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(f) EXEMPTION
OF COMPENSATION ARRANGEMENTS
INVOLVING CERTAIN TYPES OF REMUNERATION.—Section
1877(h)(1) (42 U.S.C. 1395nn(h)(1)) is amended—
(1) in subparagraph (A), by inserting before the
period at the end the following: ‘‘other than an ar-
rangement involving only remuneration described in
subparagraph (C)’’, and
(2) by adding at the end the following new sub-
paragraph:
‘‘(C) Remuneration described in this subpara-
graph is any remuneration consisting of any of the
following:
‘‘(i) The forgiveness of amounts owed for in-
accurate tests or procedures, mistakenly per-
formed tests or procedures, or the correction of
minor billing errors.
‘‘(ii) The provision of items, devices, or sup-
plies of minor value that are used to—
‘‘(I) collect, transport, process, or store
specimens for the entity providing the item,
device, or supply, or
‘‘(II) communicate the results of tests
or procedures for such entity.’’.
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(g) EXCEPTION
FOR
PUBLICLY-TRADED
SECURI-
TIES.—Section 1877(c) (42 U.S.C. 1395nn(c)) is amend-
ed—
(1) in the matter preceding paragraph (1), by
striking ‘‘on terms generally available to the public’’
and inserting ‘‘through public trading on a public ex-
change or which were inherited’’; and
(2) in paragraph (2), by striking ‘‘total assets
exceeding $100,000,000’’ and inserting ‘‘stockholder
equity exceeding $75,000,000’’.
(h) 
MISCELLANEOUS
AND
TECHNICAL
CORREC-
TIONS.—Section 1877 (42 U.S.C. 1395nn) is amended—
(1) in subsection (b)(2)(A)(i), by striking ‘‘who
are employed by such physician or group practice
and who are personally’’ and inserting ‘‘who are di-
rectly’’;
(2) in the fourth sentence of subsection (f)—
(A) by striking ‘‘provided’’ and inserting
‘‘furnished’’, and
(B) by striking ‘‘provides’’ and inserting
‘‘furnish’’;
(3) in the last sentence of subsection (f)—
(A) by striking ‘‘providing’’ each place it
appears and inserting ‘‘furnishing’’,
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(B) by striking ‘‘with respect to the provid-
ers’’ and inserting ‘‘with respect to the entities’’,
and
(C) by striking ‘‘diagnostic imaging services
of any type’’ and inserting ‘‘magnetic resonance
imaging, computerized axial tomography scans,
and ultrasound services’’; and
(4) in subsection (a)(2)(B), by striking ‘‘sub-
section (h)(1)(A)’’ and inserting ‘‘subsection (h)(1)’’.
(i) EFFECTIVE DATES.—
(1) Except as provided in paragraph (2), the
amendments made by this section shall apply to refer-
rals made on or after January 1, 1992.
(2) The amendments made by subsection (a)
apply with respect to a referral by a physician for
designated health services (as defined in section
1877(h)(6) of the Social Security Act) made after De-
cember 31, 1994.
SEC. 7305. REDUCTION IN PAYMENT FOR ERYTHROPOIETIN.
(a) IN GENERAL.—Section 1881(b)(11)(B)(ii)(I) (42
U.S.C. 1395rr(b)(11)(B)(ii)(I)) is amended—
(1) by striking ‘‘1991’’ and inserting ‘‘1994’’,
and
(2) by striking ‘‘$11’’ and inserting ‘‘$10’’.
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(b) EFFECTIVE DATE.—The amendments made by sub-
section (a) apply to erythropoietin furnished after 1993.
Subtitle B—Medicaid Program
PART I—PROGRAM SAVINGS PROVISIONS
Subpart A—Repeal of Mandate
SEC. 7401. PERSONAL CARE SERVICES FURNISHED OUT-
SIDE THE HOME AS OPTIONAL BENEFIT.
(a) IN
GENERAL.—Section 1905(a) (42 U.S.C.
1396d(a)), as amended by subsection (b), is amended—
(1) in paragraph (7), by striking ‘‘including per-
sonal care services’’ and all that follows through
‘‘nursing facility’’;
(2) in paragraph (23), by striking ‘‘and’’ at the
end;
(3) by redesignating paragraph (24) as para-
graph (25); and
(4) by inserting after paragraph (23) the follow-
ing new paragraph:
‘‘(24) personal care services furnished to an indi-
vidual who is not an inpatient or resident of a nurs-
ing facility or other medical institution that are (A)
authorized by a physician for the individual in ac-
cordance with a plan of treatment, (B) provided by
an individual who is qualified to provide such serv-
ices and who is not a member of the individual’s fam-
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ily, (C) supervised by a registered nurse, and (D) fur-
nished in a home or other location; and’’.
(b) REDESIGNATIONS
TO PARAGRAPHS ADDED
BY
OBRA–1990.—Section 1905(a) (42 U.S.C. 1396d(a)) is
amended—
(1) by striking ‘‘and’’ at the end of paragraph
(21);
(2) in paragraph (24), by striking the comma at
the end and inserting ‘‘; and’’; and
(3) by redesignating paragraphs (22), (23), and
(24) as paragraphs (24), (22), and (23), respectively,
and by transferring and inserting paragraph (24), as
so redesignated, after paragraph (23), as so redesig-
nated.
(c) 
CONFORMING
AMENDMENTS.—(1) 
Section
1902(a)(10)(C)(iv) (42 U.S.C. 1396a(a)(10)(C)(iv)) is
amended by striking ‘‘through (21)’’ and inserting ‘‘through
(24)’’.
(2) Section 1902(j) (42 U.S.C. 1396a(j)) is amended
by striking ‘‘through (22)’’ and inserting ‘‘through (25)’’.
(d) EFFECTIVE DATE.—The amendments made by this
section shall take effect as if included in the enactment of
OBRA–1990.
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Subpart B—Outpatient Prescription Drugs
SEC. 
7411. 
PERMITTING 
PRESCRIPTION 
DRUG
FORMULARIES UNDER STATE PLANS.
(a) ELIMINATION OF PROHIBITION AGAINST USE OF
FORMULARIES.—Paragraph (54) of section 1902(a) (42
U.S.C. 1396a(a)) is amended to read as follows:
‘‘(54) in the case of a State plan that provides
medical assistance for covered outpatient drugs (as
defined in section 1927(k)), comply with the applica-
ble requirements of section 1927;’’.
(b) STANDARDS FOR FORMULARIES.—Section 1927(d)
(42 U.S.C. 1396r–8(d)), as amended by section 7412(a), is
amended—
(1) by adding at the end of paragraph (1) the
following new subparagraph:
‘‘(C) In the case of a State that establishes a for-
mulary in accordance with paragraph (6), the State
may exclude coverage of a covered outpatient drug
that is not included in the formulary.’’; and
(2) by inserting after paragraph (5) the follow-
ing new paragraph:
‘‘(6) REQUIREMENTS
FOR
FORMULARIES.—A
State may establish a formulary only if the following
requirements are met:
‘‘(A) The formulary is developed by a com-
mittee consisting of physicians, pharmacists, and
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other appropriate individuals appointed by the
Governor of the State or, at the option of the
State, the State’s drug use review board estab-
lished under subsection (g)(3).
‘‘(B) The formulary includes each covered
outpatient drug of a manufacturer which has en-
tered into and complies with an agreement under
subsection (a) unless the drug is contained in the
list referred to in paragraph (2) or excluded in
accordance with subparagraph (C).
‘‘(C)(i) The committee may exclude a cov-
ered outpatient drug with respect to the treat-
ment of a specific disease or condition for an
identified population (if any) only if the com-
mittee finds that the excluded drug does not have
a significant, clinically meaningful therapeutic
advantage in terms of safety, effectiveness, or
clinical outcome of such treatment for such popu-
lation over other drugs included in the for-
mulary.
‘‘(ii) The committee’s finding under clause
(i) shall be based on—
‘‘(I) the drug’s labeling, or
‘‘(II) in the case of a drug the pre-
scribed use of which is not approved under
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the Federal Food, Drug, and Cosmetic Act
but is a medically accepted indication, on
information from the appropriate compen-
dia described in subsection (k)(6).
‘‘(D) With respect to a recommendation to
exclude a covered outpatient drug from the for-
mulary or to exclude a prescribed use of such a
drug, the committee issues a written explanation
of its recommendation that is available to the
public.
‘‘(E) The State plan permits coverage of a
drug excluded from the formulary pursuant to a
prior authorization program that is consistent
with paragraph (5) unless the drug is contained
in the list referred to in paragraph (2).
‘‘(F) The formulary meets such other re-
quirements as the Secretary may impose.’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to calendar quarters beginning on or
after October 1, 1993, without regard to whether or not reg-
ulations to carry out such amendments have been promul-
gated by such date.
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SEC. 7412. ELIMINATION OF SPECIAL EXEMPTION FROM
PRIOR AUTHORIZATION FOR NEW DRUGS.
(a) IN GENERAL.—Section 1927(d) (42 U.S.C. 1396r–
8(d)) is amended by striking paragraph (6).
(b) 
CONFORMING
AMENDMENT.—(1) 
Section
1927(d)(1)(A) (42 U.S.C. 1396r–8(d)(1)(A)) is amended by
striking ‘‘Except as provided in paragraph (6), a State’’
and inserting ‘‘A State’’.
(2) Section 1927(d)(3) (42 U.S.C. 1396r–8(d)(3)) is
amended by striking ‘‘(except with respect’’ and all that fol-
lows through ‘‘of this paragraph)’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to calendar quarters beginning on or
after October 1, 1993, without regard to whether or not reg-
ulations to carry out such amendments have been promul-
gated by such date.
SEC. 7413. MODIFICATIONS TO DRUG REBATE PROGRAM.
(a) ELIMINATION OF ADDITIONAL REBATE BASED ON
WEIGHTED AVERAGE MANUFACTURER PRICE.—Paragraph
(2) of section 1927(c) (42 U.S.C. 1396r–8(c)) is amended
to read as follows:
‘‘(2) ADDITIONAL REBATE FOR SINGLE SOURCE
AND INNOVATOR MULTIPLE SOURCE DRUGS.—
‘‘(A) IN GENERAL.—The amount of the re-
bate for a calendar quarter with respect to each
dosage form and strength of a single source drug
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or an innovator multiple source drug, is in-
creased by an amount equal to the product of—
‘‘(i) the total number of dosage units
dispensed after December 31, 1990, for
which payment was made under the State
plan for the period reported by the State
under subsection (b)(2), and
‘‘(ii) the amount (if any) by which—
‘‘(I) the average manufacturer
price for the dosage form and strength
of the drug for the period, exceeds
‘‘(II) the average manufacturer
price for such dosage form and strength
for the calendar quarter beginning
July 1, 1990, increased by the percent-
age by which the average of the
consumer price indices for all urban
consumers (U.S. city average) for
months during the calendar quarter ex-
ceeds such index for September 1990.
‘‘(B) SPECIAL RULE.—In the case of a cov-
ered outpatient drug approved by the Food and
Drug Administration after October 1, 1990,
subclause (II) of subparagraph (A)(ii) shall be
applied by substituting ‘the first full calendar
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quarter after the drug was marketed’ for ‘the cal-
endar quarter beginning July 1, 1990’ and ‘the
month prior to the first month of the first full
calendar quarter after the drug was marketed’
for ‘September 1990’.’’.
(b) BASE DATE FOR COVERED OUTPATIENT DRUG
SOLD OR TRANSFERRED.—Paragraph (2) of section 1927(c)
(42 U.S.C. 1396r–8(c)), as amended by subsection (a), is
amended by adding at the end the following new subpara-
graph:
‘‘(C) BASE DATE FOR COVERED OUTPATIENT
DRUG SOLD OR TRANSFERRED.—For purposes of
computing the additional rebate under this para-
graph for any covered outpatient drug that is
sold or transferred to any entity, including a di-
vision or subsidiary of a manufacturer, the base
date for such drug after such sale or transfer
shall be the original base date established for
such drug.’’.
(c) MAXIMUM ALLOWABLE COST LIMITATIONS.—Sec-
tion 1927 (42 U.S.C. 1396r–8) is amended by adding at
the end the following new subsection:
‘‘(l) MAXIMUM ALLOWABLE COST LIMITATIONS.—This
section shall not supersede or affect provisions in effect
prior to January 1, 1991, relating to maximum allowable
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cost limitations for payment by States for covered out-
patient drugs, and rebates under this section shall be made
without regard to whether or not payment by the State for
such drugs is subject to such limitations or the amount of
such cost limitations.’’.
(d) EFFECTIVE DATES.—(1) The amendments made
by subsections (a) and (c) shall be effective as if included
in the enactment of section 4401 of OBRA–1990.
(2) The amendment made by subsection (b) shall be
effective on the date of the enactment of this Act.
Subpart C—Restrictions on Divestiture of Assets and
Estate Recovery
SEC. 7421. MEDICAID ESTATE RECOVERIES.
(a) MANDATE TO SEEK RECOVERY.—The matter pre-
ceding subparagraph (A) of section 1917(b)(1) (42 U.S.C.
1396p(b)(1)) is amended to read as follows: ‘‘The State
agency shall seek adjustment or recovery of any medical as-
sistance correctly paid on behalf of an individual under the
State plan—’’.
(b) HARDSHIP WAIVER.—Section 1917(b) (42 U.S.C.
1396p(b)) is amended by adding at the end the following
new paragraph:
‘‘(3) The State agency shall establish procedures (in
accordance with standards specified by the Secretary) under
which the agency shall waive the application of this sub-
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section if such application would work an undue hardship
as determined on the basis of criteria established by the Sec-
retary.’’.
(c) DEFINITION
OF ESTATE.—Section 1917(b) (42
U.S.C. 1396p(b)), as amended by subsection (b), is amended
by adding at the end the following new paragraph:
‘‘(4) DEFINITION.—For purposes of this section, the
term ‘estate’, with respect to a deceased individual—
‘‘(A) shall include all real and personal property
and other assets included within the individual’s es-
tate, as defined for purposes of State law with respect
to inheritance, and
‘‘(B) may include, at the option of the State,
any or all other real or personal property or other as-
sets in which the individual had any legal title or in-
terest at the time of death, including such assets con-
veyed to a survivor, heir, or assign of the deceased in-
dividual through joint tenancy, tenancy in common,
survivorship, life estate, living trust, or other arrange-
ment.’’.
(d) EFFECTIVE DATE.—(1)(A) Except as provided in
subparagraph (B), the amendments made by this section
shall apply to payments under title XIX of the Social Secu-
rity Act for calendar quarters beginning on or after October
1, 1993.
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(B) In the case of a State plan for medical assistance
under title XIX of the Social Security Act which the Sec-
retary of Health and Human Services determines requires
State legislation (other than legislation appropriating
funds) in order for the plan to meet the additional require-
ments imposed by the amendments made by this section,
the State plan shall not be regarded as failing to comply
with the requirements imposed by such amendments solely
on the basis of its failure to meet these additional require-
ments before the first day of the first calendar quarter be-
ginning after the close of the first regular session of the
State legislature that begins after the date of the enactment
of this Act. For purposes of the preceding sentence, in the
case of a State that has a 2-year legislative session, each
year of such session shall be deemed to be a separate regular
session of the State legislature.
(2) The amendments made by this section shall not
apply to individuals who died before October 1, 1993.
SEC. 7422. TRANSFERS OF ASSETS.
(a) MANDATORY AND OPTIONAL PERIODS OF INELI-
GIBILITY.—Section 1917(c) (42 U.S.C. 1396p(c)) is amend-
ed—
(1) by amending paragraph (1) to read as fol-
lows:
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‘‘(1)(A) In order to meet the requirements of this sub-
section for purposes of section 1902(a)(18), the State plan
shall provide that any institutionalized individual (or the
spouse of such individual) who disposes of assets for less
than fair market value on the date specified in subpara-
graph (B)(ii), or at any time thereafter during such indi-
vidual’s lifetime, is ineligible for medical assistance for—
‘‘(i) nursing facility services,
‘‘(ii) a level of care in any institution equivalent
to that of nursing facility services, and
‘‘(iii) home or community-based services under
subsection (c) or (d) of section 1915,
during any and all applicable periods specified in para-
graph (2).
‘‘(B)(i) The date specified in this clause, with respect
to an institutionalized individual, is the first date as of
which the individual—
‘‘(I) is an institutionalized individual, and
‘‘(II) has applied for or is receiving medical as-
sistance under the State plan.
‘‘(ii) The date specified in this clause, with respect to
an institutionalized individual, is the date 30 months before
the date specified in clause (i) (or, at the option of the State,
such earlier date as provided by the State in accordance
with paragraph (3)(A)(iii)).’’;
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(2) by redesignating paragraphs (2) through (5)
as paragraphs (4) through (7) and by inserting after
paragraph (1) the following new paragraphs:
‘‘(2) The period of ineligibility required under para-
graph (1) with respect to an institutionalized individual—
‘‘(A) shall be a number of months equal to—
‘‘(i) the total uncompensated value of all as-
sets transferred by the individual or the individ-
ual’s spouse on or after the date specified in
paragraph (1)(B)(ii), divided by
‘‘(ii) the average cost to a private patient of
nursing facility services in the State (or, at the
option of the State, in the community in which
the individual is institutionalized) on the date
specified in paragraph (1)(B)(i) based on costs
which include the cost of services included in the
State’s nursing facility reimbursement rate; and
‘‘(B) shall begin with the first month in which—
‘‘(i) the individual—
‘‘(I) is an institutionalized individual,
‘‘(II) is (or but for the provisions of
this subsection would be) entitled to have
medical assistance paid under the State
plan for services specified under paragraph
(1), and
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‘‘(III) is receiving or is an applicant
for such medical assistance, and
‘‘(ii) the State has become aware that assets
have been transferred.
‘‘(3)(A) The State plan may include, in accordance
with this paragraph, any or all of the following provisions
concerning eligibility for medical assistance of individuals
who (or whose spouses) dispose of assets for less than fair
market value:
‘‘(i) The State plan may provide for periods of
ineligibility for medical assistance for long-term care
services specified by the State and approved by the
Secretary for any or all individuals (or groups of in-
dividuals) otherwise eligible for such medical assist-
ance, in addition to the individuals specified in para-
graph (1).
‘‘(ii) Subject to such restrictions as the Secretary
may impose, the State plan may provide for periods
of ineligibility for medical assistance for any long-
term care services (in addition to the services speci-
fied in paragraph (1)(A)) for which medical assist-
ance is otherwise available under the plan.
‘‘(iii) The State plan may provide for a date on
and after which transfers of assets are subject to re-
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view earlier than the date specified in paragraph
(1)(B)(ii), but not earlier than 4 years before—
‘‘(I) in the case of an institutionalized indi-
vidual, the date specified in paragraph (1)(B)(i),
or 
‘‘(II) in the case of any other individual,
the date on which the individual applied for
medical assistance under the State plan.
‘‘(B)(i) The period of ineligibility imposed by the State
pursuant to this paragraph for services other than those
specified in paragraph (1)(A) shall not be longer than the
period of ineligibility that would have resulted if the indi-
vidual had expended the assets transferred for the costs of
medical care furnished on and after the date the individual
applied for medical assistance, as determined by the State
in accordance with clause (ii).
‘‘(ii) In determining the period of ineligibility of an
individual pursuant to clause (i), the State—
‘‘(I) may presume that the individual’s cost of
medical care furnished is equal to the average cost to
a private patient for such care on a daily, monthly,
or other basis, or
‘‘(II) may use any other method approved by the
Secretary.’’;
(3) in paragraph (4), as redesignated—
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(A) by amending subparagraph (B) to read
as follows:
‘‘(B) the resources—
‘‘(i) were transferred to the individual’s
spouse or to another for the sole benefit of the in-
dividual’s spouse and did not exceed the amount
permitted under section 1924(f)(1);
‘‘(ii) were transferred from the individual’s
spouse to another for the sole benefit of the indi-
vidual’s spouse and did not exceed the amount
permitted under section 1924(f)(1); or
‘‘(iii) were transferred to the individual’s
child described in subparagraph (A)(ii)(II);’’;
(B) in subparagraph (C)—
(i) by striking ‘‘any’’;
(ii) by striking ‘‘or (ii)’’ and inserting
‘‘(ii)’’; and
(iii) by striking ‘‘; or’’ and inserting ‘‘,
or (iii) all assets transferred by an individ-
ual for less than fair market value have
been returned to the individual;’’;
(C) by amending subparagraph (D) to read
as follows:
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‘‘(D) the State determines (in accordance with
regulations promulgated by the Secretary) that denial
of eligibility would work an undue hardship; or’’;
(D) by adding at the end the following new
subparagraph:
‘‘(E) the State determines that the total fair
market value of all of the assets transferred by the in-
dividual during the period between the date specified
in paragraph (1)(B)(i) and the date specified by the
State under paragraph (1)(B)(ii) are below an
amount determined appropriate by the State and ap-
proved by the Secretary.’’; and
(E) by adding at the end the following flush
sentence:
‘‘In determining whether an individual has made a satis-
factory showing to the State under subparagraph (C)(ii),
the State shall consider the individual’s health status at the
time of the transfer of assets and whether, at the time of
such transfer, the individual retained assets sufficient to
meet the individual’s foreseeable future health care needs
based on such health status.’’;
(4) by striking paragraph (5), as redesignated,
and inserting the following:
‘‘(5) For purposes of this subsection, in the case of an
asset held by an individual in common with another person
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or persons in a joint tenancy, tenancy in common, or simi-
lar arrangement, the asset (or the affected portion of such
asset) shall be considered to be transferred by such individ-
ual when any action is taken, either by such individual
or by any other person, that reduces or eliminates such in-
dividual’s ownership or control of such asset, except to the
extent an action taken by a person other than the individ-
ual is an action consistent with partial ownership of the
asset, as provided in regulations issued by the Secretary.’’;
(5) by adding the following at the end of para-
graph (6), as redesignated: ‘‘In the case of a transfer
by the spouse of an institutionalized individual which
results in a period of ineligibility for medical assist-
ance under a State plan for the institutionalized in-
dividual, a State shall apply a reasonable methodol-
ogy to transfer all or a portion of any such period of
ineligibility to such spouse if the spouse becomes an
institutionalized individual.’’; and
(6) by amending paragraph (7), as redesignated,
to read as follows:
‘‘(7) For purposes of this subsection:
‘‘(A) The term ‘assets’, with respect to an indi-
vidual, includes all income and resources of the indi-
vidual and of the individual’s spouse, including any
income or resources which the individual or such in-
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dividual’s spouse is entitled to but does not receive be-
cause of action—
‘‘(i) by the individual or such individual’s
spouse,
‘‘(ii) by a person, including a court or ad-
ministrative body, with legal authority to act in
place of or on behalf of the individual or such in-
dividual’s spouse, or
‘‘(iii) by any person, including any court or
administrative body, acting at the direction or
upon the request of the individual or such indi-
vidual’s spouse.
‘‘(B) The term ‘income’ has the meaning given
such term in section 1612.
‘‘(C) The term ‘resources’ has the meaning given
such term in section 1613, without regard (in the case
of an institutionalized individual) to the exclusion de-
scribed in subsection (a)(1) of such section.
‘‘(D) The term ‘institutionalized individual’
means, and the term ‘individual is institutionalized’
refers to, an individual receiving any of the services
specified in paragraph (1)(A).’’.
(b) 
CONFORMING
AMENDMENTS.—(1) 
Section
1902(a)(51) (42 U.S.C. 1396a(a)(51)) is amended—
(A) by striking ‘‘(A)’’; and
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(B) by striking ‘‘, and (B)’’ and all that follows
and inserting a semicolon.
(2) Section 1924(f)(1) (42 U.S.C. 1396r–5(f)(1)) is
amended by striking ‘‘transfer an amount’’ and inserting
‘‘transfer an amount sufficient to make the resources of the
community spouse’’.
(c) REQUIREMENTS FOR NURSING FACILITIES.—
(1) 
MEDICAID
PROGRAM.—Section
1919(c)(5)(A)(i) (42 U.S.C. 1396r(c)(5)(A)(i)) is
amended by striking ‘‘and (III)’’ and inserting ‘‘(III)
not require individuals applying to reside or residing
in the facility, or family members of such individuals,
to provide any financial information other than to
identify the source of payment for such individual’s
stay in the facility, and (IV)’’.
(2) 
MEDICARE
PROGRAM.—Section
1819(c)(5)(A)(i) (42 U.S.C. 1395i–3(c)(5)(A)(i)) is
amended by striking ‘‘and (III)’’ and inserting ‘‘(III)
not require individuals applying to reside or residing
in the facility, or family members of such individuals,
to provide any financial information other than to
identify the source of payment for such individual’s
stay in the facility, and (IV)’’.
(d) EFFECTIVE DATE.—(1)(A) Except as provided in
subparagraph (B), the amendments made by this section
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shall apply to calendar quarters beginning on or after Octo-
ber 1, 1993.
(B) In the case of a State plan for medical assistance
under title XIX of the Social Security Act which the Sec-
retary of Health and Human Services determines requires
State legislation (other than legislation appropriating
funds) in order for the plan to meet the additional require-
ments imposed by the amendments made by this section,
the State plan shall not be regarded as failing to comply
with the requirements imposed by such amendments solely
on the basis of its failure to meet these additional require-
ments before the first day of the first calendar quarter be-
ginning after the close of the first regular session of the
State legislature that begins after the date of the enactment
of this Act. For purposes of the preceding sentence, in the
case of a State that has a 2-year legislative session, each
year of such session shall be deemed to be a separate regular
session of the State legislature.
(2) The amendments made by this section shall not
apply with respect to assets disposed of before the date
which is 60 days after the date of the enactment of this
Act.
SEC. 7423. TREATMENT OF CERTAIN TRUSTS.
(a) IN GENERAL.—Section 1917 (42 U.S.C. 1396p) is
amended by adding at the end the following:
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‘‘(d)(1) For purposes of determining an individual’s
eligibility for, or amount of, benefits under a State plan
under this title, the following rules shall apply to a trust
established by such individual:
‘‘(A) In the case of a revocable trust—
‘‘(i) the corpus of the trust shall be consid-
ered resources available to the individual,
‘‘(ii) payments from the trust to or for the
benefit of the individual shall be considered in-
come of the individual, and
‘‘(iii) any other payments from the trust
shall be considered a transfer of assets by the in-
dividual subject to subsection (c).
‘‘(B) In the case of an irrevocable trust—
‘‘(i) the portion of the corpus from which, or
the income on the corpus from which, payment
to the individual could be made shall be consid-
ered resources available to the individual, and
payments from that portion of the corpus or in-
come—
‘‘(I) to or for the benefit of the individ-
ual, shall be considered income of the indi-
vidual, and
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‘‘(II) for any other purpose, shall be
considered a transfer of assets by the indi-
vidual subject to subsection (c); and
‘‘(ii) any portion of the trust from which, or
any income on the corpus from which, no pay-
ment could under any circumstances be made to
the individual shall be considered, as of the date
of establishment of the trust (or, if later, the date
on which payment to the individual was fore-
closed) a transfer of assets by the individual sub-
ject to subsection (c), and payments from such
portion of the trust after such date shall be dis-
regarded.
‘‘(2)(A) For purposes of this subsection, an individual
shall be considered to have established a trust if—
‘‘(i) any of the following individuals established
such trust other than by will:
‘‘(I) the individual,
‘‘(II) the individual’s spouse,
‘‘(III) a person, including a court or ad-
ministrative body, with legal authority to act in
place of or on behalf of the individual or the in-
dividual’s spouse, or
‘‘(IV) a person, including any court or ad-
ministrative body, acting at the direction or
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upon the request of the individual or the individ-
ual’s spouse; and
‘‘(ii) assets of the individual were used to form
all or part of the corpus of the trust.
‘‘(B) In the case of a trust the corpus of which includes
assets of an individual (as determined under subparagraph
(A)) and assets of any other person or persons, the provi-
sions of this subsection shall apply to the portion of the
trust attributable to the assets of the individual.
‘‘(3) This subsection shall apply without regard to—
‘‘(A) the purposes for which a trust is estab-
lished,
‘‘(B) whether the trustees have or exercise any
discretion under the trust,
‘‘(C) any restrictions on when or whether dis-
tributions may be made from the trust, or
‘‘(D) any restrictions on the use of distributions
from the trust.
‘‘(4)(A) This subsection shall not apply to any of the
following trusts:
‘‘(i) A trust containing the assets of a disabled
individual (as determined under section 1614(a)(3))
established for the benefit of such individual by a par-
ent, grandparent, legal guardian of the individual, or
a court if the State will receive all amounts remain-
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ing in the trust upon the death of such individual up
to an amount equal to the total medical assistance re-
ceived by the individual under a State plan under
this title.
‘‘(ii) A trust established in a State for the benefit
of an individual if—
‘‘(I) the trust is composed only of pension,
Social Security, and other income to the individ-
ual (and accumulated income in the trust),
‘‘(II) the State will receive all amounts re-
maining in the trust upon the death of such in-
dividual up to an amount equal to the total
medical assistance received by the individual
under a State plan under this title, and
‘‘(III) the State makes medical assistance
available to individuals described in section
1902(a)(10)(A)(ii)(V), but does not make such
assistance available to individuals for nursing
facility services under section 1902(a)(10)(C).
‘‘(B) For purposes of this subsection, the term ‘trust’
includes any legal instrument or device that is similar to
a trust but includes an annuity only to such extent and
in such manner as the Secretary specifies.
‘‘(C) The State agency shall establish procedures (in
accordance with standards specified by the Secretary) under
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which the agency waives the application of this subsection
with respect to an individual if the individual establishes
that such application would work an undue hardship on
the individual as determined on the basis of criteria estab-
lished by the Secretary.
‘‘(5) For purposes of this subsection, the terms ‘assets’,
‘income’, and ‘resources’ shall have the meaning given to
such terms under subsection (c)(7).’’.
(b) 
CONFORMING
AMENDMENTS.—(1) 
Section
1902(a)(18) (42 U.S.C. 1396a(a)(18)) is amended by strik-
ing ‘‘and transfers of assets’’ and inserting ‘‘, transfers of
assets, and treatment of certain trusts’’.
(2) Section 1902 (42 U.S.C. 1396a) is amended by re-
pealing subsection (k).
(c) EFFECTIVE DATE.—(1)(A) Except as provided in
subparagraph (B), the amendments made by this section
shall apply to payments under title XIX of the Social Secu-
rity Act for calendar quarters beginning on or after October
1, 1993.
(B) In the case of a State plan for medical assistance
under title XIX of the Social Security Act which the Sec-
retary of Health and Human Services determines requires
State legislation (other than legislation appropriating
funds) in order for the plan to meet the additional require-
ments imposed by the amendments made by this section,
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the State plan shall not be regarded as failing to comply
with the requirements imposed by such amendments solely
on the basis of its failure to meet these additional require-
ments before the first day of the first calendar quarter be-
ginning after the close of the first regular session of the
State legislature that begins after the date of the enactment
of this Act. For purposes of the preceding sentence, in the
case of a State that has a 2-year legislative session, each
year of such session shall be deemed to be a separate regular
session of the State legislature.
(2) The amendments made by this section shall not
apply with respect to trusts established before the date which
is 60 days after the date of the enactment of this Act.
Subpart D—Improvement in Identification and
Collection of Third Party Payments
SEC. 7431. LIABILITY OF THIRD PARTIES TO PAY FOR CARE
AND SERVICES.
(a) LIABILITY
OF
ERISA PLANS.—(1) Section
1902(a)(25)(A) (42 U.S.C. 1396a(a)(25)(A)) is amended by
striking ‘‘insurers)’’ and inserting ‘‘insurers, group health
plans (as defined in section 607(1) of the Employee Retire-
ment Income Security Act of 1974), service benefit plans,
and health maintenance organizations)’’.
(2) Section 1903(o) (42 U.S.C. 1396b(o)) is amended
by striking ‘‘regulation)’’ and inserting ‘‘regulation and in-
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cluding a group health plan (as defined in section 607(1)
of the Employee Retirement Income Security Act of 1974)),
a service benefit plan, and a health maintenance organiza-
tion’’.
(b) REQUIRING STATE TO PROHIBIT INSURERS FROM
TAKING
MEDICAID
STATUS
INTO
ACCOUNT.—Section
1902(a)(25) (42 U.S.C. 1396a(a)(25)) is amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (F);
(2) by adding ‘‘and’’ at the end of subparagraph
(G); and
(3) by adding after subparagraph (G) the follow-
ing new subparagraph:
‘‘(H) assurances satisfactory to the Sec-
retary that the State has in effect laws which
prohibit any health insurer (including a group
health plan, as defined in section 607(1) of the
Employee Retirement Income Security Act of
1974, a service benefit plan, and a health main-
tenance organization), in enrolling an individ-
ual or in making any payments for benefits to
the individual or on the individual’s behalf, from
taking into account that the individual is eligi-
ble for or is provided medical assistance under a
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plan under this title for such State, or any other
State;’’.
(c) STATE RIGHT TO THIRD PARTY PAYMENTS FOR
RECIPIENT.—Section 
1902(a)(25) 
(42 
U.S.C.
1396a(a)(25)), as amended by subsection (b), is amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (G);
(2) by adding ‘‘and’’ at the end of subparagraph
(H); and
(3) by adding after subparagraph (H) the follow-
ing new subparagraph:
‘‘(I) assurances satisfactory to the Secretary
that the State has in effect laws under which, to
the extent that payment has been made under the
State plan for medical assistance for health care
items or services furnished to an individual, the
State is considered to have acquired the rights of
such individual to payment by any other party
for such health care items or services;’’.
(d) EFFECTIVE DATE.—(1) Except as provided in
paragraph (2), the amendments made by subsections (a)(1),
(b), and (c) shall apply to calendar quarters beginning on
or after October 1, 1993, without regard to whether or not
final regulations to carry out such amendments have been
promulgated by such date.
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(2) In the case of a State plan for medical assistance
under title XIX of the Social Security Act which the Sec-
retary of Health and Human Services determines requires
State legislation (other than legislation appropriating
funds) in order for the plan to meet the additional require-
ments imposed by the amendments made by subsections (a)
and (b), the State plan shall not be regarded as failing to
comply with the requirements of such title solely on the
basis of its failure to meet these additional requirements
before the first day of the first calendar quarter beginning
after the close of the first regular session of the State legisla-
ture that begins after the date of the enactment of this Act.
For purposes of the preceding sentence, in the case of a State
that has a 2-year legislative session, each year of such ses-
sion shall be deemed to be a separate regular session of the
State legislature.
(3) The amendment made by subsection (a)(2) shall
apply to items and services furnished on or after October
1, 1993.
SEC. 7432. MEDICAL CHILD SUPPORT.
(a) STATE PLAN REQUIREMENT.—Section 1902(a) (42
U.S.C. 1396a(a)), as amended by subsection (c), is amend-
ed—
(1) by striking ‘‘and’’ at the end of paragraph
(58);
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(2) by striking the period at the end of para-
graph (59) and inserting ‘‘; and’’; and
(3) by adding at the end the following new para-
graph:
‘‘(60) provide that the State agency shall provide
assurances satisfactory to the Secretary that the State
has in effect the laws relating to medical child sup-
port required under section 1908.’’.
(b) MEDICAL CHILD SUPPORT LAWS.—Title XIX (42
U.S.C 1936 et seq.) is amended by inserting after section
1907 the following new section:
‘‘REQUIRED LAWS RELATING TO MEDICAL CHILD SUPPORT
‘‘SEC. 1908. (a) IN GENERAL.—The laws relating to
medical child support, which a State is required to have
in effect under section 1902(a)(60), are as follows:
‘‘(1) A law that prohibits an insurer from deny-
ing enrollment of a child under the health coverage of
the child’s parent on the ground that—
‘‘(A) the child was born out of wedlock,
‘‘(B) the child is not claimed as a depend-
ent on the parent’s Federal income tax return, or
‘‘(C) the child does not reside with the par-
ent or in the insurer’s service area.
‘‘(2) In any case in which a parent is required
by a court or administrative order to provide health
coverage for a child and the parent is eligible for fam-
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ily health coverage through an insurer, a law that re-
quires such insurer—
‘‘(A) to permit such parent to enroll under
such family coverage any such child who is oth-
erwise eligible for such coverage (without regard
to any enrollment season restrictions and subject
to the requirements under paragraph (1)); and
‘‘(B) if such a parent fails to provide such
health insurance coverage for any such child, to
enroll such child under such family coverage
upon application by the child’s other parent or
by the State agency administering the program
under this title or part D of title IV.
‘‘(3) In any case in which a parent is required
by a court or administrative order to provide health
coverage for a child and the parent is eligible for fam-
ily health coverage through an employer doing busi-
ness in the State, a law that requires such em-
ployer—
‘‘(A) to permit such parent to enroll under
such family coverage any such child who is oth-
erwise eligible for such coverage (without regard
to any enrollment season restrictions and subject
to the requirements under paragraph (1));
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‘‘(B) if such a parent fails to provide such
health insurance coverage for a child, to enroll
such child under such family coverage upon ap-
plication by the child’s other parent or by the
State agency administering the program under
this title or part D of title IV;
‘‘(C) not to disenroll (or eliminate coverage
of) any such child unless the employer is pro-
vided satisfactory written evidence that—
‘‘(i) such court or administrative order
is no longer in effect, or
‘‘(ii) the child is or will be enrolled in
comparable health coverage which will take
effect not later than the effective date of such
disenrollment; and
‘‘(D) to withhold from such employee’s com-
pensation the employee’s share (if any) of pre-
miums for health coverage and to pay such share
of premiums to the insurer.
‘‘(4) A law that prohibits an insurer from im-
posing requirements on a State agency, which has
been assigned the rights of an individual eligible for
medical assistance under this title and covered for
health benefits from the insurer, that are different
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from requirements applicable to an agent or assignee
of any other individual so covered.
‘‘(5) A law that requires an insurer, in any case
in which a child has health coverage through the in-
surer of a noncustodial parent—
‘‘(A) to provide such information to the cus-
todial parent as may be necessary for the child
to obtain benefits through such coverage;
‘‘(B) to permit the custodial parent (or pro-
vider, with the custodial parent’s approval) to
submit claims for covered services without the
approval of the noncustodial parent; and
‘‘(C) to make payment on claims submitted
in accordance with subparagraph (B) directly to
such custodial parent, the provider, or the State
agency.
‘‘(6) A law that permits the State agency under
this title to garnish the wages, salary, or other em-
ployment income of, and requires withholding
amounts from State tax refunds to, any person who—
‘‘(A) is required by court or administrative
order to provide coverage of the costs of health
services to a child who is eligible for medical as-
sistance under this title,
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‘‘(B) has received payment from a third
party for the costs of such services to such child,
but
‘‘(C) has not used such payments to reim-
burse, as appropriate, either the other parent or
guardian of such child or the provider of such
services,
to the extent necessary to reimburse the State agency
for expenditures for such costs under its plan under
this title, but any claims for current or past-due child
support shall take priority over any such claims for
the costs of such services.
‘‘(b) SPECIAL RULE.—The Secretary may provide by
regulation for such exceptions to the requirement under sub-
section (a)(3) as the Secretary determines necessary to en-
sure compliance with the conditions of any order referred
to in such subsection or with the maximum amounts per-
mitted to be withheld under section 303(b) of the Consumer
Credit Protection Act.
‘‘(c) DEFINITION.—For purposes of this subsection, the
term ‘insurer’ includes a group health plan, as defined in
section 607(1) of the Employee Retirement Income Security
Act of 1974, a health maintenance organization, and an
entity offering a service benefit plan.’’.
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(c) REDESIGNATIONS
TO PARAGRAPHS ADDED
BY
OBRA–1990.—Section 1902(a) (42 U.S.C. 1396a(a)) is
amended—
(1) by striking ‘‘and’’ at the end of paragraph
(54);
(2) in the paragraph (55) inserted by section
4602(a)(3) of OBRA–1990, by striking the period at
the end and inserting a semicolon;
(3) by redesignating the paragraph (55) inserted
by section 4604(b)(3) of OBRA–1990 as paragraph
(56), by transferring and inserting it after the para-
graph (55) inserted by section 4602(a)(3) of such Act,
and by striking the period at the end and inserting
a semicolon;
(4) by placing paragraphs (57) and (58), in-
serted by section 4751(a)(1)(C) of OBRA–1990, im-
mediately after paragraph (56), as redesignated by
paragraph (3);
(5) in the paragraph (58) inserted by section
4751(a)(1)(C) of OBRA–1990, by striking the period
at the end and inserting ‘‘; and’’; and
(6) by redesignating the paragraph (58) inserted
by section 4752(c)(1)(C) of OBRA–1990 as paragraph
(59) and by transferring and inserting it after the
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paragraph (58) inserted by section 4751(a)(1)(C) of
such Act.
(d) EFFECTIVE DATE.—(1) Except as provided in
paragraph (2), the amendments made by this section apply
to calendar quarters beginning on or after April 1, 1994.
(2) In the case of a State plan under title XIX of the
Social Security Act which the Secretary of Health and
Human Services determines requires State legislation in
order for the plan to meet the additional requirements im-
posed by the amendments made by this section, the State
plan shall not be regarded as failing to comply with the
requirements of such title solely on the basis of its failure
to meet these additional requirements before the first day
of the first calendar quarter beginning after the close of the
first regular session of the State legislature that begins after
the date of enactment of this Act. For purposes of the pre-
ceding sentence, in the case of a State that has a 2-year
legislative session, each year of such session shall be deemed
to be a separate regular session of the State legislature.
SEC. 7433. OFFSET OF PAYMENT OBLIGATIONS RELATING
TO MEDICAL ASSISTANCE AGAINST OVERPAY-
MENTS OF STATE AND FEDERAL INCOME
TAXES.
(a) AMENDMENTS TO THE INTERNAL REVENUE CODE
OF 1986.—
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(1) IN GENERAL.—Section 6402 of the Internal
Revenue Code of 1986 is amended—
(A) by redesignating subsections (e), (f), (g),
(h), and (i) as subsections (f), (g), (h), (i), and
(j), respectively; and
(B) by adding after subsection (d) the fol-
lowing new subsection:
‘‘(e) COLLECTION
OF CERTAIN DEBTS OWED
TO
STATES.—
‘‘(1) IN GENERAL.—Upon receiving notice from
any State under section 1931(b)(1) of the Social Se-
curity Act that a named person owes a legally en-
forceable debt for any payment obligation relating to
medical assistance, the Secretary shall—
‘‘(A) reduce the amount of any overpayment
payable to such person by the amount of such
debt;
‘‘(B) pay the amount by which such over-
payment is reduced under subparagraph (A) to
such State; and
‘‘(C) notify the person making such over-
payment that such overpayment has been re-
duced by an amount necessary to satisfy such
debt.
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‘‘(2) PRIORITIES
FOR
OFFSET.—Any overpay-
ment by a person shall be reduced pursuant to this
subsection after such overpayment is reduced pursu-
ant to subsections (c) and (d) and before such over-
payment is credited to the future liability for tax of
such person pursuant to subsection (b). Any overpay-
ment by a person shall be applied against any debts
described in paragraph (1) in the order in which such
debts accrued.
‘‘(3) NOTICE; PROTECTION OF OTHER PERSONS
FILING
JOINT
RETURN.—For purposes of this sub-
section, rules similar to the rules described in clause
(i) and the first sentence of clause (ii) of subsection
(d)(3)(B) shall apply.
‘‘(4) DEFINITION.—For purposes of this sub-
section, the term ‘medical assistance’ means medical
assistance provided under title XIX of the Social Se-
curity Act.’’.
(2) CONFORMING AMENDMENT.—Section 6402(f)
of the Internal Revenue Code of 1986, as redesignated,
is amended by striking ‘‘(c) or (d)’’ and inserting
‘‘(c), (d), or (e)’’.
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall be effective for taxable years
beginning after December 31, 1993.
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(b) AMENDMENTS TO THE SOCIAL SECURITY ACT.—
(1) STATE PLAN AMENDMENT.—Section 1902(a)
(42 U.S.C. 1396a(a)), as amended by section 7432, is
amended—
(A) by striking ‘‘and’’ at the end of para-
graph (59);
(B) by striking the period at the end of
paragraph (60) and inserting ‘‘; and’’; and
(C) by adding at the end the following new
paragraph:
‘‘(61) provide that recovery of any legally en-
forceable debt for any payment obligation relating to
medical assistance provided under this title shall be
made in accordance with a program for the collection
of such debt from State and Federal tax refunds in
accordance with section 1931.’’.
(2) PROGRAM
FOR
COLLECTIONS
FROM
STATE
AND FEDERAL TAX REFUNDS.—Title XIX (42 U.S.C
1936 et seq.) is amended by adding at the end the fol-
lowing new section:
‘‘COLLECTION
OF
PAYMENT
OBLIGATIONS
RELATING
TO
MEDICAL ASSISTANCE FROM STATE AND FEDERAL TAX
REFUNDS
‘‘SEC. 1931. (a) STATE TAX REFUNDS.—If a State
with a State plan approved under this title has a State
income tax system, such State shall require the State agency
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administering the State plan and the State agency respon-
sible for administering the States income tax system to de-
velop and implement a program under which any person
determined appropriate by the State agency administering
the State plan who owes a legally enforceable debt for any
payment obligation relating to medical assistance provided
under this title will have withheld an appropriate amount
from any refund otherwise payable to such person under
the State income tax system.
‘‘(b) FEDERAL TAX REFUNDS.—
‘‘(1) NOTICE TO THE SECRETARY OF THE TREAS-
URY.—
‘‘(A) IN GENERAL.—If a State with a State
plan approved under this title—
‘‘(i) implements a program described
in subsection (a), or
‘‘(ii) is a State that does not have a
State income tax system,
the State agency administering such plan may
provide a notice to the Secretary of the Treasury
regarding any person determined appropriate by
such State agency who owes a legally enforceable
debt for any payment obligation relating to med-
ical assistance provided under this title and the
Secretary of the Treasury shall withhold an ap-
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propriate amount from any refund otherwise
payable to such person in accordance with sec-
tion 6402(e) of the Internal Revenue Code of
1986 (hereafter in this section referred to as the
‘Code’).
‘‘(B) REGULATIONS
RELATING
TO
NO-
TICES.—The Secretary of the Treasury shall
issue regulations, after consultation with the Sec-
retary, which—
‘‘(i) prescribe the timing by which
State agencies may submit notices of pay-
ment obligations relating to medical assist-
ance,
‘‘(ii) specify the manner in which such
notices must be submitted,
‘‘(iii) specify the necessary information
that must be contained in or accompany
such notices,
‘‘(iv) specify the minimum payment
obligation relating to medical assistance to
which the offset procedures may be applied,
‘‘(v) specify the fee that a State must
pay to reimburse the Secretary of the Treas-
ury for the full cost of applying the offset
procedure, and
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‘‘(vi) provide that the Secretary of the
Treasury will advise the Secretary, not less
frequently than annually, of the States
which have furnished notices under this sub-
section, the number of cases in each State
with respect to which such notices have been
furnished, the total amount of payment ob-
ligations sought to be collected under this
subsection by each State, and the amount of
such collections actually made in the case of
each State.
‘‘(2) NOTICE.—Prior to notifying the Secretary
of the Treasury under paragraph (1), the State agen-
cy shall send a notice to the person owing the legally
enforceable debt for a payment obligation relating to
medical assistance provided under this title which—
‘‘(A) explains that a withholding may be
made under 6402(e) of the Code from any refund
otherwise payable to such person,
‘‘(B) instructs the person having the pay-
ment obligation of the steps which may be taken
to contest the State’s determination that such
payment obligation is owed or the amount of the
payment obligation, and
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‘‘(C) provides information with respect to
procedures to be followed, in the case of a joint
return, to protect the share of the refund which
may be payable to another person.
‘‘(3) EXCESS
WITHHOLDING.—In any case in
which an amount was withheld under section 6402(e)
of the Code and the State subsequently determines
that the amount certified as owing with respect to
medical assistance was in excess of the amount actu-
ally owed at the time the amount withheld is distrib-
uted to the State, the State shall pay the excess
amount withheld to the named person determined to
have the payment obligation (or, in the case of
amounts withheld on the basis of a joint return, joint-
ly to the parties filing such return).’’.
(3) EFFECTIVE DATE.—
(A) IN GENERAL.—The amendments made
by this paragraph shall apply to calendar quar-
ters beginning on or after December 31, 1993.
(B) SPECIAL RULE.—In the case of a State
which the Secretary determines requires State
legislation (other than legislation authorizing or
appropriating funds) in order to comply with
the amendments made by subparagraph (A), the
State shall not be regarded as failing to comply
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with such amendments solely on the basis of its
failure to meet the requirements of such amend-
ments before the first day of the first calendar
quarter beginning after the close of the first regu-
lar session of the State legislature that begins
after the date of the enactment of this Act. For
purposes of the preceding sentence, in the case of
a State that has a 2-year legislative session, each
year of such session shall be deemed to be a sepa-
rate regular session of the State legislature.
Subpart E—Assuring Proper Payments to
Disproportionate Share Hospitals
SEC. 7441. ASSURING PROPER PAYMENTS TO DISPROPOR-
TIONATE SHARE HOSPITALS.
(a) DISPROPORTIONATE
SHARE
HOSPITALS
RE-
QUIRED TO PROVIDE MINIMUM LEVEL OF SERVICES TO
MEDICAID PATIENTS.—Section 1923 (42 U.S.C. 1396r–4)
is amended—
(1) in subsection (a)(1)(A), by striking ‘‘require-
ment’’ and inserting ‘‘requirements’’;
(2) in subsection (b)(1), by striking ‘‘require-
ment’’ and inserting ‘‘requirements’’;
(3) in the heading to subsection (d), by striking
‘‘REQUIREMENT’’ and inserting ‘‘REQUIREMENTS’’;
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(4) by adding at the end of subsection (d) the fol-
lowing new paragraph:
‘‘(3) No hospital may be defined or deemed as a
disproportionate share hospital under a State plan
under this title or under subsection (b) or (e) of this
section unless the hospital has a medicaid inpatient
utilization rate (as defined in subsection (b)(2)) of
not less than 1 percent.’’;
(5) in subsection (e)(1)—
(A) by striking ‘‘and’’ before ‘‘(B)’’, and
(B) by inserting before the period at the end
the following: ‘‘, and (C) the plan meets the re-
quirement of subsection (d)(3) and such payment
adjustments are made consistent with the fourth
sentence of subsection (c)’’; and
(6) in subsection (e)(2)—
(A) in subparagraph (A), by inserting
‘‘(other than the fourth sentence of subsection
(c))’’ after ‘‘(c)’’,
(B) by striking ‘‘and’’ at the end of sub-
paragraph (A),
(C) by striking the period at the end of sub-
paragraph (B) and inserting ‘‘, and’’, and
(D) by adding at the end the following new
subparagraph:
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‘‘(C) subsection (d)(3) shall apply.’’.
(b) LIMITING AMOUNT OF PAYMENT ADJUSTMENTS
FOR
STATE
OR
COUNTY
HOSPITALS
TO
UNCOVERED
COSTS.—Subsection (c) of section 1923 (42 U.S.C. 1396r–
4) is amended by adding at the end the following: ‘‘A pay-
ment adjustment during a year is not considered to be con-
sistent with this subsection with respect to a hospital owned
or operated by a State (or by an instrumentality of, or a
unit of government within, a State) if the payment adjust-
ment exceeds the costs incurred during the year of furnish-
ing hospital services (as determined by the Secretary and
net of payments under this title, other than under this sec-
tion, and by uninsured patients) by the hospital to individ-
uals who either are eligible for medical assistance under the
State plan or have no health insurance (or other source of
third party coverage) for services provided during the year.
For purposes of the preceding sentence, payments made to
a hospital for services provided to indigent patients made
by a State or a unit of local government within a State
shall not be considered to be a source of third party pay-
ment.’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to payments to States under section
1903(a) of the Social Security Act which are for payments
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to hospitals made under State plans after the end of the
State fiscal year that ends during 1995.
Subpart F—Anti-Fraud and Abuse Provisions
SEC. 7451. APPLICATION OF MEDICARE RULES LIMITING
CERTAIN PHYSICIAN REFERRALS.
(a) IN
GENERAL.—Section 1903(i) (42 U.S.C.
1396b(i)), as amended by subsection (b), is amended—
(1) in paragraph (12), by striking ‘‘or’’ at the
end,
(2) in paragraph (13), by striking the period at
the end and inserting ‘‘; or’’, and
(3) by inserting after paragraph (13) the follow-
ing new paragraph:
‘‘(14) with respect to any amount expended for
an item or service for which payment would be denied
under section 1877(g)(1) if the item or service were
furnished to an individual entitled to benefits under
title XVIII.’’.
(b) REDESIGNATIONS.—Section 1903(i) (42 U.S.C.
1396b(i)), as amended by section 2(b)(2) of the Medicaid
Voluntary Contribution and Provider-Specific Tax Amend-
ments of 1991, is amended—
(1) by redesignating the paragraph (12) inserted
by section 4752(a)(2) of OBRA–1990 as paragraph
(11), by transferring and inserting it after the para-
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graph (10) inserted by section 4401(a)(1)(B) of
OBRA–1990, and by striking the period at the end
and inserting a semicolon;
(2) by redesignating the paragraph (14) inserted
by section 4752(e) of OBRA–1990 as paragraph (12),
by transferring and inserting it after paragraph (11),
as redesignated by paragraph (2), and by striking the
period at the end and inserting ‘‘; or’’; and
(3) by redesignating the paragraph (11) inserted
by section 4801(e)(16)(A) of OBRA–1990 as para-
graph (13) and by transferring and inserting it after
paragraph (12), as redesignated by paragraph (3),
and by striking ‘‘; or’’ and inserting a period.
(c) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to items and services furnished on
or after October 1, 1993.
PART II—OTHER MEDICAID PROVISIONS
SEC. 7501. EXTENSION OF DEMONSTRATION PROJECT ON
THE EFFECT OF ALLOWING STATES TO EX-
TEND MEDICAID COVERAGE TO CERTAIN
LOW-INCOME FAMILIES.
(a) IN GENERAL.—Section 4745 of OBRA–1990 is
amended—
(1) in paragraph (1) of subsection (e), by strik-
ing ‘‘$12,000,000 in each of fiscal years 1991, 1992,
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and 1993, and to no more than $4,000,000 in fiscal
year 1994’’ and inserting ‘‘$40,000,000’’; and
(2) in paragraph (2) of subsection (f) by striking
‘‘January 1, 1995’’ and inserting ‘‘one year after the
termination of the projects’’.
(b) EFFECTIVE DATE.—The amendments made by
paragraph (1) shall take effect as if included in the enact-
ment of OBRA–1990.
Subtitle C—Income Security
Programs
SEC. 7601. MATCHING OF STATE ADMINISTRATIVE COSTS.
(a) AFDC MATCHING.—Section 403(a)(3) (42 U.S.C.
603(a)(3)) is amended to read as follows:
‘‘(3) in the case of any State, 50 percent of the
total amounts expended during such quarter as found
necessary by the Secretary for the proper and efficient
administration of the State plan, except that no pay-
ment shall be made with respect to amounts expended
in connection with the provision of any service de-
scribed in section 2002(a) of this Act other than serv-
ices furnished pursuant to section 402(g); and’’.
(b) TERRITORIAL PROGRAMS FOR AGED, BLIND, AND
DISABLED.—Sections 3(a)(4), 1003(a)(3), 1403(a)(3), and
1603(a)(4) (42 U.S.C. 303(a)(3), 1203(a)(3), 1353(a)(3),
and 1383 note) (as in effect as provided by section 303 of
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the Social Security Amendments of 1972) are each amended
by striking ‘‘the sum of’’ and all that follows and inserting
‘‘50 percent of the total amounts expended during such
quarter as found necessary by the Secretary for the proper
and efficient administration of the State plan.’’.
(c) REQUIREMENTS FOR ATTESTING TO CITIZENSHIP
STATUS.—Paragraph (1)(A) of section 1137(d) (42 U.S.C.
1320b–7(d)) is amended to read as follows:
‘‘(1)(A) The State shall require, as a condition
of an individual’s eligibility for benefits under a pro-
gram listed in subsection (b), a declaration in writ-
ing, under penalty of perjury—
‘‘(i) by the individual,
‘‘(ii) in the case in which eligibility for pro-
gram benefits is determined on a family or
household basis, by any adult member of such in-
dividual’s family or household (as applicable), or
‘‘(iii) in the case of an individual born into
a family or household receiving benefits under
such program, by any adult member of such
family or household no later than the next rede-
termination of eligibility of such family or
household following the birth of such individual,
stating whether the individual is a citizen or national
of the United States, and, if that individual is not a
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citizen or national of the United States, that the indi-
vidual is in a satisfactory immigration status.’’.
(d) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by—
(A) subsections (a) and (b) shall be effective
with respect to calendar quarters beginning on
or after April 1, 1994, and
(B) subsection (c) shall be effective on and
after the date of the enactment of this Act.
(2) SPECIAL RULE.—In the case of a State whose
legislature meets biennially, and does not have a reg-
ular session scheduled in calendar year 1994, the
amendments made by subsections (a) and (b) shall be
effective no later than the first day of the first cal-
endar quarter beginning after the close of the first
regular session of the State legislature that begins
after the date of enactment of this Act.
SEC. 7602. STATE PATERNITY ESTABLISHMENT PROGRAMS.
(a) PERFORMANCE STANDARDS FOR STATE PATER-
NITY ESTABLISHMENT PROGRAMS.— Section 452(g) (42
U.S.C. 652(g)) is amended—
(1) in paragraph (1)—
(A) by striking ‘‘1991’’ and inserting
‘‘1994’’;
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(B) by inserting ‘‘is based on reliable data
and’’ before ‘‘equals or exceeds’’; and
(C) by striking subparagraphs (A), (B), and
(C) and inserting the following new subpara-
graphs:
‘‘(A) 75 percent;
‘‘(B) for a State with a paternity establish-
ment percentage of not less than 50 percent but
less than 75 percent for such fiscal year, the pa-
ternity establishment percentage of the State for
the immediately preceding fiscal year plus 3 per-
centage points; or
‘‘(C) for a State with a paternity establish-
ment percentage of less than 50 percent for such
fiscal year, the paternity establishment percent-
age of the State for the immediately preceding
fiscal year plus 6 percentage points.’’; and
(2) in paragraph (2)—
(A) by striking ‘‘(or under all such plans)’’
each place it appears;
(B) by inserting ‘‘or part (E)’’ after ‘‘under
part A’’ each place it appears;
(C) by striking subparagraph (B) and in-
serting the following new subparagraph:
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‘‘(B) the term ‘reliable data’ means the most
recent data available which are found by the
Secretary to be reliable for purposes of this sec-
tion.’’;
(D) by inserting ‘‘unless paternity is estab-
lished for such child’’ after ‘‘the death of a par-
ent’’; and
(E) by inserting ‘‘or any child with respect
to whom the State agency administering the
plan under part E determines (as provided in
section 454(4)(B)) that it is against the best in-
terest of such child to do so’’ after ‘‘cooperate
under section 402(a)(26)’’.
(b) STATE PLAN REQUIREMENTS FOR THE ESTAB-
LISHMENT
OF PATERNITY.—Section 466(a) (42 U.S.C.
666(a)) is amended—
(1) in paragraph (2)—
(A) by striking ‘‘at the option of the State,’’;
and
(B) by inserting ‘‘or paternity establish-
ment’’ after ‘‘support order issuance and enforce-
ment’’;
(2) in paragraph (5) by adding at the end the
following new subparagraphs:
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‘‘(C) Procedures for a simple civil process
for voluntarily acknowledging paternity under
which the State must provide that the rights and
responsibilities of acknowledging paternity are
explained and ensure that due process safeguards
are afforded. Such procedures must include (i) a
hospital-based program for the voluntary ac-
knowledgment of paternity during the period im-
mediately preceding or following the birth of a
child, and (ii) the inclusion of signature lines on
applications for official birth certificates which,
once signed by the father and the mother, con-
stitute a voluntary acknowledgment of paternity.
‘‘(D) Procedures under which the voluntary
acknowledgment of paternity creates a rebuttable,
or at the option of the State, conclusive presump-
tion of paternity, and under which such vol-
untary acknowledgment is admissible as evidence
of paternity.
‘‘(E) Procedures under which the voluntary
acknowledgment of paternity must be recognized
as a basis for seeking a support order without
first requiring any further proceedings to estab-
lish paternity.
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‘‘(F) Procedures which provide that (i) any
objection to genetic testing results must be made
in writing within a specified number of days be-
fore any hearing at which such results may be
introduced into evidence, and (ii) if no objection
is made, the test results are admissible as evi-
dence of paternity without the need for founda-
tion testimony or other proof of authenticity or
accuracy.
‘‘(G) Procedures which create a rebuttable
or, at the option of the State, conclusive pre-
sumption of paternity upon genetic testing re-
sults indicating a threshold probability of the al-
leged father being the father of the child.
‘‘(H) Procedures requiring a default order
to be entered in a paternity case upon a showing
of service of process on the defendent and any
additional showing required by State law.’’; and
(3) by inserting after paragraph (10) the follow-
ing new paragraph:
‘‘(11) Procedures under which a State must give
full faith and credit to a determination of paternity
made by any other State, whether established through
voluntary acknowledgment or through administrative
or judicial processes.’’.
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(c) EFFECTIVE DATE.—The amendments made by this
section shall become effective with respect to a State on the
later of—
(1) October 1, 1993 or,
(2) the date of enactment by the legislature of
such State of all laws required by such amendments,
but in no event later than the first day of the first calendar
quarter beginning after the close of the first regular session
of the State legislature that begins after the date of enact-
ment of this Act. For purposes of the previous sentence, in
the case of a State that has a 2-year legislative session, each
year of such session shall be deemed to be a separate regular
session of the State legislature.
SEC. 7603. FEES FOR FEDERAL ADMINISTRATION OF STATE
SUPPLEMENTARY PAYMENTS.
(a) IN GENERAL.—
(1) OPTIONAL
STATE
SUPPLEMENTARY
PAY-
MENTS.—Section 1616(d) (42 U.S.C. 1382e(d)) is
amended—
(A) by inserting ‘‘(1)’’ after ‘‘(d)’’;
(B) by inserting ‘‘, plus an administration
fee assessed in accordance with paragraph (2)
and any additional services fee charged in ac-
cordance with paragraph (3)’’ before the period;
and
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(C) by adding after and below the end the
following:
‘‘(2)(A) The Secretary shall assess each State an ad-
ministration fee in an amount equal to—
‘‘(i) the number of supplementary payments
made by the Secretary on behalf of the State under
this section for any month in a fiscal year; multiplied
by
‘‘(ii) the applicable rate for the fiscal year.
‘‘(B) As used in subparagraph (A), the term ‘applica-
ble rate’ means—
‘‘(i) for fiscal year 1995, $1.67;
‘‘(ii) for fiscal year 1996, $3.33;
‘‘(iii) for fiscal year 1997, $5.00; and
‘‘(iv) for fiscal year 1998 and each succeeding
fiscal year, $5.00, or such different rate as the Sec-
retary determines pursuant to criteria established in
regulations is appropriate for the State, taking into
account the complexity of the State’s supplementary
payment program.
‘‘(C) All fees collected pursuant to this paragraph shall
be transferred to the United States at the same time that
amounts for such supplementary payments are required to
be so transferred.
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‘‘(3)(A) The Secretary shall charge a State an addi-
tional services fee if, at the request of the State, the Sec-
retary provides additional services beyond the level cus-
tomarily provided, in the administration of State supple-
mentary payments pursuant to this section.
‘‘(B) The additional services fee shall be in an amount
that the Secretary determines is necessary to cover all costs
(including indirect costs) incurred by the Federal Govern-
ment in furnishing the additional services referred to in
subparagraph (A).
‘‘(C) The additional services fee shall be payable in
advance or by way of reimbursement.
‘‘(4) All administration fees and additional services
fees collected pursuant to this subsection shall be deposited
in the general fund of the Treasury of the United States
as miscellaneous receipts.’’.
(2) MANDATORY
STATE
SUPPLEMENTARY
PAY-
MENTS.—Section 212(b)(3) of Public Law 93–66 (42
U.S.C. 1382 note) is amended—
(A) by inserting ‘‘(A)’’ after ‘‘(3)’’;
(B) by inserting ‘‘, plus an administration
fee assessed in accordance with subparagraph
(B) and any additional services fee charged in
accordance with subparagraph (C)’’ before the
period; and
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(C) by adding after and below the end the
following:
‘‘(B)(i) The Secretary shall assess each State an ad-
ministration fee in an amount equal to—
‘‘(I) the number of supplementary payments
made by the Secretary on behalf of the State under
this subsection for any month in a fiscal year; multi-
plied by
‘‘(II) the applicable rate for the fiscal year.
‘‘(ii) As used in clause (i), the term ‘applicable rate’
means—
‘‘(I) for fiscal year 1995, $1.67;
‘‘(II) for fiscal year 1996, $3.33;
‘‘(III) for fiscal year 1997, $5.00; and
‘‘(IV) for fiscal year 1998 and each succeeding
fiscal year, $5.00, or such different rate as the Sec-
retary determines pursuant to regulations established
in regulations is appropriate for the State, taking
into account the complexity of the State’s supple-
mentary payment program.
‘‘(iii) All fees collected pursuant to this subparagraph
shall be transferred to the United States at the same time
that amounts for such supplementary payments are re-
quired to be so transferred.
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‘‘(C)(i) The Secretary shall charge a State an addi-
tional services fee if, at the request of the State, the Sec-
retary provides additional services beyond the level cus-
tomarily provided, in the administration of State supple-
mentary payments pursuant to this subsection.
‘‘(ii) The additional services fee shall be in an amount
that the Secretary determines is necessary to cover all costs
(including indirect costs) incurred by the Federal Govern-
ment in furnishing the additional services referred to in
clause (i).
‘‘(iii) The additional services fee shall be payable in
advance or by way of reimbursement.
‘‘(D) All administration fees and additional services
fees collected pursuant to this paragraph shall be deposited
in the general fund of the Treasury of the United States
as miscellaneous receipts.’’.
(b) EFFECTIVE DATE.—The amendments made by this
section shall apply to supplementary payments made pur-
suant to section 1616(a) of the Social Security Act or sec-
tion 212(a) of Public Law 93–66 for any calendar month
beginning after September 30, 1994, and to services fur-
nished after such date, regardless of whether regulations to
implement such amendments have been promulgated by
such date, or whether any agreement entered into under
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such section 1616(a) or such section 212(a) has been modi-
fied.
Subtitle D—Miscellaneous
Provisions
PART I—TRADE PROVISIONS
SEC. 7701. EXTENSION OF AUTHORITY TO LEVY CUSTOMS
USER FEES.
Section 13031(j)(3) of the Consolidated Omnibus
Budget Reconciliation Act of 1985 (19 U.S.C. 58c(j)(3)) is
amended by striking out ‘‘1995’’ and inserting ‘‘1998’’.
SEC. 7702. EXTENSION OF, AND AUTHORIZATION OF APPRO-
PRIATIONS FOR, TRADE ADJUSTMENT AS-
SISTANCE PROGRAM.
(a) EXTENSION.—Section 285 of the Trade Act of 1974
(19 U.S.C. 2271, preceding note) is amended—
(1) by striking ‘‘No’’ and all that follows through
‘‘and no duty’’ in subsection (b) and inserting ‘‘No
duty’’; and
(2) by adding at the end the following new sub-
section:
‘‘(c) No assistance, vouchers, allowances, or other pay-
ments may be provided under chapter 2, and no technical
assistance may be provided under chapter 3, after Septem-
ber 30, 1998.’’.
(b) AUTHORIZATION OF APPROPRIATIONS.—
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(1) CHAPTER 2 ADJUSTMENT ASSISTANCE.—Sec-
tion 245 of the Trade Act of 1974 (19 U.S.C. 2317)
is amended by striking ‘‘1988, 1989, 1990, 1991,
1992, and 1993’’ and inserting ‘‘1993, 1994, 1995,
1996, 1997, and 1998’’.
(2) CHAPTER 3 ADJUSTMENT ASSISTANCE.—Sec-
tion 256(b) of such Act (19 U.S.C. 2346(b)) is amend-
ed by striking ‘‘1988, 1989, 1990, 1991, 1992, and
1993’’ and inserting ‘‘1993, 1994, 1995, 1996, 1997,
and 1998’’.
PART II—IMPROVED ACCESS TO CHILDHOOD
IMMUNIZATIONS
SEC. 7801. REIMBURSEMENT TO VACCINE MANUFACTUR-
ERS.
(a) IN GENERAL.—Section 1902(a)(32) (42 U.S.C.
1396a(32)) is amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (B);
(2) by striking the period at the end of subpara-
graph (C) and inserting ‘‘; and’’; and
(3) by adding at the end the following new sub-
paragraph:
‘‘(D) nothing in this paragraph shall be
construed to prevent the making of such payment
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to a manufacturer of a childhood vaccine under
a contract with the State pursuant to which the
manufacturer participates in a vaccine replace-
ment program described in subsection (z).’’.
(b) STATE VACCINE BULK PURCHASE PROGRAM.—
Section 1902 (42 U.S.C. 1396a) is amended by adding after
paragraph (58) the following new paragraph:
‘‘(59) provide for the establishment of a State
vaccine bulk purchase program for the purchase of pe-
diatric vaccines.’’
and by adding at the end the following new subsection:
‘‘(z)(1) For purposes of section 1396a(a)(59), a vaccine
replacement program described in this subsection is a vac-
cine bulk purchase program under which a State with a
State plan approved under this title contracts with each
manufacturer of childhood vaccines selling such vaccines in
the State to—
‘‘(A) supply doses of childhood vaccines to pro-
viders (or in the case of a State medicaid vaccine pro-
gram, the State) administering such vaccines to indi-
viduals eligible to receive medical assistance under the
State plan and replace such vaccines as needed; and
‘‘(B) charge the State agency for such doses of
childhood vaccine the price under the most recent bid
(determined once such a bid price is made public)
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submitted by a manufacturer which receives the Cen-
ters for Disease Control and Prevention contract with
respect to the childhood immunization program under
the Public Health Services Act, plus a reasonable fee
to cover shipping and handling of returns for such
doses.
‘‘(2) Any manufacturer of childhood vaccines selling
such vaccines in a State which does not participate in a
vaccine replacement program described in paragraph (1)
which is operated in such State shall be ineligible to bid
for Centers for Disease Control and Prevention Immuniza-
tion contracts under section 317(j) of the Public Health
Services Act.’’.
(c) DEFINITION OF STATE VACCINE BULK PURCHASE
PROGRAM.—Section 1902 (42 U.S.C. 1396d) is amended by
adding at the end the following new subsection:
‘‘(t) VACCINE BULK PURCHASE PROGRAM.—The term
‘vaccine bulk purchase program’ means a State program
which purchases vaccines at prices negotiated by the Centers
for Disease Control and Prevention’s childhood immuniza-
tion program and distributes such vaccines free of charge
to entities providing medical assistance to individuals eligi-
ble for such medical assistance under this title.’’.
(d) 
AGREEMENT
WITH
THE
STATE.—Section
1902(a)(27) (42 U.S.C. 1396a(a)(27)) is amended—
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(1) by striking ‘‘under the State plan’’, and in-
serting ‘‘under the State plan and with any entity
that is a manufacturer of a childhood vaccine under
a contract with the State pursuant to which the man-
ufacturer participates in a vaccine replacement pro-
gram described in subsection (z)’’; and
(2) by striking ‘‘such person or institution’’ each
place it appears and inserting ‘‘such person, institu-
tion, or entity’’.
(e) CDC PRICE PLUS CPI.—To the extent that, at the
date of enactment, a specific vaccine is purchased under
contract with the Centers for Disease Control and Preven-
tion as provided in the Public Health Service Act, no bid
for the purchase of such vaccine shall be accepted by the
Centers for Disease Control and Prevention if the price per
dose of such vaccine exceeds the price in effect on the date
of enactment increased by the percentage increase in CPI
from date of the contract in effect on the date of the enact-
ment to the date of the contract. This provision shall be
in effect for contracts made in fiscal year 1994 through fis-
cal year 1998.
(f) MULTIPLE SUPPLIERS.—The Public Health Service
provisions relating to the Centers for Disease Control and
Prevention purchase of vaccine may not be construed as
prohibiting the Secretary from entering into a contract
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with each manufacturer of a vaccine that meets the terms
and conditions of the Secretary for an award of such a con-
tract (including terms and conditions regarding safety,
quality, and price).
SEC. 7802. STATE OPTION TO PROVIDE THAT CERTAIN PAY-
MENTS UNDER AFDC ARE CONDITIONED ON
RECEIPT OF IMMUNIZATIONS.
(a) IN GENERAL.—Section 402 (42 U.S.C. 602) is
amended—
(1) in paragraph (44), by striking ‘‘; and’’ and
inserting a semicolon;
(2) in paragraph (45) by striking the period at
the end and inserting ‘‘; and’’; and
(3) by adding at the end the following new para-
graph:
‘‘(46) at the option of the State, provide that if
a family receiving aid to families with dependent
children for any month includes a child under the age
of 6 who has not received appropriate immunizations
(as determined by the State), the State will take ac-
tions to encourage the timely immunization of such
child including, but not limited to, reducing the total
benefits received by such family for such month by all
or a portion of the benefits allocable to the parent or
guardian of such child and either—
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‘‘(A) placing all or a portion of such
amount in an account until the family dem-
onstrates to the State that such child has been
appropriately immunized; or
‘‘(B) using all or a portion of such amount
to provide services to such family intended to en-
sure that such child receives appropriate immu-
nizations.’’.
(b) STATE PROGRAMS TO ENCOURAGE APPROPRIATE
IMMUNIZATIONS.—
(1) IN GENERAL.—The Secretary of Health and
Human Services (hereafter referred to in this sub-
section as the ‘‘Secretary’’) shall provide for the estab-
lishment or programs intended to ensure the appro-
priate immunization of children to be operated in the
States electing to take actions to encourage the timely
immunization of children described in section
402(a)(46) of the Social Security Act.
(2) PAYMENTS TO STATES AND LIMITS ON FUND-
ING.—
(A) PAYMENTS TO STATES.—Except as pro-
vided in subparagraph (B), the Secretary shall
pay to each State conducting a program under
this subsection for each quarter in which such
program is conducted an amount equal such
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State’s Federal percentage (as determined under
section 403(a) of the Social Security Act) of the
expenditures incurred by such State during such
quarter in conducting such program.
(B) LIMITS
ON
FUNDING.—In conducting
programs under this subsection, the Secretary
shall limit the total amount of the Federal share
of expenses incurred under title IV and section
1903 of the Social Security Act to no more than
$250,000 for each State in any year.
(c) EFFECTIVE DATE.—The amendment made by sub-
section (a) and the provisions of subsection (b) shall become
effective on the date of the enactment of this Act.
PART III—DISCLOSURE PROVISIONS
SEC. 7901. DISCLOSURE OF RETURN INFORMATION FOR AD-
MINISTRATION OF CERTAIN VETERANS PRO-
GRAMS.
(a) GENERAL RULE.—Subparagraph (D) of section
6103(l)(7) of the Internal Revenue Code of 1986 (relating
to disclosure of return information to Federal, State, and
local agencies administering certain programs) is amended
by striking ‘‘September 30, 1997’’ in the second sentence
following clause (viii) and inserting ‘‘September 30, 1998’’.
(b) AUTHORITY FOR SECRETARY OF VETERANS AF-
FAIRS TO OBTAIN INFORMATION.—Section 5317(g) of title
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38, United States Code, is amended by striking out ‘‘Sep-
tember 30, 1997’’ and inserting ‘‘September 30, 1998’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall take effect on the date of the enactment of this
Act.
SEC. 7902. DISCLOSURE OF RETURN INFORMATION TO
CARRY OUT INCOME CONTINGENT REPAY-
MENT OF STUDENT LOANS.
(a) GENERAL RULE.—Subsection (l) of section 6103
of the Internal Revenue Code of 1986 (relating to confiden-
tiality and disclosure of returns and return information)
is amended by adding at the end thereof the following new
paragraph:
‘‘(13) DISCLOSURE OF RETURN INFORMATION TO
CARRY OUT INCOME CONTINGENT REPAYMENT OF STU-
DENT LOANS.—
‘‘(A) IN
GENERAL.—The Secretary may,
upon written request from the Secretary of Edu-
cation, disclose to officers and employees of the
Department of Education return information
with respect to a taxpayer who has received an
applicable student loan and whose loan repay-
ment amounts are based in whole or in part on
the taxpayer’s income. Such return information
shall be limited to—
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‘‘(i) taxpayer identity information
with respect to such taxpayer,
‘‘(ii) the filing status of such taxpayer,
and
‘‘(iii) the adjusted gross income of such
taxpayer.
‘‘(B) RESTRICTION ON USE OF DISCLOSED
INFORMATION.—Return 
information 
disclosed
under subparagraph (A) may be used by officers
and employees of the Department of Education
only for the purposes of, and to the extent nec-
essary in, establishing the appropriate income
contingent repayment amount for an applicable
student loan.
‘‘(C) APPLICABLE
STUDENT
LOAN.—For
purposes of this paragraph, the term ‘applicable
student loan’ means—
‘‘(i) any loan made under the program
authorized under part D of title IV of the
Higher Education Act of 1965, and
‘‘(ii) any loan made under part B or
E of title IV of the Higher Education Act
of 1965 which is in default and has been as-
signed to the Department of Education.
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‘‘(D) TERMINATION.—This paragraph shall
not apply to any request made after September
30, 1998.’’
(b) CONFORMING AMENDMENTS.—
(1) So much of paragraph (4) of section 6103(m)
of such Code as precedes subparagraph (B) thereof is
amended to read as follows:
‘‘(4) INDIVIDUALS WHO OWE AN OVERPAYMENT
OF
FEDERAL
PELL
GRANTS
OR
WHO
HAVE
DE-
FAULTED ON STUDENT LOANS ADMINISTERED BY THE
DEPARTMENT OF EDUCATION.—
‘‘(A) IN GENERAL.—Upon written request
by the Secretary of Education, the Secretary
may disclose the mailing address of any tax-
payer—
‘‘(i) who owes an overpayment of a
grant awarded to such taxpayer under sub-
part 1 of part A of title IV of the Higher
Education Act of 1965, or
‘‘(ii) who has defaulted on a loan—
‘‘(I) made under part B, D, or E
of title IV of the Higher Education Act
of 1965, or
‘‘(II) made pursuant to section
3(a)(1) of the Migration and Refugee
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Assistance Act of 1962 to a student at
an institution of higher education,
for use only by officers, employees, or agents of
the Department of Education for purposes of lo-
cating such taxpayer for purposes of collecting
such overpayment or loan .’’
(2) Subparagraph (B) of section 6103(m)(4) of
such Code is amended—
(A) in clause (i), by striking ‘‘under part
B’’ and inserting ‘‘under part B or D’’; and
(B) in clause (ii), by striking ‘‘under part
E’’ and inserting ‘‘under subpart 1 of part A, or
part D or E,’’;
(3) Section 6103(p) of such Code is amended—
(A) in paragraph (3)(A), by striking ‘‘(11),
or (12), (m)’’ and inserting ‘‘(11), (12), or (13),
(m)’’;
(B) in paragraph (4)—
(i) in the matter preceding subpara-
graph (A), by striking out ‘‘(10), or (11),’’
and inserting ‘‘(10), (11), or (13),’’, and
(ii) in subparagraph (F)(ii), by strik-
ing ‘‘(11), or (12),’’ and inserting ‘‘(11),
(12), or (13),’’.
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(c) EFFECTIVE DATE.—The amendments made by this
section shall take effect on the date of the enactment of this
Act.
SEC. 7903. USE OF RETURN INFORMATION FOR INCOME
VERIFICATION UNDER CERTAIN HOUSING AS-
SISTANCE PROGRAMS.
(a) IN
GENERAL.—Subparagraph (D) of section
6103(l)(7) of the Internal Revenue Code of 1986 (relating
to the disclosure of return information to Federal, State,
and local agencies administering certain programs) is
amended—
(1) in clause (vii), by striking ‘‘and’’ at the end;
(2) in clause (viii), by striking the period at the
end and inserting ‘‘; and’’;
(3) by inserting after clause (viii) the following
new clause:
‘‘(ix) any housing assistance program adminis-
tered by the Department of Housing and Urban De-
velopment that involves initial and periodic review of
an applicant’s or participant’s income, except that
return information may be disclosed under this clause
only on written request by the Secretary of Housing
and Urban Development and only for use by officers
and employees of the Department of Housing and
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Urban Development with respect to applicants for
and participants in such programs.’’; and
(4) by adding at the end thereof the following:
‘‘Clause (ix) shall not apply after September 30,
1998.’’
(b) CONFORMING AMENDMENT.—The heading of para-
graph (7) of section 6103(l) of such Code is amended by
inserting after ‘‘CODE’’ the following: ‘‘, OR CERTAIN HOUS-
ING ASSISTANCE PROGRAMS’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall take effect on the date of the enactment of this
Act.
SEC. 7904. USE OF RETURN INFORMATION FOR HEALTH
COVERAGE CLEARINGHOUSE.
(a) ESTABLISHMENT OF HEALTH COVERAGE CLEAR-
INGHOUSE.—Part A of title XI (42 U.S.C. 1301 et seq.) is
amended by adding at the end the following new section:
‘‘THIRD PARTY LIABILITY CLEARINGHOUSE
‘‘SEC. 1144. (a) ESTABLISHMENT
OF
CLEARING-
HOUSE.—
‘‘(1) IN GENERAL.—The Secretary shall establish
and operate a Third Party Liability Clearinghouse
(hereafter in this section referred to as the ‘Clearing-
house’) for the purpose of identifying third parties re-
sponsible for payment for health care items and serv-
ices furnished to beneficiaries of the medicare pro-
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gram under title XVIII and the medicaid program
under title XIX.
‘‘(2) DIRECTOR.—The Clearinghouse established
pursuant to paragraph (1) shall be headed by a Di-
rector.
‘‘(b) DATA BANK.—
‘‘(1) 
MAINTENANCE
OF
INFORMATION.—The
Clearinghouse shall maintain a data bank containing
information obtained pursuant to section 6103(l)(12)
of the Internal Revenue Code of 1986. Information in
the data bank shall be retained for not less than 1
year after the date the information was obtained.
‘‘(2) DISCLOSURE
OF
INFORMATION
IN
DATA
BANK.—The Director is authorized (subject to the re-
striction in section 6103(l)(12)(E)(i) of the Internal
Revenue Code of 1986) to disclose any information in
the data bank established pursuant to paragraph (1)
to the Commissioner of Social Security, the Secretary
of the Treasury, employers, group health plans, the
administrator of the medicare program under title
XVIII, and the administrators of the medicaid pro-
gram under title XIX, to the extent necessary to assist
the administration of such programs.
‘‘(c) REQUIREMENT THAT EMPLOYERS FURNISH IN-
FORMATION.—
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‘‘(1) IN GENERAL.—An employer shall furnish to
the Director the information requested pursuant to
section 6103(l)(12)(C)(i) of the Internal Revenue Code
of 1986 within 60 days after receipt of such a request.
‘‘(2) CIVIL MONEY PENALTY FOR FAILURE TO CO-
OPERATE.—An employer (other than a Federal or
other governmental entity) who willfully or repeatedly
fails to provide a timely and accurate response to a
request for information pursuant to paragraph (1)
shall be subject, in addition to any other penalties
that may be prescribed by law, to a civil money pen-
alty of not to exceed $1,000 for each individual or in-
dividual’s spouse with respect to which such a request
is made. The provisions of section 1128A (other than
subsections (a) and (b)) shall apply to such civil
money penalty in the same manner as such provi-
sions apply to penalties or proceedings under section
1128A(a).
‘‘(d) COLLECTIONS FROM THIRD PARTIES.—The Di-
rector is authorized, upon request by the administrator of
the medicare program under title XVIII or any adminis-
trator of the medicaid program under title XIX, to assist
in the collection of amounts due from liable third parties
to reimburse costs incurred by such program for health care
items and services.
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‘‘(e) FEES FOR CLEARINGHOUSE SERVICES.—The Di-
rector shall establish fees for services provided under section
6103(l)(12)(C)(ii) of the Internal Revenue Code of 1986 and
subsection (d) which are designed to cover the full costs to
the Clearinghouse of providing such services. Clearinghouse
services under such section and subsection shall be available
subject to payment of such fees.
‘‘(f) EVALUATION RESPONSIBILITIES.—The Director
shall evaluate methods for improving—
‘‘(1) procedures for the collection, management,
and appropriate disclosure of health care coverage in-
formation, and
‘‘(2) Federal laws and policies concerning third
party liability for medical care.
‘‘(g) DEFINITIONS.—For purposes of this section, the
term ‘group health plan’ has the meaning given to such
term in section 6103(l)(12)(G) of the Internal Revenue Code
of 1986.’’.
(b) DISCLOSURE OF TAX RETURN INFORMATION.—
(1) IN
GENERAL.—Paragraph (12) of section
6103(l) of the Internal Revenue Code of 1986, as
amended by section 7303, is amended to read as fol-
lows:
‘‘(12) DISCLOSURE OF CERTAIN TAXPAYER RE-
TURN INFORMATION FOR PURPOSES OF IDENTIFYING
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HEALTH INSURANCE COVERAGE OF CERTAIN INDIVID-
UALS AND SPOUSES.—
‘‘(A) RETURN INFORMATION FROM INTER-
NAL
REVENUE
SERVICE.—The Secretary shall,
upon written request from the Commissioner of
Social Security (referred to in this subparagraph
as the ‘Commissioner’), disclose to the Commis-
sioner available filing status and taxpayer iden-
tity information from the individual master files
of the Internal Revenue Service relating to
whether any individual identified by the Com-
missioner was a married individual (as defined
in section 7703) for any specified year after
1986, and, if so, the name of the spouse of such
individual and such spouse’s TIN.
‘‘(B) RETURN INFORMATION FROM SOCIAL
SECURITY ADMINISTRATION.—The Commissioner
shall, upon written request from the Director of
the Third Party Liability Clearinghouse (re-
ferred to in this subparagraph as the ‘Director’),
disclose to the Director the following information
with respect to the individuals, and the spouses
of such individuals, specified in subparagraph
(A):
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‘‘(i) For each such individual who is
identified as having received wages (as de-
fined in section 3401(a)) above an amount
(if any) specified by the Secretary of Health
and Human Services from an employer in
a previous year—
‘‘(I) the name and TIN of the in-
dividual,
‘‘(II) the name, address, and TIN
of the employer, and
‘‘(III) the information reported
under section 6051(a)(10).
‘‘(ii) For each individual who was
identified as married under subparagraph
(A) and whose spouse is identified as hav-
ing received wages above an amount (if
any) specified by the Secretary of Health
and Human Services from an employer in
a previous year—
‘‘(I) the name and TIN of the in-
dividual,
‘‘(II) the name and TIN of the
spouse,
‘‘(III) the name, address, and TIN
of the spouse’s employer, and
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‘‘(IV) the information reported
under section 6051(a)(10) with respect
to the spouse.
‘‘(C) DISCLOSURE BY THIRD PARTY LIABIL-
ITY CLEARINGHOUSE.—The Director may (sub-
ject to the provisions of subparagraph (E)) dis-
close—
‘‘(i) with respect to the information
disclosed under subparagraph (B), to the
employer referred to in such subparagraph
the name and TIN of each individual iden-
tified under such subparagraph as having
received wages from the employer (hereafter
referred to in this subparagraph as the ‘em-
ployee’) for purposes of determining during
what period such employee or the employee’s
spouse may be (or have been) covered under
a group health plan of the employer and
what benefits are or were covered under the
plan (including the name, address, and
identifying number of the plan),
‘‘(ii) to the administrator of the medi-
care program under title XVIII of the So-
cial Security Act or to any administrator of
the medicaid program under title XIX of
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such Act the information disclosed under
subparagraph (B) and clause (i) for pur-
poses of providing information concerning
employment and group health coverage of
individuals and individual’s spouses who
are program beneficiaries,
‘‘(iii) to any agent of such Director the
information referred to in subparagraph
(B) for purposes of carrying out clauses (i)
and (ii) on behalf of such Director, and
‘‘(iv) to any person specified in sub-
section (b)(2) of section 1144 of the Social
Security Act, information in the data bank
established pursuant to subsection (b)(1) of
such section, for the purposes specified in
such subsection.
‘‘(D) DISCLOSURE BY CERTAIN PROGRAMS
TO GROUP HEALTH PLANS.—The administrator
of the medicare program under title XVIII of the
Social Security Act or any administrator of the
medicaid program under title XIX of such Act
may (subject to the provisions of subparagraph
(E)) disclose information concerning an em-
ployee or spouse disclosed to the Director pursu-
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ant to subparagraph (B) and redisclosed to such
administrator pursuant to subparagraph (C)—
‘‘(i) to any group health plan which
provides or provided coverage to such em-
ployee or spouse, and
‘‘(ii) to any agent of such adminis-
trator,
for purposes of identifying, or collecting on
claims under coverage of such employee or spouse
under such group health plan.
‘‘(E) SPECIAL RULES.—
‘‘(i) RESTRICTIONS ON DISCLOSURE.—
Information may be disclosed under sub-
paragraphs (A) through (D) only for pur-
poses of, and to the extent necessary in, de-
termining the extent to which any individ-
ual is covered under any group health plan.
‘‘(ii) 
TIMELY
RESPONSE
TO
RE-
QUESTS.—Any request made under sub-
paragraph (A) or (B) shall be complied
with as soon as possible but in no event
later than 120 days after the date the re-
quest was made.
‘‘(F) DISCLOSURE
CONCERNING
ENFORCE-
MENT
ACTIVITIES.—The Secretary shall, upon
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written request from the Secretary of Health and
Human Services, disclose to the Secretary of
Health and Human Services the status of any
activities undertaken (with respect to persons
specified by the Secretary of Health and Human
Services) to enforce the requirements of section
5000.
‘‘(G) DEFINITIONS.—For purposes of this
paragraph, the term ‘group health plan’ means
any group health plan (as defined in section
5000(b)).’’.
(2) REPORTING OF GROUP HEALTH PLAN INFOR-
MATION.—Section 6051(a) of the Internal Revenue
Code of 1986 is amended—
(A) by striking ‘‘and’’ at the end of para-
graph (8),
(B) by striking the period at the end of
paragraph (9) and inserting ‘‘, and’’, and
(C) by inserting after paragraph (9) the fol-
lowing new paragraph:
‘‘(10) whether a group health plan (as defined in
section 6103(l)(12)(G)) is available to the employee
and the plan coverage (single or family) elected by
such employee (if any).’’.
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(c) CONFORMING AMENDMENT.—Section 1862(b)(5)
(42 U.S.C. 1395y(b)(5)), as amended by section 7303, is
amended to read as follows:
‘‘(5) IDENTIFICATION OF SECONDARY PAYER SIT-
UATIONS.—In addition to any other information pro-
vided under this title to fiscal intermediaries and car-
riers, the Administrator shall disclose to such
intermediaries and carriers (or to such a single
intermediary or carrier as the Secretary may des-
ignate) the information received under section
6103(l)(12)(C)(ii) of the Internal Revenue Code of
1986.’’.
(d) EXCEPTION
FROM
PRIVACY
ACT
REQUIRE-
MENTS.—Subsection (a)(8)(B) of section 552a of title 5,
United States Code, is amended—
(1) in clause (v), by striking ‘‘; or’’ at the end;
(2) in clause (vi), by striking the semicolon at
the end and inserting ‘‘; or’’; and
(3) by adding at the end the following new
clause:
‘‘(vii) matches performed pursuant to
section 6103(l)(12) of the Internal Revenue
Code of 1986 and section 1144 of the Social
Security Act for the purpose of identifying
third parties responsible for payment for
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health care items and services furnished to
beneficiaries of certain Federal and feder-
ally assisted programs;’’.
(e) EFFECTIVE DATE.—The amendments made by this
section shall take effect on April 1, 1995.
PART IV—OTHER PROVISIONS
SEC. 7950. DISALLOWANCE OF INTEREST ON CERTAIN
OVERPAYMENTS OF TAX.
(a) GENERAL RULE.—Subsection (e) of section 6611
of the Internal Revenue Code of 1986 (relating to income
tax refund within 45 days after return is filed) is amended
to read as follows:
‘‘(e) DISALLOWANCE OF INTEREST ON CERTAIN OVER-
PAYMENTS.—
‘‘(1) REFUNDS WITHIN 45 DAYS AFTER RETURN
IS FILED.—If any overpayment of tax imposed by
this title is refunded within 45 days after the last day
prescribed for filing the return of such tax (deter-
mined without regard to any extension of time for fil-
ing the return) or, in the case of a return filed after
such last date, is refunded within 45 days after the
date the return is filed, no interest shall be allowed
under subsection (a) on such overpayment.
‘‘(2) REFUNDS AFTER CLAIM FOR CREDIT OR RE-
FUND.—If—
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(3) Paragraph (3) of section 6611(e) of such
Code (as so amended) shall apply in the case of any
refund paid on or after January 1, 1995, regardless
of the taxable period to which such refund relates.
SEC. 7951. FEES FOR APPLICATIONS FOR ALCOHOL LABEL-
ING AND FORMULA REVIEWS.
(a) IN GENERAL.—The Secretary of the Treasury or
his delegate (hereinafter in this section referred to as the
‘Secretary’) shall establish a program requiring the pay-
ment of user fees for—
(1) requests for each certificate of alcohol label
approval required under the Federal Alcohol Admin-
istration Act (27 U.S.C. 201 et seq.) and for each re-
quest for exemption from such requirement, and
(2) requests for each formula review, and re-
quests for each statement of process (including labora-
tory tests and analyses), under such Act or under
chapter 51 of the Internal Revenue Code of 1986.
(b) PROGRAM CRITERIA.—
(1) IN GENERAL.—The fees charged under the
program required by subsection (a) shall be deter-
mined such that the Secretary estimates that the ag-
gregate of such fees received during any fiscal year
will be $5,000,000.
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(2) MINIMUM FEES.—The fee charged under the
program required by subsection (a) shall not be less
than—
(A) $50 for each request referred to in sub-
section (a)(1), and
(B) $250 for each request referred to in sub-
section (a)(2).
(c) APPLICATION OF SECTION.—Subsection (a) shall
apply to requests made on or after the 90th day after the
date of the enactment of this Act.
(d) DEPOSIT
AND
CREDIT
AS
OFFSETTING
RE-
CEIPTS.—The amounts collected by the Secretary under the
program required by subsection (a) (to the extent such
amounts do not exceed $5,000,000) shall be deposited into
the Treasury as offsetting receipts and ascribed to the alco-
hol compliance program of the Bureau of Alcohol, Tobacco,
and Firearms.
SEC. 7952. USE OF HARBOR MAINTENANCE TRUST FUND
AMOUNTS FOR ADMINISTRATIVE EXPENSES.
(a) IN GENERAL.—Paragraph (3) of section 9505(c)
of the Internal Revenue Code of 1986 (relating to expendi-
tures from Harbor Maintenance Trust Fund) is amended
to read as follows:
‘‘(3) for the payment of all expenses of adminis-
tration incurred by the Department of the Treasury,
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the Army Corps of Engineers, and the Department of
Commerce related to the administration of subchapter
A of chapter 36 (relating to harbor maintenance tax),
but not in excess of $5,000,000 for any fiscal year.’’
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to fiscal years beginning after the
date of the enactment of this Act.
SEC. 7953. INCREASE IN PRESIDENTIAL ELECTION CAM-
PAIGN FUND CHECK-OFF.
(a) IN GENERAL.—Section 6096(a) of the Internal
Revenue Code of 1986 (relating to designation by individ-
uals) is amended—
(1) by striking ‘‘$1’’ each place it appears and
inserting ‘‘$3’’, and
(2) by striking ‘‘$2’’ and inserting ‘‘$6’’.
(b) EFFECTIVE DATE.—The amendments made by sub-
section (a) apply with respect to tax returns required to
be filed after December 31, 1993.
SEC. 7954. INCREASE IN PUBLIC DEBT LIMIT.
(a) GENERAL RULE.—Subsection (b) of section 3101
of title 31, United States Code, is amended by striking out
the dollar limitation contained in such subsection and in-
serting in lieu thereof ‘‘$4,900,000,000,000’’.
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(b) REPEAL OF TEMPORARY INCREASE.—Effective on
and after the date of the enactment of this Act, section 1
of Public Law 103–12 is hereby repealed.
TITLE 
VIII—FINANCE 
COMMIT-
TEE REVENUE PROVISIONS
SEC. 8000. SHORT TITLE; ETC.
(a) SHORT TITLE.—This title may be cited as the
‘‘Revenue Reconciliation Act of 1993’’.
(b) AMENDMENT TO 1986 CODE.—Except as otherwise
expressly provided, whenever in this title an amendment
or repeal is expressed in terms of an amendment to, or re-
peal 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) SECTION 15 NOT TO APPLY.—Except in the case
of the amendments made by section 8221 (relating to cor-
porate rate increase), no amendment made by this title
shall be treated as a change in a rate of tax for purposes
of section 15 of the Internal Revenue Code of 1986.
(d) WAIVER OF ESTIMATED TAX PENALTIES.—No ad-
dition to tax shall be made under section 6654 or 6655 of
the Internal Revenue Code of 1986 for any period before
April 16, 1994 (March 16, 1994, in the case of a corpora-
tion), with respect to any underpayment to the extent such
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underpayment was created or increased by any provision
of this title.
(e) TABLE OF CONTENTS.—
Sec. 8000. Short title; etc.
Subtitle A—Training and Investment Incentives
PART I—PROVISIONS RELATING TO EDUCATION AND TRAINING
Sec. 8101. Employer-provided educational assistance.
Sec. 8102. Targeted jobs credit.
PART II—INVESTMENT INCENTIVES
SUBPART A—RESEARCH CREDIT
Sec. 8111. Extension of research credit.
Sec. 8112. Modification of fixed base percentage for startup companies.
Sec. 8113. Sense of Senate regarding permanent extension of research credit.
SUBPART B—MODIFICATION TO MINIMUM TAX DEPRECIATION RULES
Sec. 8115. Modification to minimum tax depreciation rules.
SUBPART C—INCREASE IN EXPENSE TREATMENT FOR SMALL BUSINESSES
Sec. 8119. Increase in expense treatment for small businesses.
SUBPART D—TAX EXEMPT BONDS
Sec. 8121. Extension of qualified small issue bonds.
PART III—EXPANSION AND SIMPLIFICATION OF EARNED INCOME TAX CREDIT
Sec. 8131. Expansion and simplification of earned income tax credit.
PART IV—INCENTIVES FOR INVESTMENT IN REAL ESTATE
SUBPART A—EXTENSION OF QUALIFIED MORTGAGE BONDS AND LOW-INCOME
HOUSING CREDIT
Sec. 8141. Extension of qualified mortgage bonds.
Sec. 8141A. Sense of the Senate regarding permanent extension of qualified mort-
gage bonds.
Sec. 8142. Low-income housing credit.
SUBPART B—PASSIVE LOSS RULES
Sec. 8143. Modification of passive loss rules.
SUBPART C—PROVISIONS RELATING TO REAL ESTATE INVESTMENTS BY PENSION
FUNDS
Sec. 8144. Real estate property acquired by a qualified organization.
Sec. 8145. Repeal of special treatment of publicly treated partnerships.
Sec. 8146. Title-holding companies permitted to receive small amounts of unre-
lated business taxable income.
Sec. 8147. Exclusion from unrelated business tax of gains from certain property.
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Sec. 8148. Exclusion from unrelated business tax of certain fees and option pre-
miums.
Sec. 8149. Treatment of pension fund investments in real estate investment trusts.
SUBPART D—INCREASE IN RECOVERY PERIOD FOR NONRESIDENTIAL REAL
PROPERTY
Sec. 8151. Increase in recovery period for nonresidential real property.
PART V—LUXURY TAX
Sec. 8161. Repeal of luxury excise taxes other than on passenger vehicles.
Sec. 8162. Exemption from luxury excise tax for certain equipment installed on
passenger vehicles for use by disabled individuals.
Sec. 8163. Tax on diesel fuel used in noncommercial boats.
PART VI—OTHER CHANGES
Sec. 8171. Alternative minimum tax treatment of contributions of appreciated
property.
Sec. 8172. Substantiation requirement for deduction of certain charitable con-
tributions.
Sec. 8173. Disclosure related to quid pro quo contributions.
Sec. 8174. Certain transfers to railroad retirement account made permanent.
Sec. 8175. Temporary extension of deduction for health insurance costs of self-em-
ployed individuals.
PART VII—INVESTMENT IN INDIAN RESERVATIONS
Sec. 8181. Investment tax credit for property on Indian Reservations.
Sec. 8182. Indian employment credit.
Subtitle B—Revenue Increases
PART I—PROVISIONS AFFECTING INDIVIDUALS
SUBPART A—RATE INCREASES
Sec. 8201. Increase in top marginal rate under section 1.
Sec. 8202. Surtax on high-income taxpayers.
Sec. 8203. Modifications to alternative minimum tax rates and exemption
amounts.
Sec. 8203A. Rate increases not to take effect until July 1, 1993.
Sec. 8204. Overall limitation on itemized deductions for high-income taxpayers
made permanent.
Sec. 8205. Phaseout of personal exemption of high-income taxpayers made perma-
nent.
Sec. 8206. Provisions to prevent conversion of ordinary income to capital gain.
SUBPART B—OTHER PROVISIONS
Sec. 8207. Repeal of limitation on amount of wages subject to health insurance
employment tax.
Sec. 8208. Top estate and gift tax rates made permanent.
Sec. 8209. Reduction in deductible portion of business meals and entertainment.
Sec. 8209A. Sense of the Senate relating to the deductibility of business meals and
entertainment expenses.
Sec. 8210. Elimination of deduction for club membership fees.
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Sec. 8211. Disallowance of deduction for certain employee remuneration in excess
of $1,000,000.
Sec. 8212. Reduction in compensation taken into account in determining con-
tributions and benefits under qualified retirement plans.
Sec. 8213. Modification to deduction for certain moving expenses.
Sec. 8214. Simplification of individual estimated tax safe harbor based on last
year’s tax.
Sec. 8215. Social security and tier 1 railroad retirement benefits.
PART II—PROVISIONS AFFECTING BUSINESSES
Sec. 8221. Increase in top marginal rate under section 11.
Sec. 8222. Disallowance of deduction for lobbying expenditures.
Sec. 8223. Mark to market accounting method for securities dealers.
Sec. 8224. Clarification of treatment of certain FSLIC financial assistance.
Sec. 8225. Modification of corporate estimated tax rules.
Sec. 8226. Modifications of discharge of indebtedness provisions.
Sec. 8227. Limitation on section 936 credit.
Sec. 8228. Modification to limitation on deduction for certain interest.
PART III—FOREIGN TAX PROVISIONS
SUBPART A—CURRENT TAXATION OF CERTAIN EARNINGS OF CONTROLLED
FOREIGN CORPORATIONS
Sec. 8231. Earnings invested in excess passive assets.
Sec. 8232. Modification to taxation of investment in United States property.
Sec. 8233. Other modifications to Subpart F.
SUBPART B—ALLOCATION OF RESEARCH AND EXPERIMENTAL EXPENDITURES
Sec. 8234. Allocation of research and experimental expenditures.
SUBPART C—OTHER PROVISIONS
Sec. 8235. Repeal of certain exceptions for working capital.
Sec. 8236. Modifications of accuracy-related penalty.
Sec. 8237. Denial of portfolio interest exemption for contingent interest.
Sec. 8238. Regulations dealing with conduit arrangements.
Sec. 8239. Treatment of export of certain softwood logs.
PART IV—TRANSPORTATION FUELS PROVISIONS
SUBPART A—TRANSPORTATION FUELS TAX
Sec. 8241. Transportation fuels tax.
SUBPART B—MODIFICATIONS TO TAX ON DIESEL FUEL
Sec. 8242. Modifications to tax on diesel fuel.
Sec. 8243. Floor stocks tax.
SUBPART C—EXTENSION OF MOTOR FUEL TAX RATES; INCREASED DEPOSITS
INTO HIGHWAY TRUST FUND
Sec. 8244. Extension of motor fuel tax rates; increased deposits into Highway
Trust Fund.
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PART V—COMPLIANCE PROVISIONS
Sec. 8251. Modifications to substantial understatement and return-preparer pen-
alties.
Sec. 8252. Returns relating to the cancellation of indebtedness by certain finan-
cial entities.
PART VI—TREATMENT OF INTANGIBLES
Sec. 8261. Amortization of goodwill and certain other intangibles.
Sec. 8262. Treatment of certain payments to retired or deceased partner.
PART VII—MISCELLANEOUS PROVISIONS
Sec. 8271. Denial of deduction relating to travel expenses.
Sec. 8272. Increase in withholding from supplemental wage payments.
Sec. 8273. Excise tax on certain vaccines made permanent.
Subtitle A—Training and
Investment Incentives
PART I—PROVISIONS RELATING TO EDUCATION
AND TRAINING
SEC. 8101. EMPLOYER-PROVIDED EDUCATIONAL ASSIST-
ANCE.
(a) EXTENSION OF EXCLUSION.—
(1) IN GENERAL.—Subsection (d) of section 127
(relating to educational assistance programs) is
amended to read as follows:
‘‘(d) TERMINATION.—
‘‘(1) IN GENERAL.—This section shall not apply
to taxable years beginning after June 30, 1994.
‘‘(2) SPECIAL RULE.—In the case of any taxable
year beginning in 1994, only amounts paid before
July 1, 1994, by the employer for educational assist-
ance for any employee shall be taken into account for
purposes of this section.’’
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(2) CONFORMING AMENDMENT.—Paragraph (2)
of section 103(a) of the Tax Extension Act of 1991 is
hereby repealed.
(b) COORDINATION WITH SECTION 132.—Paragraph
(8) of section 132(i) is amended to read as follows:
‘‘(8) APPLICATION OF SECTION TO OTHERWISE
TAXABLE
EDUCATIONAL
OR
TRAINING
BENEFITS.—
Amounts paid or expenses incurred by the employer
for education or training provided to the employee
which are not excludable from gross income under sec-
tion 127 shall be excluded from gross income under
this section if (and only if) such amounts or expenses
are a working condition fringe.’’
(c) EFFECTIVE DATES.—
(1) SUBSECTION (a).—The amendments made by
subsection (a) shall apply to taxable years ending
after June 30, 1992.
(2) SUBSECTION (b).—The amendment made by
subsection (b) shall apply to taxable years beginning
after December 31, 1988.
SEC. 8102. TARGETED JOBS CREDIT.
(a) EXTENSION OF CREDIT.—Paragraph (4) of section
51(c) (relating to amount of targeted jobs credit) is amend-
ed by striking ‘‘1992’’ and inserting ‘‘1994’’.
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(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to individuals who begin work for
the employer after June 30, 1992.
PART II—INVESTMENT INCENTIVES
Subpart A—Research Credit
SEC. 8111. EXTENSION OF RESEARCH CREDIT.
(a) IN GENERAL.—Subsection (h) of section 41 (relat-
ing to credit for research activities) is amended to read as
follows:
‘‘(h) NONAPPLICABILITY.—
‘‘(1) IN GENERAL.—This section shall not apply
to amounts paid or incurred during any suspension
period.
‘‘(2) BASE AMOUNT.—In the case of any taxable
year which includes a portion of any suspension pe-
riod, the base amount with respect to such taxable
year shall be the amount which bears the same ratio
to the base amount for such year (determined without
regard to this paragraph) as the number of days in
such taxable year which are not in any suspension
period bears to the total number of days in such tax-
able year.
‘‘(3) FIXED-BASE PERCENTAGE.—The fixed-base
percentage under subsection (c)(3)(B)(ii) shall be
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computed as if this section were in effect during any
suspension period.
‘‘(4) SUSPENSION PERIOD.—For purposes of this
subsection, the term ‘suspension period’ includes—
‘‘(A) the period beginning July 1, 1992, and
ending June 30, 1993, and
‘‘(B) any period after June 30, 1994.’’
(b) CONFORMING AMENDMENT.—Subparagraph (D) of
section 28(b)(1) is amended by striking ‘‘for periods after
June 30, 1992’’ and inserting ‘‘during any suspension pe-
riod (as defined in section 41(h)(4))’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years ending after June 30,
1992.
SEC. 8112. MODIFICATION OF FIXED BASE PERCENTAGE
FOR STARTUP COMPANIES.
(a) 
GENERAL
RULE.—Clause 
(ii) 
of 
section
41(c)(3)(B) is amended to read as follows:
‘‘(ii) FIXED-BASE PERCENTAGE.—In a
case to which this subparagraph applies, the
fixed-base percentage is—
‘‘(I) 3 percent for each of the tax-
payer’s 1st 5 taxable years beginning
after December 31, 1993, for which the
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taxpayer has qualified research ex-
penses,
‘‘(II) in the case of the taxpayer’s
6th such taxable year, 1⁄6 of the per-
centage which the aggregate qualified
research expenses of the taxpayer for
the 4th and 5th such taxable years is
of the aggregate gross receipts of the
taxpayer for such years,
‘‘(III) in the case of the taxpayer’s
7th such taxable year, 1⁄3 of the per-
centage which the aggregate qualified
research expenses of the taxpayer for
the 5th and 6th such taxable years is
of the aggregate gross receipts of the
taxpayer for such years,
‘‘(IV) in the case of the taxpayer’s
8th such taxable year, 1⁄2 of the per-
centage which the aggregate qualified
research expenses of the taxpayer for
the 5th, 6th, and 7th such taxable
years is of the aggregate gross receipts
of the taxpayer for such years,
‘‘(V) in the case of the taxpayer’s
9th such taxable year, 2⁄3 of the per-
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centage which the aggregate qualified
research expenses of the taxpayer for
the 5th, 6th, 7th, and 8th such taxable
years is of the aggregate gross receipts
of the taxpayer for such years,
‘‘(VI) in the case of the taxpayer’s
10th such taxable year, 5⁄6 of the per-
centage which the aggregate qualified
research expenses of the taxpayer for
the 5th, 6th, 7th, 8th, and 9th such
taxable years is of the aggregate gross
receipts of the taxpayer for such years,
and
‘‘(VII) for taxable years thereafter,
the percentage which the aggregate
qualified research expenses for any 5
taxable years selected by the taxpayer
from among the 5th through the 10th
such taxable years is of the aggregate
gross receipts of the taxpayer for such
selected years.’’.
(b) CONFORMING AMENDMENTS.—
(1) Clause (iii) of section 41(c)(3)(B) is amended
by striking ‘‘clause (i)’’ and inserting ‘‘clauses (i) and
(ii)’’.
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(2) Subparagraph (D) of section 41(c)(3) is
amended by striking ‘‘subparagraph (A)’’ and insert-
ing ‘‘subparagraphs (A) and (B)(ii)’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after Decem-
ber 31, 1993.
SEC. 8113. SENSE OF SENATE REGARDING PERMANENT EX-
TENSION OF RESEARCH CREDIT.
It is the sense of the Senate that the research credit
under section 41 of the Internal Revenue Code of 1986 be
extended permanently.
Subpart B—Modification To Minimum Tax
Depreciation Rules
SEC. 8115. MODIFICATION TO MINIMUM TAX DEPRECIATION
RULES.
(a) ELIMINATION OF ACE DEPRECIATION ADJUST-
MENT.—Clause (i) of section 56(g)(4)(A) (relating to depre-
ciation adjustments for computing adjusted current earn-
ings) is amended by adding at the end thereof the following
new sentence: ‘‘The preceding sentence shall not apply to
any property placed in service after December 31, 1993,
and the depreciation deduction with respect to such prop-
erty shall be determined under the rules of subsection
(a)(1)(A).’’.
(b) EFFECTIVE DATES.—
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(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section shall
apply to property placed in service after December
31, 1993.
(2) 
COORDINATION
WITH
TRANSITIONAL
RULES.—The amendments made by this section shall
not apply to any property to which paragraph (1) of
section 56(a) of the Internal Revenue Code of 1986
does not apply by reason of subparagraph (C)(i)
thereof.
Subpart C—Increase in Expense Treatment for Small
Businesses
SEC. 8119. INCREASE IN EXPENSE TREATMENT FOR SMALL
BUSINESSES.
(a) GENERAL RULE.—Paragraph (1) of section 179(b)
(relating to dollar limitation) is amended by striking
‘‘$10,000’’ and inserting ‘‘$20,500’’.
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to taxable years beginning after De-
cember 31, 1992.
Subpart D—Tax Exempt Bonds
SEC. 8121. EXTENSION OF QUALIFIED SMALL ISSUE BONDS.
(a) IN
GENERAL.—Subparagraph (B) of section
144(a)(12) is amended by striking ‘‘1992’’ and inserting
‘‘1994’’.
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(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to bonds issued after June 30, 1992.
PART III—EXPANSION AND SIMPLIFICATION OF
EARNED INCOME TAX CREDIT
SEC. 8131. EXPANSION AND SIMPLIFICATION OF EARNED
INCOME TAX CREDIT.
(a) GENERAL RULE.—Section 32 (relating to earned
income credit) is amended by striking subsections (a) and
(b) and inserting the following:
‘‘(a) ALLOWANCE OF CREDIT.—
‘‘(1) IN GENERAL.—In the case of an eligible in-
dividual, there shall be allowed as a credit against the
tax imposed by this subtitle for the taxable year an
amount equal to the credit percentage of so much of
the taxpayer’s earned income for the taxable year as
does not exceed the earned income amount.
‘‘(2) LIMITATION.—The amount of the credit al-
lowable to a taxpayer under paragraph (1) for any
taxable year shall not exceed the excess (if any) of—
‘‘(A) the credit percentage of the earned in-
come amount, over
‘‘(B) the phaseout percentage of so much of
the adjusted gross income (or, if greater, the
earned income) of the taxpayer for the taxable
year as exceeds the phaseout amount.
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‘‘(b) PERCENTAGES AND AMOUNTS.—For purposes of
subsection (a)—
‘‘(1) PERCENTAGES.—The credit percentage and
the phaseout percentage shall be determined as fol-
lows:
‘‘(A) IN GENERAL.—In the case of taxable
years beginning after 1995:
In the case of an eli-
gible individual with:
The credit percentage
is:
The phaseout percent-
age is:
1 qualifying child ......
34 ..................................
16.16
2 or more qualifying
children ..................
39 ..................................
20.72
‘‘(B) TRANSITIONAL
PERCENTAGES
FOR
1995.—In the case of a taxable year beginning in
1995:
In the case of an eli-
gible individual with:
The credit percentage
is:
The phaseout percent-
age is:
1 qualifying child ......
34 ..................................
16.16
2 or more qualifying
children ..................
34 ..................................
15.94
‘‘(C) TRANSITIONAL
PERCENTAGES
FOR
1994.—In the case of a taxable year beginning in
1994:
In the case of an eli-
gible individual with:
The credit percentage
is:
The phaseout percent-
age is:
1 qualifying child ......
26 ..................................
16.16
2 or more qualifying
children ..................
30 ..................................
15.94
‘‘(2) AMOUNTS.—The earned income amount and
the phaseout amount shall be determined as follows:
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‘‘(A) IN GENERAL.—In the case of taxable
years beginning after 1994:
In the case of an eli-
gible individual with:
The earned income
amount is:
The phaseout amount
is:
1 qualifying child ......
$6,000 ...........................
$11,000
2 or more qualifying
children ..................
$8,500 ...........................
$11,000
‘‘(B) TRANSITIONAL AMOUNTS.—In the case
of a taxable year beginning in 1994:
In the case of an eli-
gible individual with:
The earned income
amount is:
The phaseout amount
is:
1 qualifying child ......
$7,750 ...........................
$11,000
2 or more qualifying
children ..................
$8,500 ...........................
$11,000.’’
(b) INFLATION ADJUSTMENTS.—Section 32(i) (relat-
ing to inflation adjustments) is amended—
(1) by striking paragraphs (1) and (2) and in-
serting the following new paragraph:
‘‘(1) IN GENERAL.—In the case of any taxable
year beginning after 1994, each dollar amount con-
tained in subsection (b)(2)(A) shall be increased by
an amount equal to—
‘‘(A) such dollar amount, multiplied by
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3), for the calendar
year in which the taxable year begins, by sub-
stituting ‘calendar year 1993’ for ‘calendar year
1992’.’’, and
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(2) by redesignating paragraph (3) as para-
graph (2).
(c) CONFORMING AMENDMENTS.—
(1) Subparagraph (D) of section 32(c)(3) is
amended—
(A) by striking ‘‘clause (i) or (ii)’’ in clause
(iii) and inserting ‘‘clause (i)’’,
(B) by striking clause (ii), and
(C) by redesignating clause (iii) as clause
(ii).
(2) Paragraph (3) of section 162(l) is amended
to read as follows:
‘‘(3) COORDINATION
WITH
MEDICAL
DEDUC-
TION.—Any amount paid by a taxpayer for insurance
to which paragraph (1) applies shall not be taken
into account in computing the amount allowable to
the taxpayer as a deduction under section 213(a).’’
(3) Section 213 is amended by striking sub-
section (f).
(4) Subsection (b) of section 3507 is amended by
redesignating paragraphs (2) and (3) as paragraphs
(3) and (4), respectively, and by inserting after para-
graph (1) the following new paragraph:
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‘‘(2) certifies that the employee has 1 or more
qualifying children (within the meaning of section
32(c)(3)) for such taxable year,’’.
(5) Subparagraph (B) of section 3507(c)(2) is
amended by striking clauses (i) and (ii) and inserting
the following:
‘‘(i) of not more than the credit per-
centage in effect under section 32(b)(1) for
an eligible individual with 1 qualifying
child and with earned income not in excess
of the earned income amount in effect under
section 32(b)(2) for such an eligible individ-
ual, which
‘‘(ii) phases out at the phaseout per-
centage in effect under section 32(b)(1) for
such an eligible individual between the
phaseout amount in effect under section
32(b)(2) for such an eligible individual and
the amount of earned income at which the
credit under section 32(a) phases out for
such an eligible individual, or’’.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after Decem-
ber 31, 1993.
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PART IV—INCENTIVES FOR INVESTMENT IN REAL
ESTATE
Subpart A—Extension of Qualified Mortgage Bonds
and Low-Income Housing Credit
SEC. 8141. EXTENSION OF QUALIFIED MORTGAGE BONDS.
(a) IN
GENERAL.—Subparagraph (B) of section
143(a)(1) (defining qualified mortgage bond) is amended
by striking ‘‘1992’’ each place it appears and inserting
‘‘1994’’.
(b) MORTGAGE CREDIT CERTIFICATES.—Subsection
(h) of section 25 is amended by striking ‘‘1992’’ and insert-
ing ‘‘1994’’.
(c) EFFECTIVE DATES.—
(1) BONDS.—The amendment made by sub-
section (a) shall apply to bonds issued after June 30,
1992.
(2) CERTIFICATES.—The amendment made by
subsection (b) shall apply to elections for periods after
June 30, 1992.
SEC. 8141A. SENSE OF THE SENATE REGARDING PERMA-
NENT EXTENSION OF QUALIFIED MORTGAGE
BONDS.
(a) FINDINGS.—The Senate finds that:
(1) Low and moderate income families often
have difficulty in obtaining affordable mortgage fi-
nancing.
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(2) The mortgage revenue bond provisions of the
Internal Revenue Code are an important tool in pro-
viding affordable financing for first-time home buy-
ers.
(3) The tax-exempt status of mortgage revenue
bonds have enabled State and local housing agencies
to finance home mortgages for first-time buyers at
rates below conventional market rates. This cost dif-
ferential enables buyers, who otherwise might not be
able to get mortgage financing, to obtain a loan at an
affordable rate.
(4) Mortgage revenue bonds are targeted to fami-
lies with the greatest need. In 1992, the average in-
come of a mortgage revenue bond borrower was 74
percent of median income. Mortgage revenue bonds
are only available to buyers who have not owned a
home within the past 3 years, earn 115 percent or less
of the applicable median income, and buy a principal
residence that does not exceed 90 percent of the aver-
age home purchase price.
(5) Prior to its expiration in June, mortgage
revenue bonds were the only Federal assistance tar-
geted to first-time home buyers. During the past 15
years, mortgage revenue bonds have financed more
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than 2 million home purchases and accounted for 1
out of every 12 mortgages made to first-time buyers.
(6) In the last decade, mortgage revenue bonds
have been scheduled to sunset 7 times, making admin-
istration and timing of bond issues extremely difficult
and costly. The mortgage revenue bond program
lapsed on June 30, underscoring the need for perma-
nent extension.
(b) SENSE OF THE SENATE.—It is the sense of the Sen-
ate that mortgage revenue bonds are a vital, proven tool
for providing affordable home ownership opportunities for
low- and moderate-income families and that Congress
should adopt a permanent extension of the mortgage reve-
nue bond program as part of the Internal Revenue Code.
SEC. 8142. LOW-INCOME HOUSING CREDIT.
(a) PERMANENT EXTENSION.—
(1) IN GENERAL.—Section 42 (relating to low-
income housing credit) is amended by striking sub-
section (o).
(2) EFFECTIVE DATE.—The amendments made
by paragraph (1) shall apply to periods ending after
June 30, 1992.
(b) MODIFICATIONS.—
(1) HOUSING CREDIT AGENCY DETERMINATION
OF REASONABLENESS OF PROJECT COSTS.—Subpara-
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graph (B) of section 42(m)(2) (relating to credit allo-
cated to building not to exceed amount necessary to
assure project feasibility) is amended—
(A) by striking ‘‘and’’ at the end of clause
(ii),
(B) by striking the period at the end of
clause (iii) and inserting ‘‘, and’’, and
(C) by inserting after clause (iii) the follow-
ing new clause:
‘‘(iv) the reasonableness of the devel-
opmental and operational costs of the
project.’’
(2) UNITS WITH CERTAIN FULL-TIME STUDENTS
NOT
DISQUALIFIED.—Subparagraph (D) of section
42(i)(3) (defining low-income unit) is amended to
read as follows:
‘‘(D) CERTAIN
STUDENTS
NOT
TO
DIS-
QUALIFY UNIT.—A unit shall not fail to be treat-
ed as a low-income unit merely because it is oc-
cupied—
‘‘(i) by an individual who is—
‘‘(I) a student and receiving as-
sistance under title IV of the Social Se-
curity Act, or
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‘‘(II) enrolled in a job training
program receiving assistance under the
Job Training Partnership Act or
under other similar Federal, State, or
local laws, or
‘‘(ii) entirely by full-time students if
such students are—
‘‘(I) single parents and their chil-
dren and such parents and children
are not dependents (as defined in sec-
tion 152) of another individual, or
‘‘(II) married and file a joint re-
turn.’’
(3) TREASURY WAIVERS OF CERTAIN DE MINIMIS
ERRORS AND RECERTIFICATIONS.—Subsection (g) of
section 42 (relating to qualified low-income housing
projects) is amended by adding at the end thereof the
following new paragraph:
‘‘(8) WAIVER OF CERTAIN DE MINIMIS ERRORS
AND RECERTIFICATIONS.—On application by the tax-
payer, the Secretary may waive—
‘‘(A) any recapture under subsection (j) in
the case of any de minimis error in complying
with paragraph (1), or
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‘‘(B) any annual recertification of tenant
income for purposes of this subsection, if the en-
tire building is occupied by low-income tenants.’’
(4) DISCRIMINATION AGAINST TENANTS PROHIB-
ITED.—Section 42(h)(6)(B) (defining extended low-in-
come housing commitment) is amended by redesignat-
ing clauses (iv) and (v) as clauses (v) and (vi) and
by inserting after clause (iii) the following new
clause:
‘‘(iv) which prohibits the refusal to
lease to a holder of a voucher or certificate
of eligibility under section 8 of the United
States Housing Act of 1937 because of the
status of the prospective tenant as such a
holder,’’.
(5) EFFECTIVE DATES.—
(A) IN GENERAL.—Except as provided in
subparagraph (B), the amendments made by this
subsection shall apply to—
(i) determinations under section 42 of
the Internal Revenue Code of 1986 with re-
spect to housing credit dollar amounts allo-
cated from State housing credit ceilings
after June 30, 1992, or
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(ii) buildings placed in service after
June 30, 1992, to the extent paragraph (1)
of section 42(h) of such Code does not apply
to any building by reason of paragraph (4)
thereof, but only with respect to bonds is-
sued after such date.
(B) WAIVER AUTHORITY AND PROHIBITED
DISCRIMINATION.—The amendments made by
paragraphs (3) and (4) shall take effect on the
date of the enactment of this Act.
(c) ELECTION TO DETERMINE RENT LIMITATION
BASED ON NUMBER OF BEDROOMS AND DEEP RENT SKEW-
ING.—In the case of a building to which the amendments
made by subsection (e)(1) or (n)(2) of section 7108 of the
Revenue Reconciliation Act of 1989 did not apply, the tax-
payer may elect to have such amendments apply to such
building but only with respect to tenants first occupying
any unit in the building after the date of the election, and
only if the taxpayer has met the requirements of the proce-
dures described in section 42(m)(1)(B)(iii) of the Internal
Revenue Code of 1986. Such an election may be made only
during the 180 day period beginning on the date of the en-
actment of this Act and, once made, shall be irrevocable.
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Subpart B—Passive Loss Rules
SEC. 8143. MODIFICATION OF PASSIVE LOSS RULES.
(a) GENERAL RULE.—Section 469 (relating to passive
activity losses and credits limited) is amended by redesig-
nating subsections (l) and (m) as subsections (m) and (n),
respectively, and by inserting after subsection (k) the follow-
ing new subsection:
‘‘(l) SPECIAL RULES
FOR REAL ESTATE ACTIVI-
TIES.—
‘‘(1) LOSS FROM CERTAIN RENTAL REAL ESTATE
ACTIVITIES TREATED AS NOT PASSIVE.—If the tax-
payer meets the requirements of paragraph (2) for the
taxable year, subsection (a) shall not apply to so
much of the passive activity loss for such taxable year
as does not exceed the least of—
‘‘(A) the lesser of—
‘‘(i) the net loss for such taxable year
from rental real estate activities in which
the taxpayer materially participates, or
‘‘(ii) the net loss for such taxable year
from all rental real estate activities of the
taxpayer,
‘‘(B) the net income of the taxpayer for the
taxable year from real property trade or business
activities which are not passive activities, or
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‘‘(C) the taxable income of the taxpayer for
the taxable year determined without regard to
this subsection.
A similar rule shall apply to any passive activity
credit.
‘‘(2) REQUIREMENTS.—The taxpayer meets the
requirements of this paragraph for any taxable year
if more than one-half of the personal services per-
formed in trades or businesses by the taxpayer during
such taxable year are performed in real property
trades or businesses in which the taxpayer materially
participates.
‘‘(3) REAL PROPERTY TRADE OR BUSINESS.—
For purposes of this paragraph, the term ‘real prop-
erty trade or business’ means any real property devel-
opment, redevelopment, construction, reconstruction,
acquisition, conversion, rental, operation, manage-
ment, leasing, or brokerage trade or business.
‘‘(4) SPECIAL RULES.—
‘‘(A) PERSONAL
SERVICES
AS
AN
EM-
PLOYEE.—For purposes of paragraph (2), per-
sonal services performed as an employee shall
not be treated as performed in real property
trades or businesses. The preceding sentence shall
not apply if such employee is a 5-percent owner
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(as defined in section 416(i)(1)(B)) in the em-
ployer.
‘‘(B) CLOSELY
HELD
C
CORPORATIONS.—
This subsection shall not apply to any interests
held by a closely held C corporation.
‘‘(5) COORDINATION WITH SUBSECTION (i).—
‘‘(A) IN GENERAL.—This subsection shall be
applied after the application of subsection (i).
‘’(B) AMOUNTS
ALLOWED
UNDER
SUB-
SECTION (i).—For purposes of this subsection—
‘‘(i) the passive activity loss and pas-
sive activity credit, and
‘‘(ii) the net loss referred to in para-
graph (1)(A),
shall not include any amount allowed under sub-
section (i).’’
(b) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after Decem-
ber 31, 1993.
Subpart C—Provisions Relating to Real Estate
Investments by Pension Funds
SEC. 8144. REAL ESTATE PROPERTY ACQUIRED BY A QUALI-
FIED ORGANIZATION.
(a) MODIFICATIONS OF EXCEPTIONS.—Paragraph (9)
of section 514(c) (relating to real property acquired by a
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qualified organization) is amended by adding at the end
thereof the following new subparagraphs:
‘‘(G) SPECIAL
RULES
FOR
PURPOSES
OF
THE EXCEPTIONS.—Except as otherwise provided
by regulations—
‘‘(i) SMALL LEASES DISREGARDED.—
For purposes of clauses (iii) and (iv) of sub-
paragraph (B), a lease to a person described
in such clause (iii) or (iv) shall be dis-
regarded if no more than 25 percent of the
leasable floor space in a building (or com-
plex of buildings) is covered by the lease
and if the lease is on commercially reason-
able terms.
‘‘(ii) COMMERCIALLY REASONABLE FI-
NANCING.—Clause (v) of subparagraph (B)
shall not apply if the financing is on com-
mercially reasonable terms.
‘‘(H) QUALIFYING SALES BY FINANCIAL IN-
STITUTIONS.—
‘‘(i) IN GENERAL.—In the case of a
qualifying sale by a financial institution,
except as provided in regulations, clauses
(i) and (ii) of subparagraph (B) shall not
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apply with respect to financing provided by
such institution for such sale.
‘‘(ii) QUALIFYING SALE.—For purposes
of this clause, there is a qualifying sale by
a financial institution if—
‘‘(I) a qualified organization ac-
quires property described in clause
(iii) from a financial institution and
any gain recognized by the financial
institution with respect to the property
is ordinary income,
‘‘(II) the stated principal amount
of the financing provided by the finan-
cial institution does not exceed the
amount of the outstanding indebtedness
(including accrued but unpaid inter-
est) of the financial institution with
respect to the property described in
clause (iii) immediately before the ac-
quisition referred to in clause (iii) or
(v), whichever is applicable, and
‘‘(III) the present value (deter-
mined as of the time of the sale and by
using the applicable Federal rate deter-
mined under section 1274(d)) of the
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maximum amount payable pursuant
to the financing that is determined by
reference to the revenue, income, or
profits derived from the property can-
not exceed 30 percent of the total pur-
chase price of the property (including
the contingent payments).
‘‘(iii) PROPERTY TO WHICH SUBPARA-
GRAPH APPLIES.—Property is described in
this clause if such property is foreclosure
property, or is real property which—
‘‘(I) was acquired by the qualified
organization from a financial institu-
tion which is in conservatorship or re-
ceivership, or from the conservator or
receiver of such an institution, and
‘‘(II) was held by the financial in-
stitution at the time it entered into
conservatorship or receivership.
‘‘(iv) FINANCIAL
INSTITUTION.—For
purposes of this subparagraph, the term ‘fi-
nancial institution’ means—
‘‘(I) any financial institution de-
scribed in section 581 or 591(a),
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‘‘(II) any other corporation which
is a direct or indirect subsidiary of an
institution referred to in subclause (I)
but only if, by virtue of being affiliated
with such institution, such other cor-
poration is subject to supervision and
examination by a Federal or State
agency which regulates institutions re-
ferred to in subclause (I), and
‘‘(III) any person acting as a con-
servator or receiver of an entity re-
ferred to in subclause (I) or (II) (or
any government agency or corporation
succeeding to the rights or interest of
such person).
‘‘(v) FORECLOSURE
PROPERTY.—For
purposes of this subparagraph, the term
‘foreclosure property’ means any real prop-
erty acquired by the financial institution as
the result of having bid on such property at
foreclosure, or by operation of an agreement
or process of law, after there was a default
(or a default was imminent) on indebted-
ness which such property secured.’’.
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(b) CONFORMING AMENDMENT.—Paragraph (9) of sec-
tion 514(c) is amended—
(1) by adding the following new sentence at the
end of subparagraph (A): ‘‘For purposes of this para-
graph, an interest in a mortgage shall in no event be
treated as real property.’’, and
(2) by striking the last sentence of subparagraph
(B).
(c) EFFECTIVE DATES.—
(1) IN
GENERAL.—The amendments made by
this section shall apply to acquisitions on or after
January 1, 1994.
(2) SMALL LEASES.—The provisions of section
514(c)(9)(G)(i) of the Internal Revenue Code of 1986
shall, in addition to any leases to which the provi-
sions apply by reason of paragraph (1), apply to
leases entered into on or after January 1, 1994.
SEC. 8145. REPEAL OF SPECIAL TREATMENT OF PUBLICLY
TREATED PARTNERSHIPS.
(a) GENERAL RULE.—Subsection (c) of section 512 is
amended—
(1) by striking paragraph (2),
(2) by redesignating paragraph (3) as para-
graph (2), and
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(3) by striking ‘‘paragraph (1) or (2)’’ in para-
graph (2) (as so redesignated) and inserting ‘‘para-
graph (1)’’.
(b) EFFECTIVE DATE.—The amendments made by sub-
section (a) shall apply to partnership years beginning on
or after January 1, 1994.
SEC. 8146. TITLE-HOLDING COMPANIES PERMITTED TO RE-
CEIVE 
SMALL 
AMOUNTS 
OF 
UNRELATED
BUSINESS TAXABLE INCOME.
(a) GENERAL
RULE.—Paragraph
(25)
of
section
501(c) is amended by adding at the end thereof the follow-
ing new subparagraph:
‘‘(G)(i) An organization shall not be treated
as failing to be described in this paragraph
merely by reason of the receipt of any otherwise
disqualifying income which is incidentally de-
rived from the holding of real property.
‘‘(ii) Clause (i) shall not apply if the
amount of gross income described in such clause
exceeds 10 percent of the organization’s gross in-
come for the taxable year unless the organization
establishes to the satisfaction of the Secretary
that the receipt of gross income described in
clause (i) in excess of such limitation was inad-
vertent and reasonable steps are being taken to
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correct the circumstances giving rise to such in-
come.’’
(b) CONFORMING AMENDMENT.—Paragraph (2) of sec-
tion 501(c) is amended by adding at the end thereof the
following new sentence: ‘‘Rules similar to the rules of sub-
paragraph (G) of paragraph (25) shall apply for purposes
of this paragraph.’’
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning on or after
January 1, 1994.
SEC. 8147. EXCLUSION FROM UNRELATED BUSINESS TAX
OF GAINS FROM CERTAIN PROPERTY.
(a) GENERAL RULE.—Subsection (b) of section 512
(relating to modifications) is amended by adding at the end
thereof the following new paragraph:
‘‘(16)(A) Notwithstanding paragraph (5)(B),
there shall be excluded all gains or losses from the
sale, exchange, or other disposition of any real prop-
erty described in subparagraph (B) if—
‘‘(i) such property was acquired by the or-
ganization from—
‘‘(I) a financial institution described
in section 581 or 591(a) which is in
conservatorship or receivership, or
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‘‘(II) the conservator or receiver of such
an institution (or any government agency
or corporation succeeding to the rights or
interests of the conservator or receiver),
‘‘(ii) such property is designated by the or-
ganization within the 9-month period beginning
on the date of its acquisition as property held for
sale, except that not more than one-half (by
value determined as of such date) of property ac-
quired
in
a
single
transaction
may
be
so
designated,
‘‘(iii) such sale, exchange, or disposition oc-
curs before the later of—
‘‘(I) the date which is 30 months after
the date of the acquisition of such property,
or
‘‘(II) the date specified by the Sec-
retary in order to assure an orderly disposi-
tion of property held by persons described
in subparagraph (A), and
‘‘(iv) while such property was held by the
organization, the aggregate expenditures on im-
provements and development activities included
in the basis of the property are (or were) not in
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excess of 20 percent of the net selling price of
such property.
‘‘(B) Property is described in this subparagraph
if it is real property which—
‘‘(i) was held by the financial institution at
the time it entered into conservatorship or receiv-
ership, or
‘‘(ii) was foreclosure property (as defined in
section 514(c)(9)(H)(v)) which secured indebted-
ness held by the financial institution at such
time.
For purposes of this subparagraph, real property in-
cludes an interest in a mortgage.’’
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to property acquired on or after Jan-
uary 1, 1994.
SEC. 8148. EXCLUSION FROM UNRELATED BUSINESS TAX
OF CERTAIN FEES AND OPTION PREMIUMS.
(a) LOAN COMMITMENT FEES.—Paragraph (1) of sec-
tion 512(b) (relating to modifications) is amended by in-
serting ‘‘amounts received or accrued as consideration for
entering into agreements to make loans,’’ before ‘‘and annu-
ities’’.
(b) OPTION PREMIUMS.—The second sentence of sec-
tion 512(b)(5) is amended—
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(1) by striking ‘‘all gains on’’ and inserting ‘‘all
gains or losses recognized, in connection with the or-
ganization’s investment activities, from’’,
(2) by striking ‘‘, written by the organization in
connection with its investment activities,’’ and
(3) by inserting ‘‘or real property and all gains
or losses from the forfeiture of good-faith deposits
(that are consistent with established business practice)
for the purchase, sale, or lease of real property in con-
nection with the organization’s investment activities’’
before the period.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to amounts received on or after January
1, 1994.
SEC. 8149. TREATMENT OF PENSION FUND INVESTMENTS
IN REAL ESTATE INVESTMENT TRUSTS.
(a) GENERAL RULE.—Subsection (h) of section 856
(relating to closely held determinations) is amended by add-
ing at the end thereof the following new paragraph:
‘‘(3) TREATMENT OF TRUSTS DESCRIBED IN SEC-
TION 401(a).—
‘‘(A) LOOK-THRU TREATMENT.—
‘‘(i) IN GENERAL.—Except as provided
in clause (ii), in determining whether the
stock ownership requirement of section
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542(a)(2) is met for purposes of paragraph
(1)(A), any stock held by a qualified trust
shall be treated as held directly by its bene-
ficiaries in proportion to their actuarial in-
terests in such trust and shall not be treated
as held by such trust.
‘‘(ii) CERTAIN RELATED TRUSTS NOT
ELIGIBLE.—Clause (i) shall not apply to
any qualified trust if one or more disquali-
fied 
persons 
(as 
defined 
in 
section
4975(e)(2), without regard to subpara-
graphs (B) and (I) thereof) with respect to
such qualified trust hold in the aggregate 5
percent or more in value of the interests in
the real estate investment trust and such
real estate investment trust has accumulated
earnings and profits attributable to any pe-
riod for which it did not qualify as a real
estate investment trust.
‘‘(B) COORDINATION WITH PERSONAL HOLD-
ING COMPANY RULES.—If any entity qualifies as
a real estate investment trust for any taxable
year by reason of subparagraph (A), such entity
shall not be treated as a personal holding com-
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pany for such taxable year for purposes of part
II of subchapter G of this chapter.
‘‘(C) TREATMENT FOR PURPOSES OF UNRE-
LATED BUSINESS TAX.—If any qualified trust
holds more than 10 percent (by value) of the in-
terests in any pension-held REIT at any time
during a taxable year, the trust shall be treated
as having for such taxable year gross income
from an unrelated trade or business in an
amount which bears the same ratio to the aggre-
gate dividends paid (or treated as paid) by the
REIT to the trust for the taxable year of the
REIT with or within which the taxable year of
the trust ends (the ‘REIT year’) as—
‘‘(i) the gross income (less direct ex-
penses related thereto) of the REIT for the
REIT year from unrelated trades or busi-
nesses (determined as if the REIT were a
qualified trust), bears to
‘‘(ii) the gross income (less direct ex-
penses related thereto) of the REIT for the
REIT year.
This subparagraph shall apply only if the ratio
determined under the preceding sentence is at
least 5 percent.
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‘‘(D) PENSION-HELD
REIT.—The purposes
of subparagraph (C)—
‘‘(i) IN GENERAL.—A real estate in-
vestment trust is a pension-held REIT if
such trust would not have qualified as a
real estate investment trust but for the pro-
visions of this paragraph and if such trust
is predominantly held by qualified trusts.
‘‘(ii) 
PREDOMINANTLY
HELD.—For
purposes of clause (i), a real estate invest-
ment trust is predominantly held by quali-
fied trusts if—
‘‘(I) at least 1 qualified trust
holds more than 25 percent (by value)
of the interests in such real estate in-
vestment trust, or
‘‘(II) 1 or more qualified trusts
(each of whom own more than 10 per-
cent by value of the interests in such
real estate investment trust) hold in
the aggregate more than 50 percent (by
value) of the interests in such real es-
tate investment trust.
‘‘(E) QUALIFIED TRUST.—For purposes of
this paragraph, the term ‘qualified trust’ means
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any trust described in section 401(a) and exempt
from tax under section 501(a).’’
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply to taxable years beginning after Decem-
ber 31, 1993.
Subpart D—Increase in Recovery Period for
Nonresidential Real Property
SEC. 
8151. INCREASE 
IN 
RECOVERY 
PERIOD 
FOR
NONRESIDENTIAL REAL PROPERTY.
(a) GENERAL RULE.—Paragraph (1) of section 168(c)
(relating to applicable recovery period) is amended by strik-
ing the item relating to nonresidential real property and
inserting the following:
‘‘Nonresidential real property .......................................................
38 years.’’.
(b) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendment made by subsection (a)
shall apply to property placed in service by the tax-
payer on or after February 25, 1993.
(2) EXCEPTION.—The amendments made by this
section shall not apply to property placed in service
by the taxpayer before January 1, 1994, if—
(A) the taxpayer or a qualified person en-
tered into a binding written contract to purchase
or construct such property before February 25,
1993, or
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(B) the construction of such property was
commenced by or for the taxpayer or a quali-
fied person before February 25, 1993.
For purposes of this paragraph, the term ‘‘qualified
person’’ means any person who transfers his rights in
such a contract or such property to the taxpayer but
only if the property is not placed in service by such
person before such rights are transferred to the tax-
payer.
PART V—LUXURY TAX
SEC. 8161. REPEAL OF LUXURY EXCISE TAXES OTHER THAN
ON PASSENGER VEHICLES.
(a) IN GENERAL.—Subchapter A of chapter 31 (relat-
ing to retail excise taxes) is amended to read as follows:
‘‘Subchapter A—Luxury Passenger Automobiles
‘‘Sec. 4001. Imposition of tax.
‘‘Sec. 4002. 1st retail sale; uses, etc. treated as sales; determination
of price.
‘‘Sec. 4003. Special rules.
‘‘SEC. 4001. IMPOSITION OF TAX.
‘‘(a) IMPOSITION OF TAX.—There is hereby imposed on
the 1st retail sale of any passenger vehicle a tax equal to
10 percent of the price for which so sold to the extent such
price exceeds $30,000.
‘‘(b) PASSENGER VEHICLE.—
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‘‘(1) IN
GENERAL.—For purposes of this sub-
chapter, the term ‘passenger vehicle’ means any 4-
wheeled vehicle—
‘‘(A) which is manufactured primarily for
use on public streets, roads, and highways, and
‘‘(B) which is rated at 6,000 pounds un-
loaded gross vehicle weight or less.
‘‘(2) SPECIAL RULES.—
‘‘(A) TRUCKS AND VANS.—In the case of a
truck or van, paragraph (1)(B) shall be applied
by substituting ‘gross vehicle weight’ for ‘un-
loaded gross vehicle weight’.
‘‘(B) LIMOUSINES.—In the case of a lim-
ousine, paragraph (1) shall be applied without
regard to subparagraph (B) thereof.
‘‘(c) EXCEPTIONS FOR TAXICABS, ETC.—The tax im-
posed by this section shall not apply to the sale of any pas-
senger vehicle for use by the purchaser exclusively in the
active conduct of a trade or business of transporting persons
or property for compensation or hire.
‘‘(d) EXEMPTION
FOR LAW ENFORCEMENT USES,
ETC.—No tax shall be imposed by this section on the sale
of any passenger vehicle—
‘‘(1) to the Federal Government, or a State or
local government, for use exclusively in police, fire-
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fighting, search and rescue, or other law enforcement
or public safety activities, or in public works activi-
ties, or
‘‘(2) to any person for use exclusively in provid-
ing emergency medical services.
‘‘(e) INFLATION ADJUSTMENT.—
‘‘(1) IN GENERAL.—In the case of any calendar
year after 1992, the $30,000 amount in subsection (a)
and section 4003(a) shall be increased by an amount
equal to—
‘‘(A) $30,000, multiplied by
‘‘(B) the cost-of-living adjustment under sec-
tion 1(f)(3) for such calendar year, determined
by substituting ‘calendar year 1990’ for ‘cal-
endar year 1992’ in subparagraph (B) thereof.
‘‘(2) ROUNDING.—If any amount as adjusted
under paragraph (1) is not a multiple of $100, such
amount shall be rounded to the nearest multiple of
$100.
‘‘(f) TERMINATION.—The tax imposed by this section
shall not apply to any sale or use after December 31, 1999.
‘‘SEC. 4002. 1ST RETAIL SALE; USES, ETC. TREATED AS
SALES; DETERMINATION OF PRICE.
‘‘(a) 1ST RETAIL SALE.—For purposes of this sub-
chapter, the term ‘1st retail sale’ means the 1st sale, for
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a purpose other than resale, after manufacture, production,
or importation.
‘‘(b) USE TREATED AS SALE.—
‘‘(1) IN GENERAL.—If any person uses a pas-
senger vehicle (including any use after importation)
before the 1st retail sale of such vehicle, then such per-
son shall be liable for tax under this subchapter in the
same manner as if such vehicle were sold at retail by
him.
‘‘(2) EXEMPTION
FOR
FURTHER
MANUFAC-
TURE.—Paragraph (1) shall not apply to use of a ve-
hicle as material in the manufacture or production of,
or as a component part of, another vehicle taxable
under this subchapter to be manufactured or produced
by him.
‘‘(3) EXEMPTION FOR DEMONSTRATION USE.—
Paragraph (1) shall not apply to any use of a pas-
senger vehicle as a demonstrator.
‘‘(4) EXCEPTION FOR USE AFTER IMPORTATION
OF
CERTAIN
VEHICLES.—Paragraph (1) shall not
apply to the use of a vehicle after importation if the
user or importer establishes to the satisfaction of the
Secretary that the 1st use of the vehicle occurred be-
fore January 1, 1991, outside the United States.
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‘‘(5) COMPUTATION OF TAX.—In the case of any
person made liable for tax by paragraph (1), the tax
shall be computed on the price at which similar vehi-
cles are sold at retail in the ordinary course of trade,
as determined by the Secretary.
‘‘(c) LEASES CONSIDERED AS SALES.—For purposes
of this subchapter—
‘‘(1) IN GENERAL.—Except as otherwise provided
in this subsection, the lease of a vehicle (including
any renewal or any extension of a lease or any subse-
quent lease of such vehicle) by any person shall be
considered a sale of such vehicle at retail.
‘‘(2) SPECIAL RULES FOR LONG-TERM LEASES.—
‘‘(A) TAX NOT IMPOSED ON SALE FOR LEAS-
ING IN A QUALIFIED LEASE.—The sale of a pas-
senger vehicle to a person engaged in a passenger
vehicle leasing or rental trade or business for
leasing by such person in a long-term lease shall
not be treated as the 1st retail sale of such vehi-
cle.
‘‘(B) LONG-TERM LEASE.—For purposes of
subparagraph (A), the term ‘long-term lease’
means any long-term lease (as defined in section
4052).
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‘‘(C) SPECIAL
RULES.—In the case of a
long-term lease of a vehicle which is treated as
the 1st retail sale of such vehicle—
‘‘(i) DETERMINATION OF PRICE.—The
tax under this subchapter shall be computed
on the lowest price for which the vehicle is
sold by retailers in the ordinary course of
trade.
‘‘(ii) PAYMENT OF TAX.—Rules similar
to the rules of section 4217(e)(2) shall
apply.
‘‘(iii) NO TAX WHERE EXEMPT USE BY
LESSEE.—No tax shall be imposed on any
lease payment under a long-term lease if the
lessee’s use of the vehicle under such lease is
an exempt use (as defined in section
4003(b)) of such vehicle.
‘‘(d) DETERMINATION OF PRICE.—
‘‘(1) IN
GENERAL.—In determining price for
purposes of this subchapter—
‘‘(A) there shall be included any charge in-
cident to placing the passenger vehicle in condi-
tion ready for use,
‘‘(B) there shall be excluded—
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‘‘(i) the amount of the tax imposed by
this subchapter,
‘‘(ii) if stated as a separate charge, the
amount of any retail sales tax imposed by
any State or political subdivision thereof or
the District of Columbia, whether the liabil-
ity for such tax is imposed on the vendor or
vendee, and
‘‘(iii) the value of any component of
such passenger vehicle if—
‘‘(I) such component is furnished
by the 1st user of such passenger vehi-
cle, and
‘‘(II) such component has been
used before such furnishing, and
‘‘(C) the price shall be determined without
regard to any trade-in.
‘‘(2) OTHER RULES.—Rules similar to the rules
of paragraphs (2) and (4) of section 4052(b) shall
apply for purposes of this subchapter.
‘‘SEC. 4003. SPECIAL RULES.
‘‘(a) SEPARATE PURCHASE OF VEHICLE AND PARTS
AND ACCESSORIES THEREFOR.—Under regulations pre-
scribed by the Secretary—
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‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), if—
‘‘(A) the owner, lessee, or operator of any
passenger vehicle installs (or causes to be in-
stalled) any part or accessory on such vehicle,
and
‘‘(B) such installation is not later than the
date 6 months after the date the vehicle was 1st
placed in service,
then there is hereby imposed on such installation a
tax equal to 10 percent of the price of such part or
accessory and its installation.
‘‘(2) LIMITATION.—The tax imposed by para-
graph (1) on the installation of any part or accessory
shall not exceed 10 percent of the excess (if any) of—
‘‘(A) the sum of—
‘‘(i) the price of such part or accessory
and its installation,
‘‘(ii) the aggregate price of the parts
and accessories (and their installation) in-
stalled before such part or accessory, plus
‘‘(iii) the price for which the passenger
vehicle was sold, over
‘‘(B) $30,000.
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‘‘(3) EXCEPTIONS.—Paragraph (1) shall not
apply if—
‘‘(A) the part or accessory installed is a re-
placement part or accessory,
‘‘(B) the part or accessory is installed to en-
able or assist an individual with a disability to
operate the vehicle, or to enter or exit the vehicle,
by compensating for the effect of such disability,
or
‘‘(C) the aggregate price of the parts and
accessories (and their installation) described in
paragraph (1) with respect to the vehicle does
not exceed $200 (or such other amount or
amounts as the Secretary may by regulation pre-
scribe).
The price of any part or accessory (and its installa-
tion) to which paragraph (1) does not apply by rea-
son of this paragraph shall not be taken into account
under paragraph (2)(A).
‘‘(4) INSTALLERS
SECONDARILY
LIABLE
FOR
TAX.—The owners of the trade or business installing
the parts or accessories shall be secondarily liable for
the tax imposed by this subsection.
‘‘(b) IMPOSITION OF TAX ON SALES, ETC., WITHIN 2
YEARS OF VEHICLES PURCHASED TAX-FREE.—
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‘‘(1) IN GENERAL.—If—
‘‘(A) no tax was imposed under this sub-
chapter on the 1st retail sale of any passenger
vehicle by reason of its exempt use, and
‘‘(B) within 2 years after the date of such
1st retail sale, such vehicle is resold by the pur-
chaser or such purchaser makes a substantial
nonexempt use of such vehicle,
then such sale or use of such vehicle by such purchaser
shall be treated as the 1st retail sale of such vehicle
for a price equal to its fair market value at the time
of such sale or use.
‘‘(2) EXEMPT USE.—For purposes of this sub-
section, the term ‘exempt use’ means any use of a ve-
hicle if the 1st retail sale of such vehicle is not taxable
under this subchapter by reason of such use.
‘‘(c) PARTS AND ACCESSORIES SOLD WITH TAXABLE
PASSENGER VEHICLE.—Parts and accessories sold on, in
connection with, or with the sale of any passenger vehicle
shall be treated as part of the vehicle.
‘‘(d) PARTIAL PAYMENTS, ETC.—In the case of a con-
tract, sale, or arrangement described in paragraph (2), (3),
or (4) of section 4216(c), rules similar to the rules of section
4217(e)(2) shall apply for purposes of this subchapter.’’
(b) TECHNICAL AMENDMENTS.—
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‘‘(B) the part or accessory is installed on a
passenger vehicle to enable or assist an individ-
ual with a disability to operate the vehicle, or to
enter or exit the vehicle, by compensating for the
effect of such disability, or’’, and
(4) by inserting after subparagraph (C) the fol-
lowing flush sentence:
‘‘The price of any part or accessory (and its installa-
tion) to which paragraph (1) does not apply by rea-
son of this paragraph shall not be taken into account
under paragraph (2)(A).’’
(b) EFFECTIVE DATE.—The amendments made by this
section shall take effect as if included in the amendments
made by section 11221(a) of the Omnibus Budget Reconcili-
ation Act of 1990.
(c) PERIOD FOR FILING CLAIMS.—If refund or credit
of any overpayment of tax resulting from the application
of 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), refund or credit
of such overpayment (to the extent attributable to such
amendments) may, nevertheless, be made or allowed if claim
therefor is filed before the close of such 1-year period.
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SEC. 8163. TAX ON DIESEL FUEL USED IN NONCOMMERCIAL
BOATS.
(a) GENERAL RULE.—
(1) Paragraph (2) of section 4092(a) (defining
diesel fuel) is amended by striking ‘‘or a diesel-pow-
ered train’’ and inserting ‘‘, a diesel-powered train,
or a diesel-powered boat’’.
(2) Paragraph (1) of section 4041(a) is amend-
ed—
(A) by striking ‘‘diesel-powered highway ve-
hicle’’ each place it appears and inserting ‘‘die-
sel-powered highway vehicle or diesel-powered
boat’’, and
(B) by striking ‘‘such vehicle’’ and inserting
‘‘such vehicle or boat’’.
(3) Subparagraph (B) of section 4092(b)(1) is
amended by striking ‘‘commercial and noncommercial
vessels’’ each place it appears and inserting ‘‘vessels
for use in an off-highway business use (as defined in
section 6421(e)(2)(B))’’.
(b) EXEMPTION FOR USE IN FISHERIES OR COMMER-
CIAL
NAVIGATION.—Subparagraph 
(B) 
of 
section
6421(e)(2) is amended to read as follows:
‘‘(B) USES IN BOATS.—
‘‘(i) IN GENERAL.—Except as otherwise
provided in this subparagraph, the term
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‘off-highway business use’ does not include
any use in a motorboat.
‘‘(ii) FISHERIES AND WHALING.—The
term ‘off-highway business use’ shall include
any use in a vessel employed in the fisheries
or in the whaling business.
‘‘(iii) EXCEPTION FOR DIESEL FUEL.—
The term ‘off-highway business use’ shall in-
clude the use of diesel fuel in a boat in the
active conduct of—
‘‘(I) a trade or business of com-
mercial fishing or transporting persons
or property for compensation or hire,
or
‘‘(II) any other trade or business,
except that this subclause shall not
apply to noncommercial uses described
in clause (iv) during a taxable period.
‘‘(iv) TAXABLE
PERIODS
FOR
NON-
COMMERCIAL BOATS.—In the case of any
use of diesel fuel in a boat used predomi-
nantly in any activity which is of a type
generally considered to constitute entertain-
ment, amusement, or recreation, the taxable
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period for purposes of clause (iii)(II) shall
be—
‘‘(I) in the case so much of the tax
under section 4091 as is attributable to
4.3 cents of the diesel fuel deficit reduc-
tion rate imposed under such section,
any period beginning after September
30, 1993, and
‘‘(II) in the case so much of the
tax under section 4091 as is not de-
scribed in subclause (I) the period be-
ginning after January 1, 1994, and
ending on December 31, 1999.
(c) RETENTION OF TAXES IN GENERAL FUND.—
(1) TAXES IMPOSED AT HIGHWAY TRUST FUND
FINANCING RATE.—Paragraph (4) of section 9503(b)
(relating to transfers to Highway Trust Fund) is
amended—
(A) by striking ‘‘and’’ at the end of sub-
paragraph (A),
(B) by striking the period at the end of sub-
paragraph (B) and inserting ‘‘, and’’, and
(C) by adding at the end thereof the follow-
ing new subparagraph:
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‘‘(C) there shall not be taken into account
the taxes imposed by sections 4041 and 4091 on
diesel fuel sold for use or used as fuel in a diesel-
powered boat.’’
(2) TAXES IMPOSED AT LEAKING UNDERGROUND
STORAGE TANK TRUST FUND FINANCING RATE.—Sub-
section (b) of section 9508 (relating to transfers to
Leaking Underground Storage Tank Trust Fund) is
amended by adding at the end thereof the following
new sentence: ‘‘For purposes of this subsection, there
shall not be taken into account the taxes imposed by
sections 4041 and 4091 on diesel fuel sold for use or
used as fuel in a diesel-powered boat.’’
(d) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section shall
take effect on October 1, 1993.
(2) SPECIAL RULE.—No tax shall be imposed be-
fore January 1, 1994, under section 4091 of the Inter-
nal Revenue Code of 1986 by reason of the amend-
ments made by this section, other than the portion of
such tax as is attributable to 4.3 cents of the diesel
fuel deficit reduction rate imposed by such section.
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PART VI—OTHER CHANGES
SEC. 8171. ALTERNATIVE MINIMUM TAX TREATMENT OF
CONTRIBUTIONS 
OF 
APPRECIATED 
PROP-
ERTY.
(a) REPEAL OF TAX PREFERENCE.—Subsection (a) of
section 57 is amended by striking paragraph (6) (relating
to appreciated property charitable deduction) and by redes-
ignating paragraph (7) as paragraph (6).
(b) EFFECT ON ADJUSTED CURRENT EARNINGS.—
Paragraph (4) of section 56(g) is amended by adding at
the end thereof the following new subparagraph:
‘‘(J) TREATMENT
OF
CHARITABLE
CON-
TRIBUTIONS.—Notwithstanding 
subparagraphs
(B) and (C), no adjustment related to the earn-
ings and profits effects of any charitable con-
tribution shall be made in computing adjusted
current earnings.’’
(c) CONFORMING AMENDMENT.—Subclause (II) of sec-
tion 53(d)(1)(B)(ii) is amended by striking ‘‘(5) and (6)’’
and inserting ‘‘(5)’’.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to contributions made after June 30,
1992, except that in the case of any contribution of capital
gain property which is not tangible personal property, such
amendments shall apply only if the contribution is made
after December 31, 1992.
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‘‘(ii) 
QUID
PRO
QUO
CONTRIBU-
TIONS.—If the contribution was made by
means of a payment part of which con-
stituted consideration for goods or services
provided by the donee organization, the ac-
knowledgment must provide a good faith
estimate of the value of such goods or serv-
ices. The preceding sentence shall not apply
to any payment made to an organization,
organized exclusively for religious purposes,
in return for which the taxpayer receives
solely an intangible religious benefit that
generally is not sold in a commercial trans-
action outside the donative context.
‘‘(C) CONTEMPORANEOUS.—For purposes of
subparagraph (A), an acknowledgment shall be
considered to be contemporaneous if the taxpayer
obtains the acknowledgment on or before the ear-
lier of—
‘‘(i) the date on which the taxpayer
files a return for the taxable year in which
the contribution was made, or
‘‘(ii) the due date (including exten-
sions) for filing such return.
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‘‘(D) SUBSTANTIATION NOT REQUIRED FOR
CONTRIBUTIONS REPORTED BY THE DONEE OR-
GANIZATION.—Subparagraph (A) shall not apply
to a contribution if the donee organization files
a return, on such form and in accordance with
such regulations as the Secretary may prescribe,
which includes the information described in sub-
paragraph (B) with respect to the contribution.
‘‘(E) REGULATIONS.—The Secretary shall
prescribe such regulations as may be necessary
or appropriate to carry out the purposes of this
paragraph, including regulations that may pro-
vide that some or all of the requirements of this
paragraph do not apply in appropriate cases.’’
(b) EFFECTIVE DATE.—The provisions of this section
shall apply to contributions made on or after January 1,
1994.
SEC. 8173. DISCLOSURE RELATED TO QUID PRO QUO
CONTRIBUTIONS.
(a) DISCLOSURE REQUIREMENT.—Subchapter B of
chapter 61 (relating to information and returns) is amend-
ed by redesignating section 6115 as section 6116 and by
inserting after section 6114 the following new section:
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‘‘SEC. 6115. DISCLOSURE RELATED TO QUID PRO QUO CON-
TRIBUTIONS.
‘‘(a) DISCLOSURE REQUIREMENT.—If an organization
described in section 170(c) (other than paragraph (1) there-
of) receives a quid pro quo contribution in excess of $75,
the organization shall, in connection with the solicitation
or receipt of the contribution, provide a written statement
which—
‘‘(1) informs the donor that the amount of the
contribution that is deductible for Federal income tax
purposes is limited to the excess of the amount of any
money and the value of any property other than
money contributed by the donor over the value of the
goods or services provided by the organization, and
‘‘(2) provides the donor with a good faith esti-
mate of the value of such goods or services.
‘‘(b) QUID PRO QUO CONTRIBUTION.—For purposes of
this section, the term ‘quid pro quo contribution’ means a
payment made partly as a contribution and partly in con-
sideration for goods or services provided to the payor by
the donee organization. A quid pro quo contribution does
not include any payment made to an organization, orga-
nized exclusively for religious purposes, in return for which
the taxpayer receives solely an intangible religious benefit
that generally is not sold in a commercial transaction out-
side the donative context.’’
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(b) PENALTY FOR FAILURE TO DISCLOSE.—Part I of
subchapter B of chapter 68 (relating to assessable penalties)
is amended by inserting after section 6713 the following
new section:
‘‘SEC. 6714. FAILURE TO MEET DISCLOSURE REQUIRE-
MENTS APPLICABLE TO QUID PRO QUO CON-
TRIBUTIONS.
‘‘(a) IMPOSITION OF PENALTY.—If an organization
fails to meet the disclosure requirement of section 6115 with
respect to a quid pro quo contribution, such organization
shall pay a penalty of $10 for each contribution in respect
of which the organization fails to make the required disclo-
sure, except that the total penalty imposed by this sub-
section with respect to a particular fundraising event or
mailing shall not exceed $5,000.
‘‘(b) REASONABLE CAUSE EXCEPTION.—No penalty
shall be imposed under this section with respect to any fail-
ure if it is shown that such failure is due to reasonable
cause.’’
(c) CLERICAL AMENDMENTS.—
(1) The table for subchapter B of chapter 61 is
amended by striking the item relating to section 6115
and inserting the following new items:
‘‘Sec. 6115. Disclosure related to quid pro quo contributions.
‘‘Sec. 6116. Cross reference.’’
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(2) The table for part I of subchapter B of chap-
ter 68 is amended by inserting after the item for sec-
tion 6713 the following new item:
‘‘Sec. 6714. Failure to meet disclosure requirements applicable to
quid pro quo contributions.’’
(d) EFFECTIVE DATE.—The provisions of this section
shall apply to quid pro quo contributions made on or after
January 1, 1994.
SEC. 8174. CERTAIN TRANSFERS TO RAILROAD RETIRE-
MENT ACCOUNT MADE PERMANENT.
Subsection (c)(1)(A) of section 224 of the Railroad Re-
tirement Solvency Act of 1983 (relating to section 72(r) rev-
enue increase transferred to certain railroad accounts) is
amended by striking ‘‘with respect to benefits received before
October 1, 1992’’.
SEC. 8175. TEMPORARY EXTENSION OF DEDUCTION FOR
HEALTH INSURANCE COSTS OF SELF-EM-
PLOYED INDIVIDUALS.
(a) IN GENERAL.—
(1) EXTENSION.—Paragraph (6) of section
162(l) (relating to special rules for health insurance
costs of self-employed individuals) is amended by
striking ‘‘June 30, 1992’’ and inserting ‘‘December
31, 1993’’.
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(2) CONFORMING AMENDMENT.—Paragraph (2)
of section 110(a) of the Tax Extension Act of 1991 is
hereby repealed.
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to taxable years ending
after June 30, 1992.
(b) DETERMINATION OF ELIGIBILITY FOR EMPLOYER-
SPONSORED HEALTH PLAN.—
(1) IN GENERAL.—Paragraph (2)(B) of section
162(l) is amended to read as follows:
‘‘(B) OTHER
COVERAGE.—Paragraph (1)
shall not apply to any taxpayer for any calendar
month for which the taxpayer is eligible to par-
ticipate in any subsidized health plan main-
tained by any employer of the taxpayer or of the
spouse of the taxpayer.’’
(2) EFFECTIVE DATE.—The amendment made by
paragraph (1) shall apply to taxable years beginning
after December 31, 1992.
Part VII—Investment in Indian Reservations
SEC. 8181. INVESTMENT TAX CREDIT FOR PROPERTY ON IN-
DIAN RESERVATIONS.
(a) ALLOWANCE OF INDIAN RESERVATION CREDIT.—
Section 46 (relating to investment credits) is amended by
striking ‘‘and’’ at the end of paragraph (2), by striking the
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period at the end of paragraph (3) and inserting ‘‘, and’’,
and by adding after paragraph (3) the following new para-
graph:
‘‘(4) the Indian reservation credit.’’
(b) AMOUNT OF INDIAN RESERVATION CREDIT.—
(1) IN GENERAL.—Section 48 (relating to the en-
ergy credit and the reforestation credit) is amended
by adding after subsection (b) the following new sub-
section:
‘‘(c) INDIAN RESERVATION CREDIT.—
‘‘(1) IN GENERAL.—For purposes of section 46,
the Indian reservation credit for any taxable year is
the Indian reservation percentage of the qualified in-
vestment in qualified Indian reservation property
placed in service during such taxable year, deter-
mined in accordance with the following table:
‘‘In the case of qualified
Indian reservation property
The Indian reservation
which is:
percentage is:
Reservation personal property ..................................
New reservation construction property ....................
Reservation infrastructure investment .....................
15.
‘‘(2) QUALIFIED INVESTMENT IN QUALIFIED IN-
DIAN RESERVATION PROPERTY DEFINED.—For pur-
poses of this subpart—
‘‘(A) IN GENERAL.—The term ‘qualified In-
dian reservation property’ means property—
‘‘(i) which is—
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‘‘(I) reservation personal prop-
erty,
‘‘(II) new reservation construction
property, or
‘‘(III) reservation infrastructure
investment, and
‘‘(ii) not acquired (directly or indi-
rectly) by the taxpayer from a person who
is related to the taxpayer (within the mean-
ing of section 465(b)(3)(C)).
The term ‘qualified Indian reservation property’
does not include any property (or any portion
thereof) placed in service for purposes of conduct-
ing or housing class I, II, or III gaming (as de-
fined in section 4 of the Indian Regulatory Act
(25 U.S.C. 2703)).
‘‘(B) QUALIFIED
INVESTMENT.—The term
‘qualified investment’ means—
‘‘(i) in the case of reservation infra-
structure investment, the amount expended
by the taxpayer for the acquisition or con-
struction of the reservation infrastructure
investment; and
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‘‘(ii) in the case of all other qualified
Indian reservation property, the taxpayer’s
basis for such property.
‘‘(C) RESERVATION PERSONAL PROPERTY.—
The term ‘reservation personal property’ means
qualified personal property which is used by the
taxpayer predominantly in the active conduct of
a trade or business within an Indian reserva-
tion. Property shall not be treated as ‘reservation
personal property’ if it is used or located outside
the Indian reservation on a regular basis.
‘‘(D) QUALIFIED
PERSONAL
PROPERTY.—
The term ‘qualified personal property’ means
property—
‘‘(i) for which depreciation is allowable
under section 168,
‘‘(ii) which is not—
‘‘(I) nonresidential real property,
‘‘(II) residential rental property,
or
‘‘(III) real property which is not
described in (I) or (II) and which has
a class life of more than 12.5 years.
For purposes of this subparagraph, the terms
‘nonresidential real property’, ‘residential rental
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property’, and ‘class life’ have the respective
meanings given such terms by section 168.
‘‘(E) NEW
RESERVATION
CONSTRUCTION
PROPERTY.—The term ‘new reservation construc-
tion property’ means qualified real property—
‘‘(i) which is located in an Indian res-
ervation,
‘‘(ii) which is used by the taxpayer
predominantly in the active conduct of a
trade or business within an Indian reserva-
tion, and
‘‘(iii) which is originally placed in
service by the taxpayer.
‘‘(F) QUALIFIED
REAL
PROPERTY.—The
term ‘qualified real property’ means property for
which depreciation is allowable under section
168 and which is described in clause (I), (II), or
(III) of subparagraph (D)(ii).
‘‘(G) RESERVATION
INFRASTRUCTURE
IN-
VESTMENT.—
‘‘(i) IN GENERAL.—The term ‘reserva-
tion 
infrastructure 
investment’ 
means
qualified personal property or qualified real
property which—
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‘‘(I) benefits the tribal infrastruc-
ture,
‘‘(II) is available to the general
public, and
‘‘(III) is placed in service in con-
nection with the taxpayer’s active con-
duct of a trade or business within an
Indian reservation.
‘‘(ii) PROPERTY MAY BE LOCATED OUT-
SIDE
THE
RESERVATION.—Qualified per-
sonal property and qualified real property
used or located outside an Indian reserva-
tion shall be reservation infrastructure in-
vestment only if its purpose is to connect to
existing tribal infrastructure in the reserva-
tion, and shall include, but not be limited
to, roads, power lines, water systems, rail-
road spurs, and communications facilities.
‘‘(H) COORDINATION
WITH
OTHER
CRED-
ITS.—The term ‘qualified Indian reservation
property’ shall not include any property with re-
spect to which the energy credit or the rehabilita-
tion credit is allowed.
‘‘(3) REAL ESTATE RENTALS.—For purposes of
this section, the rental to others of real property lo-
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‘‘(iii) if such Indian unemployment
rate does not exceed 150 percent, 0 percent
of such credit.
‘‘(B) 
SPECIAL
RULE
FOR
LARGE
PROJECTS.—In the case of a qualified Indian
reservation property which has (or is a compo-
nent of a project which has) a projected construc-
tion period of more than 2 years or a cost of
more than $1,000,000, subparagraph (A) shall
apply by substituting ‘during the earlier of the
calendar year in which the taxpayer enters into
a binding agreement to make a qualified invest-
ment or the first calendar year in which the tax-
payer has expended at least 10 percent of the
taxpayer’s qualified investment, or the preceding
calendar year’ for ‘during the calendar year in
which the property is placed in service or during
the immediately preceding 2 calendar years’.
‘‘(C) DETERMINATION
OF
INDIAN
UNEM-
PLOYMENT.—For purposes of this paragraph,
with respect to any Indian reservation, the In-
dian unemployment rate shall be based upon In-
dians unemployed and able to work, and shall be
certified by the Secretary of the Interior.
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‘‘(6) COORDINATION WITH NONREVENUE LAWS.—
Any reference in this subsection to a provision not
contained in this title shall be treated for purposes of
this subsection as a reference to such provision as in
effect on the date of the enactment of this paragraph.’’
(2) LODGING
TO
QUALIFY.—Paragraph (2) of
section 50(b) (relating to property used for lodging)
is amended—
(A) by striking ‘‘and’’ at the end of sub-
paragraph (C),
(B) by striking the period at the end of sub-
paragraph (D) and inserting ‘‘; and’’ and
(C) by adding at the end thereof the follow-
ing subparagraph:
‘‘(E) new reservation construction prop-
erty.’’
(c) RECAPTURE.—Subsection (a) of section 50 (relat-
ing to recapture in case of dispositions, etc.), is amended
by adding at the end thereof the following new paragraph:
‘‘(6) SPECIAL RULES FOR INDIAN RESERVATION
PROPERTY.—
‘‘(A) IN GENERAL.—If, during any taxable
year, property with respect to which the tax-
payer claimed an Indian reservation credit—
‘‘(i) is disposed of, or
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‘‘(ii) in the case of reservation personal
property—
‘‘(I) otherwise ceases to be invest-
ment credit property with respect to
the taxpayer, or
‘‘(II) is removed from the Indian
reservation, converted or otherwise
ceases to be Indian reservation prop-
erty,
the tax under this chapter for such taxable year
shall be increased by the amount described in
subparagraph (B).
‘‘(B) AMOUNT OF INCREASE.—The increase
in tax under subparagraph (A) shall equal the
aggregate decrease in the credits allowed under
section 38 by reason of section 48(c) for all prior
taxable years which would have resulted had the
qualified investment taken into account with re-
spect to the property been limited to an amount
which bears the same ratio to the qualified in-
vestment with respect to such property as the pe-
riod such property was held by the taxpayer
bears to the applicable recovery period under sec-
tion 168(g).
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‘‘(C) COORDINATION WITH OTHER RECAP-
TURE PROVISIONS.—In the case of property to
which this paragraph applies, paragraph (1)
shall not apply and the rules of paragraphs (3),
(4), and (5) shall apply.’’
(d) BASIS ADJUSTMENT TO REFLECT INVESTMENT
CREDIT.—Paragraph (3) of section 50(c) (relating to basis
adjustment to investment credit property) is amended by
striking ‘‘energy credit or reforestation credit’’ and insert-
ing ‘‘energy credit, reforestation credit or Indian reserva-
tion credit other than with respect to any expenditure for
new reservation construction property’’.
(e) CERTAIN GOVERNMENTAL USE PROPERTY TO
QUALIFY.—Paragraph (4) of section 50(b) (relating to
property used by governmental units or foreign persons or
entities) is amended by redesignating subparagraphs (D)
and (E) as subparagraphs (E) and (F), respectively, and
inserting after subparagraph (C) the following new sub-
paragraph:
‘‘(D) EXCEPTION FOR RESERVATION INFRA-
STRUCTURE INVESTMENT.—This paragraph shall
not apply for purposes of determining the Indian
reservation credit with respect to reservation in-
frastructure investment.’’
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(f) APPLICATION OF AT-RISK RULES.—Subparagraph
(C) of section 49(a)(1) 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) the qualified investment in quali-
fied Indian reservation property.’’
(g) CLERICAL AMENDMENTS.—
(1) Section 48 is amended by striking the head-
ing and inserting the following:
‘‘SEC. 48. ENERGY CREDIT; REFORESTATION CREDIT; IN-
DIAN RESERVATION CREDIT.’’
(2) The table of sections for subpart E of part IV
of subchapter A of chapter 1 is amended by striking
out the item relating to section 48 and inserting the
following:
‘‘Sec. 48. Energy credit; reforestation credit; Indian reservation
credit.’’
(h) EFFECTIVE DATE.—The amendments made by this
section shall apply to property placed in service after De-
cember 31, 1993.
SEC. 8182. INDIAN EMPLOYMENT CREDIT.
(a) ALLOWANCE OF INDIAN EMPLOYMENT CREDIT.—
Section 38(b) (relating to general business credits) is
amended by striking ‘‘plus’’ at the end of paragraph (6),
by striking the period at the end of paragraph (7) and in-
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serting ‘‘, plus’’, and by adding after paragraph (7) the fol-
lowing new paragraph:
‘‘(8) the Indian employment credit as deter-
mined under section 45(a).’’
(b) AMOUNT OF INDIAN EMPLOYMENT CREDIT.—Sub-
part D of Part IV of subchapter A of chapter 1 (relating
to business related credits) is amended by adding at the
end thereof the following new section:
‘‘SEC. 45. INDIAN EMPLOYMENT CREDIT.
‘‘(a) AMOUNT OF CREDIT.—
‘‘(1) IN GENERAL.—For purposes of section 38,
the amount of the Indian employment credit deter-
mined under this section with respect to any em-
ployer for any taxable year is 10 percent (30 percent
in the case of an employer with at least 85 percent
Indian employees throughout the taxable year) of the
sum of—
‘‘(A) the qualified wages paid or incurred
during such taxable year, plus
‘‘(B) qualified employee health insurance
costs paid or incurred during such taxable year.
In no event shall the amount of the Indian employ-
ment credit for any taxable year exceed the credit
limitation amount determined under subsection (e)
for such taxable year.
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‘‘(2) INDIAN EMPLOYEE.—For purposes of para-
graph (1), the term ‘Indian employee’ means an em-
ployee who is an enrolled member of an Indian tribe
or the spouse of such a member.
‘‘(b) QUALIFIED
WAGES; QUALIFIED
EMPLOYEE
HEALTH INSURANCE COSTS.—For purposes of this sec-
tion—
‘‘(1) QUALIFIED WAGES.—
‘‘(A) IN
GENERAL.—The term ‘qualified
wages’ means any wages paid or incurred by an
employer for services performed by an employee
while such employee is a qualified employee.
‘‘(B) COORDINATION WITH TARGETED JOBS
CREDIT.—The term ‘qualified wages’ shall not
include wages attributable to service rendered
during the 1-year period beginning with the day
the individual begins work for the employer if
any portion of such wages is taken into account
in determining the credit under section 51.
‘‘(2) QUALIFIED EMPLOYEE HEALTH INSURANCE
COSTS.—
‘‘(A) IN GENERAL.—The term ‘qualified em-
ployee health insurance costs’ means any amount
paid or incurred by an employer for health in-
surance to the extent such amount is attributable
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to coverage provided to any employee while such
employee is a qualified employee.
‘‘(B) 
EXCEPTION
FOR
AMOUNTS
PAID
UNDER
SALARY
REDUCTION
ARRANGEMENTS.—
No amount paid or incurred for health insurance
pursuant to a salary reduction arrangement
shall be taken into account under subparagraph
(A).
‘‘(c) QUALIFIED EMPLOYEE.—For purposes of this sec-
tion—
‘‘(1) IN GENERAL.—Except as otherwise provided
in this subsection, the term ‘qualified employee’
means, with respect to any period, any employee of
an employer if—
‘‘(A) substantially all of the services per-
formed during such period by such employee for
such employer are performed within an Indian
reservation,
‘‘(B) the principal place of abode of such
employee while performing such services is on or
near the reservation in which the services are
performed, and
‘‘(C) the employee began work for such em-
ployer on or after January 1, 1994.
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‘‘(2) CREDIT
ALLOWED
ONLY
FOR
FIRST
YEARS.—An employee shall not be treated as a quali-
fied employee for any period after the date 7 years
after the day on which such employee first began work
for the employer.
‘‘(3) INDIVIDUALS RECEIVING WAGES IN EXCESS
OF $30,000 NOT ELIGIBLE.—An employee shall not be
treated as a qualified employee for any taxable year
of the employer if the total amount of the wages paid
or incurred by such employer to such employee during
such taxable year (whether or not for services within
an Indian reservation) exceeds the amount deter-
mined at an annual rate of $30,000. The Secretary
shall adjust the $30,000 amount contained in the pre-
ceding sentence for years beginning after 1993 at the
same time and in the same manner as under section
415(d).
‘‘(4) EMPLOYMENT MUST BE TRADE OR BUSI-
NESS EMPLOYMENT.—An employee shall be treated as
a qualified employee for any taxable year of the em-
ployer only if more than 50 percent of the wages paid
or incurred by the employer to such employee during
such taxable year are for services performed in a
trade or business of the employer. Any determination
as to whether the preceding sentence applies with re-
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spect to any employee for any taxable year shall be
made without regard to subsection (f)(2).
‘‘(5) CERTAIN EMPLOYEES NOT ELIGIBLE.—The
term ‘qualified employee’ shall not include—
‘‘(A) any individual described in subpara-
graph (A), (B), or (C) of section 51(i)(1),
‘‘(B) any 5-percent owner (as defined in
section 416(i)(1)(B)),
‘‘(C) any individual who is neither an en-
rolled member of an Indian tribe nor the spouse
of an enrolled member of an Indian tribe, and
‘‘(D) any individual if the services per-
formed by such individual for the employer in-
volve the conduct of class I, II, or III gaming as
defined in section 4 of the Indian Gaming Regu-
latory Act (25 U.S.C. 2703), or are performed in
a building housing such gaming activity.
‘‘(6) INDIAN TRIBE DEFINED.—The term ‘Indian
tribe’ means any Indian tribe, band, nation, pueblo,
or other organized group or community, including
any Alaska Native village, or regional or village cor-
poration, as defined in, or established pursuant to,
the Alaska Native Claims Settlement Act (43 U.S.C.
1601 et seq.) which is recognized as eligible for the
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special programs and services provided by the United
States to Indians because of their status as Indians.
‘‘(7) INDIAN RESERVATION DEFINED.—The term
‘Indian reservation’ means a reservation, as defined
in—
‘‘(A) section 3(d) of the Indian Financing
Act of 1974 (25 U.S.C. 1452(d)), or
‘‘(B) section 4(10) of the Indian Child Wel-
fare Act of 1978 (25 U.S.C. 1903 (10)).
‘‘(d) EARLY TERMINATION OF EMPLOYMENT BY EM-
PLOYER.—
‘‘(1) IN GENERAL.—If the employment of any
employee is terminated by the taxpayer before the day
1 year after the day on which such employee began
work for the employer—
‘‘(A) no wages (or qualified employee health
insurance costs) with respect to such employee
shall be taken into account under subsection (a)
for the taxable year in which such employment
is terminated, and
‘‘(B) the tax under this chapter for the tax-
able year in which such employment is termi-
nated shall be increased by the aggregate credits
(if any) allowed under section 38(a) for prior
taxable years by reason of wages (or qualified
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employee health insurance costs) taken into ac-
count with respect to such employee.
‘‘(2) 
CARRYBACKS
AND
CARRYOVERS
AD-
JUSTED.—In the case of any termination of employ-
ment to which paragraph (1) applies, the carrybacks
and carryovers under section 39 shall be properly ad-
justed.
‘‘(3) SUBSECTION
NOT
TO
APPLY
IN
CERTAIN
CASES.—
‘‘(A) IN
GENERAL.—Paragraph (1) shall
not apply to—
‘‘(i) a termination of employment of
an employee who voluntarily leaves the em-
ployment of the taxpayer,
‘‘(ii) a termination of employment of
an individual who before the close of the pe-
riod referred to in paragraph (1) becomes
disabled to perform the services of such em-
ployment unless such disability is removed
before the close of such period and the tax-
payer fails to offer reemployment to such
individual, or
‘‘(iii) a termination of employment of
an individual if it is determined under the
applicable State unemployment compensa-
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tion law that the termination was due to
the misconduct of such individual.
‘‘(B) CHANGES IN FORM OF BUSINESS.—
For purposes of paragraph (1), the employment
relationship between the taxpayer and an em-
ployee shall not be treated as terminated—
‘‘(i) by a transaction to which section
381(a) applies if the employee continues to
be employed by the acquiring corporation,
or
‘‘(ii) by reason of a mere change in the
form of conducting the trade or business of
the taxpayer if the employee continues to be
employed in such trade or business and the
taxpayer retains a substantial interest in
such trade or business.
‘‘(4) SPECIAL RULE.—Any increase in tax under
paragraph (1) shall not be treated as a tax imposed
by this chapter for purposes of—
‘‘(A) determining the amount of any credit
allowable under this chapter, and
‘‘(B) determining the amount of the tax im-
posed by section 55.
‘‘(e) CREDIT LIMITATION AMOUNT.—For purposes of
this section—
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‘‘(1) CREDIT LIMITATION AMOUNT.—The credit
limitation amount for a taxable year shall be an
amount equal to the credit rate (10 or 30 percent as
determined under subsection (a)) multiplied by the
increased credit base.
‘‘(2) INCREASED CREDIT BASE.—The increased
credit base for a taxable year shall be the excess of—
‘‘(A) the sum of any qualified wages and
qualified employee health insurance costs paid or
incurred by the employer during the taxable year
with respect to employees whose wages (paid or
incurred by the employer) during the taxable
year do not exceed the amount determined under
paragraph (3) of subsection (c), over
‘‘(B) the sum of any qualified wages and
qualified employee health insurance costs paid or
incurred by the employer (or any predecessor)
during calendar year 1993 with respect to em-
ployees whose wages (paid or incurred by the
employer or any predecessor) during 1993 did
not exceed $30,000.
‘‘(3) SPECIAL
RULE
FOR
SHORT
TAXABLE
YEARS.—For any taxable year having less than 12
months—
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‘‘(A) the amounts paid or incurred by the
employer shall be annualized for purposes of de-
termining the increased credit base, and
‘‘(B) the credit limitation amount shall be
multiplied by a fraction, the numerator of which
is the number of days in the taxable year and
the denominator of which is 365.
‘‘(f) OTHER DEFINITIONS AND SPECIAL RULES.—For
purposes of this section—
‘‘(1) WAGES.—The term ‘wages’ has the same
meaning given to such term in section 51.
‘‘(2) CONTROLLED GROUPS.—
‘‘(A) All employers treated as a single em-
ployer under section (a) or (b) of section 52 shall
be treated as a single employer for purposes of
this section.
‘‘(B) The credit (if any) determined under
this section with respect to each such employer
shall be its proportionate share of the wages and
qualified employee health insurance costs giving
rise to such credit.
‘‘(3) CERTAIN
OTHER
RULES
MADE
APPLICA-
BLE.—Rules similar to the rules of section 51(k) and
subsections (c), (d), and (e) of section 52 shall apply.
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‘‘(4) COORDINATION WITH NONREVENUE LAWS.—
Any reference in this section to a provision not con-
tained in this title shall be treated for purposes of this
section as a reference to such provision as in effect on
the date of the enactment of this paragraph.’’
(c) DENIAL OF DEDUCTION FOR PORTION OF WAGES
EQUAL TO INDIAN EMPLOYMENT CREDIT.—
(1) Subsection (a) of section 280C (relating to
rule for targeted jobs credit) is amended by striking
‘‘51(a)’’ and inserting ‘‘45(a), 51(a), and’’.
(2) Subsection (c) of section 196 (relating to de-
duction for certain unused business credits) is amend-
ed by striking ‘‘and’’ at the end of paragraph (5), by
striking the period at the end of paragraph (6) and
inserting ‘‘, and’’, and by adding at the end the fol-
lowing new paragraph:
‘‘(7) the Indian employment credit determined
under section 45(a).’’
(d) DENIAL
OF CARRYBACKS
TO PREENACTMENT
YEARS.—Subsection (d) of section 39 is amended by adding
at the end thereof the following new paragraph:
‘‘(4) NO CARRYBACK OF SECTION 45 CREDIT BE-
FORE ENACTMENT.—No portion of the unused busi-
ness credit for any taxable year which is attributable
to the Indian employment credit determined under
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section 45 may be carried to a taxable year ending
before the date of the enactment of section 45.’’
(e) CLERICAL AMENDMENT.—The table of sections for
subpart D of part IV of subchapter A of chapter 1 is amend-
ed by adding at the end thereof the following:
‘‘Sec. 45. Indian employment credit.’’
(f) EFFECTIVE DATE.—The amendments made by this
section shall apply to wages paid or incurred after Decem-
ber 31, 1993.
Subtitle B—Revenue Increases
PART I—PROVISIONS AFFECTING INDIVIDUALS
Subpart A—Rate Increases
SEC. 8201. INCREASE IN TOP MARGINAL RATE UNDER SEC-
TION 1.
(a) GENERAL RULE.—Section 1 (relating to tax im-
posed) is amended by striking subsections (a) through (e)
and inserting the following:
‘‘(a) MARRIED INDIVIDUALS FILING JOINT RETURNS
AND SURVIVING SPOUSES.—There is hereby imposed on the
taxable income of—
‘‘(1) every married individual (as defined in sec-
tion 7703) who makes a single return jointly with his
spouse under section 6013, and
‘‘(2) every surviving spouse (as defined in section
2(a)),
a tax determined in accordance with the following table:
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every married individual (as defined in section 7703) who
does not make a single return jointly with his spouse under
section 6013, a tax determined in accordance with the fol-
lowing table:
‘‘If taxable income is:
The tax is:
Not over $18,450 ..............................
15% of taxable income.
Over $18,450 but not over $44,575
$2,767.50, plus 28% of the excess over
$18,450.
Over $44,575 but not over $70,000
$10,082.50, plus 31% of the excess over
$44,575.
Over $70,000 .....................................
$17,964.25, plus 36% of the excess over
$70,000.
‘‘(e) ESTATES AND TRUSTS.—There is hereby imposed
on the taxable income of—
‘‘(1) every estate, and
‘‘(2) every trust,
taxable under this subsection a tax determined in accord-
ance with the following table:
‘‘If taxable income is:
The tax is:
Not over $1,500 ................................
15% of taxable income.
Over $1,500 but not over $3,500 .....
$225, plus 28% of the excess over
$1,500.
Over $3,500 but not over $5,500 .....
$785, plus 31% of the excess over
$3,500.
Over $5,500 .......................................
$1,405, plus 36% of the excess over
$5,500.’’
(b) CONFORMING AMENDMENTS.—
(1) Section 531 is amended by striking ‘‘28 per-
cent’’ and inserting ‘‘36 percent’’.
(2) Section 541 is amended by striking ‘‘28 per-
cent’’ and inserting ‘‘36 percent’’.
(3)(A) Subsection (f) of section 1 is amended—
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(i) by striking ‘‘1990’’ in paragraph (1)
and inserting‘‘1993’’, and
(ii) by striking ‘‘1989’’ in paragraph (3)(B)
and inserting ‘‘1992’’.
(B) Subsection (f) of section 1 is amended by
adding at the end thereof the following new para-
graph:
‘‘(7) SPECIAL RULE FOR CERTAIN BRACKETS.—
‘‘(A) CALENDAR YEAR 1994.—In prescribing
the tables under paragraph (1) which apply with
respect to taxable years beginning in calendar
year 1994, the Secretary shall make no adjust-
ment to the dollar amounts at which the 36 per-
cent rate bracket begins or at which the 39.6 per-
cent rate begins under any table contained in
subsection (a), (b), (c), (d), or (e).
‘‘(B) LATER
CALENDAR
YEARS.—In pre-
scribing tables under paragraph (1) which apply
with respect to taxable years beginning in a cal-
endar year after 1994, the cost-of-living adjust-
ment used in making adjustments to the dollar
amounts referred to in subparagraph (A) shall be
determined under paragraph (3) by substituting
‘1993’ for ‘1992’.’’
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(C) Subparagraph (C) of section 41(e)(5) is
amended by striking ‘‘1989’’ each place it appears
and inserting ‘‘1992’’.
(D) Subparagraph (B) of section 63(c)(4) is
amended by striking ‘‘1989’’ and inserting ‘‘1992’’.
(E) Subparagraph (B) of section 68(b)(2) is
amended by striking ‘‘1989’’ and inserting ‘‘1992’’.
(F) Subparagraph (B) of section 132(f)(6) is
amended by striking ‘‘, determined by substituting’’
and all that follows down through the period at the
end thereof and inserting a period.
(G) Subparagraphs (A)(ii) and (B)(ii) of section
151(d)(4) are each amended by striking ‘‘1989’’ and
inserting ‘‘1992’’.
(H) Clause (ii) of section 513(h)(2)(C) is amend-
ed by striking ‘‘1989’’ and inserting ‘‘1992’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after Decem-
ber 31, 1992.
SEC. 8202. SURTAX ON HIGH-INCOME TAXPAYERS.
(a) GENERAL RULE.—
(1) Subsection (a) of section 1 (as amended by
section 8201) is amended by striking the last item in
the table contained therein and inserting the follow-
ing:
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‘‘Over 
$140,000 
but 
not 
over
$250,000.
$35,928.50, plus 36% of the excess over
$140,000.
Over $250,000 ...................................
$75,528.50, plus 39.6% of the excess
over $250,000.’’
(2) Subsection (b) of section 1 (as so amended)
is amended by striking the last item in the table con-
tained therein and inserting the following:
‘‘Over 
$127,500 
but 
not 
over
$250,000.
$33,385, plus 36% of the excess over
$127,500.
Over $250,000 ...................................
$77,485, plus 39.6% of the excess over
$250,000.’’
(3) Subsection (c) of section 1 (as so amended)
is amended by striking the last item in the table con-
tained therein and inserting the following:
‘‘Over 
$115,000 
but 
not 
over
$250,000.
$31,172, plus 36% of the excess over
$115,000.
Over $250,000 ...................................
$79,772, plus 39.6% of the excess over
$250,000.’’
(4) Subsection (d) of section 1 (as so amended)
is amended by striking the last item in the table con-
tained therein and inserting the following:
‘‘Over 
$70,000 
but 
not 
over
$125,000.
$17,964.25, plus 36% of the excess over
$70,000.
Over $125,000 ...................................
$37,764.25, plus 39.6% of the excess
over $125,000.’’
(5) Subsection (e) of section 1 (as so amended)
is amended by striking the last item in the table con-
tained therein and inserting the following:
‘‘Over $5,500 but not over $7,500 ...
$1,405, plus 36% of the excess over
$5,500.
Over $7,500 .......................................
$2,125, plus 39.6% of the excess over
$7,500.’’
(b) SURTAX ON NET CAPITAL GAINS.—Section 1(h)
(relating to maximum capital gains rate) is amended by
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striking the period at the end of paragraph (2) and insert-
ing ‘‘, plus’’, and by adding at the end the following new
paragraph:
‘‘(3) a tax of 2.8 percent of the lesser of—
‘‘(A) the net capital gain, or
‘‘(B) the amount of taxable income in excess
of the dollar amount at which the last rate
bracket begins for such taxable year in the table
contained in subsection (a), (b), (c), (d), or (e),
whichever is applicable.’’
(c) TECHNICAL AMENDMENT.—Sections 531 and 541
(as amended by section 8201) are each amended by striking
‘‘36 percent’’ and inserting ‘‘39.6 percent’’.
(d) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after Decem-
ber 31, 1992.
SEC. 8203. MODIFICATIONS TO ALTERNATIVE MINIMUM TAX
RATES AND EXEMPTION AMOUNTS.
(a) INCREASE IN RATE.—Paragraph (1) of section
55(b) (defining tentative minimum tax) is amended to read
as follows:
‘‘(1) AMOUNT OF TENTATIVE TAX.—
‘‘(A) NONCORPORATE TAXPAYERS.—
‘‘(i) IN GENERAL.—In the case of a
taxpayer other than a corporation, the ten-
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tative minimum tax for the taxable year is
the sum of—
‘‘(I) 26 percent of so much of the
taxable excess as does not exceed
$175,000, plus
‘‘(II) 28 percent of so much of the
taxable 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 tax-
able year.
‘‘(ii) TAXABLE EXCESS.—For purposes
of clause (i), the term ‘taxable excess’ means
so much of the alternative minimum taxable
income for the taxable year as exceeds the
exemption amount.
‘‘(iii) MARRIED
INDIVIDUAL
FILING
SEPARATE RETURN.—In the case of a mar-
ried individual filing a separate return,
clause (i) shall be applied by substituting
‘$87,500’ for ‘$175,000’ each place it ap-
pears. For purposes of the preceding sen-
tence, marital status shall be determined
under section 7703.