H. R. 2488—98 
(A) by striking ‘‘, or under section 907(f ) (relating 
to carryback and carryover of disallowed oil and gas extrac-
tion taxes)’’, and 
(B) by striking ‘‘or 907(f )’’. 
(5) The table of sections for subpart A of part III of sub-
chapter N of chapter 1 is amended by striking the item relating 
to section 907. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 2007. 
SEC. 909. ADVANCE PRICING AGREEMENTS TREATED AS CONFIDEN-
TIAL TAXPAYER INFORMATION. 
(a) IN GENERAL.— 
(1) TREATMENT AS RETURN INFORMATION.—Paragraph (2) 
of section 6103(b) (defining return information) is amended 
by striking ‘‘and’’ at the end of subparagraph (A), by inserting 
‘‘and’’ at the end of subparagraph (B), and by inserting after 
subparagraph (B) the following new subparagraph: 
‘‘(C) any advance pricing agreement entered into by 
a taxpayer and the Secretary and any background informa-
tion related to such agreement or any application for an 
advance pricing agreement,’’. 
(2) EXCEPTION FROM PUBLIC INSPECTION AS WRITTEN DETER-
MINATION.—Paragraph (1) of section 6110(b) (defining written 
determination) is amended by adding at the end the following 
new sentence: ‘‘Such term shall not include any advance pricing 
agreement entered into by a taxpayer and the Secretary and 
any background information related to such agreement or any 
application for an advance pricing agreement.’’. 
(3) EFFECTIVE DATE.—The amendments made by this sub-
section shall take effect on the date of the enactment of this 
Act. 
(b) ANNUAL REPORT REGARDING ADVANCE PRICING AGREE-
MENTS.— 
(1) IN GENERAL.—Not later than 90 days after the end 
of each calendar year, the Secretary of the Treasury shall 
prepare and publish a report regarding advance pricing agree-
ments. 
(2) CONTENTS OF REPORT.—The report shall include the 
following for the calendar year to which such report relates: 
(A) Information about the structure, composition, and 
operation of the advance pricing agreement program office. 
(B) A copy of each model advance pricing agreement. 
(C) The number of— 
(i) applications filed during such calendar year 
for advanced pricing agreements; 
(ii) advance pricing agreements executed cumula-
tively to date and during such calendar year; 
(iii) renewals of advanced pricing agreements 
issued; 
(iv) pending requests for advance pricing agree-
ments; 
(v) pending renewals of advance pricing agree-
ments; 
(vi) for each of the items in clauses (ii) through 
(v), the number that are unilateral, bilateral, and 
multilateral, respectively; 
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H. R. 2488—99 
(vii) advance pricing agreements revoked or can-
celed, and the number of withdrawals from the advance 
pricing agreement program; and 
(viii) advanced pricing agreements finalized or 
renewed by industry. 
(D) General descriptions of— 
(i) the nature of the relationships between the 
related organizations, trades, or businesses covered by 
advance pricing agreements; 
(ii) the covered transactions and the business func-
tions performed and risks assumed by such organiza-
tions, trades, or businesses; 
(iii) the related organizations, trades, or businesses 
whose prices or results are tested to determine compli-
ance with transfer pricing methodologies prescribed 
in advanced pricing agreements; 
(iv) methodologies used to evaluate tested parties 
and transactions and the circumstances leading to the 
use of those methodologies; 
(v) critical assumptions made and sources of 
comparables used; 
(vi) comparable selection criteria and the rationale 
used in determining such criteria; 
(vii) the nature of adjustments to comparables or 
tested parties; 
(viii) the nature of any ranges agreed to, including 
information regarding when no range was used and 
why, when interquartile ranges were used, and when 
there was a statistical narrowing of the comparables; 
(ix) adjustment mechanisms provided to rectify 
results that fall outside of the agreed upon advance 
pricing agreement range; 
(x) the various term lengths for advance pricing 
agreements, including rollback years, and the number 
of advance pricing agreements with each such term 
length; 
(xi) the nature of documentation required; and 
(xii) approaches for sharing of currency or other 
risks. 
(E) Statistics regarding the amount of time taken to 
complete new and renewal advance pricing agreements. 
(F) A detailed description of the Secretary of the Treas-
ury’s efforts to ensure compliance with existing advance 
pricing agreements. 
(3) CONFIDENTIALITY.—The reports required by this sub-
section shall be treated as authorized by the Internal Revenue 
Code of 1986 for purposes of section 6103 of such Code, but 
the reports shall not include information— 
(A) which would not be permitted to be disclosed under 
section 6110(c) of such Code if such report were a written 
determination as defined in section 6110 of such Code, 
or 
(B) which can be associated with, or otherwise identify, 
directly or indirectly, a particular taxpayer. 
(4) FIRST REPORT.—The report for calendar year 1999 shall 
include prior calendar years after 1990. 
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H. R. 2488—100 
(c) USER FEE.—Section 7527, as added by title XV of this 
Act, is amended by redesignating subsection (c) as subsection (d) 
and by inserting after subsection (b) the following new subsection: 
‘‘(c) ADVANCE PRICING AGREEMENTS.— 
‘‘(1) IN GENERAL.—In addition to any fee otherwise imposed 
under this section, the fee imposed for requests for advance 
pricing agreements shall be increased by $500. 
‘‘(2) REDUCED FEE FOR SMALL BUSINESSES.—The Secretary 
shall provide an appropriate reduction in the amount imposed 
by reason of paragraph (1) for requests for advance pricing 
agreements for small businesses.’’. 
(d) REGULATIONS.—The Secretary of the Treasury or the Sec-
retary’s delegate shall prescribe such regulations as may be nec-
essary or appropriate to carry out the purposes of section 
6103(b)(2)(C), and the last sentence of section 6110(b)(1), of the 
Internal Revenue Code of 1986, as added by this section. 
SEC. 910. INCREASE IN DOLLAR LIMITATION ON SECTION 911 EXCLU-
SION. 
(a) GENERAL RULE.—The table contained in clause (i) of section 
911(b)(2)(D) is amended to read as follows: 
‘‘For calendar year— 
The exclusion 
amount is— 
2000 ...................................................................................................
$76,000
2001 ...................................................................................................
78,000
2002 ...................................................................................................
80,000
2003 ...................................................................................................
83,000
2004 ...................................................................................................
86,000
2005 ...................................................................................................
89,000
2006 ...................................................................................................
92,000
2007 and thereafter ..........................................................................
95,000.’’.
(b) 
CONFORMING
AMENDMENT.—Clause 
(ii) 
of 
section 
911(b)(2)(D) is amended by striking ‘‘$80,000’’ and inserting 
‘‘$95,000’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 1999. 
SEC. 911. AIRLINE MILEAGE AWARDS TO CERTAIN FOREIGN PERSONS. 
(a) IN GENERAL.—Paragraph (3) of section 4261(e) is amended 
by redesignating subparagraph (C) as subparagraph (D) and by 
inserting after subparagraph (B) the following new subparagraph: 
‘‘(C) MILEAGE AWARDS ISSUED TO INDIVIDUALS RESIDING 
OUTSIDE THE UNITED STATES.—The tax imposed by sub-
section (a) shall not apply to amounts attributable to mile-
age awards credited to individuals whose mailing addresses 
on record with the person providing the right to air 
transportation are outside the United States.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to amounts paid after December 31, 2004. 
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H. R. 2488—101 
TITLE X—PROVISIONS RELATING TO 
TAX-EXEMPT ORGANIZATIONS 
SEC. 1001. EXEMPTION FROM INCOME TAX FOR STATE-CREATED 
ORGANIZATIONS PROVIDING PROPERTY AND CASUALTY 
INSURANCE FOR PROPERTY FOR WHICH SUCH COV-
ERAGE IS OTHERWISE UNAVAILABLE. 
(a) IN GENERAL.—Subsection (c) of section 501 (relating to 
exemption from tax on corporations, certain trusts, etc.) is amended 
by adding at the end the following new paragraph: 
‘‘(28)(A) Any association created before January 1, 1999, 
by State law and organized and operated exclusively to provide 
property and casualty insurance coverage for property located 
within the State for which the State has determined that cov-
erage in the authorized insurance market is limited or unavail-
able at reasonable rates, if— 
‘‘(i) no part of the net earnings of which inures to 
the benefit of any private shareholder or individual, 
‘‘(ii) except as provided in clause (v), no part of the 
assets of which may be used for, or diverted to, any purpose 
other than— 
‘‘(I) to satisfy, in whole or in part, the liability 
of the association for, or with respect to, claims made 
on policies written by the association, 
‘‘(II) to invest in investments authorized by 
applicable law, 
‘‘(III) to pay reasonable and necessary administra-
tion expenses in connection with the establishment 
and operation of the association and the processing 
of claims against the association, or 
‘‘(IV) to make remittances pursuant to State law 
to be used by the State to provide for the payment 
of claims on policies written by the association, pur-
chase reinsurance covering losses under such policies, 
or to support governmental programs to prepare for 
or mitigate the effects of natural catastrophic events, 
‘‘(iii) the State law governing the association permits 
the association to levy assessments on insurance companies 
authorized to sell property and casualty insurance in the 
State, or on property and casualty insurance policyholders 
with insurable interests in property located in the State 
to fund deficits of the association, including the creation 
of reserves, 
‘‘(iv) the plan of operation of the association is subject 
to approval by the chief executive officer or other official 
of the State, by the State legislature, or both, and 
‘‘(v) the assets of the association revert upon dissolution 
to the State, the State’s designee, or an entity designated 
by the State law governing the association, or State law 
does not permit the dissolution of the association. 
‘‘(B)(i) An entity described in clause (ii) shall be disregarded 
as a separate entity and treated as part of the association 
described in subparagraph (A) from which it receives remit-
tances described in clause (ii) if an election is made within 
30 days after the date that such association is determined 
to be exempt from tax. 
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