II
Calendar No. 223
107TH CONGRESS
1ST SESSION
H.R. 3090
IN THE SENATE OF THE UNITED STATES
OCTOBER 24, 2001
Received; read twice and referred to the Committee on Finance
NOVEMBER 9, 2001
Reported by Mr. BAUCUS, with an amendment and an amendment to the title
[Strike out all after the enacting clause and insert the part printed in italic]
AN ACT
To provide tax incentives for economic recovery.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; ETC.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Economic Security and Recovery Act of 2001’’.
(b) REFERENCES TO INTERNAL REVENUE CODE OF
1986.—Except as otherwise expressly provided, whenever
in this Act an amendment or repeal is expressed in terms
of an amendment to, or repeal of, a section or other provi-
sion, the reference shall be considered to be made to a
section or other provision of the Internal Revenue Code
of 1986.
(c) TABLE OF CONTENTS.—
Sec. 1. Short title; etc.
TITLE I—BUSINESS PROVISIONS
Sec. 101. Special depreciation allowance for certain property acquired after
September 10, 2001, and before September 11, 2004.
Sec. 102. Temporary increase in expensing under section 179.
Sec. 103. Repeal of alternative minimum tax on corporations.
Sec. 104. Carryback of certain net operating losses allowed for 5 years.
Sec. 105. Recovery period for depreciation of certain leasehold improvements.
TITLE II—INDIVIDUAL PROVISIONS
Sec. 201. Acceleration of 25 percent individual income tax rate.
Sec. 202. Repeal of 5-year holding period requirement for reduced individual
capital gains rates.
Sec. 203. Temporary increase in deduction for capital losses of taxpayers other
than corporations.
Sec. 204. Temporary expansion of penalty-free retirement plan distributions for
health insurance premiums of unemployed individuals.
TITLE III—EXTENSIONS OF CERTAIN EXPIRING PROVISIONS
Subtitle A—Two-Year Extensions
Sec. 301. Allowance of nonrefundable personal credits against regular and min-
imum tax liability.
Sec. 302. Credit for qualified electric vehicles.
Sec. 303. Credit for electricity produced from renewable resources.
Sec. 304. Work opportunity credit.
Sec. 305. Welfare-to-work credit.
Sec. 306. Deduction for clean-fuel vehicles and certain refueling property.
Sec. 307. Taxable income limit on percentage depletion for oil and natural gas
produced from marginal properties.
Sec. 308. Qualified zone academy bonds.
Sec. 309. Cover over of tax on distilled spirits.
Sec. 310. Parity in the application of certain limits to mental health benefits.
Sec. 311. Delay in effective date of requirement for approved diesel or kerosene
terminals.
Subtitle B—One-Year Extensions
Sec. 321. One-year extension of availability of medical savings accounts.
Subtitle C—Permanent Extensions
Sec. 331. Subpart F exemption for active financing.
Subtitle D—Other Provisions
Sec. 341. Excluded cancellation of indebtedness income of S corporation not to
result in adjustment to basis of stock of shareholders.
Sec. 342. Limitation on use of nonaccrual experience method of accounting.
TITLE IV—SUPPLEMENTAL REBATE; OTHER PROVISIONS
Sec. 401. Supplemental rebate.
Sec. 402. Special Reed Act transfer in fiscal year 2002.
TITLE V—HEALTH CARE ASSISTANCE FOR THE UNEMPLOYED
Sec. 501. Health care assistance for the unemployed.
TITLE I—BUSINESS PROVISIONS
SEC. 101. SPECIAL DEPRECIATION ALLOWANCE FOR CER-
TAIN
PROPERTY
ACQUIRED
AFTER
SEP-
TEMBER 10, 2001, AND BEFORE SEPTEMBER
11, 2004.
(a) IN GENERAL.—Section 168 (relating to acceler-
ated cost recovery system) is amended by adding at the
end the following new subsection:
‘‘(k) SPECIAL ALLOWANCE FOR CERTAIN PROPERTY
ACQUIRED AFTER SEPTEMBER 10, 2001, AND BEFORE
SEPTEMBER 11, 2004.—
‘‘(1) ADDITIONAL ALLOWANCE.—In the case of
any qualified property—
‘‘(A) the depreciation deduction provided
by section 167(a) for the taxable year in which
such property is placed in service shall include
an allowance equal to 30 percent of the ad-
justed basis of the qualified property, and
‘‘(B) the adjusted basis of the qualified
property shall be reduced by the amount of
such deduction before computing the amount
otherwise allowable as a depreciation deduction
under this chapter for such taxable year and
any subsequent taxable year.
‘‘(2) QUALIFIED PROPERTY.—For purposes of
this subsection—
‘‘(A) IN
GENERAL.—The term ‘qualified
property’ means property—
‘‘(i)(I) to which this section applies
which has a recovery period of 20 years or
less or which is water utility property, or
‘‘(II) which is computer software (as
defined in section 167(f)(1)(B)) for which
a
deduction
is
allowable
under
section
167(a) without regard to this subsection,
‘‘(ii) the original use of which com-
mences with the taxpayer after September
10, 2001,
‘‘(iii) which is—
‘‘(I) acquired by the taxpayer
after September 10, 2001, and before
September 11, 2004, but only if no
written binding contract for the acqui-
sition was in effect before September
11, 2001, or
‘‘(II) acquired by the taxpayer
pursuant to a written binding contract
which was entered into after Sep-
tember 10, 2001, and before Sep-
tember 11, 2004, and
‘‘(iv) which is placed in service by the
taxpayer before January 1, 2005.
‘‘(B) EXCEPTIONS.—
‘‘(i)
ALTERNATIVE
DEPRECIATION
PROPERTY.—The term ‘qualified property’
shall not include any property to which the
alternative depreciation system under sub-
section (g) applies, determined—
‘‘(I) without regard to paragraph
(7) of subsection (g) (relating to elec-
tion to have system apply), and
‘‘(II) after application of section
280F(b) (relating to listed property
with limited business use).
‘‘(ii) ELECTION OUT.—If a taxpayer
makes an election under this clause with
respect to any class of property for any
taxable
year,
this
subsection
shall
not
apply to all property in such class placed
in service during such taxable year.
‘‘(iii) REPAIRED OR RECONSTRUCTED
PROPERTY.—Except as otherwise provided
in regulations, the term ‘qualified property’
shall not include any repaired or recon-
structed property.
‘‘(iv)
QUALIFIED
LEASEHOLD
IM-
PROVEMENT PROPERTY.—The term ‘quali-
fied property’ shall not include any quali-
fied leasehold improvement property (as
defined in section 168(e)(6)).
‘‘(C) SPECIAL RULES RELATING TO ORIGI-
NAL USE.—
‘‘(i)
SELF-CONSTRUCTED
PROP-
ERTY.—In the case of a taxpayer manufac-
turing, constructing, or producing property
for the taxpayer’s own use, the require-
ments of clause (iii) of subparagraph (A)
shall be treated as met if the taxpayer be-
gins manufacturing, constructing, or pro-
ducing the property after September 10,
2001, and before September 11, 2004.
‘‘(ii)
SALE-LEASEBACKS.—For
pur-
poses
of
subparagraph
(A)(ii),
if
property—
‘‘(I) is originally placed in service
after September 10, 2001, by a per-
son, and
‘‘(II) sold and leased back by
such person within 3 months after the
date
such
property
was
originally
placed in service,
such property shall be treated as originally
placed in service not earlier than the date
on which such property is used under the
leaseback referred to in subclause (II).
‘‘(D)
COORDINATION
WITH
SECTION
280F.—For purposes of section 280F—
‘‘(i) AUTOMOBILES.—In the case of a
passenger automobile (as defined in section
280F(d)(5)) which is qualified property,
the Secretary shall increase the limitation
under section 280F(a)(1)(A)(i) by $4,600.
‘‘(ii) LISTED PROPERTY.—The deduc-
tion allowable under paragraph (1) shall be
taken into account in computing any re-
capture
amount
under
section
280F(b)(2).’’
(b) ALLOWANCE AGAINST ALTERNATIVE MINIMUM
TAX.—
(1) IN GENERAL.—Section 56(a)(1)(A) (relat-
ing to depreciation adjustment for alternative min-
imum tax) is amended by adding at the end the fol-
lowing new clause:
‘‘(iii) ADDITIONAL
ALLOWANCE
FOR
CERTAIN PROPERTY ACQUIRED AFTER SEP-
TEMBER
10,
2001,
AND
BEFORE
SEP-
TEMBER
11,
2004.—The deduction under
section 168(k) shall be allowed.’’
(2) CONFORMING AMENDMENT.—Clause (i) of
section 56(a)(1)(A) is amended by striking ‘‘clause
(ii)’’ both places it appears and inserting ‘‘clauses
(ii) and (iii)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to property placed in service after
September 10, 2001, in taxable years ending after such
date.
SEC. 102. TEMPORARY INCREASE IN EXPENSING UNDER
SECTION 179.
(a) IN GENERAL.—The table contained in section
179(b)(1) (relating to dollar limitation) is amended to
read as follows:
‘‘If the taxable year
The applicable
begins in:
amount is:
2001 .......................................................................
$24,000
2002 or 2003 .........................................................
$35,000
2004 or thereafter .................................................
$25,000.’’.
(b) TEMPORARY INCREASE IN AMOUNT OF PROP-
ERTY TRIGGERING PHASEOUT OF MAXIMUM BENEFIT.—
Paragraph (2) of section 179(b) is amended by inserting
before the period ‘‘($325,000 in the case of taxable years
beginning during 2002 or 2003)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
SEC. 103. REPEAL OF ALTERNATIVE MINIMUM TAX ON COR-
PORATIONS.
(a) IN GENERAL.—So much of section 55 as precedes
subsection (b)(2) is amended to read as follows:
‘‘SEC. 55. ALTERNATIVE MINIMUM TAX FOR TAXPAYERS
OTHER THAN CORPORATIONS.
‘‘(a) IN GENERAL.—In the case of a taxpayer other
than a corporation, there is hereby imposed (in addition
to any other tax imposed by this subtitle) a tax equal to
the excess (if any) of—
‘‘(1) the tentative minimum tax for the taxable
year, over
‘‘(2) the regular tax for the taxable year.
‘‘(b) TENTATIVE MINIMUM TAX.—For purposes of
this part—
‘‘(1) AMOUNT OF TENTATIVE TAX.—
‘‘(A) IN
GENERAL.—The tentative min-
imum tax for the taxable year is the sum of—
‘‘(i) 26 percent of so much of the tax-
able excess as does not exceed $175,000,
plus
‘‘(ii) 28 percent of so much of the tax-
able excess as exceeds $175,000.
The amount determined under the preceding
sentence shall be reduced by the alternative
minimum tax foreign tax credit for the taxable
year.
‘‘(B) TAXABLE EXCESS.—For purposes of
this subsection, the term ‘taxable excess’ means
so much of the alternative minimum taxable in-
come for the taxable year as exceeds the exemp-
tion amount.
‘‘(C) MARRIED INDIVIDUAL FILING SEPA-
RATE RETURN.—In the case of a married indi-
vidual filing a separate return, clause (i) shall
be
applied
by
substituting
‘$87,500’
for
‘$175,000’ each place it appears. For purposes
of the preceding sentence, marital status shall
be determined under section 7703.’’
(b) CONFORMING AMENDMENTS.—
(1) Paragraph (3) of section 55(b) is amended
by striking ‘‘paragraph (1)(A)(i)’’ and inserting
‘‘paragraph (1)(A)’’.
(2) Paragraph (1) of section 55(c) is amended
by striking ‘‘, the section 936 credit allowable under
section 27(b), and the Puerto Rico economic activity
credit under section 30A’’.
(3)(A)
Paragraph
(1)
of
section
55(d)
is
amended by—
(i) by striking ‘‘FOR
TAXPAYERS
OTHER
THAN CORPORATIONS’’ in the heading, and
(ii) by striking ‘‘In the case of a taxpayer
other than a corporation, the’’ and inserting
‘‘The’’.
(B) Section 55(d) is amended by striking para-
graph (2) and by redesignating paragraph (3) as
paragraph (2).
(C) Subparagraph (A) of section 55(d)(2), as so
redesignated is amended by striking ‘‘or (2)’’.
(4) Section 55 is amended by striking sub-
section (e).
(5)(A) The designation and heading for sub-
section (a) of section 56 is amended to read as fol-
lows:
‘‘(a) GENERAL RULES.—’’.
(B) Paragraph (1) of section 56(a) is amended
by striking subparagraph (D).
(C)
Paragraph
(6)
of
section
56(a)
is
amended—
(i) by striking ‘‘paragraph (2) or sub-
section (b)(2)’’ and inserting ‘‘paragraph (2) or
(9)’’, and
(ii) by striking ‘‘or (5), or subsection
(b)(2)’’ and inserting ‘‘(5), or (9)’’.
(6)(A) Subsection (b) of section 56 is amended
by striking so much of such subsection as precedes
paragraph (1) and by redesignating paragraphs (1),
(2), and (3) as paragraphs (8), (9), and (10), re-
spectively, of subsection (a).
(B) Paragraph (9) of section 56(a), as so redes-
ignated, is amended by striking subparagraph (C)
and by redesignating subparagraph (D) as subpara-
graph (C).
(7) Section 56 is amended by striking sub-
sections (c) and (g) and by redesignating subsections
(d) and (e) as subsections (b) and (c), respectively.
(8) Subparagraph (E) of section 57(a)(2) is
amended—
(A) by striking ‘‘FOR INDEPENDENT PRO-
DUCERS’’ in the heading, and
(B) by striking clause (i) and inserting the
following new clause:
‘‘(i) IN
GENERAL.—This paragraph
shall not apply to any taxable year begin-
ning after December 31, 1992.’’
(9) Subsection (a) of section 58 is amended by
striking paragraph (3) and by redesignating para-
graph (4) as paragraph (3).
(10)(A) Section 59 is amended by striking sub-
sections (b) and (f) and by redesignating subsections
(c), (d), (e), (g), (h), (i), and (j) as subsections (b),
(c), (d), (e), (f), (g), and (h), respectively.
(B) Paragraph (2) of section 59(d), as so redes-
ignated, is amended by striking ‘‘(determined with-
out regard to section 291)’’.
(C)
Sections
173(b),
174(f)(2),
263(c),
263A(c)(6), 616(e), 617(i), and 1016(a)(20) are
each amended by striking ‘‘59(e)’’ each place it ap-
pears and inserting ‘‘59(d)’’.
(11) Subsection (d) of section 11 is amended by
striking ‘‘the taxes imposed by subsection (a) and
section 55’’ and inserting ‘‘the tax imposed by sub-
section (a)’’.
(12) Section 12 is amended by striking para-
graph (7).
(13) Paragraph (6) of section 29(b) is amended
to read as follows:
‘‘(6) APPLICATION
WITH
OTHER
CREDITS.—
The credit allowed by subsection (a) for any taxable
year shall not exceed the excess (if any) of the reg-
ular tax for the taxable year reduced by the sum of
the credits allowable under subpart A and section
27. In the case of a taxpayer other than a corpora-
tion, such excess shall be further reduced (but not
below zero) by the tentative minimum tax for the
taxable year.’’
(14) Paragraph (3) of section 30(b) is amended
to read as follows:
‘‘(3) APPLICATION
WITH
OTHER
CREDITS.—
The credit allowed by subsection (a) for any taxable
year shall not exceed the excess (if any) of the reg-
ular tax for the taxable year reduced by the sum of
the credits allowable under subpart A and sections
27 and 29. In the case of a taxpayer other than a
corporation, such excess shall be further reduced
(but not below zero) by the tentative minimum tax
for the taxable year.’’
(15)(A)
Paragraph
(1)
of
section
38(c)
is
amended to read as follows:
‘‘(1) IN GENERAL.—
‘‘(A) CORPORATIONS.—In the case of a
corporation, the credit allowed under subsection
(a) for any taxable year shall not exceed the ex-
cess (if any) of the taxpayer’s net income tax
over 25 percent of so much of the taxpayer’s
net regular tax liability as exceeds $25,000.
‘‘(B) TAXPAYERS OTHER THAN CORPORA-
TIONS.—In the case of a taxpayer other than a
corporation, the credit allowed under subsection
(a) for any taxable year shall not exceed the ex-
cess (if any) of the taxpayer’s net income tax
over the greater of—
‘‘(i) the tentative minimum tax for the
taxable year, or
‘‘(ii) 25 percent of so much of the tax-
payer’s net regular tax liability as exceeds
$25,000.
‘‘(C) DEFINITIONS.—For purposes of this
paragraph—
‘‘(i) the term ‘net income tax’ means
the sum of the regular tax liability and the
tax imposed by section 55, reduced by the
credits allowable under subparts A and B
of this part, and
‘‘(ii) the term ‘net regular tax liabil-
ity’ means the regular tax liability reduced
by the sum of the credits allowable under
subparts A and B of this part.’’
(B) Clause (ii) of section 38(c)(2)(A) is amend-
ed to read as follows:
‘‘(ii) for purposes of applying para-
graph (1) to such credit—
‘‘(I)
the
applicable
limitation
under paragraph (1) (as modified by
subclause (II) in the case of a tax-
payer other than a corporation) shall
be
reduced
by
the
credit
allowed
under subsection (a) for the taxable
year (other than the empowerment
zone employment credit), and
‘‘(II) in the case of a taxpayer
other than a corporation, 75 percent
of the tentative minimum tax shall be
substituted for the tentative minimum
tax under subparagraph (B)(i) there-
of.’’
(C) Paragraph (3) of section 38(c) is amended
by striking ‘‘subparagraph (B) of’’ each place it ap-
pears.
(16)(A) Subclause (I) of section 53(d)(1)(B)(ii)
is amended by striking ‘‘subsection (b)(1)’’ and in-
serting ‘‘subsection (a)(8)’’.
(B) Clause (iv) of section 53(d)(1)(B) is hereby
repealed.
(17)(A) Part VII of subchapter A of chapter 1
is hereby repealed.
(B) The table of parts for subchapter A of
chapter 1 is amended by striking the item relating
to part VII.
(C) Paragraph (2) of section 26(b) is amended
by striking subparagraph (B) and by redesignating
the succeeding subparagraphs accordingly.
(D) Subsection (c) of section 30A is amended
by striking paragraph (1) and redesignating the suc-
ceeding paragraphs accordingly.
(E) Subsection (a) of section 164 is amended
by striking paragraph (5).
(F) Subsection (a) of section 275 is amended
by striking ‘‘Paragraph (1) shall not apply to the
tax imposed by section 59A.’’
(G) Paragraph (1) of section 882(a) is amended
by striking ‘‘59A,’’.
(H) Paragraph (3) of section 936(a) is amend-
ed by striking subparagraph (A) and redesignating
the succeeding subparagraphs accordingly.
(I) Subsection (a) of section 1561 is amended
by adding ‘‘and’’ at the end of paragraph (2), by
striking ‘‘, and’’ at the end of paragraph (3) and in-
serting a period, and by striking paragraph (4).
(J) Subparagraph (A) of section 6425(c)(1) is
amended by adding ‘‘plus’’ at the end of clause (i),
by striking ‘‘plus’’ at the end of clause (ii) and in-
serting ‘‘over’’, and by striking clause (iii).
(18) Section 382(l) (relating to limitation on
net operating loss carryforwards and certain built-in
losses following ownership change) is amended by
striking paragraph (7) and by redesignating para-
graph (8) as paragraph (7).
(19) Paragraph (2) of section 815(c) (relating
to distributions to shareholders from pre-1984 pol-
icyholders surplus account) is amended by striking
the last sentence.
(20) Section 847 (relating to special estimated
tax payments) is amended—
(A) in paragraph (9), by striking the last
sentence; and
(B) in paragraph (10), by inserting ‘‘and’’
at the end of subparagraph (A) and by striking
subparagraph (B) and redesignating subpara-
graph (C) as subparagraph (B).
(21) Section 848 (relating to capitalization of
certain policy acquisition expenses) is amended by
striking subsection (i) and by redesignating sub-
section (j) as subsection (i).
(22) Paragraph (1) of section 882(a) (relating
to tax on income of foreign corporations connected
with United States business) is amended by striking
‘‘55,’’.
(23) Paragraph (1) of section 962(a) (relating
to election by individuals to be subject to tax at cor-
porate rates) is amended by striking ‘‘sections 11
and 55’’ and inserting ‘‘section 11’’.
(24) Subsection (a) of section 1561 (relating to
limitations on certain multiple tax benefits in the
case of certain controlled corporations) is amended
by striking the last sentence.
(25) Subparagraph (A) of section 6425(c)(1)
(defining income tax liability), as amended by para-
graph (17) is amended to read as follows:
‘‘(A) the tax imposed by section 11 or
1201(a), or subchapter L of chapter 1, which-
ever is applicable, over’’.
(26)(A) Paragraph (2) of section 6655(e) is
amended—
(i) by striking ‘‘, alternative minimum tax-
able income, and modified alternative minimum
taxable income’’ each place it appears in sub-
paragraphs (A) and (B)(i), and
(ii) by striking clause (iii) of subparagraph
(B).
(B) Subparagraph (A) of section 6655(g)(1)
(relating to failure by corporation to pay estimated
income tax), is amended to read as follows:
‘‘(A) the sum of—
‘‘(i) the tax imposed by section 11 or
1201(a), or subchapter L of chapter 1,
whichever applies, plus
‘‘(ii) the tax imposed by section 887,
over’’.
(27) The table of sections for part VI of sub-
chapter A of chapter 1 is amended by striking the
item relating to section 55 and inserting the fol-
lowing new item:
‘‘Sec. 55. Alternative minimum tax for taxpayers other than cor-
porations.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2000.
(d) REFUND OF UNUSED MINIMUM TAX CREDIT.—
(1)
IN
GENERAL.—In
the
case
of
a
corporation—
(A) section 53(c) of the Internal Revenue
Code of 1986 shall not apply to such corpora-
tion’s first taxable year beginning after Decem-
ber 31, 2000, and
(B) for purposes of such Code (other than
section 53 of such Code), the credit allowed by
section 53 of such Code for such first taxable
year shall be treated as if it were allowed by
subpart C of part IV of subchapter A of chap-
ter 1 of such Code (relating to refundable cred-
its).
(2)
SPECIAL
RULES
RELATING
TO
CARRYBACKS.—In the case of a carryback of a cor-
poration from a taxable year beginning after Decem-
ber 31, 2000, to a taxable year beginning before
January 1, 2001—
(A) the tax imposed by section 55 of such
Code shall not be increased or decreased by rea-
son of such a carryback,
(B) tentative minimum tax shall not be in-
creased or decreased by reason of such a
carryback
for
purposes
of
determining
the
amount of any credit other than the credit al-
lowed by section 38, and
(C) the amount of such a carryback which
is taken into account in determining tentative
minimum tax for purposes of section 38(c) shall
be the amount of such carryback which is taken
into account in determining regular tax liability.
SEC.
104.
CARRYBACK
OF
CERTAIN
NET
OPERATING
LOSSES ALLOWED FOR 5 YEARS.
(a) IN GENERAL.—Paragraph (1) of section 172(b)
(relating to years to which loss may be carried) is amended
by adding at the end the following new subparagraph:
‘‘(H) In the case of a taxpayer which has
a net operating loss for any taxable year ending
after September 10, 2001, and before Sep-
tember 11, 2004, subparagraph (A)(i) shall be
applied by substituting ‘5’ for ‘2’ and subpara-
graph (F) shall not apply.’’.
(b)
ELECTION
TO
DISREGARD
5-YEAR
CARRYBACK.—Section 172 (relating to net operating loss
deduction) is amended by redesignating subsection (j) as
subsection (k) and by inserting after subjection (i) the fol-
lowing new subsection:
‘‘(j) ELECTION TO DISREGARD 5-YEAR CARRYBACK
FOR CERTAIN NET OPERATING LOSSES.—Any taxpayer
entitled to a 5-year carryback under subsection (b)(1)(H)
from any loss year may elect to have the carryback period
with respect to such loss year determined without regard
to subsection (b)(1)(H). Such election shall be made in
such manner as may be prescribed by the Secretary and
shall be made by the due date (including extensions of
time) for filing the taxpayer’s return for the taxable year
of the net operating loss. Such election, once made for any
taxable year, shall be irrevocable for such taxable year.’’.
(c) TEMPORARY SUSPENSION OF 90 PERCENT LIMIT
ON CERTAIN NOL CARRYBACKS.—Subparagraph (A) of
section 56(b)(1) (relating to general rule defining alter-
native tax net operating loss deduction), as amended by
section 103, is amended to read as follows:
‘‘(A) the amount of such deduction shall
not exceed the sum of—
‘‘(i) the lesser of—
‘‘(I) the amount of such deduc-
tion
attributable
to
net
operating
losses (other than the deduction at-
tributable to carrybacks described in
clause (ii)(I)), or
‘‘(II)
percent
of
alternate
minimum taxable income determined
without regard to such deduction, plus
‘‘(ii) the lesser of—
‘‘(I) the amount of such deduc-
tion attributable to carrybacks of net
operating losses for taxable years end-
ing after September 10, 2001, and be-
fore September 11, 2004, or
‘‘(II) alternate minimum taxable
income determined without regard to
such deduction reduced by the amount
determined under clause (i), and’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to net operating losses for taxable
years ending after September 10, 2001.
SEC. 105. RECOVERY PERIOD FOR DEPRECIATION OF CER-
TAIN LEASEHOLD IMPROVEMENTS.
(a)
15-YEAR
RECOVERY
PERIOD.—Subparagraph
(E) of section 168(e)(3) (relating to 15-year property) is
amended by striking ‘‘and’’ at the end of clause (ii), by
striking the period at the end of clause (iii) and inserting
‘‘, and’’, and by adding at the end the following new
clause:
‘‘(iv) any qualified leasehold improve-
ment property.’’.
(b) QUALIFIED LEASEHOLD IMPROVEMENT PROP-
ERTY.—Subsection (e) of section 168 is amended by add-
ing at the end the following new paragraph:
‘‘(6)
QUALIFIED
LEASEHOLD
IMPROVEMENT
PROPERTY.—
‘‘(A) IN
GENERAL.—The term ‘qualified
leasehold improvement property’ means any im-
provement to an interior portion of a building
which is nonresidential real property if—
‘‘(i) such improvement is made under
or pursuant to a lease (as defined in sub-
section (h)(7))—
‘‘(I) by the lessee (or any subles-
see) of such portion, or
‘‘(II) by the lessor of such por-
tion,
‘‘(ii) such portion is to be occupied ex-
clusively by the lessee (or any sublessee) of
such portion, and
‘‘(iii) such improvement is placed in
service more than 3 years after the date
the building was first placed in service.
‘‘(B) CERTAIN
IMPROVEMENTS
NOT
IN-
CLUDED.—Such term shall not include any im-
provement for which the expenditure is attrib-
utable to—
‘‘(i) the enlargement of the building,
‘‘(ii) any elevator or escalator,
‘‘(iii) any structural component bene-
fiting a common area, and
‘‘(iv) the internal structural frame-
work of the building.
‘‘(C) DEFINITIONS AND SPECIAL RULES.—
For purposes of this paragraph—
‘‘(i) COMMITMENT TO LEASE TREAT-
ED
AS
LEASE.—A commitment to enter
into a lease shall be treated as a lease, and
the parties to such commitment shall be
treated as lessor and lessee, respectively.
‘‘(ii) RELATED PERSONS.—A lease be-
tween related persons shall not be consid-
ered a lease. For purposes of the preceding
sentence,
the
term
‘related
persons’
means—
‘‘(I)
members
of
an
affiliated
group (as defined in section 1504),
and
‘‘(II) persons having a relation-
ship described in subsection (b) of
section 267; except that, for purposes
of this clause, the phrase ‘80 percent
or more’ shall be substituted for the
phrase ‘more than 50 percent’ each
place it appears in such subsection.
‘‘(D) IMPROVEMENTS MADE BY LESSOR.—
‘‘(i) IN GENERAL.—In the case of an
improvement made by the person who was
the lessor of such improvement when such
improvement was placed in service, such
improvement shall be qualified leasehold
improvement property (if at all) only so
long as such improvement is held by such
person.
‘‘(ii) EXCEPTION
FOR
CHANGES
IN
FORM
OF
BUSINESS.—Property shall not
cease to be qualified leasehold improve-
ment property under clause (i) by reason
of—
‘‘(I) death,
‘‘(II) a transaction to which sec-
tion 381(a) applies, or
‘‘(III) a mere change in the form
of conducting the trade or business so
long as the property is retained in
such trade or business as qualified
leasehold improvement property and
the taxpayer retains a substantial in-
terest in such trade or business.’’
(c) REQUIREMENT TO USE STRAIGHT LINE METH-
OD.—Paragraph (3) of section 168(b) is amended by add-
ing at the end the following new subparagraph:
‘‘(G) Qualified leasehold improvement property
described in subsection (e)(6).’’.
(d) ALTERNATIVE SYSTEM.—The table contained in
section 168(g)(3)(B) is amended by adding at the end the
following new item:
‘‘(E)(iv) .................................................................................
15’’.
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to qualified leasehold improvement
property placed in service after September 10, 2001.
TITLE II—INDIVIDUAL
PROVISIONS
SEC. 201. ACCELERATION OF 25 PERCENT INDIVIDUAL IN-
COME TAX RATE.
(a) IN GENERAL.—The table contained in paragraph
(2) of section 1(i) (relating to reductions in rates after
June 30, 2001) is amended—
(1)
by
striking
‘‘27.0%’’
and
inserting
‘‘25.0%’’, and
(2)
by
striking
‘‘26.0%’’
and
inserting
‘‘25.0%’’.
(b) REDUCTION NOT TO INCREASE MINIMUM TAX.—
(1) Subparagraph (A) of section 55(d)(1) is
amended by striking ‘‘($49,000 in the case of tax-
able years beginning in 2001, 2002, 2003, and
2004)’’ and inserting ‘‘($49,000 in the case of tax-
able years beginning in 2001, $52,200 in the case of
taxable years beginning in 2002 or 2003, and
$50,700 in the case of taxable years beginning in
2004)’’.
(2) Subparagraph (B) of section 55(d)(1) is
amended by striking ‘‘($35,750 in the case of tax-
able years beginning in 2001, 2002, 2003, and
2004)’’ and inserting ‘‘($35,750 in the case of tax-
able years beginning in 2001, $37,350 in the case of
taxable years beginning in 2002 or 2003, and
$36,600 in the case of taxable years beginning in
2004)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
(d) SECTION 15 NOT TO APPLY.—No amendment
made by this section shall be treated as a change in a
rate of tax for purposes of section 15 of the Internal Rev-
enue Code of 1986 .
SEC. 202. REPEAL OF 5-YEAR HOLDING PERIOD REQUIRE-
MENT FOR REDUCED INDIVIDUAL CAPITAL
GAINS RATES.
(a) IN GENERAL.—
(1) Sections 1(h)(1)(B) and 55(b)(3)(B) are
each amended by striking ‘‘10 percent’’ and insert-
ing ‘‘8 percent’’.
(2) The following sections are each amended by
striking ‘‘20 percent’’ and inserting ‘‘18 percent’’:
(A) Section 1(h)(1)(C).
(B) Section 55(b)(3)(C).
(C) Section 1445(e)(1).
(D)
The
second
sentence
of
section
7518(g)(6)(A).
(E)
The
second
sentence
of
section
607(h)(6)(A)
of
the
Merchant
Marine
Act,
1936.
(b) CONFORMING AMENDMENTS.—
(1) Subsection (e) of section 311 of the Tax-
payer Relief Act of 1997 is repealed.
(2) Section 1(h) is amended—
(A) by striking paragraphs (2) and (9),
(B)
by
redesignating
paragraphs
(3)
through (8) as paragraphs (2) through (7), re-
spectively, and
(C)
by
redesignating
paragraphs
(10),
(11), and (12) as paragraphs (8), (9), and (10),
respectively.
(3) Paragraph (3) of section 55(b) is amended
by striking ‘‘In the case of taxable years beginning
after December 31, 2000, rules similar to the rules
of section 1(h)(2) shall apply for purposes of sub-
paragraphs (B) and (C).’’.
(4) Paragraph (7) of section 57(a) is amended
by striking the last sentence and by striking ‘‘42
percent’’ and inserting ‘‘28 percent’’.
(c) TRANSITIONAL RULES
FOR TAXABLE YEARS
WHICH INCLUDE OCTOBER 12, 2001.—For purposes of
applying section 1(h) of the Internal Revenue Code of
1986 in the case of a taxable year which includes October
12, 2001—
(1) The amount of tax determined under sub-
paragraph (B) of section 1(h)(1) of such Code shall
be the sum of—
(A) 8 percent of the lesser of—
(i) the sum of—
(I) the net capital gain taking
into account only gain or loss properly
taken into account for the portion of
the taxable year on or after October
12, (determined without regard to col-
lectibles gain or loss, gain described in
section (1)(h)(6)(A)(i) of such Code,
and section 1202 gain), and
(II) the qualified 5-year gain (as
defined in section 1(h)(9) of the Inter-
nal Revenue Code of 1986, as in ef-
fect on the day before the date of the
enactment of this Act) properly taken
into account for the portion of the
taxable year before October 12, 2001,
or
(ii) the amount on which a tax is de-
termined under such subparagraph (with-
out regard to this subsection), plus
(B) 10 percent of the excess (if any) of—
(i) the amount on which a tax is de-
termined under such subparagraph (with-
out regard to this subsection), over
(ii) the amount on which a tax is de-
termined under subparagraph (A).
(2) The amount of tax determined under sub-
paragraph (C) of section (1)(h)(1) of such Code
shall be the sum of—
(A) 18 percent of the lesser of—
(i) the excess (if any) of the amount
of net capital gain determined under sub-
paragraph (A)(i)(I) of paragraph (1) of
this subsection over the amount on which
a tax is determined under subparagraph
(A) of paragraph (1) of this subsection, or
(ii) the amount on which a tax is de-
termined under such subparagraph (C)
(without regard to this subsection), plus
(B) 20 percent of the excess (if any) of—
(i) the amount on which a tax is de-
termined under such subparagraph (C)
(without regard to this subsection), over
(ii) the amount on which a tax is de-
termined under subparagraph (A) of this
paragraph.
(3) For purposes of applying section 55(b)(3)
of such Code, rules similar to the rules of para-
graphs (1) and (2) of this subsection shall apply.
(4) In applying this subsection with respect to
any pass-thru entity, the determination of when
gains and loss are properly taken into account shall
be made at the entity level.
(5) Terms used in this subsection which are
also used in section 1(h) of such Code shall have the
respective meanings that such terms have in such
section.
(d) EFFECTIVE DATES.—
(1) IN
GENERAL.—Except as otherwise pro-
vided by this subsection, the amendments made by
this section shall apply to taxable years ending on or
after October 12, 2001.
(2) WITHHOLDING.—The amendment made by
subsection (a)(2)(C) shall apply to amounts paid
after the date of the enactment of this Act.
(3) ELECTION TO RECOGNIZE GAIN ON ASSESTS
HELD ON JANUARY 1, 2001.—The repeal made by
subsection (b)(1) shall take effect as if included in
section 311 of the Taxpayer Relief Act of 1997, and
the Internal Revenue Code of 1986 shall be applied
and administered as if subsection (e) of such section
311 had never been enacted.
(4)
SMALL
BUSINESS
STOCK.—The
amend-
ments made by subsection (b)(4) shall apply to dis-
positions on or after October 12, 2001.
SEC. 203. TEMPORARY INCREASE IN DEDUCTION FOR CAP-
ITAL LOSSES OF TAXPAYERS OTHER THAN
CORPORATIONS.
(a) IN GENERAL.—Subsection (b) of section 1211
(relating to limitation on capital losses for taxpayers other
than corporations) is amended by adding at the end the
following flush sentence:
‘‘Paragraph (1) shall be applied by substituting ‘$4,000’
for ‘$3,000’ and ‘$2,000’ for ‘$1,500’ in the case of tax-
able years beginning in 2001, and by substituting ‘$5,000’
for ‘$3,000’ and ‘$2,500’ for ‘$1,500’ in the case of tax-
able years beginning in 2002.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to taxable years beginning after
December 31, 2000.
SEC. 204. TEMPORARY EXPANSION OF PENALTY-FREE RE-
TIREMENT
PLAN
DISTRIBUTIONS
FOR
HEALTH INSURANCE PREMIUMS OF UNEM-
PLOYED INDIVIDUALS.
(a) IN GENERAL.—Subparagraph (D) of section
72(t)(2) is amended by adding at the end the following
new clause:
‘‘(iv) SPECIAL
RULES
FOR
INDIVID-
UALS
RECEIVING
UNEMPLOYMENT
COM-
PENSATION
AFTER
SEPTEMBER
10,
2001,
AND
BEFORE
JANUARY
1,
2003.—In the
case of an individual who receives unem-
ployment compensation for 4 consecutive
weeks after September 10, 2001, and be-
fore January 1, 2003—
‘‘(I) clause (i) shall apply to dis-
tributions from all qualified retire-
ment plans (as defined in section
4974(c)), and
‘‘(II) such 4 consecutive weeks
shall be substituted for the 12 con-
secutive weeks referred to in subclause
(I) of clause (i).’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to distributions after the date of
the enactment of this Act.
TITLE III—EXTENSIONS OF
CERTAIN EXPIRING PROVISIONS
Subtitle A—Two-Year Extensions
SEC. 301. ALLOWANCE OF NONREFUNDABLE PERSONAL
CREDITS AGAINST REGULAR AND MINIMUM
TAX LIABILITY.
(a) IN GENERAL.—Paragraph (2) of section 26(a) is
amended—
(1) by striking ‘‘RULE FOR 2000 AND 2001.—’’
and inserting ‘‘RULE
FOR
2000,
2001,
2002,
AND
2003.—’’, and
(2) by striking ‘‘during 2000 or 2001,’’ and in-
serting ‘‘during 2000, 2001, 2002, or 2003,’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 904(h) is amended by striking ‘‘dur-
ing 2000 or 2001’’ and inserting ‘‘during 2000,
2001, 2002, or 2003’’.
(2) The amendments made by sections 201(b),
202(f), and 618(f) of the Economic Growth and Tax
Relief Reconciliation Act of 2001 shall not apply to
taxable years beginning during 2002 and 2003.
(c) TECHNICAL CORRECTION.—Section 24(d)(1)(B)
is amended by striking ‘‘amount of credit allowed by this
section’’ and inserting ‘‘aggregate amount of credits al-
lowed by this subpart’’.
(d) EFFECTIVE DATES.—
(1) The amendments made by subsections (a)
and (b) shall apply to taxable years beginning after
December 31, 2001.
(2) The amendment made by subsection (c)
shall apply to taxable years beginning after Decem-
ber 31, 2000.
SEC. 302. CREDIT FOR QUALIFIED ELECTRIC VEHICLES.
(a) IN GENERAL.—Section 30 is amended—
(1) in subsection (b)(2)—
(A) by striking ‘‘December 31, 2001,’’ and
inserting ‘‘December 31, 2003,’’, and
(B) in subparagraphs (A), (B), and (C), by
striking ‘‘2002’’, ‘‘2003’’, and ‘‘2004’’, respec-
tively,
and
inserting
‘‘2004’’,
‘‘2005’’,
and
‘‘2006’’, respectively, and
(2) in subsection (e), by striking ‘‘December 31,
2004’’ and inserting ‘‘December 31, 2006’’.
(b) CONFORMING AMENDMENTS.—
(1) Subparagraph (C) of section 280F(a)(1) is
amended by adding at the end the following new
clause
‘‘(iii)
APPLICATION
OF
SUBPARA-
GRAPH.—This subparagraph shall apply to
property placed in service after August 5,
1997, and before January 1, 2007.’’.
(2) Subsection (b) of section 971 of the Tax-
payer Relief Act of 1997 is amended by striking
‘‘and before January 1, 2005’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
SEC. 303. CREDIT FOR ELECTRICITY PRODUCED FROM RE-
NEWABLE RESOURCES.
(a) IN GENERAL.—Subparagraphs (A), (B), and (C)
of section 45(c)(3) are each amended by striking ‘‘2002’’
and inserting ‘‘2004’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall take effect on the date of the enact-
ment of this Act.
SEC. 304. WORK OPPORTUNITY CREDIT.
(a) IN GENERAL.—Subparagraph (B) of section
51(c)(4) is amended by striking ‘‘2001’’ and inserting
‘‘2003’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to individuals who begin work
for the employer after December 31, 2001.
SEC. 305. WELFARE-TO-WORK CREDIT.
(a) IN GENERAL.—Subsection (f) of section 51A is
amended by striking ‘‘2001’’ and inserting ‘‘2003’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to individuals who begin work
for the employer after December 31, 2001.
SEC. 306. DEDUCTION FOR CLEAN-FUEL VEHICLES AND
CERTAIN REFUELING PROPERTY.
(a) IN GENERAL.—Section 179A is amended—
(1) in subsection (b)(1)(B)—
(A) by striking ‘‘December 31, 2001,’’ and
inserting ‘‘December 31, 2003,’’, and
(B) in clauses (i), (ii), and (iii), by striking
‘‘2002’’, ‘‘2003’’, and ‘‘2004’’, respectively, and
inserting ‘‘2004’’, ‘‘2005’’, and ‘‘2006’’, respec-
tively, and
(2) in subsection (f), by striking ‘‘December 31,
2004’’ and inserting ‘‘December 31, 2006’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall take effect on the date of the enact-
ment of this Act.
SEC. 307. TAXABLE INCOME LIMIT ON PERCENTAGE DEPLE-
TION FOR OIL AND NATURAL GAS PRODUCED
FROM MARGINAL PROPERTIES.
(a) IN GENERAL.—Subparagraph (H) of section
613A(c)(6) is amended by striking ‘‘2002’’ and inserting
‘‘2004’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to taxable years beginning after
December 31, 2001.
SEC. 308. QUALIFIED ZONE ACADEMY BONDS.
(a)
IN
GENERAL.—Paragraph
(1)
of
section
1397E(e) is amended by striking ‘‘2000, and 2001’’ and
inserting ‘‘2000, 2001, 2002, and 2003’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on the date of the enact-
ment of this Act.
SEC. 309. COVER OVER OF TAX ON DISTILLED SPIRITS.
(a) IN GENERAL.—Paragraph (1) of section 7652(f)
is amended by striking ‘‘January 1, 2002’’ and inserting
‘‘January 1, 2004’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on the date of the enact-
ment of this Act.
SEC. 310. PARITY IN THE APPLICATION OF CERTAIN LIMITS
TO MENTAL HEALTH BENEFITS.
(a) IN GENERAL.—Subsection (f) of section 9812 is
amended by striking ‘‘2001’’ and inserting ‘‘2003’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to plan years beginning after
December 31, 2001.
SEC. 311. DELAY IN EFFECTIVE DATE OF REQUIREMENT
FOR APPROVED DIESEL OR KEROSENE TER-
MINALS.
Paragraph (2) of section 1032(f) of the Taxpayer Re-
lief Act of 1997 (Public Law 105–34) is amended by strik-
ing ‘‘January 1, 2002’’ and inserting ‘‘January 1, 2004’’.
Subtitle B—One-Year Extensions
SEC. 321. ONE-YEAR EXTENSION OF AVAILABILITY OF MED-
ICAL SAVINGS ACCOUNTS.
(a) IN GENERAL.—Paragraphs (2) and (3)(B) of sec-
tion 220(i) (defining cut-off year) are each amended by
striking ‘‘2002’’ each place it appears and inserting
‘‘2003’’.
(b) CONFORMING AMENDMENTS.—
(1) Paragraph (2) of section 220(j) is amended
by striking ‘‘1998, 1999, or 2001’’ each place it ap-
pears and inserting ‘‘1998, 1999, 2001, or 2002’’.
(2) Subparagraph (A) of section 220(j)(4) is
amended by striking ‘‘and 2001’’ and inserting
‘‘2001, and 2002’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
Subtitle C—Permanent Extensions
SEC. 331. SUBPART F EXEMPTION FOR ACTIVE FINANCING.
(a) IN GENERAL.—
(1) Section 953(e)(10) is amended—
(A) by striking ‘‘, and before January 1,
2002,’’, and
(B) by striking the second sentence.
(2) Section 954(h)(9) is amended by striking ‘‘,
and before January 1, 2002,’’.
(b) LIFE INSURANCE AND ANNUITY CONTRACTS.—
(1) IN GENERAL.—Subparagraph (B) of section
954(i)(4) is amended to read as follows:
‘‘(B) LIFE INSURANCE AND ANNUITY CON-
TRACTS.—
‘‘(i) IN
GENERAL.—Except as pro-
vided in clause (ii), the amount of the re-
serve of a qualifying insurance company or
qualifying insurance company branch for
any life insurance or annuity contract shall
be equal to the greater of—
‘‘(I) the net surrender value of
such contract (as defined in section
807(e)(1)(A)), or
‘‘(II)
the
reserve
determined
under paragraph (5).
‘‘(ii) RULING REQUEST.—The amount
of the reserve under clause (i) shall be the
foreign statement reserve for the contract
(less any catastrophe, deficiency, equali-
zation, or similar reserves), if, pursuant to
a ruling request submitted by the taxpayer,
the Secretary determines that the factors
taken into account in determining the for-
eign statement reserve provide an appro-
priate means of measuring income.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
Subtitle D—Other Provisions
SEC. 341. EXCLUDED CANCELLATION OF INDEBTEDNESS
INCOME OF S CORPORATION NOT TO RESULT
IN
ADJUSTMENT
TO
BASIS
OF
STOCK
OF
SHAREHOLDERS.
(a) IN GENERAL.—Subparagraph (A) of section
108(d)(7) (relating to certain provisions to be applied at
corporate level) is amended by inserting before the period
‘‘, including by not taking into account under section
1366(a) any amount excluded under subsection (a) of this
section’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to discharges of indebtedness after
October 11, 2001, in taxable years ending after such date.
SEC. 342. LIMITATION ON USE OF NONACCRUAL EXPERI-
ENCE METHOD OF ACCOUNTING.
(a) IN GENERAL.—Paragraph (5) of section 448(d)
is amended to read as follows:
‘‘(5) SPECIAL RULE FOR CERTAIN SERVICES.—
‘‘(A) IN
GENERAL.—In the case of any
person using an accrual method of accounting
with respect to amounts to be received for the
performance of services by such person, such
person shall not be required to accrue any por-
tion of such amounts which (on the basis of
such person’s experience) will not be collected
if—
‘‘(i) such services are in fields referred
to in paragraph (2)(A), or
‘‘(ii) such person meets the gross re-
ceipts test of subsection (c) for all prior
taxable years.
‘‘(B) EXCEPTION.—This paragraph shall
not apply to any amount if interest is required
to be paid on such amount or there is any pen-
alty for failure to timely pay such amount.
‘‘(C) REGULATIONS.—The Secretary shall
prescribe regulations to permit taxpayers to de-
termine amounts referred to in subparagraph
(A) using computations or formulas which,
based
on
experience,
accurately
reflect
the
amount of income that will not be collected by
such person. A taxpayer may adopt, or request
consent of the Secretary to change to, a com-
putation or formula that clearly reflects the tax-
payer’s experience. A request under the pre-
ceding sentence shall be approved only if such
computation or formula clearly reflects the tax-
payer’s experience.’’.
(b) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by
this section shall apply to taxable years ending after
the date of the enactment of this Act.
(2) CHANGE IN METHOD OF ACCOUNTING.—In
the case of any taxpayer required by the amend-
ments made by this section to change its method of
accounting for its first taxable year ending after the
date of the enactment of this Act—
(A) such change shall be treated as initi-
ated by the taxpayer,
(B) such change shall be treated as made
with the consent of the Secretary of the Treas-
ury, and
(C) the net amount of the adjustments re-
quired to be taken into account by the taxpayer
under section 481 of the Internal Revenue Code
of 1986 shall be taken into account over a pe-
riod of 4 years (or if less, the number of taxable
years that the taxpayer used the method per-
mitted under section 448(d)(5) of such Code as
in effect before the date of the enactment of
this Act) beginning with such first taxable year.
TITLE IV—SUPPLEMENTAL
REBATE; OTHER PROVISIONS
SEC. 401. SUPPLEMENTAL REBATE.
(a) IN GENERAL.—Section 6428 (relating to accel-
eration of 10 percent income tax rate bracket benefit for
2001) is amended by adding at the end the following new
subsection:
‘‘(f) SUPPLEMENTAL REBATE.—
‘‘(1) IN GENERAL.—Each individual who was
an eligible individual for such individual’s first tax-
able year beginning in 2000 and who, before October
16, 2001, filed a return of tax imposed by subtitle
A for such taxable year shall be treated as having
made a payment against the tax imposed by chapter
1 for such first taxable year in an amount equal to
the supplemental refund amount for such taxable
year.
‘‘(2) SUPPLEMENTAL
REFUND
AMOUNT.—For
purposes of this subsection, the supplemental refund
amount is an amount equal to the excess (if any)
of—
‘‘(A)(i) $600 in the case of taxpayers to
whom section 1(a) applies,
‘‘(ii) $500 in the case of taxpayers to
whom section 1(b) applies, and
‘‘(iii) $300 in the case of taxpayers to
whom subsections (c) or (d) of section 1 ap-
plies, over
‘‘(B)
the
taxpayer’s
advance
refund
amount under subsection (e).
‘‘(3) TIMING
OF
PAYMENTS.—In the case of
any overpayment attributable to this subsection, the
Secretary shall, subject to the provisions of this title,
refund or credit such overpayment as rapidly as pos-
sible.
‘‘(4) NO INTEREST.—No interest shall be al-
lowed on any overpayment attributable to this sub-
section.’’
(b) CONFORMING AMENDMENTS.—
(1) Subparagraph (A) of section 6428(d)(1) is
amended by striking ‘‘subsection (e)’’ and inserting
‘‘subsections (e) and (f)’’.
(2) Subparagraph (B) of section 6428(d)(1) is
amended by striking ‘‘subsection (e)’’ and inserting
‘‘subsection (e) or (f)’’.
(3) Paragraph (3) of section 6428(e) is amend-
ed by striking ‘‘December 31, 2001’’ and inserting
‘‘the date of the enactment of the Economic Security
and Recovery Act of 2001’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
SEC. 402. SPECIAL REED ACT TRANSFER IN FISCAL YEAR
2002.
(a) REPEAL OF CERTAIN PROVISIONS ADDED BY
THE BALANCED BUDGET ACT OF 1997.—
(1) IN GENERAL.—The following provisions of
section 903 of the Social Security Act (42 U.S.C.
1103) are repealed:
(A) Paragraph (3) of subsection (a).
(B) The last sentence of subsection (c)(2).
(2) SAVINGS PROVISION.—Any amounts trans-
ferred before the date of enactment of this Act
under the provision repealed by paragraph (1)(A)
shall remain subject to section 903 of the Social Se-
curity Act, as last in effect before such date of en-
actment.
(b) SPECIAL TRANSFER IN FISCAL YEAR 2002.—
Section 903 of the Social Security Act is amended by add-
ing at the end the following:
‘‘Special Transfer in Fiscal Year 2002
‘‘(d)(1) The Secretary of the Treasury shall transfer
(as of the date determined under paragraph (5)(A)) from
the Federal unemployment account to the account of each
State in the Unemployment Trust Fund the amount deter-
mined with respect to such State under paragraph (2).
‘‘(2) The amount to be transferred under this sub-
section to a State account shall (as determined by the Sec-
retary of Labor and certified by such Secretary to the Sec-
retary of the Treasury) be equal to—
‘‘(A) the amount which would have been re-
quired to have been transferred under this section to
such account at the beginning of fiscal year 2002 if
section 402(a)(1) of the Economic Security and Re-
covery Act of 2001 had been enacted before the close
of fiscal year 2001, minus
‘‘(B) the amount which was in fact transferred
under this section to such account at the beginning
of fiscal year 2002.
‘‘(3)(A)
Except
as
provided
in
paragraph
(4),
amounts transferred to a State account pursuant to this
subsection may be used only in the payment of cash
benefits—
‘‘(i) to individuals with respect to their unem-
ployment, and
‘‘(ii) which are allowable under subparagraph
(B) or (C).
‘‘(B)(i) At the option of the State, cash benefits
under this paragraph may include amounts which shall be
payable as regular or additional compensation for individ-
uals eligible for regular compensation under the unemploy-
ment compensation law of such State.
‘‘(ii) Any additional compensation under clause (i)
may not be taken into account for purposes of any deter-
mination relating to the amount of any extended com-
pensation for which an individual might be eligible.
‘‘(C)(i) At the option of the State, cash benefits
under this paragraph may include amounts which shall be
payable to 1 or more categories of individuals not other-
wise eligible for regular compensation under the unem-
ployment compensation law of such State.
‘‘(ii) The benefits paid under this subparagraph to
any individual may not, for any period of unemployment,
exceed the maximum amount of regular compensation au-
thorized under the unemployment compensation law of
such State for that same period, plus any additional bene-
fits (described in subparagraph (B)(i)) which could have
been paid with respect to that amount.
‘‘(D) Amounts transferred to a State account under
this subsection may be used in the payment of cash bene-
fits to individuals only for weeks of unemployment—
‘‘(i) beginning after the date of enactment of
this subsection, and
‘‘(ii) ending on or before March 11, 2003.
‘‘(4) Amounts transferred to a State account under
this subsection may be used for the administration of its
unemployment compensation law and public employment
offices (including in connection with benefits described in
paragraph (3) and any recipients thereof), subject to the
same conditions as set forth in subsection (c)(2) (exclud-
ing subparagraph (B) thereof, and deeming the reference
to ‘subsections (a) and (b)’ in subparagraph (D) thereof
to include this subsection).
‘‘(5) Transfers under this subsection—
‘‘(A) shall be made on such date as the Sec-
retary of Labor (in consultation with the Secretary
of the Treasury) shall determine, but in no event
later than 10 days after the date of enactment of
this subsection, and
‘‘(B) may, notwithstanding any other provision
of this subsection, be made only to the extent that
they do not to exceed—
‘‘(i) the balance in the Federal unemploy-
ment account as of the date determined under
subparagraph (A), or
‘‘(ii) the total amount that was transferred
under this section to the Federal unemployment
account at the beginning of fiscal year 2002,
whichever is less.’’
(c) LIMITATIONS ON TRANSFERS.—Section 903(b) of
the Social Security Act shall apply to transfers under sec-
tion 903(d) of such Act (as amended by this section). For
purposes of the preceding sentence, such section 903(b)
shall be deemed to be amended as follows:
(1) By substituting ‘‘the transfer date described
in subsection (d)(5)(A)’’ for ‘‘October 1 of any fiscal
year’’.
(2) By substituting ‘‘remain in the Federal un-
employment account’’ for ‘‘be transferred to the
Federal unemployment account as of the beginning
of such October 1’’.
(3) By substituting ‘‘fiscal year 2002 (after the
transfer date described in subsection (d)(5)(A))’’ for
‘‘the fiscal year beginning on such October 1’’.
(4) By substituting ‘‘under subsection (d)’’ for
‘‘as of October 1 of such fiscal year’’.
(5) By substituting ‘‘(as of the close of fiscal
year 2002)’’ for ‘‘(as of the close of such fiscal
year)’’.
(d)
TECHNICAL
AMENDMENTS.—(1)
Sections
3304(a)(4)(B) and 3306(f)(2) of the Internal Revenue
Code of 1986 are amended by inserting ‘‘or 903(d)(4)’’
before ‘‘of the Social Security Act’’.
(2) Section 303(a)(5) of the Social Security Act is
amended in the second proviso by inserting ‘‘or 903(d)(4)’’
after ‘‘903(c)(2)’’.
(e) REGULATIONS.—The Secretary of Labor may
prescribe any operating instructions or regulations nec-
essary to carry out this section and the amendments made
by this section.
TITLE V—HEALTH CARE ASSIST-
ANCE FOR THE UNEMPLOYED
SEC.
501.
HEALTH
CARE
ASSISTANCE
FOR
THE
UNEM-
PLOYED.
Title XX of the Social Security Act (42 U.S.C. 1397–
1397f) is amended by adding at the end the following:
‘‘SEC. 2008. GRANTS FOR HEALTH CARE ASSISTANCE FOR
THE UNEMPLOYED.
‘‘(a) FUNDING.—For purposes of section 2003, the
amount specified in section 2003(c) for fiscal year 2002
is increased by $3,000,000,000.
‘‘(b) USE OF FUNDS.—Notwithstanding any other
provision of this title, to the extent that an amount paid
to a State under section 2002 is attributable to funds
made available by reason of subsection (a) of this
section—
‘‘(1) the State shall use the amount to assist an
unemployed individual who is not eligible for Federal
health coverage to purchase health care coverage for
the individual or any member of the family of the in-
dividual who is not so eligible; and
‘‘(2) the amount—
‘‘(A) shall be used to supplement, not sup-
plant, any other Federal, State, or local funds
that are used for the provision of health care
coverage; and
‘‘(B) may not be included in determining
the amount of non-Federal contributions re-
quired under any program.
‘‘(c) DEFINITIONS.—In this section:
‘‘(1)
UNEMPLOYED
INDIVIDUAL.—The
term
‘unemployed individual’ means an individual who—
‘‘(A) is without a job (determined in ac-
cordance with the criteria used by the Bureau
of Labor Statistics of the Department of Labor
in defining individuals as unemployed);
‘‘(B) is seeking and available for work; and
‘‘(C) has or had a benefit year (within the
meaning of section 205 of the Federal-State
Extended Unemployment Compensation Act of
1970) beginning on or after January 1, 2001.
‘‘(2) FEDERAL HEALTH COVERAGE.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), the term ‘Federal health coverage’
means coverage under any medical care pro-
gram described in—
‘‘(i) title XVIII, XIX, or XXI of this
Act (other than under section 1928);
‘‘(ii) chapter 55 of title 10, United
States Code;
‘‘(iii) chapter 17 of title 38, United
States Code;
‘‘(iv) chapter 89 of title 5, United
States Code (other than coverage which is
comparable to continuation coverage under
section 4980B of the Internal Revenue
Code of 1986); or
‘‘(v) the Indian Health Care Improve-
ment Act.
‘‘(B) SPECIAL RULE.—Such term does not
include coverage under a qualified long-term
care insurance contract.’’.
SECTION 1. SHORT TITLE; ETC.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Economic Recovery and Assistance for American Workers
Act of 2001’’.
(b) REFERENCES TO INTERNAL REVENUE CODE OF
1986.—Except as otherwise expressly provided, whenever in
this Act an amendment or repeal is expressed in terms of
an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or
other provision of the Internal Revenue Code of 1986.
(c) TABLE OF CONTENTS.—
Sec. 1. Short title; etc.
TITLE I—SUPPLEMENTAL REBATE FOR INDIVIDUAL TAXPAYERS
Sec. 101. Supplemental rebate.
TITLE II—TEMPORARY BUSINESS RELIEF PROVISIONS
Sec. 201. Special depreciation allowance for certain property.
Sec. 202. Increase in section 179 expensing.
Sec. 203. Carryback of certain net operating losses allowed for 5 years.
TITLE III—TAX INCENTIVES AND RELIEF FOR VICTIMS OF
TERRORISM, DISASTERS, AND DISTRESSED CONDITIONS
Subtitle A—Tax Incentives for New York City and Distressed Areas
Sec. 301. Expansion of work opportunity tax credit targeted categories to include
certain employees in New York City.
Sec. 302. Tax-exempt private activity bonds for rebuilding portion of New York
City damaged in the September 11, 2001, terrorist attack.
Sec. 303. Gain or loss from property damaged or destroyed in New York Recovery
Zone.
Sec. 304. Reenactment of exceptions for qualified-mortgage-bond-financed loans to
victims of Presidentially declared disasters.
Sec. 305. One-year expansion of authority for Indian tribes to issue tax-exempt
private activity bonds.
Subtitle B—Victims of Terrorism Tax Relief
Sec. 310. Short title.
PART I—RELIEF PROVISIONS FOR VICTIMS OF APRIL 19, 1995, AND
SEPTEMBER 11, 2001, TERRORIST ATTACKS
Sec. 311. Income and employment taxes of victims of terrorist attacks.
Sec. 312. Estate tax reduction.
Sec. 313. Payments by charitable organizations treated as exempt payments.
Sec. 314. Exclusion of certain cancellations of indebtedness.
PART II—GENERAL RELIEF FOR VICTIMS OF DISASTERS AND TERRORISTIC OR
MILITARY ACTIONS
Sec. 321. Exclusion for disaster relief payments.
Sec. 322. Authority to postpone certain deadlines and required actions.
Sec. 323. Internal Revenue Service disaster response team.
Sec. 324. Application of certain provisions to terroristic or military actions.
Sec. 325. Clarification of due date for airline excise tax deposits.
Sec. 326. Coordination with Air Transportation Safety and System Stabilization
Act.
PART III—DISCLOSURE OF TAX INFORMATION IN TERRORISM AND NATIONAL
SECURITY INVESTIGATIONS
Sec. 331. Disclosure of tax information in terrorism and national security inves-
tigations.
TITLE IV—EXTENSIONS OF CERTAIN EXPIRING TAX PROVISIONS
Sec. 401. Allowance of nonrefundable personal credits against regular and min-
imum tax liability.
Sec. 402. Work opportunity credit.
Sec. 403. Welfare-to-work credit.
Sec. 404. Credit for electricity produced from renewable resources.
Sec. 405. Taxable income limit on percentage depletion for oil and natural gas
produced from marginal properties.
Sec. 406. Qualified zone academy bonds.
Sec. 407. Subpart F exemption for active financing.
Sec. 408. Cover over of tax on distilled spirits.
Sec. 409. Delay in effective date of requirement for approved diesel or kerosene
terminals.
Sec. 410. Deduction for clean-fuel vehicles and certain refueling property.
Sec. 411. Credit for qualified electric vehicles.
Sec. 412. Parity in the application of certain limits to mental health benefits.
Sec. 413. Combined employment tax reporting.
TITLE V—EXTENSION OF CERTAIN TRADE PROVISIONS EXPIRING
IN 2001.
Sec. 501. Generalized System of Preferences.
Sec. 502. Andean Trade Preference Act.
Sec. 503. Reauthorization of trade adjustment assistance.
TITLE VI—HEALTH INSURANCE COVERAGE OPTIONS FOR
RECENTLY UNEMPLOYED INDIVIDUALS AND THEIR FAMILIES
Sec. 601. Premium assistance for COBRA continuation coverage for individuals
and their families.
Sec. 602. State option to provide temporary medicaid coverage for certain unin-
sured individuals.
Sec. 603. State option to provide temporary coverage under medicaid for the un-
subsidized portion of COBRA continuation premiums.
Sec. 604. Temporary increases of medicaid FMAP for fiscal year 2002.
Sec. 605. Definitions.
TITLE VII—TEMPORARY ENHANCED UNEMPLOYMENT BENEFITS
Sec. 701. Short title.
Sec. 702. Federal-State agreements.
Sec. 703. Temporary supplemental unemployment compensation account.
Sec. 704. Payments to States having agreements under this title.
Sec. 705. Financing provisions.
Sec. 706. Fraud and overpayments.
Sec. 707. Definitions.
Sec. 708. Applicability.
TITLE VIII—EMERGENCY AGRICULTURE ASSISTANCE
Subtitle A—Crop Loss Assistance
Sec. 801. Crop loss assistance.
Sec. 802. Livestock assistance program.
Sec. 803. Commodity purchases.
Subtitle B—Rural Development
Sec. 811. Rural community facilities and utilities.
Sec. 812. Rural telecommunications loans.
Sec. 813. Telemedicine and distance learning services.
Sec. 814. Environmental quality incentives program.
Sec. 815. Farmland protection program.
Subtitle C—Administration
Sec. 821. Commodity Credit Corporation.
Sec. 822. Administrative expenses.
Sec. 823. Regulations.
TITLE IX—ADDITIONAL PROVISIONS
Sec. 901. Credit to holders of qualified Amtrak bonds.
Sec. 902. Broadband Internet access tax credit.
Sec. 903. Citrus tree canker relief.
Sec. 904. Allowance of electronic 1099s.
Sec. 905. Clarification of excise tax exemptions for agricultural aerial applica-
tors.
Sec. 906. Recovery period for certain wireless telecommunications equipment.
Sec. 907. No impact on social security trust funds.
Sec. 908. Emergency designation.
TITLE 
I—SUPPLEMENTAL 
RE-
BATE FOR INDIVIDUAL TAX-
PAYERS
SEC. 101. SUPPLEMENTAL REBATE.
(a) IN GENERAL.—Section 6428 (relating to accelera-
tion of 10 percent income tax rate bracket benefit for 2001)
is amended by adding at the end the following new sub-
section:
‘‘(f) SUPPLEMENTAL REBATE.—
‘‘(1) IN GENERAL.—Each individual who was an
eligible individual for such individual’s first taxable
year beginning in 2000 and who, before October 16,
2001—
‘‘(A) filed a return of tax imposed by sub-
title A for such taxable year, or
‘‘(B) filed a return of income tax with the
government of American Samoa, Guam, the
Commonwealth of the Northern Mariana Islands,
the Commonwealth of Puerto Rico, or the Virgin
Islands of the United States,
shall be treated as having made a payment against
the tax imposed by chapter 1 for such first taxable
year in an amount equal to the supplemental refund
amount for such taxable year.
‘‘(2) SUPPLEMENTAL
REFUND
AMOUNT.—For
purposes of this subsection, the supplemental refund
amount is an amount equal to the excess (if any) of—
‘‘(A)(i) $600 in the case of taxpayers to
whom section 1(a) applies,
‘‘(ii) $500 in the case of taxpayers to whom
section 1(b) applies, and
‘‘(iii) $300 in the case of taxpayers to
whom subsections (c) or (d) of section 1 applies,
over
‘‘(B) the amount of any advance refund
amount paid to the taxpayer under subsection
(e).
‘‘(3) TIMING OF PAYMENTS.—In the case of any
overpayment attributable to this subsection, the Sec-
retary shall, subject to the provisions of this title, re-
fund or credit such overpayment as rapidly as pos-
sible.
‘‘(4) NO INTEREST.—No interest shall be allowed
on any overpayment attributable to this subsection.
‘‘(5) 
SPECIAL
RULE
FOR
CERTAIN
NON-
RESIDENTS.—The determination under subsection
(c)(2) as to whether an individual who filed a return
of tax described in paragraph (1)(B) is a nonresident
alien individual shall, under rules prescribed by the
Secretary, be made by reference to the possession or
Commonwealth with which the return was filed and
not the United States.’’.
(b) TECHNICAL CORRECTION.—
(1) IN GENERAL.—Subsection (b) of section 6428
is amended to read as follows:
‘‘(b) CREDIT TREATED
AS NONREFUNDABLE PER-
SONAL CREDIT.—For purposes of this title, the credit al-
lowed under this section shall be treated as a credit allow-
able under subpart A of part IV of subchapter A of chapter
1.’’.
(2) CONFORMING AMENDMENTS.—
(A) Subsection (d) of section 6428 is
amended to read as follows:
‘‘(d) COORDINATION
WITH ADVANCE REFUNDS
OF
CREDIT.—
‘‘(1) IN GENERAL.—The amount of credit which
would (but for this paragraph) be allowable under
this section shall be reduced (but not below zero) by
the aggregate refunds and credits made or allowed to
the taxpayer under subsection (e). Any failure to so
reduce the credit shall be treated as arising out of a
mathematical or clerical error and assessed according
to section 6213(b)(1).
‘‘(2) JOINT RETURNS.—In the case of a refund or
credit made or allowed under subsection (e) with re-
spect to a joint return, half of such refund or credit
shall be treated as having been made or allowed to
each individual filing such return.’’.
(B) Paragraph (2) of section 6428(e) is
amended to read as follows:
‘‘(2) ADVANCE REFUND AMOUNT.—For purposes
of paragraph (1), the advance refund amount is the
amount that would have been allowed as a credit
under this section for such first taxable year if—
‘‘(A) this section (other than subsections (b)
and (d) and this subsection) had applied to such
taxable year, and
‘‘(B) the credit for such taxable year were
not allowed to exceed the excess (if any) of—
‘‘(i) the sum of the regular tax liability
(as defined in section 26(b)) plus the tax
imposed by section 55, over
‘‘(ii) the sum of the credits allowable
under part IV of subchapter A of chapter 1
(other than the credits allowable under sub-
part C thereof, relating to refundable cred-
its).’’.
(c) CONFORMING AMENDMENTS.—
(1) Paragraph (1) of section 6428(d), as amend-
ed by subsection (b), is amended by striking ‘‘sub-
section (e)’’ and inserting ‘‘subsections (e) and (f)’’.
(2) Paragraph (2) of section 6428(d), as amend-
ed by subsection (b), is amended by striking ‘‘sub-
section (e)’’ and inserting ‘‘subsection (e) or (f)’’.
(3) Paragraph (3) of section 6428(e) is amended
by striking ‘‘December 31, 2001’’ and inserting ‘‘the
date of the enactment of the Economic Recovery and
Assistance for American Workers Act of 2001’’.
(d) REPORTING REQUIREMENT.—For purposes of de-
termining the individuals who are eligible for the supple-
mental rebate under section 6428(f) of the Internal Revenue
Code of 1986, the governments of American Samoa, Guam,
the Commonwealth of the Northern Mariana Islands, the
Commonwealth of Puerto Rico, and the Virgin Islands of
the United States shall provide, at such time and in such
manner as provided by the Secretary of the Treasury, the
names, addresses, and taxpayer identifying numbers (with-
in the meaning of section 6109 of the Internal Revenue Code
of 1986) of residents who filed returns of income tax with
such governments for 2000.
(e) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section shall
take effect on the date of the enactment of this Act.
(2) TECHNICALS.—The amendments made by
subsection (b) shall take effect as if included in the
amendment made by section 101(b)(1) of the Eco-
nomic Growth and Tax Relief Reconciliation Act of
2001.
TITLE II—TEMPORARY BUSINESS
RELIEF PROVISIONS
SEC. 201. SPECIAL DEPRECIATION ALLOWANCE FOR CER-
TAIN PROPERTY.
(a) IN GENERAL.—Section 168 (relating to accelerated
cost recovery system) is amended by adding at the end the
following new subsection:
‘‘(k) SPECIAL ALLOWANCE FOR CERTAIN PROPERTY
ACQUIRED AFTER SEPTEMBER 10, 2001, AND BEFORE
SEPTEMBER 11, 2002.—
‘‘(1) ADDITIONAL ALLOWANCE.—In the case of
any qualified property—
‘‘(A) the depreciation deduction provided by
section 167(a) for the taxable year in which such
property is placed in service shall include an al-
lowance equal to 10 percent of the adjusted basis
of the qualified property, and
‘‘(B) the adjusted basis of the qualified
property shall be reduced by the amount of such
deduction before computing the amount otherwise
allowable as a depreciation deduction under this
chapter for such taxable year and any subsequent
taxable year.
‘‘(2) QUALIFIED
PROPERTY.—For purposes of
this subsection—
‘‘(A) IN
GENERAL.—The term ‘qualified
property’ means property—
‘‘(i)(I) to which this section applies
which has an applicable recovery period of
20 years or less or which is water utility
property,
‘‘(II) which is computer software (as
defined in section 167(f)(1)(B)) for which a
deduction is allowable under section 167(a)
without regard to this subsection,
‘‘(III) which is qualified leasehold im-
provement property, or
‘‘(IV) which is eligible for depreciation
under section 167(g),
‘‘(ii) the original use of which com-
mences with the taxpayer after September
10, 2001,
‘‘(iii) which is—
‘‘(I) acquired by the taxpayer
after September 10, 2001, and before
September 11, 2002, but only if no
written binding contract for the acqui-
sition was in effect before September
11, 2001, or
‘‘(II) acquired by the taxpayer
pursuant to a written binding contract
which was entered into after September
10, 2001, and before September 11,
2002, and
‘‘(iv) which is placed in service by the
taxpayer before January 1, 2003.
‘‘(B) EXCEPTIONS.—
‘‘(i) 
ALTERNATIVE
DEPRECIATION
PROPERTY.—The term ‘qualified property’
shall not include any property to which the
alternative depreciation system under sub-
section (g) applies, determined—
‘‘(I) without regard to paragraph
(7) of subsection (g) (relating to elec-
tion to have system apply), and
‘‘(II) after application of section
280F(b) (relating to listed property
with limited business use).
‘‘(ii) ELECTION
OUT.—If a taxpayer
makes an election under this clause with re-
spect to any class of property for any tax-
able year, this subsection shall not apply to
all property in such class placed in service
during such taxable year.
‘‘(C) SPECIAL RULES.—
‘‘(i) SELF-CONSTRUCTED PROPERTY.—
In the case of a taxpayer manufacturing,
constructing, or producing property for the
taxpayer’s own use, the requirements of
clause (iii) of subparagraph (A) shall be
treated as met if the taxpayer begins manu-
facturing, constructing, or producing the
property after September 10, 2001, and be-
fore September 11, 2002.
‘‘(ii) 
SALE-LEASEBACKS.—For 
pur-
poses of subparagraph (A)(ii), if property—
‘‘(I) is originally placed in service
after September 10, 2001, by a person,
and
‘‘(II) sold and leased back by such
person within 3 months after the date
such property was originally placed in
service,
such property shall be treated as originally
placed in service not earlier than the date
on which such property is used under the
leaseback referred to in subclause (II).
‘‘(D) COORDINATION WITH SECTION 280F.—
For purposes of section 280F—
‘‘(i) AUTOMOBILES.—In the case of a
passenger automobile (as defined in section
280F(d)(5)) which is qualified property, the
Secretary shall increase the limitation
under section 280F(a)(1)(A)(i) by $1,600.
‘‘(ii) LISTED PROPERTY.—The deduc-
tion allowable under paragraph (1) shall be
taken into account in computing any recap-
ture amount under section 280F(b)(2).
‘‘(3) 
QUALIFIED
LEASEHOLD
IMPROVEMENT
PROPERTY.—For purposes of this subsection—
‘‘(A) IN
GENERAL.—The term ‘qualified
leasehold improvement property’ means any im-
provement to an interior portion of a building
which is nonresidential real property if—
‘‘(i) such improvement is made under
or pursuant to a lease (as defined in sub-
section (h)(7))—
‘‘(I) by the lessee (or any subles-
see) of such portion, or
‘‘(II) by the lessor of such portion,
‘‘(ii) such portion is to be occupied ex-
clusively by the lessee (or any sublessee) of
such portion, and
‘‘(iii) such improvement is placed in
service more than 3 years after the date the
building was first placed in service.
‘‘(B) CERTAIN
IMPROVEMENTS
NOT
IN-
CLUDED.—Such term shall not include any im-
provement for which the expenditure is attrib-
utable to—
‘‘(i) the enlargement of the building,
‘‘(ii) any elevator or escalator,
‘‘(iii) any structural component bene-
fiting a common area, and
‘‘(iv) the internal structural framework
of the building.
‘‘(C) DEFINITIONS AND SPECIAL RULES.—
For purposes of this paragraph—
‘‘(i) BINDING COMMITMENT TO LEASE
TREATED AS LEASE.—A binding commit-
ment to enter into a lease shall be treated
as a lease, and the parties to such commit-
ment shall be treated as lessor and lessee, re-
spectively.
‘‘(ii) RELATED PERSONS.—A lease be-
tween related persons shall not be considered
a lease. For purposes of the preceding sen-
tence, the term ‘related persons’ means—
‘‘(I) members of an affiliated
group (as defined in section 1504), and
‘‘(II) persons having a relation-
ship described in subsection (b) of sec-
tion 267; except that, for purposes of
this clause, the phrase ‘80 percent or
more’ shall be substituted for the
phrase ‘more than 50 percent’ each
place it appears in such subsection.
‘‘(D) IMPROVEMENTS MADE BY LESSOR.—In
the case of an improvement made by the person
who was the lessor of such improvement when
such improvement was placed in service, such
improvement shall be qualified leasehold im-
provement property (if at all) only so long as
such improvement is held by such person.’’.
(b) ALLOWANCE AGAINST ALTERNATIVE MINIMUM
TAX.—
(1) IN GENERAL.—Section 56(a)(1)(A) (relating
to depreciation adjustment for alternative minimum
tax) is amended by adding at the end the following
new clause:
‘‘(iii) ADDITIONAL
ALLOWANCE
FOR
CERTAIN PROPERTY ACQUIRED AFTER SEP-
TEMBER 10, 2001, AND BEFORE SEPTEMBER
11, 
2002.—The deduction under section
168(k) shall be allowed.’’.
(2) CONFORMING
AMENDMENT.—Clause (i) of
section 56(a)(1)(A) is amended by striking ‘‘clause
(ii)’’ both places it appears and inserting ‘‘clauses (ii)
and (iii)’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to property placed in service after Sep-
tember 10, 2001, in taxable years ending after such date.
SEC. 202. INCREASE IN SECTION 179 EXPENSING.
(a) IN GENERAL.—The table contained in section
179(b)(1) (relating to dollar limitation) is amended to read
as follows:
‘‘If the taxable year
The applicable
begins in:
amount is:
2001 ............................................................................
$24,000
2002 ............................................................................
$35,000
2003 or thereafter .......................................................
$25,000.’’.
(b) TEMPORARY INCREASE IN AMOUNT OF PROPERTY
TRIGGERING PHASEOUT OF MAXIMUM BENEFIT.—Para-
graph (2) of section 179(b) is amended by inserting before
the period ‘‘($325,000 in the case of taxable years beginning
during 2002)’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after Decem-
ber 31, 2000.
SEC. 203. CARRYBACK OF CERTAIN NET OPERATING LOSSES
ALLOWED FOR 5 YEARS.
(a) IN GENERAL.—Paragraph (1) of section 172(b)
(relating to years to which loss may be carried) is amended
by adding at the end the following new subparagraph:
‘‘(H) In the case of a taxpayer which has
a net operating loss for any taxable year ending
in 2001, subparagraph (A)(i) shall be applied by
substituting ‘5’ for ‘2’ and subparagraph (F)
shall not apply.’’.
(b) ELECTION TO DISREGARD 5-YEAR CARRYBACK.—
Section 172 (relating to net operating loss deduction) is
amended by redesignating subsection (j) as subsection (k)
and by inserting after subsection (i) the following new sub-
section:
‘‘(j) ELECTION TO DISREGARD 5-YEAR CARRYBACK
FOR CERTAIN NET OPERATING LOSSES.—Any taxpayer en-
titled to a 5-year carryback under subsection (b)(1)(H)
from any loss year may elect to have the carryback period
with respect to such loss year determined without regard
to subsection (b)(1)(H). Such election shall be made in such
manner as may be prescribed by the Secretary and shall
be made by the due date (including extensions of time) for
filing the taxpayer’s return for the taxable year of the net
operating loss. Such election, once made for any taxable
year, shall be irrevocable for such taxable year.’’.
(c) TEMPORARY SUSPENSION OF 90 PERCENT LIMIT
ON CERTAIN NOL CARRYBACKS.—Subparagraph (A) of sec-
tion 56(d)(1) (relating to general rule defining alternative
tax net operating loss deduction) is amended to read as fol-
lows:
‘‘(A) the amount of such deduction shall not
exceed the sum of—
‘‘(i) the lesser of—
‘‘(I) the amount of such deduction
attributable to net operating losses
(other than the deduction attributable
to carrybacks described in clause
(ii)(I)), or
‘‘(II) 90 percent of alternative
minimum taxable income determined
without regard to such deduction, plus
‘‘(ii) the lesser of—
‘‘(I) the amount of such deduction
attributable to carrybacks of net oper-
ating losses for taxable years ending in
2001, or
‘‘(II) alternative minimum tax-
able income determined without regard
to such deduction reduced by the
amount determined under clause (i),
and’’.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to net operating losses for taxable years
ending in 2001.
TITLE III—TAX INCENTIVES AND
RELIEF FOR VICTIMS OF TER-
RORISM, 
DISASTERS, 
AND
DISTRESSED CONDITIONS
Subtitle A—Tax Incentives for New
York City and Distressed Areas
SEC. 301. EXPANSION OF WORK OPPORTUNITY TAX CREDIT
TARGETED CATEGORIES TO INCLUDE CER-
TAIN EMPLOYEES IN NEW YORK CITY.
(a) IN GENERAL.—For purposes of section 51 of the
Internal Revenue Code of 1986 (relating to work oppor-
tunity credit), a New York Recovery Zone business em-
ployee shall be treated as a member of a targeted group.
(b) NEW YORK RECOVERY ZONE BUSINESS EM-
PLOYEE.—For purposes of this section—
(1) IN GENERAL.—The term ‘‘New York Recovery
Zone business employee’’ means, with respect to the
period beginning after September 10, 2001, and end-
ing before January 1, 2003, any employee of a New
York Recovery Zone business if—
(A) substantially all the services performed
during such period by such employee for such
business are performed in a trade or business of
such business located in an area described in
paragraph (2), and
(B) with respect to any employee of such
business described in paragraph (2)(B), such em-
ployee is certified by the New York State Depart-
ment of Labor as not exceeding, when added to
all other employees previously certified with re-
spect to such period as New York Recovery Zone
business employees with respect to such business,
the number of employees of such business on Sep-
tember 11, 2001, in the New York Recovery
Zone.
(2) NEW YORK RECOVERY ZONE BUSINESS.—The
term ‘‘New York Recovery Zone business’’ means any
business establishment which is—
(A) located in the New York Recovery Zone,
or
(B) located in the City of New York, New
York, outside the New York Recovery Zone, as
the result of the destruction or damage of such
establishment by the September 11, 2001, ter-
rorist attack.
(3) NEW
YORK
RECOVERY
ZONE.—The term
‘‘New York Recovery Zone’’ means the area located on
or south of Canal Street, East Broadway (east of its
intersection with Canal Street), or Grand Street (east
of its intersection with East Broadway) in the Bor-
ough of Manhattan in the City of New York, New
York.
(4) SPECIAL RULES FOR DETERMINING AMOUNT
OF CREDIT.—For purposes of applying subpart E of
part IV of subchapter B of chapter 1 of the Internal
Revenue Code of 1986 to wages paid or incurred to
any New York Recovery Zone business employee—
(A) section 51(a) of such Code shall be ap-
plied by substituting ‘‘qualified wages’’ for
‘‘qualified first-year wages’’,
(B) section 51(d)(12)(A)(i) of such Code
shall be applied to the certification of individ-
uals employed by a New York Recovery Zone
business before April 1, 2002, by substituting
‘‘on or before May 1, 2002’’ for ‘‘on or before the
day on which such individual begins work for
the employer’’,
(C) subsections (c)(4) and (i)(2) of section
51 of such Code shall not apply, and
(D) in determining qualified wages, the fol-
lowing shall apply in lieu of section 51(b) of
such Code:
(i) 
QUALIFIED
WAGES.—The 
term
‘‘qualified wages’’ means the wages paid or
incurred by the employer for work per-
formed during the period beginning on Sep-
tember 11, 2001, and ending on December
31, 2002, to individuals who are New York
Recovery Zone business employees of such
employer.
(ii) ONLY FIRST $12,000 OF WAGES PER
TAXABLE YEAR TAKEN INTO ACCOUNT.—The
amount of the qualified wages which may be
taken into account with respect to any indi-
vidual shall not exceed $12,000 per taxable
year of the employer.
(c) CREDIT ALLOWED AGAINST REGULAR AND MIN-
IMUM TAX.—
(1) IN GENERAL.—Subsection (c) of section 38
(relating to limitation based on amount of tax) is
amended by redesignating paragraph (3) as para-
graph (4) and by inserting after paragraph (2) the
following new paragraph:
‘‘(3) SPECIAL RULES FOR NEW YORK RECOVERY
ZONE BUSINESS EMPLOYEE CREDIT.—
‘‘(A) IN GENERAL.—In the case of the New
York Recovery Zone business employee credit—
‘‘(i) this section and section 39 shall be
applied separately with respect to such
credit, and
‘‘(ii) in applying paragraph (1) to
such credit—
‘‘(I) the tentative minimum tax
shall be treated as being zero, and
‘‘(II) the limitation under para-
graph (1) (as modified by subclause
(I)) shall be reduced by the credit al-
lowed under subsection (a) for the tax-
able year (other than the New York Re-
covery Zone business employee credit).
‘‘(B) NEW YORK RECOVERY ZONE BUSINESS
EMPLOYEE CREDIT.—For purposes of this sub-
section, the term ‘New York Recovery Zone busi-
ness employee credit’ means the portion of work
opportunity credit under section 51 determined
under section 301 of the Economic Recovery and
Assistance for American Workers Act of 2001.’’.
(2) CONFORMING
AMENDMENT.—Subclause (II)
of section 38(c)(2)(A)(ii) is amended by inserting ‘‘or
the New York Recovery Zone business employee cred-
it’’ after ‘‘employment credit’’.
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to taxable years ending
after September 11, 2001.
(d) COORDINATION WITH EMERGENCY APPROPRIA-
TIONS.—Notwithstanding any other provision of law, any
amount otherwise available for disaster recovery activities
and assistance related to the September 11, 2001, terrorist
attack in the City of New York, New York, under the 2001
Emergency Supplemental Appropriations Act for Recovery
from and Response to Terrorist Attacks on the United
States (Public Law 107–38) shall be reduced by the aggre-
gate 10-year cost to the United States Treasury resulting
from the credits allowed under this section, as estimated for
purposes of determining whether this Act complies with the
Congressional Budget Act of 1974.
SEC. 302. TAX-EXEMPT PRIVATE ACTIVITY BONDS FOR RE-
BUILDING PORTION OF NEW YORK CITY DAM-
AGED IN THE SEPTEMBER 11, 2001, TER-
RORIST ATTACK.
(a) TREATMENT AS QUALIFIED BONDS.—For purposes
of the Internal Revenue Code of 1986, any qualified NYC
recovery bond shall be treated as an exempt facility bond
under section 141(e) of such Code.
(b) QUALIFIED NYC RECOVERY BOND.—For purposes
of this section, the term ‘‘qualified NYC recovery bond’’
means any bond which—
(1) is issued by the State of New York or any po-
litical subdivision thereof (or any agency, instrumen-
tality or constituted authority on behalf thereof), and
(2) meets the requirements of subsections (c)
through (f).
(c) DESIGNATION REQUIREMENTS.—A bond meets the
requirements of this subsection if it is issued as part of an
issue designated as a qualified NYC recovery bond by the
Mayor of the City of New York, New York, or an individual
specifically appointed to make such designation.
(d) ISSUANCE AND VOLUME REQUIREMENTS.—
(1) IN GENERAL.—Except as provided in para-
graph (3), a bond issued as part of an issue meets the
requirements of this subsection if such bond is issued
during 2002 (or during the period elected under para-
graph (2)) and the aggregate face amount of the bonds
issued pursuant to such issue, when added to the ag-
gregate face amount of qualified NYC recovery bonds
previously issued, does not exceed $15,000,000,000.
(2) ELECTIVE CARRYFORWARD OF UNUSED LIMI-
TATION.—If the volume cap under paragraph (1) ex-
ceeds the aggregate amount of qualified NYC recovery
bonds issued during 2002, the issuing authority under
subsection (b) may elect to carry forward such excess
volume cap for an additional 3-year period under
rules similar to the rules of section 146(f) of the Inter-
nal Revenue Code of 1986 (other than paragraph (2)
thereof).
(3) 
CERTAIN
CURRENT
REFUNDINGS
NOT
COUNTED.—For purposes of paragraph (1), there
shall not be taken into account any current refunding
bond the proceeds of which are used to refund any
bond described in paragraph (1) to the extent the face
amount of such current refunding bond does not ex-
ceed the outstanding face amount of the refunded
bond.
(e) QUALIFIED PROJECT REQUIREMENTS.—
(1) IN
GENERAL.—A bond meets the require-
ments of this subsection if it is issued as part of an
issue at least 95 percent of the net proceeds of which
are to be used for qualified project costs.
(2) QUALIFIED PROJECT COSTS.—For purposes
of this subsection—
(A) IN
GENERAL.—The term ‘‘qualified
project costs’’ means—
(i) with respect to a qualified project
described in paragraph (3)(A)(i), the costs
of acquisition, construction, reconstruction,
and renovation of commercial real property
and 
residential 
rental 
real 
property,
including—
(I) buildings and their structural
components,
(II) fixed tenant improvements,
and
(III) public utility property, and
(ii) with respect to a qualified project
described in paragraph (3)(A)(ii), the costs
of acquisition, construction, reconstruction,
and renovation of commercial real property,
including—
(I) buildings and their structural
components, and
(II) fixed tenant improvements.
(B) LIMITATIONS.—
(i) RESIDENTIAL RENTAL REAL PROP-
ERTY.—Such term shall not include costs
with respect to residential rental real prop-
erty to the extent such costs for all such
property exceed 20 percent of the aggregate
face amount of the bonds issued under this
section.
(ii) RETAIL SALES PROPERTY.—Such
term shall not include costs with respect to
property used for retail sales of tangible
property and functionally related and sub-
ordinate property to the extent such costs
for all such property exceeds 10 percent of
the aggregate face amount of the bonds
issued under this section.
(iii) MOVABLE FIXTURES AND EQUIP-
MENT.—Such term shall not include costs
with respect to movable fixtures and equip-
ment.
(3) QUALIFIED PROJECTS.—For purposes of this
subsection—
(A) IN
GENERAL.—The term ‘‘qualified
project’’ means any project—
(i) located within the New York Recov-
ery Zone, or
(ii) located within the City of New
York, New York, but outside of the New
York Recovery Zone, but only if—
(I) such project consists of at least
100,000 square feet of usable office or
other commercial space located in a
single building or multiple adjacent
buildings, and
(II) the aggregate face amount of
the bonds issued to finance such
project, when added to the aggregate
face amount of all bonds issued to fi-
nance all other projects described in
this 
clause, 
does 
not 
exceed
$7,000,000,000.
(B) NEW YORK RECOVERY ZONE.—The term
‘‘New York Recovery Zone’’ means the area lo-
cated on or south of Canal Street, East Broad-
way (east of its intersection with Canal Street),
or Grand Street (east of its intersection with
East Broadway) in the Borough of Manhattan
in the City of New York, New York.
(f) GENERAL REQUIREMENTS.—A bond meets the re-
quirements of this subsection if it is issued as part of an
issue which meets the requirements of part IV of subchapter
B of chapter 1 of the Internal Revenue Code of 1986 appli-
cable to an exempt facility bond, except as follows:
(1) Sections 142(d) and 150(b)(2) (relating to
qualified residential rental project), and section 146
(relating to volume cap) of such Code shall not apply
to bonds issued under this section.
(2) The application of section 147(c) of such
Code (relating to limitation on use for land acquisi-
tion) shall be determined by reference to the aggregate
authorized face amount of all bonds issued under this
section rather than the net proceeds of each issue.
(3) Section 147(d) of such Code (relating to ac-
quisition of existing property not permitted) shall be
applied by substituting ‘‘50 percent’’ for ‘‘15 percent’’
each place it appears.
(4) Section 148(f)(4)(C) of such Code (relating to
exception from rebate for certain proceeds to be used
to finance construction expenditures) shall apply to
construction proceeds of bonds issued under this sec-
tion.
(5) Rules similar to the rules of section
143(a)(2)(A)(iv) of such Code (relating to use of loan
repayments) shall apply to bonds issued under this
section.
(g) BOND INTEREST
NOT
AN AMT PREFERENCE
ITEM.—For purposes of section 57(a)(5) of the Internal
Revenue Code of 1986, a qualified NYC recovery bond shall
not be treated as a specified private activity bond.
(h) SEPARATE ISSUE TREATMENT OF PORTIONS OF AN
ISSUE.—This section shall not apply to the portion of the
proceeds of an issue which (if issued as a separate issue)
would be treated as a qualified bond or as a bond that is
not a private activity bond (determined without regard to
subsection (a)), if the issuer elects to so treat such portion.
(i) NET PROCEEDS.—For purposes of this section, the
term ‘‘net proceeds’’ has the meaning given such term by
section 150(a)(3) of the Internal Revenue Code of 1986.
(j) INTEREST
ON DEBT USED TO PURCHASE
OR
CARRY QUALIFIED NYC RECOVERY BONDS.—
(1) IN GENERAL.—Section 265(b)(3) (relating to
exception for certain tax-exempt obligations) is
amended—
(A) by inserting ‘‘a tax-exempt obligation
issued pursuant to section 302 of the Economic
Recovery and Assistance for American Workers
Act of 2001 or’’ after ‘‘means’’ in subparagraph
(B)(i),
(B) by inserting ‘‘other than an obligation
issued pursuant to section 302 of the Economic
Recovery and Assistance for American Workers
Act of 2001’’ after ‘‘of a qualified tax-exempt ob-
ligation’’ in subparagraph (D)(ii), and
(C) by adding at the end of subparagraph
(D) the following new clause:
‘‘(iv) REFUNDINGS OF CERTAIN OBLI-
GATIONS.—In the case of a refunding (or a
series of refundings) of a qualified tax-ex-
empt obligation that is an obligation issued
pursuant to section 302 of the Economic
Recovery and Assistance for American
Workers Act of 2001, the refunding obliga-
tion shall be treated as a qualified tax-ex-
empt obligation if the refunding obligation
meets the requirements of such section.’’.
(2) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to taxable years ending
on or after the date of the enactment of this Act.
(k) COORDINATION WITH EMERGENCY APPROPRIA-
TIONS.—Notwithstanding any other provision of law, any
amount otherwise available for disaster recovery activities
and assistance related to the September 11, 2001, terrorist
attack in the City of New York, New York, under the 2001
Emergency Supplemental Appropriations Act for Recovery
from and Response to Terrorist Attacks on the United
States (Public Law 107–38) shall be reduced by the aggre-
gate 10-year cost to the United States Treasury of the quali-
fied NYC recovery bonds issued under this section, as esti-
mated for purposes of determining whether this Act com-
plies with the Congressional Budget Act of 1974.
SEC. 303. GAIN OR LOSS FROM PROPERTY DAMAGED OR DE-
STROYED IN NEW YORK RECOVERY ZONE.
(a) GENERAL RULE.—For purposes of the Internal
Revenue Code of 1986, if a taxpayer elects the application
of this section with respect to any eligible property, then
any gain or loss on the disposition of the property shall
be determined without regard to any compensation (by in-
surance or otherwise) received by the taxpayer for damages
sustained to the property as a result of the terrorist attacks
occurring on September 11, 2001. Such election shall be
made at such time and in such manner as the Secretary
of the Treasury may prescribe, and, once made, is irrev-
ocable.
(b) LIMITATION BASED ON PURCHASE OF REPLACE-
MENT PROPERTY.—
(1) IN GENERAL.—Subsection (a) shall apply to
compensation received with respect to eligible prop-
erty only to the extent of the cost of any qualified re-
placement property purchased by the taxpayer.
(2) ALLOCATION.—If the aggregate compensation
received by a taxpayer with respect to all eligible
property exceeds the aggregate cost of all qualified re-
placement property purchased by the taxpayer, such
cost shall be allocated to such eligible property in ac-
cordance with rules prescribed by the Secretary.
(3) 
SPECIAL
RULE
FOR
CONSOLIDATED
GROUPS.—For purposes of paragraph (1), an affili-
ated group filing a consolidated return may elect to
treat any qualified replacement property purchased
by a member of the group as purchased by another
member of the group.
(c) ELIGIBLE PROPERTY.—For purposes of this sec-
tion, the term ‘‘eligible property’’ means any tangible
property—
(1) which is section 1245 property (as defined in
section 1245(a)(3) of the Internal Revenue Code of
1986) or qualified leasehold improvement property
(as defined in section 168(k)(3) of such Code),
(2) substantially all of the use of which as of
September 11, 2001, was in a business establishment
of the taxpayer located in the New York Recovery
Zone, and
(3) which was damaged or destroyed in the ter-
rorist attacks of September 11, 2001.
(d) QUALIFIED REPLACEMENT PROPERTY.—For pur-
poses of this section—
(1) IN GENERAL.—The term ‘‘qualified replace-
ment property’’ means tangible property—
(A) which is described in subsection (c)(1),
(B) which is purchased by the taxpayer on
or after September 11, 2001, and placed in serv-
ice in the City of New York, New York, before
January 1, 2007,
(C) the original use of which in such city
begins with the taxpayer, and
(D) substantially all of the use of which is
reasonably expected to be in connection with a
business establishment of the taxpayer located in
such city.
(2) RECAPTURE.—The Secretary shall, by regu-
lations, provide for the recapture of any Federal tax
benefit provided by this section in cases where a tax-
payer ceases to use property as qualified replacement
property and such recapture is necessary to prevent
the avoidance of the purposes of this section.
(e) COORDINATION WITH OTHER PROVISIONS
OF
CODE.—For purposes of the Internal Revenue Code of
1986—
(1) SPECIAL RULE FOR TREATMENT OF UNREC-
OGNIZED
GAIN
IN
ELIGIBLE
PROPERTY.—Sections
1245 and 1250 of such Code shall not apply to any
gain on the disposition of eligible property not recog-
nized by reason of this section.
(2) LOSS ELECTION NOT TO APPLY TO ELIGIBLE
PROPERTY.—If a taxpayer elects the application of
this section with respect to any eligible property, the
taxpayer may not make an election under section
165(i) of such Code with respect to any loss attrib-
utable to the property.
(3) BASIS
ADJUSTMENTS
OF
QUALIFIED
RE-
PLACEMENT PROPERTY.—
(A) IN GENERAL.—The basis of any quali-
fied replacement property shall be reduced by the
amount of any compensation disregarded by rea-
son of subsection (a).
(B) SPECIAL RULES FOR RECAPTURE.—For
purposes of sections 1245 and 1250 of such Code,
any reduction under subparagraph (A) shall be
treated as a deduction allowed for depreciation,
except that for purposes of section 1250(b) of
such Code, the determination of what would have
been the depreciation adjustments under the
straight line method shall be made as if there
had been no reduction under subparagraph (A).
(4) SPECIAL
RULES
FOR
APPLYING
SECTION
1033.—For purposes of applying section 1033 of such
Code to converted property which is eligible property
with respect to which an election under subsection (a)
has been made—
(A) the amount realized from the eligible
property shall not include any compensation re-
ceived by the taxpayer which is disregarded by
reason of subsection (a), and
(B) any qualified replacement property
shall be disregarded in determining whether
property was acquired for the purposes of replac-
ing the converted property.
(f) OTHER DEFINITIONS AND RULES.—For purposes
of this section—
(1) NEW
YORK
RECOVERY
ZONE.—The term
‘‘New York Recovery Zone’’ means the area located on
or south of Canal Street, East Broadway (east of its
intersection with Canal Street), or Grand Street (east
of its intersection with East Broadway) in the Bor-
ough of Manhattan in the City of New York, New
York.
(2) TIME FOR ASSESSMENT.—Rules similar to
the rules of subparagraphs (C) and (D) of section
1033(a)(2) of such Code shall apply for purposes of
this section.
(3) 
RELATED
PARTY
LIMITATION.—Section
1033(i) of such Code shall apply for purposes of this
section.
(g) COORDINATION WITH EMERGENCY APPROPRIA-
TIONS.—Notwithstanding any other provision of law, any
amount otherwise available for disaster recovery activities
and assistance related to the September 11, 2001, terrorist
attack in the City of New York, New York, under the 2001
Emergency Supplemental Appropriations Act for Recovery
from and Response to Terrorist Attacks on the United
States (Public Law 107–38) shall be reduced by the aggre-
gate 10-year cost to the United States Treasury resulting
from the enactment of this section, as estimated for purposes
of determining whether this Act complies with the Congres-
sional Budget Act of 1974.
SEC. 304. REENACTMENT OF EXCEPTIONS FOR QUALIFIED-
MORTGAGE-BOND-FINANCED LOANS TO VIC-
TIMS OF PRESIDENTIALLY DECLARED DISAS-
TERS.
Section 143(k)(11) (relating to special rules for resi-
dences located in disaster areas) is amended—
(1) by inserting ‘‘damaged or destroyed by a dis-
aster and’’ after ‘‘In the case of a residence’’,
(2) by inserting after subparagraph (B) the fol-
lowing new subparagraph:
‘‘(C) Paragraph (4) of this subsection shall
be 
applied 
by 
substituting 
‘$25,000’ 
for
‘$15,000’.’’, and
(3) by inserting ‘‘, and after December 31, 2001,
and before January 1, 2003’’ after ‘‘1999’’ in the last
sentence.
SEC. 305. ONE-YEAR EXPANSION OF AUTHORITY FOR IN-
DIAN TRIBES TO ISSUE TAX-EXEMPT PRIVATE
ACTIVITY BONDS.
(a) IN GENERAL.—Section 7871(c) (relating to addi-
tional requirements for tax-exempt bonds) is amended by
adding at the end the following new paragraph:
‘‘(4) EXCEPTION FOR QUALIFIED INDIAN PRIVATE
ACTIVITY BONDS.—
‘‘(A) IN
GENERAL.—In the case of any
qualified Indian private activity bond—
‘‘(i) paragraph (2) shall not apply,
‘‘(ii) such bond shall be treated as a
qualified bond under section 141(e), and
‘‘(iii) section 146 shall not apply.
‘‘(B) QUALIFIED INDIAN PRIVATE ACTIVITY
BOND.—For purposes of this paragraph, the term
‘qualified Indian private activity bond’ means
any bond which—
‘‘(i) is issued by a qualified Indian
tribal government—
‘‘(I) as part of an issue 95 percent
or more of the net proceeds of which
are to be used to provide qualified resi-
dential rental projects (as determined
under section 142(d), by substituting
‘statewide median gross income’ for
‘area median gross income’),
‘‘(II) as part of a qualified mort-
gage issue (as defined in section
143(a)(2)),
‘‘(III) as part of an issue 95 per-
cent or more of the net proceeds of
which are to be used to provide any fa-
cility described in section 1394(b)(1)
for any business (whether tribally
owned or not) that would qualify as an
enterprise zone business if the Indian
reservation (as defined in section
168(j)(6)) over which the qualified In-
dian tribal government exercises gen-
eral 
governmental 
authority 
were
treated as an empowerment zone, or
‘‘(IV) as part of an issue to be
used for more than 1 of the purposes
described in the preceding subclauses,
and
‘‘(ii) meets the requirements of sub-
paragraphs (D) and (E).
‘‘(C) QUALIFIED
INDIAN
TRIBAL
GOVERN-
MENT.—For purposes of this paragraph, the
term ‘qualified Indian tribal government’ means
an Indian tribal government which exercises gen-
eral governmental authority over an Indian res-
ervation (as so defined) with an unemployment
rate among members of the tribe of at least 25
percent. For purposes of the preceding sentence,
determinations of unemployment shall be made
with respect to any issuance of a bond under this
section on the basis of the most recent report
published by the Bureau of Indian Affairs under
section 17(a) of the Indian Employment, Train-
ing and Related Services Demonstration Act of
1992 (25 U.S.C. 3416(a)) before such issuance.
‘‘(D) 
DESIGNATION
REQUIREMENTS.—A
bond meets the requirements of this subpara-
graph if it is issued as part of an issue des-
ignated as a qualified Indian private activity
bond for a purpose described in subclause (I),
(II), or (III) of subparagraph (B)(i) by the
qualified Indian tribal government.
‘‘(E) VOLUME REQUIREMENTS.—
‘‘(i) IN GENERAL.—A bond issued as
part of an issue meets the requirements of
this subparagraph if such bond is issued
during 2002 (or during the period elected
under clause (ii)) and the aggregate face
amount of the bonds issued pursuant to
such issue, when added to the aggregate face
amount of qualified Indian private activity
bonds previously issued by such qualified
Indian tribal government, does not exceed
$10,000,000.
‘‘(ii) ELECTIVE
CARRYFORWARD
OF
UNUSED
LIMITATION.—If the volume cap
under clause (i) exceeds the aggregate
amount of qualified Indian private activity
bonds issued during 2002, the qualified In-
dian tribal government may elect to carry
forward such excess volume cap for an addi-
tional 3-year period under rules similar to
the rules of section 146(f) (other than para-
graph (2) thereof).
100
‘‘(F) APPLICATION OF SECTION 42 TO RESI-
DENTIAL RENTAL PROJECTS FINANCED BY BONDS
UNDER THIS PARAGRAPH.—In the case of bonds
described in subparagraph (B)(i)(I), issuance
under the requirements of subparagraph (E)
shall be treated as issuance under the require-
ments of section 146 for purposes of determining
the application of section 42 to projects financed
by the net proceeds of such bonds.
‘‘(G) SPECIAL RULE FOR DETERMINING EN-
TERPRISE
ZONE
BUSINESS.—For purposes of
subparagraph (B)(i)(III), an enterprise zone
business shall not include any facility a prin-
cipal business of which is the sale of tobacco
products or highway motor fuels, unless the
qualified Indian tribal government has entered
into an agreement with the State in which such
facility is located to collect applicable State taxes
on such products or fuels.
‘‘(H) BOND INTEREST NOT AN AMT PREF-
ERENCE ITEM.—For purposes of section 57(a)(5),
a bond designated under subparagraph (D) as a
qualified Indian private activity bond shall not
be treated as a specified private activity bond.
101
‘‘(I) REPORT.—The Secretary shall compile
necessary data from reports required under sec-
tion 149(e) relating to the issuance of bonds
under this paragraph and shall report to the
Committee on Ways and Means of the House of
Representatives and the Committee on Finance
of the Senate not later than September 30 of any
year following the calendar year in which In-
dian tribal governments issued bonds under this
paragraph and the activities for which such
bonds were issued.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 7871(c)(2) is amended by striking
‘‘paragraph (3)’’ and inserting ‘‘paragraphs (3) and
(4)’’.
(2) Section 7871 is amended—
(A) by striking clause (iii) of subsection
(c)(3)(E), and
(B) by adding at the end the following new
subsection:
‘‘(f) NET PROCEEDS.—For purposes of this section, the
term ‘net proceeds’ has the meaning given such term by sec-
tion 150(a)(3).’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to bonds issued after December 31, 2001.
102
Subtitle B—Victims of Terrorism
Tax Relief
SEC. 310. SHORT TITLE.
This subtitle may be cited as the ‘‘Victims of Terrorism
Tax Relief Act of 2001’’.
PART I—RELIEF PROVISIONS FOR VICTIMS OF
APRIL 19, 1995, AND SEPTEMBER 11, 2001, TER-
RORIST ATTACKS
SEC. 311. INCOME AND EMPLOYMENT TAXES OF VICTIMS OF
TERRORIST ATTACKS.
(a) IN GENERAL.—Section 692 (relating to income
taxes of members of Armed Forces on death) is amended
by adding at the end the following new subsection:
‘‘(d) CERTAIN INDIVIDUALS DYING AS A RESULT OF
APRIL 19, 1995, AND SEPTEMBER 11, 2001, TERRORIST AT-
TACKS.—
‘‘(1) IN GENERAL.—In the case of any individual
who dies as a result of wounds or injury incurred as
a result of the terrorist attacks against the United
States on April 19, 1995, or September 11, 2001, any
tax imposed by this subtitle shall not apply—
‘‘(A) with respect to the taxable year in
which falls the date of such individual’s death,
and
103
‘‘(B) with respect to any prior taxable year
in the period beginning with the last taxable
year ending before the taxable year in which the
wounds or injury were incurred.
‘‘(2) EXCEPTIONS.—
‘‘(A) TAXATION
OF
CERTAIN
BENEFITS.—
Subject to such rules as the Secretary may pre-
scribe, paragraph (1) shall not apply to the
amount of any tax imposed by this subtitle
which would be computed by only taking into ac-
count the items of income, gain, or other
amounts attributable to—
‘‘(i) amounts payable in the taxable
year by reason of the death of an individual
described in paragraph (1) which would
have been payable in such taxable year if
the death had occurred by reason of an
event other than the terrorist attacks
against the United States on April 19,
1995, or September 11, 2001, or
‘‘(ii) amounts payable in the taxable
year which would not have been payable in
such taxable year but for an action taken
after April 19, 1995, or after September 11,
2001 (as the case may be).
104
‘‘(B) NO
RELIEF
FOR
PERPETRATORS.—
Paragraph (1) shall not apply with respect to
any individual identified by the Attorney Gen-
eral to have been a participant or conspirator in
any such terrorist attack, or a representative of
such individual.’’.
(b) REFUND OF OTHER TAXES PAID.—Section 692, as
amended by subsection (a), is amended by adding at the
end the following new subsection:
‘‘(e) REFUND
OF OTHER TAXES PAID.—In deter-
mining the amount of tax under this section to be credited
or refunded as an overpayment with respect to any indi-
vidual for any period, such amount shall be increased by
an amount equal to the amount of taxes imposed and col-
lected under chapter 21 and sections 3201(a), 3211(a)(1),
and 3221(a) with respect to such individual for such pe-
riod.’’.
(c) CONFORMING AMENDMENTS.—
(1) Section 5(b)(1) is amended by inserting ‘‘and
victims of certain terrorist attacks’’ before ‘‘on death’’.
(2) Section 6013(f)(2)(B) is amended by insert-
ing ‘‘and victims of certain terrorist attacks’’ before
‘‘on death’’.
(d) CLERICAL AMENDMENTS.—
105
(1) The heading of section 692 is amended to
read as follows:
‘‘SEC. 692. INCOME AND EMPLOYMENT TAXES OF MEMBERS
OF ARMED FORCES AND VICTIMS OF CERTAIN
TERRORIST ATTACKS ON DEATH.’’.
(2) The item relating to section 692 in the table
of sections for part II of subchapter J of chapter 1 is
amended to read as follows:
‘‘Sec. 692. Income and employment taxes of members of Armed
Forces and victims of certain terrorist attacks on
death.’’.
(d) EFFECTIVE DATE; WAIVER OF LIMITATIONS.—
(1) EFFECTIVE DATE.—The amendments made
by this section shall apply to taxable years ending be-
fore, on, or after September 11, 2001.
(2) WAIVER OF LIMITATIONS.—If refund or cred-
it of any overpayment of tax resulting from the
amendments made by this section is prevented at any
time before the close of the 1-year period beginning on
the date of the enactment of this Act by the operation
of any law or rule of law (including res judicata),
such refund or credit may nevertheless be made or al-
lowed if claim therefor is filed before the close of such
period.
SEC. 312. ESTATE TAX REDUCTION.
(a) IN GENERAL.—Section 2201 is amended to read
as follows:
106
‘‘SEC. 2201. COMBAT ZONE-RELATED DEATHS OF MEMBERS
OF THE ARMED FORCES AND DEATHS OF VIC-
TIMS OF CERTAIN TERRORIST ATTACKS.
‘‘(a) IN GENERAL.—Unless the executor elects not to
have this section apply, in applying section 2001 to the es-
tate of a qualified decedent, the rate schedule set forth in
subsection (c) shall be deemed to be the rate schedule set
forth in section 2001(c).
‘‘(b) QUALIFIED DECEDENT.—For purposes of this sec-
tion, the term ‘qualified decedent’ means—
‘‘(1) any citizen or resident of the United States
dying while in active service of the Armed Forces of
the United States, if such decedent—
‘‘(A) was killed in action while serving in
a combat zone, as determined under section
112(c), or
‘‘(B) died as a result of wounds, disease, or
injury suffered while serving in a combat zone
(as determined under section 112(c)), and while
in the line of duty, by reason of a hazard to
which such decedent was subjected as an incident
of such service, or
‘‘(2) any individual who died as a result of
wounds or injury incurred as a result of the terrorist
attacks against the United States on April 19, 1995,
or September 11, 2001.
107
Paragraph (2) shall not apply with respect to any indi-
vidual identified by the Attorney General to have been a
participant or conspirator in any such terrorist attack, or
a representative of such individual.
‘‘(c) RATE SCHEDULE.—
‘‘If the amount with respect to
which the tentative tax to
be computed is:
The tentative tax is:
Not over $150,000 ............................
1 percent of the amount by which such
amount exceeds $100,000.
Over 
$150,000 
but 
not 
over
$200,000.
$500 plus 2 percent of the excess over
$150,000.
Over 
$200,000 
but 
not 
over
$300,000.
$1,500 plus 3 percent of the excess over
$200,000.
Over 
$300,000 
but 
not 
over
$500,000.
$4,500 plus 4 percent of the excess over
$300,000.
Over 
$500,000 
but 
not 
over
$700,000.
$12,500 plus 5 percent of the excess
over $500,000.
Over 
$700,000 
but 
not 
over
$900,000.
$22,500 plus 6 percent of the excess
over $700,000.
Over 
$900,000 
but 
not 
over
$1,100,000.
$34,500 plus 7 percent of the excess
over $900,000.
Over 
$1,100,000 
but 
not 
over
$1,600,000.
$48,500 plus 8 percent of the excess
over $1,100,000.
Over 
$1,600,000 
but 
not 
over
$2,100,000.
$88,500 plus 9 percent of the excess
over $1,600,000.
Over 
$2,100,000 
but 
not 
over
$2,600,000.
$133,500 plus 10 percent of the excess
over $2,100,000.
Over 
$2,600,000 
but 
not 
over
$3,100,000.
$183,500 plus 11 percent of the excess
over $2,600,000.
Over 
$3,100,000 
but 
not 
over
$3,600,000.
$238,500 plus 12 percent of the excess
over $3,100,000.
Over 
$3,600,000 
but 
not 
over
$4,100,000.
$298,500 plus 13 percent of the excess
over $3,600,000.
Over 
$4,100,000 
but 
not 
over
$5,100,000.
$363,500 plus 14 percent of the excess
over $4,100,000.
Over 
$5,100,000 
but 
not 
over
$6,100,000.
$503,500 plus 15 percent of the excess
over $5,100,000.
Over 
$6,100,000 
but 
not 
over
$7,100,000.
$653,500 plus 16 percent of the excess
over $6,100,000.
Over 
$7,100,000 
but 
not 
over
$8,100,000.
$813,500 plus 17 percent of the excess
over $7,100,000.
Over 
$8,100,000 
but 
not 
over
$9,100,000.
$983,500 plus 18 percent of the excess
over $8,100,000.
Over 
$9,100,000 
but 
not 
over
$10,100,000.
$1,163,500 plus 19 percent of the ex-
cess over $9,100,000.
Over $10,100,000 ..............................
$1,353,500 plus 20 percent of the ex-
cess over $10,100,000.
108
‘‘(d) DETERMINATION OF UNIFIED CREDIT.—In the
case of an estate to which this section applies, subsection
(a) shall not apply in determining the credit under section
2010.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 2011 is amended by striking sub-
section (d) and by redesignating subsections (e), (f),
and (g) as subsections (d), (e), and (f), respectively.
(2) Section 2053(d)(3)(B) is amended by strik-
ing 
‘‘section 
2011(e)’’ 
and 
inserting 
‘‘section
2011(d)’’.
(3) Paragraph (9) of section 532(c) of the Eco-
nomic Growth and Tax Relief Reconciliation Act of
2001 is repealed.
(c) CLERICAL AMENDMENT.—The item relating to sec-
tion 2201 in the table of sections for subchapter C of chapter
11 is amended to read as follows:
‘‘Sec. 2201. Combat zone-related deaths of members of the Armed
Forces and deaths of victims of certain terrorist at-
tacks.’’.
(d) EFFECTIVE DATE; WAIVER OF LIMITATIONS.—
(1) EFFECTIVE DATE.—The amendments made
by this section shall apply to estates of decedents—
(A) dying on or after September 11, 2001,
and
109
(B) in the case of individuals dying as a re-
sult of the April 19, 1995, terrorist attack, dying
on or after April 19, 1995.
(2) WAIVER OF LIMITATIONS.—If refund or cred-
it of any overpayment of tax resulting from the
amendments made by this section is prevented at any
time before the close of the 1-year period beginning on
the date of the enactment of this Act by the operation
of any law or rule of law (including res judicata),
such refund or credit may nevertheless be made or al-
lowed if claim therefor is filed before the close of such
period.
SEC. 313. PAYMENTS BY CHARITABLE ORGANIZATIONS
TREATED AS EXEMPT PAYMENTS.
(a) IN GENERAL.—For purposes of the Internal Rev-
enue Code of 1986—
(1) payments made by an organization described
in section 501(c)(3) of such Code by reason of the
death, injury, or wounding of an individual incurred
as the result of the terrorist attacks against the
United States on September 11, 2001, shall be treated
as related to the purpose or function constituting the
basis for such organization’s exemption under section
501 of such Code if such payments are made using an
objective formula which is consistently applied, and
110
(2) in the case of a private foundation (as de-
fined in section 509 of such Code), any payment de-
scribed in paragraph (1) shall not be treated as made
to a disqualified person for purposes of section 4941
of such Code.
(b) EFFECTIVE DATE.—This section shall apply to
payments made on or after September 11, 2001.
SEC. 314. EXCLUSION OF CERTAIN CANCELLATIONS OF IN-
DEBTEDNESS.
(a) IN GENERAL.—For purposes of the Internal Rev-
enue Code of 1986—
(1) gross income shall not include any amount
which (but for this section) would be includible in
gross income by reason of the discharge (in whole or
in part) of indebtedness of any taxpayer if the dis-
charge is by reason of the death of an individual in-
curred as the result of the terrorist attacks against the
United States on September 11, 2001, and
(2) return requirements under section 6050P of
such Code shall not apply to any discharge described
in paragraph (1).
(b) EFFECTIVE DATE.—This section shall apply to dis-
charges made on or after September 11, 2001, and before
January 1, 2002.
111
PART II—GENERAL RELIEF FOR VICTIMS OF DIS-
ASTERS AND TERRORISTIC OR MILITARY AC-
TIONS
SEC. 321. EXCLUSION FOR DISASTER RELIEF PAYMENTS.
(a) IN GENERAL.—Part III of subchapter B of chapter
1 (relating to items specifically excluded from gross income)
is amended by redesignating section 139 as section 140 and
inserting after section 138 the following new section:
‘‘SEC. 139. DISASTER RELIEF PAYMENTS.
‘‘(a) GENERAL
RULE.—Gross income shall not
include—
‘‘(1) any amount received as payment under sec-
tion 406 of the Air Transportation Safety and Sys-
tem Stabilization Act, or
‘‘(2) any amount received by an individual as a
qualified disaster relief payment.
‘‘(b) QUALIFIED DISASTER RELIEF PAYMENT DE-
FINED.—For purposes of this section, the term ‘qualified
disaster relief payment’ means any amount paid to or for
the benefit of an individual—
‘‘(1) to reimburse or pay reasonable and nec-
essary personal, family, living, or funeral expenses
incurred as a result of a qualified disaster,
‘‘(2) to reimburse or pay reasonable and nec-
essary expenses incurred for the repair or rehabilita-
tion of a personal residence or repair or replacement
112
of its contents to the extent that the need for such re-
pair, rehabilitation, or replacement is attributable to
a qualified disaster,
‘‘(3) by a person engaged in the furnishing or
sale of transportation as a common carrier by reason
of the death or personal physical injuries incurred as
a result of a qualified disaster, or
‘‘(4) if such amount is paid by a Federal, State,
or local government, or agency or instrumentality
thereof, in connection with a qualified disaster in
order to promote the general welfare,
but only to the extent any expense compensated by such
payment is not otherwise compensated for by insurance or
otherwise.
‘‘(c) QUALIFIED DISASTER DEFINED.—For purposes
of this section, the term ‘qualified disaster’ means—
‘‘(1) a disaster which results from a terroristic or
military action (as defined in section 692(c)(2)),
‘‘(2) a Presidentially declared disaster (as de-
fined in section 1033(h)(3)),
‘‘(3) a disaster which results from an accident
involving a common carrier, or from any other event,
which is determined by the Secretary to be of a cata-
strophic nature, or
113
‘‘(4) with respect to amounts described in sub-
section (b)(4), a disaster which is determined by an
applicable Federal, State, or local authority (as deter-
mined by the Secretary) to warrant assistance from
the Federal, State, or local government or agency or
instrumentality thereof.
‘‘(d) COORDINATION WITH EMPLOYMENT TAXES.—For
purposes of chapter 2 and subtitle C, a qualified disaster
relief payment shall not be treated as net earnings from
self-employment, wages, or compensation subject to tax.
‘‘(e) NO RELIEF FOR CERTAIN INDIVIDUALS.—Sub-
section (a) shall not apply with respect to any individual
identified by the Attorney General to have been a partici-
pant or conspirator in a terroristic action (as so defined),
or a representative of such individual.’’.
(b) CONFORMING AMENDMENTS.—The table of sections
for part III of subchapter B of chapter 1 is amended by
striking the item relating to section 139 and inserting the
following new items:
‘‘Sec. 139. Disaster relief payments.
‘‘Sec. 140. Cross references to other Acts.’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years ending on or after Sep-
tember 11, 2001.
114
SEC. 322. AUTHORITY TO POSTPONE CERTAIN DEADLINES
AND REQUIRED ACTIONS.
(a) EXPANSION OF AUTHORITY RELATING TO DISAS-
TERS AND TERRORISTIC OR MILITARY ACTIONS.—Section
7508A is amended to read as follows:
‘‘SEC. 7508A. AUTHORITY TO POSTPONE CERTAIN DEAD-
LINES BY REASON OF PRESIDENTIALLY DE-
CLARED DISASTER OR TERRORISTIC OR MILI-
TARY ACTIONS.
‘‘(a) IN GENERAL.—In the case of a taxpayer deter-
mined by the Secretary to be affected by a Presidentially
declared disaster (as defined in section 1033(h)(3)) or a ter-
roristic or military action (as defined in section 692(c)(2)),
the Secretary may specify a period of up to one year that
may be disregarded in determining, under the internal rev-
enue laws, in respect of any tax liability of such taxpayer—
‘‘(1) whether any of the acts described in para-
graph (1) of section 7508(a) were performed within
the time prescribed therefor (determined without re-
gard to extension under any other provision of this
subtitle for periods after the date (determined by the
Secretary) of such disaster or action),
‘‘(2) the amount of any interest, penalty, addi-
tional amount, or addition to the tax for periods after
such date, and
‘‘(3) the amount of any credit or refund.
115
‘‘(b) SPECIAL RULES REGARDING PENSIONS, ETC.—
In the case of a pension or other employee benefit plan, or
any sponsor, administrator, participant, beneficiary, or
other person with respect to such plan, affected by a disaster
or action described in subsection (a), the Secretary may
specify a period of up to one year which may be disregarded
in determining the date by which any action is required
or permitted to be completed under this title. No plan shall
be treated as failing to be operated in accordance with the
terms of the plan solely as the result of disregarding any
period by reason of the preceding sentence.
‘‘(c) SPECIAL RULES FOR OVERPAYMENTS.—The rules
of section 7508(b) shall apply for purposes of this section.’’.
(b) CLARIFICATION OF SCOPE OF ACTS SECRETARY
MAY POSTPONE.—Section 7508(a)(1)(K) (relating to time
to be disregarded) is amended by striking ‘‘in regulations
prescribed under this section’’.
(c) CONFORMING AMENDMENTS TO ERISA.—
(1) Part 5 of subtitle B of title I of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1131 et seq.) is amended by adding at the end the fol-
lowing new section:
116
‘‘SEC. 518. AUTHORITY TO POSTPONE CERTAIN DEADLINES
BY REASON OF PRESIDENTIALLY DECLARED
DISASTER OR TERRORISTIC OR MILITARY AC-
TIONS.
‘‘In the case of a pension or other employee benefit
plan, or any sponsor, administrator, participant, bene-
ficiary, or other person with respect to such plan, affected
by a Presidentially declared disaster (as defined in section
1033(h)(3) of the Internal Revenue Code of 1986) or a ter-
roristic or military action (as defined in section 692(c)(2)
of such Code), the Secretary may, notwithstanding any
other provision of law, prescribe, by notice or otherwise, a
period of up to one year which may be disregarded in deter-
mining the date by which any action is required or per-
mitted to be completed under this Act. No plan shall be
treated as failing to be operated in accordance with the
terms of the plan solely as the result of disregarding any
period by reason of the preceding sentence.’’.
(2) Section 4002 of Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1302) is amended by
adding at the end the following new subsection:
‘‘(i) SPECIAL RULES REGARDING DISASTERS, ETC.—
In the case of a pension or other employee benefit plan, or
any sponsor, administrator, participant, beneficiary, or
other person with respect to such plan, affected by a Presi-
dentially declared disaster (as defined in section 1033(h)(3)
117
of the Internal Revenue Code of 1986) or a terroristic or
military action (as defined in section 692(c)(2) of such
Code), the corporation may, notwithstanding any other pro-
vision of law, prescribe, by notice or otherwise, a period
of up to one year which may be disregarded in determining
the date by which any action is required or permitted to
be completed under this Act. No plan shall be treated as
failing to be operated in accordance with the terms of the
plan solely as the result of disregarding any period by rea-
son of the preceding sentence.’’.
(d) ADDITIONAL CONFORMING AMENDMENTS.—
(1) Section 6404 is amended—
(A) by striking subsection (h),
(B) by redesignating subsection (i) as sub-
section (h), and
(C) by adding at the end the following new
subsection:
‘‘(i) CROSS REFERENCE.—
‘‘For authority of the Secretary to abate certain
amounts by reason of Presidentially declared dis-
aster or terroristic or military action, see section
7508A.’’.
(2) Section 6081(c) is amended to read as fol-
lows:
118
‘‘(c) CROSS REFERENCES.—
‘‘For time for performing certain acts postponed by
reason of war, see section 7508, and by reason of
Presidentially declared disaster or terroristic or
military action, see section 7508A.’’.
(3) Section 6161(d) is amended by adding at the
end the following new paragraph:
‘‘(3) POSTPONEMENT OF CERTAIN ACTS.—
‘‘For time for performing certain acts postponed by
reason of war, see section 7508, and by reason of
Presidentially declared disaster or terroristic or
military action, see section 7508A.’’.
(d) CLERICAL AMENDMENTS.—
(1) The item relating to section 7508A in the
table of sections for chapter 77 is amended to read as
follows:
‘‘Sec. 7508A. Authority to postpone certain deadlines by reason of
Presidentially declared disaster or terroristic or
military actions.’’.
(2) The table of contents for the Employee Re-
tirement Income Security Act of 1974 is amended by
inserting after the item relating to section 517 the fol-
lowing new item:
‘‘Sec. 518. Authority to postpone certain deadlines by reason of
Presidentially declared disaster or terroristic or
military actions.’’.
(e) EFFECTIVE DATE.—The amendments made by this
section shall apply to disasters and terroristic or military
actions occurring on or after September 11, 2001, with re-
spect to any action of the Secretary of the Treasury, the
Secretary of Labor, or the Pension Benefit Guaranty Cor-
119
poration occurring on or after the date of the enactment
of this Act.
SEC. 323. INTERNAL REVENUE SERVICE DISASTER RE-
SPONSE TEAM.
(a) IN GENERAL.—Section 7508A, as amended by sec-
tion 322(a), is amended by adding at the end the following
new subsection:
‘‘(d) DUTIES OF DISASTER RESPONSE TEAM.—The
Secretary shall establish as a permanent office in the na-
tional office of the Internal Revenue Service a disaster re-
sponse team which, in coordination with the Federal Emer-
gency Management Agency, shall assist taxpayers in clari-
fying and resolving Federal tax matters associated with or
resulting from any Presidentially declared disaster (as de-
fined in section 1033(h)(3)) or a terroristic or military ac-
tion (as defined in section 692(c)(2)).’’.
(b) EFFECTIVE DATE.—The amendment made by this
section shall take effect on the date of the enactment of this
Act.
SEC. 324. APPLICATION OF CERTAIN PROVISIONS TO TER-
RORISTIC OR MILITARY ACTIONS.
(a) EXCLUSION FOR DEATH BENEFITS.—Section 101
(relating to certain death benefits) is amended by adding
at the end the following new subsection:
120
‘‘(i) CERTAIN EMPLOYEE DEATH BENEFITS PAYABLE
BY REASON OF DEATH FROM TERRORISTIC OR MILITARY
ACTIONS.—
‘‘(1) IN GENERAL.—Gross income does not in-
clude amounts which are received (whether in a single
sum or otherwise) if such amounts are paid by an
employer by reason of the death of an employee in-
curred as a result of a terroristic or military action
(as defined in section 692(c)(2)).
‘‘(2) NO RELIEF FOR CERTAIN INDIVIDUALS.—
Paragraph (1) shall not apply with respect to any in-
dividual identified by the Attorney General to have
been a participant or conspirator in a terroristic ac-
tion (as so defined), or a representative of such indi-
vidual.
‘‘(3) TREATMENT OF SELF-EMPLOYED INDIVID-
UALS.—For purposes of this subsection, the term ‘em-
ployee’ includes a self-employed person (as described
in section 401(c)(1)).’’.
(b) DISABILITY INCOME.—Section 104(a)(5) (relating
to compensation for injuries or sickness) is amended by
striking ‘‘a violent attack’’ and all that follows through the
period and inserting ‘‘a terroristic or military action (as
defined in section 692(c)(2)).’’.
121
(c) EXEMPTION FROM INCOME TAX
FOR CERTAIN
MILITARY
OR CIVILIAN EMPLOYEES.—Section 692(c) is
amended—
(1) by striking ‘‘outside the United States’’ in
paragraph (1), and
(2) by striking ‘‘SUSTAINED OVERSEAS’’ in the
heading.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years ending on or after Sep-
tember 11, 2001.
SEC. 325. CLARIFICATION OF DUE DATE FOR AIRLINE EX-
CISE TAX DEPOSITS.
(a) IN GENERAL.—Paragraph (3) of section 301(a) of
the Air Transportation Safety and System Stabilization
Act (Public Law 107–42) is amended to read as follows:
‘‘(3) AIRLINE-RELATED DEPOSIT.—For purposes
of this subsection, the term ‘airline-related deposit’
means any deposit of taxes imposed by subchapter C
of chapter 33 of such Code (relating to transportation
by air).’’.
(b) EFFECTIVE DATE.—The amendment made by this
section shall take effect as if included in section 301 of the
Air Transportation Safety and System Stabilization Act
(Public Law 107–42).
122
SEC. 326. COORDINATION WITH AIR TRANSPORTATION
SAFETY AND SYSTEM STABILIZATION ACT.
No reduction in Federal tax liability by reason of any
provision of, or amendment made by, this title shall be con-
sidered as being received from a collateral source for pur-
poses of section 402(4) of the Air Transportation Safety and
System Stabilization Act (Public Law 107–42).
PART III—DISCLOSURE OF TAX INFORMATION IN
TERRORISM AND NATIONAL SECURITY IN-
VESTIGATIONS
SEC. 331. DISCLOSURE OF TAX INFORMATION IN TER-
RORISM AND NATIONAL SECURITY INVES-
TIGATIONS.
(a) DISCLOSURE WITHOUT A REQUEST OF INFORMA-
TION RELATING TO TERRORIST ACTIVITIES, ETC.—Para-
graph (3) of section 6103(i) (relating to disclosure of return
information to apprise appropriate officials of criminal ac-
tivities or emergency circumstances) is amended by adding
at the end the following new subparagraph:
‘‘(C) TERRORIST ACTIVITIES, ETC.—
‘‘(i) IN GENERAL.—Except as provided
in paragraph (6), the Secretary may dis-
close in writing return information (other
than taxpayer return information) that
may be related to a terrorist incident,
threat, or activity to the extent necessary to
123
apprise the head of the appropriate Federal
law enforcement agency responsible for in-
vestigating or responding to such terrorist
incident, threat, or activity. The head of the
agency may disclose such return informa-
tion to officers and employees of such agen-
cy to the extent necessary to investigate or
respond to such terrorist incident, threat, or
activity.
‘‘(ii) DISCLOSURE
TO
THE
DEPART-
MENT OF JUSTICE.—Returns and taxpayer
return information may also be disclosed to
the Attorney General under clause (i) to the
extent necessary for, and solely for use in
preparing, an application under paragraph
(7)(D).
‘‘(iii) TAXPAYER IDENTITY.—For pur-
poses of this subparagraph, a taxpayer’s
identity shall not be treated as taxpayer re-
turn information.
‘‘(iv) 
TERMINATION.—No 
disclosure
may be made under this subparagraph after
December 31, 2003.’’.
(b) DISCLOSURE UPON REQUEST OF INFORMATION
RELATING TO TERRORIST ACTIVITIES, ETC.—Subsection
124
(i) of section 6103 (relating to disclosure to Federal officers
or employees for administration of Federal laws not relat-
ing to tax administration) is amended by redesignating
paragraph (7) as paragraph (8) and by inserting after
paragraph (6) the following new paragraph:
‘‘(7) DISCLOSURE UPON REQUEST OF INFORMA-
TION RELATING TO TERRORIST ACTIVITIES, ETC.—
‘‘(A) DISCLOSURE TO LAW ENFORCEMENT
AGENCIES.—
‘‘(i) IN GENERAL.—Except as provided
in paragraph (6), upon receipt by the Sec-
retary of a written request which meets the
requirements of clause (iii), the Secretary
may disclose return information (other than
taxpayer return information) to officers and
employees of any Federal law enforcement
agency who are personally and directly en-
gaged in the response to or investigation of
terrorist incidents, threats, or activities.
‘‘(ii) DISCLOSURE
TO
STATE
AND
LOCAL LAW ENFORCEMENT AGENCIES.—The
head of any Federal law enforcement agency
may disclose return information obtained
under clause (i) to officers and employees of
any State or local law enforcement agency
125
but only if such agency is part of a team
with the Federal law enforcement agency in
such response or investigation and such in-
formation is disclosed only to officers and
employees who are personally and directly
engaged in such response or investigation.
‘‘(iii) 
REQUIREMENTS.—A 
request
meets the requirements of this clause if—
‘‘(I) the request is made by the
head of any Federal law enforcement
agency (or his delegate) involved in the
response to or investigation of terrorist
incidents, threats, or activities, and
‘‘(II) the request sets forth the spe-
cific reason or reasons why such disclo-
sure may be relevant to a terrorist in-
cident, threat, or activity.
‘‘(iv) LIMITATION ON USE OF INFORMA-
TION.—Information disclosed under this
subparagraph shall be solely for the use of
the officers and employees to whom such in-
formation is disclosed in such response or
investigation.
‘‘(B) DISCLOSURE TO INTELLIGENCE AGEN-
CIES.—
126
‘‘(i) IN GENERAL.—Except as provided
in paragraph (6), upon receipt by the Sec-
retary of a written request which meets the
requirements of clause (ii), the Secretary
may disclose return information (other than
taxpayer return information) to those offi-
cers and employees of the Department of
Justice, the Department of the Treasury,
and other Federal intelligence agencies who
are personally and directly engaged in the
collection or analysis of intelligence and
counterintelligence information or inves-
tigation concerning terrorists and terrorist
organizations and activities. For purposes
of the preceding sentence, the information
disclosed under the preceding sentence shall
be solely for the use of such officers and em-
ployees in such investigation, collection, or
analysis.
‘‘(ii) 
REQUIREMENTS.—A 
request
meets the requirements of this subparagraph
if the request—
‘‘(I) is made by an individual de-
scribed in clause (iii), and
127
‘‘(II) sets forth the specific reason
or reasons why such disclosure may be
relevant to a terrorist incident, threat,
or activity.
‘‘(iii) REQUESTING INDIVIDUALS.—An
individual described in this subparagraph
is an individual—
‘‘(I) who is an officer or employee
of the Department of Justice or the De-
partment of the Treasury who is ap-
pointed by the President with the ad-
vice and consent of the Senate or who
is the Director of the United States Se-
cret Service, and
‘‘(II) who is responsible for the
collection and analysis of intelligence
and 
counterintelligence 
information
concerning terrorists and terrorist or-
ganizations and activities.
‘‘(iv) TAXPAYER IDENTITY.—For pur-
poses of this subparagraph, a taxpayer’s
identity shall not be treated as taxpayer re-
turn information.
‘‘(C) DISCLOSURE
UNDER
EX
PARTE
OR-
DERS.—
128
‘‘(i) IN GENERAL.—Except as provided
in paragraph (6), any return or return in-
formation with respect to any specified tax-
able period or periods shall, pursuant to
and upon the grant of an ex parte order by
a Federal district court judge or magistrate
under clause (ii), be open (but only to the
extent necessary as provided in such order)
to inspection by, or disclosure to, officers
and employees of any Federal law enforce-
ment agency or Federal intelligence agency
who are personally and directly engaged in
any investigation, response to, or analysis
of intelligence and counterintelligence infor-
mation concerning any terrorist activity or
threats. Return or return information
opened pursuant to the preceding sentence
shall be solely for the use of such officers
and employees in the investigation, re-
sponse, or analysis, and in any judicial,
administrative, or grand jury proceedings,
pertaining to any such terrorist activity or
threat.
‘‘(ii) APPLICATION FOR ORDER.—The
Attorney General, the Deputy Attorney Gen-
129
eral, the Associate Attorney General, any
Assistant Attorney General, or any United
States attorney may authorize an applica-
tion to a Federal district court judge or
magistrate for the order referred to in clause
(i). Upon such application, such judge or
magistrate may grant such order if he de-
termines on the basis of the facts submitted
by the applicant that—
‘‘(I) there is reasonable cause to
believe, based upon information be-
lieved to be reliable, that the return or
return information may be relevant to
a matter relating to such terrorist ac-
tivity or threat, and
‘‘(II) the return or return infor-
mation is sought exclusively for use in
a Federal investigation, analysis, or
proceeding concerning terrorist activ-
ity, terrorist threats, or terrorist orga-
nizations.
‘‘(D) SPECIAL RULE FOR EX PARTE DISCLO-
SURE BY THE IRS.—
‘‘(i) IN GENERAL.—Except as provided
in paragraph (6), the Secretary may au-
130
thorize an application to a Federal district
court judge or magistrate for the order re-
ferred to in subparagraph (C)(i). Upon such
application, such judge or magistrate may
grant such order if he determines on the
basis of the facts submitted by the applicant
that the requirements of subparagraph
(C)(ii)(I) are met.
‘‘(ii) LIMITATION ON USE OF INFORMA-
TION.—Information disclosed under clause
(i)—
‘‘(I) may be disclosed only to the
extent necessary to apprise the head of
the appropriate Federal law enforce-
ment agency responsible for inves-
tigating or responding to a terrorist
incident, threat, or activity, and
‘‘(II) shall be solely for use in a
Federal investigation, analysis, or pro-
ceeding concerning terrorist activity,
terrorist threats, or terrorist organiza-
tions.
The head of such Federal agency may dis-
close such information to officers and em-
ployees of such agency to the extent nec-
131
essary to investigate or respond to such ter-
rorist incident, threat, or activity.
‘‘(E) TERMINATION.—No disclosure may be
made under this paragraph after December 31,
2003.’’.
(c) CONFORMING AMENDMENTS.—
(1) Section 6103(a)(2) is amended by inserting
‘‘any local law enforcement agency receiving informa-
tion under subsection (i)(7)(A),’’ after ‘‘State,’’.
(2) The heading of section 6103(i)(3) is amended
by inserting ‘‘OR TERRORIST’’ after ‘‘CRIMINAL’’.
(3) 
Paragraph 
(4) 
of 
section 
6103(i) 
is
amended—
(A) in subparagraph (A) by inserting ‘‘or
(7)(C)’’ after ‘‘paragraph (1)’’, and
(B) in subparagraph (B) by striking ‘‘or
(3)(A)’’ and inserting ‘‘(3)(A) or (C), or (7)’’.
(4) 
Paragraph 
(6) 
of 
section 
6103(i) 
is
amended—
(A) by striking ‘‘(3)(A)’’ and inserting
‘‘(3)(A) or (C)’’, and
(B) by striking ‘‘or (7)’’ and inserting ‘‘(7),
or (8)’’.
(5) Section 6103(p)(3) is amended—
132
(A) in subparagraph (A) by striking
‘‘(7)(A)(ii)’’ and inserting ‘‘(8)(A)(ii)’’, and
(B) in subparagraph (C) by striking
‘‘(i)(3)(B)(i)’’ and inserting ‘‘(i)(3)(B)(i) or
(7)(A)(ii)’’.
(6) Section 6103(p)(4) is amended—
(A) in the matter preceding subparagraph
(A)—
(i) by striking ‘‘or (5),’’ the first place
it appears and inserting ‘‘(5), or (7),’’, and
(ii) by striking ‘‘(i)(3)(B)(i),’’ and in-
serting ‘‘(i)(3)(B)(i) or (7)(A)(ii),’’, and
(B) in subparagraph (F)(ii) by striking ‘‘or
(5),’’ the first place it appears and inserting ‘‘(5)
or (7),’’.
(7) Section 6103(p)(6)(B)(i) is amended by
striking ‘‘(i)(7)(A)(ii)’’ and inserting ‘‘(i)(8)(A)(ii)’’.
(8) Section 6105(b) is amended—
(A) by striking ‘‘or’’ at the end of para-
graph (2),
(B) by striking ‘‘paragraphs (1) or (2)’’ in
paragraph (3) and inserting ‘‘paragraph (1),
(2), or (3)’’,
(C) by redesignating paragraph (3) as
paragraph (4), and
133
(D) by inserting after paragraph (2) the fol-
lowing new paragraph:
‘‘(3) to the disclosure of tax convention informa-
tion on the same terms as return information may be
disclosed under paragraph (3)(C) or (7) of section
6103(i), except that in the case of tax convention in-
formation provided by a foreign government, no dis-
closure may be made under this paragraph without
the written consent of the foreign government, or’’.
(9) Section 7213(a)(2) is amended by striking
‘‘(i)(3)(B)(i),’’ 
and 
inserting 
‘‘(i)(3)(B)(i) 
or
(7)(A)(ii),’’.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to disclosures made on or after the date
of the enactment of this Act.
TITLE IV—EXTENSIONS OF
CERTAIN EXPIRING PROVISIONS
SEC. 401. ALLOWANCE OF NONREFUNDABLE PERSONAL
CREDITS AGAINST REGULAR AND MINIMUM
TAX LIABILITY.
(a) IN GENERAL.—Paragraph (2) of section 26(a) is
amended—
(1) by striking ‘‘RULE FOR 2000 AND 2001.—’’
and inserting ‘‘RULE FOR 2000, 2001, AND 2002.—’’,
and
134
(2) by striking ‘‘during 2000 or 2001,’’ and in-
serting ‘‘during 2000, 2001, or 2002,’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 904(h) is amended by striking ‘‘dur-
ing 2000 or 2001’’ and inserting ‘‘during 2000, 2001,
or 2002’’.
(2) The amendments made by sections 201(b),
202(f), and 618(b) of the Economic Growth and Tax
Relief Reconciliation Act of 2001 shall not apply to
taxable years beginning during 2002.
(c) TECHNICAL CORRECTION.—Section 24(d)(1)(B) is
amended by striking ‘‘amount of credit allowed by this sec-
tion’’ and inserting ‘‘aggregate amount of credits allowed
by this subpart’’.
(d) EFFECTIVE DATES.—
(1) The amendments made by subsections (a)
and (b) shall apply to taxable years beginning after
December 31, 2001.
(2) The amendment made by subsection (c) shall
apply to taxable years beginning after December 31,
2000.
SEC. 402. WORK OPPORTUNITY CREDIT.
(a) IN
GENERAL.—Subparagraph (B) of section
51(c)(4) is amended by striking ‘‘2001’’ and inserting
‘‘2002’’.
135
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to individuals who begin work for
the employer after December 31, 2001.
SEC. 403. WELFARE-TO-WORK CREDIT.
(a) IN GENERAL.—Subsection (f) of section 51A is
amended by striking ‘‘2001’’ and inserting ‘‘2002’’.
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to individuals who begin work for
the employer after December 31, 2001.
SEC. 404. CREDIT FOR ELECTRICITY PRODUCED FROM RE-
NEWABLE RESOURCES.
(a) IN GENERAL.—Subparagraphs (A), (B), and (C)
of section 45(c)(3) are each amended by striking ‘‘2002’’
and inserting ‘‘2003’’.
(b) EFFECTIVE DATE.—The amendments made by sub-
section (a) shall take effect on the date of the enactment
of this Act.
SEC. 405. TAXABLE INCOME LIMIT ON PERCENTAGE DEPLE-
TION FOR OIL AND NATURAL GAS PRODUCED
FROM MARGINAL PROPERTIES.
(a) IN
GENERAL.—Subparagraph (H) of section
613A(c)(6) is amended by striking ‘‘2002’’ and inserting
‘‘2003’’.
136
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to taxable years beginning after De-
cember 31, 2001.
SEC. 406. QUALIFIED ZONE ACADEMY BONDS.
(a) IN GENERAL.—Paragraph (1) of section 1397E(e)
is amended by striking ‘‘2000, and 2001’’ and inserting
‘‘2000, 2001, and 2002’’.
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall take effect on the date of the enactment
of this Act.
SEC. 407. SUBPART F EXEMPTION FOR ACTIVE FINANCING.
(a) IN GENERAL.—
(1) Section 953(e)(10) is amended—
(A) by striking ‘‘2002’’ and inserting
‘‘2003’’, and
(B) by striking ‘‘2001’’ and inserting
‘‘2002’’.
(2) Section 954(h)(9) is amended by striking
‘‘2002’’ and inserting ‘‘2003’’.
(b) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after Decem-
ber 31, 2001.
SEC. 408. COVER OVER OF TAX ON DISTILLED SPIRITS.
(a) IN GENERAL.—Paragraph (1) of section 7652(f) is
amended by striking ‘‘2002’’ and inserting ‘‘2003’’.
137
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall take effect on the date of the enactment
of this Act.
SEC. 409. DELAY IN EFFECTIVE DATE OF REQUIREMENT
FOR APPROVED DIESEL OR KEROSENE TER-
MINALS.
Paragraph (2) of section 1032(f) of the Taxpayer Re-
lief Act of 1997 (Public Law 105–34) is amended by strik-
ing ‘‘2002’’ and inserting ‘‘2003’’.
SEC. 410. DEDUCTION FOR CLEAN-FUEL VEHICLES AND
CERTAIN REFUELING PROPERTY.
(a) IN GENERAL.—Section 179A is amended—
(1) in subsection (b)(1)(B)—
(A) by striking ‘‘December 31, 2001,’’ and
inserting ‘‘December 31, 2002,’’, and
(B) in clauses (i), (ii), and (iii), by striking
‘‘2002’’, ‘‘2003’’, and ‘‘2004’’, respectively, and
inserting ‘‘2003’’, ‘‘2004’’, and ‘‘2005’’, respec-
tively, and
(2) in subsection (f), by striking ‘‘2004’’ and in-
serting ‘‘2005’’.
(b) EFFECTIVE DATE.—The amendments made by sub-
section (a) shall take effect on the date of the enactment
of this Act.
138
SEC. 411. CREDIT FOR QUALIFIED ELECTRIC VEHICLES.
(a) IN GENERAL.—Section 30 is amended—
(1) in subsection (b)(2)—
(A) by striking ‘‘December 31, 2001,’’ and
inserting ‘‘December 31, 2002,’’, and
(B) in subparagraphs (A), (B), and (C), by
striking ‘‘2002’’, ‘‘2003’’, and ‘‘2004’’, respec-
tively, and inserting ‘‘2003’’, ‘‘2004’’, and
‘‘2005’’, respectively, and
(2) in subsection (e), by striking ‘‘2004’’ and in-
serting ‘‘2005’’.
(b) CONFORMING AMENDMENTS.—
(1) Subparagraph (C) of section 280F(a)(1) is
amended by adding at the end the following new
clause
‘‘(iii) 
APPLICATION
OF
SUBPARA-
GRAPH.—This subparagraph shall apply to
property placed in service after August 5,
1997, and before January 1, 2005.’’.
(2) Subsection (b) of section 971 of the Taxpayer
Relief Act of 1997 is amended by striking ‘‘and before
January 1, 2005’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall take effect on the date of the enactment of this
Act.
139
SEC. 412. PARITY IN THE APPLICATION OF CERTAIN LIMITS
TO MENTAL HEALTH BENEFITS.
(a) IN GENERAL.—Subsection (f) of section 9812 is
amended by striking ‘‘2001’’ and inserting ‘‘2002’’.
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to plan years beginning after Decem-
ber 31, 2001.
SEC. 413. COMBINED EMPLOYMENT TAX REPORTING.
(a) DEMONSTRATION PROJECT.—Section 976 of the
Taxpayer Relief Act of 1997 is amended by striking ‘‘with
the date which is 5 years after the date of the enactment
of this Act’’ and inserting ‘‘on December 31, 2002’’.
(b) EFFECTIVE DATE.—The amendment made by this
section shall take effect on the date of the enactment of this
Act.
TITLE V—EXTENSION OF ADDI-
TIONAL PROVISIONS EXPIR-
ING IN 2001.
SEC. 501. GENERALIZED SYSTEM OF PREFERENCES.
(a) EXTENSION OF DUTY-FREE TREATMENT UNDER
SYSTEM.—Section 505 of the Trade Act of 1974 (19 U.S.C.
2465) is amended by striking ‘‘September 30, 2001’’ and
inserting ‘‘December 31, 2002’’.
(b) RETROACTIVE APPLICATION FOR CERTAIN LIQ-
UIDATIONS AND RELIQUIDATIONS.—
(1) IN GENERAL.—
140
(A) ENTRY
OF
CERTAIN
ARTICLES.—Not-
withstanding section 514 of the Tariff Act of
1930 or any other provision of law, and subject
to paragraph (2), the entry—
(i) of any article to which duty-free
treatment under title V of the Trade Act of
1974 would have applied if the entry had
been made on September 30, 2001;
(ii) that was made after September 30,
2001, and before the date of enactment of
this Act; and
(iii) to which duty-free treatment
under title V of that Act did not apply,
shall be liquidated or reliquidated as free of
duty, and the Secretary of the Treasury shall re-
fund any duty paid with respect to such entry.
(B) ENTRY.—In this subsection, the term
‘‘entry’’ includes a withdrawal from warehouse
for consumption.
(2) REQUESTS.—Liquidation or reliquidation
may be made under paragraph (1) with respect to an
entry only if a request therefor is filed with the Cus-
toms Service, within 180 days after the date of enact-
ment of this Act, that contains sufficient information
to enable the Customs Service—
141
(A) to locate the entry; or
(B) to reconstruct the entry if it cannot be
located.
(c) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall take effect on October 1, 2001.
SEC. 502. ANDEAN TRADE PREFERENCE ACT.
(a) IN GENERAL.—Section 208(b) of the Andean Trade
Preference Act (19 U.S.C. 3206(b))is amended by striking
‘‘10 years after December 4, 1991’’ and inserting ‘‘after
June 4, 2002’’.
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall take effect on December 5, 2001.
SEC. 503. REAUTHORIZATION OF TRADE ADJUSTMENT AS-
SISTANCE.
(a) ASSISTANCE FOR WORKERS.—Section 245 of the
Trade Act of 1974 (19 U.S.C. 2317) is amended by striking
‘‘October 1, 1998, and ending September 30, 2001,’’ each
place it appears and inserting ‘‘October 1, 2001, and end-
ing December 31, 2002,’’.
(b) ASSISTANCE FOR FIRMS.—Section 256(b) of the
Trade Act of 1974 (19 U.S.C. 2346(b)) is amended by strik-
ing ‘‘October 1, 1998, and ending September 30, 2001’’ and
inserting ‘‘October 1, 2001, and ending December 31,
2002,’’.
142
(c) TERMINATION.—Section 285(c) of the Trade Act of
1974 (19 U.S.C. 2771 note) is amended in paragraphs (1)
and (2)(A), by striking ‘‘September 30, 2001’’ and inserting
‘‘December 31, 2002’’.
(d) TRAINING
LIMITATION
UNDER
NAFTA PRO-
GRAM.—Section 250(d)(2) of the Trade Act of 1974 (19
U.S.C. 2331(d)(2)) is amended by striking ‘‘October 1,
1998, and ending September 30, 2001’’ and inserting ‘‘Oc-
tober 1, 2001, and ending December 31, 2002’’.
(e) EFFECTIVE DATE.—The amendments made by this
section shall take effect on the date of enactment of this Act.
TITLE VI—HEALTH INSURANCE
COVERAGE OPTIONS FOR RE-
CENTLY UNEMPLOYED INDI-
VIDUALS AND THEIR FAMI-
LIES
SEC. 601. PREMIUM ASSISTANCE FOR COBRA CONTINU-
ATION COVERAGE FOR INDIVIDUALS AND
THEIR FAMILIES.
(a) ESTABLISHMENT.—
(1) IN GENERAL.—Not later than 30 days after
the date of enactment of this Act, the Secretary of the
Treasury, in consultation with the Secretary of
Labor, shall establish a program under which 75 per-
143
cent of the premium for COBRA continuation cov-
erage shall be provided for an individual who—
(A) at any time during the period that be-
gins on September 11, 2001, and ends on Decem-
ber 31, 2002, is separated from employment; and
(B) is eligible for, and has elected coverage
under, COBRA continuation coverage.
(2) INCLUSION OF CERTAIN INDIVIDUALS.—For
purposes of paragraph (1), the spouse, child, or other
individual who was an insured under health insur-
ance coverage of an individual who was killed as a
result of the terrorist-related aircraft crashes on Sep-
tember 11, 2001, or as a result of any other terrorist-
related event occurring during the period described in
that paragraph, and who is eligible for, and has elect-
ed coverage under, COBRA continuation coverage
shall be eligible for premium assistance under the
program established under this section.
(3) STATE OPTION TO ELECT ADMINISTRATION
OF PROGRAM.—
(A) IN GENERAL.—A State may elect to ad-
minister the premium assistance program estab-
lished under this section if the State submits to
the Secretary of the Treasury, not later than
January 1, 2002, a plan that describes how the
144
State will administer such program on behalf of
the individuals described in paragraph (1) or (2)
who reside in the State beginning on that date.
(B) STATE ENTITLEMENT.—In the case of a
State that submits a plan under subparagraph
(A), the Secretary of the Treasury shall pay to
each such State an amount for each quarter
equal to the total amount of premium subsidies
provided in that quarter on behalf of such indi-
viduals.
(4) IMMEDIATE
IMPLEMENTATION.—The pro-
gram established under this section shall be imple-
mented without regard to whether or not final regula-
tions to carry out such program have been promul-
gated by the date described in paragraph (1).
(b) LIMITATION
OF PERIOD
OF PREMIUM ASSIST-
ANCE.—
(1) IN GENERAL.—Premium assistance provided
in accordance with this section shall end with respect
to an individual on the earlier of—
(A) the date the individual is no longer cov-
ered under COBRA continuation coverage; or
(B) 12 months after the date the individual
is first enrolled in the premium assistance pro-
gram established under this section.
145
(2) NO ASSISTANCE AFTER DECEMBER 31, 2002.—
No premium assistance (including payment for such
assistance) may be provided under this section after
December 31, 2002.
(c) PAYMENT ARRANGEMENTS; CREDITING OF ASSIST-
ANCE.—
(1) PROVISION OF ASSISTANCE.—
(A) IN
GENERAL.—Premium assistance
shall be provided under the program established
under this section through direct payment ar-
rangements with a group health plan (including
a multiemployer plan), an issuer of health insur-
ance coverage, an administrator, or an employer
as appropriate with respect to the individual
provided such assistance.
(B) ADDITIONAL
OPTION
FOR
STATE-RUN
PROGRAM.—In the case of a State that elects to
administer the program established under this
section, such assistance may be provided through
the State public employment office or other agen-
cy responsible for administering the State unem-
ployment compensation program.
(2) PREMIUMS
PAYABLE
BY
INDIVIDUAL
RE-
DUCED BY AMOUNT OF ASSISTANCE.—Premium as-
sistance provided under this section shall be credited
146
by the group health plan, issuer of health insurance
coverage, or an administrator against the premium
otherwise owed by the individual involved for COBRA
continuation coverage.
(d) PROGRAM REQUIREMENTS.—Premium assistance
shall be provided under the program established under this
section consistent with the following:
(1) ALL QUALIFYING INDIVIDUALS MAY APPLY.—
All individuals described in paragraph (1) or (2) of
subsection (a) may apply for such assistance at any
time during the period described in subsection
(a)(1)(A).
(2) SELECTION ON FIRST-COME, FIRST-SERVED
BASIS.—Such assistance shall be provided to such in-
dividuals who apply for the assistance in the order in
which they apply.
(e) LIMITATION ON ENTITLEMENT.—Nothing in this
section shall be construed as establishing any entitlement
of individuals described in paragraph (1) or (2) of sub-
section (a) to premium assistance under this section.
(f) DISREGARD OF SUBSIDIES FOR PURPOSES OF FED-
ERAL AND STATE PROGRAMS.—Notwithstanding any other
provision of law, any premium assistance provided to, or
on behalf of, an individual under this section, shall not be
considered income or resources in determining eligibility
147
for, or the amount of assistance or benefits provided under,
any other Federal public benefit or State or local public
benefit.
(g) CHANGE IN COBRA NOTICE.—
(1) GENERAL NOTICE.—
(A) IN GENERAL.—In the case of notices
provided under section 4980B(f)(6) of the Inter-
nal Revenue Code of 1986, section 2206 of the
Public Health Service Act (42 U.S.C. 300bb–6),
section 606 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1166), or section
8905a(f)(2)(A) of title 5, United States Code,
with respect to individuals who, during the pe-
riod described in subsection (a)(1)(A), become
entitled to elect COBRA continuation coverage,
such notices shall include an additional notifica-
tion to the recipient of the availability of pre-
mium assistance for such coverage under this
section and for temporary medicaid assistance
under section 603 for the remaining portion of
COBRA continuation premiums.
(B) ALTERNATIVE NOTICE.—In the case of
COBRA continuation coverage to which the no-
tice provision under such sections does not
apply, the Secretary of the Treasury, in con-
148
sultation with the Secretary of Labor, shall, in
coordination with administrators of the group
health plans (or other entities) that provide or
administer the COBRA continuation coverage
involved, assure the provision of such notice.
(C) FORM.—The requirement of the addi-
tional notification under this paragraph may be
met by amendment of existing notice forms or by
inclusion of a separate document with the notice
otherwise required.
(2) SPECIFIC REQUIREMENTS.—Each additional
notification under paragraph (1) shall include—
(A) the forms necessary for establishing eli-
gibility and enrollment in the premium assist-
ance program established under this section in
connection with the coverage with respect to each
covered employee or other qualified beneficiary;
(B) the name, address, and telephone num-
ber necessary to contact the administrator and
any other person maintaining relevant informa-
tion in connection with the premium assistance;
and
(C) the following statement displayed in a
prominent manner:
149
‘‘You may be eligible to receive assistance with pay-
ment of 75 percent of your COBRA continuation coverage
premiums and with temporary medicaid coverage for the
remaining premium portion for a duration of not to exceed
12 months.’’.
(3) NOTICE
RELATING
TO
RETROACTIVE
COV-
ERAGE.—In the case of such notices previously trans-
mitted before the date of enactment of this Act in the
case of an individual described in paragraph (1) who
has elected (or is still eligible to elect) COBRA con-
tinuation coverage as of the date of enactment of this
Act, the administrator of the group health plan (or
other entity) involved or the Secretary of the Treas-
ury, in consultation with the Secretary of Labor, (in
the case described in the paragraph (1)(B)) shall pro-
vide (within 60 days after the date of enactment of
this Act) for the additional notification required to be
provided under paragraph (1).
(4) MODEL NOTICES.—Not later than 30 days
after the date of enactment of this Act, the Secretary
of the Treasury shall prescribe models for the addi-
tional notification required under this subsection.
(h) REPORTS.—Beginning on January 1, 2002, and
every 3 months thereafter until January 1, 2003, the Sec-
retary of the Treasury shall submit a report to Congress
150
regarding the premium assistance program established
under this section that includes the following:
(1) The status of the implementation of the pro-
gram.
(2) The number of individuals provided assist-
ance under the program as of the date of the report.
(3) The average dollar amount (monthly and an-
nually) of the premium assistance provided under the
program.
(4) The number and identification of the States
that have elected to administer the program.
(5) The total amount of expenditures incurred
(with administrative expenditures noted separately)
under the program as of the date of the report.
(i) APPROPRIATION.—
(1) IN
GENERAL.—Out of any funds in the
Treasury not otherwise appropriated, there is appro-
priated to carry out this section, such sums as are
necessary for each of fiscal years 2002 and 2003.
(2) OBLIGATION OF FUNDS.—This section con-
stitutes budget authority in advance of appropria-
tions Acts and represents the obligation of the Federal
Government to provide for the payment of premium
assistance under this section.
151
(j) SUNSET.—No premium assistance (including pay-
ment for such assistance) may be provided under this sec-
tion after December 31, 2002.
SEC. 602. STATE OPTION TO PROVIDE TEMPORARY MED-
ICAID COVERAGE FOR CERTAIN UNINSURED
INDIVIDUALS.
(a) STATE OPTION.—Notwithstanding any other pro-
vision of law, a State may elect to provide under its med-
icaid program under title XIX of the Social Security Act
medical assistance in the case of an individual—
(1) who at any time during the period that be-
gins on September 11, 2001, and ends on December
31, 2002, is separated from employment;
(2) who is not eligible for COBRA continuation
coverage;
(3) who is uninsured; and
(4) whose assets, resources, and earned or un-
earned income (or both) do not exceed such limita-
tions (if any) as the State may establish.
(b) LIMITATION OF PERIOD OF COVERAGE.—Medical
assistance provided in accordance with this section shall
end with respect to an individual on the earlier of—
(1) the date the individual is no longer unin-
sured; or
152
(2) subject to subsection (c)(4), 12 months after
the date the individual first receives such assistance.
(c) SPECIAL RULES.—In the case of medical assistance
provided under this section—
(1) the Federal medical assistance percentage
under section 1905(b) of the Social Security Act (42
U.S.C. 1396d(b)) shall be the enhanced FMAP (as de-
fined in section 2105(b) of such Act (42 U.S.C.
1397ee(b)));
(2) a State may elect to apply any income, asset,
or resource limitation permitted under the State med-
icaid plan or under title XIX of such Act;
(3) the provisions of section 1916(g) of the Social
Security Act (42 U.S.C. 1396o) shall apply to the
provision of such assistance in the same manner as
the provisions of such section apply with respect to
individuals provided medical assistance only under
subclause (XV) or (XVI) of section 1902(a)(10)(A)(ii)
of such Act (42 U.S.C. 1396a(a)(10)(A)(ii));
(4) a State may elect to provide such assistance
in accordance with section 1902(a)(34) of the Social
Security Act (42 U.S.C. 1396a(a)(34)) and any as-
sistance provided with respect to a month described in
that section shall not be included in the determina-
tion of the 12-month period under subsection (b)(2);
153
(5) a State may elect to make eligible for such
medical assistance a dependent spouse or children of
an individual eligible for medical assistance under
subsection (a), if such spouse or children are unin-
sured;
(6) individuals eligible for medical assistance
under this section shall be deemed to be described in
the list of individuals described in the matter pre-
ceding paragraph (1) of section 1905(a) of such Act
(42 U.S.C. 1396d(a));
(7) a State may elect to provide such medical as-
sistance without regard to any limitation under sec-
tions 401(a), 402(b), 403, and 421 of the Personal Re-
sponsibility and Work Opportunity Reconciliation
Act of 1996 (8 U.S.C. 1611(a), 1612(b), 1613, and
1631) and no debt shall accrue under an affidavit of
support against any sponsor of an individual who is
an alien who is provided such assistance, and the cost
of such assistance shall not be considered as an unre-
imbursed cost; and
(8) the Secretary of Health and Human Services
shall not count, for purposes of section 1108(f) of the
Social Security Act (42 U.S.C. 1308(f)), such amount
of payments under this section as bears a reasonable
relationship to the average national proportion of
154
payments made under this section for the 50 States
and the District of Columbia to the payments other-
wise made under title XIX for such States and Dis-
trict.
(d) SUNSET.—No medical assistance may be provided
under this section after December 31, 2002.
SEC. 603. STATE OPTION TO PROVIDE TEMPORARY COV-
ERAGE UNDER MEDICAID FOR THE UNSUB-
SIDIZED PORTION OF COBRA CONTINUATION
PREMIUMS.
(a) STATE OPTION.—
(1) IN GENERAL.—Notwithstanding any other
provision of law, a State may elect to provide under
its medicaid program under title XIX of the Social
Security Act medical assistance in the form of pay-
ment for the portion of the premium for COBRA con-
tinuation coverage for which an individual does not
receive a subsidy under the premium assistance pro-
gram established under section 601 in the case of an
individual—
(A) who at any time during the period that
begins on September 11, 2001, and ends on De-
cember 31, 2002, is separated from employment;
(B) who is eligible for, and has elected cov-
erage under, COBRA continuation coverage;
155
(C) who is receiving premium assistance
under the program established under section 601;
and
(D) whose family income does not exceed
200 percent of the poverty line.
(2) INCLUSION OF CERTAIN INDIVIDUALS.—For
purposes of paragraph (1), the spouse, child, or other
individual who was an insured under health insur-
ance coverage of an individual who was killed as a
result of the terrorist-related aircraft crashes on Sep-
tember 11, 2001, or as a result of any other terrorist-
related event occurring during the period described in
that paragraph, and who satisfies the requirements of
subparagraphs (B), (C), and (D) of paragraph (1)
shall be eligible for medical assistance under this sec-
tion.
(b) LIMITATION OF PERIOD OF COVERAGE.—Medical
assistance provided in accordance with this section shall
end with respect to an individual on the earlier of—
(1) the date the individual is no longer covered
under COBRA continuation coverage; or
(2) 12 months after the date the individual first
receives such assistance under this section.
(c) SPECIAL RULES.—In the case of medical assistance
provided under this section—
156
(1) such assistance may be provided without re-
gard to—
(A) whether the State otherwise has elected
to make medical assistance available for COBRA
premiums under section 1902(a)(10)(F) of the
Social Security Act (42 U.S.C. 1396a(a)(10)(F));
or
(B) the conditions otherwise imposed for the
provision of medical assistance for such COBRA
premiums under clause (XII) of the matter fol-
lowing section 1902(a)(10)(G) of the Social Se-
curity Act (42 U.S.C. 1396a(a)(10)(G)), or para-
graphs (1)(B), (1)(C), (1)(D), and (4) of section
1902(u) of such Act (42 U.S.C. 1396a(u)); and
(2) paragraphs (1), (2), (4), (5), (7), and (8) of
subsection (c) of section 602 apply to such assistance
in the same manner as such paragraphs apply to the
provision of medical assistance under that section.
(d) SUNSET.—No medical assistance may be provided
under this section after December 31, 2002.
SEC. 604. TEMPORARY INCREASES OF MEDICAID FMAP FOR
FISCAL YEAR 2002.
(a) PERMITTING MAINTENANCE OF FISCAL YEAR 2001
FMAP.—Notwithstanding any other provision of law, but
subject to subsection (d), if the FMAP determined without
157
regard to this section for a State for fiscal year 2002 is
less than the FMAP as so determined for fiscal year 2001,
the FMAP for the State for fiscal year 2001 shall be sub-
stituted for the State’s FMAP for fiscal year 2002, before
the application of this section.
(b) GENERAL 1.50 PERCENTAGE POINTS INCREASE.—
Notwithstanding any other provision of law, but subject to
subsections (d) and (e), for each State for each calendar
quarter in fiscal year 2002, the FMAP (taking into account
the application of subsection (a)) shall be increased by 1.50
percentage points.
(c) FURTHER INCREASE FOR STATES WITH HIGH UN-
EMPLOYMENT RATES.—
(1) IN
GENERAL.—Notwithstanding any other
provision of law, but subject to subsections (d) and
(e), the FMAP for a high unemployment State for a
calendar quarter in fiscal year 2002 (and any subse-
quent calendar quarter in such fiscal year regardless
of whether the State continues to be a high unemploy-
ment State for a calendar quarter in such fiscal year)
shall be increased (after the application of subsections
(a) and (b)) by 1.50 percentage points.
(2) HIGH UNEMPLOYMENT STATE.—For purposes
of this subsection, a State is a high unemployment
State for a calendar quarter if, for any 3 consecutive
158
months beginning on or after June 2001 and ending
with the second month before the beginning of the cal-
endar quarter, the State has an unemployment rate
that exceeds the national average unemployment rate.
Such unemployment rates for such months shall be
determined based on publications of the Bureau of
Labor Statistics of the Department of Labor.
(d) 1-YEAR INCREASE IN CAP ON MEDICAID PAY-
MENTS TO TERRITORIES.—Notwithstanding any other pro-
vision of law, with respect to fiscal year 2002, the amounts
otherwise determined for Puerto Rico, the Virgin Islands,
Guam, the Northern Mariana Islands, and American
Samoa under section 1108 of the Social Security Act (42
U.S.C. 1308) shall each be increased by an amount equal
to 3.093 percentage points of such amounts.
(e) SCOPE OF APPLICATION.—The increases in the
FMAP for a State under this section shall apply only for
purposes of title XIX of the Social Security Act and shall
not apply with respect to—
(1) disproportionate share hospital payments de-
scribed in section 1923 of such Act (42 U.S.C. 1396r–
4); and
(2) payments under titles IV and XXI of such
Act (42 U.S.C. 601 et seq. and 1397aa et seq.).
159
(f) STATE ELIGIBILITY.—A State is eligible for an in-
crease in its FMAP under subsection (b) or (c) only if the
eligibility under its State plan under title XIX of the Social
Security Act (including any waiver under such title or
under section 1115 of such Act (42 U.S.C. 1315)) is no more
restrictive than the eligibility under such plan (or waiver)
as in effect on October 1, 2001.
SEC. 605. DEFINITIONS.
In this title:
(1) ADMINISTRATOR.—The term ‘‘administrator’’
has the meaning given that term in section 3(16)(A)
of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1002(16)(A)).
(2) COBRA CONTINUATION COVERAGE.—
(A) IN GENERAL.—The term ‘‘COBRA con-
tinuation coverage’’ means coverage under a
group health plan provided by an employer pur-
suant to title XXII of the Public Health Service
Act, section 4980B of the Internal Revenue Code
of 1986, part 6 of subtitle B of title I of the Em-
ployee Retirement Income Security Act of 1974,
or section 8905a of title 5, United States Code.
(B) APPLICATION TO EMPLOYERS IN STATES
REQUIRING
SUCH
COVERAGE.—Such term in-
cludes such coverage provided by an employer in
160
a State that has enacted a law that requires the
employer to provide such coverage even though
the employer would not otherwise be required to
provide such coverage under the provisions of
law referred to in subparagraph (A).
(3) COVERED
EMPLOYEE.—The term ‘‘covered
employee’’ has the meaning given that term in section
607(2) of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1167(2)).
(4) FEDERAL PUBLIC BENEFIT.—The term ‘‘Fed-
eral public benefit’’ has the meaning given that term
in section 401(c) of the Personal Responsibility and
Work Opportunity Reconciliation Act of 1996 (8
U.S.C. 1611(c)).
(5) FMAP.—The term ‘‘FMAP’’ means the Fed-
eral medical assistance percentage, as defined in sec-
tion 1905(b) of the Social Security Act (42 U.S.C.
1396d(b)).
(6) GROUP
HEALTH
PLAN.—The term ‘‘group
health plan’’ has the meaning given that term in sec-
tion 2791(a) of the Public Health Service Act (42
U.S.C. 300gg–91(a)) and in section 607(1) of the Em-
ployee Retirement Income Security Act of 1974 (29
U.S.C. 1167(1)).
161
(7) HEALTH INSURANCE COVERAGE.—The term
‘‘health insurance coverage’’ has the meaning given
that term in section 2791(b)(1) of the Public Health
Service Act (42 U.S.C. 300gg–91(b)(1)).
(8) MULTIEMPLOYER PLAN.—The term ‘‘multi-
employer plan’’ has the meaning given that term in
section 3(37) of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1002(37)).
(9) POVERTY
LINE.—The term ‘‘poverty line’’
has the meaning given that term in section 2110(c)(5)
of the Social Security Act (42 U.S.C. 1397jj(c)(5)).
(10) 
QUALIFIED
BENEFICIARY.—The 
term
‘‘qualified beneficiary’’ has the meaning given that
term in section 607(3) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1167(3)).
(11) STATE.—The term ‘‘State’’ has the meaning
given such term for purposes of title XIX of the Social
Security Act (42 U.S.C. 1396 et seq.).
(12) STATE OR LOCAL PUBLIC BENEFIT.—The
term ‘‘State or local public benefit’’ has the meaning
given that term in section 411(c) of the Personal Re-
sponsibility and Work Opportunity Reconciliation
Act of 1996 (8 U.S.C. 1621(c)).
(13) UNINSURED.—
162
(A) IN GENERAL.—The term ‘‘uninsured’’
means, with respect to an individual, that the
individual is not covered under—
(i) a group health plan;
(ii) health insurance coverage; or
(iii) a program under title XVIII,
XIX, or XXI of the Social Security Act
(other than under such title XIX pursuant
to section 602).
(B) 
EXCLUSION.—Such 
coverage 
under
clause (i) or (ii) shall not include coverage con-
sisting solely of coverage of excepted benefits (as
defined in section 2791(c) of the Public Health
Service Act (42 U.S.C. 300gg–91(c)).
TITLE 
VII—TEMPORARY 
EN-
HANCED 
UNEMPLOYMENT
BENEFITS
SEC. 701. SHORT TITLE.
This title may be cited as the ‘‘Temporary Unemploy-
ment Compensation Act of 2001’’.
SEC. 702. FEDERAL-STATE AGREEMENTS.
(a) IN GENERAL.—Any State which desires to do so
may enter into and participate in an agreement under this
title with the Secretary of Labor (in this title referred to
as the ‘‘Secretary’’). Any State which is a party to an
163
agreement under this title may, upon providing 30 days’
written notice to the Secretary, terminate such agreement.
(b) PROVISIONS OF AGREEMENT.—
(1) IN
GENERAL.—Any agreement under sub-
section (a) shall provide that the State agency of the
State will make—
(A) payments of regular compensation to
individuals in amounts and to the extent that
such payments would be determined if the State
law were applied with the modifications de-
scribed in paragraph (2); and
(B) payments of temporary supplemental
unemployment 
compensation 
to 
individuals
who—
(i) have exhausted all rights to regular
compensation under the State law;
(ii) do not, with respect to a week,
have any rights to compensation (excluding
extended compensation) under the State law
of any other State (whether one that has en-
tered into an agreement under this title or
otherwise) nor compensation under any
other Federal law (other than under the
Federal-State 
Extended 
Unemployment
Compensation Act of 1970 (26 U.S.C. 3304
164
note)), and are not paid or entitled to be
paid any additional compensation under
any Federal or State law; and
(iii) are not receiving compensation
with respect to such week under the unem-
ployment compensation law of Canada.
(2) MODIFICATIONS DESCRIBED.—The modifica-
tions described in this paragraph are as follows:
(A) ALTERNATIVE BASE PERIOD.—An indi-
vidual shall be eligible for regular compensation
if the individual would be so eligible, determined
by applying—
(i) the base period that would other-
wise apply under the State law if this title
had not been enacted; or
(ii) a base period ending at the close of
the calendar quarter most recently com-
pleted before the date of the individual’s ap-
plication for benefits, provided that wage
data for that quarter has been reported to
the State;
whichever results in the greater amount.
(B) PART-TIME
EMPLOYMENT.—An indi-
vidual shall not be denied regular compensation
under the State law’s provisions relating to
165
availability for work, active search for work, or
refusal to accept work, solely by virtue of the fact
that such individual is seeking, or is available
for, only part-time (and not full-time) work, if—
(i) the individual’s employment on
which eligibility for the regular compensa-
tion is based was part-time employment; or
(ii) the individual can show good cause
for seeking, or being available for, only
part-time (and not full-time) work.
(C) INCREASED BENEFITS.—
(i) IN GENERAL.—The amount of reg-
ular compensation (including dependents’
allowances) payable for any week shall be
equal to the amount determined under the
State law (before the application of this
subparagraph), plus an amount equal to the
greater of—
(I) 15 percent of the amount so
determined; or
(II) $25.
(ii) ROUNDING.—For purposes of de-
termining the amount under clause (i)(I),
such amount shall be rounded to the dollar
amount specified under State law.
166
(c) NONREDUCTION RULE.—Under the agreement, sub-
section (b)(2)(C) shall not apply (or shall cease to apply)
with respect to a State upon a determination by the Sec-
retary that the method governing the computation of reg-
ular compensation under the State law of that State has
been modified in a way such that—
(1) the average weekly amount of regular com-
pensation which will be payable during the period of
the agreement (determined disregarding the modifica-
tions described in subsection (b)(2)) will be less than
(2) the average weekly amount of regular com-
pensation which would otherwise have been payable
during such period under the State law, as in effect
on September 11, 2001.
(d) COORDINATION RULES.—
(1) REGULAR COMPENSATION PAYABLE UNDER A
FEDERAL LAW.—The modifications described in sub-
section (b)(2) shall also apply in determining the
amount of benefits payable under any Federal law to
the extent that those benefits are determined by ref-
erence to regular compensation payable under the
State law of the State involved.
(2) TSUC TO
SERVE
AS
SECOND-TIER
BENE-
FITS.—Notwithstanding any other provision of law,
extended benefits shall not be payable to any indi-
167
vidual for any week for which temporary supple-
mental unemployment compensation is payable to
such individual.
(e) EXHAUSTION OF BENEFITS.—For purposes of sub-
section (b)(1)(B)(i), an individual shall be considered to
have exhausted such individual’s rights to regular com-
pensation under a State law when—
(1) no payments of regular compensation can be
made under such law because such individual has re-
ceived all regular compensation available to such in-
dividual based on employment or wages during such
individual’s base period; or
(2) such individual’s rights to such compensation
have been terminated by reason of the expiration of
the benefit year with respect to which such rights ex-
isted.
(f) WEEKLY BENEFIT AMOUNT, TERMS AND CONDI-
TIONS, ETC. RELATING TO TSUC.—For purposes of any
agreement under this title—
(1) the amount of temporary supplemental un-
employment compensation which shall be payable to
an individual for any week of total unemployment
shall be equal to the amount of regular compensation
(including dependents’ allowances) payable to such
168
individual under the State law for a week for total
unemployment during such individual’s benefit year;
(2) the terms and conditions of the State law
which apply to claims for regular compensation and
to the payment thereof shall apply to claims for tem-
porary supplemental unemployment compensation
and the payment thereof, except where inconsistent
with the provisions of this title or with the regula-
tions or operating instructions of the Secretary pro-
mulgated to carry out this title; and
(3) the maximum amount of temporary supple-
mental unemployment compensation payable to any
individual for whom a temporary supplemental un-
employment compensation account is established
under section 703 shall not exceed the amount estab-
lished in such account for such individual.
SEC. 703. TEMPORARY SUPPLEMENTAL UNEMPLOYMENT
COMPENSATION ACCOUNT.
(a) IN GENERAL.—Any agreement under this title
shall provide that the State will establish, for each eligible
individual who files an application for temporary supple-
mental unemployment compensation, a temporary supple-
mental unemployment compensation account.
(b) AMOUNT IN ACCOUNT.—
169
(1) IN GENERAL.—The amount established in an
account under subsection (a) shall be equal to the less-
er of—
(A) 50 percent of the total amount of reg-
ular compensation (including dependents’ allow-
ances) payable to the individual during the indi-
vidual’s benefit year under such law; or
(B) 13 times the individual’s weekly benefit
amount.
(2) WEEKLY BENEFIT AMOUNT.—For purposes of
this subsection, an individual’s weekly benefit amount
for any week is the amount of regular compensation
(including dependents’ allowances) under the State
law payable to such individual for such week for total
unemployment.
(3) RULE OF CONSTRUCTION.—For purposes of
any computation under paragraph (1) (and any de-
termination of amount under section 702(f)(1)), the
modification described in section 702(b)(2)(C) (relat-
ing to increased benefits) shall be deemed to have been
in effect with respect to the entirety of the benefit year
involved.
170
SEC. 704. PAYMENTS TO STATES HAVING AGREEMENTS
UNDER THIS TITLE.
(a) GENERAL RULE.—There shall be paid to each
State which has entered into an agreement under this title
an amount equal to—
(1) 100 percent of any regular compensation
made payable to individuals by such State by virtue
of the modifications which are described in section
702(b)(2) and deemed to be in effect with respect to
such State pursuant to section 702(b)(1)(A);
(2) 100 percent of any regular compensation—
(A) which is paid to individuals by such
State by reason of the fact that its State law
contains provisions comparable to the modifica-
tions described in subparagraphs (A) and (B) of
section 702(b)(2); but only
(B) to the extent that those amounts would,
if such amounts were instead payable by virtue
of the State law’s being deemed to be so modified
pursuant to section 702(b)(1)(A), have been re-
imbursable under paragraph (1); and
(3) 100 percent of the temporary supplemental
unemployment compensation paid to individuals by
the State pursuant to such agreement.
(b) DETERMINATION OF AMOUNT.—Sums under sub-
section (a) payable to any State by reason of such State
171
having an agreement under this title shall be payable, either
in advance or by way of reimbursement (as may be deter-
mined by the Secretary), in such amounts as the Secretary
estimates the State will be entitled to receive under this title
for each calendar month, reduced or increased, as the case
may be, by any amount by which the Secretary finds that
the Secretary’s estimates for any prior calendar month were
greater or less than the amounts which should have been
paid to the State. Such estimates may be made on the basis
of such statistical, sampling, or other method as may be
agreed upon by the Secretary and the State agency of the
State involved.
(c) ADMINISTRATIVE EXPENSES, ETC.—There is here-
by appropriated out of the employment security adminis-
tration account of the Unemployment Trust Fund (as estab-
lished by section 901(a) of the Social Security Act (42
U.S.C. 1101(a))) $500,000,000 to reimburse States for the
costs of the administration of agreements under this title
(including any improvements in technology in connection
therewith) and to provide reemployment services to unem-
ployment compensation claimants in States having agree-
ments under this title. Each State’s share of the amount
appropriated by the preceding sentence shall be determined
by the Secretary according to the factors described in section
172
302(a) of the Social Security Act (42 U.S.C. 501(a)) and
certified by the Secretary to the Secretary of the Treasury.
SEC. 705. FINANCING PROVISIONS.
(a) IN GENERAL.—Funds in the extended unemploy-
ment compensation account (as established by section
905(a) of the Social Security Act (42 U.S.C. 1105(a))), and
the Federal unemployment account (as established by sec-
tion 904(g) of such Act (42 U.S.C. 1104(g))), of the Unem-
ployment Trust Fund (as established by section 904(a) of
such Act (42 U.S.C. 1104(a))) shall be used, in accordance
with subsection (b), for the making of payments (described
in section 704(a)) to States having agreements entered into
under this title.
(b) CERTIFICATION.—The Secretary shall from time to
time certify to the Secretary of the Treasury for payment
to each State the sums described in section 704(a) which
are payable to such State under this title. The Secretary
of the Treasury, prior to audit or settlement by the General
Accounting Office, shall make payments to the State in ac-
cordance with such certification by transfers from the ex-
tended unemployment compensation account, as so estab-
lished (or, to the extent that there are insufficient funds in
that account, from the Federal unemployment account, as
so established) to the account of such State in the Unem-
ployment Trust Fund (as so established).
173
SEC. 706. FRAUD AND OVERPAYMENTS.
(a) IN GENERAL.—If an individual knowingly has
made, or caused to be made by another, a false statement
or representation of a material fact, or knowingly has
failed, or caused another to fail, to disclose a material fact,
and as a result of such false statement or representation
or of such nondisclosure such individual has received any
regular compensation or temporary supplemental unem-
ployment compensation under this title to which he was not
entitled, such individual—
(1) shall be ineligible for any further benefits
under this title in accordance with the provisions of
the applicable State unemployment compensation law
relating to fraud in connection with a claim for un-
employment compensation; and
(2) shall be subject to prosecution under section
1001 of title 18, United States Code.
(b) REPAYMENT.—In the case of individuals who have
received any regular compensation or temporary supple-
mental unemployment compensation under this title to
which such individuals were not entitled, the State shall
require such individuals to repay those benefits to the State
agency, except that the State agency may waive such repay-
ment if it determines that—
(1) the payment of such benefits was without
fault on the part of any such individual; and
174
(2) such repayment would be contrary to equity
and good conscience.
(c) RECOVERY BY STATE AGENCY.—
(1) IN GENERAL.—The State agency may recover
the amount to be repaid, or any part thereof, by de-
ductions from any regular compensation or tem-
porary supplemental unemployment compensation
payable to such individual under this title or from
any unemployment compensation payable to such in-
dividual under any Federal unemployment compensa-
tion law administered by the State agency or under
any other Federal law administered by the State
agency which provides for the payment of any assist-
ance or allowance with respect to any week of unem-
ployment, during the 3-year period after the date such
individuals received the payment of the regular com-
pensation or temporary supplemental unemployment
compensation to which such individuals were not en-
titled, except that no single deduction may exceed 50
percent of the weekly benefit amount from which such
deduction is made.
(2) OPPORTUNITY FOR HEARING.—No repayment
shall be required, and no deduction shall be made,
until a determination has been made, notice thereof
and an opportunity for a fair hearing has been given
175
to the individual, and the determination has become
final.
(d) REVIEW.—Any determination by a State agency
under this section shall be subject to review in the same
manner and to the same extent as determinations under
the State unemployment compensation law, and only in
that manner and to that extent.
SEC. 707. DEFINITIONS.
For purposes of this title:
(1) IN
GENERAL.—The terms ‘‘compensation’’,
‘‘regular compensation’’, ‘‘extended compensation’’,
‘‘additional compensation’’, ‘‘benefit year’’, ‘‘base pe-
riod’’, ‘‘State’’, ‘‘State agency’’, ‘‘State law’’, and
‘‘week’’ have the respective meanings given such terms
under section 205 of the Federal-State Extended Un-
employment Compensation Act of 1970, subject to
paragraph (2).
(2) STATE LAW AND REGULAR COMPENSATION.—
In the case of a State entering into an agreement
under this title—
(A) ‘‘State law’’ shall be considered to refer
to the State law of such State, applied in con-
formance with the modifications described in sec-
tion 702(b)(2), subject to section 702(c); and
176
(B) ‘‘regular compensation’’ shall be consid-
ered to refer to such compensation, determined
under its State law (applied in the manner de-
scribed in subparagraph (A));
except as otherwise provided or where the context
clearly indicates otherwise.
SEC. 708. APPLICABILITY.
(a) IN GENERAL.—An agreement entered into under
this title shall apply to weeks of unemployment—
(1) beginning after the date on which such agree-
ment is entered into; and
(2) ending before January 1, 2003.
(b) SPECIFIC RULES.—
(1) IN GENERAL.—Under such an agreement, the
following rules shall apply:
(A) ALTERNATIVE
BASE
PERIODS.—The
modification described in section 702(b)(2)(A)
(relating to alternative base periods) shall not
apply except in the case of initial claims filed on
or after the first day of the week that includes
September 11, 2001.
(B) PART-TIME
EMPLOYMENT
AND
IN-
CREASED
BENEFITS.—The modifications de-
scribed in subparagraphs (B) and (C) of section
702(b)(2) (relating to part-time employment and
177
increased benefits, respectively) shall apply to
weeks of unemployment described in subsection
(a), regardless of the date on which an individ-
ual’s initial claim for benefits is filed.
(C) ELIGIBILITY FOR TSUC.—The payments
described in section 702(b)(1)(B) (relating to
temporary supplemental unemployment com-
pensation) shall not apply except in the case of
individuals exhausting their rights to regular
compensation (as described in clause (i) of such
section) on or after the first day of the week that
includes September 11, 2001.
(2) REAPPLICATION PROCESS.—
(A) ALTERNATIVE BASE PERIODS.—In the
case of an individual who filed an initial claim
for regular compensation on or after the first
day of the week that includes September 11,
2001, and before the date that the State entered
into an agreement under subsection (a)(1) that
was denied as a result of the application of the
base period that applied under the State law
prior to the date on which the State entered into
the such agreement, such individual—
(i) may refile a claim for regular com-
pensation based on the modification de-
178
scribed in section 702(b)(2)(A) (relating to
alternative base periods) on or after the
date on which the State enters into such
agreement and before the date on which
such agreement terminates; and
(ii) if eligible, shall be entitled to such
compensation only for weeks of unemploy-
ment described in subsection (a) beginning
on or after the date on which the individual
files such claim.
(B) PART-TIME EMPLOYMENT.—In the case
of an individual who before the date that the
State entered into an agreement under subsection
(a)(1) was denied regular compensation under
the State law’s provisions relating to availability
for work, active search for work, or refusal to ac-
cept work, solely by virtue of the fact that such
individual is seeking, or available for, only part-
time (and not full-time) work, such individual—
(i) may refile a claim for regular compensa-
tion based on the modification described in sec-
tion 702(b)(2)(B) (relating to part-time employ-
ment) on or after the date on which the State en-
ters into the agreement under subsection (a)(1)
179
and before the date on which such agreement ter-
minates; and
(ii) if eligible, shall be entitled to such com-
pensation only for weeks of unemployment de-
scribed in subsection (a) beginning on or after
the date on which the individual files such claim.
(3) NO
RETROACTIVE
PAYMENTS
FOR
WEEKS
PRIOR TO AGREEMENT.—No amounts shall be payable
to an individual under an agreement entered into
under this title for any week of unemployment prior
to the week beginning after the date on which such
agreement is entered into.
TITLE VIII—EMERGENCY
AGRICULTURE ASSISTANCE
Subtitle A—Crop Loss Assistance
SEC. 801. CROP LOSS ASSISTANCE.
(a) IN GENERAL.—The Secretary of Agriculture (re-
ferred to in this title as the ‘‘Secretary’’) shall use
$1,800,000,000 of funds of the Commodity Credit Corpora-
tion to make emergency financial assistance available to
producers on a farm that have incurred qualifying losses
for the 2001 crop.
(b) ADMINISTRATION.—The Secretary shall make as-
sistance available under this section in the same manner
as provided under section 815 of the Agriculture, Rural De-
180
velopment, Food and Drug Administration, and Related
Agencies Appropriations Act, 2001 (Public Law 105–277;
114 Stat. 1549A–55), including using the same loss thresh-
olds for the quantity and economic losses as were used in
administering that section.
(c) USE OF FUNDS FOR CASH PAYMENTS.—The Sec-
retary may use funds made available under this section to
make, in a manner consistent with this section, cash pay-
ments not for crop disasters, but for income loss to carry
out the purposes of this section.
SEC. 802. LIVESTOCK ASSISTANCE PROGRAM.
(a) 
IN
GENERAL.—The 
Secretary 
shall 
use
$500,000,000 of the funds of the Commodity Credit Cor-
poration to make and administer payments for livestock
losses to producers for 2001 losses in a county that has re-
ceived an emergency designation by the President or the
Secretary after January 1, 2001.
(b) ADMINISTRATION.—The Secretary shall make as-
sistance available under this section in the same manner
as provided under section 806 of the Agriculture, Rural De-
velopment, Food and Drug Administration, and Related
Agencies Appropriations Act, 2001 (Public Law 105–277;
114 Stat. 1549A–51).
181
SEC. 803. COMMODITY PURCHASES.
(a) 
IN
GENERAL.—The 
Secretary 
shall 
use
$220,000,000 of funds of the Commodity Credit Corporation
to purchase agricultural commodities, especially agricul-
tural commodities that have experienced low prices during
the 2001 crop year, as determined by the Secretary.
(b) GEOGRAPHIC DIVERSITY.—The Secretary is en-
couraged to purchase agricultural commodities under this
section in a manner that reflects the geographic diversity
of agricultural production in the United States, particu-
larly agricultural production in the Northeast and Mid-At-
lantic States.
(c) OTHER PURCHASES.—The Secretary shall ensure
that purchases of agricultural commodities under this sec-
tion are in addition to purchases by the Secretary under
any other law.
(d) TRANSPORTATION AND DISTRIBUTION COSTS.—
The Secretary may use not more than $20,000,000 of the
funds made available under subsection (a) to provide assist-
ance to States to cover costs incurred by the States in trans-
porting and distributing agricultural commodities pur-
chased under this section.
(e) PURCHASES
FOR
SCHOOL
NUTRITION
PRO-
GRAMS.—The Secretary shall use not less than $55,000,000
of the funds made available under subsection (a) to pur-
chase agricultural commodities of the type distributed
182
under section 6(a) of the Richard B. Russell National
School Lunch Act (42 U.S.C. 1755(a)) for distribution to
schools and service institutions in accordance with section
6(a) of that Act.
Subtitle B—Rural Development
SEC. 811. RURAL COMMUNITY FACILITIES AND UTILITIES.
(a) FUNDING.—
(1) IN GENERAL.—Not later than 30 days after
the date of enactment of this Act, out of any funds in
the Treasury not otherwise appropriated, the Sec-
retary of the Treasury shall transfer to the Secretary
of Agriculture—
(A) $130,100,000 for the cost of water or
waste disposal direct loans under section
306(a)(1) of the Consolidated Farm and Rural
Development Act (7 U.S.C. 1926(a)(1));
(B) $1,074,798,000 for water or waste dis-
posal grants under section 306(a)(2) of that Act;
(C) $8,362,000 for the cost of community
facility direct loans under section 306(a)(1) of
that Act; and
(D) $60,000,000 for community facility
grants under paragraph (19), (20), or (21) of
section 306(a)(1) of that Act.
183
(2) RECEIPT AND ACCEPTANCE.—The Secretary
shall be entitled to receive, shall accept, and shall use
in accordance with paragraph (1) the funds trans-
ferred under paragraph (1), without further appro-
priation.
(3) AVAILABILITY OF FUNDS.—Funds transferred
under paragraph (1) shall remain available until ex-
pended.
(4) APPLICABILITY OF OTHER LAWS.—For the
purposes of the Federal Credit Reform Act of 1990 (2
U.S.C. 661a et seq.), this section shall be treated as
if enacted in an Act of appropriation.
(5) APPROPRIATED
AMOUNTS.—Funds made
available under this subsection shall be available to
the Secretary—
(A) to provide funds for pending applica-
tions for loans, loan guarantees, and grants de-
scribed in paragraph (1); and
(B) only to the extent that funds for the
loans, loan guarantees, and grants appropriated
in the annual appropriations Act for fiscal year
2002 have been exhausted.
(b) COMMUNITY FACILITY GUARANTEED LOANS.—The
Secretary may guarantee an additional $128,000,000 for
community facility guaranteed loans under section
184
306(a)(1) of the Consolidated Farm and Rural Development
Act (7 U.S.C. 1926(a)(1)).
SEC. 812. RURAL TELECOMMUNICATIONS LOANS.
(a) IN GENERAL.—Not later than 30 days after the
date of enactment of this Act, out of any funds in the Treas-
ury not otherwise appropriated, the Secretary of the Treas-
ury shall transfer to the Secretary of Agriculture to make
insured cost of money rural telecommunications loans
under sections 305 and 306 of the Rural Electrification Act
of 1936 (7 U.S.C. 935, 936) $40,000,000, to remain avail-
able until expended.
(b) RECEIPT AND ACCEPTANCE.—The Secretary shall
be entitled to receive, shall accept, and shall use to carry
out this section the funds transferred under subsection (a),
without further appropriation.
(c) APPLICABILITY OF OTHER LAWS.—For the pur-
poses of the Federal Credit Reform Act of 1990 (2 U.S.C.
661a et seq.), this section shall be treated as if enacted in
an Act of appropriation.
SEC. 813. TELEMEDICINE AND DISTANCE LEARNING SERV-
ICES.
(a) IN GENERAL.—The Secretary may make addi-
tional loans and grants for the broadband pilot program
and for telemedicine and distance learning services under
chapter 1 of subtitle D of title XXIII of the Food, Agri-
185
culture, Conservation, and Trade Act of 1990 (7 U.S.C.
950aaa et seq.).
(b) AMOUNT OF LOANS.—The Secretary shall make
loans under this section in an amount not to exceed
$400,000,000.
(c) FUNDING.—
(1) IN GENERAL.—Not later than 30 days after
the date of enactment of this Act, out of any funds in
the Treasury not otherwise appropriated, the Sec-
retary of the Treasury shall transfer to the Secretary
of Agriculture for the cost of loans and grants under
this section $5,000,000, to remain available until ex-
pended.
(2) RECEIPT AND ACCEPTANCE.—The Secretary
shall be entitled to receive, shall accept, and shall use
to carry out this section the funds transferred under
paragraph (1), without further appropriation.
(3) APPLICABILITY OF OTHER LAWS.—For the
purposes of the Federal Credit Reform Act of 1990 (2
U.S.C. 661a et seq.), this subsection shall be treated
as if enacted in an Act of appropriation.
SEC. 814. ENVIRONMENTAL QUALITY INCENTIVES PRO-
GRAM.
In addition to funds otherwise available, the Secretary
shall use $1,400,000,000 of funds of the Commodity Credit
186
Corporation to carry out the environmental quality incen-
tives program established under chapter 4 of subtitle D of
title XII of the Food Security Act of 1985 (16 U.S.C.
3839aa et seq.), including technical assistance under the
program.
SEC. 815. FARMLAND PROTECTION PROGRAM.
In addition to funds otherwise available, the Secretary
shall use $150,000,000 of funds of the Commodity Credit
Corporation to carry out the farmland protection program
established under section 388 of the Federal Agriculture Im-
provement and Reform Act of 1996 (16 U.S.C. 3830 note;
Public Law 104–127).
Subtitle C—Administration
SEC. 821. COMMODITY CREDIT CORPORATION.
The Secretary shall use the funds, facilities, and au-
thorities of the Commodity Credit Corporation to carry out
subtitle A.
SEC. 822. ADMINISTRATIVE EXPENSES.
(a) IN GENERAL.—In addition to funds otherwise
available, not later than 30 days after the date of enactment
of this Act, out of any funds in the Treasury not otherwise
appropriated, the Secretary of the Treasury shall transfer
to the Secretary of Agriculture to pay the salaries and ex-
penses of the Department of Agriculture in carrying out this
title $104,500,000, to remain available until expended.
187
(b) RECEIPT AND ACCEPTANCE.—The Secretary shall
be entitled to receive, shall accept, and shall use to carry
out this section the funds transferred under subsection (a),
without further appropriation.
SEC. 823. REGULATIONS.
(a) IN GENERAL.—The Secretary may promulgate
such regulations as are necessary to implement this title.
(b) PROCEDURE.—The promulgation of the regulations
and administration of this subtitle shall be made without
regard to—
(1) the notice and comment provisions of section
553 of title 5, United States Code;
(2) the Statement of Policy of the Secretary of
Agriculture effective July 24, 1971 (36 Fed. Reg.
13804), relating to notices of proposed rulemaking
and public participation in rulemaking; and
(3) chapter 35 of title 44, United States Code
(commonly known as the ‘‘Paperwork Reduction
Act’’).
(c) CONGRESSIONAL
REVIEW
OF
AGENCY
RULE-
MAKING.—In carrying out this section, the Secretary shall
use the authority provided under section 808 of title 5,
United States Code.
188
TITLE IX—ADDITIONAL
PROVISIONS
SEC. 901. CREDIT TO HOLDERS OF QUALIFIED AMTRAK
BONDS.
(a) IN GENERAL.—Part IV of subchapter A of chapter
1 (relating to credits against tax) is amended by adding
at the end the following new subpart:
‘‘Subpart H—Nonrefundable Credit for Holders of
Qualified Amtrak Bonds
‘‘Sec. 54. Credit to holders of qualified Amtrak bonds.
‘‘SEC. 54. CREDIT TO HOLDERS OF QUALIFIED AMTRAK
BONDS.
‘‘(a) ALLOWANCE OF CREDIT.—In the case of a tax-
payer who holds a qualified Amtrak bond on a credit allow-
ance date of such bond which occurs during the taxable
year, there shall be allowed as a credit against the tax im-
posed by this chapter for such taxable year an amount equal
to the sum of the credits determined under subsection (b)
with respect to credit allowance dates during such year on
which the taxpayer holds such bond.
‘‘(b) AMOUNT OF CREDIT.—
‘‘(1) IN GENERAL.—The amount of the credit de-
termined under this subsection with respect to any
credit allowance date for a qualified Amtrak bond is