In the Senate of the United States,
December 20 (legislative day, December 18), 2001.
Resolved, That the Senate agree to the amendment of
the House of Representatives to the amendments of the Sen-
ate to the bill (H.R. 2884) entitled ‘‘An Act to amend the
Internal Revenue Code of 1986 to provide tax relief for vic-
tims of the terrorist attacks against the United States on
September 11, 2001.’’, with the following
SENATE AMENDMENT TO HOUSE AMENDMENT TO
SENATE AMENDMENTS:
In lieu of the matter proposed to be inserted by the
House amendment to the text of the bill, insert:
SECTION 1. SHORT TITLE; ETC.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Victims of Terrorism Tax Relief Act of 2001’’.
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(b) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this Act an amend-
ment or repeal is expressed in terms of an amendment
to, or repeal of, a section or other provision, the reference
shall be considered to be made to a section or other provi-
sion of the Internal Revenue Code of 1986.
(c) TABLE OF CONTENTS.—The table of contents for
this Act is as follows:
Sec. 1. Short title; etc.
TITLE I—VICTIMS OF TERRORISM TAX RELIEF
Subtitle A—Relief Provisions for Victims of Terrorist Attacks
Sec. 101. Income taxes of victims of terrorist attacks.
Sec. 102. Exclusion of certain death benefits.
Sec. 103. Estate tax reduction.
Sec. 104. Payments by charitable organizations treated as exempt payments.
Sec. 105. Exclusion of certain cancellations of indebtedness.
Subtitle B—Other Relief Provisions
Sec. 111. Exclusion for disaster relief payments.
Sec. 112. Authority to postpone certain deadlines and required actions.
Sec. 113. Application of certain provisions to terroristic or military actions.
Sec. 114. Clarification of due date for airline excise tax deposits.
Sec. 115. Treatment of certain structured settlement payments.
Sec. 116. Personal exemption deduction for certain disability trusts.
TITLE II—DISCLOSURE OF TAX INFORMATION IN TERRORISM
AND NATIONAL SECURITY INVESTIGATIONS
Sec. 201. Disclosure of tax information in terrorism and national security in-
vestigations.
TITLE III—NO IMPACT ON SOCIAL SECURITY TRUST FUNDS
Sec. 301. No impact on social security trust funds.
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TITLE I——VICTIMS OF
TERRORISM TAX RELIEF
Subtitle A—Relief Provisions for
Victims of Terrorist Attacks
SEC. 101. INCOME TAXES OF VICTIMS OF TERRORIST AT-
TACKS.
(a) IN GENERAL.—Section 692 (relating to income
taxes of members of Armed Forces on death) is amended
by adding at the end the following new subsection:
‘‘(d) INDIVIDUALS DYING AS A RESULT OF CERTAIN
ATTACKS.—
‘‘(1) IN GENERAL.—In the case of a specified
terrorist victim, any tax imposed by this chapter
shall not apply—
‘‘(A) with respect to the taxable year in
which falls the date of death, and
‘‘(B) with respect to any prior taxable year
in the period beginning with the last taxable
year ending before the taxable year in which the
wounds, injury, or illness referred to in para-
graph (3) were incurred.
‘‘(2) $10,000 MINIMUM BENEFIT.—If, but for
this paragraph, the amount of tax not imposed by
paragraph (1) with respect to a specified terrorist
victim is less than $10,000, then such victim shall
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be treated as having made a payment against the
tax imposed by this chapter for such victim’s last
taxable year in an amount equal to the excess of
$10,000 over the amount of tax not so imposed.
‘‘(3) TAXATION OF CERTAIN BENEFITS.—Sub-
ject to such rules as the Secretary may prescribe,
paragraph (1) shall not apply to the amount of any
tax imposed by this chapter which would be com-
puted by only taking into account the items of in-
come, gain, or other amounts attributable to—
‘‘(A) deferred compensation which would
have been payable after death if the individual
had died other than as a specified terrorist vic-
tim, or
‘‘(B) amounts payable in the taxable year
which would not have been payable in such tax-
able year but for an action taken after Sep-
tember 11, 2001.
‘‘(4) SPECIFIED TERRORIST VICTIM.—For pur-
poses of this subsection, the term ‘specified terrorist
victim’ means any decedent—
‘‘(A) who dies as a result of wounds or in-
jury incurred as a result of the terrorist attacks
against the United States on April 19, 1995, or
September 11, 2001, or
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(d) EFFECTIVE DATE; WAIVER OF LIMITATIONS.—
(1) EFFECTIVE DATE.—The amendments made
by this section shall apply to taxable years ending
before, on, or after September 11, 2001.
(2) WAIVER
OF
LIMITATIONS.—If refund or
credit of any overpayment of tax resulting from the
amendments made by this section is prevented at
any time before the close of the 1-year period begin-
ning on the date of the enactment of this Act by the
operation of any law or rule of law (including res ju-
dicata), such refund or credit may nevertheless be
made or allowed if claim therefor is filed before the
close of such period.
SEC. 102. EXCLUSION OF CERTAIN DEATH BENEFITS.
(a) IN GENERAL.—Section 101 (relating to certain
death benefits) is amended by adding at the end the fol-
lowing new subsection:
‘‘(i) CERTAIN EMPLOYEE DEATH BENEFITS PAY-
ABLE BY REASON OF DEATH OF CERTAIN TERRORIST
VICTIMS.—
‘‘(1) IN GENERAL.—Gross income does not in-
clude amounts (whether in a single sum or other-
wise) paid by an employer by reason of the death of
an employee who is a specified terrorist victim (as
defined in section 692(d)(4)).
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‘‘(2) LIMITATION.—
‘‘(A) IN GENERAL.—Subject to such rules
as the Secretary may prescribe, paragraph (1)
shall not apply to amounts which would have
been payable after death if the individual had
died other than as a specified terrorist victim
(as so defined).
‘‘(B) 
EXCEPTION.—Subparagraph 
(A)
shall not apply to incidental death benefits paid
from a plan described in section 401(a) and ex-
empt from tax under section 501(a).
‘‘(3) TREATMENT OF SELF-EMPLOYED INDIVID-
UALS.—For purposes of paragraph (1), the term
‘employee’ includes a self-employed individual (as de-
fined in section 401(c)(1)).’’.
(b) EFFECTIVE DATE; WAIVER OF LIMITATIONS.—
(1) EFFECTIVE DATE.—The amendment made
by this section shall apply to taxable years ending
before, on, or after September 11, 2001.
(2) WAIVER
OF
LIMITATIONS.—If refund or
credit of any overpayment of tax resulting from the
amendments made by this section is prevented at
any time before the close of the 1-year period begin-
ning on the date of the enactment of this Act by the
operation of any law or rule of law (including res ju-
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dicata), such refund or credit may nevertheless be
made or allowed if claim therefor is filed before the
close of such period.
SEC. 103. ESTATE TAX REDUCTION.
(a) IN GENERAL.—Section 2201 is amended to read
as follows:
‘‘SEC. 2201. COMBAT ZONE-RELATED DEATHS OF MEMBERS
OF THE ARMED FORCES AND DEATHS OF VIC-
TIMS OF CERTAIN TERRORIST ATTACKS.
‘‘(a) IN GENERAL.—Unless the executor elects not to
have this section apply, in applying sections 2001 and
2101 to the estate of a qualified decedent, the rate sched-
ule set forth in subsection (c) shall be deemed to be the
rate schedule set forth in section 2001(c).
‘‘(b) QUALIFIED DECEDENT.—For purposes of this
section, the term ‘qualified decedent’ means—
‘‘(1) any citizen or resident of the United
States dying while in active service of the Armed
Forces of the United States, if such decedent—
‘‘(A) was killed in action while serving in
a combat zone, as determined under section
112(c), or
‘‘(B) died as a result of wounds, disease,
or injury suffered while serving in a combat
zone (as determined under section 112(c)), and
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while in the line of duty, by reason of a hazard
to which such decedent was subjected as an in-
cident of such service, and
‘‘(2) any specified terrorist victim (as defined in
section 692(d)(4)).
‘‘(c) RATE SCHEDULE.—
‘‘If the amount with respect
to which the tentative tax
to be computed is:
The tentative tax is:
Not over $150,000 ........................
1 percent of the amount by which
such amount exceeds $100,000.
Over 
$150,000 
but 
not 
over
$200,000.
$500 plus 2 percent of the excess
over $150,000.
Over 
$200,000 
but 
not 
over
$300,000.
$1,500 plus 3 percent of the excess
over $200,000.
Over 
$300,000 
but 
not 
over
$500,000.
$4,500 plus 4 percent of the excess
over $300,000.
Over 
$500,000 
but 
not 
over
$700,000.
$12,500 plus 5 percent of the excess
over $500,000.
Over 
$700,000 
but 
not 
over
$900,000.
$22,500 plus 6 percent of the excess
over $700,000.
Over 
$900,000 
but 
not 
over
$1,100,000.
$34,500 plus 7 percent of the excess
over $900,000.
Over $1,100,000 but not over
$1,600,000.
$48,500 plus 8 percent of the excess
over $1,100,000.
Over $1,600,000 but not over
$2,100,000.
$88,500 plus 9 percent of the excess
over $1,600,000.
Over $2,100,000 but not over
$2,600,000.
$133,500 plus 10 percent of the ex-
cess over $2,100,000.
Over $2,600,000 but not over
$3,100,000.
$183,500 plus 11 percent of the ex-
cess over $2,600,000.
Over $3,100,000 but not over
$3,600,000.
$238,500 plus 12 percent of the ex-
cess over $3,100,000.
Over $3,600,000 but not over
$4,100,000.
$298,500 plus 13 percent of the ex-
cess over $3,600,000.
Over $4,100,000 but not over
$5,100,000.
$363,500 plus 14 percent of the ex-
cess over $4,100,000.
Over $5,100,000 but not over
$6,100,000.
$503,500 plus 15 percent of the ex-
cess over $5,100,000.
Over $6,100,000 but not over
$7,100,000.
$653,500 plus 16 percent of the ex-
cess over $6,100,000.
Over $7,100,000 but not over
$8,100,000.
$813,500 plus 17 percent of the ex-
cess over $7,100,000.
Over $8,100,000 but not over
$9,100,000.
$983,500 plus 18 percent of the ex-
cess over $8,100,000.
Over $9,100,000 but not over
$10,100,000.
$1,163,500 plus 19 percent of the ex-
cess over $9,100,000.
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‘‘If the amount with respect
to which the tentative tax
to be computed is:
The tentative tax is:
Over $10,100,000 ..........................
$1,353,500 plus 20 percent of the ex-
cess over $10,100,000.
‘‘(d) DETERMINATION OF UNIFIED CREDIT.—In the
case of an estate to which this section applies, subsection
(a) shall not apply in determining the credit under section
2010.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 2011 is amended by striking sub-
section (d) and by redesignating subsections (e), (f),
and (g) as subsections (d), (e), and (f), respectively.
(2) Section 2053(d)(3)(B) is amended by strik-
ing ‘‘section 2011(e)’’ and inserting ‘‘section
2011(d)’’.
(3) Paragraph (9) of section 532(c) of the Eco-
nomic Growth and Tax Relief Reconciliation Act of
2001 is repealed.
(c) CLERICAL AMENDMENT.—The item relating to
section 2201 in the table of sections for subchapter C of
chapter 11 is amended to read as follows:
‘‘Sec. 2201. Combat zone-related deaths of members of the Armed
Forces and deaths of victims of certain terrorist at-
tacks.’’.
(d) EFFECTIVE DATE; WAIVER OF LIMITATIONS.—
(1) EFFECTIVE DATE.—The amendments made
by this section shall apply to estates of decedents—
(A) dying on or after September 11, 2001,
and
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(B) in the case of individuals dying as a
result of the April 19, 1995, terrorist attack,
dying on or after April 19, 1995.
(2) WAIVER
OF
LIMITATIONS.—If refund or
credit of any overpayment of tax resulting from the
amendments made by this section is prevented at
any time before the close of the 1-year period begin-
ning on the date of the enactment of this Act by the
operation of any law or rule of law (including res ju-
dicata), such refund or credit may nevertheless be
made or allowed if claim therefor is filed before the
close of such period.
SEC. 104. PAYMENTS BY CHARITABLE ORGANIZATIONS
TREATED AS EXEMPT PAYMENTS.
(a) IN GENERAL.—For purposes of the Internal Rev-
enue Code of 1986—
(1) payments made by an organization de-
scribed in section 501(c)(3) of such Code by reason
of the death, injury, wounding, or illness of an indi-
vidual incurred as the result of the terrorist attacks
against the United States on September 11, 2001,
or an attack involving anthrax occurring on or after
September 11, 2001, and before January 1, 2002,
shall be treated as related to the purpose or function
constituting the basis for such organization’s exemp-
HR 2884 EAS2
tion under section 501 of such Code if such pay-
ments are made in good faith using a reasonable
and objective formula which is consistently applied,
and
(2) in the case of a private foundation (as de-
fined in section 509 of such Code), any payment de-
scribed in paragraph (1) shall not be treated as
made to a disqualified person for purposes of section
4941 of such Code.
(b) EFFECTIVE DATE.—This section shall apply to
payments made on or after September 11, 2001.
SEC. 105. EXCLUSION OF CERTAIN CANCELLATIONS OF IN-
DEBTEDNESS.
(a) IN GENERAL.—For purposes of the Internal Rev-
enue Code of 1986—
(1) gross income shall not include any amount
which (but for this section) would be includible in
gross income by reason of the discharge (in whole or
in part) of indebtedness of any taxpayer if the dis-
charge is by reason of the death of an individual in-
curred as the result of the terrorist attacks against
the United States on September 11, 2001, or as the
result of illness incurred as a result of an attack in-
volving anthrax occurring on or after September 11,
2001, and before January 1, 2002, and
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(2) return requirements under section 6050P of
such Code shall not apply to any discharge described
in paragraph (1).
(b) EFFECTIVE DATE.—This section shall apply to
discharges made on or after September 11, 2001, and be-
fore January 1, 2002.
Subtitle B—Other Relief Provisions
SEC. 111. EXCLUSION FOR DISASTER RELIEF PAYMENTS.
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 (relating to items specifically excluded from gross
income) is amended by redesignating section 139 as sec-
tion 140 and inserting after section 138 the following new
section:
‘‘SEC. 139. DISASTER RELIEF PAYMENTS.
‘‘(a) GENERAL RULE.—Gross income shall not in-
clude any amount received by an individual as a qualified
disaster relief payment.
‘‘(b) QUALIFIED DISASTER RELIEF PAYMENT DE-
FINED.—For purposes of this section, the term ‘qualified
disaster relief payment’ means any amount paid to or for
the benefit of an individual—
‘‘(1) to reimburse or pay reasonable and nec-
essary personal, family, living, or funeral expenses
incurred as a result of a qualified disaster,
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‘‘(2) to reimburse or pay reasonable and nec-
essary expenses incurred for the repair or rehabilita-
tion of a personal residence or repair or replacement
of its contents to the extent that the need for such
repair, rehabilitation, or replacement is attributable
to a qualified disaster,
‘‘(3) by a person engaged in the furnishing or
sale of transportation as a common carrier by reason
of the death or personal physical injuries incurred as
a result of a qualified disaster, or
‘‘(4) if such amount is paid by a Federal, State,
or local government, or agency or instrumentality
thereof, in connection with a qualified disaster in
order to promote the general welfare,
but only to the extent any expense compensated by such
payment is not otherwise compensated for by insurance
or otherwise.
‘‘(c) QUALIFIED DISASTER DEFINED.—For purposes
of this section, the term ‘qualified disaster’ means—
‘‘(1) a disaster which results from a terroristic
or military action (as defined in section 692(c)(2)),
‘‘(2) a Presidentially declared disaster (as de-
fined in section 1033(h)(3)),
‘‘(3) a disaster which results from an accident
involving a common carrier, or from any other event,
HR 2884 EAS2
which is determined by the Secretary to be of a cata-
strophic nature, or
‘‘(4) with respect to amounts described in sub-
section (b)(4), a disaster which is determined by an
applicable Federal, State, or local authority (as de-
termined by the Secretary) to warrant assistance
from the Federal, State, or local government or
agency or instrumentality thereof.
‘‘(d) COORDINATION WITH EMPLOYMENT TAXES.—
For purposes of chapter 2 and subtitle C, a qualified dis-
aster relief payment shall not be treated as net earnings
from self-employment, wages, or compensation subject to
tax.
‘‘(e) NO RELIEF FOR CERTAIN INDIVIDUALS.—Sub-
sections (a) and (f) shall not apply with respect to any
individual identified by the Attorney General to have been
a participant or conspirator in a terroristic action (as so
defined), or a representative of such individual.
‘‘(f) EXCLUSION
OF CERTAIN ADDITIONAL PAY-
MENTS.—Gross income shall not include any amount re-
ceived as payment under section 406 of the Air Transpor-
tation Safety and System Stabilization Act.’’
(b) CONFORMING AMENDMENTS.—The table of sec-
tions for part III of subchapter B of chapter 1 is amended
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by striking the item relating to section 139 and inserting
the following new items:
‘‘Sec. 139. Disaster relief payments.
‘‘Sec. 140. Cross references to other Acts.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years ending on or after
September 11, 2001.
SEC. 112. AUTHORITY TO POSTPONE CERTAIN DEADLINES
AND REQUIRED ACTIONS.
(a) EXPANSION OF AUTHORITY RELATING TO DISAS-
TERS AND TERRORISTIC OR MILITARY ACTIONS.—Section
7508A is amended to read as follows:
‘‘SEC. 7508A. AUTHORITY TO POSTPONE CERTAIN DEAD-
LINES BY REASON OF PRESIDENTIALLY DE-
CLARED 
DISASTER 
OR 
TERRORISTIC 
OR
MILITARY ACTIONS.
‘‘(a) IN GENERAL.—In the case of a taxpayer deter-
mined by the Secretary to be affected by a Presidentially
declared disaster (as defined in section 1033(h)(3)) or a
terroristic or military action (as defined in section
692(c)(2)), the Secretary may specify a period of up to
one year that may be disregarded in determining, under
the internal revenue laws, in respect of any tax liability
of such taxpayer—
‘‘(1) whether any of the acts described in para-
graph (1) of section 7508(a) were performed within
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the time prescribed therefor (determined without re-
gard to extension under any other provision of this
subtitle for periods after the date (determined by the
Secretary) of such disaster or action),
‘‘(2) the amount of any interest, penalty, addi-
tional amount, or addition to the tax for periods
after such date, and
‘‘(3) the amount of any credit or refund.
‘‘(b) SPECIAL RULES REGARDING PENSIONS, ETC.—
In the case of a pension or other employee benefit plan,
or any sponsor, administrator, participant, beneficiary, or
other person with respect to such plan, affected by a dis-
aster or action described in subsection (a), the Secretary
may specify a period of up to one year which may be dis-
regarded in determining the date by which any action is
required or permitted to be completed under this title. No
plan shall be treated as failing to be operated in accord-
ance with the terms of the plan solely as the result of dis-
regarding any period by reason of the preceding sentence.
‘‘(c) SPECIAL RULES
FOR OVERPAYMENTS.—The
rules of section 7508(b) shall apply for purposes of this
section.’’.
(b) CLARIFICATION OF SCOPE OF ACTS SECRETARY
MAY POSTPONE.—Section 7508(a)(1)(K) (relating to time
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to be disregarded) is amended by striking ‘‘in regulations
prescribed under this section’’.
(c) CONFORMING AMENDMENTS TO ERISA.—
(1) Part 5 of subtitle B of title I of the Em-
ployee Retirement Income Security Act of 1974 (29
U.S.C. 1131 et seq.) is amended by adding at the
end the following new section:
‘‘SEC. 518. AUTHORITY TO POSTPONE CERTAIN DEADLINES
BY REASON OF PRESIDENTIALLY DECLARED
DISASTER OR TERRORISTIC OR MILITARY AC-
TIONS.
‘‘In the case of a pension or other employee benefit
plan, or any sponsor, administrator, participant, bene-
ficiary, or other person with respect to such plan, affected
by a Presidentially declared disaster (as defined in section
1033(h)(3) of the Internal Revenue Code of 1986) or a
terroristic or military action (as defined in section
692(c)(2) of such Code), the Secretary may, notwith-
standing any other provision of law, prescribe, by notice
or otherwise, a period of up to one year which may be
disregarded in determining the date by which any action
is required or permitted to be completed under this Act.
No plan shall be treated as failing to be operated in ac-
cordance with the terms of the plan solely as the result
HR 2884 EAS2
of disregarding any period by reason of the preceding sen-
tence.’’.
(2) Section 4002 of Employee Retirement In-
come Security Act of 1974 (29 U.S.C. 1302) is
amended by adding at the end the following new
subsection:
‘‘(i) 
SPECIAL
RULES
REGARDING
DISASTERS,
ETC.—In the case of a pension or other employee benefit
plan, or any sponsor, administrator, participant, bene-
ficiary, or other person with respect to such plan, affected
by a Presidentially declared disaster (as defined in section
1033(h)(3) of the Internal Revenue Code of 1986) or a
terroristic or military action (as defined in section
692(c)(2) of such Code), the corporation may, notwith-
standing any other provision of law, prescribe, by notice
or otherwise, a period of up to one year which may be
disregarded in determining the date by which any action
is required or permitted to be completed under this Act.
No plan shall be treated as failing to be operated in ac-
cordance with the terms of the plan solely as the result
of disregarding any period by reason of the preceding sen-
tence.’’.
(d) ADDITIONAL CONFORMING AMENDMENTS.—
(1) Section 6404 is amended—
(A) by striking subsection (h),
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(B) by redesignating subsection (i) as sub-
section (h), and
(C) by adding at the end the following new
subsection:
‘‘(i) CROSS REFERENCE.—
‘‘For authority to suspend running of interest, etc.
by reason of Presidentially declared disaster or ter-
roristic or military action, see section 7508A.’’.
(2) Section 6081(c) is amended to read as fol-
lows:
‘‘(c) CROSS REFERENCES.—
‘‘For time for performing certain acts postponed
by reason of war, see section 7508, and by reason of
Presidentially declared disaster or terroristic or
military action, see section 7508A.’’.
(3) Section 6161(d) is amended by adding at
the end the following new paragraph:
‘‘(3) POSTPONEMENT OF CERTAIN ACTS.—
‘‘For time for performing certain acts postponed
by reason of war, see section 7508, and by reason of
Presidentially declared disaster or terroristic or
military action, see section 7508A.’’.
(e) CLERICAL AMENDMENTS.—
(1) The item relating to section 7508A in the
table of sections for chapter 77 is amended to read
as follows:
‘‘Sec. 7508A. Authority to postpone certain deadlines by reason
of Presidentially declared disaster or terroristic or
military actions.’’.
(2) The table of contents for the Employee Re-
tirement Income Security Act of 1974 is amended by
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inserting after the item relating to section 517 the
following new item:
‘‘Sec. 518. Authority to postpone certain deadlines by reason of
Presidentially declared disaster or terroristic or
military actions.’’.
(f) EFFECTIVE DATE.—The amendments made by
this section shall apply to disasters and terroristic or mili-
tary actions occurring on or after September 11, 2001,
with respect to any action of the Secretary of the Treas-
ury, the Secretary of Labor, or the Pension Benefit Guar-
anty Corporation occurring on or after the date of the en-
actment of this Act.
SEC. 113. APPLICATION OF CERTAIN PROVISIONS TO TER-
RORISTIC OR MILITARY ACTIONS.
(a) DISABILITY INCOME.—Section 104(a)(5) (relat-
ing to compensation for injuries or sickness) is amended
by striking ‘‘a violent attack’’ and all that follows through
the period and inserting ‘‘a terroristic or military action
(as defined in section 692(c)(2)).’’.
(b) EXEMPTION FROM INCOME TAX FOR CERTAIN
MILITARY OR CIVILIAN EMPLOYEES.—Section 692(c) is
amended—
(1) by striking ‘‘outside the United States’’ in
paragraph (1), and
(2) by striking ‘‘SUSTAINED OVERSEAS’’ in the
heading.
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(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years ending on or after
September 11, 2001.
SEC. 114. CLARIFICATION OF DUE DATE FOR AIRLINE EX-
CISE TAX DEPOSITS.
(a) IN GENERAL.—Paragraph (3) of section 301(a)
of the Air Transportation Safety and System Stabilization
Act (Public Law 107–42) is amended to read as follows:
‘‘(3) AIRLINE-RELATED
DEPOSIT.—For pur-
poses of this subsection, the term ‘airline-related de-
posit’ means any deposit of taxes imposed by sub-
chapter C of chapter 33 of such Code (relating to
transportation by air).’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall take effect as if included in section 301
of the Air Transportation Safety and System Stabilization
Act (Public Law 107–42).
SEC. 115. TREATMENT OF CERTAIN STRUCTURED SETTLE-
MENT PAYMENTS.
(a) IN GENERAL.—Subtitle E is amended by adding
at the end the following new chapter:
‘‘CHAPTER 55—STRUCTURED
SETTLEMENT FACTORING TRANSACTIONS
‘‘Sec. 5891. Structured settlement factoring transactions.
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‘‘SEC. 5891. STRUCTURED SETTLEMENT FACTORING TRANS-
ACTIONS.
‘‘(a) IMPOSITION OF TAX.—There is hereby imposed
on any person who acquires directly or indirectly struc-
tured settlement payment rights in a structured settle-
ment factoring transaction a tax equal to 40 percent of
the factoring discount as determined under subsection
(c)(4) with respect to such factoring transaction.
‘‘(b) EXCEPTION FOR CERTAIN APPROVED TRANS-
ACTIONS.—
‘‘(1) IN GENERAL.—The tax under subsection
(a) shall not apply in the case of a structured settle-
ment factoring transaction in which the transfer of
structured settlement payment rights is approved in
advance in a qualified order.
‘‘(2) QUALIFIED ORDER.—For purposes of this
section, the term ‘qualified order’ means a final
order, judgment, or decree which—
‘‘(A) finds that the transfer described in
paragraph (1)—
‘‘(i) does not contravene any Federal
or State statute or the order of any court
or responsible administrative authority,
and
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‘‘(ii) is in the best interest of the
payee, taking into account the welfare and
support of the payee’s dependents, and
‘‘(B) is issued—
‘‘(i) under the authority of an applica-
ble State statute by an applicable State
court, or
‘‘(ii) by the responsible administrative
authority (if any) which has exclusive ju-
risdiction over the underlying action or
proceeding which was resolved by means of
the structured settlement.
‘‘(3) APPLICABLE STATE STATUTE.—For pur-
poses of this section, the term ‘applicable State stat-
ute’ means a statute providing for the entry of an
order, judgment, or decree described in paragraph
(2)(A) which is enacted by—
‘‘(A) the State in which the payee of the
structured settlement is domiciled, or
‘‘(B) if there is no statute described in
subparagraph (A), the State in which either the
party to the structured settlement (including an
assignee under a qualified assignment under
section 130) or the person issuing the funding
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asset for the structured settlement is domiciled
or has its principal place of business.
‘‘(4) APPLICABLE
STATE
COURT.—For pur-
poses of this section—
‘‘(A) IN GENERAL.—The term ‘applicable
State court’ means, with respect to any applica-
ble State statute, a court of the State which en-
acted such statute.
‘‘(B) SPECIAL RULE.—In the case of an
applicable State statute described in paragraph
(3)(B), such term also includes a court of the
State in which the payee of the structured set-
tlement is domiciled.
‘‘(5) QUALIFIED ORDER DISPOSITIVE.—A quali-
fied order shall be treated as dispositive for purposes
of the exception under this subsection.
‘‘(c) DEFINITIONS.—For purposes of this section—
‘‘(1) STRUCTURED
SETTLEMENT.—The term
‘structured settlement’ means an arrangement—
‘‘(A) which is established by—
‘‘(i) suit or agreement for the periodic
payment of damages excludable from the
gross income of the recipient under section
104(a)(2), or
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‘‘(ii) agreement for the periodic pay-
ment of compensation under any workers’
compensation law excludable from the
gross income of the recipient under section
104(a)(1), and
‘‘(B) under which the periodic payments
are—
‘‘(i) of the character described in sub-
paragraphs 
(A) 
and 
(B) 
of 
section
130(c)(2), and
‘‘(ii) payable by a person who is a
party to the suit or agreement or to the
workers’ compensation claim or by a per-
son who has assumed the liability for such
periodic payments under a qualified assign-
ment in accordance with section 130.
‘‘(2) 
STRUCTURED
SETTLEMENT
PAYMENT
RIGHTS.—The term ‘structured settlement payment
rights’ means rights to receive payments under a
structured settlement.
‘‘(3) STRUCTURED
SETTLEMENT
FACTORING
TRANSACTION.—
‘‘(A) IN GENERAL.—The term ‘structured
settlement factoring transaction’ means a trans-
fer of structured settlement payment rights (in-
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cluding portions of structured settlement pay-
ments) made for consideration by means of
sale, assignment, pledge, or other form of en-
cumbrance or alienation for consideration.
‘‘(B) EXCEPTION.—Such term shall not
include—
‘‘(i) the creation or perfection of a se-
curity interest in structured settlement
payment rights under a blanket security
agreement entered into with an insured de-
pository institution in the absence of any
action to redirect the structured settlement
payments to such institution (or agent or
successor thereof) or otherwise to enforce
such blanket security interest as against
the structured settlement payment rights,
or
‘‘(ii) a subsequent transfer of struc-
tured settlement payment rights acquired
in a structured settlement factoring trans-
action.
‘‘(4) FACTORING
DISCOUNT.—The term ‘fac-
toring discount’ means an amount equal to the ex-
cess of—
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‘‘(A) the aggregate undiscounted amount
of structured settlement payments being ac-
quired in the structured settlement factoring
transaction, over
‘‘(B) the total amount actually paid by the
acquirer to the person from whom such struc-
tured settlement payments are acquired.
‘‘(5) RESPONSIBLE ADMINISTRATIVE AUTHOR-
ITY.—The term ‘responsible administrative author-
ity’ means the administrative authority which had
jurisdiction over the underlying action or proceeding
which was resolved by means of the structured set-
tlement.
‘‘(6) STATE.—The term ‘State’ includes the
Commonwealth of Puerto Rico and any possession of
the United States.
‘‘(d) COORDINATION WITH OTHER PROVISIONS.—
‘‘(1) IN GENERAL.—If the applicable require-
ments of sections 72, 104(a)(1), 104(a)(2), 130, and
461(h) were satisfied at the time the structured set-
tlement involving structured settlement payment
rights was entered into, the subsequent occurrence
of a structured settlement factoring transaction shall
not affect the application of the provisions of such
sections to the parties to the structured settlement
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(including an assignee under a qualified assignment
under section 130) in any taxable year.
‘‘(2) NO WITHHOLDING OF TAX.—The provi-
sions of section 3405 regarding withholding of tax
shall not apply to the person making the payments
in the event of a structured settlement factoring
transaction.’’.
(b) CLERICAL AMENDMENT.—The table of chapters
for subtitle E is amended by adding at the end the fol-
lowing new item:
‘‘Chapter 55. Structured settlement factoring transactions.’’.
(c) EFFECTIVE DATES.—
(1) IN GENERAL.—The amendments made by
this section (other than the provisions of section
5891(d) of the Internal Revenue Code of 1986, as
added by this section) shall apply to structured set-
tlement factoring transactions (as defined in section
5891(c) of such Code (as so added)) entered into on
or after the 30th day following the date of the enact-
ment of this Act.
(2) CLARIFICATION OF EXISTING LAW.—Section
5891(d) of such Code (as so added) shall apply to
structured settlement factoring transactions (as de-
fined in section 5891(c) of such Code (as so added))
entered into before, on, or after such 30th day.
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(3) TRANSITION RULE.—In the case of a struc-
tured settlement factoring transaction entered into
during the period beginning on the 30th day fol-
lowing the date of the enactment of this Act and
ending on July 1, 2002, no tax shall be imposed
under section 5891(a) of such Code if—
(A) the structured settlement payee is
domiciled in a State (or possession of the
United States) which has not enacted a statute
providing that the structured settlement fac-
toring transaction is ineffective unless the
transaction has been approved by an order,
judgment, or decree of a court (or where appli-
cable, a responsible administrative authority)
which finds that such transaction—
(i) does not contravene any Federal or
State statute or the order of any court (or
responsible administrative authority), and
(ii) is in the best interest of the struc-
tured settlement payee or is appropriate in
light of a hardship faced by the payee, and
(B) the person acquiring the structured
settlement payment rights discloses to the
structured settlement payee in advance of the
structured settlement factoring transaction the
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amounts and due dates of the payments to be
transferred, the aggregate amount to be trans-
ferred, the consideration to be received by the
structured settlement payee for the transferred
payments, the discounted present value of the
transferred payments (including the present
value as determined in the manner described in
section 7520 of such Code), and the expenses
required under the terms of the structured set-
tlement factoring transaction to be paid by the
structured settlement payee or deducted from
the proceeds of such transaction.
SEC. 116. PERSONAL EXEMPTION DEDUCTION FOR CER-
TAIN DISABILITY TRUSTS.
(a) IN GENERAL.—Subsection (b) of section 642 (re-
lating to deduction for personal exemption) is amended to
read as follows:
‘‘(b) DEDUCTION FOR PERSONAL EXEMPTION.—
‘‘(1) ESTATES.—An estate shall be allowed a
deduction of $600.
‘‘(2) TRUSTS.—
‘‘(A) IN GENERAL.—Except as otherwise
provided in this paragraph, a trust shall be al-
lowed a deduction of $100.
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‘‘(B) TRUSTS DISTRIBUTING INCOME CUR-
RENTLY.—A trust which, under its governing
instrument, is required to distribute all of its
income currently shall be allowed a deduction of
$300.
‘‘(C) DISABILITY TRUSTS.—
‘‘(i) IN
GENERAL.—A qualified dis-
ability trust shall be allowed a deduction
equal to the exemption amount under sec-
tion 151(d), determined—
‘‘(I) by treating such trust as an
individual 
described 
in 
section
151(d)(3)(C)(iii), and
‘‘(II) by applying section 67(e)
(without the reference to section
642(b)) for purposes of determining
the adjusted gross income of the
trust.
‘‘(ii) QUALIFIED DISABILITY TRUST.—
For purposes of clause (i), the term ‘quali-
fied disability trust’ means any trust if—
‘‘(I) such trust is a disability
trust 
described 
in 
subsection
(c)(2)(B)(iv) of section 1917 of the
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Social 
Security 
Act 
(42 
U.S.C.
1396p), and
‘‘(II) all of the beneficiaries of
the trust as of the close of the taxable
year are determined by the Commis-
sioner of Social Security to have been
disabled (within the meaning of sec-
tion 1614(a)(3) of the Social Security
Act, 42 U.S.C. 1382c(a)(3)) for some
portion of such year.
A trust shall not fail to meet the require-
ments of subclause (II) merely because the
corpus of the trust may revert to a person
who is not so disabled after the trust
ceases to have any beneficiary who is so
disabled.’’
‘‘(3) DEDUCTIONS IN LIEU OF PERSONAL EX-
EMPTION.—The deductions allowed by this sub-
section shall be in lieu of the deductions allowed
under section 151 (relating to deduction for personal
exemption).’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years ending on or after
September 11, 2001.
HR 2884 EAS2
TITLE II—DISCLOSURE OF TAX
INFORMATION IN TERRORISM
AND NATIONAL SECURITY IN-
VESTIGATIONS
SEC. 201. DISCLOSURE OF TAX INFORMATION IN TER-
RORISM AND NATIONAL SECURITY INVES-
TIGATIONS.
(a) DISCLOSURE WITHOUT A REQUEST OF INFORMA-
TION RELATING TO TERRORIST ACTIVITIES, ETC.—Para-
graph (3) of section 6103(i) (relating to disclosure of re-
turn information to apprise appropriate officials of crimi-
nal activities or emergency circumstances) is amended by
adding at the end the following new subparagraph:
‘‘(C) TERRORIST ACTIVITIES, ETC.—
‘‘(i) IN
GENERAL.—Except as pro-
vided in paragraph (6), the Secretary may
disclose in writing return information
(other than taxpayer return information)
that may be related to a terrorist incident,
threat, or activity to the extent necessary
to apprise the head of the appropriate Fed-
eral law enforcement agency responsible
for investigating or responding to such ter-
rorist incident, threat, or activity. The
head of the agency may disclose such re-
HR 2884 EAS2
turn information to officers and employees
of such agency to the extent necessary to
investigate or respond to such terrorist in-
cident, threat, or activity.
‘‘(ii) DISCLOSURE
TO
THE
DEPART-
MENT OF JUSTICE.—Returns and taxpayer
return information may also be disclosed to
the Attorney General under clause (i) to
the extent necessary for, and solely for use
in preparing, an application under para-
graph (7)(D).
‘‘(iii) TAXPAYER IDENTITY.—For pur-
poses of this subparagraph, a taxpayer’s
identity shall not be treated as taxpayer
return information.
‘‘(iv) TERMINATION.—No disclosure
may be made under this subparagraph
after December 31, 2003.’’.
(b) DISCLOSURE UPON REQUEST OF INFORMATION
RELATING TO TERRORIST ACTIVITIES, ETC.—Subsection
(i) of section 6103 (relating to disclosure to Federal offi-
cers or employees for administration of Federal laws not
relating to tax administration) is amended by redesig-
nating paragraph (7) as paragraph (8) and by inserting
after paragraph (6) the following new paragraph:
HR 2884 EAS2
‘‘(7) DISCLOSURE UPON REQUEST OF INFORMA-
TION RELATING TO TERRORIST ACTIVITIES, ETC.—
‘‘(A) DISCLOSURE TO LAW ENFORCEMENT
AGENCIES.—
‘‘(i) IN
GENERAL.—Except as pro-
vided in paragraph (6), upon receipt by the
Secretary of a written request which meets
the requirements of clause (iii), the Sec-
retary may disclose return information
(other than taxpayer return information)
to officers and employees of any Federal
law enforcement agency who are personally
and directly engaged in the response to or
investigation of any terrorist incident,
threat, or activity.
‘‘(ii) DISCLOSURE
TO
STATE
AND
LOCAL
LAW
ENFORCEMENT
AGENCIES.—
The head of any Federal law enforcement
agency may disclose return information ob-
tained under clause (i) to officers and em-
ployees of any State or local law enforce-
ment agency but only if such agency is
part of a team with the Federal law en-
forcement agency in such response or in-
vestigation and such information is dis-
HR 2884 EAS2
closed only to officers and employees who
are personally and directly engaged in such
response or investigation.
‘‘(iii) 
REQUIREMENTS.—A 
request
meets the requirements of this clause if—
‘‘(I) the request is made by the
head of any Federal law enforcement
agency (or his delegate) involved in
the response to or investigation of any
terrorist incident, threat, or activity,
and
‘‘(II) the request sets forth the
specific reason or reasons why such
disclosure may be relevant to a ter-
rorist incident, threat, or activity.
‘‘(iv) LIMITATION ON USE OF INFOR-
MATION.—Information disclosed under this
subparagraph shall be solely for the use of
the officers and employees to whom such
information is disclosed in such response
or investigation.
‘‘(B) 
DISCLOSURE
TO
INTELLIGENCE
AGENCIES.—
‘‘(i) IN
GENERAL.—Except as pro-
vided in paragraph (6), upon receipt by the
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Secretary of a written request which meets
the requirements of clause (ii), the Sec-
retary may disclose return information
(other than taxpayer return information)
to those officers and employees of the De-
partment of Justice, the Department of
the Treasury, and other Federal intel-
ligence agencies who are personally and di-
rectly engaged in the collection or analysis
of intelligence and counterintelligence in-
formation or investigation concerning any
terrorist incident, threat, or activity. For
purposes of the preceding sentence, the in-
formation disclosed under the preceding
sentence shall be solely for the use of such
officers and employees in such investiga-
tion, collection, or analysis.
‘‘(ii) 
REQUIREMENTS.—A 
request
meets the requirements of this subpara-
graph if the request—
‘‘(I) is made by an individual de-
scribed in clause (iii), and
‘‘(II) sets forth the specific rea-
son or reasons why such disclosure
HR 2884 EAS2
may be relevant to a terrorist inci-
dent, threat, or activity.
‘‘(iii) REQUESTING INDIVIDUALS.—An
individual described in this subparagraph
is an individual—
‘‘(I) who is an officer or em-
ployee of the Department of Justice
or the Department of the Treasury
who is appointed by the President
with the advice and consent of the
Senate or who is the Director of the
United States Secret Service, and
‘‘(II) who is responsible for the
collection and analysis of intelligence
and counterintelligence information
concerning 
any 
terrorist 
incident,
threat, or activity.
‘‘(iv) TAXPAYER IDENTITY.—For pur-
poses of this subparagraph, a taxpayer’s
identity shall not be treated as taxpayer
return information.
‘‘(C) DISCLOSURE UNDER EX PARTE OR-
DERS.—
‘‘(i) IN
GENERAL.—Except as pro-
vided in paragraph (6), any return or re-
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turn information with respect to any speci-
fied taxable period or periods shall, pursu-
ant to and upon the grant of an ex parte
order by a Federal district court judge or
magistrate under clause (ii), be open (but
only to the extent necessary as provided in
such order) to inspection by, or disclosure
to, officers and employees of any Federal
law enforcement agency or Federal intel-
ligence agency who are personally and di-
rectly engaged in any investigation, re-
sponse to, or analysis of intelligence and
counterintelligence information concerning
any terrorist incident, threat, or activity.
Return or return information opened to in-
spection or disclosure pursuant to the pre-
ceding sentence shall be solely for the use
of such officers and employees in the inves-
tigation, response, or analysis, and in any
judicial, administrative, or grand jury pro-
ceedings, pertaining to such terrorist inci-
dent, threat, or activity.
‘‘(ii) APPLICATION FOR ORDER.—The
Attorney General, the Deputy Attorney
General, the Associate Attorney General,
HR 2884 EAS2
any Assistant Attorney General, or any
United States attorney may authorize an
application to a Federal district court
judge or magistrate for the order referred
to in clause (i). Upon such application,
such judge or magistrate may grant such
order if he determines on the basis of the
facts submitted by the applicant that—
‘‘(I) there is reasonable cause to
believe, based upon information be-
lieved to be reliable, that the return or
return information may be relevant to
a matter relating to such terrorist in-
cident, threat, or activity, and
‘‘(II) the return or return infor-
mation is sought exclusively for use in
a Federal investigation, analysis, or
proceeding concerning any terrorist
incident, threat, or activity.
‘‘(D) SPECIAL RULE FOR EX PARTE DIS-
CLOSURE BY THE IRS.—
‘‘(i) IN
GENERAL.—Except as pro-
vided in paragraph (6), the Secretary may
authorize an application to a Federal dis-
trict court judge or magistrate for the
HR 2884 EAS2
order referred to in subparagraph (C)(i).
Upon such application, such judge or mag-
istrate may grant such order if he deter-
mines on the basis of the facts submitted
by the applicant that the requirements of
subparagraph (C)(ii)(I) are met.
‘‘(ii) LIMITATION ON USE OF INFOR-
MATION.—Information 
disclosed 
under
clause (i)—
‘‘(I) may be disclosed only to the
extent necessary to apprise the head
of the appropriate Federal law en-
forcement agency responsible for in-
vestigating or responding to a ter-
rorist incident, threat, or activity, and
‘‘(II) shall be solely for use in a
Federal investigation, analysis, or pro-
ceeding concerning any terrorist inci-
dent, threat, or activity.
The head of such Federal agency may dis-
close such information to officers and em-
ployees of such agency to the extent nec-
essary to investigate or respond to such
terrorist incident, threat, or activity.
HR 2884 EAS2
‘‘(E) TERMINATION.—No disclosure may
be made under this paragraph after December
31, 2003.’’.
(c) CONFORMING AMENDMENTS.—
(1) Section 6103(a)(2) is amended by inserting
‘‘any local law enforcement agency receiving infor-
mation under subsection (i)(7)(A),’’ after ‘‘State,’’.
(2) Section 6103(b) is amended by adding at
the end the following new paragraph:
‘‘(11) TERRORIST INCIDENT, THREAT, OR AC-
TIVITY.—The term ‘terrorist incident, threat, or ac-
tivity’ means an incident, threat, or activity involv-
ing an act of domestic terrorism (as defined in sec-
tion 2331(5) of title 18, United States Code) or
international terrorism (as defined in section
2331(1) of such title).’’.
(3) The heading of section 6103(i)(3) is amend-
ed by inserting ‘‘OR TERRORIST’’ after ‘‘CRIMINAL’’.
(4) Paragraph (4) of section 6103(i) is
amended—
(A) in subparagraph (A) by inserting ‘‘or
(7)(C)’’ after ‘‘paragraph (1)’’, and
(B) in subparagraph (B) by striking ‘‘or
(3)(A)’’ and inserting ‘‘(3)(A) or (C), or (7)’’.
HR 2884 EAS2
(5) Paragraph (6) of section 6103(i) is
amended—
(A) by striking ‘‘(3)(A)’’ and inserting
‘‘(3)(A) or (C)’’, and
(B) by striking ‘‘or (7)’’ and inserting
‘‘(7), or (8)’’.
(6) Section 6103(p)(3) is amended—
(A) in subparagraph (A) by striking
‘‘(7)(A)(ii)’’ and inserting ‘‘(8)(A)(ii)’’, and
(B) in subparagraph (C) by striking
‘‘(i)(3)(B)(i)’’ and inserting ‘‘(i)(3)(B)(i) or
(7)(A)(ii)’’.
(7) Section 6103(p)(4) is amended—
(A) in the matter preceding subparagraph
(A)—
(i) by striking ‘‘or (5),’’ the first place
it appears and inserting ‘‘(5), or (7),’’, and
(ii) by striking ‘‘(i)(3)(B)(i),’’ and in-
serting ‘‘(i)(3)(B)(i) or (7)(A)(ii),’’, and
(B) in subparagraph (F)(ii) by striking ‘‘or
(5),’’ the first place it appears and inserting
‘‘(5) or (7),’’.
(8) Section 6103(p)(6)(B)(i) is amended by
striking ‘‘(i)(7)(A)(ii)’’ and inserting ‘‘(i)(8)(A)(ii)’’.
(9) Section 6105(b) is amended—
HR 2884 EAS2
(A) by striking ‘‘or’’ at the end of para-
graph (2),
(B) by striking ‘‘paragraphs (1) or (2)’’ in
paragraph (3) and inserting ‘‘paragraph (1),
(2), or (3)’’,
(C) by redesignating paragraph (3) as
paragraph (4), and
(D) by inserting after paragraph (2) the
following new paragraph:
‘‘(3) to the disclosure of tax convention infor-
mation on the same terms as return information
may be disclosed under paragraph (3)(C) or (7) of
section 6103(i), except that in the case of tax con-
vention information provided by a foreign govern-
ment, no disclosure may be made under this para-
graph without the written consent of the foreign
government, or’’.
(10) Section 7213(a)(2) is amended by striking
‘‘(i)(3)(B)(i),’’ 
and 
inserting 
‘‘(i)(3)(B)(i) 
or
(7)(A)(ii),’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to disclosures made on or after
the date of the enactment of this Act.
HR 2884 EAS2
TITLE III—NO IMPACT ON
SOCIAL SECURITY TRUST FUNDS
SEC. 301. NO IMPACT ON SOCIAL SECURITY TRUST FUNDS.
(a) IN GENERAL.—Nothing in this Act (or an amend-
ment made by this Act) shall be construed to alter or
amend title II of the Social Security Act (or any regulation
promulgated under that Act).
(b) TRANSFERS.—
(1) ESTIMATE OF SECRETARY.—The Secretary
of the Treasury shall annually estimate the impact
that the enactment of this Act has on the income
and balances of the trust funds established under
section 201 of the Social Security Act (42 U.S.C.
401).
(2) TRANSFER
OF
FUNDS.—If, under para-
graph (1), the Secretary of the Treasury estimates
that the enactment of this Act has a negative impact
on the income and balances of the trust funds estab-
lished under section 201 of the Social Security Act
(42 U.S.C. 401), the Secretary shall transfer, not
less frequently than quarterly, from the general reve-
nues of the Federal Government an amount suffi-
cient so as to ensure that the income and balances