122
(B) by amending subsection (f)(2)(A) to
read as follows:
‘‘(A) any defined benefit plan described in
section 401(a) which includes a trust exempt
from tax under section 501(a), or’’, and
(C) in subsection (f)(3) by striking ‘‘sig-
nificantly’’ both places it appears.
(2) Section 204(h)(9) of the Employee Retire-
ment Income Security Act of 1974 is amended by
striking ‘‘significantly’’ both places it appears.
(3) Section 659(c)(3)(B) of the Economic
Growth and Tax Relief Reconciliation Act of 2001 is
amended by striking ‘‘(or’’ and inserting ‘‘(and’’.
(v) AMENDMENTS RELATING TO SECTION 661 OF
THE ACT.—
(1) Section 412(c)(9)(B) is amended—
(A) in clause (ii) by striking ‘‘125 percent’’
and inserting ‘‘100 percent’’, and
(B) by adding at the end the following new
clause:
‘‘(iv) LIMITATION.—A change in fund-
ing method to use a prior year valuation,
as provided in clause (ii), may not be made
unless as of the valuation date within the
prior plan year, the value of the assets of
123
the plan are not less than 125 percent of
the plan’s current liability (as defined in
paragraph (7)(B)).’’.
(2) Section 302(c)(9)(B) of the Employee Re-
tirement Income Security Act of 1974 is amended—
(A) in clause (ii) by striking ‘‘125 percent’’
and inserting ‘‘100 percent’’, and
(B) by adding at the end the following new
clause:
‘‘(iv) A change in funding method to use a prior year
valuation, as provided in clause (ii), may not be made un-
less as of the valuation date within the prior plan year,
the value of the assets of the plan are not less than 125
percent of the plan’s current liability (as defined in para-
graph (7)(B)).’’.
(w) AMENDMENTS RELATING TO SECTION 662 OF
THE ACT.—
(1) Section 404(k) is amended—
(A) in paragraph (1) by striking ‘‘during
the taxable year’’,
(B) in paragraph (2)(B) by striking
‘‘(A)(iii)’’ and inserting ‘‘(A)(iv)’’,
(C) in paragraph (4)(B) by striking ‘‘(iii)’’
and inserting ‘‘(iv)’’, and
124
(D) by redesignating subparagraph (B) of
paragraph (4) (as amended by subparagraph
(C)) as subparagraph (C) of paragraph (4) and
by inserting after subparagraph (A) the fol-
lowing new subparagraph:
‘‘(B) 
REINVESTMENT
DIVIDENDS.—For
purposes of subparagraph (A), an applicable
dividend reinvested pursuant to clause (iii)(II)
of paragraph (2)(A) shall be treated as paid in
the taxable year of the corporation in which
such dividend is reinvested in qualifying em-
ployer securities or in which the election under
clause (iii) of paragraph (2)(A) is made, which-
ever is later.’’.
(2) Section 404(k) is amended by adding at the
end the following new paragraph:
‘‘(7) FULL VESTING.—In accordance with sec-
tion 411, an applicable dividend described in clause
(iii)(II) of paragraph (2)(A) shall be subject to the
requirements of section 411(a)(1).’’.
(x) EFFECTIVE DATE.—Except as provided in sub-
section (c), the amendments made by this section shall
take effect as if included in the provisions of the Economic
Growth and Tax Relief Reconciliation Act of 2001 to
which they relate.
125
SEC. 612. AMENDMENTS RELATED TO COMMUNITY RE-
NEWAL TAX RELIEF ACT OF 2000.
(a) AMENDMENT RELATED TO SECTION 101 OF THE
ACT.—Section 469(i)(3)(E) is amended by striking
clauses (ii), (iii), and (iv) and inserting the following:
‘‘(ii) second to the portion of such loss
to which subparagraph (C) applies,
‘‘(iii) third to the portion of the pas-
sive activity credit to which subparagraph
(B) or (D) does not apply,
‘‘(iv) fourth to the portion of such
credit to which subparagraph (B) applies,
and’’.
(b) AMENDMENT RELATED TO SECTION 306 OF THE
ACT.—Section 151(c)(6)(C) is amended—
(1) by striking ‘‘FOR EARNED INCOME CRED-
IT.—For purposes of section 32, an’’ and inserting
‘‘FOR
PRINCIPAL
PLACE
OF
ABODE
REQUIRE-
MENTS.—An’’, and
(2) 
by 
striking 
‘‘requirement 
of 
section
32(c)(3)(A)(ii)’’ and inserting ‘‘principal place of
abode requirements of section 2(a)(1)(B), section
2(b)(1)(A), and section 32(c)(3)(A)(ii)’’.
(c) AMENDMENT RELATED TO SECTION 309 OF THE
ACT.—Subparagraph (A) of section 358(h)(1) is amended
to read as follows:
126
‘‘(A) which is assumed by another person
as part of the exchange, and’’.
(d) AMENDMENTS RELATED TO SECTION 401 OF
THE ACT.—
(1)(A) Section 1234A is amended by inserting
‘‘or’’ after the comma at the end of paragraph (1),
by striking ‘‘or’’ at the end of paragraph (2), and
by striking paragraph (3).
(B)(i) Section 1234B is amended in subsection
(a)(1) and in subsection (b) by striking ‘‘sale or ex-
change’’ the first place it appears in each subsection
and inserting ‘‘sale, exchange, or termination’’.
(ii) Section 1234B is amended by adding at the
end the following new subsection:
‘‘(f) CROSS REFERENCE.—
‘‘For special rules relating to dealer securities fu-
tures contracts, see section 1256.’’
(2) Section 1091(e) is amended—
(A) in the heading, by striking ‘‘SECURI-
TIES.—’’ and inserting ‘‘SECURITIES AND SE-
CURITIES FUTURES CONTRACTS TO SELL.—’’,
(B) by inserting after ‘‘closing of a short
sale of’’ the following: ‘‘(or a securities futures
contract to sell)’’,
127
(C) in paragraph (2), by inserting after
‘‘short sale of’’ the following: ‘‘(or securities fu-
tures contracts to sell)’’, and
(D) by adding at the end the following:
‘‘For purposes of this subsection, the term ‘securities fu-
tures contract’ has the meaning provided by section
1234B(c).’’.
(3) Section 1233(e)(2) is amended by striking
‘‘and’’ at the end of subparagraph (C), by striking
the period and inserting ‘‘; and’’ at the end of sub-
paragraph (D), and by adding at the end the fol-
lowing:
‘‘(E) entering into a securities futures con-
tract (as so defined) to sell shall be treated as
entering into a short sale, and the sale, ex-
change, or termination of a securities futures
contract to sell shall be treated as the closing
of a short sale.’’.
(e) EFFECTIVE DATE.—The amendments made by
this section shall take effect as if included in the provisions
of the Community Renewal Tax Relief Act of 2000 to
which they relate.
128
SEC. 613. AMENDMENTS RELATED TO THE TAX RELIEF EX-
TENSION ACT OF 1999.
(a) AMENDMENTS RELATED TO SECTION 545 OF
THE ACT.—Section 857(b)(7) is amended—
(1) in clause (i) of subparagraph (B), by strik-
ing ‘‘the amount of which’’ and inserting ‘‘to the ex-
tent the amount of the rents’’, and
(2) in subparagraph (C), by striking ‘‘if the
amount’’ and inserting ‘‘to the extent the amount’’.
(b) EFFECTIVE DATE.—The amendments made by
this section shall take effect as if included in section 545
of the Tax Relief Extension Act of 1999.
SEC. 614. AMENDMENTS RELATED TO THE TAXPAYER RE-
LIEF ACT OF 1997.
(a) AMENDMENTS RELATED TO SECTION 311 OF
THE ACT.—Section 311(e) of the Taxpayer Relief Act of
1997 (Public Law 105–34; 111 Stat. 836) is amended—
(1) in paragraph (2)(A), by striking ‘‘recog-
nized’’ and inserting ‘‘included in gross income’’,
and
(2) by adding at the end the following new
paragraph:
‘‘(5) DISPOSITION OF INTEREST IN PASSIVE AC-
TIVITY.—Section 469(g)(1)(A) of the Internal Rev-
enue Code of 1986 shall not apply by reason of an
election made under paragraph (1).’’.
129
(b) EFFECTIVE DATE.—The amendments made by
this section shall take effect as if included in section 311
of the Taxpayer Relief Act of 1997.
SEC. 615. AMENDMENT RELATED TO THE BALANCED BUDG-
ET ACT OF 1997.
(a) AMENDMENT RELATED TO SECTION 4006 OF
THE ACT.—Section 26(b)(2) is amended by striking
‘‘and’’ at the end of subparagraph (P), by striking the
period and inserting ‘‘, and’’ at the end of subparagraph
(Q), and by adding at the end the following new subpara-
graph:
‘‘(R) section 138(c)(2) (relating to penalty
for distributions from Medicare+Choice MSA
not used for qualified medical expenses if min-
imum balance not maintained).’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall take effect as if included in section 4006
of the Balanced Budget Act of 1997.
SEC. 616. OTHER TECHNICAL CORRECTIONS.
(a) COORDINATION
OF ADVANCED PAYMENTS
OF
EARNED INCOME CREDIT.—
(1) Section 32(g)(2) is amended by striking
‘‘subpart’’ and inserting ‘‘part’’.
130
(2) The amendment made by this subsection
shall take effect as if included in section 474 of the
Tax Reform Act of 1984.
(b) DISCLOSURE BY SOCIAL SECURITY ADMINISTRA-
TION TO FEDERAL CHILD SUPPORT AGENCIES.—
(1) Section 6103(l)(8) is amended—
(A) in the heading, by striking ‘‘STATE
AND LOCAL’’ and inserting ‘‘FEDERAL, STATE,
AND LOCAL’’, and
(B) in subparagraph (A), by inserting
‘‘Federal or’’ before ‘‘State or local’’.
(2) The amendments made by this subsection
shall take effect on the date of the enactment of this
Act.
(c) TREATMENT OF SETTLEMENTS UNDER PART-
NERSHIP AUDIT RULES.—
(1) The following provisions are each amended
by inserting ‘‘or the Attorney General (or his dele-
gate)’’ after ‘‘Secretary’’ each place it appears:
(A) Paragraphs (1) and (2) of section
6224(c).
(B) Section 6229(f)(2).
(C) Section 6231(b)(1)(C).
(D) Section 6234(g)(4)(A).
131
(2) The amendments made by this subsection
shall apply with respect to settlement agreements
entered into after the date of the enactment of this
Act.
(d) AMENDMENT RELATED TO PROCEDURE AND AD-
MINISTRATION.—
(1) Section 6331(k)(3) (relating to no levy
while certain offers pending or installment agree-
ment pending or in effect) is amended to read as fol-
lows:
‘‘(3) CERTAIN RULES TO APPLY.—Rules similar
to the rules of—
‘‘(A) paragraphs (3) and (4) of subsection
(i), and
‘‘(B) except in the case of paragraph
(2)(C), paragraph (5) of subsection (i),
shall apply for purposes of this subsection.’’.
(2) The amendment made by this subsection
shall take effect on the date of the enactment of this
Act.
(e) MODIFIED
ENDOWMENT
CONTRACTS.—Para-
graph (2) of section 318(a) of the Community Renewal
Tax Relief Act of 2000 (114 Stat. 2763A–645) is re-
pealed, and clause (ii) of section 7702A(c)(3)(A) shall
132
read and be applied as if the amendment made by such
paragraph had not been enacted.
SEC. 617. CLERICAL AMENDMENTS.
(1) The subsection (g) of section 25B that re-
lates to termination is redesignated as subsection
(h).
(2) Section 51A(c)(1) is amended by striking
‘‘51(d)(10)’’ and inserting ‘‘51(d)(11)’’.
(3) Section 172(b)(1)(F)(i) is amended—
(A) by striking ‘‘3 years’’ and inserting ‘‘3
taxable years’’, and
(B) by striking ‘‘2 years’’ and inserting ‘‘2
taxable years’’.
(4) Section 351(h)(1) is amended by inserting
a comma after ‘‘liability’’.
(5) Section 741 is amended by striking ‘‘which
have appreciated substantially in value’’.
(6) Section 857(b)(7)(B)(i) is amended by
striking ‘‘subsection 856(d)’’ and inserting ‘‘section
856(d)’’.
(7) Section 1394(c)(2) is amended by striking
‘‘subparagraph (A)’’ and inserting ‘‘paragraph (1)’’.
(8)(A) Section 6227(d) is amended by striking
‘‘subsection (b)’’ and inserting ‘‘subsection (c)’’.
(B) Section 6228 is amended—
133
(i) in subsection (a)(1), by striking ‘‘sub-
section (b) of section 6227’’ and inserting ‘‘sub-
section (c) of section 6227’’,
(ii) in subsection (a)(3)(A), by striking
‘‘subsection (b) of’’, and
(iii) in subsections (b)(1) and (b)(2)(A), by
striking ‘‘subsection (c) of section 6227’’ and
inserting ‘‘subsection (d) of section 6227’’.
(C) Section 6231(b)(2)(B)(i) is amended by
striking ‘‘section 6227(c)’’ and inserting ‘‘section
6227(d)’’.
(9) Section 1221(b)(1)(B)(i) is amended by
striking ‘‘1256(b))’’ and inserting ‘‘1256(b)))’’.
(10) Section 618(b)(2) of the Economic Growth
and Tax Relief Reconciliation Act of 2001 (Public
Law 107–16; 115 Stat. 108) is amended—
(A) in subparagraph (A) by striking
‘‘203(d)’’ and inserting ‘‘202(f)’’, and
(B) in subparagraphs (C), (D), and (E) by
striking ‘‘203’’ and inserting ‘‘202(f)’’.
(11)(A) Section 525 of the Ticket to Work and
Work Incentives Improvement Act of 1999 (Public
Law 106–170; 113 Stat. 1928) is amended by strik-
ing ‘‘7200’’ and inserting ‘‘7201’’.
134
(B) Section 532(c)(2) of such Act (113 Stat.
1930) is amended—
(i) in subparagraph (D), by striking
‘‘341(d)(3)’’ and inserting ‘‘341(d)’’, and
(ii) in subparagraph (Q), by striking
‘‘954(c)(1)(B)(iii) 
and 
inserting
‘‘954(c)(1)(B)’’.
SEC. 618. ADDITIONAL CORRECTIONS.
(a) AMENDMENTS RELATED TO SECTION 202 OF
THE ECONOMIC GROWTH AND TAX RELIEF RECONCILI-
ATION ACT OF 2001.—
(1) Subsection (h) of section 23 is amended—
(A) by striking ‘‘subsection (a)(1)(B)’’ and
inserting ‘‘subsection (a)(3)’’, and
(B) by adding at the end the following new
flush sentence:
‘‘If any amount as increased under the preceding sentence
is not a multiple of $10, such amount shall be rounded
to the nearest multiple of $10.’’
(2) Subsection (f) of section 137 is amended by
adding at the end the following new flush sentence:
‘‘If any amount as increased under the preceding sentence
is not a multiple of $10, such amount shall be rounded
to the nearest multiple of $10.’’
135
(b) AMENDMENTS RELATED TO SECTION 204 OF
THE ECONOMIC GROWTH AND TAX RELIEF RECONCILI-
ATION ACT OF 2001.—Section 21(d)(2) is amended—
(1) in subparagraph (A) by striking ‘‘$200’’
and inserting ‘‘$250’’, and
(2) in subparagraph (B) by striking ‘‘$400’’
and inserting ‘‘$500’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect as if included in the provisions
of the Economic Growth and Tax Relief Reconciliation Act
of 2001 to which they relate.
TITLE VII—UNEMPLOYMENT
ASSISTANCE
SEC. 701. SHORT TITLE.
This title may be cited as the ‘‘Temporary Extended
Unemployment Compensation Act of 2001’’.
SEC. 702. FEDERAL-STATE AGREEMENTS.
(a) IN GENERAL.—Any State which desires to do so
may enter into and participate in an agreement under this
title with the Secretary of Labor (in this title referred to
as the ‘‘Secretary’’). Any State which is a party to an
agreement under this title may, upon providing 30 days
written notice to the Secretary, terminate such agreement.
(b) PROVISIONS OF AGREEMENT.—Any agreement
under subsection (a) shall provide that the State agency
136
of the State will make payments of temporary extended
unemployment compensation to individuals who—
(1) have exhausted all rights to regular com-
pensation under the State law or under Federal law
with respect to a benefit year (excluding any benefit
year that ended before March 15, 2001);
(2) have no rights to regular compensation or
extended compensation with respect to a week under
such law or any other State unemployment com-
pensation law or to compensation under any other
Federal law;
(3) are not receiving compensation with respect
to such week under the unemployment compensation
law of Canada; and
(4) filed an initial claim for regular compensa-
tion on or after March 15, 2001.
(c) EXHAUSTION OF BENEFITS.—For purposes of
subsection (b)(1), an individual shall be deemed to have
exhausted such individual’s rights to regular compensation
under a State law when—
(1) no payments of regular compensation can
be made under such law because such individual has
received all regular compensation available to such
individual based on employment or wages during
such individual’s base period; or
137
(2) such individual’s rights to such compensa-
tion have been terminated by reason of the expira-
tion of the benefit year with respect to which such
rights existed.
(d) WEEKLY BENEFIT AMOUNT, ETC.—For purposes
of any agreement under this title—
(1) the amount of temporary extended unem-
ployment compensation which shall be payable to
any individual for any week of total unemployment
shall be equal to the amount of the regular com-
pensation (including dependents’ allowances) payable
to such individual during such individual’s benefit
year under the State law for a week of total unem-
ployment;
(2) the terms and conditions of the State law
which apply to claims for regular compensation and
to the payment thereof shall apply to claims for tem-
porary extended unemployment compensation and
the payment thereof, except—
(A) that an individual shall not be eligible
for temporary extended unemployment com-
pensation under this title unless, in the base pe-
riod with respect to which the individual ex-
hausted all rights to regular compensation
under the State law, the individual had 20
138
weeks of full-time insured employment or the
equivalent in insured wages, as determined
under the provisions of the State law imple-
menting section 202(a)(5) of the Federal-State
Extended Unemployment Compensation Act of
1970 (26 U.S.C. 3304 note); and
(B) where otherwise inconsistent with the
provisions of this title or with the regulations or
operating instructions of the Secretary promul-
gated to carry out this title; and
(3) the maximum amount of temporary ex-
tended unemployment compensation payable to any
individual for whom a temporary extended unem-
ployment compensation account is established under
section 703 shall not exceed the amount established
in such account for such individual.
(e) ELECTION
BY STATES.—Notwithstanding any
other provision of Federal law (and if State law permits),
the Governor of a State that is in an extended benefit pe-
riod may provide for the payment of temporary extended
unemployment compensation in lieu of extended com-
pensation to individuals who otherwise meet the require-
ments of this section. Such an election shall not require
a State to trigger off an extended benefit period.
139
SEC. 703. TEMPORARY EXTENDED UNEMPLOYMENT COM-
PENSATION ACCOUNT.
(a) IN GENERAL.—Any agreement under this title
shall provide that the State will establish, for each eligible
individual who files an application for temporary extended
unemployment compensation, a temporary extended un-
employment compensation account with respect to such in-
dividual’s benefit year.
(b) AMOUNT IN ACCOUNT.—
(1) IN GENERAL.—The amount established in
an account under subsection (a) shall be equal to the
lesser of—
(A) 50 percent of the total amount of reg-
ular compensation (including dependents’ allow-
ances) payable to the individual during the indi-
vidual’s benefit year under such law, or
(B) 13 times the individual’s average week-
ly benefit amount for the benefit year.
(2) REDUCTION FOR EXTENDED BENEFITS.—
The amount in an account under paragraph (1)
shall be reduced (but not below zero) by the aggre-
gate amount of extended compensation (if any) re-
ceived by such individual relating to the same ben-
efit year under the Federal-State Extended Unem-
ployment Compensation Act of 1970 (26 U.S.C.
3304 note).
140
(3) WEEKLY BENEFIT AMOUNT.—For purposes
of this subsection, an individual’s weekly benefit
amount for any week is the amount of regular com-
pensation (including dependents’ allowances) under
the State law payable to such individual for such
week for total unemployment.
SEC. 704. PAYMENTS TO STATES HAVING AGREEMENTS FOR
THE PAYMENT OF TEMPORARY EXTENDED
UNEMPLOYMENT COMPENSATION.
(a) GENERAL RULE.—There shall be paid to each
State that has entered into an agreement under this title
an amount equal to 100 percent of the temporary extended
unemployment compensation paid to individuals by the
State pursuant to such agreement.
(b) TREATMENT
OF REIMBURSABLE COMPENSA-
TION.—No payment shall be made to any State under this
section in respect of any compensation to the extent the
State is entitled to reimbursement in respect of such com-
pensation under the provisions of any Federal law other
than this title or chapter 85 of title 5, United States Code.
A State shall not be entitled to any reimbursement under
such chapter 85 in respect of any compensation to the ex-
tent the State is entitled to reimbursement under this title
in respect of such compensation.
141
(c) DETERMINATION OF AMOUNT.—Sums payable to
any State by reason of such State having an agreement
under this title shall be payable, either in advance or by
way of reimbursement (as may be determined by the Sec-
retary), in such amounts as the Secretary estimates the
State will be entitled to receive under this title for each
calendar month, reduced or increased, as the case may be,
by any amount by which the Secretary finds that the Sec-
retary’s estimates for any prior calendar month were
greater or less than the amounts which should have been
paid to the State. Such estimates may be made on the
basis of such statistical, sampling, or other method as may
be agreed upon by the Secretary and the State agency of
the State involved.
SEC. 705. FINANCING PROVISIONS.
(a) IN GENERAL.—Funds in the extended unemploy-
ment compensation account (as established by section
905(a) of the Social Security Act (42 U.S.C. 1105(a)) of
the Unemployment Trust Fund (as established by section
904(a) of such Act (42 U.S.C. 1104(a)) shall be used for
the making of payments to States having agreements en-
tered into under this title.
(b) CERTIFICATION.—The Secretary shall from time
to time certify to the Secretary of the Treasury for pay-
ment to each State the sums payable to such State under
142
this title. The Secretary of the Treasury, prior to audit
or settlement by the General Accounting Office, shall
make payments to the State in accordance with such cer-
tification, by transfers from the extended unemployment
compensation account (as so established) to the account
of such State in the Unemployment Trust Fund (as so
established).
(c) ASSISTANCE
TO STATES.—There are appro-
priated out of the employment security administration ac-
count (as established by section 901(a) of the Social Secu-
rity Act (42 U.S.C. 1101(a)) of the Unemployment Trust
Fund, without fiscal year limitation, such funds as may
be necessary for purposes of assisting States (as provided
in title III of the Social Security Act (42 U.S.C. 501 et
seq.)) in meeting the costs of administration of agree-
ments under this title.
(d) APPROPRIATIONS
FOR CERTAIN PAYMENTS.—
There are appropriated from the general fund of the
Treasury, without fiscal year limitation, to the extended
unemployment compensation account (as so established)
of the Unemployment Trust Fund (as so established) such
sums as the Secretary estimates to be necessary to make
the payments under this section in respect of—
(1) compensation payable under chapter 85 of
title 5, United States Code; and
143
(2) compensation payable on the basis of serv-
ices to which section 3309(a)(1) of the Internal Rev-
enue Code of 1986 applies.
Amounts appropriated pursuant to the preceding sentence
shall not be required to be repaid.
SEC. 706. FRAUD AND OVERPAYMENTS.
(a) IN GENERAL.—If an individual knowingly has
made, or caused to be made by another, a false statement
or representation of a material fact, or knowingly has
failed, or caused another to fail, to disclose a material fact,
and as a result of such false statement or representation
or of such nondisclosure such individual has received an
amount of temporary extended unemployment compensa-
tion under this title to which he was not entitled, such
individual—
(1) shall be ineligible for further temporary ex-
tended unemployment compensation under this title
in accordance with the provisions of the applicable
State unemployment compensation law relating to
fraud in connection with a claim for unemployment
compensation; and
(2) shall be subject to prosecution under section
1001 of title 18, United States Code.
(b) REPAYMENT.—In the case of individuals who
have received amounts of temporary extended unemploy-
144
ment compensation under this title to which they were not
entitled, the State shall require such individuals to repay
the amounts of such temporary extended unemployment
compensation to the State agency, except that the State
agency may waive such repayment if it determines that—
(1) the payment of such temporary extended
unemployment compensation was without fault on
the part of any such individual; and
(2) such repayment would be contrary to equity
and good conscience.
(c) RECOVERY BY STATE AGENCY.—
(1) IN GENERAL.—The State agency may re-
cover the amount to be repaid, or any part thereof,
by deductions from any temporary extended unem-
ployment compensation payable to such individual
under this title or from any unemployment com-
pensation payable to such individual under any Fed-
eral unemployment compensation law administered
by the State agency or under any other Federal law
administered by the State agency which provides for
the payment of any assistance or allowance with re-
spect to any week of unemployment, during the 3-
year period after the date such individuals received
the payment of the temporary extended unemploy-
ment compensation to which they were not entitled,
145
except that no single deduction may exceed 50 per-
cent of the weekly benefit amount from which such
deduction is made.
(2) OPPORTUNITY FOR HEARING.—No repay-
ment shall be required, and no deduction shall be
made, until a determination has been made, notice
thereof and an opportunity for a fair hearing has
been given to the individual, and the determination
has become final.
(d) REVIEW.—Any determination by a State agency
under this section shall be subject to review in the same
manner and to the same extent as determinations under
the State unemployment compensation law, and only in
that manner and to that extent.
SEC. 707. DEFINITIONS.
In this title, the terms ‘‘compensation’’, ‘‘regular
compensation’’, ‘‘extended compensation’’, ‘‘additional
compensation’’, ‘‘benefit year’’, ‘‘base period’’, ‘‘State’’,
‘‘State agency’’, ‘‘State law’’, and ‘‘week’’ have the respec-
tive meanings given such terms under section 205 of the
Federal-State Extended Unemployment Compensation Act
of 1970 (26 U.S.C. 3304 note).
SEC. 708. APPLICABILITY.
An agreement entered into under this title shall apply
to weeks of unemployment—
146
(1) beginning after the date on which such
agreement is entered into; and
(2) ending before January 1, 2003.
SEC. 709. SPECIAL REED ACT TRANSFER IN FISCAL YEAR
2002.
(a) REPEAL OF CERTAIN PROVISIONS ADDED BY
THE BALANCED BUDGET ACT OF 1997.—
(1) IN GENERAL.—The following provisions of
section 903 of the Social Security Act (42 U.S.C.
1103) are repealed:
(A) Paragraph (3) of subsection (a).
(B) The last sentence of subsection (c)(2).
(2) SAVINGS PROVISION.—Any amounts trans-
ferred before the date of enactment of this Act
under the provision repealed by paragraph (1)(A)
shall remain subject to section 903 of the Social Se-
curity Act, as last in effect before such date of en-
actment.
(b) SPECIAL TRANSFER IN FISCAL YEAR 2002.—
Section 903 of the Social Security Act is amended by add-
ing at the end the following:
‘‘Special Transfer in Fiscal Year 2002
‘‘(d)(1) The Secretary of the Treasury shall transfer
(as of the date determined under paragraph (5)) from the
Federal unemployment account to the account of each
147
State in the Unemployment Trust Fund the amount deter-
mined with respect to such State under paragraph (2).
‘‘(2) The amount to be transferred under this sub-
section to a State account shall (as determined by the Sec-
retary of Labor and certified by such Secretary to the Sec-
retary of the Treasury) be equal to—
‘‘(A) the amount which would have been re-
quired to have been transferred under this section to
such account at the beginning of fiscal year 2002
if—
‘‘(i) section 709(a)(1) of the Temporary
Extended Unemployment Compensation Act of
2001 had been enacted before the close of fiscal
year 2001, and
‘‘(ii) section 5402 of Public Law 105–33
(relating to increase in Federal unemployment
account ceiling) had not been enacted,
minus
‘‘(B) the amount which was in fact transferred
under this section to such account at the beginning
of fiscal year 2002.
‘‘(3)(A) Except as provided in paragraph (4),
amounts transferred to a State account pursuant to this
subsection may be used only in the payment of cash
benefits—
148
‘‘(i) to individuals with respect to their unem-
ployment, and
‘‘(ii) which are allowable under subparagraph
(B) or (C).
‘‘(B)(i) At the option of the State, cash benefits
under this paragraph may include amounts which shall be
payable as—
‘‘(I) regular compensation, or
‘‘(II) additional compensation, upon the exhaus-
tion of any temporary extended unemployment com-
pensation (if such State has entered into an agree-
ment under the Temporary Extended Unemployment
Compensation Act of 2001), for individuals eligible
for regular compensation under the unemployment
compensation law of such State.
‘‘(ii) Any additional compensation under clause (i)
may not be taken into account for purposes of any deter-
mination relating to the amount of any extended com-
pensation for which an individual might be eligible.
‘‘(C)(i) At the option of the State, cash benefits
under this paragraph may include amounts which shall be
payable to 1 or more categories of individuals not other-
wise eligible for regular compensation under the unem-
ployment compensation law of such State, including those
described in clause (iii).
149
‘‘(ii) The benefits paid under this subparagraph to
any individual may not, for any period of unemployment,
exceed the maximum amount of regular compensation au-
thorized under the unemployment compensation law of
such State for that same period, plus any additional com-
pensation (described in subparagraph (B)(i)) which could
have been paid with respect to that amount.
‘‘(iii) The categories of individuals described in this
clause include the following:
‘‘(I) Individuals who are seeking, or available
for, only part-time (and not full-time) work.
‘‘(II) Individuals who would be eligible for reg-
ular compensation under the unemployment com-
pensation law of such State under an alternative
base period.
‘‘(D) Amounts transferred to a State account under
this subsection may be used in the payment of cash bene-
fits to individuals only for weeks of unemployment begin-
ning after the date of enactment of this subsection.
‘‘(4) Amounts transferred to a State account under
this subsection may be used for the administration of its
unemployment compensation law and public employment
offices (including in connection with benefits described in
paragraph (3) and any recipients thereof), subject to the
same conditions as set forth in subsection (c)(2) (exclud-
151
(5) By substituting ‘‘(as of the close of fiscal
year 2002)’’ for ‘‘(as of the close of such fiscal
year)’’.
(d) 
TECHNICAL
AMENDMENTS.—(1) 
Sections
3304(a)(4)(B) and 3306(f)(2) of the Internal Revenue
Code of 1986 are amended by inserting ‘‘or 903(d)(4)’’
before ‘‘of the Social Security Act’’.
(2) Section 303(a)(5) of the Social Security Act is
amended in the second proviso by inserting ‘‘or 903(d)(4)’’
after ‘‘903(c)(2)’’.
(e) REGULATIONS.—The Secretary of Labor may
prescribe any operating instructions or regulations nec-
essary to carry out this section and the amendments made
by this section.
TITLE VIII—DISPLACED WORK-
ER 
HEALTH 
INSURANCE
CREDIT
SEC. 
801. 
DISPLACED 
WORKER 
HEALTH 
INSURANCE
CREDIT.
(a) IN GENERAL.—Subchapter B of chapter 65 is
amended by inserting after section 6428 the following new
section:
152
‘‘SEC. 6429. DISPLACED WORKER HEALTH INSURANCE
CREDIT.
‘‘(a) IN GENERAL.—In the case of an individual,
there shall be allowed as a credit against the tax imposed
by subtitle A an amount equal to 60 percent of the amount
paid during the taxable year for coverage for the taxpayer,
the taxpayer’s spouse, and dependents of the taxpayer
under qualified health insurance during eligible coverage
months.
‘‘(b) ONLY 12 ELIGIBLE COVERAGE MONTHS.—The
number of eligible coverage months taken into account
under subsection (a) for all taxable years shall not exceed
12.
‘‘(c) ELIGIBLE COVERAGE MONTH.—For purposes of
this section—
‘‘(1) IN GENERAL.—The term ‘eligible coverage
month’ means any month during 2002 or 2003 if,
as of the first day of such month—
‘‘(A) the taxpayer is unemployed,
‘‘(B) the taxpayer is covered by qualified
health insurance,
‘‘(C) the premium for coverage under such
insurance for such month is paid by the tax-
payer, and
‘‘(D) the taxpayer does not have other
specified coverage.
153
‘‘(2) SPECIAL RULES.—
‘‘(A) TREATMENT
OF
FIRST
MONTH
OF
EMPLOYMENT.—The taxpayer shall be treated
as meeting the requirement of paragraph (1)(A)
for the first month beginning on or after the
date that the taxpayer ceases to be unemployed
by reason of beginning work for an employer.
‘‘(B) INITIAL
CLAIM
MUST
BE
AFTER
MARCH
15, 2001.—The taxpayer shall not be
treated as meeting the requirement of para-
graph (1)(A) with respect to any unemployment
if the initial claim for regular compensation for
such unemployment is filed on or before March
15, 2001.
‘‘(C) JOINT RETURNS.—In the case of a
joint return, the requirements of paragraph (1)
shall be treated as met if at least 1 spouse sat-
isfies such requirements.
‘‘(3) OTHER SPECIFIED COVERAGE.—For pur-
poses of this subsection, an individual has other
specified coverage for any month if, as of the first
day of such month—
‘‘(A) SUBSIDIZED COVERAGE.—
‘‘(i) IN GENERAL.—Such individual is
covered under any qualified health insur-
154
ance under which at least 50 percent of
the cost of coverage (determined under sec-
tion 4980B) is paid or incurred by an em-
ployer (or former employer) of the tax-
payer or the taxpayer’s spouse.
‘‘(ii) 
TREATMENT
OF
CAFETERIA
PLANS
AND
FLEXIBLE
SPENDING
AC-
COUNTS.—For purposes of clause (i), the
cost of benefits—
‘‘(I) which are chosen under a
cafeteria plan (as defined in section
125(d)), or provided under a flexible
spending or similar arrangement, of
such an employer, and
‘‘(II) which are not includible in
gross income under section 106,
shall be treated as borne by such employer.
‘‘(B) COVERAGE UNDER MEDICARE, MED-
ICAID, OR SCHIP.—Such individual—
‘‘(i) is entitled to benefits under part
A of title XVIII of the Social Security Act
or is enrolled under part B of such title, or
‘‘(ii) is enrolled in the program under
title XIX or XXI of such Act.
155
‘‘(C) CERTAIN
OTHER
COVERAGE.—Such
individual—
‘‘(i) is enrolled in a health benefits
plan under chapter 89 of title 5, United
States Code, or
‘‘(ii) is entitled to receive benefits
under chapter 55 of title 10, United States
Code.
‘‘(4) DETERMINATION
OF
UNEMPLOYMENT.—
For purposes of paragraph (1), an individual shall
be treated as unemployed during any period—
‘‘(A) for which such individual is receiving
unemployment compensation (as defined in sec-
tion 85(b)), or
‘‘(B) for which such individual is certified
by a State agency (or by any other entity des-
ignated by the Secretary) as otherwise being en-
titled to receive unemployment compensation
(as so defined) but for—
‘‘(i) the termination of the period dur-
ing which such compensation was payable,
or
‘‘(ii) an exhaustion of such individ-
ual’s rights to such compensation.