458 
with the rules of this chapter and shall be dependent upon 
allocations made under subsection (a). In general, consid-
eration allocable to savings assets, such as stock in an-
other business entity, would not be included in taxable re-
ceipts of the transferor and would not be a business pur-
chase of the purchaser, but consideration allocable to the 
sale of tangible property and intangible property (other 
than savings assets) will constitute taxable receipts of the 
seller and a business purchase of the purchaser. 
‘‘(c) ELECTION TO TREAT ASSET ACQUISITION AS A 
STOCK ACQUISITION.—In the case of the sale of substan-
tially all of the assets of a business entity or substantially 
all of the assets of a line of business or a separately stand-
ing business of a business entity, the transferee and trans-
feror can jointly elect to treat the acquisition as if it were 
an acquisition of the stock of a business entity holding 
the assets so transferred. In such case, the rules of section 
213 shall apply. 
‘‘(d) AUTHORITY TO REQUIRE ALLOCATION AGREE-
MENT AND NOTICE TO THE SECRETARY.—If the Sec-
retary determines that certain types of asset acquisitions 
have significant possibilities of tax avoidance, the Sec-
retary may require— 
‘‘(1) parties to such types of acquisitions to 
enter into agreements allocating consideration, 
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‘‘(2) parties to acquisitions involving certain 
kinds of assets to enter into agreements allocating 
part of the consideration to those assets, or 
‘‘(3) parties to certain acquisitions to report in-
formation to the Secretary. 
‘‘(e) ASSET ACQUISITION RULES DO NOT APPLY IF 
CONSIDERATION INCLUDES EQUITY IN PURCHASER.— 
‘‘(1) IN GENERAL.—If a business entity issues 
its own equity or equity in a subsidiary or other con-
trolled entity as part of the consideration for the 
transfer of assets to it, the transaction shall be 
treated as a business purchase and not as an asset 
acquisition, and the taxpayer shall not be entitled to 
a loss carryover for any unused deduction attrib-
utable to the equity portion of such transfer. 
‘‘(2) EQUITY.—For purposes of this subsection, 
equity means— 
‘‘(A) stock, in the case of a corporation, 
‘‘(B) partnership or similar interest, in the 
case of a partnership or limited liability com-
pany, and 
‘‘(C) an ownership interest or interest in 
profits in the case of any other business entity. 
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‘‘SEC. 213. MERGERS AND STOCK ACQUISITIONS. 
‘‘(a) MERGERS.—A merger of one business entity 
into another or two businesses entities into a third busi-
ness entity or any other similar transaction shall have no 
direct consequences under the business consumption tax. 
The surviving entity shall assume the tax attributes of the 
merged corporations, including any loss carryovers and 
credit carryovers. 
‘‘(b) STOCK ACQUISITION.—The acquisition of all or 
substantially all of the ownership interest in one business 
entity either for cash or in exchange for ownership in the 
acquiring entity or an entity controlled by the acquired 
entity shall have no direct consequences under the busi-
ness consumption tax. 
‘‘SEC. 214. SPIN-OFFS, SPLIT-OFFS, ETC. 
‘‘A spin-off, split-off or split-up of a business entity 
shall have no direct tax consequences under the business 
consumption tax. 
‘‘SEC. 215. ALLOCATION OF CERTAIN TAX ATTRIBUTES. 
‘‘The Secretary shall prescribe rules for allocation of 
loss carryovers in cases of substantial shifts of assets from 
one business entity to another business entity. Under such 
rules, a portion of a business entity’s carryovers may be 
deemed transferred when assets are transferred. 
‘‘Subchapter D—Accounting Method Rules 
‘‘Sec. 220. General accounting rules. 
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‘‘Sec. 221. Use of the cash method of accounting. 
‘‘Sec. 222. Taxable year. 
‘‘Sec. 223. Long-term contracts. 
‘‘Sec. 224. Post-sale price adjustments and refunds. 
‘‘Sec. 225. Bad debts. 
‘‘Sec. 226. Transition rules. 
‘‘SEC. 220. GENERAL ACCOUNTING RULES. 
‘‘(a) IN GENERAL.—Except as provided in section 
221, a business entity shall use an accrual method of ac-
counting for purposes of determining the timing of rec-
ognition of taxable receipts and deduction of business pur-
chases. All business purchases shall be deducted when in-
curred (in the case of a business entity using the accrual 
method of accounting) or when paid (in case of a business 
entity using the cash method of accounting) without re-
gard to whether the business purchases are for or relate 
to— 
‘‘(1) inventory, 
‘‘(2) assets with a useful life of more than one 
year, or 
‘‘(3) property that will be used to produce other 
property. 
‘‘(b) ECONOMIC PERFORMANCE.—For purposes of 
determining whether an amount has been incurred, the all 
events test shall not be treated as met any earlier than 
when economic performance with respect to such item oc-
curs. 
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‘‘(c) CONSISTENT ACCOUNTING METHODS.—Except 
as otherwise expressly provided in this chapter, a business 
entity shall secure the consent of the Secretary before 
changing the method of accounting by which it determines 
gross profits. This provision shall not apply to changes 
required by the adoption of the business consumption tax. 
‘‘SEC. 221. USE OF THE CASH METHOD OF ACCOUNTING. 
‘‘(a) IN GENERAL.—A business entity that was per-
mitted to use and used the cash method of accounting 
under the Internal Revenue Code of 1986 shall be per-
mitted to continue to use the cash method of accounting. 
‘‘(b) NEW BUSINESS ENTITIES.—A new business en-
tity shall be permitted to use the cash method of account-
ing if permitted to under regulations prescribed by the 
Secretary. 
‘‘(c) CHANGE OR EXPANSION OF BUSINESS.—Sub-
section (a) shall cease to apply to a business entity that 
changes or expands its business such that under regula-
tions prescribed by the Secretary it is no longer eligible 
to use the cash method of accounting. 
‘‘(d) REGULATIONS.— 
‘‘(1) USE OF CASH METHOD.—The Secretary 
shall prescribe regulations defining which business 
entities may use the cash method of accounting. In 
general, those regulations shall be consistent with 
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the rules under sections 447 and 448 of the Internal 
Revenue Code of 1986. The regulations shall not re-
quire a business entity described in subsection (a) to 
convert to the accrual method prior to January 1, 
2012. 
‘‘(2) CHANGE IN ACCOUNTING METHOD.—The 
Secretary shall prescribe regulations to prevent dou-
ble counting of taxable receipts and deductible ex-
penses in the case of a change in accounting method. 
‘‘SEC. 222. TAXABLE YEAR. 
‘‘(a) COMPUTATION
OF
GROSS
PROFITS.—Gross 
profits shall be computed on the basis of a business enti-
ty’s taxable year. 
‘‘(b) TAXABLE YEAR.—‘Taxable year’ means— 
‘‘(1) the taxpayer’s annual accounting period, if 
it is a calendar year or a fiscal year; 
‘‘(2) the calendar year, if subsection (g) applies; 
or 
‘‘(3) the period for which the return is made if 
the return is made for a period of less than 12 
months. 
‘‘(c) ANNUAL ACCOUNTING PERIOD.—‘Annual ac-
counting period’ means the annual period on the basis of 
which the business entity regularly keeps its books. 
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‘‘(d) CALENDAR YEAR.—‘Calendar year’ means a pe-
riod of 12 months ending on December 31. 
‘‘(e) FISCAL YEAR.—‘Fiscal year’ means a period of 
12 months ending on the last day of any month other than 
December. In the case of any business entity that has 
made the election provided by subsection (f), the term 
means the annual period (varying from 52 to 53 weeks) 
so elected. 
‘‘(f) ELECTION OF 52–53 WEEK YEAR.— 
‘‘(1) GENERAL RULE.—A business entity which, 
in keeping its books, regularly computes its income 
or profits on a basis of an annual period which var-
ies from 52 to 53 weeks and ends always on the 
same day of the week and ends always— 
‘‘(A) on whatever date such same day of 
the week last occurs in a calendar month, or 
‘‘(B) on whatever date such same day of 
the week falls which is nearest to the last day 
of a calendar month, may elect to compute its 
gross profits on the basis of such annual period. 
‘‘(2) REGULATIONS.—The Secretary shall pre-
scribe such regulations as he deems necessary for 
the application of this subsection, including regula-
tions relating to the application of effective dates to 
taxpayers using a 52–53 week year. 
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‘‘(g) CALENDAR YEAR REQUIRED.— 
‘‘(1) NO ACCOUNTING PERIOD.—A business en-
tity’s taxable year shall be the calendar year if the 
business entity does not have an annual accounting 
period or has an annual accounting period that does 
not qualify as a fiscal year. 
‘‘(2) NEW
BUSINESS
ENTITY.—The taxable 
year of a business entity that begins business activ-
ity after December 31, 2010, shall be the calendar 
year (or a 52–53 week fiscal year ending in Decem-
ber) unless the business entity can demonstrate a 
business reason for selecting an accounting period 
other than the calendar year. 
‘‘(h) TRANSITION RULE FOR BUSINESS ENTITIES 
WITH A FISCAL YEAR.— 
‘‘(1) IN GENERAL.—A business entity with a 
taxable year that is not the calendar year shall have 
a short taxable year ending on December 31, 2010, 
and a subsequent taxable year beginning on January 
1, 2011, and ending on the day immediately pre-
ceding the beginning of the business entity’s next 
fiscal year. 
‘‘(2) BUSINESS
ENTITIES
WITH
52–53
WEEK 
YEAR ENDING IN DECEMBER.— 
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‘‘(A) IN GENERAL.—If a business entity 
has a 52–53 week taxable year (under the In-
ternal Revenue Code of 1986) that ends in De-
cember 2010, it may elect to begin its first tax-
able year for the business consumption tax on 
the first day immediately following the last day 
of such taxable year. 
‘‘(B) NO ELECTION.—If a business entity 
that has a 52–53 week taxable year that ends 
in December 2010, does not make the election 
under subparagraph (A) or is prohibited from 
making such election by subparagraph (C), the 
business entity’s taxable year under the Inter-
nal Revenue Code of 1986 that would end in 
December 2010 shall end on December 31, 
2010. 
‘‘(C) ANTI-ABUSE
RULE.—Subparagraph 
(A) shall not apply to any taxpayer that enters 
into business transactions in 2010 following the 
scheduled end of its fiscal year with business 
entities that are not subject to the business con-
sumption tax at the time of such transactions 
if such transactions deviate from the normal 
course of business in order to achieve some tax 
benefit. 
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‘‘SEC. 223. LONG-TERM CONTRACTS. 
‘‘(a) IN GENERAL.—In the case of a long-term con-
tract— 
‘‘(1) CONTRACTOR EXPENSES.—The contractor 
shall be entitled to deduct its business purchases 
when paid or incurred. 
‘‘(2) CONTRACTOR RECEIPTS.—The contractor 
shall recognize taxable receipts— 
‘‘(A) in the case of a project in which the 
acquirer has no ownership interest in the 
project until delivery— 
‘‘(i) upon delivery of the project, in 
the case of an accrual basis contractor, or 
‘‘(ii) upon the later of delivery of the 
project or the receipt of payment, in the 
case of cash-basis contractor. 
‘‘(B) in the case of a project in which the 
acquirer obtains an ownership interest as the 
project is constructed— 
‘‘(i) when the contractor has the right 
to payments, in the case of an accrual 
basis contractor, or 
‘‘(ii) upon the later of when the con-
tractor receives the cash or has the right 
to payments, in the case of a cash basis 
contractor. 
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‘‘(3) ACQUIRER EXPENSES.—The acquirer that 
is a business entity shall be entitled to deduct its 
costs of the business purchase— 
‘‘(A) in the case of a cash-basis acquirer, 
at such time as a cash basis contractor would 
be required to treat the amounts paid as tax-
able receipts, or 
‘‘(B) in the case of an accrual-basis 
acquirer, at such time as an accrual basis con-
tractor would be required to treat the amounts 
paid or due as taxable receipts. 
‘‘(b) RIGHT TO PAYMENTS.— 
‘‘(1) IN GENERAL.—A contractor shall be treat-
ed as having a right to payments with respect to a 
project at any time to the extent that the contractor 
would not be required to return payments received 
(or would be entitled to collect payments not yet re-
ceived) if the project were terminated at such time 
by the contractor. 
‘‘(2) CONTRACTUAL
PROVISIONS.—If a long- 
term contract includes a procedure for paying the 
contractor as work is completed (for example, by 
reason of a draw down from a trust account), the 
contractual provisions shall generally govern when a 
contractor has a right to payment. 
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‘‘(3) PERCENTAGE
COMPLETION
METHOD
OF 
ACCOUNTING.—If a long-term contract does not in-
clude a mechanism for paying the contractor as 
work is completed, the percentage-of-completion 
method of accounting shall be used to determine the 
timing of taxable receipts of the contractor and busi-
ness purchases of the acquirer. 
‘‘(c) LONG-TERM CONTRACT.— 
‘‘(1) 
IN
GENERAL.—‘Long-term 
contract’ 
means— 
‘‘(A) any contract that covers service or 
production through parts of two different cal-
endar years if the contract includes a formal 
deposit and draw-down mechanism, and 
‘‘(B) any contract for the manufacture, 
building, installation, or construction of prop-
erty if such contract is not completed within the 
taxable year of the contractor in which such 
contract is entered into. 
‘‘(2) EXCEPTION.—A contract for the manufac-
ture of property shall not be treated as a long-term 
contract unless such contract involves the manufac-
ture of— 
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‘‘(A) any unique item of a type which is 
not normally included in the finished goods in-
ventory of the taxpayer, or 
‘‘(B) any item which normally requires 
more than 12 calendar months to complete. 
‘‘(d) CONSISTENCY.—The Secretary may require 
business entities to file statements containing such infor-
mation with respect to long-term contracts as the Sec-
retary may prescribe to ensure consistency in reporting. 
‘‘(e) FOREIGN CONTRACTS.—This section shall not 
be construed to permit a deduction for a business purchase 
for the cost of property produced outside the United 
States pursuant to a long-term contract at any time prior 
to the import of such property into the United States. 
‘‘SEC. 224. POST-SALE PRICE ADJUSTMENTS AND REFUNDS. 
‘‘(a) RECEIPT OF PRICE ADJUSTMENT.—In the case 
of a post-sale price adjustment attributable to a business 
purchase which was taken into account in computing gross 
profits for a prior taxable year, the amount of such adjust-
ment shall be treated as a reduction or increase, as the 
case may be, in the cost of business purchases for the tax-
able year in which the adjustment is made or incurred. 
‘‘(b) ISSUANCE OF PRICE ADJUSTMENT.—In the case 
of a post-sale price adjustment attributable to a sale the 
receipts from which were taken into account in deter-
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mining taxable receipts for a prior taxable year, the 
amount of such adjustment shall be treated as a reduction 
or increase, as the case may be, in taxable receipts for 
the taxable year in which the adjustment is made or in-
curred. 
‘‘(c) POST-SALE PRICE ADJUSTMENT.—‘Post-sale 
price adjustment’ means a refund, rebate, or other price 
allowance attributable to a sale of property or services or 
an upward adjustment in price that was not previously 
taken into account under the business entity’s method of 
accounting. 
‘‘SEC. 225. BAD DEBTS. 
‘‘(a) SELLER.—If an amount owed to an accrual 
basis business entity for property or services sold— 
‘‘(1) was taken into account as a taxable receipt 
in a prior taxable year, and 
‘‘(2) becomes wholly or partially uncollectible 
during the taxable year, then the seller shall treat 
the amount as a reduction in taxable receipts for the 
taxable year in which it becomes wholly or partially 
uncollectible. 
‘‘(b) NOTICE REQUIREMENT.—No reduction shall be 
allowed under subsection (a) unless the seller notifies the 
purchaser of the amount which the seller has treated as 
wholly or partially uncollectible. 
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‘‘(c) SUBSEQUENT
COLLECTION.—If an amount 
which was treated as uncollectible under subsection (a) is 
subsequently collected, it shall be treated as a taxable re-
ceipt when collected. 
‘‘(d) PURCHASER.—If a purchaser receives notice 
under subsection (b) from a seller and the purchaser has 
treated the amount labeled uncollectible as a business pur-
chase in a prior taxable year, then the purchaser shall 
treat such amount as a reduction in the cost of business 
purchases in the taxable year to which the notice relates. 
If the purchaser subsequently repays such amount, the re-
payment shall constitute the cost of a business purchase. 
‘‘SEC. 226. TRANSITION RULES. 
‘‘(a) NO DOUBLE DEDUCTIONS.—A business entity 
shall not be entitled to treat as a ‘cost of business pur-
chase’ any amount that the business entity deducted in 
computing taxable income under the income tax in effect 
prior the effective date of the business consumption tax. 
‘‘(b) NO DOUBLE INCLUSION.—A business entity 
shall not be required to include in taxable receipts any 
receipt that the business entity took into account in com-
puting taxable income under the income tax in effect prior 
to the effect date of the business consumption tax. 
‘‘(c) NO LOSS OF DEDUCTION.—An expense which— 
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‘‘(1) a business entity would have been able to 
deduct as a cost of a business purchase in an ac-
counting period before the effective date of the busi-
ness consumption tax if the business consumption 
tax had been in effect in such period, and 
‘‘(2) the business entity would have been able to 
deduct as an expense in computing taxable income 
in a period after the business consumption tax is ef-
fective if the income tax had continued in effect, 
shall be treated as a cost of a business purchase incurred 
or paid at the time that it would have been paid or in-
curred under the income tax if the income tax had contin-
ued in effect. This subsection shall not apply to any 
amount which is to be taken into account under sub-
chapter L (relating to transition rules), any amounts 
which would have been deducted under the income tax 
through loss carryover deductions, or any deductions de-
ferred by the uniform capitalization rules under section 
263A of the Internal Revenue Code of 1986. 
‘‘(d) ALL TAXABLE RECEIPTS TAXED.—A receipt 
which— 
‘‘(1) a business entity would have been required 
to treat as a taxable receipt in an accounting period 
before the effective date of the business consumption 
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tax if the business consumption tax had been in ef-
fect in such period, and 
‘‘(2) the business entity would have been re-
quired to include in gross income in a period after 
the business consumption tax is effective if the in-
come tax had continued in effect, 
shall be treated as a taxable receipt at the time that it 
would have been included in income if the income tax had 
continued in effect. 
‘‘Subchapter E—Land and Rental Property 
‘‘Sec. 230. No deduction for land purchased for nonbusiness use. 
‘‘Sec. 231. Taxable receipts for land held for nonbusiness use. 
‘‘Sec. 232. Certain rental property. 
‘‘SEC. 230. NO DEDUCTION FOR LAND PURCHASED FOR 
NONBUSINESS USE. 
‘‘(a) IN GENERAL.—The acquisition of unimproved 
land shall not constitute a business purchase if the unim-
proved land is not acquired to be used in a business activ-
ity or if the land is acquired for— 
‘‘(1) speculation, 
‘‘(2) development (including subdivision), or 
‘‘(3) temporary leasing or other use not com-
mensurate with the value of the land, 
‘‘(4) indefinite future use in a business activity, 
or 
‘‘(5) use in compensating employees. 
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‘‘(b) FUTURE USE IN BUSINESS ACTIVITY.—Unim-
proved land will not be considered held for ‘indefinite fu-
ture use in a business activity’ if promptly upon acquisi-
tion, the purchaser or the lessee begins construction of im-
provements on the land (other than improvements, such 
as paving or sewage lines, intended for indefinite future 
development) that will be used in a business activity. Such 
improvement must be commensurate with the value of the 
land. 
‘‘(c) 
UNIMPROVED
LAND.—‘Unimproved 
land’ 
means— 
‘‘(1) land with no buildings on it, 
‘‘(2) land with improvements if the value of the 
improvements is relatively small in comparison to 
the value of the land and it is anticipated that the 
improvements will be demolished and not used, 
‘‘(3) land in excess of the amount reasonably 
needed for the buildings located on it. 
‘‘(d) CONVERSION TO BUSINESS USE.—If the acqui-
sition of land is not treated as a business purchase by rea-
son of subsection (a) and the land is subsequently used 
in a manner for which it could have been treated as a 
business purchase, the cost of the land will be treated as 
a business purchase when the improvements on the land 
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are placed in service (or in the case of construction for 
sale, substantially completed and advertised for sale). 
‘‘SEC. 231. TAXABLE RECEIPTS FROM SALE OF LAND HELD 
FOR NONBUSINESS USE. 
‘‘(a) TAX BASIS.—A business entity shall have a tax 
basis in land equal to the cost of the land if such cost 
is not deductible by reason of section 230(a) and the land 
has not been converted to business use for purposes of 
section 230(d). 
‘‘(b) TAXABLE RECEIPTS OF A LAND SALE.—The 
taxable receipts from the sale of land (or portion thereof) 
in which a business entity has a tax basis by reason of 
subsection (a) shall be the amount by which the proceeds 
exceed the basis of such land (or portion thereof). 
‘‘SEC. 232. CERTAIN RENTAL PROPERTY. 
‘‘(a) IN GENERAL.—Except as provided in subsection 
(b), the activity of rental of real estate is a business activ-
ity to which the business consumption tax applies. 
‘‘(b) NOT RENTAL PROPERTY.—Subsection (a) shall 
not apply— 
‘‘(1) to property used on more than 14 days 
during the taxable year for nonbusiness purposes, or 
‘‘(2) to property rented for no more than 14 
days during the taxable year and the total rental re-
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ceived with respect to such property does not exceed 
$10,000. 
‘‘(c) RENTAL
PROPERTY
BECOMES
NONRENTAL 
PROPERTY.—If property which is considered rental prop-
erty for purposes of subsection (a) in one taxable year 
ceases to be rental property (by reason of subsection (b)) 
in the following taxable year, the property (and any associ-
ated debt) shall be treated as distributed by the business 
entity to its owners. Section 211(a) shall apply to such 
distribution. 
‘‘Subchapter F—Insurance and Financial 
Products 
‘‘Sec. 241. General rules. 
‘‘SEC. 241. GENERAL RULES. 
‘‘(a) TAXABLE RECEIPTS.—Taxable receipts do not 
include financial receipts (as defined in section 203(e)(2)). 
‘‘(b) BUSINESS PURCHASES.—Business purchases do 
not include the cost of financial instruments (as defined 
in section 203(e)(3)) or payments for use of money or cap-
ital. 
‘‘Subchapter G—Tax-exempt Organizations 
‘‘Sec. 251. Exemption for governmental entities. 
‘‘Sec. 252. Taxable activity of governmental entities. 
‘‘Sec. 253. Tax-exempt organizations. 
‘‘Sec. 254. Special rules for (c)(3) organizations. 
‘‘Sec. 255. Tax on unrelated business activity. 
‘‘Sec. 256. Unrelated business activity. 
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‘‘SEC. 251. EXEMPTION FOR GOVERNMENTAL ENTITIES. 
‘‘(a) STATES.—Except as provided in section 252, a 
state, political subdivision thereof and the District of Co-
lumbia shall be exempt from taxation under this chapter 
on any gross profits derived from the exercise of any es-
sential governmental function. 
‘‘(b) POSSESSIONS.—The government of any posses-
sion of the United States shall be exempt from taxation 
under this chapter on any gross profits earned by the pos-
session. 
‘‘SEC. 252. TAXABLE ACTIVITY OF GOVERNMENTAL ENTI-
TIES. 
‘‘(a) CERTAIN ACTIVITIES TAXABLE.—A govern-
mental entity shall be considered a business and subject 
to tax on any business activity of a type frequently pro-
vided by business entities subject to tax under this chap-
ter. 
‘‘(b) CERTAIN ACTIVITIES TREATED AS ESSENTIAL 
GOVERNMENT
FUNCTIONS.—Subsection (a) shall not 
apply to the following activities, which shall be treated as 
essential government functions: 
‘‘(1) Provision of mass transportation services. 
‘‘(2) Provision of public utility services. 
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‘‘SEC. 253. TAX-EXEMPT ORGANIZATIONS. 
‘‘(a) EXEMPTION FROM TAXATION.—An organiza-
tion described in subsection (c) or (d) shall be exempt 
from taxation under this chapter. 
‘‘(b) TAX ON UNRELATED BUSINESS ACTIVITY.—An 
organization exempt from taxation under subsection (a) 
shall be subject to tax to the extent provided in sections 
255 and 256, but shall be considered a tax-exempt organi-
zation for purposes of any law that refers to tax-exempt 
organizations. 
‘‘(c) LIST OF EXEMPT ORGANIZATIONS.—The fol-
lowing organizations are referred to in subsection (a): 
‘‘(1) 
INSTRUMENTALITY
OF
THE
UNITED 
STATES.—Any corporation organized under Act of 
Congress which is an instrumentality of the United 
States but only if such corporation— 
‘‘(A) is exempt from Federal income 
taxes— 
‘‘(i) under such Act as amended and 
supplemented before July 18, 1984, or 
‘‘(ii) under this title without regard to 
any provision of law which is not contained 
in this title and which is not contained in 
a revenue Act, or 
‘‘(B) is described in subsection (h). 
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‘‘(2) TITLE
HOLDING
COMPANIES.—Corpora-
tions organized for the exclusive purpose of holding 
title to property, collecting income therefrom, and 
turning over the entire amount thereof, less ex-
penses, to an organization which itself is exempt 
under this section. Rules similar to the rules of sub-
paragraph (G) of paragraph (25) shall apply for 
purposes of this paragraph. 
‘‘(3) CHARITABLE, EDUCATIONAL
AND
RELI-
GIOUS
ORGANIZATIONS.—Corporations, and any 
community chest, fund, or foundation, organized and 
operated exclusively for religious, charitable, sci-
entific, testing for public safety, literary, or edu-
cational purposes, or to foster national or inter-
national amateur sports competition (but only if no 
part of its activities involve the provision of athletic 
facilities or equipment), or for the prevention of cru-
elty to children or animals, no part of the net earn-
ings of which inures to the benefit of any private 
shareholder or individual, no substantial part of the 
activities of which is carrying on propaganda, or oth-
erwise attempting, to influence legislation (except as 
otherwise provided in subsection (g)), and which 
does not participate in, or intervene in (including the 
publishing or distributing of statements), any polit-
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481 
ical campaign on behalf of (or in opposition to) any 
candidate for public office. 
‘‘(4) SOCIAL WELFARE ORGANIZATIONS, ETC.— 
‘‘(A) Civic leagues or organizations not or-
ganized for profit but operated exclusively for 
the promotion of social welfare, or local associa-
tions of employees, the membership of which is 
limited to the employees of a designated person 
or persons in a particular municipality, and the 
net earnings of which are devoted exclusively to 
charitable, educational, or recreational pur-
poses. 
‘‘(B) Subparagraph (A) shall not apply to 
an entity unless no part of the net earnings of 
such entity inures to the benefit of any private 
shareholder or individual. 
‘‘(5) LABOR
AND
AGRICULTURAL
ORGANIZA-
TIONS.—Labor, agricultural, or horticultural organi-
zations. 
‘‘(6) TRADE ASSOCIATIONS.—Business leagues, 
chambers of commerce, real-estate boards, boards of 
trade, or professional football leagues (whether or 
not administering a pension fund for football play-
ers) not organized for profit and no part of the net 
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482 
earnings of which inures to the benefit of any pri-
vate shareholder or individual. 
‘‘(7) SOCIAL
CLUBS.—Clubs organized for 
pleasure, recreation, and other nonprofitable pur-
poses, substantially all of the activities of which are 
for such purposes and no part of the net earnings 
of which inures to the benefit of any private share-
holder. 
‘‘(8) CERTAIN
FRATERNAL
SOCIETIES.—Fra-
ternal beneficiary societies, orders, or associations— 
‘‘(A) operating under the lodge system or 
for the exclusive benefit of the members of a 
fraternity itself operating under the lodge sys-
tem, and 
‘‘(B) providing for the payment of life, 
sick, accident, or other benefits to the members 
of such society, order, or association or their 
dependents. 
‘‘(9) VEBAS.—Voluntary employees’ beneficiary 
associations providing for the payment of life, sick, 
accident, or other benefits to the members of such 
association or their dependents or designated bene-
ficiaries, if no part of the net earnings of such asso-
ciation inures (other than through such payments) 
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483 
to the benefit of any private shareholder or indi-
vidual. 
‘‘(10) OTHER
FRATERNAL
ORGANIZATIONS.— 
Domestic fraternal societies, orders, or associations, 
operating under the lodge system— 
‘‘(A) the net earnings of which are devoted 
exclusively to religious, charitable, scientific, lit-
erary, educational, and fraternal purposes, and 
‘‘(B) which do not provide for the payment 
of life, sick, accident, or other benefits. 
‘‘(11) 
LOCAL
TEACHERS’ 
RETIREMENT 
FUNDS.—Teachers’ retirement fund associations of a 
purely local character, if— 
‘‘(A) no part of their net earnings inures 
(other than through payment of retirement ben-
efits) to the benefit of any private shareholder 
or individual, and 
‘‘(B) the income consists solely of amounts 
received from public taxation, amounts received 
from assessments on the teaching salaries of 
members, and income in respect of investments. 
‘‘(12) CERTAIN COOPERATIVES.— 
‘‘(A) Benevolent life insurance associations 
of a purely local character, mutual ditch or irri-
gation companies, mutual or cooperative tele-
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484 
phone companies, or like organizations; but only 
if 85 percent or more of the income consists of 
amounts collected from members for the sole 
purpose of meeting losses and expenses. 
‘‘(B) In the case of a mutual or coopera-
tive telephone company, subparagraph (A) shall 
be applied without taking into account any in-
come received or accrued— 
‘‘(i) from a nonmember telephone 
company for the performance of commu-
nication services which involve members of 
the mutual or cooperative telephone com-
pany, 
‘‘(ii) from qualified pole rentals, 
‘‘(iii) from the sale of display listings 
in a directory furnished to the members of 
the mutual or cooperative telephone com-
pany, or 
‘‘(iv) from the prepayment of a loan 
under section 306A, 306B, or 311 of the 
Rural Electrification Act of 1936 (as in ef-
fect on January 1, 1987). 
‘‘(C) In the case of a mutual or cooperative 
electric company, subparagraph (A) shall be ap-
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485 
plied without taking into account any income 
received or accrued— 
‘‘(i) from qualified pole rentals, or 
‘‘(ii) from the prepayment of a loan 
under section 306A, 306B, or 311 of the 
Rural Electrification Act of 1936 (as in ef-
fect on January 1, 1987). 
‘‘(D) For purposes of this paragraph, the 
term ‘qualified pole rental’ means any rental of 
a pole (or other structure used to support 
wires) if such pole (or other structure)— 
‘‘(i) is used by the telephone or elec-
tric company to support one or more wires 
which are used by such company in pro-
viding telephone or electric services to its 
members, and 
‘‘(ii) is used pursuant to the rental to 
support one or more wires (in addition to 
the wires described in clause (i)) for use in 
connection with the transmission by wire 
of electricity or of telephone or other com-
munications. 
For purposes of the preceding sentence, the 
term ‘rental’ includes any sale of the right to 
use the pole (or other structure). 
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486 
‘‘(13) 
NONPROFIT
CEMETERIES.—Cemetery 
companies owned and operated exclusively for the 
benefit of their members or which are not operated 
for profit; and any corporation chartered solely for 
the purpose of the disposal of bodies by burial or 
cremation which is not permitted by its charter to 
engage in any business not necessarily incident to 
that purpose and no part of the net earnings of 
which inures to the benefit of any private share-
holder or individual. 
‘‘(14) GRANDFATHERED
MUTUAL
FINANCIAL 
INSTITUTIONS.— 
‘‘(A) Credit unions without capital stock 
organized and operated for mutual purposes 
and without profit. 
‘‘(B) Certain corporations or associations 
organized before September 1, 1957, and de-
scribed in subparagraphs (B) or (C) of section 
501(c)(14) of the Internal Revenue Code of 
1986. 
‘‘(15) GRANDFATHERED
SMALL
INSURANCE 
COMPANIES.—Insurance companies described in sec-
tion 501(c)(15) of the Internal Revenue Code of 
1986. 
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‘‘(16) CROP
FINANCING
ASSOCIATIONS.—Cor-
porations organized by an association subject to part 
IV of this subchapter or members thereof, for the 
purpose of financing the ordinary crop operations of 
such members or other producers, and operated in 
conjunction with such association. Exemption shall 
not be denied any such corporation because it has 
capital stock, if the dividend rate of such stock is 
fixed at not to exceed the legal rate of interest in the 
State of incorporation or 8 percent per annum, 
whichever is greater, on the value of the consider-
ation for which the stock was issued, and if substan-
tially all such stock (other than nonvoting preferred 
stock, the owners of which are not entitled or per-
mitted to participate, directly or indirectly, in the 
profits of the corporation, on dissolution or other-
wise, beyond the fixed dividends) is owned by such 
association, or members thereof; nor shall exemption 
be denied any such corporation because there is ac-
cumulated and maintained by it a reserve required 
by State law or a reasonable reserve for any nec-
essary purpose. 
‘‘(17) SUPPLEMENTAL EMPLOYMENT BENEFIT 
TRUST.— 
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488 
‘‘(A) A trust or trusts forming part of a 
plan providing for the payment of supplemental 
unemployment compensation benefits, if— 
‘‘(i) under the plan, it is impossible, 
at any time prior to the satisfaction of all 
liabilities, with respect to employees under 
the plan, for any part of the corpus or in-
come to be (within the taxable year or 
thereafter) used for, or diverted to, any 
purpose other than the providing of supple-
mental unemployment compensation bene-
fits, 
‘‘(ii) such benefits are payable to em-
ployees under a classification which is set 
forth in the plan and which is found by the 
Secretary not to be discriminatory in favor 
of employees who are highly compensated 
employees (within the meaning of section 
414(q)), and 
‘‘(iii) such benefits do not discrimi-
nate in favor of employees who are highly 
compensated employees (within the mean-
ing of section 414(q). A plan shall not be 
considered discriminatory within the mean-
ing of this clause merely because the bene-
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489 
fits received under the plan bear a uniform 
relationship to the total compensation, or 
the basic or regular rate of compensation, 
of the employees covered by the plan. 
‘‘(B) Rules similar to those contained in 
subparagraphs (B) through (E) of section 
501(c)(7) of the Internal Revenue Code of 1986 
shall apply to subparagraph (A). 
‘‘(18) GRANDFATHERED TRUSTS.—A trust or 
trusts created before June 25, 1959, and described 
in section 501(c)(18) of the Internal Revenue Code 
of 1986. 
‘‘(19) CERTAIN VETERANS’ ORGANIZATIONS.— 
A post or organization of past or present members 
of the Armed Forces of the United States, or an 
auxiliary unit or society of, or a trust or foundation 
for, any such post or organization— 
‘‘(A) organized in the United States or any 
of its possessions, 
‘‘(B) at least 75 percent of the members of 
which are past or present members of the 
Armed Forces of the United States and sub-
stantially all of the other members of which are 
individuals who are cadets or are spouses, wid-
ows, or widowers of past or present members of 
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490 
the Armed Forces of the United States or of 
cadets, and 
‘‘(C) no part of the net earnings of which 
inures to the benefit of any private shareholder 
or individual. 
‘‘(20) LEGAL SERVICE PLAN TRUSTS.—An or-
ganization or trust created or organized in the 
United States, the exclusive function of which is to 
form part of a qualified group legal services plan or 
plans. 
‘‘(21) BLACK LUNG ACT TRUSTS.—A trust or 
trusts established in writing, created or organized in 
the United States, and contributed to by any person 
(except an insurance company) if— 
‘‘(A) the purpose of such trust or trusts is 
exclusively— 
‘‘(i) to satisfy, in whole or in part, the 
liability of such person for, or with respect 
to, claims for compensation for disability 
or death due to pneumoconiosis under 
Black Lung Acts, 
‘‘(ii) to pay premiums for insurance 
exclusively covering such liability, 
‘‘(iii) to pay administrative and other 
incidental expenses of such trust in connec-
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491 
tion with the operation of the trust and the 
processing of claims against such person 
under Black Lung Acts, and 
‘‘(iv) to pay accident or health bene-
fits for retired miners and their spouses 
and dependents (including administrative 
and other incidental expenses of such trust 
in connection therewith) or premiums for 
insurance exclusively covering such bene-
fits; and 
‘‘(B) such trusts meets requirements simi-
lar to those contained in section 501(c)(21) of 
the Internal Revenue Code of 1986. 
‘‘(22) MULTIEMPLOYER ERISA TRUST.—A trust 
created or organized in the United States and estab-
lished in writing by the plan sponsors of multiem-
ployer plans if— 
‘‘(A) the purpose of such trust is exclu-
sively— 
‘‘(i) to pay any amount described in 
section 4223(c) or (h) of the Employee Re-
tirement Income Security Act of 1974, and 
‘‘(ii) to pay reasonable and necessary 
administrative expenses in connection with 
the establishment and operation of the 
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492 
trust and the processing of claims against 
the trust, 
‘‘(B) no part of the assets of the trust may 
be used for, or diverted to, any purpose other 
than— 
‘‘(i) the purposes described in sub-
paragraph (A), or 
‘‘(ii) prudent investment in securities, 
obligations, or time or demand deposits, 
‘‘(C) such trust meets the requirements of 
paragraphs (2), (3), and (4) of section 4223(b), 
4223(h), or, if applicable, section 4223(c) of the 
Employee Retirement Income Security Act of 
1974, and 
‘‘(D) the trust instrument provides that, 
on dissolution of the trust, assets of the trust 
may not be paid other than to plans which have 
participated in the plan or, in the case of a 
trust established under section 4223(h) of such 
Act, to plans with respect to which employers 
have participated in the fund. 
‘‘(23) GRANDFATHERED VETERANS’ INSURANCE 
ORGANIZATION.—Any association organized before 
1880 more than 75 percent of the members of which 
are present or past members of the Armed Forces 
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493 
and a principal purpose of which is to provide insur-
ance and other benefits to veterans or their depend-
ents. 
‘‘(24) ERISA TRUST.—A trust described in sec-
tion 4049 of the Employee Retirement Income Secu-
rity Act of 1974 (as in effect on the date of the en-
actment of the Single-Employer Pension Plan 
Amendments Act of 1986). 
‘‘(25) REAL TITLE HOLDING CORPORATION OR 
TRUST.— 
‘‘(A) Any corporation or trust which— 
‘‘(i) has no more than 35 shareholders 
or beneficiaries, 
‘‘(ii) has only 1 class of stock or bene-
ficial interest, and 
‘‘(iii) is organized for the exclusive 
purposes of— 
‘‘(I) acquiring real property and 
holding title to, and collecting income 
from, such property, and 
‘‘(II) remitting the entire amount 
of income from such property (less ex-
penses) to 1 or more organizations de-
scribed in subparagraph (C) which are 
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494 
shareholders of such corporation or 
beneficiaries of such trust. 
For purposes of clause (iii), the term ‘real prop-
erty’ shall not include any interest as a tenant 
in common (or similar interest) and shall not 
include any indirect interest. 
‘‘(B) A corporation or trust shall be de-
scribed in subparagraph (A) without regard to 
whether the corporation or trust is organized by 
1 or more organizations described in subpara-
graph (C). 
‘‘(C) An organization is described in this 
subparagraph if such organization is— 
‘‘(i) a qualified pension, profit shar-
ing, or stock bonus plan that meets the re-
quirements of section 401(a), 
‘‘(ii) a governmental plan (within the 
meaning of section 414(d)), 
‘‘(iii) the United States, any State or 
political subdivision thereof, or any agency 
or instrumentality of any of the foregoing, 
or 
‘‘(iv) any organization described in 
paragraph (3). 
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495 
‘‘(D) A corporation or trust shall in no 
event be treated as described in subparagraph 
(A) unless such corporation or trust permits its 
shareholders or beneficiaries— 
‘‘(i) to dismiss the corporation’s or 
trust’s investment adviser, following rea-
sonable notice, upon a vote of the share-
holders or beneficiaries holding a majority 
of interest in the corporation or trust, and 
‘‘(ii) to terminate their interest in the 
corporation or trust by either, or both, of 
the following alternatives, as determined by 
the corporation or trust: 
‘‘(I) by selling or exchanging 
their stock in the corporation or inter-
est in the trust (subject to any Fed-
eral or State securities law) to any or-
ganization described in subparagraph 
(C) so long as the sale or exchange 
does not increase the number of 
shareholders or beneficiaries in such 
corporation or trust above 35, or 
‘‘(II) by having their stock or in-
terest redeemed by the corporation or 
trust after the shareholder or bene-
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497 
cessation from the corporation or trust de-
scribed in subparagraph (A) in exchange for its 
stock. 
‘‘(F) For purposes of subparagraph (A), 
the term ‘real property’ includes any personal 
property which is leased under, or in connection 
with, a lease of real property, but only if the 
rent attributable to such personal property for 
the taxable year does not exceed 15 percent of 
the total rent for the taxable year attributable 
to both the real and personal property leased 
under, or in connection with, such lease. 
‘‘(G)(i) An organization shall not be treat-
ed as failing to be described in this paragraph 
merely by reason of the receipt of any otherwise 
disqualifying income which is incidentally de-
rived from the holding of real property. 
‘‘(ii) Clause (i) shall not apply if the 
amount of gross income described in such 
clause exceeds 10 percent of the organization’s 
gross income for the taxable year unless the or-
ganization establishes to the satisfaction of the 
Secretary that the receipt of gross income de-
scribed in clause (i) in excess of such limitation 
was inadvertent and reasonable steps are being 
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498 
taken to correct the circumstances giving rise to 
such income. 
‘‘(26) STATE ESTABLISHED MEDICAL CARE IN-
SURER.—Any membership organization if— 
‘‘(A) such organization is established by a 
State exclusively to provide coverage for medical 
care on a not-for-profit basis to individuals de-
scribed in subparagraph (B) through— 
‘‘(i) insurance issued by the organiza-
tion, or 
‘‘(ii) a health maintenance organiza-
tion under an arrangement with the orga-
nization, 
‘‘(B) the only individuals receiving such 
coverage through the organization are individ-
uals— 
‘‘(i) who are residents of such State, 
and 
‘‘(ii) who, by reason of the existence 
or history of a medical condition— 
‘‘(I) are unable to acquire med-
ical care coverage for such condition 
through insurance or from a health 
maintenance organization, or 
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499 
‘‘(II) are able to acquire such 
coverage only at a rate which is sub-
stantially in excess of the rate for 
such coverage through the member-
ship organization, 
‘‘(C) the composition of the membership in 
such organization is specified by such State, 
and 
‘‘(D) no part of the net earnings of the or-
ganization inures to the benefit of any private 
shareholder or individual. A spouse and any 
qualifying child) of an individual described in 
subparagraph (B) (without regard to this sen-
tence) shall be treated as described in subpara-
graph (B). 
‘‘(27) GRANDFATHERED WORKERS COMPENSA-
TION
ORGANIZATION.—Any membership organiza-
tion established before June 1, 1996, by a State ex-
clusively to reimburse its members for losses arising 
under workmen’s compensation acts, and described 
in section 501(c)(27) of the Internal Revenue Code 
of 1986. 
‘‘(d) RELIGIOUS AND APOSTOLIC ORGANIZATIONS.— 
The following organizations are referred to in subsection 
(a): Religious or apostolic associations or corporations, if 
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500 
such associations or corporations have a common treasury 
or community treasury, even if such associations or cor-
porations engage in business for the common benefit of 
the members, but only if such activity is treated as unre-
lated business activity. 
‘‘(e) COOPERATIVE HOSPITAL SERVICE ORGANIZA-
TIONS.—For purposes of this chapter, an organization 
shall be treated as an organization organized and operated 
exclusively for charitable purposes, if— 
‘‘(1) such organization is organized and oper-
ated solely— 
‘‘(A) to perform, on a centralized basis, 
one or more of the following services which, if 
performed on its own behalf by a hospital which 
is an organization described in subsection (c)(3) 
and exempt from taxation under subsection (a), 
would constitute activities in exercising or per-
forming the purpose or function constituting 
the basis for its exemption: data processing, 
purchasing (including the purchasing of insur-
ance on a group basis), warehousing, billing 
and collection, food, clinical, industrial engi-
neering, laboratory, printing, communications, 
record center, and personnel (including selec-
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tion, testing, training, and education of per-
sonnel) services; and 
‘‘(B) to perform such services solely for 
two or more hospitals each of which is— 
‘‘(i) an organization described in sub-
section (c)(3) which is exempt from tax-
ation under subsection (a), 
‘‘(ii) a constituent part of an organi-
zation described in subsection (c)(3) which 
is exempt from taxation under subsection 
(a) and which, if organized and operated 
as a separate entity, would constitute an 
organization described in subsection (c)(3), 
or 
‘‘(iii) owned and operated by the 
United States, a State, the District of Co-
lumbia, or a possession of the United 
States, or a political subdivision or an 
agency or instrumentality of any of the 
foregoing; 
‘‘(2) such organization is organized and oper-
ated on a cooperative basis and allocates or pays, 
within 81⁄2 months after the close of its taxable year, 
all net earnings to patrons on the basis of services 
performed for them; and 
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‘‘(3) if such organization has capital stock, all 
of such stock outstanding is owned by its patrons. 
For purposes of this title, any organization which, by rea-
son of the preceding sentence, is an organization described 
in subsection (c)(3) and exempt from taxation under sub-
section (a), shall be treated as a hospital and as an organi-
zation the principal purpose or functions of which are the 
providing of medical or hospital care or medical education 
or medical research, if the organization is a hospital, or 
if the organization is a medical research organization di-
rectly engaged in the continuous active conduct of medical 
research in conjunction with a hospital. 
‘‘(f) COOPERATIVE SERVICE ORGANIZATIONS OF OP-
ERATING EDUCATIONAL ORGANIZATIONS.—For purposes 
of this chapter— 
‘‘(1) If an organization is— 
‘‘(A) organized and operated solely to hold, 
commingle, and collectively invest and reinvest 
(including arranging for and supervising the 
performance by independent contractors of in-
vestment services related thereto) in stocks and 
securities, the moneys contributed thereto by 
each of the members of such organization, and 
to collect income therefrom and turn over the 
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503 
entire amount thereof, less expenses, to such 
members, 
‘‘(B) organized and controlled by one or 
more such members, and 
‘‘(C) comprised solely of members that are 
organizations described in paragraph (2) or 
(3)— 
‘‘(i) which are exempt from taxation 
under subsection (a), or 
‘‘(ii) the gross profits of which are ex-
cluded from taxation under section 251(a), 
then such organization shall be treated as an 
organization organized and operated exclusively 
for charitable purposes. 
‘‘(2) An organization is described in this para-
graph if the organization is an educational organiza-
tion which normally maintains a regular faculty and 
curriculum and normally has a regularly enrolled 
body of pupils or students in attendance at the place 
where its educational activities are regularly carried 
on. 
‘‘(3) An organization is described in this para-
graph if the organization is an organization which 
normally receives a substantial part of its support 
(exclusive of income received in the exercise or per-
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504 
formance by such organization of its charitable, edu-
cational, or other purpose or function constituting 
the basis for its exemption under section 253(a)) 
from the United States or any State or political sub-
division thereof or from direct or indirect contribu-
tions from the general public, and which is organized 
and operated exclusively to receive, hold, invest, and 
administer property and to make expenditures to or 
for the benefit of a college or university which is an 
organization referred to in clause (ii) of this sub-
paragraph and which is an agency or instrumentality 
of a State or political subdivision thereof, or which 
is owned or operated by a State or political subdivi-
sion thereof or by an agency or instrumentality of 
one or more States or political subdivisions. 
‘‘(g) EXPENDITURES BY PUBLIC CHARITIES TO IN-
FLUENCE LEGISLATION.— 
‘‘(1) GENERAL RULE.—In the case of an orga-
nization to which this subsection applies, exemption 
from taxation under subsection (a) shall be denied 
because a substantial part of the activities of such 
organization consists of carrying on propaganda, or 
otherwise attempting, to influence legislation, but 
only if such organization normally— 
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505 
‘‘(A) makes lobbying expenditures in ex-
cess of the lobbying ceiling amount for such or-
ganization for each taxable year, or 
‘‘(B) makes grass roots expenditures in ex-
cess of the grass roots ceiling amount for such 
organization for each taxable year. 
‘‘(2) DEFINITIONS.—For purposes of this sub-
section— 
‘‘(A) LOBBYING
EXPENDITURES.—‘Lob-
bying expenditures’ means expenditures for the 
purpose of influencing legislation (as defined in 
section 4911(d)). 
‘‘(B) LOBBYING
CEILING
AMOUNT.—The 
lobbying ceiling amount for any organization 
for any taxable year is 150 percent of the lob-
bying nontaxable amount for such organization 
for such taxable year, determined under section 
4911. 
‘‘(C) GRASS
ROOTS
EXPENDITURES.— 
‘Grass roots expenditures’ means expenditures 
for the purpose of influencing legislation (as de-
fined in section 4911(d) without regard to para-
graph (1)(B) thereof). 
‘‘(D) GRASS
ROOTS
CEILING
AMOUNT.— 
The grass roots ceiling amount for any organi-
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506 
zation for any taxable year is 150 percent of 
the grass roots nontaxable amount for such or-
ganization for such taxable year, determined 
under section 4911. 
‘‘(3) ORGANIZATIONS
TO
WHICH
THIS
SUB-
SECTION APPLIES.—This subsection shall apply to 
any organization which has elected (in such manner 
and at such time as the Secretary may prescribe) to 
have the provisions of this subsection apply to such 
organization and which, for the taxable year which 
includes the date the election is made, is described 
in subsection (c)(3) and is not described in para-
graph (4) and is not a private foundation. 
‘‘(4) 
DISQUALIFIED
ORGANIZATIONS.—This 
subsection does not apply to— 
‘‘(A) a church, 
‘‘(B) an integrated auxiliary of a church or 
of a convention or association of churches, or 
‘‘(C) a member of an affiliated group of or-
ganizations (within the meaning of section 
4911(f)(2)) if one or more members of such 
group is described in subparagraph (A) or (B). 
‘‘(5) YEARS FOR WHICH ELECTION IS EFFEC-
TIVE.—An election by an organization under this 
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507 
subsection shall be effective for all taxable years of 
such organization which— 
‘‘(A) end after the date the election is 
made, and 
‘‘(B) begin before the date the election is 
revoked by such organization (under regulations 
prescribed by the Secretary). 
‘‘(6) NO
EFFECT
ON
CERTAIN
ORGANIZA-
TIONS.—With respect to any organization for a tax-
able year for which— 
‘‘(A) such organization is described in 
paragraph (5), or 
‘‘(B) an election under this subsection is 
not in effect for such organization, nothing in 
this subsection or in section 4911 shall be con-
strued to affect the interpretation of the phrase, 
‘no substantial part of the activities of which is 
carrying on propaganda, or otherwise attempt-
ing, to influence legislation,’ under subsection 
(c)(3). 
‘‘(h) GOVERNMENT CORPORATIONS EXEMPT UNDER 
SUBSECTION (c)(1).—For purposes of subsection (c)(1), 
the following organizations are described in this sub-
section: 
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508 
‘‘(1) The Central Liquidity Facility established 
under title III of the Federal Credit Union Act (12 
U.S.C. 1795 et seq.). 
‘‘(2) The Resolution Trust Corporation estab-
lished under section 21A of the Federal Home Loan 
Bank Act. 
‘‘(3) The Resolution Funding Corporation es-
tablished under section 21B of the Federal Home 
Loan Bank Act. 
‘‘(i) CERTAIN EDUCATIONAL ORGANIZATIONS.—An 
organization shall not be eligible for exemption as an edu-
cational organization under subsection (c)(3) if a substan-
tial amount of its activities and funds are devoted to— 
‘‘(1) conducting seminars and other similar pro-
grams, 
‘‘(2) conducting research to educate Congress 
or the general public about public policy issues, 
‘‘(3) producing books and pamphlets, or 
‘‘(4) a combination of the foregoing. 
‘‘SEC. 254. SPECIAL RULES FOR (c)(3) ORGANIZATIONS. 
‘‘(a) NEW ORGANIZATIONS MUST NOTIFY SEC-
RETARY.—Except as provided in subsection (c), an organi-
zation shall not be treated as an organization described 
in section 253(c)(3)— 
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509 
‘‘(1) unless that it has given notice to the Sec-
retary, in such manner as the Secretary may pre-
scribe, that it is applying for recognition of such sta-
tus, or 
‘‘(2) for any period before giving of such notice, 
if such notice is given after the time prescribed by 
the Secretary by regulations for giving notice under 
this subsection. 
‘‘(b) PRESUMPTION THAT ORGANIZATIONS ARE PRI-
VATE FOUNDATIONS.—Except as provided in subsection 
(c), any organization described in section 253(c)(3) and 
which does not notify the Secretary, at such time and in 
such manner as the Secretary may by regulations pre-
scribe, that it is not a private foundation shall be pre-
sumed to be a private foundation. 
‘‘(c) EXCEPTIONS.—Subsections (a) and (b) shall not 
apply to— 
‘‘(1) organizations organized before October 10, 
1969; 
‘‘(2) organizations which obtained recognition 
of tax-exempt status under section 501(c)(3) of the 
Internal Revenue Code of 1986 (in the case of sub-
section (a) only); 
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‘‘(3) organizations which were determined not 
to be private foundations under the Internal Rev-
enue Code of 1986; 
‘‘(4) churches, their integrated auxiliaries, and 
conventions and associations of churches; 
‘‘(5) any organization that is not a private 
foundation and the gross receipts of which in each 
taxable year are not more than $25,000, or 
‘‘(6) such other classes of organizations which 
the Secretary may exempt. 
‘‘SEC. 255. TAX ON UNRELATED BUSINESS ACTIVITY. 
‘‘(a) IN GENERAL.—Each organization described in 
subsection (b) shall be subject to the Competitive Amer-
ican Business Tax for businesses under section 201 on its 
gross profits from its unrelated business activity. 
‘‘(b) ORGANIZATIONS SUBJECT TO TAX.—This sec-
tion shall apply to— 
‘‘(1) organizations exempt from the business 
consumption tax under section 253(a), other than 
instrumentalities of the United States described in 
section 253(c)(1). 
‘‘(2) colleges and universities which are instru-
mentalities of any government and corporations 
owned by one or more such colleges or universities. 
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511 
‘‘SEC. 256. UNRELATED BUSINESS ACTIVITY. 
‘‘(a) IN GENERAL.—‘Unrelated business activity’ 
means any trade or business the conduct of which is not 
substantially related (aside from the need of such organi-
zation for income or funds or the use it makes of the prof-
its derived) to the exercise or performance by such organi-
zation of its charitable, educational, or other purpose or 
function constituting the basis for its exemption under 
section 253, except that such term does not include any 
trade or business— 
‘‘(1) in which substantially all the work in car-
rying on such trade or business is performed for the 
organization without compensation; or 
‘‘(2) which is carried on, in the case of an orga-
nization described in section 253(c)(3) or in the case 
of a college or university described in section 255(b), 
by the organization primarily for the convenience of 
its members, students, patients, officers, or employ-
ees, which is the selling by the organization of items 
of work-related clothes and equipment and items 
normally sold through vending machines, through 
food dispensing facilities, or by snack bars, for the 
convenience of its members at their usual places of 
employment; or 
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512 
‘‘(3) which is the selling of merchandise, sub-
stantially all of which has been received by the orga-
nization as gifts or contributions. 
‘‘(b) ADVERTISING, ETC., ACTIVITIES.—For purposes 
of this section, ‘trade or business’ includes any activity 
which is carried on for the production of income from the 
sale of goods or the performance of services. For purposes 
of the preceding sentence, an activity does not lose identity 
as a trade or business merely because it is carried on with-
in a larger aggregate of similar activities or within a larger 
complex of other endeavors which may, or may not, be 
related to the exempt purposes of the organization. Where 
an activity carried on for profit constitutes an unrelated 
trade or business, no part of such trade or business shall 
be excluded from such classification merely because it does 
not result in profit. 
‘‘(c) TRADE OR BUSINESS.— 
‘‘(1) CERTAIN BUSINESS ACTIVITIES.—An ac-
tivity shall not be considered a ‘trade or business’ 
solely because the activity is a business activity 
(such as certain passive rental activity) that would 
be subject to the business consumption tax if con-
ducted by a business entity other than a tax-exempt 
organization. 
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513 
‘‘(2) REGULATIONS.—The Secretary shall pre-
scribe regulations defining a ‘trade or business’. 
Such regulations shall be consistent with the provi-
sions under sections 511 through 513 of the Internal 
Revenue Code of 1986, except to the extent such 
provisions are inconsistent with other principles of 
the business consumption tax. The regulations shall 
include exclusions from the definition of ‘trade or 
business’ similar to those contained in section 513 of 
the Internal Revenue Code for— 
‘‘(A) certain bingo games, 
‘‘(B) certain hospital services, and 
‘‘(C) certain public entertainment activity 
at fairs and expositions by an organization 
which regularly conducts, as one of its substan-
tial exempt purposes, an agricultural or edu-
cational fair or exhibition. 
‘‘(3) TRADE
SHOWS.—The conduct of trade 
shows and conventions shall not be excluded from 
the definition of trade or business. 
‘‘Subchapter H—Cooperatives 
‘‘Sec. 260. Patronage dividends of cooperatives. 
‘‘SEC. 260. PATRONAGE DIVIDENDS OF COOPERATIVES. 
‘‘(a) PATRONAGE DIVIDENDS PAID BY SUPPLY CO-
OPERATIVES.—A qualified patronage dividend paid by a 
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514 
supply cooperative to a patron shall be treated as if it is 
a refund of a portion of the amounts paid by the patron 
for goods, services, or use of capital. In general, if the 
supply cooperative included the amount received from the 
patron in taxable receipts, the dividend shall reduce tax-
able receipts in the year incurred. If the recipient of the 
dividend is a business entity which deducted the cost of 
business purchases to which the dividend related, the re-
cipient will reduce its cost of business purchases by the 
amount of the dividend in the year the dividend is paid 
or incurred. 
‘‘(b) PATRONAGE DIVIDENDS PAID BY MARKETING 
COOPERATIVES.—A qualified patronage dividend paid to 
a patron by a marketing cooperative shall be treated as 
an upward price adjustment in the amount received by the 
patron for its goods marketed by the cooperative. In gen-
eral, the cooperative will increase its cost of business pur-
chases by the amount of the qualified patronage dividend 
and the recipient will increase its taxable receipts by the 
amount of the qualified patronage dividend. 
‘‘(c) DIVIDEND TREATMENT.—Only the portion of a 
patronage dividend that is not a qualified patronage divi-
dend shall be treated as a dividend under this chapter and 
chapter 2. 
‘‘(d) DEFINITIONS.— 
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515 
‘‘(1) QUALIFIED
PATRONAGE
DIVIDEND.—A 
‘qualified patronage dividend’ is that part of a pa-
tronage dividend that is attributable to the patron’s 
allocable share of patronage earnings of a marketing 
cooperative or a supply cooperative. 
‘‘(2) SUPPLY COOPERATIVE.—A ‘supply cooper-
ative’ is a cooperative that sells goods or service to 
patrons and provided patronage dividends with re-
spect to the quantity of purchases of the patrons. 
‘‘(3) MARKETING COOPERATIVE.—A ‘marketing 
cooperative’ is a cooperative that sells goods pro-
duced by its members and provides patronage divi-
dends to the members based on the quantities of 
goods sold or provided for sale. 
‘‘(e) SPECIAL RULES.— 
‘‘(1) NOTICES OF ALLOCATION AND PER-UNIT 
RETAIN
CERTIFICATES.—Except as provided in 
paragraph (2), a notice of allocation, per-unit retain 
certificate, or other similar document shall not be 
treated as a patronage dividend until it is redeemed 
in cash or property. 
‘‘(2) OPPORTUNITY
TO
RECEIVE
CASH.—If a 
patron is given an opportunity to receive a patron-
age dividend in cash, but instead chooses to accept 
a per-unit retain certificate or a qualified notice of 
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516 
allocation, the patron will be treated as receiving 
cash and simultaneously contributing to the capital 
of the cooperative. 
‘‘(3) APPLICATION LIMITED TO QUALIFIED CO-
OPERATIVES.—Under rules to be prescribed by the 
Secretary, this section shall apply only to coopera-
tives to which one of the following provisions of the 
Internal Revenue Code of 1986 would have applied: 
‘‘(A) Section 501(c)(12) (relating to coop-
erative telephone companies and similar organi-
zations). 
‘‘(B) Section 501(c)(14) (relating to cer-
tain cooperative banks). 
‘‘(C) Section 521 (relating to farm co-
operatives). 
‘‘(D) Section 1381 (relating to coopera-
tives generally). 
‘‘(4) REGULATIONS.—The Secretary shall pre-
scribe regulations for the application of this section. 
The regulations shall generally be consistent with 
subchapter T of chapter 1 of the Internal Revenue 
Code of 1986 except to the extent that such rules 
are inconsistent with provisions of this chapter. 
‘‘Subchapter I—Sourcing Rules 
‘‘Sec. 265. Exports of property or services. 
‘‘Sec. 266. Imports of property or services. 
‘‘Sec. 267. Import or export of services. 
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517 
‘‘Sec. 268. International transportation services. 
‘‘Sec. 269. International communications. 
‘‘Sec. 270. Insurance. 
‘‘Sec. 271. Banking services. 
‘‘SEC. 265. EXPORTS OF PROPERTY OR SERVICES. 
‘‘(a) GENERAL RULE.—Taxable receipts do not in-
clude amounts received by the exporter thereof for prop-
erty or services exported from the United States for use 
or consumption outside the United States. 
‘‘(b) EXPORT THROUGH NONBUSINESS ENTITY.— 
For purposes of subsection (a), if property or services are 
sold to a governmental entity or a tax-exempt organization 
for export and are exported other than in an activity of 
such entity which is subject to the business consumption 
tax, then the seller of such property or services is deemed 
to be the exporter thereof. 
‘‘(c) EXPORT OF SERVICES.—See section 267 for 
rules for determining whether services are exported or im-
ported. 
‘‘SEC. 266. IMPORTS OF PROPERTY OR SERVICES. 
‘‘(a) IN GENERAL.—The import of property or serv-
ices for consumption in the United States shall constitute 
a business purchase if such property or service is to be 
used in a business activity in the United States. Property 
being held for sale or retail by a business entity that is 
in the business of selling goods shall be considered held 
for ‘use in a business activity’. 
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518 
‘‘(b) AMOUNT OF BUSINESS PURCHASE.— 
‘‘(1) IN GENERAL.—The cost of business pur-
chases with respect to the import of property or 
services for use or consumption in the United States 
is the customs value, price or other amount used for 
purposes of determining the import tax under sec-
tion 281 or section 282. 
‘‘(2) IMPORT TAX.—The cost of business pur-
chases does not include any import tax paid. No de-
duction shall be allowed with respect to property or 
service imported by a business entity unless the im-
port tax is paid with respect to such import. 
‘‘SEC. 267. IMPORT OR EXPORT OF SERVICES. 
‘‘(a) IN GENERAL.—Except as otherwise provided in 
this subchapter, services shall not be treated as imported 
or exported from the location in which they are performed. 
‘‘(b) IMPORT OF SERVICES.—A business entity shall 
be treated as importing a service if— 
‘‘(1) the entire benefit of the service will be re-
alized in the United States, and 
‘‘(2) the benefit will be realized in connection 
with the United States business activities of the 
business entity. 
‘‘(c) EXPORT
OF SERVICES.—A business will be 
treated as exporting a service if— 
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519 
‘‘(1) the entire benefit of the service will be re-
alized outside of the United States, and 
‘‘(2) the benefit will be realized solely in con-
nection with the activities of the purchaser occurring 
outside the United States. 
‘‘(d) SERVICES ACQUIRED FROM SERVICE PROVIDER 
THAT
PROVIDES
SERVICES
IN
AND
OUTSIDE
THE 
UNITED STATES.— 
‘‘(1) IN
GENERAL.—If a business entity ac-
quires services from a service provider that provides 
services both in and outside the United States and 
the service provider shows on the invoice where the 
services are provided— 
‘‘(A) the business entity shall treat the 
services as provided where stated on the invoice, 
and 
‘‘(B) the service provider shall treat as tax-
able receipts any services listed as provided in 
the United States. 
‘‘(2) NO INVOICE.—If a business entity acquires 
services from a service provider that provides serv-
ices both in and outside the United States and the 
service provider does not show on an invoice where 
such services are provided— 
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520 
‘‘(A) the business entity shall treat the 
services as if provided in the location to which 
payment is sent, and 
‘‘(B) the service provider shall treat as tax-
able receipts any payments received in the 
United States. 
‘‘(e) SPECIAL RULES PREVAIL.—See sections 268 
and 269 for special rule relating to transportation and 
communication services. 
‘‘SEC. 268. INTERNATIONAL TRANSPORTATION SERVICES. 
‘‘(a) TRANSPORTATION OF PROPERTY.— 
‘‘(1) TAXABLE RECEIPTS.— 
‘‘(A) EXPORTS.—Taxable receipts do not 
include receipts from the transportation of 
property exported from the United States. 
‘‘(B) IMPORTS.—Taxable receipts include 
receipts from transportation of property im-
ported into the United States only if such costs 
are not taken into account in determining the 
import tax. 
‘‘(C) PRESUMPTIONS.—The Secretary shall 
prescribe regulations describing situations in 
which a transporter of property must presume 
that no import tax has been paid on the cost of 
its services. 
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‘‘(2) BUSINESS PURCHASES.— 
‘‘(A) EXPORTS.—Business purchases do 
not include amounts paid or incurred for the 
cost of transportation of property exported from 
the United States. 
‘‘(B) IMPORTS.—Amounts paid or incurred 
for transportation of goods imported into the 
United States, shall constitute a cost of busi-
ness purchase only to the extent that they are 
taken into account in determining the customs 
value for purposes of section 281(a) (relating to 
the import tax). 
‘‘(b) TRANSPORTATION OF PASSENGERS.— 
‘‘(1) TAXABLE RECEIPTS.—Taxable receipts— 
‘‘(A) include receipts from the transpor-
tation of passengers from the United States to 
a destination outside the United States, but 
‘‘(B) do not include receipts from the 
transportation of passengers from outside the 
United States to a destination in the United 
States. 
‘‘(2) BUSINESS
PURCHASES.—Business pur-
chases— 
‘‘(A) include amounts paid or incurred in 
a business activity for the transportation of 
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passengers from the United States to a destina-
tion outside the United States, but 
‘‘(B) do not include amounts paid or in-
curred for transportation of passengers from 
outside the United States to a destination in 
the United States. 
‘‘(3) SIMPLIFYING RULES.—The Secretary may 
provide rules that simplify this subsection, including 
rules under which— 
‘‘(A) half of receipts attributable to trans-
portation to or from the United States are 
treated as taxable receipts, 
‘‘(B) half of the cost for business trips to 
and from the United States are treated as busi-
ness purchases, and 
‘‘(C) all transportation expenses of a busi-
ness entity that has no regular business outside 
the United States are treated as business pur-
chases. 
‘‘SEC. 269. INTERNATIONAL COMMUNICATIONS. 
‘‘(a) IN GENERAL.—For purposes of section 266, 
communications services shall be treated as provided at 
the point of origin of the communications and shall not 
be treated as imported or exported. 
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‘‘(b) COMMUNICATIONS SERVICES.—Communications 
services include— 
‘‘(1) internet services, 
‘‘(2) telephone and electronic email communica-
tions services, 
‘‘(3) courier services (except in the case of 
transportation of property that is imported or ex-
ported), 
‘‘(4) satellite transmission services, 
‘‘(5) telegraph services, 
‘‘(6) facsimile transmission services, and 
‘‘(7) other similar services. 
‘‘SEC. 270. INSURANCE. 
‘‘(a) IN GENERAL.—Insurance services will be treat-
ed as provided at the location of the insurance company 
providing the services. Except as the Secretary may pre-
scribe by regulations, insurance companies will be treated 
as providing services at the location to which insurance 
payments are made. 
‘‘(b) INSURED RISKS IN THE UNITED STATES.—If 
insurance services are provided outside the United States 
and the insured risk is located in the United States— 
‘‘(1) the insurance service shall be treated as 
imported, 
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‘‘(2) the insurance premiums shall be subject to 
the import tax, and 
‘‘(3) payments of insurance benefits shall not be 
treated as imported. 
‘‘(c) 
INSURED
RISK
OUTSIDE
THE
UNITED 
STATES.—If insurance services are provided inside the 
United States and the insured risk is located outside the 
United States— 
‘‘(1) insurance services shall be treated as ex-
ported, 
‘‘(2) payments of insurance benefits shall be 
treated as payments for services outside the United 
States, and shall not be deducted as business pur-
chases. 
‘‘(d) INSURANCE
SERVICES.—Insurance services 
means the provision of insurance and services related to 
insurance other than insurance that is treated as a savings 
asset. 
‘‘SEC. 271. BANKING SERVICES. 
‘‘The Secretary shall prescribe regulations on the lo-
cation of banking services and the extent to which such 
services are to be treated as imported or exported. 
‘‘Subchapter J—Business Conducted in a 
Possession 
‘‘Sec. 276. Treatment of possessions. 
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‘‘SEC. 276. TREATMENT OF POSSESSIONS. 
‘‘(a) IN GENERAL.—For purposes of the business 
consumption tax imposed by this chapter, the U.S. posses-
sions shall not be treated as part of the United States. 
‘‘(b) POSSESSION.—For purposes of this subchapter, 
‘U.S. possession’ or ‘possession’ means a possession of the 
United States and includes the Commonwealth of Puerto 
Rico and the Virgin Islands. 
‘‘Subchapter K—Import Tax 
‘‘Sec. 281. Imposition of tax on property. 
‘‘Sec. 282. Imposition of tax on import of services. 
‘‘Sec. 283. General rules for the import tax. 
‘‘SEC. 281. IMPOSITION OF TAX ON PROPERTY. 
‘‘(a) GENERAL RULE.—There is hereby imposed a 
tax equal to 8.5 percent of the customs value of all prop-
erty entered into the United States for consumption, use 
or warehousing. 
‘‘(b) LIABILITY FOR TAX.—The tax imposed on the 
import of property by subsection (a) shall be paid by the 
person entering the property into the United States for 
consumption, use or warehousing. Such tax shall be due 
and payable at the time of import. 
‘‘(c) IMPORTS
OF PREVIOUSLY EXPORTED PROP-
ERTY.—In the case of any article that is classified under 
a heading or subheading of subchapter I or II of chapter 
98 of the Tariff Schedules of the United States, the tax 
under this section shall be imposed only on that portion 
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of the customs value of such article that is dutiable under 
such heading or subheading. 
‘‘(d) IMPORTS FOR PERSONAL CONSUMPTION.—The 
import tax imposed by this section shall not apply to any 
article entered into the United States duty free under sub-
chapters I through VII of chapter 98 of the Tariff Sched-
ules of the United States. 
‘‘(e) EXCEPTION FOR CERTAIN COMMODITIES AND 
PRODUCTS.—The import tax imposed by this section shall 
not apply to petroleum, petroleum products or such com-
modities or products as the President shall by Executive 
Order determine to be in short supply and vital to national 
security. 
‘‘SEC. 282. IMPOSITION OF TAX ON IMPORT OF SERVICES. 
‘‘(a) GENERAL RULE.—There is hereby imposed a 
tax equal to 8.5 percent of the cost of all services treated 
as imported into the United States during the taxable year 
of the service recipient. 
‘‘(b) LIABILITY FOR THE TAX.—The tax on the im-
port of services imposed by subsection (a) shall be paid 
by the person who receives the imported services. The tax 
shall be payable as if it were an addition to the business 
consumption tax imposed by section 201. 
‘‘(c) IMPORTED SERVICES.—For purposes of this sec-
tion, services shall be treated as imported if they are treat-
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ed as imported under section 267 (general rules on import 
or export of services) or section 270 (related to insurance). 
‘‘(d) SPECIAL RULE FOR INSURANCE.—The seller of 
insurance that is treated as imported under section 270 
shall be liable for the collection of the tax imposed by sub-
section (a) on the insurance and for paying such tax to 
the Secretary. The first sentence of subsection (b) (relat-
ing to the person liable for the tax) shall apply to insur-
ance only to the extent that the seller of the insurance 
services does not collect such tax. 
‘‘SEC. 283. GENERAL RULES FOR THE IMPORT TAX. 
‘‘ ‘Import tax’ means the tax imposed by section 281 
on the import of property and the tax imposed by section 
282 on the import of services. 
‘‘Subchapter L—Transition Rules 
‘‘Sec. 290. Amortization of transition basis. 
‘‘SEC. 290. AMORTIZATION OF TRANSITION BASIS. 
‘‘(a) TRANSITION BASIS DEDUCTION.—The ‘transi-
tion basis deduction’ for a taxable year is the sum of the 
amortization allowance determined under this section for 
the taxable year. 
‘‘(b) TREATMENT OF INTEREST FLOWS.—Interest 
flows between non-financial businesses shall be treated as 
under current law, phased out over 5 years. 
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‘‘(c) AMORTIZATION RULES.—The amortization al-
lowance to all property placed in service before the effec-
tive date of this section shall be the lesser of— 
‘‘(1) the amortization period under current law 
remaining on such date, or 
‘‘(2) a 5-year ratable period beginning on such 
date. 
‘‘Subchapter M—Rules for Administration, 
Consolidated Returns 
‘‘Sec. 301. Returns, due dates, etc. 
‘‘Sec. 302. Consolidated returns. 
‘‘SEC. 301. RETURNS, DUE DATES, ETC. 
‘‘(a) IN GENERAL.—Until subtitle F is amended to 
reflect the adoption of this chapter, the rules of subtitle 
F relating to C corporations shall apply to business enti-
ties with respect to— 
‘‘(1) returns and records; 
‘‘(2) time and place for paying tax; 
‘‘(3) assessment of taxes; 
‘‘(4) collections and liens; 
‘‘(5) abatements, credits, and refunds; 
‘‘(6) interest on underpayments and overpay-
ments; 
‘‘(7) additions to tax and penalties; 
‘‘(8) closing agreements and compromises; 
‘‘(9) crimes; 
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‘‘(10) judicial proceedings; 
‘‘(11) discovery of liability and enforcement; 
and 
‘‘(12) estimated taxes. 
‘‘(b) INDIVIDUALS ENGAGING IN BUSINESS ACTIVI-
TIES.—Under rules prescribed by the Secretary, individ-
uals engaging in business activities on their own or with 
their spouses shall be permitted to file their business con-
sumption tax returns with their individual tax returns and 
shall be subject to estimated tax rules for individual in-
come tax returns. Such rules shall include rules to prevent 
the avoidance or abuse of this chapter and chapter 1. 
‘‘SEC. 302. CONSOLIDATED RETURNS. 
‘‘(a) IN GENERAL.—Business entities may file con-
solidated returns of business consumption tax if they 
would have been permitted to file consolidated returns 
under section 1501 of the Internal Revenue Code and such 
section were applied by treating each business entity as 
a corporation and its owners or partners as shareholders. 
‘‘(b) FINANCIAL
INSTITUTIONS.—Financial inter-
mediation businesses may be included in consolidated re-
turns. 
‘‘(c) INTERCOMPANY TRANSACTIONS.—In computing 
the gross profits of a consolidated group, intercompany 
transactions can be taken into account, or at the election 
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of the filer, be disregarded (except in the case of trans-
actions with financial intermediation businesses). 
‘‘Subchapter N—Definitions and Rules of 
Application 
‘‘Sec. 310. Definitions. 
‘‘Sec. 311. Rules of application. 
‘‘SEC. 310. DEFINITIONS. 
‘‘When used in this chapter, where not otherwise dis-
tinctly expressed or manifestly incompatible with the in-
tent thereof— 
‘‘(1) INTERNAL REVENUE CODE OF 1986.—‘In-
ternal Revenue Code of 1986’ means the Internal 
Revenue Code of 1986 as in effect immediately be-
fore the enactment of the Competitive American 
Business Tax. 
‘‘(2) UNITED STATES.—‘United States’ means 
the States and the District of Columbia. 
‘‘SEC. 311. RULES OF APPLICATION. 
‘‘(a) DEFINITIONS.—Any definition included in this 
chapter shall apply for all purposes of this chapter un-
less— 
‘‘(1) such definition is limited to the purposes 
of a particular chapter, section, or subsection, or 
‘‘(2) the definition clearly would not be applica-
ble in a particular context. 
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‘‘(b) INTERPRETATIONS CONSISTENT WITH INTER-
NAL REVENUE CODE OF 1986.—Terms not defined in this 
chapter or elsewhere in this title, but defined in the Inter-
nal Revenue Code of 1986, shall be interpreted in a man-
ner consistent with the Internal Revenue Code of 1986, 
except to the extent such interpretation would be incon-
sistent with the principles and purposes of this chapter.’’. 
(b) The amendments made by this section shall be 
effective on January 1, 2011, except to the extent other-
wise specifically provided in the text of such amendments. 
SEC. 603. REPEAL OF CHAPTER 6. 
Chapter 6 of the Code (relating to consolidated re-
turns) is repealed as of January 1, 2011. 
TITLE VII—JOB TRAINING 
RESULTS ACT OF 2010 
SEC. 701. SHORT TITLE. 
This title may be cited as the ‘‘Job Training Results 
Act of 2010’’. 
SEC. 702. PURPOSE. 
The purpose of this title is to ensure accountability 
and job training results in Federal job training programs. 
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SEC. 703. IMPROVEMENT OF JOB TRAINING PROGRAMS; 
PERFORMANCE 
METRICS 
FOR 
WIA 
JOB 
TRAINING PROGRAMS. 
Title V of the Workforce Investment Act of 1998 (20 
U.S.C. 9271 et seq.) is amended— 
(1) by redesignating section 507 as section 510; 
and 
(2) by inserting after section 506, the following: 
‘‘SEC. 507. IMPROVEMENT OF JOB TRAINING PROGRAMS. 
‘‘(a) GENERAL RULES.— 
‘‘(1) GRANT
COMPETITION.—In order to en-
courage competition under the grant programs for 
providers of job training programs authorized under 
this Act, any grants under such grant programs 
shall be awarded on a competitive basis. 
‘‘(2) PRIORITY.—In awarding grants under this 
Act, the Secretary shall give priority to applicants 
that leverage private resources. 
‘‘(3) GRANT RENEWAL.— 
‘‘(A) THRESHOLD DETERMINATION.—The 
Secretary shall not renew a grant for a provider 
of a training program under this Act that fails 
to demonstrate, in accordance with the perform-
ance measures described section 508(b), that at 
least 50 percent of the participants of such pro-
gram were employed for at least 1 year in an 
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occupation related to the training provided 
under the program. 
‘‘(B) PRIORITY.—In renewing grants for 
providers who meet the requirement described 
in subparagraph (A), the Secretary shall give 
priority to those providers that have the great-
est percentage of participants who— 
‘‘(i) were employment for at least 1 
year in an occupation related to the train-
ing provided under the program; and 
‘‘(ii) as a result of the training pro-
vided under the program— 
‘‘(I) have the highest income lev-
els; and 
‘‘(II) the lowest percentage of 
participants receiving Federal assist-
ance. 
‘‘(b) EXCEPTIONS.—Subsection (a) shall not apply to 
State allotments made under sections 127 and 132. 
‘‘(c) ENROLLMENT PROHIBITION
AND REQUIRE-
MENT.— 
‘‘(1) PROHIBITION.—A provider of a job train-
ing program under this Act may not in any way 
limit recruitment for, or enrollment in, such pro-
gram to individuals who are more likely to be suc-
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cessful in obtaining employment or earning a higher 
income after the completion of the program, as com-
pared to other individuals. 
‘‘(2) REQUIREMENT.—An individual who par-
ticipates in, or receives any service under, a training 
program shall be considered to be enrolled as a par-
ticipant in the program. 
‘‘(d) DEFINITIONS.—For purposes of this section and 
section 508: 
‘‘(1) FEDERAL ASSISTANCE.— 
‘‘(A) IN GENERAL.—The term ‘Federal as-
sistance’ includes— 
‘‘(i) supplemental nutrition assistance 
authorized under the Food and Nutrition 
Act of 2008 (7 U.S.C. 2011 et seq.); 
‘‘(ii) the case where a participant’s 
adjusted gross income (or, if greater, 
earned income) for the most recently ended 
taxable year exceeds the amount of ad-
justed gross income, or earned income, as 
the case may be, which would cause the 
credit allowable to the participant for such 
taxable year under paragraph (1) of sec-
tion 32(a) of the Internal Revenue Code of 
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1986 to be reduced by reason of paragraph 
(2) of such section; 
‘‘(iii) supplemental security income 
benefits under title XVI of the Social Secu-
rity Act (42 U.S.C. 1382 et seq.); 
‘‘(iv) assistance under the State med-
icaid program under title XIX of the Social 
Security Act (42 U.S.C. 1396 et seq.); and 
‘‘(v) benefits under the temporary as-
sistance for needy families program funded 
under part A of title IV of the Social Secu-
rity Act (42 U.S.C. 601 et seq.). 
‘‘(B) DEFINED
TERMS.—The terms ‘ad-
justed gross income’, ‘earned income’, and 
‘phaseout amount’ shall have the respective 
meanings given such terms by section 32 of the 
Internal Revenue Code of 1986. 
‘‘(2) JOB TRAINING PROGRAM.—The term ‘job 
training program’ includes the following programs: 
‘‘(A) Programs for migrant youth author-
ized under section 127. 
‘‘(B) Native American Programs author-
ized under section 166. 
‘‘(C) Migrant and seasonal farm workers 
programs authorized under section 167. 
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‘‘(D) Youth Opportunity Grant authorized 
under section 169. 
‘‘(E) Grants to States for Incarcerated 
Youth Offenders authorized under section 171. 
‘‘(F) Programs for the reintegration of ex- 
offenders authorized under section 171. 
‘‘(G) Responsible Reintegration of Youth 
Offenders program authorized under section 
171. 
‘‘(H) Program of Competitive Grants for 
Worker Training and Placement in High 
Growth and Emerging Industry Sectors author-
ized under section 171. 
‘‘(I) Energy Efficiency and Renewable 
Worker Training Programs authorized under 
section 171(e). 
‘‘(J) Youthbuild Program authorized under 
section 173A. 
‘‘(K) Veterans’ Workforce Investment Pro-
gram authorized under section 168. 
‘‘(L) The program of workforce investment 
activities for youth authorized under chapter 4 
of subtitle B of title I. 
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‘‘(M) The program of workforce invest-
ment activities for adults authorized under 
chapter 5 of subtitle B of title I. 
‘‘(N) The program of workforce investment 
activities for dislocated workers under chapter 5 
of subtitle B of title I. 
‘‘(O) Job Corps program authorized under 
subtitle C of title I. 
‘‘(P) The Adult Education and Family Lit-
eracy Act authorized under title II. 
‘‘(3) PARTICIPANT.—The term ‘participant’ 
means an individual who participated in, or received 
a service under, a job training program that is fund-
ed under this Act. 
‘‘(4) PROVIDER.—The term ‘provider’— 
‘‘(A) has the meaning given the term ‘eligi-
ble provider’ in section 101(12); 
‘‘(B) has the meaning given the term ‘serv-
ice provider’ in section 142(10); and 
‘‘(C) means any other agency, entity, or 
provider that is responsible for administering, 
or carrying out, a job training program under 
this Act. 
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‘‘SEC. 508. PERFORMANCE MEASURES FOR JOB TRAINING 
PROGRAMS. 
‘‘(a) IN GENERAL.—Notwithstanding any other pro-
vision of law, each provider of a job training program 
under this Act shall, annually— 
‘‘(1) use the performance measures described in 
subsection (b) to assess the effectiveness of such job 
training program; and 
‘‘(2) submit the results of such assessment to 
the Secretary. 
‘‘(b) PERFORMANCE MEASURES.—In carrying out 
the assessment described in subsection (a), a provider of 
a job training program shall include the following perform-
ance measures in the assessment: 
‘‘(1) The type of job training each participant 
received under the program and the program costs 
(such as tuition and fees) for each participant. 
‘‘(2) The employment status of each partici-
pant— 
‘‘(A) 1 year after the participant completes 
the program; 
‘‘(B) 3 years after the participant com-
pletes the program; and 
‘‘(C) 5 years after the participant com-
pletes the program. 
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‘‘(3) The percentage and number of partici-
pants who obtained employment after the completion 
of the program in an occupation related to the train-
ing provided under the program. 
‘‘(4) The income level of each participant— 
‘‘(A) 2 years prior to participating in the 
program; and 
‘‘(B) every year, up to 5 years, after par-
ticipation in the program. 
‘‘(5) The percentage and number of partici-
pants receiving Federal assistance— 
‘‘(A) prior to participating in the program; 
and 
‘‘(B) every year, up to 5 years, after par-
ticipation in the program. 
‘‘(c) RULE OF CONSTRUCTION.—Nothing in this sec-
tion shall be construed to prohibit a provider of a job 
training program from assessing the program by using (in 
addition to the performance measures described in sub-
section (b)) a performance measure— 
‘‘(1) not described in subsection (b); or 
‘‘(2) that was being used by the provider on the 
day before the date of the enactment of this section. 
‘‘(d) AUDITS.— 
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‘‘(1) IN GENERAL.—The Inspector General of 
the Department of Labor and the Comptroller Gen-
eral of the United States shall conduct periodic au-
dits to ensure that providers of job training pro-
grams are— 
‘‘(A) accurately assessing the programs, in-
cluding the outcomes of all participants of such 
programs, using the performance measures re-
quired under this section; and 
‘‘(B) in compliance with section 507(c). 
‘‘(2) REQUIREMENTS.— 
‘‘(A) IN GENERAL.—In carrying out any 
audit under this section (other than any initial 
audit survey or any audit investigating possible 
criminal or fraudulent conduct), either directly 
or through grant or contract, the Inspector 
General of the Department of Labor and the 
Comptroller General of the United States shall 
furnish to the providers of job training pro-
grams, or other entity to be audited, advance 
notification of the overall objectives and pur-
poses of the audit, and any extensive record-
keeping or data requirements to be met, not 
later than 14 days (or as soon as practicable), 
prior to the commencement of the audit. 
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‘‘(B) NOTIFICATION
REQUIREMENT.—If 
the scope, objectives, or purposes of the audit 
change substantially during the course of the 
audit, the entity being audited shall be notified 
of the change as soon as practicable. 
‘‘(C) ADDITIONAL
REQUIREMENT.—The 
reports on the results of such audits shall cite 
the law, regulation, policy, or other criteria ap-
plicable to any finding contained in the reports. 
‘‘(D) RULE OF CONSTRUCTION.—Nothing 
contained in this title shall be construed so as 
to be inconsistent with the Inspector General 
Act of 1978 (5 U.S.C. App.) or government au-
diting standards issued by the Comptroller Gen-
eral of the United States.’’. 
SEC. 704. OTHER JOB TRAINING PROGRAMS. 
(a) IN
GENERAL.—The appropriate Secretaries 
shall— 
(1) require that the providers of job training 
programs, as such term is defined by such Secre-
taries, under the programs described in subsection 
(b), conduct an annual assessment of the programs 
in accordance with section 508(b) of the Workforce 
Investment Act of 1998; and 
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(2) award grants under the programs described 
in subsection (b) on a competitive basis. 
(b) JOB TRAINING PROGRAMS.—Subsection (a) shall 
apply to the following programs: 
(1) The Disabled Veterans Outreach Program 
authorized under section 4103A of title 38, United 
States Code. 
(2) The Local Veterans’ Employment Rep-
resentative Program authorized under section 4104 
of title 38, United States Code. 
(3) The Homeless Veterans’ Reintegration Pro-
gram authorized under section 2021 of title 38, 
United States Code. 
(4) Vocational Rehabilitation for Disabled Vet-
erans authorized under chapter 31 of title 38, 
United States Code. 
(5) The National Guard Challenge Program au-
thorized under section 509 of title 32, United States 
Code. 
(6) The Older American Community Service 
Program authorized under title V of the Older 
Americans Act of 1965 (42 U.S.C. 3056 et seq.). 
(7) The Native American Vocational and Tech-
nical Education Program authorized under section 
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543 
116 of the Carl D. Perkins Career and Technical 
Education Act of 2006 (29 U.S.C. 741). 
(8) Tribally Controlled Post-secondary Voca-
tional and Technical Institutions programs author-
ized under section 117 of the Carl D. Perkins Ca-
reer and Technical Education Act of 2006 (20 
U.S.C. 2327). 
(9) The Native Hawaiian Vocational Education 
Program authorized under section 116 of the Carl 
D. Perkins Career and Technical Education Act of 
2006 (29 U.S.C. 741). 
(10) Career and Technical Assistance to the 
States authorized under section title I of the Carl D. 
Perkins Career and Technical Education Act of 
2006 (20 U.S.C. 2321 et seq.). 
(11) Tech Prep Education Program authorized 
under title II of the Carl D. Perkins Career and 
Technical Education Act of 2006 (29 U.S.C. 2371 
et seq.). 
(12) Migrant and Seasonal Farmworkers Pro-
gram authorized under section 304 of the Rehabili-
tation Act of 1973 (29 U.S.C. 774). 
(13) Projects with industry authorized under 
section 611 of the Rehabilitation Act of 1973 (29 
U.S.C. 795). 
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544 
(14) Vocational Rehabilitation Services author-
ized under title I of the Rehabilitation Act of 1973 
(29 U.S.C. 720 et seq.). 
(15) American Indian Vocational Rehabilitation 
Services authorized under part C of title I of the Re-
habilitation Act of 1973 (29 U.S.C. 741 et seq.). 
(16) Coordination of Migrant Education Activi-
ties authorized under section 1308 of the Elemen-
tary and Secondary Education Act of 1965 (20 
U.S.C. 6398). 
(17) Programs authorized under the Commu-
nity Services Block Grant Act (42 U.S.C. 9901 et 
seq.). 
(18) The Tribal Work Grants program author-
ized under section 412(a)(2) of Social Security Act 
(42 U.S.C. 612(a)(2)). 
(19) Job training grants authorized under sec-
tion 414(c) of the American Competitiveness and 
Workforce Improvement Act of 1998 (29 U.S.C. 
2916a). 
(20) Indian Employment, Job Placement As-
sistance, and Vocational Training programs author-
ized under the Indian Self-Determination Act (25 
U.S.C. 450 et seq.). 
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545 
(21) Programs authorized under part A of title 
IV of the Social Security Act (42 U.S.C. 601 et 
seq.). 
(22) Refugee assistance programs authorized 
under chapter 2 of title IV of the Immigration and 
Nationality Act (8 U.S.C. 1521 et seq.). 
(23) Targeted assistance programs for refugees 
and entrants authorized under chapter 2 of title IV 
of the Immigration and Nationality Act (8 U.S.C. 
1521 et seq.). 
(24) Programs authorized under section 16(h) 
of the Food and Nutrition Act of 2008 (7 U.S.C. 
2025(h)). 
(25) The Federal Prisoner Reentry Initiative 
authorized under section 231(i) of Second Chance 
Act of 2007 (42 U.S.C. 17541(i)). 
(26) Employment services authorized under the 
Wagner-Peyser Act of 1933 (29 U.S.C. 49 et seq.). 
(27) Training programs under section 236 of 
part II of subchapter B of chapter 2 of title II of 
the Trade Adjustment Assistance Act of 1974 (19 
U.S.C. 2296). 
(c) DEFINITION.—The term ‘‘appropriate Secretary’’ 
means the head of the Federal agency who exercises ad-
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546 
ministrative authority over a program described in sub-
section (b). 
SEC. 705. TRANSPARENCY. 
Section 136(d)(3)(A) of the Workforce Investment 
Act of 1998 (29 U.S.C. 2871) is amended to read as fol-
lows: 
‘‘(A) shall make available to the general 
public the information contained in such reports 
and the results of an assessment using the per-
formance measures described in section 508(b) 
with respect to the workforce investment activi-
ties authorized under this subtitle— 
‘‘(i) through publication; and 
‘‘(ii) by posting such information and 
results on the Internet website of the De-
partment of Labor in a format and lan-
guage understandable by the general pub-
lic.’’. 
SEC. 706. EVALUATIONS. 
(a) EVALUATIONS.—Section 172 of the Workforce 
Investment Act of 1998 (29 U.S.C. 2917) is amended— 
(1) in subsection (a)— 
(A) in the matter preceding paragraph 
(1)— 
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547 
(i) by inserting ‘‘impact’’ after ‘‘con-
tinuing’’; and 
(ii) 
by 
inserting 
‘‘impact’’ 
after 
‘‘Such’’; and 
(B) in paragraph (1)— 
(i) by striking ‘‘the general effective-
ness’’ and inserting ‘‘outcomes measuring 
of the effectiveness’’; 
(ii) in subparagraph (A), by striking 
‘‘and’’ after the semicolon; 
(iii) in subparagraph (B)— 
(I) by striking ‘‘to the extent fea-
sible,’’; and 
(II) by inserting ‘‘and’’ after the 
semicolon; and 
(iv) by adding at the end the fol-
lowing: 
‘‘(C) increase the incomes and hourly 
wages of participants in comparison to similarly 
situated individuals who did not participate in 
such programs and activities.’’; 
(2) in subsection (b), by inserting ‘‘impact’’ 
after ‘‘conduct’’; 
(3) in subsection (c)— 
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548 
(A) by striking ‘‘Evaluations’’ and insert-
ing ‘‘Impact evaluations’’; 
(B) by inserting ‘‘intervention and’’ after 
‘‘, including the use of’ ’’ 
(C) by inserting ‘‘The Secretary for each 
impact evaluation shall fulfill all the notification 
and reporting requirements under subsections 
(d), (e), and (f).’’ after ‘‘assignment methodolo-
gies.’’; and 
(D) by striking ‘‘by the end of fiscal year 
2005’’ and inserting ‘‘not later than 3 years 
after the date of the enactment of the Job 
Training Results Act of 2010’’; 
(4) by redesignating subsections (c) through (f), 
as subsections (d) through (g), respectively; and 
(5) by inserting after subsection (c), the fol-
lowing: 
‘‘(a) 
NOTIFICATION
OF
IMPACT
EVALUATION 
PROGRESS.— 
‘‘(1) REPORTS TO CONGRESS.—Not later than 
1 year after the date of the enactment of the Job 
Training Results Act of 2010, and annually there-
after, the Secretary shall transmit to the Committee 
on Education and the Labor, and the Committee on 
the Budget, of the House of Representatives and the 
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549 
Committee on Health, Education, Labor, and Pen-
sions, and the Committee on Budget, of the Senate 
a report on the progress the Secretary is making in 
evaluating the programs and activities carried out 
under this section. 
‘‘(2) AVAILABILITY TO GENERAL PUBLIC.—Not 
later than 1 year after the date of the enactment of 
the Job Training Results Act of 2010, and annually 
thereafter not later than 30 days after the trans-
mission of an annual report under paragraph (1), 
the Secretary shall make available the reports to the 
general public on the Internet website of the Depart-
ment of Labor.’’; 
(6) by amending subsection (e) (as so redesig-
nated), by inserting ‘‘impact’’ after ‘‘carrying out 
an’’; 
(7) by amending subsection (f) (as so redesig-
nated)— 
(A) by striking ‘‘Workforce’’ and inserting 
‘‘, Labor and the Committee on the Budget,’’; 
(B) by striking ‘‘Committee on Labor and 
Human Resources’’ and inserting ‘‘Committee 
on Health, Education, Labor, and Pensions, 
and the Committee on Budget,’’; 
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550 
(C) by striking ‘‘30 days’’ and inserting 
‘‘60 days’’; and 
(D) by inserting the following: ‘‘All reports 
transmitted under this subsection shall be made 
available to the general public on the Internet 
website of the Department of Labor.’’; and 
(8) by adding at the end the following: 
‘‘(h) GAO REPORT.—Not later than 3 years after the 
date of the enactment of the Job Training Results Act 
of 2010, and every 3 years thereafter, the Comptroller 
General of the United States shall conduct a study and 
submit a report to Congress that evaluates— 
‘‘(1) the effectiveness of the impact evaluations 
conducted under this section; and 
‘‘(2) the impact of such evaluations on the as-
sessments conducted under section 508(b) with re-
spect to the programs and activities carried out 
under this title. 
‘‘(i) DEFINITIONS.—In this section: 
‘‘(1) IMPACT EVALUATION.—The term ‘impact 
evaluation’ means an evaluative study that evaluates, 
in accordance with subsection (a), the outcomes of 
programs and activities carried out under this title, 
including the impact on social conditions such pro-
grams and activities are intended to improve. 
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551 
‘‘(2) SCIENTIFIC RANDOM ASSIGNMENT METH-
ODOLOGIES.—The term ‘scientific random assign-
ment methodologies’ means research designs con-
ducted in program settings in which intervention 
and control groups are— 
‘‘(A) formed by random assignment; and 
‘‘(B) compared on the basis of outcome 
measures for the purpose of determining the 
impact of the programs and activities carried 
out under this title on participants. 
‘‘(3) CONTROL
GROUP.—The term ‘control 
group’ means a group of individuals— 
‘‘(A) who did not participate in the pro-
grams and activities carried out under this title; 
and 
‘‘(B) whose outcome measures are com-
pared to the outcome measures of individuals in 
an intervention group. 
‘‘(4) INTERVENTION GROUP.—The term ‘inter-
vention group’ means a group of individuals— 
‘‘(A) who participated in the programs and 
activities carried out under this title; and 
‘‘(B) whose outcome measures are com-
pared to the outcome measures of individuals in 
a control group.’’. 
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552 
SEC. 707. ENCOURAGING INNOVATION. 
(a) STATE BLOCK GRANT.—Section 192 (29 U.S.C. 
2942) is amended to read as follows: 
‘‘SEC. 192. JOB TRAINING IMPROVEMENT PLAN. 
‘‘(a) STATE BLOCK GRANT.— 
‘‘(1) IN GENERAL.—Not earlier than 1 year of 
the date of the enactment of the ‘Job Training Re-
sults Act of 2010’, a State may submit to the Sec-
retary, and the Secretary (in cooperation with the 
appropriate Secretaries) may approve a Job Train-
ing Improvement Plan (in this section referred to as 
a ‘Plan’) submitted by a State pursuant to sub-
section (d) under which the State is authorized to— 
‘‘(A) integrate any of the funds that the 
State is eligible to receive under the job train-
ing programs described in subsection (g) to im-
prove job training results in the State; and 
‘‘(B) waive, in accordance with the Plan 
and except as otherwise indicated in this sub-
section, any of the statutory and regulatory re-
quirements— 
‘‘(i) applicable under this title to local 
areas; and 
‘‘(ii) applicable under the programs 
described in subsection (g), the funds of 
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553 
which will be integrated under a Plan sub-
mitted under this section. 
‘‘(2) ELIGIBILITY.—In order for a State’s Plan 
to be approved under this section, the providers of 
training programs in the State shall have carried out 
at least 1 assessment pursuant to section 508 with 
respect to such programs. 
‘‘(b) PERIODS.— 
‘‘(1) IN GENERAL.—The Secretary (in coopera-
tion with other appropriate Secretaries) may— 
‘‘(A) approve a State’s Plan under this 
section for a period of not more than 3 years; 
and 
‘‘(B) renew a State’s Plan under this sec-
tion for additional 3-year periods if the State 
demonstrates a significant improvement in job 
training results at the end of the preceding 3- 
year period. 
‘‘(c) DEFINITIONS.—For purposes of this section: 
‘‘(1) JOB TRAINING RESULTS.— 
‘‘(A) IN GENERAL.—The term ‘job training 
results’ means an improvement in the assess-
ment carried out pursuant to section 508 with 
respect to the job training programs conducted 
in a State, as compared to the assessment of 
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554 
such programs carried out in the most recent 
preceding fiscal year. 
‘‘(B) IMPROVEMENTS.—An improvement 
in an assessment described in subparagraph (A) 
shall include— 
‘‘(i) an increase in the percentage of 
participants— 
‘‘(I) who were employed for at 
least 1 year in an occupation related 
to the training provided under the 
program; 
‘‘(II) who are employed at higher 
income levels; and 
‘‘(ii) a decrease in the percentage of 
participants who are receiving Federal as-
sistance 
‘‘(2) APPROPRIATE SECRETARY.—The term ‘ap-
propriate Secretary’ means the head of the Federal 
agency who exercises administrative authority over a 
program described in subsection (g). 
‘‘(d) CONTENTS OF PLAN.—To have a Plan approved 
under this subsection, a State, after consultation with 
State and local workforce investment boards, shall submit 
a Plan to the Secretary at such time, in such manner, 
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555 
and containing such information as the Secretary may re-
quire, including— 
‘‘(1) identification of the funds the State is eli-
gible to receive under the job training programs de-
scribed in subsection (g) that will be integrated; 
‘‘(2) a description of how the Plan, including 
how the integration of funds under the Plan will re-
sult in a significant improvement in job training re-
sults in the State; 
‘‘(3) a description of how the State will main-
tain accurate records of the performance measures 
for the assessments required pursuant to section 
508; 
‘‘(4) assurances that in carrying out the Plan— 
‘‘(A) the State will serve populations con-
sistent with the populations served by the funds 
which are being integrated, and will provide 
such populations universal access to work ready 
services as described in section 134(d)(2) of 
this Act; 
‘‘(B) of the funds expended under the plan 
each fiscal year, not more than 10 percent of 
such funds will be expended on the costs of ad-
ministration (as defined by the Secretary); and 
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556 
‘‘(C) the State will comply with require-
ments under this title and the programs to be 
integrated relating to wage and labor standards 
(including nondisplacement provisions), griev-
ance procedures and judicial review, and non-
discrimination; 
‘‘(5) identification of private resources that will 
be used to assist in improving job training results; 
and 
‘‘(6) a description of the job training awareness 
campaign that the State will carry out as part of 
such Plan. 
‘‘(e) INTEGRATION OF JOB TRAINING PROGRAMS AU-
THORIZED.— 
‘‘(1) AUTHORIZATION
FOR
INTEGRATION.—In 
carrying out this subsection, the Secretary, in co-
operation with the appropriate Secretaries, shall, 
upon the approval of the Plan submitted under sub-
section (d), authorize a State to integrate, as de-
scribed in paragraph (2) the portion of the funds the 
State is eligible to receive under the programs de-
scribed in subsection (g) to assist in implementing 
such Plan. 
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557 
‘‘(2) INTEGRATION.—The authorization shall 
give the State the authority to integrate, in accord-
ance with the State’s Plan, funds the State— 
‘‘(A) is eligible to receive under the pro-
grams described in subsection (g); and 
‘‘(B) has identified under the Plan as 
funds to be integrated. 
‘‘(f) EFFECT ON PROGRAM REQUIREMENTS.—The 
State may use the integrated funds used to carry out any 
of the activities authorized under any of the programs de-
scribed in subsection (g), but shall not be required to carry 
out any requirements of the statutes authorizing the pro-
grams, except as otherwise specified in this section. 
‘‘(g) JOB TRAINING PROGRAMS.—Funds that shall 
be made available for integration under an approved Plan 
are funds provided under the following programs: 
‘‘(1) Programs for migrant youth authorized 
under section 127. 
‘‘(2) Native American Programs authorized 
under section 166. 
‘‘(3) Migrant and seasonal farm workers pro-
grams authorized under section 167. 
‘‘(4) Youth Opportunity Grant authorized 
under section 169. 
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558 
‘‘(5) Grants to States for Incarcerated Youth 
Offenders authorized under section 171. 
‘‘(6) Programs for the reintegration of ex-of-
fenders authorized under section 171. 
‘‘(7) Responsible Reintegration of Youth Of-
fenders program authorized under section 171. 
‘‘(8) Program of Competitive Grants for Work-
er Training and Placement in High Growth and 
Emerging Industry Sectors authorized under section 
171. 
‘‘(9) Energy Efficiency and Renewable Worker 
Training Programs authorized under section 171(e). 
‘‘(10) Youthbuild Program authorized under 
section 173A. 
‘‘(11) Veterans’ Workforce Investment Program 
authorized under section 168. 
‘‘(12) The program of workforce investment ac-
tivities for youth authorized under chapter 4 of sub-
title B of title I. 
‘‘(13) The program of workforce investment ac-
tivities for adults authorized under chapter 5 of sub-
title B of title I. 
‘‘(14) The program of workforce investment ac-
tivities for dislocated workers under chapter 5 of 
subtitle B of title I. 
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559 
‘‘(15) The Adult Education and Family Lit-
eracy Act authorized under title II. 
‘‘(16) The Disabled Veterans Outreach Pro-
gram authorized under section 4103A of title 38, 
United States Code. 
‘‘(17) The Local Veterans’ Employment Rep-
resentative Program authorized under section 4104 
of title 38, United States Code. 
‘‘(18) The Homeless Veterans’ Reintegration 
Program authorized under section 2021 of title 38, 
United States Code. 
‘‘(19) Vocational Rehabilitation for Disabled 
Veterans authorized under chapter 31 of title 38, 
United States Code. 
‘‘(20) The National Guard Challenge Program 
authorized under section 509 of title 32, United 
States Code. 
‘‘(21) The Older American Community Service 
Program authorized under title V of the Older 
Americans Act of 1965 (42 U.S.C. 3056 et seq.). 
‘‘(22) The Native American Vocational and 
Technical Education Program authorized under sec-
tion 116 of the Carl D. Perkins Career and Tech-
nical Education Act of 2006 (29 U.S.C. 741). 
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560 
‘‘(23) Tribally Controlled Post-secondary Voca-
tional and Technical Institutions programs author-
ized under section 117 of the Carl D. Perkins Ca-
reer and Technical Education Act of 2006 (20 
U.S.C. 2327). 
‘‘(24) The Native Hawaiian Vocational Edu-
cation Program authorized under section 116 of the 
Carl D. Perkins Career and Technical Education 
Act of 2006 (29 U.S.C. 741). 
‘‘(25) Career and Technical Assistance to the 
States authorized under section title I of the Carl D. 
Perkins Career and Technical Education Act of 
2006 (20 U.S.C. 2321 et seq.). 
‘‘(26) Tech Prep Education Program author-
ized under title II of the Carl D. Perkins Career and 
Technical Education Act of 2006 (29 U.S.C. 2371 
et seq.). 
‘‘(27) Migrant and Seasonal Farmworkers Pro-
gram authorized under section 304 of the Rehabili-
tation Act of 1973 (29 U.S.C. 774). 
‘‘(28) Projects with industry authorized under 
section 611 of the Rehabilitation Act of 1973 (29 
U.S.C. 795). 
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561 
‘‘(29) Vocational Rehabilitation Services au-
thorized under title I of the Rehabilitation Act of 
1973 (29 U.S.C. 720 et seq.). 
‘‘(30) American Indian Vocational Rehabilita-
tion Services authorized under part C of title I of 
the Rehabilitation Act of 1973 (29 U.S.C. 741 et 
seq.). 
‘‘(31) Coordination of Migrant Education Ac-
tivities authorized under section 1308 of the Ele-
mentary and Secondary Education Act of 1965 (20 
U.S.C. 6398). 
‘‘(32) Programs authorized under the Commu-
nity Services Block Grant Act (42 U.S.C. 9901 et 
seq.). 
‘‘(33) The Tribal Work Grants program author-
ized under section 412(a)(2) of Social Security Act 
(42 U.S.C. 612(a)(2)). 
‘‘(34) Job training grants authorized under sec-
tion 414(c) of the American Competitiveness and 
Workforce Improvement Act of 1998 (29 U.S.C. 
2916a). 
‘‘(35) Indian Employment, Job Placement As-
sistance, and Vocational Training programs author-
ized under the Indian Self-Determination Act (25 
U.S.C. 450 et seq.). 
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562 
‘‘(36) Programs authorized under part A of 
title IV of the Social Security Act (42 U.S.C. 601 
et seq.). 
‘‘(37) Refugee assistance programs authorized 
under chapter 2 of title IV of the Immigration and 
Nationality Act (8 U.S.C. 1521 et seq.). 
‘‘(38) Targeted assistance programs for refu-
gees and entrants authorized under chapter 2 of title 
IV of the Immigration and Nationality Act (8 
U.S.C. 1521 et seq.). 
‘‘(39) Programs authorized under section 16(h) 
of the Food and Nutrition Act of 2008 (7 U.S.C. 
2025(h)). 
‘‘(40) The Federal Prisoner Reentry Initiative 
authorized under section 231(i) of Second Chance 
Act of 2007 (42 U.S.C. 17541(i)). 
‘‘(41) Employment services authorized under 
the Wagner-Peyser Act of 1933 (29 U.S.C. 49 et 
seq.). 
‘‘(42) Training programs under section 236 of 
part II of subchapter B of chapter 2 of title II of 
the Trade Adjustment Assistance Act of 1974 (19 
U.S.C. 2296). 
‘‘(h) PERFORMANCE MEASURES AND REPORTING.— 
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‘‘(1) PERFORMANCE
MEASURES.—Each State 
with an approved Plan under this section shall carry 
out an assessment pursuant to section 508 of all the 
job training programs conducted in such State that 
receive funding under the Plan for each fiscal year 
the Plan is approved under this section. 
‘‘(2) REPORTING.—Each State with an ap-
proved Plan under this section shall ensure that 
records are maintained and reports are submitted, in 
such form and containing such information, as the 
Secretary may require regarding the performance of 
job training programs funded pursuant to this sec-
tion. 
‘‘(i) TECHNICAL ASSISTANCE AND EVALUATION.— 
‘‘(1) TECHNICAL ASSISTANCE.—The Secretary 
shall provide such staff training, technical assist-
ance, and other activities as the Secretary deems ap-
propriate to support the implementation of this sec-
tion. 
‘‘(2) EVALUATION.—The Secretary may require 
that States with an approved Plan under this section 
participate in an evaluation of job training programs 
funded pursuant to this subsection, including an 
evaluation using the techniques described in section 
172(c). 
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‘‘(j) PLAN REVIEW.— 
‘‘(1) IN
GENERAL.—Upon receipt of a Plan 
from the Governor, the Secretary shall consult with 
the appropriate Secretaries in reviewing and approv-
ing such plan. Such plan shall be approved if it 
meets the requirements described in subsection (d). 
‘‘(2) PLAN APPROVAL.— 
‘‘(A) 90-DAY PERIOD.—Subject to subpara-
graph (B), a Plan that is submitted to the Sec-
retary under this section shall be considered to 
be approved by the Secretary at the end of the 
90-day period beginning on the day the Sec-
retary receives the Plan, unless the Secretary 
denies the Plan during the 90-day period. 
‘‘(B) 30-DAY
EXTENSIONS.—If the Sec-
retary is in good faith negotiations with a State 
with respect to the State’s Plan— 
‘‘(i) at the end of the 90-day period 
described in subparagraph (A), the Sec-
retary may have an additional 30 days to 
determine whether to approve the Plan; or 
‘‘(ii) at the end of the 30 days de-
scribed in clause (i), the Secretary may 
have an additional 30 days to determine 
whether to approve the Plan. 
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‘‘(3) PLAN
DENIAL.—In the case where the 
Secretary denies a Plan submitted by a State under 
this section, the Secretary shall— 
‘‘(A) provide a written explanation to the 
State for the denial of the Plan; and 
‘‘(B) make such written explanation acces-
sible to the general public. 
‘‘(k) FEDERAL RESPONSIBILITIES.— 
‘‘(1) INTERAGENCY MEMORANDUM OF UNDER-
STANDING.—Within 90 days following the date of 
enactment of this section, the Secretary and the ap-
propriate Secretaries shall enter into an interdepart-
mental memorandum of agreement providing for the 
implementation of the Plans with respect to the inte-
gration of funds administered by each Secretary. 
‘‘(2) INTERAGENCY
FUNDS
TRANSFERS
AU-
THORIZED.—The Secretary and the appropriate Sec-
retaries responsible for the programs that are in-
cluded in a Plan approved are authorized to take 
such action as may be necessary to provide for intra- 
agency or interagency transfers of funds otherwise 
available to a State in order to further the purposes 
of this section.’’. 
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SEC. 708. MAKING WIA TRAINING VOUCHERS MORE ACCES-
SIBLE AND FLEXIBLE. 
(a) USE OF FUNDS FOR EMPLOYMENT AND TRAIN-
ING ACTIVITIES.— 
(1) 
WORK
READY
SERVICES.—Section 
134(d)(2) (29 U.S.C. 2864(c)(2)) is amended— 
(A) in the heading, by striking ‘‘CORE 
SERVICES’’ and inserting ‘‘WORK READY SERV-
ICES’’; 
(B) by striking ‘‘core services’’ and insert-
ing ‘‘work ready services’’; 
(C) by striking ‘‘paragraph (1)(A)’’ and in-
serting ‘‘paragraph (1)(A)(i)’’; 
(D) by striking ‘‘who are adults or dis-
located workers’’; 
(E) in subparagraph (A), by inserting 
‘‘and assistance in obtaining eligibility deter-
minations under the other one-stop partner pro-
grams through such activities as assisting in 
the submission of applications, the provision of 
information on the results of such applications, 
the provision of intake services and information, 
and, where appropriate and consistent with the 
authorizing statute of the one-stop partner pro-
gram, determinations of eligibility’’ after ‘‘sub-
title’’; 
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(F) by amending subparagraph (D) to 
read as follows: 
‘‘(D) labor exchange services, including— 
‘‘(i) job search and placement assist-
ance, and where appropriate career coun-
seling; 
‘‘(ii) appropriate recruitment services 
for employers, including small employers, 
in the local area, which may include serv-
ices described in this subsection, including 
information and referral to specialized 
business services not traditionally offered 
through the one-stop delivery system; and 
‘‘(iii) reemployment services provided 
to 
unemployment 
claimants, 
including 
claimants identified as in need of such 
services under the worker profiling system 
established under section 303(j) of the So-
cial Security Act (42 U.S.C. 503(j));’’; 
(G) in subparagraph (I), by inserting ‘‘and 
the administration of the work test for the un-
employment compensation system’’ after ‘‘com-
pensation’’; and 
(H) by striking subparagraph (H) and in-
serting the following: 
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‘‘(H) provision of accurate information, in 
formats that are usable and understandable to 
all one-stop center customers, relating to the 
availability of supportive services or assistance, 
including child care, child support, medical or 
child health assistance under title XIX or XXI 
of the Social Security Act (42 U.S.C. 1396 et 
seq. and 1397aa et seq.), benefits under the 
Food Stamp Act of 1977 (7 U.S.C. 2011 et 
seq.), the earned income tax credit under sec-
tion 32 of the Internal Revenue Code of 1986, 
and assistance under a State program funded 
under part A of title IV of the Social Security 
Act (42 U.S.C. 601 et seq.) and other sup-
portive services and transportation provided 
through funds made available under such part, 
available in the local area, and referral to such 
services or assistance as appropriate;’’; and 
(I) by amending subparagraph (J) to read 
as follows: 
‘‘(J) assistance in establishing eligibility 
for programs of financial aid assistance for 
training and education programs that are not 
funded under this Act and are available in the 
local area; and’’; and 
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(J) by redesignating subparagraph (K) as 
subparagraph (M); and 
(K) by inserting the following new sub-
paragraphs after subparagraph (J)): 
‘‘(K) the provision of information from of-
ficial publications of the Internal Revenue Serv-
ice, regarding Federal tax credits available to 
individuals relating to education, job training 
and employment, including the Hope Scholar-
ship Credit and the Lifetime Learning Credit 
(26 U.S.C. 25A), and the Earned Income Tax 
Credit (26 U.S.C. 32); 
‘‘(L) services relating to the Work Oppor-
tunity Tax Credit (26 U.S.C. 51); 
‘‘(M) comprehensive and specialized assess-
ments of the skill levels and service needs of 
adults and dislocated workers, which may in-
clude— 
‘‘(i) diagnostic testing and use of 
other assessment tools; and 
‘‘(ii) in-depth interviewing and evalua-
tion to identify employment barriers and 
appropriate employment goals; 
‘‘(N) development of an individual employ-
ment plan, to identify the employment goals, 
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appropriate achievement objectives, and appro-
priate combination of services for the participa-
tion to achieve the employment goals; 
‘‘(O) group counseling; 
‘‘(P) individual counseling and career plan-
ning; 
‘‘(Q) case management; 
‘‘(R) short-term prevocational services, in-
cluding development of learning skills, commu-
nications skills, interviewing skills, punctuality, 
personal maintenance skills, and professional 
conduct, to prepare individuals for unsubsidized 
employment or training; 
‘‘(S) internships and work experience; 
‘‘(T) literacy activities relating to basic 
work readiness, information and communication 
technology literacy activities, and financial lit-
eracy activities, if such activities are not avail-
able to participants in the local area under pro-
grams administered under the Adult Education 
and Family Literacy Act (20 U.S.C. 2901 et 
seq.); and 
‘‘(U) out-of-area job search assistance and 
relocation assistance.’’. 
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(L) DELIVERY
OF
SERVICES.—Section 
134(c)(3) (29 U.S.C. 2864(c)(3)) is amended to 
read as follows: 
‘‘(3) DELIVERY OF SERVICES.—The work ready 
services described in paragraph (M) through (U) 
shall be provided through the one-stop delivery sys-
tem and may be provided through contracts with 
public, private for-profit, and private nonprofit serv-
ice providers, approved by the local board.’’. 
(M) 
TRAINING
SERVICES.—Section 
134(c)(4) is amended— 
(i) by amending subparagraph (A) to 
read as follows: 
‘‘(A) IN GENERAL.—Funds allocated to a 
local area under section 133(b) shall be used to 
provide training services to adults who— 
‘‘(i) after an interview, evaluation, or 
assessment, and case management, have 
been determined by a one-stop operator or 
one-stop partner, as appropriate, to— 
‘‘(I) be in need of training serv-
ices to obtain or retain suitable em-
ployment; and 
‘‘(II) have the skills and quali-
fications to successfully participate in 
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the selected program of training serv-
ices; 
‘‘(ii) select programs of training serv-
ices that are directly linked to the employ-
ment opportunities in the local area in-
volved or in another area in which the 
adults receiving such services are willing to 
commute or relocate; 
‘‘(iii) who meet the requirements of 
subparagraph (B); and 
‘‘(iv) who are determined eligible in 
accordance with the priority system in ef-
fect under subparagraph (E).’’; 
(ii) in subparagraph (B)(i), by strik-
ing ‘‘Except’’ and inserting ‘‘Notwith-
standing section 479B of the Higher Edu-
cation Act of 1965 (20 U.S.C. 1087uu) 
and except’’; 
(iii) by amending subparagraph (D) to 
read as follows: 
‘‘(D) TRAINING SERVICES.—Training serv-
ices authorized under this paragraph may in-
clude— 
‘‘(i) occupational skills training; 
‘‘(ii) on-the-job training; 
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‘‘(iii) skill upgrading and retraining; 
‘‘(iv) entrepreneurial training; 
‘‘(v) education activities leading to a 
high school diploma or its equivalent, in-
cluding a General Educational Develop-
ment credential, in combination with, con-
currently or subsequently, occupational 
skills training; 
‘‘(vi) adult education and literacy ac-
tivities provided in conjunction with other 
training authorized under this subpara-
graph; 
‘‘(vii) workplace training combined 
with related instruction; and 
‘‘(viii) occupational skills training that 
incorporates English language acquisi-
tion.’’; 
(iv) by amending subparagraph (E) to 
read as follows: 
‘‘(E) PRIORITY.— 
‘‘(i) IN GENERAL.—A priority shall be 
given to dislocated workers or workers who 
are in danger of being dislocated for the 
provision of intensive and training services 
under this subsection. 
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‘‘(ii) DETERMINATIONS.—The Gov-
ernor and the appropriate local board shall 
direct the one-stop operators in the local 
area with regard to making determinations 
with respect to the priority of service under 
this subparagraph.’’; 
(v) in subparagraph (F), by striking 
clause (iii) and inserting the following: 
‘‘(iii) ENHANCED INDIVIDUAL TRAIN-
ING ACCOUNTS.—An individual who seeks 
training services and who is eligible pursu-
ant to subparagraph (A), may, in consulta-
tion with a case manager, select an eligible 
provider of training services from the list 
or identifying information for providers de-
scribed in clause (ii)(I). Upon such selec-
tion, the one-stop operator involved shall, 
to the extent practicable, refer such indi-
vidual to the eligible provider of training 
services, and arrange for payment for such 
services through a enhanced individual 
training account. 
‘‘(iv) 
COORDINATION.—Each 
local 
board may, through one-stop centers, co-
ordinate enhanced individual training ac-
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(aa) by striking ‘‘an indi-
vidual training account’’ and in-
serting ‘‘a enhanced individual 
training account’’; 
(bb) in subclause (II), by 
striking ‘‘individual training ac-
counts’’ and inserting ‘‘enhanced 
individual training accounts’’; 
(cc) in subclause (II) by 
striking ‘‘or’’ after the semicolon; 
(dd) in subclause (III) by 
striking the period and inserting 
‘‘; or’’; and 
(ee) by adding at the end of 
the following: 
‘‘(IV) The local board determines 
that it would be most appropriate to 
award a contract to an institution of 
higher education in order to facilitate 
the training of multiple individuals in 
high-demand occupations, if such con-
tract does not limit customer choice.’’. 
(IV) in clause (iv)— 
(aa) by redesignating sub-
clause (IV) as subclause (V) and 
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inserting after subclause (III) the 
following: 
‘‘(IV) Individuals with disabil-
ities.’’. 
(2) PERMISSIBLE ACTIVITIES.—Section 134(c) 
is amended by amending paragraph (1) to read as 
follows: 
‘‘(1) DISCRETIONARY ONE-STOP DELIVERY AC-
TIVITIES.— 
‘‘(A) IN GENERAL.—Funds allocated to a 
local area under section 133(b) may be used to 
provide, through the one-stop delivery system— 
‘‘(i) customized screening and referral 
of qualified participants in training serv-
ices to employers; 
‘‘(ii) customized employment-related 
services to employers on a fee-for-service 
basis; 
‘‘(iii) customer support to navigate 
among multiple services and activities for 
special participant populations that face 
multiple barriers to employment, including 
individuals with disabilities; 
‘‘(iv) employment and training assist-
ance provided in coordination with child 
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support enforcement activities of the State 
agency carrying out subtitle D of title IV 
of the Social Security Act (42 U.S.C. 651 
et seq.); 
‘‘(v) activities to improve services to 
local employers, including small employers 
in the local area, and increase linkages be-
tween the local workforce investment sys-
tem and employers; 
‘‘(vi) activities to facilitate remote ac-
cess to services provided through a one- 
stop delivery system, including facilitating 
access through the use of technology; and 
‘‘(vii) activities to carry out business 
services and strategies that meet the work-
force investment needs of local area em-
ployers, as determined by the local board, 
consistent with the local plan under section 
118, which services— 
‘‘(I) may be provided through ef-
fective business intermediaries work-
ing in conjunction with the local 
board, and may also be provided on a 
fee-for-service basis or through the 
leveraging of economic development 
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and other resources as determined ap-
propriate by the local board; and 
‘‘(II) may include— 
‘‘(aa) identifying and dis-
seminating 
to 
business, 
edu-
cators, and job seekers, informa-
tion related to the workforce, eco-
nomic and community develop-
ment needs, and opportunities of 
the local economy; 
‘‘(bb) development and deliv-
ery of innovative workforce in-
vestment services and strategies 
for area businesses, which may 
include sectoral, industry cluster, 
regional skills alliances, career 
ladder, skills upgrading, skill 
standard development and certifi-
cation, apprenticeship, and other 
effective initiatives for meeting 
the workforce investment needs 
of area employers and workers; 
‘‘(cc) participation in semi-
nars and classes offered in part-
nership with relevant organiza-
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tions focusing on the workforce- 
related needs of area employers 
and job seekers; 
‘‘(dd) training consulting, 
needs analysis, and brokering 
services for area businesses, in-
cluding the organization and ag-
gregation of training (which may 
be paid for with funds other than 
those provided under this title), 
for individual employers and coa-
litions of employers with similar 
interests, products, or workforce 
needs; 
‘‘(ee) assistance to area em-
ployers in the aversion of layoffs 
and in managing reductions in 
force in coordination with rapid 
response activities; 
‘‘(ff) the marketing of busi-
ness services offered under this 
title, to appropriate area employ-
ers, including small and mid- 
sized employers; 
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‘‘(gg) information referral 
on concerns affecting local em-
ployers; and 
‘‘(hh) other business services 
and strategies designed to better 
engage employers in workforce 
investment activities and to make 
the workforce investment system 
more relevant to the workforce 
investment needs of area busi-
nesses, as determined by the local 
board to be consistent with the 
objectives of this title.’’. 
SEC. 709. LIFE LONG LEARNING AWARENESS CAMPAIGNS. 
(a) FEDERAL COMMUNICATIONS COMMISSION.— 
(1) IN
GENERAL.—The Federal Communica-
tions Commission shall require that each licensed 
broadcaster keep a record of the number and dura-
tion of public service announcements voluntarily 
broadcast with respect to the job training opportuni-
ties and services described in section 509 of the 
Workforce Investment Act of 1998. 
(2) DEADLINE.—Not later than 90 days after 
the date of the enactment of this Act, the Federal 
Communications Commission shall take all actions 
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