In the House of Representatives, U. S.,
December 13, 2001.
Resolved, That the House agree to the amendments of
the Senate to the bill (H.R. 2884) entitled ‘‘An Act to amend
the Internal Revenue Code of 1986 to provide tax relief for
victims of the terrorist attacks against the United States on
September 11, 2001’’, with the following
HOUSE AMENDMENT TO SENATE AMENDMENTS:
In lieu of the matter proposed to be inserted by the
Senate amendment to the text of the bill, insert the fol-
lowing:
SECTION 1. SHORT TITLE; ETC.
(a) SHORT TITLE.—This Act may be cited as the ‘‘Vic-
tims of Terrorism Tax Relief Act of 2001’’.
(b) AMENDMENT OF 1986 CODE.—Except as otherwise
expressly provided, whenever in this Act an amendment or
repeal is expressed in terms of an amendment to, or repeal
of, a section or other provision, the reference shall be consid-
ered to be made to a section or other provision of the Inter-
nal 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—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.
TITLE II—OTHER RELIEF PROVISIONS
Sec. 201. Exclusion for disaster relief payments.
Sec. 202. Authority to postpone certain deadlines and required actions.
Sec. 203. Application of certain provisions to terroristic or military actions.
Sec. 204. Clarification of due date for airline excise tax deposits.
Sec. 205. Treatment of certain structured settlement payments.
Sec. 206. Personal exemption deduction for certain disability trusts.
TITLE III—TAX BENEFITS FOR AREA OF NEW YORK CITY
DAMAGED IN TERRORIST ATTACKS ON SEPTEMBER 11, 2001
Sec. 301. Tax benefits for area of New York City damaged in terrorist attacks on
September 11, 2001.
TITLE IV—DISCLOSURE OF TAX INFORMATION IN TERRORISM AND
NATIONAL SECURITY INVESTIGATIONS
Sec. 401. Disclosure of tax information in terrorism and national security inves-
tigations.
TITLE V—NO IMPACT ON SOCIAL SECURITY TRUST FUNDS
Sec. 501. No impact on social security trust funds.
TITLE 
I—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 ter-
rorist 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 (2) were incurred.
‘‘(2) 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
‘‘(B) who dies as a result of illness incurred
as a result of an attack involving anthrax occur-
ring on or after September 11, 2001, and before
January 1, 2002.
Such term shall not include any individual identified
by the Attorney General to have been a participant
or conspirator in any such attack or a representative
of such an individual.’’.
of any law or rule of law (including res judicata),
such refund or credit may nevertheless be made or al-
lowed 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 PAYABLE
BY REASON OF DEATH OF CERTAIN TERRORIST VICTIMS.—
‘‘(1) IN GENERAL.—Gross income does not in-
clude amounts (whether in a single sum or otherwise)
paid by an employer by reason of the death of an em-
ployee who is a specified terrorist victim (as defined
in section 692(d)(2)).
‘‘(2) LIMITATION.—Subject to such rules as the
Secretary may prescribe, paragraph (1) shall not
apply to amounts which would have been payable if
the individual had died other than as a specified ter-
rorist victim (as so defined).
‘‘(3) TREATMENT OF SELF-EMPLOYED INDIVID-
UALS.—For purposes of paragraph (1), the term ‘em-
ployee’ 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 cred-
it 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 beginning on
the date of the enactment of this Act by the operation
of any law or rule of law (including res judicata),
such refund or credit may nevertheless be made or al-
lowed 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 schedule 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 sec-
tion, 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 while
in the line of duty, by reason of a hazard to
which such decedent was subjected as an incident
of such service, and
‘‘(2) any specified terrorist victim (as defined in
section 692(d)(2)).
‘‘(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.
‘‘If the amount with respect to
which the tentative tax to
be computed is:
The tentative tax is:
Over 
$2,100,000 
but 
not 
over
$2,600,000.
$133,500 plus 10 percent of the excess
over $2,100,000.
Over 
$2,600,000 
but 
not 
over
$3,100,000.
$183,500 plus 11 percent of the excess
over $2,600,000.
Over 
$3,100,000 
but 
not 
over
$3,600,000.
$238,500 plus 12 percent of the excess
over $3,100,000.
Over 
$3,600,000 
but 
not 
over
$4,100,000.
$298,500 plus 13 percent of the excess
over $3,600,000.
Over 
$4,100,000 
but 
not 
over
$5,100,000.
$363,500 plus 14 percent of the excess
over $4,100,000.
Over 
$5,100,000 
but 
not 
over
$6,100,000.
$503,500 plus 15 percent of the excess
over $5,100,000.
Over 
$6,100,000 
but 
not 
over
$7,100,000.
$653,500 plus 16 percent of the excess
over $6,100,000.
Over 
$7,100,000 
but 
not 
over
$8,100,000.
$813,500 plus 17 percent of the excess
over $7,100,000.
Over 
$8,100,000 
but 
not 
over
$9,100,000.
$983,500 plus 18 percent of the excess
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.
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 sec-
tion 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
(B) in the case of individuals dying as a re-
sult of the April 19, 1995, terrorist attack, dying
on or after April 19, 1995.
(2) WAIVER OF LIMITATIONS.—If refund or cred-
it 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 beginning on
the date of the enactment of this Act by the operation
of any law or rule of law (including res judicata),
such refund or credit may nevertheless be made or al-
lowed 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 described
in section 501(c)(3) of such Code by reason of the
death, injury, wounding, or illness of an individual
incurred as the result of the terrorist attacks against
the United States on September 11, 2001, or an at-
tack involving anthrax occurring on or after Sep-
tember 11, 2001, and before January 1, 2002, shall
be treated as related to the purpose or function consti-
tuting the basis for such organization’s exemption
under section 501 of such Code if such payments are
made—
(A) in good faith using a reasonable and
objective formula which is consistently applied,
and
(B) in furtherance of public rather than
private purposes, 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.
TITLE II—OTHER RELIEF
PROVISIONS
SEC. 201. EXCLUSION FOR DISASTER RELIEF PAYMENTS.
(a) IN GENERAL.—Part III of subchapter B of chapter
1 (relating to items specifically excluded from gross income)
is amended by redesignating section 139 as section 140 and
inserting after section 138 the following new section:
‘‘SEC. 139. DISASTER RELIEF PAYMENTS.
‘‘(a) GENERAL RULE.—Gross income shall not include
any amount received by an individual as a qualified dis-
aster 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,
‘‘(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 re-
pair, 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,
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 deter-
mined 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 disaster
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 indi-
vidual identified by the Attorney General to have been a
participant or conspirator in a terroristic action (as so de-
fined), 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 sections
for part III of subchapter B of chapter 1 is amended 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 Sep-
tember 11, 2001.
SEC. 202. 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 MILI-
TARY 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 ter-
roristic 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 rev-
enue 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
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 disaster
or action described in subsection (a), the Secretary may
specify 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 title. No plan shall
be treated as failing to be operated in accordance with the
terms of the plan solely as the result of disregarding 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
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 Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1131 et seq.) is amended by adding at the end the fol-
lowing 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 ter-
roristic or military action (as defined in section 692(c)(2)
of such Code), the Secretary may, notwithstanding any
other provision of law, prescribe, by notice or otherwise, a
period of up to one year which may be disregarded in deter-
mining the date by which any action is required or per-
mitted to be completed under this Act. No plan shall be
treated as failing to be operated in accordance with the
terms of the plan solely as the result of disregarding any
period by reason of the preceding sentence.’’.
(2) Section 4002 of Employee Retirement Income
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, beneficiary, or
other person with respect to such plan, affected by a Presi-
dentially 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, notwithstanding any other pro-
vision 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 accordance with the terms of the
plan solely as the result of disregarding any period by rea-
son of the preceding sentence.’’.
(d) ADDITIONAL CONFORMING AMENDMENTS.—
(1) Section 6404 is amended—
(A) by striking subsection (h),
(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.’’.
(d) 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
inserting after the item relating to section 517 the fol-
lowing new item:
‘‘Sec. 518. Authority to postpone certain deadlines by reason of
Presidentially declared disaster or terroristic or
military actions.’’.
(e) EFFECTIVE DATE.—The amendments made by this
section shall apply to disasters and terroristic or military
actions occurring on or after September 11, 2001, with re-
spect to any action of the Secretary of the Treasury, the
Secretary of Labor, or the Pension Benefit Guaranty Cor-
poration occurring on or after the date of the enactment
of this Act.
SEC. 203. APPLICATION OF CERTAIN PROVISIONS TO TER-
RORISTIC OR MILITARY ACTIONS.
(a) DISABILITY INCOME.—Section 104(a)(5) (relating
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.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years ending on or after Sep-
tember 11, 2001.
SEC. 204. 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 purposes
of this subsection, the term ‘airline-related deposit’
means any deposit of taxes imposed by subchapter 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. 205. 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.
‘‘SEC. 5891. STRUCTURED SETTLEMENT FACTORING TRANS-
ACTIONS.
‘‘(a) IMPOSITION OF TAX.—There is hereby imposed on
any person who acquires directly or indirectly structured
settlement payment rights in a structured settlement fac-
toring 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 settlement
factoring transaction in which the transfer of struc-
tured settlement payment rights is approved in ad-
vance 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
‘‘(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 juris-
diction over the underlying action or pro-
ceeding 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 sub-
paragraph (A), the State in which either the
party to the structured settlement (including an
assignee under a qualified assignment under sec-
tion 130) or the person issuing the funding asset
for the structured settlement is domiciled or has
its principal place of business.
‘‘(4) APPLICABLE STATE COURT.—For purposes
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 ap-
plicable State statute described in paragraph
(3)(B), such term also includes a court of the
State in which the payee of the structured settle-
ment 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
‘‘(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 person
who has assumed the liability for such peri-
odic payments under a qualified assignment
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-
cluding portions of structured settlement pay-
ments) made for consideration by means of sale,
assignment, pledge, or other form of encumbrance
or alienation for consideration.
‘‘(B) EXCEPTION.—Such term shall not
include—
‘‘(i) the creation or perfection of a se-
curity interest in structured settlement pay-
ment rights under a blanket security agree-
ment entered into with an insured deposi-
tory institution in the absence of any action
to redirect the structured settlement pay-
ments to such institution (or agent or suc-
cessor 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 ‘factoring
discount’ means an amount equal to the excess of—
‘‘(A) the aggregate undiscounted amount of
structured settlement payments being acquired 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 authority’
means the administrative authority which had juris-
diction over the underlying action or proceeding
which was resolved by means of the structured settle-
ment.
‘‘(6) STATE.—The term ‘State’ includes the Com-
monwealth 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 settle-
ment involving structured settlement payment rights
was entered into, the subsequent occurrence of a struc-
tured settlement factoring transaction shall not affect
the application of the provisions of such sections to
the parties to the structured settlement (including an
assignee under a qualified assignment under section
130) in any taxable year.
‘‘(2) NO WITHHOLDING OF TAX.—The provisions
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 following
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 settle-
ment 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 on or after such 30th day.
(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 end-
ing on July 1, 2002, no tax shall be imposed under
section 5891(a) of such Code if—
(A) the structured settlement payee is domi-
ciled in a State (or possession of the United
States) which has not enacted a statute pro-
viding that the structured settlement factoring
transaction is ineffective unless the transaction
has been approved by an order, judgment, or de-
cree of a court (or where applicable, a respon-
sible 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 set-
tlement payment rights discloses to the struc-
tured settlement payee in advance of the struc-
tured 
settlement 
factoring 
transaction 
the
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 re-
quired under the terms of the structured settle-
ment factoring transaction to be paid by the
structured settlement payee or deducted from the
proceeds of such transaction.
SEC. 206. PERSONAL EXEMPTION DEDUCTION FOR CERTAIN
DISABILITY TRUSTS.
(a) IN GENERAL.—Subsection (b) of section 642 (relat-
ing to deduction for personal exemption) is amended to read
as follows:
‘‘(b) DEDUCTION FOR PERSONAL EXEMPTION.—
‘‘(1) ESTATES.—An estate shall be allowed a de-
duction of $600.
‘‘(2) TRUSTS.—
‘‘(A) IN
GENERAL.—Except as otherwise
provided in this paragraph, a trust shall be al-
lowed a deduction of $100.
‘‘(B) TRUSTS DISTRIBUTING INCOME CUR-
RENTLY.—A trust which, under its governing in-
strument, is required to distribute all of its in-
come 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), (d)(4)(A), or (d)(4)(C) of
section 1917 of the 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 to have been disabled
(within 
the 
meaning 
of 
section
1614(a)(3) of the Social Security Act,
42 U.S.C. 1382c(a)(3)) for some por-
tion 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 EXEMP-
TION.—The deductions allowed by this subsection
shall be in lieu of the deductions allowed under sec-
tion 151 (relating to deduction for personal exemp-
tion).’’.
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply to taxable years ending on or after Sep-
tember 11, 2001.
TITLE III—TAX BENEFITS FOR
AREA OF NEW YORK CITY
DAMAGED IN TERRORIST AT-
TACKS 
ON 
SEPTEMBER 
11,
2001
SEC. 301. TAX BENEFITS FOR AREA OF NEW YORK CITY
DAMAGED IN TERRORIST ATTACKS ON SEP-
TEMBER 11, 2001.
(a) IN GENERAL.—Chapter 1 is amended by adding
at the end the following new subchapter:
‘‘Subchapter Y—New York Liberty Zone
Benefits
‘‘Sec. 1400L. Tax benefits for New York Liberty Zone.
‘‘SEC. 1400L. TAX BENEFITS FOR NEW YORK LIBERTY ZONE.
‘‘(a) SPECIAL ALLOWANCE FOR CERTAIN PROPERTY
ACQUIRED AFTER SEPTEMBER 10, 2001.—
‘‘(1) ADDITIONAL ALLOWANCE.—In the case of
any qualified New York Liberty Zone property—
‘‘(A) the depreciation deduction provided by
section 167(a) for the taxable year in which such
property is placed in service shall include an al-
lowance equal to 30 percent of the adjusted basis
of such property, and
‘‘(B) the adjusted basis of the qualified New
York Liberty Zone property shall be reduced by
the amount of such deduction before computing
the amount otherwise allowable as a depreciation
deduction under this chapter for such taxable
year and any subsequent taxable year.
‘‘(2) QUALIFIED NEW YORK LIBERTY ZONE PROP-
ERTY.—For purposes of this subsection—
‘‘(A) IN
GENERAL.—The term ‘qualified
New 
York 
Liberty 
Zone 
property’ 
means
property—
‘‘(i)(I) to which section 168 applies
(other than railroad grading and tunnel
bores), or
‘‘(II) which is computer software (as
defined in section 167(f)(1)(B)) for which a
deduction is allowable under section 167(a)
without regard to this subsection,
‘‘(ii) substantially all of the use of
which is in the New York Liberty Zone and
is in the active conduct of a trade or busi-
ness by the taxpayer in such Zone,
‘‘(iii) the original use of which in the
New York Liberty Zone commences with the
taxpayer after September 10, 2001, and
‘‘(iv) which is acquired by the tax-
payer by purchase (as defined in section
179(d)) after September 10, 2001, and
placed in service by the taxpayer on or be-
fore the termination date, but only if no
written binding contract for the acquisition
was in effect before September 11, 2001.
The term ‘termination date’ means December 31,
2006 (December 31, 2009, in the case of nonresi-
dential real property and residential rental
property).
‘‘(B) EXCEPTIONS.—
‘‘(i) 
ALTERNATIVE
DEPRECIATION
PROPERTY.—The term ‘qualified New York
Liberty Zone property’ shall not include
any property to which the alternative de-
preciation system under section 168(g) ap-
plies, determined—
‘‘(I) without regard to paragraph
(7) of section 168(g) (relating to elec-
tion to have system apply), and
‘‘(II) after application of section
280F(b) (relating to listed property
with limited business use).
‘‘(ii) QUALIFIED LEASEHOLD IMPROVE-
MENT PROPERTY.—Such term shall not in-
clude qualified leasehold improvement prop-
erty.
‘‘(iii) ELECTION OUT.—If a taxpayer
makes an election under this clause with re-
spect to any class of property for any tax-
able year, this subsection shall not apply to
all property in such class placed in service
during such taxable year.
‘‘(C) SPECIAL RULES RELATING TO ORIGI-
NAL USE.—
‘‘(i) SELF-CONSTRUCTED PROPERTY.—
In the case of a taxpayer manufacturing,
constructing, or producing property for the
taxpayer’s own use, the requirements of
clause (iv) of subparagraph (A) shall be
treated as met if the taxpayer begins manu-
facturing, constructing, or producing the
property after September 10, 2001, and be-
fore the termination date.
‘‘(ii) 
SALE-LEASEBACKS.—For 
pur-
poses 
of 
subparagraph 
(A)(iii), 
if
property—
‘‘(I) is originally placed in service
after September 10, 2001, by a person,
and
‘‘(II) sold and leased back by such
person within 3 months after the date
such property was originally placed in
service,
such property shall be treated as originally
placed in service not earlier than the date
on which such property is used under the
leaseback referred to in subclause (II).
‘‘(D) ALLOWANCE
AGAINST
ALTERNATIVE
MINIMUM TAX.—The deduction allowed by this
subsection shall be allowed in determining alter-
native minimum taxable income under section
55.
‘‘(b) 5-YEAR RECOVERY PERIOD FOR DEPRECIATION
OF CERTAIN LEASEHOLD IMPROVEMENTS.—
‘‘(1) IN GENERAL.—For purposes of section 168,
the term ‘5-year property’ includes any qualified
leasehold improvement property.
‘‘(2) 
QUALIFIED
LEASEHOLD
IMPROVEMENT
PROPERTY.—For purposes of this section—
‘‘(A) IN
GENERAL.—The term ‘qualified
leasehold improvement property’ means any im-
provement to an interior portion of a building
which is nonresidential real property if—
‘‘(i) such building is located in the
New York Liberty Zone,
‘‘(ii) such improvement is made under
or pursuant to a lease (as defined in section
168(h)(7))—
‘‘(I) by the lessee (or any subles-
see) of such portion, or
‘‘(II) by the lessor of such portion,
‘‘(iii) such portion is to be occupied ex-
clusively by the lessee (or any sublessee) of
such portion,
‘‘(iv) such improvement is placed in
service—
‘‘(I) after September 10, 2001,
and more than 3 years after the date
the building was first placed in service,
and
‘‘(II) before January 1, 2007, and
‘‘(v) no written binding contract for
such improvement was in effect before Sep-
tember 11, 2001.
‘‘(B) CERTAIN
IMPROVEMENTS
NOT
IN-
CLUDED.—Such term shall not include any im-
provement for which the expenditure is attrib-
utable to—
‘‘(i) the enlargement of the building,
‘‘(ii) any elevator or escalator,
‘‘(iii) any structural component bene-
fiting a common area, and
‘‘(iv) the internal structural framework
of the building.
‘‘(C) DEFINITIONS AND SPECIAL RULES.—
For purposes of this paragraph—
‘‘(i) COMMITMENT TO LEASE TREATED
AS LEASE.—A commitment to enter into a
lease shall be treated as a lease, and the
parties to such commitment shall be treated
as lessor and lessee, respectively.
‘‘(ii) RELATED PERSONS.—A lease be-
tween related persons shall not be considered
closure may be made under this paragraph 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.
TITLE V—NO IMPACT ON SOCIAL
SECURITY TRUST FUNDS
SEC. 501. 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 pro-
mulgated 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 bal-
ances of the trust funds established under section 201
of the Social Security Act (42 U.S.C. 401).
(2) TRANSFER OF FUNDS.—If, under paragraph
(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 established