SEC. 103. TAX EXPENDITURE PERFORMANCE REVIEWS AND 
REPORTS. 
(a) PERFORMANCE REVIEW SCHEDULE
AND RE-
PORTS.—(1) The Secretary of the Treasury (hereinafter 
in this section referred to as the ‘‘Secretary’’), in conjunc-
tion with the Director of the Office of Management and 
Budget (hereinafter in this section referred to as the ‘‘Di-
rector’’), shall conduct performance reviews of tax expend-
itures, as identified by the Joint Committee on Taxation, 
on an ongoing basis. The Secretary shall develop the 
schedule for these reviews, such that each tax expenditure 
is reviewed at least once in every four-year period. A four- 
year schedule shall be submitted by the Secretary to the 
Committee on Ways and Means of the House of Rep-
resentatives and the Committee on Finance of the Senate 
during January of each calendar year. 
(2) Within three months after the enactment of any 
new tax expenditure, the Secretary shall revise the most 
recent four-year schedule of tax expenditure performance 
reviews and submit them to the Committee on Ways and 
Means of the House of Representatives and the Committee 
on Finance of the Senate. 
(3) Not later than one year after the enactment of 
this Act, the Secretary shall have submitted to Congress 
and to the Director the first four-year schedule and begin 
the first performance reviews under paragraph (1). 
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(4) The Secretary shall endeavor to develop a four- 
year schedule that provides for the simultaneous review 
of tax expenditures that have similar policy objectives. 
(b) REPORTS.— 
(1) The Secretary shall report each of its per-
formance reviews of tax expenditures to the Com-
mittee on Ways and Means of the House of Rep-
resentatives and the Committee on Finance of the 
Senate in quarterly reports and containing all of the 
performance reviews conducted since the preceding 
report. 
(2) The Secretary may conduct expedited per-
formance reviews for any tax expenditure that has 
an estimated annual fiscal impact of less than $1 
billion, annually adjusted for inflation, unless the 
chairs and ranking minority members of the Com-
mittee on Ways and Means of the House of Rep-
resentatives and the Committee on Finance of the 
Senate jointly request, in writing, a full review. 
(3) Each performance review, except for expe-
dited performance reviews, shall include the fol-
lowing explanations, descriptions, estimates, anal-
yses, and recommendations: 
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(A) An explanation of the tax expenditure 
and any relevant economic, social, or other con-
text under which it was first enacted. 
(B) A description of the intended purpose 
of the tax expenditure. 
(C) An analysis of the overall success of 
the tax expenditure in achieving such purpose, 
and evidence supporting such analysis. 
(D) An analysis of the extent to which fur-
ther extending the tax expenditure, or making 
it permanent, would contribute to achieving 
such purpose. 
(E) A description of the direct and indirect 
beneficiaries of the tax expenditure, also speci-
fying— 
(i) any unintended beneficiaries of the 
tax expenditure; 
(ii) the classes of individuals, types of 
organizations, or types of industries whose 
Federal tax liabilities are directly affected 
by the tax expenditure; 
(iii) the extent to which terminating 
the tax expenditure may have negative ef-
fects on the category of taxpayers that cur-
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rently benefit from the tax preference and 
on the economy; and 
(iv) the extent to which the termi-
nation of the tax expenditure would affect 
the distribution of liability for payments of 
Federal taxes. 
(F) An analysis of whether the tax expend-
iture is the most cost-effective method for 
achieving the purpose for which it was intended, 
and a description of any more cost-effective 
methods through which such purpose could be 
accomplished, and in particular the extent to 
which a direct spending program might be pref-
erable to a tax expenditure, including— 
(i) whether an outlay program might 
achieve the same policy objectives as a tax 
expenditure; 
(ii) whether an outlay program might 
reduce deadweight losses and improve eco-
nomic efficiency in the national economy; 
and 
(iii) whether a direct spending pro-
gram might be more or less expense to ad-
minister. 
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(G) A description of any unintended effects 
of the tax expenditure that is useful in under-
standing the tax expenditure’s overall value. 
(H) A description of any interactions (ac-
tual or potential) with other tax expenditures or 
direct spending programs in the same or related 
budget function that should be studied further. 
(I) An estimate of the annual cost in for-
gone revenues of the tax expenditure, as well as 
a projection of the cost in foregone revenues for 
the ensuing ten fiscal years. 
(J) A description of any further informa-
tion needed to complete a more thorough exam-
ination and analysis of the tax expenditure, and 
what is necessary to make such information 
available. 
(K) A specific recommendation, based on 
analysis conducted in the performance review, 
as to whether the tax expenditure should be 
continued without modification, modified (in-
cluding converted fully or partly into a direct 
spending program), scheduled for sunset, re-
viewed at a later date, or terminated imme-
diately. The Secretary may decline to provide a 
specific recommendation, but in each such case 
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shall provide an explanation of why a rec-
ommendation has not been given. 
(4) An expedited performance review shall in-
clude at least the explanations, descriptions, esti-
mates, analyses, and recommendations as listed in 
subparagraphs (A), (B), (C), (D), (I), (J), and (K) 
of paragraph (3). 
(c) COMMITTEE HEARINGS.—After the submission of 
any performance review report under subsection (b), the 
Committee on Ways and Means of the House of Rep-
resentatives and the Committee on Finance of the Senate 
shall hold public hearings to consider the performance re-
view recommendations contained in that report. The Com-
mittees on the Budget of the House of Representatives 
and the Senate may also hold hearings on such perform-
ance review recommendations. 
SEC. 104. ACCRUAL ACCOUNTING REPORT. 
(a) ACCRUAL-BASED ACCOUNTING SYSTEM.—The 
Director of the Office of Management and Budget shall 
develop a proposal for the implementation of an accrual- 
based accounting system for certain portions of the budg-
et, excluding— 
(1) insurance; 
(2) environmental liabilities; 
(3) Federal employee pensions; 
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