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‘‘(i) the aggregate contributions to
such account which were allowed as a de-
duction under this section or which were
excluded under section 106(b), over
‘‘(ii) the aggregate prior payments or
distributions from such account which were
includible in gross income under this para-
graph.
‘‘(B) SPECIAL
RULES.—For purposes of
subparagraph (A)—
‘‘(i) all medical savings accounts of
the account holder shall be treated as 1 ac-
count,
‘‘(ii) all payments and distributions
during any taxable year shall be treated as
1 distribution, and
‘‘(iii) any distribution of property
shall be taken into account at its fair mar-
ket value on the date of the distribution.
‘‘(2) PENALTY FOR DISTRIBUTIONS NOT USED
FOR QUALIFIED MEDICAL EXPENSES.—
‘‘(A) IN GENERAL.—The tax imposed by
this chapter for any taxable year in which there
is a payment or distribution from a medical
savings account which is not used exclusively to
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pay the qualified medical expenses of the ac-
count holder shall be increased by 10 percent of
the amount of such payment or distribution
which is includible in gross income under para-
graph (1).
‘‘(B) 
EXCEPTIONS.—Subparagraph 
(A)
shall not apply if the payment or distribution is
made on or after the date the account holder—
‘‘(i) attains age 591⁄2,
‘‘(ii) becomes disabled within the
meaning of section 72(m)(7), or
‘‘(iii) dies.
‘‘(3) WITHDRAWAL
OF
EXCESS
CONTRIBU-
TIONS.—Paragraph (1) shall not apply to the dis-
tribution of any contribution paid during a taxable
year to a medical savings account if—
‘‘(A) such distribution is received on or be-
fore the day prescribed by law (including exten-
sions of time) for filing such individual’s return
for such taxable year,
‘‘(B) no deduction is allowed under this
section with respect to such contribution, and
‘‘(C) such distribution is accompanied by
the amount of net income attributable to such
contribution.
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In the case of such a distribution, for purposes of
section 61, any net income described in subpara-
graph (C) shall be deemed to have been earned and
receivable in the taxable year in which such con-
tribution is made.
‘‘(4) ROLLOVERS.—Paragraph (1) shall not
apply to any amount paid or distributed out of a
medical savings account to the account holder if the
entire amount received (including money and any
other property) is paid into another medical savings
account for the benefit of such holder not later than
the 60th day after the day on which he received the
payment or distribution.
‘‘(5) COORDINATION WITH MEDICAL EXPENSE
DEDUCTION.—For purposes of section 213, any pay-
ment or distribution out of a medical savings ac-
count for qualified medical expenses shall not be
treated as an expense paid for medical care to the
extent of the amount of such payment or distribu-
tion which is excludable from gross income solely by
reason of paragraph (1)(A).
‘‘(g) COST-OF-LIVING ADJUSTMENT.—
‘‘(1) IN GENERAL.—In the case of any taxable
year beginning in a calendar year after 1996, each
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dollar amount in subsection (b)(1) or in subsection
(c)(2) shall be increased by an amount equal to—
‘‘(A) such dollar amount, multiplied by
‘‘(B) the medical care cost adjustment for
such calendar year.
If any increase under the preceding sentence is not
a multiple of $50, such increase shall be rounded to
the nearest multiple of $50.
‘‘(2) MEDICAL CARE COST ADJUSTMENT.—For
purposes of paragraph (1), the medical care cost ad-
justment for any calendar year is the percentage (if
any) by which—
‘‘(A) the medical care component of the
Consumer Price Index (as defined in section
1(f)(5)) for August of the preceding calendar
year, exceeds
‘‘(B) such component for August of 1995.
‘‘(h) REPORTS.—The trustee of a medical savings ac-
count shall make such reports regarding such account to
the Secretary and to the account holder with respect to
contributions, distributions, and such other matters as the
Secretary may require under regulations. The reports re-
quired by this subsection shall be filed at such time and
in such manner and furnished to such individuals at such
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time and in such manner as may be required by those reg-
ulations.’’
(b) DEDUCTION ALLOWED WHETHER OR NOT INDI-
VIDUAL ITEMIZES OTHER DEDUCTIONS.—Subsection (a)
of section 62 is amended by inserting after paragraph (15)
the following new paragraph:
‘‘(16) MEDICAL SAVINGS ACCOUNTS.—The de-
duction allowed by section 220.’’
(c) EXCLUSIONS FOR EMPLOYER CONTRIBUTIONS TO
MEDICAL SAVINGS ACCOUNTS.—
(1) EXCLUSION FROM INCOME TAX.—The text
of section 106 (relating to contributions by employer
to accident and health plans) is amended to read as
follows:
‘‘(a) GENERAL RULE.—Gross income of an employee
does not include employer-provided coverage under an ac-
cident or health plan.
‘‘(b) CONTRIBUTIONS
TO MEDICAL SAVINGS AC-
COUNTS.—
‘‘(1) IN GENERAL.—In the case of an employee
who is an eligible individual, gross income does not
include amounts contributed by such employee’s em-
ployer to any medical savings account of such em-
ployee.
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‘‘(2) COORDINATION WITH DEDUCTION LIMITA-
TION.—The amount excluded from the gross income
of an employee under this subsection for any taxable
year shall not exceed the limitation under section
220(b)(1) (determined without regard to this sub-
section) which is applicable to such employee for
such taxable year.’’
‘‘(3) NO CONSTRUCTIVE RECEIPT.—No amount
shall be included in the gross income of any em-
ployee solely because the employee may choose be-
tween the contributions referred to in paragraph (1)
and employer contributions to another health plan of
the employer.
‘‘(4) SPECIAL RULE FOR DEDUCTION OF EM-
PLOYER CONTRIBUTIONS.—Any employer contribu-
tion to a medical savings account, if otherwise allow-
able as a deduction under this chapter, shall be al-
lowed only for the taxable year in which paid.
‘‘(5) DEFINITIONS.—For purposes of this sub-
section, the terms ‘eligible individual’ and ‘medical
savings account’ have the respective meanings given
to such terms by section 220.’’
(2) EXCLUSION FROM EMPLOYMENT TAXES.—
(A) SOCIAL SECURITY TAXES.—
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(i) Subsection (a) of section 3121 is
amended by striking ‘‘or’’ at the end of
paragraph (20), by striking the period at
the end of paragraph (21) and inserting ‘‘;
or’’, and by inserting after paragraph (21)
the following new paragraph:
‘‘(22) any payment made to or for the benefit
of an employee if at the time of such payment it is
reasonable to believe that the employee will be able
to exclude such payment from income under section
106(b).’’
(ii) Subsection (a) of section 209 of
the Social Security Act is amended by
striking ‘‘or’’ at the end of paragraph (17),
by striking the period at the end of para-
graph (18) and inserting ‘‘; or’’, and by in-
serting after paragraph (18) the following
new paragraph:
‘‘(19) any payment made to or for the benefit
of an employee if at the time of such payment it is
reasonable to believe that the employee will be able
to exclude such payment from income under section
106(b) of the Internal Revenue Code of 1986.’’
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(B) RAILROAD
RETIREMENT
TAX.—Sub-
section (e) of section 3231 is amended by add-
ing at the end the following new paragraph:
‘‘(10) MEDICAL SAVINGS ACCOUNT CONTRIBU-
TIONS.—The term ‘compensation’ shall not include
any payment made to or for the benefit of an em-
ployee if at the time of such payment it is reason-
able to believe that the employee will be able to ex-
clude such payment from income under section
106(b).’’
(C) UNEMPLOYMENT TAX.—Subsection (b)
of section 3306 is amended by striking ‘‘or’’ at
the end of paragraph (15), by striking the pe-
riod at the end of paragraph (16) and inserting
‘‘; or’’, and by inserting after paragraph (16)
the following new paragraph:
‘‘(17) any payment made to or for the benefit
of an employee if at the time of such payment it is
reasonable to believe that the employee will be able
to exclude such payment from income under section
106(b).’’
(D) WITHHOLDING
TAX.—Subsection (a)
of section 3401 is amended by striking ‘‘or’’ at
the end of paragraph (19), by striking the pe-
riod at the end of paragraph (20) and inserting
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‘‘; or’’, and by inserting after paragraph (20)
the following new paragraph:
‘‘(21) any payment made to or for the benefit
of an employee if at the time of such payment it is
reasonable to believe that the employee will be able
to exclude such payment from income under section
106(b).’’
(d) MEDICAL SAVINGS ACCOUNT CONTRIBUTIONS
NOT AVAILABLE UNDER CAFETERIA PLANS.—Subsection
(f) of section 125 is amended by inserting ‘‘106(b),’’ be-
fore ‘‘117’’.
(e) TAX ON PROHIBITED TRANSACTIONS.—Section
4975 (relating to tax on prohibited transactions) is
amended—
(1) by adding at the end of subsection (c) the
following new paragraph:
‘‘(4) SPECIAL RULE FOR MEDICAL SAVINGS AC-
COUNTS.—An individual for whose benefit a medical
savings account (within the meaning of section
220(d)) is established shall be exempt from the tax
imposed by this section with respect to any trans-
action concerning such account (which would other-
wise be taxable under this section) if, with respect
to such transaction, the account ceases to be a medi-
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cal savings account by reason of the application of
section 220(e)(2) to such account.’’, and
(2) by inserting ‘‘or a medical savings account
described in section 220(d)’’ in subsection (e)(1)
after ‘‘described in section 408(a)’’.
(f) FAILURE TO PROVIDE REPORTS ON MEDICAL
SAVINGS ACCOUNTS.—Section 6693 (relating to failure to
provide reports on individual retirement accounts or annu-
ities) is amended—
(1) by inserting ‘‘OR ON MEDICAL SAVINGS
ACCOUNTS’’ after ‘‘ANNUITIES’’ in the heading of
such section, and
(2) by adding at the end of subsection (a) the
following: ‘‘The person required by section 220(h) to
file a report regarding a medical savings account at
the time and in the manner required by such section
shall pay a penalty of $50 for each failure to so file
unless it is shown that such failure is due to reason-
able cause.’’
(g) CLERICAL AMENDMENTS.—
(1) The table of sections for part VII of sub-
chapter B of chapter 1 is amended by striking the
last item and inserting the following:
‘‘Sec. 220. Medical savings accounts.
‘‘Sec. 221. Cross reference.’’
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(2) The table of sections for subchapter B of
chapter 68 is amended by inserting ‘‘or on medical
savings accounts’’ after ‘‘annuities’’ in the item re-
lating to section 6693.
(h) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1995.
Subtitle C—Pickle-Johnson
Taxpayer Bill of Rights 2
PART I—TAXPAYER ADVOCATE
SEC. 13301. ESTABLISHMENT OF POSITION OF TAXPAYER
ADVOCATE 
WITHIN 
INTERNAL 
REVENUE
SERVICE.
(a) GENERAL RULE.—Section 7802 (relating to
Commissioner of Internal Revenue; Assistant Commis-
sioner (Employee Plans and Exempt Organizations)) is
amended by adding at the end the following new sub-
section:
‘‘(d) OFFICE OF TAXPAYER ADVOCATE.—
‘‘(1) IN GENERAL.—There is established in the
Internal Revenue Service an office to be known as
the ‘Office of the Taxpayer Advocate’. Such office
shall be under the supervision and direction of an of-
ficial to be known as the ‘Taxpayer Advocate’ who
shall be appointed by and report directly to the
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Commissioner of Internal Revenue. The Taxpayer
Advocate shall be entitled to compensation at the
same rate as the highest level official reporting di-
rectly to the Deputy Commissioner of the Internal
Revenue Service.
‘‘(2) FUNCTIONS OF OFFICE.—
‘‘(A) IN GENERAL.—It shall be the func-
tion of the Office of Taxpayer Advocate to—
‘‘(i) assist taxpayers in resolving prob-
lems with the Internal Revenue Service,
‘‘(ii) identify areas in which taxpayers
have problems in dealings with the Internal
Revenue Service,
‘‘(iii) to the extent possible, propose
changes in the administrative practices of
the Internal Revenue Service to mitigate
problems identified under clause (ii), and
‘‘(iv) 
identify 
potential 
legislative
changes which may be appropriate to miti-
gate such problems.
‘‘(B) ANNUAL REPORTS.—
‘‘(i) OBJECTIVES.—Not later than
June 30 of each calendar year after 1995,
the Taxpayer Advocate shall report to the
Committee on Ways and Means of the
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House of Representatives and the Commit-
tee on Finance of the Senate on the objec-
tives of the Taxpayer Advocate for the fis-
cal year beginning in such calendar year.
Any such report shall contain full and sub-
stantive analysis, in addition to statistical
information.
‘‘(ii) ACTIVITIES.—Not later than De-
cember 31 of each calendar year after
1995, the Taxpayer Advocate shall report
to the Committee on Ways and Means of
the House of Representatives and the
Committee on Finance of the Senate on
the activities of the Taxpayer Advocate
during the fiscal year ending during such
calendar year. Any such report shall con-
tain full and substantive analysis, in addi-
tion to statistical information, and shall—
‘‘(I) identify the initiatives the
Taxpayer Advocate has taken on im-
proving taxpayer services and Internal
Revenue Service responsiveness,
‘‘(II) contain recommendations
received from individuals with the au-
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thority to issue Taxpayer Assistance
Orders under section 7811,
‘‘(III) contain a summary of at
least 20 of the most serious problems
encountered by taxpayers, including a
description of the nature of such prob-
lems,
‘‘(IV) contain an inventory of the
items described in subclauses (I), (II),
and (III) for which action has been
taken and the result of such action,
‘‘(V) contain an inventory of the
items described in subclauses (I), (II),
and (III) for which action remains to
be completed and the period during
which each item has remained on such
inventory,
‘‘(VI) contain an inventory of the
items described in subclauses (II) and
(III) for which no action has been
taken, the period during which each
item has remained on such inventory,
the reasons for the inaction, and iden-
tify any Internal Revenue Service offi-
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cial who is responsible for such inac-
tion,
‘‘(VII) identify any Taxpayer As-
sistance Order which was not honored
by the Internal Revenue Service in a
timely manner, as specified under sec-
tion 7811(b),
‘‘(VIII) contain recommendations
for such administrative and legislative
action as may be appropriate to re-
solve problems encountered by tax-
payers,
‘‘(IX) describe the extent to
which regional problem resolution offi-
cers participate in the selection and
evaluation of local problem resolution
officers, and
‘‘(X) include such other informa-
tion as the Taxpayer Advocate may
deem advisable.
‘‘(iii) REPORT TO BE SUBMITTED DI-
RECTLY.—Each report required under this
subparagraph shall be provided directly to
the Committees referred to in clauses (i)
and (ii) without any prior review or com-
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ment from the Commissioner, the Sec-
retary of the Treasury, any other officer
or employee of the Department of the
Treasury, or the Office of Management
and Budget.
‘‘(3) RESPONSIBILITIES
OF
COMMISSIONER.—
The Commissioner of Internal Revenue shall estab-
lish procedures requiring a formal response to all
recommendations submitted to the Commissioner
by the Taxpayer Advocate within 3 months after
submission to the Commissioner.’’
(b) CONFORMING AMENDMENTS.—
(1) Section 7811 (relating to Taxpayer Assist-
ance Orders) is amended—
(A) by striking ‘‘the Office of Ombuds-
man’’ in subsection (a) and inserting ‘‘the Of-
fice of the Taxpayer Advocate’’, and
(B) by striking ‘‘Ombudsman’’ each place
it appears (including in the headings of sub-
sections (e) and (f)) and inserting ‘‘Taxpayer
Advocate’’.
(2) The heading for section 7802 is amended to
read as follows:
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‘‘SEC. 7802. COMMISSIONER OF INTERNAL REVENUE; AS-
SISTANT COMMISSIONERS; TAXPAYER ADVO-
CATE.’’
(3) The table of sections for subchapter A of
chapter 80 is amended by striking the item relating
to section 7802 and inserting the following new
item:
‘‘Sec. 7802. Commissioner of Internal Revenue; Assistant Com-
missioners; Taxpayer Advocate.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
SEC. 13302. EXPANSION OF AUTHORITY TO ISSUE TAX-
PAYER ASSISTANCE ORDERS.
(a) TERMS OF ORDERS.—Subsection (b) of section
7811 (relating to terms of Taxpayer Assistance Orders)
is amended—
(1) by inserting ‘‘within a specified time pe-
riod’’ after ‘‘the Secretary’’, and
(2) by inserting ‘‘take any action as permitted
by law,’’ after ‘‘cease any action,’’.
(b) LIMITATION ON AUTHORITY TO MODIFY OR RE-
SCIND.—Section 7811(c) (relating to authority to modify
or rescind) is amended to read as follows:
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‘‘(c) AUTHORITY TO MODIFY
OR RESCIND.—Any
Taxpayer Assistance Order issued by the Taxpayer Advo-
cate under this section may be modified or rescinded—
‘‘(1) only by the Taxpayer Advocate, the Com-
missioner of Internal Revenue, the Deputy Commis-
sioner of Internal Revenue, or a regional problem
resolution officer, and
‘‘(2) only if a written explanation of the reasons
for the modification or rescission is provided to the
Taxpayer Advocate.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
PART II—MODIFICATIONS TO INSTALLMENT
AGREEMENT PROVISIONS
SEC. 13306. NOTIFICATION OF REASONS FOR TERMINATION
OF INSTALLMENT AGREEMENTS.
(a) TERMINATIONS.—Subsection (b) of section 6159
(relating to extent to which agreements remain in effect)
is amended by adding at the end the following new para-
graph:
‘‘(5) NOTICE REQUIREMENTS.—The Secretary
may not take any action under paragraph (2), (3),
or (4) unless—
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is amended by adding at the end the following new sub-
section:
‘‘(c) ADMINISTRATIVE REVIEW.—The Secretary shall
establish procedures for an independent administrative re-
view of terminations of installment agreements under this
section for taxpayers who request such a review.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on January 1, 1996.
PART III—ABATEMENT OF INTEREST AND
PENALTIES
SEC. 13311. EXPANSION OF AUTHORITY TO ABATE INTER-
EST.
(a) GENERAL RULE.—Paragraph (1) of section
6404(e) (relating to abatement of interest in certain cases)
is amended—
(1) by inserting ‘‘unreasonable’’ before ‘‘error’’
each place it appears in subparagraphs (A) and (B),
and
(2) by striking ‘‘in performing a ministerial
act’’ each place it appears and inserting ‘‘in per-
forming a ministerial or managerial act’’.
(b) CLERICAL AMENDMENT.—The subsection head-
ing for subsection (e) of section 6404 is amended—
(1) by striking ‘‘ASSESSMENTS’’ and inserting
‘‘ABATEMENT’’, and
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(2) by inserting ‘‘UNREASONABLE’’ before ‘‘ER-
RORS’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to interest accruing with respect
to deficiencies or payments for taxable years beginning
after the date of the enactment of this Act.
SEC. 13312. REVIEW OF IRS FAILURE TO ABATE INTEREST.
(a) IN GENERAL.—Section 6404 is amended by add-
ing at the end the following new subsection:
‘‘(g) REVIEW OF DENIAL OF REQUEST FOR ABATE-
MENT OF INTEREST.—The Tax Court shall have jurisdic-
tion over any action brought by a taxpayer who meets the
requirements referred to in section 7430(c)(4)(A)(iii) to
determine whether the Secretary’s failure to abate interest
under this section was an abuse of discretion if such action
is brought within 6 months after the date of the Sec-
retary’s final determination not to abate such interest.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to requests for abatement after the
date of the enactment of this Act.
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SEC. 13313. EXTENSION OF INTEREST-FREE PERIOD FOR
PAYMENT OF TAX AFTER NOTICE AND DE-
MAND.
(a) GENERAL RULE.—Paragraph (3) of section
6601(e) (relating to payments made within 10 days after
notice and demand) is amended to read as follows:
‘‘(3) PAYMENTS MADE WITHIN SPECIFIED PE-
RIOD AFTER NOTICE AND DEMAND.—If notice and
demand is made for payment of any amount and if
such amount is paid within 21 calendar days (10
business days if the amount for which such notice
and demand is made equals or exceeds $100,000)
after the date of such notice and demand, interest
under this section on the amount so paid shall not
be imposed for the period after the date of such no-
tice and demand.’’
(b) CONFORMING AMENDMENTS.—
(1) Subparagraph (A) of section 6601(e)(2) is
amended by striking ‘‘10 days from the date of no-
tice and demand therefor’’ and inserting ‘‘21 cal-
endar days from the date of notice and demand
therefor (10 business days if the amount for which
such notice and demand is made equals or exceeds
$100,000)’’.
(2) Paragraph (3) of section 6651(a) is amend-
ed by striking ‘‘10 days of the date of the notice and
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demand therefor’’ and inserting ‘‘21 calendar days
from the date of notice and demand therefor (10
business days if the amount for which such notice
and demand is made equals or exceeds $100,000)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply in the case of any notice and de-
mand given after June 30, 1996.
PART IV—JOINT RETURNS
SEC. 13316. STUDIES OF JOINT RETURN-RELATED ISSUES.
The Secretary of the Treasury or his delegate and
the Comptroller General of the United States shall each
conduct separate studies of—
(1) the effects of changing the liability for tax
on a joint return from being joint and several to
being proportionate to the tax attributable to each
spouse,
(2) the effects of providing that, if a divorce de-
cree allocates liability for tax on a joint return filed
before the divorce, the Secretary may collect such li-
ability only in accordance with the decree,
(3) whether those provisions of the Internal
Revenue Code of 1986 intended to provide relief to
innocent spouses provide meaningful relief in all
cases where such relief is appropriate, and
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(4) the effect of providing that community in-
come (as defined in section 66(d) of such Code)
which, in accordance with the rules contained in sec-
tion 879(a) of such Code, would be treated as the
income of one spouse is exempt from a levy for fail-
ure to pay any tax imposed by subtitle A by the
other spouse for a taxable year ending before their
marriage.
The reports of such studies shall be submitted to the Com-
mittee on Ways and Means of the House of Representa-
tives and the Committee on Finance of the Senate within
6 months after the date of the enactment of this Act.
SEC. 13317. JOINT RETURN MAY BE MADE AFTER SEPA-
RATE RETURNS WITHOUT FULL PAYMENT OF
TAX.
(a) GENERAL RULE.—Paragraph (2) of section
6013(b) (relating to limitations on filing of joint return
after filing separate returns) is amended by striking sub-
paragraph (A) and redesignating the following subpara-
graphs accordingly.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to taxable years beginning after
the date of the enactment of this Act.
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SEC. 13318. DISCLOSURE OF COLLECTION ACTIVITIES.
Subsection (e) of section 6103 (relating to disclosure
to persons having material interest) is amended by adding
at the end the following new paragraph:
‘‘(8) DISCLOSURE OF COLLECTION ACTIVITIES
WITH
RESPECT
TO
JOINT
RETURN.—If any defi-
ciency of tax with respect to a joint return is as-
sessed and the individuals filing such return are no
longer married or no longer reside in the same
household, upon request in writing by either of such
individuals, the Secretary shall disclose in writing to
the individual making the request whether the Sec-
retary has attempted to collect such deficiency from
such other individual, the general nature of such col-
lection activities, and the amount collected.’’
PART V—COLLECTION ACTIVITIES
SEC. 13321. MODIFICATIONS TO LIEN AND LEVY PROVI-
SIONS.
(a) WITHDRAWAL OF CERTAIN NOTICES.—Section
6323 (relating to validity and priority against certain per-
sons) is amended by adding at the end the following new
subsection:
‘‘(j) WITHDRAWAL
OF NOTICE
IN CERTAIN CIR-
CUMSTANCES.—
‘‘(1) IN GENERAL.—The Secretary may with-
draw a notice of a lien filed under this section and
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this chapter shall be applied as if the withdrawn no-
tice had not been filed, if the Secretary determines
that—
‘‘(A) the filing of such notice was pre-
mature or otherwise not in accordance with ad-
ministrative procedures of the Secretary,
‘‘(B) the taxpayer has entered into an
agreement under section 6159 to satisfy the tax
liability for which the lien was imposed by
means of installment payments, unless such
agreement provides otherwise,
‘‘(C) the withdrawal of such notice will fa-
cilitate the collection of the tax liability, or
‘‘(D) with the consent of the taxpayer or
the Taxpayer Advocate, the withdrawal of such
notice would be in the best interests of the tax-
payer (as determined by the Taxpayer Advo-
cate) and the United States.
Any such withdrawal shall be made by filing notice
at the same office as the withdrawn notice. A copy
of such notice of withdrawal shall be provided to the
taxpayer.
‘‘(2) NOTICE
TO
CREDIT
AGENCIES, ETC.—
Upon written request by the taxpayer with respect
to whom a notice of a lien was withdrawn under
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paragraph (1), the Secretary shall promptly make
reasonable efforts to notify credit reporting agencies,
and any financial institution or creditor whose name
and address is specified in such request, of the with-
drawal of such notice. Any such request shall be in
such form as the Secretary may prescribe.’’
(b) RETURN
OF LEVIED PROPERTY
IN CERTAIN
CASES.—Section 6343 (relating to authority to release
levy and return property) is amended by adding at the
end the following new subsection:
‘‘(d) RETURN OF PROPERTY IN CERTAIN CASES.—
If—
‘‘(1) any property has been levied upon, and
‘‘(2) the Secretary determines that—
‘‘(A) the levy on such property was pre-
mature or otherwise not in accordance with ad-
ministrative procedures of the Secretary,
‘‘(B) the taxpayer has entered into an
agreement under section 6159 to satisfy the tax
liability for which the levy was imposed by
means of installment payments, unless such
agreement provides otherwise,
‘‘(C) the return of such property will facili-
tate the collection of the tax liability, or
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‘‘(D) with the consent of the taxpayer or
the Taxpayer Advocate, the return of such
property would be in the best interests of the
taxpayer (as determined by the Taxpayer Advo-
cate) and the United States,
the provisions of subsection (b) shall apply in the same
manner as if such property had been wrongly levied upon,
except that no interest shall be allowed under subsection
(c).’’
(c) MODIFICATIONS IN CERTAIN LEVY EXEMPTION
AMOUNTS.—
(1) FUEL, ETC.—Paragraph (2) of section
6334(a) (relating to fuel, provisions, furniture, and
personal effects exempt from levy) is amended—
(A) by striking ‘‘If the taxpayer is the
head of a family, so’’ and inserting ‘‘So’’,
(B) by striking ‘‘his household’’ and insert-
ing ‘‘the taxpayer’s household’’, and
(C) by striking ‘‘$1,650 ($1,550 in the
case of levies issued during 1989)’’ and insert-
ing ‘‘$2,500’’.
(2) INFLATION
ADJUSTMENT.—Section 6334
(relating to property exempt from levy) is amended
by adding at the end the following new subsection:
‘‘(f) INFLATION ADJUSTMENT.—
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‘‘(1) IN GENERAL.—In the case of any calendar
year beginning after 1996, each dollar amount re-
ferred to in paragraphs (2) and (3) of subsection (a)
shall be increased by an amount equal to—
‘‘(A) such dollar amount, multiplied by
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for such calendar
year, by substituting ‘calendar year 1995’ for
‘calendar year 1992’ in subparagraph (B)
thereof.
‘‘(2) ROUNDING.—If any dollar amount after
being increased under paragraph (1) is not a mul-
tiple of $10, such dollar amount shall be rounded to
the nearest multiple of $10.’’
(3) TECHNICAL AMENDMENT.—Paragraph (3)
of section 6334(a) is amended by striking ‘‘($1,050
in the case of levies issued during 1989)’’.
(d) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section
shall take effect on the date of the enactment of this
Act.
(2) 
EXEMPT
AMOUNTS.—The 
amendments
made by subsection (c) shall take effect with respect
to levies issued after December 31, 1995.
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SEC. 13322. OFFERS-IN-COMPROMISE.
(a) REVIEW REQUIREMENTS.—Subsection (b) of sec-
tion 7122 (relating to records) is amended by striking
‘‘$500.’’ and inserting ‘‘$100,000. However, such com-
promise shall be subject to continuing quality review by
the Secretary.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall take effect on the date of the enactment
of this Act.
PART VI—INFORMATION RETURNS
SEC. 13326. CIVIL DAMAGES FOR FRAUDULENT FILING OF
INFORMATION RETURNS.
(a) GENERAL RULE.—Subchapter B of chapter 76
(relating to proceedings by taxpayers and third parties)
is amended by redesignating section 7434 as section 7435
and by inserting after section 7433 the following new
section:
‘‘SEC. 7434. CIVIL DAMAGES FOR FRAUDULENT FILING OF
INFORMATION RETURNS.
‘‘(a) IN GENERAL.—If any person willfully files a
fraudulent information return with respect to payments
purported to be made to any other person, such other per-
son may bring a civil action for damages against the per-
son so filing such return.
‘‘(b) DAMAGES.—In any action brought under sub-
section (a), upon a finding of liability on the part of the
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defendant, the defendant shall be liable to the plaintiff in
an amount equal to the greater of $5,000 or the sum of—
‘‘(1) any actual damages sustained by the plain-
tiff as a proximate result of the filing of the fraudu-
lent information return (including any costs attrib-
utable to resolving deficiencies asserted as a result
of such filing),
‘‘(2) the costs of the action, and
‘‘(3) in the court’s discretion, reasonable attor-
neys fees.
‘‘(c) PERIOD
FOR
BRINGING
ACTION.—Notwith-
standing any other provision of law, an action to enforce
the liability created under this section may be brought
without regard to the amount in controversy and may be
brought only within the later of—
‘‘(1) 6 years after the date of the filing of the
fraudulent information return, or
‘‘(2) 1 year after the date such fraudulent in-
formation return would have been discovered by ex-
ercise of reasonable care.
‘‘(d) COPY OF COMPLAINT FILED WITH IRS.—Any
person bringing an action under subsection (a) shall pro-
vide a copy of the complaint to the Internal Revenue Serv-
ice upon the filing of such complaint with the court.
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‘‘(e) FINDING
OF COURT TO INCLUDE CORRECT
AMOUNT OF PAYMENT.—The decision of the court award-
ing damages in an action brought under subsection (a)
shall include a finding of the correct amount which should
have been reported in the information return.
‘‘(f) INFORMATION RETURN.—For purposes of this
section, the term ‘information return’ means any state-
ment described in section 6724(d)(1)(A).’’
(b) CLERICAL AMENDMENT.—The table of sections
for subchapter B of chapter 76 is amended by striking
the item relating to section 7434 and inserting the
following:
‘‘Sec. 7434. Civil damages for fraudulent filing of information re-
turns.
‘‘Sec. 7435. Cross references.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to fraudulent information returns
filed after the date of the enactment of this Act.
SEC. 13327. REQUIREMENT TO CONDUCT REASONABLE IN-
VESTIGATIONS OF INFORMATION RETURNS.
(a) GENERAL RULE.—Section 6201 (relating to as-
sessment authority) is amended by redesignating sub-
section (d) as subsection (e) and by inserting after sub-
section (c) the following new subsection:
‘‘(d) REQUIRED REASONABLE VERIFICATION OF IN-
FORMATION RETURNS.—In any court proceeding, if a tax-
payer asserts a reasonable dispute with respect to any
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item of income reported on an information return filed
with the Secretary under subpart B or C of part III of
subchapter A of chapter 61 by a third party and the tax-
payer has fully cooperated with the Secretary (including
providing, within a reasonable period of time, access to
and inspection of all witnesses, information, and docu-
ments within the control of the taxpayer as reasonably re-
quested by the Secretary), the Secretary shall have the
burden of producing reasonable and probative information
concerning such deficiency in addition to such information
return.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on the date of the enact-
ment of this Act.
PART VII—AWARDING OF COSTS AND CERTAIN
FEES
SEC. 13331. UNITED STATES MUST ESTABLISH THAT ITS PO-
SITION IN PROCEEDING WAS SUBSTANTIALLY
JUSTIFIED.
(a) GENERAL RULE.—Subparagraph (A) of section
7430(c)(4) (defining prevailing party) is amended by
striking clause (i) and by redesignating clauses (ii) and
(iii) as clauses (i) and (ii), respectively.
(b) BURDEN OF PROOF ON UNITED STATES.—Para-
graph (4) of section 7430(c) is amended by redesignating
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subparagraph (B) as subparagraph (C) and by inserting
after subparagraph (A) the following new subparagraph:
‘‘(B) EXCEPTION IF UNITED STATES ES-
TABLISHES THAT ITS POSITION WAS SUBSTAN-
TIALLY JUSTIFIED.—
‘‘(i) GENERAL RULE.—A party shall
not be treated as the prevailing party in a
proceeding to which subsection (a) applies
if the United States establishes that the
position of the United States in the pro-
ceeding was substantially justified.
‘‘(ii) PRESUMPTION OF NO JUSTIFICA-
TION
IF
INTERNAL
REVENUE
SERVICE
DIDN’T
FOLLOW
CERTAIN
PUBLISHED
GUIDANCE.—For purposes of clause (i),
the position of the United States shall be
presumed not to be substantially justified
if the Internal Revenue Service did not fol-
low its applicable published guidance in the
administrative proceeding. Such presump-
tion may be rebutted.
‘‘(iii) APPLICABLE PUBLISHED GUID-
ANCE.—For purposes of clause (ii), the
term 
‘applicable 
published 
guidance’
means—
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‘‘(I) regulations, revenue rulings,
revenue procedures, information re-
leases, notices, and announcements,
and
‘‘(II) any of the following which
are issued to the taxpayer: private let-
ter rulings, technical advice memo-
randa, and determination letters.’’
(c) CONFORMING AMENDMENTS.—
(1) Subparagraph (B) of section 7430(c)(2) is
amended by striking ‘‘paragraph (4)(B)’’ and insert-
ing ‘‘paragraph (4)(C)’’.
(2) Subparagraph (C) of section 7430(c)(4), as
redesignated by subsection (b), is amended by strik-
ing ‘‘subparagraph (A)’’ and inserting ‘‘this para-
graph’’.
(3) Sections 6404(g) and 6656(c)(1), as amend-
ed by this title, are each amended by striking ‘‘sec-
tion 7430(c)(4)(A)(iii)’’ and inserting ‘‘section
7430(c)(4)(A)(ii)’’.
SEC. 13332. INCREASED LIMIT ON ATTORNEY FEES.
Paragraph (1) of section 7430(c) (defining reason-
able litigation costs) is amended—
(1) by striking ‘‘$75’’ in clause (iii) of subpara-
graph (B) and inserting ‘‘$110’’,
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(2) by striking ‘‘an increase in the cost of living
or’’ in clause (iii) of subparagraph (B), and
(3) by adding after clause (iii) the following:
‘‘In the case of any calendar year beginning after
1996, the dollar amount referred to in clause (iii)
shall be increased by an amount equal to such dollar
amount multiplied by the cost-of-living adjustment
determined under section 1(f)(3) for such calendar
year, by substituting ‘calendar year 1995’ for ‘cal-
endar year 1992’ in subparagraph (B) thereof. If
any dollar amount after being increased under the
preceding sentence is not a multiple of $10, such
dollar amount shall be rounded to the nearest mul-
tiple of $10.’’
SEC. 13333. FAILURE TO AGREE TO EXTENSION NOT TAKEN
INTO ACCOUNT.
Paragraph (1) of section 7430(b) (relating to require-
ment that administrative remedies be exhausted) is
amended by adding at the end the following new sentence:
‘‘Any failure to agree to an extension of the time for the
assessment of any tax shall not be taken into account for
purposes of determining whether the prevailing party
meets the requirements of the preceding sentence.’’
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SEC. 13334. AWARD OF LITIGATION COSTS PERMITTED IN
DECLARATORY JUDGMENT PROCEEDINGS.
Subsection (b) of section 7430 is amended by striking
paragraph (3) and by redesignating paragraph (4) as
paragraph (3).
SEC. 13335. EFFECTIVE DATE.
The amendments made by this part shall apply in the
case of proceedings commenced after the date of the enact-
ment of this Act.
PART VIII—MODIFICATION TO RECOVERY OF
CIVIL DAMAGES FOR UNAUTHORIZED COL-
LECTION ACTIONS
SEC. 13336. INCREASE IN LIMIT ON RECOVERY OF CIVIL
DAMAGES FOR UNAUTHORIZED COLLECTION
ACTIONS.
(a) GENERAL RULE.—Subsection (b) of section 7433
(relating to damages) is amended by striking ‘‘$100,000’’
and inserting ‘‘$1,000,000’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to actions by officers or employ-
ees of the Internal Revenue Service after the date of the
enactment of this Act.
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SEC. 13337. COURT DISCRETION TO REDUCE AWARD FOR
LITIGATION COSTS FOR FAILURE TO EX-
HAUST ADMINISTRATIVE REMEDIES.
(a) GENERAL RULE.—Paragraph (1) of section
7433(d) (relating to civil damages for certain unauthor-
ized collection actions) is amended to read as follows:
‘‘(1) AWARD FOR DAMAGES MAY BE REDUCED
IF ADMINISTRATIVE REMEDIES NOT EXHAUSTED.—
The amount of damages awarded under subsection
(b) may be reduced if the court determines that the
plaintiff has not exhausted the administrative rem-
edies available to such plaintiff within the Internal
Revenue Service.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply in the case of proceedings com-
menced after the date of the enactment of this Act.
PART IX—MODIFICATIONS TO PENALTY FOR
FAILURE TO COLLECT AND PAY OVER TAX
SEC. 13341. PRELIMINARY NOTICE REQUIREMENT.
(a) IN GENERAL.—Section 6672 (relating to failure
to collect and pay over tax, or attempt to evade or defeat
tax) is amended by redesignating subsection (b) as sub-
section (c) and by inserting after subsection (a) the follow-
ing new subsection:
‘‘(b) PRELIMINARY NOTICE REQUIREMENT.—
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‘‘(1) IN
GENERAL.—No penalty shall be im-
posed under subsection (a) unless the Secretary noti-
fies the taxpayer in writing by mail to an address as
determined under section 6212(b) that the taxpayer
shall be subject to an assessment of such penalty.
‘‘(2) TIMING OF NOTICE.—The mailing of the
notice described in paragraph (1) shall precede any
notice and demand of any penalty under subsection
(a) by at least 60 days.
‘‘(3) STATUTE
OF
LIMITATIONS.—If a notice
described in paragraph (1) with respect to any pen-
alty is mailed before the expiration of the period
provided by section 6501 for the assessment of such
penalty (determined without regard to this para-
graph), the period provided by such section for the
assessment of such penalty shall not expire before
the later of—
‘‘(A) the date 90 days after the date on
which such notice was mailed, or
‘‘(B) if there is a timely protest of the pro-
posed assessment, the date 30 days after the
Secretary makes a final administrative deter-
mination with respect to such protest.
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‘‘(4) EXCEPTION
FOR
JEOPARDY.—This sub-
section shall not apply if the Secretary finds that the
collection of the penalty is in jeopardy.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to proposed assessments made
after June 30, 1996.
SEC. 
13342. 
DISCLOSURE 
OF 
CERTAIN 
INFORMATION
WHERE MORE THAN 1 PERSON LIABLE FOR
PENALTY FOR FAILURE TO COLLECT AND
PAY OVER TAX.
(a) IN GENERAL.—Subsection (e) of section 6103
(relating to disclosure to persons having material interest),
as amended by section 13318, is amended by adding at
the end the following new paragraph:
‘‘(9) DISCLOSURE
OF
CERTAIN
INFORMATION
WHERE MORE THAN 1 PERSON SUBJECT TO PEN-
ALTY UNDER SECTION 6672.—If the Secretary deter-
mines that a person is liable for a penalty under sec-
tion 6672(a) with respect to any failure, upon re-
quest in writing of such person, the Secretary shall
disclose in writing to such person—
‘‘(A) the name of any other person whom
the Secretary has determined to be liable for
such penalty with respect to such failure, and
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‘‘(B) whether the Secretary has attempted
to collect such penalty from such other person,
the general nature of such collection activities,
and the amount collected.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on the date of the enact-
ment of this Act.
SEC. 13343. RIGHT OF CONTRIBUTION WHERE MORE THAN
1 PERSON LIABLE FOR PENALTY FOR FAIL-
URE TO COLLECT AND PAY OVER TAX.
(a) IN GENERAL.—Section 6672 (relating to failure
to collect and pay over tax, or attempt to evade or defeat
tax) is amended by adding at the end the following new
subsection:
‘‘(d) RIGHT OF CONTRIBUTION WHERE MORE THAN
1 PERSON LIABLE FOR PENALTY.—If more than 1 person
is liable for the penalty under subsection (a) with respect
to any tax, each person who paid such penalty shall be
entitled to recover from other persons who are liable for
such penalty an amount equal to the excess of the amount
paid by such person over such person’s proportionate
share of the penalty. Any claim for such a recovery may
be made only in a proceeding which is separate from, and
is not joined with—
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‘‘(1) an action for collection of such penalty
brought by the United States, or
‘‘(2) a proceeding in which the United States
files a counterclaim or third-party complaint for the
collection of such penalty.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to penalties assessed after the
date of the enactment of this Act.
SEC. 13344. VOLUNTEER BOARD MEMBERS OF TAX-EXEMPT
ORGANIZATIONS EXEMPT FROM PENALTY
FOR FAILURE TO COLLECT AND PAY OVER
TAX.
(a) IN GENERAL.—Section 6672 is amended by add-
ing at the end the following new subsection:
‘‘(e) EXCEPTION FOR VOLUNTARY BOARD MEMBERS
OF TAX-EXEMPT ORGANIZATIONS.—No penalty shall be
imposed by subsection (a) on any unpaid, volunteer mem-
ber of any board of trustees or directors of an organization
exempt from tax under subtitle A if such member—
‘‘(1) is solely serving in an honorary capacity,
‘‘(2) does not participate in the day-to-day or
financial operations of the organization, and
‘‘(3) does not have actual knowledge of the fail-
ure on which such penalty is imposed.
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The preceding sentence shall not apply if it results in no
person being liable for the penalty imposed by subsection
(a).’’
(b) PUBLIC INFORMATION REQUIREMENTS.—
(1) IN GENERAL.—The Secretary of the Treas-
ury or the Secretary’s delegate (hereafter in this
subsection referred to as the ‘‘Secretary’’) shall take
such actions as may be appropriate to ensure that
employees are aware of their responsibilities under
the Federal tax depository system, the circumstances
under which employees may be liable for the penalty
imposed by section 6672 of the Internal Revenue
Code of 1986, and the responsibility to promptly re-
port to the Internal Revenue Service any failure re-
ferred to in subsection (a) of such section 6672.
Such actions shall include—
(A) printing of a warning on deposit cou-
pon booklets and the appropriate tax returns
that certain employees may be liable for the
penalty imposed by such section 6672, and
(B) the development of a special informa-
tion packet.
(2) DEVELOPMENT
OF
EXPLANATORY
MATE-
RIALS.—The Secretary shall develop materials ex-
plaining the circumstances under which board mem-
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bers of tax-exempt organizations (including vol-
untary and honorary members) may be subject to
penalty under section 6672 of such Code. Such ma-
terials shall be made available to tax-exempt organi-
zations.
(3) IRS INSTRUCTIONS.—The Secretary shall
clarify the instructions to Internal Revenue Service
employees on the application of the penalty under
section 6672 of such Code with regard to voluntary
members of boards of trustees or directors of tax-
exempt organizations.
PART X—MODIFICATIONS OF RULES RELATING
TO SUMMONSES
SEC. 13346. ENROLLED AGENTS INCLUDED AS THIRD-
PARTY RECORDKEEPERS.
(a) IN GENERAL.—Paragraph (3) of section 7609(a)
(relating to third-party recordkeeper defined) is amended
by striking ‘‘and’’ at the end of subparagraph (G), by
striking the period at the end of subparagraph (H) and
inserting ‘‘; and’’, and by adding at the end the following
the subparagraph:
‘‘(I) any enrolled agent.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to summonses issued after the
date of the enactment of this Act.
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SEC. 13347. SAFEGUARDS RELATING TO DESIGNATED SUM-
MONSES.
(a) STANDARD OF REVIEW.—Subparagraph (A) of
section 6503(j)(2) (defining designated summons) is
amended by redesignating clauses (i) and (ii) as clauses
(ii) and (iii), respectively, and by inserting before clause
(ii) (as so redesignated) the following new clause:
‘‘(i) the issuance of such summons is
preceded by a review of such issuance by
the regional counsel of the Office of Chief
Counsel for the region in which the exam-
ination of the corporation is being con-
ducted,’’.
(b) LIMITATION
ON
PERSONS
TO
WHOM
DES-
IGNATED SUMMONS MAY BE ISSUED.—Paragraph (1) of
section 6503(j) is amended by striking ‘‘with respect to
any return of tax by a corporation’’ and inserting ‘‘to a
corporation (or to any other person to whom the corpora-
tion has transferred records) with respect to any return
of tax by such corporation for a taxable year (or other
period) for which such corporation is being examined
under the coordinated examination program (or any suc-
cessor program) of the Internal Revenue Service’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to summonses issued after the date
of the enactment of this Act.
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SEC. 13348. ANNUAL REPORT TO CONGRESS CONCERNING
DESIGNATED SUMMONSES.
Not later than December 31 of each calendar year
after 1995, the Secretary of the Treasury or his delegate
shall report to the Committee on Ways and Means of the
House of Representatives and the Committee on Finance
of the Senate on the number of designated summonses (as
defined in section 6503(j) of the Internal Revenue Code
of 1986) which were issued during the preceding 12
months.
PART XI—RELIEF FROM RETROACTIVE APPLICA-
TION OF TREASURY DEPARTMENT REGULA-
TIONS
SEC. 13351. RELIEF FROM RETROACTIVE APPLICATION OF
TREASURY DEPARTMENT REGULATIONS.
(a) IN GENERAL.—Subsection (b) of section 7805
(relating to rules and regulations) is amended to read as
follows:
‘‘(b) RETROACTIVITY OF REGULATIONS.—
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, no temporary, proposed, or
final regulation relating to the internal revenue laws
shall apply to any taxable period ending before the
earliest of the following dates:
‘‘(A) The date on which such regulation is
filed with the Federal Register.
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‘‘(B) In the case of any final regulation,
the date on which any proposed or temporary
regulation to which such final regulation relates
was filed with the Federal Register.
‘‘(C) The date on which any notice sub-
stantially describing the expected contents of
any temporary, proposed, or final regulation is
issued to the public.
‘‘(2) EXCEPTION FOR PROMPTLY ISSUED REGU-
LATIONS.—Paragraph (1) shall not apply to regula-
tions filed or issued within 12 months of the date of
the enactment of the statutory provision to which
the regulation relates.
‘‘(3) PREVENTION OF ABUSE.—The Secretary
may provide that any regulation may take effect or
apply retroactively to prevent abuse.
‘‘(4) 
CORRECTION
OF
PROCEDURAL
DE-
FECTS.—The Secretary may provide that any regu-
lation may apply retroactively to correct a proce-
dural defect in the issuance of any prior regulation.
‘‘(5) INTERNAL REGULATIONS.—The limitation
of paragraph (1) shall not apply to any regulation
relating to internal Treasury Department policies,
practices, or procedures.
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‘‘(6) CONGRESSIONAL
AUTHORIZATION.—The
limitation of paragraph (1) may be superseded by a
legislative grant from Congress authorizing the Sec-
retary to prescribe the effective date with respect to
any regulation.
‘‘(7) ELECTION TO APPLY RETROACTIVELY.—
Paragraph (1) shall not apply to any regulation
which the taxpayer elects to apply before the dates
specified in paragraph (1) but only if such election
applies to all regulations which were issued with
such regulation under the statutory provision to
which such regulation relates.
‘‘(8) APPLICATION
TO
RULINGS.—The Sec-
retary may prescribe the extent, if any, to which any
ruling (including any judicial decision or any admin-
istrative determination other than by regulation) re-
lating to the internal revenue laws shall be applied
without retroactive effect.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply with respect to regulations
which relate to statutory provisions enacted on or after
the date of the enactment of this Act.
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PART XII—MISCELLANEOUS PROVISIONS
SEC. 13356. REPORT ON PILOT PROGRAM FOR APPEAL OF
ENFORCEMENT ACTIONS.
Not later than March 1, 1996, the Secretary of the
Treasury or his delegate shall submit to the Committee
on Ways and Means of the House of Representatives and
the Committee on Finance of the Senate a report on the
pilot program for appeals of enforcement actions (includ-
ing lien, levy, and seizure actions) to the Appeals Division
of the Internal Revenue Service, together with such rec-
ommendations as he may deem advisable.
SEC. 13357. PHONE NUMBER OF PERSON PROVIDING PAYEE
STATEMENTS REQUIRED TO BE SHOWN ON
SUCH STATEMENT.
(a) GENERAL RULE.—The following provisions are
each amended by striking ‘‘name and address’’ and insert-
ing ‘‘name, address, and phone number of the information
contact’’:
(1) Section 6041(d)(1).
(2) Section 6041A(e)(1).
(3) Section 6042(c)(1).
(4) Section 6044(e)(1).
(5) Section 6045(b)(1).
(6) Section 6049(c)(1)(A).
(7) Section 6050B(b)(1).
(8) Section 6050H(d)(1).
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(9) Section 6050I(e)(1).
(10) Section 6050J(e).
(11) Section 6050K(b)(1).
(12) Section 6050N(b)(1).
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall apply to statements required to be fur-
nished after December 31, 1996 (determined without
regard to any extension).
SEC. 13358. REQUIRED NOTICE OF CERTAIN PAYMENTS.
If any payment is received by the Secretary of the
Treasury or his delegate from any taxpayer and the Sec-
retary cannot associate such payment with such taxpayer,
the Secretary shall make reasonable efforts to notify the
taxpayer of such inability within 60 days after the re-
ceipt of such payment.
SEC. 13359. UNAUTHORIZED ENTICEMENT OF INFORMA-
TION DISCLOSURE.
(a) IN GENERAL.—Subchapter B of chapter 76 (re-
lating to proceedings by taxpayers and third parties), as
amended by section 13316(a), is amended by redesignat-
ing section 7435 as section 7436 and by inserting after
section 7434 the following new section:
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‘‘SEC. 7435. CIVIL DAMAGES FOR UNAUTHORIZED ENTICE-
MENT OF INFORMATION DISCLOSURE.
‘‘(a) IN GENERAL.—If any officer or employee of the
United States intentionally compromises the determina-
tion or collection of any tax due from an attorney, certified
public accountant, or enrolled agent representing a tax-
payer in exchange for information conveyed by the tax-
payer to the attorney, certified public accountant, or en-
rolled agent for purposes of obtaining advice concerning
the taxpayer’s tax liability, such taxpayer may bring a civil
action for damages against the United States in a district
court of the United States. Such civil action shall be the
exclusive remedy for recovering damages resulting from
such actions.
‘‘(b) DAMAGES.—In any action brought under sub-
section (a), upon a finding of liability on the part of the
defendant, the defendant shall be liable to the plaintiff in
an amount equal to the lesser of $500,000 or the sum
of—
‘‘(1) actual, direct economic damages sustained
by the plaintiff as a proximate result of the informa-
tion disclosure, and
‘‘(2) the costs of the action.
Damages shall not include the taxpayer’s liability for any
civil or criminal penalties, or other losses attributable to
incarceration or the imposition of other criminal sanctions.
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‘‘(c) PAYMENT AUTHORITY.—Claims pursuant to
this section shall be payable out of funds appropriated
under section 1304 of title 31, United States Code.
‘‘(d) PERIOD
FOR BRINGING ACTION.—Notwith-
standing any other provision of law, an action to enforce
liability created under this section may be brought without
regard to the amount in controversy and may be brought
only within 2 years after the date the actions creating such
liability would have been discovered by exercise of reason-
able care.
‘‘(e) MANDATORY STAY.—Upon a certification by the
Commissioner or the Commissioner’s delegate that there
is an ongoing investigation or prosecution of the taxpayer,
the district court before which an action under this section
is pending, shall stay all proceedings with respect to such
action pending the conclusion of the investigation or
prosecution.
‘‘(f) CRIME-FRAUD
EXCEPTION.—Subsection (a)
shall not apply to information conveyed to an attorney,
certified public accountant, or enrolled agent for the pur-
pose of perpetrating a fraud or crime.’’
(b) CLERICAL AMENDMENT.—The table of sections
for subchapter B of chapter 76, as amended by section
13316(b), is amended by striking the item relating to sec-
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tion 7435 and by adding at the end the following new
items:
‘‘Sec. 7435. Civil damages for unauthorized enticement of infor-
mation disclosure.
‘‘Sec. 7436. Cross references.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to actions after the date of the
enactment of this Act.
SEC. 13360. ANNUAL REMINDERS TO TAXPAYERS WITH OUT-
STANDING DELINQUENT ACCOUNTS.
(a) IN GENERAL.—Chapter 77 (relating to mis-
cellaneous provisions) is amended by adding at the end
the following new section:
‘‘SEC. 7524. ANNUAL NOTICE OF TAX DELINQUENCY.
‘‘Not less often than annually, the Secretary shall
send a written notice to each taxpayer who has a tax delin-
quent account of the amount of the tax delinquency as
of the date of the notice.’’
(b) CLERICAL AMENDMENT.—The table of sections
for chapter 77 is amended by adding at the end the follow-
ing new item:
‘‘Sec. 7524. Annual notice of tax delinquency.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to calendar years after 1995.
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SEC. 13361. 5-YEAR EXTENSION OF AUTHORITY FOR UNDER-
COVER OPERATIONS.
(a) IN GENERAL.—Paragraph (3) of section 7601(c)
of the Anti-Drug Abuse Act of 1988 is amended by strik-
ing all that follows ‘‘this Act’’ and inserting a period.
(b) RESTORATION OF AUTHORITY FOR 5 YEARS.—
Subsection (c) of section 7608 is amended by adding at
the end the following new paragraph:
‘‘(6) APPLICATION
OF
SECTION.—The provi-
sions of this subsection—
‘‘(A) shall apply after November 17, 1988,
and before January 1, 1990, and
‘‘(B) shall apply after the date of the en-
actment of this paragraph and before January
1, 2001.
All amounts expended pursuant to this subsection
during the period described in subparagraph (B)
shall be recovered to the extent possible, and depos-
ited in the Treasury of the United States as mis-
cellaneous receipts, before January 1, 2001.’’
(c) ENHANCED OVERSIGHT.—
(1) ADDITIONAL
INFORMATION
REQUIRED
IN
REPORTS TO CONGRESS.—Subparagraph (B) of sec-
tion 7608(c)(4) is amended—
(A) by striking ‘‘preceding the period’’ in
clause (ii),
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(B) by striking ‘‘and’’ at the end of clause
(ii), and
(C) by striking clause (iii) and inserting
the following:
‘‘(iii) the number, by programs, of un-
dercover investigative operations closed in
the 1-year period for which such report is
submitted, and
‘‘(iv) the following information with
respect to each undercover investigative op-
eration pending as of the end of the 1-year
period for which such report is submitted
or closed during such 1-year period—
‘‘(I) the date the operation began
and the date of the certification re-
ferred to in the last sentence of para-
graph (1),
‘‘(II) 
the 
total 
expenditures
under the operation and the amount
and use of the proceeds from the op-
eration,
‘‘(III) a detailed description of
the operation including the potential
violation 
being 
investigated 
and
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whether the operation is being con-
ducted under grand jury auspices, and
‘‘(IV) the results of the operation
including the results of criminal pro-
ceedings.’’
(2) AUDITS REQUIRED WITHOUT REGARD TO
AMOUNTS INVOLVED.—Subparagraph (C) of section
7608(c)(5) is amended to read as follows:
‘‘(C) UNDERCOVER INVESTIGATIVE OPER-
ATION.—The term ‘undercover investigative op-
eration’ means any undercover investigative op-
eration of the Service; except that, for purposes
of subparagraphs (A) and (C) of paragraph (4),
such term only includes an operation which is
exempt from section 3302 or 9102 of title 31,
United States Code.’’
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall take effect on the date of the
enactment of this Act.
SEC. 13362. DISCLOSURE OF FORM 8300 INFORMATION ON
CASH TRANSACTIONS.
(a) IN GENERAL.—Subsection (l) of section 6103 (re-
lating to disclosure of returns and return information for
purposes other than tax administration) is amended by
adding at the end the following new paragraph:
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‘‘(15) DISCLOSURE OF RETURNS FILED UNDER
SECTION 6050I.—The Secretary may, upon written
request, disclose to officers and employees of—
‘‘(A) any Federal agency,
‘‘(B) any agency of a State or local govern-
ment, or
‘‘(C) any agency of the government of a
foreign country,
information contained on returns filed under section
6050I. Any such disclosure shall be made on the
same basis, and subject to the same conditions, as
apply to disclosures of information on reports filed
under section 5313 of title 31, United States Code;
except that no disclosure under this paragraph shall
be made for purposes of the administration of any
tax law.’’
(b) CONFORMING AMENDMENTS.—
(1) Subsection (i) of section 6103 is amended
by striking paragraph (8).
(2) Subparagraph (A) of section 6103(p)(3) is
amended—
(A) by striking ‘‘(7)(A)(ii), or (8)’’ and in-
serting ‘‘or (7)(A)(ii)’’, and
(B) by striking ‘‘or (14)’’ and inserting
‘‘(14), or (15)’’.
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(3) The material preceding subparagraph (A) of
section 6103(p)(4) is amended—
(A) by striking ‘‘(5), or (8)’’ and inserting
‘‘or (5)’’,
(B) by striking ‘‘(i)(3)(B)(i), or (8)’’ and
inserting ‘‘(i)(3)(B)(i),’’, and
(C) by striking ‘‘or (12)’’ and inserting
‘‘(12), or (15)’’.
(4) Clause (ii) of section 6103(p)(4)(F) is
amended—
(A) by striking ‘‘(5), or (8)’’ and inserting
‘‘or (5)’’, and
(B) by striking ‘‘or (14)’’ and inserting
‘‘(14), or (15)’’.
(5) Paragraph (2) of section 7213(a) is amend-
ed by striking ‘‘or (12)’’ and inserting ‘‘(12), or
(15)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
SEC. 13363. DISCLOSURE OF RETURNS AND RETURN INFOR-
MATION TO DESIGNEE OF TAXPAYER.
Subsection (c) of section 6103 (relating to disclosure
of returns and return information to designee of taxpayer)
is amended by striking ‘‘written request for or consent to
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such disclosure’’ and inserting ‘‘request for or consent to
such disclosure’’.
SEC. 13364. STUDY OF NETTING OF INTEREST ON OVERPAY-
MENTS AND LIABILITIES.
(a) IN GENERAL.—The Secretary of the Treasury or
his delegate shall—
(1) conduct a study of the manner in which the
Internal Revenue Service has implemented the net-
ting of interest on overpayments and underpayments
and of the policy and administrative implications of
global netting, and
(2) before submitting the report of such study,
hold a public hearing to receive comments on the
matters included in such study.
(b) REPORT.—The report of such study shall be sub-
mitted not later than 6 months after the date of the enact-
ment of this Act to the Committee on Ways and Means
of the House of Representatives and the Committee on
Finance of the Senate.
SEC. 13365. CREDIT FOR EXPENSES OF CERTAIN TCMP AU-
DITS.
(a) IN GENERAL.—Subchapter B of chapter 65 is
amended by adding at the end the following new section:
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‘‘SEC. 6428. CREDIT FOR EXPENSES OF 1994 TCMP AUDITS.
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in-
dividual, there shall be allowed as a credit against the tax
imposed by subtitle A an amount equal to the qualified
TCMP expenses paid or incurred by the taxpayer during
the taxable year.
‘‘(b) LIMITATION.—The amount of the credit allowed
by subsection (a) shall not exceed $3,000 with respect to
an audit.
‘‘(c) QUALIFIED TCMP EXPENSES.—For purposes
of this section, the term ‘qualified TCMP expenses’ means
amounts which would (but for subsection (d)) be allowed
as a deduction under section 162 or 212(3) in connection
with an audit under the Taxpayer Compliance Measure-
ment Program of the taxpayer’s return of tax imposed by
chapter 1 for any taxable year beginning during 1994.
Such term shall not include any expense in connection
with an audit of an estate, trust, partnership, or S cor-
poration.
‘‘(d) DENIAL OF DOUBLE BENEFIT.—No deduction
shall be allowed under chapter 1 for any amount for which
a credit is allowed under this section.
‘‘(e) CREDIT TREATED AS SUBPART C CREDIT.—For
purposes of this title, the credit allowed under subsection
(a) shall be treated as a credit allowed under subpart C
of part IV of subchapter A of chapter 1.’’
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(b) TECHNICAL AMENDMENTS.—
(1) Paragraph (2) of section 1324(b) of title
31, United States Code, is amended by inserting be-
fore the period ‘‘, or from section 6428 of such
Code’’.
(2) The table of sections for such subchapter B
is amended by adding at the end the following new
item:
‘‘Sec. 6428. Credit for expenses of 1994 TCMP audits.’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to amounts paid or incurred after
December 31, 1994, in taxable years ending after such
date.
SEC. 13366. EXPENSES OF DETECTION OF UNDERPAYMENTS
AND FRAUD, ETC.
(a) IN GENERAL.—Section 7623 (relating to ex-
penses of deduction and punishment of frauds) is amended
to read as follows:
‘‘SEC. 7623. EXPENSES OF DETECTION OF UNDERPAYMENTS
AND FRAUD, ETC.
‘‘The Secretary, under regulations prescribed by the
Secretary, is authorized to pay such sums as he deem nec-
essary for—
‘‘(1) detecting underpayments of tax, and
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‘‘(2) detecting and bringing to trial and punish-
ment persons guilty of violating the internal revenue
laws or conniving at the same,
in cases where such expenses are not otherwise provided
for by law. Any amount payable under the preceding sen-
tence shall be paid from the proceeds of amounts (other
than interest) collected by reason of the information pro-
vided, and any amount so collected shall be available for
such payments.’’.
(b) CLERICAL AMENDMENT.—The table of sections
for subchapter B of chapter 78 is amended by striking
the item relating to section 7623 and inserting the follow-
ing new item:
‘‘Sec. 7623. Expenses of detection of underpayments and fraud,
etc.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date which is 6 months
after the enactment of this Act.
(d) REPORT.—The Secretary of the Treasury or his
delegate shall submit an annual report to the Committee
on Ways and Means of the House of Representatives and
the Committee on Finance of the Senate on the payments
under section 7623 of the Internal Revenue Code of 1986
during the year and on the amounts collected for which
such payments were made.
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Subtitle D—Additional Technical
Corrections
SEC. 13401. REPORTING OF REAL ESTATE TRANSACTIONS.
(a) IN GENERAL.—Paragraph (3) of section 6045(e)
(relating to prohibition of separate charge for filing re-
turn) is amended by adding at the end the following new
sentence: ‘‘Nothing in this paragraph shall be construed
to prohibit the real estate reporting person from taking
into account its cost of complying with such requirement
in establishing its charge (other than a separate charge
for complying with such requirement) to any customer for
performing services in the case of a real estate trans-
action.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect as if included in section
1015(e)(2)(A) of the Technical and Miscellaneous Reve-
nue Act of 1988.
SEC. 13402. CLARIFICATION OF DENIAL OF DEDUCTION
FOR STOCK REDEMPTION EXPENSES.
(a) IN GENERAL.—Paragraph (1) of section 162(k)
is amended by striking ‘‘the redemption of its stock’’ and
inserting ‘‘the reacquisition of its stock or of the stock
of 
any 
related 
person 
(as 
defined 
in 
section
465(b)(3)(C))’’.
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(b) CERTAIN DEDUCTIONS PERMITTED.—Subpara-
graph (A) of section 162(k)(2) is amended by striking
‘‘or’’ at the end of clause (i), by redesignating clause (ii)
as clause (iii), and by inserting after clause (i) the follow-
ing new clause:
‘‘(ii) deduction for amounts which are
properly allocable to indebtedness and am-
ortized over the term of such indebtedness,
or’’.
(c) CLERICAL AMENDMENT.—The subsection head-
ing for subsection (k) of section 162 is amended by strik-
ing ‘‘REDEMPTION’’ and inserting ‘‘REACQUISITION’’.
(d) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section
shall apply to amounts paid or incurred after Sep-
tember 13, 1995, in taxable years ending after such
date.
(2) SUBSECTION (b).—The amendment made
by subsection (b) shall take effect as if included in
the amendment made by section 613 of the Tax Re-
form Act of 1986.
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SEC. 13403. CLARIFICATION OF DEPRECIATION CLASS FOR
CERTAIN ENERGY PROPERTY.
(a) IN GENERAL.—Subparagraph (B) of section
168(e)(3) (relating to 5-year property) is amended by add-
ing at the end the following flush sentence:
‘‘Nothing in any provision of law shall be con-
strued to treat property as not being described
in clause (vi)(I) (or the corresponding provi-
sions of prior law) by reason of being public
utility property (within the meaning of section
48(a)(3)).’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect as if included in the
amendments made by section 11813 of the Revenue Rec-
onciliation Act of 1990.
SEC. 13404. CLERICAL AMENDMENT TO SECTION 404.
(a) IN GENERAL.—Paragraph (1) of section 404(j)
is amended by striking ‘‘(10)’’ and inserting ‘‘(9)’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect as if included in the
amendments made by section 713(d)(4)(A) of the Deficit
Reduction Act of 1984.
SEC. 13405. TREATMENT OF CERTAIN VETERANS’ REEM-
PLOYMENT RIGHTS.
(a) IN GENERAL.—Section 414 is amended by adding
at the end the following new subsection:
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‘‘(u) SPECIAL RULES RELATING TO VETERANS’ RE-
EMPLOYMENT RIGHTS.—
‘‘(1) TREATMENT OF CERTAIN CONTRIBUTIONS
MADE
PURSUANT
TO
VETERANS’ REEMPLOYMENT
RIGHTS.—If any contribution is made by an em-
ployer or an employee under an individual account
plan with respect to an employee, or by an employee
to a defined benefit pension plan that provides for
employee contributions, and such contribution is re-
quired by reason of such employee’s rights under
chapter 43 of title 38, United States Code, resulting
from qualified military service, then—
‘‘(A) such contribution shall not be subject
to any otherwise applicable limitation contained
in section 402(g), 402(h), 403(b), 404(a),
404(h), 408, 415, or 457, and shall not be
taken into account in applying such limitations
to other contributions or benefits under such
plan or any other plan, with respect to the year
in which the contribution is made,
‘‘(B) such contribution shall be subject to
the limitations referred to in subparagraph (A)
with respect to the year to which the contribu-
tion relates (in accordance with rules prescribed
by the Secretary), and
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‘‘(C) such plan shall not be treated as fail-
ing to meet the requirements of section
401(a)(4), 
401(a)(26), 
401(k)(3), 
401(m),
403(b)(12), 408(k)(3), 408(k)(6), 410(b), or
416 by reason of the making of such contribu-
tion.
For purposes of the preceding sentence, any elective
deferral or employee contribution made under para-
graph (2) shall be treated as required by reason of
the employee’s rights under such chapter.
‘‘(2) REEMPLOYMENT RIGHTS WITH RESPECT
TO ELECTIVE DEFERRALS.—
‘‘(A) IN GENERAL.—For purposes of this
subchapter and subchapter E, if an employee is
entitled to the benefits of chapter 43 of title 38,
United States Code, with respect to any plan
which provides for elective deferrals, the em-
ployer sponsoring the plan shall be treated as
meeting the requirements of such chapter 43
with respect to such elective deferrals only if
such employer—
‘‘(i) permits such employee to make
additional elective deferrals under such
plan (in the amount determined under sub-
paragraph (B) or such lesser amount as is
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elected by the employee) during the period
which begins on the date of the reemploy-
ment of such employee with such employer
and has the same length as the lesser of—
‘‘(I) the product of 3 and the pe-
riod of qualified military service which
resulted in such rights, and
‘‘(II) 5 years, and
‘‘(ii) makes a matching contribution
with respect to any additional elective de-
ferral made pursuant to clause (i) which
would have been required had such defer-
ral actually been made during the period of
such qualified military service.
‘‘(B) AMOUNT OF MAKEUP REQUIRED.—
The amount determined under this subpara-
graph with respect to any plan is the maximum
amount of the elective deferrals that the indi-
vidual would have been permitted to make
under the plan in accordance with the limita-
tions referred to in paragraph (1)(A) during his
period of qualified military service if he had
continued to be employed by the employer dur-
ing such period and received compensation as
determined under paragraph (7). Proper adjust-
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ment shall be made to the amount determined
under the preceding sentence for any elective
deferrals actually made during the period of
such qualified military service.
‘‘(C) ELECTIVE DEFERRAL.—For purposes
of this paragraph, the term ‘elective deferral’
has the meaning given such term by section
402(g)(3); except that such term shall include
any deferral of compensation under an eligible
deferred compensation plan (as defined in sec-
tion 457(b)).
‘‘(D) AFTER-TAX
EMPLOYEE
CONTRIBU-
TIONS.—References in subparagraphs (A) and
(B) to elective deferrals shall be treated as in-
cluding references to other employee contribu-
tions.
‘‘(3) CERTAIN
RETROACTIVE
ADJUSTMENTS
NOT REQUIRED.—For purposes of this subchapter
and subchapter E, no provision of chapter 43 of title
38, United States Code, shall be construed as re-
quiring—
‘‘(A) any crediting of earnings to an em-
ployee with respect to any contribution before
such contribution is actually made, or
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‘‘(B) any allocation of any forfeiture with
respect to the period of qualified military serv-
ice.
‘‘(4) LOAN
REPAYMENT
SUSPENSIONS
PER-
MITTED.—If any plan suspends the obligation to
repay any loan made to an employee from such plan
for any part of any period during which such em-
ployee is performing qualified military service, such
suspension shall not be taken into account for pur-
poses of section 72(p), 401(a), or 4975(d)(1).
‘‘(5) QUALIFIED MILITARY SERVICE.—For pur-
poses of this subsection, the term ‘qualified military
service’ means any service in the uniformed services
(as defined in chapter 43 of title 38, United States
Code) by any individual if such individual is entitled
to reemployment rights under such chapter with re-
spect to such service.
‘‘(6) INDIVIDUAL
ACCOUNT
PLAN.—For pur-
poses of this subsection, the term ‘individual account
plan’ means any defined contribution plan, any tax-
sheltered annuity plan under section 403(b), and
any eligible deferred compensation plan (as defined
in section 457(b)).
‘‘(7) COMPENSATION.—For purposes of section
415(c)(3), an employee who is in qualified military
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service shall be treated as receiving compensation
from the employer during such period of qualified
military service equal to—
‘‘(A) the compensation the employee would
have received during such period if the em-
ployee were not in qualified military service, de-
termined based on the rate of pay the employee
would have received from the employer but for
absence during the period of qualified military
service, or
‘‘(B) if the compensation of the employee
was not based on a fixed rate, the employee’s
average compensation from the employer during
the 12-month period immediately preceding the
qualified military service (or, if shorter, the pe-
riod of employment immediately preceding the
qualified military service).
‘‘(8) REQUIREMENTS FOR QUALIFIED RETIRE-
MENT PLAN.—For purposes of this subchapter and
subchapter E, an employer sponsoring a plan shall
be treated as meeting the requirements of chapter
43 of title 38, United States Code, only if each of
the following requirements is met:
‘‘(A) An individual reemployed under such
chapter is treated with respect to such plan as
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not having incurred a break in service with the
employer maintaining the plan by reason of
such individual’s period of qualified military
service.
‘‘(B) Each period of qualified military
service served by an individual is, upon reem-
ployment under such chapter, deemed with re-
spect to such plan to constitute service with the
employer maintaining the plan for the purpose
of determining the nonforfeitability of the indi-
vidual’s accrued benefits under such plan and
for the purpose of determining the accrual of
benefits under such plan.
‘‘(C) An individual reemployed under such
chapter is entitled to accrued benefits that are
contingent on the making of, or derived from,
employee contributions or elective deferrals only
to the extent the individual makes payment to
the plan with respect to such contributions or
deferrals. No such payment may exceed the
amount the individual would have been per-
mitted or required to contribute had the indi-
vidual remained continuously employed by the
employer throughout the period of qualified
military service. Any payment to such plan shall
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be made during the period beginning with the
date of reemployment and whose duration is 3
times the period of the qualified military service
(but not greater than 5 years).
‘‘(9) REFERENCES.—For purposes of this sec-
tion, any reference to chapter 43 of title 38, United
States Code, shall be treated as a reference to such
chapter as in effect on December 12, 1994 (without
regard to any subsequent amendment).’’
(b) EFFECTIVE DATE.—The amendments made by
this section shall be effective as of December 12, 1994.
Subtitle E—Tax Information
Sharing
SEC. 13501. DISCLOSURE OF RETURN INFORMATION FOR
ADMINISTRATION OF CERTAIN VETERANS
PROGRAMS.
(a) GENERAL RULE.—Subparagraph (D) of section
6103(l)(7) (relating to disclosure of return information to
Federal, State, and local agencies administering certain
programs) is amended by striking ‘‘Clause (viii) shall not
apply after September 30, 1998.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on the date of the enact-
ment of this Act.
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Subtitle F—Revenue Increases
PART I—PROVISIONS RELATING TO BUSINESSES
SEC. 13601. TAX TREATMENT OF CERTAIN EXTRAORDINARY
DIVIDENDS.
(a) TREATMENT OF EXTRAORDINARY DIVIDENDS IN
EXCESS OF BASIS.—Paragraph (2) of section 1059(a) (re-
lating to corporate shareholder’s basis in stock reduced by
nontaxed portion of extraordinary dividends) is amended
to read as follows:
‘‘(2) AMOUNTS IN EXCESS OF BASIS.—If the
nontaxed portion of such dividends exceeds such
basis, such excess shall be treated as gain from the
sale or exchange of such stock for the taxable year
in which the extraordinary dividend is received.’’
(b) TREATMENT OF REDEMPTIONS WHERE OPTIONS
INVOLVED.—Paragraph (1) of section 1059(e) (relating to
treatment of partial liquidations and non-pro rata redemp-
tions) is amended to read as follows:
‘‘(1) TREATMENT
OF
PARTIAL
LIQUIDATIONS
AND CERTAIN REDEMPTIONS.—Except as otherwise
provided in regulations—
‘‘(A) REDEMPTIONS.—In the case of any
redemption of stock—
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‘‘(i) which is part of a partial liquida-
tion (within the meaning of section 302(e))
of the redeeming corporation,
‘‘(ii) which is not pro rata as to all
shareholders, or
‘‘(iii) which would not have been
treated (in whole or in part) as a dividend
if any options had not been taken into ac-
count under section 318(a)(4),
any amount treated as a dividend with respect
to such redemption shall be treated as an ex-
traordinary dividend to which paragraphs (1)
and (2) of subsection (a) apply without regard
to the period the taxpayer held such stock. In
the case of a redemption described in clause
(iii), only the basis in the stock redeemed shall
be taken into account under subsection (a).
‘‘(B) REORGANIZATIONS, 
ETC.—An ex-
change described in section 356(a)(1) which is
treated as a dividend under section 356(a)(2)
shall be treated as a redemption of stock for
purposes of applying subparagraph (A).’’
(c) EFFECTIVE DATES.—
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(1) IN GENERAL.—The amendments made by
this section shall apply to distributions after May 3,
1995.
(2) 
TRANSITION
RULE.—The 
amendments
made by this section shall not apply to any distribu-
tion made pursuant to the terms of—
(A) a written binding contract in effect on
May 3, 1995, and at all times thereafter before
such distribution, or
(B) a tender offer outstanding on May 3,
1995.
(3) CERTAIN
DIVIDENDS
NOT
PURSUANT
TO
CERTAIN
REDEMPTIONS.—In determining whether
the amendment made by subsection (a) applies to
any extraordinary dividend other than a dividend
treated as an extraordinary dividend under section
1059(e)(1) of the Internal Revenue Code of 1986
(as amended by this Act), paragraphs (1) and (2)
shall be applied by substituting ‘‘September 13,
1995’’ for ‘‘May 3, 1995’’.
SEC. 13602. REGISTRATION OF CONFIDENTIAL CORPORATE
TAX SHELTERS.
(a) IN GENERAL.—Section 6111 (relating to registra-
tion of tax shelters) is amended by redesignating sub-
sections (d) and (e) as subsections (e) and (f), respectively,
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and by inserting after subsection (c) the following new
subsection:
‘‘(d) 
CERTAIN
CONFIDENTIAL
ARRANGEMENTS
TREATED AS TAX SHELTERS.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘tax shelter’ includes any entity, plan,
arrangement, or transaction—
‘‘(A) a significant purpose of which is the
avoidance or evasion of Federal income tax for
a participant which is a corporation,
‘‘(B) which is offered to any potential par-
ticipant under conditions of confidentiality, and
‘‘(C) for which the tax shelter organizers
may receive fees in excess of $100,000 in the
aggregate.
‘‘(2) CONDITIONS OF CONFIDENTIALITY.—For
purposes of paragraph (1)(C), an offer is under con-
ditions of confidentiality if—
‘‘(A) the potential participant to whom the
offer is made (or any other person acting on be-
half of such participant) has an understanding
or agreement with or for the benefit of any pro-
moter of the tax shelter that such participant
(or other person) will limit disclosure of the tax
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shelter or any significant tax features of the tax
shelter, or
‘‘(B) any promoter of the tax shelter—
‘‘(i) claims, knows, or has reason to
know,
‘‘(ii) knows or has reason to know
that any other person (other than the po-
tential participant) claims, or
‘‘(iii) causes another person to claim,
that the tax shelter (or any aspect thereof) is
proprietary to any person other than the poten-
tial participant or is otherwise protected from
disclosure to or use by others.
For purposes of this subsection, the term ‘promoter’
means any person who participates in the organiza-
tion, management, or sale of the tax shelter.
‘‘(3) PERSONS
OTHER
THAN
ORGANIZER
RE-
QUIRED TO REGISTER IN CERTAIN CASES.—
‘‘(A) IN GENERAL.—If—
‘‘(i) the requirements of subsection (a)
are not met with respect to any tax shelter
(as defined in paragraph (1)) by any tax
shelter organizer, and
‘‘(ii) no tax shelter organizer is a
United States person,
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then each United States person who discussed
participation in such shelter shall register such
shelter under subsection (a).
‘‘(B) 
EXCEPTION.—Subparagraph 
(A)
shall not apply to a United States person who
discussed participation in a tax shelter if—
‘‘(i) such person notified the promoter
in writing (not later than the close of the
day on which such discussions began) that
such person would not participate in such
shelter, and
‘‘(ii) such person does not participate
in such shelter.
‘‘(4) OFFER
TO
PARTICIPATE
TREATED
AS
OFFER FOR SALE.—For purposes of subsections (a)
and (b), an offer to participate in a tax shelter (as
defined in paragraph (1)) shall be treated as an
offer for sale.’’
(b) PENALTY.—Subsection (a) of section 6707 (relat-
ing to failure to furnish information regarding tax shel-
ters) is amended by adding at the end the following new
paragraph:
‘‘(3) CONFIDENTIAL ARRANGEMENTS.—
‘‘(A) IN GENERAL.—In the case of a tax
shelter (as defined in section 6111(d)), the pen-
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alty imposed under paragraph (1) shall be an
amount equal to the greater of—
‘‘(i) 50 percent of the fees paid to any
promoter of the tax shelter with respect to
offerings made before the date such shelter
is registered under section 6111, or
‘‘(ii) $10,000.
Clause (i) shall be applied by substituting ‘75
percent’ for ‘50 percent’ in the case of an inten-
tional failure or act described in paragraph (1).
‘‘(B) SPECIAL
RULE
FOR
PARTICIPANTS
REQUIRED
TO
REGISTER
SHELTER.—In the
case of a person required to register such a tax
shelter by reason of section 6111(d)(3)—
‘‘(i) such person shall be required to
pay the penalty under paragraph (1) only
if such person actually participated in such
shelter,
‘‘(ii) the amount of such penalty shall
be determined by taking into account
under subparagraph (A)(i) only the fees
paid by such person, and
‘‘(iii) such penalty shall be in addition
to the penalty imposed on any other person
for failing to register such shelter.’’
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(c) CONFORMING AMENDMENTS.—
(1) Paragraph (2) of section 6707(a) is amend-
ed by striking ‘‘The penalty’’ and inserting ‘‘Except
as provided in paragraph (3), the penalty’’.
(2) Subparagraph (A) of section 6707(a)(1) is
amended by striking ‘‘paragraph (2)’’ and inserting
‘‘paragraph (2) or (3), as the case may be’’.
(d) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by
this section shall apply to any tax shelter (as defined
in section 6111(d) of the Internal Revenue Code of
1986, as amended by this section) interests in which
are offered to potential participants after the date of
the enactment of this Act.
(2) DUE DATE FOR REGISTRATION.—The due
date for registering any tax shelter required to be
registered by reason of the amendments made by
this section shall be not earlier than the close of a
reasonable period after the Secretary of the Treas-
ury prescribes guidance with respect to meeting such
requirements.
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SEC. 13603. DENIAL OF DEDUCTION FOR INTEREST ON
LOANS WITH RESPECT TO COMPANY-OWNED
INSURANCE.
(a) IN GENERAL.—Paragraph (4) of section 264(a)
is amended—
(1) by inserting ‘‘or endowment or annuity con-
tract’’ after ‘‘life insurance policies’’, and
(2) by striking all that follows ‘‘carried on by
the taxpayer’’ and inserting a period.
(b) PHASE-IN OF DISALLOWANCE.—Section 264 is
amended by adding at the end the following new sub-
section:
‘‘(d) PHASE-IN
OF DISALLOWANCE UNDER SUB-
SECTION (a)(4).—In the case of calendar years after 1995
and before 2000—
‘‘(1) IN
GENERAL.—The amount of interest
paid or accrued during any period in any such cal-
endar year with respect to qualified indebtedness
which is disallowed by reason of the amendment
made by section 13603(a) of the Revenue Reconcili-
ation Act of 1995 (determined without regard to this
subsection) shall not exceed the applicable percent-
age of such interest which is so disallowed.
‘‘(2) QUALIFIED
INDEBTEDNESS.—For pur-
poses of paragraph (1), the term ‘qualified indebted-
ness’ means indebtedness incurred before September
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18, 1995, with respect to a life insurance policy cov-
ering only the life of the individual who was insured
under such policy on such date. Any increase on or
after such date in the amount of such indebtedness
shall be treated as indebtedness incurred after such
date.
‘‘(3) APPLICABLE PERCENTAGE.—For purposes
of paragraph (1), the applicable percentage shall be
determined in accordance with the following table:
‘‘In the case of periods
The applicable
in calendar year:
percentage is:
1996 .......................................................................... 20 percent
1997 .......................................................................... 40 percent
1998 .......................................................................... 60 percent
1999 .......................................................................... 80 percent.’’
(c) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by
this section shall apply to interest paid or accrued
after December 31, 1995.
(2) EXCEPTION.—The amendments made by
this section shall not apply to contracts purchased
on or before June 20, 1986.
(d) 4-YEAR SPREAD OF INCOME INCLUSION ON SUR-
RENDER, ETC. OF CONTRACTS.—
(1) IN GENERAL.—In the case of indebtedness
with respect to any life insurance policy described in
paragraph (4) of section 264(a) of the Internal Rev-
enue Code of 1986, if—
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(A) the interest paid or accrued after De-
cember 31, 1995, on such indebtedness is not
allowed as a deduction under chapter 1 of such
Code by reason of such paragraph (4) (as
amended by this section), and
(B) the entire amount of interest paid or
accrued on or before such date on such indebt-
edness was allowed as a deduction under such
chapter 1,
then (in lieu of any other inclusion in gross income)
the qualified amount with respect to such policy
shall be includible in gross income ratably over the
4 taxable years beginning with the taxable year such
amount would (but for this paragraph) be includible.
(2) QUALIFIED
AMOUNT.—For purposes of
paragraph (1), the term ‘‘qualified amount’’ means,
with respect to any policy, the amount received
under such policy—
(A) on the complete surrender, redemption,
or maturity of such policy during 1996, or
(B) in full discharge during 1996 of the
obligation under the policy which is in the na-
ture of a refund of the consideration paid for
the policy,
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but only to the extent such amount is includible in
gross income for the taxable year in which the event
described in subparagraph (A) or (B) occurs.
(3) SPECIAL RULE.—A contract shall not be
treated as failing to meet the requirement of section
264(c)(1) of the Internal Revenue Code of 1986
solely by reason of an occurrence described in sub-
paragraph (A) or (B) of paragraph (2) of this sub-
section.
SEC. 13604. TERMINATION OF SUSPENSE ACCOUNTS FOR
FAMILY CORPORATIONS REQUIRED TO USE
ACCRUAL METHOD OF ACCOUNTING.
(a) IN GENERAL.—Subsection (i) of section 447 (re-
lating to method of accounting for corporations engaged
in farming) is amended by adding at the end the following
new paragraph:
‘‘(7) TERMINATION.—
‘‘(A) IN GENERAL.—No suspense account
may be established under this subsection by any
corporation required by this section to change
its method of accounting for any taxable year
ending after September 13, 1995.
‘‘(B) 20-YEAR
PHASEOUT
OF
EXISTING
SUSPENSE ACCOUNTS.—Each suspense account
under this subsection shall be reduced (but not
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below zero) for each of the first 20 taxable
years beginning after September 13, 1995, by
an amount equal to the applicable portion of
such account. Any reduction in a suspense ac-
count under this paragraph shall be included in
gross income for the taxable year of the reduc-
tion. The amount of the reduction required
under this paragraph for any taxable year shall
be reduced (but not below zero) by the amount
of any reduction required for such taxable year
under any other provision of this subsection.
‘‘(C) APPLICABLE
PORTION.—For pur-
poses of subparagraph (B), the term ‘applicable
portion’ means, for any taxable year, the
amount which would ratably reduce the amount
in the account (after taking into account prior
reductions) to zero over the period consisting of
such taxable year and the remaining taxable
years in such first 20 taxable years.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years ending after Sep-
tember 13, 1995.
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SEC. 13605. TERMINATION OF PUERTO RICO AND POSSES-
SION TAX CREDIT.
(a) IN GENERAL.—Section 936 is amended by adding
at the end the following new subsection:
‘‘(j) TERMINATION.—
‘‘(1) IN GENERAL.—This section shall not apply
to any taxable year beginning after December 31,
1995.
‘‘(2) EXCEPTION FOR EXISTING CLAIMANTS.—
‘‘(A) IN
GENERAL.—Paragraph (1) shall
be applied by substituting ‘2005’ for ‘1995’ in
the case of an existing credit claimant.
‘‘(B) EXCEPTION
TERMINATES
IF
NEW
LINE OF BUSINESS ADDED.—If, after Septem-
ber 13, 1995, a corporation which would (but
for this subparagraph) be an existing credit
claimant adds a substantial new line of busi-
ness, such corporation shall cease to be treated
as an existing credit claimant as of the close of
the taxable year ending before the date of such
addition.
‘‘(C) EXISTING
CREDIT
CLAIMANT.—For
purposes of this subsection, the term ‘existing
credit claimant’ means any corporation which
satisfied the conditions of both subparagraph
(A) and subparagraph (B) of subsection (a)(2)
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for at least 1 base period year for which such
corporation elected the application of this sec-
tion.
‘‘(3) LIMIT
ON
CREDIT
OF
EXISTING
CLAIM-
ANTS.—
‘‘(A) IN GENERAL.—In the case of an ex-
isting credit claimant, the aggregate amount of
income taken into account under subsection
(a)(1) for any taxable year beginning after De-
cember 31, 1995 (hereinafter in this subsection
referred to as the ‘current year’), shall not ex-
ceed the adjusted base period income of such
claimant.
‘‘(B) COORDINATION
WITH
SUBSECTION
(a)(4).—The amount of income described in sub-
section (a)(1)(A) which is taken into account in
applying subsection (a)(4) shall be such income
as reduced under this paragraph. In determin-
ing such reduction, any reduction under sub-
paragraph (A) in the amount which would oth-
erwise be taken into account under subsection
(a)(1) shall be allocated between the income de-
scribed in subparagraph (A) thereof and the in-
come described in subparagraph (B) thereof in
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proportion to the respective amounts of such in-
comes.
‘‘(4) ADJUSTED
BASE
PERIOD
INCOME.—For
purposes of paragraph (3)—
‘‘(A) IN
GENERAL.—The term ‘adjusted
base period income’ means the average of the
inflation-adjusted possession incomes of the cor-
poration for each base period year.
‘‘(B) INFLATION-ADJUSTED
POSSESSION
INCOME.—For purposes of subparagraph (A),
the inflation-adjusted possession income of any
corporation for any base period year shall be an
amount equal to the possession income of such
corporation for such base period year multiplied
by the inflation adjustment percentage for such
base period year.
‘‘(C) INFLATION
ADJUSTMENT
PERCENT-
AGE.—For purposes of subparagraph (B), the
inflation adjustment percentage for any base
period year means, with respect to the current
year, the percentage (if any) by which—
‘‘(i) the CPI for last calendar year
ending before the beginning of the current
year, exceeds
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‘‘(ii) the CPI for last calendar year
ending before the beginning of the base pe-
riod year.
For purposes of the preceding sentence, the
CPI for any calendar year is the CPI (as de-
fined in section 1(f)(5)) for such year under
section 1(f)(4).
‘‘(D) INCREASE
IN
INFLATION
ADJUST-
MENT PERCENTAGE FOR GROWTH DURING BASE
YEARS.—The inflation adjustment percentage
(determined under subparagraph (C) without
regard to this subparagraph) for each of the 5
taxable years referred to in paragraph (5)(A)
shall be increased by—
‘‘(i) 5 percentage points in the case of
a taxable year ending during the 1-year pe-
riod ending on September 12, 1995;
‘‘(ii) 10.25 percentage points in the
case of a taxable year ending during the 1-
year period ending on September 12, 1994;
‘‘(iii) 15.76 percentage points in the
case of a taxable year ending during the 1-
year period ending on September 12, 1993;
‘‘(iv) 21.55 percentage points in the
case of a taxable year ending during the 1-
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year period ending on September 12, 1992;
and
‘‘(v) 27.63 percentage points in the
case of a taxable year ending during the 1-
year period ending on September 12, 1991.
‘‘(5) BASE PERIOD YEAR.—For purposes of this
subsection—
‘‘(A) IN GENERAL.—The term ‘base period
year’ means each of 3 taxable years which are
among the 5 most recent taxable years of the
corporation ending before September 13, 1995,
determined by disregarding—
‘‘(i) one taxable year for which the
corporation had the largest inflation-ad-
justed possession income, and
‘‘(ii) one taxable year for which the
corporation had the smallest inflation-ad-
justed possession income.
‘‘(B) CORPORATIONS NOT HAVING SIGNIFI-
CANT
POSSESSION
INCOME
THROUGHOUT
5-
YEAR PERIOD.—
‘‘(i) IN
GENERAL.—If a corporation
does not have significant possession income
for each of the most recent 5 taxable years
ending before September 13, 1995, then,
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in lieu of applying subparagraph (A), the
term ‘base period year’ means only those
taxable years (of such 5 taxable years) for
which the corporation has significant pos-
session income; except that, if such cor-
poration has significant possession income
for 4 of such 5 taxable years, the rule of
subparagraph (A)(ii) shall apply.
‘‘(ii) SPECIAL RULE.—If there is no
year (of such 5 taxable years) for which a
corporation has significant possession in-
come—
‘‘(I) the term ‘base period year’
means the first taxable year ending on
or after September 13, 1995, but
‘‘(II) the amount of possession
income for such year which is taken
into account under paragraph (4)
shall be the amount which would be
determined if such year were a short
taxable year ending on August 31,
1995.
‘‘(iii) SIGNIFICANT
POSSESSION
IN-
COME.—For purposes of this subpara-
graph, the term ‘significant possession in-
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come’ means possession income which ex-
ceeds 2 percent of the possession income of
the taxpayer for the taxable year (of the
period of 6 taxable years ending with the
first taxable year ending on or after Sep-
tember 13, 1995) having the greatest pos-
session income.
‘‘(C) ELECTION TO USE ONE BASE PERIOD
YEAR.—
‘‘(i) IN GENERAL.—At the election of
the taxpayer, the term ‘base period year’
means only the last taxable year of the cor-
poration ending in calendar year 1992.
‘‘(ii) ELECTION.—An election under
this subparagraph by any possession cor-
poration may be made only for the cor-
poration’s first taxable year beginning
after December 31, 1995, for which it is a
possession 
corporation. 
The 
rules 
of
subclauses (II) and (III) of subsection
(a)(4)(B)(iii) shall apply to the election
under this subparagraph.
‘‘(D) ACQUISITIONS AND DISPOSITIONS.—
Rules similar to the rules of subparagraphs (A)
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and (B) of section 41(f)(3) shall apply for pur-
poses of this subsection.
‘‘(6) POSSESSION
INCOME.—For purposes of
this subsection, the term ‘possession income’ means
the sum of the income referred to in subsection
(a)(1)(A) and the income referred to in subsection
(a)(1)(B). In no event shall possession income be
treated as being less than zero.
‘‘(7) SHORT YEARS.—If the current year or a
base period year is a short taxable year, the applica-
tion of this subsection shall be made with such
annualizations as the Secretary shall prescribe.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years beginning after
December 31, 1995.
SEC. 13606. DEPRECIATION UNDER INCOME FORECAST
METHOD.
(a) GENERAL RULE.—Section 167 (relating to depre-
ciation) is amended by redesignating subsection (g) as
subsection (h) and by inserting after subsection (f) the
following new subsection:
‘‘(g) DEPRECIATION
UNDER
INCOME
FORECAST
METHOD.—
‘‘(1) IN GENERAL.—If the depreciation deduc-
tion allowable under this section to any taxpayer
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with respect to any property is determined under the
income forecast method or any similar method—
‘‘(A) in determining the amount of the de-
preciation deduction under such method, the es-
timated income from the property shall include
all estimated income from use of the property,
‘‘(B) the adjusted basis of the property
shall only include amounts with respect to
which the requirements of section 461(h) are
satisfied,
‘‘(C) the depreciation deduction under such
method for the 10th taxable year beginning
after the taxable year in which the property was
placed in service shall be equal to the adjusted
basis of such property as of the beginning of
such 10th taxable year, and
‘‘(D) such taxpayer shall pay (or be enti-
tled to receive) interest computed under the
look-back method of paragraph (2) for any re-
computation year.
‘‘(2) LOOK-BACK METHOD.—The interest com-
puted under the look-back method of this paragraph
for any recomputation year shall be determined by—
‘‘(A) first determining the depreciation de-
ductions under this section with respect to such
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property which would have been allowable for
prior taxable years if the determination of the
amounts so allowable had been made on the
basis of the sum of the following (instead of the
estimated income with respect to such prop-
erty)—
‘‘(i) the actual income from such
property for periods before the close of the
recomputation year, and
‘‘(ii) an estimate of the future income
with respect to such property for periods
after the recomputation year,
‘‘(B) second, determining (solely for pur-
poses of computing such interest) the overpay-
ment or underpayment of tax for each such
prior taxable year which would result solely
from the application of subparagraph (A), and
‘‘(C) then using the adjusted overpayment
rate 
(as 
defined 
in 
section 
460(b)(7)),
compounded daily, on the overpayment or
underpayment determined under subparagraph
(B).
For purposes of the preceding sentence, any cost in-
curred after the property is placed in service (which
is not treated as a separate property under para-
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graph (5)) shall be taken into account by discount-
ing (using the Federal mid-term rate determined
under section 1274(d) as of the time such cost is in-
curred) such cost to its value as of the date the
property is placed in service. The taxpayer may elect
with respect to any property to have the preceding
sentence not apply to such property.
‘‘(3) EXCEPTION FROM LOOK-BACK METHOD.—
Paragraph (1)(D) shall not apply with respect to
any property which, when placed in service by the
taxpayer, had a basis of $100,000 or less.
‘‘(4) RECOMPUTATION YEAR.—For purposes of
this subsection, except as provided in regulations,
the term ‘recomputation year’ means, with respect to
any property, the third and the 10th taxable years
beginning after the taxable year in which the prop-
erty was placed in service, unless the actual income
from the property for such third or 10th taxable
year (as the case may be) and each prior taxable
year is within 10 percent of the estimated income
from the property for each such year which was
taken into account under paragraph (1)(A).
‘‘(5) SPECIAL RULES.—
‘‘(A) CERTAIN COSTS TREATED AS SEPA-
RATE PROPERTY.—For purposes of this section,
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the following costs shall be treated as separate
properties:
‘‘(i) Any costs incurred with respect
to any property after the 10th taxable year
beginning after the taxable year in which
the property was placed in service.
‘‘(ii) Any costs incurred after the
property is placed in service and before the
close of such 10th taxable year if such
costs are significant and give rise to a sig-
nificant increase in the income from the
property which was not included in the es-
timated income from the property.
‘‘(B) SYNDICATION INCOME FROM TELE-
VISION SERIES.—In the case of property which
is an episode in a television series, estimated in-
come from syndicating such series shall not be
required to be taken into account under this
subsection before the earlier of—
‘‘(i) the 4th taxable year beginning
after the date the first episode in such se-
ries is placed in service, or
‘‘(ii) the earliest taxable year in which
the taxpayer had a reasonable expectation
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that there would be a future syndication of
such series.
‘‘(C) COLLECTION
OF
INTEREST.—For
purposes of subtitle F (other than sections
6654 and 6655), any interest required to be
paid by the taxpayer under paragraph (1) for
any recomputation year shall be treated as an
increase in the tax imposed by this chapter for
such year.
‘‘(D) DETERMINATIONS.—For purposes of
this subsection, determinations of the amount
of income from any property shall be deter-
mined in the same manner as for purposes of
applying the income forecast method; except
that any income from the disposition of such
property shall be taken into account.
‘‘(E) TREATMENT
OF
PASS-THRU
ENTI-
TIES.—Rules similar to the rules of section
460(b)(4) shall apply for purposes of this sub-
section.’’
(b) EFFECTIVE DATE.—
(1) IN
GENERAL.—The amendment made by
subsection (a) shall apply to property placed in serv-
ice after September 13, 1995.
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(2) BINDING
CONTRACTS.—The amendment
made by subsection (a) shall not apply to any prop-
erty produced or acquired by the taxpayer pursuant
to a written contract which was binding on Septem-
ber 13, 1995, and at all times thereafter before such
production or acquisition.
SEC. 13607. TRANSFERS OF EXCESS PENSION ASSETS.
(a) IN GENERAL.—Section 420 (relating to transfers
of excess pension assets to retiree health accounts) is
amended by adding at the end the following new sub-
section:
‘‘(f) SIMILAR RULES TO APPLY TO OTHER TRANS-
FERS OF EXCESS PLAN ASSETS.—
‘‘(1) IN GENERAL.—If there is a qualified unre-
stricted transfer of any excess pension assets of a
defined benefit plan (other than a multiemployer
plan) to an employer—
‘‘(A) a trust which is part of such plan
shall not be treated as failing to meet the re-
quirements of section 401(a) solely by reason of
such transfer (or any other action authorized
under this section), and
‘‘(B) such transfer shall not be treated as
a prohibited transaction for purposes of section
4975.
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The gross income of the employer shall include the
amount of any qualified transfer made during the
taxable year.
‘‘(2) QUALIFIED UNRESTRICTED TRANSFER.—
For purposes of this section—
‘‘(A) IN
GENERAL.—The term ‘qualified
unrestricted transfer’ means a transfer—
‘‘(i) of excess pension assets of a de-
fined benefit plan to the employer, and
‘‘(ii) with respect to which the re-
quirements of subsection (c)(2)(A) are met
(determined by treating such transfer as a
qualified transfer).
‘‘(B) COORDINATION WITH TRANSFERS TO
RETIREE HEALTH ACCOUNTS.—Such term shall
not include any qualified transfer (as defined in
subsection (b)).
‘‘(C) EXPIRATION.—No transfer in any
taxable year beginning after December 31,
2000, shall be treated as a qualified unre-
stricted transfer.
‘‘(3) DEFINITION
AND
SPECIAL
RULE.—For
purposes of this subsection—
‘‘(A) EXCESS PENSION ASSETS.—The term
‘excess pension assets’ has the meaning given
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such term by subsection (e)(2); except that the
amount thereof shall be the lesser of—
‘‘(i) the amount determined as of the
most recent valuation date of the plan pre-
ceding the transfer, or
‘‘(ii) the amount determined as of
January 1, 1995 (or, if January 1, 1995,
is not a valuation date, the most recent
prior valuation date).
‘‘(B) COORDINATION WITH SECTION 412.—
In the case of a qualified unrestricted trans-
fer—
‘‘(i) any assets transferred in a plan
year on or before the valuation date for
such year (and any income allocable there-
to) shall, for purposes of section 412, be
treated as assets in the plan as of the valu-
ation date for such year, and
‘‘(ii) the plan shall be treated as hav-
ing a net experience loss under section
412(b)(2)(B)(iv) in an amount equal to the
amount of such transfer and for which am-
ortization charges begin for the first plan
year after the plan year in which such
transfer occurs, except that such section
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shall be applied to such amount by sub-
stituting ‘10 plan years’ for ‘5 plan years’.
‘‘(C) TREATMENT
OF
TRANSFERS.—Ex-
cept for purposes of this section, a qualified un-
restricted transfer shall be treated as a quali-
fied transfer to a health benefits account.’’
(b) REVERSION TAX.—Section 4980 (relating to tax
on reversion of qualified plan assets to employers) is
amended by adding at the end the following new sub-
section:
‘‘(e) SPECIAL
RULES
FOR
QUALIFIED
UNRE-
STRICTED TRANSFERS UNDER SECTION 420.—In the
case of a qualified unrestricted transfer to which section
420(f) applies—
‘‘(1) no tax shall be imposed by subsection (a)
if such transfer occurs before July 1, 1996,
‘‘(2) subsection (a) shall be applied by sub-
stituting ‘6.5 percent’ for ‘20 percent’ if such trans-
fer occurs after June 30, 1996, and
‘‘(3) subsection (d) shall not apply.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on January 1, 1995.
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PART II—LEGAL REFORMS
SEC. 13611. REPEAL OF EXCLUSION FOR PUNITIVE DAM-
AGES 
AND 
FOR 
DAMAGES 
NOT 
ATTRIB-
UTABLE TO PHYSICAL INJURIES OR SICK-
NESS.
(a) IN GENERAL.—Paragraph (2) of section 104(a)
(relating to compensation for injuries or sickness) is
amended to read as follows:
‘‘(2) the amount of any damages (other than
punitive damages) received (whether by suit or
agreement and whether as lump sums or as periodic
payments) on account of personal physical injuries
or physical sickness;’’.
(b) EMOTIONAL DISTRESS AS SUCH TREATED AS
NOT PHYSICAL INJURY OR PHYSICAL SICKNESS.—Sec-
tion 104(a) is amended by striking the last sentence and
inserting the following new sentence: ‘‘For purposes of
paragraph (2), emotional distress shall not be treated as
a physical injury or physical sickness. The preceding sen-
tence shall not apply to an amount of damages not in ex-
cess of the amount paid for medical care (described in sub-
paragraph (A) or (B) of section 213(d)(1)) attributable
to emotional distress.’’
(c) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section
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shall apply to amounts received after December 31,
1995, in taxable years ending after such date.
(2) EXCEPTION.—The amendments made by
this section shall not apply to any amount received
under a written binding agreement, court decree, or
mediation award in effect on (or issued on or before)
September 13, 1995.
SEC. 13612. REPORTING OF CERTAIN PAYMENTS MADE TO
ATTORNEYS.
(a) IN GENERAL.—Section 6045 (relating to returns
of brokers) is amended by adding at the end the following
new subsection:
‘‘(f) RETURN REQUIRED IN THE CASE
OF PAY-
MENTS TO ATTORNEYS.—
‘‘(1) IN GENERAL.—Any person engaged in a
trade or business and making a payment (in the
course of such trade or business) to which this sub-
section applies shall file a return under subsection
(a) and a statement under subsection (b) with re-
spect to such payment.
‘‘(2) APPLICATION OF SUBSECTION.—
‘‘(A) IN GENERAL.—This subsection shall
apply to any payment to an attorney in connec-
tion with legal services (whether or not such
services are performed for the payor).
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‘‘(B) EXCEPTION.—This subsection shall
not apply to the portion of any payment which
is required to be reported under section 6041(a)
(or would be so required but for the dollar limi-
tation contained therein) or section 6051.’’
(b) REPORTING OF ATTORNEYS FEES PAYABLE TO
CORPORATIONS.—The regulations providing an exception
under section 6041 of the Internal Revenue Code of 1986
for payments made to corporations shall not apply to pay-
ments of attorneys fees.
(c) EFFECTIVE DATE.—The amendment made by
subsection (a), and subsection (b), shall apply to payments
made after December 31, 1995.
PART III—TREATMENT OF INDIVIDUALS WHO
LOSE UNITED STATES CITIZENSHIP
SEC. 13616. REVISION OF INCOME, ESTATE, AND GIFT
TAXES ON INDIVIDUALS WHO LOSE UNITED
STATES CITIZENSHIP.
(a) IN GENERAL.—Subsection (a) of section 877 is
amended to read as follows:
‘‘(a) TREATMENT OF EXPATRIATES.—
‘‘(1) IN GENERAL.—Every nonresident alien in-
dividual who, within the 10-year period immediately
preceding the close of the taxable year, lost United
States citizenship, unless such loss did not have for
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1 of its principal purposes the avoidance of taxes
under this subtitle or subtitle B, shall be taxable for
such taxable year in the manner provided in sub-
section (b) if the tax imposed pursuant to such sub-
section exceeds the tax which, without regard to this
section, is imposed pursuant to section 871.
‘‘(2) CERTAIN INDIVIDUALS TREATED AS HAV-
ING
TAX
AVOIDANCE
PURPOSE.—For purposes of
paragraph (1), an individual shall be treated as hav-
ing a principal purpose to avoid such taxes if—
‘‘(A) the average annual net income tax
(as defined in section 38(c)(1)) of such individ-
ual for the period of 5 taxable years ending be-
fore the date of the loss of United States citi-
zenship is greater than $100,000, or
‘‘(B) the net worth of the individual as of
such date is $500,000 or more.
In the case of the loss of United States citizenship
in any calendar year after 1996, such $100,000 and
$500,000 amounts shall be increased by an amount
equal to such dollar amount multiplied by the cost-
of-living 
adjustment 
determined 
under 
section
1(f)(3) for such calendar year by substituting ‘1994’
for ‘1992’ in subparagraph (B) thereof. Any in-
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crease under the preceding sentence shall be round-
ed to the nearest multiple of $1,000.’’
(b) EXCEPTIONS.—
(1) IN GENERAL.—Section 877 is amended by
striking subsection (d), by redesignating subsection
(c) as subsection (d), and by inserting after sub-
section (b) the following new subsection:
‘‘(c) TAX AVOIDANCE NOT PRESUMED IN CERTAIN
CASES.—
‘‘(1) IN GENERAL.—Subsection (a)(2) shall not
apply to an individual if—
‘‘(A) such individual is described in a sub-
paragraph of paragraph (2) of this subsection,
and
‘‘(B) within the 1-year period beginning on
the date of the loss of United States citizenship,
such individual submits a ruling request for the
Secretary’s determination as to whether such
loss has for 1 of its principal purposes the
avoidance of taxes under this subtitle or subtitle
B.
‘‘(2) INDIVIDUALS DESCRIBED.—
‘‘(A) DUAL CITIZENSHIP, ETC.—An indi-
vidual is described in this subparagraph if—
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‘‘(i) the individual became at birth a
citizen of the United States and a citizen
of another country and continues to be a
citizen of such other country, or
‘‘(ii) the individual becomes (not later
than the close of a reasonable period after
loss of United States citizenship) a citizen
of the country in which—
‘‘(I) such individual was born,
‘‘(II) if such individual is mar-
ried, such individual’s spouse was
born, or
‘‘(III) either of such individual’s
parents were born.
‘‘(B) LONG-TERM FOREIGN RESIDENTS.—
An individual is described in this subparagraph
if, for each year in the 10-year period ending on
the date of loss of United States citizenship, the
individual was present in the United States for
days 
or 
less. 
The 
rule 
of 
section
7701(b)(3)(D)(ii) shall apply for purposes of
this subparagraph.
‘‘(C) RENUNCIATION UPON REACHING AGE
OF
MAJORITY.—An individual is described in
this subparagraph if the individual’s loss of
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United States citizenship occurs before such in-
dividual attains age 181⁄2.
‘‘(D) INDIVIDUALS SPECIFIED IN REGULA-
TIONS.—An individual is described in this sub-
paragraph if the individual is described in a
category of individuals prescribed by regulation
by the Secretary.’’
(2) TECHNICAL AMENDMENT.—Paragraph (1)
of section 877(b) of such Code is amended by strik-
ing ‘‘subsection (c)’’ and inserting ‘‘subsection (d)’’.
(c) TREATMENT
OF PROPERTY DISPOSED
OF
IN
NONRECOGNITION TRANSACTIONS; TREATMENT OF DIS-
TRIBUTIONS
FROM
CERTAIN
CONTROLLED
FOREIGN
CORPORATIONS.—Subsection (d) of section 877, as redes-
ignated by subsection (b), is amended to read as follows:
‘‘(d) SPECIAL RULES FOR SOURCE, ETC.—For pur-
poses of subsection (b)—
‘‘(1) SOURCE RULES.—The following items of
gross income shall be treated as income from sources
within the United States:
‘‘(A) SALE OF PROPERTY.—Gains on the
sale or exchange of property (other than stock
or debt obligations) located in the United
States.
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‘‘(B) STOCK
OR
DEBT
OBLIGATIONS.—
Gains on the sale or exchange of stock issued
by a domestic corporation or debt obligations of
United States persons or of the United States,
a State or political subdivision thereof, or the
District of Columbia.
‘‘(C) INCOME
OR
GAIN
DERIVED
FROM
CONTROLLED FOREIGN CORPORATION.—Any in-
come or gain derived from stock in a foreign
corporation but only—
‘‘(i) if the individual losing United
States citizenship owned (within the mean-
ing of section 958(a)), or is considered as
owning (by applying the ownership rules of
section 958(b)), at any time during the 2-
year period ending on the date of the loss
of United States citizenship, more than 50
percent of—
‘‘(I) the total combined voting
power of all classes of stock entitled
to vote of such corporation, or
‘‘(II) the total value of the stock
of such corporation, and
‘‘(ii) to the extent such income or gain
does not exceed the earnings and profits
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States (or, if no income was so derived,
would have been from such sources), and
‘‘(iii) income derived from the prop-
erty acquired in the exchange would be
from sources outside the United States.
‘‘(C) 
EXCEPTION.—Subparagraph 
(A)
shall not apply if the individual enters into an
agreement with the Secretary which specifies
that any income or gain derived from the prop-
erty acquired in the exchange (or any other
property which has a basis determined in whole
or part by reference to such property) during
such 10-year period shall be treated as from
sources within the United States. If the prop-
erty transferred in the exchange is disposed of
by the person acquiring such property, such
agreement shall terminate and any gain which
was not recognized by reason of such agreement
shall be recognized as of the date of such dis-
position.
‘‘(D) SECRETARY MAY EXTEND PERIOD.—
To the extent provided in regulations prescribed
by the Secretary, subparagraph (B) shall be ap-
plied by substituting the 15-year period begin-
ning 5 years before the loss of United States
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citizenship for the 10-year period referred to
therein.
‘‘(E) SECRETARY MAY REQUIRE RECOGNI-
TION OF GAIN IN CERTAIN CASES.—To the ex-
tent provided in regulations prescribed by the
Secretary—
‘‘(i) the removal of appreciated tan-
gible personal property from the United
States, and
‘‘(ii) any other occurrence which
(without recognition of gain) results in a
change in the source of the income or gain
from property from sources within the
United States to sources outside the Unit-
ed States,
shall be treated as an exchange to which this
paragraph applies.
‘‘(3) SUBSTANTIAL DIMINISHING OF RISKS OF
OWNERSHIP.—For purposes of determining whether
this section applies to any gain on the sale or ex-
change of any property, the running of the 10-year
period described in subsection (a) shall be suspended
for any period during which the individual’s risk of
loss with respect to the property is substantially di-
minished by—
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‘‘(A) the holding of a put with respect to
such property (or similar property),
‘‘(B) the holding by another person of a
right to acquire the property, or
‘‘(C) a short sale or any other trans-
action.’’
(d) CREDIT
FOR FOREIGN TAXES IMPOSED
ON
UNITED STATES SOURCE INCOME.—
(1) Subsection (b) of section 877 is amended by
adding at the end the following new sentence: ‘‘The
tax imposed solely by reason of this section shall be
reduced (but not below zero) by the amount of any
income, war profits, and excess profits taxes (within
the meaning of section 903) paid to any foreign
country or possession of the United States on any
income of the taxpayer on which tax is imposed sole-
ly by reason of this section.’’
(2) Subsection (a) of section 877, as amended
by subsection (a), is amended by inserting ‘‘(after
any reduction in such tax under the last sentence of
such subsection)’’ after ‘‘such subsection’’.
(e) COMPARABLE ESTATE AND GIFT TAX TREAT-
MENT.—
(1) ESTATE TAX.—
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(A) IN GENERAL.—Subsection (a) of sec-
tion 2107 is amended to read as follows:
‘‘(a) TREATMENT OF EXPATRIATES.—
‘‘(1) RATE OF TAX.—A tax computed in accord-
ance with the table contained in section 2001 is
hereby imposed on the transfer of the taxable estate,
determined as provided in section 2106, of every de-
cedent nonresident not a citizen of the United States
if, within the 10-year period ending with the date of
death, such decedent lost United States citizenship,
unless such loss did not have for 1 of its principal
purposes the avoidance of taxes under this subtitle
or subtitle A.
‘‘(2) CERTAIN INDIVIDUALS TREATED AS HAV-
ING TAX AVOIDANCE PURPOSE.—
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), an individual shall be treated as hav-
ing a principal purpose to avoid such taxes if
such individual is so treated under section
877(a)(2).
‘‘(B) 
EXCEPTION.—Subparagraph 
(A)
shall not apply to a decedent meeting the re-
quirements of section 877(c)(1).’’
(B) 
CREDIT
FOR
FOREIGN
DEATH
TAXES.—Subsection (c) of section 2107 is
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amended by redesignating paragraph (2) as
paragraph (3) and by inserting after paragraph
(1) the following new paragraph:
‘‘(2) CREDIT FOR FOREIGN DEATH TAXES.—
‘‘(A) IN GENERAL.—The tax imposed by
subsection (a) shall be credited with the amount
of any estate, inheritance, legacy, or succession
taxes actually paid to any foreign country in re-
spect of any property which is included in the
gross estate solely by reason of subsection (b).
‘‘(B) LIMITATION ON CREDIT.—The credit
allowed by subparagraph (A) for such taxes
paid to a foreign country shall not exceed the
lesser of—
‘‘(i) the amount which bears the same
ratio to the amount of such taxes actually
paid to such foreign country in respect of
property included in the gross estate as the
value of the property included in the gross
estate solely by reason of subsection (b)
bears to the value of all property subjected
to such taxes by such foreign country, or
‘‘(ii) such property’s proportionate
share of the excess of—
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‘‘(I) the tax imposed by sub-
section (a), over
‘‘(II) the tax which would be im-
posed by section 2101 but for this
section.
‘‘(C) PROPORTIONATE
SHARE.—For pur-
poses of subparagraph (B), a property’s propor-
tionate share is the percentage which the value
of the property which is included in the gross
estate solely by reason of subsection (b) bears
to the total value of the gross estate.’’
(C) EXPANSION OF INCLUSION IN GROSS
ESTATE
OF
STOCK
OF
FOREIGN
CORPORA-
TIONS.—Paragraph (2) of section 2107(b) is
amended by striking ‘‘more than 50 percent of’’
and all that follows and inserting ‘‘more than
50 percent of—
‘‘(A) the total combined voting power of all
classes of stock entitled to vote of such corpora-
tion, or
‘‘(B) the total value of the stock of such
corporation,’’.
(2) GIFT TAX.—
(A) IN GENERAL.—Paragraph (3) of sec-
tion 2501(a) is amended to read as follows:
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‘‘(3) EXCEPTION.—
‘‘(A) CERTAIN
INDIVIDUALS.—Paragraph
(2) shall not apply in the case of a donor who,
within the 10-year period ending with the date
of transfer, lost United States citizenship, un-
less such loss did not have for 1 of its principal
purposes the avoidance of taxes under this sub-
title or subtitle A.
‘‘(B) CERTAIN INDIVIDUALS TREATED AS
HAVING TAX AVOIDANCE PURPOSE.—For pur-
poses of subparagraph (A), an individual shall
be treated as having a principal purpose to
avoid such taxes if such individual is so treated
under section 877(a)(2).
‘‘(C) EXCEPTION
FOR
CERTAIN
INDIVID-
UALS.—Subparagraph (B) shall not apply to a
decedent meeting the requirements of section
877(c)(1).
‘‘(D) CREDIT FOR FOREIGN GIFT TAXES.—
The tax imposed by this section solely by reason
of this paragraph shall be credited with the
amount of any gift tax actually paid to any for-
eign country in respect of any gift which is tax-
able under this section solely by reason of this
paragraph.’’
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(f) COMPARABLE TREATMENT OF LAWFUL PERMA-
NENT RESIDENTS WHO CEASE TO BE TAXED AS RESI-
DENTS.—
(1) IN GENERAL.—Section 877 is amended by
redesignating subsection (e) as subsection (f) and by
inserting after subsection (d) the following new sub-
section:
‘‘(e) COMPARABLE TREATMENT OF LAWFUL PERMA-
NENT RESIDENTS WHO CEASE TO BE TAXED AS RESI-
DENTS.—
‘‘(1) IN GENERAL.—Any long-term resident of
the United States who—
‘‘(A) ceases to be a lawful permanent resi-
dent of the United States (within the meaning
of section 7701(b)(6)), or
‘‘(B) commences to be treated as a resi-
dent of a foreign country under the provisions
of a tax treaty between the United States and
the foreign country and who does not waive the
benefits of such treaty applicable to residents of
the foreign country,
shall be treated for purposes of this section and sec-
tions 2107, 2501, and 6039F in the same manner
as if such resident were a citizen of the United
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States who lost United States citizenship on the date
of such cessation or commencement.
‘‘(2) LONG-TERM RESIDENT.—For purposes of
this subsection, the term ‘long-term resident’ means
any individual (other than a citizen of the United
States) who is a lawful permanent resident of the
United States in at least 8 taxable years during the
period of 15 taxable years ending with the taxable
year during which the event described in subpara-
graph (A) or (B) of paragraph (1) occurs. For pur-
poses of the preceding sentence, an individual shall
not be treated as a lawful permanent resident for
any taxable year if such individual is treated as a
resident of a foreign country for the taxable year
under the provisions of a tax treaty between the
United States and the foreign country and does not
waive the benefits of such treaty applicable to resi-
dents of the foreign country.
‘‘(3) SPECIAL RULES.—
‘‘(A) EXCEPTIONS NOT TO APPLY.—Sub-
section (c) shall not apply to an individual who
is treated as provided in paragraph (1).
‘‘(B) STEP-UP IN BASIS.—Solely for pur-
poses of determining any tax imposed by reason
of this subsection, property which was held by
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the long-term resident on the date the individ-
ual first became a resident of the United States
shall be treated as having a basis on such date
of not less than the fair market value of such
property on such date. The preceding sentence
shall not apply if the individual elects not to
have such sentence apply. Such an election,
once made, shall be irrevocable.
‘‘(4) AUTHORITY TO EXEMPT INDIVIDUALS.—
This subsection shall not apply to an individual who
is described in a category of individuals prescribed
by regulation by the Secretary.
‘‘(5) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be appropriate to
carry out this subsection, including regulations pro-
viding for the application of this subsection in cases
where an alien individual becomes a resident of the
United States during the 10-year period after being
treated as provided in paragraph (1).’’
(2) CONFORMING AMENDMENTS.—
(A) Section 2107 is amended by striking
subsection (d), by redesignating subsection (e)
as subsection (d), and by inserting after sub-
section (d) (as so redesignated) the following
new subsection:
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‘‘(e) CROSS REFERENCE.—
‘‘For comparable treatment of long-term lawful
permanent residents who ceased to be taxed as resi-
dents, see section 877(e).’’
(B) Paragraph (3) of section 2501(a) (as
amended by subsection (e)) is amended by add-
ing at the end the following new subparagraph:
‘‘(E) CROSS REFERENCE.—
‘‘For comparable treatment of long-term lawful
permanent residents who ceased to be taxed as resi-
dents, see section 877(e).’’
(g) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by
this section shall apply to—
(A) individuals losing United States citi-
zenship (within the meaning of section 877 of
the Internal Revenue Code of 1986) on or after
February 6, 1995, and
(B) long-term residents of the United
States with respect to whom an event described
in subparagraph (A) or (B) of section 877(e)(1)
of such Code occurs on or after June 13, 1995.
(2) SPECIAL RULE.—
(A) IN GENERAL.—In the case of an indi-
vidual who performed an act of expatriation
specified in paragraph (1), (2), (3), or (4) of
section 349(a) of the Immigration and Nation-
ality Act (8 U.S.C. 1481(a)(1)–(4)) before Feb-
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ruary 6, 1995, but who did not, on or before
such date, furnish to the United States Depart-
ment of State a signed statement of voluntary
relinquishment of United States nationality con-
firming the performance of such act, the
amendments made by this section shall apply to
such individual except that—
(i) the 10-year period described in
section 877(a) of such Code shall not ex-
pire before the end of the 10-year period
beginning on the date such statement is so
furnished, and
(ii) the 1-year period referred to in
section 877(c) of such Code, as amended
by this section, shall not expire before the
date which is 1 year after the date of the
enactment of this Act.
(B) EXCEPTION.—Subparagraph (A) shall
not apply if the individual establishes to the
satisfaction of the Secretary of the Treasury
that such loss of United States citizenship oc-
curred before February 6, 1994.
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SEC. 13617. INFORMATION ON INDIVIDUALS LOSING UNIT-
ED STATES CITIZENSHIP.
(a) IN GENERAL.—Subpart A of part III of sub-
chapter A of chapter 61 is amended by inserting after sec-
tion 6039E the following new section:
‘‘SEC. 
6039F. 
INFORMATION 
ON 
INDIVIDUALS 
LOSING
UNITED STATES CITIZENSHIP.
‘‘(a) IN GENERAL.—Notwithstanding any other pro-
vision of law, any individual who loses United States citi-
zenship (within the meaning of section 877(a)) shall pro-
vide a statement which includes the information described
in subsection (b). Such statement shall be—
‘‘(1) provided not later than the earliest date of
any act referred to in subsection (c), and
‘‘(2) provided to the person or court referred to
in subsection (c) with respect to such act.
‘‘(b) INFORMATION TO BE PROVIDED.—Information
required under subsection (a) shall include—
‘‘(1) the taxpayer’s TIN,
‘‘(2) the mailing address of such individual’s
principal foreign residence,
‘‘(3) the foreign country in which such individ-
ual is residing,
‘‘(4) the foreign country of which such individ-
ual is a citizen,
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‘‘(5) in the case of an individual having a net
worth of at least the dollar amount applicable under
section 877(a)(2)(B), information detailing the as-
sets and liabilities of such individual, and
‘‘(6) such other information as the Secretary
may prescribe.
‘‘(c) ACTS DESCRIBED.—For purposes of this sec-
tion, the acts referred to in this subsection are—
‘‘(1) the individual’s renunciation of his United
States nationality before a diplomatic or consular of-
ficer of the United States pursuant to paragraph (5)
of section 349(a) of the Immigration and Nationality
Act (8 U.S.C. 1481(a)(5)),
‘‘(2) the individual’s furnishing to the United
States Department of State a signed statement of
voluntary relinquishment of United States national-
ity confirming the performance of an act of expatria-
tion specified in paragraph (1), (2), (3), or (4) of
section 349(a) of the Immigration and Nationality
Act (8 U.S.C. 1481(a)(1)–(4)),
‘‘(3) the issuance by the United States Depart-
ment of State of a certificate of loss of nationality
to the individual, or
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‘‘(4) the cancellation by a court of the United
States of a naturalized citizen’s certificate of natu-
ralization.
‘‘(d) PENALTY.—Any individual failing to provide a
statement required under subsection (a) shall be subject
to a penalty for each year (of the 10-year period beginning
on the date of loss of United States citizenship) during
any portion of which such failure continues in an amount
equal to the greater of—
‘‘(1) 5 percent of the tax required to be paid
under section 877 for the taxable year ending during
such year, or
‘‘(2) $1,000,
unless it is shown that such failure is due to reasonable
cause and not to willful neglect.
‘‘(e) INFORMATION TO BE PROVIDED TO SEC-
RETARY.—Notwithstanding any other provision of law—
‘‘(1) any Federal agency or court which collects
(or is required to collect) the statement under sub-
section (a) shall provide to the Secretary—
‘‘(A) a copy of any such statement, and
‘‘(B) the name (and any other identifying
information) of any individual refusing to com-
ply with the provisions of subsection (a),
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‘‘(2) the Secretary of State shall provide to the
Secretary a copy of each certificate as to the loss of
American nationality under section 358 of the Immi-
gration and Nationality Act which is approved by
the Secretary of State, and
‘‘(3) the Federal agency primarily responsible
for administering the immigration laws shall provide
to the Secretary the name of each lawful permanent
resident of the United States (within the meaning of
section 7701(b)(6)) whose status as such has been
revoked or has been administratively or judicially de-
termined to have been abandoned.
Notwithstanding any other provision of law, not later than
30 days after the close of each calendar quarter, the Sec-
retary shall publish in the Federal Register the name of
each individual losing United States citizenship (within
the meaning of section 877(a)) with respect to whom the
Secretary receives information under the preceding sen-
tence during such quarter.
‘‘(f) REPORTING BY LONG-TERM LAWFUL PERMA-
NENT RESIDENTS WHO CEASE TO BE TAXED AS RESI-
DENTS.—In lieu of applying the last sentence of sub-
section (a), any individual who is required to provide a
statement under this section by reason of section
877(e)(1) shall provide such statement with the return of
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tax imposed by chapter 1 for the taxable year during
which the event described in such section occurs.
‘‘(g) EXEMPTION.—The Secretary may by regula-
tions exempt any class of individuals from the require-
ments of this section if he determines that applying this
section to such individuals is not necessary to carry out
the purposes of this section.’’
(b) CLERICAL AMENDMENT.—The table of sections
for such subpart A is amended by inserting after the item
relating to section 6039E the following new item:
‘‘Sec. 6039F. Information on individuals losing United States citi-
zenship.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to—
(1) individuals losing United States citizenship
(within the meaning of section 877 of the Internal
Revenue Code of 1986) after the date of the enact-
ment of this Act, and
(2) long-term residents of the United States
with respect to whom an event described in subpara-
graph (A) or (B) of section 877(e)(1) of such Code
occurs after such date.
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SEC. 13618. REPORT ON TAX COMPLIANCE BY UNITED
STATES CITIZENS AND RESIDENTS LIVING
ABROAD.
Not later than 90 days after the date of the enact-
ment of this Act, the Secretary of the Treasury shall pre-
pare and submit to the Committee on Ways and Means
of the House of Representatives and the Committee on
Finance of the Senate a report—
(1) describing the compliance with subtitle A of
the Internal Revenue Code of 1986 by citizens and
lawful permanent residents of the United States
(within the meaning of section 7701(b)(6) of such
Code) residing outside the United States, and
(2) recommending measures to improve such
compliance (including improved coordination be-
tween executive branch agencies).
PART IV—REFORMS RELATING TO ENERGY
PROVISIONS
SEC. 13621. TERMINATION OF CREDIT FOR ELECTRICITY
PRODUCED FROM CERTAIN RENEWABLE RE-
SOURCES.
(a) FACILITIES MUST BE PLACED IN SERVICE BE-
FORE SEPTEMBER 14, 1995.—Paragraph (3) of section
45(c) (defining qualified facility) is amended by striking
‘‘July 1, 1999’’ and inserting ‘‘September 14, 1995’’.
(b) EFFECTIVE DATE.—
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(1) IN
GENERAL.—The amendment made by
this section shall apply to taxable years ending after
September 13, 1995.
(2) BINDING
CONTRACTS.—The amendment
made by this section shall not apply to any facility—
(A) which is constructed or acquired by the
taxpayer pursuant to a written contract which
was binding on September 13, 1995, and at all
times thereafter before such construction or ac-
quisition, and
(B) which is placed in service before Sep-
tember 14, 1996.
SEC. 13622. EXCLUSION FOR ENERGY CONSERVATION SUB-
SIDIES LIMITED TO SUBSIDIES WITH RE-
SPECT TO DWELLING UNITS.
(a) IN GENERAL.—Paragraph (1) of section 136(c)
(defining energy conservation measure) is amended by
striking ‘‘energy demand—’’ and all that follows and in-
serting ‘‘energy demand with respect to a dwelling unit.’’
(b) CONFORMING AMENDMENTS.—
(1) Subsection (a) of section 136 is amended to
read as follows:
‘‘(a) EXCLUSION.—Gross income shall not include
the value of any subsidy provided (directly or indirectly)
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by a public utility to a customer for the purchase or instal-
lation of any energy conservation measure.’’
(2) Paragraph (2) of section 136(c) is amend-
ed—
(A) by striking subparagraph (A) and by
redesignating subparagraphs (B) and (C) as
subparagraphs (A) and (B), respectively, and
(B) by striking ‘‘AND SPECIAL RULES’’ in
the paragraph heading.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to amounts received after Septem-
ber 13, 1995, unless received pursuant to a written bind-
ing contract in effect on September 13, 1995, and at all
times thereafter.
PART V—REFORMS RELATING TO
NONRECOGNITION PROVISIONS
SEC. 13626. BASIS ADJUSTMENT TO PROPERTY HELD BY
CORPORATION WHERE STOCK IN CORPORA-
TION IS REPLACEMENT PROPERTY UNDER
INVOLUNTARY CONVERSION RULES.
(a) IN GENERAL.—Subsection (b) of section 1033 is
amended to read as follows:
‘‘(b) BASIS OF PROPERTY ACQUIRED THROUGH IN-
VOLUNTARY CONVERSION.—
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‘‘(1) CONVERSIONS DESCRIBED IN SUBSECTION
(a)(1).—If the property was acquired as the result
of a compulsory or involuntary conversion described
in subsection (a)(1), the basis shall be the same as
in the case of the property so converted—
‘‘(A) decreased in the amount of any
money received by the taxpayer which was not
expended in accordance with the provisions of
law (applicable to the year in which such con-
version was made) determining the taxable sta-
tus of the gain or loss upon such conversion,
and
‘‘(B) increased in the amount of gain or
decreased in the amount of loss to the taxpayer
recognized upon such conversion under the law
applicable to the year in which such conversion
was made.
‘‘(2) CONVERSIONS DESCRIBED IN SUBSECTION
(a)(2).—In the case of property purchased by the
taxpayer in a transaction described in subsection
(a)(2) which resulted in the nonrecognition of any
part of the gain realized as the result of a compul-
sory or involuntary conversion, the basis shall be the
cost of such property decreased in the amount of the
gain not so recognized; and if the property pur-
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chased consists of more than 1 piece of property, the
basis determined under this sentence shall be allo-
cated to the purchased properties in proportion to
their respective costs.
‘‘(3) PROPERTY HELD BY CORPORATION THE
STOCK OF WHICH IS REPLACEMENT PROPERTY.—
‘‘(A) IN GENERAL.—If the basis of stock
in a corporation is decreased under paragraph
(2), an amount equal to such decrease shall also
be applied to reduce the basis of property held
by the corporation at the time the taxpayer ac-
quired 
control 
(as 
defined 
in 
subsection
(a)(2)(E)) of such corporation.
‘‘(B) 
LIMITATION.—Subparagraph 
(A)
shall not apply to the extent that it would (but
for this subparagraph) require a reduction in
the aggregate adjusted bases of the property of
the corporation below the taxpayer’s adjusted
basis of the stock in the corporation (deter-
mined immediately after such basis is decreased
under paragraph (2)).
‘‘(C) ALLOCATION OF BASIS REDUCTION.—
The decrease required under subparagraph (A)
shall be allocated—
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‘‘(i) first to property which is similar
or related in service or use to the converted
property,
‘‘(ii) second to depreciable property
(as defined in section 1017(b)(3)(B)) not
described in clause (i), and
‘‘(iii) then to other property.
‘‘(D) SPECIAL RULES.—
‘‘(i) REDUCTION NOT TO EXCEED AD-
JUSTED BASIS OF PROPERTY.—No reduc-
tion in the basis of any property under this
paragraph shall exceed the adjusted basis
of such property (determined without re-
gard to such reduction).
‘‘(ii) ALLOCATION
OF
REDUCTION
AMONG
PROPERTIES.—If more than 1
property is described in a clause of sub-
paragraph (C), the reduction under this
paragraph shall be allocated among such
property in proportion to the adjusted
bases of such property (determined without
regard to such reduction).’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to involuntary conversions occur-
ring after September 13, 1995.
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SEC. 13627. EXPANSION OF REQUIREMENT THAT INVOLUN-
TARILY 
CONVERTED 
PROPERTY 
BE 
RE-
PLACED WITH PROPERTY ACQUIRED FROM
AN UNRELATED PERSON.
(a) IN GENERAL.—Subsection (i) of section 1033 is
amended to read as follows:
‘‘(i) REPLACEMENT PROPERTY MUST BE ACQUIRED
FROM UNRELATED PERSON IN CERTAIN CASES.—
‘‘(1) IN GENERAL.—If the property which is in-
voluntarily converted is held by a taxpayer to which
this subsection applies, subsection (a) shall not apply
if the replacement property or stock is acquired from
a related person. The preceding sentence shall not
apply to the extent that the related person acquired
the replacement property or stock from an unrelated
person during the period applicable under subsection
(a)(2)(B).
‘‘(2) TAXPAYERS TO WHICH SUBSECTION AP-
PLIES.—This subsection shall apply to—
‘‘(A) a C corporation,
‘‘(B) a partnership in which 1 or more C
corporations own, directly or indirectly (deter-
mined in accordance with section 707(b)(3)),
more than 50 percent of the capital interest, or
profits interest, in such partnership at the time
of the involuntary conversion, and
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‘‘(C) any other taxpayer if, with respect to
property which is involuntarily converted during
the taxable year, the aggregate of the amount
of realized gain on such property on which
there is realized gain exceeds $100,000.
In the case of a partnership, subparagraph (C) shall
apply with respect to the partnership and with re-
spect to each partner. A similar rule shall apply in
the case of an S corporation and its shareholders.
‘‘(3) RELATED PERSON.—For purposes of this
subsection, a person is related to another person if
the person bears a relationship to the other person
described in section 267(b) or 707(b)(1).’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to involuntary conversions occur-
ring after September 13, 1995.
SEC. 13628. NO ROLLOVER OR EXCLUSION OF GAIN ON
SALE OF PRINCIPAL RESIDENCE WHICH IS
ATTRIBUTABLE TO DEPRECIATION DEDUC-
TIONS.
(a) IN GENERAL.—Subsection (d) of section 1034
(relating to limitations) is amended by adding at the end
the following new paragraph:
‘‘(3) RECOGNITION OF GAIN ATTRIBUTABLE TO
DEPRECIATION.—Subsection (a) shall not apply to
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so much of the gain from the sale of any residence
as does not exceed the portion of the depreciation
adjustments (as defined in section 1250(b)(3)) at-
tributable to periods after December 31, 1995, in re-
spect of such residence.’’
(b) COMPARABLE TREATMENT UNDER 1-TIME EX-
CLUSION OF GAIN ON SALE OF PRINCIPAL RESIDENCE.—
Subsection (d) of section 121 is amended by adding at
the end the following new paragraph:
‘‘(10) RECOGNITION
OF
GAIN
ATTRIBUTABLE
TO DEPRECIATION.—
‘‘(A) IN
GENERAL.—Subsection (a) shall
not apply to so much of the gain from the sale
of any property as does not exceed the portion
of the depreciation adjustments (as defined in
section 1250(b)(3)) attributable to periods after
December 31, 1995, in respect of such prop-
erty.
‘‘(B) COORDINATION
WITH
PARAGRAPH
(5).—If this section does not apply to gain at-
tributable to a portion of a residence by reason
of paragraph (5), subparagraph (A) shall not
apply to depreciation adjustments attributable
to such portion.’’
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(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years ending after De-
cember 31, 1995.
SEC. 13629. NONRECOGNITION OF GAIN ON SALE OF PRIN-
CIPAL RESIDENCE BY NONCITIZENS LIMITED
TO NEW RESIDENCES LOCATED IN THE UNIT-
ED STATES.
(a) IN GENERAL.—Subsection (d) of section 1034
(relating to limitations) (as amended by section 13628)
is amended by adding at the end the following new para-
graph:
‘‘(4) NEW RESIDENCE MUST BE LOCATED IN
UNITED STATES IN CERTAIN CASES.—
‘‘(A) IN GENERAL.—In the case of a sale
of an old residence by a taxpayer—
‘‘(i) who is not a citizen of the United
States at the time of sale, and
‘‘(ii) who is not a citizen or resident
of the United States on the date which is
2 years after the date of the sale of such
old residence,
subsection (a) shall apply only if the new resi-
dence is located in the United States or a pos-
session of the United States.
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‘‘(B) PROPERTY HELD JOINTLY BY HUS-
BAND AND WIFE.—Subparagraph (A) shall not
apply if—
‘‘(i) the old residence is held by a hus-
band and wife as joint tenants, tenants by
the entirety, or community property,
‘‘(ii) such husband and wife make a
joint return for the taxable year of the sale
or exchange, and
‘‘(iii) one spouse is a citizen of the
United States at the time of sale.’’
(b) EFFECTIVE DATE.—
(1) IN
GENERAL.—The amendment made by
this section shall apply to sales of old residences
after December 31, 1995.
(2) TREATMENT OF PURCHASES OF NEW RESI-
DENCES.—The amendment made by this section
shall not apply to new residences—
(A) purchased before September 13, 1995,
or
(B) purchased on or after such date pursu-
ant to a binding contract in effect on such date
and at all times thereafter before such pur-
chase.
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(3) CERTAIN RULES TO APPLY.—For purposes
of this subsection, the rules of paragraphs (1), (2),
and (3) of section 1034(c) of the Internal Revenue
Code of 1986 shall apply.
PART VI—REFORMS RELATING TO GAMING
ACTIVITIES
SEC. 13631. TREATMENT OF INDIAN GAMING ACTIVITIES
UNDER UNRELATED BUSINESS INCOME TAX.
(a) IN GENERAL.—Paragraph (2) of section 511(a)
(relating to imposition of tax on unrelated business income
of charitable, etc., organizations) is amended by adding
at the end the following new subparagraph:
‘‘(C) GAMING
ACTIVITIES
OF
INDIAN
TRIBES.—
‘‘(i) IN GENERAL.—The tax imposed
by paragraph (1) shall apply to any Indian
tribal organization; except that, notwith-
standing any other provision of this part,
in the case of such an organization, the
term ‘unrelated trade or business’ means
only a trade or business of conducting any
class II or class III gaming activity (as de-
fined in section 4 of the Indian Gaming
Regulatory Act (25 U.S.C. 2701 et seq.),
as in effect on the date of the enactment
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of this subparagraph), including a gaming
activity described in section 513(a)(1).
‘‘(ii) 
INDIAN
TRIBAL
ORGANIZA-
TION.—For purposes of clause (i), the
term ‘Indian tribal organization’ means
any Indian tribe and any organization
which is immune or exempt from tax under
this subtitle solely by reason of being
owned or controlled by an Indian tribe.’’
(b) TREATMENT
OF AMOUNTS PAID
FOR CHARI-
TABLE PURPOSES, ETC., BY REASON OF STATE OR FED-
ERAL LAW.—Subsection (b) of section 512 is amended by
adding at the end the following new paragraph:
‘‘(17) In the case of an Indian tribal organiza-
tion (as defined in section 511(a)(3)), if, by reason
of State or Federal law or of a contract with the
United States or with any State or political subdivi-
sion thereof, such organization is required to use
any portion of the net proceeds of any gaming activ-
ity for specified purposes, the deduction for so using
such proceeds shall be treated as allowed under sec-
tion 170 for purposes of applying paragraph (10).
The preceding sentence shall not apply to such pro-
ceeds which are paid as general revenues to the
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United States or to any State or political subdivision
thereof.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on January 1, 1996.
(d) STUDY OF GAMBLING CONDUCTED BY TAX-EX-
EMPT ORGANIZATIONS.—The Secretary of the Treasury or
his delegate shall conduct a study on the nature and ex-
tent of gaming activities conducted by organizations ex-
empt from tax under section 501(a) of the Internal Reve-
nue Code of 1986, including an examination of—
(1) the types of gaming activities (including
bingo, pull tabs, and casino nights) engaged in by
charities and other nonprofit organizations and the
frequency of such activities;
(2) the dollar volume of such gaming activities;
(3) the nature and extent of the involvement of
for-profit entities and private parties in the manage-
ment or operation of gaming activities of such orga-
nizations;
(4) competition between taxable gaming activi-
ties and gaming activities that are exempt from Fed-
eral income tax; and
(5) an analysis of the present law tax treatment
of gaming activities of tax-exempt organizations.
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The study may include any recommendations for change,
including examination of the South End decision and the
special exception for bingo games. The Secretary shall
submit the results of the study to the Committee on Ways
and Means of the House of Representatives and the Com-
mittee on Finance of the Senate not later than July 1,
1996.
SEC. 13632. REPEAL OF TARGETED EXEMPTION FROM TAX
ON UNRELATED TRADE OR BUSINESS IN-
COME FROM GAMBLING IN CERTAIN STATES.
(a) IN GENERAL.—Section 311 of the Tax Reform
Act of 1984 is hereby repealed.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to games of chance conducted
after December 31, 1995, in taxable years ending after
such date.
SEC. 13633. EXTENSION OF WITHHOLDING TO CERTAIN
GAMBLING WINNINGS.
(a) REPEAL
OF
EXEMPTION
FOR
BINGO
AND
KENO.—Paragraph (5) of section 3402(q) is amended to
read as follows:
‘‘(5) EXEMPTION FOR SLOT MACHINES.—The
tax imposed under paragraph (1) shall not apply to
winnings from a slot machine.’’
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(b) THRESHOLD AMOUNT.—Paragraph (3) of section
3402(q) is amended—
(1) by striking ‘‘(B) and (C)’’ in subparagraph
(A) and inserting ‘‘(B), (C), and (D)’’, and
(2) by adding at the end the following new sub-
paragraph:
‘‘(D) BINGO
AND
KENO.—Proceeds of
more than $5,000 from a wager placed in a
bingo or keno game.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on January 1, 1996.
PART VII—OTHER REFORMS
SEC. 13636. SUNSET OF LOW-INCOME HOUSING CREDIT.
(a) REPEAL OF REALLOCATION OF UNUSED CRED-
ITS
AMONG
STATES.—Subparagraph (D) of section
42(h)(3) is amended by adding at the end the following
new clause:
‘‘(v) TERMINATION.—No amount may
be allocated under this paragraph for any
calendar year after 1995.’’
(b) TERMINATION.—Section 42 is amended by add-
ing at the end the following new subsection:
‘‘(o) TERMINATION.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2)—
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‘‘(A) clause (i) of subsection (h)(3)(C)
shall not apply to any amount allocated after
December 31, 1997, and
‘‘(B) subsection (h)(4) shall not apply to
any building placed in service after such date.
‘‘(2) EXCEPTION FOR BOND-FINANCED BUILD-
INGS
IN
PROGRESS.—For purposes of paragraph
(1)(B), a building shall be treated as placed in serv-
ice before January 1, 1998, if—
‘‘(A) the bonds with respect to such build-
ing are issued before such date,
‘‘(B) the taxpayer’s basis in the project (of
which the building is a part) as of December
31, 1997, is more than 10 percent of the tax-
payer’s reasonably expected basis in such
project as of December 31, 1999, and
‘‘(C) such building is placed in service be-
fore January 1, 2000.’’
SEC. 13637. REPEAL OF CREDIT FOR CONTRIBUTIONS TO
COMMUNITY DEVELOPMENT CORPORATIONS.
(a) IN GENERAL.—Section 13311 of the Revenue
Reconciliation Act of 1993 (relating to credit for contribu-
tions to certain community development corporations) is
hereby repealed.
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(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to contributions made after the
date of the enactment of this Act (other than contributions
made pursuant to a legally enforceable agreement which
is effect on the date of the enactment of this Act).
SEC. 13638. REPEAL OF DIESEL FUEL TAX REBATE TO PUR-
CHASERS 
OF 
DIESEL-POWERED 
AUTO-
MOBILES AND LIGHT TRUCKS.
(a) IN GENERAL.—Section 6427 is amended by strik-
ing subsection (g).
(b) CONFORMING AMENDMENTS.—
(1) Paragraph (3) of section 34(a) is amended
to read as follows:
‘‘(3) under section 6427 with respect to fuels
used for nontaxable purposes or resold during the
taxable year (determined without regard to section
6427(k)).’’
(2) Paragraphs (1) and (2)(A) of section
6427(i) are each amended—
(A) by striking ‘‘(g),’’, and
(B) by striking ‘‘(or a qualified diesel pow-
ered highway vehicle purchased)’’ each place it
appears.
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(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to vehicles purchased after Decem-
ber 31, 1995.
SEC. 13639. APPLICATION OF FAILURE-TO-PAY PENALTY TO
SUBSTITUTE RETURNS.
(a) GENERAL RULE.—Section 6651 (relating to fail-
ure to file tax return or to pay tax) is amended by adding
at the end the following new subsection:
‘‘(g) TREATMENT OF RETURNS PREPARED BY SEC-
RETARY UNDER SECTION 6020(b).—In the case of any
return made by the Secretary under section 6020(b)—
‘‘(1) such return shall be disregarded for pur-
poses of determining the amount of the addition
under paragraph (1) of subsection (a), but
‘‘(2) such return shall be treated as the return
filed by the taxpayer for purposes of determining the
amount of the addition under paragraphs (2) and
(3) of subsection (a).’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply in the case of any return the
due date for which (determined without regard to exten-
sions) is after the date of the enactment of this Act.
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SEC. 13640. REPEAL OF SPECIAL RULE FOR RENTAL USE OF
VACATION HOMES, ETC., FOR LESS THAN 15
DAYS.
(a) IN GENERAL.—Section 280A (relating to dis-
allowance of certain expenses in connection with business
use of home, rental of vacation homes, etc.) is amended
by striking subsection (g).
(b) NO BASIS REDUCTION UNLESS DEPRECIATION
CLAIMED.—Section 1016 is amended by redesignating
subsection (e) as subsection (f) and by inserting after sub-
section (d) the following new subsection:
‘‘(e) SPECIAL RULE WHERE RENTAL USE OF VACA-
TION HOME, ETC., FOR LESS THAN 15 DAYS.—If a dwell-
ing unit is used during the taxable year by the taxpayer
as a residence and such dwelling unit is actually rented
for less than 15 days during the taxable year, the reduc-
tion under subsection (a)(2) by reason of such rental use
in any taxable year beginning after December 31, 1995,
shall not exceed the depreciation deduction allowed for
such rental use.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1995.
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SEC. 13641. ELECTION TO CEASE STATUS AS QUALIFIED
SCHOLARSHIP FUNDING CORPORATION.
(a) IN GENERAL.—Subsection (d) of section 150 (re-
lating to definitions and special rules) is amended by add-
ing at the end thereof the following new paragraph:
‘‘(3) ELECTION TO CEASE STATUS AS QUALI-
FIED SCHOLARSHIP FUNDING CORPORATION.—
‘‘(A) IN GENERAL.—Any qualified scholar-
ship funding bond, and qualified student loan
bond, outstanding on the date of the issuer’s
election under this paragraph (and any bond
(or series of bonds) issued to refund such a
bond) shall not fail to be a tax-exempt bond
solely because the issuer ceases to be described
in subparagraphs (A) and (B) of paragraph (2)
if the issuer meets the requirements of subpara-
graphs (B) and (C) of this paragraph.
‘‘(B) ASSETS AND LIABILITIES OF ISSUER
TRANSFERRED TO TAXABLE SUBSIDIARY.—The
requirements of this subparagraph are met by
an issuer if—
‘‘(i) all of the student loan notes of
the issuer and other assets pledged to se-
cure the repayment of qualified scholarship
funding bond indebtedness of the issuer
are transferred to another corporation
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within a reasonable period after the elec-
tion is made under this paragraph;
‘‘(ii) such transferee corporation as-
sumes or otherwise provides for the pay-
ment of all of the qualified scholarship
funding bond indebtedness of the issuer
within a reasonable period after the elec-
tion is made under this paragraph;
‘‘(iii) to the extent permitted by law,
such transferee corporation assumes all of
the responsibilities, and succeeds to all of
the rights, of the issuer under the issuer’s
agreements with the Secretary of Edu-
cation in respect of student loans;
‘‘(iv) immediately after such transfer,
the issuer, together with any other issuer
which has made an election under this
paragraph in respect of such transferee,
hold all of the senior stock in such trans-
feree corporation; and
‘‘(v) such transferee corporation is not
exempt from tax under this chapter.
‘‘(C) ISSUER TO OPERATE AS INDEPEND-
ENT
ORGANIZATION
DESCRIBED
IN
SECTION
501(c)(3).—The requirements of this subpara-
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graph are met by an issuer if, within a reason-
able period after the transfer referred to in sub-
paragraph (B)—
‘‘(i) the issuer is described in section
501(c)(3) and exempt from tax under sec-
tion 501(a);
‘‘(ii) the issuer no longer is described
in subparagraphs (A) and (B) of para-
graph (2); and
‘‘(iii) at least 80 percent of the mem-
bers of the board of directors of the issuer
are independent members.
‘‘(D) SENIOR
STOCK.—For purposes of
this paragraph, the term ‘senior stock’ means
stock—
‘‘(i) which participates pro rata and
fully in the equity value of the corporation
with all other common stock of the cor-
poration but which has the right to pay-
ment of liquidation proceeds prior to pay-
ment of liquidation proceeds in respect of
other common stock of the corporation;
‘‘(ii) which has a fixed right upon liq-
uidation and upon redemption to an
amount equal to the greater of—
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‘‘(I) the fair market value of such
stock on the date of liquidation or re-
demption (whichever is applicable); or
‘‘(II) the fair market value of all
assets transferred in exchange for
such stock and reduced by the amount
of all liabilities of the corporation
which has made an election under this
paragraph assumed by the transferee
corporation in such transfer;
‘‘(iii) the holder of which has the right
to require the transferee corporation to re-
deem on a date that is not later than 10
years after the date on which an election
under this paragraph was made and pursu-
ant to such election such stock was issued;
and
‘‘(iv) in respect of which, during the
time such stock is outstanding, there is not
outstanding any equity interest in the cor-
poration having any liquidation, redemp-
tion or dividend rights in the corporation
which are superior to those of such stock.
‘‘(E) INDEPENDENT MEMBER.—The term
‘independent member’ means a member of the
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board of directors of the issuer who (except for
services as a member of such board) receives no
compensation directly or indirectly—
‘‘(i) for services performed in connec-
tion with such transferee corporation, or
‘‘(ii) for services as a member of the
board of directors or as an officer of such
transferee corporation.
For purposes of clause (ii), the term ‘officer’ in-
cludes any individual having powers or respon-
sibilities similar to those of officers.
‘‘(F) COORDINATION WITH CERTAIN PRI-
VATE
FOUNDATION
TAXES.—For purposes of
sections 4942 (relating to the excise tax on a
failure to distribute income) and 4943 (relating
to the excise tax on excess business holdings),
the transferee corporation referred to in sub-
paragraph (B) shall be treated as a functionally
related business (within the meaning of section
4942(j)(4)) with respect to the issuer during
the period commencing with the date on which
an election is made under this paragraph and
ending on the date that is the earlier of—
‘‘(i) the last day of the last taxable
year for which more than 50 percent of the
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gross income of such transferee corpora-
tion is derived from, or more than 50 per-
cent of the assets (by value) of such trans-
feree corporation consists of, student loan
notes incurred under the Higher Education
Act of 1965; or
‘‘(ii) the last day of the taxable year
of the issuer during which occurs the date
which is 10 years after the date on which
the election under this paragraph is made.
‘‘(G) ELECTION.—An election under this
paragraph may be revoked only with the con-
sent of the Secretary.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall take effect on the date of the enactment
of this Act.
SEC. 13642. CERTAIN AMOUNTS DERIVED FROM FOREIGN
CORPORATIONS TREATED AS UNRELATED
BUSINESS TAXABLE INCOME.
(a) GENERAL RULE.—Subsection (b) of section 512
(relating to modifications) is amended by adding at the
end thereof the following new paragraph:
‘‘(18) TREATMENT OF CERTAIN AMOUNTS DE-
RIVED FROM FOREIGN CORPORATIONS.—
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with the performance of services for the
benefit of such organization or affiliate.
‘‘(C) REGULATIONS.—The Secretary shall
prescribe such regulations as may be necessary
or appropriate to carry out the purposes of this
paragraph, including regulations for the appli-
cation of this paragraph in the case of income
paid through 1 or more entities or between 2 or
more chains of entities.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to amounts included in gross in-
come in any taxable year beginning after December 31,
1995.
PART VIII—EXCISE TAX ON AMOUNTS OF
PRIVATE EXCESS BENEFITS
SEC. 13646. EXCISE TAXES FOR FAILURE BY CERTAIN
CHARITABLE ORGANIZATIONS TO MEET CER-
TAIN QUALIFICATION REQUIREMENTS.
(a) IN GENERAL.—Chapter 42 (relating to private
foundations and certain other tax-exempt organizations)
is amended by redesignating subchapter D as subchapter
E and by inserting after subchapter C the following new
subchapter:
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‘‘Subchapter D—Failure By Certain
Charitable 
Organizations 
To
Meet Certain Qualification Re-
quirements
‘‘Sec. 4958. Taxes on excess benefit transactions.
‘‘SEC. 4958. TAXES ON EXCESS BENEFIT TRANSACTIONS.
‘‘(a) INITIAL TAXES.—
‘‘(1) ON THE DISQUALIFIED PERSON.—There is
hereby imposed on each excess benefit transaction a
tax equal to 25 percent of the excess benefit. The
tax imposed by this paragraph shall be paid by any
disqualified person referred to in subsection (f)(1)
with respect to such transaction.
‘‘(2) ON THE MANAGEMENT.—In any case in
which a tax is imposed by paragraph (1), there is
hereby imposed on the participation of any organiza-
tion manager in the excess benefit transaction,
knowing that it is such a transaction, a tax equal to
10 percent of the excess benefit, unless such partici-
pation is not willful and is due to reasonable cause.
The tax imposed by this paragraph shall be paid by
any organization manager who participated in the
excess benefit transaction.
‘‘(b) ADDITIONAL TAX ON THE DISQUALIFIED PER-
SON.—In any case in which an initial tax is imposed by
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subsection (a)(1) on an excess benefit transaction and the
excess benefit involved in such transaction is not corrected
within the taxable period, there is hereby imposed a tax
equal to 200 percent of the excess benefit involved. The
tax imposed by this subsection shall be paid by any dis-
qualified person referred to in subsection (f)(1) with re-
spect to such transaction.
‘‘(c) EXCESS BENEFIT TRANSACTION; EXCESS BEN-
EFIT.—For purposes of this section—
‘‘(1) EXCESS BENEFIT TRANSACTION.—
‘‘(A) IN GENERAL.—The term ‘excess ben-
efit transaction’ means any transaction in
which an economic benefit is provided by an ap-
plicable tax-exempt organization directly or in-
directly to or for the use of any disqualified
person if the value of the economic benefit pro-
vided exceeds the value of the consideration (in-
cluding the performance of services) received
for providing such benefit. For purposes of the
preceding sentence, an economic benefit shall
not be treated as consideration for the perform-
ance of services unless such organization clearly
indicated its intent to so treat such benefit.
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‘‘(B) EXCESS BENEFIT.—The term ‘excess
benefit’ means the excess referred to in sub-
paragraph (A).
‘‘(2) AUTHORITY TO INCLUDE CERTAIN OTHER
PRIVATE
INUREMENT.—To the extent provided in
regulations prescribed by the Secretary, the term
‘excess benefit transaction’ includes any transaction
in which the amount of any economic benefit pro-
vided to or for the use of a disqualified person is de-
termined in whole or in part by the revenues of 1
or more activities of the organization but only if
such transaction results in inurement not permitted
under paragraph (3) or (4) of section 501(c), as the
case may be. In the case of any such transaction,
the excess benefit shall be the amount of the
inurement not so permitted.
‘‘(d) SPECIAL RULES.—For purposes of this sec-
tion—
‘‘(1) JOINT AND SEVERAL LIABILITY.—If more
than 1 person is liable for any tax imposed by sub-
section (a) or subsection (b), all such persons shall
be jointly and severally liable for such tax.
‘‘(2) LIMIT FOR MANAGEMENT.—With respect
to any 1 excess benefit transaction, the maximum
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amount of the tax imposed by subsection (a)(2) shall
not exceed $10,000.
‘‘(e) APPLICABLE TAX-EXEMPT ORGANIZATION.—
For purposes of this subchapter, the term ‘applicable tax-
exempt organization’ means any organization which (with-
out regard to any excess benefit) would be described in
paragraph (3) or (4) of section 501(c) and exempt from
tax under section 501(a). Such term shall not include a
private foundation (as defined in section 509(a)).
‘‘(f) OTHER DEFINITIONS.—For purposes of this sec-
tion—
‘‘(1) DISQUALIFIED PERSON.—The term ‘dis-
qualified person’ means, with respect to any trans-
action—
‘‘(A) any person who was, at any time dur-
ing the 5-year period ending on the date of
such transaction—
‘‘(i) an organization manager, or
‘‘(ii) an individual (other than an or-
ganization manager) in a position to exer-
cise substantial influence over the affairs
of the organization,
‘‘(B) a member of the family of an individ-
ual described in subparagraph (A), and
‘‘(C) a 35-percent controlled entity.
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‘‘(2) ORGANIZATION MANAGER.—The term ‘or-
ganization manager’ means, with respect to any ap-
plicable tax-exempt organization, any officer, direc-
tor, or trustee of such organization (or any individ-
ual having powers or responsibilities similar to those
of officers, directors, or trustees of the organiza-
tion).
‘‘(3) 35-PERCENT CONTROLLED ENTITY.—
‘‘(A) IN GENERAL.—The term ‘35-percent
controlled entity’ means—
‘‘(i) a corporation in which persons
described in subparagraph (A) or (B) of
paragraph (1) own more than 35 percent
of the total combined voting power,
‘‘(ii) a partnership in which such per-
sons own more than 35 percent of the
profits interest, and
‘‘(iii) a trust or estate in which such
persons own more than 35 percent of the
beneficial interest.
‘‘(B) 
CONSTRUCTIVE
OWNERSHIP
RULES.—Rules similar to the rules of para-
graphs (3) and (4) of section 4946(a) shall
apply for purposes of this paragraph.
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tax-exempt organization shall be terminated only
if—
‘‘(A)(i) such organization notifies the Sec-
retary (at such time and in such manner as the
Secretary may by regulations prescribe) of its
intent to accomplish such termination, or
‘‘(ii) there is a final determination by the
Secretary that such status has terminated, and
‘‘(B)(i) such organization pays the tax im-
posed by paragraph (2) (or any portion not
abated pursuant to paragraph (3)), or
‘‘(ii) the entire amount of such tax is
abated pursuant to paragraph (3).
‘‘(2) IMPOSITION OF TAX.—There is hereby im-
posed on each organization referred to in paragraph
(1) a tax equal to the lesser of—
‘‘(A) the amount which the organization
substantiates by adequate records or other cor-
roborating evidence as the aggregate tax benefit
resulting from its exemption from tax under
section 501(a), or
‘‘(B) the value of the net assets of such or-
ganization.
‘‘(3) ABATEMENT OF TAX.—The Secretary may
abate the unpaid portion of the assessment of any
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tax imposed by paragraph (2), or any liability in re-
spect thereof, if the applicable tax-exempt organiza-
tion distributes all of its net assets to 1 or more or-
ganizations each of which has been in existence, and
described in section 501(c)(3), for a continuous pe-
riod of at least 60 calendar months. If the distribut-
ing organization is described in section 501(c)(4),
the preceding sentence shall be applied by treating
the reference to section 501(c)(3) as including a ref-
erence to section 501(c)(4).
‘‘(4) CERTAIN
RULES
MADE
APPLICABLE.—
Rules similar to the rules of subsections (d), (e), and
(f) of section 507 shall apply for purposes of this
subsection.’’
(b) APPLICATION OF PRIVATE INUREMENT RULE TO
TAX-EXEMPT ORGANIZATIONS DESCRIBED IN SECTION
501(c)(4).—Paragraph (4) of section 501(c) is amended
by inserting ‘‘(A)’’ after ‘‘(4)’’ and by adding at the end
the following:
‘‘(B) Subparagraph (A) shall not apply to an
entity unless no part of the net earnings of such en-
tity inures to the benefit of any private shareholder
or individual.’’
(c) TECHNICAL AND CONFORMING AMENDMENTS.—
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(1) Subsection (e) of section 4955 is amend-
ed—
(A) by striking ‘‘SECTION 4945’’ in the
heading and inserting ‘‘SECTIONS 4945 and
4958’’, and
(B) by inserting before the period ‘‘or an
excess benefit for purposes of section 4958’’.
(2) Subsections (a), (b), and (c) of section 4963
are each amended by inserting ‘‘4958,’’ after
‘‘4955,’’.
(3) Subsection (e) of section 6213 is amended
by inserting ‘‘4958 (relating to private excess bene-
fit),’’ before ‘‘4971’’.
(4) Paragraphs (2) and (3) of section 7422(g)
are each amended by inserting ‘‘4958,’’ after
‘‘4955,’’.
(5) Subsection (b) of section 7454 is amended
by inserting ‘‘or whether an organization manager
(as defined in section 4958(f)(2)) has ‘knowingly’
participated in an excess benefit transaction (as de-
fined in section 4958(c)),’’ after ‘‘section 4912(b),’’.
(6) The table of subchapters for chapter 42 is
amended by striking the last item and inserting the
following:
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‘‘Subchapter D. Failure by certain charitable organizations to
meet certain qualification requirements.
‘‘Subchapter E. Abatement of first and second tier taxes in cer-
tain cases.’’
(d) EFFECTIVE DATES.—
(1) IN GENERAL.—The amendments made by
this section (other than subsection (b)) shall apply
to excess benefit transactions occurring on or after
September 14, 1995.
(2) BINDING CONTRACTS FOR PERSONAL SERV-
ICES.—The amendments referred to in paragraph
(1) shall not apply to any transaction pursuant to
any written contract for the performance of personal
services which was binding on September 13, 1995,
and at all times thereafter before such transaction
occurred.
(3) APPLICATION
OF
PRIVATE
INUREMENT
RULE TO TAX-EXEMPT ORGANIZATIONS DESCRIBED
IN SECTION 501(C)(4).—
(A) IN GENERAL.—The amendment made
by subsection (b) shall apply to inurement oc-
curring on or after September 14, 1995.
(B) BINDING
CONTRACTS.—The amend-
ment made by subsection (b) shall not apply to
any inurement occurring before January 1,
1997, pursuant to a written contract which was
binding on September 13, 1995, and at all
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times thereafter before such inurement oc-
curred.
SEC. 13647. REPORTING OF CERTAIN EXCISE TAXES AND
OTHER INFORMATION.
(a) REPORTING BY ORGANIZATIONS DESCRIBED IN
SECTION 501(c)(3).—Subsection (b) of section 6033 (re-
lating to certain organizations described in section
501(c)(3)) is amended by striking ‘‘and’’ at the end of
paragraph (9), by redesignating paragraph (10) as para-
graph (14), and by inserting after paragraph (9) the fol-
lowing new paragraphs:
‘‘(10) the respective amounts (if any) of the
taxes paid by the organization during the taxable
year under the following provisions:
‘‘(A) section 4911 (relating to tax on ex-
cess expenditures to influence legislation),
‘‘(B) section 4912 (relating to tax on dis-
qualifying lobbying expenditures of certain or-
ganizations), and
‘‘(C) section 4955 (relating to taxes on po-
litical expenditures of section 501(c)(3) organi-
zations),
‘‘(11) the respective amounts (if any) of the
taxes paid by the organization or any disqualified
person during the taxable year under section 4958
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(relating to taxes on private excess benefit from cer-
tain charitable organizations),
‘‘(12) such information as the Secretary may
require with respect to any excess benefit trans-
action (as defined in section 4958),
‘‘(13) the name of each disqualified person who
receives an economic benefit from an applicable tax-
exempt organization (as defined in section 4958(e))
and such other information as the Secretary may
prescribe with respect to such benefit, and’’.
(b) 
ORGANIZATIONS
DESCRIBED
IN
SECTION
501(c)(4).—Section 6033 is amended by redesignating
subsection (f) as subsection (g) and by inserting after sub-
section (e) the following new subsection:
‘‘(f) CERTAIN ORGANIZATIONS DESCRIBED IN SEC-
TION 501(c)(4).—Every organization described in section
501(c)(4) which is subject to the requirements of sub-
section (a) shall include on the return required under sub-
section (a) the information referred to in paragraphs (10),
(11), (12) and (13) of subsection (b) with respect to such
organization.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to returns for taxable years begin-
ning after the date of the enactment of this Act.
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SEC. 13648. EXEMPT ORGANIZATIONS REQUIRED TO PRO-
VIDE COPY OF RETURN.
(a) GENERAL RULE.—
(1) Subparagraph (A) of section 6104(e)(1) (re-
lating to public inspection of annual returns) is
amended to read as follows:
‘‘(A) IN GENERAL.—During the 3-year pe-
riod beginning on the filing date—
‘‘(i) a copy of the annual return filed
under section 6033 (relating to returns by
exempt organizations) by any organization
to which this paragraph applies shall be
made available by such organization for in-
spection during regular business hours by
any individual at the principal office of
such organization and, if such organization
regularly maintains 1 or more regional or
district offices having 3 or more employees,
at each such regional or district office, and
‘‘(ii) upon request of an individual
made at such principal office or such a re-
gional or district office, a copy of such an-
nual return shall be provided to such indi-
vidual without charge other than a reason-
able fee for any reproduction and mailing
costs.
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If the request under clause (ii) is made in per-
son, such copy shall be provided immediately
and, if made other than in person, shall be pro-
vided within 30 days.’’
(2) Clause (ii) of section 6104(e)(2)(A) is
amended by inserting before the period at the end
thereof the following: ‘‘(and, upon request of an in-
dividual made at such principal office or such a re-
gional or district office, a copy of the material re-
quired to be available for inspection under this sub-
paragraph shall be provided (in accordance with the
last sentence of paragraph (1)(A)) to such individual
without charge other than a reasonable fee for any
reproduction and mailing costs)’’.
(3) Subsection (e) of section 6104 is amended
by adding at the end the following new paragraph:
‘‘(3) LIMITATION.—Paragraph (1)(A)(ii) (and
the corresponding provision of paragraph (2)) shall
not apply to any request if the Secretary determines,
upon application by an organization, that such re-
quest is part of a harassment campaign and that
compliance with such request is not in the public in-
terest.’’
(b) ADVERTISEMENTS ETC., REQUIRED TO DIS-
CLOSE AVAILABILITY OF ANNUAL RETURN.—
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(1) Paragraph (1) of section 6104(e) is amend-
ed by adding at the end thereof the following new
subparagraph:
‘‘(E) ADVERTISEMENTS
ETC., REQUIRED
TO
DISCLOSE
AVAILABILITY
OF
ANNUAL
RE-
TURN.—In the case of an organization required
by subparagraph (A) to provide a copy of its
annual return under section 6033 upon request
to individuals, each written advertisement or so-
licitation by (or on behalf of) such organization
shall contain an express statement (in a con-
spicuous and easily recognizable format) that
such return shall be provided to individuals
upon request.’’
(2) Section 6716, as added by section 13649 of
this title, is amended—
(A) by striking ‘‘section 6116’’ each place
it appears and inserting ‘‘section 6116 or sec-
tion 6104(e)(1)(E)’’,
(B) by striking ‘‘$1,000’’ in subsection (a)
and inserting ‘‘$1,000 ($100 in the case of a
failure 
to 
meet 
the 
requirements 
of
6104(e)(1)(E))’’, and
(C) by inserting before the period at the
end of the section heading ‘‘; FAILURE
OF
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CERTAIN EXEMPT ORGANIZATIONS TO DIS-
CLOSE
AVAILABILITY
OF
ANNUAL
RE-
TURN’’.
(3) Subparagraph (C) of section 6652(c)(1) is
amended by striking ‘‘(e)(1)’’ and inserting ‘‘(e)(1)
(other than subparagraph (E))’’, by striking ‘‘$10’’
and inserting ‘‘$20’’, and by striking ‘‘$5,000’’ and
inserting ‘‘$10,000’’.
(4) Subparagraph (D) of section 6652(c)(1) is
amended by striking ‘‘$10’’ and inserting ‘‘$20’’.
(5) The item relating to section 6716 in the
table of sections for part I of subchapter B of chap-
ter 68 is amended by inserting before the period ‘‘;
failure of certain exempt organizations to disclose
availability of annual return’’.
(c) INCREASE IN PENALTY FOR WILLFUL FAILURE
TO ALLOW PUBLIC INSPECTION OF CERTAIN RETURNS,
ETC.—Section 6685 is amended by striking ‘‘$1,000’’ and
inserting ‘‘$5,000’’.
(d) COPIES OF RETURNS OF EXEMPT ORGANIZA-
TIONS
AVAILABLE
FROM
SECRETARY
IN
CERTAIN
CASES.—Subsection (b) of section 6104 is amended to
read as follows:
‘‘(b) INSPECTION
OF ANNUAL INFORMATION RE-
TURNS.—
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‘‘(1) IN GENERAL.—The information required
to be furnished by sections 6033, 6034, and 6058,
together with the names and addresses of such orga-
nizations and trusts, shall be made available to the
public at such times and in such places as the Sec-
retary may prescribe. Nothing in this subsection
shall authorize the Secretary to disclose the name or
address of any contributor to any organization or
trust (other than a private foundation, as defined in
section 509(a)) which is required to furnish such in-
formation.
‘‘(2) COPIES
PROVIDED
OF
RETURNS
FILED
UNDER
SECTION
6033
AND
APPLICATIONS
FILED
UNDER SECTION 508 IN CERTAIN CASES.—The Sec-
retary shall provide copies of returns filed under sec-
tion 6033 and applications for exemption filed under
section 508 by any organization to which subsection
(d) or (e)(1) applies to any person who agrees (sub-
ject to such conditions as the Secretary shall pre-
scribe)—
‘‘(A) to accept broad categories of such re-
turns and applications, and
‘‘(B) to provide electronic access to the
provided returns and applications on an elec-
tronic network available to the general public.
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Such copies shall be provided without charge if such
person agrees to provide such access without charge.
Otherwise, the Secretary may impose a reasonable
fee for any reproduction and mailing costs.
‘‘(3) RETURNS AND APPLICATIONS FILED BE-
FORE 1996.—Paragraph (2) shall apply to returns
and applications filed before January 1, 1996, only
to the extent provided by the Secretary.’’
(e) EFFECTIVE DATE.—The amendments made by
this section shall take effect on January 1, 1996 (or, if
later, the 90th day after the date of the enactment of this
Act).
SEC. 13649. CERTAIN ORGANIZATIONS REQUIRED TO DIS-
CLOSE NONEXEMPT STATUS.
(a) GENERAL RULE.—Subchapter B of chapter 61
(relating to miscellaneous provisions) is amended by redes-
ignating section 6116 as section 6117 and by inserting
after section 6115 the following new section:
‘‘SEC. 6116. CERTAIN ORGANIZATIONS REQUIRED TO DIS-
CLOSE NONEXEMPT STATUS.
‘‘(a) IN GENERAL.—If—
‘‘(1) in an advertisement or solicitation by (or
on behalf of) an organization, such organization is
referred to as being nonprofit, and
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‘‘(2) such organization is not exempt from tax
under subtitle A,
such advertisement or solicitation shall contain an express
statement (in a conspicuous and easily recognizable for-
mat) that such organization is not exempt from Federal
income taxes.
‘‘(b) CROSS REFERENCE.—
‘‘For penalties for violation of subsection (a), see
section 6716.’’
(b) PENALTY.—Part I of subchapter B of chapter 68
is amended by adding at the end thereof the following new
section:
‘‘SEC. 6716. FAILURE TO DISCLOSE NONEXEMPT STATUS.
‘‘(a) IMPOSITION OF PENALTY.—If there is a failure
to meet the requirements of section 6116 with respect to
any advertisement or solicitation by (or on behalf of) an
organization, such organization shall pay a penalty of
$1,000 for each day on which such a failure occurred. The
maximum penalty imposed under this subsection on fail-
ures by any organization during any calendar year shall
not exceed $10,000.
‘‘(b) REASONABLE CAUSE EXEMPTION.—No penalty
shall be imposed under this section with respect to any
failure if it is shown that such failure is due to reasonable
cause.
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‘‘(c) $10,000 LIMITATION NOT TO APPLY WHERE
INTENTIONAL DISREGARD.—If any failure to which sub-
section (a) applies is due to intentional disregard of the
requirements of section 6116—
‘‘(1) the penalty under subsection (a) for the
day on which failure occurred shall be the greater
of—
‘‘(A) $1,000, or
‘‘(B) 50 percent of the aggregate cost of
the advertisements and solicitations which oc-
curred on such day and with respect to which
there was such failure,
‘‘(2) the $10,000 limitation of subsection (a)
shall not apply to any penalty under subsection (a)
for the day on which such failure occurred, and
‘‘(3) such penalty shall not be taken into ac-
count in applying such limitation to other penalties
under subsection (a).
‘‘(d) DAY ON WHICH FAILURE OCCURS.—For pur-
poses of this section, rules similar to the rules of section
6710(d) shall apply in determining the day on which any
failure occurs.’’
(c) CLERICAL AMENDMENTS.—
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(1) The table of sections for subchapter B of
chapter 61 is amended by striking the item relating
to section 6116 and inserting the following:
‘‘Sec. 6116. Certain organizations required to disclose
nonexempt status.
‘‘Sec. 6117. Cross reference.’’
(2) The table of sections of part I of subchapter
B of chapter 68 is amended by adding at the end
thereof the following new item:
‘‘Sec. 6716. Failure to disclose nonexempt status.’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall take effect on January 1, 1996 (or, if
later, the 90th day after the date of the enactment of this
Act).
SEC. 13650. INCREASE IN PENALTIES ON EXEMPT ORGANI-
ZATIONS FOR FAILURE TO FILE COMPLETE
AND TIMELY ANNUAL RETURNS.
(a) IN GENERAL.—Subparagraph (A) of section
6652(c)(1) (relating to annual returns under section
6033) is amended by striking ‘‘$10’’ and inserting ‘‘$20’’
and by striking ‘‘$5,000’’ and inserting ‘‘$10,000’’.
(b) LARGER PENALTY ON ORGANIZATIONS HAVING
GROSS RECEIPTS IN EXCESS OF $1,000,000.—Subpara-
graph (A) of section 6652(c)(1) is amended by adding at
the end the following new sentence: ‘‘In the case of an
organization having gross receipts exceeding $1,000,000
for any year, with respect to the return required under
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section 6033 for such year, the first sentence of this sub-
paragraph shall be applied by substituting ‘$100’ for ‘$20’
and, in lieu of applying the second sentence of this sub-
paragraph, the maximum penalty under this subparagraph
shall not exceed $50,000.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to returns for taxable years ending
on or after December 31, 1995.
SEC. 13651. STUDIES.
(a) IN GENERAL.—The Secretary of the Treasury or
his delegate shall conduct a study of—
(1) whether the statutory prohibition on private
inurement, and the provisions of section 4958 of the
Internal Revenue Code of 1986 (as added by this
part), should apply to other tax-exempt organiza-
tions,
(2) whether State officials responsible for
overseeing charitable organizations should be pro-
vided with Federal tax information in addition to the
information available under section 6103 of such
Code for purposes of such oversight, and
(3) whether the return required to be filed by
section 6033 of such Code should be modified to as-
sure the return’s utility to such Secretary and to the
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public and to reduce any unnecessary reporting bur-
dens.
(b) REPORT.—Not later than January 1, 1997, the
report of such study shall be submitted to the Committee
on Ways and Means of the House of Representatives and
the Committee on Finance of the Senate.
Subtitle G—Reform of the Earned
Income Tax Credit
SEC. 13701. REPEAL OF EARNED INCOME CREDIT FOR INDI-
VIDUALS WITHOUT QUALIFYING CHILDREN;
MODIFICATIONS TO CREDIT PHASEOUT.
(a) REPEAL OF CREDIT FOR INDIVIDUALS WITHOUT
CHILDREN.—Subparagraph (A) of section 32(c)(1) (defin-
ing eligible individual) is amended to read as follows:
‘‘(A) IN GENERAL.—The term ‘eligible in-
dividual’ means any individual who has a quali-
fying child for the taxable year.’’
(b) MODIFICATIONS TO PHASEOUT.—
(1) Subsection (b) of section 32 is amended to
read as follows:
‘‘(b) PERCENTAGES.—
‘‘(1) IN GENERAL.—The credit percentage and
the phaseout percentage shall be determined as
follows:
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‘‘In the case of an eligible individ-
ual with:
The credit percentage
is:
The phaseout percentage
is:
1 qualifying child .....................
34 .............................
2 or more qualifying children ..
40 .............................
‘‘(2) AMOUNTS.—The earned income amount
and the phaseout amount shall be determined as
follows:
‘‘In the case of an eligible individ-
ual with:
The earned income
amount is:
The phaseout amount is:
1 qualifying child .....................
$6,340 ......................
$11,630
2 or more qualifying children ..
$8,910 ......................
$11,630.’’
(2) Subsection (j) of section 32 is amended—
(A) by striking ‘‘subsection (b)(2)(A)’’ and
inserting ‘‘subsection (b)(2)’’,
(B) by striking ‘‘1994’’ and inserting
‘‘1996’’, and
(C) by striking ‘‘1993’’ and inserting
‘‘1995’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1995.
SEC. 13702. MODIFICATION OF ADJUSTED GROSS INCOME
USED FOR PHASEOUT.
(a) IN GENERAL.—Subsections (a)(2)(B), (c)(1)(C),
and (f)(2)(B) of section 32 are each amended by striking
‘‘adjusted gross income’’ each place it appears and insert-
ing ‘‘modified adjusted gross income’’.
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(b) MODIFIED ADJUSTED GROSS INCOME.—Sub-
section (c) of section 32 is amended by adding at the end
the following new paragraph:
‘‘(5) MODIFIED
ADJUSTED
GROSS
INCOME.—
For purposes of this section, the term ‘modified ad-
justed gross income’ means adjusted gross income
increased by—
‘‘(A) any amount received as a pension or
annuity, and any distribution or payment re-
ceived from an individual retirement plan, by
the taxpayer during the taxable year to the ex-
tent not otherwise included in gross income,
and
‘‘(B) the social security benefits (as de-
fined in section 86(d)) received by the taxpayer
during the taxable year to the extent not in-
cluded in gross income.
Any amount which is not includible in gross income
by reason of paragraph (3), (4), or (5) of section
408(d) or section 402(c), 403(a)(4), 403(b)(8), or
457(e)(10) shall be treated as not described in sub-
paragraph (A).’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1995.
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SEC. 13703. EARNED INCOME TAX CREDIT DENIED TO INDI-
VIDUALS 
NOT 
AUTHORIZED 
TO 
BE 
EM-
PLOYED IN THE UNITED STATES.
(a) IN GENERAL.—Section 32(c)(1) (relating to indi-
viduals eligible to claim the earned income tax credit) is
amended by adding at the end the following new subpara-
graph:
‘‘(F) IDENTIFICATION NUMBER REQUIRE-
MENT.—The term ‘eligible individual’ does not
include any individual who does not include on
the return of tax for the taxable year—
‘‘(i) such individual’s taxpayer identi-
fication number, and
‘‘(ii) if the individual is married (with-
in the meaning of section 7703), the tax-
payer identification number of such indi-
vidual’s spouse.’’
(b) SPECIAL IDENTIFICATION NUMBER.—Section 32
is amended by adding at the end the following new sub-
section:
‘‘(l) IDENTIFICATION NUMBERS.—Solely for pur-
poses of subsections (c)(1)(F) and (c)(3)(D), a taxpayer
identification number means a social security number is-
sued to an individual by the Social Security Administra-
tion (other than a social security number issued pursuant
to clause (II) (or that portion of clause (III) that relates
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to clause (II)) of section 205(c)(2)(B)(i) of the Social Se-
curity Act).’’
(c) EXTENSION OF PROCEDURES APPLICABLE TO
MATHEMATICAL
OR
CLERICAL
ERRORS.—Section
6213(g)(2) (relating to the definition of mathematical or
clerical errors) is amended by striking ‘‘and’ at the end
of subparagraph (D), by striking the period at the end
of subparagraph (E) and inserting a comma, and by in-
serting after subparagraph (E) the following new subpara-
graphs:
‘‘(F) an omission of a correct taxpayer
identification number required under section 32
(relating to the earned income tax credit) to be
included on a return, and
‘‘(G) an entry on a return claiming the
credit under section 32 with respect to net
earnings from self-employment described in sec-
tion 32(c)(2)(A) to the extent the tax imposed
by section 1401 (relating to self-employment
tax) on such net earnings has not been paid.’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1995.
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Subtitle H—Increase in Public
Debt Limit
SEC. 13801. INCREASE IN PUBLIC DEBT LIMIT.
Subsection (b) of section 3101 of title 31, United
States Code, is amended by striking the dollar amount
contained therein and inserting ‘‘$5,500,000,000,000’’.
Subtitle I—Coal Industry Retiree
Health Equity
SEC. 13901. REPEAL OF REACHBACK PROVISIONS OF COAL
INDUSTRY HEALTH BENEFIT SYSTEM.
(a) AMENDMENTS RELATED TO DEFINITIONS.—
(1) AGREEMENTS.—
(A) IN GENERAL.—Paragraph (1) of sec-
tion 9701(b) (relating to agreements) is amend-
ed to read as follows:
‘‘(1) COAL WAGE AGREEMENTS.—
‘‘(A) 1988 AGREEMENT.—The term ‘1988
agreement’ means the collective bargaining
agreement between the settlors which became
effective on February 1, 1988.
‘‘(B) COAL WAGE AGREEMENT.—The term
‘coal wage agreement’ means any predecessor to
the 1988 agreement.’’
(B) CONFORMING
AMENDMENT.—Section
9701(b) is amended by striking paragraph (3).
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(2) OPERATORS.—
(A) SIGNATORY
OPERATOR.—Paragraph
(1) of section 9701(c) (relating to operators) is
amended to read as follows:
‘‘(1) SIGNATORY OPERATOR.—The term ‘signa-
tory operator’ means a 1988 agreement operator.’’
(B) 1988 AGREEMENT OPERATOR.—Para-
graph (3) of section 9701(c) is amended to read
as follows:
‘‘(3) 1988 AGREEMENT OPERATOR.—The term
‘1988 agreement operator’ means—
‘‘(A) an operator which was a signatory to
the 1988 agreement, or
‘‘(B) a person in business which, during
the term of the 1988 agreement, was a signa-
tory to an agreement (other than the National
Coal Mine Construction Agreement and the
Coal Haulers’ Agreement) containing pension
and health care contribution and benefit provi-
sions which are the same as those contained in
the 1988 agreement.
Such term shall not include any operator who was
assessed, and did pay the full amount of, contractual
withdrawal liability to the 1950 UMWA Benefit
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Plan, the 1974 UMWA Benefit Plan, or the Com-
bined Fund.’’
(C) LAST SIGNATORY OPERATOR.—Section
9701(c)(4) is amended by inserting ‘‘bitu-
minous’’ before ‘‘coal’’ each place it appears.
(b) COMBINED BENEFIT FUND.—Section 9702(b)(1)
is amended to read as follows:
‘‘(b) BOARD OF TRUSTEES.—
‘‘(1) IN GENERAL.—For purposes of subsection
(a), the board of trustees for the Combined Fund
shall be appointed as follows:
‘‘(A) two individuals who represent employ-
ers in the coal mining industry shall be des-
ignated by the BCOA;
‘‘(B) two individuals designated by the
United Mine Workers of America; and
‘‘(C) three persons selected by the persons
appointed under subparagraphs (A) and (B).’’
(c) ASSIGNMENT
OF ELIGIBLE BENEFICIARIES.—
Subsection (a) of section 9706 is amended by adding at
the end the following new flush sentence:
‘‘For purposes of assessing premiums on or after October
1, 1995, under this chapter, the Commissioner of Social
Security shall, effective October 1, 1995, revoke all assign-
ments previously made (and shall make no further assign-
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ments and shall terminate all unpaid liabilities for any
pending assignments) to all persons other than signatory
operators and shall deem each affected coal industry re-
tiree who is an eligible beneficiary to be an unassigned
beneficiary under section 9706. The preceding sentence
shall not be construed to prevent any transfer, or any
treatment of a successor as an assigned operator, under
subsection (b)(2).’’
(d) 1992 UMWA BENEFIT PLAN.—Section 9712(d)
is amended—
(1) by striking paragraph (3) and by redesig-
nating paragraphs (4), (5), and (6) as paragraphs
(3), (4), and (5), respectively, and
(2) by striking ‘‘or last signatory operator de-
scribed in paragraph (3),’’ in paragraph (3) (as re-
designated under paragraph (1)).
(e) INFORMATION REQUIREMENTS.—
(1) IN
GENERAL.—Subsection (h) of section
9704 is amended by adding at the end the following
new paragraph:
‘‘(2) INFORMATION TO CONTRIBUTORS.—
‘‘(A) IN
GENERAL.—The trustees of the
Combined Fund shall, within 30 days of a writ-
ten request, make available to any person re-
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quired to make contributions to the Combined
Fund, or their agent—
‘‘(i) all documents which reflect its fi-
nancial and operational status, including
documents under which it is operated, and
‘‘(ii) all documents prepared at the re-
quest of the trustees or staff of the Com-
bined Fund which form the basis for any
of its actions or reports, including the eli-
gibility of participants in predecessor
plans.
‘‘(B) FEES.—The trustees may charge rea-
sonable fees (not in excess of actual expenses)
for providing documents under this paragraph.’’
(2) CONFORMING AMENDMENT.—Subsection (h)
of section 9704 is amended by striking ‘‘(h) INFOR-
MATION.—The’’ and inserting the following:
‘‘(h) INFORMATION.—
‘‘(1) INFORMATION TO SECRETARY.—The’’.
(f) EFFECTIVE DATE.—The amendments made by
this section shall apply to plan years beginning after Sep-
tember 30, 1995.
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TITLE 
XIV—COMMITTEE 
ON
WAYS AND MEANS—TAX SIM-
PLIFICATION
SEC. 14001. SHORT TITLE; AMENDMENT TO 1986 CODE.
(a) SHORT TITLE.—This title may be cited as the
‘‘Tax Simplification Act of 1995’’.
(b) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this title an amend-
ment or repeal is expressed in terms of an amendment
to, or repeal of, a section or other provision, the reference
shall be considered to be made to a section or other provi-
sion of the Internal Revenue Code of 1986.
(c) TABLE OF CONTENTS.—The table of contents for
this title is as follows:
TITLE XIV—COMMITTEE ON WAYS AND MEANS—TAX
SIMPLIFICATION
Sec. 14001. Short title; amendment to 1986 Code.
Subtitle A—Provisions Relating to Individuals
PART I—PROVISIONS RELATING TO ROLLOVER OF GAIN ON SALE OF
PRINCIPAL RESIDENCE
Sec. 14101. Multiple sales within rollover period.
Sec. 14102. Special rules in case of divorce.
Sec. 14103. One-time exclusion of gain from sale of principal residence for cer-
tain spouses.
PART II—OTHER PROVISIONS
Sec. 14111. Payment of tax by commercially acceptable means.
Sec. 14112. Simplified foreign tax credit limitation for individuals.
Sec. 14113. Treatment of personal transactions by individuals under foreign
currency rules.
Sec. 14114. Treatment of certain reimbursed expenses of rural mail carriers.
Sec. 14115. Exclusion of combat pay from withholding limited to amount ex-
cludable from gross income.
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Sec. 14116. Treatment of traveling expenses of certain Federal employees en-
gaged in criminal investigations.
Subtitle B—Pension Simplification
PART I—SIMPLIFIED DISTRIBUTION RULES
Sec. 14201. Repeal of 5-year income averaging for lump-sum distributions.
Sec. 14202. Repeal of $5,000 exclusion of employees’ death benefits.
Sec. 14203. Simplified method for taxing annuity distributions under certain
employer plans.
Sec. 14204. Required distributions.
PART II—INCREASED ACCESS TO PENSION PLANS
Sec. 14211. Modifications of simplified employee pensions.
Sec. 14212. State and local governments and tax-exempt organizations eligible
under section 401(k).
PART III—NONDISCRIMINATION PROVISIONS
Sec. 14221. Definition of highly compensated employees.
Sec. 14222. Repeal of family aggregation rules.
Sec. 14223. Modification of additional participation requirements.
Sec. 14224. Nondiscrimination rules for qualified cash or deferred arrange-
ments and matching contributions.
PART IV—MISCELLANEOUS SIMPLIFICATION
Sec. 14231. Treatment of leased employees.
Sec. 14232. Plans covering self-employed individuals.
Sec. 14233. Elimination of special vesting rule for multiemployer plans.
Sec. 14234. Distributions under rural cooperative plans.
Sec. 14235. Treatment of governmental plans under section 415.
Sec. 14236. Uniform retirement age.
Sec. 14237. Uniform penalty provisions to apply to certain pension reporting
requirements.
Sec. 14238. Contributions on behalf of disabled employees.
Sec. 14239. Treatment of deferred compensation plans of State and local gov-
ernments and tax-exempt organizations.
Sec. 14240. Trust requirement for deferred compensation plans of State and
local governments.
Sec. 14241. Transition rule for computing maximum benefits under section 415
limitations.
Sec. 14242. Multiple salary reduction agreements permitted under section
403(b).
Sec. 14243. Waiver of minimum period for joint and survivor annuity expla-
nation before annuity starting date.
Sec. 14244. Repeal of limitation in case of defined benefit plan and defined
contribution plan for same employee.
Sec. 14245. Date for adoption of plan amendments.
Subtitle C—Treatment of Large Partnerships
PART I—GENERAL PROVISIONS
Sec. 14301. Simplified flow-through for large partnerships.
Sec. 14302. Simplified audit procedures for large partnerships.
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Sec. 14303. Due date for furnishing information to partners of large partner-
ships.
Sec. 14304. Returns may be required on magnetic media.
Sec. 14305. Treatment of partnership items of individual retirement accounts.
Sec. 14306. Effective date.
PART II—PROVISIONS RELATED TO CERTAIN PARTNERSHIP PROCEEDINGS
Sec. 14311. Treatment of partnership items in deficiency proceedings.
Sec. 14312. Partnership return to be determinative of audit procedures to be
followed.
Sec. 14313. Provisions relating to statute of limitations.
Sec. 14314. Expansion of small partnership exception.
Sec. 14315. Exclusion of partial settlements from 1-year limitation on assess-
ment.
Sec. 14316. Extension of time for filing a request for administrative adjust-
ment.
Sec. 14317. Availability of innocent spouse relief in context of partnership pro-
ceedings.
Sec. 14318. Determination of penalties at partnership level.
Sec. 14319. Provisions relating to court jurisdiction, etc.
Sec. 14320. Treatment of premature petitions filed by notice partners or 5-per-
cent groups.
Sec. 14321. Bonds in case of appeals from certain proceeding.
Sec. 14322. Suspension of interest where delay in computational adjustment re-
sulting from certain settlements.
Sec. 14323. Special rules for administrative adjustment requests with respect
to bad debts or worthless securities.
Subtitle D—Foreign Provisions
PART I—MODIFICATIONS TO TREATMENT OF PASSIVE FOREIGN INVESTMENT
COMPANIES
Sec. 14401. United States shareholders of controlled foreign corporations not
subject to PFIC inclusion.
Sec. 14402. Election of mark to market for marketable stock in passive foreign
investment company.
Sec. 14403. Modifications to definition of passive income.
Sec. 14404. Effective date.
PART II—TREATMENT OF CONTROLLED FOREIGN CORPORATIONS
Sec. 14411. Gain on certain stock sales by controlled foreign corporations treat-
ed as dividends.
Sec. 14412. Miscellaneous modifications to subpart F.
Sec. 14413. Indirect foreign tax credit allowed for certain lower tier companies.
Sec. 14414. Repeal of inclusion of certain earnings invested in excess passive
assets.
PART III—OTHER PROVISIONS
Sec. 14421. Exchange rate used in translating foreign taxes.
Sec. 14422. Election to use simplified section 904 limitation for alternative
minimum tax.
Sec. 14423. Modification of section 1491.
Sec. 14424. Modification of section 367(b).