H. R. 2676—72
‘‘(ii) the liability at law or in equity of any trans-
feree or fiduciary of any person referred to in clause
(i);
‘‘(E)(i) issued by a criminal investigator of the Internal
Revenue Service in connection with the investigation of
an offense connected with the administration or enforce-
ment of the internal revenue laws; and
‘‘(ii) served on any person who is not a third-party
recordkeeper (as defined in section 7603(b)); or
‘‘(F) described in subsection (f ) or (g).
‘‘(3) RECORDS.—For purposes of this section, the term
‘records’ includes books, papers, and other data.’’.
(3) Paragraph (2) of section 7609(e) is amended by striking
‘‘third-party recordkeeper’s’’ and all that follows through ‘‘sub-
section (f )’’ and inserting ‘‘summoned party’s response to the
summons’’.
(4) Subsection (f ) of section 7609 is amended—
(A) by striking ‘‘described in subsection (c)’’ and insert-
ing ‘‘described in subsection (c)(1)’’; and
(B) by inserting ‘‘or testimony’’ after ‘‘records’’ in para-
graph (3).
(5) Subsection (g) of section 7609 is amended by striking
‘‘In the case of any summons described in subsection (c), the
provisions of subsections (a)(1) and (b) shall not apply if ’’ and
inserting ‘‘A summons is described in this subsection if ’’.
(6)(A) Subsection (i) of section 7609 is amended by striking
‘‘THIRD-PARTY RECORDKEEPER AND’’ in the subsection heading.
(B) Paragraph (1) of section 7609(i) is amended by striking
‘‘described in subsection (c), the third-party recordkeeper’’ and
inserting ‘‘to which this section applies for the production of
records, the summoned party’’.
(C) Paragraph (2) of section 7609(i) is amended—
(i) by striking ‘‘RECORDKEEPER’’ in the heading and
inserting ‘‘SUMMONED PARTY’’; and
(ii) by striking ‘‘the third-party recordkeeper’’ and
inserting ‘‘the summoned party’’.
(D) Paragraph (3) of section 7609(i) is amended to read
as follows:
‘‘(3) PROTECTION FOR SUMMONED PARTY WHO DISCLOSES.—
Any summoned party, or agent or employee thereof, making
a disclosure of records or testimony pursuant to this section
in good faith reliance on the certificate of the Secretary or
an order of a court requiring production of records or the
giving of such testimony shall not be liable to any customer
or other person for such disclosure.’’.
(d) EFFECTIVE DATE.—The amendments made by this section
shall apply to summonses served after the date of the enactment
of this Act.
SEC. 3416. SERVICE OF SUMMONSES TO THIRD-PARTY RECORD-
KEEPERS PERMITTED BY MAIL.
(a) IN GENERAL.—Section 7603 (relating to service of summons)
is amended by striking ‘‘A summons issued’’ and inserting ‘‘(a)
IN GENERAL.—A summons issued’’ and by adding at the end the
following new subsection:
‘‘(b) SERVICE BY MAIL TO THIRD-PARTY RECORDKEEPERS.—
H. R. 2676—73
‘‘(1) IN GENERAL.—A summons referred to in subsection
(a) for the production of books, papers, records, or other data
by a third-party recordkeeper may also be served by certified
or registered mail to the last known address of such record-
keeper.
‘‘(2) THIRD-PARTY RECORDKEEPER.—For purposes of para-
graph (1), the term ‘third-party recordkeeper’ means—
‘‘(A) any mutual savings bank, cooperative bank,
domestic building and loan association, or other savings
institution chartered and supervised as a savings and loan
or similar association under Federal or State law, any
bank (as defined in section 581), or any credit union (within
the meaning of section 501(c)(14)(A));
‘‘(B) any consumer reporting agency (as defined under
section 603(f ) of the Fair Credit Reporting Act (15 U.S.C.
1681a(f )));
‘‘(C) any person extending credit through the use of
credit cards or similar devices;
‘‘(D) any broker (as defined in section 3(a)(4) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(4)));
‘‘(E) any attorney;
‘‘(F) any accountant;
‘‘(G) any barter exchange (as defined in section
6045(c)(3));
‘‘(H) any regulated investment company (as defined
in section 851) and any agent of such regulated investment
company when acting as an agent thereof, and
‘‘(I) any enrolled agent.’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to summonses served after the date of the enactment
of this Act.
SEC. 3417. NOTICE OF INTERNAL REVENUE SERVICE CONTACT OF
THIRD PARTIES.
(a) IN GENERAL.—Section 7602 (relating to examination of books
and witnesses), as amended by section 3412, is amended by
redesignating subsections (c) and (d) as subsections (d) and (e),
respectively, and by inserting after subsection (b) the following
new subsection:
‘‘(c) NOTICE OF CONTACT OF THIRD PARTIES.—
‘‘(1) GENERAL
NOTICE.—An officer or employee of the
Internal Revenue Service may not contact any person other
than the taxpayer with respect to the determination or collec-
tion of the tax liability of such taxpayer without providing
reasonable notice in advance to the taxpayer that contacts
with persons other than the taxpayer may be made.
‘‘(2) NOTICE OF SPECIFIC CONTACTS.—The Secretary shall
periodically provide to a taxpayer a record of persons contacted
during such period by the Secretary with respect to the deter-
mination or collection of the tax liability of such taxpayer.
Such record shall also be provided upon request of the taxpayer.
‘‘(3) EXCEPTIONS.—This subsection shall not apply—
‘‘(A) to any contact which the taxpayer has authorized;
‘‘(B) if the Secretary determines for good cause
shown that such notice would jeopardize collection of any
tax or such notice may involve reprisal against any person;
or
H. R. 2676—74
‘‘(C) with respect to any pending criminal investiga-
tion.’’.
(b) EFFECTIVE DATE.—The amendments made by subsection
(a) shall apply to contacts made after the 180th day after the
date of the enactment of this Act.
PART III—COLLECTION ACTIVITIES
Subpart A—Approval Process
SEC. 3421. APPROVAL PROCESS FOR LIENS, LEVIES, AND SEIZURES.
(a) IN GENERAL.—The Commissioner of Internal Revenue shall
develop and implement procedures under which—
(1) a determination by an employee to file a notice of
lien or levy with respect to, or to levy or seize, any property
or right to property would, where appropriate, be required
to be reviewed by a supervisor of the employee before the
action was taken; and
(2) appropriate disciplinary action would be taken against
the employee or supervisor where the procedures under para-
graph (1) were not followed.
(b) REVIEW PROCESS.—The review process under subsection
(a)(1) may include a certification that the employee has—
(1) reviewed the taxpayer’s information;
(2) verified that a balance is due; and
(3) affirmed that the action proposed to be taken is appro-
priate given the taxpayer’s circumstances, considering the
amount due and the value of the property or right to property.
(c) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided in paragraph (2), this
section shall take effect on the date of the enactment of this
Act.
(2) AUTOMATED COLLECTION SYSTEM ACTIONS.—In the case
of any action under an automated collection system, this section
shall apply to actions initiated after December 31, 2000.
Subpart B—Liens and Levies
SEC. 3431. MODIFICATIONS TO CERTAIN LEVY EXEMPTION AMOUNTS.
(a) FUEL, ETC.—Section 6334(a)(2) (relating to fuel, provisions,
furniture, and personal effects) is amended by striking ‘‘$2,500’’
and inserting ‘‘$6,250’’.
(b) BOOKS, ETC.—Section 6334(a)(3) (relating to books and tools
of a trade, business, or profession) is amended by striking ‘‘$1,250’’
and inserting ‘‘$3,125’’.
(c) CONFORMING AMENDMENT.—Section 6334(g)(1) (relating to
inflation adjustment) is amended—
(1) by striking ‘‘1997’’ and inserting ‘‘1999’’; and
(2) by striking ‘‘1996’’ in subparagraph (B) and inserting
‘‘1998’’.
(d) EFFECTIVE DATE.—The amendments made by this section
shall take effect with respect to levies issued after the date of
the enactment of this Act.
H. R. 2676—75
SEC. 3432. RELEASE OF LEVY UPON AGREEMENT THAT AMOUNT IS
UNCOLLECTIBLE.
(a) IN GENERAL.—Section 6343 (relating to authority to release
levy and return property) is amended by adding at the end the
following new subsection:
‘‘(e) RELEASE
OF LEVY UPON AGREEMENT THAT AMOUNT
IS
NOT COLLECTIBLE.—In the case of a levy on the salary or wages
payable to or received by the taxpayer, upon agreement with the
taxpayer that the tax is not collectible, the Secretary shall release
such levy as soon as practicable.’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to levies imposed after December 31, 1999.
SEC. 3433. LEVY PROHIBITED DURING PENDENCY OF REFUND
PROCEEDINGS.
(a) IN GENERAL.—Section 6331 (relating to levy and distraint)
is amended by redesignating subsection (i) as subsection ( j) and
by inserting after subsection (h) the following new subsection:
‘‘(i) NO LEVY DURING PENDENCY OF PROCEEDINGS FOR REFUND
OF DIVISIBLE TAX.—
‘‘(1) IN GENERAL.—No levy may be made under subsection
(a) on the property or rights to property of any person with
respect to any unpaid divisible tax during the pendency of
any proceeding brought by such person in a proper Federal
trial court for the recovery of any portion of such divisible
tax which was paid by such person if—
‘‘(A) the decision in such proceeding would be res judi-
cata with respect to such unpaid tax; or
‘‘(B) such person would be collaterally estopped from
contesting such unpaid tax by reason of such proceeding.
‘‘(2) DIVISIBLE TAX.—For purposes of paragraph (1), the
term ‘divisible tax’ means—
‘‘(A) any tax imposed by subtitle C; and
‘‘(B) the penalty imposed by section 6672 with respect
to any such tax.
‘‘(3) EXCEPTIONS.—
‘‘(A) CERTAIN UNPAID TAXES.—This subsection shall not
apply with respect to any unpaid tax if—
‘‘(i) the taxpayer files a written notice with the
Secretary which waives the restriction imposed by this
subsection on levy with respect to such tax; or
‘‘(ii) the Secretary finds that the collection of such
tax is in jeopardy.
‘‘(B) CERTAIN
LEVIES.—This subsection shall not
apply to—
‘‘(i) any levy to carry out an offset under section
6402; and
‘‘(ii) any levy which was first made before the
date that the applicable proceeding under this sub-
section commenced.
‘‘(4) LIMITATION ON COLLECTION ACTIVITY; AUTHORITY TO
ENJOIN COLLECTION.—
‘‘(A) LIMITATION
ON
COLLECTION.—No proceeding in
court for the collection of any unpaid tax to which para-
graph (1) applies shall be begun by the Secretary during
the pendency of a proceeding under such paragraph. This
subparagraph shall not apply to—
H. R. 2676—76
‘‘(i) any counterclaim in a proceeding under such
paragraph; or
‘‘(ii) any proceeding relating to a proceeding under
such paragraph.
‘‘(B) AUTHORITY TO ENJOIN.—Notwithstanding section
7421(a), a levy or collection proceeding prohibited by this
subsection may be enjoined (during the period such prohibi-
tion is in force) by the court in which the proceeding
under paragraph (1) is brought.
‘‘(5) SUSPENSION OF STATUTE OF LIMITATIONS ON COLLEC-
TION.—The period of limitations under section 6502 shall be
suspended for the period during which the Secretary is prohib-
ited under this subsection from making a levy.
‘‘(6) PENDENCY OF PROCEEDING.—For purposes of this sub-
section, a proceeding is pending beginning on the date such
proceeding commences and ending on the date that a final
order or judgment from which an appeal may be taken is
entered in such proceeding.’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to unpaid tax attributable to taxable periods beginning
after December 31, 1998.
SEC. 3434. APPROVAL REQUIRED FOR JEOPARDY AND TERMINATION
ASSESSMENTS AND JEOPARDY LEVIES.
(a) IN GENERAL.—Paragraph (1) of section 7429(a) (relating
to review of jeopardy levy or assessment procedures) is amended
to read as follows:
‘‘(1) ADMINISTRATIVE REVIEW.—
‘‘(A) PRIOR APPROVAL REQUIRED.—No assessment may
be made under section 6851(a), 6852(a), 6861(a), or 6862,
and no levy may be made under section 6331(a) less than
30 days after notice and demand for payment is made,
unless the Chief Counsel for the Internal Revenue Service
(or such Counsel’s delegate) personally approves (in writ-
ing) such assessment or levy.
‘‘(B) INFORMATION TO TAXPAYER.—Within 5 days after
the day on which such an assessment or levy is made,
the Secretary shall provide the taxpayer with a written
statement of the information upon which the Secretary
relied in making such assessment or levy.’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to taxes assessed and levies made after the date of
the enactment of this Act.
SEC. 3435. INCREASE IN AMOUNT OF CERTAIN PROPERTY ON WHICH
LIEN NOT VALID.
(a) CERTAIN PROPERTY.—
(1) IN GENERAL.—Subsection (b) of section 6323 (relating
to validity and priority against certain persons) is amended—
(A) by striking ‘‘$250’’ in paragraph (4) (relating to
personal property purchased in casual sale) and inserting
‘‘$1,000’’; and
(B) by striking ‘‘$1,000’’ in paragraph (7) (relating to
residential property subject to a mechanic’s lien for certain
repairs and improvements) and inserting ‘‘$5,000’’.
(2) INFLATION ADJUSTMENT.—Subsection (i) of section 6323
(relating to special rules) is amended by adding at the end
the following new paragraph:
H. R. 2676—77
‘‘(4) COST-OF-LIVING ADJUSTMENT.—In the case of notices
of liens imposed by section 6321 which are filed in any calendar
year after 1998, each of the dollar amounts under paragraph
(4) or (7) of subsection (b) shall be increased by an amount
equal to—
‘‘(A) such dollar amount, multiplied by
‘‘(B) the cost-of-living adjustment determined under
section 1(f )(3) for the calendar year, determined by
substituting ‘calendar year 1996’ for ‘calendar year 1992’
in subparagraph (B) thereof.
If any amount as adjusted under the preceding sentence is
not a multiple of $10, such amount shall be rounded to the
nearest multiple of $10.’’.
(b) EXPANSION OF TREATMENT OF PASSBOOK LOANS.—Paragraph
(10) of section 6323(b) is amended—
(1) by striking ‘‘PASSBOOK
LOANS’’ in the heading and
inserting ‘‘DEPOSIT-SECURED LOANS’’;
(2) by striking ‘‘, evidenced by a passbook,’’; and
(3) by striking all that follows ‘‘secured by such account’’
and inserting a period.
(c) EFFECTIVE DATE.—The amendments made by this section
shall take effect on the date of the enactment of this Act.
SEC. 3436. WAIVER OF EARLY WITHDRAWAL TAX FOR INTERNAL REVE-
NUE 
SERVICE 
LEVIES 
ON 
EMPLOYER-SPONSORED
RETIREMENT PLANS OR IRAs.
(a) IN GENERAL.—Section 72(t)(2)(A) (relating to subsection not
to apply to certain distributions) is amended by striking ‘‘or’’ at
the end of clauses (iv) and (v), by striking the period at the end
of clause (vi) and inserting ‘‘, or’’, and by adding at the end the
following new clause:
‘‘(vii) made on account of a levy under section
6331 on the qualified retirement plan.’’.
(b) EFFECTIVE DATE.—The amendments made by this section
shall apply to distributions after December 31, 1999.
Subpart C—Seizures
SEC. 3441. PROHIBITION OF SALES OF SEIZED PROPERTY AT LESS
THAN MINIMUM BID.
(a) IN GENERAL.—Section 6335(e)(1)(A)(i) (relating to deter-
minations relating to minimum price) is amended by striking ‘‘a
minimum price for which such property shall be sold’’ and inserting
‘‘a minimum price below which such property shall not be sold’’.
(b) REFERENCE TO PENALTY FOR VIOLATION.—Section 6335(e)
is amended by adding at the end the following new paragraph:
‘‘(4) CROSS REFERENCE.—
‘‘For provision providing for civil damages for violation of para-
graph (1)(A)(i), see section 7433.’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to sales made after the date of the enactment of this
Act.
SEC. 3442. ACCOUNTING OF SALES OF SEIZED PROPERTY.
(a) IN GENERAL.—Section 6340 (relating to records of sale)
is amended—
(1) in subsection (a)—
H. R. 2676—78
(A) by striking ‘‘real’’; and
(B) by inserting ‘‘or certificate of sale of personal
property’’ after ‘‘deed’’; and
(2) by adding at the end the following new subsection:
‘‘(c) ACCOUNTING TO TAXPAYER.—The taxpayer with respect to
whose liability the sale was conducted or who redeemed the property
shall be furnished—
‘‘(1) the record under subsection (a) (other than the names
of the purchasers);
‘‘(2) the amount from such sale applied to the taxpayer’s
liability; and
‘‘(3) the remaining balance of such liability.’’.
(b) EFFECTIVE DATE.—The amendments made by this section
shall apply to seizures occurring after the date of the enactment
of this Act.
SEC. 3443. UNIFORM ASSET DISPOSAL MECHANISM.
Not later than the date which is 2 years after the date of
the enactment of this Act, the Secretary of the Treasury or the
Secretary’s delegate shall implement a uniform asset disposal
mechanism for sales under section 6335 of the Internal Revenue
Code of 1986. The mechanism should be designed to remove any
participation in such sales by revenue officers of the Internal Reve-
nue Service and should consider the use of outsourcing.
SEC. 3444. CODIFICATION OF INTERNAL REVENUE SERVICE ADMINIS-
TRATIVE PROCEDURES FOR SEIZURE OF TAXPAYER’S
PROPERTY.
(a) IN GENERAL.—Section 6331 (relating to levy and distraint),
as amended by section 3433, is amended by redesignating subsection
( j) as subsection (k) and by inserting after subsection (i) the follow-
ing new subsection:
‘‘( j) NO LEVY BEFORE INVESTIGATION OF STATUS OF PROPERTY.—
‘‘(1) IN GENERAL.—For purposes of applying the provisions
of this subchapter, no levy may be made on any property
or right to property which is to be sold under section 6335
until a thorough investigation of the status of such property
has been completed.
‘‘(2) ELEMENTS IN INVESTIGATION.—For purposes of para-
graph (1), an investigation of the status of any property shall
include—
‘‘(A) a verification of the taxpayer’s liability;
‘‘(B) the completion of an analysis under sub-
section (f );
‘‘(C) the determination that the equity in such property
is sufficient to yield net proceeds from the sale of such
property to apply to such liability; and
‘‘(D) a thorough consideration of alternative collection
methods.’’.
(b) EFFECTIVE DATE.—The amendments made by this section
shall take effect on the date of the enactment of this Act.
SEC. 
3445. 
PROCEDURES 
FOR 
SEIZURE 
OF 
RESIDENCES 
AND
BUSINESSES.
(a) IN GENERAL.—Section 6334(a)(13) (relating to property
exempt from levy) is amended to read as follows:
H. R. 2676—79
‘‘(13) RESIDENCES EXEMPT IN SMALL DEFICIENCY CASES AND
PRINCIPAL RESIDENCES AND CERTAIN BUSINESS ASSETS EXEMPT
IN ABSENCE OF CERTAIN APPROVAL OR JEOPARDY.—
‘‘(A) RESIDENCES IN SMALL DEFICIENCY CASES.—If the
amount of the levy does not exceed $5,000—
‘‘(i) any real property used as a residence by the
taxpayer; or
‘‘(ii) any real property of the taxpayer (other than
real property which is rented) used by any other
individual as a residence.
‘‘(B) PRINCIPAL
RESIDENCES
AND
CERTAIN
BUSINESS
ASSETS.—Except to the extent provided in subsection (e)—
‘‘(i) the principal residence of the taxpayer (within
the meaning of section 121); and
‘‘(ii) tangible personal property or real property
(other than real property which is rented) used in
the trade or business of an individual taxpayer.’’.
(b) LEVY
ALLOWED
IN
CERTAIN
CIRCUMSTANCES.—Section
6334(e) is amended to read as follows:
‘‘(e) LEVY ALLOWED ON PRINCIPAL RESIDENCES AND CERTAIN
BUSINESS ASSETS IN CERTAIN CIRCUMSTANCES.—
‘‘(1) PRINCIPAL RESIDENCES.—
‘‘(A) APPROVAL REQUIRED.—A principal residence shall
not be exempt from levy if a judge or magistrate of a
district court of the United States approves (in writing)
the levy of such residence.
‘‘(B) JURISDICTION.—The district courts of the United
States shall have exclusive jurisdiction to approve a levy
under subparagraph (A).
‘‘(2) CERTAIN
BUSINESS
ASSETS.—Property (other than a
principal residence) described in subsection (a)(13)(B) shall not
be exempt from levy if—
‘‘(A) a district director or assistant district director
of the Internal Revenue Service personally approves (in
writing) the levy of such property; or
‘‘(B) the Secretary finds that the collection of tax is
in jeopardy.
An official may not approve a levy under subparagraph (A)
unless the official determines that the taxpayer’s other assets
subject to collection are insufficient to pay the amount due,
together with expenses of the proceedings.’’.
(c) STATE FISH AND WILDLIFE PERMITS.—
(1) IN GENERAL.—With respect to permits issued by a State
and required under State law for the harvest of fish or wildlife
in the trade or business of an individual taxpayer, the term
‘‘other assets’’ as used in section 6334(e)(2) of the Internal
Revenue Code of 1986 shall include future income which may
be derived by such taxpayer from the commercial sale of fish
or wildlife under such permit.
(2) CONSTRUCTION.—Paragraph (1) shall not be construed
to invalidate or in any way prejudice any assertion that the
privilege embodied in permits described in paragraph (1) is
not property or a right to property under the Internal Revenue
Code of 1986.
(d) EFFECTIVE DATE.—The amendments made by this section
shall take effect on the date of the enactment of this Act.
H. R. 2676—80
PART IV—PROVISIONS RELATING TO
EXAMINATION AND COLLECTION ACTIVITIES
SEC. 3461. PROCEDURES RELATING TO EXTENSIONS OF STATUTE OF
LIMITATIONS BY AGREEMENT.
(a) AUTHORITY TO EXTEND 10-YEAR COLLECTION PERIOD AFTER
ASSESSMENT.—Section 6502(a) (relating to length of period after
collection) is amended—
(1) by striking paragraph (2) and inserting:
‘‘(2) if—
‘‘(A) there is an installment agreement between the
taxpayer and the Secretary, prior to the date which is
90 days after the expiration of any period for collection
agreed upon in writing by the Secretary and the taxpayer
at the time the installment agreement was entered into;
or
‘‘(B) there is a release of levy under section 6343 after
such 10-year period, prior to the expiration of any period
for collection agreed upon in writing by the Secretary and
the taxpayer before such release.’’; and
(2) by striking the first sentence in the matter following
paragraph (2).
(b) NOTICE
TO TAXPAYER
OF RIGHT TO REFUSE
OR LIMIT
EXTENSION.—Paragraph (4) of section 6501(c) (relating to the period
for limitations on assessment and collection) is amended—
(1) by striking ‘‘Where’’ and inserting the following:
‘‘(A) IN GENERAL.—Where’’; and
(2) by adding at the end the following new subparagraph:
‘‘(B) NOTICE
TO
TAXPAYER
OF
RIGHT
TO
REFUSE
OR
LIMIT EXTENSION.—The Secretary shall notify the taxpayer
of the taxpayer’s right to refuse to extend the period of
limitations, or to limit such extension to particular issues
or to a particular period of time, on each occasion when
the taxpayer is requested to provide such consent.’’.
(c) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by this section
shall apply to requests to extend the period of limitations
made after December 31, 1999.
(2) PRIOR REQUEST.—If, in any request to extend the period
of limitations made on or before December 31, 1999, a taxpayer
agreed to extend such period beyond the 10-year period referred
to in section 6502(a) of the Internal Revenue Code of 1986,
such extension shall expire on the latest of—
(A) the last day of such 10-year period;
(B) December 31, 2002; or
(C) in the case of an extension in connection with
an installment agreement, the 90th day after the end of
the period of such extension.
SEC. 3462. OFFERS-IN-COMPROMISE.
(a) STANDARDS FOR EVALUATION OF OFFERS-IN-COMPROMISE.—
Section 7122 (relating to offers-in-compromise) is amended by
adding at the end the following new subsection:
‘‘(c) STANDARDS FOR EVALUATION OF OFFERS.—
‘‘(1) IN GENERAL.—The Secretary shall prescribe guidelines
for officers and employees of the Internal Revenue Service
H. R. 2676—81
to determine whether an offer-in-compromise is adequate and
should be accepted to resolve a dispute.
‘‘(2) ALLOWANCES FOR BASIC LIVING EXPENSES.—
‘‘(A) IN
GENERAL.—In prescribing guidelines under
paragraph (1), the Secretary shall develop and publish
schedules of national and local allowances designed to pro-
vide that taxpayers entering into a compromise have an
adequate means to provide for basic living expenses.
‘‘(B) USE OF SCHEDULES.—The guidelines shall provide
that officers and employees of the Internal Revenue Service
shall determine, on the basis of the facts and circumstances
of each taxpayer, whether the use of the schedules pub-
lished under subparagraph (A) is appropriate and shall
not use the schedules to the extent such use would result
in the taxpayer not having adequate means to provide
for basic living expenses.
‘‘(3) SPECIAL RULES RELATING TO TREATMENT OF OFFERS.—
The guidelines under paragraph (1) shall provide that—
‘‘(A) an officer or employee of the Internal Revenue
Service shall not reject an offer-in-compromise from a low-
income taxpayer solely on the basis of the amount of the
offer; and
‘‘(B) in the case of an offer-in-compromise which relates
only to issues of liability of the taxpayer—
‘‘(i) such offer shall not be rejected solely because
the Secretary is unable to locate the taxpayer’s return
or return information for verification of such liability;
and
‘‘(ii) the taxpayer shall not be required to provide
a financial statement.’’.
(b) LEVY PROHIBITED WHILE OFFER-IN-COMPROMISE PENDING
OR INSTALLMENT AGREEMENT PENDING OR IN EFFECT.—Section 6331
(relating to levy and distraint), as amended by sections 3433 and
3444, is amended by redesignating subsection (k) as subsection
(l) and by inserting after subsection ( j) the following new subsection:
‘‘(k) NO LEVY WHILE CERTAIN OFFERS PENDING OR INSTALL-
MENT AGREEMENT PENDING OR IN EFFECT.—
‘‘(1) OFFER-IN-COMPROMISE PENDING.—No levy may be made
under subsection (a) on the property or rights to property
of any person with respect to any unpaid tax—
‘‘(A) during the period that an offer-in-compromise by
such person under section 7122 of such unpaid tax is
pending with the Secretary; and
‘‘(B) if such offer is rejected by the Secretary, during
the 30 days thereafter (and, if an appeal of such rejection
is filed within such 30 days, during the period that such
appeal is pending).
For purposes of subparagraph (A), an offer is pending beginning
on the date the Secretary accepts such offer for processing.
‘‘(2) INSTALLMENT
AGREEMENTS.—No levy may be made
under subsection (a) on the property or rights to property
of any person with respect to any unpaid tax—
‘‘(A) during the period that an offer by such person
for an installment agreement under section 6159 for pay-
ment of such unpaid tax is pending with the Secretary;
‘‘(B) if such offer is rejected by the Secretary, during
the 30 days thereafter (and, if an appeal of such rejection
H. R. 2676—82
is filed within such 30 days, during the period that such
appeal is pending);
‘‘(C) during the period that such an installment agree-
ment for payment of such unpaid tax is in effect; and
‘‘(D) if such agreement is terminated by the Secretary,
during the 30 days thereafter (and, if an appeal of such
termination is filed within such 30 days, during the period
that such appeal is pending).
‘‘(3) CERTAIN RULES TO APPLY.—Rules similar to the rules
of paragraphs (3), (4), and (5) of subsection (i) shall apply
for purposes of this subsection.’’.
(c) REVIEW
OF REJECTIONS
OF OFFERS-IN-COMPROMISE
AND
INSTALLMENT AGREEMENTS.—
(1) IN GENERAL.—Section 7122 (relating to compromises),
as amended by subsection (a), is amended by adding at the
end the following new subsection:
‘‘(d) ADMINISTRATIVE REVIEW.—The Secretary shall establish
procedures—
‘‘(1) for an independent administrative review of any rejec-
tion of a proposed offer-in-compromise or installment agreement
made by a taxpayer under this section or section 6159 before
such rejection is communicated to the taxpayer; and
‘‘(2) which allow a taxpayer to appeal any rejection of
such offer or agreement to the Internal Revenue Service Office
of Appeals.’’.
(2) CONFORMING AMENDMENT.—Section 6159 (relating to
installment agreements) is amended by adding at the end the
following new subsection:
‘‘(d) CROSS REFERENCE.—
‘‘For rights to administrative review and appeal, see section
7122(d).’’.
(d) PREPARATION
OF
STATEMENT
RELATING
TO
OFFERS-IN-
COMPROMISE.—The Secretary of the Treasury shall prepare a state-
ment which sets forth in simple, nontechnical terms the rights
of a taxpayer and the obligations of the Internal Revenue Service
relating to offers-in-compromise. Such statement shall—
(1) advise taxpayers who have entered into a compromise
of the advantages of promptly notifying the Internal Revenue
Service of any change of address or marital status;
(2) provide notice to taxpayers that in the case of a com-
promise terminated due to the actions of one spouse or former
spouse, the Internal Revenue Service will, upon application,
reinstate such compromise with the spouse or former spouse
who remains in compliance with such compromise; and
(3) provide notice to the taxpayer that the taxpayer may
appeal the rejection of an offer-in-compromise to the Internal
Revenue Service Office of Appeals.
(e) EFFECTIVE DATES.—
(1) IN GENERAL.—The amendments made by this section
shall apply to proposed offers-in-compromise and installment
agreements submitted after the date of the enactment of this
Act.
(2) SUSPENSION OF COLLECTION BY LEVY.—The amendment
made by subsection (b) shall apply to offers-in-compromise
pending on or made after December 31, 1999.
H. R. 2676—83
SEC. 3463. NOTICE OF DEFICIENCY TO SPECIFY DEADLINES FOR
FILING TAX COURT PETITION.
(a) IN
GENERAL.—The Secretary of the Treasury or the
Secretary’s delegate shall include on each notice of deficiency under
section 6212 of the Internal Revenue Code of 1986 the date deter-
mined by such Secretary (or delegate) as the last day on which
the taxpayer may file a petition with the Tax Court.
(b) LATER FILING DEADLINES SPECIFIED ON NOTICE OF DEFI-
CIENCY TO BE BINDING.—Subsection (a) of section 6213 (relating
to restrictions applicable to deficiencies; petition to Tax Court)
is amended by adding at the end the following new sentence:
‘‘Any petition filed with the Tax Court on or before the last date
specified for filing such petition by the Secretary in the notice
of deficiency shall be treated as timely filed.’’.
(c) EFFECTIVE DATE.—Subsection (a) and the amendment made
by subsection (b) shall apply to notices mailed after December
31, 1998.
SEC. 3464. REFUND OR CREDIT OF OVERPAYMENTS BEFORE FINAL
DETERMINATION.
(a) TAX COURT PROCEEDINGS.—Subsection (a) of section 6213
is amended—
(1) by striking ‘‘, including the Tax Court.’’ and inserting
‘‘, including the Tax Court, and a refund may be ordered by
such court of any amount collected within the period during
which the Secretary is prohibited from collecting by levy or
through a proceeding in court under the provisions of this
subsection.’’; and
(2) by striking ‘‘to enjoin any action or proceeding’’ and
inserting ‘‘to enjoin any action or proceeding or order any
refund’’.
(b) OTHER PROCEEDINGS.—Subsection (a) of section 6512 is
amended by striking the period at the end of paragraph (4) and
inserting ‘‘, and’’, and by inserting after paragraph (4) the following
new paragraphs:
‘‘(5) As to any amount collected within the period during
which the Secretary is prohibited from making the assessment
or from collecting by levy or through a proceeding in court
under the provisions of section 6213(a); and
‘‘(6) As to overpayments the Secretary is authorized to
refund or credit pending appeal as provided in subsection (b).’’.
(c) REFUND
OR CREDIT PENDING APPEAL.—Paragraph (1) of
section 6512(b) is amended by adding at the end the following
new sentence: ‘‘If a notice of appeal in respect of the decision
of the Tax Court is filed under section 7483, the Secretary is
authorized to refund or credit the overpayment determined by the
Tax Court to the extent the overpayment is not contested on
appeal.’’.
(d) EFFECTIVE DATE.—The amendments made by this section
shall take effect on the date of the enactment of this Act.
SEC. 3465. INTERNAL REVENUE SERVICE PROCEDURES RELATING TO
APPEALS OF EXAMINATIONS AND COLLECTIONS.
(a) DISPUTE RESOLUTION PROCEDURES.—
(1) IN GENERAL.—Chapter 74 (relating to closing agree-
ments and compromises) is amended by redesignating section
H. R. 2676—84
7123 as section 7124 and by inserting after section 7122 the
following new section:
‘‘SEC. 7123. APPEALS DISPUTE RESOLUTION PROCEDURES.
‘‘(a) EARLY REFERRAL TO APPEALS PROCEDURES.—The Secretary
shall prescribe procedures by which any taxpayer may request
early referral of 1 or more unresolved issues from the examination
or collection division to the Internal Revenue Service Office of
Appeals.
‘‘(b) ALTERNATIVE DISPUTE RESOLUTION PROCEDURES.—
‘‘(1) MEDIATION.—The Secretary shall prescribe procedures
under which a taxpayer or the Internal Revenue Service Office
of Appeals may request non-binding mediation on any issue
unresolved at the conclusion of—
‘‘(A) appeals procedures; or
‘‘(B) unsuccessful attempts to enter into a closing agree-
ment under section 7121 or a compromise under section
7122.
‘‘(2) ARBITRATION.—The Secretary shall establish a pilot
program under which a taxpayer and the Internal Revenue
Service Office of Appeals may jointly request binding arbitration
on any issue unresolved at the conclusion of—
‘‘(A) appeals procedures; or
‘‘(B) unsuccessful attempts to enter into a closing agree-
ment under section 7121 or a compromise under section
7122.’’.
(2) CONFORMING AMENDMENT.—The table of sections for
chapter 74 is amended by striking the item relating to section
7123 and inserting the following new items:
‘‘Sec. 7123. Appeals dispute resolution procedures.
‘‘Sec. 7124. Cross references.’’.
(b) APPEALS OFFICERS IN EACH STATE.—The Commissioner of
Internal Revenue shall ensure that an appeals officer is regularly
available within each State.
(c) APPEALS VIDEOCONFERENCING ALTERNATIVE
FOR RURAL
AREAS.—The Commissioner of Internal Revenue shall consider the
use of the videoconferencing of appeals conferences between appeals
officers and taxpayers seeking appeals in rural or remote areas.
SEC. 3466. APPLICATION OF CERTAIN FAIR DEBT COLLECTION PROCE-
DURES.
(a) IN GENERAL.—Subchapter A of chapter 64 (relating to collec-
tion) is amended by inserting after section 6303 the following new
section:
‘‘SEC. 6304. FAIR TAX COLLECTION PRACTICES.
‘‘(a) COMMUNICATION WITH THE TAXPAYER.—Without the prior
consent of the taxpayer given directly to the Secretary or the
express permission of a court of competent jurisdiction, the Sec-
retary may not communicate with a taxpayer in connection with
the collection of any unpaid tax—
‘‘(1) at any unusual time or place or a time or place known
or which should be known to be inconvenient to the taxpayer;
‘‘(2) if the Secretary knows the taxpayer is represented
by any person authorized to practice before the Internal Reve-
nue Service with respect to such unpaid tax and has knowledge
of, or can readily ascertain, such person’s name and address,
H. R. 2676—85
unless such person fails to respond within a reasonable period
of time to a communication from the Secretary or unless such
person consents to direct communication with the taxpayer;
or
‘‘(3) at the taxpayer’s place of employment if the Secretary
knows or has reason to know that the taxpayer’s employer
prohibits the taxpayer from receiving such communication.
In the absence of knowledge of circumstances to the contrary,
the Secretary shall assume that the convenient time for commu-
nicating with a taxpayer is after 8 a.m. and before 9 p.m., local
time at the taxpayer’s location.
‘‘(b) PROHIBITION OF HARASSMENT AND ABUSE.—The Secretary
may not engage in any conduct the natural consequence of which
is to harass, oppress, or abuse any person in connection with
the collection of any unpaid tax. Without limiting the general
application of the foregoing, the following conduct is a violation
of this subsection:
‘‘(1) The use or threat of use of violence or other criminal
means to harm the physical person, reputation, or property
of any person.
‘‘(2) The use of obscene or profane language or language
the natural consequence of which is to abuse the hearer or
reader.
‘‘(3) Causing a telephone to ring or engaging any person
in telephone conversation repeatedly or continuously with
intent to annoy, abuse, or harass any person at the called
number.
‘‘(4) Except as provided under rules similar to the rules
in section 804 of the Fair Debt Collection Practices Act (15
U.S.C. 1692b), the placement of telephone calls without mean-
ingful disclosure of the caller’s identity.
‘‘(c) CIVIL ACTION FOR VIOLATIONS OF SECTION.—
‘‘For civil action for violations of this section, see section 7433.’’.
(b) CLERICAL AMENDMENT.—The table of sections for subchapter
A of chapter 64 is amended by inserting after the item relating
to section 6303 the following new item:
‘‘Sec. 6304. Fair tax collection practices.’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall take effect on the date of the enactment of this Act.
SEC. 3467. GUARANTEED AVAILABILITY OF INSTALLMENT AGREE-
MENTS.
(a) IN GENERAL.—Section 6159 (relating to agreements for pay-
ment of tax liability in installments) is amended by redesignating
subsection (c) as subsection (d) and by inserting after subsection
(b) the following new subsection:
‘‘(c) SECRETARY REQUIRED TO ENTER INTO INSTALLMENT AGREE-
MENTS IN CERTAIN CASES.—In the case of a liability for tax of
an individual under subtitle A, the Secretary shall enter into an
agreement to accept the payment of such tax in installments if,
as of the date the individual offers to enter into the agreement—
‘‘(1) the aggregate amount of such liability (determined
without regard to interest, penalties, additions to the tax, and
additional amounts) does not exceed $10,000;
H. R. 2676—86
‘‘(2) the taxpayer (and, if such liability relates to a joint
return, the taxpayer’s spouse) has not, during any of the preced-
ing 5 taxable years—
‘‘(A) failed to file any return of tax imposed by sub-
title A;
‘‘(B) failed to pay any tax required to be shown on
any such return; or
‘‘(C) entered into an installment agreement under this
section for payment of any tax imposed by subtitle A,
‘‘(3) the Secretary determines that the taxpayer is finan-
cially unable to pay such liability in full when due (and the
taxpayer submits such information as the Secretary may
require to make such determination);
‘‘(4) the agreement requires full payment of such liability
within 3 years; and
‘‘(5) the taxpayer agrees to comply with the provisions
of this title for the period such agreement is in effect.’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall take effect on the date of the enactment of this Act.
SEC. 3468. PROHIBITION ON REQUESTS TO TAXPAYERS TO GIVE UP
RIGHTS TO BRING ACTIONS.
(a) PROHIBITION.—No officer or employee of the United States
may request a taxpayer to waive the taxpayer’s right to bring
a civil action against the United States or any officer or employee
of the United States for any action taken in connection with the
internal revenue laws.
(b) EXCEPTIONS.—Subsection (a) shall not apply in any case
where—
(1) a taxpayer waives the right described in subsection
(a) knowingly and voluntarily; or
(2) the request by the officer or employee is made in person
and the taxpayer’s attorney or other federally authorized tax
practitioner (within the meaning of section 7525(a)(3)(A) of
the Internal Revenue Code of 1986) is present, or the request
is made in writing to the taxpayer’s attorney or other represent-
ative.
Subtitle F—Disclosures to Taxpayers
SEC. 3501. EXPLANATION OF JOINT AND SEVERAL LIABILITY.
(a) IN
GENERAL.—The Secretary of the Treasury or the
Secretary’s delegate shall, as soon as practicable, but not later
than 180 days after the date of the enactment of this Act, establish
procedures to clearly alert married taxpayers of their joint and
several liabilities on all appropriate publications and instructions.
(b) RIGHT TO LIMIT LIABILITY.—The procedures under sub-
section (a) shall include requirements that notice of an individual’s
right to relief under section 6015 of the Internal Revenue Code
of 1986 shall be included in the statement required by section
6227 of the Omnibus Taxpayer Bill of Rights (Internal Revenue
Service Publication No. 1) and in any collection-related notices.
SEC. 3502. EXPLANATION OF TAXPAYERS’ RIGHTS IN INTERVIEWS WITH
THE INTERNAL REVENUE SERVICE.
The Secretary of the Treasury or the Secretary’s delegate shall,
as soon as practicable, but not later than 180 days after the date
H. R. 2676—87
of the enactment of this Act, revise the statement required by
section 6227 of the Omnibus Taxpayer Bill of Rights (Internal
Revenue Service Publication No. 1) to more clearly inform taxpayers
of their rights—
(1) to be represented at interviews with the Internal
Revenue Service by any person authorized to practice before
the Internal Revenue Service; and
(2) to suspend an interview pursuant to section 7521(b)(2)
of the Internal Revenue Code of 1986.
SEC. 3503. DISCLOSURE OF CRITERIA FOR EXAMINATION SELECTION.
(a) IN GENERAL.—The Secretary of the Treasury or the Sec-
retary’s delegate shall, as soon as practicable, but not later than
180 days after the date of the enactment of this Act, incorporate
into the statement required by section 6227 of the Omnibus Tax-
payer Bill of Rights (Internal Revenue Service Publication No.
1) a statement which sets forth in simple and nontechnical terms
the criteria and procedures for selecting taxpayers for examination.
Such statement shall not include any information the disclosure
of which would be detrimental to law enforcement, but shall specify
the general procedures used by the Internal Revenue Service,
including whether taxpayers are selected for examination on the
basis of information available in the media or on the basis of
information provided to the Internal Revenue Service by informants.
(b) 
TRANSMISSION
TO
COMMITTEES
OF
CONGRESS.—The
Secretary shall transmit drafts of the statement required under
subsection (a) (or proposed revisions to any such statement) to
the Committee on Ways and Means of the House of Representatives
and the Committee on Finance of the Senate on the same day.
SEC. 3504. EXPLANATIONS OF APPEALS AND COLLECTION PROCESS.
The Secretary of the Treasury or the Secretary’s delegate shall,
as soon as practicable, but not later than 180 days after the date
of the enactment of this Act, include with any first letter of proposed
deficiency which allows the taxpayer an opportunity for administra-
tive review in the Internal Revenue Service Office of Appeals an
explanation of the entire process from examination through collec-
tion with respect to such proposed deficiency, including the assist-
ance available to the taxpayer from the National Taxpayer Advocate
at various points in the process.
SEC. 3505. EXPLANATION OF REASON FOR REFUND DISALLOWANCE.
(a) IN GENERAL.—Section 6402 (relating to authority to make
credits or refunds) is amended by adding at the end the following
new subsection:
‘‘( j) EXPLANATION OF REASON FOR REFUND DISALLOWANCE.—
In the case of a disallowance of a claim for refund, the Secretary
shall provide the taxpayer with an explanation for such disallow-
ance.’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to disallowances after the 180th day after the date
of the enactment of this Act.
SEC. 3506. STATEMENTS REGARDING INSTALLMENT AGREEMENTS.
The Secretary of the Treasury or the Secretary’s delegate shall,
beginning not later than July 1, 2000, provide each taxpayer who
has an installment agreement in effect under section 6159 of the
Internal Revenue Code of 1986 an annual statement setting forth
H. R. 2676—88
the initial balance at the beginning of the year, the payments
made during the year, and the remaining balance as of the end
of the year.
SEC. 3507. NOTIFICATION OF CHANGE IN TAX MATTERS PARTNER.
(a) IN GENERAL.—Section 6231(a)(7) (defining tax matters part-
ner) is amended by adding at the end the following new sentence:
‘‘The Secretary shall, within 30 days of selecting a tax matters
partner under the preceding sentence, notify all partners required
to receive notice under section 6223(a) of the name and address
of the person selected.’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to selections of tax matters partners made by the
Secretary of the Treasury after the date of the enactment of this
Act.
SEC. 3508. DISCLOSURE TO TAXPAYERS.
The Secretary of the Treasury or the Secretary’s delegate shall
ensure that any instructions booklet accompanying an individual
Federal income tax return form (including forms 1040, 1040A,
1040EZ, and any similar or successor forms) shall include, in clear
language, in conspicuous print, and in a conspicuous place, a concise
description of the conditions under which return information may
be disclosed to any party outside the Internal Revenue Service,
including disclosure to any State or agency, body, or commission
(or legal representative) thereof.
SEC. 3509. DISCLOSURE OF CHIEF COUNSEL ADVICE.
(a) IN GENERAL.—Section 6110(b)(1) (defining written deter-
mination) is amended by striking ‘‘or technical advice memorandum’’
and inserting ‘‘technical advice memorandum, or Chief Counsel
advice’’.
(b) CHIEF COUNSEL ADVICE.—Section 6110 (relating to public
inspection of written determinations) is amended by redesignating
subsections (i), ( j), (k), and (l) as subsections ( j), (k), (l), and (m),
respectively, and by inserting after subsection (h) the following
new subsection:
‘‘(i) SPECIAL
RULES
FOR
DISCLOSURE
OF
CHIEF
COUNSEL
ADVICE.—
‘‘(1) CHIEF COUNSEL ADVICE DEFINED.—
‘‘(A) IN GENERAL.—For purposes of this section, the
term ‘Chief Counsel advice’ means written advice or
instruction, under whatever name or designation, prepared
by any national office component of the Office of Chief
Counsel which—
‘‘(i) is issued to field or service center employees
of the Service or regional or district employees of the
Office of Chief Counsel; and
‘‘(ii) conveys—
‘‘(I) any legal interpretation of a revenue
provision;
‘‘(II) any Internal Revenue Service or Office
of Chief Counsel position or policy concerning a
revenue provision; or
‘‘(III) any legal interpretation of State law,
foreign law, or other Federal law relating to the
assessment or collection of any liability under a
revenue provision.
H. R. 2676—89
‘‘(B) REVENUE
PROVISION
DEFINED.—For purposes of
subparagraph (A), the term ‘revenue provision’ means any
existing or former internal revenue law, regulation, revenue
ruling, revenue procedure, other published or unpublished
guidance, or tax treaty, either in general or as applied
to specific taxpayers or groups of specific taxpayers.
‘‘(2) ADDITIONAL DOCUMENTS TREATED AS CHIEF COUNSEL
ADVICE.—The Secretary may by regulation provide that this
section shall apply to any advice or instruction prepared and
issued by the Office of Chief Counsel which is not described
in paragraph (1).
‘‘(3) DELETIONS FOR CHIEF COUNSEL ADVICE.—In the case
of Chief Counsel advice open to public inspection pursuant
to this section—
‘‘(A) paragraphs (2) through (7) of subsection (c) shall
not apply, but
‘‘(B) the Secretary may make deletions of material
in accordance with subsections (b) and (c) of section 552
of title 5, United States Code, except that in applying
subsection (b)(3) of such section, no statutory provision
of this title shall be taken into account.
‘‘(4) NOTICE OF INTENTION TO DISCLOSE.—
‘‘(A) NONTAXPAYER-SPECIFIC CHIEF COUNSEL ADVICE.—
In the case of Chief Counsel advice which is written without
reference to a specific taxpayer or group of specific tax-
payers—
‘‘(i) subsection (f )(1) shall not apply; and
‘‘(ii) the Secretary shall, within 60 days after the
issuance of the Chief Counsel advice, complete any
deletions described in subsection (c)(1) or paragraph
(3) and make the Chief Counsel advice, as so edited,
open for public inspection.
‘‘(B) TAXPAYER-SPECIFIC
CHIEF
COUNSEL
ADVICE.—In
the case of Chief Counsel advice which is written with
respect to a specific taxpayer or group of specific taxpayers,
the Secretary shall, within 60 days after the issuance of
the Chief Counsel advice, mail the notice required by sub-
section (f )(1) to each such taxpayer. The notice shall include
a copy of the Chief Counsel advice on which is indicated
the information that the Secretary proposes to delete pursu-
ant to subsection (c)(1). The Secretary may also delete
from the copy of the text of the Chief Counsel advice
any of the information described in paragraph (3), and
shall delete the names, addresses, and other identifying
details of taxpayers other than the person to whom the
advice pertains, except that the Secretary shall not delete
from the copy of the Chief Counsel advice that is furnished
to the taxpayer any information of which that taxpayer
was the source.’’.
(c) CONFORMING AMENDMENTS.—
(1) Section 6110(f )(1) is amended by striking ‘‘The
Secretary’’ and inserting ‘‘Except as otherwise provided by sub-
section (i), the Secretary’’.
(2) Paragraphs (1)(B) and (2) of section 6110( j)(1), as
redesignated by this section, are amended by striking ‘‘sub-
section (g)’’ each place it appears and inserting ‘‘subsection
(g) or (i)(4)(B)’’.
H. R. 2676—90
(3) Section 6110(k)(1)(B), as so redesignated, is amended
by striking ‘‘subsection (c)’’ and inserting ‘‘subsection (c)(1) or
(i)(3)’’.
(d) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as otherwise provided in this sub-
section, the amendments made by this section shall apply to
any Chief Counsel advice issued more than 90 days after the
date of the enactment of this Act.
(2) TRANSITION
RULES.—The amendments made by this
section shall apply to any Chief Counsel advice issued after
December 31, 1985, and before the 91st day after the date
of the enactment of this Act by the offices of the associate
chief counsel for domestic, employee benefits and exempt
organizations, and international, except that any such Chief
Counsel advice shall be treated as made available on a timely
basis if such advice is made available for public inspection
not later than the following dates:
(A) One year after the date of the enactment of this
Act, in the case of all litigation guideline memoranda,
service center advice, tax litigation bulletins, criminal tax
bulletins, and general litigation bulletins.
(B) Eighteen months after such date of enactment,
in the case of field service advice and technical assistance
to the field issued on or after January 1, 1994.
(C) Three years after such date of enactment, in the
case of field service advice and technical assistance to
the field issued on or after January 1, 1992, and before
January 1, 1994.
(D) Six years after such date of enactment, in the
case of any other Chief Counsel advice issued after Decem-
ber 31, 1985.
(3) DOCUMENTS
TREATED
AS
CHIEF
COUNSEL
ADVICE.—If
the Secretary of the Treasury by regulation provides pursuant
to section 6110(i)(2) of the Internal Revenue Code of 1986,
as added by this section, that any additional advice or instruc-
tion issued by the Office of Chief Counsel shall be treated
as Chief Counsel advice, such additional advice or instruction
shall be made available for public inspection pursuant to section
6110 of such Code, as amended by this section, only in accord-
ance with the effective date set forth in such regulation.
(4) CHIEF COUNSEL ADVICE TO BE AVAILABLE ELECTRONI-
CALLY.—The Internal Revenue Service shall make any Chief
Counsel advice issued more than 90 days after the date of
the enactment of this Act and made available for public inspec-
tion pursuant to section 6110 of such Code, as amended by
this section, also available by computer telecommunications
within 1 year after issuance.
Subtitle G—Low-Income Taxpayer Clinics
SEC. 3601. LOW-INCOME TAXPAYER CLINICS.
(a) IN GENERAL.—Chapter 77 (relating to miscellaneous provi-
sions), as amended by section 3411, is amended by adding at the
end the following new section:
H. R. 2676—91
‘‘SEC. 7526. LOW-INCOME TAXPAYER CLINICS.
‘‘(a) IN GENERAL.—The Secretary may, subject to the availabil-
ity of appropriated funds, make grants to provide matching funds
for the development, expansion, or continuation of qualified low-
income taxpayer clinics.
‘‘(b) DEFINITIONS.—For purposes of this section—
‘‘(1) QUALIFIED LOW-INCOME TAXPAYER CLINIC.—
‘‘(A) IN GENERAL.—The term ‘qualified low-income tax-
payer clinic’ means a clinic that—
‘‘(i) does not charge more than a nominal fee for
its services (except for reimbursement of actual costs
incurred); and
‘‘(ii)(I) represents low-income taxpayers in con-
troversies with the Internal Revenue Service; or
‘‘(II) operates programs to inform individuals for
whom English is a second language about their rights
and responsibilities under this title.
‘‘(B) REPRESENTATION OF LOW-INCOME TAXPAYERS.—A
clinic meets the requirements of subparagraph (A)(ii)(I)
if—
‘‘(i) at least 90 percent of the taxpayers represented
by the clinic have incomes which do not exceed 250
percent of the poverty level, as determined in accord-
ance with criteria established by the Director of the
Office of Management and Budget; and
‘‘(ii) the amount in controversy for any taxable
year generally does not exceed the amount specified
in section 7463.
‘‘(2) CLINIC.—The term ‘clinic’ includes—
‘‘(A) a clinical program at an accredited law, business,
or accounting school in which students represent low-
income taxpayers in controversies arising under this title;
and
‘‘(B) an organization described in section 501(c) and
exempt from tax under section 501(a) which satisfies the
requirements of paragraph (1) through representation of
taxpayers or referral of taxpayers to qualified representa-
tives.
‘‘(3) QUALIFIED REPRESENTATIVE.—The term ‘qualified rep-
resentative’ means any individual (whether or not an attorney)
who is authorized to practice before the Internal Revenue Serv-
ice or the applicable court.
‘‘(c) SPECIAL RULES AND LIMITATIONS.—
‘‘(1) AGGREGATE
LIMITATION.—Unless otherwise provided
by specific appropriation, the Secretary shall not allocate more
than $6,000,000 per year (exclusive of costs of administering
the program) to grants under this section.
‘‘(2) LIMITATION
ON
ANNUAL
GRANTS
TO
A
CLINIC.—The
aggregate amount of grants which may be made under this
section to a clinic for a year shall not exceed $100,000.
‘‘(3) MULTI-YEAR GRANTS.—Upon application of a qualified
low-income taxpayer clinic, the Secretary is authorized to award
a multi-year grant not to exceed 3 years.
‘‘(4) CRITERIA
FOR
AWARDS.—In determining whether to
make a grant under this section, the Secretary shall consider—
H. R. 2676—92
‘‘(A) the numbers of taxpayers who will be served by
the clinic, including the number of taxpayers in the geo-
graphical area for whom English is a second language;
‘‘(B) the existence of other low-income taxpayer clinics
serving the same population;
‘‘(C) the quality of the program offered by the low-
income taxpayer clinic, including the qualifications of its
administrators and qualified representatives, and its
record, if any, in providing service to low-income taxpayers;
and
‘‘(D) alternative funding sources available to the clinic,
including amounts received from other grants and contribu-
tions, and the endowment and resources of the institution
sponsoring the clinic.
‘‘(5) REQUIREMENT OF MATCHING FUNDS.—A low-income tax-
payer clinic must provide matching funds on a dollar-for-dollar
basis for all grants provided under this section. Matching funds
may include—
‘‘(A) the salary (including fringe benefits) of individuals
performing services for the clinic; and
‘‘(B) the cost of equipment used in the clinic.
Indirect expenses, including general overhead of the institution
sponsoring the clinic, shall not be counted as matching funds.’’.
(b) CLERICAL AMENDMENT.—The table of sections for chapter
77, as amended by section 3411, is amended by adding at the
end the following new item:
‘‘Sec. 7526. Low-income taxpayer clinics.’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall take effect on the date of the enactment of this Act.
Subtitle H—Other Matters
SEC. 3701. CATALOGING COMPLAINTS.
In collecting data for the report required under section 1211
of the Taxpayer Bill of Rights 2 (Public Law 104–168), the Secretary
of the Treasury or the Secretary’s delegate shall, not later than
January 1, 2000, maintain records of taxpayer complaints of mis-
conduct by Internal Revenue Service employees on an individual
employee basis.
SEC. 3702. ARCHIVE OF RECORDS OF INTERNAL REVENUE SERVICE.
(a) IN GENERAL.—Subsection (l) of section 6103 (relating to
confidentiality and disclosure of returns and return information)
is amended by adding at the end the following new paragraph:
‘‘(17) DISCLOSURE
TO
NATIONAL
ARCHIVES
AND
RECORDS
ADMINISTRATION.—The Secretary shall, upon written request
from the Archivist of the United States, disclose or authorize
the disclosure of returns and return information to officers
and employees of the National Archives and Records Adminis-
tration for purposes of, and only to the extent necessary in,
the appraisal of records for destruction or retention. No such
officer or employee shall, except to the extent authorized by
subsection (f ), (i)(7), or (p), disclose any return or return
information disclosed under the preceding sentence to any per-
son other than to the Secretary, or to another officer or
employee of the National Archives and Records Administration
H. R. 2676—93
whose official duties require such disclosure for purposes of
such appraisal.’’.
(b) CONFORMING AMENDMENTS.—Section 6103(p) is amended—
(1) in paragraph (3)(A), by striking ‘‘or (16)’’ and inserting
‘‘(16), or (17)’’;
(2) in paragraph (4), by striking ‘‘or (14)’’ and inserting
‘‘, (14), or (17)’’ in the matter preceding subparagraph (A);
and
(3) in paragraph (4)(F)(ii), by striking ‘‘or (15)’’ and insert-
ing ‘‘, (15), or (17)’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to requests made by the Archivist of the United States
after the date of the enactment of this Act.
SEC. 3703. PAYMENT OF TAXES.
The Secretary of the Treasury or the Secretary’s delegate shall
establish such rules, regulations, and procedures as are necessary
to allow payment of taxes by check or money order made payable
to the United States Treasury.
SEC. 3704. CLARIFICATION OF AUTHORITY OF SECRETARY RELATING
TO THE MAKING OF ELECTIONS.
Subsection (d) of section 7805 is amended by striking ‘‘by regu-
lations or forms’’.
SEC. 3705. INTERNAL REVENUE SERVICE EMPLOYEE CONTACTS.
(a) NOTICE.—The Secretary of the Treasury or the Secretary’s
delegate shall provide that—
(1) any manually generated correspondence received by
a taxpayer from the Internal Revenue Service shall include
in a prominent manner the name, telephone number, and
unique identifying number of an Internal Revenue Service
employee the taxpayer may contact with respect to the cor-
respondence;
(2) any other correspondence or notice received by a tax-
payer from the Internal Revenue Service shall include in a
prominent manner a telephone number that the taxpayer may
contact; and
(3) an Internal Revenue Service employee shall give a
taxpayer during a telephone or personal contact the employee’s
name and unique identifying number.
(b) SINGLE CONTACT.—The Secretary of the Treasury or the
Secretary’s delegate shall develop a procedure under which, to
the extent practicable and if advantageous to the taxpayer, one
Internal Revenue Service employee shall be assigned to handle
a taxpayer’s matter until it is resolved.
(c) TELEPHONE HELPLINE IN SPANISH.—The Secretary of the
Treasury or the Secretary’s delegate shall provide, in appropriate
circumstances, that taxpayer questions on telephone helplines of
the Internal Revenue Service are answered in Spanish.
(d) OTHER TELEPHONE HELPLINE OPTIONS.—The Secretary of
the Treasury or the Secretary’s delegate shall provide, in appro-
priate circumstances, on telephone helplines of the Internal Revenue
Service an option for any taxpayer to talk to an Internal Revenue
Service employee during normal business hours. The person shall
direct phone questions of the taxpayer to other Internal Revenue
Service personnel who can provide assistance to the taxpayer.
(e) EFFECTIVE DATES.—
H. R. 2676—94
(1) IN GENERAL.—Except as otherwise provided in this sub-
section, this section shall take effect 60 days after the date
of the enactment of this Act.
(2) SUBSECTION
(c).—Subsection (c) shall take effect on
January 1, 2000.
(3) SUBSECTION
(d).—Subsection (d) shall take effect on
January 1, 2000.
(4) UNIQUE IDENTIFYING NUMBER.—Any requirement under
this section to provide a unique identifying number shall take
effect 6 months after the date of the enactment of this Act.
SEC. 3706. USE OF PSEUDONYMS BY INTERNAL REVENUE SERVICE
EMPLOYEES.
(a) IN GENERAL.—Any employee of the Internal Revenue Service
may use a pseudonym only if—
(1) adequate justification for the use of a pseudonym is
provided by the employee, including protection of personal
safety; and
(2) such use is approved by the employee’s supervisor before
the pseudonym is used.
(b) EFFECTIVE DATE.—Subsection (a) shall apply to requests
made after the date of the enactment of this Act.
SEC. 3707. ILLEGAL TAX PROTESTER DESIGNATION.
(a) PROHIBITION.—The officers and employees of the Internal
Revenue Service—
(1) shall not designate taxpayers as illegal tax protesters
(or any similar designation); and
(2) in the case of any such designation made on or before
the date of the enactment of this Act—
(A) shall remove such designation from the individual
master file; and
(B) shall disregard any such designation not located
in the individual master file.
(b) DESIGNATION
OF
NONFILERS
ALLOWED.—An officer or
employee of the Internal Revenue Service may designate any appro-
priate taxpayer as a nonfiler, but shall remove such designation
once the taxpayer has filed income tax returns for 2 consecutive
taxable years and paid all taxes shown on such returns.
(c) EFFECTIVE DATE.—The provisions of this section shall take
effect on the date of the enactment of this Act, except that the
removal of any designation under subsection (a)(2)(A) shall not
be required to begin before January 1, 1999.
SEC. 3708. PROVISION OF CONFIDENTIAL INFORMATION TO CONGRESS
BY WHISTLEBLOWERS.
(a) IN GENERAL.—Section 6103(f ) (relating to disclosure to
committees of Congress) is amended by adding at the end the
following new paragraph:
‘‘(5) DISCLOSURE
BY
WHISTLEBLOWER.—Any person who
otherwise has or had access to any return or return information
under this section may disclose such return or return
information to a committee referred to in paragraph (1) or
any individual authorized to receive or inspect information
under paragraph (4)(A) if such person believes such return
or return information may relate to possible misconduct, mal-
administration, or taxpayer abuse.’’.
H. R. 2676—95
(b) EFFECTIVE DATE.—The amendment made by this section
shall take effect on the date of the enactment of this Act.
SEC. 3709. LISTING OF LOCAL INTERNAL REVENUE SERVICE TELE-
PHONE NUMBERS AND ADDRESSES.
The Secretary of the Treasury or the Secretary’s delegate shall,
as soon as practicable, provide that the local telephone numbers
and addresses of Internal Revenue Service offices located in any
particular area be listed in a telephone book for that area.
SEC. 3710. IDENTIFICATION OF RETURN PREPARERS.
(a) IN GENERAL.—The last sentence of section 6109(a) (relating
to identifying numbers) is amended by striking ‘‘For purposes of
this subsection’’ and inserting ‘‘For purposes of paragraphs (1),
(2), and (3)’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall take effect on the date of the enactment of this Act.
SEC. 3711. OFFSET OF PAST-DUE, LEGALLY ENFORCEABLE STATE
INCOME TAX OBLIGATIONS AGAINST OVERPAYMENTS.
(a) IN GENERAL.—Section 6402 (relating to authority to make
credits or refunds), as amended by section 3505, is amended by
redesignating subsections (e) through ( j) as subsections (f ) through
(k), respectively, and by inserting after subsection (d) the following
new subsection:
‘‘(e) COLLECTION OF PAST-DUE, LEGALLY ENFORCEABLE STATE
INCOME TAX OBLIGATIONS.—
‘‘(1) IN GENERAL.—Upon receiving notice from any State
that a named person owes a past-due, legally enforceable State
income tax obligation to such State, the Secretary shall, under
such conditions as may be prescribed by the Secretary—
‘‘(A) reduce the amount of any overpayment payable
to such person by the amount of such State income tax
obligation;
‘‘(B) pay the amount by which such overpayment is
reduced under subparagraph (A) to such State and notify
such State of such person’s name, taxpayer identification
number, address, and the amount collected; and
‘‘(C) notify the person making such overpayment that
the overpayment has been reduced by an amount necessary
to satisfy a past-due, legally enforceable State income tax
obligation.
If an offset is made pursuant to a joint return, the notice
under subparagraph (B) shall include the names, taxpayer
identification numbers, and addresses of each person filing
such return.
‘‘(2) OFFSET PERMITTED ONLY AGAINST RESIDENTS OF STATE
SEEKING OFFSET.—Paragraph (1) shall apply to an overpayment
by any person for a taxable year only if the address shown
on the Federal return for such taxable year of the overpayment
is an address within the State seeking the offset.
‘‘(3) PRIORITIES FOR OFFSET.—Any overpayment by a person
shall be reduced pursuant to this subsection—
‘‘(A) after such overpayment is reduced pursuant to—
‘‘(i) subsection (a) with respect to any liability for
any internal revenue tax on the part of the person
who made the overpayment;
H. R. 2676—96
‘‘(ii) subsection (c) with respect to past-due support;
and
‘‘(iii) subsection (d) with respect to any past-due,
legally enforceable debt owed to a Federal agency; and
‘‘(B) before such overpayment is credited to the future
liability for any Federal internal revenue tax of such person
pursuant to subsection (b).
If the Secretary receives notice from one or more agencies
of the State of more than one debt subject to paragraph (1)
that is owed by such person to such an agency, any overpayment
by such person shall be applied against such debts in the
order in which such debts accrued.
‘‘(4) NOTICE; CONSIDERATION OF EVIDENCE.—No State may
take action under this subsection until such State—
‘‘(A) notifies by certified mail with return receipt the
person owing the past-due State income tax liability that
the State proposes to take action pursuant to this section;
‘‘(B) gives such person at least 60 days to present
evidence that all or part of such liability is not past-due
or not legally enforceable;
‘‘(C) considers any evidence presented by such person
and determines that an amount of such debt is past-due
and legally enforceable; and
‘‘(D) satisfies such other conditions as the Secretary
may prescribe to ensure that the determination made under
subparagraph (C) is valid and that the State has made
reasonable efforts to obtain payment of such State income
tax obligation.
‘‘(5) PAST-DUE, LEGALLY ENFORCEABLE STATE INCOME TAX
OBLIGATION.—For purposes of this subsection, the term ‘past-
due, legally enforceable State income tax obligation’ means
a debt—
‘‘(A)(i) which resulted from—
‘‘(I) a judgment rendered by a court of competent
jurisdiction which has determined an amount of State
income tax to be due; or
‘‘(II) a determination after an administrative
hearing which has determined an amount of State
income tax to be due; and
‘‘(ii) which is no longer subject to judicial review; or
‘‘(B) which resulted from a State income tax which
has been assessed but not collected, the time for redeter-
mination of which has expired, and which has not been
delinquent for more than 10 years.
For purposes of this paragraph, the term ‘State income tax’
includes any local income tax administered by the chief tax
administration agency of the State.
‘‘(6) REGULATIONS.—The Secretary shall issue regulations
prescribing the time and manner in which States must submit
notices of past-due, legally enforceable State income tax obliga-
tions and the necessary information that must be contained
in or accompany such notices. The regulations shall specify
the types of State income taxes and the minimum amount
of debt to which the reduction procedure established by para-
graph (1) may be applied. The regulations may require States
to pay a fee to reimburse the Secretary for the cost of applying
such procedure. Any fee paid to the Secretary pursuant to
H. R. 2676—97
the preceding sentence shall be used to reimburse appropria-
tions which bore all or part of the cost of applying such proce-
dure.
‘‘(7) ERRONEOUS PAYMENT TO STATE.—Any State receiving
notice from the Secretary that an erroneous payment has been
made to such State under paragraph (1) shall pay promptly
to the Secretary, in accordance with such regulations as the
Secretary may prescribe, an amount equal to the amount of
such erroneous payment (without regard to whether any other
amounts payable to such State under such paragraph have
been paid to such State).’’.
(b) DISCLOSURE OF CERTAIN INFORMATION TO STATES REQUEST-
ING REFUND OFFSETS FOR PAST-DUE, LEGALLY ENFORCEABLE STATE
INCOME TAX OBLIGATIONS.—
(1) Paragraph (10) of section 6103(l) is amended by striking
‘‘(c) or (d)’’ each place it appears and inserting ‘‘(c), (d), or
(e)’’.
(2) The heading for paragraph (10) is amended by striking
‘‘SECTION 6402 (c) OR 6402 (d)’’ AND INSERTING ‘‘SUBSECTION (c),
(d), OR (e) OF SECTION 6402’’.
(c) CONFORMING AMENDMENTS.—
(1) Subsection (a) of section 6402 is amended by striking
‘‘(c) and (d)’’ and inserting ‘‘(c), (d), and (e)’’.
(2) Paragraph (2) of section 6402(d) is amended by striking
‘‘and before such overpayment’’ and inserting ‘‘and before such
overpayment is reduced pursuant to subsection (e) and before
such overpayment’’.
(3) Subsection (f ) of section 6402, as redesignated by sub-
section (a), is amended—
(A) by striking ‘‘(c) or (d)’’ and inserting ‘‘(c), (d), or
(e)’’; and
(B) by striking ‘‘Federal agency’’ and inserting ‘‘Federal
agency or State’’.
(4) Subsection (h) of section 6402, as redesignated by sub-
section (a), is amended by striking ‘‘subsection (c)’’ and inserting
‘‘subsection (c) or (e)’’.
(d) EFFECTIVE DATE.—The amendments made by this section
(other than subsection (d)) shall apply to refunds payable under
section 6402 of the Internal Revenue Code of 1986 after December
31, 1999.
SEC. 
3712. 
REPORTING 
REQUIREMENTS 
IN 
CONNECTION 
WITH
EDUCATION TAX CREDIT.
(a) AMOUNTS TO BE REPORTED.—Subparagraph (C) of section
6050S(b)(2) is amended—
(1) by redesignating clauses (ii) and (iii) as clauses (iii)
and (iv), respectively, and by inserting after clause (i) the
following new clause:
‘‘(ii) the amount of any grant received by such
individual for payment of costs of attendance and proc-
essed by the person making such return during such
calendar year,’’;
(2) in clause (iii) (as so redesignated), by inserting ‘‘by
the person making such return’’ after ‘‘year’’; and
(3) in clause (iv) (as so redesignated), by inserting ‘‘and’’
at the end.
(b) CONFORMING AMENDMENTS.—
H. R. 2676—98
(1) Paragraph (2) of section 6050S(d) is amended by striking
‘‘aggregate’’.
(2) Subsection (e) of section 6050S is amended by inserting
‘‘(without regard to subsection (g)(2) thereof)’’ after ‘‘section
25A’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to returns required to be filed with respect to taxable
years beginning after December 31, 1998.
Subtitle I—Studies
SEC. 3801. ADMINISTRATION OF PENALTIES AND INTEREST.
The Joint Committee on Taxation and the Secretary of the
Treasury shall each conduct a separate study—
(1) reviewing the administration and implementation by
the Internal Revenue Service of the interest and penalty provi-
sions of the Internal Revenue Code of 1986 (including the
penalty reform provisions of the Omnibus Budget Reconciliation
Act of 1989); and
(2) making any legislative and administrative recommenda-
tions the Committee or the Secretary deems appropriate to
simplify penalty or interest administration and reduce taxpayer
burden.
Such studies shall be submitted to the Committee on Ways and
Means of the House of Representatives and the Committee on
Finance of the Senate not later than 1 year after the date of
the enactment of this Act.
SEC. 3802. CONFIDENTIALITY OF TAX RETURN INFORMATION.
The Joint Committee on Taxation and the Secretary of the
Treasury shall each conduct a separate study of the scope and
use of provisions regarding taxpayer confidentiality, and shall report
the findings of such study, together with such recommendations
as the Committee or the Secretary deems appropriate, to the Con-
gress not later than 18 months after the date of the enactment
of this Act. Such study shall examine—
(1) the present protections for taxpayer privacy;
(2) any need for third parties to use tax return information;
(3) whether greater levels of voluntary compliance may
be achieved by allowing the public to know who is legally
required to file tax returns, but does not file tax returns;
(4) the interrelationship of the taxpayer confidentiality
provisions in the Internal Revenue Code of 1986 with such
provisions in other Federal law, including section 552a of title
5, United States Code (commonly known as the ‘‘Freedom of
Information Act’’);
(5) the impact on taxpayer privacy of the sharing of income
tax return information for purposes of enforcement of State
and local tax laws other than income tax laws, and including
the impact on the taxpayer privacy intended to be protected
at the Federal, State, and local levels under Public Law 105–
35, the Taxpayer Browsing Protection Act of 1997; and
(6) whether the public interest would be served by greater
disclosure of information relating to tax exempt organizations
described in section 501 of the Internal Revenue Code of 1986.
H. R. 2676—99
SEC. 3803. STUDY OF NONCOMPLIANCE WITH INTERNAL REVENUE
LAWS BY TAXPAYERS.
Not later than 1 year after the date of the enactment of this
Act, the Secretary of the Treasury and the Commissioner of Internal
Revenue shall jointly conduct a study, in consultation with the
Joint Committee on Taxation, of the noncompliance with internal
revenue laws by taxpayers (including willful noncompliance and
noncompliance due to tax law complexity or other factors) and
report the findings of such study to Congress.
SEC. 3804. STUDY OF PAYMENTS MADE FOR DETECTION OF UNDERPAY-
MENTS AND FRAUD.
Not later than 1 year after the date of the enactment of this
Act, the Secretary of the Treasury shall conduct a study and report
to Congress on the use of section 7623 of the Internal Revenue
Code of 1986 including—
(1) an analysis of the present use of such section and
the results of such use; and
(2) any legislative or administrative recommendations
regarding the provisions of such section and its application.
TITLE IV—CONGRESSIONAL ACCOUNT-
ABILITY FOR THE INTERNAL REVE-
NUE SERVICE
Subtitle A—Oversight
SEC. 4001. EXPANSION OF DUTIES OF THE JOINT COMMITTEE ON
TAXATION.
(a) IN GENERAL.—Section 8021 (relating to the powers of the
Joint Committee on Taxation) is amended by adding at the end
the following new subsections:
‘‘(e) INVESTIGATIONS.—The Joint Committee shall review all
requests (other than requests by the chairman or ranking member
of a committee or subcommittee) for investigations of the Internal
Revenue Service by the General Accounting Office, and approve
such requests when appropriate, with a view towards eliminating
overlapping investigations, ensuring that the General Accounting
Office has the capacity to handle the investigation, and ensuring
that investigations focus on areas of primary importance to tax
administration.
‘‘(f ) RELATING TO JOINT REVIEWS.—
‘‘(1) IN GENERAL.—The Chief of Staff, and the staff of the
Joint Committee, shall provide such assistance as is required
for joint reviews described in paragraph (2).
‘‘(2) JOINT REVIEWS.—Before June 1 of each calendar year
after 1998 and before 2004, there shall be a joint review of
the strategic plans and budget for the Internal Revenue Service
and such other matters as the Chairman of the Joint Committee
deems appropriate. Such joint review shall be held at the
call of the Chairman of the Joint Committee and shall include
two members of the majority and one member of the minority
from each of the Committees on Finance, Appropriations, and
Governmental Affairs of the Senate, and the Committees on
H. R. 2676—100
Ways and Means, Appropriations, and Government Reform and
Oversight of the House of Representatives.’’.
(b) EFFECTIVE DATES.—
(1) Subsection (e) of section 8021 of the Internal Revenue
Code of 1986, as added by subsection (a) of this section, shall
apply to requests made after the date of the enactment of
this Act.
(2) Subsection (f ) of such section shall take effect on the
date of the enactment of this Act.
SEC. 4002. COORDINATED OVERSIGHT REPORTS.
(a) IN GENERAL.—Paragraph (3) of section 8022 (relating to
the duties of the Joint Committee on Taxation) is amended to
read as follows:
‘‘(3) REPORTS.—
‘‘(A) To report, from time to time, to the Committee
on Finance and the Committee on Ways and Means, and,
in its discretion, to the Senate or House of Representatives,
or both, the results of its investigations, together with
such recommendations as it may deem advisable.
‘‘(B) Subject to amounts specifically appropriated to
carry out this subparagraph, to report, at least once each
Congress, to the Committee on Finance and the Committee
on Ways and Means on the overall state of the Federal
tax system, together with recommendations with respect
to possible simplification proposals and other matters relat-
ing to the administration of the Federal tax system as
it may deem advisable.
‘‘(C) To report, for each calendar year after 1998 and
before 2004, to the Committees on Finance, Appropriations,
and Governmental Affairs of the Senate, and to the
Committees on Ways and Means, Appropriations, and
Government Reform and Oversight of the House of Rep-
resentatives, with respect to—
‘‘(i) strategic and business plans for the Internal
Revenue Service;
‘‘(ii) progress of the Internal Revenue Service in
meeting its objectives;
‘‘(iii) the budget for the Internal Revenue Service
and whether it supports its objectives;
‘‘(iv) progress of the Internal Revenue Service in
improving taxpayer service and compliance;
‘‘(v) progress of the Internal Revenue Service on
technology modernization; and
‘‘(vi) the annual filing season.’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall take effect on the date of the enactment of this Act.
Subtitle B—Century Date Change
SEC. 4011. CENTURY DATE CHANGE.
It is the sense of the Congress that—
(1) the Internal Revenue Service should place a high prior-
ity on resolving the century date change computing problems;
and
H. R. 2676—101
(2) the Internal Revenue Service efforts to resolve the cen-
tury date change computing problems should be funded fully
to provide for certain resolution of such problems.
Subtitle C—Tax Law Complexity
SEC. 4021. ROLE OF THE INTERNAL REVENUE SERVICE.
It is the sense of the Congress that the Internal Revenue
Service should provide Congress with an independent view of tax
administration, and that during the legislative process, the tax
writing committees of Congress should hear from front-line tech-
nical experts at the Internal Revenue Service with respect to the
administrability of pending amendments to the Internal Revenue
Code of 1986.
SEC. 4022. TAX LAW COMPLEXITY ANALYSIS.
(a) COMMISSIONER STUDY.—
(1) IN GENERAL.—The Commissioner of Internal Revenue
shall conduct each year after 1998 an analysis of the sources
of complexity in administration of the Federal tax laws. Such
analysis may include an analysis of—
(A) questions frequently asked by taxpayers with
respect to return filing;
(B) common errors made by taxpayers in filling out
their returns;
(C) areas of law which frequently result in disagree-
ments between taxpayers and the Internal Revenue
Service;
(D) major areas of law in which there is no (or incom-
plete) published guidance or in which the law is uncertain;
(E) areas in which revenue officers make frequent
errors interpreting or applying the law;
(F) the impact of recent legislation on complexity; and
(G) forms supplied by the Internal Revenue Service,
including the time it takes for taxpayers to complete and
review forms, the number of taxpayers who use each form,
and how recent legislation has affected the time it takes
to complete and review forms.
(2) REPORT.—The Commissioner shall not later than March
1 of each year report the results of the analysis conducted
under paragraph (1) for the preceding year to the Committee
on Ways and Means of the House of Representatives and the
Committee on Finance of the Senate. The report shall include
any recommendations—
(A) for reducing the complexity of the administration
of Federal tax laws; and
(B) for repeal or modification of any provision the
Commissioner believes adds undue and unnecessary
complexity to the administration of the Federal tax laws.
(b) ANALYSIS TO ACCOMPANY CERTAIN LEGISLATION.—
(1) IN
GENERAL.—The Joint Committee on Taxation, in
consultation with the Internal Revenue Service and the Depart-
ment of the Treasury, shall include a tax complexity analysis
in each report for legislation, or provide such analysis to mem-
bers of the committee reporting the legislation as soon as prac-
ticable after the report is filed, if—
H. R. 2676—102
(A) such legislation is reported by the Committee on
Finance in the Senate, the Committee on Ways and Means
of the House of Representatives, or any committee of con-
ference; and
(B) such legislation includes a provision which would
directly or indirectly amend the Internal Revenue Code
of 1986 and which has widespread applicability to individ-
uals or small businesses.
(2) TAX COMPLEXITY ANALYSIS.—For purposes of this sub-
section, the term ‘‘tax complexity analysis’’ means, with respect
to any legislation, a report on the complexity and administrative
difficulties of each provision described in paragraph (1)(B)
which—
(A) includes—
(i) an estimate of the number of taxpayers affected
by the provision; and
(ii) if applicable, the income level of taxpayers
affected by the provision; and
(B) should include (if determinable)—
(i) the extent to which tax forms supplied by the
Internal Revenue Service would require revision and
whether any new forms would be required;
(ii) the extent to which taxpayers would be
required to keep additional records;
(iii) the estimated cost to taxpayers to comply with
the provision;
(iv) the extent to which enactment of the provision
would require the Internal Revenue Service to develop
or modify regulatory guidance;
(v) the extent to which the provision may result
in disagreements between taxpayers and the Internal
Revenue Service; and
(vi) any expected impact on the Internal Revenue
Service from the provision (including the impact on
internal training, revision of the Internal Revenue
Manual, reprogramming of computers, and the extent
to which the Internal Revenue Service would be
required to divert or redirect resources in response
to the provision).
(3) LEGISLATION SUBJECT TO POINT OF ORDER IN HOUSE
OF REPRESENTATIVES.—
(A) LEGISLATION
REPORTED
BY
COMMITTEE
ON
WAYS
AND MEANS.—Clause 2(l) of rule XI of the Rules of the
House of Representatives is amended by adding at the
end the following new subparagraph:
‘‘(8) The report of the Committee on Ways and Means on
any bill or joint resolution containing any provision amending the
Internal Revenue Code of 1986 shall include a Tax Complexity
Analysis prepared by the Joint Committee on Taxation in accord-
ance with section 4022(b) of the Internal Revenue Service
Restructuring and Reform Act of 1998 unless the Committee on
Ways and Means causes to have such Analysis printed in the
Congressional Record prior to the consideration of the bill or joint
resolution.’’.
(B) CONFERENCE REPORTS.—Rule XXVIII of the Rules
of the House of Representatives is amended by adding
at the end the following new clause:
H. R. 2676—103
‘‘7. It shall not be in order to consider the report of a committee
of conference which contains any provision amending the Internal
Revenue Code of 1986 unless—
‘‘(a) the accompanying joint explanatory statement contains
a Tax Complexity Analysis prepared by the Joint Committee
on Taxation in accordance with section 4022(b) of the Internal
Revenue Service Restructuring and Reform Act of 1998; or
‘‘(b) such Analysis is printed in the Congressional Record
prior to the consideration of the report.’’.
(C) RULES OF HOUSE OF REPRESENTATIVES.—This para-
graph is enacted by the House of Representatives—
(i) as an exercise of the rulemaking power of the
House of Representatives, and as such it is deemed
a part of the Rules of the House, and it supersedes
other rules only to the extent that it is inconsistent
therewith; and
(ii) with full recognition of the constitutional right
of the House to change its rules at any time, in the
same manner and to the same extent as in the case
of any other rule of the House.
(4) EFFECTIVE DATE.—This subsection shall apply to legisla-
tion considered on and after January 1, 1999.
TITLE V—ADDITIONAL PROVISIONS
SEC. 5001. LOWER CAPITAL GAINS RATES TO APPLY TO PROPERTY
HELD MORE THAN 1 YEAR.
(a) GENERAL RULE.—
(1) Paragraph (5) of section 1(h) is amended to read as
follows:
‘‘(5) 28-PERCENT
RATE
GAIN.—For purposes of this sub-
section, the term ‘28-percent rate gain’ means the excess (if
any) of—
‘‘(A) the sum of—
‘‘(i) collectibles gain; and
‘‘(ii) section 1202 gain, over
‘‘(B) the sum of—
‘‘(i) collectibles loss;
‘‘(ii) the net short-term capital loss; and
‘‘(iii) the amount of long-term capital loss carried
under section 1212(b)(1)(B) to the taxable year.’’.
(2) Subparagraph (A) of section 1(h)(6) is amended by
striking ‘‘18 months’’ and inserting ‘‘1 year’’.
(3) Clauses (i) and (ii) of section 1(h)(7)(A) are amended
to read as follows:
‘‘(i) the amount of long-term capital gain (not other-
wise treated as ordinary income) which would be treat-
ed as ordinary income if section 1250(b)(1) included
all depreciation and the applicable percentage under
section 1250(a) were 100 percent, over
‘‘(ii) the excess (if any) of—
‘‘(I) the amount described in paragraph (5)(B);
over
‘‘(II) the amount described in paragraph
(5)(A).’’.
H. R. 2676—104
(4) So much of paragraph (13) of section 1(h) as precedes
subparagraph (C) is amended to read as follows:
‘‘(13) SPECIAL RULES.—
‘‘(A) DETERMINATION
OF
28-PERCENT
RATE
GAIN.—In
applying paragraph (5)—
‘‘(i) the amount determined under subparagraph
(A) of paragraph (5) shall include long-term capital
gain (not otherwise described in such subparagraph)—
‘‘(I) which is properly taken into account for
the portion of the taxable year before May 7, 1997;
or
‘‘(II) from property held not more than 18
months which is properly taken into account for
the portion of the taxable year after July 28, 1997,
and before January 1, 1998;
‘‘(ii) the amount determined under subparagraph
(B) of paragraph (5) shall include long-term capital
loss (not otherwise described in such subparagraph)—
‘‘(I) which is properly taken into account for
the portion of the taxable year before May 7, 1997;
or
‘‘(II) from property held not more than 18
months which is properly taken into account for
the portion of the taxable year after July 28, 1997,
and before January 1, 1998; and
‘‘(iii) subparagraph (B) of paragraph (5) (as in effect
immediately before the enactment of this clause) shall
apply to amounts properly taken into account before
January 1, 1998.
‘‘(B) DETERMINATION OF UNRECAPTURED SECTION 1250
GAIN.—The amount determined under paragraph (7)(A)
shall not include gain—
‘‘(i) which is properly taken into account for the
portion of the taxable year before May 7, 1997; or
‘‘(ii) from property held not more than 18 months
which is properly taken into account for the portion
of the taxable year after July 28, 1997, and before
January 1, 1998.’’.
(5) Paragraphs (11) and (12) of section 1223, and section
1235(a), are each amended by striking ‘‘18 months’’ each place
it appears and inserting ‘‘1 year’’.
(b) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
ending after December 31, 1997.
(2) SUBSECTION
(a)(5).—The amendments made by sub-
section (a)(5) shall take effect on January 1, 1998.
SEC. 5002. CLARIFICATION OF EXCLUSION OF MEALS FOR CERTAIN
EMPLOYEES.
(a) IN GENERAL.—Subsection (b) of section 119 (relating to
meals or lodging furnished for the convenience of the employer)
is amended by adding at the end the following new paragraph:
‘‘(4) MEALS FURNISHED TO EMPLOYEES ON BUSINESS PREM-
ISES
WHERE
MEALS
OF
MOST
EMPLOYEES
ARE
OTHERWISE
EXCLUDABLE.—All meals furnished on the business premises
of an employer to such employer’s employees shall be treated
H. R. 2676—105
as furnished for the convenience of the employer if, without
regard to this paragraph, more than half of the employees
to whom such meals are furnished on such premises are fur-
nished such meals for the convenience of the employer.’’.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to taxable years beginning before, on, or after the
date of the enactment of this Act.
SEC. 5003. CLARIFICATION OF DESIGNATION OF NORMAL TRADE
RELATIONS.
(a) FINDINGS AND POLICY.—
(1) FINDINGS.—The Congress makes the following findings:
(A) Since the 18th century, the principle of non-
discrimination among countries with which the United
States has trade relations, commonly referred to as ‘‘most-
favored-nation’’ treatment, has been a cornerstone of
United States trade policy.
(B) Although the principle remains firmly in place
as a fundamental concept in United States trade relations,
the term ‘‘most-favored-nation’’ is a misnomer which has
led to public misunderstanding.
(C) It is neither the purpose nor the effect of the
most-favored-nation principle to treat any country as ‘‘most
favored’’. To the contrary, the principle reflects the
intention to confer on a country the same trade benefits
that are conferred on any other country, that is, the
intention not to discriminate among trading partners.
(D) The term ‘‘normal trade relations’’ is a more
accurate description of the principle of nondiscrimination
as it applies to the tariffs applicable generally to imports
from United States trading partners, that is, the general
rates of duty set forth in column 1 of the Harmonized
Tariff Schedule of the United States.
(2) POLICY.—It is the sense of the Congress that—
(A) the language used in United States laws, treaties,
agreements, executive orders, directives, and regulations
should more clearly and accurately reflect the underlying
principles of United States trade policy; and
(B) accordingly, the term ‘‘normal trade relations’’
should, where appropriate, be substituted for the term
‘‘most-favored-nation’’.
(b) CHANGE IN TERMINOLOGY.—
(1) TRADE EXPANSION ACT OF 1962.—The heading for section
251 of the Trade Expansion Act of 1962 (19 U.S.C. 1881)
is amended to read as follows: ‘‘NORMAL TRADE RELATIONS’’.
(2) TRADE ACT OF 1974.—(A) Section 402 of the Trade Act
of 1974 (19 U.S.C. 2432) is amended by striking ‘‘(most-favored-
nation treatment)’’ each place it appears and inserting ‘‘(normal
trade relations)’’.
(B) Section 601(9) of the Trade Act of 1974 (19 U.S.C.
2481(9)) is amended by striking ‘‘most-favored-nation treat-
ment’’ and inserting ‘‘trade treatment based on normal trade
relations (known under international law as most-favored-
nation treatment)’’.
(3) CFTA.—Section 302(a)(3)(C) of the United States Can-
ada Free-Trade Agreement Implementation Act of 1988 (19
U.S.C. 2112 note) is amended by striking ‘‘the most-favored-
H. R. 2676—106
nation rate of duty’’ each place it appears and inserting ‘‘the
general subcolumn of the column 1 rate of duty set forth in
the Harmonized Tariff Schedule of the United States’’.
(4) NAFTA.—Section 202(n) of the North American Free
Trade Agreement Implementation Act (19 U.S.C. 3332(n)) is
amended by striking ‘‘most-favored-nation’’.
(5) URUGUAY ROUND AGREEMENTS ACT.—Section 135(a)(2)
of the Uruguay Round Agreements Act (19 U.S.C. 3555(a)(2))
is amended by striking ‘‘most-favored-nation’’ and inserting
‘‘normal trade relations’’.
(6) SEED ACT.—Section 2(c)(11) of the Support for East
European 
Democracy 
(SEED) 
Act 
of 
1989 
(22 
U.S.C.
5401(c)(11)) is amended—
(A) by striking ‘‘(commonly referred to as ‘most favored
nation status’)’’; and
(B) by striking ‘‘MOST FAVORED NATION TRADE STATUS’’
in the heading and inserting ‘‘NORMAL TRADE RELATIONS’’.
(7) UNITED STATES-HONG KONG POLICY ACT OF 1992.—
Section 103(4) of the United States-Hong Kong Policy Act of
1992 (22 U.S.C. 5713(4)) is amended by striking ‘‘(commonly
referred to as ‘most-favored-nation status’)’’.
(c) SAVINGS PROVISIONS.—Nothing in this section shall affect
the meaning of any provision of law, Executive order, Presidential
proclamation, rule, regulation, delegation of authority, other docu-
ment, or treaty or other international agreement of the United
States relating to the principle of ‘‘most-favored-nation’’ (or ‘‘most
favored nation’’) treatment. Any Executive order, Presidential
proclamation, rule, regulation, delegation of authority, other docu-
ment, or treaty or other international agreement of the United
States that has been issued, made, granted, or allowed to become
effective and that is in effect on the effective date of this Act,
or was to become effective on or after the effective date of this
Act, shall continue in effect according to its terms until modified,
terminated, superseded, set aside, or revoked in accordance with
law.
TITLE VI—TECHNICAL CORRECTIONS
SEC. 6001. SHORT TITLE; COORDINATION WITH OTHER TITLES.
(a) SHORT TITLE.—This title may be cited as the ‘‘Tax Technical
Corrections Act of 1998’’.
(b) COORDINATION WITH OTHER TITLES.—For purposes of apply-
ing the amendments made by any title of this Act other than
this title, the provisions of this title shall be treated as having
been enacted immediately before the provisions of such other titles.
SEC. 6002. DEFINITIONS.
For purposes of this title—
(1) 1986 CODE.—The term ‘‘1986 Code’’ means the Internal
Revenue Code of 1986.
(2) 1997 ACT.—The term ‘‘1997 Act’’ means the Taxpayer
Relief Act of 1997.
SEC. 6003. AMENDMENTS RELATED TO TITLE I OF 1997 ACT.
(a) AMENDMENTS RELATED TO SECTION 101(a) OF 1997 ACT.—
(1) Subsection (d) of section 24 of the 1986 Code is
amended—
H. R. 2676—107
(A) by striking paragraphs (3) and (4);
(B) by redesignating paragraph (5) as paragraph (3);
and
(C) by striking paragraphs (1) and (2) and inserting
the following new paragraphs:
‘‘(1) IN GENERAL.—In the case of a taxpayer with three
or more qualifying children for any taxable year, the aggregate
credits allowed under subpart C shall be increased by the
lesser of—
‘‘(A) the credit which would be allowed under this
section without regard to this subsection and the limitation
under section 26(a); or
‘‘(B) the amount by which the aggregate amount of
credits allowed by this subpart (without regard to this
subsection) would increase if the limitation imposed by
section 26(a) were increased by the excess (if any) of—
‘‘(i) the taxpayer’s Social Security taxes for the
taxable year, over
‘‘(ii) the credit allowed under section 32 (deter-
mined without regard to subsection (n)) for the taxable
year.
The amount of the credit allowed under this subsection shall
not be treated as a credit allowed under this subpart and
shall reduce the amount of credit otherwise allowable under
subsection (a) without regard to section 26(a).
‘‘(2) REDUCTION OF CREDIT TO TAXPAYER SUBJECT TO ALTER-
NATIVE MINIMUM TAX.—The credit determined under this sub-
section for the taxable year shall be reduced by the excess
(if any) of—
‘‘(A) the amount of tax imposed by section 55 (relating
to alternative minimum tax) with respect to such taxpayer
for such taxable year, over
‘‘(B) the amount of the reduction under section 32(h)
with respect to such taxpayer for such taxable year.’’.
(2) Paragraph (3) of section 24(d) of the 1986 Code (as
redesignated by paragraph (1)) is amended by striking ‘‘para-
graph (3)’’ and inserting ‘‘paragraph (1)’’.
(b) AMENDMENTS RELATED TO SECTION 101(b) OF 1997 ACT.—
(1) The subsection (m) of section 32 of the 1986 Code
added by section 101(b) of the 1997 Act is amended to read
as follows:
‘‘(n) SUPPLEMENTAL CHILD CREDIT.—
‘‘(1) IN GENERAL.—In the case of a taxpayer with respect
to whom a credit is allowed under section 24(a) for the taxable
year, the credit otherwise allowable under this section shall
be increased by the lesser of—
‘‘(A) the excess of—
‘‘(i) the credits allowed under subpart A (deter-
mined after the application of section 26 and without
regard to this subsection), over
‘‘(ii) the credits which would be allowed under
subpart A after the application of section 26, deter-
mined without regard to section 24 and this subsection;
or
‘‘(B) the excess of—
H. R. 2676—108
‘‘(i) the sum of the credits allowed under this part
(determined without regard to sections 31, 33, and
34 and this subsection), over
‘‘(ii) the sum of the regular tax and the Social
Security taxes (as defined in section 24(d)).
The credit determined under this subsection shall be allowed
without regard to any other provision of this section, including
subsection (d).
‘‘(2) COORDINATION WITH OTHER CREDITS.—The amount of
the credit under this subsection shall reduce the amount of
the credits otherwise allowable under subpart A for the taxable
year (determined after the application of section 26), but the
amount of the credit under this subsection (and such reduction)
shall not be taken into account in determining the amount
of any other credit allowable under this part.’’.
SEC. 6004. AMENDMENTS RELATED TO TITLE II OF 1997 ACT.
(a) AMENDMENTS RELATED TO SECTION 201 OF 1997 ACT.—
(1) The item relating to section 25A in the table of sections
for subpart A of part IV of subchapter A of chapter 1 of
the 1986 Code is amended to read as follows:
‘‘Sec. 25A. Hope and Lifetime Learning credits.’’.
(2) Subsection (a) of section 6050S of the 1986 Code is
amended to read as follows:
‘‘(a) IN GENERAL.—Any person—
‘‘(1) which is an eligible educational institution—
‘‘(A) which receives payments for qualified tuition and
related expenses with respect to any individual for any
calendar year; or
‘‘(B) which makes reimbursements or refunds (or simi-
lar amounts) to any individual of qualified tuition and
related expenses;
‘‘(2) which is engaged in a trade or business of making
payments to any individual under an insurance arrangement
as reimbursements or refunds (or similar amounts) of qualified
tuition and related expenses; or
‘‘(3) except as provided in regulations, which is engaged
in a trade or business and, in the course of which, receives
from any individual interest aggregating $600 or more for any
calendar year on one or more qualified education loans,
shall make the return described in subsection (b) with respect
to the individual at such time as the Secretary may by regulations
prescribe.’’.
(3) Subparagraph (A) of section 201(c)(2) of the 1997 Act
is amended to read as follows:
‘‘(A) Subparagraph (B) of section 6724(d)(1) (relating
to definitions) is amended by redesignating clauses (x)
through (xv) as clauses (xi) through (xvi), respectively, and
by inserting after clause (ix) the following new clause:
‘‘ ‘(x) section 6050S (relating to returns relating
to 
payments 
for 
qualified 
tuition 
and 
related
expenses),’ ’’.
(b) AMENDMENTS RELATED TO SECTION 202 OF 1997 ACT.—
(1) Paragraph (1) of section 221(e) of the 1986 Code is
amended by inserting ‘‘by the taxpayer solely’’ after ‘‘incurred’’
the first place it appears.
H. R. 2676—109
(2) Subsection (d) of section 221 of the 1986 Code
is amended by adding at the end the following new sen-
tence: ‘‘Such 60 months shall be determined in the manner
prescribed by the Secretary in the case of multiple loans
which are refinanced by, or serviced as, a single loan and
in the case of loans incurred before the date of the enact-
ment of this section.’’.
(c) AMENDMENTS RELATED TO SECTION 211 OF 1997 ACT.—
(1) Paragraph (3) of section 135(c) of the 1986 Code is
amended to read as follows:
‘‘(3) 
ELIGIBLE
EDUCATIONAL
INSTITUTION.—The 
term
‘eligible educational institution’ has the meaning given such
term by section 529(e)(5).’’.
(2) Subparagraph (A) of section 529(c)(3) of the 1986 Code
is amended by striking ‘‘section 72(b)’’ and inserting ‘‘section
72’’.
(3) Paragraph (2) of section 529(e) of the 1986 Code is
amended to read as follows:
‘‘(2) MEMBER OF FAMILY.—The term ‘member of the family’
means, with respect to any designated beneficiary—
‘‘(A) the spouse of such beneficiary;
‘‘(B) an individual who bears a relationship to such
beneficiary which is described in paragraphs (1) through
(8) of section 152(a); and
‘‘(C) the spouse of any individual described in subpara-
graph (B).’’.
(d) AMENDMENTS RELATED TO SECTION 213 OF 1997 ACT.—
(1) Section 530(b)(1) of the 1986 Code (defining education
individual retirement account) is amended by inserting ‘‘an
individual who is’’ before ‘‘the designated beneficiary’’ in the
material preceding subparagraph (A).
(2)(A) Section 530(b)(1)(E) of the 1986 Code (defining edu-
cation individual retirement account) is amended to read as
follows:
‘‘(E) Except as provided in subsection (d)(7), any bal-
ance to the credit of the designated beneficiary on the
date on which the beneficiary attains age 30 shall be
distributed within 30 days after such date to the beneficiary
or, if the beneficiary dies before attaining age 30, shall
be distributed within 30 days after the date of death of
such beneficiary.’’.
(B) Paragraph (7) of section 530(d) of the 1986 Code is
amended by inserting at the end the following new sentence:
‘‘In applying the preceding sentence, members of the family
(as so defined) of the designated beneficiary shall be treated
in the same manner as the spouse under such paragraph (8).’’.
(C) Subsection (d) of section 530 of the 1986 Code is
amended by adding at the end the following new paragraph:
‘‘(8) DEEMED
DISTRIBUTION
ON
REQUIRED
DISTRIBUTION
DATE.—In any case in which a distribution is required under
subsection (b)(1)(E), any balance to the credit of a designated
beneficiary as of the close of the 30-day period referred to
in such subsection for making such distribution shall be deemed
distributed at the close of such period.’’.
(3)(A) Paragraph (1) of section 530(d) of the 1986 Code
is amended by striking ‘‘section 72(b)’’ and inserting ‘‘section
72’’.
H. R. 2676—110
(B) Subsection (e) of section 72 of the 1986 Code is amended
by inserting after paragraph (8) the following new paragraph:
‘‘(9) EXTENSION OF PARAGRAPH (2)(B) TO QUALIFIED STATE
TUITION PROGRAMS AND EDUCATIONAL INDIVIDUAL RETIREMENT
ACCOUNTS.—Notwithstanding any other provision of this sub-
section, paragraph (2)(B) shall apply to amounts received under
a qualified State tuition program (as defined in section 529(b))
or under an education individual retirement account (as defined
in section 530(b)). The rule of paragraph (8)(B) shall apply
for purposes of this paragraph.’’.
(4) Paragraph (2) of section 135(d) of the 1986 Code is
amended to read as follows:
‘‘(2) COORDINATION WITH OTHER HIGHER EDUCATION BENE-
FITS.—The amount of the qualified higher education expenses
otherwise taken into account under subsection (a) with respect
to the education of an individual shall be reduced (before the
application of subsection (b)) by—
‘‘(A) the amount of such expenses which are taken
into account in determining the credit allowable to the
taxpayer or any other person under section 25A with
respect to such expenses; and
‘‘(B) the amount of such expenses which are taken
into account in determining the exclusion under section
530(d)(2).’’.
(5) Section 530(d)(2) of the 1986 Code (relating to distribu-
tions for qualified higher education expenses) is amended by
adding at the end the following new subparagraph:
‘‘(D) DISALLOWANCE OF EXCLUDED AMOUNTS AS CREDIT
OR DEDUCTION.—No deduction or credit shall be allowed
to the taxpayer under any other section of this chapter
for any qualified education expenses to the extent taken
into account in determining the amount of the exclusion
under this paragraph.’’.
(6) Section 530(d)(4)(B) of the 1986 Code (relating to excep-
tions) is amended by striking ‘‘or’’ at the end of clause (ii),
by striking the period at the end of clause (iii) and inserting
‘‘; or’’, and by adding at the end the following new clause:
‘‘(iv) an amount which is includible in gross income
solely because the taxpayer elected under paragraph
(2)(C) to waive the application of paragraph (2) for
the taxable year.’’.
(7) So much of section 530(d)(4)(C) of the 1986 Code as
precedes clause (ii) thereof is amended to read as follows:
‘‘(C) CONTRIBUTIONS RETURNED BEFORE DUE DATE OF
RETURN.—Subparagraph (A) shall not apply to the distribu-
tion of any contribution made during a taxable year on
behalf of the designated beneficiary if—
‘‘(i) such distribution is made on or before the
day prescribed by law (including extensions of time)
for filing the beneficiary’s return of tax for the taxable
year or, if the beneficiary is not required to file such
a return, the 15th day of the 4th month of the taxable
year following the taxable year; and’’.
(8)(A) Paragraph (5) of section 530(d) of the 1986 Code
is amended by striking the first sentence and inserting the
following new sentence: ‘‘Paragraph (1) shall not apply to any
H. R. 2676—111
amount paid or distributed from an education individual retire-
ment account to the extent that the amount received is paid,
not later than the 60th day after the date of such payment
or distribution, into another education individual retirement
account for the benefit of the same beneficiary or a member
of the family (within the meaning of section 529(e)(2)) of such
beneficiary who has not attained age 30 as of such date.’’.
(B) Paragraph (6) of section 530(d) of the 1986 Code is
amended by inserting before the period ‘‘and has not attained
age 30 as of the date of such change’’.
(9) Subparagraph (C) of section 135(c)(2) of the 1986 Code
is amended—
(A) by inserting ‘‘AND EDUCATION INDIVIDUAL RETIRE-
MENT ACCOUNTS’’ in the heading after ‘‘PROGRAM’’; and
(B) by striking ‘‘section 529(c)(3)(A)’’ and inserting
‘‘section 72’’.
(10)(A) Paragraph (1) of section 4973(e) of the 1986 Code
is amended to read as follows:
‘‘(1) IN GENERAL.—In the case of education individual retire-
ment accounts maintained for the benefit of any one beneficiary,
the term ‘excess contributions’ means the sum of—
‘‘(A) the amount by which the amount contributed for
the taxable year to such accounts exceeds $500 (or, if
less, the sum of the maximum amounts permitted to be
contributed under section 530(c) by the contributors to
such accounts for such year);
‘‘(B) if any amount is contributed (other than a con-
tribution described in section 530(b)(2)(B)) during such year
to a qualified State tuition program for the benefit of
such beneficiary, any amount contributed to such accounts
for such taxable year; and
‘‘(C) the amount determined under this subsection for
the preceding taxable year, reduced by the sum of—
‘‘(i) the distributions out of the accounts for the
taxable year (other than rollover distributions); and
‘‘(ii) the excess (if any) of the maximum amount
which may be contributed to the accounts for the tax-
able year over the amount contributed to the accounts
for the taxable year.’’.
(B) Paragraph (2) of section 4973(e) of the 1986 Code is
amended by striking subparagraph (B) and by redesignating
subparagraph (C) as subparagraph (B).
(e) AMENDMENTS RELATED TO SECTION 224 OF 1997 ACT.—
(1) Clauses (vi) and (vii) of section 170(e)(6)(B) of the 1986
Code are each amended by striking ‘‘entity’s’’ and inserting
‘‘donee’s’’.
(2) Clause (iv) of section 170(e)(6)(B) of the 1986 Code
is amended by striking ‘‘organization or entity’’ and inserting
‘‘donee’’.
(3) Subclause (I) of section 170(e)(6)(C)(ii) of the 1986 Code
is amended by striking ‘‘an entity’’ and inserting ‘‘a donee’’.
(4) Section 170(e)(6)(F) of the 1986 Code (relating to termi-
nation) is amended by striking ‘‘1999’’ and inserting ‘‘2000’’.
(f ) AMENDMENTS RELATED TO SECTION 225 OF 1997 ACT.—
(1) The last sentence of section 108(f )(2) of the 1986 Code
is amended to read as follows:
H. R. 2676—112
‘‘The term ‘student loan’ includes any loan made by an edu-
cational organization described in section 170(b)(1)(A)(ii) or by
an organization exempt from tax under section 501(a) to
refinance a loan to an individual to assist the individual in
attending any such educational organization but only if the
refinancing loan is pursuant to a program of the refinancing
organization which is designed as described in subparagraph
(D)(ii).’’.
(2) Section 108(f )(3) of the 1986 Code is amended by strik-
ing ‘‘(or by an organization described in paragraph (2)(E) from
funds provided by an organization described in paragraph
(2)(D))’’.
(g) AMENDMENTS RELATED TO SECTION 226 OF 1997 ACT.—
(1) Section 226(a) of the 1997 Act is amended by striking
‘‘section 1397E’’ and inserting ‘‘section 1397D’’.
(2) Section 1397E(d)(4)(B) of the 1986 Code is amended
by striking ‘‘local education agency as defined’’ and inserting
‘‘local educational agency as defined’’.
(3) Section 1397E is amended by adding at the end the
following new subsection:
‘‘(h) CREDIT TREATED AS ALLOWED UNDER PART IV OF SUB-
CHAPTER A.—For purposes of subtitle F, the credit allowed by
this section shall be treated as a credit allowable under part IV
of subchapter A of this chapter.’’.
(4) Subsection (g) of section 1397E of the 1986 Code is
amended by inserting ‘‘(determined without regard to sub-
section (c))’’ after ‘‘section’’.
(5) Subparagraph (D) of section 42( j)(4) of the 1986 Code
is amended by striking ‘‘subpart A, B, D, or G of this part’’
and inserting ‘‘this chapter’’.
(6) Paragraph (4) of section 49(b) of the 1986 Code is
amended by striking ‘‘subpart A, B, D, or G’’ and inserting
‘‘this chapter’’.
(7) Subparagraph (C) of section 50(a)(5) of the 1986 Code
is amended by striking ‘‘subpart A, B, D, or G’’ and inserting
‘‘this chapter’’.
SEC. 6005. AMENDMENTS RELATED TO TITLE III OF 1997 ACT.
(a) AMENDMENTS RELATED TO SECTION 301 OF 1997 ACT.—
(1) Section 219(g) of the 1986 Code is amended—
(A) by inserting ‘‘or the individual’s spouse’’ after
‘‘individual’’ in paragraph (1); and
(B) by striking paragraph (7) and inserting:
‘‘(7) SPECIAL
RULE
FOR
SPOUSES
WHO
ARE
NOT
ACTIVE
PARTICIPANTS.—If this subsection applies to an individual for
any taxable year solely because their spouse is an active partici-
pant, then, in applying this subsection to the individual (but
not their spouse)—
‘‘(A) the applicable dollar amount under paragraph
(3)(B)(i) shall be $150,000; and
‘‘(B) the amount applicable under paragraph (2)(A)(ii)
shall be $10,000.’’.
(2) Paragraph (2) of section 301(a) of the 1997 Act is
amended by inserting ‘‘after ‘$10,000’ ’’ before the period.
(b) AMENDMENTS RELATED TO SECTION 302 OF 1997 ACT.—
(1) Section 408A(c)(3)(A) of the 1986 Code is amended
by striking ‘‘shall be reduced’’ and inserting ‘‘shall not exceed
H. R. 2676—113
an amount equal to the amount determined under paragraph
(2)(A) for such taxable year, reduced’’.
(2) Section 408A(c)(3) of the 1986 Code (relating to limits
based on modified adjusted gross income) is amended—
(A) by inserting ‘‘or a married individual filing a sepa-
rate return’’ after ‘‘joint return’’ in subparagraph (A)(ii),
(B) in subparagraph (B)—
(i) by inserting ‘‘, for the taxable year of the dis-
tribution to which such contribution relates’’ after ‘‘if ’’;
and
(ii) by striking ‘‘for such taxable year’’ in clause
(i), and
(C) by striking ‘‘and the deduction under section 219
shall be taken into account’’ in subparagraph (C)(i).
(3)(A) Section 408A(d)(2) of the 1986 Code (defining quali-
fied distribution) is amended by striking subparagraph (B) and
inserting the following new subparagraph:
‘‘(B) DISTRIBUTIONS WITHIN NONEXCLUSION PERIOD.—
A payment or distribution from a Roth IRA shall not be
treated as a qualified distribution under subparagraph (A)
if such payment or distribution is made within the 5-
taxable year period beginning with the first taxable year
for which the individual made a contribution to a Roth
IRA (or such individual’s spouse made a contribution to
a Roth IRA) established for such individual.’’.
(B) Section 408A(d)(2) of the 1986 Code is amended by
adding at the end the following new subparagraph:
‘‘(C) DISTRIBUTIONS
OF
EXCESS
CONTRIBUTIONS
AND
EARNINGS.—The term ‘qualified distribution’ shall not
include any distribution of any contribution described in
section 408(d)(4) and any net income allocable to the con-
tribution.’’.
(4) Section 408A(d)(3) of the 1986 Code (relating to rollovers
from IRAs other than Roth IRAs) is amended—
(A) by striking clause (iii) of subparagraph (A) and
inserting:
‘‘(iii) unless the taxpayer elects not to have this
clause apply for any taxable year, any amount required
to be included in gross income for such taxable year
by reason of this paragraph for any distribution before
January 1, 1999, shall be so included ratably over
the 4-taxable year period beginning with such taxable
year.
Any election under clause (iii) for any distributions during
a taxable year may not be changed after the due date
for such taxable year.’’; and
(B) by adding at the end the following new subpara-
graph:
‘‘(F) SPECIAL
RULES
FOR
CONTRIBUTIONS
TO
WHICH
4-YEAR AVERAGING APPLIES.—In the case of a qualified roll-
over contribution to a Roth IRA of a distribution to which
subparagraph (A)(iii) applied, the following rules shall
apply:
‘‘(i) ACCELERATION OF INCLUSION.—
‘‘(I) IN GENERAL.—The amount required to be
included in gross income for each of the first 3
H. R. 2676—114
taxable years in the 4-year period under subpara-
graph (A)(iii) shall be increased by the aggregate
distributions from Roth IRAs for such taxable year
which are allocable under paragraph (4) to the
portion of such qualified rollover contribution
required to be included in gross income under
subparagraph (A)(i).
‘‘(II) LIMITATION
ON
AGGREGATE
AMOUNT
INCLUDED.—The amount required to be included
in gross income for any taxable year under
subparagraph (A)(iii) shall not exceed the aggre-
gate amount required to be included in gross
income under subparagraph (A)(iii) for all taxable
years in the 4-year period (without regard to sub-
clause (I)) reduced by amounts included for all
preceding taxable years.
‘‘(ii) DEATH OF DISTRIBUTEE.—
‘‘(I) IN GENERAL.—If the individual required
to include amounts in gross income under such
subparagraph dies before all of such amounts are
included, all remaining amounts shall be included
in gross income for the taxable year which includes
the date of death.
‘‘(II) SPECIAL RULE FOR SURVIVING SPOUSE.—
If the spouse of the individual described in sub-
clause (I) acquires the individual’s entire interest
in any Roth IRA to which such qualified rollover
contribution is properly allocable, the spouse may
elect to treat the remaining amounts described
in subclause (I) as includible in the spouse’s gross
income in the taxable years of the spouse ending
with or within the taxable years of such individual
in which such amounts would otherwise have been
includible. Any such election may not be made
or changed after the due date for the spouse’s
taxable year which includes the date of death.
‘‘(G) SPECIAL RULE FOR APPLYING SECTION 72.—
‘‘(i) IN GENERAL.—If—
‘‘(I) any portion of a distribution from a Roth
IRA is properly allocable to a qualified rollover
contribution described in this paragraph; and
‘‘(II) such distribution is made within the 5-
taxable year period beginning with the taxable
year in which such contribution was made,
then section 72(t) shall be applied as if such portion
were includible in gross income.
‘‘(ii) LIMITATION.—Clause (i) shall apply only to
the extent of the amount of the qualified rollover con-
tribution includible in gross income under subpara-
graph (A)(i).’’.
(5)(A) Section 408A(d)(4) of the 1986 Code is amended
to read as follows:
‘‘(4) AGGREGATION AND ORDERING RULES.—
‘‘(A) AGGREGATION RULES.—Section 408(d)(2) shall be
applied separately with respect to Roth IRAs and other
individual retirement plans.
H. R. 2676—115
‘‘(B) ORDERING RULES.—For purposes of applying this
section and section 72 to any distribution from a Roth
IRA, such distribution shall be treated as made—
‘‘(i) from contributions to the extent that the
amount of such distribution, when added to all previous
distributions from the Roth IRA, does not exceed the
aggregate contributions to the Roth IRA; and
‘‘(ii) from such contributions in the following order:
‘‘(I) Contributions other than qualified rollover
contributions to which paragraph (3) applies.
‘‘(II) Qualified rollover contributions to which
paragraph (3) applies on a first-in, first-out basis.
Any distribution allocated to a qualified rollover contribu-
tion under clause (ii)(II) shall be allocated first to the
portion of such contribution required to be included in
gross income.’’.
(B) Section 408A(d)(1) of the 1986 Code is amended to
read as follows:
‘‘(1) EXCLUSION.—Any qualified distribution from a Roth
IRA shall not be includible in gross income.’’.
(6)(A) Section 408A(d) of the 1986 Code (relating to dis-
tribution rules) is amended by adding at the end the following
new paragraph:
‘‘(6) TAXPAYER
MAY
MAKE
ADJUSTMENTS
BEFORE
DUE
DATE.—
‘‘(A) IN GENERAL.—Except as provided by the Secretary,
if, on or before the due date for any taxable year, a taxpayer
transfers in a trustee-to-trustee transfer any contribution
to an individual retirement plan made during such taxable
year from such plan to any other individual retirement
plan, then, for purposes of this chapter, such contribution
shall be treated as having been made to the transferee
plan (and not the transferor plan).
‘‘(B) SPECIAL RULES.—
‘‘(i) TRANSFER
OF
EARNINGS.—Subparagraph (A)
shall not apply to the transfer of any contribution
unless such transfer is accompanied by any net income
allocable to such contribution.
‘‘(ii) NO
DEDUCTION.—Subparagraph (A) shall
apply to the transfer of any contribution only to the
extent no deduction was allowed with respect to the
contribution to the transferor plan.’’.
(B) Section 408A(d)(3) of the 1986 Code, as amended by
this subsection, is amended by striking subparagraph (D) and
by redesignating subparagraphs (E), (F), and (G) as subpara-
graphs (D), (E), and (F), respectively.
(7) Section 408A(d) of the 1986 Code, as amended by para-
graph (6), is amended by adding at the end the following
new paragraph:
‘‘(7) DUE DATE.—For purposes of this subsection, the due
date for any taxable year is the date prescribed by law (includ-
ing extensions of time) for filing the taxpayer’s return for such
taxable year.’’.
(8)(A) Section 4973(f ) of the 1986 Code is amended—
(i) by striking ‘‘such accounts’’ in paragraph (1)(A) and
inserting ‘‘Roth IRAs’’; and
H. R. 2676—116
(ii) by striking ‘‘to the accounts’’ in paragraph (2)(B)
and inserting ‘‘by the individual to all individual retirement
plans’’.
(B) Section 4973(b) of the 1986 Code is amended—
(i) by inserting ‘‘a contribution to a Roth IRA or’’ after
‘‘other than’’ in paragraph (1)(A); and
(ii) by inserting ‘‘(including the amount contributed
to a Roth IRA)’’ after ‘‘annuities’’ in paragraph (2)(C).
(C) Section 302(b) of the 1997 Act is amended by striking
‘‘Section 4973(b)’’ and inserting ‘‘Section 4973’’.
(9) Section 408A of the 1986 Code is amended by adding
at the end the following new subsection:
‘‘(f ) INDIVIDUAL
RETIREMENT
PLAN.—For purposes of this
section—
‘‘(1) a simplified employee pension or a simple retirement
account may not be designated as a Roth IRA; and
‘‘(2) contributions to any such pension or account shall
not be taken into account for purposes of subsection (c)(2)(B).’’.
(c) AMENDMENTS RELATED TO SECTION 303 OF 1997 ACT.—
(1) Section 72(t)(8)(E) of the 1986 Code is amended—
(A) by striking ‘‘120 days’’ and inserting ‘‘120th day’’;
and
(B) by striking ‘‘60 days’’ and inserting ‘‘60th day’’.
(2)(A) Section 402(c)(4) of the 1986 Code is amended by
striking ‘‘and’’ at the end of subparagraph (A), by striking
the period at the end of subparagraph (B) and inserting ‘‘,
and’’, by inserting at the end the following new subparagraph:
‘‘(C) any hardship distribution described in section
401(k)(2)(B)(i)(IV).’’.
(B) Section 403(b)(8)(B) of the 1986 Code is amended by
inserting ‘‘(including paragraph (4)(C) thereof)’’ after ‘‘section
402(c)’’.
(C) The amendments made by this paragraph shall apply
to distributions after December 31, 1998.
(d) AMENDMENTS RELATED TO SECTION 311 OF 1997 ACT.—
(1) Subsection (h) of section 1 of the 1986 Code (relating
to maximum capital gains rate) is amended to read as follows:
‘‘(h) MAXIMUM CAPITAL GAINS RATE.—
‘‘(1) IN GENERAL.—If a taxpayer has a net capital gain
for any taxable year, the tax imposed by this section for such
taxable year shall not exceed the sum of—
‘‘(A) a tax computed at the rates and in the same
manner as if this subsection had not been enacted on
the greater of—
‘‘(i) taxable income reduced by the net capital
gain; or
‘‘(ii) the lesser of—
‘‘(I) the amount of taxable income taxed at
a rate below 28 percent; or
‘‘(II) taxable income reduced by the adjusted
net 
capital
gain;
‘‘(B) 10 percent of so much of the adjusted net capital
gain (or, if less, taxable income) as does not exceed the
excess (if any) of—
H. R. 2676—117
‘‘(i) the amount of taxable income which would
(without regard to this paragraph) be taxed at a rate
below 28 percent, over
‘‘(ii) the taxable income reduced by the adjusted
net capital gain;
‘‘(C) 20 percent of the adjusted net capital gain (or,
if less, taxable income) in excess of the amount on which
a tax is determined under subparagraph (B);
‘‘(D) 25 percent of the excess (if any) of—
‘‘(i) the unrecaptured section 1250 gain (or, if less,
the net capital gain), over
‘‘(ii) the excess (if any) of—
‘‘(I) the sum of the amount on which tax is
determined under subparagraph (A) plus the net
capital gain, over
‘‘(II) taxable income; and
‘‘(E) 28 percent of the amount of taxable income in
excess of the sum of the amounts on which tax is deter-
mined under the preceding subparagraphs of this para-
graph.
‘‘(2) REDUCED CAPITAL GAIN RATES FOR QUALIFIED 5-YEAR
GAIN.—
‘‘(A) REDUCTION IN 10-PERCENT RATE.—In the case of
any taxable year beginning after December 31, 2000, the
rate under paragraph (1)(B) shall be 8 percent with respect
to so much of the amount to which the 10-percent rate
would otherwise apply as does not exceed qualified 5-year
gain, and 10 percent with respect to the remainder of
such amount.
‘‘(B) REDUCTION IN 20-PERCENT RATE.—The rate under
paragraph (1)(C) shall be 18 percent with respect to so
much of the amount to which the 20-percent rate would
otherwise apply as does not exceed the lesser of—
‘‘(i) the excess of qualified 5-year gain over the
amount of such gain taken into account under subpara-
graph (A) of this paragraph; or
‘‘(ii) the amount of qualified 5-year gain (deter-
mined by taking into account only property the holding
period for which begins after December 31, 2000),
and 20 percent with respect to the remainder of such
amount. For purposes of determining under the preceding
sentence whether the holding period of property begins
after December 31, 2000, the holding period of property
acquired pursuant to the exercise of an option (or other
right or obligation to acquire property) shall include the
period such option (or other right or obligation) was held.
‘‘(3) NET CAPITAL GAIN TAKEN INTO ACCOUNT AS INVESTMENT
INCOME.—For purposes of this subsection, the net capital gain
for any taxable year shall be reduced (but not below zero)
by the amount which the taxpayer takes into account as invest-
ment income under section 163(d)(4)(B)(iii).
‘‘(4) ADJUSTED NET CAPITAL GAIN.—For purposes of this
subsection, the term ‘adjusted net capital gain’ means net cap-
ital gain reduced (but not below zero) by the sum of—
‘‘(A) unrecaptured section 1250 gain; and
‘‘(B) 28-percent rate gain.
H. R. 2676—118
‘‘(5) 28-PERCENT
RATE
GAIN.—For purposes of this sub-
section—
‘‘(A) IN
GENERAL.—The term ‘28-percent rate gain’
means the excess (if any) of—
‘‘(i) the sum of—
‘‘(I) the aggregate long-term capital gain from
property held for more than 1 year but not more
than 18 months;
‘‘(II) collectibles gain; and
‘‘(III) section 1202 gain, over
‘‘(ii) the sum of—
‘‘(I) the aggregate long-term capital loss (not
described in subclause (IV)) from property referred
to in clause (i)(I);
‘‘(II) collectibles loss;
‘‘(III) the net short-term capital loss; and
‘‘(IV) the amount of long-term capital loss car-
ried under section 1212(b)(1)(B) to the taxable
year.
‘‘(B) SPECIAL RULES.—
‘‘(i) SHORT SALE GAINS AND HOLDING PERIODS.—
Rules similar to the rules of section 1233(b) shall apply
where the substantially identical property has been
held more than 1 year but not more than 18 months;
except that, for purposes of such rules—
‘‘(I) section 1233(b)(1) shall be applied by
substituting ‘18 months’ for ‘1 year’ each place
it appears; and
‘‘(II) the holding period of such property shall
be treated as being 1 year on the day before the
earlier of the date of the closing of the short sale
or the date such property is disposed of.
‘‘(ii) LONG-TERM LOSSES.—Section 1233(d) shall be
applied separately by substituting ‘18 months’ for ‘1
year’ each place it appears.
‘‘(iii) OPTIONS.—A rule similar to the rule of section
1092(f ) shall apply where the stock was held for more
than 18 months.
‘‘(iv) SECTION 1256 CONTRACTS.—Amounts treated
as long-term capital gain or loss under section
1256(a)(3) shall be treated as attributable to property
held for more than 18 months.
‘‘(6) COLLECTIBLES GAIN AND LOSS.—For purposes of this
subsection—
‘‘(A) IN
GENERAL.—The terms ‘collectibles gain’ and
‘collectibles loss’ mean gain or loss (respectively) from the
sale or exchange of a collectible (as defined in section
408(m) without regard to paragraph (3) thereof) which
is a capital asset held for more than 18 months but only
to the extent such gain is taken into account in computing
gross income and such loss is taken into account in comput-
ing taxable income.
‘‘(B) PARTNERSHIPS, ETC.—For purposes of subpara-
graph (A), any gain from the sale of an interest in a
partnership, S corporation, or trust which is attributable
to unrealized appreciation in the value of collectibles shall
be treated as gain from the sale or exchange of a collectible.
H. R. 2676—119
Rules similar to the rules of section 751 shall apply for
purposes of the preceding sentence.
‘‘(7) UNRECAPTURED SECTION 1250 GAIN.—For purposes of
this subsection—
‘‘(A) IN
GENERAL.—The term ‘unrecaptured section
1250 gain’ means the excess (if any) of—
‘‘(i) the amount of long-term capital gain (not
otherwise treated as ordinary income) which would
be treated as ordinary income if—
‘‘(I) section 1250(b)(1) included all depreciation
and the applicable percentage under section
1250(a) were 100 percent, and
‘‘(II) only gain from property held for more
than 18 months were taken into account, over
‘‘(ii) the excess (if any) of—
‘‘(I) the amount described in paragraph
(5)(A)(ii), over
‘‘(II) the amount described in paragraph
(5)(A)(i).
‘‘(B) LIMITATION WITH RESPECT TO SECTION 1231 PROP-
ERTY.—The amount described in subparagraph (A)(i) from
sales, exchanges, and conversions described in section
1231(a)(3)(A) for any taxable year shall not exceed the
net section 1231 gain (as defined in section 1231(c)(3))
for such year.
‘‘(8) SECTION 1202 GAIN.—For purposes of this subsection,
the term ‘section 1202 gain’ means an amount equal to the
gain excluded from gross income under section 1202(a).
‘‘(9) QUALIFIED
5-YEAR
GAIN.—For purposes of this sub-
section, the term ‘qualified 5-year gain’ means the aggregate
long-term capital gain from property held for more than 5
years. The determination under the preceding sentence shall
be made without regard to collectibles gain, gain described
in paragraph (7)(A)(i), and section 1202 gain.
‘‘(10) COORDINATION
WITH
RECAPTURE
OF
NET
ORDINARY
LOSSES UNDER SECTION 1231.—If any amount is treated as ordi-
nary income under section 1231(c), such amount shall be allo-
cated among the separate categories of net section 1231 gain
(as defined in section 1231(c)(3)) in such manner as the Sec-
retary may by forms or regulations prescribe.
‘‘(11) REGULATIONS.—The Secretary may prescribe such
regulations as are appropriate (including regulations requiring
reporting) to apply this subsection in the case of sales and
exchanges by pass-thru entities and of interests in such entities.
‘‘(12) PASS-THRU
ENTITY
DEFINED.—For purposes of this
subsection, the term ‘pass-thru entity’ means—
‘‘(A) a regulated investment company;
‘‘(B) a real estate investment trust;
‘‘(C) an S corporation;
‘‘(D) a partnership;
‘‘(E) an estate or trust;
‘‘(F) a common trust fund;
‘‘(G) a foreign investment company which is described
in section 1246(b)(1) and for which an election is in effect
under section 1247; and
‘‘(H) a qualified electing fund (as defined in section
1295).
H. R. 2676—120
‘‘(13) SPECIAL RULES FOR PERIODS DURING 1997.—
‘‘(A) DETERMINATION
OF
28-PERCENT
RATE
GAIN.—In
applying paragraph (5)—
‘‘(i) the amount determined under subclause (I)
of paragraph (5)(A)(i) shall include long-term capital
gain (not otherwise described in paragraph (5)(A)(i))
which is properly taken into account for the portion
of the taxable year before May 7, 1997;
‘‘(ii) the amounts determined under subclause (I)
of paragraph (5)(A)(ii) shall include long-term capital
loss (not otherwise described in paragraph (5)(A)(ii))
which is properly taken into account for the portion
of the taxable year before May 7, 1997; and
‘‘(iii) clauses (i)(I) and (ii)(I) of paragraph (5)(A)
shall be applied by not taking into account any gain
and loss on property held for more than 1 year but
not more than 18 months which is properly taken
into account for the portion of the taxable year after
May 6, 1997, and before July 29, 1997.
‘‘(B) OTHER SPECIAL RULES.—
‘‘(i) DETERMINATION
OF
UNRECAPTURED
SECTION
1250
GAIN
NOT
TO
INCLUDE
PRE-MAY
7, 1997
GAIN.—
The amount determined under paragraph (7)(A)(i) shall
not include gain properly taken into account for the
portion of the taxable year before May 7, 1997.
‘‘(ii) OTHER
TRANSITIONAL
RULES
FOR
18-MONTH
HOLDING PERIOD.—Paragraphs (6)(A) and (7)(A)(i)(II)
shall be applied by substituting ‘1 year’ for ‘18 months’
with respect to gain properly taken into account for
the portion of the taxable year after May 6, 1997,
and before July 29, 1997.
‘‘(C) SPECIAL
RULES
FOR
PASS-THRU
ENTITIES.—In
applying this paragraph with respect to any pass-thru
entity, the determination of when gains and loss are prop-
erly taken into account shall be made at the entity level.’’.
(2) Paragraph (3) of section 55(b) of the 1986 Code is
amended to read as follows:
‘‘(3) MAXIMUM RATE OF TAX ON NET CAPITAL GAIN OF NON-
CORPORATE
TAXPAYERS.—The amount determined under the
first sentence of paragraph (1)(A)(i) shall not exceed the sum
of—
‘‘(A) the amount determined under such first sentence
computed at the rates and in the same manner as if this
paragraph had not been enacted on the taxable excess
reduced by the lesser of—
‘‘(i) the net capital gain; or
‘‘(ii) the sum of—
‘‘(I) the adjusted net capital gain, plus
‘‘(II) the unrecaptured section 1250 gain, plus
‘‘(B) 10 percent of so much of the adjusted net capital
gain (or, if less, taxable excess) as does not exceed the
amount on which a tax is determined under section
1(h)(1)(B), plus
‘‘(C) 20 percent of the adjusted net capital gain (or,
if less, taxable excess) in excess of the amount on which
tax is determined under subparagraph (B), plus
H. R. 2676—121
‘‘(D) 25 percent of the amount of taxable excess in
excess of the sum of the amounts on which tax is deter-
mined under the preceding subparagraphs of this para-
graph.
In the case of taxable years beginning after December 31,
2000, rules similar to the rules of section 1(h)(2) shall apply
for purposes of subparagraphs (B) and (C). Terms used in
this paragraph which are also used in section 1(h) shall have
the respective meanings given such terms by section 1(h) but
computed with the adjustments under this part.’’.
(3) Section 57(a)(7) of the 1986 Code is amended by adding
at the end the following new sentence: ‘‘In the case of stock
the holding period of which begins after December 31, 2000
(determined with the application of the last sentence of section
1(h)(2)(B)), the preceding sentence shall be applied by substitut-
ing ‘28 percent’ for ‘42 percent’.’’.
(4) Paragraphs (11) and (12) of section 1223, and section
1235(a), of the 1986 Code are each amended by striking ‘‘1
year’’ each place it appears and inserting ‘‘18 months’’.
(e) AMENDMENTS RELATED TO SECTION 312 OF 1997 ACT.—
(1) Paragraph (2) of section 121(b) of the 1986 Code is
amended to read as follows:
‘‘(2) SPECIAL RULES FOR JOINT RETURNS.—In the case of
a husband and wife who make a joint return for the taxable
year of the sale or exchange of the property—
‘‘(A) 
$500,000 
LIMITATION
FOR
CERTAIN
JOINT
RETURNS.—Paragraph (1) shall be applied by substituting
‘$500,000’ for ‘$250,000’ if—
‘‘(i) either spouse meets the ownership require-
ments of subsection (a) with respect to such property;
‘‘(ii) both spouses meet the use requirements of
subsection (a) with respect to such property; and
‘‘(iii) neither spouse is ineligible for the benefits
of subsection (a) with respect to such property by rea-
son of paragraph (3).
‘‘(B) OTHER JOINT RETURNS.—If such spouses do not
meet the requirements of subparagraph (A), the limitation
under paragraph (1) shall be the sum of the limitations
under paragraph (1) to which each spouse would be entitled
if such spouses had not been married. For purposes of
the preceding sentence, each spouse shall be treated as
owning the property during the period that either spouse
owned the property.’’.
(2) Section 121(c)(1) of the 1986 Code is amended to read
as follows:
‘‘(1) IN GENERAL.—In the case of a sale or exchange to
which this subsection applies, the ownership and use require-
ments of subsection (a), and subsection (b)(3), shall not apply;
but the dollar limitation under paragraph (1) or (2) of subsection
(b), whichever is applicable, shall be equal to—
‘‘(A) the amount which bears the same ratio to such
limitation (determined without regard to this paragraph)
as
‘‘(B)(i) the shorter of—
‘‘(I) the aggregate periods, during the 5-year period
ending on the date of such sale or exchange, such
H. R. 2676—122
property has been owned and used by the taxpayer
as the taxpayer’s principal residence; or
‘‘(II) the period after the date of the most recent
prior sale or exchange by the taxpayer to which sub-
section (a) applied and before the date of such sale
or exchange, bears to
‘‘(ii) 2 years.’’.
(3) Section 312(d)(2) of the 1997 Act (relating to sales
before date of the enactment) is amended by inserting ‘‘on
or’’ before ‘‘before’’ each place it appears in the text and heading.
(f ) AMENDMENTS RELATED TO SECTION 313 OF 1997 ACT.—
(1) Subsection (a) of section 1045 of such Code is amended—
(A) by striking ‘‘an individual’’ and inserting ‘‘a tax-
payer other than a corporation’’; and
(B) by striking ‘‘such individual’’ and inserting ‘‘such
taxpayer’’.
(2) Subsection (b) of section 1045 of the 1986 Code is
amended by adding at the end the following new paragraph:
‘‘(5) CERTAIN RULES TO APPLY.—Rules similar to the rules
of subsections (f ), (g), (h), (i), ( j), and (k) of section 1202
shall apply.’’.
SEC. 6006. AMENDMENT RELATED TO TITLE IV OF 1997 ACT.
(a) AMENDMENT RELATED TO SECTION 401 OF 1997 ACT.—Para-
graph (1) of section 55(e) of the 1986 Code is amended to read
as follows:
‘‘(1) IN GENERAL.—
‘‘(A) $7,500,000 GROSS RECEIPTS TEST.—The tentative
minimum tax of a corporation shall be zero for any taxable
year if the corporation’s average annual gross receipts for
all 3-taxable-year periods ending before such taxable year
does not exceed $7,500,000. For purposes of the preceding
sentence, only taxable years beginning after December 31,
1993, shall be taken into account.
‘‘(B) $5,000,000 GROSS RECEIPTS TEST FOR FIRST 3-YEAR
PERIOD.—Subparagraph (A) shall be applied by substituting
‘$5,000,000’ for ‘$7,500,000’ for the first 3-taxable-year
period (or portion thereof) of the corporation which is taken
into account under subparagraph (A).
‘‘(C) FIRST TAXABLE YEAR CORPORATION IN EXISTENCE.—
If such taxable year is the first taxable year that such
corporation is in existence, the tentative minimum tax
of such corporation for such year shall be zero.
‘‘(D) SPECIAL RULES.—For purposes of this paragraph,
the rules of paragraphs (2) and (3) of section 448(c) shall
apply.’’.
(b) AMENDMENT RELATED
TO SECTION 402 OF 1997 ACT.—
Subsection (c) of section 168 of the 1986 Code is amended—
(1) by striking paragraph (2), and
(2) by striking the portion of such subsection preceding
the table in paragraph (1) and inserting the following:
‘‘(c) APPLICABLE RECOVERY PERIOD.—For purposes of this sec-
tion, the applicable recovery period shall be determined in accord-
ance with the following table:’’.
SEC. 6007. AMENDMENTS RELATED TO TITLE V OF 1997 ACT.
(a) AMENDMENTS RELATED TO SECTION 501 OF 1997 ACT.—
H. R. 2676—123
(1) Subsection (c) of section 2631 of the 1986 Code is
amended to read as follows:
‘‘(c) INFLATION ADJUSTMENT.—
‘‘(1) IN GENERAL.—In the case of any calendar year after
1998, the $1,000,000 amount contained in subsection (a) shall
be increased by an amount equal to—
‘‘(A) $1,000,000, multiplied by
‘‘(B) the cost-of-living adjustment determined under
section 1(f )(3) for such calendar year by substituting ‘cal-
endar year 1997’ for ‘calendar year 1992’ in subparagraph
(B) thereof.
If any amount as adjusted under the preceding sentence is
not a multiple of $10,000, such amount shall be rounded to
the next lowest multiple of $10,000.
‘‘(2) ALLOCATION OF INCREASE.—Any increase under para-
graph (1) for any calendar year shall apply only to generation-
skipping transfers made during or after such calendar year;
except that no such increase for calendar years after the cal-
endar year in which the transferor dies shall apply to transfers
by such transferor.’’.
(2) Subsection (f ) of section 501 of the 1997 Act is amended
by inserting ‘‘(other than the amendment made by subsection
(d))’’ after ‘‘this section’’.
(b) AMENDMENTS RELATED TO SECTION 502 OF 1997 ACT.—
(1)(A) Section 2033A of the 1986 Code is hereby moved
to the end of part IV of subchapter A of chapter 11 of the
1986 Code and redesignated as section 2057.
(B) So much of such section 2057 (as so redesignated)
as precedes subsection (b) thereof is amended to read as follows:
‘‘SEC. 2057. FAMILY-OWNED BUSINESS INTERESTS.
‘‘(a) GENERAL RULE.—
‘‘(1) ALLOWANCE OF DEDUCTION.—For purposes of the tax
imposed by section 2001, in the case of an estate of a decedent
to which this section applies, the value of the taxable estate
shall be determined by deducting from the value of the gross
estate the adjusted value of the qualified family-owned business
interests of the decedent which are described in subsection
(b)(2).
‘‘(2) MAXIMUM DEDUCTION.—The deduction allowed by this
section shall not exceed $675,000.
‘‘(3) COORDINATION WITH UNIFIED CREDIT.—
‘‘(A) IN GENERAL.—Except as provided in subparagraph
(B), if this section applies to an estate, the applicable
exclusion amount under section 2010 shall be $625,000.
‘‘(B) INCREASE IN UNIFIED CREDIT IF DEDUCTION IS LESS
THAN $675,000.—If the deduction allowed by this section
is less than $675,000, the amount of the applicable exclu-
sion amount under section 2010 shall be increased (but
not above the amount which would apply to the estate
without regard to this section) by the excess of $675,000
over the amount of the deduction allowed.’’.
(C) Subparagraph (A) of section 2057(b)(2) of the 1986
Code (as so redesignated) is amended by striking ‘‘(without
regard to this section)’’.
H. R. 2676—124
(D) Subsection (c) of section 2057 of the 1986 Code (as
so redesignated) is amended by striking ‘‘(determined without
regard to this section)’’.
(E) The table of sections for part III of subchapter A of
chapter 11 of the 1986 Code is amended by striking the item
relating to section 2033A.
(F) The table of sections for part IV of such subchapter
is amended by adding at the end the following new item:
‘‘Sec. 2057. Family-owned business interests.’’.
(2) Section 2057(b)(3) of the 1986 Code (as so redesignated)
is amended to read as follows:
‘‘(3) INCLUDIBLE GIFTS OF INTERESTS.—The amount of the
gifts of qualified family-owned business interests determined
under this paragraph is the sum of—
‘‘(A) the amount of such gifts from the decedent to
members of the decedent’s family taken into account under
section 2001(b)(1)(B), plus
‘‘(B) the amount of such gifts otherwise excluded under
section 2503(b),
to the extent such interests are continuously held by members
of such family (other than the decedent’s spouse) between the
date of the gift and the date of the decedent’s death.’’.
(3)(A) Section 2057(e)(2)(C) of the 1986 Code (as so redesig-
nated) is amended by striking ‘‘(as defined in section 543(a))’’
and inserting ‘‘(as defined in section 543(a) without regard
to paragraph (2)(B) thereof) if such trade or business were
a corporation’’.
(B) Clause (ii) of section 2057(e)(2)(D) of the 1986 Code
(as so redesignated) is amended by striking ‘‘income of which
is described in section 543(a) or’’ and inserting ‘‘personal holding
company income (as defined in subparagraph (C)) or income
described’’.
(C) Paragraph (2) of section 2057(e) of the 1986 Code (as
so redesignated) is amended by adding at the end the following
new flush sentence:
‘‘In the case of a lease of property on a net cash basis by
the decedent to a member of the decedent’s family, income
from such lease shall not be treated as personal holding com-
pany income for purposes of subparagraph (C), and such prop-
erty shall not be treated as an asset described in subparagraph
(D)(ii), if such income and property would not be so treated
if the lessor had engaged directly in the activities engaged
in by the lessee with respect to such property.’’.
(4) Paragraph (2) of section 2057(f ) of the 1986 Code (as
so redesignated) is amended—
(A) by striking ‘‘(as determined under rules similar
to the rules of section 2032A(c)(2)(B))’’; and
(B) by adding at the end the following new subpara-
graph:
‘‘(C) ADJUSTED
TAX
DIFFERENCE.—For purposes of
subparagraph (A)—
‘‘(i) IN
GENERAL.—The adjusted tax difference
attributable to a qualified family-owned business
interest is the amount which bears the same ratio
to the adjusted tax difference with respect to the estate
(determined under clause (ii)) as the value of such
H. R. 2676—125
interest bears to the value of all qualified family-owned
business interests described in subsection (b)(2).
‘‘(ii) ADJUSTED TAX DIFFERENCE WITH RESPECT TO
THE
ESTATE.—For purposes of clause (i), the term
‘adjusted tax difference with respect to the estate’
means the excess of what would have been the estate
tax liability but for the election under this section
over the estate tax liability. For purposes of this clause,
the term ‘estate tax liability’ means the tax imposed
by section 2001 reduced by the credits allowable
against such tax.’’.
(5)(A) Paragraph (1) of section 2057(e) of the 1986 Code
(as so redesignated) is amended by adding at the end the
following new flush sentence:
‘‘For purposes of the preceding sentence, a decedent shall be
treated as engaged in a trade or business if any member of
the decedent’s family is engaged in such trade or business.’’.
(B) Subsection (f ) of section 2057 of the 1986 Code (as
so redesignated) is amended by adding at the end the following
new paragraph:
‘‘(3) USE IN TRADE OR BUSINESS BY FAMILY MEMBERS.—
A qualified heir shall not be treated as disposing of an interest
described in subsection (e)(1)(A) by reason of ceasing to be
engaged in a trade or business so long as the property to
which such interest relates is used in a trade or business
by any member of such individual’s family.’’.
(6) Paragraph (1) of section 2057(g) of the 1986 Code (as
so redesignated) is amended by striking ‘‘or (M)’’.
(7) Paragraph (3) of section 2057(i) of the 1986 Code (as
so redesignated) is amended by redesignating subparagraphs
(L), (M), and (N) as subparagraphs (N), (O), and (P), respec-
tively, and by inserting after subparagraph (K) the following
new subparagraphs:
‘‘(L) Section 2032A(g) (relating to application to
interests in partnerships, corporations, and trusts).
‘‘(M) Subsections (h) and (i) of section 2032A.’’.
(c) AMENDMENTS RELATED TO SECTION 503 OF THE 1997 ACT.—
(1) Clause (iii) of section 6166(b)(7)(A) of the 1986 Code
is amended to read as follows:
‘‘(iii) for purposes of applying section 6601( j), the
2-percent portion (as defined in such section) shall
be treated as being zero.’’.
(2) Clause (iii) of section 6166(b)(8)(A) of the 1986 Code
is amended to read as follows:
‘‘(iii) 2-PERCENT INTEREST RATE NOT TO APPLY.—
For purposes of applying section 6601( j), the 2-percent
portion (as defined in such section) shall be treated
as being zero.’’.
(d) AMENDMENT RELATED TO SECTION 505 OF THE 1997 ACT.—
Paragraphs (1) and (2) of section 7479(a) of the 1986 Code are
each amended by striking ‘‘an estate,’’ and inserting ‘‘an estate
(or with respect to any property included therein),’’.
(e) AMENDMENTS RELATED TO SECTION 506 OF THE 1997 ACT.—
(1) Paragraph (1) of section 506(e) of the 1997 Act is
amended by striking ‘‘and (c)’’ and inserting ‘‘, (c), and (d)’’.
(2)(A) Paragraph (9) of section 6501(c) of the 1986 Code
is amended by striking the last sentence.
H. R. 2676—126
(B) Subsection (f ) of section 2001 of the 1986 Code is
amended to read as follows:
‘‘(f ) VALUATION OF GIFTS.—
‘‘(1) IN GENERAL—If the time has expired under section
6501 within which a tax may be assessed under chapter 12
(or under corresponding provisions of prior laws) on—
‘‘(A) the transfer of property by gift made during a
preceding calendar period (as defined in section 2502(b));
or
‘‘(B) an increase in taxable gifts required under section
2701(d),
the value thereof shall, for purposes of computing the tax
under this chapter, be the value as finally determined for
purposes of chapter 12.
‘‘(2) FINAL DETERMINATION.—For purposes of paragraph (1),
a value shall be treated as finally determined for purposes
of chapter 12 if—
‘‘(A) the value is shown on a return under such chapter
and such value is not contested by the Secretary before
the expiration of the time referred to in paragraph (1)
with respect to such return;
‘‘(B) in a case not described in subparagraph (A), the
value is specified by the Secretary and such value is not
timely contested by the taxpayer; or
‘‘(C) the value is determined by a court or pursuant
to a settlement agreement with the Secretary.’’.
(B) Subsection (c) of section 2504 of the 1986 Code is
amended to read as follows:
‘‘(c) VALUATION OF GIFTS.—If the time has expired under section
6501 within which a tax may be assessed under this chapter 12
(or under corresponding provisions of prior laws) on—
‘‘(1) the transfer of property by gift made during a preceding
calendar period (as defined in section 2502(b)); or
‘‘(2) an increase in taxable gifts required under section
2701(d),
the value thereof shall, for purposes of computing the tax under
this chapter, be the value as finally determined (within the meaning
of section 2001(f )(2)) for purposes of this chapter.’’.
(f ) AMENDMENTS RELATED TO SECTION 507 OF 1997 ACT.—
(1) Paragraph (3) of section 1(g) of the 1986 Code is
amended by striking subparagraph (C) and by redesignating
subparagraph (D) as subparagraph (C).
(2) Section 641 of the 1986 Code is amended by striking
subsection (c) and by redesignating subsection (d) as subsection
(c).
(3) Paragraph (4) of section 1361(e) of the 1986 Code is
amended by striking ‘‘section 641(d)’’ and inserting ‘‘section
641(c)’’.
(4) Subparagraph (A) of section 6103(e)(1) of the 1986 Code
is amended by striking clause (ii) and by redesignating clauses
(iii) and (iv) as clauses (ii) and (iii), respectively.
(g) AMENDMENTS RELATED TO SECTION 508 OF 1997 ACT.—
(1) Subsection (c) of section 2031 of the 1986 Code is
amended by redesignating paragraph (9) as paragraph (10)
and by inserting after paragraph (8) the following new para-
graph:
H. R. 2676—127
‘‘(9) TREATMENT OF EASEMENTS GRANTED AFTER DEATH.—
In any case in which the qualified conservation easement is
granted after the date of the decedent’s death and on or before
the due date (including extensions) for filing the return of
tax imposed by section 2001, the deduction under section
2055(f ) with respect to such easement shall be allowed to
the estate but only if no charitable deduction is allowed under
chapter 1 to any person with respect to the grant of such
easement.’’.
(2) The first sentence of paragraph (6) of section 2031(c)
of the 1986 Code is amended by striking all that follows ‘‘shall
be made’’ and inserting ‘‘on or before the due date (including
extensions) for filing the return of tax imposed by section
2001 and shall be made on such return.’’.
SEC. 6008. AMENDMENTS RELATED TO TITLE VII OF 1997 ACT.
(a) AMENDMENT RELATED TO SECTION 1400 OF 1986 CODE.—
Section 1400(b)(2)(B) of the 1986 Code is amended by inserting
‘‘as determined on the basis of the 1990 census’’ after ‘‘percent’’.
(b) AMENDMENT RELATED TO SECTION 1400A OF 1986 CODE.—
Subsection (a) of section 1400A of the 1986 Code is amended by
inserting before the period ‘‘and section 1394(b)(3)(B)(iii) shall be
applied without regard to the employee residency requirement’’.
(c) AMENDMENTS RELATED TO SECTION 1400B OF 1986 CODE.—
(1) Section 1400B(b) of the 1986 Code is amended by
inserting after paragraph (4) the following new paragraph:
‘‘(5) TREATMENT
OF
DC
ZONE
TERMINATION.—The termi-
nation of the designation of the DC Zone shall be disregarded
for purposes of determining whether any property is a DC
Zone asset.’’.
(2) Paragraph (6) of section 1400B(b) of the 1986 Code
is amended by striking ‘‘(4)(A)(ii)’’ and inserting ‘‘(4)(A)(i) or
(ii)’’.
(3) Section 1400B(c) of the 1986 Code is amended by
striking ‘‘entity which is an’’.
(4) Section 1400B(d)(2) of the 1986 Code is amended by
inserting ‘‘as determined on the basis of the 1990 census’’
after ‘‘percent’’.
(d) AMENDMENTS RELATED TO SECTION 1400C OF 1986 CODE.—
(1) Paragraph (1) of section 1400C(b) of the 1986 Code
is amended by inserting ‘‘and subsection (d)’’ after ‘‘this sub-
section’’.
(2) Paragraph (1) of section 1400C(c) of the 1986 Code
is amended to read as follows:
‘‘(1) IN GENERAL.—The term ‘first-time homebuyer’ means
any individual if such individual (and if married, such individ-
ual’s spouse) had no present ownership interest in a principal
residence in the District of Columbia during the 1-year period
ending on the date of the purchase of the principal residence
to which this section applies.’’.
(3) Subparagraph (B) of section 1400C(e)(2) of the 1986
Code is amended by inserting before the period ‘‘on the date
the taxpayer first occupies such residence’’.
(4) Paragraph (3) of section 1400C(e) of the 1986 Code
is amended by striking all that follows ‘‘principal residence’’
and inserting ‘‘on the date such residence is purchased.’’.
H. R. 2676—128
(5) Subsection (i) of section 1400C of the 1986 Code is
amended to read as follows:
‘‘(i) APPLICATION
OF SECTION.—This section shall apply to
property purchased after August 4, 1997, and before January 1,
2001.’’.
(6) Subsection (c) of section 23 of the 1986 Code is amended
by inserting ‘‘and section 1400C’’ after ‘‘other than this section’’.
(7) Subparagraph (C) of section 25(e)(1) of the 1986 Code
is amended by striking ‘‘section 23’’ and inserting ‘‘sections
23 and 1400C’’.
SEC. 6009. AMENDMENTS RELATED TO TITLE IX OF 1997 ACT.
(a) AMENDMENT RELATED
TO SECTION 908 OF 1997 ACT.—
Paragraph (6) of section 5041(b) of the 1986 Code is amended
by inserting ‘‘which is a still wine’’ after ‘‘hard cider’’.
(b) AMENDMENT RELATED TO SECTION 964 OF 1997 ACT.—
(1) IN GENERAL.—Subparagraph (C) of section 7704(g)(3)
of the 1986 Code is amended by striking the period at the
end and inserting ‘‘and shall be paid by the partnership. Section
6655 shall be applied to such partnership with respect to such
tax in the same manner as if the partnership were a corpora-
tion, such tax were imposed by section 11, and references
in such section to taxable income were references to the gross
income referred to in subparagraph (A).’’.
(2) EFFECTIVE
DATE.—The second sentence of section
7704(g)(3)(C) of the 1986 Code (as added by paragraph (1))
shall apply to taxable years beginning after the date of the
enactment of this Act.
(c) AMENDMENT RELATED TO SECTION 971 OF 1997 ACT.—Clause
(ii) of section 280F(a)(1)(C) is amended by striking ‘‘subparagraph
(A)’’ and inserting ‘‘subparagraphs (A) and (B)’’.
(d) AMENDMENT RELATED TO SECTION 976 OF 1997 ACT.—Sec-
tion 6103(d)(5) of the 1986 Code is amended by striking ‘‘section
967 of the Taxpayer Relief Act of 1997.’’ and inserting ‘‘section
976 of the Taxpayer Relief Act of 1997. Subsections (a)(2) and
(p)(4) and sections 7213 and 7213A shall not apply with respect
to disclosures or inspections made pursuant to this paragraph.’’.
(e) AMENDMENT RELATED TO SECTION 977 OF 1997 ACT.—Para-
graph (2) of section 977(e) of the 1997 Act is amended to read
as follows:
‘‘(2) NON-AMTRAK
STATE.—The term ‘non-Amtrak State’
means any State which is not receiving intercity passenger
rail service from the Corporation as of the date of the enactment
of this Act.’’.
SEC. 6010. AMENDMENTS RELATED TO TITLE X OF 1997 ACT.
(a) AMENDMENTS RELATED TO SECTION 1001 OF 1997 ACT.—
(1) Paragraph (2) of section 1259(b) of the 1986 Code is
amended—
(A) by striking ‘‘debt’’ each place it appears in clauses
(i), (ii), and (iii) of subparagraph (A) and inserting ‘‘posi-
tion’’;
(B) by striking ‘‘and’’ at the end of subparagraph (A);
and
(C) by redesignating subparagraph (B) as subpara-
graph (C) and by inserting after subparagraph (A) the
following new subparagraph:
H. R. 2676—129
‘‘(B) any hedge with respect to a position described
in subparagraph (A), and’’.
(2) Section 1259(d)(1) of the 1986 Code is amended by
inserting ‘‘(including cash)’’ after ‘‘property’’.
(3) Subparagraph (D) of section 475(f )(1) of the 1986 Code
is amended by adding at the end the following new sentence:
‘‘Subsection (d)(3) shall not apply under the preceding sentence
for purposes of applying sections 1402 and 7704.’’.
(4) Subparagraph (C) of section 1001(d)(3) of the 1997
Act is amended by striking ‘‘within the 30-day period beginning
on’’ and inserting ‘‘before the close of the 30th day after’’.
(b) AMENDMENT RELATED TO SECTION 1011 OF 1997 ACT.—
Paragraph (1) of section 1059(g) of the 1986 Code is amended
by striking ‘‘and in the case of stock held by pass-thru entities’’
and inserting ‘‘, in the case of stock held by pass-thru entities,
and in the case of consolidated groups’’.
(c) AMENDMENTS RELATED TO SECTION 1012 OF 1997 ACT.—
(1) Paragraph (1) of section 1012(d) of the 1997 Act is
amended by striking ‘‘1997, pursuant’’ and inserting ‘‘1997;
except that the amendment made by subsection (a) shall apply
to such distributions only if pursuant’’.
(2) Subparagraph (A) of section 355(e)(3) of the 1986 Code
is amended—
(A) by striking ‘‘shall not be treated as described in’’
and inserting ‘‘shall not be taken into account in applying’’;
and
(B) by striking clause (iv) and inserting the following
new clause:
‘‘(iv) The acquisition of stock in the distributing
corporation or any controlled corporation to the extent
that the percentage of stock owned directly or indirectly
in such corporation by each person owning stock in
such corporation immediately before the acquisition
does not decrease.’’.
(3)(A) Subsection (c) of section 351 of the 1986 Code is
amended to read as follows:
‘‘(c) SPECIAL RULES WHERE DISTRIBUTION TO SHAREHOLDERS.—
‘‘(1) IN GENERAL.—In determining control for purposes of
this section, the fact that any corporate transferor distributes
part or all of the stock in the corporation which it receives
in the exchange to its shareholders shall not be taken into
account.
‘‘(2) SPECIAL RULE FOR SECTION 355.—If the requirements
of section 355 (or so much of section 356 as relates to section
355) are met with respect to a distribution described in para-
graph (1), then, solely for purposes of determining the tax
treatment of the transfers of property to the controlled corpora-
tion by the distributing corporation, the fact that the sharehold-
ers of the distributing corporation dispose of part or all of
the distributed stock shall not be taken into account in deter-
mining control for purposes of this section.’’.
(B) Clause (ii) of section 368(a)(2)(H) of the 1986 Code
is amended to read as follows:
‘‘(ii) in the case of a transaction with respect to
which the requirements of section 355 (or so much
of section 356 as relates to section 355) are met, the
H. R. 2676—130
fact that the shareholders of the distributing corpora-
tion dispose of part or all of the distributed stock
shall not be taken into account.’’.
(d) AMENDMENTS RELATED TO SECTION 1013 OF 1997 ACT.—
(1) Paragraph (5) of section 304(b) of the 1986 Code is
amended by striking subparagraph (B) and by redesignating
subparagraph (C) as subparagraph (B).
(2) Subsection (b) of section 304 of the 1986 Code is
amended by adding at the end the following new paragraph:
‘‘(6) AVOIDANCE OF MULTIPLE INCLUSIONS, ETC.—In the case
of any acquisition to which subsection (a) applies in which
the acquiring corporation or the issuing corporation is a foreign
corporation, the Secretary shall prescribe such regulations as
are appropriate in order to eliminate a multiple inclusion of
any item in income by reason of this subpart and to provide
appropriate basis adjustments (including modifications to the
application of sections 959 and 961).’’.
(e) AMENDMENTS RELATED TO SECTION 1014 OF 1997 ACT.—
(1) Paragraph (1) of section 351(g) of the 1986 Code is
amended by adding ‘‘and’’ at the end of subparagraph (A) and
by striking subparagraphs (B) and (C) and inserting the follow-
ing new subparagraph:
‘‘(B) if (and only if) the transferor receives stock other
than nonqualified preferred stock—
‘‘(i) subsection (b) shall apply to such transferor;
and
‘‘(ii) such nonqualified preferred stock shall be
treated as other property for purposes of applying sub-
section (b).’’.
(2) Clause (ii) of section 354(a)(2)(C) of 1986 Code is
amended by adding at the end the following new subclause:
‘‘(III) EXTENSION
OF
STATUTE
OF
LIMITA-
TIONS.—The statutory period for the assessment
of any deficiency attributable to a corporation fail-
ing to be a family-owned corporation shall not
expire before the expiration of 3 years after the
date the Secretary is notified by the corporation
(in such manner as the Secretary may prescribe)
of such failure, and such deficiency may be
assessed before the expiration of such 3-year period
notwithstanding the provisions of any other law
or rule of law which would otherwise prevent such
assessment.’’.
(f ) AMENDMENT RELATED TO SECTION 1024 OF 1997 ACT.—
Section 6331(h)(1) of the 1986 Code is amended by striking ‘‘The
effect of a levy’’ and inserting ‘‘If the Secretary approves a levy
under this subsection, the effect of such levy’’.
(g) AMENDMENTS RELATED TO SECTION 1031 OF 1997 ACT.—
(1) Subsection (l) of section 4041 of the 1986 Code is
amended by striking ‘‘subsection (e) or (f )’’ and inserting ‘‘sub-
section (f ) or (g)’’.
(2) Subsection (b) of section 9502 of the 1986 Code is
amended by moving the sentence added at the end of paragraph
(1) to the end of such subsection.
(3) Subsection (c) of section 6421 of the 1986 Code is
amended—
(A) by striking ‘‘(2)(A)’’ and inserting ‘‘(2)’’; and
H. R. 2676—131
(B) by adding at the end the following sentence:
‘‘Subsection (a) shall not apply to gasoline to which this
subsection applies.’’.
(h) AMENDMENTS RELATED TO SECTION 1032 OF 1997 ACT.—
(1) Section 1032(a) of the 1997 Act is amended by striking
‘‘Subsection (a) of section 4083’’ and inserting ‘‘Paragraph (1)
of section 4083(a)’’.
(2) Section 1032(e)(12)(A) of the 1997 Act shall be applied
as if ‘‘gasoline, diesel fuel,’’ were the material proposed to
be stricken.
(3) Paragraph (1) of section 4082(d) of the 1986 Code is
amended to read as follows:
‘‘(1) AVIATION-GRADE
KEROSENE.—Subsection (a)(2) shall
not apply to aviation-grade kerosene (as determined under regu-
lations prescribed by the Secretary) which the Secretary deter-
mines is destined for use as a fuel in an aircraft.’’.
(4) Paragraph (3) of section 4082(d) of the 1986 Code is
amended by striking ‘‘a removal, entry, or sale of kerosene
to’’ and inserting ‘‘kerosene received by’’.
(5) Paragraph (1) of section 4101(e) of the 1986 Code is
amended by striking ‘‘dyed diesel fuel and kerosene’’ and insert-
ing ‘‘such fuel in a dyed form’’.
(i) AMENDMENT RELATED
TO SECTION 1034 OF 1997 ACT.—
Paragraph (3) of section 4251(d) of the 1986 Code is amended
by striking ‘‘other similar arrangement’’ and inserting ‘‘any other
similar arrangement’’.
( j) AMENDMENTS RELATED TO SECTION 1041 OF 1997 ACT.—
(1) Subparagraph (A) of section 512(b)(13) of the 1986
Code is amended by inserting ‘‘or accrues’’ after ‘‘receives’’.
(2) Subclause (I) of section 512(b)(13)(B)(i) of the 1986
Code is amended by striking ‘‘(as defined in section
513A(a)(5)(A))’’.
(3) Paragraph (2) of section 1041(b) of the 1997 Act is
amended to read as follows:
‘‘(2) BINDING CONTRACTS.—The amendments made by this
section shall not apply to any amount received or accrued
during the first 2 taxable years beginning on or after the
date of the enactment of this Act if such amount is received
or accrued pursuant to a written binding contract in effect
on June 8, 1997, and at all times thereafter before such amount
is received or accrued. The preceding sentence shall not apply
to any amount which would (but for the exercise of an option
to accelerate payment of such amount) be received or accrued
after such 2 taxable years.’’.
(k) AMENDMENTS RELATED TO SECTION 1053 OF 1997 ACT.—
(1) Section 853 of the 1986 Code is amended by redesignat-
ing subsection (e) as subsection (f ) and by inserting after
subsection (d) the following new subsection:
‘‘(e) TREATMENT OF TAXES NOT ALLOWED AS A CREDIT UNDER
SECTION 901(k).—This section shall not apply to any tax with
respect to which the regulated investment company is not allowed
a credit under section 901 by reason of section 901(k).’’.
(2) Subsection (c) of section 853 of the 1986 Code is
amended by striking the last sentence.
(3) Subparagraph (A) of section 901(k)(4) of the 1986 Code
is amended by striking ‘‘securities business’’ and inserting ‘‘busi-
ness as a securities dealer’’.
H. R. 2676—132
(l) AMENDMENT RELATED
TO SECTION 1055 OF 1997 ACT.—
Section 6611(g)(1) of the 1986 Code is amended by striking ‘‘(e),
and (h)’’ and inserting ‘‘and (e)’’.
(m) AMENDMENT RELATED TO SECTION 1061 OF 1997 ACT.—
Subsection (c) of section 751 of the 1986 Code is amended by
striking ‘‘731’’ each place it appears and inserting ‘‘731, 732,’’.
(n) AMENDMENT RELATED TO SECTION 1083 OF 1997 ACT.—
Section 1083(a)(2) of the 1997 Act is amended—
(1) by striking ‘‘21’’ and inserting ‘‘20’’; and
(2) by striking ‘‘22’’ and inserting ‘‘21’’.
(o) AMENDMENTS RELATED TO SECTION 1084 OF 1997 ACT.—
(1) Paragraph (3) of section 264(a) of the 1986 Code is
amended by striking ‘‘subsection (c)’’ and inserting ‘‘subsection
(d)’’.
(2) Paragraph (4) of section 264(a) of the 1986 Code is
amended by striking ‘‘subsection (d)’’ and inserting ‘‘subsection
(e)’’.
(3)(A) Paragraph (4) of section 264(f ) of the 1986 Code
is amended by adding at the end the following new subpara-
graph:
‘‘(E) MASTER CONTRACTS.—If coverage for each insured
under a master contract is treated as a separate contract
for purposes of sections 817(h), 7702, and 7702A, coverage
for each such insured shall be treated as a separate contract
for purposes of subparagraph (A). For purposes of the
preceding sentence, the term ‘master contract’ shall not
include any group life insurance contract (as defined in
section 848(e)(2)).’’.
(B) The second sentence of section 1084(d) of the 1997
Act is amended by striking ‘‘but’’ and all that follows and
inserting ‘‘except that, in the case of a master contract (within
the meaning of section 264(f )(4)(E) of the Internal Revenue
Code of 1986), the addition of covered lives shall be treated
as a new contract only with respect to such additional covered
lives.’’.
(4)(A) Clause (iv) of section 264(f )(5)(A) of the 1986 Code
is amended by striking the second sentence.
(B) Subparagraph (B) of section 6724(d)(1) of the 1986
Code is amended by striking ‘‘or’’ at the end of clause (xv),
by striking the period at the end of clause (xvi) and inserting
‘‘; or’’, and by adding at the end the following new clause:
‘‘(xvii) section 264(f )(5)(A)(iv) (relating to reporting
with respect to certain life insurance and annuity con-
tracts).’’.
(C) Paragraph (2) of section 6724(d) of the 1986 Code
is amended by striking ‘‘or’’ at the end of subparagraph (Y),
by striking the period at the end of subparagraph (Z) and
inserting ‘‘or’’, and by adding at the end the following new
subparagraph:
‘‘(AA) section 264(f )(5)(A)(iv) (relating to reporting with
respect to certain life insurance and annuity contracts).’’.
(5) Subparagraph (A) of section 264(f )(8) of the 1986 Code
is amended by striking ‘‘subsection (d)(5)(B)’’ and inserting
‘‘subsection (e)(5)(B)’’.
(p) AMENDMENTS RELATED TO SECTION 1085 OF 1997 ACT.—
(1) Paragraph (5) of section 32(c) of the 1986 Code is
amended—
H. R. 2676—133
(A) by inserting before the period at the end of subpara-
graph (A) ‘‘and increased by the amounts described in
subparagraph (C)’’;
(B) by adding ‘‘or’’ at the end of clause (iii) of subpara-
graph (B); and
(C) by striking all that follows subclause (II) of
subparagraph (B)(iv) and inserting the following:
‘‘(III) other trades or businesses.
For purposes of clause (iv), there shall not be taken
into account items which are attributable to a trade
or business which consists of the performance of serv-
ices by the taxpayer as an employee.
‘‘(C) CERTAIN
AMOUNTS
INCLUDED.—An amount is
described in this subparagraph if it is—
‘‘(i) interest received or accrued during the taxable
year which is exempt from tax imposed by this chapter;
or
‘‘(ii) amounts received as a pension or annuity,
and any distributions or payments received from an
individual retirement plan, by the taxpayer during the
taxable year to the extent not included in gross income.
Clause (ii) shall not include any amount which is not
includible in gross income by reason of a trustee-to-trustee
transfer or a rollover distribution.’’.
(2) Clause (v) of section 32(c)(2)(B) of the 1986 Code is
amended by inserting ‘‘shall be taken into account’’ before ‘‘,
but only’’.
(3) The text of paragraph (3) of section 1085(a) of the
1997 Act is amended to read as follows: ‘‘Paragraph (2) of
section 6213(g) (relating to the definition of mathematical or
clerical errors) is amended by striking ‘‘and’’ at the end of
subparagraph (I), by striking the period at the end of subpara-
graph (J) and inserting ‘‘, and’’, and by inserting after subpara-
graph (J) the following new subparagraph:
‘‘(K) an omission of information required by section
32(k)(2) (relating to taxpayers making improper prior
claims of earned income credit).’’.
(q) AMENDMENT RELATED TO SECTION 1088 OF 1997 ACT.—
Section 1088(b)(2)(C) of the 1997 Act is amended by inserting ‘‘more
than 1 year’’ before ‘‘after’’.
(r) AMENDMENT RELATED TO SECTION 1089 OF 1997 ACT.—
Paragraphs (1)(C) and (2)(C) of section 664(d) of the 1986 Code
are each amended by adding ‘‘, and’’ at the end.
SEC. 6011. AMENDMENTS RELATED TO TITLE XI OF 1997 ACT.
(a) AMENDMENT RELATED TO SECTION 1103 OF 1997 ACT.—
Paragraph (3) of section 59(a) added by section 1103 of the 1997
Act is redesignated as paragraph (4).
(b) AMENDMENTS RELATED TO SECTION 1121 OF 1997 ACT.—
(1) Subsection (e) of section 1297 of the 1986 Code is
amended by adding at the end the following new paragraph:
‘‘(4) TREATMENT OF HOLDERS OF OPTIONS.—Paragraph (1)
shall not apply to stock treated as owned by a person by
reason of section 1298(a)(4) (relating to the treatment of a
person that has an option to acquire stock as owning such
stock) unless such person establishes that such stock is owned
(within the meaning of section 958(a)) by a United States
H. R. 2676—134
shareholder (as defined in section 951(b)) who is not exempt
from tax under this chapter.’’.
(2) Section 1298(a)(2)(B) of the 1986 Code is amended by
adding at the end the following new sentence: ‘‘Section 1297(e)
shall not apply in determining whether a corporation is a
passive foreign investment company for purposes of this
subparagraph.’’.
(c) AMENDMENTS RELATED TO SECTION 1122 OF 1997 ACT.—
(1) Section 672(f )(3)(B) of the 1986 Code is amended by
striking ‘‘section 1296’’ and inserting ‘‘section 1297’’.
(2) Paragraph (1) of section 1291(d) of the 1986 Code is
amended by adding at the end the following new sentence:
‘‘In the case of stock which is marked to market under section
475 or any other provision of this chapter, this section shall
not apply, except that rules similar to the rules of section
1296( j) shall apply.’’.
(3) Subsection (d) of section 1296 of the 1986 Code is
amended by adding at the end the following new sentence:
‘‘In the case of a regulated investment company which elected
to mark to market the stock held by such company as of
the last day of the taxable year preceding such company’s
first taxable year for which such company elects the application
of this section, the amount referred to in paragraph (1) shall
include amounts included in gross income under such mark
to market with respect to such stock for prior taxable years.’’.
(d) AMENDMENT RELATED TO SECTION 1123 OF 1997 ACT.—
Subsection (e) of section 1297 of the 1986 Code added by section
1123 of the 1997 Act is redesignated as subsection (f ).
(e) AMENDMENTS RELATED TO SECTION 1131 OF 1997 ACT.—
(1) Section 991 of the 1986 Code is amended by striking
‘‘except for the tax imposed by chapter 5’’.
(2) Section 6013 of the 1986 Code is amended by striking
‘‘chapters 1 and 5’’ each place it appears in paragraphs (1)(A)
and (5) of subsection (g) and in subsection (h)(1) and inserting
‘‘chapter 1’’.
(f ) AMENDMENT RELATED TO SECTION 1142 OF 1997 ACT.—
(1) Paragraph (2) of section 6038(a) of the 1986 Code is
amended by striking ‘‘by regulations’’.
(2) Paragraph (3) of section 6038(a) of the 1986 Code is
amended by striking ‘‘such information’’ and all that follows
through the period and inserting ‘‘the Secretary has prescribed
the furnishing of such information on or before the first day
of such annual accounting period.’’.
(3) Paragraph (4) of section 6038(e) of the 1986 Code is
amended by striking ‘‘corporation’’ and inserting ‘‘foreign busi-
ness entity’’ each place it appears.
(g) AMENDMENT RELATED TO SECTION 1144 OF 1997 ACT.—
Paragraphs (1) and (2) of section 1144(c) of the 1997 Act are
each amended by striking ‘‘6038B(b)’’ and inserting ‘‘6038B(c) (as
redesignated by subsection (b))’’.
SEC. 6012. AMENDMENTS RELATED TO TITLE XII OF 1997 ACT.
(a) AMENDMENT RELATED TO SECTION 1204 OF 1997 ACT.—
The last sentence of section 162(a) of the 1986 Code is amended
by striking ‘‘investigate’’ and all that follows and inserting ‘‘inves-
tigate or prosecute, or provide support services for the investigation
or prosecution of, a Federal crime.’’.
H. R. 2676—135
(b) AMENDMENTS RELATED TO SECTION 1205 OF 1997 ACT.—
(1) Section 6311(e)(1) of the 1986 Code is amended by
striking ‘‘section 6103(k)(8)’’ and inserting ‘‘section 6103(k)(9)’’.
(2) Paragraph (8) of section 6103(k) of the 1986 Code (as
added by section 1205(c)(1) of the 1997 Act) is redesignated
as paragraph (9).
(3) Subsection (g) of section 7431 of the 1986 Code added
by section 1205 of the 1997 Act is redesignated as subsection
(h) and is amended by striking ‘‘(8)’’ in the heading and insert-
ing ‘‘(9)’’.
(4) Section 1205(c)(3) of the 1997 Act shall be applied
as if it read as follows:
‘‘(3) 
Section 
6103(p)(3)(A), 
as 
amended 
by 
section
1026(b)(1)(A) of the 1997 Act, is amended by striking ‘‘or (8)’’
and inserting ‘‘(8), or (9)’’.
(5) Section 1213(b) of the 1997 Act is amended by striking
‘‘section 6724(d)(1)(A)’’ and inserting ‘‘section 6724(d)(1)’’.
(c) AMENDMENT RELATED TO SECTION 1221 OF 1997 ACT.—
Paragraph (2) of section 774(d) of the 1986 Code is amended by
inserting before the period ‘‘or 857(b)(3)(D)’’.
(d) AMENDMENT RELATED TO SECTION 1223 OF 1997 ACT.—
Subsection (c) of section 6724 of the 1986 Code is amended by
inserting before the period ‘‘(more than 100 information returns
in the case of a partnership having more than 100 partners)’’.
(e) AMENDMENT RELATED TO SECTION 1226 OF 1997 ACT.—
Section 1226 of the 1997 Act is amended by striking ‘‘ending on
or’’ and inserting ‘‘beginning’’.
(f ) AMENDMENT RELATED TO SECTION 1231 OF 1997 ACT.—
Subsection (c) of section 6211 of the 1986 Code is amended—
(1) by striking ‘‘SUBCHAPTER C’’ in the heading and insert-
ing ‘‘SUBCHAPTERS C AND D’’; and
(2) by striking ‘‘subchapter C’’ in the text and inserting
‘‘subchapters C and D’’.
(g) AMENDMENT RELATED TO SECTION 1256 OF 1997 ACT.—
Subparagraph (A) of section 857(d)(3) of the 1986 Code is amended
by striking ‘‘earliest accumulated earnings and profits (other than
earnings and profits to which subsection (a)(2)(A) applies)’’ and
inserting ‘‘earliest earnings and profits accumulated in any taxable
year to which the provisions of this part did not apply’’.
(h) AMENDMENT RELATED TO SECTION 1285 OF 1997 ACT.—
Section 7430(b) of the 1986 Code is amended by redesignating
paragraph (5) as paragraph (4).
SEC. 6013. AMENDMENTS RELATED TO TITLE XIII OF 1997 ACT.
(a) AMENDMENTS RELATED TO SECTION 1305 OF 1997 ACT.—
(1) Section 646 of the 1986 Code is redesignated as section
645.
(2) The item relating to section 646 in the table of sections
for subpart A of part I of subchapter J of chapter 1 of the
1986 Code is amended by striking ‘‘Sec. 646’’ and inserting
‘‘Sec. 645’’.
(3) Paragraph (1) of section 2652(b) of the 1986 Code is
amended by striking ‘‘section 646’’ and inserting ‘‘section 645’’.
(4)(A) Paragraph (1) of section 2652(b) of the 1986 Code
is amended by striking the second sentence.
(B) Subsection (b) of section 2654 of the 1986 Code is
amended by adding at the end the following new sentence:
H. R. 2676—136
‘‘For purposes of this subsection, a trust shall be treated as
part of an estate during any period that the trust is so treated
under section 645.’’.
(b) AMENDMENTS RELATED TO SECTION 1309 OF 1997 ACT.—
(1) Subsection (b) of section 685 of the 1986 Code is
amended by adding at the end the following new flush sentence:
‘‘A trust shall not fail to be treated as meeting the requirement
of paragraph (6) by reason of the death of an individual but only
during the 60-day period beginning on the date of such death.’’.
(2) Subsection (f ) of section 685 of the 1986 Code is
amended by inserting before the period at the end ‘‘and of
trusts terminated during the year’’.
SEC. 6014. AMENDMENTS RELATED TO TITLE XIV OF 1997 ACT.
(a) AMENDMENTS RELATED TO SECTION 1421 OF 1997 ACT.—
(1) Paragraph (1) of section 5054(a) of the 1986 Code is
amended—
(A) by inserting ‘‘, or imported into the United States
and transferred to a brewery free of tax under section
5418,’’ after ‘‘produced in the United States’’ in the text;
and
(B) by inserting ‘‘; CERTAIN IMPORTED BEER’’ after ‘‘PRO-
DUCED IN THE UNITED STATES’’ in the heading.
(2) Paragraph (2) of section 5054(a) of the 1986 Code is
amended by inserting ‘‘and not transferred to a brewery free
of tax under section 5418’’ after ‘‘United States’’.
(3) Section 5056 of the 1986 Code is amended by striking
‘‘produced in the United States’’ each place it appears and
inserting ‘‘removed for consumption or sale’’.
(b) AMENDMENTS RELATED TO SECTION 1422 OF 1997 ACT.—
(1) Paragraph (2) of section 5043(a) of the 1986 Code is
amended by inserting ‘‘which are not transferred to a bonded
wine cellar free of tax under section 5364’’ after ‘‘foreign wines’’.
(2) Subsection (a) of section 5044 of the 1986 Code is
amended by striking ‘‘produced in the United States’’ and
inserting ‘‘removed from a bonded wine cellar’’.
(3) Section 5364 of the 1986 Code is amended by striking
‘‘Wine imported or brought into’’ and inserting ‘‘Natural wine
(as defined in section 5381) imported or brought into’’.
(c) AMENDMENT RELATED TO SECTION 1434 OF 1997 ACT.—
Paragraph (2) of section 4052(f ) of the 1986 Code is amended
by striking ‘‘this section’’ and inserting ‘‘such section’’.
(d) AMENDMENT RELATED TO SECTION 1436 OF 1997 ACT.—
Paragraph (2) of section 4091(a) of the 1986 Code is amended
by inserting ‘‘or on which tax has been credited or refunded’’ after
‘‘such paragraph’’.
(e) AMENDMENT RELATED TO SECTION 1453 OF 1997 ACT.—
Subparagraph (D) of section 7430(c)(4) of the 1986 Code is amended
by striking ‘‘subparagraph (A)(iii)’’ and inserting ‘‘subparagraph
(A)(ii)’’.
SEC. 6015. AMENDMENTS RELATED TO TITLE XV OF 1997 ACT.
(a) AMENDMENT RELATED TO SECTION 1501 OF 1997 ACT.—
Paragraph (8) of section 408(p) of the 1986 Code added by section
1501(b) of the 1997 Act is redesignated as paragraph (9).
(b) AMENDMENT RELATED TO SECTION 1505 OF 1997 ACT.—
Section 1505(d)(2) of the 1997 Act is amended by striking ‘‘(b)(12)’’
and inserting ‘‘(b)(12)(A)(i)’’.
H. R. 2676—137
(c) AMENDMENTS RELATED TO SECTION 1529 OF 1997 ACT.—
(1) Section 1529(a) of the 1997 Act is amended to read
as follows:
‘‘(a) GENERAL RULE.—Amounts to which this section applies
which are received by an individual (or the survivors of the individ-
ual) as a result of hypertension or heart disease of the individual
shall be excludable from gross income under section 104(a)(1) of
the Internal Revenue Code of 1986.’’.
(2) Section 1529(b)(1)(B) of the 1997 Act is amended to
read as follows:
‘‘(B) under—
‘‘(i) a State law (as amended on May 19, 1992)
which irrebuttably presumed that heart disease and
hypertension are work-related illnesses but only for
employees hired before July 1, 1992; or
‘‘(ii) any other statute, ordinance, labor agreement,
or similar provision as a disability pension payment
or in the nature of a disability pension payment attrib-
utable to employment as a police officer or fireman,
but only if the individual is referred to in the State
law described in clause (i); and’’.
(d) AMENDMENT RELATED TO SECTION 1530 OF 1997 ACT.—
Subparagraph (C) of section 404(a)(9) of the 1986 Code (as added
by section 1530 of the 1997 Act) is redesignated as subparagraph
(D) and is amended by striking ‘‘A qualified’’ and inserting ‘‘QUALI-
FIED GRATUITOUS TRANSFERS.—A qualified’’.
(e) AMENDMENT RELATED TO SECTION 1531 OF 1997 ACT.—
Subsection (f ) of section 9811 of the 1986 Code (as added by section
1531 of the 1997 Act) is redesignated as subsection (e).
SEC. 6016. AMENDMENTS RELATED TO TITLE XVI OF 1997 ACT.
(a) AMENDMENTS RELATED TO SECTION 1601(d) OF 1997 ACT.—
(1) AMENDMENTS RELATED TO SECTION 1601(d)(1)—
(A) Section 408(p)(2)(D)(i) of the 1986 Code is amended
by striking ‘‘or (B)’’ in the last sentence.
(B) Section 408(p) of the 1986 Code is amended by
adding at the end the following new paragraph:
‘‘(10) SPECIAL RULES FOR ACQUISITIONS, DISPOSITIONS, AND
SIMILAR TRANSACTIONS.—
‘‘(A) IN GENERAL.—An employer which fails to meet
any applicable requirement by reason of an acquisition,
disposition, or similar transaction shall not be treated as
failing to meet such requirement during the transition
period if—
‘‘(i) the employer satisfies requirements similar to
the requirements of section 410(b)(6)(C)(i)(II); and
‘‘(ii) the qualified salary reduction arrangement
maintained by the employer would satisfy the require-
ments of this subsection after the transaction if the
employer which maintained the arrangement before
the transaction had remained a separate employer.
‘‘(B) APPLICABLE REQUIREMENT.—For purposes of this
paragraph, the term ‘applicable requirement’ means—
‘‘(i) the requirement under paragraph (2)(A)(i) that
an employer be an eligible employer;
‘‘(ii) the requirement under paragraph (2)(D) that
an arrangement be the only plan of an employer; and
H. R. 2676—138
‘‘(iii) the participation requirements under para-
graph (4).
‘‘(C) TRANSITION PERIOD.—For purposes of this para-
graph, the term ‘transition period’ means the period begin-
ning on the date of any transaction described in subpara-
graph (A) and ending on the last day of the second calendar
year following the calendar year in which such transaction
occurs.’’.
(C) Section 408(p)(2) of the 1986 Code is amended—
(i) by striking ‘‘the preceding sentence shall apply
only in accordance with rules similar to the rules of
section 410(b)(6)(C)(i)’’ in the last sentence of subpara-
graph (C)(i)(II) and inserting ‘‘the preceding sentence
shall not apply’’; and
(ii) by striking clause (iii) of subparagraph (D).
(2) 
AMENDMENT
TO
SECTION
1601
(d)(4).—Section
1601(d)(4)(A) of the 1997 Act is amended—
(A) by striking ‘‘Section 403(b)(11)’’ and inserting
‘‘Paragraphs (7)(A)(ii) and (11) of section 403(b)’’; and
(B) by striking ‘‘403(b)(1)’’ in clause (ii) and inserting
‘‘403(b)(10)’’.
(b) AMENDMENT RELATED TO SECTION 1601(f )(4) OF 1997 ACT.—
Subsection (d) of section 6427 of the 1986 Code is amended—
(1) by striking ‘‘HELICOPTERS’’ in the heading and inserting
‘‘OTHER AIRCRAFT USES’’; and
(2) by inserting ‘‘or a fixed-wing aircraft’’ after ‘‘helicopter’’.
SEC. 6017. AMENDMENT RELATED TO TRANSPORTATION EQUITY ACT
FOR THE 21ST CENTURY.
(a) IN GENERAL.—Subparagraph (B) of section 6427(i)(2) of
the 1986 Code is amended to read as follows:
‘‘(B) TIME FOR FILING CLAIM.—No claim filed under
this paragraph shall be allowed unless filed during the
first quarter following the last quarter included in the
claim.’’.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall take effect as if included in the amendments made by section
9009 of the Transportation Equity Act for the 21st Century.
SEC. 6018. AMENDMENTS RELATED TO SMALL BUSINESS JOB PROTEC-
TION ACT OF 1996.
(a) AMENDMENT RELATED TO SECTION 1116.—Subparagraph (C)
of section 1116(b)(2) of the Small Business Job Protection Act of
1996 is amended by striking ‘‘chapter 68’’ and inserting ‘‘chapter
61’’.
(b) AMENDMENT RELATED TO SECTION 1421.—Section 408(d)(7)
of the 1986 Code is amended—
(1) by inserting ‘‘or 402(k)’’ after ‘‘section 402(h)’’ in
subparagraph (B) thereof; and
(2) by inserting ‘‘OR SIMPLE RETIREMENT ACCOUNTS’’ after
‘‘PENSIONS’’ in the heading thereof.
(c) AMENDMENT RELATED TO SECTION 1431.—Subparagraph (E)
of section 1431(c)(1) of the Small Business Job Protection Act of
1996 is amended to read as follows:
‘‘(E) Section 414(q)(5), as redesignated by subparagraph
(A), is amended by striking ‘under paragraph (4) or the number
of officers taken into account under paragraph (5)’ ’’.
H. R. 2676—139
(d) AMENDMENT RELATED
TO SECTION 1604.—Paragraph (3)
of section 1604(b) of such Act is amended—
(1) by striking ‘‘such Code’’ and inserting ‘‘the Internal
Revenue Code of 1986’’; and
(2) by striking ‘‘such date of enactment’’ and inserting
‘‘the date of the enactment of this Act’’.
(e) AMENDMENT RELATED
TO SECTION 1609.—Paragraph (1)
of section 1609(h) of such Act is amended by striking ‘‘paragraph
(3)(A)(i)’’ and inserting ‘‘paragraph (3)(A)’’.
(f ) AMENDMENTS RELATED TO SECTION 1807.—
(1) Subparagraph (A) of section 23(b)(2) of the 1986 Code
(relating to income limitation on credit for adoption expenses)
is amended by inserting ‘‘(determined without regard to sub-
section (c))’’ after ‘‘for any taxable year’’.
(2) Paragraph (3) of section 1807(c) of the Small Business
Job Protection Act of 1996 is amended by striking ‘‘Clause
(i)’’ and inserting ‘‘Clause (ii)’’.
(g) AMENDMENT RELATED
TO SECTION 1903.—Subsection (b)
of section 1903 of such Act shall be applied as if ‘‘or’’ in the
material proposed to be stricken were capitalized.
(h) EFFECTIVE DATE.—The amendments made by this section
shall take effect as if included in the provisions of the Small
Business Job Protection Act of 1996 to which they relate.
SEC. 6019. AMENDMENTS RELATED TO TAXPAYER BILL OF RIGHTS 2.
(a) IN GENERAL.—Subsection (b) of section 6104 of the 1986
Code is amended by adding at the end the following new sentence:
‘‘In the case of an organization described in section 501(d), this
subsection shall not apply to copies referred to in section 6031(b)
with respect to such organization.’’.
(b) PUBLIC INSPECTION.—Subparagraph (C) of section 6104(e)(1)
of the 1986 Code is amended by adding at the end the following
new sentence: ‘‘In the case of an organization described in section
501(d), subparagraph (A) shall not require the disclosure of the
copies referred to in section 6031(b) with respect to such organiza-
tion.’’.
(c) DISCLOSURE
TO
AUTHORIZED
REPRESENTATIVES
OF
THE
TAXPAYER.—Paragraph (6) of section 6103(e) of the 1986 Code is
amended by striking ‘‘or (5)’’ and inserting ‘‘(5), (8), or (9)’’.
(d) EFFECTIVE DATE.—The amendments made by this section
shall take effect on the date of the enactment of this Act.
SEC. 6020. AMENDMENT RELATED TO OMNIBUS BUDGET RECONCILI-
ATION ACT OF 1993.
(a) IN GENERAL.—Section 196(c) of the 1986 Code is amended
by striking ‘‘and’’ at the end of paragraph (6), by striking the
period at the end of paragraph (7), and insert ‘‘, and’’, and by
adding at the end the following new paragraph:
‘‘(8) the employer Social Security credit determined under
section 45B(a).’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall take effect as if included in the amendments made by section
13443 of the Revenue Reconciliation Act of 1993.
SEC. 6021. AMENDMENT RELATED TO REVENUE RECONCILIATION ACT
OF 1990.
(a) IDENTIFICATION REQUIREMENT FOR INDIVIDUALS ELIGIBLE
FOR EARNED INCOME CREDIT.—Subparagraph (F) of section 32(c)(1)
H. R. 2676—140
of the 1986 Code is amended by striking ‘‘The term ‘eligible individ-
ual’ does not include any individual who does not include on the
return of tax for the taxable year—’’ and inserting ‘‘No credit
shall be allowed under this section to an eligible individual who
does not include on the return of tax for the taxable year—’’.
(b) IDENTIFICATION REQUIREMENT FOR QUALIFYING CHILDREN
UNDER EARNED INCOME CREDIT.—
(1) IN GENERAL.—Clause (i) of section 32(c)(3)(D) of the
1986 Code is amended to read as follows:
‘‘(i) IN GENERAL.—A qualifying child shall not be
taken into account under subsection (b) unless the
taxpayer includes the name, age, and TIN of the
qualifying child on the return of tax for the taxable
year.’’.
(2) INDIVIDUALS WHO DO NOT INCLUDE TIN, ETC., OF ANY
QUALIFYING CHILD.—Paragraph (1) of section 32(c) of the 1986
Code is amended by adding at the end the following new
subparagraph:
‘‘(G) INDIVIDUALS WHO DO NOT INCLUDE TIN, ETC., OF
ANY QUALIFYING CHILD.—No credit shall be allowed under
this section to any eligible individual who has one or more
qualifying children if no qualifying child of such individual
is taken into account under subsection (b) by reason of
paragraph (3)(D).’’.
(3) CONFORMING AMENDMENT.—Subparagraph (A) of section
32(c)(3) is amended by inserting ‘‘and’’ at the end of clause
(ii), by striking ‘‘, and’’ at the end of clause (iii) and inserting
a period, and by striking clause (iv).
(c) EFFECTIVE DATES.—
(1) ELIGIBLE INDIVIDUALS.—The amendment made by sub-
section (a) shall take effect as if included in the amendments
made by section 451 of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996.
(2) QUALIFYING CHILDREN.—The amendments made by sub-
section (b) shall take effect as if included in the amendments
made by section 11111 of Revenue Reconciliation Act of 1990.
SEC. 6022. AMENDMENT RELATED TO TAX REFORM ACT OF 1986.
(a) IN GENERAL.—Section 6401(b)(1) of the 1986 Code is
amended by striking ‘‘and D’’ and inserting ‘‘D, and G’’.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall take effect as if included in the amendments made by section
701(b) of the Tax Reform Act of 1986.
SEC. 6023. MISCELLANEOUS CLERICAL AND DEADWOOD CHANGES.
(1) The heading for subparagraph (B) of section 45A(b)(1)
of the 1986 Code is amended by striking ‘‘TARGETED
JOBS
CREDIT’’ and inserting ‘‘WORK OPPORTUNITY CREDIT’’.
(2) The subsection heading for section 59(b) of the 1986
Code is amended by striking ‘‘SECTION 936 CREDIT’’ and insert-
ing ‘‘CREDITS UNDER SECTION 30A OR 936’’.
(3) Subsection (n) of section 72 of the 1986 Code is amended
by inserting ‘‘(as in effect on the day before the date of the
enactment of the Small Business Job Protection Act of 1996)’’
after ‘‘section 101(b)(2)(D)’’.
(4) Subparagraph (A) of section 72(t)(3) of the 1986 Code
is amended by striking ‘‘(A)(v),’’ and inserting ‘‘(A)(v)’’.
H. R. 2676—141
(5) Clause (ii) of section 142(f )(3)(A) of the 1986 Code
is amended by striking ‘‘1997, (’’ and inserting ‘‘1997 (’’.
(6) The last sentence of paragraph (3) of section 501(n)
of the 1986 Code is amended by striking ‘‘subparagraph (C)(ii)’’
and inserting ‘‘subparagraph (E)(ii)’’.
(7) Subsection (o) of section 501 of the 1986 Code is
amended by striking ‘‘section 1853(e)’’ and inserting ‘‘section
1855(d)’’.
(8) The heading for subclause (II) of section 512(b)(17)(B)(ii)
of the 1986 Code is amended by striking ‘‘RULE’’ and inserting
‘‘RULE’’.
(9) Clause (ii) of section 543(d)(5)(A) of the 1986 Code
is amended by striking ‘‘section 563(c)’’ and inserting ‘‘section
563(d)’’.
(10) Subparagraph (B) of section 871(f )(2) of the 1986 Code
is amended by striking ‘‘(19 U.S.C. 2462)’’ and inserting ‘‘19
U.S.C. 2461 et seq.)’’.
(11) Paragraph (2) of section 1017(a) of the 1986 Code
is amended by striking ‘‘(b)(2)(D)’’ and inserting ‘‘(b)(2)(E)’’.
(12) Subparagraph (D) of section 1250(d)(4) of the 1986
Code is amended by striking ‘‘the last sentence of section
1033(b)’’ and inserting ‘‘section 1033(b)(2)’’.
(13) Paragraph (5) of section 3121(a) of the 1986 Code
is amended—
(A) by striking the semicolon at the end of subpara-
graph (F) and inserting a comma;
(B) by striking ‘‘or’’ at the end of subparagraph (G);
and
(C) by striking the period at the end of subparagraph
(I) and inserting a semicolon.
(14) Paragraph (19) of section 3401(a) of the 1986 Code
is amended by inserting ‘‘for’’ before ‘‘any benefit provided to’’.
(15) Paragraph (21) of section 3401(a) of the 1986 Code
is amended by inserting ‘‘for’’ before ‘‘any payment made’’.
(16) Sections 4092(b) and 6427(q)(2) of the 1986 Code are
each amended by striking ‘‘section 4041(c)(4)’’ and inserting
‘‘section 4041(c)(2)’’.
(17) Sections 4221(c) and 4222(d) of the 1986 Code are
each amended by striking ‘‘4053(a)(6)’’ and inserting ‘‘4053(6)’’.
(18)(A) The heading of section 4973 of the 1986 Code is
amended to read as follows:
‘‘SEC. 4973. TAX ON EXCESS CONTRIBUTIONS TO CERTAIN TAX-
FAVORED ACCOUNTS AND ANNUITIES.’’.
(B) The item relating to section 4973 in the table of sections
for chapter 43 of the 1986 Code is amended to read as follows:
‘‘Sec. 4973. Tax on excess contributions to certain tax-favored accounts and
annuities.’’.
(19) Section 4975 of the 1986 Code is amended—
(A) in subsection (c)(3) by striking ‘‘exempt for the
tax’’ and inserting ‘‘exempt from the tax’’; and
(B) in subsection (i) by striking ‘‘Secretary of Treasury’’
and inserting ‘‘Secretary of the Treasury’’.
(20) Paragraph (1) of section 6039(a) of the 1986 Code
is amended by inserting ‘‘to any person’’ after ‘‘transfers’’.
H. R. 2676—142
(21) Subparagraph (A) of section 6050R(b)(2) of the 1986
Code is amended by striking the semicolon at the end thereof
and inserting a comma.
(22) Subparagraph (A) of section 6103(h)(4) of the 1986
Code is amended by inserting ‘‘if ’’ before ‘‘the taxpayer is a
party to’’.
(23) Paragraph (5) of section 6416(b) of the 1986 Code
is amended by striking ‘‘section 4216(e)(1)’’ each place it appears
and inserting ‘‘section 4216(d)(1)’’.
(24)(A) Section 6421 of the 1986 Code is amended by
redesignating subsections ( j) and (k) as subsections (i) and
( j), respectively.
(B) Subsection (b) of section 34 of the 1986 Code is amended
by striking ‘‘section 6421( j)’’ and inserting ‘‘section 6421(i)’’.
(C) Subsections (a) and (b) of section 6421 of the 1986
Code are each amended by striking ‘‘subsection ( j)’’ and insert-
ing ‘‘subsection (i)’’.
(25) Paragraph (3) of section 6427(f ) of the 1986 Code
is amended by striking ‘‘, (e),’’.
(26)(A) Section 6427 of the 1986 Code, as amended by
paragraph (16), is amended by redesignating subsections (n),
(p), (q), and (r) as subsections (m), (n), (o), and (p), respectively.
(B) Paragraphs (1) and (2)(A) of section 6427(i) of the
1986 Code are each amended by striking ‘‘(q)’’ and inserting
‘‘(o)’’.
(27) Subsection (m) of section 6501 of the 1986 Code is
amended by striking ‘‘election under’’ and all that follows
through ‘‘(or any’’ and inserting ‘‘election under section 30(d)(4),
40(f ), 43, 45B, 45C(d)(4), or 51( j) (or any’’.
(28) The paragraph heading of paragraph (2) of section
7702B(e) of the 1986 Code is amended by inserting ‘‘SECTION’’
after ‘‘APPLICATION OF’’.
(29) Paragraph (3) of section 7434(b) of the 1986 Code
is amended by striking ‘‘attorneys fees’’ and inserting ‘‘attor-
neys’ fees’’.
(30) Subparagraph (B) of section 7872(f )(2) of the 1986
Code is amended by striking ‘‘foregone’’ and inserting ‘‘forgone’’.
(31) Subsection (e) of section 9502 of the 1986 Code is
amended to read as follows:
‘‘(e) CERTAIN TAXES
ON ALCOHOL MIXTURES TO REMAIN
IN
GENERAL FUND.—For purposes of this section, the amounts which
would (but for this subsection) be required to be appropriated
under subparagraphs (A), (C), and (D) of subsection (b)(1) shall
be reduced by—
‘‘(1) 0.6 cent per gallon in the case of taxes imposed on
any mixture at least 10 percent of which is alcohol (as defined
in section 4081(c)(3)) if any portion of such alcohol is ethanol;
and
‘‘(2) 0.67 cent per gallon in the case of fuel used in produc-
ing a mixture described in paragraph (1).’’.
(32) The amendments made by this section shall take effect
on the date of the enactment of this Act.
SEC. 6024. EFFECTIVE DATE.
Except as otherwise provided in this title, the amendments
made by this title shall take effect as if included in the provisions
of the Taxpayer Relief Act of 1997 to which they relate.
H. R. 2676—143
TITLE VII—REVENUE PROVISIONS
SEC. 7001. CLARIFICATION OF DEDUCTION FOR DEFERRED COM-
PENSATION.
(a) IN GENERAL.—Section 404(a) (relating to deduction for con-
tributions of an employer to an employee’s trust or annuity plan
and compensation under a deferred-payment plan) is amended by
adding at the end the following new paragraph:
‘‘(11) DETERMINATIONS RELATING TO DEFERRED COMPENSA-
TION.—For purposes of determining under this section—
‘‘(A) whether compensation of an employee is deferred
compensation; and
‘‘(B) when deferred compensation is paid,
no amount shall be treated as received by the employee, or
paid, until it is actually received by the employee.’’.
(b) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendment made by subsection (a)
shall apply to taxable years ending after the date of the enact-
ment of this Act.
(2) CHANGE IN METHOD OF ACCOUNTING.—In the case of
any taxpayer required by the amendment made by subsection
(a) to change its method of accounting for its first taxable
year ending after the date of the enactment of this Act—
(A) such change shall be treated as initiated by the
taxpayer,
(B) such change shall be treated as made with the
consent of the Secretary of the Treasury; and
(C) the net amount of the adjustments required to
be taken into account by the taxpayer under section 481
of the Internal Revenue Code of 1986 shall be taken into
account ratably over the 3-taxable year period beginning
with such first taxable year.
SEC. 7002. TERMINATION OF EXCEPTION FOR CERTAIN REAL ESTATE
INVESTMENT 
TRUSTS 
FROM 
THE 
TREATMENT 
OF
STAPLED ENTITIES.
(a) IN GENERAL.—Notwithstanding paragraph (3) of section
136(c) of the Tax Reform Act of 1984 (relating to stapled stock;
stapled entities), the REIT gross income provisions shall be applied
by treating the activities and gross income of members of the
stapled REIT group properly allocable to any nonqualified real
property interest held by the exempt REIT or any stapled entity
which is a member of such group (or treated under subsection
(c) as held by such REIT or stapled entity) as the activities and
gross income of the exempt REIT in the same manner as if the
exempt REIT and such group were one entity.
(b) NONQUALIFIED REAL PROPERTY INTEREST.—For purposes
of this section—
(1) IN
GENERAL.—The term ‘‘nonqualified real property
interest’’ means, with respect to any exempt REIT, any interest
in real property acquired after March 26, 1998, by the exempt
REIT or any stapled entity.
(2) EXCEPTION FOR BINDING CONTRACTS, ETC.—Such term
shall not include any interest in real property acquired after
March 26, 1998, by the exempt REIT or any stapled entity
if—