115
ance trust fund receipts in calendar year 2002 (tak-
ing into account only receipts pursuant to chapter
21 of the Internal Revenue Code).
‘‘SEC. 905. WITHHOLDING OF TAX ON NONRESIDENT ALIENS
AND FOREIGN CORPORATIONS.
‘‘(a) IN GENERAL.—All persons, in whatever capacity
acting (including lessees or mortgagors or real or personal
property, fiduciaries, employers, and all officers and em-
ployees of the United States) having control, receipt, cus-
tody, disposal, or payment of any income to the extent
such income constitutes gross income from sources within
the United States of any nonresident alien individual, for-
eign partnership, or foreign corporation shall deduct and
withhold from that income a tax equal to 23 percent there-
of.
‘‘(b) EXCEPTION.—No tax shall be required to be de-
ducted from interest on portfolio debt investments.
‘‘(c) TREATY COUNTRIES.—In the case of payments
to nonresident alien individuals, foreign partnerships, or
foreign corporations that have a residence in (or the na-
tionality of a country) that has entered into a tax treaty
with the United States, then the rate of withholding tax
prescribed by the treaty shall govern.’’.
116
SEC. 202. CONFORMING AND TECHNICAL AMENDMENTS.
(a) REPEALS.—The following provisions of the Inter-
nal Revenue Code of 1986 are repealed:
(1) Subchapter A of chapter 61 of subtitle D
(as redesignated by section 104) (relating to infor-
mation and returns).
(2) Sections 6103 through 6116 of subchapter
B of chapter 61 of subtitle D (as so redesignated).
(3) Section 6157 (relating to unemployment
taxes).
(4) Section 6163 (relating to estate taxes).
(5) Section 6164 (relating to corporate taxes).
(6) Section 6166 (relating to estate taxes).
(7) Section 6167 (relating to foreign expropria-
tion losses).
(8) Sections 6201, 6205 and 6207 (relating to
assessments).
(9) Subchapter C of chapter 63 of subtitle D
(as so redesignated) (relating to tax treatment of
partnership items).
(10) Section 6305 (relating to collections of cer-
tain liabilities).
(11) Sections 6314, 6315, 6316, and 6317 (re-
lating to payments of repealed taxes).
(12) Sections 6324, 6324A and 6324B (relat-
ing to liens for estate and gift taxes).
117
(13) Section 6344 (relating to cross references).
(14) Section 6411 (relating to carrybacks).
(15) Section 6413 (relating to employment
taxes).
(16) Section 6414 (relating to withheld income
taxes).
(17) Section 6422 (relating to cross references).
(18) Section 6425 (relating to overpayment of
corporate estimated taxes).
(19) Section 6504 (relating to cross references).
(20) Section 6652 (relating to failure to file
certain information returns).
(21) Sections 6654 and 6655 (relating to fail-
ure to payment estimated income tax).
(22) Section 6662 (relating to penalties).
(23) Sections 6677 through 6711 (relating to
income tax related penalties).
(24) Part II of subchapter B of chapter 68 (re-
lating to certain information returns).
(25) Part I of subchapter A of chapter 70 (re-
lating to termination of taxable year).
(26) 
Section 
6864 
(relating 
to 
certain
carrybacks).
(27) Section 7103 (relating to cross references).
118
(28) Section 7204 (relating to withholding
statements).
(29) Section 7211 (relating certain statements).
(30) Section 7231 (relating to failure to obtain
certain licenses).
(31) Section 7270 (relating to insurance poli-
cies).
(32) Section 7404 (relating to estate taxes).
(33) Section 7407 (relating to income tax pre-
parers).
(34) Section 7408 (relating to income tax shel-
ters).
(35) Section 7409 (relating to 501(c)(3) organi-
zations).
(36) Section 7427 (relating to income tax pre-
parers).
(37) Section 7428 (relating to 501(c)(3) organi-
zations).
(38) Section 7476 (relating to declaratory judg-
ments relating to retirement plans).
(39) Section 7478 (relating to declaratory judg-
ments relating to certain tax-exempt obligations).
(40) Section 7508 (relating to postponing time
for certain actions required by the income, estate,
and gift tax).
119
(41) Section 7509 (relating to Postal Service
payroll taxes).
(42) Section 7512 (relating to payroll taxes).
(43) Section 7517 (relating to estate and gift
tax evaluation).
(44) Section 7518 (relating to Merchant Marine
tax incentives).
(45) Section 7519 (relating to taxable years).
(46) Section 7520 (relating to insurance and
annuity valuation tables).
(47) Section 7523 (relating to reporting Fed-
eral income and outlays on Form 1040s).
(48) Section 7611 (relating to church income
tax exemptions and church unrelated business in-
come tax inquiries).
(49) Section 7654 (relating to possessions’ in-
come taxes).
(50) Section 7655 (relating to cross references).
(51) Section 7701(a)(16).
(52) Section 7701(a)(19).
(53) Section 7701(a)(20).
(54) Paragraphs (32) through (38) of section
7701(a).
(55) Paragraphs (41) through (46) of section
7701(a).
120
(56) Section 7701(b).
(57) Subsections (e) through (m) of section
7701.
(58) Section 7702 (relating to life insurance
contracts).
(59) Section 7702A (relating to modified en-
dowment contracts).
(60) Section 7702B (relating to long-term care
insurance).
(61) Section 7703 (relating to the determina-
tion of marital status).
(62) Section 7704 (relating to publicly traded
partnerships).
(63) Section 7805.
(64) Section 7851.
(65) Section 7872.
(66) Section 7873.
(b) OTHER CONFORMING AND TECHNICAL AMEND-
MENTS.—
(1) Section 6151 is amended by striking sub-
section (b) and by redesignating subsection (c) as
subsection (b).
(2) Section 6161 is amended to read as follows:
121
‘‘SEC. 6161. EXTENSION OF TIME FOR PAYING TAX.
‘‘The Secretary, except as otherwise provided in this
title, may extend the time for payment of the amount of
the tax shown or required to be shown on any return, re-
port, or declaration required under authority of this title
for a reasonable period not to exceed 6 months (12 months
in the case of a taxpayer who is abroad).’’.
(3) Section 6211(a) is amended—
(A) by striking ‘‘income, estate and gift
taxes imposed by subtitles A and B and’’,
(B) by striking ‘‘subtitle A or B, or’’, and
(C) by striking ‘‘, as defined in subsection
(b)(2),’’ in paragraph (2).
(4) Section 6211(b) is amended to read as fol-
lows:
‘‘(b) REBATE DEFINED.—For purposes of subsection
(a)(2), the term ‘rebate’ means so much of an abatement,
credit, refund, or other payment, as was made on the
ground that the tax imposed by chapter 41, 42, 43, or
44 was less than the excess of the amount specified in
subsection (a)(1) over the rebates previously made.’’.
(5) Section 6212 is amended to read as follows:
‘‘(b) ADDRESS FOR NOTICE OF DEFICIENCY.—In the
absence of notice to the Secretary under section 6903 of
the existence of a fiduciary relationship, notice of a defi-
ciency in respect of a tax imposed by chapter 42, 43, or
122
44 if mailed to the taxpayer at his last known address,
shall be sufficient for purposes of such chapter and this
chapter even if such taxpayer is deceased, or is under a
legal disability, or, in the case of a corporation, has termi-
nated its existence.’’.
(6) Section 6302(b) is amended by striking
‘‘21,’’.
(7) Section 6302 is amended by striking sub-
sections (g) and (i) and by redesignating subsection
(h) as subsection (g).
(8) Section 6325 is amended by striking sub-
section (c) and by redesignating subsections (d)
through (h) as subsections (c) through (g), respec-
tively.
(9) Section 6402(d) is amended by striking
paragraph (3).
(10) Section 6402 is amended by striking sub-
section (j) and by redesignating subsection (k) as
subsection (j).
(11) Section 6501(b) is amended—
(A) by striking ‘‘except tax imposed by
chapter 3, 21 or 24,’’ in paragraph (1), and
(B) by striking paragraph (2) and by re-
designating paragraphs (3) and (4) as para-
graphs (2) and (3), respectively.
123
(12) Section 6501(c) is amended by striking
paragraphs (5) through (9).
(13) Section 6501(e) is amended by striking
‘‘subsection (c)—’’ and all that follows through
‘‘subtitle D’’ in paragraph (3) and inserting ‘‘sub-
section (c), in the case of a return of a tax imposed
under a provision of subtitle B’’.
(14) Section 6501 is amended by striking sub-
sections (f) through (k) and subsections (m) and (n)
and by redesignating subsection (l) as subsection (f).
(15) Section 6503(a) is amended—
(A) by striking paragraph (2),
(B) by striking ‘‘DEFICIENCY.—’’ and all
that follows through ‘‘The running’’ and insert-
ing ‘‘DEFICIENCY.—The running’’, and
(C) by striking ‘‘income, estate, gift and’’.
(16) Section 6503 is amended by striking sub-
sections (e), (f), (i), and (k) and by redesignating
subsections (g), (h), and (j) as subsections (e), (f),
and (g), respectively.
(17) Section 6511 is amended by striking sub-
sections (d) and (g) and by redesignating sub-
sections (f) and (h) as subsections (d) and (e), re-
spectively.
124
(18) Section 6512(b)(1) is amended by striking
‘‘of income tax for the same taxable year, of gift tax
for the same calendar year or calendar quarter, of
estate tax in respect of the taxable estate of the
same decedent or’’.
(19) Section 6513 is amended—
(A) by striking ‘‘(a) EARLY RETURN OR
ADVANCE PAYMENT OF TAX.—’’, and
(B) by striking subsections (b) through (e).
(20) Chapter 67 is amended by striking sub-
chapters A through D and inserting the following:
‘‘SEC. 6601. INTEREST ON OVERPAYMENTS AND UNDERPAY-
MENTS.
‘‘(a) UNDERPAYMENTS.—If any amount of tax im-
posed by this title is not paid on or before the last date
prescribed for payment, interest on such amount at the
Federal short-term rate (as defined in section 512(b))
shall be paid from such last date to the date paid.
‘‘(b) OVERPAYMENTS.—Interest shall be allowed and
paid upon any overpayment in respect of any internal rev-
enue tax at the Federal short-term rate (as defined in sec-
tion 512(b)) from 60 days after the date of the overpay-
ment until the date the overpayment is refunded.’’.
125
(21) Section 6651(a)(1) is amended by striking
‘‘subchapter A of chapter 61 (other than part III
thereof),’’.
(22) Section 6656 is amended by striking sub-
section (c) and by redesignating subsection (d) as
subsection (c).
(23) Section 6663 is amended by striking sub-
section (c).
(24) Section 6664(c) is amended—
(A) by striking ‘‘EXCEPTION.—’’ and all
that follows through ‘‘No penalty’’ and insert-
ing ‘‘EXCEPTION.—No penalty’’, and
(B) by striking paragraphs (2) and (3).
(25) Chapter 72 is amended by striking all
matter preceding section 7011.
(26) Section 7422 is amended by striking sub-
sections (h) and (i) and by redesignating subsections
(j) and (k) as subsections (h) and (i), respectively.
(27) Section 7451 is amended to read as fol-
lows:
‘‘SEC. 7451. FEE FOR FILING PETITION.
‘‘The Tax Court is authorized to impose a fee in an
amount not in excess of $60 to be fixed by the Tax Court
for the filing of any petition for the redetermination of
a deficiency.’’.
126
(28) Section 7454 is amended by striking sub-
section (b) and by redesignating subsection (c) as
subsection (b).
(29) Section 7463(a) is amended—
(A) by striking paragraphs (2) and (3),
(B) by redesignating paragraph (4) as
paragraph (2), and
(C) by striking ‘‘D’’ in paragraph (2) (as
so redesignated) and inserting ‘‘B’’.
(30) Section 7463(c) is amended by striking
‘‘sections 6214(a) and’’ and inserting ‘‘section’’.
(31) Section 7463(e) is amended by striking ‘‘,
to the extent that the procedures described in sub-
chapter B of chapter 63 apply’’.
(32) Section 7481 is amended by striking sub-
section (d).
(33) Section 7608 is amended by striking ‘‘sub-
title E’’ each place it appears and inserting ‘‘subtitle
C’’.
(34) Section 7651 is amended by striking para-
graph (5).
(35) Section 7701(a)(29) is amended by strik-
ing ‘‘1986’’ and inserting ‘‘2001’’.
(36) Section 7809(c) is amended by striking
paragraphs (1) and (4) and by redesignating para-
127
graphs (2) and (3) as paragraphs (1) and (2), re-
spectively.
(37) Section 7871(a) is amended by striking
paragraphs (1) and (3) through (6) and by redesig-
nating paragraphs (2) and (7) as paragraphs (1)
and (2), respectively.
(38) Section 7871 is amended by striking sub-
section (c) and by redesignating subsections (d) and
(e) as subsections (c) and (d), respectively.
(39) Section 8021 is amended by striking sub-
section (a) and by redesignating subsections (b)
through (f) as subsections (a) through (e), respec-
tively.
(40) Section 8022(a)(2)(A) is ammended by
striking ‘‘, particularly the income tax’’.
(41) Section 8023 is amended by striking ‘‘In-
ternal Revenue Service’’ each place it appears and
inserting ‘‘Department of the Treasury’’.
(42) Section 9501(b)(2) is amended by striking
subparagraph (C).
(43) Section 9702(a) is amended by striking
paragraph (4).
(44) Section 9705(a) is amended by striking
paragraph (4) and by redesignating paragraph (5)
as paragraph (4).
128
(45) Section 9706(d)(2)(A) is amended by
striking ‘‘6103’’ and inserting ‘‘605(e)’’.
(46) Section 9707 is amended by striking sub-
section (f).
(47) Section 9712(d) is amended by striking
paragraph (5) and by redesignating paragraph (6)
as paragraph (5).
(48) Section 9803(a) is amended by striking
‘‘(as defined in section 414(f))’’.
TITLE III—OTHER MATTERS
SEC. 301. PHASE-OUT OF ADMINISTRATION OF REPEALED
FEDERAL TAXES.
(a) APPROPRIATIONS.—Appropriations for any ex-
penses of the Internal Revenue Service including proc-
essing tax returns for years prior to the repeal of the taxes
repealed by title I of this Act, revenue accounting, man-
agement, transfer of payroll and wage data to the Social
Security Administration for years after fiscal year 2007
shall not be authorized.
(b) RECORDS.—Federal records related to the admin-
istration of taxes repealed by title I of this Act shall be
destroyed by the end of fiscal year 2007, except that any
records necessary to calculate social security benefits shall
be retained by the Social Security Administration and any
records necessary to support ongoing litigation with re-
129
spect to taxes owed or refunds due shall be retained until
final disposition of such litigation.
(c) CONFORMING AMENDMENTS.—Section 7802 is
amended—
(1) by striking subsections (a) and (b) and by
redesignating subsections (c) and (d) as subsections
(a) and (b),
(2) by striking ‘‘Internal Revenue Service’’ each
place it appears and inserting ‘‘Department of the
Treasury’’, and
(3) by striking ‘‘Commissioner’’ or ‘‘Commis-
sioner of Internal Revenue’’ each place they appear
and inserting ‘‘Secretary’’.
(d) EFFECTIVE DATE.—The amendments made by
subsection (c) shall take effect on January 1, 2007.
SEC. 302. ADMINISTRATION OF OTHER FEDERAL TAXES.
(a) IN GENERAL.—Section 7801 (relating to the au-
thority of the Department of the Treasury) is amended
by adding at the end the following:
‘‘(d) EXCISE TAX BUREAU.—There shall be in the
Department of the Treasury an Excise Tax Bureau to ad-
minister those excise taxes not administered by the Bu-
reau of Alcohol, Tobacco and Firearms.
‘‘(e) SALES TAX BUREAU.—There shall be in the De-
partment of the Treasury a Sales Tax Bureau to admin-
130
ister the national sales tax in those States where it is re-
quired pursuant to section 404, and to discharge other
Federal duties and powers relating to the national sales
tax (including those required by sections 402, 403, and
405). The Office of Revenue Allocation shall be within the
Sales Tax Bureau.’’.
(b) 
ASSISTANT
GENERAL
COUNSELS.—Section
7801(b)(2) is amended to read as follows:
‘‘(2) ASSISTANT
GENERAL
COUNSELS.—The
Secretary of the Treasury may appoint, without re-
gard to the provisions of the civil service laws, and
fix the duties of not more than 5 assistant general
counsels.’’.
SEC. 303. SALES TAX INCLUSIVE SOCIAL SECURITY BENE-
FITS INDEXATION.
Subparagraph (D) of section 215(i)(1) of the Social
Security Act (42 U.S.C. 415(i)(1)) (relating to cost-of-liv-
ing increases in social security benefits) is amended to
read as follows:
‘‘(D)(i) the term ‘CPI increase percentage’,
with respect to a base quarter or cost-of-living quar-
ter in any calendar year, means the percentage
(rounded to the nearest one-tenth of 1 percent) by
which the Consumer Price Index for that quarter (as
prepared by the Department of Labor) exceeds such
131
index for the most recent prior calendar quarter
which was a base quarter under subparagraph
(A)(ii) or, if later, the most recent cost-of-living
computation quarter under subparagraph (B);
‘‘(ii) if the Consumer Price Index (as so pre-
pared) does not include the national sales tax paid,
then the term ‘CPI increase percentage’, with re-
spect to a base quarter or cost-of-living quarter in
any calendar year, means the percentage (rounded
to the nearest one-tenth of 1 percent) by which the
product of—
‘‘(I) the Consumer Price Index for that
quarter (as so prepared), and
‘‘(II) the national sales tax factor,
exceeds such index for the most recent prior cal-
endar quarter which was a base quarter under sub-
paragraph (A)(ii) or, if later, the most recent cost
of living computation quarter under subparagraph
(B); and
‘‘(iii) the national sales tax factor is equal to 1
plus the quotient that is—
‘‘(I) the sales tax rate imposed by section
101 of the Internal Revenue Code of 2001, di-
vided by
132
‘‘(II) the quantity that is 1 minus such
sales tax rate.’’.
Æ