral nutrition equipment

18 and supplies;

19 ‘‘(7) prosthetic devices and orthotics and pros20 thetics;

21 ‘‘(8) outpatient prescription drugs;

22 ‘‘(9) home infusion therapy services, home dial23 ysis, and home health services;

24 ‘‘(10) ambulance services;

25 ‘‘(11) inpatient and outpatient hospital services;
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1 ‘‘(12) comprehensive outpatient rehabilitation

2 facility services;

3 ‘‘(13) contact lenses and eyeglasses; and

4 ‘‘(14) hearing aids.’’.

5 SEC. 13523. EXCEPTIONS FOR BOTH OWNERSHIP AND COM6 PENSATION ARRANGEMENTS.

7 (a) MODIFICATION TO EXCEPTION FOR IN-OFFICE

8 ANCILLARY SERVICES.—Section 1877(b)(2) (42 U.S.C.

9 1395nn(b)(2)) is amended—

10 (1) by inserting ‘‘(other than durable medical

11 equipment, parenteral and enteral nutrition equip12 ment and supplies, and ambulance services)’’ after

13 ‘‘services’’ the first place it appears, and

14 (2) in subparagraph (A)(ii)(II), by striking

15 ‘‘centralized provision’’ and inserting ‘‘provision of

16 some or all’’.

17 (b) MODIFICATION OF RURAL PROVIDER EXCEP18 TION.—

19 (1) IN GENERAL.—Section 1877(b) (42 U.S.C.

20 1395nn(b)) is amended—

21 (A) by redesignating paragraph (5) as

22 paragraph (6), and

23 (B) by inserting after paragraph (4) the

24 following new paragraph:
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1 ‘‘(5) RURAL PROVIDERS.—In the case of des2 ignated health services if—

3 ‘‘(A) the entity furnishing the services is in

4 a rural area (as defined in section

5 1886(d)(2)(D)), and

6 ‘‘(B) substantially all of the services (as

7 defined by the Secretary) furnished by the en8 tity are furnished to individuals who reside in

9 such a rural area.’’.

10 (2) CONFORMING AMENDMENTS.—Section

11 1877(d) (42 U.S.C. 1395nn(d)) is amended—

12 (A) by striking paragraph (2), and

13 (B) by redesignating paragraph (3) as

14 paragraph (2).

15 SEC. 13524. EXCEPTIONS RELATED ONLY TO OWNERSHIP

16 OR INVESTMENT.

17 (a) PUBLICLY-TRADED SECURITIES.—Section

18 1877(c)(2) (42 U.S.C. 1395nn(c)(2)) is amended by strik19 ing ‘‘total assets’’ and inserting ‘‘stockholder equity’’.

20 (b) RURAL PROVIDERS.—For amendment to excep21 tion relation to rural providers, see section 13523(b).

22 SEC. 13525. EXCEPTIONS RELATED ONLY TO COMPENSA23 TION ARRANGEMENTS.

24 (a) RENTAL OF OFFICE SPACE AND EQUIPMENT.—
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1 (1) IN GENERAL.—Paragraph (1) of section

2 1877(e) (42 U.S.C. 1395nn(e)) is amended to read

3 as follows:

4 ‘‘(1) RENTAL OF OFFICE SPACE; RENTAL OF

5 EQUIPMENT.—

6 ‘‘(A) OFFICE SPACE.—Payments made by

7 a lessee to a lessor for the use of premises if—

8 ‘‘(i) the lease is set out in writing,

9 signed by the parties, and specifies the

10 premises covered by the lease,

11 ‘‘(ii) the aggregate space rented or

12 leased does not exceed that which is rea13 sonable and necessary for the legitimate

14 business purposes of the lease or rental

15 and is used exclusively by the lessee when

16 being used by the lessee,

17 ‘‘(iii) the lease provides for a term of

18 rental or lease for at least one year,

19 ‘‘(iv) the aggregate rental charges

20 over the term of the lease are set in ad21 vance, are consistent with fair market

22 value, and are not determined in a manner

23 that takes into account the volume or value

24 of any referrals or other business gen25 erated between the parties,
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1 ‘‘(v) the lease would be commercially

2 reasonable even if no referrals were made

3 between the parties,

4 ‘‘(vi) the lease covers all of the prem5 ises leased between the parties for the pe6 riod of the lease, and

7 ‘‘(vii) the compensation arrangement

8 meets such other requirements as the Sec9 retary may impose by regulation as needed

10 to protect against program or patient

11 abuse.

12 ‘‘(B) EQUIPMENT.—Payments made by a

13 lessee of equipment to the lessor of the equip14 ment for the use of the equipment if—

15 ‘‘(i) the lease is set out in writing,

16 signed by the parties, and specifies the

17 equipment covered by the lease,

18 ‘‘(ii) the equipment rented or leased

19 does not exceed that which is reasonable

20 and necessary for the legitimate business

21 purposes of the lease or rental and is used

22 exclusively by the lessee when being used

23 by the lessee,

24 ‘‘(iii) the lease provides for a term of

25 rental or lease of at least one year,
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1 ‘‘(iv) the aggregate rental charges

2 over the term of the lease are set in ad3 vance, are consistent with fair market

4 value, and are not determined in a manner

5 that takes into account the volume or value

6 of any referrals or other business gen7 erated between the parties,

8 ‘‘(v) the lease would be commercially

9 reasonable even if no referrals were made

10 between the parties,

11 ‘‘(vi) the lease covers all of the equip12 ment leased between the parties for the pe13 riod of the lease, and

14 ‘‘(vii) the compensation arrangement

15 meets such other requirements as the Sec16 retary may impose by regulation as needed

17 to protect against program or patient

18 abuse.’’.

19 (2) CONFORMING AMENDMENT.—Section

20 1877(h) (42 U.S.C. 1395nn(h)) is amended by strik21 ing paragraphs (5) and (6).

22 (b) BONA FIDE EMPLOYMENT RELATIONSHIPS.—

23 Section 1877(e) (42 U.S.C. 1395nn(e)) is amended—

24 (1) in paragraph (2)—
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1 (A) by striking ‘‘EMPLOYMENT’’ and all

2 that follows through ‘‘if’’ and inserting ‘‘BONA

3 FIDE EMPLOYMENT RELATIONSHIPS.—Any

4 amount paid by an employer to a physician (or

5 immediate family member) who has a bona fide

6 employment relationship with the employer for

7 the provision of services if’’;

8 (B) in subparagraphs (A), (B), and (D),

9 by striking ‘‘arrangement’’ and inserting ‘‘em10 ployment’’;

11 (C) in subparagraph (C), by striking ‘‘to

12 the hospital’’; and

13 (D) by adding at the end the following:

14 ‘‘Subparagraph (B)(ii) shall not be construed as pro15 hibiting the payment of remuneration in the form of

16 shares of overall profits or in the form of a produc17 tivity bonus based on services performed personally

18 by the physician or family member, if the amount of

19 the remuneration is not determined in a manner

20 that takes into account directly the volume or value

21 of any referrals by the referring physician.’’; and

22 (2) in paragraph (5)(A), by striking ‘‘in the

23 same manner as they apply to a hospital’’.

24 (c) PERSONAL SERVICE ARRANGEMENTS.—
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1 (1) IN GENERAL.—Paragraph (3) of section

2 1877(e) (42 U.S.C. 1395nn(e)) is amended to read

3 as follows:

4 ‘‘(3) PERSONAL SERVICE ARRANGEMENTS.—Re5 muneration from an entity under an arrangement

6 if—

7 ‘‘(A) the arrangement is set out in writing,

8 signed by the parties, and specifies the services

9 covered by the arrangement,

10 ‘‘(B) the arrangement covers all of the

11 services to be provided by the physician (or

12 family member) to the entity,

13 ‘‘(C) the aggregate services contracted for

14 do not exceed those that are reasonable and

15 necessary for the legitimate business purposes

16 of the arrangement,

17 ‘‘(D) the term of the arrangement is for at

18 least one year,

19 ‘‘(E) the compensation to be paid over the

20 term of the arrangement is set in advance, does

21 not exceed fair market value, and is not deter22 mined in a manner that takes into account di23 rectly or indirectly the volume or value of any

24 referrals or other business generated between

25 the parties,
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1 ‘‘(F) the services to be performed under

2 the arrangement do not involve the counseling

3 or promotion of a business arrangement or

4 other activity that violates any State or Federal

5 law, and

6 ‘‘(G) the arrangement meets such other re7 quirements as the Secretary may impose by reg8 ulation as needed to protect against program or

9 patient abuse.’’.

10 (2) HEALTH SERVICES FURNISHED UNDER

11 CERTAIN HOSPITAL ARRANGEMENTS.—Section

12 1877(e) (42 U.S.C. 1395nn(e)) is amended by add13 ing at the end the following new paragraph:

14 ‘‘(7) CERTAIN GROUP PRACTICE ARRANGE15 MENTS WITH A HOSPITAL.—

16 ‘‘(A) IN GENERAL.—An arrangement be17 tween a hospital and a group for the provision

18 of designated health services by the group but

19 billed in the name of the hospital if—

20 ‘‘(i) the group would be a group prac21 tice, but for the fact that it bills for such

22 services in the name of the hospital;

23 ‘‘(ii) with respect to services provided

24 to an inpatient of the hospital, the ar25 rangement is pursuant to the provision of
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1 inpatient hospital services under section

2 1861(b)(3);

3 ‘‘(iii) the arrangement began before

4 December 19, 1989, and has continued in

5 effect without interruption since such date;

6 ‘‘(iv) the group provides substantially

7 all of the designated health services fur8 nished under the arrangement to the hos9 pital’s patients;

10 ‘‘(v) the arrangement is pursuant to

11 an agreement that is set out in writing and

12 that specifies the services to be provided by

13 the parties and the compensation for serv14 ices provided under the agreement;

15 ‘‘(vi) the compensation paid over the

16 term of the agreement is consistent with

17 fair market value and the compensation

18 per unit of services is fixed in advance and

19 is not determined in a manner that takes

20 into account the volume or value of any re21 ferrals or other business generated between

22 the parties;

23 ‘‘(vii) the compensation is provided

24 pursuant to an agreement which would be
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1 commercially reasonable even if no refer2 rals were made to the entity; and

3 ‘‘(viii) the arrangement between the

4 parties meets such other requirements as

5 the Secretary may impose by regulation as

6 needed to protect against program or pa7 tient abuse.’’.

8 (d) PHYSICIAN RECRUITMENT.—Section 1877(e)(4)

9 (42 U.S.C. 1395nn(e)(4)) is amended—

10 (1) by redesignating subparagraphs (A) through

11 (C) as subparagraph (B) through (D), and

12 (2) by inserting before subparagraph (B), as so

13 redesignated, the following new subparagraph:

14 ‘‘(A) the remuneration arrangement is set

15 out in writing, signed by the parties, and speci16 fies the benefits provided by the hospital, the

17 terms under which the benefits are to be pro18 vided, and the obligations of the parties,’’.

19 (e) ISOLATED TRANSACTIONS.—Section 1877(e)(5)

20 (42 U.S.C. 1395nn(e)(5)) is amended—

21 (1) by striking ‘‘ISOLATED’’ and inserting

22 ‘‘ONE-TIME’’,

23 (2) by striking ‘‘isolated’’ and inserting ‘‘one24 time’’, and
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1 (3) by inserting ‘‘or practice’’ after ‘‘one-time

2 sale of property’’.

3 (f) NEW EXCEPTION FOR PAYMENTS BY PHYSI4 CIAN.—Section 1877(e) (42 U.S.C. 1395nn(e)), as amend5 ed by subsection (c)(2), is further amended by adding at

6 the end the following new paragraph:

7 ‘‘(8) PAYMENTS BY A PHYSICIAN FOR ITEMS

8 AND SERVICES.—Payments made by a physician—

9 ‘‘(A) to a laboratory in exchange for the

10 provision of clinical laboratory services, or

11 ‘‘(B) to an entity as compensation for

12 other items or services if the items or services

13 are furnished at a price that is consistent with

14 fair market value.’’.

15 SEC. 13526. CLARIFICATION CONCERNING CIVIL MONEY

16 PENALTY SANCTIONS.

17 Section 1877(g)(3) (42 U.S.C. 1395nn(g)(3)) is

18 amended by inserting ‘‘(including a referring physician)’’

19 after ‘‘Any person’’.

20 SEC. 13527. REQUIREMENTS FOR GROUP PRACTICE.

21 (a) ADDITIONAL REQUIREMENTS.—Section

22 1877(h)(4) (42 U.S.C. 1395nn(h)(4)) is amended—

23 (1) by striking ‘‘and’’ at the end of subpara24 graph (C);
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1 (2) by redesignating subparagraphs (A), (B),

2 (C), and (D) as clauses (i), (ii), (iii), and (vii), re3 spectively;

4 (3) by inserting ‘‘(A)’’ after ‘‘.—’’;

5 (4) by inserting after clause (iii), as so redesig6 nated, the following:

7 ‘‘(iv) subject to subparagraph (B), no phy8 sician who is a member of the group receives

9 compensation based on the volume or value of

10 referrals by the physician;

11 ‘‘(v) there are no less than, on average, 5

12 physicians for each office location (as defined in

13 subparagraph (C)), except where there is only a

14 single office location for the entire group prac15 tice;

16 ‘‘(vi) members of the group personally con17 duct no less than 75 percent of the physician18 patient encounters of the group practice; and’’;

19 and

20 (5) by adding at the end the following new sub21 paragraphs:

22 ‘‘(B) A physician in a group practice may be

23 paid a share of overall profits of the group or a pro24 ductivity bonus (based on services personally per25 formed or personally supervised by the physician or
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1 by another physician in the group) so long as the

2 share or bonus is not determined in any manner

3 which is directly related to the volume or value of re4 ferrals by that physician.

5 ‘‘(C)(i) Except as provided in clauses (ii)

6 through (iv), the term ‘office location’ means an of7 fice where physician services are offered to patients.

8 ‘‘(ii) Such term does not include a location con9 sisting solely of a diagnostic facility, nursing facility,

10 or treatment facility (such as a physical or occupa11 tional therapy center), or administrative services af12 filiated with the group practice.

13 ‘‘(iii) Any office location which is located imme14 diately adjacent to another office location shall be

15 treated as the same office location.

16 ‘‘(iv) The term ‘office location’ does not include

17 an office located in a rural area (as defined in sec18 tion 1886(d)(2)(D)) if at least 85 percent of the

19 physician services at the location are provided to in20 dividuals who reside in such a rural area.’’.

21 (b) USE OF BILLING NUMBERS, ETC.—Section 1877

22 (42 U.S.C. 1395nn) is amended—

23 (1) in subsection (b)(2)(B), by inserting ‘‘under

24 a billing number assigned to the group practice’’

25 after ‘‘member’’,
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1 (2) in subsection (h)(4)(A)(ii), as redesignated

2 by subsection (a)(2), by inserting ‘‘and under a bill3 ing number assigned to the group’’ after ‘‘in the

4 name of the group’’, and

5 (3) in subsection (h)(4)(A)(iii), as redesignated

6 by subsection (a)(2), by striking ‘‘by members of the

7 group’’.

8 (c) TREATMENT OF CERTAIN FACULTY PRACTICE

9 PLANS.—The last sentence of section 1877(h)(4)(A) (42

10 U.S.C. 1395nn(h)(4)(A)), as redesignated by subsection

11 (a)(2), is amended by inserting ‘‘, institution of higher

12 education, or medical school’’ after ‘‘hospital’’.

13 SEC. 13538. NO FEDERAL PREEMPTION OF MORE RESTRIC14 TIVE STATE LAWS.

15 Section 1877 (42 U.S.C. 1395nn), as amended by

16 section 13522(2), is amended by adding at the end the

17 following new subsection:

18 ‘‘(j) NO FEDERAL PREEMPTION OF MORE RESTRIC19 TIVE STATE LAWS.—Nothing in this section shall preempt

20 provisions of State law—

21 ‘‘(1) that relate to referrals not covered by this

22 section, or

23 ‘‘(2) that relate to referrals covered by this sec24 tion and are more restrictive with respect to such re25 ferrals than the provisions of this section.’’.
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1 SEC. 13529. MISCELLANEOUS PROVISIONS.

2 (a) INDIRECT FINANCIAL RELATIONSHIPS.—The last

3 sentence of section 1877(a)(2) (42 U.S.C. 1395nn(a)(2))

4 is amended by inserting before the period the following:

5 ‘‘and includes an interest in an entity that holds an owner6 ship or investment in another entity’’.

7 (b) MINOR REMUNERATION.—Section 1877(h)(1)

8 (42 U.S.C. 1395nn(h)(1)) is amended—

9 (1) in subparagraph (A), by inserting before the

10 period at the end the following: ‘‘(other than an ar11 rangement involving only remuneration described in

12 subparagraph (C))’’, and

13 (2) by adding at the end the following new sub14 paragraph:

15 ‘‘(C) Remuneration described in this subpara16 graph is any remuneration consisting of any of the

17 following:

18 ‘‘(i) The forgiveness of amounts owed for

19 inaccurate tests or procedures, mistakenly per20 formed tests or procedures, or the correction of

21 minor billing errors.

22 ‘‘(ii) The provision of items, devices, or

23 supplies that are used solely to—

24 ‘‘(I) collect, transport, process, or

25 store specimens for the entity providing

26 the item, device, or supply, or
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1 ‘‘(II) communicate the results of tests

2 or procedures for such entity.’’.

3 (c) REFERRING PHYSICIAN.—Section 1877(h)(7)(C)

4 (42 U.S.C. 1395nn(h)(7)(C)) is amended—

5 (1) by inserting ‘‘a request by a radiologist for

6 diagnostic radiology services, and a request by a ra7 diation oncologist for radiation therapy,’’ after ‘‘ex8 amination services,’’, and

9 (2) by inserting ‘‘, radiologist, or radiation

10 oncologist’’ after ‘‘pathologist’’ the second place it

11 appears.

12 (d) MISCELLANEOUS AND TECHNICAL CORREC13 TIONS.—Section 1877 (42 U.S.C. 1395nn) is further

14 amended—

15 (1) in the next to last sentence of subsection

16 (f)—

17 (A) by striking ‘‘provided’’ and inserting

18 ‘‘furnished’’, and

19 (B) by striking ‘‘provides’’ and inserting

20 ‘‘furnish’’;

21 (2) in the last sentence of subsection (f)—

22 (A) by striking ‘‘providing’’ each place it

23 appears and inserting ‘‘furnishing’’,
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1 (B) by striking ‘‘with respect to the provid2 ers’’ and inserting ‘‘with respect to the enti3 ties’’, and

4 (C) by striking ‘‘diagnostic imaging serv5 ices of any type’’ and inserting ‘‘magnetic reso6 nance imaging, computerized axial tomography

7 scans, and ultrasound services’’; and

8 (3) in subsection (a)(2)(B), by striking ‘‘sub9 section (h)(1)(A)’’ and inserting ‘‘subsection (h)(1)’’.

10 SEC. 13530. EFFECTIVE DATES.

11 (a) EXPANSION OF PAYERS AND SERVICES.—The

12 amendments made by sections 13521 and 13522 shall

13 apply with respect to a referral by a physician made on

14 or after December 31, 1994.

15 (b) OTHER PROVISIONS.—

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

17 subsection, the amendments made by sections 13523

18 through 13529 shall apply to referrals made on or

19 after January 1, 1992.

20 (2) DELAY IN EFFECTIVENESS FOR MORE RE21 STRICTIVE PROVISIONS.—The amendments made by

22 the following sections shall apply with respect to a

23 referral by a physician made on or after December

24 31, 1994:
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1 (A) Section 13523(b) (relating to the rural

2 provider exception).

3 (B) Section 13524(a) (relating to publicly4 traded securities).

5 (C)(i) Section 13525(a) (relating to an ex6 ception for office rental and equipment), other

7 than the exception relating to equipment.

8 (ii) Section 13525(c)(1) (relating to excep9 tion for personal services arrangements).

10 (iii) Section 13525(d) (relating to physi11 cian recruitment).

12 (D) Section 13526 (relating to civil money

13 penalty).

14 (E) Section 13527 (relating to require15 ments for group practices), other than sub16 section (c) (relating to faculty plans).

17 (F) Section 13528 (relating to non-pre18 emption).

19 (G) Section 13529(a) (relating to indirect

20 financial relationships).

21 Subchapter D—Other Provisions

22 SEC. 13551. DIRECT GRADUATE MEDICAL EDUCATION.

23 (a) ADJUSTMENT IN GME BASE-YEAR COSTS OF

24 FEDERAL INSURANCE CONTRIBUTIONS ACT.—
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1 (1) IN GENERAL.—In determining the amount

2 of payment to be made under section 1886(h) of the

3 Social Security Act in the case of a hospital de4 scribed in paragraph (2) for cost reporting periods

5 beginning on or after October 1, 1992, the Secretary

6 of Health and Human Services shall redetermine the

7 approved FTE resident amount to reflect the

8 amount that would have been paid the hospital if,

9 during the hospital’s base cost reporting period, the

10 hospital had been liable for FICA taxes or for con11 tributions to the retirement system of a State, a po12 litical subdivision of a State, or an instrumentality

13 of such a State or political subdivision with respect

14 to interns and residents in its medical residency

15 training program.

16 (2) HOSPITALS AFFECTED.—A hospital de17 scribed in this paragraph is a hospital that did not

18 pay FICA taxes with respect to interns and resi19 dents in its medical residency training program dur20 ing the hospital’s base cost reporting period, but is

21 required to pay FICA taxes or make contributions to

22 a retirement system described in paragraph (1) with

23 respect to such interns and residents because of the

24 amendments made by section 11332(b) of OBRA–

25 1990.
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1 (3) DEFINITIONS.—In this subsection:

2 (A) The ‘‘base cost reporting period’’ for a

3 hospital is the hospital’s cost reporting period

4 that began during fiscal year 1984.

5 (B) The term ‘‘FICA taxes’’ means, with

6 respect to a hospital, the taxes under section

7 3111 of the Internal Revenue Code of 1986.

8 (b) PUBLICLY-FUNDED FAMILY PRACTICE RESI9 DENCY PROGRAMS.—

10 (1) IN GENERAL.—Section 1886(h)(5) (42

11 U.S.C. 1395ww(h)(5)) is amended by adding at the

12 end the following new subparagraph:

13 ‘‘(I) ADJUSTMENTS FOR CERTAIN FAMILY

14 PRACTICE RESIDENCY PROGRAMS.—

15 ‘‘(i) IN GENERAL.—In the case of an

16 approved medical residency training pro17 gram (meeting the requirements of clause

18 (ii)) of a hospital which received payments

19 from the United States, a State, or a polit20 ical subdivision of a State or an instrumen21 tality of such a State or political subdivi22 sion (other than payments under this title

23 or a State plan under title XIX) for the

24 program during the cost reporting period
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1 that began during fiscal year 1984, the

2 Secretary shall—

3 ‘‘(I) provide for an average

4 amount under paragraph (2)(A) that

5 takes into account the Secretary’s es6 timate of the amount that would have

7 been recognized as reasonable under

8 this title if the hospital had not re9 ceived such payments, and

10 ‘‘(II) reduce the payment amount

11 otherwise provided under this sub12 section in an amount equal to the pro13 portion of such program payments

14 during the cost reporting period in15 volved that is allocable to this title.

16 ‘‘(ii) ADDITIONAL REQUIREMENTS.—

17 A hospital’s approved medical residency

18 program meets the requirements of this

19 clause if—

20 ‘‘(I) the program is limited to

21 training for family and community

22 medicine;

23 ‘‘(II) the program is the only ap24 proved medical residency program of

25 the hospital; and
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1 ‘‘(III) the average amount deter2 mined under paragraph (2)(A) for the

3 hospital (as determined without re4 gard to the increase in such amount

5 described in clause (i)(I)) does not ex6 ceed $10,000.’’.

7 (2) EFFECTIVE DATE.—The amendment made

8 by paragraph (1) shall apply to payments under sec9 tion 1886(h) of the Social Security Act for cost re10 porting periods beginning on or after October 1,

11 1990.

12 (c) PREVENTIVE CARE RESIDENCIES.—

13 (1) ELIGIBILITY OF PREVENTIVE CARE RESI14 DENCY PROGRAMS FOR EXPANDED INITIAL RESI15 DENCY PERIODS.—Section 1886(h)(5)(F)(ii) (42

16 U.S.C. 1395ww(h)(5)(F)(ii)) is amended by insert17 ing after ‘‘fellowship program’’ the following: ‘‘or a

18 preventive care residency or fellowship program’’.

19 (2) EFFECTIVE DATE.—The amendment made

20 by paragraph (1) shall apply to cost reporting peri21 ods beginning on or after October 1, 1993.

22 SEC. 13552. IMMUNOSUPPRESSIVE DRUG THERAPY.

23 Section 1861(s)(2)(J) (42 U.S.C. 1395x(s)(2)(J)) is

24 amended by striking ‘‘title, within’’ and all that follows
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1 and inserting the following: ‘‘title, but only in the case of

2 drugs furnished—

3 ‘‘(i) before 1994, within 12 months after

4 the date of the transplant procedure,

5 ‘‘(ii) during 1994, within 18 months after

6 the date of the transplant procedure,

7 ‘‘(iii) during 1995, within 24 months after

8 the date of the transplant procedure,

9 ‘‘(iv) during 1996, within 30 months after

10 the date of the transplant procedure, and

11 ‘‘(v) during any year after 1997, within 36

12 months after the date of the transplant proce13 dure;’’.

14 SEC. 13553. REDUCTION IN PAYMENTS FOR

15 ERYTHROPOIENTIN.

16 (a) IN GENERAL.—Section 1881(b)(11)(B)(ii)(I) (42

17 U.S.C. 1395rr(b)(11)(B)(ii)(I)) is amended—

18 (1) by striking ‘‘1991’’ and inserting ‘‘1994’’;

19 and

20 (2) by striking ‘‘$11’’ and inserting ‘‘$10’’.

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

22 subsection (a) shall apply to erythropoietin furnished on

23 or after January 1, 1994.
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1 SEC. 13554. QUALIFIED MEDICARE BENEFICIARY OUT2 REACH.

3 The Secretary of Health and Human Services shall

4 establish and implement a method for obtaining informa5 tion from newly eligible medicare beneficiaries that may

6 be used to determine whether such beneficiaries may be

7 eligible for medical assistance for medicare cost-sharing

8 under State medicaid plans as qualified medicare bene9 ficiaries, and for transmitting such information to the

10 State in which such a beneficiary resides.

11 SEC. 13555. EXTENSION OF SOCIAL HEALTH MAINTENANCE

12 ORGANIZATION DEMONSTRATIONS.

13 (a) EXTENSION OF CURRENT WAIVERS.—Section

14 4018(b) of OBRA–1987, as amended by section

15 4207(b)(4)(B) of OBRA–1990, is amended—

16 (1) in paragraph (1) by striking ‘‘December 31,

17 1995’’ and inserting ‘‘December 31, 1997’’; and

18 (2) in paragraph (4) by striking ‘‘March 31,

19 1996’’ and inserting ‘‘March 31, 1998’’.

20 (b) EXPANSION OF DEMONSTRATIONS.—Section

21 2355 of the Deficit Reduction Act of 1984 is amended—

22 (1) in the last sentence of subsection (a) by

23 striking ‘‘12 months’’ and inserting ‘‘36 months’’;

24 and

25 (2) in subsection (b)(1)(B)—
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1 (A) by striking ‘‘or’’ at the end of clause

2 (iii); and

3 (B) by redesignating clause (iv) as clause

4 (v) and inserting after clause (iii) the following

5 new clause:

6 ‘‘(iv) integrating acute and chronic

7 care management for patients with end8 stage renal disease through expanded com9 munity care case management services

10 (and for purposes of a demonstration

11 project conducted under this clause, any

12 requirement under a waiver granted under

13 this section that a project disenroll individ14 uals who develop end-stage renal disease

15 shall not apply); or’’.

16 (c) EXPANSION OF NUMBER OF MEMBERS PER

17 SITE.—The Secretary of Health and Human Services may

18 not impose a limit of less than 12,000 on the number of

19 individuals that may participate in a project conducted

20 under section 2355 of the Deficit Reduction Act of 1984.

21 (d) MISCELLANEOUS AND TECHNICAL CORREC22 TIONS.—

23 (1) The section following section 4206 of

24 OBRA–1990 is amended by striking ‘‘SEC. 4027.’’
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1 and inserting ‘‘SEC. 4207.’’, and in this subtitle is

2 referred to as section 4207 of OBRA–1990.

3 (2) Section 2355(b)(1)(B) of the Deficit Reduc4 tion Act of 1984, as amended by section

5 4207(b)(4)(B)(ii) of OBRA–1990, is amended—

6 (A) by striking ‘‘12907(c)(4)(A)’’ and in7 serting ‘‘4207(b)(4)(B)(i)’’, and

8 (B) by striking ‘‘feasibilitly’’ and inserting

9 ‘‘feasibility’’.

10 (3) Section 4207(b)(4)(B)(iii)(III) of OBRA–

11 1990 is amended by striking the period at the end

12 and inserting a semicolon.

13 (4) Subsections (c)(3) and (e) of section 2355

14 of the Deficit Reduction Act of 1984, as amended by

15 section 4207(b)(4)(B) of OBRA–1990, are each

16 amended by striking ‘‘12907(c)(4)(A)’’ each place it

17 appears and inserting ‘‘4207(b)(4)(B)’’.

18 (5) Section 4207(c)(2) of OBRA–1990 is

19 amended by striking ‘‘the Committee on Ways and

20 Means’’ each place it appears and inserting ‘‘the

21 Committees on Ways and Means and Energy and

22 Commerce’’.

23 (6) Section 4207(d) of OBRA–1990 is amended

24 by redesignating the second paragraph (3) (relating

25 to effective date) as paragraph (4).
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1 (7) Section 4207(i)(2) of OBRA–1990 is

2 amended—

3 (A) by striking the period at the end of

4 clause (iii) and inserting a semicolon, and

5 (B) in clause (v), by striking ‘‘residents’’

6 and inserting ‘‘patients’’.

7 (8) Section 4207(j) of OBRA–1990 is amended

8 by striking ‘‘title’’ each place it appears and insert9 ing ‘‘subtitle’’.

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

11 this section shall take effect as if included in the enact12 ment of OBRA–90.

13 SEC. 13556. HOSPICE NOTIFICATION TO HOME HEALTH

14 BENEFICIARIES.

15 (a) IN GENERAL.—Section 1891(a)(1) (42 U.S.C.

16 1395bbb(a)(1)) is amended by adding at the end the fol17 lowing new subparagraph:

18 ‘‘(H) The right, in the case of a resident

19 who is entitled to benefits under this title, to be

20 fully informed orally and in writing (at the time

21 of coming under the care of the agency) of the

22 entitlement of individuals to hospice care under

23 section 1812(a)(4) (unless there is no hospice

24 program providing hospice care for which pay25 ment may be made under this title within the
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1 geographic area of the facility and it is not the

2 common practice of the agency to refer patients

3 to hospice programs located outside such geo4 graphic area).’’.

5 (b) EFFECTIVE DATE.—The amendment made by

6 subsection (a) shall apply to services furnished on or after

7 the first day of the first month beginning more than one

8 year after the date of the enactment of this Act.

9 SEC. 13557. INTEREST PAYMENTS.

10 (a) IN GENERAL.—Sections 1816(c)(2)(B)(ii)(IV)

11 and 1842(c)(2)(B)(ii)(IV) of the Social Security Act shall

12 be applied with respect to claims received in the 12-month

13 period beginning October 1, 1992, by substituting ‘‘30 cal14 endar days’’ for ‘‘24 calendar days’’ and ‘‘17 calendar

15 days’’.

16 (b) EFFECTIVE DATE.—Subsection (a) shall be in ef17 fect during the period that begins on the date of the enact18 ment of this Act and ends on September 30, 1993.

19 SEC. 13558. PEER REVIEW ORGANIZATIONS.

20 (a) REPEAL OF PRO PRECERTIFICATION REQUIRE21 MENT FOR CERTAIN SURGICAL PROCEDURES.—

22 (1) IN GENERAL.—Section 1164 (42 U.S.C.

23 1320c–13) is repealed.

24 (2) CONFORMING AMENDMENTS.—
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1 (A) Section 1154 (42 U.S.C. 1320c–3) is

2 amended—

3 (i) in subsection (a), by striking para4 graph (12), and

5 (ii) in subsection (d), by striking

6 ‘‘(and except as provided in section

7 1164)’’.

8 (B) Section 1833 (42 U.S.C. 1395l) is

9 amended—

10 (i) in subsection (a)(1)(D)(i), by strik11 ing ‘‘, or for tests furnished in connection

12 with obtaining a second opinion required

13 under section 1164(c)(2) (or a third opin14 ion, if the second opinion was in disagree15 ment with the first opinion)’’;

16 (ii) in subsection (a)(1), by striking

17 clause (G);

18 (iii) in subsection (a)(2)(A), by strik19 ing ‘‘, to items and services (other than

20 clinical diagnostic laboratory tests) fur21 nished in connection with obtaining a sec22 ond opinion required under section

23 1164(c)(2) (or a third opinion, if the sec24 ond opinion was in disagreement with the

25 first opinion),’’;
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1 (iv) in subsection (a)(2)(D)(i)—

2 (I) by striking ‘‘basis,’’ and in3 serting ‘‘basis or’’, and

4 (II) by striking ‘‘, or for tests

5 furnished in connection with obtaining

6 a second opinion required under sec7 tion 1164(c)(2) (or a third opinion, if

8 the second opinion was in disagree9 ment with the first opinion)’’;

10 (v) in subsection (a)(3), by striking

11 ‘‘and for items and services furnished in

12 connection with obtaining a second opinion

13 required under section 1164(c)(2), or a

14 third opinion, if the second opinion was in

15 disagreement with the first opinion)’’; and

16 (vi) in the first sentence of subsection

17 (b), by striking ‘‘(4)’’ and all that follows

18 through ‘‘and (5)’’ and inserting and (4)’’.

19 (C) Section 1834(g)(1)(B) (42 U.S.C.

20 1395m(g)(1)(B)) is amended by striking ‘‘and

21 for items and services furnished in connection

22 with obtaining a second opinion required under

23 section 1164(c)(2), or a third opinion, if the

24 second opinion was in disagreement with the

25 first opinion)’’.
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1 (D) Section 1862(a) (42 U.S.C. 1395y(a))

2 is amended—

3 (i) by adding ‘‘or’’ at the end of para4 graph (14),

5 (ii) by striking ‘‘; or’’ at the end of

6 paragraph (15) and inserting a period, and

7 (iii) by striking paragraph (16).

8 (E) The third sentence of section

9 1866(a)(2)(A) (42 U.S.C. 1395w(a)(2)(A)) is

10 amended by striking ‘‘, with respect to items

11 and services furnished in connection with ob12 taining a second opinion required under section

13 1164(c)(2) (or a third opinion, if the second

14 opinion was in disagreement with the first opin15 ion),’’.

16 (3) EFFECTIVE DATE.—The amendments made

17 by this subsection shall apply to services provided on

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

19 (b) MISCELLANEOUS AND TECHNICAL CORREC20 TIONS.—(1) The third sentence of section 1156(b)(1) (42

21 U.S.C. 1320c–5(b)(1)) is amended by striking ‘‘whehter’’

22 and inserting ‘‘whether’’.

23 (2) Section 1154(a)(9)(B) (42 U.S.C. 1320c–

24 3(a)(9)(B)) is amended by striking ‘‘this subsection’’ and

25 inserting ‘‘section 1156(a)’’.
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1 (3) Section 4205(d)(2)(B) of OBRA–1990 is amend2 ed by striking ‘‘amendments’’ and inserting ‘‘amend3 ment’’.

4 (4) Section 1160(d) (42 U.S.C. 1320c–9(d)) is

5 amended by striking ‘‘subpena’’ and inserting ‘‘subpoena’’.

6 (5) Section 4205(e)(2) of OBRA–1990 is amended

7 by striking ‘‘amendments’’ and inserting ‘‘amendment’’

8 and by striking ‘‘all’’.

9 (6)(A) Except as provided in subparagraph (B), the

10 amendments made by this subsection shall take effect as

11 if included in the enactment of OBRA–1990.

12 (B) The amendment made by paragraph (2) (relating

13 to the requirement on reporting of information to State

14 licensing boards) shall take effect on the date of the enact15 ment of this Act.

16 SEC. 13559. HEALTH MAINTENANCE ORGANIZATIONS.

17 (a) ADJUSTMENT IN MEDICARE CAPITATION PAY18 MENTS TO ACCOUNT FOR REGIONAL VARIATIONS IN AP19 PLICATION OF SECONDARY PAYER PROVISIONS.—

20 (1) IN GENERAL.—Section 1876(a)(4) (42

21 U.S.C. 1395mm(a)(4)) is amended by adding at the

22 end the following new sentence: ‘‘In establishing the

23 adjusted average per capita cost for a geographic

24 area, the Secretary shall take into account the dif25 ferences between the proportion of individuals in the
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1 area with respect to whom there is a group health

2 plan that is a primary plan (within the meaning of

3 section 1862(b)(2)(A)) compared to the proportion

4 of all such individuals with respect to whom there is

5 such a group health plan.’’.

6 (2) EFFECTIVE DATE.—The amendment made

7 by paragraph (1) shall apply to contracts entered

8 into for years beginning with 1994.

9 (b) REVISIONS IN THE PAYMENT METHODOLOGY

10 FOR RISK CONTRACTORS.—Section 4204(b) of OBRA–

11 1990 is amended to read as follows:

12 ‘‘(b) REVISIONS IN THE PAYMENT METHODOLOGY

13 FOR RISK CONTRACTORS.—(1)(A) Not later than October

14 1, 1993, the Secretary of Health and Human Services (in

15 this subsection referred to as the ‘‘Secretary’’) shall sub16 mit a proposal to the Congress that provides for revisions

17 to the payment method to be applied in years beginning

18 with 1995 for organizations with a risk-sharing contract

19 under section 1876(g) of the Social Security Act.

20 ‘‘(B) In proposing the revisions required under sub21 paragraph (A) the Secretary shall consider—

22 ‘‘(i) the difference in costs associated with med23 icare beneficiaries with differing health status and

24 demographic characteristics; and
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1 ‘‘(ii) the effects of using alternative geographic

2 classifications on the determinations of costs associ3 ated with beneficiaries residing in different areas.

4 ‘‘(2) Not later than 3 months after the date of sub5 mittal of the proposal under paragraph (1), the Comptrol6 ler General shall review the proposal and shall report to

7 Congress on the appropriateness of the proposed modifica8 tions.’’.

9 (c) MISCELLANEOUS AND TECHNICAL CORREC10 TIONS.—(1) Section 1876(a)(3) (42 U.S.C.

11 1395mm(a)(3)) is amended by striking ‘‘subsection

12 (c)(7)’’ and inserting ‘‘subsections (c)(2)(B)(ii) and

13 (c)(7)’’.

14 (2) Section 4204(c)(3) of OBRA–1990 is amended

15 by striking ‘‘for 1991’’ and inserting ‘‘for years beginning

16 with 1991’’.

17 (3) Section 4204(d)(2) of OBRA–1990 is amended

18 by striking ‘‘amendment’’ and inserting ‘‘amendments’’.

19 (4) Section 1876(a)(1)(E)(ii)(I) (42 U.S.C.

20 1395mm(a)(1)(E)(ii)(I)) is amended by striking the

21 comma after ‘‘contributed to’’.

22 (5) Section 4204(e)(2) of OBRA–1990 is amended

23 by striking ‘‘(which has a risk-sharing contract under sec24 tion 1876 of the Social Security Act)’’.
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1 (6) Section 4204(f)(4) of OBRA–1990 is amended by

2 striking ‘‘final’’.

3 (7) Section 1862(b)(3)(C) (42 U.S.C.

4 1395y(b)(3)(C)) is amended—

5 (A) in the heading, by striking ‘‘PLAN’’ and in6 serting ‘‘PLAN OR A LARGE GROUP HEALTH PLAN’’;

7 (B) by striking ‘‘group health plan’’ and insert8 ing ‘‘group health plan or a large group health

9 plan’’;

10 (C) by striking ‘‘, unless such incentive is also

11 offered to all individuals who are eligible for cov12 erage under the plan’’; and

13 (D) by striking ‘‘the first sentence of subsection

14 (a) and other than subsection (b)’’ and inserting

15 ‘‘subsections (a) and (b)’’.

16 (8) The amendments made by this subsection shall

17 take effect as if included in the enactment of OBRA–1990.

18 SEC. 13560. MEDICARE ADMINISTRATION BUDGET PROC19 ESS.

20 (a) ADJUSTMENTS.—Section 251(b)(2) of the Bal21 anced Budget and Emergency Deficit Control Act of 1985

22 is amended by redesignating subparagraphs (E) and (F)

23 as subparagraphs (F) and (G), respectively, and by insert24 ing after subparagraph (D) the following new subpara25 graph:
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1 ‘‘(E) MEDICARE ADMINISTRATIVE

2 COSTS.—To the extent that appropriations are

3 enacted that provide additional new budget au4 thority (as compared with a base level of

5 $1,526,000,000 for new budget authority) for

6 the administration of the Medicare program by

7 fiscal intermediaries and carriers pursuant to

8 sections 1816 and 1842(a) of title XVIII of the

9 Social Security Act, the adjustment for that

10 year shall be that amount, but shall not ex11 ceed—

12 ‘‘(i) for fiscal year 1994,

13 $198,000,000 in new budget authority and

14 $198,000,000 in outlays; and

15 ‘‘(ii) for fiscal year 1995,

16 $220,000,000 in new budget authority and

17 $220,000,000 in outlays; and

18 the prior-year outlays resulting from these appro19 priations of budget authority and additional adjust20 ments equal to the sum of the maximum adjust21 ments that could have been made in preceding fiscal

22 years under this subparagraph.’’.

23 (b) CONFORMING AMENDMENTS.—

24 (1) Section 603(a) of the Congressional Budget

25 Act of 1974 is amended by striking ‘‘section
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1 251(b)(2)(E)(i)’’ and inserting ‘‘section

2 251(b)(2)(F)(i)’’.

3 (2) Section 606(d) of the Congressional Budget

4 Act of 1974 is amended—

5 (A) in paragraph (1)(A) by striking ‘‘sec6 tion 251(b)(2)(E)(i)’’ and inserting ‘‘section

7 251(b)(2)(F)(i)’’; and

8 (B) in paragraph (2), by inserting

9 ‘‘251(b)(2)(E),’’ after ‘‘251(b)(2)(D),’’.

10 SEC. 13561. OTHER PROVISIONS.

11 (a) SURVEY AND CERTIFICATION REQUIREMENTS.—

12 (1) Section 1864 (42 U.S.C. 1395aa) is amended—

13 (A) in subsection (e), by striking ‘‘title’’ and in14 serting ‘‘title (other than any fee relating to section

15 353 of the Public Health Service Act)’’; and

16 (B) in the first sentence of subsection (a), by

17 striking ‘‘1861(s) or’’ and all that follows through

18 ‘‘Service Act,’’ and inserting ‘‘1861(s),’’.

19 (2) An agreement made by the Secretary of Health

20 and Human Services with a State under section 1864(a)

21 of the Social Security Act may include an agreement that

22 the services of the State health agency or other appro23 priate State agency (or the appropriate local agencies) will

24 be utilized by the Secretary for the purpose of determining
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1 whether a laboratory meets the requirements of section

2 353 of the Public Health Service Act.

3 (b) HOME DIALYSIS DEMONSTRATION TECHNICAL

4 CORRECTION.—Section 4202 of OBRA–1990 is amend5 ed—

6 (1) in subsection (b)(1)(A), by striking ‘‘home

7 hemodialysis staff assistant’’ and inserting ‘‘quali8 fied home hemodialysis staff assistant (as described

9 in subsection (d))’’;

10 (2) in subsection (b)(2)(B)(ii)(I), by striking

11 ‘‘(as adjusted to reflect differences in area wage lev12 els);

13 (3) in subsection (c)(1)(A), by striking

14 ‘‘skilled’’; and

15 (4) in subsection (c)(1)(E), by striking ‘‘(b)(4)’’

16 and inserting ‘‘(b)(2)’’.

17 (c) OTHER TECHNICAL AMENDMENTS.—(1) Section

18 1833 (42 U.S.C. 1395l) is amended by redesignating the

19 subsection (r) added by section 4206(b)(2) of OBRA–

20 1990 as subsection (s).

21 (2) Section 1866(f)(1) (42 U.S.C. 1395cc(f)(1)) is

22 amended by striking ‘‘1833(r)’’ and inserting ‘‘1833(s)’’.

23 (3) Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)) is

24 amended by moving subparagraph (O), as redesignated by
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1 section 13478(f)(8)(B)(iii)(II) of this title, two ems to the

2 left.

3 (4) Section 1881(b)(1)(C) (42 U.S.C.

4 1395rr(b)(1)(C)) is amended by striking ‘‘1861(s)(2)(Q)’’

5 and inserting ‘‘1861(s)(2)(P)’’.

6 (5) Section 4201(d)(2) of OBRA–1990 is amended

7 by striking ‘‘(B) by striking’’, ‘‘(C) by striking’’, and ‘‘(3)

8 by adding’’ and inserting ‘‘(i) by striking’’, ‘‘(ii) by strik9 ing’’, and ‘‘(B) by adding’’, respectively.

10 (6)(A) Section 4207(a)(1) of OBRA–1990 is amend11 ed by adding closing quotation marks and a period after

12 ‘‘such review.’’.

13 (B) Section 4207(a)(4) of OBRA–1990 is amended

14 by striking ‘‘this subsection’’ and inserting ‘‘paragraphs

15 (2) and (3)’’.

16 (C) Section 4207(b)(1) of OBRA–1990 is amended

17 by striking ‘‘section 3(7)’’ and inserting ‘‘section

18 601(a)(1)’’.

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

20 this section shall take effect as if included in the enact21 ment of OBRA–1990.
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1 CHAPTER 4—MEDICARE SUPPLEMENTAL

2 INSURANCE POLICIES

3 SEC. 13571. STANDARDS FOR MEDICARE SUPPLEMENTAL

4 INSURANCE POLICIES.

5 (a) SIMPLIFICATION OF MEDICARE SUPPLEMENTAL

6 POLICIES.—

7 (1) Section 4351 of OBRA–1990 is amended by

8 striking ‘‘(a) IN GENERAL.—’’.

9 (2) Section 1882(p) (42 U.S.C. 1395ss(p)) is

10 amended—

11 (A) in paragraph (1)(A)—

12 (i) by striking ‘‘promulgates’’ and in13 serting ‘‘changes the revised NAIC Model

14 Regulation (described in subsection (m)) to

15 incorporate’’,

16 (ii) by striking ‘‘(such limitations, lan17 guage, definitions, format, and standards

18 referred to collectively in this subsection as

19 ‘NAIC standards’)’’, and

20 (iii) by striking ‘‘included a reference

21 to the NAIC standards’’ and inserting

22 ‘‘were a reference to the revised NAIC

23 Model Regulation as changed under this

24 subparagraph (such changed regulation re-
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1 ferred to in this section as the ‘1991 NAIC

2 Model Regulation’)’’;

3 (B) in paragraph (1)(B)—

4 (i) by striking ‘‘promulgate NAIC

5 standards’’ and inserting ‘‘make the

6 changes in the revised NAIC Model Regu7 lation’’,

8 (ii) by striking ‘‘limitations, language,

9 definitions, format, and standards de10 scribed in clauses (i) through (iv) of such

11 subparagraph (in this subsection referred

12 to collectively as ‘Federal standards’)’’ and

13 inserting ‘‘a regulation’’, and

14 (iii) by striking ‘‘included a reference

15 to the Federal standards’’ and inserting

16 ‘‘were a reference to the revised NAIC

17 Model Regulation as changed by the Sec18 retary under this subparagraph (such

19 changed regulation referred to in this sec20 tion as the ‘1991 Federal Regulation’)’’;

21 (C) in paragraph (1)(C)(i), by striking

22 ‘‘NAIC standards or the Federal standards’’

23 and inserting ‘‘1991 NAIC Model Regulation or

24 1991 Federal Regulation’’;
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1 (D) in paragraphs (1)(C)(ii)(I), (1)(E),

2 (2), and (9)(B), by striking ‘‘NAIC or Federal

3 standards’’ and inserting ‘‘1991 NAIC Model

4 Regulation or 1991 Federal Regulation’’;

5 (E) in paragraph (2)(C), by striking

6 ‘‘(5)(B)’’ and inserting ‘‘(4)(B)’’;

7 (F) in paragraph (4)(A)(i), by inserting

8 ‘‘or paragraph (6)’’ after ‘‘(B)’’;

9 (G) in paragraph (4), by striking ‘‘applica10 ble standards’’ each place it appears and insert11 ing ‘‘applicable 1991 NAIC Model Regulation

12 or 1991 Federal Regulation’’;

13 (H) in paragraph (6), by striking ‘‘in re14 gard to the limitation of benefits described in

15 paragraph (4)’’ and inserting ‘‘described in

16 clauses (i) through (iii) of paragraph (1)(A)’’;

17 (I) in paragraph (7), by striking ‘‘policy18 holder’’ and inserting ‘‘policyholders’’;

19 (J) in paragraph (8), by striking ‘‘after the

20 effective date of the NAIC or Federal standards

21 with respect to the policy, in violation of the

22 previous requirements of this subsection’’ and

23 inserting ‘‘on and after the effective date speci24 fied in paragraph (1)(C) (but subject to para25 graph (10)), in violation of the applicable 1991
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1 NAIC Model Regulation or 1991 Federal Regu2 lation insofar as such regulation relates to the

3 requirements of subsection (o) or (q) or clause

4 (i), (ii), or (iii) of paragraph (1)(A)’’;

5 (K) in paragraph (9), by adding at the end

6 the following new subparagraph:

7 ‘‘(D) Subject to paragraph (10), this paragraph shall

8 apply to sales of policies occurring on or after the effective

9 date specified in paragraph (1)(C).’’; and

10 (L) in paragraph (10), by striking ‘‘this

11 subsection’’ and inserting ‘‘paragraph

12 (1)(A)(i)’’.

13 (b) GUARANTEED RENEWABILITY.—Section 1882(q)

14 (42 U.S.C. 1395ss(q)) is amended—

15 (1) in paragraph (2), by striking ‘‘paragraph

16 (2)’’ and inserting ‘‘paragraph (4)’’, and

17 (2) in paragraph (4), by striking ‘‘the succeed18 ing issuer’’ and inserting ‘‘issuer of the replacement

19 policy’’.

20 (c) ENFORCEMENT OF STANDARDS.—

21 (1) Section 1882(a)(2) (42 U.S.C.

22 1395ss(a)(2)) is amended—

23 (A) in subparagraph (A), by striking

24 ‘‘NAIC standards or the Federal standards’’
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1 and inserting ‘‘1991 NAIC Model Regulation or

2 1991 Federal Regulation’’, and

3 (B) by striking ‘‘after the effective date of

4 the NAIC or Federal standards with respect to

5 the policy’’ and inserting ‘‘on and after the ef6 fective date specified in subsection (p)(1)(C)’’.

7 (2) The sentence in section 1882(b)(1) added

8 by section 4353(c)(5) of OBRA–1990 is amended—

9 (A) by striking ‘‘The report’’ and inserting

10 ‘‘Each report’’,

11 (B) by inserting ‘‘and requirements’’ after

12 ‘‘standards’’,

13 (C) by striking ‘‘and’’ after ‘‘compliance,’’,

14 and

15 (D) by striking the comma after ‘‘Commis16 sioners’’.

17 (3) Section 1882(g)(2)(B) (42 U.S.C.

18 1395ss(g)(2)(B)) is amended by striking ‘‘Panel’’

19 and inserting ‘‘Secretary’’.

20 (4) Section 1882(b)(1) (42 U.S.C.

21 1395ss(b)(1)) is amended by striking ‘‘the the Sec22 retary’’ and inserting ‘‘the Secretary’’.

23 (d) PREVENTING DUPLICATION.—

24 (1) Section 1882(d)(3)(A) (42 U.S.C.

25 1395ss(d)(3)(A)) is amended—
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1 (A) by amending the first sentence to read

2 as follows:

3 ‘‘(i) It is unlawful for a person to sell or issue to an

4 individual entitled to benefits under part A or enrolled

5 under part B of this title—

6 ‘‘(I) a health insurance policy with knowledge

7 that the policy duplicates health benefits to which

8 the individual is otherwise entitled under this title or

9 title XIX,

10 ‘‘(II) a medicare supplemental policy with

11 knowledge that the individual is entitled to benefits

12 under another medicare supplemental policy, or

13 ‘‘(III) a health insurance policy (other than a

14 medicare supplemental policy) with knowledge that

15 the policy duplicates health benefits to which the in16 dividual is otherwise entitled, other than benefits to

17 which the individual is entitled under a requirement

18 of State or Federal law.’’;

19 (B) by designating the second sentence as

20 clause (ii) and, in such clause, by striking ‘‘the

21 previous sentence’’ and inserting ‘‘clause (i)’’;

22 (C) by designating the third sentence as

23 clause (iii) and, in such clause—

24 (i) by striking ‘‘the previous sentence’’

25 and inserting ‘‘clause (i) with respect to
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1 the sale of a medicare supplemental pol2 icy’’, and

3 (ii) by striking ‘‘and the statement’’

4 and all that follows up to the period at the

5 end; and

6 (D) by striking the last sentence.

7 (2) Section 1882(d)(3)(B) (42 U.S.C.

8 1395ss(d)(3)(B)) is amended—

9 (A) in clause (ii)(II), by striking ‘‘65 years

10 of age or older’’,

11 (B) in clause (iii)(I), by striking ‘‘another

12 medicare’’ and inserting ‘‘a medicare’’,

13 (C) in clause (iii)(I), by striking ‘‘such a

14 policy’’ and inserting ‘‘a medicare supplemental

15 policy’’,

16 (D) in clause (iii)(II), by striking ‘‘another

17 policy’’ and inserting ‘‘a medicare supplemental

18 policy’’, and

19 (E) by amending subclause (III) of clause

20 (iii) to read as follows:

21 ‘‘(III) If the statement required by clause (i) is ob22 tained and indicates that the individual is entitled to any

23 medical assistance under title XIX, the sale of the policy

24 is not in violation of clause (i) (insofar as such clause re25 lates to such medical assistance), if a State medicaid plan
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1 under such title pays the premiums for the policy, or, in

2 the case of a qualified medicare beneficiary described in

3 section 1905(p)(1), if the State pays less than the full

4 amount of medicare cost-sharing as described in subpara5 graphs (B), (C), and (D) of section 1905(p)(3) for such

6 individual.’’.

7 (3)(A) Section 1882(d)(3)(C) (42 U.S.C.

8 1395ss(d)(3)(C)) is amended—

9 (i) by striking ‘‘the selling’’ and inserting

10 ‘‘(i) the sale or issuance’’, and

11 (ii) by inserting before the period at the

12 end the following: ‘‘, (ii) the sale or issuance of

13 a policy or plan described in subparagraph

14 (A)(i)(I) (other than a medicare supplemental

15 policy to an individual entitled to any medical

16 assistance under title XIX) under which all the

17 benefits are fully payable directly to or on be18 half of the individual without regard to other

19 health benefit coverage of the individual but

20 only if (for policies sold or issued more than 60

21 days after the date the statements are pub22 lished or promulgated under subparagraph (D))

23 there is disclosed in a prominent manner as

24 part of (or together with) the application the

25 applicable statement (specified under subpara-
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1 graph (D)) of the extent to which benefits pay2 able under the policy or plan duplicate benefits

3 under this title, or (iii) the sale or issuance of

4 a policy or plan described in subparagraph

5 (A)(i)(III) under which all the benefits are fully

6 payable directly to or on behalf of the individual

7 without regard to other health benefit coverage

8 of the individual’’.

9 (B) Section 1882(d)(3) (42 U.S.C.

10 1395ss(d)(3)) is amended by adding at the end the

11 following:

12 ‘‘(D)(i) If—

13 ‘‘(I) within the 90-day period beginning on the

14 date of the enactment of this subparagraph, the Na15 tional Association of Insurance Commissioners devel16 ops (after consultation with consumer and insurance

17 industry representatives) and submits to the Sec18 retary a statement for each of the types of health in19 surance policies (other than medicare supplemental

20 policies and including, as separate types of policies,

21 policies paying directly to the beneficiary fixed, cash

22 benefits) which are sold to persons entitled to health

23 benefits under this title, of the extent to which bene24 fits payable under the policy or plan duplicate bene25 fits under this title, and
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1 ‘‘(II) the Secretary approves all the statements

2 submitted as meeting the requirements of subclause

3 (I),

4 each such statement shall be (for purposes of subpara5 graph (C)) the statement specified under this subpara6 graph for the type of policy involved. The Secretary shall

7 review and approve (or disapprove) all the statements sub8 mitted under subclause (I) within 30 days after the date

9 of their submittal. Upon approval of such statements, the

10 Secretary shall publish such statements.

11 ‘‘(ii) If the Secretary does not approve the statements

12 under clause (i) or the statements are not submitted with13 in the 90-day period specified in such clause, the Secretary

14 shall promulgate (after consultation with consumer and

15 insurance industry representatives and not later than 90

16 days after the date of disapproval or the end of such 90-

17 day period (as the case may be)) a statement for each

18 of the types of health insurance policies (other than medi19 care supplemental policies and including, as separate types

20 of policies, policies paying directly to the beneficiary fixed,

21 cash benefits) which are sold to persons entitled to health

22 benefits under this title, of the extent to which benefits

23 payable under the policy or plan duplicate benefits under

24 this title, and each such statement shall be (for purposes
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1 of subparagraph (C)) the statement specified under this

2 subparagraph for the type of policy involved.’’.

3 (C) The requirement of a disclosure under sec4 tion 1882(d)(3)(C)(ii) of the Social Security Act

5 shall not apply to an application made for a policy

6 or plan before 60 days after the date of the Sec7 retary of Health and Human Services publishes or

8 promulgates all the statements under section

9 1882(d)(3)(D) of such Act.

10 (4) Subparagraphs (A) and (B) of section

11 1882(q)(5)(A) are amended by striking ‘‘of the So12 cial Security Act’’.

13 (5) The second subsection (b) of section 4354

14 of OBRA–1990 (relating to effective date) is amend15 ed by redesignating such subsection as subsection

16 (c).

17 (e) LOSS RATIOS AND REFUNDS OF PREMIUMS.—

18 (1) Section 1882(r) (42 U.S.C. 1395ss(r)) is

19 amended—

20 (A) in paragraph (1), by striking ‘‘or sold’’

21 and inserting ‘‘or renewed (or otherwise provide

22 coverage after the date described in subsection

23 (p)(1)(C))’’;
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1 (B) in paragraph (1)(A), by inserting ‘‘for

2 periods after the effective date of these provi3 sions’’ after ‘‘the policy can be expected’’;

4 (C) in paragraph (1)(A), by striking

5 ‘‘Commissioners,’’ and inserting ‘‘Commis6 sioners)’’;

7 (D) in paragraph (1)(B), by inserting be8 fore the period at the end the following: ‘‘,

9 treating policies of the same type as a single

10 policy for each standard package’’;

11 (E) by adding at the end of paragraph (1)

12 the following: ‘‘For the purpose of calculating

13 the refund or credit required under paragraph

14 (1)(B) for a policy issued before the date speci15 fied in subsection (p)(1)(C), the refund or cred16 it calculation shall be based on the aggregate

17 benefits provided and premiums collected under

18 all such policies issued by an insurer in a State

19 (separated as to individual and group policies)

20 and shall be based only on aggregate benefits

21 provided and premiums collected under such

22 policies after the date specified in section

23 13571(m)(4) of the Omnibus Budget Reconcili24 ation Act of 1993.’’;
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1 (F) in the first sentence of paragraph

2 (2)(A), by striking ‘‘by policy number’’ and in3 serting ‘‘by standard package’’;

4 (G) by striking the second sentence of

5 paragraph (2)(A) and inserting the following:

6 ‘‘Paragraph (1)(B) shall not apply to a policy

7 until 12 months following issue.’’;

8 (H) in the last sentence of paragraph

9 (2)(A), by striking ‘‘in order’’ and all that fol10 lows through ‘‘are effective’’;

11 (I) by adding at the end of paragraph

12 (2)(A), the following new sentence: ‘‘In the case

13 of a policy issued before the date specified in

14 subsection (p)(1)(C), paragraph (1)(B) shall

15 not apply until 1 year after the date specified

16 in section 13571(m)(4) of the Omnibus Budget

17 Reconciliation Act of 1993.’’;

18 (J) in paragraph (2), by striking ‘‘policy

19 year’’ each place it appears and inserting ‘‘cal20 endar year’’;

21 (K) in paragraph (4), by striking ‘‘Feb22 ruary’’, ‘‘disllowance’’, ‘‘loss-ratios’’ each place

23 it appears, and ‘‘loss-ratio’’ and inserting ‘‘Oc24 tober’’, ‘‘disallowance’’, ‘‘loss ratios’’, and ‘‘loss

25 ratio’’, respectively;
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1 (L) in paragraph (6)(A), by striking ‘‘is2 sues a policy in violation of the loss ratio re3 quirements of this subsection’’ and ‘‘such viola4 tion’’ and inserting ‘‘fails to provide refunds or

5 credits as required in paragraph (1)(B)’’ and

6 ‘‘policy issued for which such failure occurred’’,

7 respectively; and

8 (M) in paragraph (6)(B), by striking ‘‘to

9 policyholders’’ and inserting ‘‘to the policy10 holder or, in the case of a group policy, to the

11 certificate holder’’.

12 (2) Section 1882(b)(1) (42 U.S.C.

13 1395ss(b)(1)) is amended, in the matter after sub14 paragraph (H), by striking ‘‘subsection (F)’’ and in15 serting ‘‘subparagraph (F)’’.

16 (3) Section 4355(d) of OBRA–1990 is amended

17 by striking ‘‘sold or issued’’ and all that follows and

18 inserting ‘‘issued or renewed (or otherwise providing

19 coverage after the date described in section

20 1882(p)(1)(C) of the Social Security Act) on or after

21 the date specified in section 1882(p)(1)(C) of such

22 Act.’’.

23 (f) TREATMENT OF HMO’S.—

24 (1) Section 1882(g)(1) (42 U.S.C.

25 1395ss(g)(1)) is amended by striking ‘‘a health
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1 maintenance organization or other direct service or2 ganization’’ and all that follows through ‘‘1833’’ and

3 inserting ‘‘an eligible organization (as defined in sec4 tion 1876(b)) if the policy or plan provides benefits

5 pursuant to a contract under section 1876 or an ap6 proved demonstration project described in section

7 603(c) of the Social Security Amendments of 1983,

8 section 2355 of the Deficit Reduction Act of 1984,

9 or section 9412(b) of the Omnibus Budget Reconcili10 ation Act of 1986 or, during the period beginning on

11 the date specified in subsection (p)(1)(C) and ending

12 on December 31, 1994, a policy or plan of an orga13 nization if the policy or plan provides benefits pursu14 ant to an agreement under section 1833(a)(1)(A)’’.

15 (2) Section 4356(b) of OBRA–1990 is amended

16 by striking ‘‘on the date of the enactment of this

17 Act’’ and inserting ‘‘on the date specified in section

18 1882(p)(1)(C) of the Social Security Act’’.

19 (g) PRE-EXISTING CONDITION LIMITATIONS.—Sec20 tion 1882(s) (42 U.S.C. 1395ss(s)) is amended—

21 (1) in paragraph (2)(A), by striking ‘‘for which

22 an application is submitted’’ and inserting ‘‘in the

23 case of an individual for whom an application is sub24 mitted prior to or’’,
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1 (2) in paragraph (2)(A), by striking ‘‘in which

2 the individual (who is 65 years of age or older) first

3 is enrolled for benefits under part B’’ and inserting

4 ‘‘as of the first day on which the individual is 65

5 years of age or older and is enrolled for benefits

6 under part B’’, and

7 (3) in paragraph (2)(B), by striking ‘‘before it’’

8 and inserting ‘‘before the policy’’.

9 (h) MEDICARE SELECT POLICIES.—

10 (1) Section 1882(t) (42 U.S.C. 1395ss(t)) is

11 amended—

12 (A) in paragraph (1), by inserting ‘‘medi13 care supplemental’’ after ‘‘If a’’,

14 (B) in paragraph (1), by striking ‘‘NAIC

15 Model Standards’’ and inserting ‘‘1991 NAIC

16 Model Regulation or 1991 Federal Regulation’’,

17 (C) in paragraph (1)(A), by inserting ‘‘or

18 agreements’’ after ‘‘contracts’’,

19 (D) in subparagraphs (E)(i) and (F) of

20 paragraph (1), by striking ‘‘NAIC standards’’

21 and inserting ‘‘standards in the 1991 NAIC

22 Model Regulation or 1991 Federal Regulation’’,

23 and
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1 (E) in paragraph (2), by inserting ‘‘the is2 suer’’ before ‘‘is subject to a civil money pen3 alty’’.

4 (2) Section 1154(a)(4)(B) (42 U.S.C. 1320c–

5 3(a)(4)(B)) is amended—

6 (A) by inserting ‘‘that is’’ after ‘‘(or’’, and

7 (B) by striking ‘‘1882(t)’’ and inserting

8 ‘‘1882(t)(3)’’.

9 (i) HEALTH INSURANCE COUNSELING.—Section

10 4360 of OBRA–1990 is amended—

11 (1) in subsection (b)(2)(A)(ii), by striking

12 ‘‘Act’’ and inserting ‘‘Act)’’;

13 (2) in subsection (b)(2)(D), by striking ‘‘serv14 ices’’ and inserting ‘‘counseling’’;

15 (3) in subsection (b)(2)(I), by striking ‘‘assist16 ance’’ and inserting ‘‘referrals’’;

17 (4) in subsection (c)(1), by striking ‘‘and that

18 such activities will continue to be maintained at such

19 level’’;

20 (5) in subsection (d)(3), by striking ‘‘to the

21 rural areas’’ and inserting ‘‘eligible individuals resid22 ing in rural areas’’;

23 (6) in subsection (e)—

24 (A) by striking ‘‘subsection (c) or (d)’’ and

25 inserting ‘‘this section’’,
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1 (B) by striking ‘‘and annually thereafter,

2 issue an annual report’’ and inserting ‘‘and an3 nually thereafter during the period of the grant,

4 issue a report’’,

5 (C) in paragraph (1), by striking ‘‘State6 wide’’, and

7 (D) in subsection (f), by striking para8 graph (2) and by redesignating paragraphs (3)

9 through (5) as paragraphs (2) through (4), re10 spectively; and

11 (7) by redesignating the second subsection (f)

12 (relating to authorization of appropriations for

13 grants) as subsection (g).

14 (j) TELEPHONE INFORMATION SYSTEM.—

15 (1) Section 1804 (42 U.S.C. 1395b–2) is

16 amended—

17 (A) by adding at the end of the heading

18 the following: ‘‘; MEDICARE AND MEDIGAP IN19 FORMATION’’,

20 (B) by inserting ‘‘(a)’’ after ‘‘1804.’’, and

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

22 subsection:

23 ‘‘(b) The Secretary shall provide information via a

24 toll-free telephone number on the programs under this

25 title.’’.
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1 (2) Section 1882(f) (42 U.S.C. 1395ss(f)) is

2 amended by adding at the end the following new

3 paragraph:

4 ‘‘(3) The Secretary shall provide information via a

5 toll-free telephone number on medicare supplemental poli6 cies (including the relationship of State programs under

7 title XIX to such policies).’’.

8 (3) Section 1889 is repealed.

9 (k) MAILING OF POLICIES.—Section 1882(d)(4) (42

10 U.S.C. 1395ss(d)(4)) is amended—

11 (1) in subparagraph (D), by striking ‘‘, if such

12 policy’’ and all that follows up to the period at the

13 end, and

14 (2) by adding at the end the following new sub15 paragraph:

16 ‘‘(E) Subparagraph (A) shall not apply in the case

17 of an issuer who mails or causes to be mailed a policy,

18 certificate, or other matter solely to comply with the re19 quirements of subsection (q).’’.

20 (l) EFFECTIVE DATE.—The amendments made by

21 this section shall be effective as if included in the enact22 ment of OBRA–1990; except that—

23 (1) the amendments made by subsection (d)(1)

24 shall take effect on the date of the enactment of this

25 Act, but no penalty shall be imposed under section
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1 1882(d)(3)(A) of the Social Security Act (for an ac2 tion occurring after the effective date of the amend3 ments made by section 4354 of OBRA–1990 and be4 fore the date of the enactment of this Act) with re5 spect to the sale or issuance of a policy which is not

6 unlawful under section 1882(d)(3)(A)(i)(II) of the

7 Social Security Act (as amended by this section);

8 (2) the amendments made by subsection

9 (d)(2)(A) and by subparagraphs (A), (B), and (E)

10 of subsection (e)(1) shall be effective on the date

11 specified in subsection (m)(4); and

12 (3) the amendment made by subsection (g)(2)

13 shall take effect on January 1, 1994, and shall apply

14 to individuals who attain 65 years of age or older on

15 or after the effective date of section 1882(s)(2) of

16 the Social Security Act (and, in the case of individ17 uals who attained 65 years of age after such effec18 tive date and before January 1, 1994, and who were

19 not covered under such section before January 1,

20 1994, the 6-month period specified in that section

21 shall begin January 1, 1994).

22 (m) TRANSITION PROVISIONS.—

23 (1) IN GENERAL.—If the Secretary of Health

24 and Human Services identifies a State as requiring

25 a change to its statutes or regulations to conform its
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1 regulatory program to the changes made by this sec2 tion, the State regulatory program shall not be con3 sidered to be out of compliance with the require4 ments of section 1882 of the Social Security Act due

5 solely to failure to make such change until the date

6 specified in paragraph (4).

7 (2) NAIC STANDARDS.—If, within 6 months

8 after the date of the enactment of this Act, the Na9 tional Association of Insurance Commissioners (in

10 this subsection referred to as the ‘‘NAIC’’) modifies

11 its 1991 NAIC Model Regulation (adopted in July

12 1991) to conform to the amendments made by this

13 section and to delete from section 15C the exception

14 which begins with ‘‘unless’’, such modifications shall

15 be considered to be part of that Regulation for the

16 purposes of section 1882 of the Social Security Act.

17 (3) SECRETARY STANDARDS.—If the NAIC

18 does not make the modifications described in para19 graph (2) within the period specified in such para20 graph, the Secretary of Health and Human Services

21 shall make the modifications described in such para22 graph and such modifications shall be considered to

23 be part of that Regulation for the purposes of sec24 tion 1882 of the Social Security Act.

25 (4) DATE SPECIFIED.—
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1 (A) IN GENERAL.—Subject to subpara2 graph (B), the date specified in this paragraph

3 for a State is the earlier of—

4 (i) the date the State changes its stat5 utes or regulations to conform its regu6 latory program to the changes made by

7 this section, or

8 (ii) 1 year after the date the NAIC or

9 the Secretary first makes the modifications

10 under paragraph (2) or (3), respectively.

11 (B) ADDITIONAL LEGISLATIVE ACTION RE12 QUIRED.—In the case of a State which the Sec13 retary identifies as—

14 (i) requiring State legislation (other

15 than legislation appropriating funds) to

16 conform its regulatory program to the

17 changes made in this section, but

18 (ii) having a legislature which is not

19 scheduled to meet in 1994 in a legislative

20 session in which such legislation may be

21 considered,

22 the date specified in this paragraph is the first

23 day of the first calendar quarter beginning after

24 the close of the first legislative session of the

25 State legislature that begins on or after Janu-
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1 ary 1, 1994. For purposes of the previous sen2 tence, in the case of a State that has a 2-year

3 legislative session, each year of such session

4 shall be deemed to be a separate regular session

5 of the State legislature.

6 CHAPTER 5—TREATMENT OF CERTAIN

7 STATE HEALTH CARE PROGRAMS

8 SEC. 13581. TREATMENT OF CERTAIN STATE HEALTH CARE

9 PROGRAMS.

10 Section 514(b)(5) of the Employee Retirement In11 come Security Act of 1974 (29 U.S.C. 1144(b)(5)) is

12 amended to read as follows:

13 ‘‘(5)(A) Except as provided in subparagraphs

14 (B) and (C), subsection (a) shall not apply to the

15 Hawaii Prepaid Health Care Act (Haw. Rev. Stat.

16 §§ 393–1 through 393–51).

17 ‘‘(B) Nothing in subparagraph (A) shall be con18 strued to exempt from subsection (a) any State tax

19 law relating to employee benefits plans.

20 ‘‘(C) If the Secretary of Labor notifies the Gov21 ernor of the State of Hawaii that as the result of

22 an amendment to the Hawaii Prepaid Health Care

23 Act enacted after October 5, 1992—
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1 ‘‘(i) the proportion of the population with

2 health care coverage under such Act is less than

3 such proportion on such date, or

4 ‘‘(ii) the level of benefit coverage provided

5 under such Act is less than the actuarial equiv6 alent of such level of coverage on such date,

7 subparagraph (A) shall not apply with respect to the

8 application of such amendment to such Act after the

9 date of such notification.’’.

10 TITLE XIV—REVENUE

11 PROVISIONS

12 SEC. 14001. SHORT TITLE; ETC.

13 (a) SHORT TITLE.—This title may be cited as the

14 ‘‘Revenue Reconciliation Act of 1993’’.

15 (b) AMENDMENT TO 1986 CODE.—Except as other16 wise expressly provided, whenever in this title an amend17 ment or repeal is expressed in terms of an amendment

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

19 shall be considered to be made to a section or other provi20 sion of the Internal Revenue Code of 1986.

21 (c) SECTION 15 NOT TO APPLY.—Except in the case

22 of the amendments made by section 14221 (relating to

23 corporate rate increase), no amendment made by this title

24 shall be treated as a change in a rate of tax for purposes

25 of section 15 of the Internal Revenue Code of 1986.
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1 (d) WAIVER OF ESTIMATED TAX PENALTIES.—No

2 addition to tax shall be made under section 6654 or 6655

3 of the Internal Revenue Code of 1986 for any period be4 fore April 16, 1994 (March 16, 1994, in the case of a

5 corporation), with respect to any underpayment to the ex6 tent such underpayment was created or increased by any

7 provision of this title.

8 (e) TABLE OF CONTENTS.—

TITLE XIV—REVENUE PROVISIONS

Sec. 14001. Short title; etc.

Subtitle A—Training and Investment Incentives

PART I—PROVISIONS RELATING TO EDUCATION AND TRAINING

Sec. 14101. Employer-provided educational assistance.

Sec. 14102. Targeted jobs credit.

PART II—INVESTMENT INCENTIVES

SUBPART A—RESEARCH CREDIT

Sec. 14111. Permanent extension of research credit.

Sec. 14112. Modification of fixed base percentage for startup companies.

SUBPART B—CAPITAL GAIN PROVISIONS

Sec. 14113. 50-percent exclusion for gain from certain small business stock.

Sec. 14114. Rollover of gain from sale of publicly traded securities into specialized small business investment companies.

SUBPART C—MODIFICATIONS TO MINIMUM TAX DEPRECIATION RULES

Sec. 14115. Modification to minimum tax depreciation rules.

SUBPART D—INCREASE IN EXPENSE TREATMENT FOR SMALL BUSINESSES

Sec. 14116. Increase in expense treatment for small businesses.

PART III—TAX-EXEMPT BOND PROVISIONS

Sec. 14121. High-speed intercity rail facility bonds exempt from State volume

cap.

Sec. 14122. Permanent extension of qualified small issue bonds.

PART IV—EXPANSION AND SIMPLIFICATION OF EARNED INCOME TAX

CREDIT

Sec. 14131. Expansion and simplification of earned income tax credit.
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PART V—INCENTIVES FOR INVESTMENT IN REAL ESTATE

SUBPART A—EXTENSION OF QUALIFIED MORTGAGE BONDS AND LOW-INCOME

HOUSING CREDIT

Sec. 14141. Permanent extension of qualified mortgage bonds.

Sec. 14142. Permanent extension of low-income housing credit.

SUBPART B—MODIFICATION OF PASSIVE LOSS RULES

Sec. 14143. Application of passive loss rules to rental real estate activities.

SUBPART C—PROVISIONS RELATING TO REAL ESTATE INVESTMENTS BY

PENSION FUNDS

Sec. 14144. Real estate property acquired by a qualified organization.

Sec. 14145. Repeal of special treatment of publicly traded partnerships.

Sec. 14146. Title-holding companies permitted to receive small amounts of unrelated business taxable income.

Sec. 14147. Exclusion from unrelated business tax of gains from certain property.

Sec. 14148. Exclusion from unrelated business tax of certain fees and option

premiums.

Sec. 14149. Treatment of pension fund investments in real estate investment

trusts.

SUBPART D—DISCHARGE OF INDEBTEDNESS

Sec. 14150. Exclusion from gross income for income from discharge of qualified

real property business indebtedness.

SUBPART E—INCREASE IN RECOVERY PERIOD FOR NONRESIDENTIAL REAL

PROPERTY

Sec. 14151. Increase in recovery period for nonresidential real property.

PART VI—LUXURY TAX

Sec. 14161. Repeal of luxury excise taxes other than on passenger vehicles.

Sec. 14162. Exemption from luxury excise tax for certain equipment installed

on passenger vehicles for use by disabled individuals.

Sec. 14163. Tax on diesel fuel used in noncommercial boats.

PART VII—OTHER CHANGES

Sec. 14171. Alternative minimum tax treatment of contributions of appreciated

property.

Sec. 14172. Certain transfers to railroad retirement account made permanent.

Sec. 14173. Temporary extension of deduction for health insurance costs of

self-employed individuals.

Subtitle B—Revenue Increases

PART I—PROVISIONS AFFECTING INDIVIDUALS

SUBPART A—RATE INCREASES

Sec. 14201. Increase in top marginal rate under section 1.

Sec. 14202. Surtax on high-income taxpayers.
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Sec. 14203. Modifications to alternative minimum tax rates and exemption

amounts.

Sec. 14204. Overall limitation on itemized deductions for high-income taxpayers

made permanent.

Sec. 14205. Phaseout of personal exemption of high-income taxpayers made

permanent.

Sec. 14206. Provisions to prevent conversion of ordinary income to capital gain.

SUBPART B—OTHER PROVISIONS

Sec. 14207. Repeal of limitation on amount of wages subject to health insurance employment tax.

Sec. 14208. Top estate and gift tax rates made permanent.

Sec. 14209. Reduction in deductible portion of business meals and entertainment.

Sec. 14210. Elimination of deduction for club membership fees.

Sec. 14211. Disallowance of deduction for certain employee remuneration in excess of $1,000,000.

Sec. 14212. Reduction in compensation taken into account in determining contributions and benefits under qualified retirement plans.

Sec. 14213. Modification to deduction for certain moving expenses.

Sec. 14214. Simplification of individual estimated tax safe harbor based on last

year’s tax.

Sec. 14215. Social security and tier 1 railroad retirement benefits.

PART II—PROVISIONS AFFECTING BUSINESSES

Sec. 14221. Increase in top marginal rate under section 11.

Sec. 14222. Denial of deduction for lobbying expenses.

Sec. 14223. Mark to market accounting method for securities dealers.

Sec. 14224. Clarification of treatment of certain FSLIC financial assistance.

Sec. 14225. Modification of corporate estimated tax rules.

Sec. 14226. Limitation on section 936 credit.

Sec. 14227. Modification to limitation on deduction for certain interest.

PART III—FOREIGN TAX PROVISIONS

SUBPART A—CURRENT TAXATION OF CERTAIN EARNINGS OF CONTROLLED

FOREIGN CORPORATIONS

Sec. 14231. Earnings invested in excess passive assets.

Sec. 14232. Modification to taxation of investment in United States property.

Sec. 14233. Other modifications to subpart F.

SUBPART B—ALLOCATION OF RESEARCH AND EXPERIMENTAL EXPENDITURES

Sec. 14234. Allocation of research and experimental expenditures.

SUBPART C—OTHER PROVISIONS

Sec. 14235. Repeal of certain exceptions for working capital.

Sec. 14236. Modifications of accuracy-related penalty.

Sec. 14237. Denial of portfolio interest exemption for contingent interest.

Sec. 14238. Regulations dealing with conduit arrangements.

PART IV—ENERGY TAX PROVISIONS
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SUBPART A—ENERGY TAX BASED ON BTU CONTENT

Sec. 14241. Imposition of energy tax based on Btu content.

SUBPART B—MODIFICATIONS TO TAX ON DIESEL FUEL

Sec. 14242. Modifications to tax on diesel fuel.

Sec. 14243. Floor stocks tax.

SUBPART C—EXTENSION OF MOTOR FUEL TAX RATES; INCREASED DEPOSITS

INTO HIGHWAY TRUST FUND

Sec. 14244. Extension of motor fuel tax rates; increased deposits into highway

trust fund.

PART V—COMPLIANCE PROVISIONS

Sec. 14251. Reporting required for certain payments to corporations.

Sec. 14252. Modifications to substantial understatement and return-preparer

penalties.

Sec. 14253. Returns relating to the cancellation of indebtedness by certain financial entities.

PART VI—TREATMENT OF INTANGIBLES

Sec. 14261. Amortization of goodwill and certain other intangibles.

Sec. 14262. Treatment of certain payments to retired or deceased partner.

PART VII—MISCELLANEOUS PROVISIONS

Sec. 14271. Substantiation requirement for deduction of certain charitable contributions.

Sec. 14272. Disclosure related to quid pro quo contributions.

Sec. 14273. Disallowance of interest on certain overpayments of tax.

Sec. 14274. Denial of deduction relating to travel expenses.

Sec. 14275. Increase in withholding from supplemental wage payments.

Subtitle C—Empowerment Zones and Enterprise Communities, Etc.

PART I—EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES

Sec. 14301. Designation and treatment of empowerment zones and enterprise

communities.

Sec. 14302. Expansion of targeted jobs credit.

Sec. 14303. Technical and conforming amendments.

Sec. 14304. Effective date.

PART II—CREDIT FOR CONTRIBUTIONS TO CERTAIN COMMUNITY

DEVELOPMENT CORPORATIONS

Sec. 14311. Credit for contributions to certain community development corporations.

Subtitle D—Other Provisions

PART I—DISCLOSURE PROVISIONS

Sec. 14401. Disclosure of return information for administration of certain veterans programs.
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Sec. 14402. Disclosure of return information to carry out income contingent repayment of student loans.

Sec. 14403. Use of return information for income verification under certain

housing assistance programs.

PART II—USER FEE PROVISIONS

Sec. 14411. Fees for applications for alcohol labeling and formula reviews.

Sec. 14412. Use of Harbor Maintenance Trust Fund amounts for administrative expenses.

Sec. 14413. Increase in tax on fuel used in commercial transportation on inland

waterways.

PART III—PUBLIC DEBT LIMIT

Sec. 14421. Increase in public debt limit.

PART IV—VACCINE PROVISIONS

Sec. 14431. Excise tax on certain vaccines made permanent.

Sec. 14432. Continuation coverage under group health plans of costs of pediatric vaccines.

Sec. 14433. Childhood Immunization Trust Fund.

1 Subtitle A—Training and

2 Investment Incentives

3 PART I—PROVISIONS RELATING TO EDUCATION

4 AND TRAINING

5 SEC. 14101. EMPLOYER-PROVIDED EDUCATIONAL ASSIST6 ANCE.

7 (a) PERMANENT EXTENSION OF EXCLUSION.—

8 (1) IN GENERAL.—Section 127 (relating to edu9 cational assistance programs) is amended by striking

10 subsection (d) and by redesignating subsection (e) as

11 subsection (d).

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

13 of section 103(a) of the Tax Extension Act of 1991

14 is hereby repealed.
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1 (b) COORDINATION WITH SECTION 132.—Paragraph

2 (8) of section 132(i) is amended to read as follows:

3 ‘‘(8) APPLICATION OF SECTION TO OTHERWISE

4 TAXABLE EDUCATIONAL OR TRAINING BENEFITS.—

5 Amounts paid or expenses incurred by the employer

6 for education or training provided to the employee

7 which are not excludable from gross income under

8 section 127 shall be excluded from gross income

9 under this section if (and only if) such amounts or

10 expenses are a working condition fringe.’’

11 (c) EFFECTIVE DATES.—

12 (1) SUBSECTION (a).—The amendments made

13 by subsection (a) shall apply to taxable years ending

14 after June 30, 1992.

15 (2) SUBSECTION (b).—The amendment made

16 by subsection (b) shall apply to taxable years begin17 ning after December 31, 1988.

18 (d) TRANSITION RULES.—

19 (1) WAIVER OF INTEREST AND PENALTIES.—

20 No interest, penalty, or addition to tax shall be im21 posed or required to be paid solely by reason of a

22 failure, before the date of the enactment of this Act,

23 to treat educational assistance in a manner consist24 ent with the provisions of section 103(a) of the Tax
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1 Extension Act of 1991 (as in effect before the

2 amendments made by subsection (a)).

3 (2) SPECIAL RULES FOR 1992.—

4 (A) EMPLOYMENT TAXES.—If—

5 (i) an employer provided an employee

6 with educational assistance during the pe7 riod beginning on July 1, 1992, and end8 ing on December 31, 1992,

9 (ii) consistent with the provisions of

10 section 103(a) of the Tax Extension Act of

11 1991 (as so in effect), such employer treat12 ed such assistance as taxable for purposes

13 of any employment tax and as a result of

14 such treatment there was an increase in

15 taxable wages for purposes of such tax,

16 (iii) on or after the date of the enact17 ment of this Act and before January 1,

18 1994, such employer pays such employee

19 amounts which are taxable wages for pur20 poses of such tax and which equal or ex21 ceed the increase referred to in clause (ii),

22 and

23 (iv) such employee did not treat such

24 assistance for purposes of such employ25 ment tax (or for purposes of chapter 1 of
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1 the Internal Revenue Code of 1986 in the

2 case of employment tax imposed by chap3 ter 24 of such Code) in a manner incon4 sistent with the employer’s treatment of

5 such assistance,

6 the amendments made by subsection (a) shall

7 not apply to such educational assistance for

8 purposes of such employment tax, but, for pur9 poses of applying such employment tax (and for

10 purposes of the reporting requirements imposed

11 by chapter 61 of such Code), the taxable wages

12 of the employee referred to in clause (iii) shall

13 be reduced by the amount of the increase re14 ferred to in clause (ii). For purposes of clause

15 (iv), an employer may assume that the em16 ployee treated the assistance in a manner con17 sistent with the employer’s treatment unless

18 such employer has actual knowledge to the con19 trary.

20 (B) REPORTING REQUIREMENT.—An em21 ployer shall separately report the amounts of

22 any reduction under subparagraph (A) as non23 taxable income on any returns or receipts re24 quired under chapter 61 of such Code for cal25 endar year 1993.
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1 (C) DEFINITIONS.—For purposes of this

2 paragraph—

3 (i) EMPLOYMENT TAX.—The term

4 ‘‘employment tax’’ means any tax imposed

5 by subtitle C of such Code.

6 (ii) TAXABLE WAGES.—The term

7 ‘‘taxable wages’’means—

8 (I) wages (as defined in section

9 3121(a) of such Code) in the case of

10 the taxes imposed by chapter 21 of

11 such Code,

12 (II) compensation (as defined in

13 section 3231(e) of such Code) in the

14 case of the taxes imposed by chapter

15 22 of such Code,

16 (III) wages (as defined in section

17 3306(b) of such Code) in the case of

18 the taxes imposed by chapter 23 of

19 such Code, and

20 (IV) wages (as defined in section

21 3401(a) of such Code) in the case of

22 the taxes imposed by chapter 24 of

23 such Code.

24 (3) INCOME TAX TREATMENT.—If—
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1 (A) subparagraph (A) of paragraph (2) ap2 plies to any educational assistance referred to

3 in such paragraph provided to any employee,

4 and

5 (B) such employee included such assistance

6 in his taxable income for purposes of the tax

7 imposed by chapter 1 of such Code,

8 the amendments made by subsection (a) shall not

9 apply to such assistance for purposes of such chap10 ter 1, but the amount included in the gross income

11 of such employee by reason of wages received from

12 the employer referred to in subparagraph (A) of

13 paragraph (2) during 1993 shall be reduced in the

14 manner provided in such subparagraph (A).

15 SEC. 14102. TARGETED JOBS CREDIT.

16 (a) PERMANENT EXTENSION OF CREDIT.—

17 (1) IN GENERAL.—Subsection (c) of section 51

18 (relating to amount of targeted jobs credit) is

19 amended by striking paragraph (4).

20 (2) EFFECTIVE DATE.—The amendment made

21 by paragraph (1) shall apply to individuals who

22 begin work for the employer after June 30, 1992.

23 (b) CREDIT FOR PARTICIPANTS IN APPROVED

24 SCHOOL-TO-WORK PROGRAMS.—
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1 (1) IN GENERAL.—Subparagraph (I) of section

2 51(d)(1) (defining members of targeted group) is

3 amended to read as follows:

4 ‘‘(I) a qualified participant in an

5 approved school-to-work program, or’’.

6 (2) QUALIFIED PARTICIPANT IN AN APPROVED

7 SCHOOL-TO-WORK PROGRAM.—Paragraph (10) of

8 section 51(d) is amended to read as follows:

9 ‘‘(10) QUALIFIED PARTICIPANT IN AN AP10 PROVED SCHOOL-TO-WORK PROGRAM DEFINED.—

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

12 provided in this paragraph, the term ‘qualified

13 participant in an approved school-to-work pro14 gram’ means any individual who is certified

15 under an approved school-to-work program as—

16 ‘‘(i) having attained age 16 but not

17 having attained age 21, and

18 ‘‘(ii) being enrolled in and making

19 satisfactory progress in completing such

20 approved school-to-work program.

21 ‘‘(B) LIMITATION ON NUMBER OF PARTICI22 PANTS.—

23 ‘‘(i) IN GENERAL.—Any individual

24 who begins work for the employer during

25 any calendar year shall not be treated as
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1 a qualified participant in an approved

2 school-to-work program unless the individ3 ual is certified under such program as an

4 eligible participant with respect to such

5 calendar year.

6 ‘‘(ii) LIMITATION ON CERTIFI7 CATIONS.—The aggregate number of indi8 viduals certified under an approved school9 to-work program as eligible participants

10 with respect to any calendar year shall not

11 exceed the portion of the national school12 to-work program limitation for such cal13 endar year allocated under subsection (l)

14 to such program.

15 ‘‘(C) APPROVED SCHOOL-TO-WORK PRO16 GRAM.—The term ‘approved school-to-work pro17 gram’ means any program which—

18 ‘‘(i) is a planned program of struc19 tured job training designed to integrate

20 academic instruction provided by an edu21 cational institution and work-based learn22 ing provided by an employer, and

23 ‘‘(ii) is approved by the Secretaries of

24 Labor and Education.
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1 ‘‘(D) LIMITATION ON AMOUNT OF WAGES

2 TAKEN INTO ACCOUNT.—For purposes of apply3 ing this subpart to wages paid or incurred to

4 any qualified participant in an approved school5 to-work program, subsection (b)(3) shall be ap6 plied by substituting ‘$3,000’ for ‘$6,000’.

7 ‘‘(E) WAGES.—In the case of remunera8 tion attributable to services performed while the

9 individual meets the requirements of subpara10 graph (A), wages, and unemployment insurance

11 wages, shall be determined without regard to

12 section 3306(c)(10)(C).’’

13 (3) OVERALL LIMITATIONS.—Section 51 is

14 amended by adding at the end thereof the following

15 new subsection:

16 ‘‘(l) OVERALL LIMITATION ON APPROVED SCHOOL17 TO-WORK PROGRAM PARTICIPANTS.—

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

19 (d)(10), the national school-to-work program limita20 tion—

21 ‘‘(A) for calendar year 1994 is 125,000,

22 ‘‘(B) for calendar year 1995 is 140,000,

23 ‘‘(C) for calendar year 1996 is 160,000,

24 ‘‘(D) for calendar year 1997 is 180,000,

25 and
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1 ‘‘(E) for calendar year 1998 and any sub2 sequent calendar year is 200,000.

3 ‘‘(2) ALLOCATION TO STATES.—The national

4 school-to-work program limitation for any calendar

5 year shall be allocated among the States in propor6 tion to the number of their eligible participants that

7 are estimated to be served in approved school-to8 work programs for that year. Such estimates shall

9 be published by the Secretaries of Labor and Edu10 cation before the beginning of the calendar year to

11 which the allocation applies.

12 ‘‘(3) ALLOCATION TO APPROVED SCHOOL-TO13 WORK PROGRAMS.—The portion of the national

14 school-to-work program limitation for any calendar

15 year which is allocated to any State shall be allo16 cated among the approved school-to-work programs

17 in such State in such manner as the Secretaries of

18 Labor and Education shall prescribe.’’

19 (4) EFFECTIVE DATE.—The amendments made

20 by this subsection shall apply in the case of individ21 uals who begin work for the employer after Decem22 ber 31, 1993.
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1 PART II—INVESTMENT INCENTIVES

2 Subpart A—Research Credit

3 SEC. 14111. PERMANENT EXTENSION OF RESEARCH CRED4 IT.

5 (a) IN GENERAL.—Section 41 (relating to credit for

6 increasing research activities) is amended by striking sub7 section (h).

8 (b) CONFORMING AMENDMENT.—Paragraph (1) of

9 section 28(b) is amended by striking subparagraph (D).

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

11 this section shall apply to taxable years ending after June

12 30, 1992.

13 SEC. 14112. MODIFICATION OF FIXED BASE PERCENTAGE

14 FOR STARTUP COMPANIES.

15 (a) GENERAL RULE.—Clause (ii) of section

16 41(c)(3)(B) is amended to read as follows:

17 ‘‘(ii) FIXED-BASE PERCENTAGE.—In a

18 case to which this subparagraph applies,

19 the fixed-base percentage is—

20 ‘‘(I) 3 percent for each of the

21 taxpayer’s 1st 5 taxable years begin22 ning after December 31, 1993, for

23 which the taxpayer has qualified re24 search expenses,

25 ‘‘(II) in the case of the tax26 payer’s 6th such taxable year, 1/6 of
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1 the percentage which the aggregate

2 qualified research expenses of the tax3 payer for the 4th and 5th such tax4 able years is of the aggregate gross

5 receipts of the taxpayer for such

6 years,

7 ‘‘(III) in the case of the tax8 payer’s 7th such taxable year, 1/3 of

9 the percentage which the aggregate

10 qualified research expenses of the tax11 payer for the 5th and 6th such tax12 able years is of the aggregate gross

13 receipts of the taxpayer for such

14 years,

15 ‘‘(IV) in the case of the tax16 payer’s 8th such taxable year, 1/2 of

17 the percentage which the aggregate

18 qualified research expenses of the tax19 payer for the 5th, 6th, and 7th such

20 taxable years is of the aggregate gross

21 receipts of the taxpayer for such

22 years,

23 ‘‘(V) in the case of the taxpayer’s

24 9th such taxable year, 2/3 of the per25 centage which the aggregate qualified
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1 research expenses of the taxpayer for

2 the 5th, 6th, 7th, and 8th such tax3 able years is of the aggregate gross

4 receipts of the taxpayer for such

5 years,

6 ‘‘(VI) in the case of the tax7 payer’s 10th such taxable year, 5/6 of

8 the percentage which the aggregate

9 qualified research expenses of the tax10 payer for the 5th, 6th, 7th, 8th, and

11 9th such taxable years is of the aggre12 gate gross receipts of the taxpayer for

13 such years, and

14 ‘‘(VII) for taxable years there15 after, the percentage which the aggre16 gate qualified research expenses for

17 any 5 taxable years selected by the

18 taxpayer from among the 5th through

19 the 10th such taxable years is of the

20 aggregate gross receipts of the tax21 payer for such selected years.’’

22 (b) CONFORMING AMENDMENTS.—

23 (1) Clause (iii) of section 41(c)(3)(B) is amend24 ed by striking ‘‘clause (i)’’ and inserting ‘‘clauses (i)

25 and (ii)’’.
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1 (2) Subparagraph (D) of section 41(c)(3) is

2 amended by striking ‘‘subparagraph (A)’’ and insert3 ing ‘‘subparagraphs (A) and (B)(ii)’’.

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

5 this section shall apply to taxable years beginning after

6 December 31, 1993.

7 Subpart B—Capital Gain Provisions

8 SEC. 14113. 50-PERCENT EXCLUSION FOR GAIN FROM CER9 TAIN SMALL BUSINESS STOCK.

10 (a) GENERAL RULE.—Part I of subchapter P of

11 chapter 1 (relating to capital gains and losses) is amended

12 by adding at the end thereof the following new section:

13 ‘‘SEC. 1202. 50-PERCENT EXCLUSION FOR GAIN FROM CER14 TAIN SMALL BUSINESS STOCK.

15 ‘‘(a) 50–PERCENT EXCLUSION.—In the case of a tax16 payer other than a corporation, gross income shall not in17 clude 50 percent of any gain from the sale or exchange

18 of qualified small business stock held for more than 5

19 years.

20 ‘‘(b) PER-ISSUER LIMITATION ON TAXPAYER’S ELI21 GIBLE GAIN.—

22 ‘‘(1) IN GENERAL.—If the taxpayer has eligible

23 gain for the taxable year from 1 or more dispositions

24 of stock issued by any corporation, the aggregate

25 amount of such gain from dispositions of stock is-
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1 sued by such corporation which may be taken into

2 account under subsection (a) for the taxable year

3 shall not exceed the greater of—

4 ‘‘(A) $10,000,000 reduced by the aggre5 gate amount of eligible gain taken into account

6 under subsection (a) for prior taxable years and

7 attributable to dispositions of stock issued by

8 such corporation, or

9 ‘‘(B) 10 times the aggregate adjusted

10 bases of qualified small business stock issued by

11 such corporation and disposed of by the tax12 payer during the taxable year.

13 For purposes of subparagraph (B), the adjusted

14 basis of any stock shall be determined without re15 gard to any addition to basis after the date on which

16 such stock was originally issued.

17 ‘‘(2) ELIGIBLE GAIN.—For purposes of this

18 subsection, the term ‘eligible gain’ means any gain

19 from the sale or exchange of qualified small business

20 stock held for more than 5 years.

21 ‘‘(3) TREATMENT OF MARRIED INDIVIDUALS.—

22 ‘‘(A) SEPARATE RETURNS.—In the case of

23 a separate return by a married individual, para24 graph (1)(A) shall be applied by substituting

25 ‘$5,000,000’ for ‘$10,000,000’.
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1 ‘‘(B) ALLOCATION OF EXCLUSION.—In the

2 case of any joint return, the amount of gain

3 taken into account under subsection (a) shall be

4 allocated equally between the spouses for pur5 poses of applying this subsection to subsequent

6 taxable years.

7 ‘‘(C) MARITAL STATUS.—For purposes of

8 this subsection, marital status shall be deter9 mined under section 7703.

10 ‘‘(c) QUALIFIED SMALL BUSINESS STOCK.—For pur11 poses of this section—

12 ‘‘(1) IN GENERAL.—Except as otherwise pro13 vided in this section, the term ‘qualified small busi14 ness stock’ means any stock in a C corporation

15 which is originally issued after December 31, 1992,

16 if—

17 ‘‘(A) as of the date of issuance, such cor18 poration is a qualified small business, and

19 ‘‘(B) except as provided in subsections (f)

20 and (h), such stock is acquired by the taxpayer

21 at its original issue (directly or through an un22 derwriter)—

23 ‘‘(i) in exchange for money or other

24 property (not including stock), or
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1 ‘‘(ii) as compensation for services pro2 vided to such corporation (other than serv3 ices performed as an underwriter of such

4 stock).

5 ‘‘(2) ACTIVE BUSINESS REQUIREMENT; ETC.—

6 ‘‘(A) IN GENERAL.—Stock in a corporation

7 shall not be treated as qualified small business

8 stock unless, during substantially all of the tax9 payer’s holding period for such stock, such cor10 poration meets the active business requirements

11 of subsection (e) and such corporation is a C

12 corporation.

13 ‘‘(B) SPECIAL RULE FOR CERTAIN SMALL

14 BUSINESS INVESTMENT COMPANIES.—

15 ‘‘(i) WAIVER OF ACTIVE BUSINESS RE16 QUIREMENT.—Notwithstanding any provi17 sion of subsection (e), a corporation shall

18 be treated as meeting the active business

19 requirements of such subsection for any

20 period during which such corporation

21 qualifies as a specialized small business in22 vestment company.

23 ‘‘(ii) SPECIALIZED SMALL BUSINESS

24 INVESTMENT COMPANY.—For purposes of

25 clause (i), the term ‘specialized small busi-
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1 ness investment company’ means any eligi2 ble corporation (as defined in subsection

3 (e)(4)) which is licensed to operate under

4 section 301(d) of the Small Business In5 vestment Act of 1958 (as in effect on May

6 13, 1993).

7 ‘‘(3) CERTAIN PURCHASES BY CORPORATION OF

8 ITS OWN STOCK.—

9 ‘‘(A) REDEMPTIONS FROM TAXPAYER OR

10 RELATED PERSON.—Stock acquired by the tax11 payer shall not be treated as qualified small

12 business stock if, at any time during the 4–year

13 period beginning on the date 2 years before the

14 issuance of such stock, the corporation issuing

15 such stock purchased (directly or indirectly) any

16 of its stock from the taxpayer or from a person

17 related (within the meaning of section 267(b) or

18 707(b)) to the taxpayer.

19 ‘‘(B) SIGNIFICANT REDEMPTIONS.—Stock

20 issued by a corporation shall not be treated as

21 qualified business stock if, during the 2–year

22 period beginning on the date 1 year before the

23 issuance of such stock, such corporation made

24 1 or more purchases of its stock with an aggre25 gate value (as of the time of the respective pur-
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1 chases) exceeding 5 percent of the aggregate

2 value of all of its stock as of the beginning of

3 such 2–year period.

4 ‘‘(C) ACQUISITIONS BY RELATED PER5 SONS.—For purposes of this paragraph, the

6 purchase by any person related (within the

7 meaning of section 267(b) or 707(b)) to the is8 suing corporation of any stock in the issuing

9 corporation shall be treated as a purchase by

10 the issuing corporation.

11 ‘‘(d) QUALIFIED SMALL BUSINESS.—For purposes of

12 this section—

13 ‘‘(1) IN GENERAL.—The term ‘qualified small

14 business’ means any domestic corporation which is a

15 C corporation if—

16 ‘‘(A) the aggregate capitalization of such

17 corporation (or any predecessor thereof) at all

18 times on or after January 1, 1993, and before

19 the issuance did not exceed $50,000,000,

20 ‘‘(B) the aggregate capitalization of such

21 corporation immediately after the issuance (de22 termined by taking into account amounts re23 ceived in the issuance) does not exceed

24 $50,000,000, and
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1 ‘‘(C) such corporation agrees to submit

2 such reports to the Secretary and to sharehold3 ers as the Secretary may require to carry out

4 the purposes of this section.

5 ‘‘(2) AGGREGATE CAPITALIZATION.—For pur6 poses of paragraph (1), the term ‘aggregate capital7 ization’ means the excess of—

8 ‘‘(A) the amount of cash and the aggregate

9 adjusted bases of other property held by the

10 corporation, over

11 ‘‘(B) the aggregate amount of the short12 term indebtedness of the corporation.

13 For purposes of the preceding sentence, the term

14 ‘short-term indebtedness’ means any indebtedness

15 which, when incurred, did not have a term in excess

16 of 1 year.

17 ‘‘(3) LOOK-THRU IN CASE OF SUBSIDIARIES.—

18 In determining whether a corporation meets the re19 quirements of this subsection—

20 ‘‘(A) stock and debt of any subsidiary (as

21 defined in subsection (e)(5)(C)) held by such

22 corporation shall be disregarded, and

23 ‘‘(B) such corporation shall be treated as

24 holding its ratable share of the assets of such
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1 subsidiary and as being liable for its ratable

2 share of the indebtedness of such subsidiary.

3 ‘‘(e) ACTIVE BUSINESS REQUIREMENT.—

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

5 (c)(2), the requirements of this subsection are met

6 by a corporation for any period if during such pe7 riod—

8 ‘‘(A) at least 80 percent (by value) of the

9 assets of such corporation are used by such cor10 poration in the active conduct of a qualified

11 trade or business, and

12 ‘‘(B) such corporation is an eligible cor13 poration.

14 ‘‘(2) SPECIAL RULE FOR CERTAIN ACTIVI15 TIES.—For purposes of paragraph (1), if, in connec16 tion with any future qualified trade or business, a

17 corporation is engaged in—

18 ‘‘(A) start-up activities described in section

19 195(c)(1)(A),

20 ‘‘(B) activities resulting in the payment or

21 incurring of expenditures which may be treated

22 as research and experimental expenditures

23 under section 174, or

24 ‘‘(C) activities with respect to in-house re25 search expenses described in section 41(b)(4),
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1 assets used in such activities shall be treated as used

2 in the active conduct of a qualified trade or busi3 ness. Any determination under this paragraph shall

4 be made without regard to whether a corporation

5 has any gross income from such activities at the

6 time of the determination.

7 ‘‘(3) QUALIFIED TRADE OR BUSINESS.—For

8 purposes of this subsection, the term ‘qualified trade

9 or business’ means any trade or business other

10 than—

11 ‘‘(A) any trade or business involving the

12 performance of services in the fields of health,

13 law, engineering, architecture, accounting, actu14 arial science, performing arts, consulting, ath15 letics, financial services, brokerage services, or

16 any other trade or business where the principal

17 asset of such trade or business is the reputation

18 or skill of 1 or more of its employees,

19 ‘‘(B) any banking, insurance, financing,

20 leasing, investing, or similar business,

21 ‘‘(C) any farming business (including the

22 business of raising or harvesting trees),

23 ‘‘(D) any business involving the production

24 or extraction of products of a character with re-
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1 spect to which a deduction is allowable under

2 section 613 or 613A, and

3 ‘‘(E) any business of operating a hotel,

4 motel, restaurant, or similar business.

5 ‘‘(4) ELIGIBLE CORPORATION.—For purposes

6 of this subsection, the term ‘eligible corporation’

7 means any domestic corporation; except that such

8 term shall not include—

9 ‘‘(A) a DISC or former DISC,

10 ‘‘(B) a corporation with respect to which

11 an election under section 936 is in effect,

12 ‘‘(C) a regulated investment company, real

13 estate investment trust, or REMIC, and

14 ‘‘(D) a cooperative.

15 ‘‘(5) STOCK IN OTHER CORPORATIONS.—

16 ‘‘(A) LOOK-THRU IN CASE OF SUBSIDI17 ARIES.—For purposes of this subsection, stock

18 and debt in any subsidiary corporation shall be

19 disregarded and the parent corporation shall be

20 deemed to own its ratable share of the subsidi21 ary’s assets, and to conduct its ratable share of

22 the subsidiary’s activities.

23 ‘‘(B) PORTFOLIO STOCK OR SECURITIES.—

24 A corporation shall be treated as failing to meet

25 the requirements of paragraph (1) for any pe-
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1 riod during which more than 10 percent of the

2 value of its assets (in excess of liabilities) con3 sists of stock or securities in other corporations

4 which are not subsidiaries of such corporation

5 (other than assets described in paragraph (6)).

6 ‘‘(C) SUBSIDIARY.—For purposes of this

7 paragraph, a corporation shall be considered a

8 subsidiary if the parent owns more than 50 per9 cent of the combined voting power of all classes

10 of stock entitled to vote, or more than 50 per11 cent in value of all outstanding stock, of such

12 corporation.

13 ‘‘(6) WORKING CAPITAL.—For purposes of

14 paragraph (1)(A), any assets which—

15 ‘‘(A) are held as a part of the reasonably

16 required working capital needs of a qualified

17 trade or business of the corporation, or

18 ‘‘(B) are held for investment and are rea19 sonably expected to be used within 2 years to

20 finance future research and experimentation in

21 a qualified trade or business or increases in

22 working capital needs of a qualified trade or

23 business,

24 shall be treated as used in the active conduct of a

25 qualified trade or business. For periods after the
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1 corporation has been in existence for at least 2

2 years, in no event may more than 50 percent of the

3 assets of the corporation qualify as used in the ac4 tive conduct of a qualified trade or business by rea5 son of this paragraph.

6 ‘‘(7) MAXIMUM REAL ESTATE HOLDINGS.—A

7 corporation shall not be treated as meeting the re8 quirements of paragraph (1) for any period during

9 which more than 10 percent of the total value of its

10 assets consists of real property which is not used in

11 the active conduct of a qualified trade or business.

12 For purposes of the preceding sentence, the owner13 ship of, dealing in, or renting of real property shall

14 not be treated as the active conduct of a qualified

15 trade or business.

16 ‘‘(8) COMPUTER SOFTWARE ROYALTIES.—For

17 purposes of paragraph (1), rights to computer soft18 ware which produces active business computer soft19 ware royalties (within the meaning of section

20 543(d)(1)) shall be treated as an asset used in the

21 active conduct of a trade or business.

22 ‘‘(f) STOCK ACQUIRED ON CONVERSION OF PRE23 FERRED STOCK.—If any stock in a corporation is acquired

24 solely through the conversion of other stock in such cor-
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1 poration which is qualified small business stock in the

2 hands of the taxpayer—

3 ‘‘(1) the stock so acquired shall be treated as

4 qualified small business stock in the hands of the

5 taxpayer, and

6 ‘‘(2) the stock so acquired shall be treated as

7 having been held during the period during which the

8 converted stock was held.

9 ‘‘(g) TREATMENT OF PASS-THRU ENTITIES.—

10 ‘‘(1) IN GENERAL.—If any amount included in

11 gross income by reason of holding an interest in a

12 pass-thru entity meets the requirements of para13 graph (2)—

14 ‘‘(A) such amount shall be treated as gain

15 described in subsection (a), and

16 ‘‘(B) for purposes of applying subsection

17 (b), such amount shall be treated as gain from

18 a disposition of stock in the corporation issuing

19 the stock disposed of by the pass-thru entity

20 and the taxpayer’s proportionate share of the

21 adjusted basis of the pass-thru entity in such

22 stock shall be taken into account.

23 ‘‘(2) REQUIREMENTS.—An amount meets the

24 requirements of this paragraph if—
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1 ‘‘(A) such amount is attributable to gain

2 on the sale or exchange by the pass-thru entity

3 of stock which is qualified small business stock

4 in the hands of such entity (determined by

5 treating such entity as an individual) and which

6 was held by such entity for more than 5 years,

7 and

8 ‘‘(B) such amount is includible in the gross

9 income of the taxpayer by reason of the holding

10 of an interest in such entity which was held by

11 the taxpayer on the date on which such pass12 thru entity acquired such stock and at all times

13 thereafter before the disposition of such stock

14 by such pass-thru entity.

15 ‘‘(3) LIMITATION BASED ON INTEREST ORIGI16 NALLY HELD BY TAXPAYER.—Paragraph (1) shall

17 not apply to any amount to the extent such amount

18 exceeds the amount to which paragraph (1) would

19 have applied if such amount were determined by ref20 erence to the interest the taxpayer held in the pass21 thru entity on the date the qualified small business

22 stock was acquired.

23 ‘‘(4) PASS-THRU ENTITY.—For purposes of this

24 subsection, the term ‘pass-thru entity’ means—

25 ‘‘(A) any partnership,
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1 ‘‘(B) any S corporation,

2 ‘‘(C) any regulated investment company,

3 and

4 ‘‘(D) any common trust fund.

5 ‘‘(h) CERTAIN TAX-FREE AND OTHER TRANS6 FERS.—For purposes of this section—

7 ‘‘(1) IN GENERAL.—In the case of a transfer

8 described in paragraph (2), the transferee shall be

9 treated as—

10 ‘‘(A) having acquired such stock in the

11 same manner as the transferor, and

12 ‘‘(B) having held such stock during any

13 continuous period immediately preceding the

14 transfer during which it was held (or treated as

15 held under this subsection) by the transferor.

16 ‘‘(2) DESCRIPTION OF TRANSFERS.—A transfer

17 is described in this subsection if such transfer is—

18 ‘‘(A) by gift,

19 ‘‘(B) at death, or

20 ‘‘(C) from a partnership to a partner of

21 stock with respect to which requirements simi22 lar to the requirements of subsection (g) are

23 met at the time of the transfer (without regard

24 to the 5-year holding period requirement).
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1 ‘‘(3) CERTAIN RULES MADE APPLICABLE.—

2 Rules similar to the rules of section 1244(d)(2) shall

3 apply for purposes of this section.

4 ‘‘(4) INCORPORATIONS AND REORGANIZATIONS

5 INVOLVING NONQUALIFIED STOCK.—

6 ‘‘(A) IN GENERAL.—In the case of a trans7 action described in section 351 or a reorganiza8 tion described in section 368, if qualified small

9 business stock is exchanged for other stock

10 which would not qualify as qualified small busi11 ness stock but for this subparagraph, such

12 other stock shall be treated as qualified small

13 business stock acquired on the date on which

14 the exchanged stock was acquired.

15 ‘‘(B) LIMITATION.—This section shall

16 apply to gain from the sale or exchange of stock

17 treated as qualified small business stock by rea18 son of subparagraph (A) only to the extent of

19 the gain which would have been recognized at

20 the time of the transfer described in subpara21 graph (A) if section 351 or 368 had not applied

22 at such time.

23 ‘‘(C) SUCCESSIVE APPLICATION.—For pur24 poses of this paragraph, stock treated as quali25 fied small business stock under subparagraph
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1 (A) shall be so treated for subsequent trans2 actions or reorganizations, except that the limi3 tation of subparagraph (B) shall be applied as

4 of the time of the first transfer to which sub5 paragraph (A) applied.

6 ‘‘(D) CONTROL TEST.—Except in the case

7 of a transaction described in section 368, this

8 paragraph shall apply only if, immediately after

9 the transaction, the corporation issuing the

10 stock owns directly or indirectly stock rep11 resenting control (within the meaning of section

12 368(c)) of the corporation whose stock was ex13 changed.

14 ‘‘(i) BASIS RULES.—For purposes of this section—

15 ‘‘(1) STOCK EXCHANGED FOR PROPERTY.—In

16 the case where the taxpayer transfers property

17 (other than money or stock) to a corporation in ex18 change for stock in such corporation—

19 ‘‘(A) such stock shall be treated as having

20 been acquired by the taxpayer on the date of

21 such exchange, and

22 ‘‘(B) the basis of such stock in the hands

23 of the taxpayer shall in no event be less than

24 the fair market value of the property ex25 changed.
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1 ‘‘(2) TREATMENT OF CONTRIBUTIONS TO CAP2 ITAL.—If the adjusted basis of any qualified small

3 business stock is adjusted by reason of any contribu4 tion to capital after the date on which such stock

5 was originally issued, in determining the amount of

6 the adjustment by reason of such contribution, the

7 basis of the contributed property shall in no event be

8 treated as less than its fair market value on the date

9 of the contribution.

10 ‘‘(j) TREATMENT OF CERTAIN SHORT POSITIONS.—

11 ‘‘(1) IN GENERAL.—If the taxpayer has an off12 setting short position with respect to any qualified

13 small business stock, subsection (a) shall not apply

14 to any gain from the sale or exchange of such stock

15 unless—

16 ‘‘(A) such stock was held by the taxpayer

17 for more than 5 years as of the first day on

18 which there was such a short position, and

19 ‘‘(B) the taxpayer elects to recognize gain

20 as if such stock were sold on such first day for

21 its fair market value.

22 ‘‘(2) OFFSETTING SHORT POSITION.—For pur23 poses of paragraph (1), the taxpayer shall be treated

24 as having an offsetting short position with respect to

25 any qualified small business stock if—
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1 ‘‘(A) the taxpayer has made a short sale of

2 substantially identical property,

3 ‘‘(B) the taxpayer has acquired an option

4 to sell substantially identical property at a fixed

5 price, or

6 ‘‘(C) to the extent provided in regulations,

7 the taxpayer has entered into any other trans8 action which substantially reduces the risk of

9 loss from holding such qualified small business

10 stock.

11 For purposes of the preceding sentence, any ref12 erence to the taxpayer shall be treated as including

13 a reference to any person who is related (within the

14 meaning of section 267(b) or 707(b)) to the tax15 payer.

16 ‘‘(k) REGULATIONS.—The Secretary shall prescribe

17 such regulations as may be appropriate to carry out the

18 purposes of this section, including regulations to prevent

19 the avoidance of the purposes of this section through split20 ups, shell corporations, partnerships, or otherwise.’’

21 (b) ONE-HALF OF EXCLUSION TREATED AS PREF22 ERENCE FOR MINIMUM TAX.—

23 (1) IN GENERAL.—Subsection (a) of section 57

24 (relating to items of tax preference) is amended by
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1 adding at the end thereof the following new para2 graph:

3 ‘‘(8) EXCLUSION FOR GAINS ON SALE OF CER4 TAIN SMALL BUSINESS STOCK.—An amount equal to

5 one-half of the amount excluded from gross income

6 for the taxable year under section 1202.’’

7 (2) CONFORMING AMENDMENT.—Subclause (II)

8 of section 53(d)(1)(B)(ii) is amended by striking

9 ‘‘and (6)’’ and inserting ‘‘(6), and (8)’’.

10 (c) PENALTY FOR FAILURE TO COMPLY WITH RE11 PORTING REQUIREMENTS.—Section 6652 is amended by

12 inserting before the last subsection thereof the following

13 new subsection:

14 ‘‘(k) FAILURE TO MAKE REPORTS REQUIRED

15 UNDER SECTION 1202.—In the case of a failure to make

16 a report required under section 1202(d)(1)(C) which con17 tains the information required by such section on the date

18 prescribed therefor (determined with regard to any exten19 sion of time for filing), there shall be paid (on notice and

20 demand by the Secretary and in the same manner as tax)

21 by the person failing to make such report, an amount

22 equal to $50 for each report with respect to which there

23 was such a failure. In the case of any failure due to neg24 ligence or intentional disregard, the preceding sentence

25 shall be applied by substituting ‘$100’ for ‘$50’. In the
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1 case of a report covering periods in 2 or more years, the

2 penalty determined under preceding provisions of this sub3 section shall be multiplied by the number of such years.’’

4 (d) CONFORMING AMENDMENTS.—

5 (1)(A) Section 172(d)(2) (relating to modifica6 tions with respect to net operating loss deduction) is

7 amended to read as follows:

8 ‘‘(2) CAPITAL GAINS AND LOSSES OF TAX9 PAYERS OTHER THAN CORPORATIONS.—In the case

10 of a taxpayer other than a corporation—

11 ‘‘(A) the amount deductible on account of

12 losses from sales or exchanges of capital assets

13 shall not exceed the amount includable on ac14 count of gains from sales or exchanges of cap15 ital assets; and

16 ‘‘(B) the exclusion provided by section

17 1202 shall not be allowed.’’

18 (B) Subparagraph (B) of section 172(d)(4) is

19 amended by inserting ‘‘, (2)(B),’’ after ‘‘paragraph

20 (1)’’.

21 (2) Paragraph (4) of section 642(c) is amended

22 to read as follows:

23 ‘‘(4) ADJUSTMENTS.—To the extent that the

24 amount otherwise allowable as a deduction under

25 this subsection consists of gain described in section
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1 1202(a), proper adjustment shall be made for any

2 exclusion allowable to the estate or trust under sec3 tion 1202. In the case of a trust, the deduction al4 lowed by this subsection shall be subject to section

5 681 (relating to unrelated business income).’’

6 (3) Paragraph (3) of section 643(a) is amended

7 by adding at the end thereof the following new sen8 tence: ‘‘The exclusion under section 1202 shall not

9 be taken into account.’’

10 (4) Paragraph (4) of section 691(c) is amended

11 by striking ‘‘1201, and 1211’’ and inserting ‘‘1201,

12 1202, and 1211’’.

13 (5) The second sentence of paragraph (2) of

14 section 871(a) is amended by inserting ‘‘such gains

15 and losses shall be determined without regard to sec16 tion 1202 and’’ after ‘‘except that’’.

17 (6) The table of sections for part I of sub18 chapter P of chapter 1 is amended by adding after

19 the item relating to section 1201 the following new

20 item:

‘‘Sec. 1202. 50-percent exclusion for gain from certain small business stock.’’

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

22 this section shall apply to stock issued after December 31,

23 1992.
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1 SEC. 14114. ROLLOVER OF GAIN FROM SALE OF PUBLICLY

2 TRADED SECURITIES INTO SPECIALIZED

3 SMALL BUSINESS INVESTMENT COMPANIES.

4 (a) IN GENERAL.—Part III of subchapter O of chap5 ter 1 (relating to common nontaxable exchanges) is

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

7 ‘‘SEC. 1044. ROLLOVER OF PUBLICLY TRADED SECURITIES

8 GAIN INTO SPECIALIZED SMALL BUSINESS

9 INVESTMENT COMPANIES.

10 ‘‘(a) NONRECOGNITION OF GAIN.—In the case of the

11 sale of any publicly traded securities with respect to which

12 the taxpayer elects the application of this section, gain

13 from such sale shall be recognized only to the extent that

14 the amount realized on such sale exceeds—

15 ‘‘(1) the cost of any common stock or partner16 ship interest in a specialized small business invest17 ment company purchased by the taxpayer during the

18 60-day period beginning on the date of such sale, re19 duced by

20 ‘‘(2) any portion of such cost previously taken

21 into account under this section.

22 This section shall not apply to any gain which is treated

23 as ordinary income for purposes of this subtitle.

24 ‘‘(b) LIMITATIONS.—

25 ‘‘(1) LIMITATION ON INDIVIDUALS.—In the

26 case of an individual, the amount of gain which may
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1 be excluded under subsection (a) for any taxable

2 year shall not exceed the lesser of—

3 ‘‘(A) $50,000, or

4 ‘‘(B) $500,000, reduced by the amount of

5 gain excluded under subsection (a) for all pre6 ceding taxable years.

7 ‘‘(2) LIMITATION ON C CORPORATIONS.—In the

8 case of a C corporation, the amount of gain which

9 may be excluded under subsection (a) for any tax10 able year shall not exceed the lesser of—

11 ‘‘(A) $250,000, or

12 ‘‘(B) $1,000,000, reduced by the amount

13 of gain excluded under subsection (a) for all

14 preceding taxable years.

15 ‘‘(3) SPECIAL RULES FOR MARRIED INDIVID16 UALS.—For purposes of this subsection—

17 ‘‘(A) SEPARATE RETURNS.—In the case of

18 a separate return by a married individual, para19 graph (1) shall be applied by substituting

20 ‘$25,000’ for ‘$50,000’ and ‘$250,000’ for

21 ‘$500,000’.

22 ‘‘(B) ALLOCATION OF GAIN.—In the case

23 of any joint return, the amount of gain ex24 cluded under subsection (a) for any taxable

25 year shall be allocated equally between the
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1 spouses for purposes of applying this subsection

2 to subsequent taxable years.

3 ‘‘(C) MARITAL STATUS.—For purposes of

4 this subsection, marital status shall be deter5 mined under section 7703.

6 ‘‘(4) SPECIAL RULES FOR C CORPORATION.—

7 For purposes of this subsection—

8 ‘‘(A) all corporations which are members

9 of the same controlled group of corporations

10 (within the meaning of section 52(a)) shall be

11 treated as 1 taxpayer, and

12 ‘‘(B) any gain excluded under subsection

13 (a) by a predecessor of any C corporation shall

14 be treated as having been excluded by such C

15 corporation.

16 ‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur17 poses of this section—

18 ‘‘(1) PUBLICLY TRADED SECURITIES.—The

19 term ‘publicly traded securities’ means securities

20 which are traded on an established securities mar21 ket.

22 ‘‘(2) PURCHASE.—The term ‘purchase’ has the

23 meaning given such term by section 1043(b)(4).

24 ‘‘(3) SPECIALIZED SMALL BUSINESS INVEST25 MENT COMPANY.—The term ‘specialized small busi-
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1 ness investment company’ means any partnership or

2 corporation which is licensed by the Small Business

3 Administration under section 301(d) of the Small

4 Business Investment Act of 1958 (as in effect on

5 May 13, 1993).

6 ‘‘(4) CERTAIN ENTITIES NOT ELIGIBLE.—This

7 section shall not apply to any estate, trust, partner8 ship, or S corporation.

9 ‘‘(d) BASIS ADJUSTMENTS.—If gain from any sale is

10 not recognized by reason of subsection (a), such gain shall

11 be applied to reduce (in the order acquired) the basis for

12 determining gain or loss of any common stock or partner13 ship interest in any specialized small business investment

14 company which is purchased by the taxpayer during the

15 60-day period described in subsection (a). This subsection

16 shall not apply for purposes of section 1202.’’

17 (b) CONFORMING AMENDMENT.—Paragraph (24) of

18 section 1016(a) is amended—

19 (1) by striking ‘‘section 1043’’ and inserting

20 ‘‘section 1043 or 1044’’, and

21 (2) by striking ‘‘section 1043(c)’’ and inserting

22 ‘‘section 1043(c) or 1044(d), as the case may be’’.

23 (c) CLERICAL AMENDMENT.—The table of sections

24 for part III of subchapter O of chapter 1 is amended by

25 adding at the end the following new item:
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‘‘Sec. 1044. Rollover of publicly traded securities gain into specialized small business investment companies.’’

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

2 this section shall apply to sales on and after the date of

3 the enactment of this Act, in taxable years ending on and

4 after such date.

5 Subpart C—Modifications To Minimum Tax

6 Depreciation Rules

7 SEC. 14115. MODIFICATION TO MINIMUM TAX DEPRECIA8 TION RULES.

9 (a) GENERAL RULE.—Paragraph (1) of section 56(a)

10 (relating to depreciation) is amended by redesignating

11 subparagraphs (B), (C), and (D) as subparagraphs (C),

12 (D), and (E), respectively, and by inserting after subpara13 graph (A) the following new subparagraph:

14 ‘‘(B) TREATMENT OF CERTAIN PERSONAL

15 PROPERTY PLACED IN SERVICE AFTER 1993.—

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

17 property to which this subparagraph ap18 plies, the depreciation deduction allowable

19 under section 167 shall be determined as

20 provided in section 168(a), except that the

21 method of depreciation used shall be—

22 ‘‘(I) the 120 percent declining

23 balance method switching to the

24 straight line method for the 1st tax-
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1 able year for which using the straight

2 line method with respect to the ad3 justed basis as of the beginning of the

4 year will yield a higher allowance, or

5 ‘‘(II) the straight line method in

6 the case of property for which the ap7 plicable depreciation method under

8 section 168(a) is the straight line

9 method.

10 ‘‘(ii) PROPERTY TO WHICH SUBPARA11 GRAPH APPLIES.—This subparagraph shall

12 apply to any tangible property placed in

13 service after December 31, 1993, except

14 that this subparagraph shall not apply

15 to—

16 ‘‘(I) any residential rental prop17 erty or nonresidential real property

18 (within the meaning of section

19 168(e)), and

20 ‘‘(II) any other property for

21 which the depreciation deduction pro22 vided by section 167(a) for purposes

23 of the regular tax is computed under

24 the alternative depreciation system of

25 section 168(g).
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1 ‘‘(iii) COORDINATION WITH SUBPARA2 GRAPH (A).—Subparagraph (A) shall not

3 apply to any property to which this sub4 paragraph applies.’’

5 (b) ELIMINATION OF ACE DEPRECIATION ADJUST6 MENT.—Clause (i) of section 56(g)(4)(A) (relating to de7 preciation adjustments for computing adjusted current

8 earnings) is amended by adding at the end thereof the

9 following new sentence: ‘‘The preceding sentence shall not

10 apply to any property to which subsection (a)(1)(B) ap11 plies, and the depreciation deduction with respect to such

12 property shall be determined under the rules of subsection

13 (a)(1)(B).’’.

14 (c) CONFORMING AMENDMENTS.—

15 (1) Paragraph (2) of section 168(b) is amended

16 to read as follows:

17 ‘‘(2) SPECIAL RULE FOR DECLINING BALANCE

18 METHOD IN CERTAIN CASES.—

19 ‘‘(A) 150 PERCENT METHOD FOR CERTAIN

20 PROPERTY.—Paragraph (1) shall be applied by

21 substituting ‘150 percent’ for ‘200 percent’ in

22 the case of—

23 ‘‘(i) any 15-year or 20-year property,

24 or
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1 ‘‘(ii) any property used in a farming

2 business (within the meaning of section

3 263A(e)(4)).

4 ‘‘(B) ELECTION TO USE MINIMUM TAX

5 METHOD.—In the case of any property (other

6 than property described in paragraph (3)) with

7 respect to which the taxpayer elects under para8 graph (5) to have the provisions of this sub9 paragraph apply, paragraph (1) shall be applied

10 by substituting ‘120 percent’ for ‘200 percent’

11 (and subparagraph (A) of this paragraph shall

12 not apply).’’

13 (2) Paragraph (5) of section 168(b) is amended

14 by striking ‘‘paragraph (2)(C)’’ and inserting ‘‘para15 graph (2)(B)’’.

16 (3) Subsection (c) of section 168 is amended—

17 (A) by striking paragraph (2), and

18 (B) by striking so much of such subsection

19 as precedes the table contained in paragraph

20 (1) and inserting the following:

21 ‘‘(c) APPLICABLE RECOVERY PERIOD.—For purposes

22 of this section, the applicable recovery period shall be de23 termined in accordance with the following table:’’.

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

3 shall apply to property placed in service after De4 cember 31, 1993.

5 (2) COORDINATION WITH TRANSITIONAL

6 RULES.—The amendments made by this section

7 shall not apply to any property to which paragraph

8 (1) of section 56(a) of the Internal Revenue Code of

9 1986 does not apply by reason of subparagraph

10 (D)(i) thereof (as redesignated by subsection (a) of

11 this section).

12 Subpart D—Increase in Expense Treatment for Small

13 Businesses

14 SEC. 14116. INCREASE IN EXPENSE TREATMENT FOR SMALL

15 BUSINESSES.

16 (a) GENERAL RULE.—Paragraph (1) of section

17 179(b) (relating to dollar limitation) is amended by strik18 ing ‘‘$10,000’’ and inserting ‘‘$25,000’’.

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

20 subsection (a) shall apply to taxable years beginning after

21 December 31, 1992.
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1 PART III—TAX-EXEMPT BOND PROVISIONS

2 SEC. 14121. HIGH-SPEED INTERCITY RAIL FACILITY BONDS

3 EXEMPT FROM STATE VOLUME CAP.

4 (a) IN GENERAL.—Paragraph (4) of section 146(g)

5 (relating to exemption for certain bonds) is amended by

6 striking ‘‘75 percent of’’.

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

8 subsection (a) shall apply to bonds issued after December

9 31, 1993.

10 SEC. 14122. PERMANENT EXTENSION OF QUALIFIED SMALL

11 ISSUE BONDS.

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

13 144(a)(12) is amended to read as follows:

14 ‘‘(B) BONDS ISSUED TO FINANCE

15 MANUFACTURING FACILITIES AND FARM

16 PROPERTY.—Subparagraph (A) shall not

17 apply to any bond issued as part of an

18 issue 95 percent or more of the net pro19 ceeds of which are to be used to provide—

20 ‘‘(i) any manufacturing facility, or

21 ‘‘(ii) any land or property in accord22 ance with section 147(c)(2).’’

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

24 subsection (a) shall apply to bonds issued after June 30,

25 1992.
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1 PART IV—EXPANSION AND SIMPLIFICATION OF

2 EARNED INCOME TAX CREDIT

3 SEC. 14131. EXPANSION AND SIMPLIFICATION OF EARNED

4 INCOME TAX CREDIT.

5 (a) GENERAL RULE.—Section 32 (relating to earned

6 income credit) is amended by striking subsections (a) and

7 (b) and inserting the following:

8 ‘‘(a) ALLOWANCE OF CREDIT.—

9 ‘‘(1) IN GENERAL.—In the case of an eligible

10 individual, there shall be allowed as a credit against

11 the tax imposed by this subtitle for the taxable year

12 an amount equal to the credit percentage of so much

13 of the taxpayer’s earned income for the taxable year

14 as does not exceed the earned income amount.

15 ‘‘(2) LIMITATION.—The amount of the credit

16 allowable to a taxpayer under paragraph (1) for any

17 taxable year shall not exceed the excess (if any) of—

18 ‘‘(A) the credit percentage of the earned

19 income amount, over

20 ‘‘(B) the phaseout percentage of so much

21 of the adjusted gross income (or, if greater, the

22 earned income) of the taxpayer for the taxable

23 year as exceeds the phaseout amount.

24 ‘‘(b) PERCENTAGES AND AMOUNTS.—For purposes

25 of subsection (a)—
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1 ‘‘(1) PERCENTAGES.—The credit percentage

2 and the phaseout percentage shall be determined as

3 follows:

4 ‘‘(A) IN GENERAL.—In the case of taxable

5 years beginning after 1994:

In the case of an

eligible individual with:

The credit percentage is:The phaseout percentage is:

1 qualifying child ..... 34.37 .......................... 16.16

2 or more qualifying

children ................. 39.66 .......................... 19.83

No qualifying children ...................... 7.65 .......................... 7.65

6 ‘‘(B) TRANSITIONAL PERCENTAGES.—In

7 the case of a taxable year beginning in 1994:

In the case of

an eligible individual with:

The credit percentage is:The phaseout percentage is:

1 qualifying child . 26.60 .......................... 16.16

2 or more qualifying children ...... 31.59 .......................... 15.79

No qualifying children ................. 7.65 .......................... 7.65

8 ‘‘(2) AMOUNTS.—The earned income amount

9 and the phaseout amount shall be determined as fol10 lows:

11 ‘‘(A) IN GENERAL.—In the case of taxable

12 years beginning after 1994:

In the case of an

eligible individual with:

The earned income amount is:The phaseout

amount is:

1 qualifying child ..... $6,000 ........................ $11,000

2 or more qualifying

children ................. $8,500 ........................ $11,000

No qualifying children ...................... $4,000 ........................ $5,000
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1 ‘‘(B) TRANSITIONAL AMOUNTS.—In the

2 case of a taxable year beginning in 1994:

In the case of

an eligible individual with:

The earned income amount is:The phaseout

amount is:

1 qualifying child . $7,750 ........................ $11,000

2 or more qualifying children ...... $8,500 ........................ $11,000

No qualifying children ................. $4,000 ........................ $5,000’’.

3 (b) ELIGIBLE INDIVIDUAL.—Subparagraph (A) of

4 section 32(c)(1) (defining eligible individual) is amended

5 to read as follows:

6 ‘‘(A) IN GENERAL.—The term ‘eligible in7 dividual’ means—

8 ‘‘(i) any individual who has a qualify9 ing child for the taxable year, or

10 ‘‘(ii) any other individual who does

11 not have a qualifying child for the taxable

12 year, if—

13 ‘‘(I) such individual’s principal

14 place of abode is in the United States

15 for more than one-half of such taxable

16 year,

17 ‘‘(II) such individual (or, if the

18 individual is married, the individual’s

19 spouse) has attained age 22 before

20 the close of the taxable year, and
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1 ‘‘(III) such individual (or, if the

2 individual is married, the individual’s

3 spouse) is not a dependent for whom

4 a deduction is allowable under section

5 151 to another taxpayer for any tax6 able year beginning in the same cal7 endar year as such taxable year.’’

8 (c) INFLATION ADJUSTMENTS.—Section 32(i) (relat9 ing to inflation adjustments) is amended—

10 (1) by striking paragraphs (1) and (2) and in11 serting the following new paragraph:

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

13 year beginning after 1994, each dollar amount con14 tained in subsection (b)(2)(A) shall be increased by

15 an amount equal to—

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

17 ‘‘(B) the cost-of-living adjustment deter18 mined under section 1(f)(3), for the calendar

19 year in which the taxable year begins, by sub20 stituting ‘calendar year 1993’ for ‘calendar year

21 1992’.’’, and

22 (2) by redesignating paragraph (3) as para23 graph (2).

24 (d) CONFORMING AMENDMENTS.—
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1 (1) Subparagraph (D) of section 32(c)(3) is

2 amended—

3 (A) by striking ‘‘clause (i) or (ii)’’ in clause

4 (iii) and inserting ‘‘clause (i)’’,

5 (B) by striking clause (ii), and

6 (C) by redesignating clause (iii) as clause

7 (ii).

8 (2) Paragraph (3) of section 162(l) is amended

9 to read as follows:

10 ‘‘(3) COORDINATION WITH MEDICAL DEDUC11 TION.—Any amount paid by a taxpayer for insur12 ance to which paragraph (1) applies shall not be

13 taken into account in computing the amount allow14 able to the taxpayer as a deduction under section

15 213(a).’’

16 (3) Section 213 is amended by striking sub17 section (f).

18 (4) Subsection (b) of section 3507 is amended

19 by redesignating paragraphs (2) and (3) as para20 graphs (3) and (4), respectively, and by inserting

21 after paragraph (1) the following new paragraph:

22 ‘‘(2) certifies that the employee has 1 or more

23 qualifying children (within the meaning of section

24 32(c)(3)) for such taxable year,’’.
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1 (5) Subparagraph (B) of section 3507(c)(2) is

2 amended by striking clauses (i) and (ii) and insert3 ing the following:

4 ‘‘(i) of not more than the credit per5 centage in effect under section 32(b)(1) for

6 an eligible individual with 1 qualifying

7 child and with earned income not in excess

8 of the earned income amount in effect

9 under section 32(b)(2) for such an eligible

10 individual, which

11 ‘‘(ii) phases out at the phaseout per12 centage in effect under section 32(b)(1) for

13 such an eligible individual between the

14 phaseout amount in effect under section

15 32(b)(2) for such an eligible individual and

16 the amount of earned income at which the

17 credit under section 32(a) phases out for

18 such an eligible individual, or’’.

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

20 this section shall apply to taxable years beginning after

21 December 31, 1993.
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1 PART V—INCENTIVES FOR INVESTMENT IN REAL

2 ESTATE

3 Subpart A—Extension of Qualified Mortgage Bonds

4 and Low-Income Housing Credit

5 SEC. 14141. PERMANENT EXTENSION OF QUALIFIED MORT6 GAGE BONDS.

7 (a) IN GENERAL.—Paragraph (1) of section 143(a)

8 (defining qualified mortgage bond) is amended to read as

9 follows:

10 ‘‘(1) QUALIFIED MORTGAGE BOND DEFINED.—

11 For purposes of this title, the term ‘qualified mort12 gage bond’ means a bond which is issued as part of

13 a qualified mortgage issue.’’

14 (b) MORTGAGE CREDIT CERTIFICATES.—Section 25

15 is amended by striking subsection (h) and by redesignat16 ing subsections (i) and (j) as subsections (h) and (i), re17 spectively.

18 (c) EFFECTIVE DATES.—

19 (1) BONDS.—The amendment made by sub20 section (a) shall apply to bonds issued after June

21 30, 1992.

22 (2) CERTIFICATES.—The amendment made by

23 subsection (b) shall apply to elections for periods

24 after June 30, 1992.
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1 SEC. 14142. PERMANENT EXTENSION OF LOW-INCOME

2 HOUSING CREDIT.

3 (a) IN GENERAL.—Section 42 (relating to low-income

4 housing credit) is amended by striking subsection (o).

5 (b) HOME ASSISTANCE NOT TO RESULT IN CER6 TAIN BUILDINGS BEING FEDERALLY SUBSIDIZED.—

7 Paragraph (2) of section 42(i) (relating to determination

8 of whether building is federally subsidized) is amended by

9 adding at the end thereof the following new subparagraph:

10 ‘‘(E) BUILDINGS RECEIVING HOME ASSIST11 ANCE.—Assistance provided under the HOME

12 Investment Partnerships Act (as in effect on

13 the date of the enactment of this subparagraph)

14 with respect to any building shall not be taken

15 under subparagraph (D) if 40 percent or more

16 of the residential units in the building are occu17 pied by individuals whose income is 50 percent

18 or less of area median gross income. Subsection

19 (d)(5)(C) shall not apply to any building to

20 which the preceding sentence applies.’’.

21 (c) EFFECTIVE DATES.—

22 (1) The amendment made by subsection (a)

23 shall apply to periods after June 30, 1992.

24 (2) The amendment made by subsection (b)

25 shall apply to periods after the date of the enact26 ment of this Act.
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1 Subpart B—Modification of Passive Loss Rules

2 SEC. 14143. APPLICATION OF PASSIVE LOSS RULES TO

3 RENTAL REAL ESTATE ACTIVITIES.

4 (a) RENTAL REAL ESTATE ACTIVITIES OF PERSONS

5 IN REAL PROPERTY BUSINESS NOT AUTOMATICALLY

6 TREATED AS PASSIVE ACTIVITIES.—Subsection (c) of sec7 tion 469 (defining passive activity) is amended by adding

8 at the end thereof the following new paragraph:

9 ‘‘(7) SPECIAL RULES FOR TAXPAYERS IN REAL

10 PROPERTY BUSINESS.—

11 ‘‘(A) IN GENERAL.—If this paragraph ap12 plies to any taxpayer for a taxable year—

13 ‘‘(i) paragraph (2) shall not apply to

14 any rental real estate activity of such tax15 payer for such taxable year, and

16 ‘‘(ii) this section shall be applied as if

17 each interest of the taxpayer in rental real

18 estate were a separate activity.

19 Notwithstanding clause (ii), a taxpayer may

20 elect to treat all interests in rental real estate

21 as one activity. Nothing in the preceding provi22 sions of this subparagraph shall be construed as

23 affecting the determination of whether the tax24 payer materially participates with respect to

25 any interest in a limited partnership as a lim26 ited partner.
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1 ‘‘(B) TAXPAYERS TO WHOM PARAGRAPH

2 APPLIES.—This paragraph shall apply to a tax3 payer for a taxable year if more than one-half

4 of the personal services performed in trades or

5 businesses by the taxpayer during such taxable

6 year are performed in real property trades or

7 businesses in which the taxpayer materially par8 ticipates.

9 ‘‘(C) REAL PROPERTY TRADE OR BUSI10 NESS.—For purposes of this paragraph, the

11 term ‘real property trade or business’ means

12 any real property development, redevelopment,

13 construction, reconstruction, acquisition, con14 version, rental, operation, management, leasing,

15 or brokerage trade or business.

16 ‘‘(D) SPECIAL RULES FOR SUBPARAGRAPH

17 (B).—

18 ‘‘(i) CLOSELY HELD C CORPORA19 TIONS.—In the case of a closely held C

20 corporation, the requirements of subpara21 graph (B) shall be treated as met for any

22 taxable year if more than 50 percent of the

23 gross receipts of such corporation for such

24 taxable year are derived from real property
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1 trades or businesses in which the corpora2 tion materially participates.

3 ‘‘(ii) PERSONAL SERVICES AS AN EM4 PLOYEE.—For purposes of subparagraph

5 (B), personal services performed as an em6 ployee shall not be treated as performed in

7 real property trades or businesses. The

8 preceding sentence shall not apply if such

9 employee is a 5-percent owner (as defined

10 in section 416(i)(1)(B)) in the employer.’’

11 (b) CONFORMING AMENDMENTS.—

12 (1) Paragraph (2) of section 469(c) is amended

13 by striking ‘‘The’’ and inserting ‘‘Except as provided

14 in paragraph (7), the’’.

15 (2) Clause (iv) of section 469(i)(3)(E) is

16 amended by inserting ‘‘or any loss allowable by rea17 son of subsection (c)(7)’’ after ‘‘loss’’.

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

19 this section shall apply to taxable years beginning after

20 December 31, 1993.
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1 Subpart C—Provisions Relating To Real Estate

2 Investments by Pension Funds

3 SEC. 14144. REAL ESTATE PROPERTY ACQUIRED BY A

4 QUALIFIED ORGANIZATION.

5 (a) MODIFICATIONS OF EXCEPTIONS.—Paragraph

6 (9) of section 514(c) (relating to real property acquired

7 by a qualified organization) is amended by adding at the

8 end thereof the following new subparagraphs:

9 ‘‘(G) SPECIAL RULES FOR PURPOSES OF

10 THE EXCEPTIONS.—Except as otherwise pro11 vided by regulations—

12 ‘‘(i) SMALL LEASES DISREGARDED.—

13 For purposes of clauses (iii) and (iv) of

14 subparagraph (B), a lease to a person de15 scribed in such clause (iii) or (iv) shall be

16 disregarded if no more than 25 percent of

17 the leasable floor space in a building (or

18 complex of buildings) is covered by the

19 lease and if the lease is on commercially

20 reasonable terms.

21 ‘‘(ii) COMMERCIALLY REASONABLE FI22 NANCING.—Clause (v) of subparagraph (B)

23 shall not apply if the financing is on com24 mercially reasonable terms.

25 ‘‘(H) QUALIFYING SALES BY FINANCIAL

26 INSTITUTIONS.—
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1 ‘‘(i) IN GENERAL.—In the case of a

2 qualifying sale by a financial institution,

3 except as provided in regulations, clauses

4 (i) and (ii) of subparagraph (B) shall not

5 apply with respect to financing provided by

6 such institution for such sale.

7 ‘‘(ii) QUALIFYING SALE.—For pur8 poses of this clause, there is a qualifying

9 sale by a financial institution if—

10 ‘‘(I) a qualified organization ac11 quires property described in clause

12 (iii) from a financial institution and

13 any gain recognized by the financial

14 institution with respect to the prop15 erty is ordinary income,

16 ‘‘(II) the stated principal amount

17 of the financing provided by the finan18 cial institution does not exceed the

19 amount of the outstanding indebted20 ness (including accrued but unpaid in21 terest) of the financial institution with

22 respect to the property described in

23 clause (iii) immediately before the ac24 quisition referred to in clause (iii) or

25 (v), whichever is applicable, and
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1 ‘‘(III) the present value (deter2 mined as of the time of the sale and

3 by using the applicable Federal rate

4 determined under section 1274(d)) of

5 the maximum amount payable pursu6 ant to the financing that is deter7 mined by reference to the revenue, in8 come, or profits derived from the

9 property cannot exceed 30 percent of

10 the total purchase price of the prop11 erty (including the contingent pay12 ments).

13 ‘‘(iii) PROPERTY TO WHICH SUBPARA14 GRAPH APPLIES.—Property is described in

15 this clause if such property is foreclosure

16 property, or is real property which—

17 ‘‘(I) was acquired by the quali18 fied organization from a financial in19 stitution which is in conservatorship

20 or receivership, or from the conserva21 tor or receiver of such an institution,

22 and

23 ‘‘(II) was held by the financial

24 institution at the time it entered into

25 conservatorship or receivership.
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1 ‘‘(iv) FINANCIAL INSTITUTION.—For

2 purposes of this subparagraph, the term

3 ‘financial institution’ means—

4 ‘‘(I) any financial institution de5 scribed in section 581 or 591(a),

6 ‘‘(II) any other corporation which

7 is a direct or indirect subsidiary of an

8 institution referred to in subclause (I)

9 but only if, by virtue of being affili10 ated with such institution, such other

11 corporation is subject to supervision

12 and examination by a Federal or

13 State agency which regulates institu14 tions referred to in subclause (I), and

15 ‘‘(III) any person acting as a

16 conservator or receiver of an entity re17 ferred to in subclause (I) or (II) (or

18 any government agency or corporation

19 succeeding to the rights or interest of

20 such person).

21 ‘‘(v) FORECLOSURE PROPERTY.—For

22 purposes of this subparagraph, the term

23 ‘foreclosure property’ means any real prop24 erty acquired by the financial institution as

25 the result of having bid on such property
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1 at foreclosure, or by operation of an agree2 ment or process of law, after there was a

3 default (or a default was imminent) on in4 debtedness which such property secured.’’.

5 (b) CONFORMING AMENDMENT.—Paragraph (9) of

6 section 514(c) is amended—

7 (1) by adding the following new sentence at the

8 end of subparagraph (A): ‘‘For purposes of this

9 paragraph, an interest in a mortgage shall in no

10 event be treated as real property.’’, and

11 (2) by striking the last sentence of subpara12 graph (B).

13 (c) EFFECTIVE DATES.—

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

15 this section shall apply to acquisitions on or after

16 January 1, 1994.

17 (2) SMALL LEASES.—The provisions of section

18 514(c)(9)(G)(i) of the Internal Revenue Code of

19 1986 shall, in addition to any leases to which the

20 provisions apply by reason of paragraph (1), apply

21 to leases entered into on or after January 1, 1994.

22 SEC. 14145. REPEAL OF SPECIAL TREATMENT OF PUBLICLY

23 TREATED PARTNERSHIPS.

24 (a) GENERAL RULE.—Subsection (c) of section 512

25 is amended—
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1 (1) by striking paragraph (2),

2 (2) by redesignating paragraph (3) as para3 graph (2), and

4 (3) by striking ‘‘paragraph (1) or (2)’’ in para5 graph (2) (as so redesignated) and inserting ‘‘para6 graph (1)’’.

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

8 subsection (a) shall apply to partnership years beginning

9 on or after January 1, 1994.

10 SEC. 14146. TITLE-HOLDING COMPANIES PERMITTED TO

11 RECEIVE SMALL AMOUNTS OF UNRELATED

12 BUSINESS TAXABLE INCOME.

13 (a) GENERAL RULE.—Paragraph (25) of section

14 501(c) is amended by adding at the end thereof the follow15 ing new subparagraph:

16 ‘‘(G)(i) An organization shall not be treat17 ed as failing to be described in this paragraph

18 merely by reason of the receipt of any otherwise

19 disqualifying income which is incidentally de20 rived from the holding of real property.

21 ‘‘(ii) Clause (i) shall not apply if the

22 amount of gross income described in such

23 clause exceeds 10 percent of the organization’s

24 gross income for the taxable year unless the or25 ganization establishes to the satisfaction of the
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1 Secretary that the receipt of gross income de2 scribed in clause (i) in excess of such limitation

3 was inadvertent and reasonable steps are being

4 taken to correct the circumstances giving rise to

5 such income.’’

6 (b) CONFORMING AMENDMENT.—Paragraph (2) of

7 section 501(c) is amended by adding at the end thereof

8 the following new sentence: ‘‘Rules similar to the rules of

9 subparagraph (G) of paragraph (25) shall apply for pur10 poses of this paragraph.’’

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

12 this section shall apply to taxable years beginning on or

13 after January 1, 1994.

14 SEC. 14147. EXCLUSION FROM UNRELATED BUSINESS TAX

15 OF GAINS FROM CERTAIN PROPERTY.

16 (a) GENERAL RULE.—Subsection (b) of section 512

17 (relating to modifications) is amended by adding at the

18 end thereof the following new paragraph:

19 ‘‘(16)(A) Notwithstanding paragraph (5)(B),

20 there shall be excluded all gains or losses from the

21 sale, exchange, or other disposition of any real prop22 erty described in subparagraph (B) if—

23 ‘‘(i) such property was acquired by the or24 ganization from—
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1 ‘‘(I) a financial institution described

2 in section 581 or 591(a) which is in

3 conservatorship or receivership, or

4 ‘‘(II) the conservator or receiver of

5 such an institution (or any government

6 agency or corporation succeeding to the

7 rights or interests of the conservator or re8 ceiver),

9 ‘‘(ii) such property is designated by the or10 ganization within the 9-month period beginning

11 on the date of its acquisition as property held

12 for sale, except that not more than one-half (by

13 value determined as of such date) of property

14 acquired in a single transaction may be so

15 designated,

16 ‘‘(iii) such sale, exchange, or disposition

17 occurs before the later of—

18 ‘‘(I) the date which is 30 months after

19 the date of the acquisition of such prop20 erty, or

21 ‘‘(II) the date specified by the Sec22 retary in order to assure an orderly dis23 position of property held by persons de24 scribed in subparagraph (A), and
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1 ‘‘(iv) while such property was held by the

2 organization, the aggregate expenditures on im3 provements and development activities included

4 in the basis of the property are (or were) not

5 in excess of 20 percent of the net selling price

6 of such property.

7 ‘‘(B) Property is described in this subparagraph

8 if it is real property which—

9 ‘‘(i) was held by the financial institution at

10 the time it entered into conservatorship or re11 ceivership, or

12 ‘‘(ii) was foreclosure property (as defined

13 in section 514(c)(9)(H)(v)) which secured in14 debtedness held by the financial institution at

15 such time.

16 For purposes of this subparagraph, real property in17 cludes an interest in a mortgage.’’

18 (b) EFFECTIVE DATE.—The amendment made by

19 subsection (a) shall apply to property acquired on or after

20 January 1, 1994.

21 SEC. 14148. EXCLUSION FROM UNRELATED BUSINESS TAX

22 OF CERTAIN FEES AND OPTION PREMIUMS.

23 (a) LOAN COMMITMENT FEES.—Paragraph (1) of

24 section 512(b) (relating to modifications) is amended by

25 inserting ‘‘amounts received or accrued as consideration
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1 for entering into agreements to make loans,’’ before ‘‘and

2 annuities’’.

3 (b) OPTION PREMIUMS.—The second sentence of sec4 tion 512(b)(5) is amended—

5 (1) by striking ‘‘all gains on’’ and inserting ‘‘all

6 gains or losses recognized, in connection with the or7 ganization’s investment activities, from’’,

8 (2) by striking ‘‘, written by the organization in

9 connection with its investment activities,’’ and

10 (3) by inserting ‘‘or real property and all gains

11 or losses from the forfeiture of good-faith deposits

12 (that are consistent with established business prac13 tice) for the purchase, sale, or lease of real property

14 in connection with the organization’s investment ac15 tivities’’ before the period.

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

17 this section shall apply to amounts received on or after

18 January 1, 1994.

19 SEC. 14149. TREATMENT OF PENSION FUND INVESTMENTS

20 IN REAL ESTATE INVESTMENT TRUSTS.

21 (a) GENERAL RULE.—Subsection (h) of section 856

22 (relating to closely held determinations) is amended by

23 adding at the end thereof the following new paragraph:

24 ‘‘(3) TREATMENT OF TRUSTS DESCRIBED IN

25 SECTION 401(a).—
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1 ‘‘(A) LOOK-THRU TREATMENT.—

2 ‘‘(i) IN GENERAL.—Except as pro3 vided in clause (ii), in determining whether

4 the stock ownership requirement of section

5 542(a)(2) is met for purposes of paragraph

6 (1)(A), any stock held by a qualified trust

7 shall be treated as held directly by its

8 beneficiaries in proportion to their actuar9 ial interests in such trust and shall not be

10 treated as held by such trust.

11 ‘‘(ii) CERTAIN RELATED TRUSTS NOT

12 ELIGIBLE.—Clause (i) shall not apply to

13 any qualified trust if one or more disquali14 fied persons (as defined in section

15 4975(e)(2), without regard to subpara16 graphs (B) and (I) thereof) with respect to

17 such qualified trust hold in the aggregate

18 5 percent or more in value of the interests

19 in the real estate investment trust and

20 such real estate investment trust has accu21 mulated earnings and profits attributable

22 to any period for which it did not qualify

23 as a real estate investment trust.

24 ‘‘(B) COORDINATION WITH PERSONAL

25 HOLDING COMPANY RULES.—If any entity
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1 qualifies as a real estate investment trust for

2 any taxable year by reason of subparagraph

3 (A), such entity shall not be treated as a per4 sonal holding company for such taxable year for

5 purposes of part II of subchapter G of this

6 chapter.

7 ‘‘(C) TREATMENT FOR PURPOSES OF UN8 RELATED BUSINESS TAX.—If any qualified

9 trust holds more than 10 percent (by value) of

10 the interests in any pension-held REIT at any

11 time during a taxable year, the trust shall be

12 treated as having for such taxable year gross

13 income from an unrelated trade or business in

14 an amount which bears the same ratio to the

15 aggregate dividends paid (or treated as paid) by

16 the REIT to the trust for the taxable year of

17 the REIT with or within which the taxable year

18 of the trust ends (the ‘REIT year’) as—

19 ‘‘(i) the gross income (less direct ex20 penses related thereto) of the REIT for the

21 REIT year from unrelated trades or busi22 nesses (determined as if the REIT were a

23 qualified trust), bears to
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1 ‘‘(ii) the gross income (less direct ex2 penses related thereto) of the REIT for the

3 REIT year.

4 This subparagraph shall apply only if the ratio

5 determined under the preceding sentence is at

6 least 5 percent.

7 ‘‘(D) PENSION-HELD REIT.—The purposes

8 of subparagraph (C)—

9 ‘‘(i) IN GENERAL.—A real estate in10 vestment trust is a pension-held REIT if

11 such trust would not have qualified as a

12 real estate investment trust but for the

13 provisions of this paragraph and if such

14 trust is predominantly held by qualified

15 trusts.

16 ‘‘(ii) PREDOMINANTLY HELD.—For

17 purposes of clause (i), a real estate invest18 ment trust is predominantly held by quali19 fied trusts if—

20 ‘‘(I) at least 1 qualified trust

21 holds more than 25 percent (by value)

22 of the interests in such real estate in23 vestment trust, or

24 ‘‘(II) 1 or more qualified trusts

25 (each of whom own more than 10 per-
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1 cent by value of the interests in such

2 real estate investment trust) hold in

3 the aggregate more than 50 percent

4 (by value) of the interests in such real

5 estate investment trust.

6 ‘‘(E) QUALIFIED TRUST.—For purposes of

7 this paragraph, the term ‘qualified trust’ means

8 any trust described in section 401(a) and ex9 empt from tax under section 501(a).’’

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

11 this section shall apply to taxable years beginning after

12 December 31, 1993.

13 Subpart D—Discharge of Indebtedness

14 SEC. 14150. EXCLUSION FROM GROSS INCOME FOR IN15 COME FROM DISCHARGE OF QUALIFIED

16 REAL PROPERTY BUSINESS INDEBTEDNESS.

17 (a) IN GENERAL.—Paragraph (1) of section 108(a)

18 (relating to income from discharge of indebtedness) is

19 amended by striking ‘‘or’’ at the end of subparagraph (B),

20 by striking the period at the end of subparagraph (C) and

21 inserting ‘‘, or’’, and by adding at the end the following

22 new subparagraph:

23 ‘‘(D) in the case of a taxpayer other than a C

24 corporation, the indebtedness discharged is qualified

25 real property business indebtedness.’’
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1 (b) QUALIFIED REAL PROPERTY BUSINESS INDEBT2 EDNESS.—Section 108 is amended by inserting after sub3 section (b) the following new subsection:

4 ‘‘(c) TREATMENT OF DISCHARGE OF QUALIFIED

5 REAL PROPERTY BUSINESS INDEBTEDNESS.—

6 ‘‘(1) BASIS REDUCTION.—

7 ‘‘(A) IN GENERAL.—The amount excluded

8 from gross income under subparagraph (D) of

9 subsection (a)(1) shall be applied to reduce the

10 basis of the depreciable real property of the tax11 payer.

12 ‘‘(B) CROSS REFERENCE.—For provisions

13 making the reduction described in subpara14 graph (A), see section 1017.

15 ‘‘(2) LIMITATIONS.—

16 ‘‘(A) INDEBTEDNESS IN EXCESS OF

17 VALUE.—The amount excluded under subpara18 graph (D) of subsection (a)(1) with respect to

19 any qualified real property business indebted20 ness shall not exceed the excess (if any) of—

21 ‘‘(i) the outstanding principal amount

22 of such indebtedness (immediately before

23 the discharge), over

24 ‘‘(ii) the fair market value of the real

25 property described in paragraph (3)(A) (as
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1 of such time), reduced by the outstanding

2 principal amount of any other qualified

3 real property business indebtedness se4 cured by such property (as of such time).

5 ‘‘(B) OVERALL LIMITATION.—The amount

6 excluded under subparagraph (D) of subsection

7 (a)(1) shall not exceed the aggregate adjusted

8 bases of depreciable real property (determined

9 after any reductions under subsections (b) and

10 (g)) held by the taxpayer immediately before

11 the discharge (other than depreciable real prop12 erty acquired in contemplation of such dis13 charge).

14 ‘‘(3) QUALIFIED REAL PROPERTY BUSINESS IN15 DEBTEDNESS.—The term ‘qualified real property

16 business indebtedness’ means indebtedness which—

17 ‘‘(A) was incurred or assumed by the tax18 payer in connection with real property used in

19 a trade or business and is secured by such real

20 property,

21 ‘‘(B) was incurred or assumed before Jan22 uary 1, 1993, or if incurred or assumed on or

23 after such date, is qualified acquisition indebt24 edness, and
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1 ‘‘(C) with respect to which such taxpayer

2 makes an election to have this paragraph apply.

3 Such term shall not include qualified farm indebted4 ness. Indebtedness under subparagraph (B) shall in5 clude indebtedness resulting from the refinancing of

6 indebtedness under subparagraph (B) (or this sen7 tence), but only to the extent it does not exceed the

8 amount of the indebtedness being refinanced.

9 ‘‘(4) QUALIFIED ACQUISITION INDEBTED10 NESS.—For purposes of paragraph (3)(B), the term

11 ‘qualified acquisition indebtedness’ means, with re12 spect to any real property described in paragraph

13 (3)(A), indebtedness incurred or assumed to acquire,

14 construct, reconstruct, or substantially improve such

15 property.

16 ‘‘(5) REGULATIONS.—The Secretary shall issue

17 such regulations as are necessary to carry out this

18 subsection, including regulations preventing the

19 abuse of this subsection through cross20 collateralization or other means.’’

21 (c) TECHNICAL AMENDMENTS.—

22 (1) Subparagraph (A) of section 108(a)(2) is

23 amended by striking ‘‘and (C)’’ and inserting ‘‘, (C),

24 and (D)’’.
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1 (2) Subparagraph (B) of section 108(a)(2) is

2 amended to read as follows:

3 ‘‘(B) INSOLVENCY EXCLUSION TAKES

4 PRECEDENCE OVER QUALIFIED FARM EXCLU5 SION AND QUALIFIED REAL PROPERTY BUSI6 NESS EXCLUSION.—Subparagraphs (C) and (D)

7 of paragraph (1) shall not apply to a discharge

8 to the extent the taxpayer is insolvent.’’

9 (3) Subsection (d) of section 108 is amended—

10 (A) by striking ‘‘subsections (a), (b), and

11 (g)’’ in paragraphs (6) and (7)(A) and inserting

12 ‘‘subsections (a), (b), (c), and (g)’’,

13 (B) by striking ‘‘SUBSECTIONS (a), (b),

14 AND (g)’’ in the subsection heading and insert15 ing ‘‘CERTAIN PROVISIONS’’, and

16 (C) by striking ‘‘SUBSECTIONS (a), (b),

17 AND (g)’’ in the headings of paragraphs (6) and

18 (7)(A) and inserting ‘‘CERTAIN PROVISIONS’’.

19 (4) Subparagraph (B) of section 108(d)(7) is

20 amended by adding at the end thereof the following

21 new sentence: ‘‘The preceding sentence shall not

22 apply to any discharge to the extent that subsection

23 (a)(1)(D) applies to such discharge.’’
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1 (5) Subparagraph (A) of section 108(d)(9) is

2 amended by inserting ‘‘or under paragraph (3)(B) of

3 subsection (c)’’ after ‘‘subsection (b)’’.

4 (6) Paragraph (2) of section 1017(a) is amend5 ed by striking ‘‘or (b)(5)’’ and inserting ‘‘, (b)(5), or

6 (c)(1)’’.

7 (7) Subparagraph (A) of section 1017(b)(3) is

8 amended by inserting ‘‘or (c)(1)’’ after ‘‘subsection

9 (b)(5)’’.

10 (8) Section 1017(b)(3) is amended by adding at

11 the end the following new subparagraph:

12 ‘‘(F) SPECIAL RULES FOR QUALIFIED

13 REAL PROPERTY BUSINESS INDEBTEDNESS.—

14 In the case of any amount which under section

15 108(c)(1) is to be applied to reduce basis—

16 ‘‘(i) depreciable property shall only in17 clude depreciable real property for pur18 poses of subparagraphs (A) and (C),

19 ‘‘(ii) subparagraph (E) shall not

20 apply, and

21 ‘‘(iii) in the case of property taken

22 into account under section 108(c)(2)(B),

23 the reduction with respect to such property

24 shall be made as of the time immediately
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1 before disposition if earlier than the time

2 under subsection (a).’’

3 (9) Paragraph (1) of section 703(b) is amended

4 by striking ‘‘subsection (b)(5)’’ and inserting ‘‘sub5 section (b)(5) or (c)(3)’’.

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

7 this section shall apply to discharges after December 31,

8 1992, in taxable years ending after such date.

9 Subpart E—Increase in Recovery Period for

10 Nonresidential Real Property

11 SEC. 14151. INCREASE IN RECOVERY PERIOD FOR

12 NONRESIDENTIAL REAL PROPERTY.

13 (a) GENERAL RULE.—Paragraph (1) of section

14 168(c) (relating to applicable recovery period) is amended

15 by striking the item relating to nonresidential real prop16 erty and inserting the following:

‘‘Nonresidential real property .................................................. 39 years.’’.

17 (b) EFFECTIVE DATE.—

18 (1) IN GENERAL.—Except as provided in para19 graph (2), the amendment made by subsection (a)

20 shall apply to property placed in service by the tax21 payer on or after February 25, 1993.

22 (2) EXCEPTION.—The amendments made by

23 this section shall not apply to property placed in

24 service by the taxpayer before January 1, 1994, if—
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1 (A) the taxpayer or a qualified person en2 tered into a binding written contract to pur3 chase or construct such property before Feb4 ruary 25, 1993, or

5 (B) the construction of such property was

6 commenced by or for the taxpayer or a quali7 fied person before February 25, 1993.

8 For purposes of this paragraph, the term ‘‘qualified

9 person’’ means any person who transfers his rights

10 in such a contract or such property to the taxpayer

11 but only if the property is not placed in service by

12 such person before such rights are transferred to the

13 taxpayer.

14 PART VI—LUXURY TAX

15 SEC. 14161. REPEAL OF LUXURY EXCISE TAXES OTHER

16 THAN ON PASSENGER VEHICLES.

17 (a) IN GENERAL.—Subchapter A of chapter 31 (re18 lating to retail excise taxes) is amended to read as follows:

19 ‘‘Subchapter A—Luxury Passenger Automobiles

‘‘Sec. 4001. Imposition of tax.

‘‘Sec. 4002. 1st retail sale; uses, etc. treated as sales; determination of price.

‘‘Sec. 4003. Special rules.

20 ‘‘SEC. 4001. IMPOSITION OF TAX.

21 ‘‘(a) IMPOSITION OF TAX.—There is hereby imposed

22 on the 1st retail sale of any passenger vehicle a tax equal
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1 to 10 percent of the price for which so sold to the extent

2 such price exceeds $30,000.

3 ‘‘(b) PASSENGER VEHICLE.—

4 ‘‘(1) IN GENERAL.—For purposes of this sub5 chapter, the term ‘passenger vehicle’ means any 4-

6 wheeled vehicle—

7 ‘‘(A) which is manufactured primarily for

8 use on public streets, roads, and highways, and

9 ‘‘(B) which is rated at 6,000 pounds un10 loaded gross vehicle weight or less.

11 ‘‘(2) SPECIAL RULES.—

12 ‘‘(A) TRUCKS AND VANS.—In the case of a

13 truck or van, paragraph (1)(B) shall be applied

14 by substituting ‘gross vehicle weight’ for ‘un15 loaded gross vehicle weight’.

16 ‘‘(B) LIMOUSINES.—In the case of a lim17 ousine, paragraph (1) shall be applied without

18 regard to subparagraph (B) thereof.

19 ‘‘(c) EXCEPTIONS FOR TAXICABS, ETC.—The tax im20 posed by this section shall not apply to the sale of any

21 passenger vehicle for use by the purchaser exclusively in

22 the active conduct of a trade or business of transporting

23 persons or property for compensation or hire.
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1 ‘‘(d) EXEMPTION FOR LAW ENFORCEMENT USES,

2 ETC.—No tax shall be imposed by this section on the sale

3 of any passenger vehicle—

4 ‘‘(1) to the Federal Government, or a State or

5 local government, for use exclusively in police, fire6 fighting, search and rescue, or other law enforce7 ment or public safety activities, or in public works

8 activities, or

9 ‘‘(2) to any person for use exclusively in provid10 ing emergency medical services.

11 ‘‘(e) INFLATION ADJUSTMENT.—

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

13 year after 1992, the $30,000 amount in subsection

14 (a) and section 4003(a) shall be increased by an

15 amount equal to—

16 ‘‘(A) $30,000, multiplied by

17 ‘‘(B) the cost-of-living adjustment under

18 section 1(f)(3) for such calendar year, deter19 mined by substituting ‘calendar year 1991’ for

20 ‘calendar year 1992’ in subparagraph (B)

21 thereof.

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

23 under paragraph (1) is not a multiple of $100, such

24 amount shall be rounded to the nearest multiple of

25 $100 (or, if such amount is a multiple of $50 and
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1 not of $100, such amount shall be rounded to the

2 next highest multiple of $100).

3 ‘‘(f) TERMINATION.—The tax imposed by this section

4 shall not apply to any sale or use after December 31,

5 1999.

6 ‘‘SEC. 4002. 1ST RETAIL SALE; USES, ETC. TREATED AS

7 SALES; DETERMINATION OF PRICE.

8 ‘‘(a) 1ST RETAIL SALE.—For purposes of this sub9 chapter, the term ‘1st retail sale’ means the 1st sale, for

10 a purpose other than resale, after manufacture, produc11 tion, or importation.

12 ‘‘(b) USE TREATED AS SALE.—

13 ‘‘(1) IN GENERAL.—If any person uses a pas14 senger vehicle (including any use after importation)

15 before the 1st retail sale of such vehicle, then such

16 person shall be liable for tax under this subchapter

17 in the same manner as if such vehicle were sold at

18 retail by him.

19 ‘‘(2) EXEMPTION FOR FURTHER MANUFAC20 TURE.—Paragraph (1) shall not apply to use of a

21 vehicle as material in the manufacture or production

22 of, or as a component part of, another vehicle tax23 able under this subchapter to be manufactured or

24 produced by him.
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1 ‘‘(3) EXEMPTION FOR DEMONSTRATION USE.—

2 Paragraph (1) shall not apply to any use of a pas3 senger vehicle as a demonstrator.

4 ‘‘(4) EXCEPTION FOR USE AFTER IMPORTATION

5 OF CERTAIN VEHICLES.—Paragraph (1) shall not

6 apply to the use of a vehicle after importation if the

7 user or importer establishes to the satisfaction of the

8 Secretary that the 1st use of the vehicle occurred be9 fore January 1, 1991, outside the United States.

10 ‘‘(5) COMPUTATION OF TAX.—In the case of

11 any person made liable for tax by paragraph (1), the

12 tax shall be computed on the price at which similar

13 vehicles are sold at retail in the ordinary course of

14 trade, as determined by the Secretary.

15 ‘‘(c) LEASES CONSIDERED AS SALES.—For purposes

16 of this subchapter—

17 ‘‘(1) IN GENERAL.—Except as otherwise pro18 vided in this subsection, the lease of a vehicle (in19 cluding any renewal or any extension of a lease or

20 any subsequent lease of such vehicle) by any person

21 shall be considered a sale of such vehicle at retail.

22 ‘‘(2) SPECIAL RULES FOR LONG-TERM

23 LEASES.—

24 ‘‘(A) TAX NOT IMPOSED ON SALE FOR

25 LEASING IN A QUALIFIED LEASE.—The sale of
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1 a passenger vehicle to a person engaged in a

2 passenger vehicle leasing or rental trade or

3 business for leasing by such person in a long4 term lease shall not be treated as the 1st retail

5 sale of such vehicle.

6 ‘‘(B) LONG-TERM LEASE.—For purposes

7 of subparagraph (A), the term ‘long-term lease’

8 means any long-term lease (as defined in sec9 tion 4052).

10 ‘‘(C) SPECIAL RULES.—In the case of a

11 long-term lease of a vehicle which is treated as

12 the 1st retail sale of such vehicle—

13 ‘‘(i) DETERMINATION OF PRICE.—The

14 tax under this subchapter shall be com15 puted on the lowest price for which the ve16 hicle is sold by retailers in the ordinary

17 course of trade.

18 ‘‘(ii) PAYMENT OF TAX.—Rules simi19 lar to the rules of section 4217(e)(2) shall

20 apply.

21 ‘‘(iii) NO TAX WHERE EXEMPT USE

22 BY LESSEE.—No tax shall be imposed on

23 any lease payment under a long-term lease

24 if the lessee’s use of the vehicle under such
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1 lease is an exempt use (as defined in sec2 tion 4003(b)) of such vehicle.

3 ‘‘(d) DETERMINATION OF PRICE.—

4 ‘‘(1) IN GENERAL.—In determining price for

5 purposes of this subchapter—

6 ‘‘(A) there shall be included any charge in7 cident to placing the article in condition ready

8 for use,

9 ‘‘(B) there shall be excluded—

10 ‘‘(i) the amount of the tax imposed by

11 this subchapter,

12 ‘‘(ii) if stated as a separate charge,

13 the amount of any retail sales tax imposed

14 by any State or political subdivision there15 of or the District of Columbia, whether the

16 liability for such tax is imposed on the ven17 dor or vendee, and

18 ‘‘(iii) the value of any component of

19 such article if—

20 ‘‘(I) such component is furnished

21 by the 1st user of such article, and

22 ‘‘(II) such component has been

23 used before such furnishing, and

24 ‘‘(C) the price shall be determined without

25 regard to any trade-in.
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1 ‘‘(2) OTHER RULES.—Rules similar to the rules

2 of paragraphs (2) and (4) of section 4052(b) shall

3 apply for purposes of this subchapter.

4 ‘‘SEC. 4003. SPECIAL RULES.

5 ‘‘(a) SEPARATE PURCHASE OF VEHICLE AND PARTS

6 AND ACCESSORIES THEREFOR.—Under regulations pre7 scribed by the Secretary—

8 ‘‘(1) IN GENERAL.—Except as provided in para9 graph (2), if—

10 ‘‘(A) the owner, lessee, or operator of any

11 passenger vehicle installs (or causes to be in12 stalled) any part or accessory on such vehicle,

13 and

14 ‘‘(B) such installation is not later than the

15 date 6 months after the date the vehicle was

16 1st placed in service,

17 then there is hereby imposed on such installation a

18 tax equal to 10 percent of the price of such part or

19 accessory and its installation.

20 ‘‘(2) LIMITATION.—The tax imposed by para21 graph (1) on the installation of any part or acces22 sory shall not exceed 10 percent of the excess (if

23 any) of—

24 ‘‘(A) the sum of—
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1 ‘‘(i) the price of such part or acces2 sory and its installation,

3 ‘‘(ii) the aggregate price of the parts

4 and accessories (and their installation) in5 stalled before such part or accessory, plus

6 ‘‘(iii) the price for which the pas7 senger vehicle was sold, over

8 ‘‘(B) $30,000.

9 ‘‘(3) EXCEPTIONS.—Paragraph (1) shall not

10 apply if—

11 ‘‘(A) the part or accessory installed is a re12 placement part or accessory,

13 ‘‘(B) the part or accessory is installed to

14 enable or assist an individual with a disability

15 to operate the vehicle, or to enter or exit the ve16 hicle, by compensating for the effect of such

17 disability, or

18 ‘‘(C) the aggregate price of the parts and

19 accessories (and their installation) described in

20 paragraph (1) with respect to the vehicle does

21 not exceed $200 (or such other amount or

22 amounts as the Secretary may by regulation

23 prescribe).

24 The price of any part or accessory (and its installa25 tion) to which paragraph (1) does not apply by rea-
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1 son of this paragraph shall not be taken into ac2 count under paragraph (2)(A).

3 ‘‘(4) INSTALLERS SECONDARILY LIABLE FOR

4 TAX.—The owners of the trade or business installing

5 the parts or accessories shall be secondarily liable

6 for the tax imposed by this subsection.

7 ‘‘(b) IMPOSITION OF TAX ON SALES, ETC., WITHIN

8 2 YEARS OF VEHICLES PURCHASED TAX-FREE.—

9 ‘‘(1) IN GENERAL.—If—

10 ‘‘(A) no tax was imposed under this sub11 chapter on the 1st retail sale of any passenger

12 vehicle by reason of its exempt use, and

13 ‘‘(B) within 2 years after the date of such

14 1st retail sale, such vehicle is resold by the pur15 chaser or such purchaser makes a substantial

16 nonexempt use of such vehicle,

17 then such sale or use of such vehicle by such pur18 chaser shall be treated as the 1st retail sale of such

19 vehicle for a price equal to its fair market value at

20 the time of such sale or use.

21 ‘‘(2) EXEMPT USE.—For purposes of this sub22 section, the term ‘exempt use’ means any use of a

23 vehicle if the 1st retail sale of such vehicle is not

24 taxable under this subchapter by reason of such use.
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1 ‘‘(c) PARTS AND ACCESSORIES SOLD WITH TAXABLE

2 ARTICLE.—Parts and accessories sold on, in connection

3 with, or with the sale of any passenger vehicle shall be

4 treated as part of the vehicle.

5 ‘‘(d) PARTIAL PAYMENTS, ETC.—In the case of a

6 contract, sale, or arrangement described in paragraph (2),

7 (3), or (4) of section 4216(c), rules similar to the rules

8 of section 4217(e)(2) shall apply for purposes of this sub9 chapter.’’

10 (b) TECHNICAL AMENDMENTS.—

11 (1) Subsection (c) of section 4221 is amended

12 by striking ‘‘4002(b), 4003(c), 4004(a)’’ and insert13 ing ‘‘4001(d)’’.

14 (5) Subsection (d) of section 4222 is amended

15 by striking ‘‘4002(b), 4003(c), 4004(a)’’ and insert16 ing ‘‘4001(d)’’.

17 (3) The table of subchapters for chapter 31 is

18 amended by striking the item relating to subchapter

19 A and inserting the following:

‘‘Subchapter A. Luxury passenger vehicles.’’

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

21 this section shall take effect on January 1, 1993.
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1 SEC. 14162. EXEMPTION FROM LUXURY EXCISE TAX FOR

2 CERTAIN EQUIPMENT INSTALLED ON PAS3 SENGER VEHICLES FOR USE BY DISABLED IN4 DIVIDUALS.

5 (a) IN GENERAL.—Paragraph (3) of section 4004(b)

6 (relating to separate purchase of article and parts and ac7 cessories therefor), as in effect on the day before the date

8 of the enactment of this Act, is amended—

9 (1) by striking ‘‘or’’ at the end of subparagraph

10 (A),

11 (2) by redesignating subparagraph (B) as sub12 paragraph (C),

13 (3) by inserting after subparagraph (A) the fol14 lowing new subparagraph:

15 ‘‘(B) the part or accessory is installed on

16 a passenger vehicle to enable or assist an indi17 vidual with a disability to operate the vehicle, or

18 to enter or exit the vehicle, by compensating for

19 the effect of such disability, or’’, and

20 (4) by inserting after subparagraph (C) the fol21 lowing flush sentence:

22 ‘‘The price of any part or accessory (and its installa23 tion) to which paragraph (1) does not apply by rea24 son of this paragraph shall not be taken into ac25 count under paragraph (2)(A).’’
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1 (b) EFFECTIVE DATE.—The amendments made by

2 this section shall take effect as if included in the amend3 ments made by section 11221(a) of the Omnibus Budget

4 Reconciliation Act of 1990.

5 (c) PERIOD FOR FILING CLAIMS.—If refund or credit

6 of any overpayment of tax resulting from the application

7 of the amendments made by this section is prevented at

8 any time before the close of the 1-year period beginning

9 on the date of the enactment of this Act by the operation

10 of any law or rule of law (including res judicata), refund

11 or credit of such overpayment (to the extent attributable

12 to such amendments) may, nevertheless, be made or al13 lowed if claim therefor is filed before the close of such

14 1-year period.

15 SEC. 14163. TAX ON DIESEL FUEL USED IN NONCOMMER16 CIAL BOATS.

17 (a) GENERAL RULE.—

18 (1) Paragraph (2) of section 4092(a) (defining

19 diesel fuel) is amended by striking ‘‘or a diesel-pow20 ered train’’ and inserting ‘‘, a diesel-powered train,

21 or a diesel-powered boat’’.

22 (2) Paragraph (1) of section 4041(a) is amend23 ed—

24 (A) by striking ‘‘diesel-powered highway

25 vehicle’’ each place it appears and inserting
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1 ‘‘diesel-powered highway vehicle or diesel-pow2 ered boat’’, and

3 (B) by striking ‘‘such vehicle’’ and insert4 ing ‘‘such vehicle or boat’’.

5 (3) Subparagraph (B) of section 4092(b)(1) is

6 amended by striking ‘‘commercial and noncommer7 cial vessels’’ each place it appears and inserting

8 ‘‘vessels for use in an off-highway business use (as

9 defined in section 6421(e)(2)(B))’’.

10 (b) EXEMPTION FOR USE IN FISHERIES OR COM11 MERCIAL NAVIGATION.—Subparagraph (B) of section

12 6421(e)(2) is amended to read as follows:

13 ‘‘(B) USES IN BOATS.—The term ‘off-high14 way business use’ does not include any use in

15 a motorboat; except that such term shall in16 clude any use in—

17 ‘‘(i) a vessel employed in the fisheries

18 or in the whaling business, and

19 ‘‘(ii) in the case of diesel fuel, a boat

20 in the active conduct of—

21 ‘‘(I) a trade or business of com22 mercial fishing or transporting per23 sons or property for compensation or

24 hire, or
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1 ‘‘(II) any other trade or business

2 unless the boat is used predominantly

3 in any activity which is of a type gen4 erally considered to constitute enter5 tainment, amusement or recreation.’’

6 (c) RETENTION OF TAXES IN GENERAL FUND.—

7 (1) TAXES IMPOSED AT HIGHWAY TRUST FUND

8 FINANCING RATE.—Paragraph (4) of section

9 9503(b) (relating to transfers to Highway Trust

10 Fund) is amended—

11 (A) by striking ‘‘and’’ at the end of sub12 paragraph (A),

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

14 subparagraph (B) and inserting ‘‘, and’’, and

15 (C) by adding at the end thereof the fol16 lowing new subparagraph:

17 ‘‘(C) there shall not be taken into account

18 the taxes imposed by sections 4041 and 4091

19 on diesel fuel sold for use or used as fuel in a

20 diesel-powered boat.’’

21 (2) TAXES IMPOSED AT LEAKING UNDER22 GROUND STORAGE TANK TRUST FUND FINANCING

23 RATE.—Subsection (b) of section 9508 (relating to

24 transfers to Leaking Underground Storage Tank

25 Trust Fund) is amended by adding at the end there-
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1 of the following new sentence: ‘‘For purposes of this

2 subsection, there shall not be taken into account the

3 taxes imposed by sections 4041 and 4091 on diesel

4 fuel sold for use or used as fuel in a diesel-powered

5 boat.’’

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

7 this section shall take effect on January 1, 1994.

8 PART VII—OTHER CHANGES

9 SEC. 14171. ALTERNATIVE MINIMUM TAX TREATMENT OF

10 CONTRIBUTIONS OF APPRECIATED PROP11 ERTY.

12 (a) REPEAL OF TAX PREFERENCE.—Subsection (a)

13 of section 57 (as amended by section 14113) is amended

14 by striking paragraph (6) (relating to appreciated prop15 erty charitable deduction) and by redesignating para16 graphs (7) and (8) as paragraphs (6) and (7), respectively.

17 (b) EFFECT ON ADJUSTED CURRENT EARNINGS.—

18 Paragraph (4) of section 56(g) is amended by adding at

19 the end thereof the following new subparagraph:

20 ‘‘(J) TREATMENT OF CHARITABLE CON21 TRIBUTIONS.—Notwithstanding subparagraphs

22 (B) and (C), no adjustment related to the earn23 ings and profits effects of any charitable con24 tribution shall be made in computing adjusted

25 current earnings.’’
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1 (c) CONFORMING AMENDMENT.—Subclause (II) of

2 section 53(d)(1)(B)(ii) (as amended by section 14113) is

3 amended by striking ‘‘(5), (6), and (8)’’ and inserting

4 ‘‘(5), and (7)’’.

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

6 this section shall apply to contributions made after June

7 30, 1992, except that in the case of any contribution of

8 capital gain property which is not tangible personal prop9 erty, such amendments shall apply only if the contribution

10 is made after December 31, 1992.

11 (e) REPORT ON ADVANCE DETERMINATION OF

12 VALUE OF CHARITABLE GIFTS.—Not later than 1 year

13 after the date of the enactment of this Act, the Secretary

14 of the Treasury shall report to the Committee on Finance

15 of the Senate and the Committee on Ways and Means of

16 the House of Representatives on the development of a pro17 cedure under which taxpayers may elect to seek an agree18 ment with the Secretary as to the value of tangible per19 sonal property prior to the donation of such property to

20 a qualifying charitable organization if the time limits for

21 the donation and other conditions contained in the agree22 ment are satisfied. Such report shall address the setting

23 of possible threshold amounts for claimed value (and the

24 payment of fees) by a taxpayer in order to seek agreement

25 under the procedure, possible limitations on applying the
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1 procedure only to items with significant artistic or cultural

2 value, and recommendations for legislative action needed

3 to implement the proposed procedure.

4 SEC. 14172. CERTAIN TRANSFERS TO RAILROAD RETIRE5 MENT ACCOUNT MADE PERMANENT.

6 Subsection (c)(1)(A) of section 224 of the Railroad

7 Retirement Solvency Act of 1983 (relating to section 72(r)

8 revenue increase transferred to certain railroad accounts)

9 is amended by striking ‘‘with respect to benefits received

10 before October 1, 1992’’.

11 SEC. 14173. TEMPORARY EXTENSION OF DEDUCTION FOR

12 HEALTH INSURANCE COSTS OF SELF-EM13 PLOYED INDIVIDUALS.

14 (a) IN GENERAL.—

15 (1) EXTENSION.—Paragraph (6) of section

16 162(l) (relating to special rules for health insurance

17 costs of self-employed individuals) is amended by

18 striking ‘‘June 30, 1992’’ and inserting ‘‘December

19 31, 1993’’.

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

21 of section 110(a) of the Tax Extension Act of 1991

22 is hereby repealed.

23 (3) EFFECTIVE DATE.—The amendments made

24 by this subsection shall apply to taxable years end25 ing after June 30, 1992.
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1 (b) DETERMINATION OF ELIGIBILITY FOR EM2 PLOYER-SPONSORED HEALTH PLAN.—

3 (1) IN GENERAL.—Paragraph (2)(B) of section

4 162(l) is amended to read as follows:

5 ‘‘(B) OTHER COVERAGE.—Paragraph (1)

6 shall not apply to any taxpayer for any calendar

7 month for which the taxpayer is eligible to par8 ticipate in any subsidized health plan main9 tained by any employer of the taxpayer or of

10 the spouse of the taxpayer.’’

11 (2) EFFECTIVE DATE.—The amendment made

12 by paragraph (1) shall apply to taxable years begin13 ning after December 31, 1992.

14 Subtitle B—Revenue Increases

15 PART I—PROVISIONS AFFECTING INDIVIDUALS

16 Subpart A—Rate Increases

17 SEC. 14201. INCREASE IN TOP MARGINAL RATE UNDER SEC18 TION 1.

19 (a) GENERAL RULE.—Section 1 (relating to tax im20 posed) is amended by striking subsections (a) through (e)

21 and inserting the following:

22 ‘‘(a) MARRIED INDIVIDUALS FILING JOINT RETURNS

23 AND SURVIVING SPOUSES.—There is hereby imposed on

24 the taxable income of—
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1 ‘‘(1) every married individual (as defined in sec2 tion 7703) who makes a single return jointly with

3 his spouse under section 6013, and

4 ‘‘(2) every surviving spouse (as defined in sec5 tion 2(a)),

6 a tax determined in accordance with the following table:

‘‘If taxable income is: The tax is:

Not over $36,900 .......................... 15% of taxable income.

Over $36,900 but not over

$89,150.

$5,535, plus 28% of the excess over

$36,900.

Over $89,150 but not over

$140,000.

$20,165, plus 31% of the excess over

$89,150.

Over $140,000 ............................... $35,928.50, plus 36% of the excess

over $140,000.

7 ‘‘(b) HEADS OF HOUSEHOLDS.—There is hereby im8 posed on the taxable income of every head of a household

9 (as defined in section 2(b)) a tax determined in accordance

10 with the following table:

‘‘If taxable income is: The tax is:

Not over $29,600 .......................... 15% of taxable income.

Over $29,600 but not over

$76,400.

$4,440, plus 28% of the excess over

$29,600.

Over $76,400 but not over

$127,500.

$17,544, plus 31% of the excess over

$76,400.

Over $127,500 ............................... $33,385, plus 36% of the excess over

$127,500.

11 ‘‘(c) UNMARRIED INDIVIDUALS (OTHER THAN SUR12 VIVING SPOUSES AND HEADS OF HOUSEHOLDS).—There

13 is hereby imposed on the taxable income of every individ14 ual (other than a surviving spouse as defined in section

15 2(a) or the head of a household as defined in section 2(b))

16 who is not a married individual (as defined in section
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1 7703) a tax determined in accordance with the following

2 table:

‘‘If taxable income is: The tax is:

Not over $22,100 .......................... 15% of taxable income.

Over $22,100 but not over

$53,500.

$3,315, plus 28% of the excess over

$22,100.

Over $53,500 but not over

$115,000.

$12,107, plus 31% of the excess over

$53,500.

Over $115,000 ............................... $31,172, plus 36% of the excess over

$115,000.

3 ‘‘(d) MARRIED INDIVIDUALS FILING SEPARATE RE4 TURNS.—There is hereby imposed on the taxable income

5 of every married individual (as defined in section 7703)

6 who does not make a single return jointly with his spouse

7 under section 6013, a tax determined in accordance with

8 the following table:

‘‘If taxable income is: The tax is:

Not over $18,450 .......................... 15% of taxable income.

Over $18,450 but not over

$44,575.

$2,767.50, plus 28% of the excess

over $18,450.

Over $44,575 but not over

$70,000.

$10,082.50, plus 31% of the excess

over $44,575.

Over $70,000 ................................. $17,964.25, plus 36% of the excess

over $70,000.

9 ‘‘(e) ESTATES AND TRUSTS.—There is hereby im10 posed on the taxable income of—

11 ‘‘(1) every estate, and

12 ‘‘(2) every trust,

13 taxable under this subsection a tax determined in accord14 ance with the following table:

‘‘If taxable income is: The tax is:

Not over $1,500 ............................ 15% of taxable income.

Over $1,500 but not over $3,500 .. $225, plus 28% of the excess over

$1,500.
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‘‘If taxable income is: The tax is:

Over $3,500 but not over $5,500 .. $785, plus 31% of the excess over

$3,500.

Over $5,500 ................................... $1,405, plus 36% of the excess over

$5,500.’’

1 (b) CONFORMING AMENDMENTS.—

2 (1) Section 531 is amended by striking ‘‘28

3 percent’’ and inserting ‘‘36 percent’’.

4 (2) Section 541 is amended by striking ‘‘28

5 percent’’ and inserting ‘‘36 percent’’.

6 (3)(A) Subsection (f) of section 1 is amended—

7 (i) by striking ‘‘1990’’ in paragraph (1)

8 and inserting ‘‘1993’’, and

9 (ii) by striking ‘‘1989’’ in paragraph

10 (3)(B) and inserting ‘‘1992’’.

11 (B) Subsection (f) of section 1 is amended by

12 adding at the end thereof the following new para13 graph:

14 ‘‘(7) SPECIAL RULE FOR CERTAIN BRACKETS.—

15 ‘‘(A) CALENDAR YEAR 1994.—In prescrib16 ing the tables under paragraph (1) which apply

17 with respect to taxable years beginning in cal18 endar year 1994, the Secretary shall make no

19 adjustment to the dollar amounts at which the

20 36 percent rate bracket begins or at which the

21 39.6 percent rate begins under any table con22 tained in subsection (a), (b), (c), (d), or (e).
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1 ‘‘(B) LATER CALENDAR YEARS.—In pre2 scribing tables under paragraph (1) which apply

3 with respect to taxable years beginning in a cal4 endar year after 1994, the cost-of-living adjust5 ment used in making adjustments to the dollar

6 amounts referred to in subparagraph (A) shall

7 be determined under paragraph (3) by sub8 stituting ‘1993’ for ‘1992’.’’

9 (C) Subparagraph (C) of section 41(e)(5) is

10 amended by striking ‘‘1989’’ each place it appears

11 and inserting ‘‘1992’’.

12 (D) Subparagraph (B) of section 63(c)(4) is

13 amended by striking ‘‘1989’’ and inserting ‘‘1992’’.

14 (E) Subparagraph (B) of section 68(b)(2) is

15 amended by striking ‘‘1989’’ and inserting ‘‘1992’’.

16 (F) Subparagraph (B) of section 132(f)(6) is

17 amended by striking ‘‘, determined by substituting’’

18 and all that follows down through the period at the

19 end thereof and inserting a period.

20 (G) Subparagraphs (A)(ii) and (B)(ii) of sec21 tion 151(d)(4) are each amended by striking ‘‘1989’’

22 and inserting ‘‘1992’’.

23 (H) Clause (ii) of section 513(h)(2)(C) is

24 amended by striking ‘‘1989’’ and inserting ‘‘1992’’.
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years beginning after

3 December 31, 1992.

4 SEC. 14202. SURTAX ON HIGH-INCOME TAXPAYERS.

5 (a) GENERAL RULE.—

6 (1) Subsection (a) of section 1 (as amended by

7 section 14201) is amended by striking the last item

8 in the table contained therein and inserting the fol9 lowing:

Over $140,000 but not over

$250,000.

$35,928.50, plus 36% of the excess

over $140,000.

Over $250,000 ............................... $75,528.50, plus 39.6% of the excess

over $250,000.’’

10 (2) Subsection (b) of section 1 (as so amended)

11 is amended by striking the last item in the table

12 contained therein and inserting the following:

Over $127,500 but not over

$250,000.

$33,385, plus 36% of the excess over

$127,500.

Over $250,000 ............................... $77,485, plus 39.6% of the excess

over $250,000.’’

13 (3) Subsection (c) of section 1 (as so amended)

14 is amended by striking the last item in the table

15 contained therein and inserting the following:

Over $115,000 but not over

$250,000.

$31,172, plus 36% of the excess over

$115,000.

Over $250,000 ............................... $79,772, plus 39.6% of the excess

over $250,000.’’

16 (4) Subsection (d) of section 1 (as so amended)

17 is amended by striking the last item in the table

18 contained therein and inserting the following:
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Over $70,000 but not over

$125,000.

$17,964.25, plus 36% of the excess

over $70,000.

Over $125,000 ............................... $37,764.25, plus 39.6% of the excess

over $125,000.’’

1 (5) Subsection (e) of section 1 (as so amended)

2 is amended by striking the last item in the table

3 contained therein and inserting the following:

Over $5,500 but not over $7,500 .. $1,405, plus 36% of the excess over

$5,500.

Over $7,500 ................................... $2,125, plus 39.6% of the excess over

$7,500.’’

4 (b) TECHNICAL AMENDMENT.—Sections 531 and

5 541 (as amended by section 14201) are each amended by

6 striking ‘‘36 percent’’ and inserting ‘‘39.6 percent’’.

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

8 this section shall apply to taxable years beginning after

9 December 31, 1992.

10 SEC. 14203. MODIFICATIONS TO ALTERNATIVE MINIMUM

11 TAX RATES AND EXEMPTION AMOUNTS.

12 (a) INCREASE IN RATE.—Paragraph (1) of section

13 55(b) (defining tentative minimum tax) is amended to

14 read as follows:

15 ‘‘(1) AMOUNT OF TENTATIVE TAX.—

16 ‘‘(A) NONCORPORATE TAXPAYERS.—

17 ‘‘(i) IN GENERAL.—In the case of a

18 taxpayer other than a corporation, the ten19 tative minimum tax for the taxable year is

20 the sum of—
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1 ‘‘(I) 26 percent of so much of the

2 taxable excess as does not exceed

3 $175,000, plus

4 ‘‘(II) 28 percent of so much of

5 the taxable excess as exceeds

6 $175,000.

7 The amount determined under the preced8 ing sentence shall be reduced by the alter9 native minimum tax foreign tax credit for

10 the taxable year.

11 ‘‘(ii) TAXABLE EXCESS.—For pur12 poses of clause (i), the term ‘taxable ex13 cess’ means so much of the alternative

14 minimum taxable income for the taxable

15 year as exceeds the exemption amount.

16 ‘‘(iii) MARRIED INDIVIDUAL FILING

17 SEPARATE RETURN.—In the case of a mar18 ried individual filing a separate return,

19 clause (i) shall be applied by substituting

20 ‘$87,500’ for ‘$175,000’ each place it ap21 pears. For purposes of the preceding sen22 tence, marital status shall be determined

23 under section 7703.
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1 ‘‘(B) CORPORATIONS.—In the case of a

2 corporation, the tentative minimum tax for the

3 taxable year is—

4 ‘‘(i) 20 percent of so much of the al5 ternative minimum taxable income for the

6 taxable year as exceeds the exemption

7 amount, reduced by

8 ‘‘(ii) the alternative minimum tax for9 eign tax credit for the taxable year.’’

10 (b) INCREASE IN EXEMPTION AMOUNTS.—Para11 graph (1) of section 55(d) (defining exemption amount)

12 is amended—

13 (1) by striking ‘‘$40,000’’ in subparagraph (A)

14 and inserting ‘‘$45,000’’,

15 (2) by striking ‘‘$30,000’’ in subparagraph (B)

16 and inserting ‘‘$33,750’’, and

17 (3) by striking ‘‘$20,000’’ in subparagraph (C)

18 and inserting ‘‘$22,500’’.

19 (c) CONFORMING AMENDMENTS.—

20 (1) The last sentence of section 55(d)(3) is

21 amended by striking ‘‘$155,000 or (ii) $20,000’’ and

22 inserting ‘‘$165,000 or (ii) $22,500’’.

23 (2)(A) Subparagraph (A) of section 897(a)(2)

24 is amended by striking ‘‘the amount determined

25 under section 55(b)(1)(A) shall not be less than 21
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1 percent of’’ and inserting ‘‘the taxable excess for

2 purposes of section 55(b)(1)(A) shall not be less

3 than’’.

4 (B) The heading for paragraph (2) of section

5 897(a) is amended by striking ‘‘21-PERCENT’’.

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

7 this section shall apply to taxable years beginning after

8 December 31, 1992.

9 SEC. 14204. OVERALL LIMITATION ON ITEMIZED DEDUC10 TIONS FOR HIGH-INCOME TAXPAYERS MADE

11 PERMANENT.

12 Subsection (f) of section 68 (relating to overall limita13 tion on itemized deductions) is hereby repealed.

14 SEC. 14205. PHASEOUT OF PERSONAL EXEMPTION OF HIGH15 INCOME TAXPAYERS MADE PERMANENT.

16 Section 151(d)(3) (relating to phaseout of personal

17 exemption) is amended by striking subparagraph (E).

18 SEC. 14206. PROVISIONS TO PREVENT CONVERSION OF OR19 DINARY INCOME TO CAPITAL GAIN.

20 (a) INTEREST EMBEDDED IN FINANCIAL TRANS21 ACTIONS.—

22 (1) IN GENERAL.—Part IV of subchapter P of

23 chapter 1 (relating to special rules for determining

24 capital gains and losses) is amended by adding at

25 the end thereof the following new section:
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1 ‘‘SEC. 1258. RECHARACTERIZATION OF GAIN FROM CER2 TAIN FINANCIAL TRANSACTIONS.

3 ‘‘(a) GENERAL RULE.—In the case of any gain—

4 ‘‘(1) which (but for this section) would be treat5 ed as gain from the sale or exchange of a capital

6 asset, and

7 ‘‘(2) which is recognized on the disposition of

8 any property which was held as part of a conversion

9 transaction,

10 such gain (to the extent such gain does not exceed the

11 applicable imputed income amount) shall be treated as or12 dinary income.

13 ‘‘(b) APPLICABLE IMPUTED INCOME AMOUNT.—For

14 purposes of subsection (a), the term ‘applicable imputed

15 income amount’ means, with respect to any disposition re16 ferred to in subsection (a), an amount equal to—

17 ‘‘(1) the amount of interest which would have

18 accrued on the taxpayer’s net investment in the con19 version transaction for the period ending on the date

20 of such disposition (or, if earlier, the date on which

21 the requirements of subsection (c) ceased to be satis22 fied) at a rate equal to 120 percent of the applicable

23 rate, reduced by

24 ‘‘(2) the amount treated as ordinary income

25 under subsection (a) with respect to any prior dis-
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1 position of property which was held as a part of

2 such transaction.

3 The Secretary shall by regulations provide for such reduc4 tions in the applicable imputed income amount as may be

5 appropriate by reason of amounts capitalized under sec6 tion 263(g), ordinary income received, or otherwise.

7 ‘‘(c) CONVERSION TRANSACTION.—For purposes of

8 this section, the term ‘conversion transaction’ means any

9 of the following where substantially all of the taxpayer’s

10 expected return from the transaction is attributable to the

11 time value of the taxpayer’s net investment in such trans12 action:

13 ‘‘(1) The holding of any property (whether or

14 not actively traded), and the entering into a contract

15 to sell such property (or substantially identical prop16 erty) at a price determined in accordance with such

17 contract, but only if such property was acquired and

18 such contract was entered into on a substantially

19 contemporaneous basis.

20 ‘‘(2) Any applicable straddle.

21 ‘‘(3) Any other transaction which is marketed

22 or sold as producing capital gains.

23 ‘‘(4) Any other transaction specified in regula24 tions prescribed by the Secretary.
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1 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur2 poses of this section—

3 ‘‘(1) APPLICABLE STRADDLE.—The term ‘appli4 cable straddle’ means any straddle (within the mean5 ing of section 1092(c)); except that the term ‘per6 sonal property’ shall include stock.

7 ‘‘(2) APPLICABLE RATE.—The term ‘applicable

8 rate’ means—

9 ‘‘(A) the applicable Federal rate deter10 mined under section 1274(d) (compounded

11 semiannually) as if the conversion transaction

12 were a debt instrument, or

13 ‘‘(B) if the term of the conversion trans14 action is indefinite, the Federal short-term

15 rates in effect under section 6621(b) during the

16 period of the conversion transaction

17 (compounded daily).

18 ‘‘(3) TREATMENT OF PROPERTY WITH BUILT-IN

19 LOSS.—

20 ‘‘(A) IN GENERAL.—If any property with a

21 built-in loss becomes part of a conversion trans22 action—

23 ‘‘(i) for purposes of applying this sub24 title to such property for periods after such

25 property becomes part of such transaction,
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1 the adjusted basis of such property shall be

2 its fair market value as of the time it be3 came part of such transaction, except that

4 ‘‘(ii) upon the disposition of such

5 property in a transaction in which gain or

6 loss is recognized, such built-in loss shall

7 be recognized and shall have a character

8 determined without regard to this section.

9 ‘‘(B) BUILT-IN LOSS.—For purposes of

10 subparagraph (A), the term ‘built-in loss’

11 means the excess (if any) of the adjusted basis

12 of any property over its fair market value (de13 termined as of the date on which such property

14 became part of such transaction).

15 ‘‘(4) PROPERTY TAKEN INTO ACCOUNT AT FAIR

16 MARKET VALUE.—In determining the taxpayer’s net

17 investment in any conversion transaction, there shall

18 be included the fair market value of any property

19 which becomes part of such transaction (determined

20 as of the date on which such property became part

21 of such transaction).’’

22 (2) CLERICAL AMENDMENT.—The table of sec23 tions for part IV of subchapter P of chapter 1 is
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1 amended by adding at the end thereof the following

2 new item:

‘‘Sec. 1258. Recharacterization of gain from certain financial

transactions.’’

3 (3) EFFECTIVE DATE.—The amendments made

4 by this section shall apply to conversion transactions

5 entered into after April 30, 1993.

6 (b) REPEAL OF CERTAIN EXCEPTIONS TO MARKET

7 DISCOUNT RULES.—

8 (1) MARKET DISCOUNT BONDS ISSUED ON OR

9 BEFORE JULY 18, 1984.—The following provisions

10 are hereby repealed:

11 (A) Section 1276(e).

12 (B) Section 1277(d).

13 (2) TAX-EXEMPT OBLIGATIONS.—

14 (A) IN GENERAL.—Paragraph (1) of sec15 tion 1278(a) (defining market discount bond) is

16 amended—

17 (i) by striking clause (ii) of subpara18 graph (B) and redesignating subclauses

19 (iii) and (iv) of such subparagraph as

20 clauses (ii) and (iii), respectively,

21 (ii) by redesignating subparagraph

22 (C) as subparagraph (D), and

23 (iii) by inserting after subparagraph

24 (B) the following new subparagraph:
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1 ‘‘(C) SECTION 1277 NOT APPLICABLE TO

2 TAX-EXEMPT OBLIGATIONS.—For purposes of

3 section 1277, the term ‘market discount bond’

4 shall not include any tax-exempt obligation (as

5 defined in section 1275(a)(3)).’’

6 (B) CONFORMING AMENDMENT.—Sections

7 1276(a)(4) and 1278(b)(1) are each amended

8 by striking ‘‘sections 871(a)’’ and inserting

9 ‘‘sections 103, 871(a),’’.

10 (3) EFFECTIVE DATE.—The amendments made

11 by this section shall apply to obligations purchased

12 (within the meaning of section 1272(d)(1) of the In13 ternal Revenue Code of 1986) after April 30, 1993.

14 (c) TREATMENT OF STRIPPED PREFERRED

15 STOCK.—

16 (1) IN GENERAL.—Section 305 is amended by

17 redesignating subsection (e) as subsection (f) and by

18 inserting after subsection (d) the following new sub19 section:

20 ‘‘(e) TREATMENT OF PURCHASER OF STRIPPED PRE21 FERRED STOCK.—

22 ‘‘(1) IN GENERAL.—If any person purchases

23 after April 30, 1993 any stripped preferred stock,

24 then such person, while holding such stock, shall in25 clude in gross income amounts equal to the amounts
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1 which would have been so includible if such stripped

2 preferred stock were a bond issued on the purchase

3 date and having original issue discount equal to the

4 excess, if any, of—

5 ‘‘(A) the redemption price for such stock,

6 over

7 ‘‘(B) the price at which such person pur8 chased such stock.

9 The preceding sentence shall also apply in the case

10 of any person whose basis in such stock is deter11 mined by reference to the basis in the hands of such

12 purchaser.

13 ‘‘(2) BASIS ADJUSTMENTS.—Appropriate ad14 justments to basis shall be made for amounts includ15 ible in gross income under paragraph (1).

16 ‘‘(3) TAX TREATMENT OF PERSON STRIPPING

17 STOCK.—If any person strips the rights to 1 or more

18 dividends from any stock described in paragraph

19 (5)(B) and after April 30, 1993 disposes of such

20 dividend rights, for purposes of paragraph (1), such

21 person shall be treated as having purchased the

22 stripped preferred stock on the date of such disposi23 tion for a purchase price equal to such person’s ad24 justed basis in such stripped preferred stock.
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1 ‘‘(4) AMOUNTS TREATED AS ORDINARY IN2 COME.—Any amount included in gross income under

3 paragraph (1) shall be treated as ordinary income.

4 ‘‘(5) STRIPPED PREFERRED STOCK.—For pur5 poses of this subsection—

6 ‘‘(A) IN GENERAL.—The term ‘stripped

7 preferred stock’ means any stock described in

8 subparagraph (B) if there has been a separa9 tion in ownership between such stock and any

10 dividend on such stock which has not become

11 payable.

12 ‘‘(B) DESCRIPTION OF STOCK.—Stock is

13 described in this subsection if such stock—

14 ‘‘(i) is limited and preferred as to

15 dividends and does not participate in cor16 porate growth to any significant extent,

17 and

18 ‘‘(ii) has a fixed redemption price.

19 ‘‘(6) PURCHASE.—For purposes of this sub20 section, the term ‘purchase’ means—

21 ‘‘(A) any acquisition of stock, where

22 ‘‘(B) the basis of such stock is not deter23 mined in whole or in part by the reference to

24 the adjusted basis of such stock in the hands of

25 the person from whom acquired.’’
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1 (2) COORDINATION WITH SECTION 167(e).—

2 Paragraph (2) of section 167(e) is amended to read

3 as follows:

4 ‘‘(2) COORDINATION WITH OTHER PROVI5 SIONS.—

6 ‘‘(A) SECTION 273.—This subsection shall

7 not apply to any term interest to which section

8 273 applies.

9 ‘‘(B) SECTION 305(e).—This subsection

10 shall not apply to the holder of the dividend

11 rights which were separated from any stripped

12 preferred stock to which section 305(e)(1) ap13 plies.’’

14 (3) EFFECTIVE DATE.—The amendments made

15 by this subsection shall take effect on April 30,

16 1993.

17 (d) TREATMENT OF CAPITAL GAIN UNDER LIMITA18 TION ON INVESTMENT INTEREST.—

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

20 163(d)(4) (defining investment income) is amended

21 to read as follows:

22 ‘‘(B) INVESTMENT INCOME.—The term

23 ‘investment income’ means the sum of—
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1 ‘‘(i) gross income from property held

2 for investment (other than any gain taken

3 into account under clause (ii)(I)),

4 ‘‘(ii) the excess (if any) of—

5 ‘‘(I) the net gain attributable to

6 the disposition of property held for in7 vestment, over

8 ‘‘(II) the net capital gain deter9 mined by only taking into account

10 gains and losses from dispositions of

11 property held for investment, plus

12 ‘‘(iii) so much of the net capital gain

13 referred to in clause (ii)(II) (or, if lesser,

14 the net gain referred to in clause (ii)(I)) as

15 the taxpayer elects to take into account

16 under this clause.’’

17 (2) COORDINATION WITH SPECIAL CAPITAL

18 GAINS RATE.—Subsection (h) of section 1 is amend19 ed by adding at the end thereof the following new

20 sentence:

21 ‘‘For purposes of the preceding sentence, the net capital

22 gain for any taxable year shall be reduced (but not below

23 zero) by the amount which the taxpayer elects to take into

24 account as investment income for the taxable year under

25 section 163(d)(4)(B)(iii).’’
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1 (3) EFFECTIVE DATE.—The amendments made

2 by this subsection shall apply to taxable years begin3 ning after December 31, 1992.

4 (e) TREATMENT OF CERTAIN APPRECIATED INVEN5 TORY.—

6 (1) Paragraph (1) of section 751(d) is amended

7 to read as follows:

8 ‘‘(1) SUBSTANTIAL APPRECIATION.—

9 ‘‘(A) IN GENERAL.—Inventory items of the

10 partnership shall be considered to have appre11 ciated substantially in value if their fair market

12 value exceeds 120 percent of the adjusted basis

13 to the partnership of such property.

14 ‘‘(B) CERTAIN PROPERTY EXCLUDED.—

15 For purposes of subparagraph (A), there shall

16 be excluded any inventory property if a prin17 cipal purpose for acquiring such property was

18 to avoid the provisions of this section relating

19 to inventory items.’’

20 (2) EFFECTIVE DATE.—The amendment made

21 by paragraph (1) shall apply to sales, exchanges,

22 and distributions after April 30, 1993.
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1 Subpart B—Other Provisions

2 SEC. 14207. REPEAL OF LIMITATION ON AMOUNT OF WAGES

3 SUBJECT TO HEALTH INSURANCE EMPLOY4 MENT TAX.

5 (a) HOSPITAL INSURANCE TAX.—

6 (1) Paragraph (1) of section 3121(a) (defining

7 wages) is amended—

8 (A) by inserting ‘‘in the case of the taxes

9 imposed by sections 3101(a) and 3111(a)’’ after

10 ‘‘(1)’’,

11 (B) by striking ‘‘applicable contribution

12 base (as determined under subsection (x))’’

13 each place it appears and inserting ‘‘contribu14 tion and benefit base (as determined under sec15 tion 230 of the Social Security Act)’’, and

16 (C) by striking ‘‘such applicable contribu17 tion base’’ and inserting ‘‘such contribution and

18 benefit base’’.

19 (2) Section 3121 is amended by striking sub20 section (x).

21 (b) SELF-EMPLOYMENT TAX.—

22 (1) Subsection (b) of section 1402 is amend23 ed—

24 (A) by striking ‘‘that part of the net’’ in

25 paragraph (1) and inserting ‘‘in the case of the
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1 tax imposed by section 1401(a), that part of

2 the net’’,

3 (B) by striking ‘‘applicable contribution

4 base (as determined under subsection (k))’’ in

5 paragraph (1) and inserting ‘‘contribution and

6 benefit base (as determined under section 230

7 of the Social Security Act)’’,

8 (C) by inserting ‘‘and’’ after ‘‘section

9 3121(b),’’, and

10 (D) by striking ‘‘and (C) includes’’ and all

11 that follows through ‘‘3111(b)’’.

12 (2) Section 1402 is amended by striking sub13 section (k).

14 (c) RAILROAD RETIREMENT TAX.—

15 (1) Subparagraph (A) of section 3231(e)(2) is

16 amended by adding at the end thereof the following

17 new clause:

18 ‘‘(iii) HOSPITAL INSURANCE TAXES.—

19 Clause (i) shall not apply to—

20 ‘‘(I) so much of the rate applica21 ble under section 3201(a) or 3221(a)

22 as does not exceed the rate of tax in

23 effect under section 3101(b), and

24 ‘‘(II) so much of the rate applica25 ble under section 3211(a)(1) as does
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1 not exceed the rate of tax in effect

2 under section 1402(b).’’

3 (2) Clause (i) of section 3231(e)(2)(B) is

4 amended to read as follows:

5 ‘‘(i) TIER 1 TAXES.—Except as pro6 vided in clause (ii), the term ‘applicable

7 base’ means for any calendar year the con8 tribution and benefit base determined

9 under section 230 of the Social Security

10 Act for such calendar year.’’

11 (d) TECHNICAL AMENDMENTS.—

12 (1) Paragraph (1) of section 6413(c) is amend13 ed by striking ‘‘section 3101 or section 3201’’ and

14 inserting ‘‘section 3101(a) or section 3201(a) (to the

15 extent the rate applicable under section 3201(a) as

16 does not exceed the rate of tax in effect under sec17 tion 3101(a))’’.

18 (2) Subparagraphs (B) and (C) of section

19 6413(c)(2) are each amended by striking ‘‘section

20 3101’’ each place it appears and inserting ‘‘section

21 3101(a)’’.

22 (3) Subsection (c) of section 6413 is amended

23 by striking paragraph (3).

24 (4) Sections 3122 and 3125 of such Code are

25 each amended by striking ‘‘applicable contribution
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1 base limitation’’ and inserting ‘‘contribution and

2 benefit base limitation’’.

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

4 this section shall apply to 1994 and later calendar years.

5 SEC. 14208. TOP ESTATE AND GIFT TAX RATES MADE PER6 MANENT.

7 (a) GENERAL RULE.—The table contained in para8 graph (1) of section 2001(c) is amended by striking the

9 last item and inserting the following new items:

10

‘‘Over $2,500,000 but not over

$3,000,000.

$1,025,800, plus 53% of the excess

over $2,500,000.

Over $3,000,000 ............................ $1,290,800, plus 55% of the excess

over $3,000,000.’’

11 (b) CONFORMING AMENDMENTS.—

12 (1) Subsection (c) of section 2001 is amended

13 by striking paragraph (2) and by redesignating

14 paragraph (3) as paragraph (2).

15 (2) Paragraph (2) of section 2001(c), as redes16 ignated by paragraph (1), is amended by striking

17 ‘‘($18,340,000 in the case of decedents dying, and

18 gifts made, after 1992)’’.

19 (3) The last sentence of section 2101(b) is

20 amended by striking ‘‘section 2001(c)(3)’’ and in21 serting ‘‘section 2001(c)(2)’’.
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply in the case of decedents dying, and

3 gifts made, after December 31, 1992.

4 SEC. 14209. REDUCTION IN DEDUCTIBLE PORTION OF BUSI5 NESS MEALS AND ENTERTAINMENT.

6 (a) GENERAL RULE.—Paragraph (1) of section

7 274(n) (relating to only 80 percent of meal and entertain8 ment expenses allowed as deduction) is amended by strik9 ing ‘‘80 percent’’ and inserting ‘‘50 percent’’.

10 (b) CONFORMING AMENDMENT.—The subsection

11 heading for section 274(n) is amended by striking ‘‘80’’

12 and inserting ‘‘50’’.

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

14 this section shall apply to taxable years beginning after

15 December 31, 1993.

16 SEC. 14210. ELIMINATION OF DEDUCTION FOR CLUB MEM17 BERSHIP FEES.

18 (a) IN GENERAL.—Subsection (a) of section 274 (re19 lating to disallowance of certain entertainment, etc., ex20 penses) is amended by adding at the end thereof the fol21 lowing new paragraph:

22 ‘‘(3) DENIAL OF DEDUCTION FOR CLUB

23 DUES.—Notwithstanding the preceding provisions of

24 this subsection, no deduction shall be allowed under

25 this chapter for amounts paid or incurred for mem-
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1 bership in any club organized for business, pleasure,

2 recreation, or other social purpose. The preceding

3 sentence shall not apply in the case of an airline or

4 hotel club.’’

5 (b) EXCEPTION FOR EMPLOYEE RECREATIONAL EX6 PENSES NOT TO APPLY.—Paragraph (4) of section

7 274(e) is amended by adding at the end thereof the follow8 ing: ‘‘This paragraph shall not apply for purposes of sub9 section (a)(3).’’

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

11 this section shall apply to amounts paid or incurred after

12 December 31, 1993.

13 SEC. 14211. DISALLOWANCE OF DEDUCTION FOR CERTAIN

14 EMPLOYEE REMUNERATION IN EXCESS OF

15 $1,000,000.

16 (a) GENERAL RULE.—Section 162 (relating to trade

17 or business expenses) is amended by redesignating sub18 section (m) as subsection (n) and by inserting after sub19 section (l) the following new subsection:

20 ‘‘(m) CERTAIN EXCESSIVE EMPLOYEE REMUNERA21 TION.—

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

23 held corporation, no deduction shall be allowed

24 under this chapter for applicable employee remu25 neration with respect to any covered employee to the
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1 extent that the amount of such remuneration for the

2 taxable year with respect to such employee exceeds

3 $1,000,000.

4 ‘‘(2) PUBLICLY HELD CORPORATION.—For pur5 poses of this subsection, the term ‘publicly held cor6 poration’ means any corporation issuing any class of

7 common equity securities required to be registered

8 under section 12 of the Securities Exchange Act of

9 1934.

10 ‘‘(3) COVERED EMPLOYEE.—For purposes of

11 this subsection, the term ‘covered employee’ means

12 any employee of the taxpayer if—

13 ‘‘(A) as of the close of the taxable year,

14 such employee is the chief executive officer of

15 the taxpayer or an individual acting in such a

16 capacity, or

17 ‘‘(B) the total compensation for the tax18 able year of such employee is required to be re19 ported to shareholders under the Securities Ex20 change Act of 1934 by reason of such employee

21 being among the 4 highest compensated officers

22 for the taxable year (other than the chief execu23 tive officer).

24 ‘‘(4) APPLICABLE EMPLOYEE REMUNERA25 TION.—For purposes of this subsection—
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1 ‘‘(A) IN GENERAL.—Except as otherwise

2 provided in this paragraph, the term ‘applicable

3 employee remuneration’ means, with respect to

4 any covered employee for any taxable year, the

5 aggregate amount allowable as a deduction

6 under this chapter for such taxable year (deter7 mined without regard to this subsection) for re8 muneration for services performed by such em9 ployee (whether or not during the taxable year).

10 ‘‘(B) EXCEPTION FOR REMUNERATION

11 PAYABLE ON COMMISSION BASIS.—The term

12 ‘applicable employee remuneration’ shall not in13 clude any remuneration payable on a commis14 sion basis solely on account of income generated

15 directly by the individual performance of the in16 dividual to whom such remuneration is payable.

17 ‘‘(C) OTHER PERFORMANCE-BASED COM18 PENSATION.—The term ‘applicable employee re19 muneration’ shall not include any remuneration

20 payable solely on account of the attainment of

21 one or more performance goals but only if—

22 ‘‘(i) the performance goals are deter23 mined by a compensation committee of the

24 board of directors of the taxpayer which is
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1 comprised solely of 2 or more independent

2 directors,

3 ‘‘(ii) the material terms under which

4 the remuneration is to be paid, including

5 the performance goals, are disclosed to

6 shareholders and approved by a majority of

7 the vote in a separate shareholder vote be8 fore the payment of such remuneration,

9 and

10 ‘‘(iii) before any payment of such re11 muneration, the compensation committee

12 referred to in clause (i) certifies that the

13 performance goals and any other material

14 terms were in fact satisfied.

15 ‘‘(D) EXCEPTION FOR EXISTING BINDING

16 CONTRACTS.—The term ‘applicable employee

17 remuneration’ shall not include any remunera18 tion payable under a written binding contract

19 which was in effect on February 17, 1993, and

20 which was not modified thereafter in any mate21 rial respect before such remuneration is paid.

22 ‘‘(E) REMUNERATION.—For purposes of

23 this paragraph, the term ‘remuneration’ in24 cludes any remuneration (including benefits) in
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1 any medium other than cash, but shall not in2 clude—

3 ‘‘(i) any payment referred to in so

4 much of section 3121(a)(5) as precedes

5 subparagraph (E) thereof, and

6 ‘‘(ii) any benefit provided to or on be7 half of an employee if at the time such

8 benefit is provided it is reasonable to be9 lieve that the employee will be able to ex10 clude such benefit from gross income

11 under this chapter.

12 For purposes of clause (i), section 3121(a)(5)

13 shall be applied without regard to section

14 3121(v)(1).

15 ‘‘(F) COORDINATION WITH DISALLOWED

16 GOLDEN PARACHUTE PAYMENTS.—The dollar

17 limitation contained in paragraph (1) shall be

18 reduced (but not below zero) by the amount (if

19 any) which would have been included in the ap20 plicable employee remuneration of the covered

21 employee for the taxable year but for being dis22 allowed under section 280G.’’

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

24 subsection (a) shall apply to amounts which would other-
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1 wise be deductible for taxable years beginning on or after

2 January 1, 1994.

3 SEC. 14212. REDUCTION IN COMPENSATION TAKEN INTO

4 ACCOUNT IN DETERMINING CONTRIBUTIONS

5 AND BENEFITS UNDER QUALIFIED RETIRE6 MENT PLANS.

7 (a) IN GENERAL.—Sections 401(a)(17), 404(l), and

8 505(b)(7) are each amended—

9 (1) by striking ‘‘$200,000’’ in the first sentence

10 and inserting ‘‘$150,000’’, and

11 (2) by striking the second sentence and insert12 ing ‘‘In the case of years beginning after 1994, the

13 Secretary shall adjust the $150,000 amount at the

14 same time and in the same manner as under section

15 415(d), except that the base period for purposes of

16 section 415(d)(1)(A) shall be the calendar quarter

17 beginning October 1, 1994.’’

18 (b) SIMPLIFIED EMPLOYEE PENSIONS.—

19 (1) IN GENERAL.—Paragraphs (3)(C) and

20 (6)(D)(ii) of section 408(k) are each amended by

21 striking ‘‘$200,000’’ and inserting ‘‘$150,000’’.

22 (2) COST-OF-LIVING.—Paragraph (8) of section

23 408(k) is amended to read as follows:

24 ‘‘(8) COST-OF-LIVING ADJUSTMENT.—The Sec25 retary shall adjust the $300 amount in paragraph
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1 (2)(C) at the same time and in the same manner as

2 under section 415(d) and shall adjust the $150,000

3 amount in paragraphs (3)(C) and (6)(D)(ii) at the

4 same time and by the same amount as the adjust5 ment to the $150,000 amount in section

6 401(a)(17).’’

7 (c) CONFORMING AMENDMENT.—The heading for

8 section 505(b)(7) is amended by striking ‘‘$200,000’’.

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

10 this section shall apply to benefits accruing in plan years

11 beginning after December 31, 1993.

12 SEC. 14213. MODIFICATION TO DEDUCTION FOR CERTAIN

13 MOVING EXPENSES.

14 (a) REPEAL OF DEDUCTION FOR QUALIFIED RESI15 DENCE SALE, ETC., EXPENSES.—

16 (1) IN GENERAL.—Paragraph (1) of section

17 217(b) (defining moving expenses) is amended by in18 serting ‘‘or’’ at the end of subparagraph (C), by

19 striking ‘‘, or’’ at the end of subparagraph (D) and

20 inserting a period, and by striking

21 subparagraph (E).

22 (2) CONFORMING AMENDMENTS.—

23 (A) Subsection (b) of section 217 is

24 amended by striking paragraph (2) and redesig25 nating paragraph (3) as paragraph (2).
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1 (B) Paragraph (2) of section 217(b) (as

2 redesignated by subparagraph (A)) is amend3 ed—

4 (i) by striking the last sentence of

5 subparagraph (A), and

6 (ii) by striking ‘‘, and by’’ in subpara7 graph (B) and all that follows down

8 through the period at the end of subpara9 graph (B) and inserting a period.

10 (C) Paragraph (1) of section 217(h) is

11 amended by striking subparagraphs (B) and

12 (C) and inserting the following:

13 ‘‘(B) subsection (b)(2)(A) shall be applied

14 by substituting ‘$4,500’ for ‘$1,500’, and

15 ‘‘(C) subsection (b)(2)(B) shall be applied

16 as if the last sentence of such subsection read

17 as follows: ‘In the case of a husband and wife

18 filing separate returns, subparagraph (A) shall

19 be applied by substituting ‘‘$2,250’’ for

20 ‘‘$4,500’’.’ ’’

21 (D) Section 217 is amended by striking

22 subsection (e).

23 (b) DEDUCTION DISALLOWED FOR MEAL EX24 PENSES.—Paragraph (1) of section 217(b) is amended—
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1 (1) by striking ‘‘meals and lodging’’ in subpara2 graphs (B), (C) and (D) and inserting ‘‘lodging’’,

3 and

4 (2) by adding at the end thereof the following

5 new sentence:

6 ‘‘Such term shall not include any expenses for

7 meals.’’.

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

9 this section shall apply to expenses incurred after Decem10 ber 31, 1993.

11 SEC. 14214. SIMPLIFICATION OF INDIVIDUAL ESTIMATED

12 TAX SAFE HARBOR BASED ON LAST YEAR’S

13 TAX.

14 (a) IN GENERAL.—Paragraph (1) of section 6654(d)

15 (relating to amount of required estimated tax install16 ments) is amended by striking subparagraphs (C), (D),

17 (E), and (F) and by inserting the following new subpara18 graph:

19 ‘‘(C) LIMITATION ON USE OF PRECEDING

20 YEAR’S TAX.—

21 ‘‘(i) IN GENERAL.—If the adjusted

22 gross income shown on the return of the

23 individual for the preceding taxable year

24 exceeds $150,000, clause (ii) of subpara-
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1 graph (B) shall be applied by substituting

2 ‘110 percent’ for ‘100 percent’.

3 ‘‘(ii) SEPARATE RETURNS.—In the

4 case of a married individual (within the

5 meaning of section 7703) who files a sepa6 rate return for the taxable year for which

7 the amount of the installment is being de8 termined, clause (i) shall be applied by

9 substituting ‘$75,000’ for ‘$150,000’.

10 ‘‘(iii) SPECIAL RULE.—In the case of

11 an estate or trust, adjusted gross income

12 shall be determined as provided in section

13 67(e).’’

14 (b) CONFORMING AMENDMENTS.—

15 (1) Subparagraph (A) of section 6654(j)(3) is

16 amended by striking ‘‘and subsection (d)(1)(C)(iii)

17 shall not apply’’,

18 (2) Paragraph (4) of section 6654(l) is amend19 ed by striking ‘‘paragraphs (1)(C)(iv) and (2)(B)(i)

20 of subsection (d)’’ and inserting ‘‘subsection

21 (d)(2)(B)(i)’’.

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

23 this section shall apply to taxable years beginning after

24 December 31, 1993.
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1 SEC. 14215. SOCIAL SECURITY AND TIER 1 RAILROAD RE2 TIREMENT BENEFITS.

3 (a) IN GENERAL.—Subsections (a)(1) and (2) of sec4 tion 86 (relating to social security and tier 1 railroad re5 tirement benefits) are each amended by striking ‘‘one6 half’’ and inserting ‘‘85 percent’’.

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

8 subsection (a) shall apply to taxable years beginning after

9 December 31, 1993.

10 (c) ADDITIONAL RECEIPTS RETAINED IN GENERAL

11 FUND.—

12 (1) Subsection (e) of section 121 of the Social

13 Security Amendments of 1983 is amended by adding

14 at the end the following new paragraph:

15 ‘‘(5) CERTAIN INCREASED RECEIPTS RETAINED

16 IN GENERAL FUND.—In determining the amount ap17 propriated to any payor fund under paragraph (1),

18 there shall be excluded any increase in tax liability

19 to the extent such increase is attributable to the

20 amendments made to section 86 of the Internal Rev21 enue Code of 1986 by the Revenue Reconciliation

22 Act of 1993.’’

23 (2) Paragraph (4) of subsection (e) of such sec24 tion 121 is amended by redesignating subparagraphs

25 (A) and (B) as subparagraphs (B) and (C) and by
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1 inserting before subparagraph (B) (as so redesig2 nated) the following new subparagraph:

3 ‘‘(A) the total aggregate increase in tax li4 ability under chapter 1 of the Internal Revenue

5 Code of 1986 which is attributable to the appli6 cation of sections 86 and 871(a)(3) of such

7 Code,’’.

8 PART II—PROVISIONS AFFECTING BUSINESSES

9 SEC. 14221. INCREASE IN TOP MARGINAL RATE UNDER SEC10 TION 11.

11 (a) GENERAL RULE.—Paragraph (1) of section 11(b)

12 (relating to amount of tax) is amended—

13 (1) by striking ‘‘and’’ at the end of subpara14 graph (B),

15 (2) by striking subparagraph (C) and inserting

16 the following:

17 ‘‘(C) 34 percent of so much of the taxable

18 income as exceeds $75,000 but does not exceed

19 $10,000,000, and

20 ‘‘(D) 35 percent of so much of the taxable

21 income as exceeds $10,000,000.’’, and

22 (3) by adding at the end thereof the following

23 new sentence: ‘‘In the case of a corporation which

24 has taxable income in excess of $15,000,000, the

25 amount of the tax determined under the foregoing
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1 provisions of this paragraph shall be increased by an

2 additional amount equal to the lesser of (i) 3 percent

3 of such excess, or (ii) $100,000.’’.

4 (b) CERTAIN PERSONAL SERVICE CORPORATIONS.—

5 Paragraph (2) of section 11(b) is amended by striking ‘‘34

6 percent’’ and inserting ‘‘35 percent’’.

7 (c) CONFORMING AMENDMENTS.—

8 (1) Clause (iii) of section 852(b)(3)(D) is

9 amended by striking ‘‘66 percent’’ and inserting ‘‘65

10 percent’’.

11 (2) Subsection (a) of section 1201 is amended

12 by striking ‘‘34 percent’’ each place it appears and

13 inserting ‘‘35 percent’’.

14 (3) Paragraphs (1) and (2) of section 1445(e)

15 are each amended by striking ‘‘34 percent’’ and in16 serting ‘‘35 percent’’.

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

18 this section shall apply to taxable years beginning on or

19 after January 1, 1993; except that the amendment made

20 by subsection (c)(3) shall take effect on the date of the

21 enactment of this Act.
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1 SEC. 14222. DENIAL OF DEDUCTION FOR LOBBYING EX2 PENSES.

3 (a) DISALLOWANCE OF DEDUCTION.—Section 162(e)

4 (relating to appearances, etc., with respect to legislation)

5 is amended to read as follows:

6 ‘‘(e) DENIAL OF DEDUCTION FOR CERTAIN LOBBY7 ING AND POLITICAL EXPENDITURES.—

8 ‘‘(1) IN GENERAL.—No deduction shall be al9 lowed under subsection (a) for any amount paid or

10 incurred—

11 ‘‘(A) in connection with influencing legisla12 tion,

13 ‘‘(B) for participation in, or intervention

14 in, any political campaign on behalf of (or in

15 opposition to) any candidate for public office, or

16 ‘‘(C) in connection with any attempt to in17 fluence the general public, or segments thereof,

18 with respect to elections.

19 ‘‘(2) APPLICATION TO DUES.—

20 ‘‘(A) IN GENERAL.—No deduction shall be

21 allowed under subsection (a) for the portion of

22 dues or other similar amounts (paid by the tax23 payer with respect to an organization) which is

24 allocable to the expenditures described in para25 graph (1).

26 ‘‘(B) ALLOCATION.—
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1 ‘‘(i) IN GENERAL.—For purposes of

2 subparagraph (A), expenditures described

3 in paragraph (1) shall be treated as paid

4 out of dues or other similar amounts.

5 ‘‘(ii) CARRYOVER OF LOBBYING EX6 PENDITURES IN EXCESS OF DUES.—For

7 purposes of this paragraph, if expenditures

8 described in paragraph (1) exceed the dues

9 or other similar amounts for any calendar

10 year, such excess shall be treated as ex11 penditures described in paragraph (1)

12 which are paid or incurred by the organi13 zation during the following calendar year.

14 ‘‘(3) INFLUENCING LEGISLATION.—For pur15 poses of this subsection—

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

17 legislation’ means—

18 ‘‘(i) any attempt to influence the gen19 eral public, or segments thereof, with re20 spect to legislation, and

21 ‘‘(ii) any attempt to influence any leg22 islation through communication with any

23 member or employee of the legislative

24 body, or with any government official or
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1 employee who may participate in the for2 mulation of the legislation.

3 ‘‘(B) EXCEPTION FOR CERTAIN TECH4 NICAL ADVICE.—The term ‘influencing legisla5 tion’ shall not include the providing of technical

6 advice or assistance to a governmental body or

7 to a committee or other subdivision thereof in

8 response to a specific written request by such

9 governmental entity to the taxpayer which

10 specifies the nature of the advice or assistance

11 requested.

12 ‘‘(C) LEGISLATION.—The term ‘legislation’

13 has the meaning given such term by section

14 4911(e)(2).

15 ‘‘(4) EXCEPTION FOR CERTAIN TAXPAYERS.—

16 In the case of any taxpayer engaged in the trade or

17 business of conducting activities described in para18 graph (1), paragraph (1) shall not apply to expendi19 tures of the taxpayer in conducting such activities on

20 behalf of another person (but shall apply to pay21 ments by such other person to the taxpayer for con22 ducting such activities).

23 ‘‘(5) CROSS REFERENCE.—

‘‘For reporting requirements related to this subsection, see section 6050O.’’

24 (b) REPORTING REQUIREMENTS.—
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1 (1) IN GENERAL.—Subpart B of part III of

2 subchapter A of chapter 61 (relating to information

3 concerning transactions with other persons) is

4 amended by adding at the end the following new sec5 tion:

6 ‘‘SEC. 6050O. RETURNS RELATING TO LOBBYING EXPENDI7 TURES OF CERTAIN ORGANIZATIONS.

8 ‘‘(a) REQUIREMENT OF REPORTING.—Each organi9 zation referred to in section 162(e)(2) shall make a return,

10 according to the forms or regulations prescribed by the

11 Secretary, setting forth the names and addresses of per12 sons paying dues to the organization, the amount of the

13 dues paid by such person, and the portion of such dues

14 which is nondeductible under section 162(e)(2).

15 ‘‘(b) STATEMENTS TO BE FURNISHED TO PERSONS

16 WITH RESPECT TO WHOM INFORMATION IS FUR17 NISHED.—Any organization required to make a return

18 under subsection (a) shall furnish to each person whose

19 name is required to be set forth in such return a written

20 statement showing—

21 ‘‘(1) the name and address of the organization,

22 and

23 ‘‘(2) the dues paid by the person during the cal24 endar year and the portion of such dues which is

25 nondeductible under section 162(e)(2).
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1 The written statement required under the preceding sen2 tence shall be furnished (either in person or in a statement

3 mailing by first-class mail which includes adequate notice

4 that the statement is enclosed) to the persons on or before

5 January 31 of the year following the calendar year for

6 which the return under subsection (a) was made and shall

7 be in such form as the Secretary may prescribe by regula8 tions.

9 ‘‘(c) WAIVER.—The Secretary may waive the report10 ing requirements of this section with respect to any orga11 nization or class of organizations if the Secretary deter12 mines that such reporting is not necessary to carry out

13 the purposes of section 162(e).

14 ‘‘(d) DUES.—For purposes of this section, the term

15 ‘dues’ includes other similar amounts.’’

16 (2) PENALTIES.—

17 (A) RETURNS.—Subparagraph (A) of sec18 tion 6724(d)(1) (defining information return) is

19 amended by striking ‘‘or’’ at the end of clause

20 (xi), by striking the period at the end of the

21 clause (xii) relating to section 4101(d) and in22 serting a comma, by redesignating the clause

23 (xii) relating to section 338(h)(10) as clause

24 (xiii), by striking the period at the end of clause

25 (xiii) (as so redesignated) and inserting ‘‘, or’’,
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1 and by adding at the end the following new

2 clause:

3 ‘‘(xiv) section 6050O(a) (relating to

4 information on nondeductible lobbying ex5 penditures).’’

6 (B) PAYEE STATEMENTS.—Paragraph (2)

7 of section 6724(d) (defining payee statement) is

8 amended by striking ‘‘or’’ at the end of sub9 paragraph (R), by striking the period at the

10 end of subparagraph (S) and inserting ‘‘, or’’,

11 and by adding at the end the following new sub12 paragraph:

13 ‘‘(T) section 6050O(b) (relating to returns

14 on nondeductible lobbying expenditures).’’

15 (C) EXCESSIVE UNDERREPORTING.—Sec16 tion 6721 (relating to failure to file correct in17 formation returns) is amended by adding at the

18 end the following new subsection:

19 ‘‘(f) PENALTY IN CASE OF EXCESSIVE

20 UNDERREPORTING ON NONDEDUCTIBLE DUES.—If the

21 aggregate amount of nondeductible dues which is reported

22 on the return required to be filed under section 6050O(a)

23 for any calendar year is less than 75 percent of the aggre24 gate amount required to be so reported—
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1 ‘‘(1) subsections (b), (c), and (d) shall not

2 apply, and

3 ‘‘(2) the penalty imposed under subsection (a)

4 shall be equal to the product of—

5 ‘‘(A) the amount required to be reported

6 which was not so reported, and

7 ‘‘(B) the highest rate of tax imposed by

8 section 11 for taxable years beginning in such

9 calendar year.’’

10 (3) CONFORMING AMENDMENT.—The table of

11 sections for subpart B of part III of subchapter A

12 of chapter 61 is amended by adding at the end the

13 following new item:

‘‘Sec. 6050O. Returns relating to lobbying expenditures of certain

organizations.’’

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

15 this section shall apply to amounts paid or incurred after

16 December 31, 1993.

17 SEC. 14223. MARK TO MARKET ACCOUNTING METHOD FOR

18 SECURITIES DEALERS.

19 (a) GENERAL RULE.—Subpart D of part II of sub20 chapter E of chapter 1 (relating to inventories) is amend21 ed by adding at the end thereof the following new section:
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1 ‘‘SEC. 475. MARK TO MARKET ACCOUNTING METHOD FOR

2 DEALERS IN SECURITIES.

3 ‘‘(a) GENERAL RULE.—Notwithstanding any other

4 provision of this subpart, the following rules shall apply

5 to securities held by a dealer in securities:

6 ‘‘(1) Any security which is inventory in the

7 hands of the dealer shall be included in inventory at

8 its fair market value.

9 ‘‘(2) In the case of any security which is not in10 ventory in the hands of the dealer and which is held

11 at the close of any taxable year—

12 ‘‘(A) the dealer shall recognize gain or loss

13 as if such security were sold for its fair market

14 value on the last business day of such taxable

15 year, and

16 ‘‘(B) any gain or loss shall be taken into

17 account for such taxable year.

18 Proper adjustment shall be made in the amount of

19 any gain or loss subsequently realized for gain or

20 loss taken into account under the preceding sen21 tence. The Secretary may provide by regulations for

22 the application of this paragraph at times other than

23 the times provided in this paragraph.

24 ‘‘(b) EXCEPTIONS.—

25 ‘‘(1) IN GENERAL.—Subsection (a) shall not

26 apply to—
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1 ‘‘(A) any security held for investment,

2 ‘‘(B)(i) any security described in sub3 section (c)(2)(C) which is acquired (including

4 originated) by the taxpayer in the ordinary

5 course of a trade or business of the taxpayer

6 and which is not held for sale, and (ii) any obli7 gation to acquire a security described in clause

8 (i) if such obligation is entered into in the ordi9 nary course of such trade or business and is not

10 held for sale, and

11 ‘‘(C) any security which is a hedge with re12 spect to—

13 ‘‘(i) a security to which subsection (a)

14 does not apply, or

15 ‘‘(ii) a position, right to income, or a

16 liability which is not a security in the

17 hands of the taxpayer.

18 To the extent provided in regulations, subparagraph

19 (C) shall not apply to any security held by a person

20 in its capacity as a dealer in securities.

21 ‘‘(2) IDENTIFICATION REQUIRED.—A security

22 shall not be treated as described in subparagraph

23 (A), (B), or (C) of paragraph (1), as the case may

24 be, unless such security is clearly identified in the

25 dealer’s records as being described in such subpara-
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1 graph before the close of the day on which it was ac2 quired, originated, or entered into (or such other

3 time as the Secretary may by regulations prescribe).

4 ‘‘(3) SECURITIES SUBSEQUENTLY NOT EX5 EMPT.—If a security ceases to be described in para6 graph (1) at any time after it was identified as such

7 under paragraph (2), subsection (a) shall apply to

8 any changes in value of the security occurring after

9 the cessation.

10 ‘‘(4) SPECIAL RULE FOR PROPERTY HELD FOR

11 INVESTMENT.—To the extent provided in regula12 tions, subparagraph (A) of paragraph (1) shall not

13 apply to any security described in subparagraph (D)

14 or (E) of subsection (c)(2) which is held by a dealer

15 in such securities.

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

17 ‘‘(1) DEALER IN SECURITIES DEFINED.—The

18 term ‘dealer in securities’ means a taxpayer who—

19 ‘‘(A) regularly purchases securities from or

20 sells securities to customers in the ordinary

21 course of a trade or business; or

22 ‘‘(B) regularly offers to enter into, assume,

23 offset, assign or otherwise terminate positions

24 in securities with customers in the ordinary

25 course of a trade or business.
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1 ‘‘(2) SECURITY DEFINED.—The term ‘security’

2 means any—

3 ‘‘(A) share of stock in a corporation;

4 ‘‘(B) partnership or beneficial ownership

5 interest in a widely held or publicly traded part6 nership or trust;

7 ‘‘(C) note, bond, debenture, or other evi8 dence of indebtedness;

9 ‘‘(D) interest rate, currency, or equity no10 tional principal contract;

11 ‘‘(E) evidence of an interest in, or a deriv12 ative financial instrument in, any security de13 scribed in subparagraph (A), (B), (C), or (D),

14 or any currency, including any option, forward

15 contract, short position, and any similar finan16 cial instrument in such a security or currency;

17 and

18 ‘‘(F) position which—

19 ‘‘(i) is not a security described in sub20 paragraph (A), (B), (C), (D), or (E),

21 ‘‘(ii) is a hedge with respect to such

22 a security, and

23 ‘‘(iii) is clearly identified in the deal24 er’s records as being described in this sub25 paragraph before the close of the day on
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1 which it was acquired or entered into (or

2 such other time as the Secretary may by

3 regulations prescribe).

4 Subparagraph (E) shall not include any contract to

5 which section 1256(a) applies.

6 ‘‘(3) HEDGE.—The term ‘hedge’ means any po7 sition which reduces the dealer’s risk of interest rate

8 or price changes or currency fluctuations, including

9 any position which is reasonably expected to become

10 a hedge within 60 days after the acquisition of the

11 position.

12 ‘‘(d) SPECIAL RULES.—For purposes of this sec13 tion—

14 ‘‘(1) COORDINATION WITH CERTAIN RULES.—

15 The rules of sections 263(g), 263A, and 1256(a)

16 shall not apply to securities to which subsection (a)

17 applies, and section 1091 shall not apply (and sec18 tion 1092 shall apply) to any loss recognized under

19 subsection (a).

20 ‘‘(2) IMPROPER IDENTIFICATION.—If a tax21 payer—

22 ‘‘(A) identifies any security under sub23 section (b)(2) as being described in subsection

24 (b)(1) and such security is not so described, or
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1 ‘‘(B) fails under subsection (c)(2)(F)(iii) to

2 identify any position which is described in sub3 section (c)(2)(F) (without regard to clause (iii)

4 thereof) at the time such identification is re5 quired,

6 the provisions of subsection (a) shall apply to such

7 security or position, except that any loss under this

8 section prior to the disposition of the security or po9 sition shall be recognized only to the extent of gain

10 previously recognized under this section (and not

11 previously taken into account under this paragraph)

12 with respect to such security or position.

13 ‘‘(3) CHARACTER OF GAIN OR LOSS.—

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

15 subparagraph (B) or section 1236(b)—

16 ‘‘(i) IN GENERAL.—Any gain or loss

17 with respect to a security under subsection

18 (a)(2) shall be treated as ordinary income

19 or loss.

20 ‘‘(ii) SPECIAL RULE FOR DISPOSI21 TIONS.—If—

22 ‘‘(I) gain or loss is recognized

23 with respect to a security before the

24 close of the taxable year, and
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1 ‘‘(II) subsection (a)(2) would

2 have applied if the security were held

3 as of the close of the taxable year,

4 such gain or loss shall be treated as ordi5 nary income or loss.

6 ‘‘(B) EXCEPTION.—Subparagraph (A)

7 shall not apply to any gain or loss which is allo8 cable to a period during which—

9 ‘‘(i) the security is described in sub10 section (b)(1)(C) (without regard to sub11 section (b)(2)),

12 ‘‘(ii) the security is held by a person

13 other than in connection with its activities

14 as a dealer in securities, or

15 ‘‘(iii) the security is improperly identi16 fied (within the meaning of subparagraph

17 (A) or (B) of paragraph (2)).

18 ‘‘(e) REGULATORY AUTHORITY.—The Secretary shall

19 prescribe such regulations as may be necessary or appro20 priate to carry out the purposes of this section, including

21 rules—

22 ‘‘(1) to prevent the use of year-end transfers,

23 related parties, or other arrangements to avoid the

24 provisions of this section, and
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1 ‘‘(2) to provide for the application of this sec2 tion to any security which is a hedge which cannot

3 be identified with a specific security, position, right

4 to income, or liability.’’

5 (b) CONFORMING AMENDMENTS.—

6 (1) Paragraph (1) of section 988(d) is amend7 ed—

8 (A) by striking ‘‘section 1256’’ and insert9 ing ‘‘section 475 or 1256’’, and

10 (B) by striking ‘‘1092 and 1256’’ and in11 serting ‘‘475, 1092, and 1256’’.

12 (2) The table of sections for subpart D of part

13 II of subchapter E of chapter 1 is amended by add14 ing at the end thereof the following new item:

‘‘Sec. 475. Mark to market accounting method for dealers in securities.’’

15 (c) EFFECTIVE DATE.—

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

17 this section shall apply to all taxable years ending on

18 or after December 31, 1993.

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

20 the case of any taxpayer required by this section to

21 change its method of accounting for any taxable

22 year—

23 (A) such change shall be treated as initi24 ated by the taxpayer,
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1 (B) such change shall be treated as made

2 with the consent of the Secretary, and

3 (C) except as provided in paragraph (3),

4 the net amount of the adjustments required to

5 be taken into account by the taxpayer under

6 section 481 of the Internal Revenue Code of

7 1986 shall be taken into account ratably over

8 the 5-taxable year period beginning with the

9 first taxable year ending on or after December

10 31, 1993.

11 (3) SPECIAL RULE FOR FLOOR SPECIALISTS

12 AND MARKET MAKERS.—

13 (A) IN GENERAL.—If—

14 (i) a taxpayer used the last-in first15 out (LIFO) method of accounting with re16 spect to any qualified securities for its last

17 taxable year ending before December 31,

18 1993, and

19 (ii) any portion of the net amount de20 scribed in paragraph (2)(C) is attributable

21 to the use of such method of accounting,

22 then paragraph (2)(C) shall be applied by tak23 ing such portion into account ratably over the

24 20-taxable year period beginning with the first

25 taxable year ending on or after December 31,
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1 1993 (or, if shorter, the period of taxable years

2 equal to the greater of 5 years or the number

3 of taxable years before such first taxable year

4 for which the taxpayer (or any predecessor)

5 used such method of accounting).

6 (B) QUALIFIED SECURITY.—For purposes

7 of this paragraph, the term ‘‘qualified security’’

8 means any security acquired—

9 (i) by a floor specialist (as defined in

10 section 1236(d)(2) of the Internal Revenue

11 Code of 1986) in connection with the spe12 cialist’s duties as a specialist on an ex13 change, but only if the security is one in

14 which the specialist is registered with the

15 exchange, or

16 (ii) by a taxpayer who is a market

17 maker in connection with the taxpayer’s

18 duties as a market maker, but only if—

19 (I) the security is included on the

20 National Association of Security Deal21 ers Automated Quotation System,

22 (II) the taxpayer is registered as

23 a market maker in such security with

24 the National Association of Security

25 Dealers, and
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1 (III) as of the last day of the

2 taxable year preceding the taxpayer’s

3 first taxable year ending on or after

4 December 31, 1993, the taxpayer (or

5 any predecessor) has been actively

6 and regularly engaged as a market

7 maker in such security for the 2-year

8 period ending on such date (or, if

9 shorter, the period beginning 61 days

10 after the security was listed in such

11 quotation system and ending on such

12 date).

13 SEC. 14224. CLARIFICATION OF TREATMENT OF CERTAIN

14 FSLIC FINANCIAL ASSISTANCE.

15 (a) GENERAL RULE.—For purposes of chapter 1 of

16 the Internal Revenue Code of 1986—

17 (1) any FSLIC assistance with respect to any

18 loss of principal, capital, or similar amount upon the

19 disposition of any asset shall be taken into account

20 as compensation for such loss for purposes of section

21 165 of such Code, and

22 (2) any FSLIC assistance with respect to any

23 debt shall be taken into account for purposes of sec24 tion 166, 585, or 593 of such Code in determining

25 whether such debt is worthless (or the extent to
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1 which such debt is worthless) and in determining the

2 amount of any addition to a reserve for bad debts

3 arising from the worthlessness or partial worthless4 ness of such debts.

5 (b) FSLIC ASSISTANCE.—For purposes of this sec6 tion, the term ‘‘FSLIC assistance’’ means any assistance

7 (or right to assistance) with respect to a domestic building

8 and loan association (as defined in section 7701(a)(19) of

9 such Code without regard to subparagraph (C) thereof)

10 under section 406(f) of the National Housing Act or sec11 tion 21A of the Federal Home Loan Bank Act (or under

12 any similar provision of law).

13 (c) EFFECTIVE DATE.—

14 (1) IN GENERAL.—Except as otherwise pro15 vided in this subsection—

16 (A) The provisions of this section shall

17 apply to taxable years ending on or after March

18 4, 1991, but only with respect to FSLIC assist19 ance not credited before March 4, 1991.

20 (B) If any FSLIC assistance not credited

21 before March 4, 1991, is with respect to a loss

22 sustained or charge-off in a taxable year ending

23 before March 4, 1991, for purposes of deter24 mining the amount of any net operating loss

25 carryover to a taxable year ending on or after
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1 March 4, 1991, the provisions of this section

2 shall apply to such assistance for purposes of

3 determining the amount of the net operating

4 loss for the taxable year in which such loss was

5 sustained or debt written off. Except as pro6 vided in the preceding sentence, this section

7 shall not apply to any FSLIC assistance with

8 respect to a loss sustained or charge-off in a

9 taxable year ending before March 4, 1991.

10 (2) EXCEPTIONS.—The provisions of this sec11 tion shall not apply to any assistance to which the

12 amendments made by section 1401(a)(3) of the Fi13 nancial Institutions Reform, Recovery, and Enforce14 ment Act of 1989 apply.

15 SEC. 14225. MODIFICATION OF CORPORATE ESTIMATED

16 TAX RULES.

17 (a) INCREASE IN REQUIRED INSTALLMENT BASED

18 ON CURRENT YEAR TAX.—

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

20 6655(d)(1)(B) (relating to amount of required in21 stallment) is amended by striking ‘‘91 percent’’ each

22 place it appears and inserting ‘‘100 percent’’.

23 (2) CONFORMING AMENDMENTS.—

24 (A) Subsection (d) of section 6655 is

25 amended—
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1 (i) by striking paragraph (3), and

2 (ii) by striking ‘‘91 PERCENT’’ in the

3 paragraph heading of paragraph (2) and

4 inserting ‘‘100 PERCENT’’.

5 (B) Clause (ii) of section 6655(e)(2)(B) is

6 amended by striking the table contained therein

7 and inserting the following:

‘‘In the case of the following required installments:The applicable percentage

is:

1st ............................................................................................ 25

2nd ........................................................................................... 50

3rd ............................................................................................ 75

4th ............................................................................................ 100.’’

8 (C) Clause (i) of section 6655(e)(3)(A) is

9 amended by striking ‘‘91 percent’’ and inserting

10 ‘‘100 percent’’.

11 (b) MODIFICATION OF PERIODS FOR APPLYING

12 ANNUALIZATION.—

13 (1) Clause (i) of section 6655(e)(2)(A) is

14 amended—

15 (A) by striking ‘‘or for the first 5 months’’

16 in subclause (II),

17 (B) by striking ‘‘or for the first 8 months’’

18 in subclause (III), and

19 (C) by striking ‘‘or for the first 11

20 months’’ in subclause (IV).
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1 (2) Paragraph (2) of section 6655(e) is amend2 ed by adding at the end thereof the following new

3 subparagraph:

4 ‘‘(C) ELECTION FOR DIFFERENT

5 ANNUALIZATION PERIODS.—

6 ‘‘(i) If the taxpayer makes an election

7 under this clause—

8 ‘‘(I) subclause (I) of subpara9 graph (A)(i) shall be applied by sub10 stituting ‘2 months’ for ‘3 months’,

11 ‘‘(II) subclause (II) of subpara12 graph (A)(i) shall be applied by sub13 stituting ‘4 months’ for ‘3 months’,

14 ‘‘(III) subclause (III) of subpara15 graph (A)(i) shall be applied by sub16 stituting ‘7 months’ for ‘6 months’,

17 and

18 ‘‘(IV) subclause (IV) of subpara19 graph (A)(i) shall be applied by sub20 stituting ‘10 months’ for ‘9 months’.

21 ‘‘(ii) If the taxpayer makes an election

22 under this clause—

23 ‘‘(I) subclause (II) of subpara24 graph (A)(i) shall be applied by sub25 stituting ‘5 months’ for ‘3 months’,
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1 ‘‘(II) subclause (III) of subpara2 graph (A)(i) shall be applied by sub3 stituting ‘8 months’ for ‘6 months’,

4 and

5 ‘‘(III) subclause (IV) of subpara6 graph (A)(i) shall be applied by sub7 stituting ‘11 months’ for ‘9 months’.

8 ‘‘(iii) An election under clause (i) or

9 (ii) shall apply to the taxable year for

10 which made and such an election shall be

11 effective only if made on or before the date

12 required for the payment of the first re13 quired installment for such taxable year.’’

14 (3) The last sentence of section 6655(f)(3)(A)

15 is amended by striking ‘‘and subsection (e)(2)(A)’’

16 and inserting ‘‘and, except in the case of an election

17 under subsection (e)(2)(C), subsection (e)(2)(A)’’.

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

19 this section shall apply to taxable years beginning after

20 December 31, 1993.

21 SEC. 14226. LIMITATION ON SECTION 936 CREDIT.

22 (a) GENERAL RULE.—Subsection (a) of section 936

23 (relating to Puerto Rico and possession tax credit) is

24 amended—
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1 (1) by striking ‘‘as provided in paragraph (3)’’

2 in paragraph (1) and inserting ‘‘as otherwise pro3 vided in this section’’;

4 (2) by adding at the end thereof the following

5 new paragraph:

6 ‘‘(4) LIMITATIONS ON CREDIT.—

7 ‘‘(A) CREDIT FOR ACTIVE BUSINESS IN8 COME.—The amount of the credit determined

9 under paragraph (1)(A) for any taxable year

10 shall not exceed 60 percent of the aggregate

11 amount of the possession corporation’s qualified

12 possession wages for such taxable year.

13 ‘‘(B) CREDIT FOR INVESTMENT INCOME.—

14 ‘‘(i) IN GENERAL.—If—

15 ‘‘(I) the QPSII assets of the pos16 session corporation for any taxable

17 year, exceed

18 ‘‘(II) 80 percent of such posses19 sion corporation’s qualified tangible

20 business investment for such taxable

21 year,

22 the credit determined under paragraph

23 (1)(B) for such taxable year shall be re24 duced by the amount determined under

25 clause (ii).
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1 ‘‘(ii) AMOUNT OF REDUCTION.—The

2 reduction determined under this clause for

3 any taxable year is an amount which bears

4 the same ratio to the credit determined

5 under paragraph (1)(B) for such taxable

6 year (determined without regard to this

7 subparagraph) as—

8 ‘‘(I) the excess determined under

9 clause (i), bears to

10 ‘‘(II) the QPSII assets of the

11 possession corporation for such tax12 able year.

13 ‘‘(C) CROSS REFERENCE.—

‘‘For definitions and special rules applicable to

this paragraph, see subsection (i).’’

14 (b) DEFINITIONS AND SPECIAL RULES.—Section 936

15 is amended by adding at the end thereof the following new

16 subsection:

17 ‘‘(i) DEFINITIONS AND SPECIAL RULES RELATING

18 TO LIMITATIONS OF SUBSECTION (a)(4).—

19 ‘‘(1) QUALIFIED POSSESSION WAGES.—For

20 purposes of this section—

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

22 possession wages’ means wages paid or incurred

23 by the possession corporation during the tax24 able year to any employee for services per-
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1 formed in a possession of the United States,

2 but only if such services are performed while

3 the principal place of employment of such em4 ployee is within such possession.

5 ‘‘(B) LIMITATION ON AMOUNT OF WAGES

6 TAKEN INTO ACCOUNT.—

7 ‘‘(i) IN GENERAL.—The amount of

8 wages which may be taken into account

9 under subparagraph (A) with respect to

10 any employee for any taxable year shall

11 not exceed the contribution and benefit

12 base determined under section 230 of the

13 Social Security Act for the calendar year

14 in which such taxable year begins.

15 ‘‘(ii) TREATMENT OF PART-TIME EM16 PLOYEES, ETC.—If—

17 ‘‘(I) any employee is not em18 ployed by the possession corporation

19 on a substantially full-time basis at all

20 times during the taxable year, or

21 ‘‘(II) the principal place of em22 ployment of any employee with the

23 possession corporation is not within a

24 possession at all times during the tax25 able year,
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1 the limitation applicable under clause (i)

2 with respect to such employee shall be the

3 appropriate portion (as determined by the

4 Secretary) of the limitation which would

5 otherwise be in effect under clause (i).

6 ‘‘(C) TREATMENT OF CERTAIN EMPLOY7 EES.—The term ‘qualified possession wages’

8 shall not include any wages paid to employees

9 who are assigned by the employer to perform

10 services for another person, unless the principal

11 trade or business of the employer is to make

12 employees available for temporary periods to

13 other persons in return for compensation. All

14 possession corporations treated as 1 corporation

15 under paragraph (4) shall be treated as 1 em16 ployer for purposes of the preceding sentence.

17 ‘‘(D) WAGES.—

18 ‘‘(i) IN GENERAL.—Except as pro19 vided in clause (ii), the term ‘wages’ has

20 the meaning given to such term by sub21 section (b) of section 3306 (determined

22 without regard to any dollar limitation

23 contained in such section). For purposes of

24 the preceding sentence, such subsection (b)

25 shall be applied as if the term ‘United
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1 States’ included all possessions of the

2 United States.

3 ‘‘(ii) SPECIAL RULE FOR AGRICUL4 TURAL LABOR AND RAILWAY LABOR.—In

5 any case to which subparagraph (A) or (B)

6 of paragraph (1) of section 51(h) applies,

7 the term ‘wages’ has the meaning given to

8 such term by section 51(h)(2).

9 ‘‘(2) QPSII ASSETS.—For purposes of this sec10 tion—

11 ‘‘(A) IN GENERAL.—The QPSII assets of a

12 possession corporation for any taxable year is

13 the average of the amounts of the possession

14 corporation’s qualified investment assets as of

15 the close of each quarter of such taxable year.

16 ‘‘(B) QUALIFIED INVESTMENT ASSETS.—

17 The term ‘qualified investment assets’ means

18 the aggregate adjusted bases of the assets

19 which are held by the possession corporation

20 and the income from which qualifies as quali21 fied possession source investment income. For

22 purposes of the preceding sentence, the ad23 justed basis of any asset shall be its adjusted

24 basis as determined for purposes of computing

25 earnings and profits.
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1 ‘‘(3) QUALIFIED TANGIBLE BUSINESS INVEST2 MENT.—For purposes of this section—

3 ‘‘(A) IN GENERAL.—The qualified tangible

4 business investment of any possession corpora5 tion for any taxable year is the average of the

6 amounts of the possession corporation’s quali7 fied possession investments as of the close of

8 each quarter of such taxable year.

9 ‘‘(B) QUALIFIED POSSESSION INVEST10 MENTS.—The term ‘qualified possession invest11 ments’ means the aggregate adjusted bases of

12 tangible property used by the possession cor13 poration in a possession of the United States in

14 the active conduct of a trade or business within

15 such possession. For purposes of the preceding

16 sentence, the adjusted basis of any property

17 shall be its adjusted basis as determined for

18 purposes of computing earnings and profits.

19 ‘‘(4) RELOCATED BUSINESSES.—

20 ‘‘(A) IN GENERAL.—In determining—

21 ‘‘(i) the possession corporation’s quali22 fied possession wages for any taxable year,

23 and
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1 ‘‘(ii) the possession corporation’s

2 qualified tangible business investment for

3 such taxable year,

4 there shall be excluded all wages and all quali5 fied possession investments which are allocable

6 to a disqualified relocated business.

7 ‘‘(B) DISQUALIFIED RELOCATED BUSI8 NESS.—For purposes of subparagraph (A), the

9 term ‘disqualified relocated business’ means any

10 trade or business commenced by the possession

11 corporation after May 13, 1993, or any addition

12 after such date to an existing trade or business

13 of such possession corporation unless—

14 ‘‘(i) the possession corporation cer15 tifies that the commencement of such trade

16 or business or such addition will not result

17 in a decrease in employment at an existing

18 business operation located in the United

19 States, and

20 ‘‘(ii) there is no reason to believe that

21 such commencement or addition was done

22 with the intention of closing down oper23 ations of an existing business located in

24 the United States.
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1 ‘‘(5) ELECTION TO COMPUTE CREDIT ON CON2 SOLIDATED BASIS.—

3 ‘‘(A) IN GENERAL.—Any affiliated group

4 may elect to treat all possession corporations

5 which would be members of such group but for

6 section 1504(b)(4) as 1 corporation for pur7 poses of this section. The credit determined

8 under this section with respect to such 1 cor9 poration shall be allocated among such posses10 sion corporations in such manner as the Sec11 retary may prescribe.

12 ‘‘(B) ELECTION.—An election under sub13 paragraph (A) shall apply to the taxable year

14 for which made and all succeeding taxable years

15 unless revoked with the consent of the Sec16 retary.

17 ‘‘(6) TREATMENT OF CERTAIN TAXES.—Not18 withstanding subsection (c), if—

19 ‘‘(A) the credit determined under sub20 section (a)(1) for any taxable year is limited

21 under subsection (a)(4), and

22 ‘‘(B) the possession corporation has paid

23 or accrued any taxes of a possession of the

24 United States for such taxable year which are

25 treated as not being income, war profits, or ex-
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1 cess profits taxes paid or accrued to a posses2 sion of the United States by reason of sub3 section (c),

4 such possession corporation shall be allowed a de5 duction for such taxable year equal to the portion of

6 such taxes which are allocable (on a pro rata basis)

7 to taxable income of the possession corporation the

8 tax on which is not offset by reason of the limita9 tions of subsection (a)(4). In determining the credit

10 under subsection (a) and in applying the preceding

11 sentence, taxable income shall be determined without

12 regard to the preceding sentence.

13 ‘‘(7) POSSESSION CORPORATION.—The term

14 ‘possession corporation’ means a domestic corpora15 tion for which the election provided in subsection (a)

16 is in effect.

17 ‘‘(8) TRANSITIONAL RULE.—If any possession

18 corporation elects the benefits of this paragraph for

19 any taxable year beginning in 1994 or 1995—

20 ‘‘(A) subsection (a)(4) shall not apply to

21 such taxable year, and

22 ‘‘(B) the credit determined under sub23 section (a)(1) for such taxable year shall be the

24 following percentage of the credit which would
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1 otherwise have been determined under such

2 subsection:

3 ‘‘(i) 80 percent in the case of a tax4 able year beginning in 1994.

5 ‘‘(ii) 60 percent in the case of a tax6 able year beginning in 1995.

7 A possession corporation which elects the bene8 fits of this paragraph shall be entitled to the

9 benefits of paragraph (6) for taxes allocable to

10 taxable income the tax on which is not offset by

11 reason of this paragraph.’’

12 (c) MINIMUM TAX TREATMENT.—

13 (1) IN GENERAL.—Clause (ii) of section

14 56(g)(4)(C) (relating to treatment of special rule for

15 certain dividends) is amended by striking ‘‘sections

16 936 and 921’’ and inserting ‘‘sections 936 (including

17 subsection (a)(4) thereof) and 921’’.

18 (2) TREATMENT OF FOREIGN TAXES.—Clause

19 (iii) of section 56(g)(4)(C) is amended by adding at

20 the end thereof the following subclauses:

21 ‘‘(IV) SEPARATE APPLICATION

22 OF FOREIGN TAX CREDIT LIMITA23 TIONS.—In determining the alter24 native minimum foreign tax credit,

25 section 904(d) shall be applied as if
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1 dividends from a corporation eligible

2 for the credit provided by section 936

3 were a separate category of income re4 ferred to in a subparagraph of section

5 904(d)(1).

6 ‘‘(V) COORDINATION WITH LIMI7 TATION ON 936 CREDIT.—Any ref8 erence in this clause to a dividend re9 ceived from a corporation eligible for

10 the credit provided by section 936

11 shall be treated as a reference to the

12 portion of any such dividend for which

13 the dividends received deduction is

14 disallowed under clause (i) after the

15 application of clause (ii)(I).’’

16 (d) CONFORMING AMENDMENT.—Paragraph (4) of

17 section 904(b) is amended by inserting before the period

18 at the end thereof the following: ‘‘(without regard to sub19 section (a)(4) thereof)’’.

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

21 this section shall apply to taxable years beginning after

22 December 31, 1993.
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1 SEC. 14227. MODIFICATION TO LIMITATION ON DEDUCTION

2 FOR CERTAIN INTEREST.

3 (a) GENERAL RULE.—Paragraph (3) of section

4 163(j) (defining disqualified interest) is amended to read

5 as follows:

6 ‘‘(3) DISQUALIFIED INTEREST.—For purposes

7 of this subsection, the term ‘disqualified interest’

8 means—

9 ‘‘(A) any interest paid or accrued by the

10 taxpayer (directly or indirectly) to a related

11 person if no tax is imposed by this subtitle with

12 respect to such interest, and

13 ‘‘(B) any interest paid or accrued by the

14 taxpayer with respect to any indebtedness to a

15 person who is not a related person if—

16 ‘‘(i) there is a disqualified guarantee

17 of such indebtedness, and

18 ‘‘(ii) no gross basis tax is imposed by

19 this subtitle with respect to such interest.’’

20 (b) DEFINITIONS.—Paragraph (6) of section 163(j)

21 is amended by adding at the end thereof the following new

22 subparagraphs:

23 ‘‘(D) DISQUALIFIED GUARANTEE.—

24 ‘‘(i) IN GENERAL.—Except as pro25 vided in clause (ii), the term ‘disqualified
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1 guarantee’ means any guarantee by a re2 lated person which is—

3 ‘‘(I) an organization exempt from

4 taxation under this subtitle, or

5 ‘‘(II) a foreign person.

6 ‘‘(ii) EXCEPTIONS.—The term ‘dis7 qualified guarantee’ shall not include a

8 guarantee—

9 ‘‘(I) in any circumstances identi10 fied by the Secretary by regulation,

11 where the interest on the indebtedness

12 would have been subject to a net basis

13 tax if the interest had been paid to

14 the guarantor, or

15 ‘‘(II) if the taxpayer owns a con16 trolling interest in the guarantor.

17 For purposes of subclause (II), except as

18 provided in regulations, the term ‘a con19 trolling interest’ means direct or indirect

20 ownership of at least 80 percent of the

21 total voting power and value of all classes

22 of stock of a corporation, or 80 percent of

23 the profit and capital interests in any other

24 entity. For purposes of the preceding sen25 tence, the rules of paragraphs (1) and (5)
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1 of section 267(c) shall apply; except that

2 such rules shall also apply to interest in

3 entities other than corporations.

4 ‘‘(iii) GUARANTEE.—Except as pro5 vided in regulations, the term ‘guarantee’

6 includes any arrangement under which a

7 person (directly or indirectly through an

8 entity or otherwise) assures, on a condi9 tional or unconditional basis, the payment

10 of another person’s obligation under any

11 indebtedness.

12 ‘‘(E) GROSS BASIS AND NET BASIS TAX13 ATION.—

14 ‘‘(i) GROSS BASIS TAX.—The term

15 ‘gross basis tax’ means any tax imposed by

16 this subtitle which is determined by ref17 erence to the gross amount of any item of

18 income without any reduction for any de19 duction allowed by this subtitle.

20 ‘‘(ii) NET BASIS TAX.—The term ‘net

21 basis tax’ means any tax imposed by this

22 subtitle which is not a gross basis tax.’’

23 (c) CONFORMING AMENDMENT.—Subparagraph (B)

24 of section 163(j)(5) is amended by striking ‘‘to a related

25 person’’.
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1 (d) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to interest paid or accrued in tax3 able years beginning after December 31, 1993.

4 PART III—FOREIGN TAX PROVISIONS

5 Subpart A—Current Taxation of Certain Earnings of

6 Controlled Foreign Corporations

7 SEC. 14231. EARNINGS INVESTED IN EXCESS PASSIVE AS8 SETS.

9 (a) GENERAL RULE.—Paragraph (1) of section

10 951(a) (relating to amounts included in gross income of

11 United States shareholders) is amended by striking ‘‘and’’

12 at the end of subparagraph (A), by striking the period

13 at the end of subparagraph (B) and inserting ‘‘; and’’,

14 and by adding at the end thereof the following new sub15 paragraph:

16 ‘‘(C) the amount determined under section

17 956A with respect to such shareholder for such

18 year (but only to the extent not excluded from

19 gross income under section 959(a)(3)).’’

20 (b) AMOUNT OF INCLUSION.—Subpart F of part III

21 of subchapter N of chapter 1 is amended by inserting after

22 section 956 the following new section:
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1 ‘‘SEC. 956A. EARNINGS INVESTED IN EXCESS PASSIVE AS2 SETS.

3 ‘‘(a) GENERAL RULE.—In the case of any controlled

4 foreign corporation, the amount determined under this

5 section with respect to any United States shareholder for

6 any taxable year is the lesser of—

7 ‘‘(1) the excess (if any) of—

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

9 the amount of the controlled foreign corpora10 tion’s excess passive assets for such taxable

11 year, over

12 ‘‘(B) the amount of earnings and profits

13 described in section 959(c)(1)(B) with respect

14 to such shareholder, or

15 ‘‘(2) such shareholder’s pro rata share of the

16 applicable earnings of such controlled foreign cor17 poration determined after the application of section

18 951(a)(1)(B).

19 ‘‘(b) APPLICABLE EARNINGS.—For purposes of this

20 section, the term ‘applicable earnings’ means, with respect

21 to any controlled foreign corporation, the amounts re22 ferred to in sections 316(a)(1) and 316(a)(2) (but reduced

23 by distributions made during the taxable year), reduced

24 by the earnings and profits described in section 959(c)(1).

25 ‘‘(c) EXCESS PASSIVE ASSETS.—For purposes of this

26 section—
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1 ‘‘(1) IN GENERAL.—The excess passive assets

2 of any controlled foreign corporation for any taxable

3 year is the excess (if any) of—

4 ‘‘(A) the average of the amounts of passive

5 assets held by such corporation as of the close

6 of each quarter of such taxable year, over

7 ‘‘(B) 25 percent of the average of the

8 amounts of total assets held by such corpora9 tion as of the close of each quarter of such tax10 able year.

11 For purposes of the preceding sentence, the amount

12 taken into account with respect to any asset shall be

13 its adjusted basis as determined for purposes of

14 computing earnings and profits.

15 ‘‘(2) PASSIVE ASSET.—

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

17 provided in this section, the term ‘passive asset’

18 means any asset held by the controlled foreign

19 corporation which produces passive income (as

20 defined in section 1296(b)) or is held for the

21 production of such income.

22 ‘‘(B) COORDINATION WITH SECTION 956.—

23 The term ‘passive asset’ shall not include any

24 United States property (as defined in section

25 956).
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1 ‘‘(3) LOOK-THRU RULES MADE APPLICABLE.—

2 For purposes of this subsection, the rules of section

3 1296(c) shall apply.

4 ‘‘(4) LEASING RULES MADE APPLICABLE.—For

5 purposes of this subsection, the rules of section

6 1297(d) shall apply.

7 ‘‘(d) SPECIAL RULE WHERE CORPORATION CEASES

8 TO BE CONTROLLED FOREIGN CORPORATION DURING

9 TAXABLE YEAR.—If any foreign corporation ceases to be

10 a controlled foreign corporation during any taxable year—

11 ‘‘(1) the determination of any United States

12 shareholder’s pro rata share shall be made on the

13 basis of stock owned (within the meaning of section

14 958(a)) by such shareholder on the last day during

15 the taxable year on which the foreign corporation is

16 a controlled foreign corporation, and

17 ‘‘(2) the amount of such corporation’s excess

18 passive assets for such taxable year shall be deter19 mined by only taking into account quarters ending

20 on or before such last day, and

21 ‘‘(3) in determining applicable earnings, the

22 amount taken into account by reason of being de23 scribed in paragraph (2) of section 316(a) shall be

24 the portion of the amount so described which is allo25 cable (on a pro rata basis) to the part of such year
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1 during which the corporation is a controlled foreign

2 corporation.

3 ‘‘(e) TRANSITION RULE.—In the case of any taxable

4 year of a controlled foreign corporation beginning after

5 September 30, 1993, and before October 1, 1997, the

6 amount determined under subsection (a) shall be the ap7 plicable percentage (determined under the following table)

8 of the amount which would otherwise be determined under

9 such subsection:

‘‘In the case of a taxable year beginning during the 1-year pe- The applicable

riod beginning on: percentage is:

October 1, 1993 ................................................................ 20

October 1, 1994 ................................................................ 25

October 1, 1995 ................................................................ 35

October 1, 1996 ................................................................ 50.

10 ‘‘(f) REGULATIONS.—The Secretary shall prescribe

11 such regulations as may be necessary to carry out the pur12 poses of this section, including regulations to prevent the

13 avoidance of the provisions of this section through reorga14 nizations or otherwise.’’

15 (c) PREVIOUSLY TAXED INCOME RULES.—

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

17 959 (relating to exclusion from gross income of pre18 viously taxed earnings and profits) is amended by

19 striking ‘‘or’’ at the end of paragraph (1), by adding

20 ‘‘or’’ at the end of paragraph (2), and by inserting

21 after paragraph (2) the following new paragraph:
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1 ‘‘(3) such amounts would, but for this sub2 section, be included under section 951(a)(1)(C) in

3 the gross income of,’’.

4 (2) ALLOCATION RULES.—

5 (A) Subsection (a) of section 959 is

6 amended by adding at the end thereof the fol7 lowing new sentence: ‘‘The rules of subsection

8 (c) shall apply for purposes of paragraph (1) of

9 this subsection and the rules of subsection (f)

10 shall apply for purposes of paragraphs (2) and

11 (3) of this subsection.’’.

12 (B) Section 959 is amended by adding at

13 the end thereof the following new subsection:

14 ‘‘(f) ALLOCATION RULES FOR CERTAIN INCLU15 SIONS.—

16 ‘‘(1) IN GENERAL.—For purposes of this sec17 tion, amounts that would be included under subpara18 graph (B) or (C) of section 951(a)(1) (determined

19 without regard to this section) shall be treated as at20 tributable first to earnings described in subsection

21 (c)(2), and then to earnings described in subsection

22 (c)(3).

23 ‘‘(2) TREATMENT OF DISTRIBUTIONS.—In ap24 plying this section, actual distributions shall be

25 taken into account before amounts that would be in-
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1 cluded under subparagraphs (B) and (C) of section

2 951(a)(1) (determined without regard to this sec3 tion).’’

4 (C) Paragraph (1) of section 959(c) is

5 amended to read as follows:

6 ‘‘(1) first to the aggregate of—

7 ‘‘(A) earnings and profits attributable to

8 amounts included in gross income under section

9 951(a)(1)(B) (or which would have been in10 cluded except for subsection (a)(2) of this sec11 tion), and

12 ‘‘(B) earnings and profits attributable to

13 amounts included in gross income under section

14 951(a)(1)(C) (or which would have been in15 cluded except for subsection (a)(3) of this sec16 tion),

17 with any distribution being allocated between earn18 ings and profits described in subparagraph (A) and

19 earnings and profits described in subparagraph (B)

20 proportionately on the basis of the respective

21 amounts of such earnings and profits,’’.

22 (3) CONFORMING AMENDMENTS.—

23 (A) Subsections (a) and (b) of section 959

24 are each amended by striking ‘‘earnings and
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1 profits for a taxable year’’ and inserting ‘‘earn2 ings and profits’’.

3 (B) Paragraph (2) of section 959(c) is

4 amended to read as follows:

5 ‘‘(2) then to earnings and profits attributable to

6 amounts included in gross income under section

7 951(a)(1)(A) (but reduced by amounts not included

8 under subparagraph (B) or (C) of section 951(a)(1)

9 because of the exclusions in paragraphs (2) and (3)

10 of subsection (a) of this section), and’’

11 (C) Subsection (b) of section 989 is

12 amended by striking ‘‘section 951(a)(1)(B)’’

13 and inserting ‘‘subparagraph (B) or (C) of sec14 tion 951(a)(1)’’.

15 (d) MODIFICATIONS TO PASSIVE FOREIGN INVEST16 MENT COMPANY RULES.—

17 (1) ADJUSTED BASIS USED IN CERTAIN DETER18 MINATIONS.—Subsection (a) of section 1296 is

19 amended by striking the material following para20 graph (2) and inserting the following:

21 ‘‘In the case of a controlled foreign corporation (or any

22 other foreign corporation if such corporation so elects), the

23 determination under paragraph (2) shall be based on the

24 adjusted bases (as determined for purposes of computing

25 earnings and profits) of its assets in lieu of their value.
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1 Such an election, once made, may be revoked only with

2 the consent of the Secretary.’’

3 (2) TREATMENT OF CERTAIN SUBPART F IN4 CLUSIONS.—Subsection (b) of section 1297 is

5 amended by adding at the end thereof the following

6 new paragraph:

7 ‘‘(9) TREATMENT OF CERTAIN SUBPART F IN8 CLUSIONS.—Any amount included in gross income

9 under subparagraph (B) or (C) of section 951(a)(1)

10 shall be treated as a distribution received with re11 spect to the stock.’’

12 (3) TREATMENT OF CERTAIN DEALERS IN SE13 CURITIES.—Subsection (b) of section 1296 is

14 amended by adding at the end thereof the following

15 new paragraph:

16 ‘‘(3) TREATMENT OF CERTAIN DEALERS IN SE17 CURITIES.—

18 ‘‘(A) IN GENERAL.—In the case of any for19 eign corporation which is a controlled foreign

20 corporation (as defined in section 957(a)), the

21 term ‘passive income’ does not include any in22 come derived in the active conduct of a securi23 ties business by such corporation if such cor24 poration is registered as a securities broker or

25 dealer under section 15(a) of the Securities Ex-
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1 change Act of 1934 or is registered as a Gov2 ernment securities broker or dealer under sec3 tion 15C(a) of such Act. To the extent provided

4 in regulations, such term shall not include any

5 income derived in the active conduct of a securi6 ties business by a controlled foreign corporation

7 which is not so registered.

8 ‘‘(B) APPLICATION OF LOOK-THRU

9 RULES.—For purposes of paragraph (2)(C),

10 rules similar to the rules of subparagraph (A)

11 shall apply in determining whether any income

12 of a related person (whether or not a corpora13 tion) is passive income.

14 ‘‘(C) LIMITATION.—The preceding provi15 sions of this paragraph shall only apply in the

16 case of persons who are United States share17 holders (as defined in section 951(b)) in the

18 controlled foreign corporation.’’

19 (4) LEASING RULES.—Section 1297 is amended

20 by redesignating subsection (d) as subsection (e) and

21 by inserting after subsection (c) the following new

22 subsection:

23 ‘‘(d) TREATMENT OF CERTAIN LEASED PROP24 ERTY.—For purposes of this part—
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1 ‘‘(1) IN GENERAL.—Any tangible personal

2 property with respect to which a foreign corporation

3 is the lessee under a lease with a term of at least

4 12 months shall be treated as an asset actually held

5 by such corporation.

6 ‘‘(2) DETERMINATION OF ADJUSTED BASIS.—

7 ‘‘(A) IN GENERAL.—The adjusted basis of

8 any asset to which paragraph (1) applies shall

9 be the unamortized portion (as determined

10 under regulations prescribed by the Secretary)

11 of the present value of the payments under the

12 lease for the use of such property.

13 ‘‘(B) PRESENT VALUE.—For purposes of

14 subparagraph (A), the present value of pay15 ments described in subparagraph (A) shall be

16 determined in the manner provided in regula17 tions prescribed by the Secretary—

18 ‘‘(i) as of the beginning of the lease

19 term, and

20 ‘‘(ii) except as provided in such regu21 lations, by using a discount rate equal to

22 the applicable Federal rate determined

23 under section 1274(d)—
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1 ‘‘(I) by substituting the lease

2 term for the term of the debt instru3 ment, and

4 ‘‘(II) without regard to para5 graph (2) or (3) thereof.

6 ‘‘(3) EXCEPTIONS.—This subsection shall not

7 apply in any case where—

8 ‘‘(A) the lessor is a related person (as de9 fined in section 954(d)(3)) with respect to the

10 foreign corporation, or

11 ‘‘(B) a principal purpose of leasing the

12 property was to avoid the provisions of this sec13 tion.’’

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

15 this section shall apply to taxable years of foreign corpora16 tions beginning after September 30, 1993, and to taxable

17 years of United States shareholders in which or with which

18 such taxable years of foreign corporations end.

19 SEC. 14232. MODIFICATION TO TAXATION OF INVESTMENT

20 IN UNITED STATES PROPERTY.

21 (a) GENERAL RULE.—Section 956 (relating to in22 vestment of earnings in United States property) is amend23 ed—

24 (1) by redesignating subsections (b) and (c) as

25 subsections (c) and (d), respectively, and
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1 (2) by striking subsection (a) and inserting the

2 following:

3 ‘‘(a) GENERAL RULE.—In the case of any controlled

4 foreign corporation, the amount determined under this

5 section with respect to any United States shareholder for

6 any taxable year is the lesser of—

7 ‘‘(1) the excess (if any) of—

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

9 the average of the amounts of United States

10 property held (directly or indirectly) by the con11 trolled foreign corporation as of the close of

12 each quarter of such taxable year, over

13 ‘‘(B) the amount of earnings and profits

14 described in section 959(c)(1)(A) with respect

15 to such shareholder, or

16 ‘‘(2) such shareholder’s pro rata share of the

17 applicable earnings of such controlled foreign cor18 poration.

19 The amount taken into account under paragraph (1) with

20 respect to any property shall be its adjusted basis as deter21 mined for purposes of computing earnings and profits, re22 duced by any liability to which the property is subject.

23 ‘‘(b) ADJUSTMENTS FOR CERTAIN DISTRIBUTIONS;

24 OTHER SPECIAL RULES.—
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1 ‘‘(1) APPLICABLE EARNINGS.—For purposes of

2 this section, the term ‘applicable earnings’ has the

3 meaning given to such term by section 956A(b).

4 ‘‘(2) SPECIAL RULE WHERE CORPORATION

5 CEASES TO BE CONTROLLED FOREIGN CORPORA6 TION.—Rules similar to the rules of section 956A(d)

7 shall apply for purposes of this section.’’

8 (b) CONFORMING AMENDMENTS.—

9 (1) Subparagraph (B) of section 951(a)(1) is

10 amended to read as follows:

11 ‘‘(B) the amount determined under section

12 956 with respect to such shareholder for such

13 year (but only to the extent not excluded from

14 gross income under section 959(a)(2)); and’’

15 (2) Subsection (a) of section 951 is amended by

16 striking paragraph (4).

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

18 this section shall apply to taxable years of controlled for19 eign corporations beginning after September 30, 1993,

20 and to taxable years of United States shareholders in

21 which or with which such taxable years of controlled for22 eign corporations end.

23 (d) STUDY OF INVESTMENTS BY CONTROLLED FOR24 EIGN CORPORATIONS IN UNITED STATES PROPERTY.—
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1 (1) IN GENERAL.—The Secretary of the Treas2 ury shall conduct a study of the tax treatment of in3 vestments by controlled foreign corporations in obli4 gations of United States persons other than corpora5 tions. Such study shall include the Secretary’s views

6 as to whether the treatment of such investments

7 should be changed, along with a discussion of the

8 merits and consequences of any such change.

9 (2) REPORT.—Not later than December 31,

10 1993, the Secretary of the Treasury shall submit to

11 the Committee on Ways and Means of the House of

12 Representatives and the Committee on Finance of

13 the Senate a report on the study conducted under

14 this subsection, together with such recommendations

15 as he may deem advisable.

16 SEC. 14233. OTHER MODIFICATIONS TO SUBPART F.

17 (a) SAME COUNTRY EXCEPTION NOT TO APPLY TO

18 CERTAIN DIVIDENDS.—

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

20 954(c) (relating to certain income received from re21 lated persons) is amended by adding at the end

22 thereof the following new subparagraph:

23 ‘‘(C) EXCEPTION FOR CERTAIN DIVI24 DENDS.—Subparagraph (A)(i) shall not apply

25 to any dividend with respect to any stock which
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1 is attributable to earnings and profits of the

2 distributing corporation accumulated during

3 any period during which the person receiving

4 such dividend did not hold such stock.’’

5 (2) EFFECTIVE DATE.—The amendment made

6 by paragraph (1) shall apply to taxable years of con7 trolled foreign corporations beginning after Septem8 ber 30, 1993, and to taxable years of United States

9 shareholders in which or with which such taxable

10 years of controlled foreign corporations end.

11 (b) SIMPLIFICATION OF SECTION 960(b).—

12 (1) IN GENERAL.—Subsection (b) of section

13 960 is amended—

14 (A) by redesignating paragraphs (3) and

15 (4) as paragraphs (4) and (5), respectively, and

16 (B) by striking paragraphs (1) and (2) and

17 inserting the following new paragraphs:

18 ‘‘(1) INCREASE IN SECTION 904 LIMITATION.—

19 In the case of any taxpayer who—

20 ‘‘(A) either (i) chose to have the benefits

21 of subpart A of this part for a taxable year be22 ginning after September 30, 1993, in which he

23 was required under section 951(a) to include

24 any amount in his gross income, or (ii) did not

25 pay or accrue for such taxable year any income,
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1 war profits, or excess profits taxes to any for2 eign country or to any possession of the United

3 States,

4 ‘‘(B) chooses to have the benefits of sub5 part A of this part for any taxable year in

6 which he receives 1 or more distributions or

7 amounts which are excludable from gross in8 come under section 959(a) and which are at9 tributable to amounts included in his gross in10 come for taxable years referred to in subpara11 graph (A), and

12 ‘‘(C) for the taxable year in which such

13 distributions or amounts are received, pays, or

14 is deemed to have paid, or accrues income, war

15 profits, or excess profits taxes to a foreign

16 country or to any possession of the United

17 States with respect to such distributions or

18 amounts,

19 the limitation under section 904 for the taxable year

20 in which such distributions or amounts are received

21 shall be increased by the lesser of the amount of

22 such taxes paid, or deemed paid, or accrued with re23 spect to such distributions or amounts or the

24 amount in the excess limitation account as of the be25 ginning of such taxable year.
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1 ‘‘(2) EXCESS LIMITATION ACCOUNT.—

2 ‘‘(A) ESTABLISHMENT OF ACCOUNT.—

3 Each taxpayer meeting the requirements of

4 paragraph (1)(A) shall establish an excess limi5 tation account. The opening balance of such ac6 count shall be zero.

7 ‘‘(B) INCREASES IN ACCOUNT.—For each

8 taxable year beginning after September 30,

9 1993, the taxpayer shall increase the amount in

10 the excess limitation account by the excess (if

11 any) of—

12 ‘‘(i) the amount by which the limita13 tion under section 904(a) for such taxable

14 year was increased by reason of the total

15 amount of the inclusions in gross income

16 under section 951(a) for such taxable year,

17 over

18 ‘‘(ii) the amount of any income, war

19 profits, and excess profits taxes paid, or

20 deemed paid, or accrued to any foreign

21 country or possession of the United States

22 which were allowable as a credit under sec23 tion 901 for such taxable year and which

24 would not have been allowable but for the
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1 inclusions in gross income described in

2 clause (i).

3 Proper reductions in the amount added to the

4 account under the preceding sentence for any

5 taxable year shall be made for any increase in

6 the credit allowable under section 901 for such

7 taxable year by reason of a carryback if such

8 increase would not have been allowable but for

9 the inclusions in gross income described in

10 clause (i).

11 ‘‘(C) DECREASES IN ACCOUNT.—For each

12 taxable year beginning after September 30,

13 1993, for which the limitation under section

14 904 was increased under paragraph (1), the

15 taxpayer shall reduce the amount in the excess

16 limitation account by the amount of such in17 crease.

18 ‘‘(3) DISTRIBUTIONS OF INCOME PREVIOUSLY

19 TAXED IN YEARS BEGINNING BEFORE OCTOBER 1,

20 1993.—If the taxpayer receives a distribution or

21 amount in a taxable year beginning after September

22 30, 1993, which is excluded from gross income

23 under section 959(a) and is attributable to any

24 amount included in gross income under section

25 951(a) for a taxable year beginning before October
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1 1, 1993, the limitation under section 904 for the

2 taxable year in which such amount or distribution is

3 received shall be increased by the amount deter4 mined under this subsection as in effect on the day

5 before the date of the enactment of the Revenue

6 Reconcilation Act of 1993.’’

7 (2) EFFECTIVE DATE.—The amendment made

8 by paragraph (1) shall apply to taxable years begin9 ning after September 30, 1993.

10 Subpart B—Allocation of Research and Experimental

11 Expenditures

12 SEC. 14234. ALLOCATION OF RESEARCH AND EXPERI13 MENTAL EXPENDITURES.

14 (a) GENERAL RULE.—Subparagraph (B) of section

15 864(f)(1) (relating to allocation of research and experi16 mental expenditures) is amended by striking ‘‘64 percent’’

17 each place it appears and inserting ‘‘50 percent’’.

18 (b) CONFORMING AMENDMENTS.—

19 (1) Subsection (f) of section 864 is amended by

20 striking paragraph (5) and inserting the following:

21 ‘‘(5) REGULATIONS.—The Secretary shall pre22 scribe such regulations as may be appropriate to

23 carry out the purposes of this subsection, including

24 regulations relating to the determination of whether

25 any expenses are attributable to activities conducted
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1 in the United States or outside the United States

2 and regulations providing such adjustments to the

3 provisions of this subsection as may be appropriate

4 in the case of cost-sharing arrangements and con5 tract research.’’

6 (2) Subparagraph (D) of section 864(f)(4) is

7 amended by striking ‘‘subparagraph (C)’’ and insert8 ing ‘‘subparagraph (B) or (C)’’.

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

10 this section shall apply to taxable years ending after the

11 date of the enactment of this Act; except that such amend12 ments shall not apply in the case of any taxable year to

13 which Revenue Procedure 92–56 applies or would apply

14 if the taxpayer elected the benefits of such Revenue Proce15 dure.

16 Subpart C—Other Provisions

17 SEC. 14235. REPEAL OF CERTAIN EXCEPTIONS FOR WORK18 ING CAPITAL.

19 (a) PROVISIONS RELATING TO OIL AND GAS IN20 COME.—

21 (1) AMENDMENTS TO SECTION 907.—

22 (A) Paragraph (1) of section 907(c) is

23 amended by adding at the end thereof the fol24 lowing new flush sentence:
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1 ‘‘Such term does not include any dividend or interest in2 come which is passive income (as defined in section

3 904(d)(2)(A)).’’.

4 (B) Paragraph (2) of section 907(c) is

5 amended by adding at the end thereof the fol6 lowing new flush sentence:

7 ‘‘Such term does not include any dividend or interest in8 come which is passive income (as defined in section

9 904(d)(2)(A)).’’.

10 (2) SEPARATE APPLICATION OF FOREIGN TAX

11 CREDIT.—Clause (iii) of section 904(d)(2)(A) is

12 amended by inserting ‘‘and’’ at the end of subclause

13 (II), by striking ‘‘, and’’ at the end of subclause

14 (III) and inserting a period, and by striking

15 subclause (IV).

16 (3) TREATMENT UNDER SUBPART F.—

17 (A) Paragraph (1) of section 954(g) is

18 amended by adding at the end thereof the fol19 lowing new flush sentence:

20 Such term shall not include any foreign personal holding

21 company income (as defined in subsection (c)).’’.

22 (B) Paragraph (8) of section 954(b) is

23 amended by striking ‘‘(1),’’.

24 (b) TREATMENT OF SHIPPING INCOME.—Subsection

25 (f) of section 954 is amended by adding at the end thereof
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1 the following new sentence: ‘‘Such term shall not include

2 any dividend or interest income which is foreign personal

3 holding company income (as defined in subsection (c)).’’.

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

5 this section shall apply to taxable years beginning after

6 December 31, 1992.

7 SEC. 14236. MODIFICATIONS OF ACCURACY-RELATED PEN8 ALTY.

9 (a) THRESHOLD REQUIREMENT.—Clause (ii) of sec10 tion 6662(e)(1)(B) (relating to substantial valuation

11 misstatement under chapter 1) is amended to read as fol12 lows:

13 ‘‘(ii) the net section 482 transfer price

14 adjustment for the taxable year exceeds

15 the lesser of $5,000,000 or 10 percent of

16 the taxpayer’s gross receipts.’’

17 (b) CERTAIN ADJUSTMENTS EXCLUDED IN DETER18 MINING THRESHOLD.—Subparagraph (B) of section

19 6662(e)(3) is amended to read as follows:

20 ‘‘(B) CERTAIN ADJUSTMENTS EXCLUDED

21 IN DETERMINING THRESHOLD.—For purposes

22 of determining whether the threshold require23 ments of paragraph (1)(B)(ii) are met, the fol24 lowing shall be excluded:
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1 ‘‘(i) Any portion of the net increase in

2 taxable income referred to in subparagraph

3 (A) which is attributable to any redeter4 mination of a price if—

5 ‘‘(I) it is established that the tax6 payer determined such price in ac7 cordance with a specific pricing meth8 od set forth in the regulations pre9 scribed under section 482 and that

10 the taxpayer’s use of such method was

11 reasonable,

12 ‘‘(II) the taxpayer has docu13 mentation (which was in existence as

14 of the time of filing the return) which

15 sets forth the determination of such

16 price in accordance with such a meth17 od and which establishes that the use

18 of such method was reasonable, and

19 ‘‘(III) the taxpayer provides such

20 documentation to the Secretary within

21 30 days of a request for such docu22 mentation.

23 ‘‘(ii) Any portion of the net increase

24 in taxable income referred to in subpara25 graph (A) which is attributable to a rede-
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1 termination of price where such price was

2 not determined in accordance with such a

3 specific pricing method if—

4 ‘‘(I) the taxpayer establishes that

5 none of such pricing methods was

6 likely to result in a price that would

7 clearly reflect income, the taxpayer

8 used another pricing method to deter9 mine such price, and such other pric10 ing method was likely to result in a

11 price that would clearly reflect in12 come,

13 ‘‘(II) the taxpayer has docu14 mentation (which was in existence as

15 of the time of filing the return) which

16 sets forth the determination of such

17 price in accordance with such other

18 method and which establishes that the

19 requirements of subclause (I) were

20 satisfied, and

21 ‘‘(III) the taxpayer provides such

22 documentation to the Secretary within

23 30 days of request for such docu24 mentation.
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1 ‘‘(iii) Any portion of such net increase

2 which is attributable to any transaction

3 solely between foreign corporations unless,

4 in the case of any such corporations, the

5 treatment of such transaction affects the

6 determination of income from sources with7 in the United States or taxable income ef8 fectively connected with the conduct of a

9 trade or business within the United

10 States.’’

11 (b) COORDINATION WITH REASONABLE CAUSE EX12 CEPTION.—Paragraph (3) of section 6662(e) is amended

13 by adding at the end thereof the following new subpara14 graph:

15 ‘‘(D) COORDINATION WITH REASONABLE

16 CAUSE EXCEPTION.—For purposes of section

17 6664(c) the taxpayer shall not be treated as

18 having reasonable cause for any portion of an

19 underpayment attributable to a net section 482

20 transfer price adjustment unless such taxpayer

21 meets the requirements of clause (i), (ii), or (iii)

22 of subparagraph (B) with respect to such por23 tion.’’

24 (c) CONFORMING AMENDMENT.—Clause (iii) of sec25 tion 6662(h)(2)(A) is amended to read as follows:
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1 ‘‘(iii) in paragraph (1)(B)(ii)—

2 ‘‘(I) ‘$20,000,000’ for

3 ‘$5,000,000’, and

4 ‘‘(II) ‘20 percent’ for ‘10 per5 cent’.’’

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

7 this section shall apply to taxable years beginning after

8 December 31, 1993.

9 SEC. 14237. DENIAL OF PORTFOLIO INTEREST EXEMPTION

10 FOR CONTINGENT INTEREST.

11 (a) GENERAL RULE.—

12 (1) Subsection (h) of section 871 (relating to

13 repeal of tax on interest of nonresident alien individ14 uals received from certain portfolio debt invest15 ments) is amended by redesignating paragraphs (4),

16 (5), and (6) as paragraphs (5), (6), and (7), respec17 tively, and by inserting after paragraph (3) the fol18 lowing new paragraph:

19 ‘‘(4) PORTFOLIO INTEREST NOT TO INCLUDE

20 CERTAIN CONTINGENT INTEREST.—For purposes of

21 this subsection—

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

23 provided in this paragraph, the term ‘portfolio

24 interest’ shall not include—
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1 ‘‘(i) any interest if the amount of such

2 interest is determined by reference to—

3 ‘‘(I) any receipts, sales or other

4 cash flow of the debtor or a related

5 person,

6 ‘‘(II) any income or profits of the

7 debtor or a related person,

8 ‘‘(III) any change in value of any

9 property of the debtor or a related

10 person, or

11 ‘‘(IV) any dividend, partnership

12 distributions, or similar payments

13 made by the debtor or a related per14 son, or

15 ‘‘(ii) any other type of contingent in16 terest that is identified by the Secretary by

17 regulation, where a denial of the portfolio

18 interest exemption is necessary or appro19 priate to prevent avoidance of Federal in20 come tax.

21 ‘‘(B) RELATED PERSON.—The term ‘relat22 ed person’ means any person who is related to

23 the debtor within the meaning of section 267(b)

24 or 707(b)(1), or who is a party to any arrange-
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1 ment undertaken for a purpose of avoiding the

2 application of this paragraph.

3 ‘‘(C) EXCEPTIONS.—Subparagraph (A)(i)

4 shall not apply to—

5 ‘‘(i) any amount of interest solely by

6 reason of the fact that the timing of any

7 interest or principal payment is subject to

8 a contingency,

9 ‘‘(ii) any amount of interest solely by

10 reason of the fact that the interest is paid

11 with respect to nonrecourse or limited re12 course indebtedness,

13 ‘‘(iii) any amount of interest all or

14 substantially all of which is determined by

15 reference to any other amount of interest

16 not described in subparagraph (A) (or by

17 reference to the principal amount of in18 debtedness on which such other interest is

19 paid),

20 ‘‘(iv) any amount of interest solely by

21 reason of the fact that the debtor or a re22 lated person enters into a hedging trans23 action to reduce the risk of interest rate or

24 currency fluctuations with respect to such

25 interest,
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1 ‘‘(v) any amount of interest deter2 mined by reference to—

3 ‘‘(I) changes in the value of prop4 erty (including stock) that is actively

5 traded (within the meaning of section

6 1092(d)) other than property de7 scribed in section 897(c)(1) or (g),

8 ‘‘(II) the yield on property de9 scribed in subclause (I), other than a

10 debt instrument that pays interest de11 scribed in subparagraph (A), or stock

12 or other property that represents a

13 beneficial interest in the debtor or a

14 related person, or

15 ‘‘(III) changes in any index of

16 the value of property described in

17 subclause (I) or of the yield on prop18 erty described in subclause (II), and

19 ‘‘(vi) any other type of interest identi20 fied by the Secretary by regulation.

21 ‘‘(D) EXCEPTION FOR CERTAIN EXISTING

22 INDEBTEDNESS.—Subparagraph (A) shall not

23 apply to any interest paid or accrued with re24 spect to any indebtedness with a fixed term—
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1 ‘‘(i) which was issued on or before

2 April 7, 1993, or

3 ‘‘(ii) which was issued after such date

4 pursuant to a written binding contract in

5 effect on such date and at all times there6 after before such indebtedness was issued.’’

7 (2) Subsection (c) of section 881 is amended by

8 redesignating paragraphs (4), (5), and (6) as para9 graphs (5), (6), and (7), respectively, and by insert10 ing after paragraph (3) the following new para11 graph:

12 ‘‘(4) PORTFOLIO INTEREST NOT TO INCLUDE

13 CERTAIN CONTINGENT INTEREST.—For purposes of

14 this subsection, the term ‘portfolio interest’ shall not

15 include any interest which is treated as not being

16 portfolio interest under the rules of section

17 871(h)(4).’’

18 (b) CONFORMING AMENDMENTS.—

19 (1) Clause (ii) of section 871(h)(2)(B) is

20 amended by striking ‘‘paragraph (4)’’ and inserting

21 ‘‘paragraph (5)’’.

22 (2) Clause (ii) of section 881(c)(2)(B) is

23 amended by striking ‘‘section 871(h)(4)’’ and insert24 ing ‘‘section 871(h)(5)’’.
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1 (3) Paragraph (6) of section 881(c) (as redesig2 nated by subsection (a)) is amended by striking

3 ‘‘section 871(h)(5)’’ each place it appears and in4 serting ‘‘section 871(h)(6)’’.

5 (4) Paragraph (9) of section 1441(c) is amend6 ed by striking ‘‘section 871(h)(3)’’ and inserting

7 ‘‘section 871(h)(3) or (4)’’.

8 (5) Subsection (a) of section 1442 is amend9 ed—

10 (A) by striking ‘‘871(h)(3)’’ and inserting

11 ‘‘871(h)(3) or (4)’’, and

12 (B) by striking ‘‘881(c)(3)’’ and inserting

13 ‘‘881(c)(3) or (4)’’.

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

15 this section shall apply to interest received after December

16 31, 1993.

17 SEC. 14238. REGULATIONS DEALING WITH CONDUIT AR18 RANGEMENTS.

19 Section 7701 is amended by redesignating subsection

20 (l) as subsection (m) and by inserting after subsection (k)

21 the following new subsection:

22 ‘‘(l) REGULATIONS RELATING TO CONDUIT AR23 RANGEMENTS.—The Secretary may prescribe regulations

24 recharacterizing any multiple-party financing transaction

25 as a transaction directly among any 2 or more of such
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1 parties where the Secretary determines that such

2 recharacterization is appropriate to prevent avoidance of

3 any tax imposed by this title.’’

4 PART IV—ENERGY TAX PROVISIONS

5 Subpart A—Energy Tax Based on Btu Content

6 SEC. 14241. IMPOSITION OF ENERGY TAX BASED ON BTU

7 CONTENT.

8 (a) IN GENERAL.—Chapter 36 (relating to other ex9 cise taxes) is amended by redesignating subchapters A and

10 B as subchapters B and C, respectively, and by inserting

11 before subchapter B (as so redesignated) the following

12 new subchapter:

13 ‘‘SUBCHAPTER A—ENERGY TAXES

‘‘Part I. Imposition of tax on refined petroleum products.

‘‘Part II. Imposition of taxes on natural gas, coal, and electricity.

‘‘Part III. Tax rates.

‘‘Part IV. Use taxes; floor stocks taxes; administrative provisions;

definitions and special rules.

‘‘Part V. Tax on imported products with high embedded energy

costs.

14 ‘‘PART I—IMPOSITION OF TAX ON REFINED

15 PETROLEUM PRODUCTS

‘‘Sec. 4441. Taxable refined petroleum products.

‘‘Sec. 4442. Tax-free transfers and uses; refunds for certain sales

and uses.

16 ‘‘SEC. 4441. TAXABLE REFINED PETROLEUM PRODUCTS.

17 ‘‘(a) IMPOSITION OF TAX.—

18 ‘‘(1) IN GENERAL.—There is hereby imposed a

19 tax on any taxable refined petroleum product—
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1 ‘‘(A) removed from any refinery in the

2 United States,

3 ‘‘(B) removed from any terminal in the

4 United States,

5 ‘‘(C) entered into the United States for

6 consumption, use, or warehousing, and

7 ‘‘(D) sold to any person who is not reg8 istered under section 4453(d).

9 No tax shall be imposed by subparagraph (D) if

10 there was a prior taxable removal or entry under

11 subparagraph (A), (B), or (C).

12 ‘‘(2) EXCEPTION FOR BULK TRANSFERS TO

13 REGISTERED REFINERIES OR TERMINALS.—The tax

14 imposed by paragraph (1) shall not apply to any re15 moval or entry of any taxable refined petroleum

16 product transferred in bulk to a refinery or terminal

17 if the person removing or entering such product and

18 the operator of such refinery or terminal are reg19 istered under section 4453(d).

20 ‘‘(b) RATE OF TAX.—

21 ‘‘(1) IN GENERAL.—The amount of the tax im22 posed by subsection (a) on each barrel of any tax23 able refined petroleum product shall be the sum of—

24 ‘‘(A) the base rate, and

25 ‘‘(B) the supplemental rate,
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1 multiplied by the applicable per unit Btu factor for

2 such product.

3 ‘‘(2) ONLY BASE RATE APPLIES TO QUALIFIED

4 HEATING OIL, DIESEL FUEL USED ON FARMS, AND

5 LIQUEFIED PETROLEUM GASES.—

6 ‘‘(A) IN GENERAL.—Subparagraph (B) of

7 paragraph (1) shall not apply to—

8 ‘‘(i) qualified heating oil,

9 ‘‘(ii) qualified farm diesel fuel, and

10 ‘‘(iii) any liquefied petroleum gas.

11 ‘‘(B) QUALIFIED HEATING OIL.—For pur12 poses of subparagraph (A), the term ‘qualified

13 heating oil’ means No. 2 distillate fuel oil (in14 cluding any kerosene in a mixture with such oil)

15 which—

16 ‘‘(i) is indelibly dyed (or dyed and

17 marked) in accordance with regulations

18 that the Secretary shall prescribe, and

19 ‘‘(ii) is delivered (or is to be delivered)

20 to any building to heat the building.

21 ‘‘(C) QUALIFIED FARM DIESEL FUEL.—

22 For purposes of subparagraph (A), the term

23 ‘qualified farm diesel fuel’ means any diesel fuel

24 which—
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1 ‘‘(i) is indelibly dyed (or dyed and

2 marked) in accordance with regulations

3 that the Secretary shall prescribe, and

4 ‘‘(ii) is used (or to be used) on a farm

5 for farming purposes (determined under

6 section 6420(c)).

7 ‘‘(c) LIABILITY FOR TAX.—The determination of who

8 is liable for the tax imposed by subsection (a) shall be

9 made under the rules applicable in determining liability

10 for the tax imposed by section 4081. Section 4103 shall

11 apply to the tax imposed by subsection (a) in the same

12 manner as it applies to the tax imposed by section 4081.

13 ‘‘(d) TAXABLE REFINED PETROLEUM PRODUCT.—

14 For purposes of this subchapter, the term ‘taxable refined

15 petroleum product’ means—

16 ‘‘(1) aviation gasoline,

17 ‘‘(2) motor gasoline (including blending compo18 nents of gasoline),

19 ‘‘(3) kerosene-type jet fuel,

20 ‘‘(4) naphtha-type jet fuel,

21 ‘‘(5) distillate fuel oil,

22 ‘‘(6) kerosene,

23 ‘‘(7) residual fuel oil,

24 ‘‘(8) petroleum coke,

25 ‘‘(9) butane,
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1 ‘‘(10) propane,

2 ‘‘(11) ethanol,

3 ‘‘(12) methanol, and

4 ‘‘(13) to the extent provided in regulations pre5 scribed by the Secretary, any other refined petro6 leum product.

7 ‘‘(e) APPLICABLE PER UNIT BTU FACTOR.—For

8 purposes of this subchapter—

9 ‘‘(1) IN GENERAL.—

The applicable per unit

Btu factor is the follow-

‘‘In the case of: ing amount per barrel:

Aviation gasoline ............................................ 5.048

Motor gasoline (including blending components of gasoline) ........................................... 5.267

Kerosene-type jet fuel .................................... 5.670

Naphtha-type jet fuel ..................................... 5.355

Distillate fuel oil ............................................ 5.852

Kerosene ........................................................ 5.670

Residual fuel oil ............................................. 6.486

Petroleum coke .............................................. 6.024

Ethanol .......................................................... 3.500

Methanol ........................................................ 3.500

Butane ........................................................... 4.326

Propane .......................................................... 3.836.

10 ‘‘(2) MIXTURES.—Any mixture which includes a

11 taxable refined petroleum product shall be treated as

12 specified in paragraph (1) and—

13 ‘‘(A) if more than 1 such product is in14 cluded in such mixture, the applicable per unit

15 Btu factor shall be the weighted average of the

16 applicable per unit Btu factors for the taxable

17 refined petroleum products included in the mix18 ture, and
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1 ‘‘(B) if any substance is included in the

2 mixture which is not a taxable refined petro3 leum product, the applicable per unit Btu factor

4 for the portion of such mixture’s volume which

5 is attributable to such substance shall be zero.

6 ‘‘(3) CROSS REFERENCE.—

‘‘For authority to adjust per unit Btu amounts, see

section 4453(e).

7 ‘‘(f) OTHER DEFINITIONS.—For purposes of this

8 subchapter—

9 ‘‘(1) REFINERY.—The term ‘refinery’ means

10 any facility—

11 ‘‘(A) at which crude oil or any petroleum

12 product is refined,

13 ‘‘(B) which is a natural gas processing or

14 fractionation plant, or

15 ‘‘(C) at which ethanol or methanol is pro16 duced for use as a fuel.

17 ‘‘(2) BLENDING COMPONENTS.—The term

18 ‘blending components’ does not include ethanol or

19 methanol.

20 ‘‘(3) ETHANOL AND METHANOL.—The terms

21 ‘ethanol’ and ‘methanol’ include ether derivatives of

22 ethanol and methanol, respectively.

23 ‘‘(4) BARREL.—The term ‘barrel’ means 42

24 United States gallons determined with such tem-
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1 perature adjustments as the Secretary may pre2 scribe. In the case of a taxable refined petroleum

3 product which is not a liquid, the term ‘barrel’

4 means a volume determined under regulations pre5 scribed by the Secretary on the basis of an equiva6 lence to a barrel of oil.

7 ‘‘(g) REFUNDS IN CERTAIN CASES.—Under regula8 tions prescribed by the Secretary, if any person who paid

9 the tax imposed by this section with respect to any taxable

10 refined petroleum product establishes to the satisfaction

11 of the Secretary that a prior tax was paid (and not cred12 ited or refunded) with respect to such product, then an

13 amount equal to the tax paid by such person shall be al14 lowed as a refund (without interest) to such person in the

15 same manner as if it were an overpayment of tax imposed

16 by this section.

17 ‘‘SEC. 4442. TAX-FREE TRANSFERS AND USES; REFUNDS

18 FOR CERTAIN SALES AND USES.

19 ‘‘(a) TAX-FREE SALES, ETC.—

20 ‘‘(1) IN GENERAL.—No tax shall be imposed by

21 section 4441—

22 ‘‘(A) on any taxable refined petroleum

23 product which is used in an exempt use by the

24 person otherwise liable for such tax, or
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1 ‘‘(B) by reason of a removal, entry, or sale

2 of such product for an exempt use by the per3 son receiving the product.

4 ‘‘(2) EXEMPT USE.—For purposes of this sub5 section, the term ‘exempt use’ means—

6 ‘‘(A) export,

7 ‘‘(B) any use in the generation of elec8 tricity,

9 ‘‘(C) any qualified feedstock use, and

10 ‘‘(D) any use in the manufacture or pro11 duction of synthetic natural gas or any other

12 synthetic fuel specified in regulations prescribed

13 by the Secretary.

14 ‘‘(3) QUALIFIED FEEDSTOCK USE.—For pur15 poses of this subsection—

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

17 qualified feedstock use, only the exempt per18 centage of any taxable refined petroleum prod19 uct shall be exempt from tax under paragraph

20 (1).

21 ‘‘(B) QUALIFIED FEEDSTOCK USE.—The

22 term ‘qualified feedstock use’ means use of any

23 taxable refined petroleum product in the manu24 facture or production of any substance.
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1 ‘‘(C) EXEMPT PERCENTAGE.—For pur2 poses of subparagraph (A), the term ‘exempt

3 percentage’ means the percentage (determined

4 on the basis of chemical structure) of the tax5 able refined petroleum product which is incor6 porated into the substance manufactured or

7 produced.

8 ‘‘(4) REGISTRATION REQUIREMENTS.—To the

9 extent provided by the Secretary, paragraph (1)

10 shall not apply to any taxable event unless—

11 ‘‘(A) such persons with respect to such

12 event as the Secretary may specify are reg13 istered under section 4453(d), and

14 ‘‘(B) in the case of a sale, the purchaser’s

15 name and address, and the purchaser’s reg16 istration number for purposes of this sub17 chapter, are provided to the seller.

18 ‘‘(5) REFUNDS OF PRODUCTS PURCHASED TAX19 PAID.—If tax was imposed under section 4441 with

20 respect to any taxable refined petroleum product and

21 such product is used by any person in an exempt

22 use, the Secretary shall pay to such person an

23 amount equal to the tax so imposed (or, in the case

24 of a qualified feedstock use, the exempt percentage

25 of the tax so imposed).
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1 ‘‘(6) CROSS REFERENCE.—

‘‘For tax on fuel used to produce steam at facility

which also generates electricity, see section 4451(e).

2 ‘‘(b) REFUNDS TO ULTIMATE VENDORS IN CERTAIN

3 CASES.—Under regulations prescribed by the Secretary—

4 ‘‘(1) HEATING OIL.—If the supplemental rate

5 of tax was imposed under section 4441 with respect

6 to any No. 2 distillate fuel oil (including any ker7 osene in a mixture with such oil) and such fuel oil

8 is delivered to any building to heat the building, the

9 Secretary shall pay to the ultimate vendor of such

10 fuel oil an amount equal to the product of the sup11 plemental rate and the applicable per unit Btu fac12 tor per barrel of the fuel oil (and kerosene) so deliv13 ered.

14 ‘‘(2) INTERNATIONAL COMMERCIAL TRANSPOR15 TATION.—

16 ‘‘(A) IN GENERAL.—If tax was imposed

17 under section 4441 with respect to any taxable

18 refined petroleum product and such product is

19 sold for use or used by the purchaser for inter20 national commercial transportation, the Sec21 retary shall pay to the ultimate vendor of such

22 product an amount equal to the tax so imposed.

23 ‘‘(B) INTERNATIONAL COMMERCIAL

24 TRANSPORTATION.—For purposes of subpara-
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1 graph (A), the term ‘international commercial

2 transportation’ means transportation in the

3 trade or business of transporting persons or

4 property for hire—

5 ‘‘(i) by any vessel actually engaged in

6 foreign trade or trade between the United

7 States and any of its possessions, or

8 ‘‘(ii) by aircraft from a point within

9 the United States to a point outside the

10 United States and outside the 225-mile

11 zone (as defined in section 4262(c)(2)).

12 ‘‘(3) VENDOR REQUIREMENTS.—A payment

13 may be made under this subsection to a vendor only

14 if the vendor establishes that such vendor—

15 ‘‘(A)(i) has not included the tax in the

16 price of the product, and

17 ‘‘(ii) has not collected the tax from the

18 purchaser of such product, or

19 ‘‘(B) has agreed to repay the tax to the

20 purchaser.

21 ‘‘(c) PRODUCTION OF CALCINED COKE.—If tax was

22 imposed under section 4441 with respect to any petroleum

23 product and such product is used by any person to

24 produce calcined coke, the Secretary shall pay to such per25 son an amount equal to the sum of the base rate and the
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1 supplemental rate for each million Btu’s of the actual Btu

2 content of the coke produced.

3 ‘‘(d) CROSS REFERENCE.—

‘‘For refunds of gasoline and diesel fuel used on

farms, see sections 6420(a) and 6427(m).

4 ‘‘PART II—IMPOSITION OF TAXES ON NATURAL

5 GAS, COAL, AND ELECTRICITY

‘‘Sec. 4444. Natural gas.

‘‘Sec. 4445. Coal.

‘‘Sec. 4446. Electricity.

6 ‘‘SEC. 4444. NATURAL GAS.

7 ‘‘(a) IMPOSITION OF TAX.—

8 ‘‘(1) IN GENERAL.—There is hereby imposed a

9 tax on natural gas—

10 ‘‘(A) removed from any pipeline in the

11 United States,

12 ‘‘(B) entered into the United States for

13 consumption, use, or warehousing, and

14 ‘‘(C) entered into any pipeline the operator

15 of which is not registered under section

16 4453(d).

17 ‘‘(2) EXCEPTION FOR TRANSFERS TO REG18 ISTERED PIPELINES.—

19 ‘‘(A) PIPELINE TO PIPELINE TRANS20 FERS.—The tax imposed by paragraph (1) shall

21 not apply to any removal from a pipeline to an-
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1 other pipeline if the operators of both pipelines

2 are registered under section 4453(d).

3 ‘‘(B) ENTRY INTO UNITED STATES TO

4 PIPELINE TRANSFERS.—The tax imposed by

5 paragraph (1) shall not apply to any entry into

6 the United States if—

7 ‘‘(i) pursuant to such entry the natu8 ral gas is entered into any pipeline, and

9 ‘‘(ii) the operator of such pipeline is

10 registered under section 4453(d).

11 ‘‘(b) RATE OF TAX.—

12 ‘‘(1) IN GENERAL.—The amount of the tax im13 posed by subsection (a) on each MCF of natural gas

14 shall be the base rate multiplied by the applicable

15 per unit Btu factor.

16 ‘‘(2) AUTHORITY TO USE ACTUAL BTU CON17 TENT.—To the extent provided in regulations pre18 scribed by the Secretary, the amount of the tax im19 posed by subsection (a) shall be the base rate for

20 each million Btu’s of the actual Btu content of the

21 natural gas.

22 ‘‘(c) LIABILITY FOR, AND COLLECTION OF, TAX.—

23 ‘‘(1) IN GENERAL.—The tax imposed by sub24 section (a)(1)(A)—
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1 ‘‘(A) shall be paid by the person receiving

2 the natural gas, and

3 ‘‘(B) shall be collected by the operator of

4 the pipeline.

5 ‘‘(2) IMPORTATION.—The tax imposed by sub6 section (a)(1)(B) shall be paid by the person enter7 ing the natural gas into the United States for con8 sumption, use, or warehousing.

9 ‘‘(3) ENTRY INTO UNREGISTERED PIPELINES.—

10 The tax imposed by subsection (a)(1)(C) shall be

11 paid by the person entering the natural gas.

12 ‘‘(4) COLLECTION OF TAX.—

13 ‘‘(A) IN GENERAL.—In the case of natural

14 gas removed from a local distribution system,

15 the operator shall also be liable for any tax im16 posed by subsection (a) which is not collected

17 from the person receiving the natural gas.

18 ‘‘(B) EXCEPTION FOR LARGE USERS FROM

19 LOCAL DISTRIBUTION SYSTEMS.—Subparagraph

20 (A) shall not apply to natural gas received by

21 any person during any month from a local dis22 tribution system if the value (exclusive of taxes)

23 of the natural gas received by such person from

24 such system during the 12-month period ending

25 before such month exceeded $3,500,000.
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1 ‘‘(d) DEFINITIONS.—For purposes of this sub2 chapter—

3 ‘‘(1) APPLICABLE PER UNIT BTU FACTOR.—

4 ‘‘(A) IN GENERAL.—The applicable per

5 unit Btu factor with respect to natural gas is

6 1.031 per MCF.

7 ‘‘(B) CROSS REFERENCE.—

‘‘For authority to adjust per unit Btu amounts, see

section 4453(e).

8 ‘‘(2) PIPELINE.—The term ‘pipeline’ includes a

9 local distribution system. To the extent provided in

10 regulations prescribed by the Secretary, such term

11 includes a gathering system.

12 ‘‘(3) NATURAL GAS.—The term ‘natural gas’

13 includes synthetic natural gas produced from coal or

14 from any petroleum product.

15 ‘‘(4) MCF.—The term ‘MCF’ means 1,000

16 cubic feet of natural gas measured at a pressure of

17 14.73 pounds per square inch (absolute) and a tem18 perature of 60 degrees Fahrenheit.

19 ‘‘(e) EXEMPTION FROM TAX FOR CERTAIN USES.—

20 ‘‘(1) IN GENERAL.—No tax shall be imposed by

21 subparagraph (A) or (B) of subsection (a)(1)—

22 ‘‘(A) on any natural gas which is used in

23 an exempt natural gas use by the person other24 wise liable for such tax, or
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1 ‘‘(B) by reason of a removal or entry of

2 natural gas for an exempt natural gas use by

3 the person receiving the natural gas.

4 ‘‘(2) EXEMPT NATURAL GAS USE.—For pur5 poses of this subsection, the term ‘exempt natural

6 gas use’ means—

7 ‘‘(A) use in the generation of electricity,

8 ‘‘(B) any qualified feedstock use, or

9 ‘‘(C) use in enhanced heavy oil recovery.

10 ‘‘(3) QUALIFIED FEEDSTOCK USE.—For pur11 poses of this subsection—

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

13 qualified feedstock use, only the exempt per14 centage of the natural gas shall be exempt from

15 tax under paragraph (1).

16 ‘‘(B) QUALIFIED FEEDSTOCK USE; EX17 EMPT PERCENTAGE.—The terms ‘qualified feed18 stock use’ and ‘exempt percentage’ have the re19 spective meanings given such terms by section

20 4442(a)(3) determined by substituting ‘natural

21 gas’ for ‘taxable refined petroleum product’

22 each place it appears.

23 ‘‘(4) ENHANCED HEAVY OIL RECOVERY.—For

24 purposes of this subsection—
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1 ‘‘(A) IN GENERAL.—Natural gas shall be

2 treated as used in enhanced heavy oil recovery

3 if such gas is used in an enhanced oil recovery

4 project in the United States for the recovery of

5 oil having a weighted average gravity of 20 de6 grees API or less (corrected to 60 degrees

7 Fahrenheit).

8 ‘‘(B) ENHANCED OIL RECOVERY

9 PROJECT.—For purposes of subparagraph (A),

10 the term ‘enhanced oil recovery project’ means

11 any project which involves the application (in

12 accordance with sound engineering principles)

13 of 1 or more tertiary recovery methods (as de14 fined in section 193(b)(3)) which can reason15 ably be expected to result in more than an in16 significant increase in the amount of crude oil

17 which will ultimately be recovered.

18 ‘‘(5) REGISTRATION REQUIREMENTS.—To the

19 extent provided by the Secretary, paragraph (1)

20 shall not apply to any taxable event unless the re21 quirements of section 4442(a)(4) are met with re22 spect to such event.

23 ‘‘(6) REFUNDS OF NATURAL GAS PURCHASED

24 TAX-PAID.—If tax was imposed by this section with

25 respect to any natural gas and such gas is used by
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1 any person in an exempt natural gas use, the Sec2 retary shall pay to such person an amount equal to

3 the tax so imposed (or, in the case of a qualified

4 feedstock use, the exempt percentage of the tax so

5 imposed).

6 ‘‘(7) CROSS REFERENCE.—

‘‘For tax on fuel used to produce steam at facility

which also generates electricity, see section 4451(e).

7 ‘‘(f) METHANE RECOVERED FROM BIOMASS OR

8 COAL MINING.—

9 ‘‘(1) IN GENERAL.—If—

10 ‘‘(A) methane is recovered from biomass or

11 in conjunction with room and pillar or long wall

12 coal mining operations, and

13 ‘‘(B) such methane is entered into any nat14 ural gas pipeline,

15 the Secretary shall pay to the person so entering

16 such methane an amount equal to the amount of tax

17 which would be imposed under this section on such

18 methane if such entry were a taxable event under

19 such section.

20 ‘‘(2) RECAPTURE OF CREDIT FOR METHANE

21 RECOVERED FROM COAL MINING IN CERTAIN

22 CASES.—

23 ‘‘(A) IN GENERAL.—If—
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1 ‘‘(i) the Secretary has made a pay2 ment under paragraph (1) to any person

3 with respect to methane recovered from

4 coal mining operations before the date the

5 actual mining commences, and

6 ‘‘(ii)(I) such person disposes of his in7 terest in such coal mining operations, or

8 ‘‘(II) the actual mining commences

9 more than 10 years after the date such

10 methane was first recovered,

11 then the tax under chapter 1 of such person for

12 the taxable year in which such disposition oc13 curs (or, in a case to which clause (ii)(II) ap14 plies, such 10th year ends) shall be increased

15 by the aggregate of such payments to such per16 son plus interest at the underpayment rate

17 under section 6621 for the periods beginning on

18 the dates such payments were made.

19 ‘‘(B) NO FURTHER PAYMENTS UNTIL MIN20 ING COMMENCES.—If there is an increase in tax

21 under subparagraph (A) with respect to any

22 payments for methane recovered from any site,

23 no further payments shall be made under this

24 subsection with respect to methane recovered
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1 from such site until actual mining commences

2 at such site.

3 ‘‘(C) NO CREDITS AGAINST TAX, ETC.—

4 Any increase in tax under this paragraph shall

5 not be taken into account in determining the

6 amount of any credit allowable under part IV of

7 subchapter A of chapter 1 or in determining the

8 amount of the tax imposed by section 55.

9 ‘‘(D) CHANGES IN FORM OF BUSINESS DIS10 REGARDED.—A person shall not be treated as

11 disposing of an interest in coal mining oper12 ations by reason of a mere change in the form

13 of conducting the trade or business so long as

14 the coal mining operations are retained in such

15 trade or business and the taxpayer retains a

16 substantial interest in such trade or business.

17 ‘‘(g) REFUNDS IN CERTAIN CASES.—A rule similar

18 to the rule of section 4441(g) shall apply to the tax im19 posed by this section.

20 ‘‘SEC. 4445. COAL.

21 ‘‘(a) GENERAL RULE.—There is hereby imposed a

22 tax on coal received at any facility in the United States

23 for use as a fuel at such facility.

24 ‘‘(b) RATE OF TAX.—The amount of the tax imposed

25 by subsection (a) shall be the base rate for each million
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1 Btu’s of the actual Btu content of the coal. For purposes

2 of the preceding sentence, the actual Btu content of any

3 coal shall be determined under procedures prescribed by

4 the Secretary.

5 ‘‘(c) LIABILITY FOR TAX.—

6 ‘‘(1) IN GENERAL.—Except as otherwise pro7 vided in this subsection, the tax imposed by sub8 section (a) shall be paid by the operator of the facil9 ity.

10 ‘‘(2) COAL RECEIVED AT SMALL FACILITIES.—

11 If the ultimate vendor of coal received at a facility

12 receives a certificate from the operator of such facil13 ity (or otherwise determines) that such facility re14 ceived less than 1,000 tons of coal during the pre15 ceding calendar year, the tax imposed by subsection

16 (a) shall be paid by the ultimate vendor.

17 ‘‘(3) RESIDENTIAL PROPERTY.—

18 ‘‘(A) IN GENERAL.—In the case of coal re19 ceived at a residential property, the tax imposed

20 by subsection (a) shall be paid by the ultimate

21 vendor.

22 ‘‘(B) RESIDENTIAL PROPERTY.—For pur23 poses of this paragraph, the term ‘residential

24 property’ means any building which contains 1
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1 or more dwelling units used for residential pur2 poses other than on a transient basis.

3 ‘‘(d) EXEMPTION FROM TAX FOR CERTAIN USES.—

4 ‘‘(1) IN GENERAL.—No tax shall be imposed by

5 subsection (a) on coal received for—

6 ‘‘(A) use in the generation of electricity,

7 ‘‘(B) any qualified feedstock use,

8 ‘‘(C) use in enhanced heavy oil recovery

9 (as determined under section 4444(e)(4) by

10 substituting ‘coal’ for ‘natural gas’),

11 ‘‘(D) use in the manufacture or production

12 of synthetic natural gas or any other synthetic

13 fuel specified in regulations prescribed by the

14 Secretary, or

15 ‘‘(E) any use in a vessel used in inter16 national commercial transportation (as defined

17 in section 4442(b)(2)(B)(i)).

18 ‘‘(2) QUALIFIED FEEDSTOCK USE.—For pur19 poses of this subsection—

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

21 qualified feedstock use, only the exempt per22 centage of the coal shall be exempt from tax

23 under paragraph (1).

24 ‘‘(B) QUALIFIED FEEDSTOCK USE; EX25 EMPT PERCENTAGE.—The terms ‘qualified feed-
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1 stock use’ and ‘exempt percentage’ have the re2 spective meanings given such terms by section

3 4442(a)(3) determined by substituting ‘coal’ for

4 ‘taxable refined petroleum product’ each place it

5 appears.

6 ‘‘(3) CROSS REFERENCE.—

‘‘For tax on fuel used to produce steam at facility

which also generates electricity, see section 4451(e).

7 ‘‘(e) PRODUCTION OF COKE FOR STEEL.—If tax was

8 imposed under this subchapter with respect to any coal

9 and such coal is used by any person to produce coke for

10 use in the reduction of iron-bearing ores in the iron and

11 steel process, the Secretary shall pay to such person an

12 amount equal to the base rate for each million Btu’s of

13 the actual Btu content of the coke produced.

14 ‘‘SEC. 4446. ELECTRICITY.

15 ‘‘(a) GENERAL RULE.—There is hereby imposed a

16 tax on—

17 ‘‘(1) the sale of electricity to ultimate users in

18 the United States, and

19 ‘‘(2) the use of electricity in the United States

20 which was not subject to tax under paragraph (1).

21 ‘‘(b) RATE OF TAX.—The amount of the tax imposed

22 by subsection (a) on each kilowatt hour of electricity sold

23 or used during any month shall be the deemed Btu tax

24 per kilowatt hour applicable for such month—
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1 ‘‘(1) to the seller in the case of the tax imposed

2 by subsection (a)(1), and

3 ‘‘(2) to the user in the case of the tax imposed

4 by subsection (a)(2).

5 ‘‘(c) LIABILITY FOR, AND COLLECTION OF, TAX.—

6 ‘‘(1) SALES.—The tax imposed by subsection

7 (a)(1)—

8 ‘‘(A) shall be paid by the person to whom

9 the electricity is sold, and

10 ‘‘(B) shall be collected by the seller.

11 ‘‘(2) USES.—The tax imposed by subsection

12 (a)(2) shall be paid by the person using the elec13 tricity.

14 ‘‘(3) COLLECTION OF TAX.—

15 ‘‘(A) IN GENERAL.—The seller shall also

16 be liable for the tax imposed by subsection

17 (a)(1) which is not collected from the person to

18 whom the electricity is sold.

19 ‘‘(B) EXCEPTION FOR LARGE USERS.—

20 Subparagraph (A) shall not apply to electricity

21 sold to any person during any month by the

22 seller if the amount paid by such person for

23 electricity (exclusive of taxes) sold by such sell24 er during the 12-month period ending before

25 such month exceeded $3,500,000.
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1 ‘‘(d) DEEMED BTU TAXES.—For purposes of this

2 section—

3 ‘‘(1) IN GENERAL.—The deemed Btu taxes per

4 kilowatt hour of electricity applicable to any person

5 for any month shall be the weighted average of—

6 ‘‘(A) the deemed Btu taxes per kilowatt

7 hour of electricity generated at each facility of

8 the person during the base period, and

9 ‘‘(B) the deemed Btu taxes per kilowatt

10 hour of electricity purchased by such person

11 during the base period.

12 For purposes of this paragraph, the term ‘base pe13 riod’ means, with respect to any month, the 2d

14 month preceding such month.

15 ‘‘(2) DEEMED BTU TAXES PER FACILITY.—The

16 deemed Btu taxes per kilowatt hour of electricity

17 generated at any facility during any month shall be

18 determined by dividing—

19 ‘‘(A) the deemed Btu taxes on fuels used

20 at such facility to generate electricity during

21 such month by

22 ‘‘(B) the aggregate kilowatt hours of elec23 tricity generated at such facility during such

24 month.

25 ‘‘(3) DEEMED BTU TAXES.—
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1 ‘‘(A) IN GENERAL.—Except as otherwise

2 provided in this paragraph, the term ‘deemed

3 Btu taxes’ means, with respect to electricity,

4 the aggregate taxes which would have been im5 posed by this subchapter on the fuels used to

6 generate such electricity—

7 ‘‘(i) but for the exemption of such

8 fuels from such taxes, and

9 ‘‘(ii) determined as of the month for

10 which the rate of the tax imposed by sub11 section (a) is being determined.

12 ‘‘(B) ELECTRICITY GENERATED BY HY13 DROPOWER OR NUCLEAR POWER.—The deemed

14 Btu taxes per kilowatt hour of electricity gen15 erated by hydropower or nuclear power shall be

16 equal to the base rate multiplied by a fraction

17 the numerator of which is 10,335 and the de18 nominator of which is 1,000,000.

19 ‘‘(C) IMPORTED ELECTRICITY.—

20 ‘‘(i) IN GENERAL.—Except as pro21 vided in clause (ii), the deemed Btu taxes

22 per kilowatt hour of electricity transmitted

23 into the United States shall be determined

24 as if such electricity were generated by hy25 dropower.
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1 ‘‘(ii) LOWER DEEMED BTU TAX MAY

2 BE ESTABLISHED.—If the importer estab3 lishes to the satisfaction of the Secretary

4 the amount which would be the deemed

5 Btu taxes per kilowatt hour of the elec6 tricity if the electricity were generated in

7 the United States, such amount shall be

8 used in lieu of the amount under clause (i).

9 ‘‘(D) ELECTRICITY GENERATED BY RE10 NEWABLE SOURCES.—The deemed Btu taxes

11 per kilowatt hour of electricity generated from

12 any renewable source shall be zero. For pur13 poses of the preceding sentence, the term ‘re14 newable source’ means solar energy, wind en15 ergy, any geothermal deposit, biomass, munici16 pal solid waste, and tires.

17 ‘‘(4) SELLERS TO SPECIFY DEEMED BTU

18 TAXES.—

19 ‘‘(A) IN GENERAL.—In the case of elec20 tricity which is sold other than to the ultimate

21 user, the seller shall certify to the purchaser the

22 deemed Btu taxes per kilowatt hour of the elec23 tricity sold.

24 ‘‘(B) FAILURE TO CERTIFY.—If the seller

25 fails to so certify—
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1 ‘‘(i) the tax imposed by subsection (a)

2 shall apply to such sale at the rate speci3 fied in subparagraph (C),

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

5 shall apply to any subsequent sale or use

6 without regard to clause (i), and

7 ‘‘(iii) the rate specified in subpara8 graph (C) shall be the deemed Btu taxes

9 per kilowatt hour of such electricity for

10 purposes of determining the tax imposed

11 by subsection (a) on any subsequent sale

12 or use of such electricity.

13 ‘‘(C) RATE.—The rate specified in this

14 subparagraph is, for each kilowatt hour, the

15 product of—

16 ‘‘(i) the sum of the base rate and the

17 supplemental rate, multiplied by

18 ‘‘(ii) a fraction the numerator of

19 which is 10,335 and the denominator of

20 which is 1,000,000.

21 ‘‘(5) REGULATIONS.—The Secretary shall pre22 scribe such regulations as may be necessary or ap23 propriate to carry out this subsection, including reg24 ulations—
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1 ‘‘(A) prescribing a base period to be used

2 by any person not in existence during the base

3 period, and

4 ‘‘(B) prescribing such other modifications

5 to the application of this subsection as are nec6 essary to carry out the purposes of this sub7 section.

8 ‘‘(e) EXCEPTIONS.—

9 ‘‘(1) ELECTRICITY USED IN CERTAIN ELECTRO10 LYTIC PROCESSES.—

11 ‘‘(A) IN GENERAL.—In the case of elec12 tricity used in any electrolytic process, the tax

13 imposed by this section shall not apply to the

14 feedstock portion of such electricity.

15 ‘‘(B) FEEDSTOCK PORTION.—For purposes

16 of subparagraph (A), the feedstock portion of

17 electricity is the portion of the electrical energy

18 which is incorporated into the manufactured

19 product.

20 ‘‘(2) ELECTRICITY USED TO GENERATE

21 PUMPED STORAGE, ETC.—The tax imposed by this

22 section shall not apply to electricity used in the

23 United States to create any hydropower source to

24 generate electricity. The electricity generated by
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1 such hydropower source shall be disregarded in de2 termining the deemed Btu taxes of the electricity.

3 ‘‘(3) USE TAX EXCEPTION.—The Secretary may

4 provide by regulations that the tax imposed by sub5 section (a)(2) shall not apply in cases where the Sec6 retary determines that such an exception is war7 ranted, after taking into account the protection of

8 revenues to the United States from this subchapter

9 and the ease of administration for both taxpayers

10 and the Secretary.

11 ‘‘PART III—TAX RATES

‘‘Sec. 4448. Tax rates.

12 ‘‘SEC. 4448. TAX RATES.

13 ‘‘(a) BASE RATE.—For purposes of this sub14 chapter—

15 ‘‘(1) PHASE-IN RATES.—Effective during—

16 ‘‘(A) the 1-year period beginning on July

17 1, 1994, the base rate is 8.9 cents, and

18 ‘‘(B) the 1-year period beginning on July

19 1, 1995, the base rate is 17.9 cents.

20 ‘‘(2) PERMANENT UNINDEXED RATE.—Effec21 tive on and after July 1, 1996, the base rate is 26.8

22 cents.

23 ‘‘(3) INDEXED RATES.—
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1 ‘‘(A) IN GENERAL.—Effective during any

2 calendar year after 1997, the base rate under

3 paragraph (2) shall be increased by an amount

4 equal to—

5 ‘‘(i) 26.8 cents, multiplied by

6 ‘‘(ii) the inflation adjustment for such

7 calendar year.

8 ‘‘(B) INFLATION ADJUSTMENT.—For pur9 poses of subparagraph (A), the inflation adjust10 ment for any calendar year is the percentage (if

11 any) by which—

12 ‘‘(i) the GDP deflator for the preced13 ing calendar year, exceeds

14 ‘‘(ii) the GDP deflator for 1996.

15 ‘‘(C) GDP DEFLATOR FOR CALENDAR

16 YEAR.—For purposes of subparagraph (B), the

17 GDP deflator for any calendar year is the GDP

18 deflator for the second calendar quarter of such

19 year.

20 ‘‘(D) GDP DEFLATOR.—For purposes of

21 subparagraph (C), the term ‘GDP deflator’

22 means the most recent revision of the implicit

23 price deflator for the gross domestic product as

24 computed and published by the Department of
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1 Commerce before November 15 of the calendar

2 year referred to in subparagraph (B)(i).

3 ‘‘(b) SUPPLEMENTAL RATE.—For purposes of this

4 subchapter—

5 ‘‘(1) PHASE-IN RATES.—Effective during—

6 ‘‘(A) the 1-year period beginning on July

7 1, 1994, the supplemental rate is 11.4 cents,

8 and

9 ‘‘(B) the 1-year period beginning on July

10 1, 1995, the supplemental rate is 22.8 cents.

11 ‘‘(2) PERMANENT UNINDEXED RATE.—Effec12 tive on and after July 1, 1996, the supplemental

13 rate is 34.2 cents.

14 ‘‘(3) INDEXED RATES.—Effective during any

15 calendar year after 1997, the supplemental rate

16 under paragraph (2) shall be increased by an

17 amount equal to—

18 ‘‘(A) 34.2 cents, multiplied by

19 ‘‘(B) the inflation adjustment for such cal20 endar year determined under subsection

21 (a)(3)(B).

22 ‘‘(c) ROUNDING.—If any increase determined under

23 subsection (a)(3) or (b)(3) is not a multiple of 0.1 cent,

24 such increase shall be rounded to the nearest multiple of

25 0.1 cent.
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1 ‘‘PART IV—USE TAXES; FLOOR STOCKS TAXES;

2 ADMINISTRATIVE PROVISIONS; DEFINITIONS

3 AND SPECIAL RULES

‘‘Sec. 4451. Tax on certain uses.

‘‘Sec. 4452. Floor stocks taxes.

‘‘Sec. 4453. Administrative provisions.

‘‘Sec. 4454. Definitions and special rules.

4 ‘‘SEC. 4451. TAX ON CERTAIN USES.

5 ‘‘(a) GENERAL RULE.—There is hereby imposed a

6 tax on the use of any fossil fuel—

7 ‘‘(1) in the manufacture or production in the

8 United States of a fuel other than at a refinery, or

9 ‘‘(2) as a fuel.

10 The preceding sentence shall not apply if tax was imposed

11 under this subchapter before such use and such tax is not

12 credited or refunded.

13 ‘‘(b) RATE OF TAX.—

14 ‘‘(1) IN GENERAL.—Except as otherwise pro15 vided in this subsection, the amount of tax imposed

16 by subsection (a) shall be the amount which would

17 be imposed under the appropriate section of part I

18 or II if such use were a taxable event under such

19 section.

20 ‘‘(2) CRUDE OIL AND OTHER PRODUCTS NOT

21 TAXED ON REMOVAL OR IMPORTATION.—The

22 amount of the tax imposed by subsection (a) on

23 crude oil or other product not subject to tax under
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1 part I or II shall be the base rate (increased by the

2 supplemental rate in the case of crude oil or any pe3 troleum product other than any liquefied petroleum

4 gas, isopentane, and natural gasoline) for each mil5 lion Btu’s of the Btu content of such oil or product.

6 ‘‘(3) AUTHORITY TO PRESCRIBE APPLICABLE

7 PER UNIT BTU FACTORS.—In the case of crude oil

8 or any other product for which an applicable per

9 unit Btu factor is not prescribed for purposes of

10 part I or II, the Secretary may prescribe such a fac11 tor, and, if so prescribed, such factor shall apply for

12 purposes of paragraph (2).

13 ‘‘(c) LIABILITY FOR TAX.—The taxes imposed by

14 subsection (a) shall be paid by the person using the fuel.

15 ‘‘(d) EXCEPTIONS.—

16 ‘‘(1) IN GENERAL.—Except as provided in sub17 section (e), the tax imposed by this section shall not

18 apply to—

19 ‘‘(A) any use to which section 4442, sec20 tion 4444(e), or subsection (d) or (e) of section

21 4445 applies, or

22 ‘‘(B) any use of methane described in sec23 tion 4444(f)(1)(A).

24 ‘‘(2) USE ON PRODUCTION PREMISES.—The tax

25 imposed by this section shall not apply to any use
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1 of crude oil or natural gas for producing crude oil

2 or natural gas if—

3 ‘‘(A) in the case of crude oil, it is used be4 fore entry at the lease automatic custody trans5 fer point (or its manual equivalent), and

6 ‘‘(B) in the case of natural gas, it is used

7 before entry into an interstate or intrastate

8 transmission pipeline.

9 ‘‘(3) CRUDE OIL USED AT REFINERY, ETC.—

10 The tax imposed by this section shall not apply to—

11 ‘‘(A) any use of crude oil at a facility at

12 which crude oil is refined or any use at such fa13 cility of any product produced at such facility,

14 ‘‘(B) any use of natural gas at a natural

15 gas processing or fractionation plant or any use

16 at such plant of any product produced at such

17 plant, or

18 ‘‘(C) any use of ethanol at a facility at

19 which ethanol is produced for use as a fuel.

20 ‘‘(4) OTHERWISE TAXABLE EVENT OCCURRING

21 BEFORE EFFECTIVE DATE.—The tax imposed by

22 this section shall not apply to any use if no tax

23 would be imposed by this section on such use were

24 this subchapter in effect for all periods before July

25 1, 1994.
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1 ‘‘(e) GENERATION OF STEAM AND ELECTRICITY.—

2 ‘‘(1) IN GENERAL.—In the case of a facility

3 which uses any taxable refined petroleum product,

4 natural gas, or coal—

5 ‘‘(A) to generate electricity, and

6 ‘‘(B) to produce steam which is used or

7 which is furnished or sold in the trade or busi8 ness of the furnishing or sale of steam,

9 the tax imposed by subsection (a) shall apply to the

10 use of such product, gas, or coal at such facility to

11 the extent such use is attributable (determined on

12 the basis of the proportionate Btu content of the

13 electricity and the steam) to the production of steam

14 which is so used, furnished, or sold.

15 ‘‘(2) EXCEPTIONS.—Paragraph (1) shall not

16 apply to steam used for any purpose if tax would not

17 be imposed under this subchapter on the fuel used

18 to produce the steam had such fuel been used di19 rectly for such purpose.

20 ‘‘(f) TREATMENT OF NATURAL GAS LOST IN TRANS21 MISSION.—For purposes of this section, natural gas lost

22 in transmission by a pipeline shall be treated as used as

23 a fuel for such pipeline.
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1 ‘‘SEC. 4452. FLOOR STOCKS TAXES.

2 ‘‘(a) IMPOSITION OF TAX.—There is hereby imposed

3 a tax on any taxable fuel which on any tax-increase date

4 is held in the United States by any person.

5 ‘‘(b) AMOUNT OF TAX.—The amount of the tax im6 posed by subsection (a) on any taxable fuel with respect

7 to any tax-increase date shall be equal to the excess (if

8 any) of—

9 ‘‘(1) the amount of tax which would be imposed

10 under part I or II if a taxable event with respect to

11 such fuel had occurred on such date, over

12 ‘‘(2) the prior tax (if any) imposed by this sub13 chapter on such fuel.

14 ‘‘(c) LIABILITY FOR TAX.—The person holding the

15 taxable fuel on any tax-increase date shall pay the tax im16 posed by subsection (a).

17 ‘‘(d) EXCEPTIONS.—The tax imposed by subsection

18 (a) shall not apply to—

19 ‘‘(1) any taxable fuel held before the point

20 where it would otherwise be subject to tax under

21 part I or II, or

22 ‘‘(2) any taxable fuel held by any person exclu23 sively for any use by such person to the extent a

24 credit or refund (or other payment) of the tax im25 posed by this section would be allowable or payable

26 if such tax were imposed by part I or II.
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1 ‘‘(e) CREDIT AGAINST TAX.—

2 ‘‘(1) IN GENERAL.—Each person shall be al3 lowed $200 as a credit against the taxes imposed by

4 subsection (a) with respect to each tax-increase date.

5 Such credit shall not exceed the amount of taxes im6 posed by subsection (a) for which such person is lia7 ble with respect to such date.

8 ‘‘(2) CONTROLLED GROUPS.—For purposes of

9 paragraph (1)—

10 ‘‘(A) all persons who are treated as a sin11 gle employer under subsection (a) or (b) of sec12 tion 52 shall be treated as 1 taxpayer, and

13 ‘‘(B) the $200 amount specified in para14 graph (1) shall be apportioned among such per15 sons under regulations prescribed by the Sec16 retary.

17 ‘‘(f) DEFINITIONS.—For purposes of this section—

18 ‘‘(1) TAXABLE FUEL.—The term ‘taxable fuel’

19 means any taxable refined petroleum product, natu20 ral gas, or coal.

21 ‘‘(2) TAX-INCREASE DATE.—The term ‘tax-in22 crease date’ means—

23 ‘‘(A) July 1, 1994,

24 ‘‘(B) July 1, 1995,

25 ‘‘(C) July 1, 1996, and
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1 ‘‘(D) January 1 of each calendar year for

2 which there is an increase in a rate of tax by

3 reason of subsection (a)(3) or (b)(3) of section

4 4448 (relating to inflation adjustment).

5 ‘‘(g) DUE DATE.—The tax imposed by subsection (a)

6 shall be paid on or before the close of the 7-month period

7 beginning on the tax-increase date.

8 ‘‘SEC. 4453. ADMINISTRATIVE PROVISIONS.

9 ‘‘(a) RULES RELATING TO REFUNDS FOR EXEMPT

10 AND OTHER USES.—

11 ‘‘(1) PERIOD FOR FILING CLAIMS.—No pay12 ment shall be made under section 4442, 4444(f), or

13 4445(e) unless, within 2 years after the date that

14 the event occurs giving rise to a right to such pay15 ment, a claim therefor is filed by the person entitled

16 to such payment.

17 ‘‘(2) DENIAL OF INTEREST.—Except as pro18 vided in paragraph (3), no interest shall be paid on

19 claims for payments under section 4442, 4444(f), or

20 4445(e).

21 ‘‘(3) MINIMUM AMOUNTS AND PERIODS.—In

22 the case of persons who meet such requirements as

23 the Secretary may prescribe, if—

24 ‘‘(A) a claim for payment is filed under

25 section 4442, 4444(f), or 4445(e) for any pe-
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1 riod for which more than $1,000 is payable and

2 which is not less than 1 week, and

3 ‘‘(B) the Secretary has not paid such claim

4 within 20 days after the date the claim was

5 filed,

6 such claim shall be paid with interest from such date

7 using the overpayment rate and method under sec8 tion 6621. The preceding sentence shall not apply to

9 a claim filed under section 4442(b)(1). Nothing in

10 section 6611(e) shall bar interest payable under this

11 paragraph.

12 ‘‘(4) HEATING OIL.—

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

14 subparagraph (B), not more than 1 claim may

15 be filed under section 4442(b)(1) by any person

16 with respect to fuel oil sold by such person dur17 ing any calendar year.

18 ‘‘(B) EXCEPTION.—If $1,000 or more is

19 payable under section 4442(b)(1) to any person

20 with respect to fuel oil sold during any of the

21 1st 3 quarters of the calendar year, a claim

22 may be filed under section 4442(b)(1) with re23 spect to fuel oil sold during such quarter. No

24 claim filed under this subparagraph shall be al25 lowed unless filed on or before the last day of
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1 the 1st quarter following the quarter for which

2 the claim is filed.

3 ‘‘(5) APPLICABLE LAWS.—

4 ‘‘(A) IN GENERAL.—All provisions of law,

5 including penalties, applicable in respect of the

6 tax imposed by this subchapter shall, insofar as

7 applicable and not inconsistent with this sub8 section and section 4442, 4444(f), or 4445(e),

9 apply in respect of payments provided for in

10 such section to the same extent as if such pay11 ments constituted refunds of overpayments of

12 the tax so imposed.

13 ‘‘(B) EXAMINATION OF BOOKS AND WIT14 NESSES.—For the purpose of ascertaining the

15 correctness of any claim made under section

16 4442, 4444(f), or 4445(e), or the correctness of

17 any payment made in respect of such claim, the

18 Secretary shall have the authority granted by

19 paragraphs (1), (2), and (3) of section 7602(a)

20 (relating to examination of books and wit21 nesses) as if the claimant were the person liable

22 for tax.

23 ‘‘(b) PAYMENT OF TAX TO PERSONS REQUIRED TO

24 COLLECT TAX.—
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1 ‘‘(1) PAYMENT WITHIN 30 DAYS.—In the case

2 of the taxes imposed by sections 4444 and 4446

3 which are required to be collected by another person,

4 the person liable for such tax shall remit the tax to

5 such other person within 30 days after the date of

6 the taxable event.

7 ‘‘(2) RELIEF FROM PENALTY FOR CERTAIN

8 FAILURES TO COLLECT TAX.—No penalty shall be

9 imposed under this title on the failure of any person

10 to collect the taxes referred to in paragraph (1) if—

11 ‘‘(A) during the 30-day period referred to

12 in paragraph (1), such person exercises due dili13 gence in attempting to collect such tax, and

14 ‘‘(B) such person notifies the Secretary,

15 within 15 days after the close of the month in

16 which such 30-day period ends, of the failure to

17 collect such tax and provides such other infor18 mation as the Secretary may require.

19 ‘‘(3) EXCEPTION FOR PERSONS WITH SECOND20 ARY LIABILITY.—Paragraphs (1) and (2) shall not

21 apply if the person required to collect the tax is re22 quired to pay any portion of such tax which is not

23 paid by the person primarily liable for such tax.

24 ‘‘(c) INFORMATION REPORTING.—The Secretary may

25 require—
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1 ‘‘(1) information reporting by each remitter of

2 tax imposed by this subchapter, and

3 ‘‘(2) information reporting by, and registration

4 of, such other persons as the Secretary deems nec5 essary to carry out this subchapter.

6 ‘‘(d) REGISTRATION.—

7 ‘‘(1) IN GENERAL.—Every person required by

8 the Secretary to register under this subsection with

9 respect to any tax imposed by this subchapter shall

10 register with the Secretary at such time, in such

11 form and manner, and subject to such terms and

12 conditions, as the Secretary may by regulations pre13 scribe. A registration under this subsection may be

14 used only in accordance with regulations prescribed

15 under this section.

16 ‘‘(2) OTHER RULES.—Rules similar to the rules

17 of section 4101(b) and 4222(c) shall apply for pur18 poses of this subsection.

19 ‘‘(e) ADJUSTMENTS TO PER UNIT BTU FACTORS.—

20 ‘‘(1) IN GENERAL.—If the Secretary determines

21 that the applicable per unit Btu factor then in effect

22 for any taxable refined petroleum product or natural

23 gas does not, when multiplied by 1,000,000, properly

24 reflect the Btu content per unit for such substance

25 (in the circumstances where taxable events under
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1 this subchapter occur with respect to such sub2 stance), the Secretary may modify the applicable per

3 unit Btu factor for such substance. Any such modi4 fication shall be effective as of the date prescribed

5 by the Secretary.

6 ‘‘(2) MODIFICATION OF LIST OF REFINED PE7 TROLEUM PRODUCTS.—The Secretary may modify,

8 as appropriate, the list of refined petroleum products

9 in section 4441 for which applicable per unit Btu

10 factors are separately determined.

11 ‘‘SEC. 4454. DEFINITIONS AND SPECIAL RULES.

12 ‘‘(a) DEFINITIONS.—For purposes of this sub13 chapter—

14 ‘‘(1) FOSSIL FUEL.—The term ‘fossil fuel’

15 means crude oil, any petroleum product, natural gas,

16 any natural gas product, and coal.

17 ‘‘(2) CRUDE OIL.—The term ‘crude oil’ includes

18 condensates from crude oil.

19 ‘‘(3) COAL.—The term ‘coal’ includes lignite.

20 ‘‘(4) UNITED STATES.—The term ‘United

21 States’ means the 50 States, the District of Colum22 bia, and the foreign trade zones of the United

23 States.

24 ‘‘(5) PERSON.—The term ‘person’ includes the

25 United States, any State or political subdivision
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1 thereof, the District of Columbia, and any agency or

2 instrumentality of any of the foregoing.

3 ‘‘(c) FRACTIONAL PART OF UNIT.—In the case of a

4 fraction of a unit, the tax imposed by this subchapter shall

5 be the same fraction of the amount of such tax imposed

6 on a whole unit.

7 ‘‘(d) SPECIAL RULES RELATING TO PUERTO RICO

8 AND THE VIRGIN ISLANDS.—

9 ‘‘(1) LIKE TAX ON ARTICLES BROUGHT INTO

10 THE UNITED STATES FROM PUERTO RICO OR THE

11 VIRGIN ISLANDS.—For purposes of this subchapter,

12 articles brought into the United States from the

13 Commonwealth of Puerto Rico or the Virgin Islands

14 shall be treated as entered into the United States at

15 the time brought into the United States.

16 ‘‘(2) DISPOSITION OF REVENUES.—The provi17 sions of subsections (a)(3) and (b)(3) of section

18 7652 shall not apply to any tax imposed by this sub19 chapter.

20 ‘‘(e) NO EXEMPTION FROM TAX.—No person shall

21 be exempt from any tax imposed by this subchapter except

22 to the extent provided in this subchapter or in any provi23 sion of law enacted after the date of the enactment of this

24 subchapter which grants a specific exemption, by reference

25 to this subchapter, from a tax imposed by this subchapter.
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1 ‘‘PART V—TAX ON IMPORTED HIGH-ENERGY

2 PRODUCTS

‘‘Sec. 4456. Imposition of tax.

‘‘Sec. 4457. Definitions and special rules.

3 ‘‘SEC. 4456. IMPOSITION OF TAX.

4 ‘‘(a) GENERAL RULE.—There is hereby imposed a

5 tax on any taxable high-energy product entered into the

6 United States for consumption, use, or warehousing.

7 ‘‘(b) AMOUNT OF TAX.—The amount of the tax im8 posed by subsection (a) on any taxable high-energy prod9 uct shall be the imputed Btu tax with respect to such

10 product.

11 ‘‘(c) LIABILITY FOR TAX.—The tax imposed by sub12 section (a) shall be paid by the person entering the prod13 uct for consumption, use, or warehousing.

14 ‘‘SEC. 4457. DEFINITIONS AND SPECIAL RULES.

15 ‘‘(a) TAXABLE HIGH-ENERGY PRODUCT.—For pur16 poses of this part—

17 ‘‘(1) IN GENERAL.—The term ‘taxable high-en18 ergy product’ means any product which, at the time

19 entered into the United States for consumption, use,

20 or warehousing, is listed as a taxable high-energy

21 product by the Secretary.

22 ‘‘(2) DETERMINATION OF PRODUCTS ON

23 LIST.—A product shall be listed under paragraph

24 (1) if the product is produced in an industry identi-
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1 fied (using 4-digit SIC codes) in the most recent

2 census of manufacturing as producing products

3 which on average have more than 2 percent of their

4 value attributable to direct energy inputs (exclusive

5 of the tax imposed by parts I and II) of taxable en6 ergy sources.

7 ‘‘(3) TAXABLE ENERGY SOURCE.—The term

8 ‘taxable energy source’ means any taxable refined

9 petroleum product, natural gas, coal, and electricity.

10 ‘‘(b) IMPUTED BTU TAX.—For purposes of this

11 part—

12 ‘‘(1) IN GENERAL.—Except as otherwise pro13 vided in this subsection, the term ‘imputed Btu tax’

14 means, with respect to any taxable high-energy prod15 uct, the amount of tax which would have been im16 posed by parts I and II on taxable energy sources

17 directly used in the manufacture or production of

18 the product if—

19 ‘‘(A) such product were manufactured or

20 produced using the predominant method of

21 manufacture or production of such product in

22 the United States, and

23 ‘‘(B) such taxable energy sources had been

24 subject to tax under such parts on the date of
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1 the entry of the product into the United States

2 for consumption, use, or warehousing.

3 ‘‘(2) TAX WHERE INFORMATION FURNISHED.—

4 If the person liable for the tax imposed by section

5 4456 with respect to any product furnishes to the

6 Secretary (at such time and in such manner as the

7 Secretary shall prescribe) sufficient information to

8 determine the imputed Btu tax with respect to such

9 product, the imputed Btu tax determined using such

10 information shall apply in lieu of the amount deter11 mined under paragraph (1).

12 ‘‘(c) REQUESTS TO CHANGE LIST.—If any importer

13 or producer of any product requests that the Secretary

14 determine whether—

15 ‘‘(1) such product should be listed as a taxable

16 high-energy product under subsection (a)(1) or be

17 removed from such listing, or

18 ‘‘(2) the imputed Btu tax for such product

19 under subsection (b)(1),

20 the Secretary shall make such determination within 180

21 days after the date the request was filed.’’

22 (b) REFUNDS FOR FARM USE OF GASOLINE AND

23 DIESEL FUEL.—

24 (1) GASOLINE.—
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1 (A) Subsection (a) of section 6420 is

2 amended by adding at the end thereof the fol3 lowing new flush sentence:

4 ‘‘If the supplemental rate of the tax imposed by section

5 4441 was imposed on such gasoline, the Secretary shall

6 also pay (without interest) to such ultimate purchaser an

7 amount equal to the product of such supplemental rate

8 and the applicable per unit Btu factor per barrel (deter9 mined under section 4441) of the gasoline so used.’’

10 (B) Subsection (h) of section 6420 is

11 amended by inserting ‘‘and taxes imposed by

12 section 4441’’ after ‘‘financing rate’’.

13 (2) DIESEL FUEL.—

14 (A) Section 6427 is amended by redesig15 nating subsections (m) through (r) as sub16 sections (n) through (s), respectively, and by in17 serting after subsection (l) the following new

18 subsection:

19 ‘‘(m) REFUNDS OF SUPPLEMENTAL RATE OF BTU

20 TAX ON FARM USE OF DIESEL FUEL.—Except as pro21 vided in subsection (k), if the supplemental rate of the

22 tax imposed by section 4441 was imposed on diesel fuel

23 used on a farm for farming purposes (within the meaning

24 of section 6420(c)), the Secretary shall pay (without inter25 est) to the ultimate purchaser of such fuel an amount
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1 equal to the product of such supplemental rate and the

2 applicable per unit Btu factor per barrel (determined

3 under section 4441) of the diesel fuel so used.’’

4 (B) Paragraph (1) of section 6427(i) is

5 amended by inserting ‘‘(m),’’ after ‘‘(l),’’.

6 (C) Paragraph (4) of section 6427(i), as

7 amended by subpart B, is amended—

8 (i) by striking ‘‘OR 4091’’ in the para9 graph heading and inserting ‘‘, 4091, OR

10 4441’’, and

11 (ii) by striking ‘‘subsection (l)’’ each

12 place it appears and inserting ‘‘subsections

13 (l) and (m)’’.

14 (c) CIVIL PENALTY FOR USING REDUCED-RATE

15 FUEL FOR TAXABLE USE.—

16 (1) IN GENERAL.—Part I of subchapter B of

17 chapter 68 (relating to assessable penalties) is

18 amended by adding at the end thereof the following

19 new section:

20 ‘‘SEC. 6714. DYED FUEL SOLD FOR USE OR USED IN TAX21 ABLE USE.

22 ‘‘(a) IMPOSITION OF PENALTY.—If any dyed fuel—

23 ‘‘(1) is sold by any person for any use which

24 such person knows or has reason to know is not a

25 reduced-tax use of such fuel, or
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1 ‘‘(2) is used by any person for a use other than

2 a reduced-tax use and such person knew, or had rea3 son to know, that such fuel was so dyed,

4 then, in addition to the tax, such person shall pay a pen5 alty on such sale or use.

6 ‘‘(b) AMOUNT OF PENALTY.—The amount of the

7 penalty under subsection (a) on any sale or use shall be

8 the greater of—

9 ‘‘(1) $1,000, or

10 ‘‘(2) an amount equal to twice the excess of the

11 aggregate taxes which should have been imposed

12 under section 4441 on the fuel so sold or used over

13 the prior taxes (if any) imposed on such fuel under

14 such section which have not been credited or re15 funded.

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

17 ‘‘(1) DYED FUEL.—The term ‘dyed fuel’

18 means—

19 ‘‘(A) qualified heating oil (as defined in

20 section 4441(b)(2)(B)), and

21 ‘‘(B) diesel fuel dyed in accordance with

22 section 4441(b)(2)(C).

23 ‘‘(2) REDUCED-TAX USE.—The term ‘reduced24 tax use’ means, with respect to any fuel, the use for

25 which such fuel was dyed.’’
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1 (2) CLERICAL AMENDMENT.—The table of sec2 tions for such part I is amended by adding at the

3 end thereof the following new item:

‘‘Sec. 6714. Dyed fuel sold for use or used in taxable use.’’

4 (d) TECHNICAL AMENDMENTS.—

5 (1)(A) Subsection (a) of section 6675 is amend6 ed by inserting ‘‘section 4442 (relating to refunds of

7 petroleum tax for certain sales and uses), section

8 4444(f) (relating to methane recovered from biomass

9 or coal mining), section 4445(e) (relating to coal

10 used in production of coke for steel),’’ before ‘‘sec11 tion 6420’’.

12 (B) Subsection (b) of section 6675 is amended

13 by inserting ‘‘4442, 4444(f), 4445(e),’’ before

14 ‘‘6420’’.

15 (2) Section 6206 is amended—

16 (A) by inserting ‘‘(a) FUEL TAXES.—’’ be17 fore ‘‘Any portion of’’, and

18 (B) by adding at the end thereof the fol19 lowing new subsection:

20 ‘‘(b) BTU TAXES.—Any portion of a payment made

21 under section 4442, 4444(f), or 4445(e) which constitutes

22 an excessive amount (as defined in section 6675(b)), and

23 any civil penalty provided by section 6675, may be as24 sessed and collected as if it were a tax imposed by sub25 chapter A of chapter 36 and as if the person who made
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1 the claim were liable for such tax. The period for assessing

2 any such portion, and for assessing any such penalty, shall

3 be 3 years from the last day prescribed for filing a claim

4 under section 4442, 4444(f), or 4445(e).’’

5 (3)(A) The section heading for section 6206 is

6 amended by striking ‘‘UNDER SECTIONS 6420, 6421,

7 AND 6427’’ and inserting ‘‘FOR CERTAIN FUELS TAX

8 REFUNDS AND ENERGY TAX REFUNDS’’.

9 (B) The item relating to section 6206 in the

10 table of sections for subchapter A of chapter 63 is

11 amended by striking ‘‘under sections 6420, 6421,

12 and 6427’’ and inserting ‘‘for certain fuels tax re13 funds and energy tax refunds’’.

14 (4) Subparagraph (B) of section 6724(d)(1) is

15 amended—

16 (A) by striking ‘‘or’’ at the end of clause

17 (xi),

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

19 clause (xii) relating to section 4101(d) and in20 serting a comma,

21 (C) by redesignating the clause (xii) relat22 ing to section 338(h)(10)(C) as clause (xiii) and

23 by striking the period at the end thereof and in24 serting ‘‘, or’’, and
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1 (D) by inserting after clause (xiii), as so

2 redesignated, the following new clause:

3 ‘‘(xiv) section 4453(c) (relating to in4 formation reporting with respect to energy

5 taxes).’’

6 (5) Sections 7210, section 7603, subsections (b)

7 and (c)(2) of section 7604, section 7605, and

8 7610(c) are each amended by inserting

9 ‘‘4453(a)(5)(B),’’ before ‘‘6420(e)(2)’’ each place it

10 appears.

11 (6) Subparagraph (A) of section 9505(c)(3) is

12 amended by striking ‘‘subchapter A’’ and inserting

13 ‘‘subchapter B’’.

14 (7) The table of subchapters for chapter 36 is

15 amended by striking the items relating to sub16 chapters A and B and inserting the following:

‘‘Subchapter A. Energy taxes.

‘‘Subchapter B. Harbor maintenance tax.

‘‘Subchapter C. Transportation by water.’’

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

18 this section shall take effect on July 1, 1994.

19 Subpart B—Modifications to Tax on Diesel Fuel

20 SEC. 14242. MODIFICATIONS TO TAX ON DIESEL FUEL.

21 (a) IN GENERAL.—Subparts A and B of part III of

22 subchapter A of chapter 32 (relating to manufacturers ex23 cise taxes) are amended to read as follows:
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1 ‘‘Subpart A—Gasoline and Diesel Fuel

‘‘Sec. 4081. Imposition of tax.

‘‘Sec. 4082. Exemptions for diesel fuel.

‘‘Sec. 4083. Definitions and special rule.

‘‘Sec. 4084. Cross references.

2 ‘‘SEC. 4081. IMPOSITION OF TAX.

3 ‘‘(a) TAX IMPOSED.—

4 ‘‘(1) TAX ON REMOVAL, ENTRY, OR SALE.—

5 ‘‘(A) IN GENERAL.—There is hereby im6 posed a tax at the rate specified in paragraph

7 (2) on—

8 ‘‘(i) the removal of a taxable fuel from

9 any refinery,

10 ‘‘(ii) the removal of a taxable fuel

11 from any terminal,

12 ‘‘(iii) the entry into the United States

13 of any taxable fuel for consumption, use,

14 or warehousing, and

15 ‘‘(iv) the sale of a taxable fuel to any

16 person who is not registered under section

17 4101 unless there was a prior taxable re18 moval or entry of such fuel under clause

19 (i), (ii), or (iii).

20 ‘‘(B) EXEMPTION FOR BULK TRANSFERS

21 TO REGISTERED TERMINALS.—The tax imposed

22 by this paragraph shall not apply to any re23 moval or entry of a taxable fuel transferred in
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1 bulk to a terminal if the person removing or en2 tering the taxable fuel and the operator of such

3 terminal are registered under section 4101.

4 ‘‘(2) RATES OF TAX.—

5 ‘‘(A) IN GENERAL.—The rate of the tax

6 imposed by this section is the sum of—

7 ‘‘(i) the Highway Trust Fund financ8 ing rate,

9 ‘‘(ii) the Leaking Underground Stor10 age Tank Trust Fund financing rate, and

11 ‘‘(iii) the deficit reduction rate.

12 ‘‘(B) RATES.—For purposes of subpara13 graph (A)—

14 ‘‘(i) the Highway Trust Fund financ15 ing rate is—

16 ‘‘(I) 11.5 cents per gallon in the

17 case of gasoline, and

18 ‘‘(II) 17.5 cents per gallon in the

19 case of diesel fuel,

20 ‘‘(ii) the Leaking Underground Stor21 age Tank Trust Fund financing rate is 0.1

22 cent per gallon, and

23 ‘‘(iii) the deficit reduction rate is 2.5

24 cents per gallon.
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1 ‘‘(b) TREATMENT OF REMOVAL OR SUBSEQUENT

2 SALE BY BLENDER.—

3 ‘‘(1) IN GENERAL.—There is hereby imposed a

4 tax at the rate specified in subsection (a) on taxable

5 fuel removed or sold by the blender thereof.

6 ‘‘(2) CREDIT FOR TAX PREVIOUSLY PAID.—If—

7 ‘‘(A) tax is imposed on the removal or sale

8 of a taxable fuel by reason of paragraph (1),

9 and

10 ‘‘(B) the blender establishes the amount of

11 the tax paid with respect to such fuel by reason

12 of subsection (a),

13 the amount of the tax so paid shall be allowed as a

14 credit against the tax imposed by reason of para15 graph (1).

16 ‘‘(c) TAXABLE FUELS MIXED WITH ALCOHOL AT

17 REFINERY, ETC.—

18 ‘‘(1) REDUCED RATES.—

19 ‘‘(A) IN GENERAL.—Under regulations

20 prescribed by the Secretary, subsection (a) shall

21 be applied by substituting rates which are the

22 applicable fraction of the otherwise applicable

23 rates in the case of the removal or entry of any

24 taxable fuel for use in producing at the time of

25 such removal or entry a qualified alcohol mix-
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1 ture. Subject to such terms and conditions as

2 the Secretary may prescribe (including the ap3 plication of section 4101), the treatment under

4 the preceding sentence also shall apply to use in

5 producing such a mixture after the time of such

6 removal or entry.

7 ‘‘(B) APPLICABLE FRACTION.—For pur8 poses of subparagraph (A), the applicable frac9 tion is—

10 ‘‘(i) in the case of a qualified alcohol

11 mixture which contains gasoline, the frac12 tion the numerator of which is 10 and the

13 denominator of which is—

14 ‘‘(I) 9 in the case of 10 percent

15 gasohol,

16 ‘‘(II) 9.23 in the case of 7.7 per17 cent gasohol, and

18 ‘‘(II) 9.43 in the case of 5.7 per19 cent gasohol, and

20 ‘‘(ii) in the case of a qualified alcohol

21 mixture which does not contain gasoline,

10 22 ⁄9.

23 ‘‘(2) LATER SEPARATION OF FUEL FROM

24 QUALIFIED ALCOHOL MIXTURE.—If any person sep25 arates the taxable fuel from a qualified alcohol mix-
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1 ture on which tax was imposed under subsection (a)

2 at the otherwise applicable Highway Trust Fund fi3 nancing rate (or its equivalent) by reason of this

4 subsection (or with respect to which a credit or pay5 ment was allowed or made by reason of section

6 6427(f)(1)), such person shall be treated as the re7 finer of such taxable fuel. The amount of tax im8 posed on any removal of such fuel by such person

9 shall be reduced by the amount of tax imposed (and

10 not credited or refunded) on any prior removal or

11 entry of such fuel.

12 ‘‘(3) ALCOHOL; QUALIFIED ALCOHOL MIX13 TURE.—For purposes of this subsection—

14 ‘‘(A) ALCOHOL.—The term ‘alcohol’ in15 cludes methanol and ethanol but does not in16 clude alcohol produced from petroleum, natural

17 gas, or coal (including peat). Such term does

18 not include alcohol with a proof of less than

19 190 (determined without regard to any added

20 denaturants).

21 ‘‘(B) QUALIFIED ALCOHOL MIXTURE.—

22 The term ‘qualified alcohol mixture’ means—

23 ‘‘(i) any mixture of gasoline with alco24 hol if at least 5.7 percent of such mixture

25 is alcohol, and
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1 ‘‘(ii) any mixture of diesel fuel with

2 alcohol if at least 10 percent of such mix3 ture is alcohol.

4 ‘‘(4) OTHERWISE APPLICABLE RATES FOR GAS5 OLINE MIXTURES.—For purposes of this sub6 section—

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

8 Highway Trust Fund financing rate, the other9 wise applicable rate for gasoline in a qualified

10 alcohol mixture is—

11 ‘‘(i) 6.1 cents a gallon for 10 percent

12 gasohol,

13 ‘‘(ii) 7.342 cents a gallon for 7.7 per14 cent gasohol, and

15 ‘‘(iii) 8.422 cents a gallon for 5.7 per16 cent gasohol.

17 In the case of a mixture none of the alcohol in

18 which consists of ethanol, clauses (i), (ii), and

19 (iii) shall be applied by substituting ‘5.5 cents’

20 for ‘6.1 cents’, ‘6.88 cents’ for ‘7.342 cents’,

21 and ‘8.08 cents’ for ‘8.422 cents’.

22 ‘‘(B) 10 PERCENT GASOHOL.—The term

23 ‘10 percent gasohol’ means any mixture of gas24 oline with alcohol if at least 10 percent of such

25 mixture is alcohol.
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1 ‘‘(C) 7.7 PERCENT GASOHOL.—The term

2 ‘7.7 percent gasohol’ means any mixture of gas3 oline with alcohol if at least 7.7 percent, but

4 not 10 percent or more, of such mixture is alco5 hol.

6 ‘‘(D) 5.7 PERCENT GASOHOL.—The term

7 ‘5.7 percent gasohol’ means any mixture of gas8 oline with alcohol if at least 5.7 percent, but

9 not 7.7 percent or more, of such mixture is al10 cohol.

11 ‘‘(5) OTHERWISE APPLICABLE RATES FOR DIE12 SEL FUEL MIXTURES.—For purposes of this sub13 section, in the case of the Highway Trust Fund fi14 nancing rate, the otherwise applicable rate for diesel

15 fuel in a qualified alcohol mixture is 12.1 cents per

16 gallon (11.5 cents per gallon in the case of a quali17 fied alcohol mixture none of the alcohol in which

18 consists of ethanol).

19 ‘‘(6) TERMINATION.—Paragraph (1) shall not

20 apply to any removal or sale after September 30,

21 2000.

22 ‘‘(d) TERMINATION.—

23 ‘‘(1) HIGHWAY TRUST FUND FINANCING

24 RATE.—On and after October 1, 1999, the Highway
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1 Trust Fund financing rate under subsection (a)(2)

2 shall not apply.

3 ‘‘(2) LEAKING UNDERGROUND STORAGE TANK

4 TRUST FUND FINANCING RATE.—The Leaking Un5 derground Storage Tank Trust Fund financing rate

6 under subsection (a)(2) shall not apply after Decem7 ber 31, 1995.

8 ‘‘(3) DEFICIT REDUCTION RATE.—On and after

9 October 1, 1995, the deficit reduction rate under

10 subsection (a)(2) shall not apply.

11 ‘‘(e) REFUNDS IN CERTAIN CASES.—Under regula12 tions prescribed by the Secretary, if any person who paid

13 the tax imposed by this section with respect to any taxable

14 fuel establishes to the satisfaction of the Secretary that

15 a prior tax was paid (and not credited or refunded) with

16 respect to such taxable fuel, then an amount equal to the

17 tax paid by such person shall be allowed as a refund (with18 out interest) to such person in the same manner as if it

19 were an overpayment of tax imposed by this section.

20 ‘‘SEC. 4082. EXEMPTIONS FOR DIESEL FUEL.

21 ‘‘(a) IN GENERAL.—The tax imposed by section 4081

22 shall not apply to diesel fuel—

23 ‘‘(1) which the Secretary determines is destined

24 for a nontaxable use,
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1 ‘‘(2) which is indelibly dyed in accordance with

2 regulations which the Secretary shall prescribe, and

3 ‘‘(3) which meets such marking requirements

4 (if any) as may be prescribed by the Secretary in

5 regulations.

6 ‘‘(b) NONTAXABLE USE.—For purposes of this sec7 tion, the term ‘nontaxable use’ means—

8 ‘‘(1) any use which is exempt from the tax im9 posed by section 4041(a)(1) other than by reason of

10 the imposition of tax on any sale thereof,

11 ‘‘(2) any use in a train, and

12 ‘‘(3) any use described in section 6427(b)(1).

13 ‘‘(c) REGULATIONS.—The Secretary shall prescribe

14 such regulations as may be necessary to carry out this

15 section, including regulations requiring the conspicuous la16 beling of retail diesel fuel pumps and other delivery facili17 ties to assure that persons are aware of which fuel is avail18 able only for nontaxable uses.

19 ‘‘(d) CROSS REFERENCE.—

‘‘For tax on train, motorboat, and certain bus uses

of fuel purchased tax-free, see section 4041(a)(1).

20 ‘‘SEC. 4083. DEFINITIONS AND SPECIAL RULE.

21 ‘‘(a) TAXABLE FUEL.—For purposes of this sub22 part—

23 ‘‘(1) IN GENERAL.—The term ‘taxable fuel’

24 means—
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1 ‘‘(A) gasoline, and

2 ‘‘(B) diesel fuel.

3 ‘‘(2) GASOLINE.—The term ‘gasoline’ includes,

4 to the extent prescribed in regulations—

5 ‘‘(A) gasoline blend stocks, and

6 ‘‘(B) products commonly used as additives

7 in gasoline.

8 For purposes of subparagraph (A), the term ‘gaso9 line blend stock’ means any petroleum product com10 ponent of gasoline.

11 ‘‘(3) DIESEL FUEL.—The term ‘diesel fuel’

12 means any liquid (other than gasoline) which is suit13 able for use as a fuel in a diesel-powered highway

14 vehicle, a diesel-powered train, or a diesel-powered

15 boat.

16 ‘‘(b) CERTAIN USES DEFINED AS REMOVAL.—If any

17 person uses taxable fuel (other than in the production of

18 gasoline, diesel fuel, or special fuels referred to in section

19 4041), such use shall for the purposes of this chapter be

20 considered a removal.
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1 ‘‘SEC. 4084. CROSS REFERENCES.

‘‘(1) For provisions to relieve farmers from excise

tax in the case of gasoline used on the farm for

farming purposes, see section 6420.

‘‘(2) For provisions to relieve purchasers of gasoline from excise tax in the case of gasoline used for

certain nonhighway purposes, used by local transit

systems, or sold for certain exempt purposes, see

section 6421.

‘‘(3) For provisions to relieve purchasers from excise tax in the case of taxable fuel not used for taxable purposes, see section 6427.

2 ‘‘Subpart B—Aviation Fuel

‘‘Sec. 4091. Imposition of tax.

‘‘Sec. 4092. Exemptions.

‘‘Sec. 4093. Definitions.

3 ‘‘SEC. 4091. IMPOSITION OF TAX.

4 ‘‘(a) IN GENERAL.—There is hereby imposed a tax

5 on the sale of aviation fuel by the producer or the importer

6 thereof or by any producer of aviation fuel.

7 ‘‘(b) RATE OF TAX.—

8 ‘‘(1) IN GENERAL.—The rate of the tax im9 posed by subsection (a) shall be the sum of—

10 ‘‘(A) the Airport and Airway Trust Fund

11 financing rate, and

12 ‘‘(B) the Leaking Underground Storage

13 Tank Trust Fund financing rate.

14 ‘‘(2) AIRPORT AND AIRWAY TRUST FUND FI15 NANCING RATE.—For purposes of paragraph (1),

16 the Airport and Airway Trust Fund financing rate

17 is 17.5 cents per gallon.
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1 ‘‘(3) LEAKING UNDERGROUND STORAGE TANK

2 TRUST FUND FINANCING RATE.—For purposes of

3 paragraph (1), the Leaking Underground Storage

4 Tank Trust Fund financing rate is 0.1 cent per gal5 lon.

6 ‘‘(4) TERMINATION OF RATES.—

7 ‘‘(A) The Airport and Airway Trust Fund

8 financing rate shall not apply on and after Jan9 uary 1, 1996.

10 ‘‘(B) The Leaking Underground Storage

11 Tank Fund financing rate shall not apply dur12 ing any period during which the Leaking Un13 derground Storage Tank Trust Fund financing

14 rate under section 4081 does not apply.

15 ‘‘(c) REDUCED RATE OF TAX FOR AVIATION FUEL

16 IN ALCOHOL MIXTURE, ETC.—

17 ‘‘(1) IN GENERAL.—The Airport and Airway

18 Trust Fund financing rate shall be—

19 ‘‘(A) 4.1 cents per gallon in the case of the

20 sale of any mixture of aviation fuel if—

21 ‘‘(i) at least 10 percent of such mix22 ture consists of alcohol (as defined in sec23 tion 4081(c)(3)), and
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1 ‘‘(ii) the aviation fuel in such mixture

2 was not taxed under subparagraph (B),

3 and

4 ‘‘(B) 4.56 cents per gallon in the case of

5 the sale of aviation fuel for use (at the time of

6 such sale) in producing a mixture described in

7 subparagraph (A).

8 In the case of a sale described in subparagraph (B),

9 the Leaking Underground Storage Tank Trust Fund

financing rate shall be 1 10 ⁄9 cent per gallon.

11 ‘‘(2) LATER SEPARATION.—If any person sepa12 rates the aviation fuel from a mixture of the aviation

13 fuel and alcohol on which tax was imposed under

14 subsection (a) at the Airport and Airway Trust

15 Fund financing rate equivalent to 4.1 cents per gal16 lon by reason of this subsection (or with respect to

17 which a credit or payment was allowed or made by

18 reason of section 6427(f)(1)), such person shall be

19 treated as the producer of such aviation fuel. The

20 amount of tax imposed on any sale of such aviation

21 fuel by such person shall be reduced by the amount

22 of tax imposed (and not credited or refunded) on

23 any prior sale of such fuel.

24 ‘‘(3) TERMINATION.—Paragraph (1) shall not

25 apply to any sale after September 30, 2000.
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1 ‘‘(d) LOWER RATES OF TAX ON ALCOHOL MIXTURES

2 NOT MADE FROM ETHANOL.—In the case of a mixture

3 described in subsection (c)(1)(A)(i) none of the alcohol in

4 which is ethanol—

5 ‘‘(1) subsections (c)(1)(A) and (c)(2) shall each

6 be applied by substituting rates which are 0.6 cents

7 less than the rates contained therein, and

8 ‘‘(2) subsection (c)(1)(B) shall be applied by

substituting rates which are 10 9 ⁄9 of the rates deter10 mined under paragraph (1).

11 ‘‘SEC. 4092. EXEMPTIONS.

12 ‘‘(a) NONTAXABLE USES.—The Airport and Airway

13 Trust Fund financing rate under section 4091 shall not

14 apply to aviation fuel sold by a producer or importer for

15 use by the purchaser in a nontaxable use (as defined in

16 section 6427(l)(2)(B)).

17 ‘‘(b) SALES TO PRODUCER.—Under regulations pre18 scribed by the Secretary, the tax imposed by section 4091

19 shall not apply to aviation fuel sold to a producer of such

20 fuel.

21 ‘‘(c) SUPPLIES FOR VESSELS AND AIRCRAFT.—

22 Under regulations prescribed by the Secretary, the Leak23 ing Underground Storage Tank Trust Fund financing rate

24 under section 4091 shall not apply to aviation fuel sold
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1 for use or used as supplies for vessels or aircraft (within

2 the meaning of section 4221(d)(3)).

3 ‘‘SEC. 4093. DEFINITIONS.

4 ‘‘(a) AVIATION FUEL.—For purposes of this subpart,

5 the term ‘aviation fuel’ means any liquid (other than any

6 product taxable under section 4081) which is suitable for

7 use as a fuel in an aircraft.

8 ‘‘(b) PRODUCER.—For purposes of this subpart—

9 ‘‘(1) CERTAIN PERSONS TREATED AS PRODUC10 ERS.—

11 ‘‘(A) IN GENERAL.—The term ‘producer’

12 includes any person described in subparagraph

13 (B) and registered under section 4101 with re14 spect to the tax imposed by section 4091.

15 ‘‘(B) PERSONS DESCRIBED.—A person is

16 described in this subparagraph if such person

17 is—

18 ‘‘(i) a refiner, blender, or wholesale

19 distributor of aviation fuel, or

20 ‘‘(ii) a dealer selling aviation fuel ex21 clusively to producers of aviation fuel.

22 ‘‘(C) REDUCED RATE PURCHASERS TREAT23 ED AS PRODUCERS.—Any person to whom avia24 tion fuel is sold at a reduced rate under this
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1 subpart shall be treated as the producer of such

2 fuel.

3 ‘‘(2) WHOLESALE DISTRIBUTOR.—For purposes

4 of paragraph (1), the term ‘wholesale distributor’ in5 cludes any person who sells aviation fuel to produc6 ers, retailers, or to users who purchase in bulk quan7 tities and deliver into bulk storage tanks. Such term

8 does not include any person who (excluding the term

9 ‘wholesale distributor’ from paragraph (1)) is a pro10 ducer or importer.’’

11 (b) CIVIL PENALTY FOR USING REDUCED-RATE

12 FUEL FOR TAXABLE USE.—

13 (1) Paragraph (1) of section 6714(c), as added

14 by subpart A, is amended by striking ‘‘and’’ at the

15 end of subparagraph (A), by striking the period at

16 the end of subparagraph (B) and inserting ‘‘, and’’,

17 and by adding at the end thereof the following new

18 subparagraph:

19 ‘‘(C) diesel fuel dyed in accordance with

20 section 4082.’’

21 (2) Paragraph (2) of section 6714(b), as added

22 by subpart A, is amended by striking ‘‘section 4441’’

23 and inserting ‘‘sections 4081 and 4441’’ and by

24 striking ‘‘such section’’ and inserting ‘‘such sec25 tions’’.
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1 (c) TECHNICAL AND CONFORMING AMENDMENTS.—

2 (1) Subsection (c) of section 40 is amended by

3 striking ‘‘, section 4081(c), or section 4091(c)’’ and

4 inserting ‘‘or section 4081(c)’’.

5 (2) Subsection (a) of section 4101 is amended

6 by striking ‘‘4081’’ and inserting ‘‘4041(a)(1),

7 4081,’’.

8 (3) Section 4102 is amended by striking ‘‘gaso9 line’’ and inserting ‘‘any taxable fuel (as defined in

10 section 4083)’’.

11 (4) Paragraph (1) of section 4041(a) is amend12 ed to read as follows:

13 ‘‘(1) TAX ON DIESEL FUEL IN CERTAIN

14 CASES.—

15 ‘‘(A) IN GENERAL.—There is hereby im16 posed a tax on any liquid other than gasoline

17 (as defined in section 4083)—

18 ‘‘(i) sold by any person to an owner,

19 lessee, or other operator of a diesel-pow20 ered highway vehicle, a diesel-powered

21 train, or a diesel-powered boat for use as

22 a fuel in such vehicle, train, or boat, or

23 ‘‘(ii) used by any person as a fuel in

24 a diesel-powered highway vehicle, a diesel25 powered train, or a diesel-powered boat un-
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1 less there was a taxable sale of such fuel

2 under clause (i).

3 ‘‘(B) EXEMPTION FOR PREVIOUSLY TAXED

4 FUEL.—No tax shall be imposed by this para5 graph on the sale or use of diesel fuel if there

6 was a taxable sale of such fuel under section

7 4081 and the tax thereon was not credited or

8 refunded.

9 ‘‘(C) RATE OF TAX.—

10 ‘‘(i) IN GENERAL.—Except as other11 wise provided in this subparagraph, the

12 rate of the tax imposed by this paragraph

13 shall be the sum of the Highway Trust

14 Fund financing rate on diesel fuel and the

15 deficit reduction rate in effect under sec16 tion 4081 at the time of such sale or use.

17 ‘‘(ii) HIGHWAY RATE NOT TO APPLY

18 TO TRAINS.—The Highway Trust Fund fi19 nancing rate shall not apply to any sale for

20 use, or use, of fuel in a train.

21 ‘‘(iii) CERTAIN BUS USES.—If the lim22 itation in section 6427(b)(2)(A) applies to

23 fuel sold for use or used in an automobile

24 bus, the Highway Trust Fund financing
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1 rate shall be 3 cents per gallon and the

2 deficit reduction rate shall not apply.’’

3 (5) Paragraph (2) of section 4041(a) is amend4 ed by striking ‘‘or paragraph (1) of this subsection’’

5 and by inserting ‘‘on gasoline’’ after ‘‘Highway

6 Trust Fund financing rate’’.

7 (6) Paragraph (2) of section 4041(c) is amend8 ed by striking ‘‘any product taxable under section

9 4081’’ and inserting ‘‘gasoline (as defined in section

10 4083)’’.

11 (7) Paragraph (2) of section 4041(d) is amend12 ed—

13 (A) by striking ‘‘(other than a product tax14 able under section 4081)’’ and inserting ‘‘(other

15 than gasoline (as defined in section 4083))’’,

16 and

17 (B) by striking ‘‘section 4091’’ and insert18 ing ‘‘section 4081’’.

19 (8) Paragraph (3) of section 4041(d) is amend20 ed by striking ‘‘(other than any product taxable

21 under section 4081)’’ and inserting ‘‘(other than

22 gasoline (as defined in section 4083))’’.

23 (9) Subparagraph (A) of section 4041(k)(1) is

24 amended by striking ‘‘sections 4081(c) and 4091(c),
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1 as the case may be’’ and inserting ‘‘section

2 4081(c)’’.

3 (10) Subparagraph (B) of section 4041(m)(1)

4 is amended by striking ‘‘section 4091(d)(1)’’ and in5 serting ‘‘section 4091(c)(1)’’.

6 (11) Section 6206 is amended by striking

7 ‘‘4041 or 4091’’ and inserting ‘‘4041, 4081, or

8 4091’’.

9 (12) Paragraph (1) of section 6302(f) is

10 amended by inserting ‘‘on gasoline’’ after ‘‘section

11 4081’’ and after ‘‘such tax’’.

12 (13) Paragraph (1) of section 6412(a) is

13 amended by striking ‘‘gasoline’’ each place it ap14 pears (including the heading) and inserting ‘‘taxable

15 fuel’’.

16 (14)(A) Subparagraph (A) of section

17 6416(a)(4) is amended by striking ‘‘product’’ each

18 place it appears and inserting ‘‘gasoline’’.

19 (B) Subparagraph (B) of section 6416(a)(4) is

20 amended by striking all that follows ‘‘substituting’’

21 and inserting ‘‘ ‘any gasoline taxable under section

22 4081’ for ‘aviation fuel’ therein).’’

23 (15) Sections 6420(c)(5) and 6421(e)(1) are

24 each amended by striking ‘‘section 4082(b)’’ and in25 serting ‘‘section 4083(a)’’.
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1 (16) Subsection (b) of section 6427 is amend2 ed—

3 (A) by striking ‘‘if any fuel’’ in paragraph

4 (1) and inserting ‘‘if any diesel fuel (as defined

5 in section 4083(a))’’, and

6 (B) by striking ‘‘4091’’ each place it ap7 pears and inserting ‘‘4081’’.

8 (17)(A) Paragraph (1) of section 6427(f) is

9 amended by striking ‘‘4091(c)(1)(A), or

10 4091(d)(1)(A)’’ and inserting ‘‘or 4091(c)(1)(A)’’.

11 (B) Paragraph (2) of section 6427(f) is amend12 ed to read as follows:

13 ‘‘(2) DEFINITIONS.—For purposes of paragraph

14 (1)—

15 ‘‘(A) REGULAR TAX RATE.—The term ‘reg16 ular tax rate’ means—

17 ‘‘(i) in the case of gasoline or diesel

18 fuel, the aggregate rate of tax imposed by

19 section 4081 determined without regard to

20 subsection (c) thereof, and

21 ‘‘(ii) in the case of aviation fuel, the

22 aggregate rate of tax imposed by section

23 4091 determined without regard to sub24 section (c) thereof.
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1 ‘‘(B) INCENTIVE TAX RATE.—The term

2 ‘incentive tax rate’ means—

3 ‘‘(i) in the case of gasoline or diesel

4 fuel, the aggregate rate of tax imposed by

5 section 4081 with respect to fuel described

6 in subsection (c)(1) thereof, and

7 ‘‘(ii) in the case of aviation fuel, the

8 aggregate rate of tax imposed by section

9 4091 with respect to fuel described in sub10 section (c)(1)(B) thereof.’’

11 (18) Subsection (h) of section 6427 is amended

12 by striking ‘‘section 4082(b)’’ and inserting ‘‘section

13 4083(a)(2)’’.

14 (19) Paragraph (3) of section 6427(i) is amend15 ed—

16 (A) by striking ‘‘GASOHOL’’ in the heading

17 and inserting ‘‘ALCOHOL MIXTURE’’, and

18 (B) by striking ‘‘gasoline used to produce

19 gasohol (as defined in section 4081(c)(1))’’ in

20 subparagraph (A) and inserting ‘‘gasoline or

21 diesel fuel used to produce a qualified alcohol

22 mixture (as defined in section 4081(c)(3))’’.

23 (20) The heading of paragraph (4) of section

24 6427(i) is amended by inserting ‘‘4081 OR’’ before

25 ‘‘4091’’.
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1 (21) Subsection (l) of section 6427 is amended

2 to read as follows:

3 ‘‘(l) NONTAXABLE USES OF DIESEL FUEL AND AVIA4 TION FUEL.—

5 ‘‘(1) IN GENERAL.—Except as provided in sub6 section (k) and in paragraphs (3) and (4) of this

7 subsection, if—

8 ‘‘(A) any diesel fuel on which tax has been

9 imposed by section 4081, or

10 ‘‘(B) any aviation fuel on which tax has

11 been imposed by section 4091,

12 is used by any person in a nontaxable use, the Sec13 retary shall pay (without interest) to the ultimate

14 purchaser of such fuel an amount equal to the ag15 gregate amount of tax imposed on such fuel under

16 section 4081 or 4091, as the case may be.

17 ‘‘(2) NONTAXABLE USE.—For purposes of this

18 subsection, the term ‘nontaxable use’ means—

19 ‘‘(A) in the case of diesel fuel, any use

20 which is exempt from the tax imposed by sec21 tion 4041(a)(1) other than by reason of the im22 position of tax on any sale thereof, and

23 ‘‘(B) in the case of aviation fuel, any use

24 which is exempt from the tax imposed by sec-
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1 tion 4041(c)(1) other than by reason of the im2 position of tax on any sale thereof.

3 ‘‘(3) LIMIT ON REFUND OF LEAKING UNDER4 GROUND STORAGE TANK TRUST FUND FINANCING

5 RATE.—Paragraph (1) shall not apply to so much of

6 the tax imposed by section 4081 or 4091 as is at7 tributable to the Leaking Underground Storage

8 Tank Trust Fund financing rate imposed by such

9 section in the case of—

10 ‘‘(A) fuel used in a diesel-powered train,

11 and

12 ‘‘(B) fuel used in any aircraft (other than

13 as supplies for vessels or aircraft, within the

14 meaning of section 4221(d)(3)).

15 ‘‘(4) NO REFUND OF DEFICIT REDUCTION TAX

16 ON FUEL USED IN TRAINS.—Fuel used in a diesel17 powered train shall be treated as a nontaxable use

18 for purposes of this section, except that paragraph

19 (1) shall not apply to so much of the tax imposed

20 by section 4081 as is attributable to the deficit re21 duction rate imposed by such section unless such

22 fuel was used by a State or any political subdivision

23 thereof.’’

24 (22) Paragraph (1) of section 9503(b) is

25 amended—
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1 (A) by striking ‘‘gasoline),’’ in subpara2 graph (E) and inserting ‘‘gasoline and diesel

3 fuel), and’’,

4 (B) by striking subparagraph (F), and

5 (C) by redesignating subparagraph (G) as

6 subparagraph (F).

7 (23)(A) Subparagraph (B) of section

8 9503(b)(4) is amended by striking ‘‘, 4081, and

9 4091’’ and inserting ‘‘and 4081’’.

10 (B) Subparagraph (C) of section 9503(b)(4), as

11 amended by subtitle A, is amended by striking

12 ‘‘4091’’ and inserting ‘‘4081’’.

13 (24) Subparagraph (D) of section 9503(c)(6) is

14 amended by striking ‘‘, 4081, and 4091’’ and insert15 ing ‘‘and 4081’’.

16 (25) Paragraph (2) of section 9503(e) is

17 amended—

18 (A) by striking ‘‘, 4081, and 4091’’ and in19 serting ‘‘and 4081’’, and

20 (B) by striking ‘‘, 4081, or 4091’’ and in21 serting ‘‘or 4081’’.

22 (26) Subsection (b) of section 9508 is amend23 ed—

24 (A) by inserting ‘‘and diesel fuel’’ after

25 ‘‘gasoline’’ in paragraph (2),
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1 (B) by striking ‘‘diesel fuel and’’ in para2 graph (3), and

3 (C) by striking ‘‘4091’’ in the last sen4 tence, as added by subtitle A, and inserting

5 ‘‘4081’’.

6 (27) The table of subparts for part III of sub7 chapter A of chapter 32 is amended by striking the

8 items relating to subparts A and B and inserting the

9 following new items:

‘‘Subpart A. Gasoline and diesel fuel.

‘‘Subpart B. Aviation fuel.’’

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

11 this section shall take effect on April 1, 1994.

12 SEC. 14243. FLOOR STOCKS TAX.

13 (a) IN GENERAL.—There is hereby imposed a floor

14 stocks tax on diesel fuel held by any person on April 1,

15 1994, if—

16 (1) no tax was imposed on such fuel under sec17 tion 4041(a) or 4091 of the Internal Revenue Code

18 of 1986 as in effect on the day before the date of

19 the enactment of this Act, and

20 (2) tax would have been imposed by section

21 4081 of such Code, as amended by this Act, on any

22 prior removal, entry, or sale of such fuel had such

23 section 4081 applied to all prior removals, entries,

24 and sales of such fuel.
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1 (b) RATE OF TAX.—The rate of the tax imposed by

2 subsection (a) shall be the amount of tax which would be

3 imposed under section 4081 of the Internal Revenue Code

4 of 1986 if there were a taxable sale of such fuel on such

5 date.

6 (c) LIABILITY AND PAYMENT OF TAX.—

7 (1) LIABILITY FOR TAX.—A person holding the

8 diesel fuel on April 1, 1994, to which the tax im9 posed by this section applies shall be liable for such

10 tax.

11 (2) METHOD OF PAYMENT.—The tax imposed

12 by this section shall be paid in such manner as the

13 Secretary shall prescribe.

14 (3) TIME FOR PAYMENT.—The tax imposed by

15 this section shall be paid on or before January 31,

16 1995.

17 (d) DEFINITIONS.—For purposes of this section—

18 (1) DIESEL FUEL.—The term ‘‘diesel fuel’’ has

19 the meaning given such term by section 4083(a) of

20 such Code.

21 (2) SECRETARY.—The term ‘‘Secretary’’ means

22 the Secretary of the Treasury or his delegate.

23 (e) EXCEPTIONS.—

24 (1) PERSONS ENTITLED TO CREDIT OR RE25 FUND.—The tax imposed by this section shall not
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1 apply to fuel held by any person exclusively for any

2 use to the extent a credit or refund of the tax im3 posed by section 4081 is allowable for such use.

4 (2) COMPLIANCE WITH DYEING REQUIRED.—

5 Paragraph (1) shall not apply to the holder of any

6 fuel if the holder of such fuel fails to comply with

7 any requirement imposed by the Secretary with re8 spect to dyeing and marking such fuel.

9 (f) OTHER LAWS APPLICABLE.—All provisions of

10 law, including penalties, applicable with respect to the

11 taxes imposed by section 4081 of such Code shall, insofar

12 as applicable and not inconsistent with the provisions of

13 this section, apply with respect to the floor stock taxes

14 imposed by this section to the same extent as if such taxes

15 were imposed by such section 4081.

16 Subpart C—Extension of Motor Fuel Tax Rates;

17 Increased Deposits Into Highway Trust Fund

18 SEC. 14244. EXTENSION OF MOTOR FUEL TAX RATES; IN19 CREASED DEPOSITS INTO HIGHWAY TRUST

20 FUND.

21 (a) IN GENERAL.—Clause (i) of section

22 4081(a)(2)(B), as amended by subpart B, is amended—

23 (1) by striking ‘‘11.5 cents’’ and inserting ‘‘14

24 cents’’, and
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1 (2) by striking ‘‘17.5 cents’’ and inserting ‘‘20

2 cents’’.

3 (b) CONFORMING AMENDMENTS.—

4 (1) Subparagraph (A) of section 4081(c)(4), as

5 so amended, is amended to read as follows:

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

7 Highway Trust Fund financing rate, the other8 wise applicable rate for gasoline in a qualified

9 alcohol mixture is—

10 ‘‘(i) 8.6 cents a gallon for 10 percent

11 gasohol,

12 ‘‘(ii) 9.842 cents a gallon for 7.7 per13 cent gasohol, and

14 ‘‘(iii) 10.922 cents a gallon for 5.7

15 percent gasohol.

16 In the case of a mixture none of the alcohol in which

17 consists of ethanol, clauses (i), (ii), and (iii) shall be

18 applied by substituting ‘8.0 cents’ for ‘8.6 cents’,

19 ‘9.38 cents’ for ‘9.842 cents’, and ‘10.58 cents’ for

20 ‘10.922’.’’

21 (2) Paragraph (5) of section 4081(c), as so

22 amended, is amended—

23 (A) by striking ‘‘12.1 cents’’ and inserting

24 ‘‘14.6 cents’’, and
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1 (B) by striking ‘‘11.5 cents’’ and inserting

2 ‘‘14.0’’.

3 (3) Subparagraph (A) of section 4041(m)(1) is

4 amended to read as follows:

5 ‘‘(A) under subsection (a)(2) the Highway

6 Trust Fund financing shall be 7 cents per gal7 lon, and’’.

8 (4) Paragraph (4) of section 6427(l), as amend9 ed by subpart B, is amended—

10 (A) by striking ‘‘the deficit reduction rate’’

11 and inserting ‘‘2.5 cents per gallon of the High12 way Trust Fund financing rate’’, and

13 (B) by striking ‘‘DEFICIT REDUCTION

14 TAX’’ in the heading and inserting ‘‘PORTION

15 OF TAX’’.

16 (5) Subsection (b) of section 9503 is amended

17 by adding at the end thereof the following new para18 graph:

19 ‘‘(6) RETENTION OF CERTAIN TAXES IN GEN20 ERAL FUND.—

21 ‘‘(A) IN GENERAL.—There shall not be

22 taken into account under paragraphs (1) and

23 (2)—

24 ‘‘(i) the tax imposed by section 4081

25 on diesel fuel used in any train, and
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1 ‘‘(ii) so much of the following taxes as

2 are attributable to 2.5 cents of the High3 way Trust Fund financing rate:

4 ‘‘(I) Motorboat fuel taxes (as de5 fined in subsection (c)(4)(D)).

6 ‘‘(II) Small-engine fuel taxes (as

7 defined in subsection (c)(5)(B)).

8 ‘‘(III) Nonhighway recreational

9 fuel taxes (as defined in subsection

10 (c)(6)(D)).

11 ‘‘(B) TRANSFERS FROM HIGHWAY TRUST

12 FUND.—For purposes of determining the

13 amount paid from the Highway Trust Fund

14 under paragraphs (4), (5), and (6) of sub15 section (c), the Highway Trust Fund financing

16 rates shall be treated as being 2.5 cents less

17 than the otherwise applicable rates.’’

18 (c) INCREASE IN DEPOSITS IN MASS TRANSIT AC19 COUNT.—Paragraph (2) of section 9503(e) is amended by

20 striking ‘‘1.5 cents’’ and inserting ‘‘2 cents’’.

21 (d) REPEAL OF EXPIRED PROVISIONS.—

22 (1) Subparagraph (A) of section 4081(a)(2)

23 (relating to rate of tax), as amended by subpart B,

24 is amended—
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1 (A) by adding ‘‘and’’ at the end of clause

2 (i),

3 (B) by striking ‘‘, and’’ at the end of

4 clause (ii) and inserting a period, and

5 (C) by striking clause (iii).

6 (2) Subparagraph (B) of section 4081(a)(2), as

7 so amended, is amended—

8 (A) by adding ‘‘and’’ at the end of clause

9 (i),

10 (B) by striking ‘‘, and’’ at the end of

11 clause (ii) and inserting a period, and

12 (C) by striking clause (iii).

13 (3) Subsection (d) of section 4081, as so

14 amended, is amended by striking paragraph (3).

15 (4) Paragraphs (1) and (2) of section 4041(a)

16 (as so amended), and paragraph (3) of section

17 4041(c), are each amended by striking ‘‘the sum of

18 the Highway Trust Fund financing rate and the die19 sel fuel deficit reduction rate’’ and by inserting ‘‘the

20 Highway Trust Fund financing rate’’.

21 (5) Clause (ii) of section 4041(a)(1)(C), as so

22 amended, is amended—

23 (A) by striking ‘‘The Highway Trust Fund

24 financing rate’’ and inserting ‘‘So much of the
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1 Highway Trust Fund financing rate as exceeds

2 2.5 cents per gallon’’, and

3 (B) by striking ‘‘HIGHWAY RATE’’ in the

4 heading and inserting ‘‘PORTION OF HIGHWAY

5 RATE’’.

6 (6) Clause (iii) of section 4041(a)(1)(C), as so

7 amended, is amended by striking ‘‘and the deficit re8 duction rate shall not apply’’.

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

10 this section shall take effect October 1, 1995, but the

11 amendment made by subsection (c) shall apply only to

12 amounts attributable to taxes imposed on or after such

13 date.

14 PART V—COMPLIANCE PROVISIONS

15 SEC. 14251. REPORTING REQUIRED FOR CERTAIN PAY16 MENTS TO CORPORATIONS.

17 (a) SECTION 6041.—Section 6041 (relating to infor18 mation at source) is amended by adding at the end thereof

19 the following new subsection:

20 ‘‘(f) SPECIAL RULES FOR PAYMENTS FOR SERV21 ICES.—No payment for the performance of services shall

22 be exempt from the requirements of this section merely

23 because it is a payment to a corporation.’’

24 (b) SECTION 6041A(a).—Subsection (a) of section

25 6041A is amended by adding at the end thereof the follow-
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1 ing new sentence: ‘‘A payment shall not be exempt from

2 the requirements of this subsection merely because it is

3 a payment to a corporation.’’.

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

5 this section shall apply to payments made after December

6 31, 1993.

7 SEC. 14252. MODIFICATIONS TO SUBSTANTIAL UNDER8 STATEMENT AND RETURN-PREPARER PEN9 ALTIES.

10 (a) REASONABLE BASIS REQUIRED.—

11 (1) SUBSTANTIAL UNDERSTATEMENT PEN12 ALTY.—Clause (ii) of section 6662(d)(2)(B) (relat13 ing to reduction for understatement due to position

14 of taxpayer or disclosed item) is amended to read as

15 follows:

16 ‘‘(ii) any item if—

17 ‘‘(I) the relevant facts affecting

18 the item’s tax treatment are ade19 quately disclosed in the return or in a

20 statement attached to the return, and

21 ‘‘(II) there is a reasonable basis

22 for the tax treatment of such item by

23 the taxpayer.’’

24 (2) RETURN PREPARER PENALTY.—Paragraph

25 (3) of section 6694(a) (relating to understatement of
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1 taxpayer’s liability by income tax return preparer) is

2 amended to read as follows:

3 ‘‘(3) the requirements of subclauses (I) and (II)

4 of section 6662(d)(2)(B)(ii) are not satisfied with

5 respect to such position,’’.

6 (b) SPECIAL TAX SHELTER RULE.—Subclause (II)

7 of section 6662(d)(2)(C)(i) (relating to special rules for

8 tax shelters) is amended by inserting before the period at

9 the end thereof the following: ‘‘and the reasonably antici10 pated after-tax benefits from the taxpayer’s investment in

11 such shelter do not significantly exceed the reasonably an12 ticipated pre-tax economic profit or loss from such invest13 ment’’.

14 (c) REASONABLE CAUSE EXCEPTION.—Paragraph

15 (1) of section 6664(c) is revised by striking ‘‘this part’’

16 and inserting ‘‘section 6662’’.

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

18 this section shall apply to returns the due dates for which

19 (determined without regard to extensions) are after De20 cember 31, 1993.

21 SEC. 14253. RETURNS RELATING TO THE CANCELLATION

22 OF INDEBTEDNESS BY CERTAIN FINANCIAL

23 ENTITIES.

24 (a) IN GENERAL.—Subpart B of part III of sub25 chapter A of chapter 61 (relating to information concern-
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1 ing transactions with other persons) is amended by adding

2 at the end thereof the following new section:

3 ‘‘SEC. 6050P. RETURNS RELATING TO THE CANCELLATION

4 OF INDEBTEDNESS BY CERTAIN FINANCIAL

5 ENTITIES.

6 ‘‘(a) IN GENERAL.—Any applicable financial entity

7 which discharges (in whole or in part) the indebtedness

8 of any person during any calendar year shall make a re9 turn (at such time and in such form as the Secretary may

10 by regulations prescribe) setting forth—

11 ‘‘(1) the name, address, and TIN of each per12 son whose indebtedness was discharged during such

13 calendar year,

14 ‘‘(2) the date of the discharge and the amount

15 of the indebtedness discharged, and

16 ‘‘(3) such other information as the Secretary

17 may prescribe.

18 ‘‘(b) EXCEPTION.—Subsection (a) shall not apply to

19 any discharge of less than $600.

20 ‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur21 poses of this section—

22 ‘‘(1) APPLICABLE FINANCIAL ENTITY.—The

23 term ‘applicable financial entity’ means—

24 ‘‘(A) any financial institution described in

25 section 581 or 591(a) and any credit union,
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1 ‘‘(B) the Federal Deposit Insurance Cor2 poration, the Resolution Trust Corporation, and

3 the National Credit Union Administration, and

4 any successor or subunit of any of the fore5 going, and

6 ‘‘(C) any other corporation which is a di7 rect or indirect subsidiary of an entity referred

8 to in subparagraph (A) but only if, by virtue of

9 being affiliated with such entity, such other cor10 poration is subject to supervision and examina11 tion by a Federal or State agency which regu12 lates entities referred to in subparagraph (A).

13 ‘‘(2) GOVERNMENTAL UNITS.—In the case of

14 an entity described in paragraph (1)(B), any return

15 under this section shall be made by the officer or

16 employee appropriately designated for the purpose of

17 making such return.

18 ‘‘(d) STATEMENTS TO BE FURNISHED TO PERSONS

19 WITH RESPECT TO WHOM INFORMATION IS REQUIRED

20 TO BE FURNISHED.—Every applicable financial entity re21 quired to make a return under subsection (a) shall furnish

22 to each person whose name is required to be set forth in

23 such return a written statement showing—

24 ‘‘(1) the name and address of the entity re25 quired to make such return, and
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1 ‘‘(2) the information required to be shown on

2 the return with respect to such person.

3 The written statement required under the preceding sen4 tence shall be furnished to the person on or before Janu5 ary 31 of the year following the calendar year for which

6 the return under subsection (a) was made.’’

7 (b) PENALTIES.—

8 (1) RETURNS.—Subparagraph (B) of section

9 6724(d)(1) is amended by redesignating clauses

10 (viii) through (xv) as clauses (ix) through (xvi), re11 spectively, and by inserting after clause (vii) the fol12 lowing new clause:

13 ‘‘(viii) section 6050P (relating to re14 turns relating to the cancellation of indebt15 edness by certain financial entities),’’.

16 (2) STATEMENTS.—Paragraph (2) of section

17 6724(d) is amended by redesignating subparagraphs

18 (P) through (S) as subparagraphs (Q) through (T),

19 respectively, and by inserting after subparagraph

20 (O) the following new subparagraph:

21 ‘‘(P) section 6050P(d) (relating to returns

22 relating to the cancellation of indebtedness by

23 certain financial entities),’’.

24 (c) CLERICAL AMENDMENT.—The table of sections

25 for subpart B of part III of subchapter A of chapter 61
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1 is amended by adding at the end thereof the following new

2 item:

‘‘Sec. 6050P. Returns relating to the cancellation of indebtedness

by certain financial entities.’’

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

4 this section shall apply to discharges of indebtedness after

5 the date of the enactment of this Act.

6 PART VI—TREATMENT OF INTANGIBLES

7 SEC. 14261. AMORTIZATION OF GOODWILL AND CERTAIN

8 OTHER INTANGIBLES.

9 (a) GENERAL RULE.—Part VI of subchapter B of

10 chapter 1 (relating to itemized deductions for individuals

11 and corporations) is amended by adding at the end thereof

12 the following new section:

13 ‘‘SEC. 197. AMORTIZATION OF GOODWILL AND CERTAIN

14 OTHER INTANGIBLES.

15 ‘‘(a) GENERAL RULE.—A taxpayer shall be entitled

16 to an amortization deduction with respect to any amortiz17 able section 197 intangible. The amount of such deduction

18 shall be determined by amortizing the adjusted basis (for

19 purposes of determining gain) of such intangible ratably

20 over the 14-year period beginning with the month in which

21 such intangible was acquired.

22 ‘‘(b) NO OTHER DEPRECIATION OR AMORTIZATION

23 DEDUCTION ALLOWABLE.—Except as provided in sub24 section (a), no depreciation or amortization deduction
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1 shall be allowable with respect to any amortizable section

2 197 intangible.

3 ‘‘(c) AMORTIZABLE SECTION 197 INTANGIBLE.—For

4 purposes of this section—

5 ‘‘(1) IN GENERAL.—Except as otherwise pro6 vided in this section, the term ‘amortizable section

7 197 intangible’ means any section 197 intangible—

8 ‘‘(A) which is acquired by the taxpayer

9 after the date of the enactment of this section,

10 and

11 ‘‘(B) which is held in connection with the

12 conduct of a trade or business or an activity de13 scribed in section 212.

14 ‘‘(2) EXCLUSION OF SELF-CREATED INTANGI15 BLES, ETC.—The term ‘amortizable section 197 in16 tangible’ shall not include any section 197 intangi17 ble—

18 ‘‘(A) which is not described in subpara19 graph (D), (E), or (F) of subsection (d)(1), and

20 ‘‘(B) which is created by the taxpayer.

21 This paragraph shall not apply if the intangible is

22 created in connection with a transaction (or series of

23 related transactions) involving the acquisition of as24 sets constituting a trade or business or substantial

25 portion thereof.
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1 ‘‘(3) ANTI-CHURNING RULES.—

‘‘For exclusion of intangibles acquired in certain

transactions, see subsection (f)(9).

2 ‘‘(d) SECTION 197 INTANGIBLE.—For purposes of

3 this section—

4 ‘‘(1) IN GENERAL.—Except as otherwise pro5 vided in this section, the term ‘section 197 intangi6 ble’ means—

7 ‘‘(A) goodwill,

8 ‘‘(B) going concern value,

9 ‘‘(C) any of the following intangible items:

10 ‘‘(i) workforce in place including its

11 composition and terms and conditions

12 (contractual or otherwise) of its employ13 ment,

14 ‘‘(ii) business books and records, oper15 ating systems, or any other information

16 base (including lists or other information

17 with respect to current or prospective cus18 tomers),

19 ‘‘(iii) any patent, copyright, formula,

20 process, design, pattern, knowhow, format,

21 or other similar item,

22 ‘‘(iv) any customer-based intangible,

23 ‘‘(v) any supplier-based intangible,

24 and
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1 ‘‘(vi) any other similar item,

2 ‘‘(D) any license, permit, or other right

3 granted by a governmental unit or an agency or

4 instrumentality thereof,

5 ‘‘(E) any covenant not to compete (or

6 other arrangement to the extent such arrange7 ment has substantially the same effect as a cov8 enant not to compete) entered into in connec9 tion with an acquisition (directly or indirectly)

10 of an interest in a trade or business or substan11 tial portion thereof, and

12 ‘‘(F) any franchise, trademark, or trade

13 name.

14 ‘‘(2) CUSTOMER-BASED INTANGIBLE.—

15 ‘‘(A) IN GENERAL.—The term ‘customer16 based intangible’ means—

17 ‘‘(i) composition of market,

18 ‘‘(ii) market share, and

19 ‘‘(iii) any other value resulting from

20 future provision of goods or services pursu21 ant to relationships (contractual or other22 wise) in the ordinary course of business

23 with customers.

24 ‘‘(B) SPECIAL RULE FOR FINANCIAL INSTI25 TUTIONS.—In the case of a financial institu-
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1 tion, the term ‘customer-based intangible’ in2 cludes deposit base and similar items.

3 ‘‘(3) SUPPLIER-BASED INTANGIBLE.—The term

4 ‘supplier-based intangible’ means any value resulting

5 from future acquisitions of goods or services pursu6 ant to relationships (contractual or otherwise) in the

7 ordinary course of business with suppliers of goods

8 or services to be used or sold by the taxpayer.

9 ‘‘(e) EXCEPTIONS.—For purposes of this section, the

10 term ‘section 197 intangible’ shall not include any of the

11 following:

12 ‘‘(1) FINANCIAL INTERESTS.—Any interest—

13 ‘‘(A) in a corporation, partnership, trust,

14 or estate, or

15 ‘‘(B) under an existing futures contract,

16 foreign currency contract, notional principal

17 contract, or other similar financial contract.

18 ‘‘(2) LAND.—Any interest in land.

19 ‘‘(3) COMPUTER SOFTWARE.—

20 ‘‘(A) IN GENERAL.—Any—

21 ‘‘(i) computer software which is read22 ily available for purchase by the general

23 public, is subject to a nonexclusive license,

24 and has not been substantially modified,

25 and
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1 ‘‘(ii) other computer software which is

2 not acquired in a transaction (or series of

3 related transactions) involving the acquisi4 tion of assets constituting a trade or busi5 ness or substantial portion thereof.

6 ‘‘(B) COMPUTER SOFTWARE DEFINED.—

7 For purposes of subparagraph (A), the term

8 ‘computer software’ means any program de9 signed to cause a computer to perform a de10 sired function. Such term shall not include any

11 data base or similar item unless the data base

12 or item is in the public domain and is incidental

13 to the operation of otherwise qualifying com14 puter software.

15 ‘‘(4) CERTAIN INTERESTS OR RIGHTS AC16 QUIRED SEPARATELY.—Any of the following not ac17 quired in a transaction (or series of related trans18 actions) involving the acquisition of assets constitut19 ing a trade business or substantial portion thereof:

20 ‘‘(A) Any interest in a film, sound record21 ing, video tape, book, or similar property.

22 ‘‘(B) Any right to receive tangible property

23 or services under a contract or granted by a

24 governmental unit or agency or instrumentality

25 thereof.
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1 ‘‘(C) Any interest in a patent or copyright.

2 ‘‘(D) To the extent provided in regulations,

3 any right under a contract (or granted by a

4 governmental unit or an agency or instrumen5 tality thereof) if such right—

6 ‘‘(i) has a fixed duration of less than

7 14 years, or

8 ‘‘(ii) is fixed as to amount and, with9 out regard to this section, would be recov10 erable under a method similar to the unit11 of-production method.

12 ‘‘(5) INTERESTS UNDER LEASES AND DEBT IN13 STRUMENTS.—Any interest under—

14 ‘‘(A) an existing lease of tangible property,

15 or

16 ‘‘(B) except as provided in subsection

17 (d)(2)(B), any existing indebtedness.

18 ‘‘(6) TREATMENT OF SPORTS FRANCHISES.—A

19 franchise to engage in professional football, basket20 ball, baseball, or other professional sport, and any

21 item acquired in connection with such a franchise.

22 ‘‘(7) CERTAIN TRANSACTION COSTS.—Any fees

23 for professional services, and any transaction costs,

24 incurred by parties to a transaction with respect to
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1 which any portion of the gain or loss is not recog2 nized under part III of subchapter C.

3 ‘‘(f) SPECIAL RULES.—

4 ‘‘(1) TREATMENT OF CERTAIN DISPOSITIONS,

5 ETC.—If there is a disposition of any amortizable

6 section 197 intangible acquired in a transaction or

7 series of related transactions (or any such intangible

8 becomes worthless) and one or more other amortiz9 able section 197 intangibles acquired in such trans10 action or series of related transactions are re11 tained—

12 ‘‘(A) no loss shall be recognized by reason

13 of such disposition (or such worthlessness), and

14 ‘‘(B) appropriate adjustments to the ad15 justed bases of such retained intangibles shall

16 be made for any loss not recognized under sub17 paragraph (A).

18 All persons treated as a single taxpayer under sec19 tion 41(f)(1) shall be so treated for purposes of the

20 preceding sentence.

21 ‘‘(2) TREATMENT OF CERTAIN TRANSFERS.—

22 ‘‘(A) IN GENERAL.—In the case of any sec23 tion 197 intangible transferred in a transaction

24 described in subparagraph (B), the transferee

25 shall be treated as the transferor for purposes
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1 of applying this section with respect to so much

2 of the adjusted basis in the hands of the trans3 feree as does not exceed the adjusted basis in

4 the hands of the transferor.

5 ‘‘(B) TRANSACTIONS COVERED.—The

6 transactions described in this subparagraph

7 are—

8 ‘‘(i) any transaction described in sec9 tion 332, 351, 361, 721, 731, 1031, or

10 1033, and

11 ‘‘(ii) any transaction between mem12 bers of the same affiliated group during

13 any taxable year for which a consolidated

14 return is made by such group.

15 ‘‘(3) TREATMENT OF AMOUNTS PAID PURSUANT

16 TO COVENANTS NOT TO COMPETE, ETC.—Any

17 amount paid or incurred pursuant to a covenant or

18 arrangement referred to in subsection (d)(1)(E)

19 shall be treated as an amount chargeable to capital

20 account.

21 ‘‘(4) TREATMENT OF FRANCHISES, ETC.—

22 ‘‘(A) FRANCHISE.—The term ‘franchise’

23 has the meaning given to such term by section

24 1253(b)(1).
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1 ‘‘(B) TREATMENT OF RENEWALS.—Any

2 renewal of a franchise, trademark, or trade

3 name (or of a license, a permit, or other right

4 referred to in subsection (d)(1)(D)) shall be

5 treated as an acquisition. The preceding sen6 tence shall only apply with respect to costs in7 curred in connection with such renewal.

8 ‘‘(C) CERTAIN AMOUNTS NOT TAKEN INTO

9 ACCOUNT.—Any amount to which section

10 1253(d)(1) applies shall not be taken into ac11 count under this section.

12 ‘‘(5) TREATMENT OF CERTAIN REINSURANCE

13 TRANSACTIONS.—In the case of any amortizable sec14 tion 197 intangible resulting from an assumption re15 insurance transaction, the amount taken into ac16 count as the adjusted basis of such intangible under

17 this section shall be the excess of—

18 ‘‘(A) the amount paid or incurred by the

19 acquirer under the assumption reinsurance

20 transaction, over

21 ‘‘(B) the amount required to be capitalized

22 under section 848 in connection with such

23 transaction.

24 Subsection (b) shall not apply to any amount re25 quired to be capitalized under section 848.
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1 ‘‘(6) TREATMENT OF CERTAIN SUBLEASES.—

2 For purposes of this section, a sublease shall be

3 treated in the same manner as a lease of the under4 lying property involved.

5 ‘‘(7) TREATMENT AS DEPRECIABLE.—For pur6 poses of this chapter, any amortizable section 197

7 intangible shall be treated as property which is of a

8 character subject to the allowance for depreciation

9 provided in section 167.

10 ‘‘(8) TREATMENT OF CERTAIN INCREMENTS IN

11 VALUE.—This section shall not apply to any incre12 ment in value if, without regard to this section, such

13 increment is properly taken into account in deter14 mining the cost of property which is not a section

15 197 intangible.

16 ‘‘(9) ANTI-CHURNING RULES.—For purposes of

17 this section—

18 ‘‘(A) IN GENERAL.—The term ‘amortizable

19 section 197 intangible’ shall not include any

20 section 197 intangible which is described in

21 subparagraph (A) or (B) of subsection (d)(1)

22 (or for which depreciation or amortization

23 would not have been allowable but for this sec24 tion) and which is acquired by the taxpayer
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1 after the date of the enactment of this section,

2 if—

3 ‘‘(i) the intangible was held or used at

4 any time on or after July 25, 1991, and on

5 or before such date of enactment by the

6 taxpayer or a related person,

7 ‘‘(ii) the intangible was acquired from

8 a person who held such intangible at any

9 time on or after July 25, 1991, and on or

10 before such date of enactment, and, as

11 part of the transaction, the user of such

12 intangible does not change, or

13 ‘‘(iii) the taxpayer grants the right to

14 use such intangible to a person (or a per15 son related to such person) who held or

16 used such intangible at any time on or

17 after July 25, 1991, and on or before such

18 date of enactment.

19 For purposes of this subparagraph, the deter20 mination of whether the user of property

21 changes as part of a transaction shall be deter22 mined in accordance with regulations prescribed

23 by the Secretary. For purposes of this subpara24 graph, deductions allowable under section
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1 1253(d) shall be treated as deductions allowable

2 for amortization.

3 ‘‘(B) EXCEPTION WHERE GAIN RECOG4 NIZED.—If—

5 ‘‘(i) subparagraph (A) would not

6 apply to an intangible acquired by the tax7 payer but for the last sentence of subpara8 graph (C)(i), and

9 ‘‘(ii) the person from whom the tax10 payer acquired the intangible elects, not11 withstanding any other provision of this

12 title—

13 ‘‘(I) to recognize gain on the dis14 position of the intangible, and

15 ‘‘(II) to pay a tax on such gain

16 which, when added to any other in17 come tax on such gain under this title,

18 equals such gain multiplied by the

19 highest rate of income tax applicable

20 to such person under this title,

21 then subparagraph (A) shall apply to the

22 intangible only to the extent that the tax23 payer’s adjusted basis in the intangible ex24 ceeds the gain recognized under clause

25 (ii)(I).
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1 ‘‘(C) RELATED PERSON DEFINED.—For

2 purposes of this paragraph—

3 ‘‘(i) RELATED PERSON.—A person

4 (hereinafter in this paragraph referred to

5 as the ‘related person’) is related to any

6 person if—

7 ‘‘(I) the related person bears a

8 relationship to such person specified

9 in section 267(b) or section 707(b)(1),

10 or

11 ‘‘(II) the related person and such

12 person are engaged in trades or busi13 nesses under common control (within

14 the meaning of subparagraphs (A)

15 and (B) of section 41(f)(1)).

16 For purposes of subclause (I), in applying

17 section 267(b) or 707(b)(1), ‘20 percent’

18 shall be substituted for ‘50 percent’.

19 ‘‘(ii) TIME FOR MAKING DETERMINA20 TION.—A person shall be treated as related

21 to another person if such relationship ex22 ists immediately before or immediately

23 after the acquisition of the intangible in24 volved.
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1 ‘‘(D) ACQUISITIONS BY REASON OF

2 DEATH.—Subparagraph (A) shall not apply to

3 the acquisition of any property by the taxpayer

4 if the basis of the property in the hands of the

5 taxpayer is determined under section 1014(a).

6 ‘‘(E) SPECIAL RULE FOR PARTNER7 SHIPS.—With respect to any increase in the

8 basis of partnership property under section 732,

9 734, or 743, determinations under this para10 graph shall be made at the partner level and

11 each partner shall be treated as having owned

12 and used such partner’s proportionate share of

13 the partnership assets.

14 ‘‘(F) ANTI-ABUSE RULES.—The term ‘am15 ortizable section 197 intangible’ does not in16 clude any section 197 intangible acquired in a

17 transaction, one of the principal purposes of

18 which is to avoid the requirement of subsection

19 (c)(1) that the intangible be acquired after the

20 date of the enactment of this section or to avoid

21 the provisions of subparagraph (A).

22 ‘‘(g) REGULATIONS.—The Secretary shall prescribe

23 such regulations as may be appropriate to carry out the

24 purposes of this section, including such regulations as may
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1 be appropriate to prevent avoidance of the purposes of this

2 section through related persons or otherwise.’’

3 (b) MODIFICATIONS TO DEPRECIATION RULES.—

4 (1) TREATMENT OF CERTAIN PROPERTY EX5 CLUDED FROM SECTION 197.—Section 167 (relating

6 to depreciation deduction) is amended by redesignat7 ing subsection (f) as subsection (g) and by inserting

8 after subsection (e) the following new subsection:

9 ‘‘(f) TREATMENT OF CERTAIN PROPERTY EXCLUDED

10 FROM SECTION 197.—

11 ‘‘(1) COMPUTER SOFTWARE.—

12 ‘‘(A) IN GENERAL.—If a depreciation de13 duction is allowable under subsection (a) with

14 respect to any computer software, such deduc15 tion shall be computed by using the straight

16 line method and a useful life of 36 months.

17 ‘‘(B) COMPUTER SOFTWARE.—For pur18 poses of this section, the term ‘computer soft19 ware’ has the meaning given to such term by

20 section 197(e)(3)(B); except that such term

21 shall not include any such software which is an

22 amortizable section 197 intangible.

23 ‘‘(2) CERTAIN INTERESTS OR RIGHTS AC24 QUIRED SEPARATELY.—If a depreciation deduction

25 is allowable under subsection (a) with respect to any
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1 property described in subparagraph (B), (C), or (D)

2 of section 197(e)(4), such deduction shall be com3 puted in accordance with regulations prescribed by

4 the Secretary.’’

5 (2) ALLOCATION OF BASIS IN CASE OF LEASED

6 PROPERTY.—Subsection (c) of section 167 is amend7 ed to read as follows:

8 ‘‘(c) BASIS FOR DEPRECIATION.—

9 ‘‘(1) IN GENERAL.—The basis on which exhaus10 tion, wear and tear, and obsolescence are to be al11 lowed in respect of any property shall be the ad12 justed basis provided in section 1011, for the pur13 pose of determining the gain on the sale or other

14 disposition of such property.

15 ‘‘(2) SPECIAL RULE FOR PROPERTY SUBJECT

16 TO LEASE.—If any property is acquired subject to a

17 lease—

18 ‘‘(A) no portion of the adjusted basis shall

19 be allocated to the leasehold interest, and

20 ‘‘(B) the entire adjusted basis shall be

21 taken into account in determining the deprecia22 tion deduction (if any) with respect to the prop23 erty subject to the lease.’’
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1 (c) AMENDMENTS TO SECTION 1253.—Subsection

2 (d) of section 1253 is amended by striking paragraphs (2),

3 (3), (4), and (5) and inserting the following:

4 ‘‘(2) OTHER PAYMENTS.—Any amount paid or

5 incurred on account of a transfer, sale, or other dis6 position of a franchise, trademark, or trade name to

7 which paragraph (1) does not apply shall be treated

8 as an amount chargeable to capital account.

9 ‘‘(3) RENEWALS, ETC.—For purposes of deter10 mining the term of a transfer agreement under this

11 section, there shall be taken into account all renewal

12 options (and any other period for which the parties

13 reasonably expect the agreement to be renewed).’’

14 (d) AMENDMENT TO SECTION 848.—Subsection (g)

15 of section 848 is amended by striking ‘‘this section’’ and

16 inserting ‘‘this section or section 197’’.

17 (e) AMENDMENTS TO SECTION 1060.—

18 (1) Paragraph (1) of section 1060(b) is amend19 ed by striking ‘‘goodwill or going concern value’’ and

20 inserting ‘‘section 197 intangibles’’.

21 (2) Paragraph (1) of section 1060(d) is amend22 ed by striking ‘‘goodwill or going concern value (or

23 similar items)’’ and inserting ‘‘section 197 intangi24 bles’’.

25 (f) TECHNICAL AND CONFORMING AMENDMENTS.—
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1 (1) Subsection (g) of section 167 (as redesig2 nated by subsection (b)) is amended to read as fol3 lows:

4 ‘‘(g) CROSS REFERENCES.—

‘‘(1) For additional rule applicable to depreciation

of improvements in the case of mines, oil and gas

wells, other natural deposits, and timber, see section 611.

‘‘(2) For amortization of goodwill and certain

other intangibles, see section 197.’’

5 (2) Subsection (f) of section 642 is amended by

6 striking ‘‘section 169’’ and inserting ‘‘sections 169

7 and 197’’.

8 (3) Subsection (a) of section 1016 is amended

9 by striking paragraph (19) and by redesignating the

10 following paragraphs accordingly.

11 (4) Subparagraph (C) of section 1245(a)(2) is

12 amended by striking ‘‘193, or 1253(d) (2) or (3)’’

13 and inserting ‘‘or 193’’.

14 (5) Paragraph (3) of section 1245(a) is amend15 ed by striking ‘‘section 185 or 1253(d) (2) or (3)’’.

16 (6) The table of sections for part VI of sub17 chapter B of chapter 1 is amended by adding at the

18 end thereof the following new item:

‘‘Sec. 197. Amortization of goodwill and certain other intangibles.’’

19 (g) EFFECTIVE DATE.—

20 (1) IN GENERAL.—Except as otherwise pro21 vided in this subsection, the amendments made by
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1 this section shall apply with respect to property ac2 quired after the date of the enactment of this Act.

3 (2) ELECTION TO HAVE AMENDMENTS APPLY

4 TO PROPERTY ACQUIRED AFTER JULY 25, 1991.—

5 (A) IN GENERAL.—If an election under

6 this paragraph applies to the taxpayer—

7 (i) the amendments made by this sec8 tion shall apply to property acquired by the

9 taxpayer after July 25, 1991,

10 (ii) subsection (c)(1)(A) of section

11 197 of the Internal Revenue Code of 1986

12 (as added by this section) (and so much of

13 subsection (f)(9)(A) of such section 197 as

14 precedes clause (i) thereof) shall be applied

15 with respect to the taxpayer by treating

16 July 25, 1991, as the date of the enact17 ment of such section, and

18 (iii) in applying subsection (f)(9) of

19 such section, with respect to any property

20 acquired by the taxpayer on or before the

21 date of the enactment of this Act, only

22 holding or use on July 25, 1991, shall be

23 taken into account.

24 (B) ELECTION.—An election under this

25 paragraph shall be made at such time and in
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1 such manner as the Secretary of the Treasury

2 or his delegate may prescribe. Such an election

3 by any taxpayer, once made—

4 (i) may be revoked only with the con5 sent of the Secretary, and

6 (ii) shall apply to the taxpayer making

7 such election and any other taxpayer under

8 common control with the taxpayer (within

9 the meaning of subparagraphs (A) and (B)

10 of section 41(f)(1) of such Code) at any

11 time after November 22, 1991, and on or

12 before the date on which such election is

13 made.

14 (3) ELECTIVE BINDING CONTRACT EXCEP15 TION.—

16 (A) IN GENERAL.—The amendments made

17 by this section shall not apply to any acquisi18 tion of property by the taxpayer if—

19 (i) such acquisition is pursuant to a

20 written binding contract in effect on the

21 date of the enactment of this Act and at

22 all times thereafter before such acquisition,

23 (ii) an election under paragraph (2)

24 does not apply to the taxpayer, and
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1 (iii) the taxpayer makes an election

2 under this paragraph with respect to such

3 contract.

4 (B) ELECTION.—An election under this

5 paragraph shall be made at such time and in

6 such manner as the Secretary of the Treasury

7 or his delegate shall prescribe. Such an election,

8 once made—

9 (i) may be revoked only with the con10 sent of the Secretary, and

11 (ii) shall apply to all property ac12 quired pursuant to the contract with re13 spect to which such election was made.

14 (h) ANNUAL REPORTS.—The Secretary of the Treas15 ury shall submit annual reports to the Committee on Ways

16 and Means of the House of Representatives and the Com17 mittee on Finance of the Senate on the implementation

18 and effects of the amendments made by this section, in19 cluding the effects of such amendments on merger and

20 acquisition activities. The first such annual report shall

21 be submitted on or before December 31, 1994.

22 (i) ANNUAL REPORTS ON OUTSTANDING CASES.—

23 The Secretary of the Treasury shall submit annual reports

24 to the Committee on Ways and Means of the House of

25 Representatives and the Committee on Finance of the
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1 Senate regarding the volume of cases still outstanding that

2 involve disputes regarding the amortization of intangibles,

3 progress made in resolving such cases, efforts made to co4 ordinate settlement proceedings, and factors inhibiting the

5 resolution of such cases. The report shall also address the

6 impact of the amendments made by this section on the

7 volume of disputes regarding the amortization of intangi8 bles. The first such annual report shall be submitted on

9 or before December 31, 1994.

10 SEC. 14262. TREATMENT OF CERTAIN PAYMENTS TO RE11 TIRED OR DECEASED PARTNER.

12 (a) SECTION 736(b) NOT TO APPLY IN CERTAIN

13 CASES.—Subsection (b) of section 736 (relating to pay14 ments for interest in partnership) is amended by adding

15 at the end thereof the following new paragraph:

16 ‘‘(3) LIMITATION ON APPLICATION OF PARA17 GRAPH (2).—Paragraph (2) shall apply only if—

18 ‘‘(A) capital is not a material income-pro19 ducing factor for the partnership, and

20 ‘‘(B) the retiring or deceased partner was

21 a general partner in the partnership.’’

22 (b) LIMITATION ON DEFINITION OF UNREALIZED

23 RECEIVABLES.—

24 (1) IN GENERAL.—Subsection (c) of section

25 751 (defining unrealized receivables) is amended—
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1 (A) by striking ‘‘sections 731, 736, and

2 741’’ each place they appear and inserting ‘‘,

3 sections 731 and 741 (but not for purposes of

4 section 736)’’, and

5 (B) by striking ‘‘section 731, 736, or 741’’

6 each place it appears and inserting ‘‘section

7 731 or 741’’.

8 (2) TECHNICAL AMENDMENTS.—

9 (A) Subsection (e) of section 751 is

10 amended by striking ‘‘sections 731, 736, and

11 741’’ and inserting ‘‘sections 731 and 741’’.

12 (B) Section 736 is amended by striking

13 subsection (c).

14 (c) EFFECTIVE DATE.—

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

16 this section shall apply in the case of partners retir17 ing or dying on or after January 5, 1993.

18 (2) BINDING CONTRACT EXCEPTION.—The

19 amendments made by this section shall not apply to

20 any partner retiring on or after January 5, 1993, if

21 a written contract to purchase such partner’s inter22 est in the partnership was binding on January 4,

23 1993, and at all times thereafter before such pur24 chase.
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1 PART VII—MISCELLANEOUS PROVISIONS

2 SEC. 14271. SUBSTANTIATION REQUIREMENT FOR DEDUC3 TION OF CERTAIN CHARITABLE CONTRIBU4 TIONS.

5 (a) SUBSTANTIATION REQUIREMENT.—Section

6 170(f) (providing special rules relating to the deduction

7 of charitable contributions and gifts) is amended by add8 ing at the end the following new paragraph:

9 ‘‘(8) SUBSTANTIATION REQUIREMENT FOR CER10 TAIN CONTRIBUTIONS.—

11 ‘‘(A) GENERAL RULE.—No deduction shall

12 be allowed under subsection (a) for any con13 tribution of $750 or more unless the taxpayer

14 substantiates the contribution by a contempora15 neous written acknowledgment of the contribu16 tion by the donee organization that meets the

17 requirements of subparagraph (B).

18 ‘‘(B) CONTENT OF ACKNOWLEDGMENT.—

19 An acknowledgment meets the requirements of

20 this subparagraph if it provides information

21 sufficient to substantiate the amount of the de22 ductible contribution. If the contribution was

23 made by means of a payment part of which con24 stituted consideration for goods or services pro25 vided by the donee organization, the acknowl-
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1 edgment must provide a good faith estimate of

2 the value of such goods or services.

3 ‘‘(C) CONTEMPORANEOUS.—For purposes

4 of subparagraph (A), an acknowledgment shall

5 be considered to be contemporaneous if the tax6 payer obtains the acknowledgment on or before

7 the earlier of—

8 ‘‘(i) the date on which the taxpayer

9 files a return for the taxable year in which

10 the contribution was made, or

11 ‘‘(ii) the due date (including exten12 sions) for filing such return.

13 ‘‘(D) SUBSTANTIATION NOT REQUIRED

14 FOR CONTRIBUTIONS REPORTED BY THE

15 DONEE ORGANIZATION.—Subparagraph (A)

16 shall not apply to a contribution if the donee

17 organization files a return, on such form and in

18 accordance with such regulations as the Sec19 retary may prescribe, which includes the infor20 mation described in subparagraph (B) with re21 spect to the contribution.

22 ‘‘(E) REGULATIONS.—The Secretary shall

23 prescribe such regulations as may be necessary

24 or appropriate to carry out the purposes of this

25 paragraph, including regulations that may pro-
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1 vide that some or all of the requirements of this

2 paragraph do not apply in appropriate cases.’’

3 (b) EFFECTIVE DATE.—The provisions of this sec4 tion shall apply to contributions made on or after January

5 1, 1994.

6 SEC. 14272. DISCLOSURE RELATED TO QUID PRO QUO

7 CONTRIBUTIONS.

8 (a) DISCLOSURE REQUIREMENT.—Subchapter B of

9 chapter 61 (relating to information and returns) is amend10 ed by redesignating section 6115 as section 6116 and by

11 inserting after section 6114 the following new section:

12 ‘‘SEC. 6115. DISCLOSURE RELATED TO QUID PRO QUO CON13 TRIBUTIONS.

14 ‘‘(a) DISCLOSURE REQUIREMENT.—If an organiza15 tion described in section 170(c) (other than paragraph (1)

16 thereof) receives a quid pro quo contribution, the organi17 zation shall, in connection with the solicitation or receipt

18 of the contribution—

19 ‘‘(1) inform the donor that the amount of the

20 contribution that is deductible for Federal income

21 tax purposes is limited to the excess of the amount

22 of any money and the value of any property other

23 than money contributed by the donor over the value

24 of the goods or services provided by the organiza25 tion, and
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1 ‘‘(2) provide the donor with a good faith esti2 mate of the value of such goods or services.

3 ‘‘(b) QUID PRO QUO CONTRIBUTION.—For purposes

4 of this section, the term ‘quid pro quo contribution’ means

5 a payment made partly as a contribution and partly in

6 consideration for goods or services provided to the payor

7 by the donee organization.’’

8 (b) PENALTY FOR FAILURE TO DISCLOSE.—Part I

9 of subchapter B of chapter 68 (relating to assessable pen10 alties) is amended by inserting after section 6713 the fol11 lowing new section:

12 ‘‘SEC. 6714. FAILURE TO MEET DISCLOSURE REQUIRE13 MENTS APPLICABLE TO QUID PRO QUO CON14 TRIBUTIONS.

15 ‘‘(a) IMPOSITION OF PENALTY.—If an organization

16 fails to meet the disclosure requirement of section 6115

17 with respect to a quid pro quo contribution, such organiza18 tion shall pay a penalty of $10 for each contribution in

19 respect of which the organization fails to make the re20 quired disclosure, except that the total penalty imposed

21 by this subsection with respect to a particular fundraising

22 event or mailing shall not exceed $5,000.

23 ‘‘(b) REASONABLE CAUSE EXCEPTION.—No penalty

24 shall be imposed under this section with respect to any
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1 failure if it is shown that such failure is due to reasonable

2 cause.’’

3 (c) CLERICAL AMENDMENTS.—

4 (1) The table for subchapter B of chapter 61

5 is amended by striking the item relating to section

6 6115 and inserting the following new item:

‘‘Sec. 6115. Disclosure related to quid pro quo contributions.

‘‘Sec. 6116. Cross reference.’’

7 (2) The table for part I of subchapter B of

8 chapter 68 is amended by inserting after the item

9 for section 6713 the following new item:

‘‘Sec. 6714. Failure to meet disclosure requirements applicable to

quid pro quo contributions.’’

10 (d) EFFECTIVE DATE.—The provisions of this sec11 tion shall apply to quid pro quo contributions made on

12 or after January 1, 1994.

13 SEC. 14273. DISALLOWANCE OF INTEREST ON CERTAIN

14 OVERPAYMENTS OF TAX.

15 (a) GENERAL RULE.—Subsection (e) of section 6611

16 is amended to read as follows:

17 ‘‘(e) DISALLOWANCE OF INTEREST ON CERTAIN

18 OVERPAYMENTS.—

19 ‘‘(1) REFUNDS WITHIN 45 DAYS AFTER RETURN

20 IS FILED.—If any overpayment of tax imposed by

21 this title is refunded within 45 days after the last

22 day prescribed for filing the return of such tax (de23 termined without regard to any extension of time for
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1 filing the return) or, in the case of a return filed

2 after such last date, is refunded within 45 days after

3 the date the return is filed, no interest shall be al4 lowed under subsection (a) on such overpayment.

5 ‘‘(2) REFUNDS AFTER CLAIM FOR CREDIT OR

6 REFUND.—If—

7 ‘‘(A) the taxpayer files a claim for a credit

8 or refund for any overpayment of tax imposed

9 by this title, and

10 ‘‘(B) such overpayment is refunded within

11 45 days after such claim is filed,

12 no interest shall be allowed on such overpayment

13 from the date the claim is filed until the day the re14 fund is made.

15 ‘‘(3) IRS INITIATED ADJUSTMENTS.—If an ad16 justment initiated by the Secretary, results in a re17 fund or credit of an overpayment, interest on such

18 overpayment shall be computed by subtracting 45

19 days from the number of days interest would other20 wise be allowed with respect to such overpayment.’’

21 (b) EFFECTIVE DATES.—

22 (1) Paragraph (1) of section 6611(e) of the In23 ternal Revenue Code of 1986 (as amended by sub24 section (a)) shall apply in the case of returns the
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1 due date for which (determined without regard to

2 extensions) is on or after January 1, 1994.

3 (2) Paragraph (2) of section 6611(e) of such

4 Code (as so amended) shall apply in the case of

5 claims for credit or refund of any overpayment filed

6 on or after January 1, 1995, regardless of the tax7 able period to which such refund relates.

8 (3) Paragraph (3) of section 6611(e) of such

9 Code (as so amended) shall apply in the case of any

10 refund paid on or after January 1, 1995, regardless

11 of the taxable period to which such refund relates.

12 SEC. 14274. DENIAL OF DEDUCTION RELATING TO TRAVEL

13 EXPENSES.

14 (a) IN GENERAL.—Section 274(m) (relating to addi15 tional limitations on travel expenses) is amended by add16 ing at the end thereof the following new paragraph:

17 ‘‘(3) TRAVEL EXPENSES OF SPOUSE, DEPEND18 ENT, OR OTHERS.—No deduction shall be allowed

19 under this chapter (other than section 217) for trav20 el expenses paid or incurred with respect to a

21 spouse, dependent, or other individual accompanying

22 the taxpayer (or an officer or employee of the tax23 payer) on business travel, unless—

24 ‘‘(A) the spouse, dependent, or other indi25 vidual is an employee of the taxpayer,
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1 ‘‘(B) the travel of the spouse, dependent,

2 or other individual is for a bona fide business

3 purpose, and

4 ‘‘(C) such expenses would otherwise be de5 ductible by the spouse, dependent, or other indi6 vidual.’’

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

8 this section shall apply to amounts paid or incurred after

9 December 31, 1993.

10 SEC. 14275. INCREASE IN WITHHOLDING FROM SUPPLE11 MENTAL WAGE PAYMENTS.

12 If an employer elects under Treasury Regulation

13 31.3402 (g)–1 to determine the amount to be deducted

14 and withheld from any supplemental wage payment by

15 using a flat percentage rate, the rate to be used in deter16 mining the amount to be so deducted and withheld shall

17 not be less than 28 percent. The preceding sentence shall

18 apply to payments made after December 31, 1993.
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1 Subtitle C—Empowerment Zones

2 and Enterprise Communities, Etc.

3 PART I—EMPOWERMENT ZONES AND

4 ENTERPRISE COMMUNITIES

5 SEC. 14301. DESIGNATION AND TREATMENT OF

6 EMPOWERMENT ZONES AND ENTERPRISE

7 COMMUNITIES.

8 (a) IN GENERAL.—Chapter 1 (relating to normal

9 taxes and surtaxes) is amended by inserting after sub10 chapter T the following new subchapter:

11 ‘‘Subchapter U—Designation and Treatment

12 of Empowerment Zones and Enterprise

13 Communities

‘‘Part I. Designation.

‘‘Part II. Incentives for empowerment zones and enterprise communities.

‘‘Part III. Additional incentives for empowerment zones.

‘‘Part IV. Regulations.

14 ‘‘PART I—DESIGNATION

‘‘Sec. 1391. Designation procedure.

‘‘Sec. 1392. Eligibility criteria.

‘‘Sec. 1393. Definitions and special rules.

15 ‘‘SEC. 1391. DESIGNATION PROCEDURE.

16 ‘‘(a) IN GENERAL.—From among the areas nomi17 nated for designation under this section, the appropriate

18 Secretaries may, in consultation with the Enterprise

19 Board, designate empowerment zones and enterprise com20 munities.

21 ‘‘(b) NUMBER OF DESIGNATIONS.—
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1 ‘‘(1) ENTERPRISE COMMUNITIES.—The appro2 priate Secretaries may designate in the aggregate

3 100 nominated areas as enterprise communities

4 under this section, subject to the availability of eligi5 ble nominated areas. Of that number, not more than

6 65 may be designated in urban areas, not more than

7 30 may be designated in rural areas, and not more

8 than 5 may be designated by the Secretary of the

9 Interior in Indian reservations.

10 ‘‘(2) EMPOWERMENT ZONES.—The appropriate

11 Secretaries may designate in the aggregate 10 nomi12 nated areas as empowerment zones under this sec13 tion, subject to the availability of eligible nominated

14 areas. Of that number, not more than 6 may be des15 ignated in urban areas, not more than 3 may be des16 ignated in rural areas, and not more than 1 may be

17 designated by the Secretary of the Interior in an In18 dian reservation. If 6 empowerment zones are des19 ignated in urban areas, no less than 1 shall be des20 ignated in an urban area the most populous city of

21 which has a population of 500,000 or less. The Sec22 retary of Housing and Urban Development shall des23 ignate empowerment zones located in urban areas in

24 such a manner that the aggregate population of all

25 such zones does not exceed 750,000.
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1 ‘‘(c) PERIOD DESIGNATIONS MAY BE MADE.—A des2 ignation may be made under this section only after 1993

3 and before 1996.

4 ‘‘(d) PERIOD FOR WHICH DESIGNATION IS IN EF5 FECT.—

6 ‘‘(1) IN GENERAL.—Any designation under this

7 section shall remain in effect during the period be8 ginning on the date of the designation and ending

9 on the earliest of—

10 ‘‘(A) the close of the 10th calendar year

11 beginning on or after such date of designation,

12 ‘‘(B) the termination date designated by

13 the State and local governments as provided for

14 in their nomination, or

15 ‘‘(C) the date the appropriate Secretary re16 vokes the designation.

17 ‘‘(2) REVOCATION OF DESIGNATION.—

18 ‘‘(A) IN GENERAL.—The appropriate Sec19 retary, in consultation with the Enterprise

20 Board, may revoke the designation under this

21 section of an area if such Secretary determines

22 that the local government or the State in which

23 it is located—

24 ‘‘(i) has modified the boundaries of

25 the area, or
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1 ‘‘(ii) is not complying substantially

2 with, or fails to make progress in achieving

3 the benchmarks set forth in, the strategic

4 plan under subsection (f)(2).

5 ‘‘(B) APPLICABLE PROCEDURES.—A des6 ignation may be revoked by the appropriate

7 Secretary under subparagraph (A) only after a

8 hearing on the record involving officials of the

9 State or local government involved.

10 ‘‘(e) LIMITATIONS ON DESIGNATIONS.—An area may

11 be designated under subsection (a) only if—

12 ‘‘(1) the area is nominated by 1 or more local

13 governments and the State or States in which it is

14 located for designation under this section,

15 ‘‘(2) such State or States and the local govern16 ments have the authority—

17 ‘‘(A) to nominate the area for designation

18 under this section, and

19 ‘‘(B) to provide the assurances described in

20 paragraph (3),

21 ‘‘(3) such State or States and the local govern22 ments provide written assurances satisfactory to the

23 appropriate Secretary that the strategic plan de24 scribed in the application under subsection (f)(2) for

25 such area will be implemented,
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1 ‘‘(4) the appropriate Secretary determines that

2 any information furnished is reasonably accurate,

3 and

4 ‘‘(5) such State or States and local govern5 ments certify that no portion of the area nominated

6 is already included in an empowerment zone or in an

7 enterprise community or in an area otherwise nomi8 nated to be designated under this section.

9 ‘‘(f) APPLICATION.—An application for designation

10 as an empowerment zone or as an enterprise community

11 shall—

12 ‘‘(1) demonstrate that the nominated area sat13 isfies the eligibility criteria described in section

14 1392,

15 ‘‘(2) include a strategic plan for accomplishing

16 the purposes of this subchapter that—

17 ‘‘(A) describes the coordinated economic,

18 human, community, and physical development

19 plan and related activities proposed for the

20 nominated area,

21 ‘‘(B) describes the process by which the af22 fected community is a full partner in the proc23 ess of developing and implementing the plan

24 and the extent to which local institutions and
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1 organizations have contributed to the planning

2 process,

3 ‘‘(C) identifies the amount of State, local,

4 and private resources that will be available in

5 the nominated area and the private/public part6 nerships to be used, which may include partici7 pation by, and cooperation with, universities,

8 medical centers, and other private and public

9 entities,

10 ‘‘(D) identifies the funding requested

11 under any Federal program in support of the

12 proposed economic, human, community, and

13 physical development and related activities,

14 ‘‘(E) identifies baselines, methods, and

15 benchmarks for measuring the success of carry16 ing out the strategic plan, including the extent

17 to which poor persons and families will be em18 powered to become economically self-sufficient,

19 and

20 ‘‘(F) does not include any action to assist

21 any establishment in relocating from one area

22 outside the nominated area to the nominated

23 area, except that assistance for the expansion of

24 an existing business entity through the estab-
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1 lishment of a new branch, affiliate, or subsidi2 ary is permitted if—

3 ‘‘(i) the establishment of the new

4 branch, affiliate, or subsidiary will not re5 sult in a decrease in employment in the

6 area of original location or in any other

7 area where the existing business entity

8 conducts business operations, and

9 ‘‘(ii) there is no reason to believe that

10 the new branch, affiliate, or subsidiary is

11 being established with the intention of clos12 ing down the operations of the existing

13 business entity in the area of its original

14 location or in any other area where the ex15 isting business entity conducts business op16 eration, and

17 ‘‘(3) include such other information as may be

18 required by the appropriate Secretary or the Enter19 prise Board.

20 ‘‘SEC. 1392. ELIGIBILITY CRITERIA.

21 ‘‘(a) IN GENERAL.—A nominated area shall be eligi22 ble for designation under section 1391 only if it meets the

23 following criteria:

24 ‘‘(1) POPULATION.—The nominated area has a

25 maximum population of—
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1 ‘‘(A) in the case of an urban area, the

2 lesser of—

3 ‘‘(i) 200,000, or

4 ‘‘(ii) the greater of 50,000 or 10 per5 cent of the population of the most popu6 lous city located within the nominated

7 area, and

8 ‘‘(B) in the case of a rural area, 30,000.

9 ‘‘(2) DISTRESS.—The nominated area is one of

10 pervasive poverty, unemployment, and general dis11 tress.

12 ‘‘(3) SIZE.—The nominated area—

13 ‘‘(A) does not exceed 20 square miles if an

14 urban area or 1,000 square miles if a rural

15 area or an Indian reservation,

16 ‘‘(B) has a boundary which is continuous,

17 or, except in the case of a rural area located in

18 more than 1 State, consists of not more than

19 3 noncontiguous parcels,

20 ‘‘(C)(i) in the case of an urban area, is lo21 cated entirely within no more than 2 contiguous

22 States, and

23 ‘‘(ii) in the case of a rural area, is located

24 entirely within no more than 3 contiguous

25 States, and
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1 ‘‘(D) does not include any portion of a

2 central business district (as such term is used

3 for purposes of the most recent Census of Re4 tail Trade) unless the poverty rate for each

5 population census tract in such district is not

6 less than 35 percent (30 percent in the case of

7 an enterprise community).

8 ‘‘(4) POVERTY RATE.—The poverty rate—

9 ‘‘(A) for each population census tract with10 in the nominated area is not less than 20 per11 cent,

12 ‘‘(B) for at least 90 percent of the popu13 lation census tracts within the nominated area

14 is not less than 25 percent, and

15 ‘‘(C) for at least 50 percent of the popu16 lation census tracts within the nominated area

17 is not less than 35 percent.

18 ‘‘(b) SPECIAL RULES RELATING TO DETERMINATION

19 OF POVERTY RATE.—For purposes of subsection (a)(4)—

20 ‘‘(1) TREATMENT OF CENSUS TRACTS WITH

21 SMALL POPULATIONS.—

22 ‘‘(A) TRACTS WITH NO POPULATION.—In

23 the case of a population census tract with no

24 population—
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1 ‘‘(i) such tract shall be treated as hav2 ing a poverty rate which meets the require3 ments of subparagraphs (A) and (B) of

4 subsection (a)(4), but

5 ‘‘(ii) such tract shall be treated as

6 having a zero poverty rate for purposes of

7 applying subparagraph (C) thereof.

8 ‘‘(B) TRACTS WITH POPULATIONS OF LESS

9 THAN 2,000.—A population census tract with a

10 population of less than 2,000 shall be treated as

11 having a poverty rate which meets the require12 ments of subparagraphs (A) and (B) of sub13 section (a)(4) if more than 75 percent of such

14 tract is zoned for commercial or industrial use.

15 ‘‘(2) DISCRETION TO ADJUST REQUIRE16 MENTS.—Where necessary to carry out the purposes

17 of this subchapter, the appropriate Secretary may

18 reduce by 5 percentage points one of the following

19 thresholds for not more than 10 percent of the popu20 lation census tracts (or, if fewer, 5 population cen21 sus tracts) in the nominated area:

22 ‘‘(A) The 20 percent threshold in sub23 section (a)(4)(A).

24 ‘‘(B) The 25 percent threshold in sub25 section (a)(4)(B).
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1 ‘‘(C) The 35 percent threshold in sub2 section (a)(4)(C).

3 If the appropriate Secretary elects to reduce the

4 threshold under subparagraph (C) for an enterprise

5 community, such Secretary may (in lieu of applying

6 the preceding sentence) reduce by 10 percentage

7 points the threshold under subparagraph (C) for 3

8 population census tracts.

9 ‘‘(3) EACH NONCONTIGUOUS AREA MUST SAT10 ISFY POVERTY RATE RULE.—A nominated area may

11 not include a noncontiguous parcel unless such par12 cel separately meets (subject to paragraphs (1) and

13 (2)) the criteria set forth in subsection (a)(4).

14 ‘‘(4) AREAS NOT WITHIN CENSUS TRACTS.—In

15 the case of an area which is not tracted for popu16 lation census tracts, the equivalent county divisions

17 (as defined by the Bureau of the Census for pur18 poses of defining poverty areas) shall be used for

19 purposes of determining poverty rates.

20 ‘‘(c) FACTORS TO CONSIDER.—From among the

21 nominated areas eligible for designation under section

22 1391 by the appropriate Secretary, such appropriate Sec23 retary shall make designations of empowerment zones and

24 enterprise communities on the basis of—
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1 ‘‘(1) the effectiveness of the strategic plan sub2 mitted pursuant to section 1391(f)(2) and the assur3 ances made pursuant to section 1391(e)(3), and

4 ‘‘(2) criteria specified by the Enterprise Board.

5 ‘‘SEC. 1393. DEFINITIONS AND SPECIAL RULES.

6 ‘‘(a) IN GENERAL.—For purposes of this sub7 chapter—

8 ‘‘(1) APPROPRIATE SECRETARY.—The term ‘ap9 propriate Secretary’ means—

10 ‘‘(A) the Secretary of Housing and Urban

11 Development in the case of any nominated area

12 which is located in an urban area,

13 ‘‘(B) the Secretary of Agriculture in the

14 case of any nominated area which is located in

15 a rural area, and

16 ‘‘(C) the Secretary of the Interior in the

17 case of any nominated area which is located in

18 an Indian reservation.

19 ‘‘(2) ENTERPRISE BOARD.—The term ‘Enter20 prise Board’ means any board hereafter established

21 and designated for purposes of this subchapter as

22 the ‘Enterprise Board’.

23 ‘‘(3) RURAL AREA.—The term ‘rural area’

24 means any area which is—
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1 ‘‘(A) outside of a metropolitan statistical

2 area (within the meaning of section

3 143(k)(2)(B)), or

4 ‘‘(B) determined by the Secretary of Agri5 culture, after consultation with the Secretary of

6 Commerce, to be a rural area.

7 ‘‘(4) URBAN AREA.—The term ‘urban area’

8 means an area which is not a rural area.

9 ‘‘(5) INDIAN RESERVATION.—

10 ‘‘(A) IN GENERAL.—The term ‘Indian res11 ervation’ means a reservation as defined in—

12 ‘‘(i) section 3(d) of the Indian Financ13 ing Act of 1974 (25 U.S.C. 1452(d)), or

14 ‘‘(ii) section 4(10) of the Indian Child

15 Welfare Act of 1978 (25 U.S.C.

16 1903(10)).

17 ‘‘(B) GOVERNMENTS.—In the case of an

18 area in an Indian reservation, the reservation

19 governing body (as determined by the Secretary

20 of the Interior) shall be deemed to be both the

21 State and local governments with respect to

22 such area.

23 ‘‘(6) LOCAL GOVERNMENT.—The term ‘local

24 government’ means—
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1 ‘‘(A) any county, city, town, township, par2 ish, village, or other general purpose political

3 subdivision of a State, and

4 ‘‘(B) any combination of political subdivi5 sions described in subparagraph (A) recognized

6 by the appropriate Secretary.

7 ‘‘(7) NOMINATED AREA.—The term ‘nominated

8 area’ means an area which is nominated by 1 or

9 more local governments and the State or States in

10 which it is located for designation under section

11 1391.

12 ‘‘(8) GOVERNMENTS.—If more than 1 State or

13 local government seeks to nominate an area as a tax

14 enterprise zone, any reference to, or requirement of,

15 this subchapter shall apply to all such governments.

16 ‘‘(9) SPECIAL RULE.—An area shall be treated

17 as nominated by a State and a local government if

18 it is nominated by such other entity as may be speci19 fied by the Enterprise Board.

20 ‘‘(10) USE OF CENSUS DATA.—Population and

21 poverty rate shall be determined by the most recent

22 decennial census data available.

23 ‘‘(b) EMPOWERMENT ZONE; ENTERPRISE COMMU24 NITY.—For purposes of this title, the terms ‘empowerment
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1 zone’ and ‘enterprise community’ mean areas designated

2 as such under section 1391.

3 ‘‘PART II—INCENTIVES FOR EMPOWERMENT

4 ZONES AND ENTERPRISE COMMUNITIES

‘‘Sec. 1394. Incentives.

5 ‘‘SEC. 1394. INCENTIVES.

6 ‘‘(a) INCREASE IN LOW INCOME HOUSING CREDIT.—

7 For purposes of section 42(d)(5)(C), a building shall be

8 treated as located in a qualified census tract if—

9 ‘‘(1) such building is located in a census tract

10 having a poverty rate of at least 30 percent (deter11 mined in accordance with section 1393(a)(10)), and

12 ‘‘(2) such building is located in an

13 empowerment zone or an enterprise community.

14 ‘‘(b) TAX EXEMPT ENTERPRISE ZONE FACILITY

15 BONDS.—

16 ‘‘(1) IN GENERAL.—For purposes of part IV of

17 subchapter B of chapter 1 (relating to tax exemption

18 requirements for State and local bonds), the term

19 ‘exempt facility bond’ includes any bond issued as

20 part of an issue 95 percent or more of the net pro21 ceeds (as defined in section 150(a)(3)) of which are

22 to be used to provide any enterprise zone facility.

23 ‘‘(2) ENTERPRISE ZONE FACILITY.—For pur24 poses of this subsection—
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1 ‘‘(A) IN GENERAL.—The term ‘enterprise

2 zone facility’ means any qualified zone property

3 the principal user of which is an enterprise zone

4 business (as defined in section 1399B), and any

5 land which is functionally related and subordi6 nate to such property.

7 ‘‘(B) QUALIFIED ZONE PROPERTY.—The

8 term ‘qualified zone property’ has the meaning

9 given such term by section 1399(c); except

10 that—

11 ‘‘(i) section 1399(c)(3) shall not

12 apply, and

13 ‘‘(ii) the references to empowerment

14 zones shall be treated as including ref15 erences to enterprise communities.

16 ‘‘(3) LIMITATION ON AMOUNT OF BONDS.—

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

18 not apply to any issue if the aggregate amount

19 of outstanding enterprise zone facility bonds al20 locable to any enterprise zone business (taking

21 into account such issue) exceeds—

22 ‘‘(i) $3,000,000 with respect to any 1

23 empowerment zone or enterprise commu24 nity, or
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1 ‘‘(ii) $20,000,000 with respect to all

2 empowerment zones and enterprise com3 munities.

4 ‘‘(B) AGGREGATE ENTERPRISE ZONE FA5 CILITY BOND BENEFIT.—For purposes of sub6 paragraph (A), the aggregate amount of out7 standing enterprise zone facility bonds allocable

8 to any business shall be determined under rules

9 similar to the rules of section 144(a)(10), tak10 ing into account only bonds to which paragraph

11 (1) applies.

12 ‘‘(4) ACQUISITION OF LAND AND EXISTING

13 PROPERTY PERMITTED.—The requirements of sec14 tions 147(c)(1)(A) and 147(d) shall not apply to any

15 bond described in paragraph (1).

16 ‘‘(5) PARTIAL EXEMPTION FROM VOLUME

17 CAP.—Only for purposes of section 146, the term

18 ‘private activity bond’ shall not include 50 percent of

19 any bond issued as part of an issue described in

20 paragraph (1).

21 ‘‘(6) PENALTY FOR CEASING TO MEET RE22 QUIREMENTS.—

23 ‘‘(A) FAILURES CORRECTED.—An issue

24 which fails to meet 1 or more of the require-
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1 ments of paragraphs (1) and (2) shall be

2 treated as meeting such requirements if—

3 ‘‘(i) the issuer and any principal user

4 in good faith attempted to meet such re5 quirements, and

6 ‘‘(ii) any failure to meet such require7 ments is corrected within a reasonable pe8 riod after such failure is first discovered.

9 ‘‘(B) LOSS OF DEDUCTIONS WHERE FACIL10 ITY CEASES TO BE QUALIFIED.—No deduction

11 shall be allowed under this chapter for interest

12 on any financing provided from any bond to

13 which paragraph (1) applies with respect to any

14 facility to the extent such interest accrues dur15 ing the period beginning on the first day of the

16 calendar year which includes the date on

17 which—

18 ‘‘(i) substantially all of the facility

19 with respect to which the financing was

20 provided ceases to be used in an

21 empowerment zone or enterprise commu22 nity, or

23 ‘‘(ii) the principal user of such facility

24 ceases to be an enterprise zone business

25 (as defined in section 1399B, but treating
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1 references to empowerment zones as in2 cluding references to enterprise commu3 nities).

4 ‘‘(C) EXCEPTION IF ZONE CEASES.—Sub5 paragraphs (A) and (B) shall not apply solely

6 by reason of the termination or revocation of a

7 designation as an empowerment zone or an en8 terprise community.

9 ‘‘(D) EXCEPTION FOR BANKRUPTCY.—

10 Subparagraphs (A) and (B) shall not apply to

11 any cessation resulting from bankruptcy.

12 ‘‘(c) ENTERPRISE ZONE FACILITY BONDS NOT SUB13 JECT TO INTEREST DEDUCTION LIMITATIONS ON FINAN14 CIAL INSTITUTIONS.—Any tax-exempt bond described in

15 subsection (b)(1)—

16 ‘‘(1) shall be treated as acquired before August

17 8, 1986, for purposes of sections 265(b) and

18 291(e)(1)(B), and

19 ‘‘(2) shall not be taken into account in deter20 mining whether any issuer is a qualified small issuer

21 for purposes of section 265(b).

22 ‘‘(d) ADDITIONAL LOW-INCOME HOUSING CREDIT

23 AMOUNT.—

24 ‘‘(1) IN GENERAL.—Each State which includes

25 any empowerment zone or enterprise community
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1 shall receive an additional State housing credit ceil2 ing amount for purposes of section 42 of $818,000

3 for each such zone or community.

4 ‘‘(2) ADDITIONAL AMOUNT MUST BE ALLO5 CATED TO BUILDINGS IN DESIGNATED AREAS.—

6 ‘‘(A) IN GENERAL.—The portion of the ad7 ditional amount received under paragraph (1)

8 by reason of any empowerment zone or enter9 prise community which may be applied to in10 crease the State housing credit ceiling for any

11 calendar year shall not exceed the lesser of—

12 ‘‘(i) the unused portion of such addi13 tional amount with respect to such zone or

14 community, or

15 ‘‘(ii) the aggregate housing credit dol16 lar amount allocated from such ceiling for

17 such year to buildings located in such zone

18 or community.

19 ‘‘(B) UNUSED PORTION.—For purposes of

20 subparagraph (A), the unused portion for any

21 calendar year of the additional amount received

22 under paragraph (1) is the amount equal to the

23 excess of—
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1 ‘‘(i) the additional amount received

2 under paragraph (1) by the State by rea3 son of the zone or community, over

4 ‘‘(ii) the aggregate of the increases in

5 the State housing credit ceiling by reason

6 of such amount for all prior calendar

7 years.

8 ‘‘(3) AVAILABILITY OF ADDITIONAL AMOUNT.—

9 None of the additional amount received under para10 graph (1) may be applied after 1996.

11 ‘‘(4) AREAS LOCATED IN MORE THAN 1

12 STATE.—In the case of an empowerment zone or en13 terprise community which is located in more than 1

14 State, the $818,000 amount shall be allocated

15 among such States in proportion to the population

16 of such zone or community which is within each

17 such State.

18 ‘‘(5) ZONES LOCATED IN CONSTITUTIONAL

19 HOME RULE CITIES.—If any empowerment zone or

20 enterprise community is located in a constitutional

21 home rule city (as defined in section 42(h)(4)(E)),

22 the additional amount received under paragraph (1)

23 shall be allocated to such city and shall not be taken

24 into account in determining such city’s share of the
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1 State housing credit ceiling under section

2 42(h)(4)(E).

3 ‘‘PART III—ADDITIONAL INCENTIVES FOR

4 EMPOWERMENT ZONES

‘‘SUBPART A. Empowerment zone employment credit.

‘‘SUBPART B. Zone resident empowerment savings credit.

‘‘SUBPART C. Depreciation and other incentives.

5 ‘‘Subpart A—Empowerment Zone Employment Credit

‘‘Sec. 1396. Empowerment zone employment credit.

‘‘Sec. 1397. Other definitions and special rules.

6 ‘‘SEC. 1396. EMPOWERMENT ZONE EMPLOYMENT CREDIT.

7 ‘‘(a) AMOUNT OF CREDIT.—For purposes of section

8 38, the amount of the empowerment zone employment

9 credit determined under this section with respect to any

10 employer for any taxable year is the applicable percentage

11 of the qualified zone wages paid or incurred during the

12 calendar year which ends with or within such taxable year.

13 ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of

14 this section, the term ‘applicable percentage’ means the

15 percentage determined in accordance with the following

16 table:

‘‘In the case of wages paid or The applicable

incurred during calendar year: percentage is:

1994 through 2000 ........................................ 25

2001 ............................................................... 20

2002 ............................................................... 15

2003 ............................................................... 10

2004 ............................................................... 5

17 ‘‘(c) QUALIFIED ZONE WAGES.—
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1 ‘‘(1) IN GENERAL.—For purposes of this sec2 tion, the term ‘qualified zone wages’ means any

3 wages paid or incurred by an employer for services

4 performed by an employee while such employee is a

5 qualified zone employee.

6 ‘‘(2) ONLY FIRST $20,000 OF WAGES PER YEAR

7 TAKEN INTO ACCOUNT.—With respect to each quali8 fied zone employee, the amount of qualified zone

9 wages which may be taken into account for a cal10 endar year shall not exceed $20,000.

11 ‘‘(3) COORDINATION WITH TARGETED JOBS

12 CREDIT.—

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

14 zone wages’ shall not include wages taken into

15 account in determining the credit under section

16 51.

17 ‘‘(B) COORDINATION WITH PARAGRAPH

18 (2).—The $20,000 amount in paragraph (2)

19 shall be reduced for any calendar year by the

20 amount of wages paid or incurred during such

21 year which are taken into account in determin22 ing the credit under section 51.

23 ‘‘(d) QUALIFIED ZONE EMPLOYEE.—For purposes of

24 this section—
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1 ‘‘(1) IN GENERAL.—Except as otherwise pro2 vided in this subsection, the term ‘qualified zone em3 ployee’ means, with respect to any period, any em4 ployee of an employer if—

5 ‘‘(A) substantially all of the services per6 formed during such period by such employee for

7 such employer are performed within an

8 empowerment zone in a trade or business of the

9 employer, and

10 ‘‘(B) the principal place of abode of such

11 employee while performing such services is

12 within such empowerment zone.

13 ‘‘(2) CERTAIN INDIVIDUALS NOT ELIGIBLE.—

14 The term ‘qualified zone employee’ shall not in15 clude—

16 ‘‘(A) any individual described in subpara17 graph (A), (B), or (C) of section 51(i)(1),

18 ‘‘(B) any 5-percent owner (as defined in

19 section 416(i)(1)(B)),

20 ‘‘(C) any individual employed by the em21 ployer for less than 90 days,

22 ‘‘(D) any individual employed by the em23 ployer at any facility described in section

24 144(c)(6)(B), and
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1 ‘‘(E) any individual employed by the em2 ployer in a trade or business the principal activ3 ity of which is farming (within the meaning of

4 subparagraphs (A) or (B) of section

5 2032A(e)(5)), but only if, as of the close of the

6 taxable year, the sum of—

7 ‘‘(i) the aggregate unadjusted bases

8 (or, if greater, the fair market value) of

9 the assets owned by the employer which

10 are used in such a trade or business, and

11 ‘‘(ii) the aggregate value of assets

12 leased by the employer which are used in

13 such a trade or business (as determined

14 under regulations prescribed by the Sec15 retary),

16 exceeds $500,000.

17 ‘‘(3) SPECIAL RULES RELATED TO TERMI18 NATION OF EMPLOYMENT.—

19 ‘‘(A) IN GENERAL.—Paragraph (2)(C)

20 shall not apply to—

21 ‘‘(i) a termination of employment of

22 an individual who before the close of the

23 period referred to in paragraph (2)(C) be24 comes disabled to perform the services of

25 such employment unless such disability is
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1 removed before the close of such period

2 and the taxpayer fails to offer reemploy3 ment to such individual, or

4 ‘‘(ii) a termination of employment of

5 an individual if it is determined under the

6 applicable State unemployment compensa7 tion law that the termination was due to

8 the misconduct of such individual.

9 ‘‘(B) CHANGES IN FORM OF BUSINESS.—

10 For purposes of paragraph (2)(C), the employ11 ment relationship between the taxpayer and an

12 employee shall not be treated as terminated—

13 ‘‘(i) by a transaction to which section

14 381(a) applies if the employee continues to

15 be employed by the acquiring corporation,

16 or

17 ‘‘(ii) by reason of a mere change in

18 the form of conducting the trade or busi19 ness of the taxpayer if the employee con20 tinues to be employed in such trade or

21 business and the taxpayer retains a sub22 stantial interest in such trade or business.

23 ‘‘SEC. 1397. OTHER DEFINITIONS AND SPECIAL RULES.

24 ‘‘(a) WAGES.—For purposes of this subpart—
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1 ‘‘(1) IN GENERAL.—The term ‘wages’ has the

2 same meaning as when used in section 51.

3 ‘‘(2) CERTAIN TRAINING AND EDUCATIONAL

4 BENEFITS.—

5 ‘‘(A) IN GENERAL.—The following

6 amounts shall be treated as wages paid to an

7 employee:

8 ‘‘(i) Any amount paid or incurred by

9 an employer which is excludable from the

10 gross income of an employee under section

11 127, but only to the extent paid or in12 curred to a person not related to the em13 ployer.

14 ‘‘(ii) In the case of an employee who

15 has not attained the age of 19, any

16 amount paid or incurred by an employer

17 for any youth training program operated

18 by such employer in conjunction with local

19 education officials.

20 ‘‘(B) RELATED PERSON.—A person is re21 lated to any other person if the person bears a

22 relationship to such other person specified in

23 section 267(b) or 707(b)(1), or such person and

24 such other person are engaged in trades or

25 businesses under common control (within the
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1 meaning of subsections (a) and (b) of section

2 52). For purposes of the preceding sentence, in

3 applying section 267(b) or 707(b)(1), ‘10 per4 cent’ shall be substituted for ‘50 percent’.

5 ‘‘(b) CONTROLLED GROUPS.—For purposes of this

6 subpart—

7 ‘‘(1) all employers treated as a single employer

8 under subsection (a) or (b) of section 52 shall be

9 treated as a single employer for purposes of this

10 subpart, and

11 ‘‘(2) the credit (if any) determined under sec12 tion 1396 with respect to each such employer shall

13 be its proportionate share of the wages giving rise

14 to such credit.

15 ‘‘(c) CERTAIN OTHER RULES MADE APPLICABLE.—

16 For purposes of this subpart, rules similar to the rules

17 of section 51(k) and subsections (c), (d), and (e) of section

18 52 shall apply.

19 ‘‘(d) NOTICE OF AVAILABILITY OF ADVANCE PAY20 MENT OF EARNED INCOME CREDIT.—Each employer

21 shall take reasonable steps to notify all qualified zone em22 ployees of the availability to eligible individuals of receiv23 ing advanced payments of the credit under section 32 (re24 lating to the earned income credit).
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1 ‘‘Subpart B—Zone Resident Empowerment Savings

2 Credit

‘‘Sec. 1398. Zone resident empowerment savings credit.

3 ‘‘SEC. 1398. ZONE RESIDENT EMPOWERMENT SAVINGS

4 CREDIT.

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

6 the amount of the zone resident empowerment savings

7 credit determined under this section with respect to any

8 employer for any taxable year is 50 percent of the quali9 fied savings contributions for the taxable year.

10 ‘‘(b) QUALIFIED SAVINGS CONTRIBUTIONS.—For

11 purposes of this section—

12 ‘‘(1) IN GENERAL.—The term ‘qualified savings

13 contribution’ means any contribution by an employer

14 to a defined contribution plan—

15 ‘‘(A) which is made on behalf of an em16 ployee in connection with services performed by

17 such employee while such employee is a quali18 fied zone employee, and

19 ‘‘(B) with respect to which the employee

20 has a nonforfeitable right.

21 ‘‘(2) LIMITATION BASED ON COMPENSATION.—

22 ‘‘(A) IN GENERAL.—The qualified savings

23 contributions taken into account with respect to

24 any qualified zone employee for any taxable

25 year shall not exceed an amount equal to 2 per-
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1 cent of so much of the employee’s compensation

2 (as defined in section 414(s)) as does not

3 exceed $35,000.

4 ‘‘(B) ZONE DESIGNATION IN EFFECT FOR

5 PARTIAL YEAR.—If a designation of an area as

6 an empowerment zone is in effect for less than

7 the entire taxable year, the $35,000 amount

8 under subparagraph (A) shall be ratably re9 duced to reflect the portion of the year such

10 designation is not in effect.

11 ‘‘(3) CERTAIN CONTRIBUTIONS EXCLUDED.—

12 The term ‘qualified savings contribution’ shall not

13 include any contribution—

14 ‘‘(A) to a plan subject to the funding re15 quirements of section 412,

16 ‘‘(B) to a tax credit employee stock owner17 ship plan (as defined in section 409(a)) or to an

18 employee stock ownership plan (as defined in

19 section 4975(e)(7)),

20 ‘‘(C) to a stock bonus plan, or

21 ‘‘(D) which is an elective deferral (within

22 the meaning of section 402(g)(3)).

23 ‘‘(4) SIMPLIFIED EMPLOYEE PENSION.—A con24 tribution to an individual savings plan pursuant to

25 a simplified employee pension (as defined in section
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1 408(k)) shall be treated as a contribution to a de2 fined contribution plan.

3 ‘‘(c) EMPLOYER REQUIREMENTS.—This section shall

4 apply to an employer for any taxable year only if—

5 ‘‘(1) the employer elects the application of this

6 section, and

7 ‘‘(2) the plan pursuant to which any qualified

8 savings contribution is made provides that any con9 tribution to such plan (whether or not a qualified

10 savings contribution) may be withdrawn by a quali11 fied zone employee as described in section 72(t)(2)

12 (B) or (D).

13 ‘‘(d) DEFINITIONS.—For purposes of this section—

14 ‘‘(1) QUALIFIED ZONE EMPLOYEE.—The term

15 ‘qualified zone employee’ has the meaning given such

16 term by section 1396(d).

17 ‘‘(2) DEFINED CONTRIBUTION PLAN.—The

18 term ‘defined contribution plan’ means a defined

19 contribution plan (as defined in section 414(i))

20 which is described in section 401(a) and includes a

21 trust exempt from tax under section 501(a).

22 ‘‘(e) TREATMENT OF PLANS.—A plan shall not be

23 treated as failing to meet any requirement of part I of

24 subchapter D of chapter 1 by reason of permitting with25 drawals required to be permitted under subsection (c)(2).
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1 ‘‘Subpart C—Depreciation and Other Incentives

‘‘Sec. 1399. Depreciation benefits.

‘‘Sec. 1399A. Additional exclusion from volume cap for certain enterprise zone facility bonds.

‘‘Sec. 1399B. Enterprise zone business.

2 ‘‘SEC. 1399. DEPRECIATION BENEFITS.

3 ‘‘(a) INCREASE IN EXPENSING UNDER SECTION

4 179.—

5 ‘‘(1) IN GENERAL.—In the case of an enterprise

6 zone business, for purposes of section 179—

7 ‘‘(A) qualified zone property shall be treat8 ed as section 179 property,

9 ‘‘(B) the limitation under section

10 179(b)(1) shall be increased by the lesser of—

11 ‘‘(i) $50,000, or

12 ‘‘(ii) the cost of qualified zone prop13 erty placed in service during the taxable

14 year, and

15 ‘‘(C) section 179(b)(2) shall be applied by

16 substituting ‘by one-half of the amount by

17 which the cost of qualified zone property (other

18 than real property) and other section 179 prop19 erty’ for ‘by the amount by which the cost of

20 section 179 property’.

21 ‘‘(b) ACCELERATED DEPRECIATION.—

22 ‘‘(1) IN GENERAL.—For purposes of section

23 168(a), with respect to qualified zone property of an
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1 enterprise zone business, the applicable recovery pe2 riod shall be determined in accordance with the table

3 contained in paragraph (2) in lieu of the table con4 tained in section 168(c).

5 ‘‘(2) APPLICABLE RECOVERY PERIOD FOR

6 QUALIFIED ZONE PROPERTY.—For purposes of para7 graph (1)—

The applicable

‘‘In the case of: recovery period is:

3-year property ........................................................................ 2 years

5-year property ........................................................................ 3 years

7-year property ........................................................................ 4 years

10-year property ...................................................................... 6 years

15-year property ...................................................................... 9 years

20-year property ...................................................................... 12 years

Nonresidential real property .................................................... 22 years.

8 ‘‘(3) DEDUCTION ALLOWED IN COMPUTING

9 MINIMUM TAX.—Paragraph (1) shall apply for pur10 poses of determining alternative minimum taxable

11 income under section 55.

12 ‘‘(c) QUALIFIED ZONE PROPERTY.—For purposes of

13 this section—

14 ‘‘(1) IN GENERAL.—The term ‘qualified zone

15 property’ means any property to which section 168

16 applies (or would apply but for section 179) if—

17 ‘‘(A) such property was acquired by the

18 taxpayer by purchase (as defined in section

19 179(d)(2)) after the date on which the designa20 tion of the empowerment zone took effect,
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1 ‘‘(B) the original use of which in an

2 empowerment zone commences with the tax3 payer, and

4 ‘‘(C) substantially all of the use of which

5 is in an empowerment zone and is in the active

6 conduct of a trade or business by the taxpayer

7 in such zone.

8 ‘‘(2) SPECIAL RULE FOR SUBSTANTIAL REN9 OVATIONS.—In the case of any property which is

10 substantially renovated by the taxpayer, the require11 ments of subparagraphs (A) and (B) of paragraph

12 (1) shall be treated as satisfied. For purposes of the

13 preceding sentence, property shall be treated as sub14 stantially renovated by the taxpayer if, during any

15 24-month period beginning after the date on which

16 the designation of the empowerment zone took ef17 fect, additions to basis with respect to such property

18 in the hands of the taxpayer exceed the greater of

19 (i) an amount equal to the adjusted basis at the be20 ginning of such 24-month period in the hands of the

21 taxpayer, or (ii) $5,000.

22 ‘‘(3) EXCEPTION FOR ALTERNATIVE DEPRECIA23 TION PROPERTY.—The term ‘qualified zone prop24 erty’ does not include any property to which the al-
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1 ternative depreciation system under section 168(g)

2 applies, determined—

3 ‘‘(A) without regard to section 168(g)(7)

4 (relating to election to use alternative deprecia5 tion system), and

6 ‘‘(B) after the application of section

7 280F(b) (relating to listed property with limited

8 business use).

9 ‘‘(d) SPECIAL RULES FOR SALE-LEASEBACKS.—For

10 purposes of subsection (c)(1)(B), if property is sold and

11 leased back by the taxpayer within 3 months after the date

12 such property was originally placed in service, such prop13 erty shall be treated as originally placed in service not ear14 lier than the date on which such property is used under

15 the leaseback.

16 ‘‘(e) RECAPTURE.—Rules similar to the rules under

17 section 179(d)(10) shall apply with respect to any quali18 fied zone property of any business which ceases to be an

19 enterprise zone business.

20 ‘‘SEC. 1399A. ADDITIONAL EXCLUSION FROM VOLUME CAP

21 FOR CERTAIN ENTERPRISE ZONE FACILITY

22 BONDS.

23 ‘‘(a) IN GENERAL.—Section 1394(b)(5) shall be ap24 plied by substituting ‘75 percent’ for ‘50 percent’ in the

25 case of any bond described in section 1394(b)(1) issued
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1 as part of an issue 95 percent or more of the net proceeds

2 (as defined in section 150(a)(3)) of which are used to pro3 vide qualified zone property the principal user of which

4 is any enterprise zone business if the ownership require5 ments of subsection (b) are met with respect to such busi6 ness.

7 ‘‘(b) OWNERSHIP REQUIREMENTS.—The ownership

8 requirements of this subsection are met with respect to

9 an enterprise zone business if—

10 ‘‘(1) in the case of a sole proprietorship, the

11 principal place of abode of the proprietor is in an

12 empowerment zone,

13 ‘‘(2) in the case of a corporation, more than 50

14 percent of the stock (by vote and value) in the cor15 poration is owned (directly or indirectly) by individ16 uals whose principal place of abode is in an

17 empowerment zone, and

18 ‘‘(3) in the case of a partnership, more than 50

19 percent of the capital and profits interests in the

20 partnership is owned (directly or indirectly) by indi21 viduals whose principal place of abode is in an

22 empowerment zone.

23 ‘‘SEC. 1399B. ENTERPRISE ZONE BUSINESS DEFINED.

24 ‘‘(a) IN GENERAL.—For purposes of this subpart, the

25 term ‘enterprise zone business’ means—
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1 ‘‘(1) any qualified business entity, and

2 ‘‘(2) any qualified proprietorship.

3 ‘‘(b) QUALIFIED BUSINESS ENTITY.—For purposes

4 of this section, the term ‘qualified business entity’ means,

5 with respect to any taxable year, any corporation or part6 nership if for such year—

7 ‘‘(1) every trade or business of such entity is

8 the active conduct of a qualified business within an

9 empowerment zone,

10 ‘‘(2) at least 80 percent of the total gross in11 come of such entity is derived from the active con12 duct of such business,

13 ‘‘(3) substantially all of the use of the tangible

14 property of such entity (whether owned or leased) is

15 within an empowerment zone,

16 ‘‘(4) substantially all of the intangible property

17 of such entity is used in, and exclusively related to,

18 the active conduct of any such business,

19 ‘‘(5) substantially all of the services performed

20 for such entity by its employees are performed in an

21 empowerment zone,

22 ‘‘(6) at least 35 percent of its employees are

23 residents of an empowerment zone,

24 ‘‘(7) less than 5 percent of the average of the

25 aggregate unadjusted bases of the property of such
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1 entity is attributable to collectibles (as defined in

2 section 408(m)(2)) other than collectibles that are

3 held primarily for sale to customers in the ordinary

4 course of such business, and

5 ‘‘(8) less than 5 percent of the average of the

6 aggregate unadjusted bases of the property of such

7 entity is attributable to nonqualified financial prop8 erty.

9 ‘‘(c) QUALIFIED PROPRIETORSHIP.—For purposes of

10 this section, the term ‘qualified proprietorship’ means,

11 with respect to any taxable year, any qualified business

12 carried on by an individual as a proprietorship if for such

13 year—

14 ‘‘(1) at least 80 percent of the total gross in15 come of such individual from such business is de16 rived from the active conduct of such business in an

17 empowerment zone,

18 ‘‘(2) substantially all of the use of the tangible

19 property of such individual in such business (wheth20 er owned or leased) is within an empowerment zone,

21 ‘‘(3) substantially all of the intangible property

22 of such business is used in, and exclusively related

23 to, the active conduct of such business,

24 ‘‘(4) substantially all of the services performed

25 for such individual in such business by employees of
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1 such business are performed in an empowerment

2 zone,

3 ‘‘(5) at least 35 percent of such employees are

4 residents of an empowerment zone,

5 ‘‘(6) less than 5 percent of the average of the

6 aggregate unadjusted bases of the property of such

7 individual which is used in such business is attrib8 utable to collectibles (as defined in section

9 408(m)(2)) other than collectibles that are held pri10 marily for sale to customers in the ordinary course

11 of such business, and

12 ‘‘(7) less than 5 percent of the average of the

13 aggregate unadjusted bases of the property of such

14 individual which is used in such business is attrib15 utable to nonqualified financial property.

16 For purposes of this subsection, the term ‘employee’ in17 cludes the proprietor.

18 ‘‘(d) QUALIFIED BUSINESS.—For purposes of this

19 section—

20 ‘‘(1) IN GENERAL.—Except as otherwise pro21 vided in this subsection, the term ‘qualified business’

22 means any trade or business.

23 ‘‘(2) RENTAL OF REAL PROPERTY.—The rental

24 to others of real property located in an
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1 empowerment zone shall be treated as a qualified

2 business if and only if—

3 ‘‘(A) the property is not residential rental

4 property (as defined in section 168(e)(2)), and

5 ‘‘(B) at least 50 percent of the gross rental

6 income from the real property is from enter7 prise zone businesses.

8 ‘‘(3) RENTAL OF TANGIBLE PERSONAL PROP9 ERTY.—The rental to others of tangible personal

10 property shall be treated as a qualified business if

11 and only if substantially all of the rental of such

12 property is by enterprise zone businesses or by resi13 dents of an empowerment zone.

14 ‘‘(4) TREATMENT OF BUSINESS HOLDING IN15 TANGIBLES.—The term ‘qualified business’ shall not

16 include any trade or business consisting predomi17 nantly of the development or holding of intangibles

18 for sale or license.

19 ‘‘(5) CERTAIN BUSINESSES EXCLUDED.—The

20 term ‘qualified business’ shall not include—

21 ‘‘(A) any trade or business consisting of

22 the operation of any facility described in section

23 144(c)(6)(B), and

24 ‘‘(B) any trade or business the principal

25 activity of which is farming (within the meaning
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1 of subparagraphs (A) or (B) of section

2 2032A(e)(5)), but only if, as of the close of the

3 preceding taxable year, the sum of—

4 ‘‘(i) the aggregate unadjusted bases

5 (or, if greater, the fair market value) of

6 the assets owned by the taxpayer which are

7 used in such a trade or business, and

8 ‘‘(ii) the aggregate value of assets

9 leased by the taxpayer which are used in

10 such a trade or business,

11 exceeds $500,000.

12 For purposes of subparagraph (B), rules similar to

13 the rules of section 1397(b) shall apply.

14 ‘‘(e) NONQUALIFIED FINANCIAL PROPERTY.—For

15 purposes of this section, the term ‘nonqualified financial

16 property’ means debt, stock, partnership interests, op17 tions, futures contracts, forward contracts, warrants, no18 tional principal contracts, annuities, and other similar

19 property specified in regulations; except that such term

20 shall not include—

21 ‘‘(1) reasonable amounts of working capital

22 held in cash, cash equivalents, or debt instruments

23 with a term of 18 months or less, or

24 ‘‘(2) debt instruments described in section

25 1221(4).
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1 ‘‘PART IV—REGULATIONS

‘‘Sec. 1399C. Regulations.

2 ‘‘SEC. 1399C. REGULATIONS.

3 ‘‘The Secretary shall prescribe such regulations as

4 may be necessary or appropriate to carry out the purposes

5 of parts II and III, including—

6 ‘‘(1) regulations limiting the benefit of parts II

7 and III in circumstances where such benefits, in

8 combination with benefits provided under other Fed9 eral programs, would result in an activity being 100

10 percent or more subsidized by the Federal Govern11 ment,

12 ‘‘(2) regulations preventing abuse of the provi13 sions of parts II and III, and

14 ‘‘(3) regulations dealing with inadvertent fail15 ures of entities to be enterprise zone businesses.’’

16 (b) CLERICAL AMENDMENT.—The table of sub17 chapters for chapter 1 is amended by inserting after the

18 item relating to subchapter T the following new item:

‘‘Subchapter U. Designation and treatment of empowerment

zones and enterprise communities.’’

19 SEC. 14302. EXPANSION OF TARGETED JOBS CREDIT.

20 (a) ALLOWANCE OF CREDIT FOR HIRING

21 EMPOWERMENT ZONE RESIDENT.—Paragraph (1) of sec22 tion 51(d) (defining members of targeted groups) is

23 amended by striking ‘‘or’’ at the end of subparagraph (I),
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1 by striking the period at the end of subparagraph (J) and

2 inserting ‘‘, or’’, and by adding at the end the following

3 new subparagraph:

4 ‘‘(K) an economically disadvantaged

5 empowerment zone resident.’’

6 (b) ECONOMICALLY DISADVANTAGED

7 EMPOWERMENT ZONE RESIDENT.—Section 51(d) is

8 amended by redesignating paragraphs (13) through (16)

9 as paragraphs (14) through (17), respectively, and by in10 serting after paragraph (12) the following new paragraph:

11 ‘‘(13) ECONOMICALLY DISADVANTAGED

12 EMPOWERMENT ZONE RESIDENT.—The term ‘eco13 nomically disadvantaged empowerment zone resi14 dent’ means an individual—

15 ‘‘(A) whose principal place of abode while

16 performing services for the employer is within

17 an empowerment zone, and

18 ‘‘(B) who is certified by the designated

19 local agency as being a member of an economi20 cally disadvantaged family (as determined

21 under paragraph (11)).

22 Such term shall not include a qualified zone em23 ployee (as defined in section 1396(d) without regard

24 to paragraph (2) thereof).’’
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1 (c) CONFORMING AMENDMENT.—Subparagraph (C)

2 of section 51(d)(12) is amended by striking ‘‘paragraph

3 (14)’’ and inserting ‘‘paragraph (15)’’.

4 SEC. 14303. TECHNICAL AND CONFORMING AMENDMENTS.

5 (a) CERTAIN CREDITS PART OF GENERAL BUSINESS

6 CREDIT.—

7 (1) Subsection (b) of section 38 (relating to

8 current year business credit) is amended by striking

9 ‘‘plus’’ at the end of paragraph (7), by striking the

10 period at the end of paragraph (8) and inserting a

11 comma, and by adding at the end the following new

12 paragraphs:

13 ‘‘(9) the empowerment zone employment credit

14 determined under section 1396(a), plus

15 ‘‘(10) the zone resident empowerment savings

16 credit determined under section 1398.’’

17 (2) Subsection (d) of section 39 is amended by

18 adding at the end the following new paragraph:

19 ‘‘(4) ENTERPRISE ZONE CREDITS.—No portion

20 of the unused business credit which is attributable to

21 the credit determined under section 1396 (relating

22 to empowerment zone employment credit) or section

23 1398 (relating to zone resident empowerment sav24 ings credit) may be carried to any taxable year end25 ing before January 1, 1994.’’
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1 (b) DENIAL OF DEDUCTION FOR PORTION OF WAGES

2 EQUAL TO EMPOWERMENT ZONE EMPLOYMENT CRED3 IT.—

4 (1) Subsection (a) of section 280C (relating to

5 rule for targeted jobs credit) is amended—

6 (A) by striking ‘‘the amount of the credit

7 determined for the taxable year under section

8 51(a)’’ and inserting ‘‘the sum of the credits

9 determined for the taxable year under sections

10 51(a) and 1396(a)’’, and

11 (B) by striking ‘‘TARGETED JOBS CRED12 IT’’ in the subsection heading and inserting

13 ‘‘EMPLOYMENT CREDITS’’.

14 (2) Subsection (c) of section 196 (relating to

15 deduction for certain unused business credits) is

16 amended by striking ‘‘and’’ at the end of paragraph

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

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

19 the following new paragraph:

20 ‘‘(6) the empowerment zone employment credit

21 determined under section 1396(a).’’

22 (c) EMPLOYMENT AND SAVINGS CREDITS MAY OFF23 SET 25 PERCENT OF MINIMUM TAX.—

24 (1) IN GENERAL.—Section 38(c) (relating to

25 limitation based on amount of tax) is amended by
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1 redesignating paragraph (2) as paragraph (3) and

2 by inserting after paragraph (1) the following new

3 paragraph:

4 ‘‘(2) EMPOWERMENT ZONE CREDITS MAY OFF5 SET 25 PERCENT OF MINIMUM TAX.—

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

7 empowerment zone credits—

8 ‘‘(i) this section and section 39 shall

9 be applied separately with respect to such

10 credits, and

11 ‘‘(ii) for purposes of applying para12 graph (1) to such credits—

13 ‘‘(I) 75 percent of the tentative

14 minimum tax shall be substituted for

15 the tentative minimum tax under sub16 paragraph (A) thereof, and

17 ‘‘(II) the limitation under para18 graph (1) (as modified by subclause

19 (I)) shall be reduced by the credit al20 lowed under subsection (a) for the

21 taxable year (other than the

22 empowerment zone credits).

23 ‘‘(B) EMPOWERMENT ZONE CREDITS.—

24 For purposes of this paragraph, the term

25 ‘empowerment zone credits’ means the portion
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1 of the credit under subsection (a) which is at2 tributable to the credits determined under sec3 tion 1396 (relating to empowerment zone em4 ployment credit) and section 1398 (relating to

5 zone resident empowerment savings credit).’’

6 (d) CHANGES RELATING TO EMPOWERMENT ZONE

7 RESIDENT EMPOWERMENT SAVINGS CREDIT.—

8 (1) DISALLOWANCE OF DEDUCTION.—Section

9 404 (relating to deduction for certain employer con10 tributions) is amended by adding at the end the fol11 lowing new subsection:

12 ‘‘(m) COORDINATION WITH EMPOWERMENT ZONE

13 CREDIT.—No deduction shall be allowed under this sec14 tion for any qualified employer contribution taken into ac15 count in computing the credit determined under section

16 1398.’’

17 (2) PENALTY-FREE DISTRIBUTIONS.—

18 (A) IN GENERAL.—Paragraph (2) of sec19 tion 72(t) (relating to exceptions to 10-percent

20 additional tax on early distributions from quali21 fied retirement plans) is amended by adding at

22 the end thereof the following new subpara23 graph:
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1 ‘‘(D) DISTRIBUTIONS FROM CERTAIN

2 PLANS FOR FIRST HOME PURCHASES OR EDU3 CATIONAL EXPENSES.—

4 ‘‘(i) IN GENERAL.—Distributions to

5 an individual from a qualified retirement

6 plan—

7 ‘‘(I) which are qualified first-time

8 homebuyer distributions (as defined in

9 paragraph (6)),

10 ‘‘(II) to the extent such distribu11 tions do not exceed the qualified high12 er education expenses (as defined in

13 paragraph (7)) of the taxpayer for the

14 taxable year, or

15 ‘‘(III) to the extent such distribu16 tions do not exceed an amount equal

17 to the aggregate investment made by

18 the taxpayer during the taxable year

19 in any enterprise zone business (as

20 defined in section 1399B) that meets

21 the ownership requirements of section

22 1399A(b).

23 ‘‘(ii) LIMITATION.—Clause (i) shall

24 not apply to the extent that the aggregate
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1 amount of the distributions described in

2 clause (i) is greater than the excess of—

3 ‘‘(I) the qualified savings con4 tributions (as defined in section

5 1398(b)) of the taxpayer, and any

6 earnings thereon, over

7 ‘‘(II) the aggregate amounts to

8 which clause (i) and the last sentence

9 of paragraph (3)(A) applied for pre10 ceding taxable years.’’

11 (B) DEFINITIONS.—Section 72(t) is

12 amended by adding at the end thereof the fol13 lowing new paragraphs:

14 ‘‘(6) QUALIFIED FIRST-TIME HOMEBUYER DIS15 TRIBUTIONS.—For purposes of paragraph

16 (2)(D)(i)(I)—

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

18 first-time homebuyer distribution’ means any

19 payment or distribution received by an individ20 ual to the extent such payment or distribution

21 is used by the individual before the close of the

22 60th day after the day on which such payment

23 or distribution is received to pay qualified ac24 quisition costs with respect to a principal resi-
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1 dence of a first-time homebuyer who is such in2 dividual or the spouse of such individual.

3 ‘‘(B) QUALIFIED ACQUISITION COSTS.—

4 For purposes of this paragraph, the term

5 ‘qualified acquisition costs’ means the costs of

6 acquiring, constructing, or reconstructing a res7 idence. Such term includes any usual or reason8 able settlement, financing, or other closing

9 costs.

10 ‘‘(C) FIRST-TIME HOMEBUYER; OTHER

11 DEFINITIONS.—For purposes of this para12 graph—

13 ‘‘(i) FIRST-TIME HOMEBUYER.—The

14 term ‘first-time homebuyer’ means any in15 dividual if—

16 ‘‘(I) such individual (and if mar17 ried, such individual’s spouse) had no

18 present ownership interest in a prin19 cipal residence during the 3-year pe20 riod ending on the date of acquisition

21 of the principal residence to which

22 this paragraph applies, and

23 ‘‘(II) subsection (a)(6), (h), or

24 (k) of section 1034 did not suspend

25 the running of any period of time
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1 specified in section 1034 with respect

2 to such individual on the day before

3 the date the distribution is applied

4 pursuant to subparagraph (A)(ii).

5 ‘‘(ii) PRINCIPAL RESIDENCE.—The

6 term ‘principal residence’ has the same

7 meaning as when used in section 1034.

8 ‘‘(iii) DATE OF ACQUISITION.—The

9 term ‘date of acquisition’ means the date—

10 ‘‘(I) on which a binding contract

11 to acquire the principal residence to

12 which subparagraph (A) applies is en13 tered into, or

14 ‘‘(II) on which construction or re15 construction of such a principal resi16 dence is commenced.

17 ‘‘(D) SPECIAL RULE WHERE DELAY IN AC18 QUISITION.—If any distribution from any quali19 fied retirement plan fails to meet the require20 ments of subparagraph (A) solely by reason of

21 a delay or cancellation of the purchase or con22 struction of the residence, the amount of the

23 distribution may be recontributed to the plan

24 from which it was distributed within 120 days

25 after the date of such distribution.
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1 ‘‘(7) QUALIFIED HIGHER EDUCATION EX2 PENSES.—For purposes of paragraph

3 (2)(D)(ii)(II)—

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

5 higher education expenses’ means tuition, fees,

6 books, supplies, and equipment required for the

7 enrollment or attendance of—

8 ‘‘(i) the taxpayer,

9 ‘‘(ii) the taxpayer’s spouse, or

10 ‘‘(iii) the taxpayer’s child (as defined

11 in section 151(c)(3)) or grandchild,

12 at an eligible educational institution (as defined

13 in section 135(c)(3)).

14 ‘‘(B) COORDINATION WITH SAVINGS BOND

15 PROVISIONS.—The amount of qualified higher

16 education expenses for any taxable year shall be

17 reduced by any amount excludable from gross

18 income under section 135.’’

19 (C) CONFORMING AMENDMENTS.—

20 (i) Subparagraph (B) of section

21 72(t)(2) is amended by striking ‘‘or (C)’’

22 and inserting ‘‘, (C), or (D)’’.

23 (ii) Section 401(k)(2)(B)(i) is amend24 ed by striking ‘‘or’’ at the end of subclause

25 (III), by striking ‘‘and’’ at the end of
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1 subclause (IV) and inserting ‘‘or’’, and by

2 inserting after subclause (IV) the following

3 new subclause:

4 ‘‘(V) subject to the limitation of

5 section 72(t)(2)(D)(ii), the date on

6 which qualified first-time homebuyer

7 distributions (as defined in section

8 72(t)(6)), distributions for qualified

9 higher education expenses (as defined

10 in section 72(t)(7)), or distributions

11 for investments described in section

12 72(t)(2)(D)(i)(III) are made, and’’.

13 (e) AMENDMENT OF TARGETED JOBS CREDIT.—

14 Subparagraph (A) of section 51(i)(1) is amended by in15 serting ‘‘, or, if the taxpayer is an entity other than a

16 corporation, to any individual who owns, directly or indi17 rectly, more than 50 percent of the capital and profits in18 terests in the entity,’’ after ‘‘of the corporation’’.

19 (f) CARRYOVERS.—Subsection (c) of section 381 (re20 lating to carryovers in certain corporate acquisitions) is

21 amended by adding at the end the following new para22 graph:

23 ‘‘(26) ENTERPRISE ZONE PROVISIONS.—The

24 acquiring corporation shall take into account (to the

25 extent proper to carry out the purposes of this sec-
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1 tion and subchapter U, and under such regulations

2 as may be prescribed by the Secretary) the items re3 quired to be taken into account for purposes of sub4 chapter U in respect of the distributor or transferor

5 corporation.’’

6 SEC. 14304. EFFECTIVE DATE.

7 The amendments made by this part shall take effect

8 on the date of the enactment of this Act.

9 PART II—CREDIT FOR CONTRIBUTIONS TO CER10 TAIN COMMUNITY DEVELOPMENT CORPORA11 TIONS

12 SEC. 14311. CREDIT FOR CONTRIBUTIONS TO CERTAIN

13 COMMUNITY DEVELOPMENT CORPORATIONS.

14 (a) IN GENERAL.—For purposes of section 38 of the

15 Internal Revenue Code of 1986, the current year business

16 credit shall include the credit determined under this sec17 tion.

18 (b) DETERMINATION OF CREDIT.—The credit deter19 mined under this section for each taxable year in the credit

20 period with respect to any qualified CDC contribution

21 made by the taxpayer is an amount equal to 5 percent

22 of such contribution.

23 (c) CREDIT PERIOD.—For purposes of this section,

24 the credit period with respect to any qualified CDC con-
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1 tribution is the period of 10 taxable years beginning with

2 the taxable year during which such contribution was made.

3 (d) QUALIFIED CDC CONTRIBUTION.—For purposes

4 of this section—

5 (1) IN GENERAL.—The term ‘‘qualified CDC

6 contribution’’ means any transfer of cash—

7 (A) which is made to a selected community

8 development corporation during the 5-year pe9 riod beginning on the date such corporation was

10 selected for purposes of this section,

11 (B) the amount of which is available for

12 use by such corporation for at least 10 years,

13 (C) which is to be used by such corpora14 tion for qualified low-income assistance within

15 its operational area, and

16 (D) which is designated by such corpora17 tion for purposes of this section.

18 (2) LIMITATIONS ON AMOUNT DESIGNATED.—

19 The aggregate amount of contributions to a selected

20 community development corporation which may be

21 designated by such corporation shall not exceed

22 $4,000,000.

23 (e) SELECTED COMMUNITY DEVELOPMENT COR24 PORATIONS.—
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1 (1) IN GENERAL.—For purposes of this section,

2 the term ‘‘selected community development corpora3 tion’’ means any corporation—

4 (A) which is described in section 501(c)(3)

5 of such Code and exempt from tax under sec6 tion 501(a) of such Code,

7 (B) the principal purposes of which include

8 promoting employment of, and business oppor9 tunities for, low-income individuals who are

10 residents of the operational area, and

11 (C) which is selected by the Secretary of

12 Housing and Urban Development for purposes

13 of this section.

14 (2) ONLY 10 CORPORATIONS MAY BE SE15 LECTED.—

16 (A) IN GENERAL.—The Secretary of Hous17 ing and Urban Development may select 10 cor18 porations for purposes of this section, subject to

19 the availability of eligible corporations. Such se20 lections may be made only before July 1, 1994.

21 At least 4 of the operational areas of the cor22 porations selected must be rural areas (as de23 fined by section 1393(a)(3) of such Code).

24 (B) PRIORITY OF DESIGNATIONS.—In se25 lecting corporations for purposes of this section,
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1 such Secretary shall give priority to corpora2 tions with a demonstrated record of perform3 ance in administering community development

4 programs which target at least 75 percent of

5 the jobs emanating from their investment funds

6 to low income or unemployed individuals.

7 (3) OPERATIONAL AREAS MUST HAVE CERTAIN

8 CHARACTERISTICS.—A corporation may be selected

9 for purposes of this section only if its operational

10 area meets the following criteria:

11 (A) The area meets the size requirements

12 under section 1392(a)(3).

13 (B) The unemployment rate (as deter14 mined by the appropriate available data) is not

15 less than the national unemployment rate.

16 (C) The median family income of residents

17 of such area does not exceed 80 percent of the

18 median gross income of residents of the juris19 diction of the local government which includes

20 such area.

21 (f) QUALIFIED LOW-INCOME ASSISTANCE.—For pur22 poses of this section, the term ‘‘qualified low-income as23 sistance’’ means assistance—

24 (1) which is designed to provide employment of,

25 and business opportunities for, low-income individ-
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1 uals who are residents of the operational area of the

2 community development corporation, and

3 (2) which is approved by the Secretary of Hous4 ing and Urban Development.

5 Subtitle D—Other Provisions

6 PART I—DISCLOSURE PROVISIONS

7 SEC. 14401. DISCLOSURE OF RETURN INFORMATION FOR

8 ADMINISTRATION OF CERTAIN VETERANS

9 PROGRAMS.

10 (a) GENERAL RULE.—Subparagraph (D) of section

11 6103(l)(7) (relating to disclosure of return information to

12 Federal, State, and local agencies administering certain

13 programs) is amended by striking ‘‘September 30, 1997’’

14 in the second sentence following clause (viii) and inserting

15 ‘‘September 30, 1998’’.

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

17 subsection (a) shall take effect on the date of the enact18 ment of this Act.

19 SEC. 14402. DISCLOSURE OF RETURN INFORMATION TO

20 CARRY OUT INCOME CONTINGENT REPAY21 MENT OF STUDENT LOANS.

22 (a) GENERAL RULE.—Subsection (l) of section 6103

23 (relating to confidentiality and disclosure of returns and

24 return information) is amended by adding at the end

25 thereof the following new paragraph:
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1 ‘‘(13) DISCLOSURE OF RETURN INFORMATION

2 TO CARRY OUT INCOME CONTINGENT REPAYMENT

3 OF STUDENT LOANS.—

4 ‘‘(A) IN GENERAL.—The Secretary may,

5 upon written request from the Secretary of

6 Education, disclose to officers and employees of

7 the Department of Education return informa8 tion with respect to a taxpayer who has received

9 an applicable student loan and whose loan re10 payment amounts are based in whole or in part

11 on the taxpayer’s income. Such return informa12 tion shall be limited to—

13 ‘‘(i) taxpayer identity information

14 with respect to such taxpayer,

15 ‘‘(ii) the filing status of such tax16 payer, and

17 ‘‘(iii) the adjusted gross income of

18 such taxpayer.

19 ‘‘(B) RESTRICTION ON USE OF DISCLOSED

20 INFORMATION.—Return information disclosed

21 under subparagraph (A) may be used by offi22 cers and employees of the Department of Edu23 cation only for the purposes of, and to the ex24 tent necessary in, establishing the appropriate
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1 income contingent repayment amount for an

2 applicable student loan.

3 ‘‘(C) APPLICABLE STUDENT LOAN.—For

4 purposes of this paragraph, the term ‘applicable

5 student loan’ means—

6 ‘‘(i) any loan made under the program

7 authorized under part D of title IV of the

8 Higher Education Act of 1965, and

9 ‘‘(ii) any loan made under part B or

10 E of title IV of the Higher Education Act

11 of 1965 which is in default and has been

12 assigned to the Department of Education.

13 ‘‘(D) TERMINATION.—This paragraph

14 shall not apply to any request made after Sep15 tember 30, 1998.’’

16 (b) CONFORMING AMENDMENTS.—

17 (1) So much of paragraph (4) of section

18 6103(m) as precedes subparagraph (B) thereof is

19 amended to read as follows:

20 ‘‘(4) INDIVIDUALS WHO OWE AN OVERPAYMENT

21 OF FEDERAL PELL GRANTS OR WHO HAVE DE22 FAULTED ON STUDENT LOANS ADMINISTERED BY

23 THE DEPARTMENT OF EDUCATION.—

24 ‘‘(A) IN GENERAL.—Upon written request

25 by the Secretary of Education, the Secretary
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1 may disclose the mailing address of any tax2 payer—

3 ‘‘(i) who owes an overpayment of a

4 grant awarded to such taxpayer under sub5 part 1 of part A of title IV of the Higher

6 Education Act of 1965, or

7 ‘‘(ii) who has defaulted on a loan—

8 ‘‘(I) made under part B, D, or E

9 of title IV of the Higher Education

10 Act of 1965, or

11 ‘‘(II) made pursuant to section

12 3(a)(1) of the Migration and Refugee

13 Assistance Act of 1962 to a student

14 at an institution of higher education,

15 for use only by officers, employees, or agents of

16 the Department of Education for purposes of

17 locating such taxpayer for purposes of collecting

18 such overpayment or loan.’’

19 (2) Subparagraph (B) of section 6103(m)(4) is

20 amended—

21 (A) in clause (i), by striking ‘‘under part

22 B’’ and inserting ‘‘under part B or D’’; and

23 (B) in clause (ii), by striking ‘‘under part

24 E’’ and inserting ‘‘under subpart 1 of part A,

25 or part D or E,’’;
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1 (3) Section 6103(p) is amended—

2 (A) in paragraph (3)(A), by striking ‘‘(11),

3 or (12), (m)’’ and inserting ‘‘(11), (12), or

4 (13), (m)’’;

5 (B) in paragraph (4)—

6 (i) in the matter preceding subpara7 graph (A), by striking out ‘‘(10), or (11),’’

8 and inserting ‘‘(10), (11), or (13),’’, and

9 (ii) in subparagraph (F)(ii), by strik10 ing ‘‘(11), or (12),’’ and inserting ‘‘(11),

11 (12), or (13),’’.

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

13 this section shall take effect on the date of the enactment

14 of this Act.

15 (d) STUDY OF INTERNAL REVENUE SERVICE COL16 LECTION OF STUDENT LOANS.—

17 (1) GENERAL RULE.—The Secretary of the

18 Treasury, in consultation with the Secretary of Edu19 cation, shall conduct a study of the feasibility of im20 plementing a system for the repayment of Federal

21 student loans through wage withholding or other

22 means involving the Internal Revenue Service. Such

23 study shall include an examination of—

24 (A) whether the Internal Revenue Service

25 could implement such a system within its cur-
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1 rent resources and without adversely affecting

2 the ability of the Internal Revenue Service to

3 collect tax revenues,

4 (B) the cumulative impact on voluntary

5 compliance with the tax system of increased dis6 closure of tax return information and increased

7 Internal Revenue Service involvement in nontax

8 collection activities,

9 (C) the anticipated effect on the manage10 ment of Federal student loan collections and on

11 borrower repayment of such loans, and

12 (D) the ability of the Internal Revenue

13 Service to effectively service student loans.

14 (2) RECOMMENDATIONS.—Not later than the

15 date 6 months after the date of the enactment of

16 this Act, the Secretary of the Treasury shall submit

17 to the Congress a report on the study conducted

18 under paragraph (1) (together with such legislative

19 recommendations as such Secretary may deem advis20 able).

21 SEC. 14403. USE OF RETURN INFORMATION FOR INCOME

22 VERIFICATION UNDER CERTAIN HOUSING AS23 SISTANCE PROGRAMS.

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

25 6103(l)(7) (relating to the disclosure of return information
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1 to Federal, State, and local agencies administering certain

2 programs) is amended—

3 (1) in clause (vii), by striking ‘‘and’’ at the end;

4 (2) in clause (viii), by striking the period at the

5 end and inserting ‘‘; and’’;

6 (3) by inserting after clause (viii) the following

7 new clause:

8 ‘‘(ix) any housing assistance program adminis9 tered by the Department of Housing and Urban De10 velopment that involves initial and periodic review of

11 an applicant’s or participant’s income, except that

12 return information may be disclosed under this

13 clause only on written request by the Secretary of

14 Housing and Urban Development and only for use

15 by officers and employees of the Department of

16 Housing and Urban Development with respect to ap17 plicants for and participants in such programs.’’;

18 and

19 (4) by adding at the end thereof the following:

20 ‘‘Clause (ix) shall not apply after September 30,

21 1998.’’

22 (b) CONFORMING AMENDMENT.—The heading of

23 paragraph (7) of section 6103(l) is amended by inserting

24 after ‘‘CODE’’ the following: ‘‘, OR CERTAIN HOUSING AS25 SISTANCE PROGRAMS’’.
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall take effect on the date of the enactment

3 of this Act.

4 (d) STUDY.—The Secretary of the Treasury or his

5 delegate, in consultation with the Secretary of Housing

6 and Urban Development, shall conduct a study on—

7 (1) whether the information provided under sec8 tion 6103(l)(7)(D)(ix) of the Internal Revenue Code

9 of 1986 is being used effectively by the Department

10 of Housing and Urban Development,

11 (2) such Department’s compliance with the re12 quirements of section 6103(p) of such Code, and

13 (3) the impact on the privacy rights of appli14 cants for and participants in housing assistance pro15 grams administered by the Department of Housing

16 and Urban Development.

17 The report of such study shall be submitted before Janu18 ary 1, 1998, to the Congress.

19 PART II—USER FEE PROVISIONS

20 SEC. 14411. FEES FOR APPLICATIONS FOR ALCOHOL LA21 BELING AND FORMULA REVIEWS.

22 (a) IN GENERAL.—The Secretary of the Treasury or

23 his delegate (hereinafter in this section referred to as the

24 ‘Secretary’) shall establish a program requiring the pay25 ment of user fees for—
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1 (1) requests for each certificate of alcohol label

2 approval required under the Federal Alcohol Admin3 istration Act (27 U.S.C. 201 et seq.) and for each

4 request for exemption from such requirement, and

5 (2) requests for each formula review, and re6 quests for each statement of process (including lab7 oratory tests and analyses), under such Act or under

8 chapter 51 of the Internal Revenue Code of 1986.

9 (b) PROGRAM CRITERIA.—

10 (1) IN GENERAL.—The fees charged under the

11 program required by subsection (a) shall be deter12 mined such that the Secretary estimates that the ag13 gregate of such fees received during any fiscal year

14 will be $5,000,000.

15 (2) MINIMUM FEES.—The fee charged under

16 the program required by subsection (a) shall not be

17 less than—

18 (A) $50 for each request referred to in

19 subsection (a)(1), and

20 (B) $250 for each request referred to in

21 subsection (a)(2).

22 (c) APPLICATION OF SECTION.—Subsection (a) shall

23 apply to requests made on or after the 90th day after the

24 date of the enactment of this Act.
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1 (d) DEPOSIT AND CREDIT AS OFFSETTING RE2 CEIPTS.—The amounts collected by the Secretary under

3 the program required by subsection (a) (to the extent such

4 amounts do not exceed $5,000,000) shall be deposited into

5 the Treasury as offsetting receipts and ascribed to the

6 alcohol compliance program of the Bureau of Alcohol, To7 bacco, and Firearms.

8 SEC. 14412. USE OF HARBOR MAINTENANCE TRUST FUND

9 AMOUNTS FOR ADMINISTRATIVE EXPENSES.

10 (a) IN GENERAL.—Paragraph (3) of section 9505(c)

11 (relating to expenditures from Harbor Maintenance Trust

12 Fund) is amended to read as follows:

13 ‘‘(3) for the payment of all expenses of adminis14 tration incurred by the Department of the Treasury

15 in administering subchapter A of chapter 36 (relat16 ing to harbor maintenance tax), but not in excess of

17 $5,000,000 for any fiscal year.’’

18 (b) EFFECTIVE DATE.—The amendment made by

19 subsection (a) shall apply to fiscal years beginning after

20 the date of the enactment of this Act.

21 SEC. 14413. INCREASE IN TAX ON FUEL USED IN COMMER22 CIAL TRANSPORTATION ON INLAND WATER23 WAYS.

24 (a) IN GENERAL.—The table contained in section

25 4042(a)(2)(A) is amended to read as follows:
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‘‘If the use occurs during: The tax per gallon is:

1994 ............................................................... 24 cents

1995 ............................................................... 40 cents

1996 ............................................................... 55 cents

1997 or thereafter ......................................... 70 cents.’’

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

2 subsection (a) shall take effect on January 1, 1994.

3 PART III—PUBLIC DEBT LIMIT

4 SEC. 14421. INCREASE IN PUBLIC DEBT LIMIT.

5 (a) GENERAL RULE.—Subsection (b) of section 3101

6 of title 31, United States Code, is amended by striking

7 out the dollar limitation contained in such subsection and

8 inserting in lieu thereof ‘‘$4,900,000,000,000’’.

9 (b) REPEAL OF TEMPORARY INCREASE.—Effective

10 on and after the date of the enactment of this Act, section

11 1 of Public Law 103–12 is hereby repealed.

12 PART IV—VACCINE PROVISIONS

13 SEC. 14431. EXCISE TAX ON CERTAIN VACCINES MADE PER14 MANENT.

15 (a) TAX.—Subsection (c) of section 4131 (relating to

16 tax on certain vaccines) is amended to read as follows:

17 ‘‘(c) APPLICATION OF SECTION.—The tax imposed by

18 this section shall apply—

19 ‘‘(1) after December 31, 1987, and before Jan20 uary 1, 1993, and

21 ‘‘(2) during periods after the date of the enact22 ment of this subsection.’’
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1 (b) TRUST FUND.—Paragraph (1) of section 9510(c)

2 (relating to expenditures from Vaccine Injury Compensa3 tion Trust Fund) is amended by striking ‘‘and before Oc4 tober 1, 1992,’’.

5 (c) STUDY.—The Secretary of the Treasury, in con6 sultation with the Secretary of Health and Human Serv7 ices, shall conduct a study of—

8 (1) the estimated amount that will be paid from

9 the Vaccine Injury Compensation Trust Fund with

10 respect to vaccines administered after September 30,

11 1988,

12 (2) the rates of vaccine-related injury or death

13 with respect to the various types of such vaccines,

14 (3) new vaccines and immunization practices

15 being developed or used for which amounts may be

16 paid from such Trust Fund,

17 (4) whether additional vaccines should be in18 cluded in the vaccine injury compensation program,

19 and

20 (5) the appropriate treatment of vaccines pro21 duced by State governmental entities.

22 The report of such study shall be submitted not later than

23 1 year after the date of the enactment of this Act, to the

24 Committee on Ways and Means of the House of Rep25 resentatives and the Committee on Finance of the Senate.
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1 (d) FLOOR STOCKS TAX.—

2 (1) IMPOSITION OF TAX.—On any taxable vac3 cine—

4 (A) which was sold by the manufacturer,

5 producer, or importer before the date of the en6 actment of this Act,

7 (B) on which no tax was imposed by sec8 tion 4131 of the Internal Revenue Code of 1986

9 (or, if such tax was imposed, was credited or re10 funded), and

11 (C) which is held on such date by any per12 son for sale or use,

13 there is hereby imposed a tax in the amount deter14 mined under section 4131(b) of such Code.

15 (2) LIABILITY FOR TAX AND METHOD OF PAY16 MENT.—

17 (A) LIABILITY FOR TAX.—The person

18 holding any taxable vaccine to which the tax

19 imposed by paragraph (1) applies shall be liable

20 for such tax.

21 (B) METHOD OF PAYMENT.—The tax im22 posed by paragraph (1) shall be paid in such

23 manner as the Secretary shall prescribe by reg24 ulations.
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1 (C) TIME FOR PAYMENT.—The tax im2 posed by paragraph (1) shall be paid on or be3 fore the last day of the 6th month beginning

4 after the date of the enactment of this Act.

5 (3) DEFINITIONS.—For purposes of this sub6 section, terms used in this subsection which are also

7 used in section 4131 of such Code shall have the re8 spective meanings such terms have in such section.

9 (4) OTHER LAWS APPLICABLE.—All provisions

10 of law, including penalties, applicable with respect to

11 the taxes imposed by section 4131 of such Code

12 shall, insofar as applicable and not inconsistent with

13 the provisions of this subsection, apply to the floor

14 stocks taxes imposed by paragraph (1), to the same

15 extent as if such taxes were imposed by such section

16 4131.

17 SEC. 14432. CONTINUATION COVERAGE UNDER GROUP

18 HEALTH PLANS OF COSTS OF PEDIATRIC

19 VACCINES.

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

21 4980B(f) is amended by inserting ‘‘the coverage of the

22 costs of pediatric vaccines (as defined under section 2162

23 of the Public Health Service Act) is not reduced below

24 the coverage provided by the plan as of May 1, 1993, and

25 only if’’ after ‘‘only if’’.
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1 (b) EFFECTIVE DATE.—The amendment made by

2 subsection (a) shall apply with respect to plan years begin3 ning after the date of the enactment of this Act.

4 SEC. 14433. CHILDHOOD IMMUNIZATION TRUST FUND.

5 (a) IN GENERAL.—Subchapter A of chapter 98 (re6 lating to trust fund code) is amended by adding at the

7 end thereof the following new section:

8 ‘‘SEC. 9512. CHILDHOOD IMMUNIZATION TRUST FUND.

9 ‘‘(a) CREATION OF TRUST FUND.—There is estab10 lished in the Treasury of the United States a trust fund

11 to be known as the ‘Childhood Immunization Trust Fund’,

12 consisting of such amounts as may be appropriated or

13 credited to such Trust Fund as provided in this section

14 or section 9602(b).

15 ‘‘(b) TRANSFERS TO TRUST FUND.—There are here16 by appropriated to the Childhood Immunization Trust

17 Fund amounts equivalent to the taxes received in the

18 Treasury under any tax hereafter specified by law for pur19 poses of this subsection.

20 ‘‘(c) EXPENDITURES FROM TRUST FUND.—Amounts

21 in the Childhood Immunization Trust Fund shall be avail22 able, as provided in appropriation Acts, only for purposes

23 of making expenditures to carry out part A of subtitle 3

24 of title XXI of the Public Health Service Act.’’
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1 (b) CLERICAL AMENDMENT.—The table of sections

2 for such subchapter A is amended by adding at the end

3 thereof the following new item:

‘‘Sec. 9512. Childhood Immunization Trust Fund.’’

Æ