1001
Title IX, Subtitle I
under section 203(d) of such an immi-
grant).’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to aliens with respect to whom
an immigrant visa is issued (or adjustment of status is
granted) after the date specified by the Attorney General
under section 9802(c)
Subtitle I—Earned Income Tax
Credit
SEC. 9901. 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) of the Internal
Revenue Code of 1986 (relating to individuals eligible to
claim the earned income tax credit) is amended by adding
at the end the following new subparagraph:
‘‘(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-
1002
Title IX, Subtitle I
payer identification number of such indi-
vidual’s spouse.’’
(b) SPECIAL IDENTIFICATION NUMBER.—Section 32
of such Code is amended by adding at the end the follow-
ing new subsection:
‘‘(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
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) of such Code (relating to the definition of
mathematical or clerical errors) is amended by striking
‘‘and’ at the end of subparagraph (D), by striking the pe-
riod at the end of subparagraph (E) and inserting a
comma, and by inserting after subparagraph (E) the fol-
lowing new subparagraphs:
‘‘(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
1003
Title X, Subtitle A
‘‘(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.
TITLE X—REDUCTIONS IN COR-
PORATE TAX SUBSIDIES AND
OTHER REFORMS
SEC. 10001. SHORT TITLE.
This title may be cited as the ‘‘Revenue Reconcili-
ation Act of 1995’’.
Subtitle A—Tax Treatment of
Expatriation
SEC. 10101. REVISION OF TAX RULES ON EXPATRIATION.
(a) IN GENERAL.—Subpart A of part II of sub-
chapter N of chapter 1 of the Internal Revenue Code of
1986 is amended by inserting after section 877 the follow-
ing new section:
‘‘SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION.
‘‘(a) GENERAL RULES.—For purposes of this sub-
title—
1004
Title X, Subtitle A
‘‘(1) MARK TO MARKET.—Except as provided in
subsection (f)(2), all property held by an expatriate
immediately before the expatriation date shall be
treated as sold at such time for its fair market
value.
‘‘(2) RECOGNITION OF GAIN OR LOSS.—In the
case of any sale under paragraph (1)—
‘‘(A) notwithstanding any other provision
of this title, any gain arising from such sale
shall be taken into account for the taxable year
of the sale unless such gain is excluded from
gross income under part III of subchapter B,
and
‘‘(B) any loss arising from such sale shall
be taken into account for the taxable year of
the sale to the extent otherwise provided by this
title, except that section 1091 shall not apply
(and section 1092 shall apply) to any such loss.
‘‘(3) ELECTION TO CONTINUE TO BE TAXED AS
UNITED STATES CITIZEN.—
‘‘(A) IN GENERAL.—If an expatriate elects
the application of this paragraph with respect
to any property—
1005
Title X, Subtitle A
‘‘(i) this section (other than this para-
graph) shall not apply to such property,
but
‘‘(ii) such property shall be subject to
tax under this title in the same manner as
if the individual were a United States
citizen.
‘‘(B) LIMITATION ON AMOUNT OF ESTATE,
GIFT, AND
GENERATION-SKIPPING
TRANSFER
TAXES.—The aggregate amount of taxes im-
posed under subtitle B with respect to any
transfer of property by reason of an election
under subparagraph (A) shall not exceed the
amount of income tax which would be due if the
property were sold for its fair market value im-
mediately before the time of the transfer or
death (taking into account the rules of sub-
section (a)(2)).
‘‘(C) REQUIREMENTS.—Subparagraph (A)
shall not apply to an individual unless the indi-
vidual—
‘‘(i) provides security for payment of
tax in such form and manner, and in such
amount, as the Secretary may require,
1006
Title X, Subtitle A
‘‘(ii) consents to the waiver of any
right of the individual under any treaty of
the United States which would preclude as-
sessment or collection of any tax which
may be imposed by reason of this para-
graph, and
‘‘(iii) complies with such other re-
quirements as the Secretary may prescribe.
‘‘(D) ELECTION.—An election under sub-
paragraph (A) shall apply only to the property
described in the election and, once made, shall
be irrevocable.
‘‘(b) EXCLUSION FOR CERTAIN GAIN.—The amount
which would (but for this subsection) be includible in the
gross income of any individual by reason of subsection (a)
shall be reduced (but not below zero) by $600,000.
‘‘(c) PROPERTY TREATED AS HELD.—For purposes
of this section, except as otherwise provided by the Sec-
retary, an individual shall be treated as holding—
‘‘(1) all property which would be includible in
his gross estate under chapter 11 if such individual
were a citizen or resident of the United States (with-
in the meaning of chapter 11) who died at the time
the property is treated as sold,
1007
Title X, Subtitle A
‘‘(2) any other interest in a trust which the in-
dividual is treated as holding under the rules of sub-
section (f)(1), and
‘‘(3) any other interest in property specified by
the Secretary as necessary or appropriate to carry
out the purposes of this section.
‘‘(d) EXCEPTIONS.—The following property shall not
be treated as sold for purposes of this section:
‘‘(1) UNITED STATES REAL PROPERTY INTER-
ESTS.—Any United States real property interest (as
defined in section 897(c)(1)), other than stock of a
United States real property holding corporation
which does not, on the expatriation date, meet the
requirements of section 897(c)(2).
‘‘(2) INTEREST
IN
CERTAIN
RETIREMENT
PLANS.—
‘‘(A) IN
GENERAL.—Any interest in a
qualified retirement plan (as defined in section
4974(c)), other than any interest attributable to
contributions which are in excess of any limita-
tion or which violate any condition for tax-
favored treatment.
‘‘(B) FOREIGN PENSION PLANS.—
‘‘(i) IN GENERAL.—Under regulations
prescribed by the Secretary, interests in
1008
Title X, Subtitle A
foreign pension plans or similar retirement
arrangements or programs.
‘‘(ii) LIMITATION.—The value of prop-
erty which is treated as not sold by reason
of this subparagraph shall not exceed
$500,000.
‘‘(e) DEFINITIONS.—For purposes of this section—
‘‘(1) 
EXPATRIATE.—The 
term 
‘expatriate’
means—
‘‘(A) any United States citizen who relin-
quishes his citizenship, or
‘‘(B) any long-term resident of the United
States who—
‘‘(i) ceases to be a lawful permanent
resident of the United States (within the
meaning of section 7701(b)(6)), or
‘‘(ii) commences to be treated as a
resident 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.
An individual shall not be treated as an expatriate
for purposes of this section by reason of the individ-
1009
Title X, Subtitle A
ual relinquishing United States citizenship before at-
taining the age of 181⁄2 if the individual has been
a resident of the United States (as defined in section
7701(b)(1)(A)(ii)) for less than 5 taxable years be-
fore the date of relinquishment.
‘‘(2) EXPATRIATION
DATE.—The term ‘expa-
triation date’ means—
‘‘(A) the date an individual relinquishes
United States citizenship, or
‘‘(B) in the case of a long-term resident of
the United States, the date of the event de-
scribed in clause (i) or (ii) of paragraph (1)(B).
‘‘(3) RELINQUISHMENT
OF
CITIZENSHIP.—A
citizen shall be treated as relinquishing his United
States citizenship on the earliest of—
‘‘(A) the date the individual renounces his
United States nationality before a diplomatic or
consular officer of the United States pursuant
to paragraph (5) of section 349(a) of the Immi-
gration 
and 
Nationality 
Act 
(8 
U.S.C.
1481(a)(5)),
‘‘(B) the date the individual furnishes to
the United States Department of State a signed
statement 
of 
voluntary 
relinquishment 
of
United States nationality confirming the per-
1010
Title X, Subtitle A
formance of an act of expatriation 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)),
‘‘(C) the date the United States Depart-
ment of State issues to the individual a certifi-
cate of loss of nationality, or
‘‘(D) the date a court of the United States
cancels a naturalized citizen’s certificate of nat-
uralization.
Subparagraph (A) or (B) shall not apply to any indi-
vidual unless the renunciation or voluntary relin-
quishment is subsequently approved by the issuance
to the individual of a certificate of loss of nationality
by the United States Department of State.
‘‘(4) LONG-TERM RESIDENT.—
‘‘(A) IN GENERAL.—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 dur-
ing which the sale under subsection (a)(1) is
treated as occurring. For purposes of the pre-
ceding sentence, an individual shall not be
1011
Title X, Subtitle A
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 be-
tween the United States and the foreign coun-
try and does not waive the benefits of such
treaty applicable to residents of the foreign
country.
‘‘(B) SPECIAL
RULE.—For purposes of
subparagraph (A), there shall not be taken into
account—
‘‘(i) any taxable year during which
any prior sale is treated under subsection
(a)(1) as occurring, or
‘‘(ii) any taxable year prior to the tax-
able year referred to in clause (i).
‘‘(f) SPECIAL
RULES
APPLICABLE
TO
BENE-
FICIARIES’ INTERESTS IN TRUST.—
‘‘(1) DETERMINATION OF BENEFICIARIES’ IN-
TEREST IN TRUST.—For purposes of this section—
‘‘(A) GENERAL RULE.—A beneficiary’s in-
terest in a trust shall be based upon all relevant
facts and circumstances, including the terms of
the trust instrument and any letter of wishes or
similar document, historical patterns of trust
1012
Title X, Subtitle A
distributions, and the existence of and functions
performed by a trust protector or any similar
advisor.
‘‘(B) SPECIAL RULE.—The remaining in-
terests in the trust not determined under sub-
paragraph (A) to be held by any beneficiary
shall be allocated first to the grantor, if a bene-
ficiary, and then to other beneficiaries under
rules prescribed by the Secretary similar to the
rules of intestate succession.
‘‘(C) CONSTRUCTIVE
OWNERSHIP.—If a
beneficiary of a trust is a corporation, partner-
ship, trust, or estate, the shareholders, part-
ners, or beneficiaries shall be deemed to be the
trust beneficiaries for purposes of this section.
‘‘(D) TAXPAYER
RETURN
POSITION.—A
taxpayer shall clearly indicate on its income tax
return—
‘‘(i) the methodology used to deter-
mine that taxpayer’s trust interest under
this section, and
‘‘(ii) if the taxpayer knows (or has
reason to know) that any other beneficiary
of such trust is using a different methodol-
1013
Title X, Subtitle A
ogy to determine such beneficiary’s trust
interest under this section.
‘‘(2) DEEMED SALE IN CASE OF TRUST INTER-
EST.—If an individual who is an expatriate is treat-
ed under paragraph (1) as holding an interest in a
trust for purposes of this section—
‘‘(A) the individual shall not be treated as
having sold such interest,
‘‘(B) such interest shall be treated as a
separate share in the trust, and
‘‘(C)(i) such separate share shall be treat-
ed as a separate trust consisting of the assets
allocable to such share,
‘‘(ii) the separate trust shall be treated as
having sold its assets immediately before the ex-
patriation date for their fair market value and
as having distributed all of its assets to the in-
dividual as of such time, and
‘‘(iii) the individual shall be treated as hav-
ing recontributed the assets to the separate
trust.
Subsection (a)(2) shall apply to any income, gain, or
loss of the individual arising from a distribution de-
scribed in subparagraph (C)(ii).
1014
Title X, Subtitle A
‘‘(g) TERMINATION OF DEFERRALS, ETC.—On the
date any property held by an individual is treated as sold
under subsection (a), notwithstanding any other provision
of this title—
‘‘(1) any period during which recognition of in-
come or gain is deferred shall terminate, and
‘‘(2) any extension of time for payment of tax
shall cease to apply and the unpaid portion of such
tax shall be due and payable at the time and in the
manner prescribed by the Secretary.
‘‘(h) RULES RELATING TO PAYMENT OF TAX.—
‘‘(1) IMPOSITION OF TENTATIVE TAX.—
‘‘(A) IN GENERAL.—If an individual is re-
quired to include any amount in gross income
under subsection (a) for any taxable year, there
is hereby imposed, immediately before the expa-
triation date, a tax in an amount equal to the
amount of tax which would be imposed if the
taxable year were a short taxable year ending
on the expatriation date.
‘‘(B) DUE DATE.—The due date for any
tax imposed by subparagraph (A) shall be the
90th day after the expatriation date.
‘‘(C) TREATMENT OF TAX.—Any tax paid
under subparagraph (A) shall be treated as a
1015
Title X, Subtitle A
payment of the tax imposed by this chapter for
the taxable year to which subsection (a) applies.
‘‘(2) DEFERRAL OF TAX.—The payment of any
tax attributable to amounts included in gross income
under subsection (a) may be deferred to the same
extent, and in the same manner, as any tax imposed
by chapter 11, except that the Secretary may extend
the period for extension of time for paying tax under
section 6161 to such number of years as the Sec-
retary determines appropriate.
‘‘(3) RULES
RELATING
TO
SECURITY
INTER-
ESTS.—
‘‘(A) ADEQUACY
OF
SECURITY
INTER-
ESTS.—In determining the adequacy of any se-
curity to be provided under this section, the
Secretary may take into account the principles
of section 2056A.
‘‘(B) SPECIAL
RULE
FOR
TRUST.—If a
taxpayer is required by this section to provide
security in connection with any tax imposed by
reason of this section with respect to the hold-
ing of an interest in a trust and any trustee of
such trust is an individual citizen of the United
States or a domestic corporation, such trustee
shall be required to provide such security upon
1016
Title X, Subtitle A
notification 
by 
the 
taxpayer 
of 
such
requirement.
‘‘(i) COORDINATION
WITH
ESTATE
AND
GIFT
TAXES.—If subsection (a) applies to property held by an
individual for any taxable year and—
‘‘(1) such property is includible in the gross es-
tate of such individual solely by reason of section
2107, or
‘‘(2) section 2501 applies to a transfer of such
property by such individual solely by reason of sec-
tion 2501(a)(3),
then there shall be allowed as a credit against the addi-
tional tax imposed by section 2101 or 2501, whichever is
applicable, solely by reason of section 2107 or 2501(a)(3)
an amount equal to the increase in the tax imposed by
this chapter for such taxable year by reason of this
section.
‘‘(j) REGULATIONS.—The Secretary shall prescribe
such regulations as may be necessary or appropriate to
carry out the purposes of this section, including regula-
tions to prevent double taxation by ensuring that—
‘‘(1) appropriate adjustments are made to basis
to reflect gain recognized by reason of subsection (a)
and the exclusion provided by subsection (b),
1017
Title X, Subtitle A
‘‘(2) no interest in property is treated as held
for purposes of this section by more than one tax-
payer, and
‘‘(3) any gain by reason of a deemed sale under
subsection (a) of an interest in a corporation, part-
nership, trust, or estate is reduced to reflect that
portion of such gain which is attributable to an in-
terest in a trust which a shareholder, partner, or
beneficiary is treated as holding directly under sub-
section (f)(1)(C).
‘‘(k) CROSS REFERENCE.—
‘‘For income tax treatment of individuals who ter-
minate 
United 
States 
citizenship, 
see 
section
7701(a)(47).’’
(b) DEFINITION
OF
TERMINATION
OF
UNITED
STATES CITIZENSHIP.—Section 7701(a) of the Internal
Revenue Code of 1986 is amended by adding at the end
the following new paragraph:
‘‘(47) TERMINATION OF UNITED STATES CITI-
ZENSHIP.—An individual shall not cease to be treat-
ed as a United States citizen before the date on
which the individual’s citizenship is treated as relin-
quished under section 877A(e)(3).’’
(c) CONFORMING AMENDMENTS.—
(1) Section 877 of the Internal Revenue Code
of 1986 is amended by adding at the end the follow-
ing new subsection:
1018
Title X, Subtitle A
‘‘(f) APPLICATION.—This section shall not apply to
any individual who relinquishes (within the meaning of
section 877A(e)(3)) United States citizenship on or after
February 6, 1995.’’
(2) Section 2107(c) of such Code is amended by
adding at the end the following new paragraph:
‘‘(3) CROSS
REFERENCE.—For credit against
the tax imposed by subsection (a) for expatriation
tax, see section 877A(i).’’
(3) Section 2501(a)(3) of such Code is amended
by adding at the end the following new flush
sentence:
‘‘For credit against the tax imposed under this sec-
tion by reason of this paragraph, see section
877A(i).’’
(4) Section 6851 of such Code is amended by
striking subsection (d) and by redesignating sub-
section (e) as subsection (d).
(5) Paragraph (10) of section 7701(b) of such
Code is amended by adding at the end the following
new sentence: ‘‘This paragraph shall not apply to
any long-term resident of the United States who is
an expatriate (as defined in section 877A(e)(1)).’’
(d) CLERICAL AMENDMENT.—The table of sections
for subpart A of part II of subchapter N of chapter 1
1019
Title X, Subtitle A
of the Internal Revenue Code of 1986 is amended by in-
serting after the item relating to section 877 the following
new item:
‘‘Sec. 877A. Tax responsibilities of expatriation.’’
(e) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by
this section shall apply to expatriates (within the
meaning of section 877A(e) of the Internal Revenue
Code of 1986, as added by this section) whose expa-
triation date (as so defined) occurs on or after Feb-
ruary 6, 1995.
(2) DUE DATE FOR TENTATIVE TAX.—The due
date under section 877A(h)(1)(B) of such Code shall
in no event occur before the 90th day after the date
of the enactment of this Act.
SEC. 10102. BASIS OF ASSETS OF NONRESIDENT ALIEN IN-
DIVIDUALS BECOMING CITIZENS OR RESI-
DENTS.
(a) IN GENERAL.—Part IV of subchapter O of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to
special rules for gain or loss on disposition of property)
is amended by redesignating section 1061 as section 1062
and by inserting after section 1060 the following new
section:
1020
Title X, Subtitle A
‘‘SEC. 1061. BASIS OF ASSETS OF NONRESIDENT ALIEN INDI-
VIDUALS 
BECOMING 
CITIZENS 
OR 
RESI-
DENTS.
‘‘(a) GENERAL RULE.—If a nonresident alien individ-
ual becomes a citizen or resident of the United States,
gain or loss on the disposition of any property held on
the date the individual becomes such a citizen or resident
shall be determined by substituting, as of the applicable
date, the fair market value of such property (on the appli-
cable date) for its cost basis.
‘‘(b) EXCEPTION FOR DEPRECIATION.—Any deduc-
tion under this chapter for depreciation, depletion, or am-
ortization shall be determined without regard to the appli-
cation of this section.
‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section—
‘‘(1) APPLICABLE DATE.—The term ‘applicable
date’ means, with respect to any property to which
subsection (a) applies, the earlier of—
‘‘(A) the date the individual becomes a citi-
zen or resident of the United States, or
‘‘(B) the date the property first becomes
subject to tax under this subtitle by reason of
being used in a United States trade or business
or by reason of becoming a United States real
1021
Title X, Subtitle A
property interest (within the meaning of section
897(c)(1)).
‘‘(2) RESIDENT.—The term ‘resident’ does not
include an individual who is treated as a resident of
a foreign country under the provisions of a tax trea-
ty between the United States and a foreign country
and who does not waive the benefits of such treaty
applicable to residents of the foreign country.
‘‘(3) TRUSTS.—A trust shall not be treated as
an individual.
‘‘(4) 
ELECTION
NOT
TO
HAVE
SECTION
APPLY.—An individual may elect not to have this
section apply solely for purposes of determining gain
with respect to any property. Such election shall
apply only to property specified in the election and,
once made, shall be irrevocable.
‘‘(5) SECTION
ONLY
TO
APPLY
ONCE.—This
section shall apply only with respect to the first time
the individual becomes either a citizen or resident of
the United States.
‘‘(d) REGULATIONS.—The Secretary shall prescribe
regulations for purposes of this section, including regula-
tions—
1022
Title X, Subtitle A
‘‘(1) for application of this section in the case
of property which consists of a direct or indirect in-
terest in a trust, and
‘‘(2) providing look-thru rules in the case of any
indirect interest in any United States real property
interest (within the meaning of section 897(c)(1)) or
property used in a United States trade or business.’’
(b) CONFORMING AMENDMENT.—The table of sec-
tions for part IV of subchapter O of chapter 1 of the Inter-
nal Revenue Code of 1986 is amended by striking the item
relating to section 1061 and inserting the following new
items:
‘‘Sec. 1061. Basis of assets of nonresident alien individuals be-
coming citizens or residents.
‘‘Sec. 1062. Cross references.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to dispositions after the date of
the enactment of this Act, and to any disposition occurring
on or before such date to which section 877A of the Inter-
nal Revenue Code of 1986 (as added by section 611) ap-
plies.
1023
Title X, Subtitle B
Subtitle B—Modification to Earned
Income Credit
SEC. 10201. EARNED INCOME TAX CREDIT DENIED TO INDI-
VIDUALS WITH SUBSTANTIAL CAPITAL GAIN
NET INCOME.
(a) IN GENERAL.—Paragraph (2) of section 32(i) of
the Internal Revenue Code of 1986 (relating to denial of
credit for individuals having excessive investment income)
is amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (B),
(2) by striking the period at the end of sub-
paragraph (C) and inserting ‘‘, and’’, and
(3) by adding at the end the following new sub-
paragraph:
‘‘(D) capital gain net income for the tax-
able year.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years beginning after
December 31, 1995.
1024
Title X, Subtitle C
Subtitle C—Alternative Minimum
Tax on Corporations Importing
Products into the United States
at Artificially Inflated Prices
SEC. 10301. ALTERNATIVE MINIMUM TAX ON CORPORA-
TIONS 
IMPORTING 
PRODUCTS 
INTO 
THE
UNITED STATES AT ARTIFICIALLY INFLATED
PRICES.
(a) IN GENERAL.—Subchapter A of chapter 1 of the
Internal Revenue Code of 1986 (relating to determination
of tax liability) is amended by adding at the end the fol-
lowing new part:
‘‘PART VIII—ALTERNATIVE MINIMUM TAX ON
CORPORATIONS 
IMPORTING 
PRODUCTS
INTO THE UNITED STATES AT ARTIFICIALLY
INFLATED PRICES
‘‘Sec. 59B. Alternative minimum tax on corporations importing products into
the United States at artificially inflated prices.
‘‘SEC. 59B. ALTERNATIVE MINIMUM TAX ON CORPORA-
TIONS 
IMPORTING 
PRODUCTS 
INTO 
THE
UNITED STATES AT ARTIFICIALLY INFLATED
PRICES.
‘‘(a) IMPOSITION OF TAX.—In the case of a corpora-
tion to which this section applies, there is hereby imposed
1025
Title X, Subtitle C
an alternative minimum tax equal to 4 percent of net busi-
ness receipts of the corporation for the taxable year.
‘‘(b) TAXPAYERS TO WHICH SECTION APPLIES.—
This section shall apply to any corporation, foreign or do-
mestic, if—
‘‘(1) gross sales in the United States during the
tax year of parts or products manufactured by the
corporation, or any subsidiary or affiliate controlled
by the corporation, exceeded $10,000,000,
‘‘(2) during that same tax year parts or prod-
ucts manufactured by the corporation, or any sub-
sidiary or affiliate controlled by the corporation, with
a customs value in excess of $10,000,000 were im-
ported into the United States, and
‘‘(3) its tax obligation under this section ex-
ceeds its total tax obligation under all other sections
of the Internal Revenue Code of 1986.
‘‘(c) CREDIT FOR TAXES PAID.—There shall be a
nonrefundable credit against the taxes owed under this
section equal to the total of all other taxes paid by the
corporation under the Internal Revenue Code of 1986.
‘‘(d) DEFINITIONS.—For purposes of this section:
‘‘(1) NET BUSINESS RECEIPTS.—The term ‘net
business receipts’ means the value of all parts or
products sold in the United States, excluding—
1026
Title X, Subtitle C
‘‘(A) the value of parts or products sold for
export,
‘‘(B) expenses paid for parts or products
produced in the United States,
‘‘(C) expenses paid for services performed
in the United States, and
‘‘(D) amounts paid for income, sales or use
taxes imposed by any State, or political subdivi-
sion thereof, or by the District of Columbia,
Puerto Rico, Guam or the Virgin Islands.
‘‘(2) SUBSIDIARY OR AFFILIATE CONTROLLED
BY THE CORPORATION.—An entity shall be consid-
ered to be a ‘subsidiary or affiliate controlled by the
corporation’ if the corporation owns 5 percent or
more of any class of stock of the entity or if the cor-
poration exercises control over a majority of the
board of directors of the entity.’’
(b) CLERICAL AMENDMENT.—The table of parts for
such subchapter A is amended by adding at the end there-
of the following new item:
‘‘Part VIII. Alternative minimum tax on corporations importing
products into the United States at artificially in-
flated prices.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1995.
1027
Title X, Subtitle D
Subtitle D—Tax Treatment of
Certain Extraordinary Dividends
SEC. 10401. TAX TREATMENT OF CERTAIN EXTRAORDINARY
DIVIDENDS.
(a) TREATMENT OF EXTRAORDINARY DIVIDENDS IN
EXCESS OF BASIS.—Paragraph (2) of section 1059(a) of
the Internal Revenue Code of 1986 (relating 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) of such
Code (relating to treatment of partial liquidations and
non-pro rata redemptions) 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—
1028
Title X, Subtitle D
‘‘(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.—
1029
Title X, Subtitle D
(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’’.
1030
Title X, Subtitle E
Subtitle E—Foreign Trust Tax
Compliance
SEC. 10501. IMPROVED INFORMATION REPORTING ON FOR-
EIGN TRUSTS.
(a) IN GENERAL.—Section 6048 of the Internal Rev-
enue Code of 1986 (relating to returns as to certain for-
eign trusts) is amended to read as follows:
‘‘SEC. 6048. INFORMATION WITH RESPECT TO CERTAIN
FOREIGN TRUSTS.
‘‘(a) NOTICE OF CERTAIN EVENTS.—
‘‘(1) GENERAL RULE.—On or before the 90th
day (or such later day as the Secretary may pre-
scribe) after any reportable event, the responsible
party shall provide written notice of such event to
the Secretary in accordance with paragraph (2).
‘‘(2) CONTENTS
OF
NOTICE.—The notice re-
quired by paragraph (1) shall contain such informa-
tion as the Secretary may prescribe, including—
‘‘(A) the amount of money or other prop-
erty (if any) transferred to the trust in connec-
tion with the reportable event, and
‘‘(B) the identity of the trust and of each
trustee and beneficiary (or class of bene-
ficiaries) of the trust.
1031
Title X, Subtitle E
‘‘(3) REPORTABLE
EVENT.—For purposes of
this subsection—
‘‘(A) IN GENERAL.—The term ‘reportable
event’ means—
‘‘(i) the creation of any foreign trust
by a United States person,
‘‘(ii) the transfer of any money or
property (directly or indirectly) to a for-
eign trust by a United States person, in-
cluding a transfer by reason of death, and
‘‘(iii) the death of a citizen or resident
of the United States if—
‘‘(I) the decedent was treated as
the owner of any portion of a foreign
trust under the rules of subpart E of
part I of subchapter J of chapter 1,
or
‘‘(II) any portion of a foreign
trust was included in the gross estate
of the decedent.
‘‘(B) EXCEPTIONS.—
‘‘(i) FAIR
MARKET
VALUE
SALES.—
Subparagraph (A)(ii) shall not apply to
any transfer of property to a trust in ex-
change for consideration of at least the fair
1032
Title X, Subtitle E
market value of the transferred property.
For purposes of the preceding sentence,
consideration other than cash shall be
taken into account at its fair market value
and the rules of section 679(a)(3) shall
apply.
‘‘(ii) 
PENSION
AND
CHARITABLE
TRUSTS.—Subparagraph 
(A) 
shall 
not
apply with respect to a trust which is—
‘‘(I) 
described 
in 
section
404(a)(4) or 404A, or
‘‘(II) determined by the Sec-
retary to be described in section
501(c)(3).
‘‘(4) RESPONSIBLE
PARTY.—For purposes of
this 
subsection, 
the 
term 
‘responsible 
party’
means—
‘‘(A) the grantor in the case of the cre-
ation of an inter vivos trust,
‘‘(B) the transferor in the case of a report-
able event described in paragraph (3)(A)(ii)
other than a transfer by reason of death, and
‘‘(C) the executor of the decedent’s estate
in any other case.
1033
Title X, Subtitle E
‘‘(b) UNITED
STATES
GRANTOR
OF
FOREIGN
TRUST.—
‘‘(1) IN GENERAL.—If, at any time during any
taxable year of a United States person, such person
is treated as the owner of any portion of a foreign
trust under the rules of subpart E of part I of sub-
chapter J of chapter 1, such person shall be respon-
sible to ensure that—
‘‘(A) such trust makes a return for such
year which sets forth a full and complete ac-
counting of all trust activities and operations
for the year, the name of the United States
agent for such trust, and such other informa-
tion as the Secretary may prescribe, and
‘‘(B) such trust furnishes such information
as the Secretary may prescribe to each United
States person (i) who is treated as the owner of
any portion of such trust or (ii) who receives
(directly or indirectly) any distribution from the
trust.
‘‘(2) TRUSTS
NOT
HAVING
UNITED
STATES
AGENT.—
‘‘(A) IN
GENERAL.—If the rules of this
subsection apply to any foreign trust, the deter-
mination of amounts required to be taken into
1034
Title X, Subtitle E
account with respect to such trust by a United
States person under the rules of subpart E of
part I of subchapter J of chapter 1 shall be de-
termined by the Secretary in the Secretary’s
sole discretion from the Secretary’s own knowl-
edge or from such information as the Secretary
may obtain through testimony or otherwise.
‘‘(B) UNITED STATES AGENT REQUIRED.—
The rules of this subsection shall apply to any
foreign trust to which paragraph (1) applies un-
less such trust agrees (in such manner, subject
to such conditions, and at such time as the Sec-
retary shall prescribe) to authorize a United
States person to act as such trust’s limited
agent solely for purposes of applying sections
7602, 7603, and 7604 with respect to—
‘‘(i) any request by the Secretary to
examine records or produce testimony re-
lated to the proper treatment of amounts
required to be taken into account under
the rules referred to in subparagraph (A),
or
‘‘(ii) any summons by the Secretary
for such records or testimony.
1035
Title X, Subtitle E
The appearance of persons or production of
records by reason of a United States person
being such an agent shall not subject such per-
sons or records to legal process for any purpose
other than determining the correct treatment
under this title of the amounts required to be
taken into account under the rules referred to
in subparagraph (A). A foreign trust which ap-
points an agent described in this subparagraph
shall not be considered to have an office or a
permanent establishment in the United States,
or to be engaged in a trade or business in the
United States, solely because of the activities of
such agent pursuant to this subsection.
‘‘(C) OTHER
RULES
TO
APPLY.—Rules
similar to the rules of paragraphs (2) and (4)
of section 6038A(e) shall apply for purposes of
this paragraph.
‘‘(c) REPORTING BY UNITED STATES BENEFICIARIES
OF FOREIGN TRUSTS.—
‘‘(1) IN GENERAL.—If any United States per-
son receives (directly or indirectly) during any tax-
able year of such person any distribution from a for-
eign trust, such person shall make a return with re-
spect to such trust for such year which includes—
1036
Title X, Subtitle E
‘‘(A) the name of such trust,
‘‘(B) the aggregate amount of the distribu-
tions so received from such trust during such
taxable year, and
‘‘(C) such other information as the Sec-
retary may prescribe.
‘‘(2) INCLUSION IN INCOME IF RECORDS NOT
PROVIDED.—If adequate records are not provided to
the Secretary to determine the proper treatment of
any distribution from a foreign trust, such distribu-
tion shall be treated as an accumulation distribution
includible in the gross income of the distributee
under chapter 1. To the extent provided in regula-
tions, the preceding sentence shall not apply if the
foreign trust elects to be subject to rules similar to
the rules of subsection (b)(2)(B).
‘‘(d) SPECIAL RULES.—
‘‘(1) DETERMINATION
OF
WHETHER
UNITED
STATES
PERSON
RECEIVES
DISTRIBUTION.—For
purposes of this section, in determining whether a
United States person receives a distribution from a
foreign trust, the fact that a portion of such trust
is treated as owned by another person under the
rules of subpart E of part I of subchapter J of chap-
ter 1 shall be disregarded.
1037
Title X, Subtitle E
‘‘(2) DOMESTIC TRUSTS WITH FOREIGN ACTIVI-
TIES.—To the extent provided in regulations, a trust
which is a United States person shall be treated as
a foreign trust for purposes of this section and sec-
tion 6677 if such trust has substantial activities, or
holds substantial property, outside the United
States.
‘‘(3) TIME AND MANNER OF FILING INFORMA-
TION.—Any notice or return required under this sec-
tion shall be made at such time and in such manner
as the Secretary shall prescribe.
‘‘(4) MODIFICATION
OF
RETURN
REQUIRE-
MENTS.—The Secretary is authorized to suspend or
modify any requirement of this section if the Sec-
retary determines that the United States has no sig-
nificant tax interest in obtaining the required infor-
mation.’’
(b) INCREASED PENALTIES.—Section 6677 of such
Code (relating to failure to file information returns with
respect to certain foreign trusts) is amended to read as
follows:
1038
Title X, Subtitle E
‘‘SEC. 6677. FAILURE TO FILE INFORMATION WITH RESPECT
TO CERTAIN FOREIGN TRUSTS.
‘‘(a) CIVIL PENALTY.—In addition to any criminal
penalty provided by law, if any notice or return required
to be filed by section 6048—
‘‘(1) is not filed on or before the time provided
in such section, or
‘‘(2) does not include all the information re-
quired pursuant to such section or includes incorrect
information,
the person required to file such notice or return shall pay
a penalty equal to 35 percent of the gross reportable
amount. If any failure described in the preceding sentence
continues for more than 90 days after the day on which
the Secretary mails notice of such failure to the person
required to pay such penalty, such person shall pay a pen-
alty (in addition to the amount determined under the pre-
ceding sentence) of $10,000 for each 30-day period (or
fraction thereof) during which such failure continues after
the expiration of such 90-day period.
‘‘(b) SPECIAL RULES FOR RETURNS UNDER SEC-
TION 6048(b).—In the case of a return required under
section 6048(b)—
‘‘(1) the United States person referred to in
such section shall be liable for the penalty imposed
by subsection (a), and
1039
Title X, Subtitle E
‘‘(2) subsection (a) shall be applied by sub-
stituting ‘5 percent’ for ‘35 percent’.
‘‘(c) GROSS REPORTABLE AMOUNT.—For purposes
of subsection (a), the term ‘gross reportable amount’
means—
‘‘(1) the gross value of the property involved in
the event (determined as of the date of the event)
in the case of a failure relating to section 6048(a),
‘‘(2) the gross value of the portion of the trust’s
assets at the close of the year treated as owned by
the United States person in the case of a failure re-
lating to section 6048(b)(1), and
‘‘(3) the gross amount of the distributions in
the case of a failure relating to section 6048(c).
‘‘(d) REASONABLE CAUSE EXCEPTION.—No penalty
shall be imposed by this section on any failure which is
shown to be due to reasonable cause and not due to willful
neglect. The fact that a foreign jurisdiction would impose
a civil or criminal penalty on the taxpayer (or any other
person) for disclosing the required information is not rea-
sonable cause.
‘‘(e) DEFICIENCY PROCEDURES NOT TO APPLY.—
Subchapter B of chapter 63 (relating to deficiency proce-
dures for income, estate, gift, and certain excise taxes)
1040
Title X, Subtitle E
shall not apply in respect of the assessment or collection
of any penalty imposed by subsection (a).’’
(c) CONFORMING AMENDMENTS.—
(1) Paragraph (2) of section 6724(d) of such
Code is amended by striking ‘‘or’’ at the end of sub-
paragraph (S), by striking the period at the end of
subparagraph (T) and inserting ‘‘, or’’, and by in-
serting after subparagraph (T) the following new
subparagraph:
‘‘(U) section 6048(b)(1)(B) (relating to
foreign trust reporting requirements).’’
(2) The table of sections for subpart B of part
III of subchapter A of chapter 61 of such Code is
amended by striking the item relating to section
6048 and inserting the following new item:
‘‘Sec. 6048. Information with respect to certain foreign trusts.’’
(3) The table of sections for part I of sub-
chapter B of chapter 68 of such Code is amended
by striking the item relating to section 6677 and in-
serting the following new item:
‘‘Sec. 6677. Failure to file information with respect to certain for-
eign trusts.’’
(d) EFFECTIVE DATES.—
(1) REPORTABLE EVENTS.—To the extent re-
lated to subsection (a) of section 6048 of the Inter-
nal Revenue Code of 1986, as amended by this sec-
1041
Title X, Subtitle E
tion, the amendments made by this section shall
apply to reportable events (as defined in such section
6048) occurring after the date of the enactment of
this Act.
(2) GRANTOR TRUST REPORTING.—To the ex-
tent related to subsection (b) of such section 6048,
the amendments made by this section shall apply to
taxable years of United States persons beginning
after the date of the enactment of this Act.
(3) REPORTING
BY
UNITED
STATES
BENE-
FICIARIES.—To the extent related to subsection (c)
of such section 6048, the amendments made by this
section shall apply to distributions received after the
date of the enactment of this Act.
SEC. 10502. MODIFICATIONS OF RULES RELATING TO FOR-
EIGN TRUSTS HAVING ONE OR MORE UNITED
STATES BENEFICIARIES.
(a) TREATMENT OF TRUST OBLIGATIONS, ETC.—
(1) Paragraph (2) of section 679(a) of the In-
ternal Revenue Code of 1986 is amended by striking
subparagraph (B) and inserting the following:
‘‘(B) 
TRANSFERS
AT
FAIR
MARKET
VALUE.—To any transfer of property to a trust
in exchange for consideration of at least the fair
market value of the transferred property. For
1042
Title X, Subtitle E
purposes of the preceding sentence, consider-
ation other than cash shall be taken into ac-
count at its fair market value.’’
(2) Subsection (a) of section 679 of such Code
(relating to foreign trusts having one or more Unit-
ed States beneficiaries) is amended by adding at the
end the following new paragraph:
‘‘(3) CERTAIN OBLIGATIONS NOT TAKEN INTO
ACCOUNT
UNDER
FAIR
MARKET
VALUE
EXCEP-
TION.—
‘‘(A) IN GENERAL.—In determining wheth-
er paragraph (2)(B) applies to any transfer by
a person described in clause (ii) or (iii) of sub-
paragraph (C), there shall not be taken into ac-
count—
‘‘(i) any obligation of a person de-
scribed in subparagraph (C), and
‘‘(ii) to the extent provided in regula-
tions, any obligation which is guaranteed
by a person described in subparagraph (C).
‘‘(B) TREATMENT
OF
PRINCIPAL
PAY-
MENTS
ON
OBLIGATION.—Principal payments
by the trust on any obligation referred to in
subparagraph (A) shall be taken into account
on and after the date of the payment in deter-
1043
Title X, Subtitle E
mining the portion of the trust attributable to
the property transferred.
‘‘(C) PERSONS DESCRIBED.—The persons
described in this subparagraph are—
‘‘(i) the trust,
‘‘(ii) any grantor or beneficiary of the
trust, and
‘‘(iii) any person who is related (with-
in the meaning of section 643(i)(3)) to any
grantor or beneficiary of the trust.’’
(b) EXEMPTION
OF TRANSFERS
TO CHARITABLE
TRUSTS.—Subsection (a) of section 679 of such Code is
amended by striking ‘‘section 404(a)(4) or 404A’’ and in-
serting ‘‘section 6048(a)(3)(B)(ii)’’.
(c) OTHER MODIFICATIONS.—Subsection (a) of sec-
tion 679 of such Code is amended by adding at the end
the following new paragraphs:
‘‘(4) SPECIAL RULES APPLICABLE TO FOREIGN
GRANTOR WHO LATER BECOMES A UNITED STATES
PERSON.—
‘‘(A) IN GENERAL.—If a nonresident alien
individual has a residency starting date within
5 years after directly or indirectly transferring
property to a foreign trust, this section and sec-
tion 6048 shall be applied as if such individual
1044
Title X, Subtitle E
transferred to such trust on the residency start-
ing date an amount equal to the portion of such
trust attributable to the property transferred by
such individual to such trust in such transfer.
‘‘(B) TREATMENT OF UNDISTRIBUTED IN-
COME.—For purposes of this section, undistrib-
uted net income for periods before such individ-
ual’s residency starting date shall be taken into
account in determining the portion of the trust
which is attributable to property transferred by
such individual to such trust but shall not oth-
erwise be taken into account.
‘‘(C) RESIDENCY
STARTING
DATE.—For
purposes of this paragraph, an individual’s resi-
dency starting date is the residency starting
date determined under section 7701(b)(2)(A).
‘‘(5) OUTBOUND TRUST MIGRATIONS.—If—
‘‘(A) an individual who is a citizen or resi-
dent of the United States transferred property
to a trust which was not a foreign trust, and
‘‘(B) such trust becomes a foreign trust
while such individual is alive,
then this section and section 6048 shall be applied
as if such individual transferred to such trust on the
date such trust becomes a foreign trust an amount
1045
Title X, Subtitle E
equal to the portion of such trust attributable to the
property previously transferred by such individual to
such trust. A rule similar to the rule of paragraph
(4)(B) shall apply for purposes of this paragraph.’’
(d) MODIFICATIONS RELATING TO WHETHER TRUST
HAS UNITED STATES BENEFICIARIES.—Subsection (c) of
section 679 of such Code is amended by adding at the
end the following new paragraphs:
‘‘(3) CERTAIN UNITED STATES BENEFICIARIES
DISREGARDED.—A beneficiary shall not be treated
as a United States person in applying this section
with respect to any transfer of property to foreign
trust if such beneficiary first became a United
States person more than 5 years after the date of
such transfer.
‘‘(4) TREATMENT OF FORMER UNITED STATES
PERSONS.—To the extent provided by the Secretary,
for purposes of this subsection, the term ‘United
States person’ includes any person who was a
United States person at any time during the exist-
ence of the trust.’’
(e) TECHNICAL AMENDMENT.—Subparagraph (A) of
section 679(c)(2) of such Code is amended to read as fol-
lows:
1046
Title X, Subtitle E
‘‘(A) in the case of a foreign corporation,
such corporation is a controlled foreign corpora-
tion (as defined in section 957(a)),’’.
(f) REGULATIONS.—Section 679 of such Code is
amended by adding at the end the following new sub-
section:
‘‘(d) REGULATIONS.—The Secretary shall prescribe
such regulations as may be necessary or appropriate to
carry out the purposes of this section.’’
(g) EFFECTIVE DATE.—The amendments made by
this section shall apply to transfers of property after Feb-
ruary 6, 1995.
SEC. 10503. FOREIGN PERSONS NOT TO BE TREATED AS
OWNERS UNDER GRANTOR TRUST RULES.
(a) GENERAL RULE.—
(1) Subsection (f) of section 672 of the Internal
Revenue Code of 1986 (relating to special rule where
grantor is foreign person) is amended to read as fol-
lows:
‘‘(f) SUBPART NOT TO RESULT IN FOREIGN OWNER-
SHIP.—
‘‘(1) IN GENERAL.—Notwithstanding any other
provision of this subpart, this subpart shall apply
only to the extent such application results in an
amount being currently taken into account (directly
1047
Title X, Subtitle E
or through 1 or more entities) under this chapter in
computing the income of a citizen or resident of the
United States or a domestic corporation.
‘‘(2) EXCEPTIONS.—
‘‘(A) CERTAIN
REVOCABLE
AND
IRREV-
OCABLE TRUSTS.—
‘‘(i) IN
GENERAL.—Except as pro-
vided in clause (ii), paragraph (1) shall not
apply to any trust if—
‘‘(I) the power to revest abso-
lutely in the grantor title to the trust
property is exercisable solely by the
grantor without the approval or con-
sent of any other person or with the
consent of a related or subordinate
party who is subservient to the grant-
or, or
‘‘(II) the only amounts distribut-
able from such trust (whether income
or corpus) during the lifetime of the
grantor are amounts distributable to
the grantor or the spouse of the
grantor.
‘‘(ii) EXCEPTION.—Clause (i) shall
not apply to any trust which has a bene-
1048
Title X, Subtitle E
ficiary who is a United States person to
the extent such beneficiary has made
transfers of property by gift (directly or in-
directly) to a foreign person who is the
grantor of such trust. For purposes of the
preceding sentence, any gift shall not be
taken into account to the extent such gift
is excluded from taxable gifts under sec-
tion 2503(b).
‘‘(B) COMPENSATORY TRUSTS.—Except as
provided in regulations, paragraph (1) shall not
apply to any portion of a trust distributions
from which are taxable as compensation for
services rendered.
‘‘(3) SPECIAL
RULES.—Except as otherwise
provided in regulations prescribed by the Sec-
retary—
‘‘(A) a controlled foreign corporation (as
defined in section 957) shall be treated as a do-
mestic corporation for purposes of paragraph
(1), and
‘‘(B) paragraph (1) shall not apply for
purposes of applying part III of subchapter G
(relating to foreign personal holding companies)
and part VI of subchapter P (relating to treat-
1049
Title X, Subtitle E
ment of certain passive foreign investment com-
panies).
‘‘(4) RECHARACTERIZATION
OF
PURPORTED
GIFTS.—In the case of any transfer directly or indi-
rectly from a partnership or foreign corporation
which the transferee treats as a gift or bequest, the
Secretary may recharacterize such transfer in such
circumstances as the Secretary determines to be ap-
propriate to prevent the avoidance of the purposes of
this subsection.
‘‘(5) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be necessary or ap-
propriate to carry out the purposes of this sub-
section, including regulations providing that para-
graph (1) shall not apply in appropriate cases.’’
(2) The last sentence of subsection (c) of sec-
tion 672 of such Code is amended by inserting ‘‘sub-
section (f) and’’ before ‘‘sections 674’’.
(b) CREDIT FOR CERTAIN TAXES.—Paragraph (2) of
section 665(d) of such Code is amended by adding at the
end the following new sentence: ‘‘Under rules or regula-
tions prescribed by the Secretary, in the case of any for-
eign trust of which the settlor or another person would
be treated as owner of any portion of the trust under sub-
part E but for section 672(f), the term ‘taxes imposed on
1050
Title X, Subtitle E
the trust’ includes the allocable amount of any income,
war profits, and excess profits taxes imposed by any for-
eign country or possession of the United States on the
settlor or such other person in respect of trust gross in-
come.’’
(c) DISTRIBUTIONS BY CERTAIN FOREIGN TRUSTS
THROUGH NOMINEES.—
(1) Section 643 of such Code is amended by
adding at the end the following new subsection:
‘‘(h) DISTRIBUTIONS BY CERTAIN FOREIGN TRUSTS
THROUGH NOMINEES.—For purposes of this part, any
amount paid to a United States person which is derived
directly or indirectly from a foreign trust of which the
payor is not the grantor shall be deemed in the year of
payment to have been directly paid by the foreign trust
to such United States person.’’
(2) Section 665 of such Code is amended by
striking subsection (c).
(d) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided by para-
graph (2), the amendments made by this section
shall take effect on the date of the enactment of this
Act.
1051
Title X, Subtitle E
(2) EXCEPTION
FOR
CERTAIN
TRUSTS.—The
amendments made by this section shall not apply to
any trust—
(A) which is treated as owned by the
grantor or another person under section 676 or
677 (other than subsection (a)(3) thereof) of
the Internal Revenue Code of 1986, and
(B) which is in existence on September 19,
1995.
The preceding sentence shall not apply to the por-
tion of any such trust attributable to any transfer to
such trust after September 19, 1995.
(e) TRANSITIONAL RULE.—If—
(1) by reason of the amendments made by this
section, any person other than a United States per-
son ceases to be treated as the owner of a portion
of a domestic trust, and
(2) before January 1, 1997, such trust becomes
a foreign trust, or the assets of such trust are trans-
ferred to a foreign trust,
no tax shall be imposed by section 1491 of the Internal
Revenue Code of 1986 by reason of such trust becoming
a foreign trust or the assets of such trust being trans-
ferred to a foreign trust.
1052
Title X, Subtitle E
SEC. 10504. INFORMATION REPORTING REGARDING FOR-
EIGN GIFTS.
(a) IN GENERAL.—Subpart A of part III of sub-
chapter A of chapter 61 of the Internal Revenue Code of
1986 is amended by inserting after section 6039E the fol-
lowing new section:
‘‘SEC. 6039F. NOTICE OF GIFTS RECEIVED FROM FOREIGN
PERSONS.
‘‘(a) IN GENERAL.—If the value of the aggregate for-
eign gifts received by a United States person (other than
an organization described in section 501(c) and exempt
from tax under section 501(a)) during any taxable year
exceeds $10,000, such United States person shall furnish
(at such time and in such manner as the Secretary shall
prescribe) such information as the Secretary may pre-
scribe regarding each foreign gift received during such
year.
‘‘(b) FOREIGN GIFT.—For purposes of this section,
the term ‘foreign gift’ means any amount received from
a person other than a United States person which the re-
cipient treats as a gift or bequest. Such term shall not
include any qualified transfer (within the meaning of sec-
tion 2503(e)(2)).
‘‘(c) PENALTY FOR FAILURE TO FILE INFORMA-
TION.—
1053
Title X, Subtitle E
‘‘(1) IN GENERAL.—If a United States person
fails to furnish the information required by sub-
section (a) with respect to any foreign gift within
the time prescribed therefor (including extensions)—
‘‘(A) the tax consequences of the receipt of
such gift shall be determined by the Secretary
in the Secretary’s sole discretion from the Sec-
retary’s own knowledge or from such informa-
tion as the Secretary may obtain through testi-
mony or otherwise, and
‘‘(B) such United States person shall pay
(upon notice and demand by the Secretary and
in the same manner as tax) an amount equal to
5 percent of the amount of such foreign gift for
each month for which the failure continues (not
to exceed 25 percent of such amount in the ag-
gregate).
‘‘(2) REASONABLE CAUSE EXCEPTION.—Para-
graph (1) shall not apply to any failure to report a
foreign gift if the United States person shows that
the failure is due to reasonable cause and not due
to willful neglect.
‘‘(d) REGULATIONS.—The Secretary shall prescribe
such regulations as may be necessary or appropriate to
carry out the purposes of this section.’’
1054
Title X, Subtitle E
(b) CLERICAL AMENDMENT.—The table of sections
for such subpart is amended by inserting after the item
relating to section 6039E the following new item:
‘‘Sec. 6039F. Notice of large gifts received from foreign persons.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to amounts received after the date
of the enactment of this Act in taxable years ending after
such date.
SEC. 10505. MODIFICATION OF RULES RELATING TO FOR-
EIGN TRUSTS WHICH ARE NOT GRANTOR
TRUSTS.
(a) MODIFICATION OF INTEREST CHARGE ON ACCU-
MULATION DISTRIBUTIONS.—Subsection (a) of section
668 of the Internal Revenue Code of 1986 (relating to
interest charge on accumulation distributions from foreign
trusts) is amended to read as follows:
‘‘(a) GENERAL RULE.—For purposes of the tax de-
termined under section 667(a)—
‘‘(1) 
INTEREST
DETERMINED
USING
UNDERPAYMENT RATES.—The interest charge deter-
mined under this section with respect to any dis-
tribution is the amount of interest which would be
determined on the partial tax computed under sec-
tion 667(b) for the period described in paragraph
(2) using the rates and the method under section
6621 applicable to underpayments of tax.
1055
Title X, Subtitle E
‘‘(2) PERIOD.—For purposes of paragraph (1),
the period described in this paragraph is the period
which begins on the date which is the applicable
number of years before the date of the distribution
and which ends on the date of the distribution.
‘‘(3) APPLICABLE
NUMBER
OF
YEARS.—For
purposes of paragraph (2)—
‘‘(A) IN GENERAL.—The applicable num-
ber of years with respect to a distribution is the
number determined by dividing—
‘‘(i) the sum of the products described
in subparagraph (B) with respect to each
undistributed income year, by
‘‘(ii) the aggregate undistributed net
income.
The quotient determined under the preceding
sentence shall be rounded under procedures
prescribed by the Secretary.
‘‘(B) PRODUCT
DESCRIBED.—For pur-
poses of subparagraph (A), the product de-
scribed in this subparagraph with respect to
any undistributed income year is the product
of—
‘‘(i) the undistributed net income for
such year, and
1056
Title X, Subtitle E
‘‘(ii) the sum of the number of taxable
years between such year and the taxable
year of the distribution (counting in each
case the undistributed income year but not
counting the taxable year of the distribu-
tion).
‘‘(4) UNDISTRIBUTED INCOME YEAR.—For pur-
poses of this subsection, the term ‘undistributed in-
come year’ means any prior taxable year of the trust
for which there is undistributed net income, other
than a taxable year during all of which the bene-
ficiary receiving the distribution was not a citizen or
resident of the United States.
‘‘(5) DETERMINATION OF UNDISTRIBUTED NET
INCOME.—Notwithstanding section 666, for pur-
poses of this subsection, an accumulation distribu-
tion from the trust shall be treated as reducing pro-
portionately the undistributed net income for prior
taxable years.
‘‘(6) PERIODS BEFORE 1996.—Interest for the
portion of the period described in paragraph (2)
which occurs before January 1, 1996, shall be deter-
mined—
‘‘(A) by using an interest rate of 6 percent,
and
1057
Title X, Subtitle E
‘‘(B) without compounding until January
1, 1996.’’
(b) ABUSIVE TRANSACTIONS.—Section 643(a) of
such Code is amended by inserting after paragraph (6)
the following new paragraph:
‘‘(7) ABUSIVE TRANSACTIONS.—The Secretary
shall prescribe such regulations as may be necessary
or appropriate to carry out the purposes of this part,
including regulations to prevent avoidance of such
purposes.’’
(c) TREATMENT OF USE OF TRUST PROPERTY.—
(1) IN GENERAL.—Section 643 of such Code
(relating to definitions applicable to subparts A, B,
C, and D) is amended by adding at the end the fol-
lowing new subsection:
‘‘(i) USE OF FOREIGN TRUST PROPERTY.—For pur-
poses of subparts B, C, and D—
‘‘(1) GENERAL RULE.—If a foreign trust makes
a loan of cash or marketable securities directly or in-
directly to—
‘‘(A) any grantor or beneficiary of such
trust who is a United States person, or
‘‘(B) any United States person not de-
scribed in subparagraph (A) who is related to
such grantor or beneficiary,
1058
Title X, Subtitle E
the amount of such loan shall be treated as a dis-
tribution by such trust to such grantor or bene-
ficiary (as the case may be).
‘‘(2) USE
OF
OTHER
PROPERTY.—Except as
provided in regulations prescribed by the Secretary,
any direct or indirect use of trust property (other
than cash or marketable securities) by a person re-
ferred to in subparagraph (A) or (B) of paragraph
(1) shall be treated as a distribution to the grantor
or beneficiary (as the case may be) equal to the fair
market value of the use of such property. The Sec-
retary may prescribe regulations treating a loan
guarantee by the trust as a use of trust property
equal to the value of the guarantee.
‘‘(3) DEFINITIONS AND SPECIAL RULES.—For
purposes of this subsection—
‘‘(A) CASH.—The term ‘cash’ includes for-
eign currencies and cash equivalents.
‘‘(B) RELATED PERSON.—
‘‘(i) IN GENERAL.—A person is relat-
ed to another person if the relationship be-
tween such persons would result in a dis-
allowance of losses under section 267 or
707(b). In applying section 267 for pur-
poses of the preceding sentence, section
1059
Title X, Subtitle E
267(c)(4) shall be applied as if the family
of an individual includes the spouses of the
members of the family.
‘‘(ii) ALLOCATION
OF
USE.—If any
person described in paragraph (1)(B) is re-
lated to more than one person, the grantor
or beneficiary to whom the treatment
under this subsection applies shall be de-
termined under regulations prescribed by
the Secretary.
‘‘(C) EXCLUSION OF TAX-EXEMPTS.—The
term ‘United States person’ does not include
any entity exempt from tax under this chapter.
‘‘(D) TRUST
NOT
TREATED
AS
SIMPLE
TRUST.—Any trust which is treated under this
subsection as making a distribution shall be
treated as not described in section 651.
‘‘(4) SUBSEQUENT TRANSACTIONS REGARDING
LOAN PRINCIPAL.—If any loan is taken into account
under paragraph (1), any subsequent transaction be-
tween the trust and the original borrower regarding
the principal of the loan (by way of complete or par-
tial repayment, satisfaction, cancellation, discharge,
or otherwise) shall be disregarded for purposes of
this title.’’
1060
Title X, Subtitle E
(2) TECHNICAL AMENDMENT.—Paragraph (8)
of section 7872(f) of such Code is amended by in-
serting ‘‘, 643(i),’’ before ‘‘or 1274’’ each place it
appears.
(d) EFFECTIVE DATES.—
(1) INTEREST CHARGE.—The amendment made
by subsection (a) shall apply to distributions after
the date of the enactment of this Act.
(2) ABUSIVE TRANSACTIONS.—The amendment
made by subsection (b) shall take effect on the date
of the enactment of this Act.
(3) USE OF TRUST PROPERTY.—The amend-
ment made by subsection (c) shall apply to—
(A) loans of cash or marketable securities
after September 19, 1995, and
(B) uses of other trust property after De-
cember 31, 1995.
SEC. 10506. RESIDENCE OF ESTATES AND TRUSTS, ETC.
(a) TREATMENT AS UNITED STATES PERSON.—
(1) IN GENERAL.—Paragraph (30) of section
7701(a) of the Internal Revenue Code of 1986 is
amended by striking subparagraph (D) and by in-
serting after subparagraph (C) the following:
‘‘(D) any estate or trust if—
1061
Title X, Subtitle E
‘‘(i) a court within the United States
is able to exercise primary supervision over
the administration of the estate or trust,
and
‘‘(ii) in the case of a trust, one or
more United States fiduciaries have the
authority to control all substantial deci-
sions of the trust.’’
(2) 
CONFORMING
AMENDMENT.—Paragraph
(31) of section 7701(a) of such Code is amended to
read as follows:
‘‘(31) FOREIGN ESTATE OR TRUST.—The term
‘foreign estate’ or ‘foreign trust’ means any estate or
trust other than an estate or trust described in sec-
tion 7701(a)(30)(D).’’
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall apply—
(A) to taxable years beginning after De-
cember 31, 1996, or
(B) at the election of the trustee of a
trust, to taxable years ending after the date of
the enactment of this Act.
Such an election, once made, shall be irrevocable.
(b) DOMESTIC TRUSTS WHICH BECOME FOREIGN
TRUSTS.—
1062
Title X, Subtitle F
(1) IN GENERAL.—Section 1491 of such Code
(relating to imposition of tax on transfers to avoid
income tax) is amended by adding at the end the fol-
lowing new flush sentence:
‘‘If a trust which is not a foreign trust becomes a foreign
trust, such trust shall be treated for purposes of this sec-
tion as having transferred, immediately before becoming
a foreign trust, all of its assets to a foreign trust.’’
(2) PENALTY.—Section 1494 of such Code is
amended by adding at the end the following new
subsection:
‘‘(c) PENALTY.—In the case of any failure to file a
return required by the Secretary with respect to any trans-
fer described in section 1491, the person required to file
such return shall be liable for the penalties provided in
section 6677 in the same manner as if such failure were
a failure to file a return under section 6048(a).’’
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall take effect on the date of the
enactment of this Act.
Subtitle F—Limitation on Section
936 Credit
SEC. 10601. LIMITATION ON SECTION 936 CREDIT.
(a) GENERAL RULE.—Paragraph (4) of section
936(a) of the Internal Revenue Code of 1986 (relating to
1063
Title X, Subtitle F
Puerto Rico and possession tax credit) is amended by re-
designating subparagraphs (B) and (C) as subparagraphs
(C) and (D), respectively, and by striking subparagraph
(A) and inserting the following new subsections:
‘‘(A) CREDIT
FOR
ACTIVE
BUSINESS
IN-
COME.—The amount of the credit determined
under paragraph (1)(A) for any taxable year
shall not exceed 60 percent of the aggregate
amount of the possession corporation’s qualified
possession wages for such taxable year.
‘‘(B) CREDIT FOR INVESTMENT INCOME.—
‘‘(i) IN GENERAL.—If—
‘‘(I) the QPSII assets of the pos-
session corporation for any taxable
year, exceed
‘‘(II) 80 percent of such posses-
sion corporation’s qualified tangible
business investment for such taxable
year,
the credit determined under paragraph
(1)(B) for such taxable year shall be re-
duced by the amount determined under
clause (ii).
‘‘(ii) AMOUNT
OF
REDUCTION.—The
reduction determined under this clause for
1064
Title X, Subtitle F
any taxable year is an amount which bears
the same ratio to the credit determined
under paragraph (1)(B) for such taxable
year (determined without regard to this
subparagraph) as—
‘‘(I) the excess determined under
clause (i), bears to
‘‘(II) the QPSII assets of the
possession corporation for such tax-
able year.’’
(b) PHASEDOWN OF CREDIT.—The table contained
in clause (ii) of section 936(a)(4)(C) of such Code, as re-
designated by subsection (a), is amended to read as fol-
lows:
‘‘In the case of taxable
The
years beginning in:
percentage is:
1994 .....................................................
1995 .....................................................
1996 .....................................................
1997 .....................................................
1998 and thereafter .............................
0.’’
(c) DEFINITIONS AND SPECIAL RULES.—Subsection
(i) of section 936 of such Code is amended to read as fol-
lows:
‘‘(i) DEFINITIONS AND SPECIAL RULES RELATING
TO LIMITATIONS OF SUBSECTION (a)(4).—
‘‘(1) QUALIFIED
POSSESSION
WAGES.—For
purposes of this section—
1065
Title X, Subtitle F
‘‘(A) IN
GENERAL.—The term ‘qualified
possession wages’ means wages paid or incurred
by the possession corporation during the tax-
able year to any employee for services per-
formed in a possession of the United States,
but only if such services are performed while
the principal place of employment of such em-
ployee is within such possession.
‘‘(B) LIMITATION ON AMOUNT OF WAGES
TAKEN INTO ACCOUNT.—
‘‘(i) IN
GENERAL.—The amount of
wages which may be taken into account
under subparagraph (A) with respect to
any employee for any taxable year shall
not exceed the contribution and benefit
base determined under section 230 of the
Social Security Act for the calendar year
in which such taxable year begins.
‘‘(ii) TREATMENT OF PART-TIME EM-
PLOYEES, ETC.—If—
‘‘(I) any employee is not em-
ployed by the possession corporation
on a substantially full-time basis at all
times during the taxable year, or
1066
Title X, Subtitle F
‘‘(II) the principal place of em-
ployment of any employee with the
possession corporation is not within a
possession at all times during the tax-
able year,
the limitation applicable under clause (i)
with respect to such employee shall be the
appropriate portion (as determined by the
Secretary) of the limitation which would
otherwise be in effect under clause (i).
‘‘(C) TREATMENT
OF
CERTAIN
EMPLOY-
EES.—The term ‘qualified possession wages’
shall not include any wages paid to employees
who are assigned by the employer to perform
services for another person, unless the principal
trade or business of the employer is to make
employees available for temporary periods to
other persons in return for compensation. All
possession corporations treated as 1 corporation
under paragraph (4) shall be treated as 1 em-
ployer for purposes of the preceding sentence.
‘‘(D) WAGES.—
‘‘(i) IN
GENERAL.—Except as pro-
vided in clause (ii), the term ‘wages’ has
the meaning given to such term by sub-
1067
Title X, Subtitle F
section (b) of section 3306 (determined
without regard to any dollar limitation
contained in such section). For purposes of
the preceding sentence, such subsection (b)
shall be applied as if the term ‘United
States’ included all possessions of the
United States.
‘‘(ii) SPECIAL
RULE
FOR
AGRICUL-
TURAL LABOR AND RAILWAY LABOR.—In
any case to which subparagraph (A) or (B)
of paragraph (1) of section 51(h) applies,
the term ‘wages’ has the meaning given to
such term by section 51(h)(2).
‘‘(2) QPSII ASSETS.—For purposes of this sec-
tion—
‘‘(A) IN GENERAL.—The QPSII assets of a
possession corporation for any taxable year is
the average of the amounts of the possession
corporation’s qualified investment assets as of
the close of each quarter of such taxable year.
‘‘(B) QUALIFIED INVESTMENT ASSETS.—
The term ‘qualified investment assets’ means
the aggregate adjusted bases of the assets
which are held by the possession corporation
and the income from which qualifies as quali-
1068
Title X, Subtitle F
fied possession source investment income. For
purposes of the preceding sentence, the ad-
justed basis of any asset shall be its adjusted
basis as determined for purposes of computing
earnings and profits.
‘‘(3) QUALIFIED TANGIBLE BUSINESS INVEST-
MENT.—For purposes of this section—
‘‘(A) IN GENERAL.—The qualified tangible
business investment of any possession corpora-
tion for any taxable year is the average of the
amounts of the possession corporation’s quali-
fied possession investments as of the close of
each quarter of such taxable year.
‘‘(B) QUALIFIED
POSSESSION
INVEST-
MENTS.—The term ‘qualified possession invest-
ments’ means the aggregate adjusted bases of
tangible property used by the possession cor-
poration in a possession of the United States in
the active conduct of a trade or business within
such possession. For purposes of the preceding
sentence, the adjusted basis of any property
shall be its adjusted basis as determined for
purposes of computing earnings and profits.
‘‘(4) RELOCATED BUSINESSES.—
‘‘(A) IN GENERAL.—In determining—
1069
Title X, Subtitle F
‘‘(i) the possession corporation’s quali-
fied possession wages for any taxable year,
and
‘‘(ii) 
the 
possession 
corporation’s
qualified tangible business investment for
such taxable year,
there shall be excluded all wages and all quali-
fied possession investments which are allocable
to a disqualified relocated business.
‘‘(B) DISQUALIFIED
RELOCATED
BUSI-
NESS.—For purposes of subparagraph (A), the
term ‘disqualified relocated business’ means any
trade or business commenced by the possession
corporation after October 12, 1995, or any ad-
dition after such date to an existing trade or
business of such possession corporation un-
less—
‘‘(i) the possession corporation cer-
tifies that the commencement of such trade
or business or such addition will not result
in a decrease in employment at an existing
business operation located in the United
States, and
‘‘(ii) there is no reason to believe that
such commencement or addition was done
1070
Title X, Subtitle F
with the intention of closing down oper-
ations of an existing business located in
the United States.
‘‘(5) ELECTION TO COMPUTE CREDIT ON CON-
SOLIDATED BASIS.—
‘‘(A) IN GENERAL.—Any affiliated group
may elect to treat all possession corporations
which would be members of such group but for
section 1504(b)(4) as 1 corporation for pur-
poses of this section. The credit determined
under this section with respect to such 1 cor-
poration shall be allocated among such posses-
sion corporations in such manner as the Sec-
retary may prescribe.
‘‘(B) ELECTION.—An election under sub-
paragraph (A) shall apply to the taxable year
for which made and all succeeding taxable years
unless revoked with the consent of the Sec-
retary.
‘‘(6) TREATMENT
OF
CERTAIN
TAXES.—Not-
withstanding subsection (c), if—
‘‘(A) the credit determined under sub-
section (a)(1) for any taxable year is limited
under subsection (a)(4), and
1071
Title X, Subtitle F
‘‘(B) the possession corporation has paid
or accrued any taxes of a possession of the
United States for such taxable year which are
treated as not being income, war profits, or ex-
cess profits taxes paid or accrued to a posses-
sion of the United States by reason of sub-
section (c), such possession corporation shall be
allowed a deduction for such taxable year equal
to the portion of such taxes which are allocable
(on a pro rata basis) to taxable income of the
possession corporation the tax on which is not
offset by reason of the limitations of subsection
(a)(4). In determining the credit under sub-
section (a) and in applying the preceding sen-
tence, taxable income shall be determined with-
out regard to the preceding sentence.
‘‘(7) POSSESSION
CORPORATION.—The term
‘possession corporation’ means a domestic corpora-
tion for which the election provided in subsection (a)
is in effect.’’
(d) MINIMUM TAX TREATMENT.—Clause (iii) of sec-
tion 56(g)(4)(C) of such Code is amended by adding at
the end thereof the following subclauses:
‘‘(III) SEPARATE
APPLICATION
OF
FOREIGN
TAX
CREDIT
LIMITA-
1072
Title X, Subtitle F
TIONS.—In determining the alter-
native minimum foreign tax credit,
section 904(d) shall be applied as if
dividends from a corporation eligible
for the credit provided by section 936
were a separate category of income re-
ferred to in a subparagraph of section
904(d)(1).
‘‘(IV) COORDINATION WITH LIMI-
TATION
ON
936
CREDIT.—Any ref-
erence in this clause to a dividend re-
ceived from a corporation eligible for
the credit provided by section 936
shall be treated as a reference to the
portion of any such dividend for which
the dividends received deduction is
disallowed under clause (i) after the
application of clause (ii)(I).’’
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1995.
1073
Title XI, Subtitle A
TITLE XI—COMMITTEE ON
VETERANS’ AFFAIRS
SEC. 11001. SHORT TITLE.
This title may be cited as the ‘‘Veterans Reconcili-
ation Act of 1995’’.
Subtitle A—Permanent Extension
of Temporary Authorities
SEC. 11011. AUTHORITY TO REQUIRE THAT CERTAIN VET-
ERANS AGREE TO MAKE COPAYMENTS IN EX-
CHANGE FOR RECEIVING HEALTH-CARE BEN-
EFITS.
Section 8013 of the Omnibus Budget Reconciliation
Act of 1990 (38 U.S.C. 1710 note) is amended by striking
out subsection (e).
SEC. 11012. MEDICAL CARE COST RECOVERY AUTHORITY.
Section 1729(a)(2)(E) of title 38, United States
Code, is amended by striking out ‘‘before October 1,
1998,’’.
SEC. 11013. INCOME VERIFICATION AUTHORITY.
Section 5317 of title 38, United States Code, is
amended by striking out subsection (g).
1074
Title XI, Subtitle B
SEC. 11014. LIMITATION ON PENSION FOR CERTAIN RECIPI-
ENTS 
OF 
MEDICAID-COVERED 
NURSING
HOME CARE.
Section 5503(f) of title 38, United States Code, is
amended by striking out paragraph (7).
SEC. 11015. HOME LOAN FEES.
Section 3729(a) of title 38, United States Code, is
amended—
(1) in paragraph (4), by striking out ‘‘and be-
fore October 1, 1998’’; and
(2) in paragraph (5)(C), by striking out ‘‘, and
before October 1, 1998’’.
SEC. 11016. PROCEDURES APPLICABLE TO LIQUIDATION
SALES ON DEFAULTED HOME LOANS GUAR-
ANTEED BY THE DEPARTMENT OF VETERANS
AFFAIRS.
Section 3732(c)(11) of title 38, United States Code,
is amended by striking out paragraph (11).
Subtitle B—Other Matters
SEC. 11021. REVISED STANDARD FOR LIABILITY FOR INJU-
RIES RESULTING FROM DEPARTMENT OF
VETERANS AFFAIRS TREATMENT.
(a) REVISED STANDARD.—Section 1151 of title 38,
United States Code, is amended—
(1) by designating the second sentence as sub-
section (c);
1075
Title XI, Subtitle B
(2) by striking out the first sentence and insert-
ing in lieu thereof the following:
‘‘(a) Compensation under this chapter and depend-
ency and indemnity compensation under chapter 13 of this
title shall be awarded for a qualifying additional disability
of a veteran or the qualifying death of a veteran in the
same manner as if such disability or death were service-
connected.
‘‘(b)(1) For purposes of this section, a disability or
death is a qualifying additional disability or a qualifying
death only if the disability or death—
‘‘(A) was caused by Department health care
and was a proximate result of—
‘‘(i) negligence on the part of the Depart-
ment in furnishing the Department health care;
or
‘‘(ii) an event not reasonably foreseeable;
or
‘‘(B) was incurred as a proximate result of the
provision of training and rehabilitation services by
the Secretary (including by a service-provider used
by the Secretary for such purpose under section
3115 of this title) as part of an approved rehabilita-
tion program under chapter 31 of this title.
1076
Title XI, Subtitle B
‘‘(2) For purposes of this section, the term ‘Depart-
ment health care’ means hospital care, medical or surgical
treatment, or an examination that is furnished under any
law administered by the Secretary to a veteran by a De-
partment employee or in a Department facility (as defined
in section 1701(3)(A) of this title).
‘‘(3) A disability or death of a veteran which is the
result of the veteran’s willful misconduct is not a qualify-
ing disability or death for purposes of this section.’’; and
(3) by adding at the end the following:
‘‘(d) Effective with respect to injuries, aggravations
of injuries, and deaths occurring after September 30,
2002, a disability or death is a qualifying additional dis-
ability or a qualifying death for purposes of this section
(notwithstanding the provisions of subsection (b)(1)) if the
disability or death—
‘‘(1) was the result of Department health care;
or
‘‘(2) was the result of the pursuit of a course
of vocational rehabilitation under chapter 31 of this
title.’’.
(b) CONFORMING AMENDMENTS.—Subsection (c) of
such section, as designated by subsection (a)(1), is amend-
ed—
1077
Title XI, Subtitle B
(1) by striking out ‘‘, aggravation,’’ both places
it appears; and
(2) by striking out ‘‘sentence’’ and inserting in
lieu thereof ‘‘subsection’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to any administrative or judicial
determination of eligibility for benefits under section 1151
of title 38, United States Code, based on a claim that is
received by the Secretary on or after October 1, 1995, in-
cluding any such determination based on an original appli-
cation or an application seeking to reopen, revise, recon-
sider, or otherwise readjudicate any claim for benefits
under section 1151 of that title or any predecessor provi-
sion of law.
SEC. 11022. ENHANCED LOAN ASSET SALE AUTHORITY.
Section 3720(h)(2) of title 38, United States Code,
is amended by striking out ‘‘December 31, 1995’’ and in-
serting in lieu thereof ‘‘September 30, 1996’’.
SEC. 11023. WITHHOLDING OF PAYMENTS AND BENEFITS.
(a) NOTICE REQUIRED IN LIEU OF CONSENT OR
COURT ORDER.—Section 3726 of title 38, United States
Code, is amended by striking out ‘‘unless’’ and all that
follows and inserting in lieu thereof the following: ‘‘unless
the Secretary provides such veteran or surviving spouse
with notice by certified mail with return receipt requested
1078
Title XI, Subtitle B
of the authority of the Secretary to waive the payment
of indebtedness under section 5302(b) of this title. If the
Secretary does not waive the entire amount of the liability,
the Secretary shall then determine whether the veteran or
surviving spouse should be released from liability under
section 3713(b) of this title. If the Secretary determines
that the veteran or surviving spouse should not be released
from liability, the Secretary shall notify the veteran or sur-
viving spouse of that determination and provide a notice
of the procedure for appealing that determination, unless
the Secretary has previously made such determination and
notified the veteran or surviving spouse of the procedure
for appealing the determination.’’.
(b) CONFORMING AMENDMENT.—Section 5302(b) of
such title is amended by inserting ‘‘with return receipt re-
quested’’ after ‘‘certified mail’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to any indebtedness
to the United States arising pursuant to chapter 37 of
title 38, United States Code, before, on, or after the date
of the enactment of this Act.
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Title XI, Subtitle C
Subtitle C—Health Care Eligibility
Reform
SEC. 11031. HOSPITAL CARE AND MEDICAL SERVICES.
(a) ELIGIBILITY FOR CARE.—Section 1710(a) of title
38, United States Code, is amended by striking out para-
graphs (1) and (2) and inserting the following:
‘‘(a)(1) The Secretary shall, to the extent and in the
amount provided in advance in appropriations Acts for
these purposes, provide hospital care and medical services,
and may provide nursing home care, which the Secretary
determines is needed to any veteran—
‘‘(A) with a compensable service-connected dis-
ability;
‘‘(B) whose discharge or release from active
military, naval, or air service was for a compensable
disability that was incurred or aggravated in the line
of duty;
‘‘(C) who is in receipt of, or who, but for a sus-
pension pursuant to section 1151 of this title (or
both a suspension and the receipt of retired pay),
would be entitled to disability compensation, but
only to the extent that such veteran’s continuing eli-
gibility for such care is provided for in the judgment
or settlement provided for in such section;
‘‘(D) who is a former prisoner of war;
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Title XI, Subtitle C
‘‘(E) of the Mexican border period or of World
War I;
‘‘(F) who was exposed to a toxic substance, ra-
diation, or environmental hazard, as provided in sub-
section (e); and
‘‘(G) who is unable to defray the expenses of
necessary care as determined under section 1722(a)
of this title.
‘‘(2) In the case of a veteran who is not described
in paragraph (1), the Secretary may, to the extent re-
sources and facilities are available and subject to the pro-
visions of subsection (f), furnish hospital care, medical
services, and nursing home care which the Secretary deter-
mines is needed.’’.
(b) 
CONFORMING
AMENDMENTS.—(1) 
Section
1710(e) of such title is amended—
(A) in paragraph (1), by striking out ‘‘hospital
care and nursing home care’’ in subparagraphs (A),
(B), and (C) and inserting in lieu thereof ‘‘hospital
care, medical services, and nursing home care’’;
(B) in paragraph (2), by inserting ‘‘and medical
services’’ after ‘‘Hospital and nursing home care’’;
and
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Title XI, Subtitle C
(C) by striking out ‘‘subsection (a)(1)(G) of
this section’’ each place it appears and inserting in
lieu thereof ‘‘subsection (a)(1)(F)’’.
(2) Chapter 17 of such title is amended—
(A) by redesignating subsection (g) of section
1710 as subsection (h); and
(B) by transferring subsection (f) of section
1712 of such title to section 1710 so as to appear
after subsection (f), redesignating such subsection as
subsection (g), and amending such subsection by
striking out ‘‘section 1710(a)(2) of this title’’ in
paragraph (1) and inserting in lieu thereof ‘‘sub-
section (a)(2) of this section’’.
(3) Section 1712 of such title is amended—
(A) by striking out subsections (a) and (i); and
(B) by redesignating subsections (b), (c), (d),
(h) and (j), as subsections (a), (b), (c), (d), and (e),
respectively.
SEC. 11032. EXTENSION OF AUTHORITY TO PRIORITY
HEALTH CARE FOR PERSIAN GULF VETER-
ANS.
Section 1710(e)(3) of title 38, United States Code,
is amended by striking out ‘‘December 31, 1995’’ and in-
serting in lieu thereof ‘‘December 31, 1998’’.
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Title XI, Subtitle C
SEC. 11033. PROSTHETICS.
(a) 
ELIGIBILITY
FOR
PROSTHETICS.—Section
1701(6)(A)(i) of title 38, United States Code, is amend-
ed—
(1) by striking out ‘‘(in the case of a person
otherwise receiving care or services under this chap-
ter)’’ and ‘‘(except under the conditions described in
section 1712(a)(5)(A) of this title),’’;
(2) by inserting ‘‘(in the case of a person other-
wise receiving care or services under this chapter)’’
before ‘‘wheelchairs,’’; and
(3) by inserting ‘‘except that the Secretary may
not furnish sensori-neural aids other than in accord-
ance with guidelines which the Secretary shall pre-
scribe,’’ after ‘‘reasonable and necessary,’’.
(b) REGULATIONS.—Not later than 30 days after the
date of the enactment of this Act, the Secretary of Veter-
ans Affairs shall prescribe the guidelines required by the
amendments made by subsection (a) and shall furnish a
copy of those guidelines to the Committees on Veterans’
Affairs of the Senate and House of Representatives.
SEC. 11034. MANAGEMENT OF HEALTH CARE.
(a) IN GENERAL.—(1) Chapter 17 of title 38, United
States Code, is amended by inserting after section 1704
the following new sections:
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Title XI, Subtitle C
‘‘§ 1705. Management of health care: patient enroll-
ment system
‘‘(a) In managing the provision of hospital care and
medical services under section 1710(a)(1) of this title, the
Secretary, in accordance with regulations the Secretary
shall prescribe, shall establish and operate a system of an-
nual patient enrollment. The Secretary shall manage the
enrollment of veterans in accordance with the following
priorities, in the order listed:
‘‘(1) Veterans with service-connected disabilities
rated 30 percent or greater.
‘‘(2) Veterans who are former prisoners of war
and veterans with service connected disabilities rated
10 percent or 20 percent.
‘‘(3) Veterans who are in receipt of increased
pension based on a need of regular aid and attend-
ance or by reason of being permanently housebound
and other veterans who are catastrophically disabled.
‘‘(4) Veterans not covered by paragraphs (1)
through (3) who are unable to defray the expenses
of necessary care as determined under section
1722(a) of this title.
‘‘(5) All other veterans eligible for hospital care,
medical services, and nursing home care under sec-
tion 1710(a)(1) of this title.
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Title XI, Subtitle C
‘‘(b) In the design of an enrollment system under
subsection (a), the Secretary—
‘‘(1) shall ensure that the system will be man-
aged in a manner to ensure that the provision of
care to enrollees is timely and acceptable in quality;
‘‘(2) may establish additional priorities within
each priority group specified in subsection (a), as
the Secretary determines necessary; and
‘‘(3) may provide for exceptions to the specified
priorities where dictated by compelling medical rea-
sons.
‘‘§ 1706. Management of health care: other require-
ments
‘‘(a) In managing the provision of hospital care and
medical services under section 1710(a) of this title, the
Secretary shall, to the extent feasible, design, establish
and manage health care programs in such a manner as
to promote cost-effective delivery of health care services
in the most clinically appropriate setting.
‘‘(b) In managing the provision of hospital care and
medical services under section 1710(a) of this title, the
Secretary—
‘‘(1) may contract for hospital care and medical
services when Department facilities are not capable
1085
Title XI, Subtitle C
of furnishing such care and services economically,
and
‘‘(2) shall make such rules and regulations re-
garding acquisition procedures or policies as the Sec-
retary considers appropriate to provide such needed
care and services.
‘‘(c) In managing the provision of hospital care and
medical services under section 1710(a) of this title, the
Secretary shall ensure that the Department maintains its
capacity to provide for the specialized treatment and reha-
bilitative needs of disabled veterans described in section
1710(a) of this title (including veterans with spinal cord
dysfunction, blindness, amputations, and mental illness)
within distinct programs or facilities of the Department
that are dedicated to the specialized needs of those veter-
ans in a manner that (1) affords those veterans reasonable
access to care and services for those specialized needs, and
(2) ensures that overall capacity of the Department to pro-
vide such services is not reduced below the capacity of the
Department, nationwide, to provide those services, as of
the date of the enactment of this section.
‘‘(d) In managing the provision of hospital care and
medical services under section 1710(a) of this title, the
Secretary shall ensure that any veteran with a service-con-
nected disability is provided all benefits under this chapter
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Title XI, Subtitle C
for which that veteran was eligible before the date of the
enactment of this section.’’.
(2) The table of sections at the beginning of chapter
17 of such title is amended by inserting after the item
relating to section 1704 the following new items:
‘‘1705. Management of health care: patient enrollment system.
‘‘1706. Management of health care: other requirements.’’.
(b) 
CONFORMING
AMENDMENTS
TO
SECTION
1703.—(1) Section 1703 of such title is amended—
(A) by striking out subsections (a) and (b); and
(B) in subsection (c) by—
(i) striking out ‘‘(c)’’, and
(ii) striking out ‘‘this section, sections’’
and inserting in lieu thereof ‘‘sections 1710,’’.
(2)(A) The heading of such section is amended to
read as follows:
‘‘§ 1703. Annual report on furnishing of care and
services by contract’’.
(B) The item relating to such section in the table of
sections at the beginning of chapter 17 of such title is
amended to read as follows:
‘‘1703. Annual report on furnishing of care and services by contract.’’.
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Title XI, Subtitle C
SEC. 11035. IMPROVED EFFICIENCY IN HEALTH CARE RE-
SOURCE MANAGEMENT.
(a) REPEAL OF SUNSET PROVISION.—Section 204 of
the Veterans Health Care Act of 1992 (Public Law 102-
585; 106 Stat. 4950) is repealed.
(b) COST RECOVERY.—Title II of such Act is further
amended by adding at the end the following new section:
‘‘SEC. 207. AUTHORITY TO BILL HEALTH-PLAN CONTRACTS.
‘‘(a) RIGHT TO RECOVER.—In the case of a primary
beneficiary (as described in section 201(2)(B)) who has
coverage under a health-plan contract, as defined in sec-
tion 1729(i)(1)(A) of title 38, United States Code, and
who is furnished care or services by a Department medical
facility pursuant to this title, the United States shall have
the right to recover or collect charges for such care or
services from such health-plan contract to the extent that
the beneficiary (or the provider of the care or services)
would be eligible to receive payment for such care or serv-
ices from such health-plan contract if the care or services
had not been furnished by a department or agency of the
United States. Any funds received from such health-plan
contract shall be credited to funds that have been allotted
to the facility that furnished the care or services.
‘‘(b) ENFORCEMENT.—The right of the United
States to recover under such a beneficiary’s health-plan
contract shall be enforceable in the same manner as that
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Title XI, Subtitle C
provided by subsections (a)(3), (b), (c)(1), (d), (f), (h),
and (i) of section 1729 of title 38, United States Code.’’.
SEC. 11036. SHARING AGREEMENTS FOR SPECIALIZED MED-
ICAL RESOURCES.
(a) REPEAL OF SECTION 8151.—(1) Subchapter IV
of chapter 81 of title 38, United States Code, is amend-
ed—
(A) by striking out section 8151; and
(B) by redesignating sections 8152, 8153,
8154, 8155, 8156, 8157, and 8158 as sections 8151,
8152, 8153, 8154, 8155, 8156, and 8157, respec-
tively.
(2) The table of sections at the beginning of chapter
81 is amended—
(A) by striking out the item relating to section
8151; and
(B) by revising the items relating to sections
8152, 8153, 8154, 8155, 8156, 8157, and 8158 to
reflect the redesignations by paragraph (1)(B).
(b) REVISED AUTHORITY
FOR SHARING AGREE-
MENTS.—Section 8152 of such title, as redesignated by
subsection (a)(1)(B), is amended—
(1) in subsection (a)(1)(A)—
1089
Title XI, Subtitle C
(A) by striking out ‘‘specialized medical re-
sources’’ and inserting in lieu thereof ‘‘health-
care resources’’; and
(B) by striking out ‘‘other’’ and all that
follows through ‘‘medical schools’’ and inserting
in lieu thereof ‘‘any medical school, health-care
provider, health-care plan, insurer, or other en-
tity or individual’’;
(2) in subsection (a)(2) by striking out ‘‘only’’
and all that follows through ‘‘are not’’ and inserting
in lieu thereof ‘‘if such resources are not, or would
not be,’’;
(3) in subsection (b), by striking out ‘‘reciprocal
reimbursement’’ in the first sentence and all that
follows through the period at the end of that sen-
tence and inserting in lieu thereof ‘‘payment to the
Department in accordance with procedures that pro-
vide appropriate flexibility to negotiate payment
which is in the best interest of the Government.’’;
(4) in subsection (d), by striking out ‘‘preclude
such payment, in accordance with—’’ and all that
follows through ‘‘to such facility therefor’’ and in-
serting in lieu thereof ‘‘preclude such payment to
such facility for such care or services’’;
1090
Title XI, Subtitle C
(5) by redesignating subsection (e) as sub-
section (f); and
(6) by inserting after subsection (d) the follow-
ing new subsection (e):
‘‘(e) The Secretary may make an arrangement that
authorizes the furnishing of services by the Secretary
under this section to individuals who are not veterans only
if the Secretary determines—
‘‘(1) that such an arrangement will not result
in the denial of, or a delay in providing access to,
care to any veteran at that facility; and
‘‘(2) that such an arrangement—
‘‘(A) is necessary to maintain an accept-
able level and quality of service to veterans at
that facility; or
‘‘(B) will result in the improvement of
services to eligible veterans at that facility.’’.
(c) CROSS-REFERENCE AMENDMENTS.—(1) Section
8110(c)(3)(A) of such title is amended by striking out
‘‘8153’’ and inserting in lieu thereof ‘‘8152’’.
(2) Subsection (b) of section 8154 of such title (as
redesignated by subsection (a)(1)(B)) is amended by strik-
ing out ‘‘section 8154’’ and inserting in lieu thereof ‘‘sec-
tion 8153’’.
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Title XI, Subtitle C
(3) Section 8156 of such title (as redesignated by
subsection (a)(1)(B)) is amended—
(A) in subsection (a), by striking out ‘‘section
8153(a)’’ and inserting in lieu thereof ‘‘section
8152(a)’’; and
(B) in subsection (b)(3), by striking out ‘‘sec-
tion 8153’’ and inserting in lieu thereof ‘‘section
8152’’.
(4) Subsection (a) of section 8157 of such title (as
redesignated by subsection (a)(1)(B)) is amended—
(A) in the matter preceding paragraph (1), by
striking out ‘‘section 8157’’ and ‘‘section 8153(a)’’
and inserting in lieu thereof ‘‘section 8156’’ and
‘‘section 8152(a)’’, respectively; and
(B) in paragraph (1), by striking out ‘‘section
8157(b)(4)’’ and inserting in lieu thereof ‘‘section
8156(b)(4)’’.
SEC. 11037. PERSONNEL FURNISHING SHARED RESOURCES.
Section 712(b)(2) of title 38, United States Code, is
amended—
(1) by striking out ‘‘the sum of—’’ and insert-
ing in lieu thereof ‘‘the sum of the following:’’;
(2) by capitalizing the first letter of the first
word of each of subparagraphs (A) and (B);
1092
Title XIII
(3) by striking out ‘‘; and’’ at the end of sub-
paragraph (A) and inserting in lieu thereof a period;
and
(4) by adding at the end the following:
‘‘(C) The number of such positions in the
Department during that fiscal year held by per-
sons involved in providing health-care resources
under section 8111 or 8152 of this title.’’.
TITLE XII—LEGISLATIVE
BRANCH
SEC. 12101. REQUIREMENT THAT EXCESS FUNDS PROVIDED
FOR OFFICIAL ALLOWANCES OF MEMBERS
OF THE HOUSE OF REPRESENTATIVES BE
DEDICATED TO DEFICIT REDUCTION.
Of the funds made available in any appropriation Act
for fiscal year 1996 or any succeeding fiscal year for the
official expenses allowance, the clerk hire allowance, or the
official mail allowance of a Member of the House of Rep-
resentatives, any amount that remains unobligated at the
end of such fiscal year shall be transferred to the Deficit
Reduction Fund established by Executive Order 12858
(58 Fed. Reg. 42185). Any amount so transferred shall
be in addition to the amounts specified in section 2(b) of
such order, but shall be subject to the requirements and
limitations set forth in sections 2(c) and 3 of such order.
1093
Title XIII
TITLE XIII—MISCELLANEOUS
PROVISIONS
SEC. 13101. ELIMINATION OF DISPARITY BETWEEN EFFEC-
TIVE DATES FOR MILITARY AND CIVILIAN RE-
TIREE COST-OF-LIVING ADJUSTMENTS FOR
FISCAL YEARS 1996, 1997, AND 1998.
(a) CONFORMANCE WITH SCHEDULE
FOR CIVIL
SERVICE
COLAS.—Subparagraph 
(B) 
of 
section
1401a(b)(2) of title 10, United States Code, is amended—
(1) by striking out ‘‘THROUGH 1998’’ the first
place it appears and all that follows through ‘‘In the
case of’’ the second place it appears and inserting in
lieu thereof ‘‘THROUGH 1996.—In the case of’’;
(2) by striking ‘‘of 1994, 1995, 1996, or 1997’’
and inserting in lieu thereof ‘‘of 1993, 1994, or
1995’’; and
(3) by striking out ‘‘September’’ and inserting
in lieu thereof ‘‘March’’.
(b) REPEAL OF PRIOR CONDITIONAL ENACTMENT.—
Section 8114A(b) of Public Law 103–335 (108 Stat.
2648) is repealed.
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Title XIII
SEC. 13102. DISPOSAL OF CERTAIN MATERIALS IN NA-
TIONAL DEFENSE STOCKPILE FOR DEFICIT
REDUCTION.
(a) DISPOSALS REQUIRED.—(1) During fiscal year
1996, the President shall dispose of all cobalt contained
in the National Defense Stockpile that, as the date of the
enactment of this Act, is authorized for disposal under any
law (other than this Act).
(2) In addition to the disposal of cobalt under para-
graph (1), the President shall dispose of additional quan-
tities of cobalt and quantities of aluminum, ferro colum-
bium, germanium, palladium, platinum, and rubber con-
tained in the National Defense Stockpile so as to result
in receipts to the United States in amounts equal to—
(A) $21,000,000 during the fiscal year ending
September 30, 1996;
(B) $338,000,000 during the five-fiscal year pe-
riod ending on September 30, 2000; and
(C) $649,000,000 during the seven-fiscal year
period ending on September 30, 2002.
(3) The President is not required to include the dis-
posal of the materials identified in paragraph (2) in an
annual materials plan for the National Defense Stockpile.
Disposals made under this section may be made without
consideration of the requirements of an annual materials
plan.
1095
Title XIII
(b) LIMITATION ON DISPOSAL QUANTITY.—The total
quantities of materials authorized for disposal by the
President under subsection (a)(2) may not exceed the
amounts set forth in the following table:
Authorized Stockpile Disposals
Material for disposal
Quantity
Aluminum .............................................................................
62,881 short tons
Cobalt ....................................................................................
42,482,323 pounds con-
tained
Ferro Columbium ..................................................................
930,911 pounds contained
Germanium ...........................................................................
68,207 kilograms
Palladium ..............................................................................
1,264,601 troy ounces
Platinum ...............................................................................
452,641 troy ounces
Rubber ..................................................................................
125,138 long tons
(c) DEPOSIT OF RECEIPTS.—Notwithstanding sec-
tion 9 of the Strategic and Critical Materials Stock Piling
Act (50 U.S.C. 98h), funds received as a result of the dis-
posal of materials under subsection (a)(2) shall be depos-
ited into the general fund of the Treasury for the purpose
of deficit reduction.
(d) RELATIONSHIP TO OTHER DISPOSAL AUTHOR-
ITY.—The disposal authority provided in subsection (a)(2)
is new disposal authority and is in addition to, and shall
not affect, any other disposal authority provided by law
regarding the materials specified in such subsection.
(e) TERMINATION OF DISPOSAL AUTHORITY.—The
President may not use the disposal authority provided in
subsection (a)(2) after the date on which the total amount
of receipts specified in subparagraph (C) of such sub-
section is achieved.
1096
Title XIII
(f) DEFINITION.—The term ‘‘National Defense
Stockpile’’ means the National Defense Stockpile provided
for in section 4 of the Strategic and Critical Materials
Stock Piling Act (50 U.S.C. 98c).
SEC. 13103. REQUIREMENT THAT CERTAIN AGENCIES
PREFUND GOVERNMENT HEALTH BENEFITS
CONTRIBUTIONS FOR THEIR ANNUITANTS.
(a) DEFINITIONS.—For the purpose of this section—
(1) the term ‘‘agency’’ means any agency or
other instrumentality within the executive branch of
the Government, the receipts and disbursements of
which are not generally included in the totals of the
budget of the United States Government submitted
by the President;
(2) the term ‘‘health benefits plan’’ means, with
respect to an agency, a health benefits plan, estab-
lished by or under Federal law, in which employees
or annuitants of such agency may participate;
(3) the term ‘‘health-benefits coverage’’ means
coverage under a health benefits plan;
(4) an individual shall be considered to be an
‘‘annuitant of an agency’’ if such individual is enti-
tled to an annuity, under a retirement system estab-
lished by or under Federal law, by virtue of—
1097
Title XIII
(A) such individual’s service with, and sep-
aration from, such agency; or
(B) being the survivor of an annuitant
under subparagraph (A) or of an individual who
died while employed by such agency; and
(5) the term ‘‘Office’’ means the Office of Per-
sonnel Management.
(b) PREFUNDING REQUIREMENT.—
(1) IN GENERAL.—Effective as of October 1,
1996, each agency shall be required to prepay the
Government contributions which are or will be re-
quired in connection with providing health-benefits
coverage for annuitants of such agency.
(2) REGULATIONS.—The Office shall prescribe
such regulations as may be necessary to carry out
this section. The regulations shall be designed to en-
sure at least the following:
(A) Amounts paid by each agency shall be
sufficient to cover the amounts which would
otherwise be payable by such agency (on a
‘‘pay-as-you-go’’ basis), on or after the applica-
ble effective date under paragraph (1), on be-
half of—
(i) individuals who are annuitants of
the agency as of such effective date; and
1114
Title XIII
a special deficit message that includes proposed legislative
changes to offset the net deficit impact of the excess iden-
tified by that OMB sequestration preview report for each
such year through any combination of:
‘‘(1) Reductions in outlays.
‘‘(2) Increases in revenues.
‘‘(3) Increases in the deficit targets, if the
President submits a written determination that, be-
cause of economic or programmatic reasons, only
some or none of the excess should be offset.
‘‘(b) INTRODUCTION OF PRESIDENT’S PACKAGE.—
Within 10 days after the President submitted a special
deficit message, the text referred to in subsection (a) shall
be introduced as a joint resolution in the House of Rep-
resentatives by the chairman of its Committee on the
Budget and in the Senate by the chairman of its Commit-
tee on the Budget. If the chairman fails to do so, after
the 10th day the resolution may be introduced by any
Member of the House of Representatives or the Senate,
as the case may be. A joint resolution introduced under
this subsection shall be referred to the Committee on the
Budget of the House of Representatives or the Senate, as
the case may be.