‘‘(B) any property included in the gross es-
tate of the covered expatriate for purposes of 
chapter 11 and shown on a timely filed return 
of tax imposed by chapter 11 of the estate of 
the covered expatriate. 
‘‘(3) EXCEPTIONS FOR TRANSFERS TO SPOUSE 
OR CHARITY.—Such term shall not include any prop-
erty with respect to which a deduction would be al-
lowed under section 2055, 2056, 2522, or 2523, 
whichever is appropriate, if the decedent or donor 
were a United States person. 
‘‘(4) TRANSFERS IN TRUST.— 
‘‘(A) DOMESTIC TRUSTS.—In the case of a 
covered gift or bequest made to a domestic 
trust— 
‘‘(i) subsection (a) shall apply in the 
same manner as if such trust were a 
United States citizen, and 
‘‘(ii) the tax imposed by subsection (a) 
on such gift or bequest shall be paid by 
such trust. 
‘‘(B) FOREIGN TRUSTS.— 
‘‘(i) IN GENERAL.—In the case of a 
covered gift or bequest made to a foreign 
trust, subsection (a) shall apply to any dis-
tribution attributable to such gift or be-
quest from such trust (whether from in-
come or corpus) to a United States citizen 
or resident in the same manner as if such 
distribution were a covered gift or bequest. 
‘‘(ii) DEDUCTION FOR TAX PAID BY 
RECIPIENT.—There shall be allowed as a 
deduction under section 164 the amount of 
tax imposed by this section which is paid 
or accrued by a United States citizen or 
resident by reason of a distribution from a 
foreign trust, but only to the extent such 
tax is imposed on the portion of such dis-
tribution which is included in the gross in-
come of such citizen or resident. 
‘‘(iii) ELECTION TO BE TREATED AS 
DOMESTIC TRUST.—Solely for purposes of 
this section, a foreign trust may elect to be 
treated as a domestic trust. Such an elec-
tion may be revoked with the consent of 
the Secretary. 
‘‘(f) COVERED EXPATRIATE.—For purposes of this 
section, the term ‘covered expatriate’ has the meaning 
given to such term by section 877A(g)(1).’’.
(2) CLERICAL
AMENDMENT.—The table of 
chapters for subtitle B is amended by inserting after 
the item relating to chapter 14 the following new 
item: 
‘‘CHAPTER 15. GIFTS AND BEQUESTS FROM EXPATRIATES.’’. 
(c) DEFINITION
OF
TERMINATION
OF
UNITED 
STATES CITIZENSHIP.— 
(1) IN GENERAL.—Section 7701(a) is amended 
by adding at the end the following new paragraph: 
‘‘(50) TERMINATION OF UNITED STATES CITI-
ZENSHIP.— 
‘‘(A) IN
GENERAL.—An individual shall 
not cease to be treated as a United States cit-
izen before the date on which the individual’s 
citizenship is treated as relinquished under sec-
tion 877A(g)(4). 
‘‘(B) DUAL CITIZENS.—Under regulations 
prescribed by the Secretary, subparagraph (A) 
shall not apply to an individual who became at 
birth a citizen of the United States and a cit-
izen of another country.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Paragraph (1) of section 877(e) is 
amended to read as follows: 
‘‘(1) IN GENERAL.—Any long-term resident of 
the United States who ceases to be a lawful perma-
nent resident of the United States (within the mean-
ing of section 7701(b)(6)) shall be treated for pur-
poses of this section and sections 2107, 2501, and 
6039G in the same manner as if such resident were 
a citizen of the United States who lost United States 
citizenship on the date of such cessation or com-
mencement.’’. 
(B) Paragraph (6) of section 7701(b) is 
amended by adding at the end the following 
flush sentence: 
‘‘An individual shall cease to be treated as a lawful 
permanent resident of the United States if such in-
dividual commences to be treated as a resident of a 
foreign country under the provisions of a tax treaty 
between the United States and the foreign country, 
does not waive the benefits of such treaty applicable 
to residents of the foreign country, and notifies the 
Secretary of the commencement of such treatment.’’. 
(C) Section 7701 is amended by striking 
subsection (n) and by redesignating subsections 
(o) and (p) as subsections (n) and (o), respec-
tively. 
(d) TERMINATION OF SECTION 877.—Section 877 is 
amended by adding at the end the following new sub-
section:
‘‘(h) TERMINATION.—This section shall not apply to 
any individual whose expatriation date (as defined in sec-
tion 877A(g)(3)) is on or after the date of the enactment 
of this subsection.’’. 
(e) INFORMATION
RETURNS.—Section 6039G is 
amended— 
(1) by inserting ‘‘or 877A’’ after ‘‘section 
877(b)’’ in subsection (a), and 
(2) by inserting ‘‘or 877A’’ after ‘‘section 
877(a)’’ in subsection (d). 
(f) CLERICAL AMENDMENT.—The table of sections 
for subpart A of part II of subchapter N of chapter 1 
is amended by inserting after the item relating to section 
877 the following new item: 
‘‘Sec. 877A. Tax responsibilities of expatriation.’’. 
(g) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in this 
subsection, the amendments made by this section 
shall apply to any individual whose expatriation date 
(as so defined) is on or after the date of the enact-
ment of this Act. 
(2) GIFTS AND BEQUESTS.—Chapter 15 of the 
Internal Revenue Code of 1986 (as added by sub-
section (b)) shall apply to covered gifts and bequests 
(as defined in section 2801 of such Code, as so 
added) received on or after the date of the enact-
ment of this Act from transferors (or from the es-
tates of transferors) whose expatriation date is on or 
after such date of enactment. 
SEC. 302. CERTAIN DOMESTICALLY CONTROLLED FOREIGN 
PERSONS PERFORMING SERVICES UNDER 
CONTRACT WITH UNITED STATES GOVERN-
MENT TREATED AS AMERICAN EMPLOYERS. 
(a) FICA TAXES.—Section 3121 (relating to defini-
tions) is amended by adding at the end the following new 
subsection: 
‘‘(z) TREATMENT OF CERTAIN FOREIGN PERSONS AS 
AMERICAN EMPLOYERS.— 
‘‘(1) IN GENERAL.—If any employee of a for-
eign person is performing services in connection with 
a contract between the United States Government 
(or any instrumentality thereof) and any member of 
any domestically controlled group of entities which 
includes such foreign person, such foreign person 
shall be treated for purposes of this chapter as an 
American employer with respect to such services per-
formed by such employee. 
‘‘(2) DOMESTICALLY CONTROLLED GROUP OF 
ENTITIES.—For purposes of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘domesti-
cally controlled group of entities’ means a con-
and for any penalty imposed on such person by this 
title with respect to any failure to pay such tax or 
to file any return or statement with respect to such 
tax or wages subject to such tax. No deduction shall 
be allowed under this title for any liability imposed 
by the preceding sentence. 
‘‘(4) PROVISIONS
PREVENTING
DOUBLE
TAX-
ATION.— 
‘‘(A) AGREEMENTS.—Paragraph (1) shall 
not apply to any services which are covered by 
an agreement under subsection (l). 
‘‘(B) EQUIVALENT FOREIGN TAXATION.— 
Paragraph (1) shall not apply to any services if 
the employer establishes to the satisfaction of 
the Secretary that the remuneration paid by 
such employer for such services is subject to a 
tax imposed by a foreign country which is sub-
stantially equivalent to the taxes imposed by 
this chapter. 
‘‘(5) CROSS REFERENCE.—For relief from taxes 
in cases covered by certain international agreements, 
see sections 3101(c) and 3111(c).’’. 
(b) SOCIAL SECURITY BENEFITS.—Subsection (e) of 
section 210 of the Social Security Act (42 U.S.C. 410(e)) 
is amended—
(1) by striking ‘‘(e) The term’’ and inserting 
‘‘(e)(1) The term’’, 
(2) by redesignating clauses (1) through (6) as 
clauses (A) through (F), respectively, and 
(3) by adding at the end the following new 
paragraph: 
‘‘(2)(A) If any employee of a foreign person is per-
forming services in connection with a contract between the 
United States Government (or any instrumentality there-
of) and any member of any domestically controlled group 
of entities which includes such foreign person, such foreign 
person shall be treated as an American employer with re-
spect to such services performed by such employee. 
‘‘(B) For purposes of this paragraph— 
‘‘(i) The term ‘domestically controlled group of 
entities’ means a controlled group of entities the 
common parent of which is a domestic corporation. 
‘‘(ii) The term ‘controlled group of entities’ 
means a controlled group of corporations as defined 
in section 1563(a)(1) of the Internal Revenue Code 
of 1986, except that— 
‘‘(I) ‘more than 50 percent’ shall be sub-
stituted for ‘at least 80 percent’ each place it 
appears therein, and
‘‘(II) the determination shall be made 
without regard to subsections (a)(4) and (b)(2) 
of section 1563 of such Code. 
A partnership or any other entity (other than a cor-
poration) shall be treated as a member of a con-
trolled group of entities if such entity is controlled 
(within the meaning of section 954(d)(3) of such 
Code) by members of such group (including any en-
tity treated as a member of such group by reason of 
this sentence). 
‘‘(C) Subparagraph (A) shall not apply to any serv-
ices to which paragraph (1) of section 3121(z) of the In-
ternal Revenue Code of 1986 does not apply by reason 
of paragraph (4) of such section.’’. 
(c) EFFECTIVE DATE.—The amendment made by 
this section shall apply to services performed in calendar 
months beginning more than 30 days after the date of the 
enactment of this Act. 
SEC. 303. INCREASE IN MINIMUM PENALTY ON FAILURE TO 
FILE A RETURN OF TAX. 
(a) IN GENERAL.—Subsection (a) of section 6651 is 
amended by striking ‘‘$100’’ in the last sentence and in-
serting ‘‘$135’’.
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to returns required to be filed after 
December 31, 2008. 
TITLE IV—PARITY IN THE APPLI-
CATION OF CERTAIN LIMITS 
TO MENTAL HEALTH BENE-
FITS 
SEC. 401. PARITY IN THE APPLICATION OF CERTAIN LIMITS 
TO MENTAL HEALTH BENEFITS. 
(a) INTERNAL REVENUE CODE
OF 1986.—Sub-
section (f) of section 9812 is amended— 
(1) by striking ‘‘and’’ at the end of paragraph 
(2), and 
(2) by striking paragraph (3) and inserting the 
following new paragraphs: 
‘‘(3) on or after January 1, 2008, and before 
the date of the enactment of the Heroes Earnings 
Assistance and Relief Tax Act of 2008, and 
‘‘(4) after December 31, 2008.’’. 
(b) EMPLOYEE RETIREMENT INCOME SECURITY ACT 
OF 1974.—Subsection (f) of section 712 of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 
1185a(f)) is amended by striking ‘‘services furnished after 
December 31, 2007’’ and inserting ‘‘services furnished—
‘‘(1) on or after January 1, 2008, and before 
the date of the enactment of the Heroes Earnings 
Assistance and Relief Tax Act of 2008, and 
‘‘(2) after December 31, 2008.’’. 
(c) PUBLIC HEALTH SERVICE ACT.—Subsection (f) 
of section 2705 of the Public Health Service Act (42 
U.S.C. 300gg-5(f)) is amended by striking ‘‘services fur-
nished after December 31, 2007’’ and inserting ‘‘services 
furnished— 
‘‘(1) on or after January 1, 2008, and before 
the date of the enactment of the Heroes Earnings 
Assistance and Relief Tax Act of 2008, and 
‘‘(2) after December 31, 2008.’’. 
Passed the House of Representatives May 20, 2008. 
Attest: 
Clerk.
110TH CONGRESS 
2D SESSION 
H. R. 6081 
AN ACT 
To amend the Internal Revenue Code of 1986 to 
provide benefits for military personnel, and for 
other purposes.