I 
109TH CONGRESS 
2D SESSION 
H. R. 6408 
To amend the Internal Revenue Code of 1986 to extend expiring provisions, 
and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
DECEMBER 7, 2006 
Mr. THOMAS introduced the following bill; which was referred to the Com-
mittee on Ways and Means, and in addition to the Committees on Energy 
and Commerce, Resources, Education and the Workforce, and Govern-
ment Reform, for a period to be subsequently determined by the Speaker, 
in each case for consideration of such provisions as fall within the juris-
diction of the committee concerned 
A BILL 
To amend the Internal Revenue Code of 1986 to extend 
expiring provisions, and for other purposes. 
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 
‘‘Tax Relief and Health Care Act of 2006’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title, etc. 
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DIVISION A—EXTENSION AND EXPANSION OF CERTAIN TAX 
RELIEF PROVISIONS, AND OTHER TAX PROVISIONS 
Sec. 100. Reference. 
TITLE I—EXTENSION AND MODIFICATION OF CERTAIN 
PROVISIONS 
Sec. 101. Deduction for qualified tuition and related expenses. 
Sec. 102. Extension and modification of new markets tax credit. 
Sec. 103. Election to deduct State and local general sales taxes. 
Sec. 104. Extension and modification of research credit. 
Sec. 105. Work opportunity tax credit and welfare-to-work credit. 
Sec. 106. Election to include combat pay as earned income for purposes of 
earned income credit. 
Sec. 107. Extension and modification of qualified zone academy bonds. 
Sec. 108. Above-the-line deduction for certain expenses of elementary and sec-
ondary school teachers. 
Sec. 109. Extension and expansion of expensing of brownfields remediation 
costs. 
Sec. 110. Tax incentives for investment in the District of Columbia. 
Sec. 111. Indian employment tax credit. 
Sec. 112. Accelerated depreciation for business property on Indian reservations. 
Sec. 113. Fifteen-year straight-line cost recovery for qualified leasehold im-
provements and qualified restaurant property. 
Sec. 114. Cover over of tax on distilled spirits. 
Sec. 115. Parity in application of certain limits to mental health benefits. 
Sec. 116. Corporate donations of scientific property used for research and of 
computer technology and equipment. 
Sec. 117. Availability of medical savings accounts. 
Sec. 118. Taxable income limit on percentage depletion for oil and natural gas 
produced from marginal properties. 
Sec. 119. American Samoa economic development credit. 
Sec. 120. Extension of bonus depreciation for certain qualified Gulf Oppor-
tunity Zone property. 
Sec. 121. Authority for undercover operations. 
Sec. 122. Disclosures of certain tax return information. 
Sec. 123. Special rule for elections under expired provisions. 
TITLE II—ENERGY TAX PROVISIONS 
Sec. 201. Credit for electricity produced from certain renewable resources. 
Sec. 202. Credit to holders of clean renewable energy bonds. 
Sec. 203. Performance standards for sulfur dioxide removal in advanced coal- 
based generation technology units designed to use subbitu-
minous coal. 
Sec. 204. Deduction for energy efficient commercial buildings. 
Sec. 205. Credit for new energy efficient homes. 
Sec. 206. Credit for residential energy efficient property. 
Sec. 207. Energy credit. 
Sec. 208. Special rule for qualified methanol or ethanol fuel. 
Sec. 209. Special depreciation allowance for cellulosic biomass ethanol plant 
property. 
Sec. 210. Expenditures permitted from the Leaking Underground Storage 
Tank Trust Fund. 
Sec. 211. Treatment of coke and coke gas. 
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TITLE III—HEALTH SAVINGS ACCOUNTS 
Sec. 301. Short title. 
Sec. 302. FSA and HRA terminations to fund HSAs. 
Sec. 303. Repeal of annual deductible limitation on HSA contributions. 
Sec. 304. Modification of cost-of-living adjustment. 
Sec. 305. Contribution limitation not reduced for part-year coverage. 
Sec. 306. Exception to requirement for employers to make comparable health 
savings account contributions. 
Sec. 307. One-time distribution from individual retirement plans to fund HSAs. 
TITLE IV—OTHER PROVISIONS 
Sec. 401. Deduction allowable with respect to income attributable to domestic 
production activities in Puerto Rico. 
Sec. 402. Credit for prior year minimum tax liability made refundable after pe-
riod of years. 
Sec. 403. Returns required in connection with certain options. 
Sec. 404. Partial expensing for advanced mine safety equipment. 
Sec. 405. Mine rescue team training tax credit. 
Sec. 406. Whistleblower reforms. 
Sec. 407. Frivolous tax submissions. 
Sec. 408. Addition of meningococcal and human papillomavirus vaccines to list 
of taxable vaccines. 
Sec. 409. Clarification of taxation of certain settlement funds made permanent. 
Sec. 410. Modification of active business definition under section 355 made per-
manent. 
Sec. 411. Revision of State veterans limit made permanent. 
Sec. 412. Capital gains treatment for certain self-created musical works made 
permanent. 
Sec. 413. Reduction in minimum vessel tonnage which qualifies for tonnage tax 
made permanent. 
Sec. 414. Modification of special arbitrage rule for certain funds made perma-
nent. 
Sec. 415. Great Lakes domestic shipping to not disqualify vessel from tonnage 
tax. 
Sec. 416. Use of qualified mortgage bonds to finance residences for veterans 
without regard to first-time homebuyer requirement. 
Sec. 417. Exclusion of gain from sale of a principal residence by certain em-
ployees of the intelligence community. 
Sec. 418. Sale of property by judicial officers. 
Sec. 419. Premiums for mortgage insurance. 
Sec. 420. Modification of refunds for kerosene used in aviation. 
Sec. 421. Regional income tax agencies treated as States for purposes of con-
fidentiality and disclosure requirements. 
Sec. 422. Designation of wines by semi-generic names. 
Sec. 423. Modification of railroad track maintenance credit. 
Sec. 424. Modification of excise tax on unrelated business taxable income of 
charitable remainder trusts. 
Sec. 425. Loans to qualified continuing care facilities made permanent. 
Sec. 426. Technical corrections. 
DIVISION B—MEDICARE AND OTHER HEALTH PROVISIONS 
Sec. 1. Short title of division. 
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TITLE I—MEDICARE IMPROVED QUALITY AND PROVIDER 
PAYMENTS 
Sec. 101. Physician payment and quality improvement. 
Sec. 102. Extension of floor on Medicare work geographic adjustment. 
Sec. 103. Update to the composite rate component of the basic case-mix ad-
justed prospective payment system for dialysis services. 
Sec. 104. Extension of treatment of certain physician pathology services under 
Medicare. 
Sec. 105. Extension of Medicare reasonable costs payments for certain clinical 
diagnostic laboratory tests furnished to hospital patients in cer-
tain rural areas. 
Sec. 106. Hospital Medicare reports and clarifications. 
Sec. 107. Payment for brachytherapy. 
Sec. 108. Payment process under the competitive acquisition program (CAP). 
Sec. 109. Quality reporting for hospital outpatient services and ambulatory sur-
gical center services. 
Sec. 110. Reporting of anemia quality indicators for Medicare part B cancer 
anti-anemia drugs. 
Sec. 111. Clarification of hospice satellite designation. 
TITLE II—MEDICARE BENEFICIARY PROTECTIONS 
Sec. 201. Extension of exceptions process for Medicare therapy caps. 
Sec. 202. Payment for administration of part D vaccines. 
Sec. 203. OIG study of never events. 
Sec. 204. Medicare medical home demonstration project. 
Sec. 205. Medicare DRA technical corrections. 
TITLE III—MEDICARE PROGRAM INTEGRITY EFFORTS 
Sec. 301. Offsetting adjustment in Medicare Advantage Stabilization Fund. 
Sec. 302. Extension and expansion of recovery audit contractor program under 
the Medicare Integrity Program. 
Sec. 303. Funding for the Health Care Fraud and Abuse Control Account. 
Sec. 304. Implementation funding. 
TITLE IV—MEDICAID AND OTHER HEALTH PROVISIONS 
Sec. 401. Extension of Transitional Medical Assistance (TMA) and abstinence 
education program. 
Sec. 402. Grants for research on vaccine against Valley Fever. 
Sec. 403. Change in threshold for Medicaid indirect hold harmless provision of 
broad-based health care taxes. 
Sec. 404. DSH allotments for fiscal year 2007 for Tennessee and Hawaii. 
Sec. 405. Certain Medicaid DRA technical corrections. 
DIVISION C—OTHER PROVISIONS 
TITLE I—GULF OF MEXICO ENERGY SECURITY 
Sec. 101. Short title. 
Sec. 102. Definitions. 
Sec. 103. Offshore oil and gas leasing in 181 Area and 181 south Area of Gulf 
of Mexico. 
Sec. 104. Moratorium on oil and gas leasing in certain areas of Gulf of Mexico. 
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Sec. 105. Disposition of qualified outer Continental Shelf revenues from 181 
Area, 181 south Area, and 2002–2007 planning areas of Gulf 
of Mexico. 
TITLE II—SURFACE MINING CONTROL AND RECLAMATION ACT 
AMENDMENTS OF 2006 
Sec. 200. Short title. 
Subtitle A—Mining Control and Reclamation 
Sec. 201. Abandoned Mine Reclamation Fund and purposes. 
Sec. 202. Reclamation fee. 
Sec. 203. Objectives of Fund. 
Sec. 204. Reclamation of rural land. 
Sec. 205. Liens. 
Sec. 206. Certification. 
Sec. 207. Remining incentives. 
Sec. 208. Extension of limitation on application of prohibition on issuance of 
permit. 
Sec. 209. Tribal regulation of surface coal mining and reclamation operations. 
Subtitle B—Coal Industry Retiree Health Benefit Act 
Sec. 211. Certain related persons and successors in interest relieved of liability 
if premiums prepaid. 
Sec. 212. Transfers to funds; premium relief. 
Sec. 213. Other provisions. 
TITLE III—OTHER PROVISIONS 
Sec. 301. Tobacco personal use quantity exception to not apply to delivery 
sales. 
Sec. 302. Ethanol Tariff Schedule. 
Sec. 303. Withdrawal of certain Federal land and interests in certain Federal 
land from location, entry, and patent under the mining laws 
and disposition under the mineral and geothermal leasing laws. 
Sec. 304. Continuing eligibility for certain students under District of Columbia 
School Choice Program. 
Sec. 305. Study on Establishing Uniform National Database on Elder Abuse. 
DIVISION 
A—EXTENSION 
AND 
EXPANSION OF CERTAIN TAX 
RELIEF 
PROVISIONS, 
AND 
OTHER TAX PROVISIONS 
SEC. 100. REFERENCE. 
Except as otherwise expressly provided, whenever in 
this division an amendment or repeal is expressed in terms 
of an amendment to, or repeal of, a section or other provi-
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sion, the reference shall be considered to be made to a 
section or other provision of the Internal Revenue Code 
of 1986. 
TITLE I—EXTENSION AND MODI-
FICATION OF CERTAIN PRO-
VISIONS 
SEC. 101. DEDUCTION FOR QUALIFIED TUITION AND RE-
LATED EXPENSES. 
(a) IN GENERAL.—Section 222(e) is amended by 
striking ‘‘2005’’and inserting ‘‘2007’’. 
(b) 
CONFORMING
AMENDMENTS.—Section 
222(b)(2)(B) is amended— 
(1) by striking ‘‘a taxable year beginning in 
2004 or 2005’’ and inserting ‘‘any taxable year be-
ginning after 2003’’, and 
(2) by striking ‘‘2004 AND 2005’’ in the heading 
and inserting ‘‘AFTER 2003’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2005. 
SEC. 102. EXTENSION AND MODIFICATION OF NEW MAR-
KETS TAX CREDIT. 
(a) EXTENSION.—Section 45D(f)(1)(D) is amended 
by striking ‘‘and 2007’’ and inserting ‘‘, 2007, and 2008’’. 
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(b) REGULATIONS REGARDING NON-METROPOLITAN 
COUNTIES.—Section 45D(i) is amended by striking ‘‘and’’ 
at the end of paragraph (4), by striking the period at the 
end of paragraph (5) and inserting ‘‘, and’’, and by adding 
at the end the following new paragraph: 
‘‘(6) which ensure that non-metropolitan coun-
ties receive a proportional allocation of qualified eq-
uity investments.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on the date of the enactment 
of this Act. 
SEC. 103. ELECTION TO DEDUCT STATE AND LOCAL GEN-
ERAL SALES TAXES. 
(a) IN GENERAL.—Section 164(b)(5)(I) is amended 
by striking ‘‘2006’’ and inserting ‘‘2008’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2005. 
SEC. 104. EXTENSION AND MODIFICATION OF RESEARCH 
CREDIT. 
(a) EXTENSION.— 
(1) IN
GENERAL.—Section 41(h)(1)(B) is 
amended by striking ‘‘2005’’ and inserting ‘‘2007’’. 
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(2) 
CONFORMING
AMENDMENT.—Section 
45C(b)(1)(D) is amended by striking ‘‘2005’’ and 
inserting ‘‘2007’’. 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to amounts paid or in-
curred after December 31, 2005. 
(b) INCREASE IN RATES OF ALTERNATIVE INCRE-
MENTAL CREDIT.— 
(1) IN GENERAL.—Subparagraph (A) of section 
41(c)(4) (relating to election of alternative incre-
mental credit) is amended— 
(A) by striking ‘‘2.65 percent’’ and insert-
ing ‘‘3 percent’’, 
(B) by striking ‘‘3.2 percent’’ and inserting 
‘‘4 percent’’, and 
(C) by striking ‘‘3.75 percent’’ and insert-
ing ‘‘5 percent’’. 
(2) EFFECTIVE DATE.—Except as provided in 
paragraph (3), the amendments made by this sub-
section shall apply to taxable years ending after De-
cember 31, 2006. 
(3) TRANSITION RULE.— 
(A) IN GENERAL.—In the case of a speci-
fied transitional taxable year for which an elec-
tion under section 41(c)(4) of the Internal Rev-
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enue Code of 1986 applies, the credit deter-
mined under section 41(a)(1) of such Code shall 
be equal to the sum of— 
(i) the applicable 2006 percentage 
multiplied by the amount determined 
under section 41(c)(4)(A) of such Code (as 
in effect for taxable years ending on De-
cember 31, 2006), plus 
(ii) the applicable 2007 percentage 
multiplied by the amount determined 
under section 41(c)(4)(A) of such Code (as 
in effect for taxable years ending on Janu-
ary 1, 2007). 
(B) DEFINITIONS.—For purposes of sub-
paragraph (A)— 
(i) SPECIFIED
TRANSITIONAL
TAX-
ABLE YEAR.—The term ‘‘specified transi-
tional taxable year’’ means any taxable 
year which ends after December 31, 2006, 
and which includes such date. 
(ii) APPLICABLE 2006 PERCENTAGE.— 
The term ‘‘applicable 2006 percentage’’ 
means the number of days in the specified 
transitional taxable year before January 1, 
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2007, divided by the number of days in 
such taxable year. 
(iii) 
APPLICABLE
2007
PERCENT-
AGE.—The term ‘‘applicable 2007 percent-
age’’ means the number of days in the 
specified transitional taxable year after De-
cember 31, 2006, divided by the number of 
days in such taxable year. 
(c) ALTERNATIVE SIMPLIFIED CREDIT FOR QUALI-
FIED RESEARCH EXPENSES.— 
(1) IN GENERAL.—Subsection (c) of section 41 
(relating to base amount) is amended by redesig-
nating paragraphs (5) and (6) as paragraphs (6) 
and (7), respectively, and by inserting after para-
graph (4) the following new paragraph: 
‘‘(5) ELECTION OF ALTERNATIVE SIMPLIFIED 
CREDIT.— 
‘‘(A) IN GENERAL.—At the election of the 
taxpayer, the credit determined under sub-
section (a)(1) shall be equal to 12 percent of so 
much of the qualified research expenses for the 
taxable year as exceeds 50 percent of the aver-
age qualified research expenses for the 3 tax-
able years preceding the taxable year for which 
the credit is being determined. 
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‘‘(B) SPECIAL
RULE
IN
CASE
OF
NO 
QUALIFIED RESEARCH EXPENSES IN ANY OF 3 
PRECEDING TAXABLE YEARS.— 
‘‘(i) TAXPAYERS TO WHICH SUBPARA-
GRAPH
APPLIES.—The credit under this 
paragraph shall be determined under this 
subparagraph if the taxpayer has no quali-
fied research expenses in any one of the 3 
taxable years preceding the taxable year 
for which the credit is being determined. 
‘‘(ii) CREDIT RATE.—The credit de-
termined under this subparagraph shall be 
equal to 6 percent of the qualified research 
expenses for the taxable year. 
‘‘(C) ELECTION.—An election under this 
paragraph shall apply to the taxable year for 
which made and all succeeding taxable years 
unless revoked with the consent of the Sec-
retary. An election under this paragraph may 
not be made for any taxable year to which an 
election under paragraph (4) applies.’’. 
(2) TRANSITION RULE FOR DEEMED REVOCA-
TION OF ELECTION OF ALTERNATIVE INCREMENTAL 
CREDIT.—In the case of an election under section 
41(c)(4) of the Internal Revenue Code of 1986 
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which applies to the taxable year which includes 
January 1, 2007, such election shall be treated as 
revoked with the consent of the Secretary of the 
Treasury if the taxpayer makes an election under 
section 41(c)(5) of such Code (as added by this sub-
section) for such year. 
(3) EFFECTIVE DATE.—Except as provided in 
paragraph (4), the amendments made by this sub-
section shall apply to taxable years ending after De-
cember 31, 2006. 
(4) TRANSITION RULE FOR NONCALENDAR TAX-
ABLE YEARS.— 
(A) IN GENERAL.—In the case of a speci-
fied transitional taxable year for which an elec-
tion under section 41(c)(5) of the Internal Rev-
enue Code of 1986 (as added by this sub-
section) applies, the credit determined under 
section 41(a)(1) of such Code shall be equal to 
the sum of— 
(i) the applicable 2006 percentage 
multiplied by the amount determined 
under section 41(a)(1) of such Code (as in 
effect for taxable years ending on Decem-
ber 31, 2006), plus 
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(ii) the applicable 2007 percentage 
multiplied by the amount determined 
under section 41(c)(5) of such Code (as in 
effect for taxable years ending on January 
1, 2007). 
(B) DEFINITIONS AND SPECIAL RULES.— 
For purposes of subparagraph (A)— 
(i) DEFINITIONS.—Terms used in this 
paragraph which are also used in sub-
section (b)(3) shall have the respective 
meanings given such terms in such sub-
section. 
(ii) DUAL ELECTIONS PERMITTED.— 
Elections under paragraphs (4) and (5) of 
section 41(c) of such Code may both apply 
for the specified transitional taxable year. 
(iii) DEFERRAL
OF
DEEMED
ELEC-
TION
REVOCATION.—Any election under 
section 41(c)(4) of the Internal Revenue 
Code of 1986 treated as revoked under 
paragraph (2) shall be treated as revoked 
for the taxable year after the specified 
transitional taxable year. 
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SEC. 105. WORK OPPORTUNITY TAX CREDIT AND WELFARE- 
TO-WORK CREDIT. 
(a) IN GENERAL.—Sections 51(c)(4)(B) and 51A(f) 
are each amended by striking ‘‘2005’’ and inserting 
‘‘2007’’. 
(b) ELIGIBILITY
OF
EX-FELONS
DETERMINED 
WITHOUT REGARD TO FAMILY INCOME.—Paragraph (4) 
of section 51(d) is amended by adding ‘‘and’’ at the end 
of subparagraph (A), by striking ‘‘, and’’ at the end of 
subparagraph (B) and inserting a period, and by striking 
all that follows subparagraph (B). 
(c) INCREASE IN MAXIMUM AGE FOR ELIGIBILITY OF 
FOOD
STAMP
RECIPIENTS.—Clause (i) of section 
51(d)(8)(A) is amended by striking ‘‘25’’ and inserting 
‘‘40’’. 
(d) EXTENSION
OF PAPERWORK FILING DEAD-
LINE.—Section 51(d)(12)(A)(ii)(II) is amended by strik-
ing ‘‘21st day’’ and inserting ‘‘28th day’’. 
(e) CONSOLIDATION OF WORK OPPORTUNITY CRED-
IT WITH WELFARE-TO-WORK CREDIT.— 
(1) IN
GENERAL.—Paragraph (1) of section 
51(d) is amended by striking ‘‘or’’ at the end of sub-
paragraph (G), by striking the period at the end of 
subparagraph (H) and inserting ‘‘, or’’, and by add-
ing at the end the following new subparagraph: 
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‘‘(I) a long-term family assistance recipi-
ent.’’. 
(2) LONG-TERM
FAMILY
ASSISTANCE
RECIPI-
ENT.—Subsection (d) of section 51 is amended by 
redesignating paragraphs (10) through (12) as para-
graphs (11) through (13), respectively, and by in-
serting after paragraph (9) the following new para-
graph: 
‘‘(10) LONG-TERM FAMILY ASSISTANCE RECIPI-
ENT.—The term ‘long-term family assistance recipi-
ent’ means any individual who is certified by the 
designated local agency— 
‘‘(A) as being a member of a family receiv-
ing assistance under a IV–A program (as de-
fined in paragraph (2)(B)) for at least the 18- 
month period ending on the hiring date, 
‘‘(B)(i) as being a member of a family re-
ceiving such assistance for 18 months beginning 
after August 5, 1997, and 
‘‘(ii) as having a hiring date which is not 
more than 2 years after the end of the earliest 
such 18-month period, or 
‘‘(C)(i) as being a member of a family 
which ceased to be eligible for such assistance 
by reason of any limitation imposed by Federal 
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or State law on the maximum period such as-
sistance is payable to a family, and 
‘‘(ii) as having a hiring date which is not 
more than 2 years after the date of such ces-
sation.’’. 
(3) INCREASED CREDIT FOR EMPLOYMENT OF 
LONG-TERM FAMILY ASSISTANCE RECIPIENTS.—Sec-
tion 51 is amended by inserting after subsection (d) 
the following new subsection: 
‘‘(e) CREDIT FOR SECOND-YEAR WAGES FOR EM-
PLOYMENT OF LONG-TERM FAMILY ASSISTANCE RECIPI-
ENTS.— 
‘‘(1) IN GENERAL.—With respect to the em-
ployment of a long-term family assistance recipi-
ent— 
‘‘(A) the amount of the work opportunity 
credit determined under this section for the tax-
able year shall include 50 percent of the quali-
fied second-year wages for such year, and 
‘‘(B) in lieu of applying subsection (b)(3), 
the amount of the qualified first-year wages, 
and the amount of qualified second-year wages, 
which may be taken into account with respect 
to such a recipient shall not exceed $10,000 per 
year. 
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‘‘(2) QUALIFIED
SECOND-YEAR
WAGES.—For 
purposes of this subsection, the term ‘qualified sec-
ond-year wages’ means qualified wages— 
‘‘(A) which are paid to a long-term family 
assistance recipient, and 
‘‘(B) which are attributable to service ren-
dered during the 1-year period beginning on the 
day after the last day of the 1-year period with 
respect to such recipient determined under sub-
section (b)(2). 
‘‘(3) SPECIAL RULES FOR AGRICULTURAL AND 
RAILWAY LABOR.—If such recipient is an employee 
to whom subparagraph (A) or (B) of subsection 
(h)(1) applies, rules similar to the rules of such sub-
paragraphs shall apply except that— 
‘‘(A) such subparagraph (A) shall be ap-
plied by substituting ‘$10,000’ for ‘$6,000’, and 
‘‘(B) such subparagraph (B) shall be ap-
plied by substituting ‘$833.33’ for ‘$500’.’’. 
(4) REPEAL OF SEPARATE WELFARE-TO-WORK 
CREDIT.— 
(A) IN GENERAL.—Section 51A is hereby 
repealed. 
(B) CLERICAL AMENDMENT.—The table of 
sections for subpart F of part IV of subchapter 
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A of chapter 1 is amended by striking the item 
relating to section 51A. 
(f) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to individuals who begin work for the 
employer after December 31, 2005. 
(2) CONSOLIDATION.—The amendments made 
by subsections (b), (c), (d), and (e) shall apply to in-
dividuals who begin work for the employer after De-
cember 31, 2006. 
SEC. 106. ELECTION TO INCLUDE COMBAT PAY AS EARNED 
INCOME FOR PURPOSES OF EARNED INCOME 
CREDIT. 
(a) IN GENERAL.—Section 32(c)(2)(B)(vi)(II) is 
amended by striking ‘‘2007’’ and inserting ‘‘2008’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2006. 
SEC. 107. EXTENSION AND MODIFICATION OF QUALIFIED 
ZONE ACADEMY BONDS. 
(a) 
IN
GENERAL.—Paragraph 
(1) 
of 
section 
1397E(e) is amended by striking ‘‘and 2005’’ and insert-
ing ‘‘2005, 2006, and 2007’’. 
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(b) SPECIAL RULES RELATING TO EXPENDITURES, 
ARBITRAGE, AND REPORTING.— 
(1) IN
GENERAL.—Section 1397E is amend-
ed— 
(A) in subsection (d)(1), by striking ‘‘and’’ 
at the end of subparagraph (C)(iii), by striking 
the period at the end of subparagraph (D) and 
inserting ‘‘, and’’, and by adding at the end the 
following new subparagraph: 
‘‘(E) the issue meets the requirements of 
subsections (f), (g), and (h).’’, and 
(B) by redesignating subsections (f), (g), 
(h), and (i) as subsection (i), (j), (k), and (l), 
respectively, and by inserting after subsection 
(e) the following new subsections: 
‘‘(f) SPECIAL
RULES
RELATING
TO
EXPENDI-
TURES.— 
‘‘(1) IN GENERAL.—An issue shall be treated as 
meeting the requirements of this subsection if, as of 
the date of issuance, the issuer reasonably expects— 
‘‘(A) at least 95 percent of the proceeds 
from the sale of the issue are to be spent for 
1 or more qualified purposes with respect to 
qualified zone academies within the 5-year pe-
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riod beginning on the date of issuance of the 
qualified zone academy bond, 
‘‘(B) a binding commitment with a third 
party to spend at least 10 percent of the pro-
ceeds from the sale of the issue will be incurred 
within the 6-month period beginning on the 
date of issuance of the qualified zone academy 
bond, and 
‘‘(C) such purposes will be completed with 
due diligence and the proceeds from the sale of 
the issue will be spent with due diligence. 
‘‘(2) EXTENSION
OF
PERIOD.—Upon submis-
sion of a request prior to the expiration of the period 
described in paragraph (1)(A), the Secretary may 
extend such period if the issuer establishes that the 
failure to satisfy the 5-year requirement is due to 
reasonable cause and the related purposes will con-
tinue to proceed with due diligence. 
‘‘(3) FAILURE TO SPEND REQUIRED AMOUNT 
OF BOND PROCEEDS WITHIN 5 YEARS.—To the ex-
tent that less than 95 percent of the proceeds of 
such issue are expended by the close of the 5-year 
period beginning on the date of issuance (or if an 
extension has been obtained under paragraph (2), by 
the close of the extended period), the issuer shall re-
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deem all of the nonqualified bonds within 90 days 
after the end of such period. For purposes of this 
paragraph, the amount of the nonqualified bonds re-
quired to be redeemed shall be determined in the 
same manner as under section 142. 
‘‘(g) SPECIAL RULES RELATING TO ARBITRAGE.— 
An issue shall be treated as meeting the requirements of 
this subsection if the issuer satisfies the arbitrage require-
ments of section 148 with respect to proceeds of the issue. 
‘‘(h) REPORTING.—Issuers of qualified academy zone 
bonds shall submit reports similar to the reports required 
under section 149(e).’’. 
(2) 
CONFORMING
AMENDMENTS.—Sections 
54(l)(3)(B) and 1400N(l)(7)(B)(ii) are each amend-
ed by striking ‘‘section 1397E(i)’’ and inserting 
‘‘section 1397E(l)’’. 
(c) EFFECTIVE DATES.— 
(1) EXTENSION.—The amendment made by 
subsection (a) shall apply to obligations issued after 
December 31, 2005. 
(2) SPECIAL RULES.—The amendments made 
by subsection (b) shall apply to obligations issued 
after the date of the enactment of this Act pursuant 
to allocations of the national zone academy bond 
limitation for calendar years after 2005. 
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SEC. 108. ABOVE-THE-LINE DEDUCTION FOR CERTAIN EX-
PENSES OF ELEMENTARY AND SECONDARY 
SCHOOL TEACHERS. 
(a) IN GENERAL.—Subparagraph (D) of section 
62(a)(2) is amended by striking ‘‘or 2005’’ and inserting 
‘‘2005, 2006, or 2007’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2005. 
SEC. 109. EXTENSION AND EXPANSION OF EXPENSING OF 
BROWNFIELDS REMEDIATION COSTS. 
(a) EXTENSION.—Subsection (h) of section 198 is 
amended by striking ‘‘2005’’ and inserting ‘‘2007’’. 
(b) EXPANSION.—Section 198(d)(1) (defining haz-
ardous substance) is amended by striking ‘‘and’’ at the 
end of subparagraph (A), by striking the period at the 
end of subparagraph (B) and inserting ‘‘, and’’, and by 
adding at the end the following new subparagraph: 
‘‘(C) any petroleum product (as defined in 
section 4612(a)(3)).’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to expenditures paid or incurred 
after December 31, 2005. 
SEC. 110. TAX INCENTIVES FOR INVESTMENT IN THE DIS-
TRICT OF COLUMBIA. 
(a) DESIGNATION OF ZONE.— 
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(1) IN
GENERAL.—Subsection (f) of section 
1400 is amended by striking ‘‘2005’’ both places it 
appears and inserting ‘‘2007’’. 
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to periods beginning 
after December 31, 2005. 
(b) 
TAX-EXEMPT
ECONOMIC
DEVELOPMENT 
BONDS.— 
(1) IN
GENERAL.—Subsection (b) of section 
1400A is amended by striking ‘‘2005’’ and inserting 
‘‘2007’’. 
(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall apply to bonds issued after 
December 31, 2005. 
(c) ZERO PERCENT CAPITAL GAINS RATE.— 
(1) IN
GENERAL.—Subsection (b) of section 
1400B is amended by striking ‘‘2006’’ each place it 
appears and inserting ‘‘2008’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Section 1400B(e)(2) is amended— 
(i) by striking ‘‘2010’’ and inserting 
‘‘2012’’, and 
(ii) by striking ‘‘2010’’ in the heading 
thereof and inserting ‘‘2012’’. 
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(B) Section 1400B(g)(2) is amended by 
striking ‘‘2010’’ and inserting ‘‘2012’’. 
(C) Section 1400F(d) is amended by strik-
ing ‘‘2010’’ and inserting ‘‘2012’’. 
(3) EFFECTIVE DATES.— 
(A) EXTENSION.—The amendments made 
by paragraph (1) shall apply to acquisitions 
after December 31, 2005. 
(B) 
CONFORMING
AMENDMENTS.—The 
amendments made by paragraph (2) shall take 
effect on the date of the enactment of this Act. 
(d) FIRST-TIME HOMEBUYER CREDIT.— 
(1) IN
GENERAL.—Subsection (i) of section 
1400C is amended by striking ‘‘2006’’ and inserting 
‘‘2008’’. 
(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall apply to property purchased 
after December 31, 2005. 
SEC. 111. INDIAN EMPLOYMENT TAX CREDIT. 
(a) IN GENERAL.—Section 45A(f) is amended by 
striking ‘‘2005’’ and inserting ‘‘2007’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2005. 
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SEC. 112. ACCELERATED DEPRECIATION FOR BUSINESS 
PROPERTY ON INDIAN RESERVATIONS. 
(a) IN GENERAL.—Section 168(j)(8) is amended by 
striking ‘‘2005’’ and inserting ‘‘2007’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to property placed in service after 
December 31, 2005. 
SEC. 113. FIFTEEN-YEAR STRAIGHT-LINE COST RECOVERY 
FOR QUALIFIED LEASEHOLD IMPROVEMENTS 
AND QUALIFIED RESTAURANT PROPERTY. 
(a) IN GENERAL.—Clauses (iv) and (v) of section 
168(e)(3)(E) are each amended by striking ‘‘2006’’ and 
inserting ‘‘2008’’. 
(b) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall apply to property placed in service 
after December 31, 2005. 
SEC. 114. COVER OVER OF TAX ON DISTILLED SPIRITS. 
(a) IN GENERAL.—Section 7652(f)(1) is amended by 
striking ‘‘2006’’ and inserting ‘‘2008’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to articles brought into the 
United States after December 31, 2005. 
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SEC. 115. PARITY IN APPLICATION OF CERTAIN LIMITS TO 
MENTAL HEALTH BENEFITS. 
(a) AMENDMENT TO THE INTERNAL REVENUE CODE 
OF 1986.—Section 9812(f)(3) is amended by striking 
‘‘2006’’ and inserting ‘‘2007’’. 
(b) AMENDMENT TO THE EMPLOYEE RETIREMENT 
INCOME SECURITY ACT OF 1974.—Section 712(f) of the 
Employee Retirement Income Security Act of 1974 (29 
U.S.C. 1185a(f)) is amended by striking ‘‘2006’’ and in-
serting ‘‘2007’’. 
(c) AMENDMENT TO THE PUBLIC HEALTH SERVICE 
ACT.—Section 2705(f) of the Public Health Service Act 
(42 
U.S.C. 
300gg–5(f)) 
is 
amended 
by 
striking 
‘‘2006’’and inserting ‘‘2007’’. 
SEC. 116. CORPORATE DONATIONS OF SCIENTIFIC PROP-
ERTY USED FOR RESEARCH AND OF COM-
PUTER TECHNOLOGY AND EQUIPMENT. 
(a) EXTENSION OF COMPUTER TECHNOLOGY AND 
EQUIPMENT DONATION.— 
(1) IN
GENERAL.—Section 170(e)(6)(G) is 
amended by striking ‘‘2005’’ and inserting ‘‘2007’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall apply to contributions made 
in taxable years beginning after December 31, 2005. 
(b) EXPANSION OF CHARITABLE CONTRIBUTION AL-
LOWED FOR SCIENTIFIC PROPERTY USED FOR RESEARCH 
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AND
FOR COMPUTER TECHNOLOGY
AND EQUIPMENT 
USED FOR EDUCATIONAL PURPOSES.— 
(1) SCIENTIFIC
PROPERTY
USED
FOR
RE-
SEARCH.— 
(A) IN GENERAL.—Clause (ii) of section 
170(e)(4)(B) (defining qualified research con-
tributions) is amended by inserting ‘‘or assem-
bled’’ after ‘‘constructed’’. 
(B) CONFORMING
AMENDMENT.—Clause 
(iii) of section 170(e)(4)(B) is amended by in-
serting ‘‘or assembly’’ after ‘‘construction’’. 
(2) COMPUTER TECHNOLOGY AND EQUIPMENT 
FOR EDUCATIONAL PURPOSES.— 
(A) IN GENERAL.—Clause (ii) of section 
170(e)(6)(B) is amended by inserting ‘‘or as-
sembled’’ after ‘‘constructed’’ and ‘‘or assem-
bling’’ after ‘‘construction’’. 
(B) CONFORMING AMENDMENT.—Subpara-
graph (D) of section 170(e)(6) is amended by 
inserting ‘‘or assembled’’ after ‘‘constructed’’ 
and ‘‘or assembly’’ after ‘‘construction’’. 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to taxable years begin-
ning after December 31, 2005. 
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SEC. 117. AVAILABILITY OF MEDICAL SAVINGS ACCOUNTS. 
(a) IN GENERAL.—Paragraphs (2) and (3)(B) of sec-
tion 220(i) are each amended by striking ‘‘2005’’ each 
place it appears in the text and headings and inserting 
‘‘2007’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Paragraph (2) of section 220(j) is amend-
ed— 
(A) in the text by striking ‘‘or 2004’’ each 
place it appears and inserting ‘‘2004, 2005, or 
2006’’, and 
(B) in the heading by striking ‘‘OR 2004’’ 
and inserting ‘‘2004, 2005, OR 2006’’ . 
(2) Subparagraph (A) of section 220(j)(4) is 
amended by striking ‘‘and 2004’’ and inserting 
‘‘2004, 2005, and 2006’’. 
(c) TIME FOR FILING REPORTS, ETC.— 
(1) The report required by section 220(j)(4) of 
the Internal Revenue Code of 1986 to be made on 
August 1, 2005, or August 1, 2006, as the case may 
be, shall be treated as timely if made before the 
close of the 90-day period beginning on the date of 
the enactment of this Act. 
(2) The determination and publication required 
by section 220(j)(5) of such Code with respect to 
calendar year 2005 or calendar year 2006, as the 
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case may be, shall be treated as timely if made be-
fore the close of the 120-day period beginning on the 
date of the enactment of this Act. If the determina-
tion under the preceding sentence is that 2005 or 
2006 is a cut-off year under section 220(i) of such 
Code, the cut-off date under such section 220(i) 
shall be the last day of such 120-day period. 
SEC. 118. TAXABLE INCOME LIMIT ON PERCENTAGE DEPLE-
TION FOR OIL AND NATURAL GAS PRODUCED 
FROM MARGINAL PROPERTIES. 
(a) IN GENERAL.—Section 613A(c)(6)(H) is amend-
ed by striking ‘‘2006’’ and inserting ‘‘2008’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to taxable years beginning after 
December 31, 2005. 
SEC. 119. AMERICAN SAMOA ECONOMIC DEVELOPMENT 
CREDIT. 
(a) IN GENERAL.—For purposes of section 30A of 
the Internal Revenue Code of 1986, a domestic corpora-
tion shall be treated as a qualified domestic corporation 
to which such section applies if such corporation— 
(1) is an existing credit claimant with respect 
to American Samoa, and 
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(2) elected the application of section 936 of the 
Internal Revenue Code of 1986 for its last taxable 
year beginning before January 1, 2006. 
(b) SPECIAL RULES
FOR APPLICATION
OF SEC-
TION.—The following rules shall apply in applying section 
30A of the Internal Revenue Code of 1986 for purposes 
of this section: 
(1) AMOUNT OF CREDIT.—Notwithstanding sec-
tion 30A(a)(1) of such Code, the amount of the 
credit determined under section 30A(a)(1) of such 
Code for any taxable year shall be the amount deter-
mined under section 30A(d) of such Code, except 
that section 30A(d) shall be applied without regard 
to paragraph (3) thereof. 
(2) SEPARATE APPLICATION.—In applying sec-
tion 30A(a)(3) of such Code in the case of a cor-
poration treated as a qualified domestic corporation 
by reason of this section, section 30A of such Code 
(and so much of section 936 of such Code as relates 
to such section 30A) shall be applied separately with 
respect to American Samoa. 
(3) FOREIGN TAX CREDIT ALLOWED.—Notwith-
standing section 30A(e) of such Code, the provisions 
of section 936(c) of such Code shall not apply with 
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respect to the credit allowed by reason of this sec-
tion. 
(c) DEFINITIONS.—For purposes of this section, any 
term which is used in this section which is also used in 
section 30A or 936 of such Code shall have the same 
meaning given such term by such section 30A or 936. 
(d) APPLICATION
OF SECTION.—Notwithstanding 
section 30A(h) or section 936(j) of such Code, this section 
(and so much of section 30A and section 936 of such Code 
as relates to this section) shall apply to the first two tax-
able years of a corporation to which subsection (a) applies 
which begin after December 31, 2005, and before January 
1, 2008. 
SEC. 120. EXTENSION OF BONUS DEPRECIATION FOR CER-
TAIN QUALIFIED GULF OPPORTUNITY ZONE 
PROPERTY. 
(a) IN GENERAL.—Subsection (d) of section 1400N 
is amended by adding at the end the following new para-
graph: 
‘‘(6) EXTENSION FOR CERTAIN PROPERTY.— 
‘‘(A) IN
GENERAL.—In the case of any 
specified Gulf Opportunity Zone extension prop-
erty, paragraph (2)(A) shall be applied without 
regard to clause (v) thereof. 
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‘‘(B) SPECIFIED GULF OPPORTUNITY ZONE 
EXTENSION PROPERTY.—For purposes of this 
paragraph, the term ‘specified Gulf Opportunity 
Zone extension property’ means property— 
‘‘(i) substantially all of the use of 
which is in one or more specified portions 
of the GO Zone, and 
‘‘(ii) which is— 
‘‘(I) nonresidential real property 
or residential rental property which is 
placed in service by the taxpayer on or 
before December 31, 2010, or 
‘‘(II) in the case of a taxpayer 
who places a building described in 
subclause (I) in service on or before 
December 31, 2010, property de-
scribed in section 168(k)(2)(A)(i) if 
substantially all of the use of such 
property is in such building and such 
property is placed in service by the 
taxpayer not later than 90 days after 
such building is placed in service. 
‘‘(C) SPECIFIED
PORTIONS
OF
THE
GO 
ZONE.—For purposes of this paragraph, the 
term ‘specified portions of the GO Zone’ means 
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those portions of the GO Zone which are in any 
county or parish which is identified by the Sec-
retary as being a county or parish in which hur-
ricanes occurring during 2005 damaged (in the 
aggregate) more than 60 percent of the housing 
units in such county or parish which were occu-
pied (determined according to the 2000 Cen-
sus). 
‘‘(D) ONLY PRE-JANUARY 1, 2010, BASIS 
OF REAL PROPERTY ELIGIBLE FOR ADDITIONAL 
ALLOWANCE.—In the case of property which is 
qualified Gulf Opportunity Zone property solely 
by reason of subparagraph (B)(ii)(I), paragraph 
(1) shall apply only to the extent of the ad-
justed basis thereof attributable to manufac-
ture, construction, or production before Janu-
ary 1, 2010.’’. 
(b) EXTENSION NOT APPLICABLE TO INCREASED 
SECTION 179 EXPENSING.—Paragraph (2) of section 
1400N(e) is amended by inserting ‘‘without regard to sub-
section (d)(6)’’ after ‘‘subsection (d)(2)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall take effect as if included in section 101 
of the Gulf Opportunity Zone Act of 2005. 
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SEC. 121. AUTHORITY FOR UNDERCOVER OPERATIONS. 
Paragraph (6) of section 7608(c) (relating to applica-
tion of section) is amended by striking ‘‘2007’’ both places 
it appears and inserting ‘‘2008’’. 
SEC. 122. DISCLOSURES OF CERTAIN TAX RETURN INFOR-
MATION. 
(a) DISCLOSURES TO FACILITATE COMBINED EM-
PLOYMENT TAX REPORTING.— 
(1) IN GENERAL.—Subparagraph (B) of section 
6103(d)(5) (relating to termination) is amended by 
striking ‘‘2006’’ and inserting ‘‘2007’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall apply to disclosures after De-
cember 31, 2006. 
(b) DISCLOSURES RELATING TO TERRORIST ACTIVI-
TIES.— 
(1) IN
GENERAL.—Clause (iv) of section 
6103(i)(3)(C) and subparagraph (E) of section 
6103(i)(7) are each amended by striking ‘‘2006’’ 
and inserting ‘‘2007’’. 
(2) EFFECTIVE DATE.—The amendments made 
by paragraph (1) shall apply to disclosures after De-
cember 31, 2006. 
(c) DISCLOSURES RELATING TO STUDENT LOANS.— 
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(1) IN GENERAL.—Subparagraph (D) of section 
6103(l)(13) (relating to termination) is amended by 
striking ‘‘2006’’ and inserting ‘‘2007’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall apply to requests made after 
December 31, 2006. 
SEC. 123. SPECIAL RULE FOR ELECTIONS UNDER EXPIRED 
PROVISIONS. 
(a) RESEARCH CREDIT ELECTIONS.—In the case of 
any taxable year ending after December 31, 2005, and be-
fore the date of the enactment of this Act, any election 
under section 41(c)(4) or section 280C(c)(3)(C) of the In-
ternal Revenue Code of 1986 shall be treated as having 
been timely made for such taxable year if such election 
is made not later than the later of April 15, 2007, or such 
time as the Secretary of the Treasury, or his designee, 
may specify. Such election shall be made in the manner 
prescribed by such Secretary or designee. 
(b) OTHER ELECTIONS.—Except as otherwise pro-
vided by such Secretary or designee, a rule similar to the 
rule of subsection (a) shall apply with respect to elections 
under any other expired provision of the Internal Revenue 
Code of 1986 the applicability of which is extended by rea-
son of the amendments made by this title. 
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TITLE II—ENERGY TAX 
PROVISIONS 
SEC. 201. CREDIT FOR ELECTRICITY PRODUCED FROM 
CERTAIN RENEWABLE RESOURCES. 
Subsection (d) of section 45 is amended by striking 
‘‘January 1, 2008’’ each place it appears and inserting 
‘‘January 1, 2009’’. 
SEC. 202. CREDIT TO HOLDERS OF CLEAN RENEWABLE EN-
ERGY BONDS. 
(a) IN GENERAL.—Section 54 is amended— 
(1) by striking ‘‘$800,000,000’’ in subsection 
(f)(1) and inserting ‘‘$1,200,000,000’’, 
(2) by striking ‘‘$500,000,000’’ in subsection 
(f)(2) and inserting ‘‘$750,000,000’’, and 
(3) by striking ‘‘December 31, 2007’’ in sub-
section (m) and inserting ‘‘December 31, 2008’’. 
(b) EFFECTIVE DATES.— 
(1) IN GENERAL.—The amendments made by 
paragraphs (1) and (3) of subsection (a) shall apply 
to bonds issued after December 31, 2006. 
(2) ALLOCATIONS.—The amendment made by 
subsection (a)(2) shall apply to allocations or re-
allocations after December 31, 2006. 
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SEC. 203. PERFORMANCE STANDARDS FOR SULFUR DIOX-
IDE REMOVAL IN ADVANCED COAL-BASED 
GENERATION TECHNOLOGY UNITS DESIGNED 
TO USE SUBBITUMINOUS COAL. 
(a) IN GENERAL.—Paragraph (1) of section 48A(f) 
(relating to advanced coal-based generation technology) is 
amended by adding at the end the following new flush sen-
tence: 
‘‘For purposes of the performance requirement spec-
ified for the removal of SO2 in the table contained 
in subparagraph (B), the SO2 removal design level 
in the case of a unit designed for the use of feed-
stock substantially all of which is subbituminous coal 
shall be 99 percent SO2 removal or the achievement 
of an emission level of 0.04 pounds or less of SO2 
per million Btu, determined on a 30-day average.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall take apply with respect to applications 
for certification under section 48A(d)(2) of the Internal 
Revenue Code of 1986 submitted after October 2, 2006. 
SEC. 204. DEDUCTION FOR ENERGY EFFICIENT COMMER-
CIAL BUILDINGS. 
Subsection (h) of section 179D is amended by strik-
ing ‘‘December 31, 2007’’ and inserting ‘‘December 31, 
2008’’. 
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SEC. 205. CREDIT FOR NEW ENERGY EFFICIENT HOMES. 
Subsection (g) of section 45L is amended by striking 
‘‘December 31, 2007’’ and inserting ‘‘December 31, 
2008’’. 
SEC. 206. CREDIT FOR RESIDENTIAL ENERGY EFFICIENT 
PROPERTY. 
(a) EXTENSION.—Subsection (g) of section 25D is 
amended by striking ‘‘December 31, 2007’’ and inserting 
‘‘December 31, 2008’’. 
(b) CLARIFICATION OF TERM.— 
(1) 
Subsections 
(a)(1), 
(b)(1)(A), 
and 
(e)(4)(A)(i) of section 25D are each amended by 
striking ‘‘qualified photovoltaic property expendi-
tures’’ and inserting ‘‘qualified solar electric prop-
erty expenditures’’. 
(2) Section 25D(d)(2) is amended— 
(A) by striking ‘‘qualified photovoltaic 
property expenditure’’ and inserting ‘‘qualified 
solar electric property expenditure’’, and 
(B) in the heading by striking ‘‘QUALIFIED 
PHOTOVOLTAIC PROPERTY EXPENDITURE’’ and 
inserting ‘‘QUALIFIED SOLAR ELECTRIC PROP-
ERTY EXPENDITURE’’. 
SEC. 207. ENERGY CREDIT. 
Section 48 is amended— 
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(1) by striking ‘‘January 1, 2008’’ both places 
it appears and inserting ‘‘January 1, 2009’’, and 
(2) by striking ‘‘December 31, 2007’’ both 
places it appears and inserting ‘‘December 31, 
2008’’. 
SEC. 208. SPECIAL RULE FOR QUALIFIED METHANOL OR 
ETHANOL FUEL. 
(a) EXTENSION.—Subparagraph (D) of section 
4041(b)(2) is amended by striking ‘‘October 1, 2007’’ and 
inserting ‘‘January 1, 2009’’. 
(b) 
APPLICABLE
BLENDER
RATE.—Section 
4041(b)(2)(C)(ii) is amended by striking ‘‘2007’’ and in-
serting ‘‘2008’’. 
(c) CLERICAL AMENDMENT.—The heading for sec-
tion 4041(b)(2)(B) is amended to read as follows: ‘‘QUALI-
FIED METHANOL AND ETHANOL FUEL PRODUCED FROM 
COAL’’. 
SEC. 209. SPECIAL DEPRECIATION ALLOWANCE FOR CEL-
LULOSIC BIOMASS ETHANOL PLANT PROP-
ERTY. 
(a) IN GENERAL.—Section 168 (relating to acceler-
ated cost recovery system) is amended by adding at the 
end the following: 
‘‘(l) SPECIAL ALLOWANCE FOR CELLULOSIC BIO-
MASS ETHANOL PLANT PROPERTY.— 
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‘‘(1) ADDITIONAL ALLOWANCE.—In the case of 
any qualified cellulosic biomass ethanol plant prop-
erty— 
‘‘(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 50 percent of the ad-
justed basis of such property, and 
‘‘(B) the adjusted basis of such property 
shall be reduced by the amount of such deduc-
tion before computing the amount otherwise al-
lowable as a depreciation deduction under this 
chapter for such taxable year and any subse-
quent taxable year. 
‘‘(2) QUALIFIED
CELLULOSIC
BIOMASS
ETH-
ANOL PLANT PROPERTY.—The term ‘qualified cel-
lulosic biomass ethanol plant property’ means prop-
erty of a character subject to the allowance for de-
preciation— 
‘‘(A) which is used in the United States 
solely to produce cellulosic biomass ethanol, 
‘‘(B) the original use of which commences 
with the taxpayer after the date of the enact-
ment of this subsection, 
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‘‘(C) which is acquired by the taxpayer by 
purchase (as defined in section 179(d)) after 
the date of the enactment of this subsection, 
but only if no written binding contract for the 
acquisition was in effect on or before the date 
of the enactment of this subsection, and 
‘‘(D) which is placed in service by the tax-
payer before January 1, 2013. 
‘‘(3) CELLULOSIC
BIOMASS
ETHANOL.—For 
purposes of this subsection, the term ‘cellulosic bio-
mass ethanol’ means ethanol produced by enzymatic 
hydrolysis of any lignocellulosic or hemicellulosic 
matter that is available on a renewable or recurring 
basis. 
‘‘(4) EXCEPTIONS.— 
‘‘(A) ALTERNATIVE DEPRECIATION PROP-
ERTY.—Such term shall not include any prop-
erty described in section 168(k)(2)(D)(i). 
‘‘(B) TAX-EXEMPT BOND-FINANCED PROP-
ERTY.—Such term shall not include any prop-
erty any portion of which is financed with the 
proceeds of any obligation the interest on which 
is exempt from tax under section 103. 
‘‘(C) ELECTION
OUT.—If a taxpayer 
makes an election under this subparagraph with 
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respect to any class of property for any taxable 
year, this subsection shall not apply to all prop-
erty in such class placed in service during such 
taxable year. 
‘‘(5) SPECIAL
RULES.—For purposes of this 
subsection, rules similar to the rules of subpara-
graph (E) of section 168(k)(2) shall apply, except 
that such subparagraph shall be applied— 
‘‘(A) by substituting ‘the date of the enact-
ment of subsection (l)’ for ‘September 10, 
2001’ each place it appears therein, 
‘‘(B) by substituting ‘January 1, 2013’ for 
‘January 1, 2005’ in clause (i) thereof, and 
‘‘(C) by substituting ‘qualified cellulosic 
biomass ethanol plant property’ for ‘qualified 
property’ in clause (iv) thereof. 
‘‘(6) ALLOWANCE AGAINST ALTERNATIVE MIN-
IMUM TAX.—For purposes of this subsection, rules 
similar to the rules of section 168(k)(2)(G) shall 
apply. 
‘‘(7) RECAPTURE.—For purposes of this sub-
section, rules similar to the rules under section 
179(d)(10) shall apply with respect to any qualified 
cellulosic biomass ethanol plant property which 
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ceases to be qualified cellulosic biomass ethanol 
plant property. 
‘‘(8) DENIAL
OF
DOUBLE
BENEFIT.—Para-
graph (1) shall not apply to any qualified cellulosic 
biomass ethanol plant property with respect to which 
an election has been made under section 179C (re-
lating to election to expense certain refineries).’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to property placed in service after 
the date of the enactment of this Act in taxable years end-
ing after such date. 
SEC. 210. EXPENDITURES PERMITTED FROM THE LEAKING 
UNDERGROUND 
STORAGE 
TANK 
TRUST 
FUND. 
(a) IN GENERAL.—Subsection (c) of section 9508 is 
amended— 
(1) by striking ‘‘section 9003(h)’’ and inserting 
‘‘sections 
9003(h), 
9003(i), 
9003(j), 
9004(f), 
9005(c), 9010, 9011, 9012, and 9013’’, and 
(2) by striking ‘‘Superfund Amendments and 
Reauthorization Act of 1986’’ and inserting ‘‘Public 
Law 109–168’’. 
(b) CONFORMING AMENDMENTS.—Section 9014(2) 
of the Solid Waste Disposal Act is amended by striking 
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‘‘Fund, notwithstanding section 9508(c)(1) of the Internal 
Revenue Code of 1986’’ and inserting ‘‘Fund’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on the date of the enactment 
of this Act. 
SEC. 211. TREATMENT OF COKE AND COKE GAS. 
(a) 
NONAPPLICATION
OF
PHASEOUT.—Section 
45K(g)(2) is amended by adding at the end the following 
new subparagraph: 
‘‘(D) NONAPPLICATION
OF
PHASEOUT.— 
Subsection (b)(1) shall not apply.’’. 
(b) CLARIFICATION OF QUALIFYING FACILITY.—Sec-
tion 45K(g)(1) is amended by inserting ‘‘(other than from 
petroleum based products)’’ after ‘‘coke or coke gas’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall take effect as if included in section 1321 
of the Energy Policy Act of 2005. 
TITLE III—HEALTH SAVINGS 
ACCOUNTS 
SEC. 301. SHORT TITLE. 
This title may be cited as the ‘‘Health Opportunity 
Patient Empowerment Act of 2006’’. 
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SEC. 302. FSA AND HRA TERMINATIONS TO FUND HSAS. 
(a) IN GENERAL.—Section 106 (relating to contribu-
tions by employer to accident and health plans) is amend-
ed by adding at the end the following new subsection: 
‘‘(e) FSA AND HRA TERMINATIONS
TO FUND 
HSAS.— 
‘‘(1) IN GENERAL.—A plan shall not fail to be 
treated as a health flexible spending arrangement or 
health reimbursement arrangement under this sec-
tion or section 105 merely because such plan pro-
vides for a qualified HSA distribution. 
‘‘(2) 
QUALIFIED
HSA
DISTRIBUTION.—The 
term ‘qualified HSA distribution’ means a distribu-
tion from a health flexible spending arrangement or 
health reimbursement arrangement to the extent 
that such distribution— 
‘‘(A) does not exceed the lesser of the bal-
ance in such arrangement on September 21, 
2006, or as of the date of such distribution, 
and 
‘‘(B) is contributed by the employer di-
rectly to the health savings account of the em-
ployee before January 1, 2012. 
Such term shall not include more than 1 distribution 
with respect to any arrangement. 
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‘‘(3) ADDITIONAL TAX FOR FAILURE TO MAIN-
TAIN
HIGH
DEDUCTIBLE
HEALTH
PLAN
COV-
ERAGE.— 
‘‘(A) IN GENERAL.—If, at any time during 
the testing period, the employee is not an eligi-
ble individual, then the amount of the qualified 
HSA distribution— 
‘‘(i) shall be includible in the gross in-
come of the employee for the taxable year 
in which occurs the first month in the test-
ing period for which such employee is not 
an eligible individual, and 
‘‘(ii) the tax imposed by this chapter 
for such taxable year on the employee shall 
be increased by 10 percent of the amount 
which is so includible. 
‘‘(B) EXCEPTION
FOR
DISABILITY
OR 
DEATH.—Clauses (i) and (ii) of subparagraph 
(A) shall not apply if the employee ceases to be 
an eligible individual by reason of the death of 
the employee or the employee becoming disabled 
(within the meaning of section 72(m)(7)). 
‘‘(4) DEFINITIONS AND SPECIAL RULES.—For 
purposes of this subsection— 
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‘‘(A) TESTING PERIOD.—The term ‘testing 
period’ means the period beginning with the 
month in which the qualified HSA distribution 
is contributed to the health savings account and 
ending on the last day of the 12th month fol-
lowing such month. 
‘‘(B) ELIGIBLE
INDIVIDUAL.—The term 
‘eligible individual’ has the meaning given such 
term by section 223(c)(1). 
‘‘(C) TREATMENT
AS
ROLLOVER
CON-
TRIBUTION.—A qualified HSA distribution shall 
be treated as a rollover contribution described 
in section 223(f)(5). 
‘‘(5) TAX TREATMENT RELATING TO DISTRIBU-
TIONS.—For purposes of this title— 
‘‘(A) IN GENERAL.—A qualified HSA dis-
tribution shall be treated as a payment de-
scribed in subsection (d). 
‘‘(B) COMPARABILITY EXCISE TAX.— 
‘‘(i) IN
GENERAL.—Except as pro-
vided in clause (ii), section 4980G shall 
not apply to qualified HSA distributions. 
‘‘(ii) FAILURE TO OFFER TO ALL EM-
PLOYEES.—In the case of a qualified HSA 
distribution to any employee, the failure to 
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offer such distribution to any eligible indi-
vidual covered under a high deductible 
health plan of the employer shall (notwith-
standing section 4980G(d)) be treated for 
purposes of section 4980G as a failure to 
meet 
the 
requirements 
of 
section 
4980G(b).’’. 
(b) CERTAIN FSA COVERAGE DISREGARDED COV-
ERAGE.—Subparagraph (B) of section 223(c)(1) (relating 
to certain coverage disregarded) is amended by striking 
‘‘and’’ at the end of clause (i), by striking the period at 
the end of clause (ii) and inserting ‘‘, and’’, and by insert-
ing after clause (ii) the following new clause: 
‘‘(iii) for taxable years beginning after 
December 31, 2006, coverage under a 
health flexible spending arrangement dur-
ing any period immediately following the 
end of a plan year of such arrangement 
during which unused benefits or contribu-
tions remaining at the end of such plan 
year may be paid or reimbursed to plan 
participants for qualified benefit expenses 
incurred during such period if— 
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‘‘(I) the balance in such arrange-
ment at the end of such plan year is 
zero, or 
‘‘(II) the individual is making a 
qualified HSA distribution (as defined 
in section 106(e)) in an amount equal 
to the remaining balance in such ar-
rangement as of the end of such plan 
year, in accordance with rules pre-
scribed by the Secretary.’’. 
(c) APPLICATION OF SECTION.— 
(1) SUBSECTION (a).—The amendment made 
by subsection (a) shall apply to distributions on or 
after the date of the enactment of this Act. 
(2) SUBSECTION (b).—The amendment made 
by subsection (b) shall take effect on the date of the 
enactment of this Act. 
SEC. 303. REPEAL OF ANNUAL DEDUCTIBLE LIMITATION 
ON HSA CONTRIBUTIONS. 
(a) IN GENERAL.—Paragraph (2) of section 223(b) 
(relating to monthly limitation) is amended— 
(1) in subparagraph (A) by striking ‘‘the lesser 
of—’’ and all that follows and inserting ‘‘$2,250.’’, 
and 
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(2) in subparagraph (B) by striking ‘‘the lesser 
of—’’ and all that follows and inserting ‘‘$4,500.’’. 
(b) 
CONFORMING
AMENDMENT.—Section 
223(d)(1)(A)(ii)(I) is amended by striking ‘‘subsection 
(b)(2)(B)(ii)’’ and inserting ‘‘subsection (b)(2)(B)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2006. 
SEC. 304. MODIFICATION OF COST-OF-LIVING ADJUSTMENT. 
Paragraph (1) of section 223(g) (relating to cost-of- 
living adjustment) is amended by adding at the end the 
following new flush sentence: 
‘‘In the case of adjustments made for any taxable 
year beginning after 2007, section 1(f)(4) shall be 
applied for purposes of this paragraph by sub-
stituting ‘March 31’ for ‘August 31’, and the Sec-
retary shall publish the adjusted amounts under sub-
sections (b)(2) and (c)(2)(A) for taxable years begin-
ning in any calendar year no later than June 1 of 
the preceding calendar year.’’. 
SEC. 305. CONTRIBUTION LIMITATION NOT REDUCED FOR 
PART-YEAR COVERAGE. 
(a) INCREASE IN LIMIT FOR INDIVIDUALS BECOMING 
ELIGIBLE
INDIVIDUALS
AFTER
BEGINNING
OF
THE 
YEAR.—Subsection (b) of section 223 (relating to limita-
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tions) is amended by adding at the end the following new 
paragraph: 
‘‘(8) INCREASE IN LIMIT FOR INDIVIDUALS BE-
COMING ELIGIBLE INDIVIDUALS AFTER THE BEGIN-
NING OF THE YEAR.— 
‘‘(A) IN GENERAL.—For purposes of com-
puting the limitation under paragraph (1) for 
any taxable year, an individual who is an eligi-
ble individual during the last month of such 
taxable year shall be treated— 
‘‘(i) as having been an eligible indi-
vidual during each of the months in such 
taxable year, and 
‘‘(ii) as having been enrolled, during 
each of the months such individual is 
treated as an eligible individual solely by 
reason of clause (i), in the same high de-
ductible health plan in which the individual 
was enrolled for the last month of such 
taxable year. 
‘‘(B) FAILURE
TO
MAINTAIN
HIGH
DE-
DUCTIBLE HEALTH PLAN COVERAGE.— 
‘‘(i) IN
GENERAL.—If, at any time 
during the testing period, the individual is 
not an eligible individual, then— 
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‘‘(I) gross income of the indi-
vidual for the taxable year in which 
occurs the first month in the testing 
period for which such individual is not 
an eligible individual is increased by 
the aggregate amount of all contribu-
tions to the health savings account of 
the individual which could not have 
been made but for subparagraph (A), 
and 
‘‘(II) the tax imposed by this 
chapter for any taxable year on the 
individual shall be increased by 10 
percent of the amount of such in-
crease. 
‘‘(ii) EXCEPTION FOR DISABILITY OR 
DEATH.—Subclauses (I) and (II) of clause 
(i) shall not apply if the individual ceased 
to be an eligible individual by reason of the 
death of the individual or the individual 
becoming disabled (within the meaning of 
section 72(m)(7)). 
‘‘(iii) TESTING
PERIOD.—The term 
‘testing period’ means the period beginning 
with the last month of the taxable year re-
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ferred to in subparagraph (A) and ending 
on the last day of the 12th month fol-
lowing such month.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2006. 
SEC. 306. EXCEPTION TO REQUIREMENT FOR EMPLOYERS 
TO MAKE COMPARABLE HEALTH SAVINGS AC-
COUNT CONTRIBUTIONS. 
(a) IN GENERAL.—Section 4980G (relating to failure 
of employer to make comparable health savings account 
contributions) is amended by adding at the end the fol-
lowing new subsection: 
‘‘(d) EXCEPTION.—For purposes of applying section 
4980E to a contribution to a health savings account of 
an employee who is not a highly compensated employee 
(as defined in section 414(q)), highly compensated em-
ployees shall not be treated as comparable participating 
employees.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2006. 
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SEC. 307. ONE-TIME DISTRIBUTION FROM INDIVIDUAL RE-
TIREMENT PLANS TO FUND HSAS. 
(a) IN GENERAL.—Subsection (d) of section 408 (re-
lating to taxability of beneficiary of employees’ trust) is 
amended by adding at the end the following new para-
graph: 
‘‘(9) DISTRIBUTION FOR HEALTH SAVINGS AC-
COUNT FUNDING.— 
‘‘(A) IN GENERAL.—In the case of an indi-
vidual who is an eligible individual (as defined 
in section 223(c)) and who elects the applica-
tion of this paragraph for a taxable year, gross 
income of the individual for the taxable year 
does not include a qualified HSA funding dis-
tribution to the extent such distribution is oth-
erwise includible in gross income. 
‘‘(B) QUALIFIED HSA FUNDING DISTRIBU-
TION.—For purposes of this paragraph, the 
term ‘qualified HSA funding distribution’ 
means a distribution from an individual retire-
ment plan (other than a plan described in sub-
section (k) or (p)) of the employee to the extent 
that such distribution is contributed to the 
health savings account of the individual in a di-
rect trustee-to-trustee transfer. 
‘‘(C) LIMITATIONS.— 
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‘‘(i) 
MAXIMUM
DOLLAR
LIMITA-
TION.—The amount excluded from gross 
income by subparagraph (A) shall not ex-
ceed the excess of— 
‘‘(I) the annual limitation under 
section 223(b) computed on the basis 
of the type of coverage under the high 
deductible health plan covering the in-
dividual at the time of the qualified 
HSA funding distribution, over 
‘‘(II) in the case of a distribution 
described 
in 
clause 
(ii)(II), 
the 
amount of the earlier qualified HSA 
funding distribution. 
‘‘(ii) ONE-TIME TRANSFER.— 
‘‘(I) IN
GENERAL.—Except as 
provided in subclause (II), an indi-
vidual may make an election under 
subparagraph (A) only for one quali-
fied HSA funding distribution during 
the lifetime of the individual. Such an 
election, once made, shall be irrev-
ocable. 
‘‘(II) CONVERSION
FROM
SELF- 
ONLY
TO
FAMILY
COVERAGE.—If a 
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qualified HSA funding distribution is 
made during a month in a taxable 
year during which an individual has 
self-only coverage under a high de-
ductible health plan as of the first day 
of the month, the individual may elect 
to make an additional qualified HSA 
funding distribution during a subse-
quent month in such taxable year dur-
ing which the individual has family 
coverage under a high deductible 
health plan as of the first day of the 
subsequent month. 
‘‘(D) FAILURE
TO
MAINTAIN
HIGH
DE-
DUCTIBLE HEALTH PLAN COVERAGE.— 
‘‘(i) IN
GENERAL.—If, at any time 
during the testing period, the individual is 
not an eligible individual, then the aggre-
gate amount of all contributions to the 
health savings account of the individual 
made under subparagraph (A)— 
‘‘(I) shall be includible in the 
gross income of the individual for the 
taxable year in which occurs the first 
month in the testing period for which 
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