‘‘(A) 
SPECIFIED
FRIVOLOUS
SUBMIS-
SION.—The term ‘specified frivolous submis-
sion’ means a specified submission if any por-
tion of such submission— 
‘‘(i) is based on a position which the 
Secretary has identified as frivolous under 
subsection (c), or 
‘‘(ii) reflects a desire to delay or im-
pede the administration of Federal tax 
laws. 
‘‘(B) SPECIFIED SUBMISSION.—The term 
‘specified submission’ means— 
‘‘(i) a request for a hearing under— 
‘‘(I) section 6320 (relating to no-
tice and opportunity for hearing upon 
filing of notice of lien), or 
‘‘(II) section 6330 (relating to 
notice and opportunity for hearing be-
fore levy), and 
‘‘(ii) an application under— 
‘‘(I) section 6159 (relating to 
agreements for payment of tax liabil-
ity in installments), 
‘‘(II) section 7122 (relating to 
compromises), or 
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‘‘(III) section 7811 (relating to 
taxpayer assistance orders). 
‘‘(3) OPPORTUNITY
TO
WITHDRAW
SUBMIS-
SION.—If the Secretary provides a person with no-
tice that a submission is a specified frivolous sub-
mission and such person withdraws such submission 
within 30 days after such notice, the penalty im-
posed under paragraph (1) shall not apply with re-
spect to such submission. 
‘‘(c) LISTING OF FRIVOLOUS POSITIONS.—The Sec-
retary shall prescribe (and periodically revise) a list of po-
sitions which the Secretary has identified as being frivo-
lous for purposes of this subsection. The Secretary shall 
not include in such list any position that the Secretary 
determines 
meets 
the 
requirement 
of 
section 
6662(d)(2)(B)(ii)(II). 
‘‘(d) REDUCTION OF PENALTY.—The Secretary may 
reduce the amount of any penalty imposed under this sec-
tion if the Secretary determines that such reduction would 
promote compliance with and administration of the Fed-
eral tax laws. 
‘‘(e) PENALTIES
IN ADDITION
TO OTHER PEN-
ALTIES.—The penalties imposed by this section shall be 
in addition to any other penalty provided by law.’’. 
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(b) TREATMENT
OF FRIVOLOUS REQUESTS
FOR 
HEARINGS BEFORE LEVY.— 
(1) FRIVOLOUS
REQUESTS
DISREGARDED.— 
Section 6330 (relating to notice and opportunity for 
hearing before levy) is amended by adding at the 
end the following new subsection: 
‘‘(g) FRIVOLOUS REQUESTS FOR HEARING, ETC.— 
Notwithstanding any other provision of this section, if the 
Secretary determines that any portion of a request for a 
hearing under this section or section 6320 meets the re-
quirement of clause (i) or (ii) of section 6702(b)(2)(A), 
then the Secretary may treat such portion as if it were 
never submitted and such portion shall not be subject to 
any further administrative or judicial review.’’. 
(2) PRECLUSION
FROM
RAISING
FRIVOLOUS 
ISSUES AT HEARING.—Section 6330(c)(4) is amend-
ed— 
(A) by striking ‘‘(A)’’ and inserting 
‘‘(A)(i)’’; 
(B) by striking ‘‘(B)’’ and inserting ‘‘(ii)’’; 
(C) by striking the period at the end of the 
first sentence and inserting ‘‘; or’’; and 
(D) by inserting after subparagraph (A)(ii) 
(as so redesignated) the following: 
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‘‘(B) the issue meets the requirement of 
clause (i) or (ii) of section 6702(b)(2)(A).’’. 
(3) 
STATEMENT
OF
GROUNDS.—Section 
6330(b)(1) is amended by striking ‘‘under sub-
section (a)(3)(B)’’ and inserting ‘‘in writing under 
subsection (a)(3)(B) and states the grounds for the 
requested hearing’’. 
(c) TREATMENT
OF FRIVOLOUS REQUESTS
FOR 
HEARINGS UPON FILING OF NOTICE OF LIEN.—Section 
6320 is amended— 
(1) in subsection (b)(1), by striking ‘‘under sub-
section (a)(3)(B)’’ and inserting ‘‘in writing under 
subsection (a)(3)(B) and states the grounds for the 
requested hearing’’, and 
(2) in subsection (c), by striking ‘‘and (e)’’ and 
inserting ‘‘(e), and (g)’’. 
(d) TREATMENT OF FRIVOLOUS APPLICATIONS FOR 
OFFERS-IN-COMPROMISE
AND
INSTALLMENT
AGREE-
MENTS.—Section 7122 is amended by adding at the end 
the following new subsection: 
‘‘(f) 
FRIVOLOUS
SUBMISSIONS, 
ETC.—Notwith-
standing any other provision of this section, if the Sec-
retary determines that any portion of an application for 
an offer-in-compromise or installment agreement sub-
mitted under this section or section 6159 meets the re-
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quirement of clause (i) or (ii) of section 6702(b)(2)(A), 
then the Secretary may treat such portion as if it were 
never submitted and such portion shall not be subject to 
any further administrative or judicial review.’’. 
(e) CLERICAL AMENDMENT.—The table of sections 
for part I of subchapter B of chapter 68 is amended by 
striking the item relating to section 6702 and inserting 
the following new item: 
‘‘Sec. 6702. Frivolous tax submissions.’’. 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to submissions made and issues 
raised after the date on which the Secretary first pre-
scribes a list under section 6702(c) of the Internal Rev-
enue Code of 1986, as amended by subsection (a). 
SEC. 238. ADDITION OF MENINGOCOCCAL AND HUMAN 
PAPILLOMAVIRUS VACCINES TO LIST OF TAX-
ABLE VACCINES. 
(a) MENINGOCOCCAL VACCINE.—Section 4132(a)(1) 
(defining taxable vaccine) is amended by adding at the end 
the following new subparagraph: 
‘‘(O) Any meningococcal vaccine.’’. 
(b) HUMAN
PAPILLOMAVIRUS
VACCINE.—Section 
4132(a)(1), as amended by subsection (a), is amended by 
adding at the end the following new subparagraph: 
‘‘(P) Any vaccine against the human 
papillomavirus.’’. 
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(c) EFFECTIVE DATE.— 
(1) SALES, ETC.—The amendments made by 
this section shall apply to sales and uses on or after 
the first day of the first month which begins more 
than 4 weeks after the date of the enactment of this 
Act. 
(2) DELIVERIES.—For purposes of paragraph 
(1) and section 4131 of the Internal Revenue Code 
of 1986, in the case of sales on or before the effec-
tive date described in such paragraph for which de-
livery is made after such date, the delivery date shall 
be considered the sale date. 
SEC. 239. CLARIFICATION OF TAXATION OF CERTAIN SET-
TLEMENT FUNDS MADE PERMANENT. 
(a) IN GENERAL.—Subsection (g) of section 468B, 
as amended by section 201 of the Tax Increase Prevention 
and Reconciliation Act of 2005, is amended by striking 
paragraph (3). 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall take effect as if included in section 201 
of the Tax Increase Prevention and Reconciliation Act of 
2005. 
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SEC. 240. MODIFICATION OF ACTIVE BUSINESS DEFINITION 
UNDER SECTION 355 MADE PERMANENT. 
(a) IN GENERAL.—Subparagraphs (A) and (D) of 
section 355(b)(3), as amended by section 202 of the Tax 
Increase Prevention and Reconciliation Act of 2005, are 
each amended by striking ‘‘and on or before December 31, 
2010’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall take effect as if included in section 202 
of the Tax Increase Prevention and Reconciliation Act of 
2005. 
SEC. 241. REVISION OF STATE VETERANS LIMIT MADE PER-
MANENT. 
(a) IN GENERAL.—Subparagraph (B) of section 
143(l)(3), as amended by section 203 of the Tax Increase 
Prevention and Reconciliation Act of 2005, is amended by 
striking clause (iv). 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall take effect as if included in section 203 
of the Tax Increase Prevention and Reconciliation Act of 
2005. 
SEC. 242. CAPITAL GAINS TREATMENT FOR CERTAIN SELF- 
CREATED MUSICAL WORKS MADE PERMA-
NENT. 
(a) IN GENERAL.—Paragraph (3) of section 1221(b), 
as amended by section 204 of the Tax Increase Prevention 
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and Reconciliation Act of 2005, is amended by striking 
‘‘before January 1, 2011,’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall take effect as if included in section 204 
of the Tax Increase Prevention and Reconciliation Act of 
2005. 
SEC. 243. REDUCTION IN MINIMUM VESSEL TONNAGE 
WHICH QUALIFIES FOR TONNAGE TAX MADE 
PERMANENT. 
(a) IN GENERAL.—Paragraph (4) of section 1355(a), 
as amended by section 205 of the Tax Increase Prevention 
and Reconciliation Act of 2005, is amended by striking 
‘‘10,000 (6,000, in the case of taxable years beginning 
after December 31, 2005, and ending before January 1, 
2011)’’ and inserting ‘‘6,000’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall take effect as if included in section 205 
of the Tax Increase Prevention and Reconciliation Act of 
2005. 
SEC. 244. MODIFICATION OF SPECIAL ARBITRAGE RULE 
FOR CERTAIN FUNDS MADE PERMANENT. 
(a) IN GENERAL.—Section 206 of the Tax Increase 
Prevention and Reconciliation Act of 2005 is amended by 
striking ‘‘and before August 31, 2009’’. 
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(b) EFFECTIVE DATE.—The amendment made by 
this section shall take effect as if included in section 206 
of the Tax Increase Prevention and Reconciliation Act of 
2005. 
SEC. 245. GREAT LAKES DOMESTIC SHIPPING TO NOT DIS-
QUALIFY VESSEL FROM TONNAGE TAX. 
(a) IN GENERAL.—Section 1355 (relating to defini-
tions and special rules) is amended by redesignating sub-
section (g) as subsection (h) and by inserting after sub-
section (f) the following new subsection: 
‘‘(g) GREAT LAKES DOMESTIC SHIPPING TO NOT 
DISQUALIFY VESSEL.— 
‘‘(1) IN GENERAL.—If the electing corporation 
elects (at such time and in such manner as the Sec-
retary may require) to apply this subsection for any 
taxable year to any qualifying vessel which is used 
in qualified zone domestic trade during the taxable 
year— 
‘‘(A) solely for purposes of subsection 
(a)(4), such use shall be treated as use in 
United States foreign trade (and not as use in 
United States domestic trade), and 
‘‘(B) subsection (f) shall not apply with re-
spect to such vessel for such taxable year. 
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‘‘(2) EFFECT
OF
TEMPORARILY
OPERATING 
VESSEL IN UNITED STATES DOMESTIC TRADE.—In 
the case of a qualifying vessel to which this sub-
section applies— 
‘‘(A) IN GENERAL.—An electing corpora-
tion shall be treated as using such vessel in 
qualified zone domestic trade during any period 
of temporary use in the United States domestic 
trade (other than qualified zone domestic trade) 
if the electing corporation gives timely notice to 
the Secretary stating— 
‘‘(i) that it temporarily operates or 
has operated in the United States domestic 
trade (other than qualified zone domestic 
trade) a qualifying vessel which had been 
used in the United States foreign trade or 
qualified zone domestic trade, and 
‘‘(ii) its intention to resume operation 
of the vessel in the United States foreign 
trade or qualified zone domestic trade. 
‘‘(B) NOTICE.—Notice shall be deemed 
timely if given not later than the due date (in-
cluding extensions) for the corporation’s tax re-
turn for the taxable year in which the tem-
porary cessation begins. 
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‘‘(C) PERIOD
DISREGARD
IN
EFFECT.— 
The period of temporary use under subpara-
graph (A) continues until the earlier of the date 
of which— 
‘‘(i) the electing corporation abandons 
its intention to resume operations of the 
vessel in the United States foreign trade or 
qualified zone domestic trade, or 
‘‘(ii) the electing corporation resumes 
operation of the vessel in the United States 
foreign trade or qualified zone domestic 
trade. 
‘‘(D) NO DISREGARD IF DOMESTIC TRADE 
USE
EXCEEDS
DAYS.—Subparagraph (A) 
shall not apply to any qualifying vessel which is 
operated in the United States domestic trade 
(other than qualified zone domestic trade) for 
more than 30 days during the taxable year. 
‘‘(3) ALLOCATION
OF
INCOME
AND
DEDUC-
TIONS
TO
QUALIFYING
SHIPPING
ACTIVITIES.—In 
the case of a qualifying vessel to which this sub-
section applies, the Secretary shall prescribe rules 
for the proper allocation of income, expenses, losses, 
and deductions between the qualified shipping activi-
ties and the other activities of such vessel. 
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