148
‘‘(A) IN
GENERAL.—The Secretary shall
provide for such exemptions (and reduced fees)
under such program as the Secretary deter-
mines to be appropriate.
‘‘(B) EXEMPTION FOR CERTAIN REQUESTS
REGARDING
PENSION
PLANS.—The Secretary
shall not require payment of user fees under
such program for requests for determination
letters with respect to the qualified status of a
pension benefit plan maintained solely by 1 or
more eligible employers or any trust which is
part of the plan. The preceding sentence shall
not apply to any request—
‘‘(i) made after the later of—
‘‘(I) the fifth plan year the pen-
sion benefit plan is in existence, or
‘‘(II) the end of any remedial
amendment period with respect to the
plan beginning within the first 5 plan
years, or
‘‘(ii) made by the sponsor of any pro-
totype or similar plan which the sponsor
intends to market to participating employ-
ers.
149
‘‘(C) DEFINITIONS AND SPECIAL RULES.—
For purposes of subparagraph (B)—
‘‘(i) PENSION
BENEFIT
PLAN.—The
term ‘pension benefit plan’ means a pen-
sion, profit-sharing, stock bonus, annuity,
or employee stock ownership plan.
‘‘(ii) 
ELIGIBLE
EMPLOYER.—The
term ‘eligible employer’ means an eligible
employer 
(as 
defined 
in 
section
408(p)(2)(C)(i)(I)) which has at least 1
employee who is not a highly compensated
employee (as defined in section 414(q))
and is participating in the plan. The deter-
mination of whether an employer is an eli-
gible employer under subparagraph (B)
shall be made as of the date of the request
described in such subparagraph.
‘‘(iii) DETERMINATION
OF
AVERAGE
FEES CHARGED.—For purposes of any de-
termination of average fees charged, any
request to which subparagraph (B) applies
shall not be taken into account.
‘‘(3) AVERAGE FEE REQUIREMENT.—The aver-
age fee charged under the program required by sub-
150
section (a) shall not be less than the amount deter-
mined under the following table:
Average
‘‘Category
Fee
Employee plan ruling and opinion ...........................................
$250
Exempt organization ruling .....................................................
$350
Employee plan determination ..................................................
$300
Exempt organization determination ........................................
$275
Chief counsel ruling .................................................................
$200.
‘‘(c) TERMINATION.—No fee shall be imposed under
this section with respect to requests made after December
31, 2012.’’
(b) CONFORMING AMENDMENTS.—
(1) The table of sections for chapter 77 is
amended by adding at the end the following new
item:
‘‘Sec. 7527. Internal Revenue Service user fees.’’.
(2) Section 10511 of the Revenue Act of 1987
is repealed.
(3) Section 620 of the Economic Growth and
Tax Relief Reconciliation Act of 2001 is repealed.
(c) LIMITATIONS.—Notwithstanding any other provi-
sion of law, any fees collected pursuant to section 7527
of the Internal Revenue Code of 1986, as added by sub-
section (a), shall not be expended by the Internal Revenue
Service unless provided by an appropriations Act.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to requests made after the date
of the enactment of this Act.
151
SEC. 402. EXTENSION OF CUSTOMS USER FEES.
(a) IN GENERAL.—Section 13031(j)(3) of the Con-
solidated Omnibus Budget Reconciliation Act of 1985 (19
U.S.C. 58c(j)(3)) is amended by striking ‘‘September 30,
2003’’ and inserting ‘‘December 31, 2012’’.
(b) 
CUSTOMS
AUTOMATION
FUND.—Section
13031(f) of the Consolidated Omnibus Budget Reconcili-
ation Act of 1985 (19 U.S.C. 58c(f)) is amended—
(1) in paragraph (1), by striking subparagraph
(B) and inserting the following:
‘‘(B) amounts deposited into the Customs Com-
mercial Automation Account under paragraph (5).’’;
(2) in paragraph (4), by striking ‘‘(other than
the excess fees determined by the Secretary under
paragraph (5))’’; and
(3) by striking paragraph (5) and inserting the
following:
‘‘(5)(A) There is created within the general fund of
the Treasury a separate account that shall be known as
the ‘Customs Commercial Automation Account’. In each
of fiscal years 2003, 2004, and 2005 there shall be depos-
ited into the Customs Commercial Automation Account
from 
fees 
collected 
under 
subsection 
(a)(9)(A),
$350,000,000.
‘‘(B) There is authorized to be appropriated from the
Customs Commercial Automation Account in fiscal years
152
2003 through 2005 such amounts as are available in that
Account for the development, establishment, and imple-
mentation of the Automated Commercial Environment
computer system for the processing of merchandise that
is entered or released. Amounts appropriated pursuant to
this subparagraph are authorized to remain available until
expended.
‘‘(C) In adjusting the fee imposed by subsection
(a)(9)(A) for fiscal year 2006, the Secretary of the Treas-
ury shall reduce the amount estimated to be collected in
fiscal year 2006 by the amount by which total fees depos-
ited to the Customs Commercial Automation Account dur-
ing fiscal years 2003, 2004, and 2005 exceed total appro-
priations from that Account.’’.
SEC. 403. INCLUSION IN GROSS INCOME OF FUNDED DE-
FERRED COMPENSATION OF CORPORATE IN-
SIDERS.
(a) IN GENERAL.—Subpart A of part I of subchapter
D of chapter 1 is amended by adding at the end the fol-
lowing new section:
‘‘SEC. 409A. INCLUSION IN GROSS INCOME OF FUNDED DE-
FERRED COMPENSATION OF CORPORATE IN-
SIDERS.
‘‘(a) IN GENERAL.—If an employer maintains a fund-
ed deferred compensation plan—
153
‘‘(1) compensation of any disqualified individual
which is deferred under such funded deferred com-
pensation plan shall be included in the gross income
of the disqualified individual or beneficiary for the
1st taxable year in which there is no substantial risk
of forfeiture of the rights to such compensation, and
‘‘(2) the tax treatment of any amount made
available under the plan to a disqualified individual
or beneficiary shall be determined under section 72
(relating to annuities, etc.).
‘‘(b) FUNDED DEFERRED COMPENSATION PLAN.—
For purposes of this section—
‘‘(1) IN GENERAL.—The term ‘funded deferred
compensation plan’ means any plan providing for the
deferral of compensation unless—
‘‘(A) the employee’s rights to the com-
pensation deferred under the plan are no great-
er than the rights of a general creditor of the
employer, and
‘‘(B) all amounts set aside (directly or in-
directly) for purposes of paying the deferred
compensation, and all income attributable to
such amounts, remain (until made available to
the participant or other beneficiary) solely the
property of the employer (without being re-
154
stricted to the provision of benefits under the
plan), and
‘‘(C) the amounts referred to in subpara-
graph (B) are available to satisfy the claims of
the employer’s general creditors at all times
(not merely after bankruptcy or insolvency).
Such term shall not include a qualified employer
plan.
‘‘(2) SPECIAL RULES.—
‘‘(A) EMPLOYEE’S RIGHTS.—A plan shall
be treated as failing to meet the requirements
of paragraph (1)(A) unless—
‘‘(i) the compensation deferred under
the plan is payable only upon separation
from service, death, or at a specified time
(or pursuant to a fixed schedule), and
‘‘(ii) the plan does not permit the ac-
celeration of the time such deferred com-
pensation is payable by reason of any
event.
If the employer and employee agree to a modi-
fication of the plan that accelerates the time for
payment of any deferred compensation, then all
compensation previously deferred under the
plan shall be includible in gross income for the
155
taxable year during which such modification
takes effect and the taxpayer shall pay interest
at the underpayment rate on the underpay-
ments that would have occurred had the de-
ferred compensation been includible in gross in-
come on the earliest date that there is no sub-
stantial risk of forfeiture of the rights to such
compensation.
‘‘(B) CREDITOR’S RIGHTS.—A plan shall
be treated as failing to meet the requirements
of paragraph (1)(B) with respect to amounts
set aside in a trust unless—
‘‘(i) the employee has no beneficial in-
terest in the trust,
‘‘(ii) assets in the trust are available
to satisfy claims of general creditors at all
times (not merely after bankruptcy or in-
solvency), and
‘‘(iii) there is no factor that would
make it more difficult for general creditors
to reach the assets in the trust than it
would be if the trust assets were held di-
rectly by the employer in the United
States.
156
Except as provided in regulations prescribed by
the Secretary, such a factor shall include the lo-
cation of the trust outside the United States.
‘‘(c) DISQUALIFIED INDIVIDUAL.—For purposes of
this section, the term ‘disqualified individual’ means, with
respect to a corporation, any individual—
‘‘(1) who is subject to the requirements of sec-
tion 16(a) of the Securities Exchange Act of 1934
with respect to such corporation, or
‘‘(2) who would be subject to such requirements
if such corporation were an issuer of equity securi-
ties referred to in such section.
‘‘(d) OTHER DEFINITIONS AND SPECIAL RULES.—
For purposes of this section—
‘‘(1) QUALIFIED EMPLOYER PLAN.—The term
‘qualified employer plan’ means—
‘‘(A) any plan, contract, pension, account,
or trust described in subparagraph (A) or (B)
of section 219(g)(5), and
‘‘(B) any other plan of an organization ex-
empt from tax under subtitle A.
‘‘(2) PLAN INCLUDES ARRANGEMENTS, ETC.—
The term ‘plan’ includes any agreement or arrange-
ment.
157
‘‘(3) SUBSTANTIAL RISK OF FORFEITURE.—The
rights of a person to compensation are subject to a
substantial risk of forfeiture if such person’s rights
to such compensation are conditioned upon the fu-
ture performance of substantial services by any indi-
vidual.
‘‘(4) TREATMENT
OF
EARNINGS.—Except for
purposes of subsection (a)(1) and the last sentence
of (b)(2)(A), references to deferred compensation
shall be treated as including references to income at-
tributable to such compensation or such income.’’
(b) CLERICAL AMENDMENT.—The table of sections
for such subpart A is amended by adding at the end the
following new item:
‘‘Sec. 409A. Inclusion in gross income of funded deferred com-
pensation of corporate insiders.’’
(b) EFFECTIVE DATE.—The amendments made by
this section shall apply to amounts deferred after July 10,
2002.
SEC. 404. SIMPLIFICATION OF EXCISE TAX IMPOSED ON
BOWS AND ARROWS.
(a) BOWS.—Section 4161(b)(1) (relating to bows) is
amended to read as follows:
‘‘(1) BOWS.—
‘‘(A) IN GENERAL.—There is hereby im-
posed on the sale by the manufacturer, pro-
158
ducer, or importer of any bow which has a draw
weight of 30 pounds or more, a tax equal to 11
percent of the price for which so sold.
‘‘(B) ARCHERY
EQUIPMENT.—There is
hereby imposed on the sale by the manufac-
turer, producer, or importer—
‘‘(i) of any part or accessory suitable
for inclusion in or attachment to a bow de-
scribed in subparagraph (A), and
‘‘(ii) of any quiver or broadhead suit-
able for use with an arrow described in
paragraph (3),
a tax equal to 11 percent of the price for which
so sold.’’.
(b) ARROWS.—Section 4161(b) (relating to bows and
arrows, etc.) is amended by redesignating paragraph (3)
as paragraph (4) and inserting after paragraph (2) the
following:
‘‘(3) ARROWS.—
‘‘(A) IN GENERAL.—There is hereby im-
posed on the sale by the manufacturer, pro-
ducer, or importer of any arrow, a tax equal to
12 percent of the price for which so sold.
‘‘(B) EXCEPTION.—The tax imposed by
subparagraph (A) on an arrow shall not apply
159
if the arrow contains an arrow shaft subject to
the tax imposed by paragraph (2).
‘‘(C) ARROW.—For purposes of this para-
graph, the term ‘arrow’ means any shaft de-
scribed in paragraph (2) to which additional
components are attached.’’.
(c) CONFORMING AMENDMENT.—The heading of sec-
tion 4161(b)(2) (relating to arrows) is amended by strik-
ing ‘‘ARROWS.—’’ and inserting ‘‘ARROW
COMPO-
NENTS.—’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to articles sold by the manufac-
turer, producer, or importer after December 31, 2001.
SEC. 405. EXCLUSION FROM GROSS INCOME FOR INTEREST
ON OVERPAYMENTS OF INCOME TAX BY INDI-
VIDUALS.
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 (relating to items specifically excluded from gross
income) is amended by inserting after section 139 the fol-
lowing new section:
160
‘‘SEC. 139A. EXCLUSION FROM GROSS INCOME FOR INTER-
EST ON OVERPAYMENTS OF INCOME TAX BY
INDIVIDUALS.
‘‘(a) IN GENERAL.—In the case of an individual,
gross income shall not include interest paid under section
6611 on any overpayment of tax imposed by this subtitle.
‘‘(b) EXCEPTION.—Subsection (a) shall not apply in
the case of a failure to claim items resulting in the over-
payment on the original return if the Secretary determines
that the principal purpose of such failure is to take advan-
tage of subsection (a).
‘‘(c) SPECIAL RULE FOR DETERMINING MODIFIED
ADJUSTED GROSS INCOME.—For purposes of this title,
interest not included in gross income under subsection (a)
shall not be treated as interest which is exempt from tax
for purposes of sections 32(i)(2)(B) and 6012(d) or any
computation in which interest exempt from tax under this
title is added to adjusted gross income.’’.
(b) CLERICAL AMENDMENT.—The table of sections
for part III of subchapter B of chapter 1 is amended by
inserting after the item relating to section 139 the fol-
lowing new item:
‘‘Sec. 139A. Exclusion from gross income for interest on over-
payments of income tax by individuals.’’.
161
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to interest received in calendar
years beginning after December 31, 2006.
SEC. 406. DEPOSITS MADE TO SUSPEND RUNNING OF IN-
TEREST ON POTENTIAL UNDERPAYMENTS.
(a) IN GENERAL.—Subchapter A of chapter 67 (re-
lating to interest on underpayments) is amended by add-
ing at the end the following new section:
‘‘SEC. 6603. DEPOSITS MADE TO SUSPEND RUNNING OF IN-
TEREST ON POTENTIAL UNDERPAYMENTS,
ETC.
‘‘(a) AUTHORITY TO MAKE DEPOSITS OTHER THAN
AS PAYMENT OF TAX.—A taxpayer may make a cash de-
posit with the Secretary which may be used by the Sec-
retary to pay any tax imposed under subtitle A or B or
chapter 41, 42, 43, or 44 which has not been assessed
at the time of the deposit. Such a deposit shall be made
in such manner as the Secretary shall prescribe.
‘‘(b) NO INTEREST IMPOSED.—To the extent that
such deposit is used by the Secretary to pay tax, for pur-
poses of section 6601 (relating to interest on underpay-
ments), the tax shall be treated as paid when the deposit
is made.
‘‘(c) RETURN OF DEPOSIT.—Except in a case where
the Secretary determines that collection of tax is in jeop-
162
ardy, the Secretary shall return to the taxpayer any
amount of the deposit (to the extent not used for a pay-
ment of tax) which the taxpayer requests in writing.
‘‘(d) PAYMENT OF INTEREST.—
‘‘(1) IN
GENERAL.—For purposes of section
6611 (relating to interest on overpayments), a de-
posit which is returned to a taxpayer shall be treated
as a payment of tax for any period to the extent
(and only to the extent) attributable to a disputable
tax for such period. Under regulations prescribed by
the Secretary, rules similar to the rules of section
6611(b)(2) shall apply.
‘‘(2) DISPUTABLE TAX.—
‘‘(A) IN GENERAL.—For purposes of this
section, the term ‘disputable tax’ means the
amount of tax specified at the time of the de-
posit as the taxpayer’s reasonable estimate of
the maximum amount of any tax attributable to
disputable items.
‘‘(B) SAFE
HARBOR
BASED
ON
30-DAY
LETTER.—In the case of a taxpayer who has
been issued a 30-day letter, the maximum
amount of tax under subparagraph (A) shall
not be less than the amount of the proposed de-
ficiency specified in such letter.
163
‘‘(3) OTHER
DEFINITIONS.—For purposes of
paragraph (2)—
‘‘(A) DISPUTABLE ITEM.—The term ‘dis-
putable item’ means any item of income, gain,
loss, deduction, or credit if the taxpayer—
‘‘(i) has a reasonable basis for its
treatment of such item, and
‘‘(ii) reasonably believes that the Sec-
retary also has a reasonable basis for dis-
allowing the taxpayer’s treatment of such
item.
‘‘(B) 30-DAY LETTER.—The term ‘30-day
letter’ means the first letter of proposed defi-
ciency which allows the taxpayer an opportunity
for administrative review in the Internal Rev-
enue Service Office of Appeals.
‘‘(4) RATE OF INTEREST.—The rate of interest
allowable under this subsection shall be the Federal
short-term rate determined under section 6621(b),
compounded daily.
‘‘(e) USE OF DEPOSITS.—
‘‘(1) PAYMENT OF TAX.—Except as otherwise
provided by the taxpayer, deposits shall be treated
as used for the payment of tax in the order depos-
ited.
164
‘‘(B) RETURNS OF DEPOSITS.—Deposits shall
be treated as returned to the taxpayer on a last-in,
first-out basis.’’.
(b) CLERICAL AMENDMENT.—The table of sections
for subchapter A of chapter 67 is amended by adding at
the end the following new item:
‘‘Sec. 6603. Deposits made to suspend running of interest on po-
tential underpayments, etc.’’.
(c) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by
this section shall apply to deposits made after the
date of the enactment of this Act.
(2) COORDINATION
WITH
DEPOSITS
MADE
UNDER REVENUE PROCEDURE 84–58.—In the case of
an amount held by the Secretary of the Treasury or
his delegate on the date of the enactment of this Act
as a deposit in the nature of a cash bond deposit
pursuant to Revenue Procedure 84–58, the date that
the taxpayer identifies such amount as a deposit
made pursuant to section 6603 of the Internal Rev-
enue Code (as added by this Act) shall be treated as
the date such amount is deposited for purposes of
such section 6603.
SEC. 407. PARTIAL PAYMENT OF TAX LIABILITY IN IN-
STALLMENT AGREEMENTS.
(a) IN GENERAL.—
165
(1) Section 6159(a) (relating to authorization
of agreements) is amended—
(A) by striking ‘‘satisfy liability for pay-
ment of’’ and inserting ‘‘make payment on’’,
and
(B) by inserting ‘‘full or partial’’ after ‘‘fa-
cilitate’’.
(2) Section 6159(c) (relating to Secretary re-
quired to enter into installment agreements in cer-
tain cases) is amended in the matter preceding para-
graph (1) by inserting ‘‘full’’ before ‘‘payment’’.
(b) REQUIREMENT TO REVIEW PARTIAL PAYMENT
AGREEMENTS EVERY TWO YEARS.—Section 6159 is
amended by redesignating subsections (d) and (e) as sub-
sections (e) and (f), respectively, and inserting after sub-
section (c) the following new subsection:
‘‘(d) SECRETARY REQUIRED TO REVIEW INSTALL-
MENT AGREEMENTS FOR PARTIAL COLLECTION EVERY
TWO YEARS.—In the case of an agreement entered into
by the Secretary under subsection (a) for partial collection
of a tax liability, the Secretary shall review the agreement
at least once every 2 years.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to agreements entered into on or
after the date of the enactment of this Act.
166
SEC. 408. EXTENSION OF TRANSFERS OF EXCESS PENSION
ASSETS TO RETIREE HEALTH ACCOUNTS.
Paragraph (5) of section 420(b) (relating to expira-
tion) is amended by striking ‘‘December 31, 2005’’ and
inserting ‘‘December 31, 2012’’.
SEC. 409. CLARIFICATION OF RULES FOR PAYMENT OF ES-
TIMATED TAX FOR CERTAIN DEEMED ASSET
SALES.
(a) IN GENERAL.—Paragraph (13) of section 338(h)
(relating to tax on deemed sale not taken into account for
estimated tax purposes) is amended by adding at the end
the following: ‘‘The preceding sentence shall not apply
with respect to a qualified stock purchase for which an
election is made under paragraph (10).’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to transactions occurring after
the date of the enactment of this Act.
Æ