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make assistance in accordance with paragraph (1),
except that the payment rate shall be 20 percent of the
established price, instead of 50 percent.
(c) QUALIFYING LOSSES.—Assistance under this sec-
tion shall be made available to producers on farms, other
than producers of sugar beets, that incurred qualifying
quantity or quality losses for the applicable crop due to
damaging weather or any related condition (including
losses due to crop diseases, insects, and delayed harvest),
as determined by the Secretary.
(d) QUALITY LOSSES.—
(1) IN GENERAL.—In addition to any payment
received under subsection (b), the Secretary shall use
such sums as are necessary of funds of the Commodity
Credit Corporation to make payments to producers on
a farm described in subsection (a) that incurred a
quality loss for the applicable crop of a commodity in
an amount equal to the product obtained by
multiplying—
(A) the payment quantity determined under
paragraph (2);
(B)(i) in the case of an insurable com-
modity, the coverage level elected by the insured
under the policy or plan of insurance under the
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Federal Crop Insurance Act (7 U.S.C. 1501 et
seq.); or
(ii) in the case of a noninsurable com-
modity, the applicable coverage level for the pay-
ment quantity determined under paragraph (2);
by
(C) 55 percent of the payment rate deter-
mined under paragraph (3).
(2) PAYMENT
QUANTITY.—For the purpose of
paragraph (1)(A), the payment quantity for quality
losses for a crop of a commodity on a farm shall
equal the lesser of—
(A) the actual production of the crop af-
fected by a quality loss of the commodity on the
farm; or
(B)(i) in the case of an insurable com-
modity, the actual production history for the
commodity by the producers on the farm under
the Federal Crop Insurance Act (7 U.S.C. 1501
et seq.); or
(ii) in the case of a noninsurable com-
modity, the established yield for the crop for the
producers on the farm under section 196 of the
Federal Agriculture Improvement and Reform
Act of 1996 (7 U.S.C. 7333).
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(3) PAYMENT RATE.—
(A) IN GENERAL.—For the purpose of para-
graph (1)(B), the payment rate for quality losses
for a crop of a commodity on a farm shall be
equal to the difference between (as determined by
the applicable State committee of the Farm Serv-
ice Agency)—
(i) the per unit market value that the
units of the crop affected by the quality loss
would have had if the crop had not suffered
a quality loss; and
(ii) the per unit market value of the
units of the crop affected by the quality loss.
(B) FACTORS.—In determining the pay-
ment rate for quality losses for a crop of a com-
modity on a farm, the applicable State com-
mittee of the Farm Service Agency shall take
into account—
(i) the average local market quality
discounts that purchasers applied to the
commodity during the first 2 months fol-
lowing the normal harvest period for the
commodity;
(ii) the loan rate and repayment rate
established for the commodity under the
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marketing loan program established for the
commodity under subtitle B of title I of the
Farm Security and Rural Investment Act of
2002 (7 U.S.C. 7931 et seq.);
(iii) the market value of the commodity
if sold into a secondary market; and
(iv) other factors determined appro-
priate by the committee.
(4) ELIGIBILITY.—
(A) IN GENERAL.—For producers on a farm
to be eligible to obtain a payment for a quality
loss for a crop under this subsection—
(i) the amount obtained by multi-
plying the per unit loss determined under
paragraph (1) by the number of units af-
fected by the quality loss shall be reduced by
the amount of any indemnification received
by the producers on the farm for quality
loss adjustment for the commodity under a
policy or plan of insurance under the Fed-
eral Crop Insurance Act (7 U.S.C. 1501 et
seq.); and
(ii) the remainder shall be at least 25
percent of the value that all affected produc-
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tion of the crop would have had if the crop
had not suffered a quality loss.
(B) INELIGIBILITY.—If the amount of a
quality loss payment for a commodity for the
producers on a farm determined under this
paragraph is equal to or less than zero, the pro-
ducers on the farm shall be ineligible for assist-
ance for the commodity under this subsection.
(5) ELIGIBLE PRODUCTION.—The Secretary shall
carry out this subsection in a fair and equitable man-
ner for all eligible production, including the produc-
tion of fruits and vegetables, other specialty crops,
and field crops.
(e) ELECTION OF CROP YEAR.—If a producer incurred
qualifying crop losses in more than 1 of the crop years dur-
ing the applicable period, the producers on a farm shall
elect to receive assistance under this section for losses in-
curred in only 1 of the crop years.
(f) PAYMENT LIMITATION.—
(1) LIMITATION.—Assistance provided under this
section to the producers on a farm for losses to a crop,
together with the amounts specified in paragraph (2)
applicable to the same crop, may not exceed 95 per-
cent of what the value of the crop would have been in
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the absence of the losses, as estimated by the Sec-
retary.
(2) OTHER PAYMENTS.—In applying the limita-
tion in paragraph (1), the Secretary shall include the
following:
(A) Any crop insurance payment made
under the Federal Crop Insurance Act (7 U.S.C.
1501 et seq.) or payment under section 196 of the
Federal Agricultural Improvement and Reform
Act of 1996 (7 U.S.C. 7333) that the producers
on the farm receive for losses to the same crop.
(B) The value of the crop that was not lost
(if any), as estimated by the Secretary.
(g) TIMING.—
(1) IN GENERAL.—Subject to paragraph (2), the
Secretary shall make payments to producers on a
farm for a crop under this section not later than 60
days after the date the producers on the farm submit
to the Secretary a completed application for the pay-
ments.
(2) INTEREST.—If the Secretary does not make
payments to the producers on a farm by the date de-
scribed in paragraph (1), the Secretary shall pay to
the producers on a farm interest on the payments at
a rate equal to the current (as of the sign-up deadline
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established by the Secretary) market yield on out-
standing, marketable obligations of the United States
with maturities of 30 years.
SEC. 412. DAIRY ASSISTANCE.
The Secretary shall use $95,000,000 of funds of the
Commodity Credit Corporation to make payments to dairy
producers for dairy production losses in disaster counties.
SEC. 413. MILK INCOME LOSS CONTRACT PROGRAM.
Section 1502(c)(3) of the Farm Security and Rural
Investment Act of 2002 (7 U.S.C. 7982(c)(3)) is amended—
(1) in subparagraph (A), by adding ‘‘and’’ at the
end;
(2) in subparagraph (B), by striking ‘‘August’’
and all that follows through the end and inserting
‘‘September 30, 2007, 34 percent.’’; and
(3) by striking subparagraph (C).
SEC. 414. LIVESTOCK ASSISTANCE.
(a) LIVESTOCK COMPENSATION PROGRAM.—
(1) USE OF COMMODITY CREDIT CORPORATION
FUNDS.—Effective beginning on the date of enactment
of this Act, the Secretary shall use funds of the Com-
modity Credit Corporation to carry out the 2002
Livestock Compensation Program announced by the
Secretary on October 10, 2002 (67 Fed. Reg. 63070),
to provide compensation for livestock losses during the
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applicable period for losses (including losses due to
blizzards that began in calendar year 2006 and con-
tinued in January 2007) due to a disaster, as deter-
mined by the Secretary, except that the payment rate
shall be 80 percent of the payment rate established for
the 2002 Livestock Compensation Program.
(2) ELIGIBLE APPLICANTS.—In carrying out the
program described in paragraph (1), the Secretary
shall provide assistance to any applicant for livestock
losses during the applicable period that—
(A)(i) conducts a livestock operation that is
located in a disaster county, including any ap-
plicant conducting a livestock operation with eli-
gible livestock (within the meaning of the live-
stock assistance program under section 101(b) of
division B of Public Law 108–324 (118 Stat.
1234)); or
(ii) produces an animal described in section
10806(a)(1) of the Farm Security and Rural In-
vestment Act of 2002 (21 U.S.C. 321d(a)(1));
(B) demonstrates to the Secretary that the
applicant suffered a material loss of pasture or
hay production, or experienced substantially in-
creased feed costs, due to damaging weather or a
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related condition during the calendar year, as
determined by the Secretary; and
(C) meets all other eligibility requirements
established by the Secretary for the program.
(3) MITIGATION.—In determining the eligibility
for or amount of payments for which a producer is
eligible under the livestock compensation program, the
Secretary shall not penalize a producer that takes ac-
tions (recognizing disaster conditions) that reduce the
average number of livestock the producer owned for
grazing during the production year for which assist-
ance is being provided.
(4) PAYMENTS FOR REDUCTION IN GRAZING ON
FEDERAL LAND.—
(A) IN GENERAL.—In carrying out this sub-
section, the Secretary shall make payments to
livestock producers that are in proportion to any
reduction during calendar year 2007 in grazing
on Federal land in a disaster county leased by
the producers a result of actions described in
subparagraph (B).
(B) FEDERAL ACTIONS.—Actions referred to
in subparagraph (A) are actions taken during
calendar year 2007 by the Bureau of Land Man-
agement or other Federal agency to restrict or
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prohibit grazing otherwise allowed under the
terms of the lease of the producers in order to ex-
pedite the recovery of the Federal land from
drought, wildfire, or other natural disaster de-
clared by the Secretary during the applicable pe-
riod.
(5) LIMITATION.—The Secretary shall ensure, to
the maximum extent practicable, that producers on a
farm do not receive duplicative payments under this
subsection and another Federal program with respect
to any loss.
(b) LIVESTOCK INDEMNITY PAYMENTS.—
(1) IN GENERAL.—The Secretary shall use such
sums as are necessary of funds of the Commodity
Credit Corporation to make livestock indemnity pay-
ments to producers on farms that have incurred live-
stock losses during the applicable period (including
losses due to blizzards that began in calendar year
2006 and continued in January 2007) due to a dis-
aster, as determined by the Secretary, including losses
due to hurricanes, floods, anthrax, wildfires, and ex-
treme heat.
(2) PAYMENT RATES.—Indemnity payments to a
producer on a farm under paragraph (1) shall be
made at a rate of not less than 30 percent of the mar-
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ket value of the applicable livestock on the day before
the date of death of the livestock, as determined by the
Secretary.
(c) EWE LAMB REPLACEMENT AND RETENTION.—
(1) IN
GENERAL.—The Secretary shall use
$13,000,000 of funds of the Commodity Credit Cor-
poration to make payments to producers located in
disaster counties under the Ewe Lamb Replacement
and Retention Payment Program under part 784 of
title 7, Code of Federal Regulations (or a successor
regulation) for each qualifying ewe lamb retained or
purchased during the period beginning on January 1,
2006, and ending on December 31, 2006, by the pro-
ducers.
(2) INELIGIBILITY FOR OTHER ASSISTANCE.—A
producer that receives assistance under this subsection
shall not be eligible to receive assistance under sub-
section (a).
(d) ELECTION OF PRODUCTION YEAR.—If a producer
incurred qualifying production losses in more than one of
the production years, the producers on a farm shall elect
to receive assistance under this section in only one of the
production years.
(e) EXCEPTION.—Notwithstanding any other provision
of this section, livestock producers on a farm shall be eligible
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to receive assistance under subsection (a) or livestock in-
demnity payments under subsection (b) if the producers on
a farm—
(1) have livestock operations in a county in-
cluded in the geographic area covered by a major dis-
aster or emergency designated by the President under
the Robert T. Stafford Disaster Relief and Emergency
Assistance Act (42 U.S.C. 5121 et seq.) due to bliz-
zards, ice storms, or other winter–related causes dur-
ing the period of December 2006 through January
2007; and
(2) meet all eligibility requirements for the as-
sistance or payments other than the requirements re-
lating to disaster declarations by the Secretary under
subsections (a) and (b)(1).
SEC. 415. FLOODED CROP AND GRAZING LAND.
(a) IN GENERAL.—The Secretary shall compensate eli-
gible owners of flooded crop and grazing land in the State
of North Dakota.
(b) ELIGIBILITY.—
(1) IN GENERAL.—To be eligible to receive com-
pensation under this section, an owner shall own land
described in subsection (a) that, during the 2 crop
years preceding receipt of compensation, was rendered
incapable of use for the production of an agricultural
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commodity or for grazing purposes (in a manner con-
sistent with the historical use of the land) as the re-
sult of flooding, as determined by the Secretary.
(2) INCLUSIONS.—Land described in paragraph
(1) shall include—
(A) land that has been flooded;
(B) land that has been rendered inaccessible
due to flooding; and
(C) a reasonable buffer strip adjoining the
flooded land, as determined by the Secretary.
(3) 
ADMINISTRATION.—The 
Secretary 
may
establish—
(A) reasonable minimum acreage levels for
individual parcels of land for which owners may
receive compensation under this section; and
(B) the location and area of adjoining
flooded land for which owners may receive com-
pensation under this section.
(c) SIGN-UP.—The Secretary shall establish a sign-up
program for eligible owners to apply for compensation from
the Secretary under this section.
(d) COMPENSATION PAYMENTS.—
(1) IN GENERAL.—Subject to paragraphs (2) and
(3), the rate of an annual compensation payment
under this section shall be equal to 90 percent of the
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average annual per acre rental payment rate (at the
time of entry into the contract) for comparable crop
or grazing land that has not been flooded and re-
mains in production in the county where the flooded
land is located, as determined by the Secretary.
(2) REDUCTION.—An annual compensation pay-
ment under this section shall be reduced by the
amount of any conservation program rental payments
or Federal agricultural commodity program pay-
ments received by the owner for the land during any
crop year for which compensation is received under
this section.
(3) EXCLUSION.—During any year in which an
owner receives compensation for flooded land under
this section, the owner shall not be eligible to partici-
pate in or receive benefits for the flooded land
under—
(A) the Federal crop insurance program es-
tablished under the Federal Crop Insurance Act
(7 U.S.C. 1501 et seq.);
(B) the noninsured crop assistance program
established under section 196 of the Federal Ag-
riculture Improvement and Reform Act of 1996
(7 U.S.C. 7333); or
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(C) any Federal agricultural crop disaster
assistance program.
(e) RELATIONSHIP
TO AGRICULTURAL COMMODITY
PROGRAMS.—The Secretary, by regulation, shall provide
for the preservation of cropland base, allotment history, and
payment yields applicable to land described in subsection
(a) that was rendered incapable of use for the production
of an agricultural commodity or for grazing purposes as
the result of flooding.
(f) USE OF LAND.—
(1) IN GENERAL.—An owner that receives com-
pensation under this section for flooded land shall
take such actions as are necessary to not degrade any
wildlife habitat on the land that has naturally devel-
oped as a result of the flooding.
(2) RECREATIONAL
ACTIVITIES.—To encourage
owners that receive compensation for flooded land to
allow public access to and use of the land for rec-
reational activities, as determined by the Secretary,
the Secretary may—
(A) offer an eligible owner additional com-
pensation; and
(B) provide compensation for additional
acreage under this section.
(g) FUNDING.—
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(1) IN
GENERAL.—The Secretary shall use
$6,000,000 of funds of the Commodity Credit Cor-
poration to carry out this section.
(2) PRO-RATED PAYMENTS.—In a case in which
the amount made available under paragraph (1) for
a fiscal year is insufficient to compensate all eligible
owners under this section, the Secretary shall pro-rate
payments for that fiscal year on a per acre basis.
SEC. 416. SUGAR BEET AND SUGAR CANE DISASTER ASSIST-
ANCE.
(a) 
IN
GENERAL.—The 
Secretary 
shall 
use
$24,000,000 of funds of the Commodity Credit Corporation
to provide assistance to sugar beet producers that suffered
production losses (including quality losses) for the applica-
ble crop.
(b) REQUIREMENT.—The Secretary shall make pay-
ments under subsection (a) in the same manner as pay-
ments were made under section 208 of the Agricultural As-
sistance Act of 2003 (Public Law 108–7; 117 Stat. 544),
including using the same indemnity benefits as were used
in carrying out that section.
(c) HAWAII.—The Secretary shall use $3,000,000 of
funds of the Commodity Credit Corporation to assist sugar-
cane growers in Hawaii by making a payment in that
amount to an agricultural transportation cooperative in
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Hawaii, the members of which are eligible to obtain a loan
under section 156(a) of the Federal Agriculture Improve-
ment and Reform Act of 1996 (7 U.S.C. 7272(a)).
(d) ELECTION OF CROP YEAR.—If a producer incurred
qualifying crop losses in more than one of the crop years
during the applicable period, the producers on a farm shall
elect to receive assistance under this section for losses in-
curred in only one of the crop years.
SEC. 417. NONINSURED CROP ASSISTANCE PROGRAM.
Section 196(c) of the Federal Agriculture Improvement
and Reform Act of 1996 (7 U.S.C. 7333(c)) is amended by
adding at the end the following:
‘‘(5) LOSS ASSESSMENT FOR GRAZING.—The Sec-
retary shall permit the use of 1 claims adjustor cer-
tified by the Secretary to assess the quantity of loss
on the acreage or allotment of a producer devoted to
grazing for livestock under this section.’’.
SEC. 418. REDUCTION IN PAYMENTS.
The amount of any payment for which a producer is
eligible under this subtitle shall be reduced by any amount
received by the producer for the same loss or any similar
loss under—
(1) the Department of Defense, Emergency Sup-
plemental Appropriations to Address Hurricanes in
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the Gulf of Mexico, and Pandemic Influenza Act,
2006 (Public Law 109–148; 119 Stat. 2680);
(2) an agricultural disaster assistance provision
contained in the announcement of the Secretary on
January 26, 2006, or August 29, 2006;
(3) the Emergency Supplemental Appropriations
Act for Defense, the Global War on Terror, and Hur-
ricane Recovery, 2006 (Public Law 109–234; 120
Stat. 418); or
(4) the Livestock Assistance Grant Program an-
nounced by the Secretary on August 29, 2006.
Subtitle B—Small Business
Economic Loss Grant Program
SEC. 421. SMALL BUSINESS ECONOMIC LOSS GRANT PRO-
GRAM.
(a) DEFINITION OF QUALIFIED STATE.—In this sec-
tion, the term ‘‘qualified State’’ means a State in which
at least 50 percent of the counties of the State were declared
to be primary agricultural disaster areas by the Secretary
during the applicable period.
(b) GRANTS TO QUALIFIED STATES.—
(1) IN
GENERAL.—The Secretary shall use
$100,000,000 of funds of the Commodity Credit Cor-
poration to make grants to State departments of agri-
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culture or comparable State agencies in qualified
States.
(2) AMOUNT.—
(A) IN GENERAL.—Subject to subparagraph
(B), the Secretary shall allocate grants among
qualified States described in paragraph (1) based
on the average value of agricultural sector pro-
duction in the qualified State, determined as a
percentage of the gross domestic product of the
qualified State.
(B) MINIMUM
AMOUNT.—The minimum
amount of a grant under this subsection shall be
$500,000.
(3) REQUIREMENT.—To be eligible to receive a
grant under this subsection, a qualified State shall
agree to carry out an expedited disaster assistance
program to provide direct payments to qualified
small businesses in accordance with subsection (c).
(c) DIRECT PAYMENTS TO QUALIFIED SMALL BUSI-
NESSES.—
(1) IN GENERAL.—In carrying out an expedited
disaster assistance program described in subsection
(b)(3), a qualified State shall provide direct payments
to eligible small businesses in the qualified State that
suffered material economic losses during the applica-
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ble period as a direct result of weather-related agri-
cultural losses to the crop or livestock production sec-
tors of the qualified State, as determined by the Sec-
retary.
(2) ELIGIBILITY.—
(A) IN GENERAL.—To be eligible to receive
a direct payment under paragraph (1), a small
business shall—
(i) have less than $15,000,000 in aver-
age annual gross income from all business
activities, at least 75 percent of which shall
be directly related to production agriculture
or agriculture support industries, as deter-
mined by the Secretary;
(ii) verify the amount of economic loss
attributable to weather-related agricultural
losses using such documentation as the Sec-
retary and the head of the qualified State
agency may require;
(iii) have suffered losses attributable to
weather-related agricultural disasters that
equal at least 50 percent of the total eco-
nomic loss of the small business for each
year a grant is requested; and
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(iv) demonstrate that the grant will
materially improve the likelihood the busi-
ness will—
(I) recover from the disaster; and
(II) continue to service and sup-
port production agriculture.
(B) EMERGENCY GRANTS TO ASSIST LOW-
INCOME
MIGRANT
AND
SEASONAL
FARM-
WORKERS.—
(i) Funds made available by this sub-
title may be used to carry out assistance
programs in States that are consistent with
the purpose and intent of the program au-
thorized at section 2281 of the Food, Agri-
culture, Conservation and Trade Act of
1990 (42 U.S.C. 5177a).
(ii) In carrying out this subparagraph,
a qualified State may waive the gross in-
come requirement at subparagraph (A)(i) of
this paragraph.
(3) REQUIREMENTS.—A direct payment to small
business under this subsection shall—
(A) be limited to not more than 2 years of
documented losses; and
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(B) be in an amount of not more than 75
percent of the documented average economic loss
attributable to weather-related agriculture disas-
ters for each eligible year in the qualified State.
(4) INSUFFICIENT FUNDING.—If the grant funds
received by a qualified State agency under subsection
(b) are insufficient to fund the direct payments of the
qualified State agency under this subsection, the
qualified State agency may apply a proportional re-
duction to all of the direct payments.
Subtitle C—Forestry
SEC. 431. TREE ASSISTANCE PROGRAM.
(a) DEFINITION OF TREE.—In this section, the term
‘‘tree’’ includes—
(1) a tree (including a Christmas tree, orna-
mental tree, nursery tree, and potted tree);
(2) a bush (including a shrub, nursery shrub,
nursery bush, ornamental bush, ornamental shrub,
potted bush, and potted shrub); and
(3) a vine (including a nursery vine and orna-
mental vine).
(b) PROGRAM.—Except as otherwise provided in this
section, the Secretary shall use such sums as are necessary
of the funds of the Commodity Credit Corporation to pro-
vide assistance under the terms and conditions of the tree
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assistance program established under subtitle C of title X
of the Farm Security and Rural Investment Act of 2002
(7 U.S.C. 8201 et seq.) to—
(1) producers who suffered tree losses in disaster
counties; and
(2) fruit and tree nut producers in disaster
counties.
(c) COSTS.—Funds made available under this section
shall also be made available to cover costs associated with
tree pruning, tree rehabilitation, and other appropriate
tree-related activities as determined by the Secretary.
(d) SCOPE OF ASSISTANCE.—Assistance under this sec-
tion shall compensate for losses resulting from disasters dur-
ing the applicable period.
Subtitle D—Conservation
SEC. 441. EMERGENCY CONSERVATION PROGRAM.
The Secretary shall use an additional $35,000,000 of
funds of the Commodity Credit Corporation to carry out
emergency measures, including wildfire recovery efforts in
Montana and other States, identified by the Administrator
of the Farm Service Agency as of the date of enactment of
this Act through the emergency conservation program estab-
lished under title IV of the Agricultural Credit Act of 1978
(16 U.S.C. 2201 et seq.), of which $3,000,000 shall be to
repair broken irrigation pipelines and damaged and col-
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lapsed water tanks, $1,000,000 to provide emergency loans
for losses of agricultural income, and $2,000,000 to repair
ditch irrigation systems in conjunction with the Presi-
dential declaration of a major disaster (FEMA–1664–DR),
dated October 17, 2006, and related determinations issued
under the authority of the Robert T. Stafford Disaster Relief
and Emergency Assistance Act, 42 U.S.C. 5121–5206 (the
Stafford Act): Provided, That the Secretary may transfer
a portion of these funds to the Natural Resources Conserva-
tion Service, to include Resource Conservation and Develop-
ment councils.
SEC. 442. EMERGENCY WATERSHED PROTECTION PRO-
GRAM.
The Secretary shall use an additional $50,000,000 of
funds of the Commodity Credit Corporation to carry out
emergency measures identified by the Chief of the Natural
Resources Conservation Service as of the date of enactment
of this Act through the emergency watershed protection pro-
gram established under section 403 of the Agricultural
Credit Act of 1978 (16 U.S.C. 2203).
SEC. 443. CONSERVATION SECURITY PROGRAM.
Section 20115 of Public Law 110–5 is amended by
striking ‘‘section 726’’ and inserting in lieu thereof ‘‘section
726; section 741’’.
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Subtitle E—Farm Service Agency
SEC. 451. FUNDING FOR ADDITIONAL PERSONNEL AND AD-
MINISTRATIVE SUPPORT.
The Secretary shall use $30,000,000 of funds of the
Commodity Credit Corporation—
(1) of which $9,000,000 shall be used to hire ad-
ditional County Farm Service Agency personnel to
expedite the implementation of, and delivery under,
the agricultural disaster and economic assistance pro-
grams under this title; and
(2) to be used as the Secretary determines to be
necessary to carry out this and other agriculture and
disaster assistance programs.
Subtitle F—Miscellaneous
SEC. 461. CONTRACT WAIVER.
In carrying out this title and section 101(a)(5) of the
Emergency Supplemental Appropriations for Hurricane
Disasters Assistance Act, 2005 (Public Law 108–324; 118
Stat. 1233), the Secretary shall not require participation
in a crop insurance pilot program relating to forage.
SEC. 462. INSECT INFESTATIONS.
(a) IN GENERAL.—The Secretary, acting through the
Administrator of the Animal and Plant Health Inspection
Service, shall use not less than $20,000,000 of funds made
available from the Commodity Credit Corporation for the
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Animal and Plant Health Inspection Service to survey and
control insect infestations in the States of Nevada, Idaho,
and Utah.
(b) USE OF FUNDS.—Funds described in subsection
(a) shall be used in a manner that promotes cooperative
efforts between Federal programs (including the plant pro-
tection and quarantine program of the Animal and Plant
Health Inspection Service) and State and local programs
carried out, in whole or in part, with Federal funds to fight
insect outbreaks.
SEC. 463. FUNDING.
The Secretary shall use the funds, facilities, and au-
thorities of the Commodity Credit Corporation to carry out
this title, to remain available until expended.
SEC. 464. REGULATIONS.
(a) IN GENERAL.—The Secretary may promulgate
such regulations as are necessary to implement this title.
(b) PROCEDURE.—The promulgation of the regulations
and administration of this title shall be made without re-
gard to—
(1) the notice and comment provisions of section
553 of title 5, United States Code;
(2) the Statement of Policy of the Secretary of
Agriculture effective July 24, 1971 (36 Fed. Reg.
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13804), relating to notices of proposed rulemaking
and public participation in rulemaking; and
(3) chapter 35 of title 44, United States Code
(commonly known as the ‘‘Paperwork Reduction
Act’’).
(c) CONGRESSIONAL
REVIEW
OF
AGENCY
RULE-
MAKING.—In carrying out this section, the Secretary shall
use the authority provided under section 808 of title 5,
United States Code.
Subtitle G—Emergency Designation
SEC. 471. EMERGENCY DESIGNATION.
The amounts provided under this title are designated
as an emergency requirement pursuant to section 402 of
H. Con. Res. 95 (109th Congress).
TITLE V—FAIR MINIMUM WAGE
AND TAX RELIEF
Subtitle A—Fair Minimum Wage
SEC. 500. SHORT TITLE.
This subtitle may be cited as the ‘‘Fair Minimum
Wage Act of 2007’’.
SEC. 501. MINIMUM WAGE.
(a) IN GENERAL.—Section 6(a)(1) of the Fair Labor
Standards Act of 1938 (29 U.S.C. 206(a)(1)) is amended
to read as follows:
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‘‘(1) except as otherwise provided in this section,
not less than—
‘‘(A) $5.85 an hour, beginning on the 60th
day after the date of enactment of the Fair Min-
imum Wage Act of 2007;
‘‘(B) $6.55 an hour, beginning 12 months
after that 60th day; and
‘‘(C) $7.25 an hour, beginning 24 months
after that 60th day;’’.
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall take effect 60 days after the date of enact-
ment of this Act.
SEC. 502. APPLICABILITY OF MINIMUM WAGE TO THE COM-
MONWEALTH OF THE NORTHERN MARIANA
ISLANDS.
(a) IN GENERAL.—Section 6 of the Fair Labor Stand-
ards Act of 1938 (29 U.S.C. 206) shall apply to the Com-
monwealth of the Northern Mariana Islands.
(b) TRANSITION.—Notwithstanding subsection (a), the
minimum wage applicable to the Commonwealth of the
Northern Mariana Islands under section 6(a)(1) of the Fair
Labor Standards Act of 1938 (29 U.S.C. 206(a)(1)) shall
be—
(1) $3.55 an hour, beginning on the 60th day
after the date of enactment of this Act; and
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(2) increased by $0.50 an hour (or such lesser
amount as may be necessary to equal the minimum
wage under section 6(a)(1) of such Act), beginning 6
months after the date of enactment of this Act and
every 6 months thereafter until the minimum wage
applicable to the Commonwealth of the Northern Mar-
iana Islands under this subsection is equal to the
minimum wage set forth in such section.
Subtitle B—Small Business Tax
Incentives
SEC. 510. SHORT TITLE; AMENDMENT OF CODE.
(a) SHORT TITLE.—This subtitle may be cited as the
‘‘Small Business and Work Opportunity Act of 2007’’.
(b) AMENDMENT OF 1986 CODE.—Except as otherwise
expressly provided, whenever in this subtitle an amendment
or repeal is expressed in terms of an amendment to, or re-
peal of, a section or other provision, the reference shall be
considered to be made to a section or other provision of the
Internal Revenue Code of 1986.
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PART I—SMALL BUSINESS TAX RELIEF
PROVISIONS
Subpart A—General Provisions
SEC. 511. EXTENSION OF INCREASED EXPENSING FOR
SMALL BUSINESSES.
Section 179 (relating to election to expense certain de-
preciable business assets) is amended by striking ‘‘2010’’
each place it appears and inserting ‘‘2011’’.
SEC. 512. EXTENSION AND MODIFICATION OF 15-YEAR
STRAIGHT-LINE COST RECOVERY FOR QUALI-
FIED 
LEASEHOLD 
IMPROVEMENTS 
AND
QUALIFIED RESTAURANT IMPROVEMENTS; 15-
YEAR STRAIGHT-LINE COST RECOVERY FOR
CERTAIN IMPROVEMENTS TO RETAIL SPACE.
(a) EXTENSION OF LEASEHOLD AND RESTAURANT IM-
PROVEMENTS.—
(1) IN GENERAL.—Clauses (iv) and (v) of section
168(e)(3)(E) (relating to 15-year property) are each
amended by striking ‘‘January 1, 2008’’ and insert-
ing ‘‘January 1, 2009’’.
(2) EFFECTIVE DATE.—The amendment made by
this subsection shall apply to property placed in serv-
ice after December 31, 2007.
(b) MODIFICATION
OF TREATMENT
OF QUALIFIED
RESTAURANT PROPERTY AS 15-YEAR PROPERTY FOR PUR-
POSES OF DEPRECIATION DEDUCTION.—
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(1) TREATMENT
TO
INCLUDE
NEW
CONSTRUC-
TION.—Paragraph (7) of section 168(e) (relating to
classification of property) is amended to read as fol-
lows:
‘‘(7) QUALIFIED RESTAURANT PROPERTY.—The
term ‘qualified restaurant property’ means any sec-
tion 1250 property which is a building (or its struc-
tural components) or an improvement to such build-
ing if more than 50 percent of such building’s square
footage is devoted to preparation of, and seating for
on-premises consumption of, prepared meals.’’.
(2) EFFECTIVE DATE.—The amendment made by
this subsection shall apply to any property placed in
service after the date of the enactment of this Act, the
original use of which begins with the taxpayer after
such date.
(c) RECOVERY PERIOD FOR DEPRECIATION OF CER-
TAIN IMPROVEMENTS TO RETAIL SPACE.—
(1) 
15-YEAR
RECOVERY
PERIOD.—Section
168(e)(3)(E) (relating to 15-year property) is amend-
ed by striking ‘‘and’’ at the end of clause (vii), by
striking the period at the end of clause (viii) and in-
serting ‘‘, and’’, and by adding at the end the fol-
lowing new clause:
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‘‘(ix) any qualified retail improvement
property placed in service before January 1,
2009.’’.
(2) QUALIFIED
RETAIL
IMPROVEMENT
PROP-
ERTY.—Section 168(e) is amended by adding at the
end the following new paragraph:
‘‘(8) QUALIFIED
RETAIL
IMPROVEMENT
PROP-
ERTY.—
‘‘(A) IN GENERAL.—The term ‘qualified re-
tail improvement property’ means any improve-
ment to an interior portion of a building which
is nonresidential real property if—
‘‘(i) such portion is open to the general
public and is used in the retail trade or
business of selling tangible personal prop-
erty to the general public, and
‘‘(ii) such improvement is placed in
service more than 3 years after the date the
building was first placed in service.
‘‘(B) IMPROVEMENTS MADE BY OWNER.—In
the case of an improvement made by the owner
of such improvement, such improvement shall be
qualified retail improvement property (if at all)
only so long as such improvement is held by such
owner. Rules similar to the rules under para-
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graph (6)(B) shall apply for purposes of the pre-
ceding sentence.
‘‘(C) CERTAIN
IMPROVEMENTS
NOT
IN-
CLUDED.—Such term shall not include any im-
provement for which the expenditure is attrib-
utable to—
‘‘(i) the enlargement of the building,
‘‘(ii) any elevator or escalator,
‘‘(iii) any structural component bene-
fitting a common area, or
‘‘(iv) the internal structural framework
of the building.’’.
(3) REQUIREMENT
TO
USE
STRAIGHT
LINE
METHOD.—Section 168(b)(3) is amended by adding
at the end the following new subparagraph:
‘‘(I) Qualified retail improvement property
described in subsection (e)(8).’’.
(4) ALTERNATIVE SYSTEM.—The table contained
in section 168(g)(3)(B) is amended by inserting after
the item relating to subparagraph (E)(viii) the fol-
lowing new item:
(E)(ix) .....................................................................................................
39’’.
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(5) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to property placed in
service after the date of the enactment of this Act.
SEC. 513. CLARIFICATION OF CASH ACCOUNTING RULES
FOR SMALL BUSINESS.
(a) CASH ACCOUNTING PERMITTED.—
(1) IN GENERAL.—Section 446 (relating to gen-
eral rule for methods of accounting) is amended by
adding at the end the following new subsection:
‘‘(g) CERTAIN SMALL BUSINESS TAXPAYERS PER-
MITTED TO USE CASH ACCOUNTING METHOD WITHOUT
LIMITATION.—
‘‘(1) IN GENERAL.—An eligible taxpayer shall
not be required to use an accrual method of account-
ing for any taxable year.
‘‘(2) ELIGIBLE TAXPAYER.—For purposes of this
subsection, a taxpayer is an eligible taxpayer with re-
spect to any taxable year if—
‘‘(A) for each of the prior taxable years end-
ing on or after the date of the enactment of this
subsection, the taxpayer (or any predecessor) met
the gross receipts test in effect under section
448(c) for such taxable year, and
‘‘(B) the taxpayer is not subject to section
447 or 448.’’.
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(2) EXPANSION OF GROSS RECEIPTS TEST.—
(A) IN GENERAL.—Paragraph (3) of section
448(b) (relating to entities with gross receipts of
not more than $5,000,000) is amended to read as
follows:
‘‘(3) 
ENTITIES
MEETING
GROSS
RECEIPTS
TEST.—Paragraphs (1) and (2) of subsection (a) shall
not apply to any corporation or partnership for any
taxable year if, for each of the prior taxable years
ending on or after the date of the enactment of the
Small Business and Work Opportunity Act of 2007,
the entity (or any predecessor) met the gross receipts
test in effect under subsection (c) for such prior tax-
able year.’’.
(B) CONFORMING
AMENDMENTS.—Section
448(c) of such Code is amended—
(i) by striking ‘‘$5,000,000’’ in the
heading thereof,
(ii) by striking ‘‘$5,000,000’’ each
place it appears in paragraph (1) and in-
serting ‘‘$10,000,000’’, and
(iii) by adding at the end the following
new paragraph:
‘‘(4) INFLATION
ADJUSTMENT.—In the case of
any taxable year beginning in a calendar year after
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2008, the dollar amount contained in paragraph (1)
shall be increased by an amount equal to—
‘‘(A) such dollar amount, multiplied by
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar year
in which the taxable year begins, by substituting
‘calendar year 2007’ for ‘calendar year 1992’ in
subparagraph (B) thereof.
‘‘If any amount as adjusted under this subpara-
graph is not a multiple of $100,000, such amount
shall be rounded to the nearest multiple of $100,000.’’.
(b) CLARIFICATION OF INVENTORY RULES FOR SMALL
BUSINESS.—
(1) IN GENERAL.—Section 471 (relating to gen-
eral rule for inventories) is amended by redesignating
subsection (c) as subsection (d) and by inserting after
subsection (b) the following new subsection:
‘‘(c) SMALL BUSINESS TAXPAYERS NOT REQUIRED TO
USE INVENTORIES.—
‘‘(1) IN GENERAL.—A qualified taxpayer shall
not be required to use inventories under this section
for a taxable year.
‘‘(2) TREATMENT OF TAXPAYERS NOT USING IN-
VENTORIES.—If a qualified taxpayer does not use in-
ventories with respect to any property for any taxable
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year beginning after the date of the enactment of this
subsection, such property shall be treated as a mate-
rial or supply which is not incidental.
‘‘(3) QUALIFIED
TAXPAYER.—For purposes of
this subsection, the term ‘qualified taxpayer’ means—
‘‘(A) any eligible taxpayer (as defined in
section 446(g)(2)), and
‘‘(B) any taxpayer described in section
448(b)(3).’’.
(2) CONFORMING AMENDMENTS.—
(A) Subpart D of part II of subchapter E
of chapter 1 is amended by striking section 474.
(B) The table of sections for subpart D of
part II of subchapter E of chapter 1 is amended
by striking the item relating to section 474.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after the date
of the enactment of this Act.
SEC. 514. EXTENSION AND MODIFICATION OF COMBINED
WORK OPPORTUNITY TAX CREDIT AND WEL-
FARE-TO-WORK CREDIT.
(a) EXTENSION.—Section 51(c)(4)(B) (relating to ter-
mination) is amended by striking ‘‘2007’’ and inserting
‘‘2012’’.
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(b) INCREASE IN MAXIMUM AGE FOR DESIGNATED
COMMUNITY RESIDENTS.—
(1) IN
GENERAL.—Paragraph (5) of section
51(d) is amended to read as follows:
‘‘(5) DESIGNATED COMMUNITY RESIDENTS.—
‘‘(A) IN
GENERAL.—The term ‘designated
community resident’ means any individual who
is certified by the designated local agency—
‘‘(i) as having attained age 18 but not
age 40 on the hiring date, and
‘‘(ii) as having his principal place of
abode within an empowerment zone, enter-
prise community, renewal community, or
rural renewal county.
‘‘(B) INDIVIDUAL MUST CONTINUE TO RE-
SIDE IN ZONE, COMMUNITY, OR COUNTY.—In the
case of a designated community resident, the
term ‘qualified wages’ shall not include wages
paid or incurred for services performed while the
individual’s principal place of abode is outside
an empowerment zone, enterprise community, re-
newal community, or rural renewal county.
‘‘(C) RURAL RENEWAL COUNTY.—For pur-
poses of this paragraph, the term ‘rural renewal
county’ means any county which—
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‘‘(i) is outside a metropolitan statis-
tical area (defined as such by the Office of
Management and Budget), and
‘‘(ii) during the 5-year periods 1990
through 1994 and 1995 through 1999 had a
net population loss.’’.
(2) CONFORMING
AMENDMENT.—Subparagraph
(D) of section 51(d)(1) is amended to read as follows:
‘‘(D) a designated community resident,’’.
(c) CLARIFICATION OF TREATMENT OF INDIVIDUALS
UNDER INDIVIDUAL WORK PLANS.—Subparagraph (B) of
section 51(d)(6) (relating to vocational rehabilitation refer-
ral) is amended by striking ‘‘or’’ at the end of clause (i),
by striking the period at the end of clause (ii) and inserting
‘‘, or’’, and by adding at the end the following new clause:
‘‘(iii) an individual work plan devel-
oped and implemented by an employment
network pursuant to subsection (g) of sec-
tion 1148 of the Social Security Act with
respect to which the requirements of such
subsection are met.’’.
(d) TREATMENT OF DISABLED VETERANS UNDER THE
WORK OPPORTUNITY TAX CREDIT.—
(1) DISABLED VETERANS TREATED AS MEMBERS
OF TARGETED GROUP.—
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(A) IN
GENERAL.—Subparagraph (A) of
section 51(d)(3) (relating to qualified veteran) is
amended by striking ‘‘agency as being a member
of a family’’ and all that follows and inserting
‘‘agency as—
‘‘(i) being a member of a family receiv-
ing assistance under a food stamp program
under the Food Stamp Act of 1977 for at
least a 3-month period ending during the
12-month period ending on the hiring date,
or
‘‘(ii) entitled to compensation for a
service-connected disability incurred after
September 10, 2001.’’.
(B) DEFINITIONS.—Paragraph (3) of sec-
tion 51(d) is amended by adding at the end the
following new subparagraph:
‘‘(C) OTHER DEFINITIONS.—For purposes of
subparagraph (A), the terms ‘compensation’ and
‘service-connected’ have the meanings given such
terms under section 101 of title 38, United
States Code.’’.
(2) INCREASE IN AMOUNT OF WAGES TAKEN INTO
ACCOUNT FOR DISABLED VETERANS.—Paragraph (3)
of section 51(b) is amended—
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(A) by inserting ‘‘($12,000 per year in the
case of any individual who is a qualified veteran
by reason of subsection (d)(3)(A)(ii))’’ before the
period at the end, and
(B) by striking ‘‘ONLY FIRST $6,000 of’’
in the heading and inserting ‘‘LIMITATION
ON’’.
(e) EFFECTIVE DATE.—The amendments made by this
section shall apply to individuals who begin work for the
employer after the date of the enactment of this Act, in tax-
able years ending after such date.
SEC. 515. CERTIFIED PROFESSIONAL EMPLOYER ORGANIZA-
TIONS.
(a) EMPLOYMENT TAXES.—Chapter 25 (relating to
general provisions relating to employment taxes) is amend-
ed by adding at the end the following new section:
‘‘SEC. 3511. CERTIFIED PROFESSIONAL EMPLOYER ORGANI-
ZATIONS.
‘‘(a) GENERAL RULES.—For purposes of the taxes, and
other obligations, imposed by this subtitle—
‘‘(1) a certified professional employer organiza-
tion shall be treated as the employer (and no other
person shall be treated as the employer) of any work
site employee performing services for any customer of
such organization, but only with respect to remunera-
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tion remitted by such organization to such work site
employee, and
‘‘(2) exclusions, definitions, and other rules
which are based on the type of employer and which
would (but for paragraph (1)) apply shall apply with
respect to such taxes imposed on such remuneration.
‘‘(b) SUCCESSOR EMPLOYER STATUS.—For purposes
of sections 3121(a)(1), 3231(e)(2)(C), and 3306(b)(1)—
‘‘(1) a certified professional employer organiza-
tion entering into a service contract with a customer
with respect to a work site employee shall be treated
as a successor employer and the customer shall be
treated as a predecessor employer during the term of
such service contract, and
‘‘(2) a customer whose service contract with a
certified professional employer organization is termi-
nated with respect to a work site employee shall be
treated as a successor employer and the certified pro-
fessional employer organization shall be treated as a
predecessor employer.
‘‘(c) LIABILITY
OF CERTIFIED PROFESSIONAL EM-
PLOYER ORGANIZATION.—Solely for purposes of its liability
for the taxes, and other obligations, imposed by this
subtitle—
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‘‘(1) a certified professional employer organiza-
tion shall be treated as the employer of any indi-
vidual (other than a work site employee or a person
described in subsection (f)) who is performing services
covered by a contract meeting the requirements of sec-
tion 7705(e)(2), but only with respect to remunera-
tion remitted by such organization to such individual,
and
‘‘(2) exclusions, definitions, and other rules
which are based on the type of employer and which
would (but for paragraph (1)) apply shall apply with
respect to such taxes imposed on such remuneration.
‘‘(d) TREATMENT OF CREDITS.—
‘‘(1) IN GENERAL.—For purposes of any credit
specified in paragraph (2)—
‘‘(A) such credit with respect to a work site
employee performing services for the customer
applies to the customer, not the certified profes-
sional employer organization,
‘‘(B) the customer, and not the certified pro-
fessional employer organization, shall take into
account wages and employment taxes—
‘‘(i) paid by the certified professional
employer organization with respect to the
work site employee, and
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‘‘(ii) for which the certified profes-
sional employer organization receives pay-
ment from the customer, and
‘‘(C) the certified professional employer or-
ganization shall furnish the customer with any
information necessary for the customer to claim
such credit.
‘‘(2) CREDITS SPECIFIED.—A credit is specified
in this paragraph if such credit is allowed under—
‘‘(A) section 41 (credit for increasing re-
search activity),
‘‘(B) section 45A (Indian employment cred-
it),
‘‘(C) section 45B (credit for portion of em-
ployer social security taxes paid with respect to
employee cash tips),
‘‘(D) section 45C (clinical testing expenses
for certain drugs for rare diseases or conditions),
‘‘(E) section 51 (work opportunity credit),
‘‘(F) section 51A (temporary incentives for
employing long-term family assistance recipi-
ents),
‘‘(G) section 1396 (empowerment zone em-
ployment credit),
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‘‘(H) 1400(d) (DC Zone employment cred-
it),
‘‘(I) Section 1400H (renewal community
employment credit), and
‘‘(J) any other section as provided by the
Secretary.
‘‘(e) SPECIAL RULE FOR RELATED PARTY.—This sec-
tion shall not apply in the case of a customer which bears
a relationship to a certified professional employer organiza-
tion described in section 267(b) or 707(b). For purposes of
the preceding sentence, such sections shall be applied by sub-
stituting ‘10 percent’ for ‘50 percent’.
‘‘(f) SPECIAL RULE FOR CERTAIN INDIVIDUALS.—For
purposes of the taxes imposed under this subtitle, an indi-
vidual with net earnings from self-employment derived from
the customer’s trade or business is not a work site employee
with respect to remuneration paid by a certified profes-
sional employer organization.
‘‘(g) REGULATIONS.—The Secretary shall prescribe
such regulations as may be necessary or appropriate to
carry out the purposes of this section.’’.
(b) CERTIFIED PROFESSIONAL EMPLOYER ORGANIZA-
TION DEFINED.—Chapter 79 (relating to definitions) is
amended by adding at the end the following new section:
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‘‘SEC. 7705. CERTIFIED PROFESSIONAL EMPLOYER ORGANI-
ZATIONS DEFINED.
‘‘(a) IN GENERAL.—For purposes of this title, the term
‘certified professional employer organization’ means a per-
son who has been certified by the Secretary for purposes
of section 3511 as meeting the requirements of subsection
(b).
‘‘(b) GENERAL REQUIREMENTS.—A person meets the
requirements of this subsection if such person—
‘‘(1) demonstrates that such person (and any
owner, officer, and such other persons as may be spec-
ified in regulations) meets such requirements as the
Secretary shall establish with respect to tax status,
background, experience, business location, and annual
financial audits,
‘‘(2) computes its taxable income using an ac-
crual method of accounting unless the Secretary ap-
proves another method,
‘‘(3) agrees that it will satisfy the bond and
independent financial review requirements of sub-
section (c) on an ongoing basis,
‘‘(4) agrees that it will satisfy such reporting ob-
ligations as may be imposed by the Secretary,
‘‘(5) agrees to verify on such periodic basis as the
Secretary may prescribe that it continues to meet the
requirements of this subsection, and
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‘‘(6) agrees to notify the Secretary in writing
within such time as the Secretary may prescribe of
any change that materially affects whether it con-
tinues to meet the requirements of this subsection.
‘‘(c) BOND AND INDEPENDENT FINANCIAL REVIEW RE-
QUIREMENTS.—
‘‘(1) IN GENERAL.—An organization meets the
requirements of this paragraph if such organization—
‘‘(A) meets the bond requirements of para-
graph (2), and
‘‘(B) meets the independent financial review
requirements of paragraph (3).
‘‘(2) BOND.—
‘‘(A) IN GENERAL.—A certified professional
employer organization meets the requirements of
this paragraph if the organization has posted a
bond for the payment of taxes under subtitle C
(in a form acceptable to the Secretary) in an
amount at least equal to the amount specified in
subparagraph (B).
‘‘(B) AMOUNT
OF
BOND.—For the period
April 1 of any calendar year through March 31
of the following calendar year, the amount of the
bond required is equal to the greater of—
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‘‘(i) 5 percent of the organization’s li-
ability under section 3511 for taxes imposed
by subtitle C during the preceding calendar
year (but not to exceed $1,000,000), or
‘‘(ii) $50,000.
‘‘(3) INDEPENDENT FINANCIAL REVIEW REQUIRE-
MENTS.—A certified professional employer organiza-
tion meets the requirements of this paragraph if such
organization—
‘‘(A) has, as of the most recent review date,
caused to be prepared and provided to the Sec-
retary (in such manner as the Secretary may
prescribe) an opinion of an independent certified
public accountant that the certified professional
employer organization’s financial statements are
presented fairly in accordance with generally ac-
cepted accounting principles, and
‘‘(B) provides, not later than the last day of
the second month beginning after the end of each
calendar quarter, to the Secretary from an inde-
pendent certified public accountant an assertion
regarding Federal employment tax payments
and an examination level attestation on such as-
sertion.
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Such assertion shall state that the organization has
withheld and made deposits of all taxes imposed by
chapters 21, 22, and 24 of the Internal Revenue Code
in accordance with regulations imposed by the Sec-
retary for such calendar quarter and such examina-
tion level attestation shall state that such assertion is
fairly stated, in all material respects.
‘‘(4) CONTROLLED GROUP RULES.—For purposes
of the requirements of paragraphs (2) and (3), all
professional employer organizations that are members
of a controlled group within the meaning of sections
414(b) and (c) shall be treated as a single organiza-
tion.
‘‘(5) FAILURE TO FILE ASSERTION AND ATTESTA-
TION.—If the certified professional employer organi-
zation fails to file the assertion and attestation re-
quired by paragraph (3) with respect to any calendar
quarter, then the requirements of paragraph (3) with
respect to such failure shall be treated as not satisfied
for the period beginning on the due date for such at-
testation.
‘‘(6) REVIEW DATE.—For purposes of paragraph
(3)(A), the review date shall be 6 months after the
completion of the organization’s fiscal year.
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‘‘(d) SUSPENSION AND REVOCATION AUTHORITY.—The
Secretary may suspend or revoke a certification of any per-
son under subsection (b) for purposes of section 3511 if the
Secretary determines that such person is not satisfying the
representations or requirements of subsections (b) or (c), or
fails to satisfy applicable accounting, reporting, payment,
or deposit requirements.
‘‘(e) WORK SITE EMPLOYEE.—For purposes of this
title—
‘‘(1) IN
GENERAL.—The term ‘work site em-
ployee’ means, with respect to a certified professional
employer organization, an individual who—
‘‘(A) performs services for a customer pur-
suant to a contract which is between such cus-
tomer and the certified professional employer or-
ganization and which meets the requirements of
paragraph (2), and
‘‘(B) performs services at a work site meet-
ing the requirements of paragraph (3).
‘‘(2) SERVICE
CONTRACT
REQUIREMENTS.—A
contract meets the requirements of this paragraph
with respect to an individual performing services for
a customer if such contract is in writing and provides
that the certified professional employer organization
shall—
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‘‘(A) assume responsibility for payment of
wages to such individual, without regard to the
receipt or adequacy of payment from the cus-
tomer for such services,
‘‘(B) assume responsibility for reporting,
withholding, and paying any applicable taxes
under subtitle C, with respect to such individ-
ual’s wages, without regard to the receipt or ade-
quacy of payment from the customer for such
services,
‘‘(C) assume responsibility for any employee
benefits which the service contract may require
the organization to provide, without regard to
the receipt or adequacy of payment from the cus-
tomer for such services,
‘‘(D) assume responsibility for hiring, fir-
ing, and recruiting workers in addition to the
customer’s responsibility for hiring, firing and
recruiting workers,
‘‘(E) maintain employee records relating to
such individual, and
‘‘(F) agree to be treated as a certified pro-
fessional employer organization for purposes of
section 3511 with respect to such individual.
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‘‘(3) WORK SITE COVERAGE REQUIREMENT.—The
requirements of this paragraph are met with respect
to an individual if at least 85 percent of the individ-
uals performing services for the customer at the work
site where such individual performs services are sub-
ject to 1 or more contracts with the certified profes-
sional employer organization which meet the require-
ments of paragraph (2) (but not taking into account
those individuals who are excluded employees within
the meaning of section 414(q)(5)).
‘‘(f) DETERMINATION OF EMPLOYMENT STATUS.—Ex-
cept to the extent necessary for purposes of section 3511,
nothing in this section shall be construed to affect the deter-
mination of who is an employee or employer for purposes
of this title.
‘‘(g) REGULATIONS.—The Secretary shall prescribe
such regulations as may be necessary or appropriate to
carry out the purposes of this section.’’.
(c) CONFORMING AMENDMENTS.—
(1) Section 3302 is amended by adding at the
end the following new subsection:
‘‘(h) TREATMENT OF CERTIFIED PROFESSIONAL EM-
PLOYER ORGANIZATIONS.—If a certified professional em-
ployer organization (as defined in section 7705), or a cus-
tomer of such organization, makes a contribution to the
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State’s unemployment fund with respect to a work site em-
ployee, such organization shall be eligible for the credits
available under this section with respect to such contribu-
tion.’’.
(2) Section 3303(a) is amended—
(A) by striking the period at the end of
paragraph (3) and inserting ‘‘; and’’ and by in-
serting after paragraph (3) the following new
paragraph:
‘‘(4) if the taxpayer is a certified professional
employer organization (as defined in section 7705)
that is treated as the employer under section 3511,
such certified professional employer organization is
permitted to collect and remit, in accordance with
paragraphs (1), (2), and (3), contributions during the
taxable year to the State unemployment fund with re-
spect to a work site employee.’’, and
(B) in the last sentence—
(i) by striking ‘‘paragraphs (1), (2),
and (3)’’ and inserting ‘‘paragraphs (1),
(2), (3), and (4)’’, and
(ii) by striking ‘‘paragraph (1), (2), or
(3)’’ and inserting ‘‘paragraph (1), (2), (3),
or (4)’’.
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(3) Section 6053(c) (relating to reporting of tips)
is amended by adding at the end the following new
paragraph:
‘‘(8) CERTIFIED PROFESSIONAL EMPLOYER OR-
GANIZATIONS.—For purposes of any report required
by this subsection, in the case of a certified profes-
sional employer organization that is treated under
section 3511 as the employer of a work site employee,
the customer with respect to whom a work site em-
ployee performs services shall be the employer for pur-
poses of reporting under this section and the certified
professional employer organization shall furnish to
the customer any information necessary to complete
such reporting no later than such time as the Sec-
retary shall prescribe.’’.
(d) CLERICAL AMENDMENTS.—
(1) The table of sections for chapter 25 is amend-
ed by adding at the end the following new item:
‘‘Sec. 3511. Certified professional employer organizations’’.
(2) The table of sections for chapter 79 is amend-
ed by inserting after the item relating to section 7704
the following new item:
‘‘Sec. 7705. Certified professional employer organizations defined’’.
(e) REPORTING REQUIREMENTS AND OBLIGATIONS.—
The Secretary of the Treasury shall develop such reporting
and recordkeeping rules, regulations, and procedures as the