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‘‘(A) is adopted on or before June 30,
2002,
‘‘(B) reduces benefits to the level that
would have applied without regard to the
amendments made by subsection (a) of this sec-
tion, and
‘‘(C) is effective no earlier than the years
described in paragraph (2).’’.
(k) AMENDMENTS RELATING TO SECTION 613 OF
THE ACT.—
(1) Section 416(c)(1)(C)(iii) is amended by
striking ‘‘EXCEPTION FOR FROZEN PLAN’’ and in-
serting ‘‘EXCEPTION FOR PLAN UNDER WHICH NO
KEY EMPLOYEE (OR FORMER KEY EMPLOYEE) BENE-
FITS FOR PLAN YEAR’’.
(2) Section 416(g)(3)(B) is amended by strik-
ing ‘‘separation from service’’ and inserting ‘‘sever-
ance from employment’’.
(l) AMENDMENTS RELATING TO SECTIONS 614 and
616 OF THE ACT.—
(1) Section 404(a)(12) is amended by striking
‘‘(9),’’ and inserting ‘‘(9) and subsection (h)(1)(C),’’.
(2) Section 404(n) is amended by striking ‘‘sub-
section (a),’’ and inserting ‘‘subsection (a) or para-
graph (1)(C) of subsection (h)’’.
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(3) Section 402(h)(2)(A) is amended by strik-
ing ‘‘15 percent’’ and inserting ‘‘25 percent’’.
(4) Section 404(a)(7)(C) is amended to read as
follows:
‘‘(C) PARAGRAPH NOT TO APPLY IN CER-
TAIN CASES.—
‘‘(i) BENEFICIARY TEST.—This para-
graph shall not have the effect of reducing
the amount otherwise deductible under
paragraphs (1), (2), and (3), if no em-
ployee is a beneficiary under more than 1
trust or under a trust and an annuity plan.
‘‘(ii) ELECTIVE
DEFERRALS.—If, in
connection with 1 or more defined con-
tribution plans and 1 or more defined ben-
efit plans, no amounts (other than elective
deferrals (as defined in section 402(g)(3)))
are contributed to any of the defined con-
tribution plans for the taxable year, then
subparagraph (A) shall not apply with re-
spect to any of such defined contribution
plans and defined benefit plans.’’.
(m) AMENDMENT RELATING TO SECTION 618 OF
THE ACT.—Section 25B(d)(2)(A) is amended to read as
follows:
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‘‘(A) IN GENERAL.—The qualified retire-
ment savings contributions determined under
paragraph (1) shall be reduced (but not below
zero) by the aggregate distributions received by
the individual during the testing period from
any entity of a type to which contributions
under paragraph (1) may be made. The pre-
ceding sentence shall not apply to the portion of
any distribution which is not includible in gross
income by reason of a trustee-to-trustee trans-
fer or a rollover distribution.’’.
(n) AMENDMENTS RELATING TO SECTION 619 OF
THE ACT.—
(1) Section 45E(e)(1) is amended by striking
‘‘(n)’’ and inserting ‘‘(m)’’.
(2) Section 619(d) of the Economic Growth and
Tax Relief Reconciliation Act of 2001 is amended by
striking ‘‘established’’ and inserting ‘‘first effective’’.
(o) AMENDMENTS RELATING TO SECTION 631 OF
THE ACT.—
(1) Section 402(g)(1) is amended by adding at
the end the following:
‘‘(C) CATCH-UP CONTRIBUTIONS.—In ad-
dition to subparagraph (A), in the case of an el-
igible participant (as defined in section 414(v)),
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gross income shall not include elective deferrals
in excess of the applicable dollar amount under
subparagraph (B) to the extent that the
amount of such elective deferrals does not ex-
ceed the applicable dollar amount under section
414(v)(2)(B)(i) for the taxable year (without
regard to the treatment of the elective deferrals
by an applicable employer plan under section
414(v)).’’.
(2) Section 401(a)(30) is amended by striking
‘‘402(g)(1)’’ and inserting ‘‘402(g)(1)(A)’’.
(3) Section 414(v)(2) is amended by adding at
the end the following:
‘‘(D) AGGREGATION OF PLANS.—For pur-
poses of this paragraph, plans described in
clauses (i), (ii), and (iv) of paragraph (6)(A)
that are maintained by the same employer (as
determined under subsection (b), (c), (m) or
(o)) shall be treated as a single plan, and plans
described in clause (iii) of paragraph (6)(A)
that are maintained by the same employer shall
be treated as a single plan.’’.
(4) Section 414(v)(3)(A)(i) is amended by strik-
ing ‘‘section 402(g), 402(h), 403(b), 404(a), 404(h),
408(k), 408(p), 415, or 457’’ and inserting ‘‘section
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401(a)(30), 402(h), 403(b), 408, 415(c), and
457(b)(2) (determined without regard to section
457(b)(3))’’.
(5) Section 414(v)(3)(B) is amended by striking
‘‘section 
401(a)(4), 
401(a)(26), 
401(k)(3),
401(k)(11), 401(k)(12), 403(b)(12), 408(k), 408(p),
408B, 410(b), or 416’’ and inserting ‘‘section
401(a)(4), 
401(k)(3), 
401(k)(11), 
403(b)(12),
408(k), 410(b), or 416’’.
(6) Section 414(v)(4)(B) is amended by insert-
ing before the period at the end the following: ‘‘, ex-
cept that a plan described in clause (i) of section
410(b)(6)(C) shall not be treated as a plan of the
employer until the expiration of the transition period
with respect to such plan (as determined under
clause (ii) of such section)’’.
(7) Section 414(v)(5) is amended—
(A) by striking ‘‘, with respect to any plan
year,’’ in the matter preceding subparagraph
(A),
(B) by amending subparagraph (A) to read
as follows:
‘‘(A) who would attain age 50 by the end
of the taxable year,’’, and
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(C) in subparagraph (B) by striking ‘‘plan
year’’ and inserting ‘‘plan (or other applicable)
year’’.
(8) Section 414(v)(6)(C) is amended to read as
follows:
‘‘(C) 
EXCEPTION
FOR
SECTION
457
PLANS.—This subsection shall not apply to a
participant for any year for which a higher limi-
tation applies to the participant under section
457(b)(3).’’.
(9) Section 457(e) is amended by adding at the
end the following new paragraph:
‘‘(18) COORDINATION
WITH
CATCH-UP
CON-
TRIBUTIONS FOR INDIVIDUALS AGE 50 OR OLDER.—
In the case of an individual who is an eligible partic-
ipant (as defined by section 414(v)) and who is a
participant in an eligible deferred compensation plan
of an employer described in paragraph (1)(A), sub-
sections (b)(3) and (c) shall be applied by sub-
stituting for the amount otherwise determined under
the applicable subsection the greater of—
‘‘(A) the sum of—
‘‘(i) the plan ceiling established for
purposes of subsection (b)(2) (without re-
gard to subsection (b)(3)), plus
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‘‘(ii) the applicable dollar amount for
the taxable year determined under section
414(v)(2)(B)(i), or
‘‘(B) the amount determined under the ap-
plicable subsection (without regard to this para-
graph).’’.
(p) AMENDMENTS RELATING TO SECTION 632 OF
THE ACT.—
(1) Section 403(b)(1) is amended in the matter
following subparagraph (E) by striking ‘‘then
amounts contributed’’ and all that follows and in-
serting the following:
‘‘then contributions and other additions by such
employer for such annuity contract shall be excluded
from the gross income of the employee for the tax-
able year to the extent that the aggregate of such
contributions and additions (when expressed as an
annual addition (within the meaning of section
415(c)(2))) does not exceed the applicable limit
under section 415. The amount actually distributed
to any distributee under such contract shall be tax-
able to the distributee (in the year in which so dis-
tributed) under section 72 (relating to annuities).
For purposes of applying the rules of this subsection
to contributions and other additions by an employer
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for a taxable year, amounts transferred to a contract
described in this paragraph by reason of a rollover
contribution described in paragraph (8) of this sub-
section or section 408(d)(3)(A)(ii) shall not be con-
sidered contributed by such employer.’’.
(2) Section 403(b) is amended by striking para-
graph (6).
(3) Section 403(b)(3) is amended—
(A) in the first sentence by inserting the
following before the period at the end: ‘‘, and
which precedes the taxable year by no more
than five years’’, and
(B) in the second sentence by striking ‘‘or
any amount received by a former employee after
the fifth taxable year following the taxable year
in which such employee was terminated’’.
(4) Section 415(c)(7) is amended to read as fol-
lows:
‘‘(7) SPECIAL
RULES
RELATING
TO
CHURCH
PLANS.—
‘‘(A) ALTERNATIVE
CONTRIBUTION
LIMI-
TATION.—
‘‘(i) IN
GENERAL.—Notwithstanding
any other provision of this subsection, at
the election of a participant who is an em-
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ployee of a church or a convention or asso-
ciation of churches, including an organiza-
tion described in section 414(e)(3)(B)(ii),
contributions and other additions for an
annuity contract or retirement income ac-
count described in section 403(b) with re-
spect to such participant, when expressed
as an annual addition to such participant’s
account, shall be treated as not exceeding
the limitation of paragraph (1) if such an-
nual addition is not in excess of $10,000.
‘‘(ii) $40,000 
AGGREGATE
LIMITA-
TION.—The total amount of additions with
respect to any participant which may be
taken into account for purposes of this
subparagraph for all years may not exceed
$40,000.
‘‘(B) NUMBER OF YEARS OF SERVICE FOR
DULY ORDAINED, COMMISSIONED, OR LICENSED
MINISTERS OR LAY EMPLOYEES.—For purposes
of this paragraph—
‘‘(i) all years of service by—
‘‘(I) a duly ordained, commis-
sioned, or licensed minister of a
church, or
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‘‘(II) a lay person,
as an employee of a church, a convention
or association of churches, including an or-
ganization 
described 
in 
section
414(e)(3)(B)(ii), shall be considered as
years of service for 1 employer, and
‘‘(ii) all amounts contributed for an-
nuity contracts by each such church (or
convention or association of churches) or
such organization during such years for
such minister or lay person shall be consid-
ered to have been contributed by 1 em-
ployer.
‘‘(C) FOREIGN MISSIONARIES.—In the case
of any individual described in subparagraph (D)
performing services outside the United States,
contributions and other additions for an annu-
ity contract or retirement income account de-
scribed in section 403(b) with respect to such
employee, when expressed as an annual addition
to such employee’s account, shall not be treated
as exceeding the limitation of paragraph (1) if
such annual addition is not in excess of the
greater of $3,000 or the employee’s includible
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compensation 
determined 
under 
section
403(b)(3).
‘‘(D) ANNUAL ADDITION.—For purposes of
this paragraph, the term ‘annual addition’ has
the meaning given such term by paragraph (2).
‘‘(E) CHURCH, CONVENTION OR ASSOCIA-
TION
OF
CHURCHES.—For purposes of this
paragraph, the terms ‘church’ and ‘convention
or association of churches’ have the same mean-
ing as when used in section 414(e).’’.
(5) Section 457(e)(5) is amended to read as fol-
lows:
‘‘(5) INCLUDIBLE
COMPENSATION.—The term
‘includible compensation’ has the meaning given to
the term ‘participant’s compensation’ by section
415(c)(3).’’.
(6) Section 402(g)(7)(B) is amended by strik-
ing ‘‘2001.’’ and inserting ‘‘2001).’’.
(q) AMENDMENTS RELATING TO SECTION 643 OF
THE ACT.—
(1) Section 401(a)(31)(C)(i) is amended by in-
serting ‘‘is a qualified trust which is part of a plan
which is a defined contribution plan and’’ before
‘‘agrees’’.
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(2) Section 402(c)(2) is amended by adding at
the end the following flush sentence:
‘‘In the case of a transfer described in subparagraph
(A) or (B), the amount transferred shall be treated
as consisting first of the portion of such distribution
that is includible in gross income (determined with-
out regard to paragraph (1)).’’.
(r) AMENDMENTS RELATING TO SECTION 648 OF
THE ACT.—
(1) Section 417(e) is amended—
(A) in paragraph (1) by striking ‘‘exceed
the dollar limit under section 411(a)(11)(A)’’
and inserting ‘‘exceed the amount that can be
distributed without the participant’s consent
under section 411(a)(11)’’, and
(B) in paragraph (2)(A) by striking ‘‘ex-
ceeds 
the 
dollar 
limit 
under 
section
411(a)(11)(A)’’ and inserting ‘‘exceeds the
amount that can be distributed without the par-
ticipant’s consent under section 411(a)(11)’’.
(2) Section 205(g) of the Employee Retirement
Income Security Act of 1974 is amended—
(A) in paragraph (1) by striking ‘‘exceed
the dollar limit under section 203(e)(1)’’ and
inserting ‘‘exceed the amount that can be dis-
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tributed without the participant’s consent under
section 203(e)’’, and
(B) in paragraph (2)(A) by striking ‘‘ex-
ceeds the dollar limit under section 203(e)(1)’’
and inserting ‘‘exceeds the amount that can be
distributed without the participant’s consent
under section 203(e)’’.
(s) AMENDMENT RELATING TO SECTION 652 OF THE
ACT.—Section 404(a)(1)(D)(iv) is amended by striking
‘‘PLANS
MAINTAINED
BY
PROFESSIONAL
SERVICE
EM-
PLOYERS’’ and inserting ‘‘SPECIAL
RULE
FOR
TERMI-
NATING PLANS’’.
(t) AMENDMENTS RELATING TO SECTION 657 OF
THE ACT.—Section 404(c)(3) of the Employee Retirement
Income Security Act of 1974 is amended—
(1) by striking ‘‘the earlier of’’ in subparagraph
(A) the second place it appears, and
(2) by striking ‘‘if the transfer’’ and inserting
‘‘a transfer that’’.
(u) AMENDMENTS RELATING TO SECTION 659 OF
THE ACT.—
(1) Section 4980F is amended—
(A) in subsection (e)(1) by striking ‘‘writ-
ten notice’’ and inserting ‘‘the notice described
in paragraph (2)’’,
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(B) by amending subsection (f)(2)(A) to
read as follows:
‘‘(A) any defined benefit plan described in
section 401(a) which includes a trust exempt
from tax under section 501(a), or’’, and
(C) in subsection (f)(3) by striking ‘‘sig-
nificantly’’ both places it appears.
(2) Section 204(h)(9) of the Employee Retire-
ment Income Security Act of 1974 is amended by
striking ‘‘significantly’’ both places it appears.
(3) Section 659(c)(3)(B) of the Economic
Growth and Tax Relief Reconciliation Act of 2001 is
amended by striking ‘‘(or’’ and inserting ‘‘(and’’.
(v) AMENDMENTS RELATING TO SECTION 661 OF
THE ACT.—
(1) Section 412(c)(9)(B) is amended—
(A) in clause (ii) by striking ‘‘125 percent’’
and inserting ‘‘100 percent’’, and
(B) by adding at the end the following new
clause:
‘‘(iv) LIMITATION.—A change in fund-
ing method to use a prior year valuation,
as provided in clause (ii), may not be made
unless as of the valuation date within the
prior plan year, the value of the assets of
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the plan are not less than 125 percent of
the plan’s current liability (as defined in
paragraph (7)(B)).’’.
(2) Section 302(c)(9)(B) of the Employee Re-
tirement Income Security Act of 1974 is amended—
(A) in clause (ii) by striking ‘‘125 percent’’
and inserting ‘‘100 percent’’, and
(B) by adding at the end the following new
clause:
‘‘(iv) A change in funding method to use a prior year
valuation, as provided in clause (ii), may not be made un-
less as of the valuation date within the prior plan year,
the value of the assets of the plan are not less than 125
percent of the plan’s current liability (as defined in para-
graph (7)(B)).’’.
(w) AMENDMENTS RELATING TO SECTION 662 OF
THE ACT.—
(1) Section 404(k) is amended—
(A) in paragraph (1) by striking ‘‘during
the taxable year’’,
(B) in paragraph (2)(B) by striking
‘‘(A)(iii)’’ and inserting ‘‘(A)(iv)’’,
(C) in paragraph (4)(B) by striking ‘‘(iii)’’
and inserting ‘‘(iv)’’, and
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(D) by redesignating subparagraph (B) of
paragraph (4) (as amended by subparagraph
(C)) as subparagraph (C) of paragraph (4) and
by inserting after subparagraph (A) the fol-
lowing new subparagraph:
‘‘(B) 
REINVESTMENT
DIVIDENDS.—For
purposes of subparagraph (A), an applicable
dividend reinvested pursuant to clause (iii)(II)
of paragraph (2)(A) shall be treated as paid in
the taxable year of the corporation in which
such dividend is reinvested in qualifying em-
ployer securities or in which the election under
clause (iii) of paragraph (2)(A) is made, which-
ever is later.’’.
(2) Section 404(k) is amended by adding at the
end the following new paragraph:
‘‘(7) FULL VESTING.—In accordance with sec-
tion 411, an applicable dividend described in clause
(iii)(II) of paragraph (2)(A) shall be subject to the
requirements of section 411(a)(1).’’.
(x) EFFECTIVE DATE.—Except as provided in sub-
section (c), the amendments made by this section shall
take effect as if included in the provisions of the Economic
Growth and Tax Relief Reconciliation Act of 2001 to
which they relate.
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SEC. 612. AMENDMENTS RELATED TO COMMUNITY RE-
NEWAL TAX RELIEF ACT OF 2000.
(a) AMENDMENT RELATED TO SECTION 101 OF THE
ACT.—Section 469(i)(3)(E) is amended by striking
clauses (ii), (iii), and (iv) and inserting the following:
‘‘(ii) second to the portion of such loss
to which subparagraph (C) applies,
‘‘(iii) third to the portion of the pas-
sive activity credit to which subparagraph
(B) or (D) does not apply,
‘‘(iv) fourth to the portion of such
credit to which subparagraph (B) applies,
and’’.
(b) AMENDMENT RELATED TO SECTION 306 OF THE
ACT.—Section 151(c)(6)(C) is amended—
(1) by striking ‘‘FOR EARNED INCOME CRED-
IT.—For purposes of section 32, an’’ and inserting
‘‘FOR
PRINCIPAL
PLACE
OF
ABODE
REQUIRE-
MENTS.—An’’, and
(2) 
by 
striking 
‘‘requirement 
of 
section
32(c)(3)(A)(ii)’’ and inserting ‘‘principal place of
abode requirements of section 2(a)(1)(B), section
2(b)(1)(A), and section 32(c)(3)(A)(ii)’’.
(c) AMENDMENT RELATED TO SECTION 309 OF THE
ACT.—Subparagraph (A) of section 358(h)(1) is amended
to read as follows:
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‘‘(A) which is assumed by another person
as part of the exchange, and’’.
(d) AMENDMENTS RELATED TO SECTION 401 OF
THE ACT.—
(1)(A) Section 1234A is amended by inserting
‘‘or’’ after the comma at the end of paragraph (1),
by striking ‘‘or’’ at the end of paragraph (2), and
by striking paragraph (3).
(B)(i) Section 1234B is amended in subsection
(a)(1) and in subsection (b) by striking ‘‘sale or ex-
change’’ the first place it appears in each subsection
and inserting ‘‘sale, exchange, or termination’’.
(ii) Section 1234B is amended by adding at the
end the following new subsection:
‘‘(f) CROSS REFERENCE.—
‘‘For special rules relating to dealer securities fu-
tures contracts, see section 1256.’’
(2) Section 1091(e) is amended—
(A) in the heading, by striking ‘‘SECURI-
TIES.—’’ and inserting ‘‘SECURITIES AND SE-
CURITIES FUTURES CONTRACTS TO SELL.—’’,
(B) by inserting after ‘‘closing of a short
sale of’’ the following: ‘‘(or a securities futures
contract to sell)’’,
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(C) in paragraph (2), by inserting after
‘‘short sale of’’ the following: ‘‘(or securities fu-
tures contracts to sell)’’, and
(D) by adding at the end the following:
‘‘For purposes of this subsection, the term ‘securities fu-
tures contract’ has the meaning provided by section
1234B(c).’’.
(3) Section 1233(e)(2) is amended by striking
‘‘and’’ at the end of subparagraph (C), by striking
the period and inserting ‘‘; and’’ at the end of sub-
paragraph (D), and by adding at the end the fol-
lowing:
‘‘(E) entering into a securities futures con-
tract (as so defined) to sell shall be treated as
entering into a short sale, and the sale, ex-
change, or termination of a securities futures
contract to sell shall be treated as the closing
of a short sale.’’.
(e) EFFECTIVE DATE.—The amendments made by
this section shall take effect as if included in the provisions
of the Community Renewal Tax Relief Act of 2000 to
which they relate.
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SEC. 613. AMENDMENTS RELATED TO THE TAX RELIEF EX-
TENSION ACT OF 1999.
(a) AMENDMENTS RELATED TO SECTION 545 OF
THE ACT.—Section 857(b)(7) is amended—
(1) in clause (i) of subparagraph (B), by strik-
ing ‘‘the amount of which’’ and inserting ‘‘to the ex-
tent the amount of the rents’’, and
(2) in subparagraph (C), by striking ‘‘if the
amount’’ and inserting ‘‘to the extent the amount’’.
(b) EFFECTIVE DATE.—The amendments made by
this section shall take effect as if included in section 545
of the Tax Relief Extension Act of 1999.
SEC. 614. AMENDMENTS RELATED TO THE TAXPAYER RE-
LIEF ACT OF 1997.
(a) AMENDMENTS RELATED TO SECTION 311 OF
THE ACT.—Section 311(e) of the Taxpayer Relief Act of
1997 (Public Law 105–34; 111 Stat. 836) is amended—
(1) in paragraph (2)(A), by striking ‘‘recog-
nized’’ and inserting ‘‘included in gross income’’,
and
(2) by adding at the end the following new
paragraph:
‘‘(5) DISPOSITION OF INTEREST IN PASSIVE AC-
TIVITY.—Section 469(g)(1)(A) of the Internal Rev-
enue Code of 1986 shall not apply by reason of an
election made under paragraph (1).’’.
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(b) EFFECTIVE DATE.—The amendments made by
this section shall take effect as if included in section 311
of the Taxpayer Relief Act of 1997.
SEC. 615. AMENDMENT RELATED TO THE BALANCED BUDG-
ET ACT OF 1997.
(a) AMENDMENT RELATED TO SECTION 4006 OF
THE ACT.—Section 26(b)(2) is amended by striking
‘‘and’’ at the end of subparagraph (P), by striking the
period and inserting ‘‘, and’’ at the end of subparagraph
(Q), and by adding at the end the following new subpara-
graph:
‘‘(R) section 138(c)(2) (relating to penalty
for distributions from Medicare+Choice MSA
not used for qualified medical expenses if min-
imum balance not maintained).’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall take effect as if included in section 4006
of the Balanced Budget Act of 1997.
SEC. 616. OTHER TECHNICAL CORRECTIONS.
(a) COORDINATION
OF ADVANCED PAYMENTS
OF
EARNED INCOME CREDIT.—
(1) Section 32(g)(2) is amended by striking
‘‘subpart’’ and inserting ‘‘part’’.
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(2) The amendment made by this subsection
shall take effect as if included in section 474 of the
Tax Reform Act of 1984.
(b) DISCLOSURE BY SOCIAL SECURITY ADMINISTRA-
TION TO FEDERAL CHILD SUPPORT AGENCIES.—
(1) Section 6103(l)(8) is amended—
(A) in the heading, by striking ‘‘STATE
AND LOCAL’’ and inserting ‘‘FEDERAL, STATE,
AND LOCAL’’, and
(B) in subparagraph (A), by inserting
‘‘Federal or’’ before ‘‘State or local’’.
(2) The amendments made by this subsection
shall take effect on the date of the enactment of this
Act.
(c) TREATMENT OF SETTLEMENTS UNDER PART-
NERSHIP AUDIT RULES.—
(1) The following provisions are each amended
by inserting ‘‘or the Attorney General (or his dele-
gate)’’ after ‘‘Secretary’’ each place it appears:
(A) Paragraphs (1) and (2) of section
6224(c).
(B) Section 6229(f)(2).
(C) Section 6231(b)(1)(C).
(D) Section 6234(g)(4)(A).
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(2) The amendments made by this subsection
shall apply with respect to settlement agreements
entered into after the date of the enactment of this
Act.
(d) AMENDMENT RELATED TO PROCEDURE AND AD-
MINISTRATION.—
(1) Section 6331(k)(3) (relating to no levy
while certain offers pending or installment agree-
ment pending or in effect) is amended to read as fol-
lows:
‘‘(3) CERTAIN RULES TO APPLY.—Rules similar
to the rules of—
‘‘(A) paragraphs (3) and (4) of subsection
(i), and
‘‘(B) except in the case of paragraph
(2)(C), paragraph (5) of subsection (i),
shall apply for purposes of this subsection.’’.
(2) The amendment made by this subsection
shall take effect on the date of the enactment of this
Act.
(e) MODIFIED
ENDOWMENT
CONTRACTS.—Para-
graph (2) of section 318(a) of the Community Renewal
Tax Relief Act of 2000 (114 Stat. 2763A–645) is re-
pealed, and clause (ii) of section 7702A(c)(3)(A) shall
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read and be applied as if the amendment made by such
paragraph had not been enacted.
SEC. 617. CLERICAL AMENDMENTS.
(1) The subsection (g) of section 25B that re-
lates to termination is redesignated as subsection
(h).
(2) Section 51A(c)(1) is amended by striking
‘‘51(d)(10)’’ and inserting ‘‘51(d)(11)’’.
(3) Section 172(b)(1)(F)(i) is amended—
(A) by striking ‘‘3 years’’ and inserting ‘‘3
taxable years’’, and
(B) by striking ‘‘2 years’’ and inserting ‘‘2
taxable years’’.
(4) Section 351(h)(1) is amended by inserting
a comma after ‘‘liability’’.
(5) Section 741 is amended by striking ‘‘which
have appreciated substantially in value’’.
(6) Section 857(b)(7)(B)(i) is amended by
striking ‘‘subsection 856(d)’’ and inserting ‘‘section
856(d)’’.
(7) Section 1394(c)(2) is amended by striking
‘‘subparagraph (A)’’ and inserting ‘‘paragraph (1)’’.
(8)(A) Section 6227(d) is amended by striking
‘‘subsection (b)’’ and inserting ‘‘subsection (c)’’.
(B) Section 6228 is amended—
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(i) in subsection (a)(1), by striking ‘‘sub-
section (b) of section 6227’’ and inserting ‘‘sub-
section (c) of section 6227’’,
(ii) in subsection (a)(3)(A), by striking
‘‘subsection (b) of’’, and
(iii) in subsections (b)(1) and (b)(2)(A), by
striking ‘‘subsection (c) of section 6227’’ and
inserting ‘‘subsection (d) of section 6227’’.
(C) Section 6231(b)(2)(B)(i) is amended by
striking ‘‘section 6227(c)’’ and inserting ‘‘section
6227(d)’’.
(9) Section 1221(b)(1)(B)(i) is amended by
striking ‘‘1256(b))’’ and inserting ‘‘1256(b)))’’.
(10) Section 618(b)(2) of the Economic Growth
and Tax Relief Reconciliation Act of 2001 (Public
Law 107–16; 115 Stat. 108) is amended—
(A) in subparagraph (A) by striking
‘‘203(d)’’ and inserting ‘‘202(f)’’, and
(B) in subparagraphs (C), (D), and (E) by
striking ‘‘203’’ and inserting ‘‘202(f)’’.
(11)(A) Section 525 of the Ticket to Work and
Work Incentives Improvement Act of 1999 (Public
Law 106–170; 113 Stat. 1928) is amended by strik-
ing ‘‘7200’’ and inserting ‘‘7201’’.
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(B) Section 532(c)(2) of such Act (113 Stat.
1930) is amended—
(i) in subparagraph (D), by striking
‘‘341(d)(3)’’ and inserting ‘‘341(d)’’, and
(ii) in subparagraph (Q), by striking
‘‘954(c)(1)(B)(iii) 
and 
inserting
‘‘954(c)(1)(B)’’.
SEC. 618. ADDITIONAL CORRECTIONS.
(a) AMENDMENTS RELATED TO SECTION 202 OF
THE ECONOMIC GROWTH AND TAX RELIEF RECONCILI-
ATION ACT OF 2001.—
(1) Subsection (h) of section 23 is amended—
(A) by striking ‘‘subsection (a)(1)(B)’’ and
inserting ‘‘subsection (a)(3)’’, and
(B) by adding at the end the following new
flush sentence:
‘‘If any amount as increased under the preceding sentence
is not a multiple of $10, such amount shall be rounded
to the nearest multiple of $10.’’
(2) Subsection (f) of section 137 is amended by
adding at the end the following new flush sentence:
‘‘If any amount as increased under the preceding sentence
is not a multiple of $10, such amount shall be rounded
to the nearest multiple of $10.’’
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(b) AMENDMENTS RELATED TO SECTION 204 OF
THE ECONOMIC GROWTH AND TAX RELIEF RECONCILI-
ATION ACT OF 2001.—Section 21(d)(2) is amended—
(1) in subparagraph (A) by striking ‘‘$200’’
and inserting ‘‘$250’’, and
(2) in subparagraph (B) by striking ‘‘$400’’
and inserting ‘‘$500’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect as if included in the provisions
of the Economic Growth and Tax Relief Reconciliation Act
of 2001 to which they relate.
TITLE VII—UNEMPLOYMENT
ASSISTANCE
SEC. 701. SHORT TITLE.
This title may be cited as the ‘‘Temporary Extended
Unemployment Compensation Act of 2001’’.
SEC. 702. FEDERAL-STATE AGREEMENTS.
(a) IN GENERAL.—Any State which desires to do so
may enter into and participate in an agreement under this
title with the Secretary of Labor (in this title referred to
as the ‘‘Secretary’’). Any State which is a party to an
agreement under this title may, upon providing 30 days
written notice to the Secretary, terminate such agreement.
(b) PROVISIONS OF AGREEMENT.—Any agreement
under subsection (a) shall provide that the State agency
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of the State will make payments of temporary extended
unemployment compensation to individuals who—
(1) have exhausted all rights to regular com-
pensation under the State law or under Federal law
with respect to a benefit year (excluding any benefit
year that ended before March 15, 2001);
(2) have no rights to regular compensation or
extended compensation with respect to a week under
such law or any other State unemployment com-
pensation law or to compensation under any other
Federal law;
(3) are not receiving compensation with respect
to such week under the unemployment compensation
law of Canada; and
(4) filed an initial claim for regular compensa-
tion on or after March 15, 2001.
(c) EXHAUSTION OF BENEFITS.—For purposes of
subsection (b)(1), an individual shall be deemed to have
exhausted such individual’s rights to regular compensation
under a State law when—
(1) no payments of regular compensation can
be made under such law because such individual has
received all regular compensation available to such
individual based on employment or wages during
such individual’s base period; or
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(2) such individual’s rights to such compensa-
tion have been terminated by reason of the expira-
tion of the benefit year with respect to which such
rights existed.
(d) WEEKLY BENEFIT AMOUNT, ETC.—For purposes
of any agreement under this title—
(1) the amount of temporary extended unem-
ployment compensation which shall be payable to
any individual for any week of total unemployment
shall be equal to the amount of the regular com-
pensation (including dependents’ allowances) payable
to such individual during such individual’s benefit
year under the State law for a week of total unem-
ployment;
(2) the terms and conditions of the State law
which apply to claims for regular compensation and
to the payment thereof shall apply to claims for tem-
porary extended unemployment compensation and
the payment thereof, except—
(A) that an individual shall not be eligible
for temporary extended unemployment com-
pensation under this title unless, in the base pe-
riod with respect to which the individual ex-
hausted all rights to regular compensation
under the State law, the individual had 20
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weeks of full-time insured employment or the
equivalent in insured wages, as determined
under the provisions of the State law imple-
menting section 202(a)(5) of the Federal-State
Extended Unemployment Compensation Act of
1970 (26 U.S.C. 3304 note); and
(B) where otherwise inconsistent with the
provisions of this title or with the regulations or
operating instructions of the Secretary promul-
gated to carry out this title; and
(3) the maximum amount of temporary ex-
tended unemployment compensation payable to any
individual for whom a temporary extended unem-
ployment compensation account is established under
section 703 shall not exceed the amount established
in such account for such individual.
(e) ELECTION
BY STATES.—Notwithstanding any
other provision of Federal law (and if State law permits),
the Governor of a State that is in an extended benefit pe-
riod may provide for the payment of temporary extended
unemployment compensation in lieu of extended com-
pensation to individuals who otherwise meet the require-
ments of this section. Such an election shall not require
a State to trigger off an extended benefit period.
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SEC. 703. TEMPORARY EXTENDED UNEMPLOYMENT COM-
PENSATION ACCOUNT.
(a) IN GENERAL.—Any agreement under this title
shall provide that the State will establish, for each eligible
individual who files an application for temporary extended
unemployment compensation, a temporary extended un-
employment compensation account with respect to such in-
dividual’s benefit year.
(b) AMOUNT IN ACCOUNT.—
(1) IN GENERAL.—The amount established in
an account under subsection (a) shall be equal to the
lesser of—
(A) 50 percent of the total amount of reg-
ular compensation (including dependents’ allow-
ances) payable to the individual during the indi-
vidual’s benefit year under such law, or
(B) 13 times the individual’s average week-
ly benefit amount for the benefit year.
(2) REDUCTION FOR EXTENDED BENEFITS.—
The amount in an account under paragraph (1)
shall be reduced (but not below zero) by the aggre-
gate amount of extended compensation (if any) re-
ceived by such individual relating to the same ben-
efit year under the Federal-State Extended Unem-
ployment Compensation Act of 1970 (26 U.S.C.
3304 note).
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(3) WEEKLY BENEFIT AMOUNT.—For purposes
of this subsection, an individual’s weekly benefit
amount for any week is the amount of regular com-
pensation (including dependents’ allowances) under
the State law payable to such individual for such
week for total unemployment.
SEC. 704. PAYMENTS TO STATES HAVING AGREEMENTS FOR
THE PAYMENT OF TEMPORARY EXTENDED
UNEMPLOYMENT COMPENSATION.
(a) GENERAL RULE.—There shall be paid to each
State that has entered into an agreement under this title
an amount equal to 100 percent of the temporary extended
unemployment compensation paid to individuals by the
State pursuant to such agreement.
(b) TREATMENT
OF REIMBURSABLE COMPENSA-
TION.—No payment shall be made to any State under this
section in respect of any compensation to the extent the
State is entitled to reimbursement in respect of such com-
pensation under the provisions of any Federal law other
than this title or chapter 85 of title 5, United States Code.
A State shall not be entitled to any reimbursement under
such chapter 85 in respect of any compensation to the ex-
tent the State is entitled to reimbursement under this title
in respect of such compensation.
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(c) DETERMINATION OF AMOUNT.—Sums payable to
any State by reason of such State having an agreement
under this title shall be payable, either in advance or by
way of reimbursement (as may be determined by the Sec-
retary), in such amounts as the Secretary estimates the
State will be entitled to receive under this title for each
calendar month, reduced or increased, as the case may be,
by any amount by which the Secretary finds that the Sec-
retary’s estimates for any prior calendar month were
greater or less than the amounts which should have been
paid to the State. Such estimates may be made on the
basis of such statistical, sampling, or other method as may
be agreed upon by the Secretary and the State agency of
the State involved.
SEC. 705. FINANCING PROVISIONS.
(a) IN GENERAL.—Funds in the extended unemploy-
ment compensation account (as established by section
905(a) of the Social Security Act (42 U.S.C. 1105(a)) of
the Unemployment Trust Fund (as established by section
904(a) of such Act (42 U.S.C. 1104(a)) shall be used for
the making of payments to States having agreements en-
tered into under this title.
(b) CERTIFICATION.—The Secretary shall from time
to time certify to the Secretary of the Treasury for pay-
ment to each State the sums payable to such State under
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this title. The Secretary of the Treasury, prior to audit
or settlement by the General Accounting Office, shall
make payments to the State in accordance with such cer-
tification, by transfers from the extended unemployment
compensation account (as so established) to the account
of such State in the Unemployment Trust Fund (as so
established).
(c) ASSISTANCE
TO STATES.—There are appro-
priated out of the employment security administration ac-
count (as established by section 901(a) of the Social Secu-
rity Act (42 U.S.C. 1101(a)) of the Unemployment Trust
Fund, without fiscal year limitation, such funds as may
be necessary for purposes of assisting States (as provided
in title III of the Social Security Act (42 U.S.C. 501 et
seq.)) in meeting the costs of administration of agree-
ments under this title.
(d) APPROPRIATIONS
FOR CERTAIN PAYMENTS.—
There are appropriated from the general fund of the
Treasury, without fiscal year limitation, to the extended
unemployment compensation account (as so established)
of the Unemployment Trust Fund (as so established) such
sums as the Secretary estimates to be necessary to make
the payments under this section in respect of—
(1) compensation payable under chapter 85 of
title 5, United States Code; and
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(2) compensation payable on the basis of serv-
ices to which section 3309(a)(1) of the Internal Rev-
enue Code of 1986 applies.
Amounts appropriated pursuant to the preceding sentence
shall not be required to be repaid.
SEC. 706. FRAUD AND OVERPAYMENTS.
(a) IN GENERAL.—If an individual knowingly has
made, or caused to be made by another, a false statement
or representation of a material fact, or knowingly has
failed, or caused another to fail, to disclose a material fact,
and as a result of such false statement or representation
or of such nondisclosure such individual has received an
amount of temporary extended unemployment compensa-
tion under this title to which he was not entitled, such
individual—
(1) shall be ineligible for further temporary ex-
tended unemployment compensation under this title
in accordance with the provisions of the applicable
State unemployment compensation law relating to
fraud in connection with a claim for unemployment
compensation; and
(2) shall be subject to prosecution under section
1001 of title 18, United States Code.
(b) REPAYMENT.—In the case of individuals who
have received amounts of temporary extended unemploy-
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ment compensation under this title to which they were not
entitled, the State shall require such individuals to repay
the amounts of such temporary extended unemployment
compensation to the State agency, except that the State
agency may waive such repayment if it determines that—
(1) the payment of such temporary extended
unemployment compensation was without fault on
the part of any such individual; and
(2) such repayment would be contrary to equity
and good conscience.
(c) RECOVERY BY STATE AGENCY.—
(1) IN GENERAL.—The State agency may re-
cover the amount to be repaid, or any part thereof,
by deductions from any temporary extended unem-
ployment compensation payable to such individual
under this title or from any unemployment com-
pensation payable to such individual under any Fed-
eral unemployment compensation law administered
by the State agency or under any other Federal law
administered by the State agency which provides for
the payment of any assistance or allowance with re-
spect to any week of unemployment, during the 3-
year period after the date such individuals received
the payment of the temporary extended unemploy-
ment compensation to which they were not entitled,
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except that no single deduction may exceed 50 per-
cent of the weekly benefit amount from which such
deduction is made.
(2) OPPORTUNITY FOR HEARING.—No repay-
ment shall be required, and no deduction shall be
made, until a determination has been made, notice
thereof and an opportunity for a fair hearing has
been given to the individual, and the determination
has become final.
(d) REVIEW.—Any determination by a State agency
under this section shall be subject to review in the same
manner and to the same extent as determinations under
the State unemployment compensation law, and only in
that manner and to that extent.
SEC. 707. DEFINITIONS.
In this title, the terms ‘‘compensation’’, ‘‘regular
compensation’’, ‘‘extended compensation’’, ‘‘additional
compensation’’, ‘‘benefit year’’, ‘‘base period’’, ‘‘State’’,
‘‘State agency’’, ‘‘State law’’, and ‘‘week’’ have the respec-
tive meanings given such terms under section 205 of the
Federal-State Extended Unemployment Compensation Act
of 1970 (26 U.S.C. 3304 note).
SEC. 708. APPLICABILITY.
An agreement entered into under this title shall apply
to weeks of unemployment—
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(1) beginning after the date on which such
agreement is entered into; and
(2) ending before January 1, 2003.
SEC. 709. SPECIAL REED ACT TRANSFER IN FISCAL YEAR
2002.
(a) REPEAL OF CERTAIN PROVISIONS ADDED BY
THE BALANCED BUDGET ACT OF 1997.—
(1) IN GENERAL.—The following provisions of
section 903 of the Social Security Act (42 U.S.C.
1103) are repealed:
(A) Paragraph (3) of subsection (a).
(B) The last sentence of subsection (c)(2).
(2) SAVINGS PROVISION.—Any amounts trans-
ferred before the date of enactment of this Act
under the provision repealed by paragraph (1)(A)
shall remain subject to section 903 of the Social Se-
curity Act, as last in effect before such date of en-
actment.
(b) SPECIAL TRANSFER IN FISCAL YEAR 2002.—
Section 903 of the Social Security Act is amended by add-
ing at the end the following:
‘‘Special Transfer in Fiscal Year 2002
‘‘(d)(1) The Secretary of the Treasury shall transfer
(as of the date determined under paragraph (5)) from the
Federal unemployment account to the account of each
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State in the Unemployment Trust Fund the amount deter-
mined with respect to such State under paragraph (2).
‘‘(2) The amount to be transferred under this sub-
section to a State account shall (as determined by the Sec-
retary of Labor and certified by such Secretary to the Sec-
retary of the Treasury) be equal to—
‘‘(A) the amount which would have been re-
quired to have been transferred under this section to
such account at the beginning of fiscal year 2002
if—
‘‘(i) section 709(a)(1) of the Temporary
Extended Unemployment Compensation Act of
2001 had been enacted before the close of fiscal
year 2001, and
‘‘(ii) section 5402 of Public Law 105–33
(relating to increase in Federal unemployment
account ceiling) had not been enacted,
minus
‘‘(B) the amount which was in fact transferred
under this section to such account at the beginning
of fiscal year 2002.
‘‘(3)(A) Except as provided in paragraph (4),
amounts transferred to a State account pursuant to this
subsection may be used only in the payment of cash
benefits—
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‘‘(i) to individuals with respect to their unem-
ployment, and
‘‘(ii) which are allowable under subparagraph
(B) or (C).
‘‘(B)(i) At the option of the State, cash benefits
under this paragraph may include amounts which shall be
payable as—
‘‘(I) regular compensation, or
‘‘(II) additional compensation, upon the exhaus-
tion of any temporary extended unemployment com-
pensation (if such State has entered into an agree-
ment under the Temporary Extended Unemployment
Compensation Act of 2001), for individuals eligible
for regular compensation under the unemployment
compensation law of such State.
‘‘(ii) Any additional compensation under clause (i)
may not be taken into account for purposes of any deter-
mination relating to the amount of any extended com-
pensation for which an individual might be eligible.
‘‘(C)(i) At the option of the State, cash benefits
under this paragraph may include amounts which shall be
payable to 1 or more categories of individuals not other-
wise eligible for regular compensation under the unem-
ployment compensation law of such State, including those
described in clause (iii).
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‘‘(ii) The benefits paid under this subparagraph to
any individual may not, for any period of unemployment,
exceed the maximum amount of regular compensation au-
thorized under the unemployment compensation law of
such State for that same period, plus any additional com-
pensation (described in subparagraph (B)(i)) which could
have been paid with respect to that amount.
‘‘(iii) The categories of individuals described in this
clause include the following:
‘‘(I) Individuals who are seeking, or available
for, only part-time (and not full-time) work.
‘‘(II) Individuals who would be eligible for reg-
ular compensation under the unemployment com-
pensation law of such State under an alternative
base period.
‘‘(D) Amounts transferred to a State account under
this subsection may be used in the payment of cash bene-
fits to individuals only for weeks of unemployment begin-
ning after the date of enactment of this subsection.
‘‘(4) Amounts transferred to a State account under
this subsection may be used for the administration of its
unemployment compensation law and public employment
offices (including in connection with benefits described in
paragraph (3) and any recipients thereof), subject to the
same conditions as set forth in subsection (c)(2) (exclud-
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ing subparagraph (B) thereof, and deeming the reference
to ‘subsections (a) and (b)’ in subparagraph (D) thereof
to include this subsection).
‘‘(5) Transfers under this subsection shall be made
by December 31, 2001, unless this paragraph is not en-
acted until after that date, in which case such transfers
shall be made within 10 days after the date of enactment
of this paragraph.’’
(c) LIMITATIONS ON TRANSFERS.—Section 903(b) of
the Social Security Act shall apply to transfers under sec-
tion 903(d) of such Act (as amended by this section). For
purposes of the preceding sentence, such section 903(b)
shall be deemed to be amended as follows:
(1) By substituting ‘‘the transfer date described
in subsection (d)(5)’’ for ‘‘October 1 of any fiscal
year’’.
(2) By substituting ‘‘remain in the Federal un-
employment account’’ for ‘‘be transferred to the
Federal unemployment account as of the beginning
of such October 1’’.
(3) By substituting ‘‘fiscal year 2002 (after the
transfer date described in subsection (d)(5))’’ for
‘‘the fiscal year beginning on such October 1’’.
(4) By substituting ‘‘under subsection (d)’’ for
‘‘as of October 1 of such fiscal year’’.
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(5) By substituting ‘‘(as of the close of fiscal
year 2002)’’ for ‘‘(as of the close of such fiscal
year)’’.
(d) 
TECHNICAL
AMENDMENTS.—(1) 
Sections
3304(a)(4)(B) and 3306(f)(2) of the Internal Revenue
Code of 1986 are amended by inserting ‘‘or 903(d)(4)’’
before ‘‘of the Social Security Act’’.
(2) Section 303(a)(5) of the Social Security Act is
amended in the second proviso by inserting ‘‘or 903(d)(4)’’
after ‘‘903(c)(2)’’.
(e) REGULATIONS.—The Secretary of Labor may
prescribe any operating instructions or regulations nec-
essary to carry out this section and the amendments made
by this section.
TITLE VIII—DISPLACED WORK-
ER 
HEALTH 
INSURANCE
CREDIT
SEC. 801. DISPLACED WORKER HEALTH INSURANCE CRED-
IT.
(a) IN GENERAL.—Subchapter B of chapter 65 is
amended by inserting after section 6428 the following new
section:
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‘‘SEC. 6429. DISPLACED WORKER HEALTH INSURANCE
CREDIT.
‘‘(a) IN GENERAL.—In the case of an individual,
there shall be allowed as a credit against the tax imposed
by subtitle A an amount equal to 60 percent of the amount
paid during the taxable year for coverage for the taxpayer,
the taxpayer’s spouse, and dependents of the taxpayer
under qualified health insurance during eligible coverage
months.
‘‘(b) ONLY 12 ELIGIBLE COVERAGE MONTHS.—The
number of eligible coverage months taken into account
under subsection (a) for all taxable years shall not exceed
12.
‘‘(c) ELIGIBLE COVERAGE MONTH.—For purposes of
this section—
‘‘(1) IN GENERAL.—The term ‘eligible coverage
month’ means any month during 2002 or 2003 if,
as of the first day of such month—
‘‘(A) the taxpayer is unemployed,
‘‘(B) the taxpayer is covered by qualified
health insurance,
‘‘(C) the premium for coverage under such
insurance for such month is paid by the tax-
payer, and
‘‘(D) the taxpayer does not have other
specified coverage.
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‘‘(2) SPECIAL RULES.—
‘‘(A) TREATMENT
OF
FIRST
MONTH
OF
EMPLOYMENT.—The taxpayer shall be treated
as meeting the requirement of paragraph (1)(A)
for the first month beginning on or after the
date that the taxpayer ceases to be unemployed
by reason of beginning work for an employer.
‘‘(B) INITIAL
CLAIM
MUST
BE
AFTER
MARCH
15, 2001.—The taxpayer shall not be
treated as meeting the requirement of para-
graph (1)(A) with respect to any unemployment
if the initial claim for regular compensation for
such unemployment is filed on or before March
15, 2001.
‘‘(C) JOINT RETURNS.—In the case of a
joint return, the requirements of paragraph (1)
shall be treated as met if at least 1 spouse sat-
isfies such requirements.
‘‘(3) OTHER SPECIFIED COVERAGE.—For pur-
poses of this subsection, an individual has other
specified coverage for any month if, as of the first
day of such month—
‘‘(A) SUBSIDIZED COVERAGE.—
‘‘(i) IN GENERAL.—Such individual is
covered under any qualified health insur-
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ance under which at least 50 percent of
the cost of coverage (determined under sec-
tion 4980B) is paid or incurred by an em-
ployer (or former employer) of the tax-
payer or the taxpayer’s spouse.
‘‘(ii) 
TREATMENT
OF
CAFETERIA
PLANS
AND
FLEXIBLE
SPENDING
AC-
COUNTS.—For purposes of clause (i), the
cost of benefits—
‘‘(I) which are chosen under a
cafeteria plan (as defined in section
125(d)), or provided under a flexible
spending or similar arrangement, of
such an employer, and
‘‘(II) which are not includible in
gross income under section 106,
shall be treated as borne by such employer.
‘‘(B) COVERAGE UNDER MEDICARE, MED-
ICAID, OR SCHIP.—Such individual—
‘‘(i) is entitled to benefits under part
A of title XVIII of the Social Security Act
or is enrolled under part B of such title, or
‘‘(ii) is enrolled in the program under
title XIX or XXI of such Act.
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‘‘(C) CERTAIN
OTHER
COVERAGE.—Such
individual—
‘‘(i) is enrolled in a health benefits
plan under chapter 89 of title 5, United
States Code, or
‘‘(ii) is entitled to receive benefits
under chapter 55 of title 10, United States
Code.
‘‘(4) DETERMINATION
OF
UNEMPLOYMENT.—
For purposes of paragraph (1), an individual shall
be treated as unemployed during any period—
‘‘(A) for which such individual is receiving
unemployment compensation (as defined in sec-
tion 85(b)), or
‘‘(B) for which such individual is certified
by a State agency (or by any other entity des-
ignated by the Secretary) as otherwise being en-
titled to receive unemployment compensation
(as so defined) but for—
‘‘(i) the termination of the period dur-
ing which such compensation was payable,
or
‘‘(ii) an exhaustion of such individ-
ual’s rights to such compensation.
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‘‘(d) QUALIFIED HEALTH INSURANCE.—For pur-
poses of this section, the term ‘qualified health insurance’
means insurance which constitutes medical care; except
that such term shall not include any insurance if substan-
tially all of its coverage is of excepted benefits described
in section 9832(c).
‘‘(e) COORDINATION WITH ADVANCE PAYMENTS OF
CREDIT.—
‘‘(1) RECAPTURE
OF
EXCESS
ADVANCE
PAY-
MENTS.—If any payment is made by the Secretary
under section 7527 during any calendar year to a
provider of qualified health insurance for an indi-
vidual, then the tax imposed by this chapter for the
individual’s last taxable year beginning in such cal-
endar year shall be increased by the aggregate
amount of such payments.
‘‘(2) 
RECONCILIATION
OF
PAYMENTS
AD-
VANCED AND CREDIT ALLOWED.—Any increase in
tax under paragraph (1) shall not be treated as tax
imposed by this chapter for purposes of determining
the amount of any credit (other than the credit al-
lowed by subsection (a)) allowable under part IV of
subchapter A of chapter 1.
‘‘(f) SPECIAL RULES.—
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‘‘(1) COORDINATION
WITH
OTHER
DEDUC-
TIONS.—Amounts taken into account under sub-
section (a) shall not be taken into account in deter-
mining any deduction allowed under section 162(l)
or 213.
‘‘(2) MSA DISTRIBUTIONS.—Amounts distrib-
uted from an Archer MSA (as defined in section
220(d)) shall not be taken into account under sub-
section (a).
‘‘(3) DENIAL OF CREDIT TO DEPENDENTS.—No
credit shall be allowed under this section to any indi-
vidual with respect to whom a deduction under sec-
tion 151 is allowable to another taxpayer for a tax-
able year beginning in the calendar year in which
such individual’s taxable year begins.
‘‘(4) CREDIT TREATED AS REFUNDABLE CRED-
IT.—For purposes of this title, the credit allowed
under this section shall be treated as a credit allow-
able under subpart C of part IV of subchapter A of
chapter 1.
‘‘(5) REGULATIONS.—The Secretary may pre-
scribe such regulations and other guidance as may
be necessary or appropriate to carry out this section
and section 7527.’’.
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(b) INCREASED ACCESS TO HEALTH INSURANCE FOR
INDIVIDUALS ELIGIBLE
FOR TAX CREDIT.—Notwith-
standing any other provision of law, in applying section
2741 of the Public Health Service Act (42 U.S.C. 300gg–
41)) and any alternative State mechanism under section
2744 of such Act (42 U.S.C.300gg–44)), in determining
who is an eligible individual (as defined in section 2741(b)
of such Act) in the case of an individual who may be cov-
ered by insurance for which credit is allowable under sec-
tion 6429 of the Internal Revenue Code of 1986 for an
eligible coverage month, if the individual seeks to obtain
health insurance coverage under such section during an
eligible coverage month under such section—
(1) paragraph (1) of such section 2741(b) shall
be applied as if any reference to 18 months is
deemed a reference to 12 months, and
(2) paragraphs (4) and (5) of such section
2741(b) shall not apply.
(c) INFORMATION REPORTING.—
(1) IN GENERAL.—Subpart B of part III of
subchapter A of chapter 61 (relating to information
concerning transactions with other persons) is
amended by inserting after section 6050S the fol-
lowing new section:
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‘‘SEC. 6050T. RETURNS RELATING TO DISPLACED WORKER
HEALTH INSURANCE CREDIT.
‘‘(a) 
REQUIREMENT
OF
REPORTING.—Every
person—
‘‘(1) who, in connection with a trade or busi-
ness conducted by such person, receives payments
during any calendar year from any individual for
coverage of such individual or any other individual
under qualified health insurance (as defined in sec-
tion 6429(d)), and
‘‘(2) who claims a reimbursement for an ad-
vance credit amount,
shall, at such time as the Secretary may prescribe, make
the return described in subsection (b) with respect to each
individual from whom such payments were received or for
whom such a reimbursement is claimed.
‘‘(b) FORM AND MANNER OF RETURNS.—A return
is described in this subsection if such return—
‘‘(1) is in such form as the Secretary may pre-
scribe, and
‘‘(2) contains—
‘‘(A) the name, address, and TIN of each
individual referred to in subsection (a),
‘‘(B) the aggregate of the advance credit
amounts provided to such individual and for
which reimbursement is claimed,
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‘‘(C) the number of months for which such
advance credit amounts are so provided, and
‘‘(D) such other information as the Sec-
retary may prescribe.
‘‘(c) STATEMENTS TO BE FURNISHED TO INDIVID-
UALS WITH RESPECT TO WHOM INFORMATION IS RE-
QUIRED.—Every person required to make a return under
subsection (a) shall furnish to each individual whose name
is required to be set forth in such return a written state-
ment showing—
‘‘(1) the name and address of the person re-
quired to make such return and the phone number
of the information contact for such person, and
‘‘(2) the information required to be shown on
the return with respect to such individual.
The written statement required under the preceding sen-
tence shall be furnished on or before January 31 of the
year following the calendar year for which the return
under subsection (a) is required to be made.
‘‘(d) ADVANCE CREDIT AMOUNT.—For purposes of
this section, the term ‘advance credit amount’ means an
amount for which the person can claim a reimbursement
pursuant to a program established by the Secretary under
section 7527.’’
(2) ASSESSABLE PENALTIES.—
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(A) 
Subparagraph 
(B) 
of 
section
6724(d)(1) (relating to definitions) is amended
by redesignating clauses (xi) through (xvii) as
clauses (xii) through (xviii), respectively, and by
inserting after clause (x) the following new
clause:
‘‘(xi) section 6050T (relating to re-
turns relating to displaced worker health
insurance credit),’’.
(B) Paragraph (2) of section 6724(d) is
amended by striking ‘‘or’’ at the end of sub-
paragraph (Z), by striking the period at the end
of subparagraph (AA) and inserting ‘‘, or’’, and
by adding after subparagraph (AA) the fol-
lowing new subparagraph:
‘‘(BB) section 6050T (relating to returns
relating to displaced worker health insurance
credit).’’returns relating to payments for quali-
fied health insurance).’’
(3) CLERICAL AMENDMENT.—The table of sec-
tions for subpart B of part III of subchapter A of
chapter 61 is amended by inserting after the item
relating to section 6050S the following new item:
‘‘Sec. 6050T. Returns relating to displaced worker health insur-
ance credit.’’
(d) CONFORMING AMENDMENTS.—
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(1) Paragraph (2) of section 1324(b) of title
31, United States Code, is amended by inserting be-
fore the period ‘‘, or from section 6429 of such
Code’’.
(2) The table of sections for subchapter B of
chapter 65 is amended by adding at the end the fol-
lowing new item:
‘‘Sec. 6429. Displaced worker health insurance credit.’’
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
SEC. 802. ADVANCE PAYMENT OF DISPLACED WORKER
HEALTH INSURANCE CREDIT.
(a) IN GENERAL.—Chapter 77 (relating to miscella-
neous provisions) is amended by adding at the end the
following new section:
‘‘SEC. 7527. ADVANCE PAYMENT OF DISPLACED WORKER
HEALTH INSURANCE CREDIT.
‘‘(a) GENERAL RULE.—The Secretary shall establish
a program for making payments on behalf of eligible indi-
viduals to providers of health insurance for such individ-
uals.
‘‘(b) ELIGIBLE INDIVIDUAL.—For purposes of this
section, the term ‘eligible individual’ means any individual
for whom a qualified health insurance credit eligibility cer-
tificate is in effect.
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‘‘(c) QUALIFIED HEALTH INSURANCE CREDIT ELIGI-
BILITY CERTIFICATE.—For purposes of this section, a
qualified health insurance credit eligibility certificate is a
statement certified by a State agency (or by any other en-
tity designated by the Secretary) which—
‘‘(1) certifies that the individual was unem-
ployed (within the meaning of section 6429) as of
the first day of any month, and
‘‘(2) provides such other information as the
Secretary may require for purposes of this section.’’
(c) CLERICAL AMENDMENT.—The table of sections
for chapter 77 is amended by adding at the end the fol-
lowing new item:
‘‘Sec. 7527. Advance payment of displaced worker health insur-
ance credit.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
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TITLE 
IX—EMPLOYMENT 
AND
TRAINING ASSISTANCE AND
TEMPORARY HEALTH CARE
COVERAGE ASSISTANCE
SEC. 901. EMPLOYMENT AND TRAINING ASSISTANCE AND
TEMPORARY HEALTH CARE COVERAGE AS-
SISTANCE.
(a) IN GENERAL.—Section 173(a) of the Workforce
Investment Act of 1998 (29 U.S.C. 2918(a)) is
amended—
(1) in paragraph (2), by striking ‘‘and’’ at the
end;
(2) in paragraph (3), by striking the period at
the end and inserting ‘‘; and’’; and
(3) by adding at the end the following:
‘‘(4) to the Governor of any State or outlying
area who applies for assistance under subsection (f)
to provide employment and training assistance and
temporary health care coverage assistance to work-
ers affected by major economic dislocations, such as
plant closures, mass layoffs, or multiple layoffs, in-
cluding those dislocations caused by the terrorist at-
tacks of September 11, 2001.’’.
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(b) REQUIREMENTS.—Section 173 of the Workforce
Investment Act of 1998 (29 U.S.C. 2918) is amended by
adding at the end the following:
‘‘(f) ADDITIONAL RELIEF
FOR MAJOR ECONOMIC
DISLOCATIONS.—
‘‘(1) GRANT RECIPIENT ELIGIBILITY.—
‘‘(A) IN GENERAL.—To be eligible to re-
ceive a grant under subsection (a)(4), a Gov-
ernor shall submit an application, for assistance
described in subparagraph (B), to the Secretary
at such time, in such manner, and containing
such information as the Secretary may require.
‘‘(B) TYPES OF ASSISTANCE.—
‘‘(i) IN
GENERAL.—Assistance de-
scribed in this subparagraph is—
‘‘(I) employment and training as-
sistance, including employment and
training activities described in section
134; and
‘‘(II) temporary health care cov-
erage assistance described in para-
graph (4).
‘‘(ii) MINIMUM ALLOCATION TO TEM-
PORARY HEALTH CARE COVERAGE ASSIST-
ANCE.—Not less than 30 percent of the
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cost of assistance requested in any applica-
tion submitted under this subsection shall
consist of the cost for temporary health
care coverage assistance described in para-
graph (4).
‘‘(iii) ENCOURAGEMENT OF CERTAIN
TYPES OF HEALTH CARE COVERAGE.—In
publishing requirements for applications
under this subsection, the Secretary shall
encourage the use of private health cov-
erage alternatives.
‘‘(C) MINIMUM AWARD REQUIREMENT FOR
ELIGIBLE STATES AND OUTLYING AREAS.—
‘‘(i) REQUIREMENTS.—In any case in
which the requirements of this section are
met in connection with one or more appli-
cations of the Governor of any State or
outlying area for assistance described in
subparagraph (B), the Governor—
‘‘(I) shall be awarded at least 1
grant under subsection (a)(4) pursu-
ant to such applications, and
‘‘(II) except as provided in clause
(ii), shall be awarded not less than
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$5,000,000 in total grants awarded
under (a)(4).
‘‘(ii) EXCEPTION TO MINIMUM GRANT
REQUIREMENTS.—The 
Secretary 
may
award to a Governor a total amount less
than the minimum total amount specified
in clause (i)(II), as appropriate, if the
Governor—
‘‘(I) requests less than such min-
imum total amount, or
‘‘(II) fails to demonstrate to the
Secretary that there are a sufficient
number of eligible recipients to justify
the awarding of grants in such min-
imum total amount.
‘‘(2) STATE ADMINISTRATION.—The Governor
may designate one or more local workforce invest-
ment boards or other entities with the capability to
respond to the circumstances relating to the par-
ticular closure, layoff, or other dislocation to admin-
ister the grant under subsection (a)(4).
‘‘(3) PARTICIPANT ELIGIBILITY.—An individual
shall be eligible to receive assistance described in
paragraph (1)(B) under a grant awarded under sub-
section (a)(4) if such individual is a dislocated work-
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er and the Governor has certified that a major eco-
nomic dislocation, such as a plant closure, mass lay-
off, or multiple layoff, including a dislocation caused
by the terrorist attacks of September 11, 2001, con-
tributed importantly to the dislocation.
‘‘(4) TEMPORARY HEALTH CARE COVERAGE AS-
SISTANCE.—
‘‘(A) IN
GENERAL.—Temporary health
care coverage assistance described in this para-
graph consists of health care coverage premium
assistance provided to qualified individuals
under this paragraph with respect to premiums
for coverage for themselves, for their spouses,
for their dependents, or for any combination
thereof, other than premiums for excluded
health insurance coverage.
‘‘(B) QUALIFIED INDIVIDUALS.—For pur-
poses of this paragraph—
‘‘(i) IN GENERAL.—Subject to clause
(ii), a qualified individual is an individual
who—
‘‘(I) is a dislocated worker re-
ferred to in paragraph (3) with re-
spect to whom the Governor has made
the certification regarding the disloca-
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tion as required under such para-
graph, and
‘‘(II) is receiving or has received
employment and training assistance
as 
described 
in 
paragraph
(1)(B)(i)(I).
‘‘(ii) 
LIMITATION.—An 
individual
shall not be treated as a qualified indi-
vidual if—
‘‘(I) such individual is eligible for
coverage under the program under
title XIX of the Social Security Act
applicable in the State or outlying
area, or
‘‘(II) such individual is eligible
for coverage under the program under
title XXI of such Act applicable in the
State or outlying area,
unless such eligibility is effective solely in
connection with eligibility for health care
coverage premium assistance under a pro-
gram established by the Governor in con-
nection with temporary health care cov-
erage assistance received under this sub-
section.
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‘‘(iii) CONSTRUCTION.—
‘‘(I) 
PERMITTING
COVERAGE
THROUGH ENROLLMENT IN MEDICAID
OR SCHIP.—Nothing in this subsection
shall be construed as preventing a
State from using funds made available
by reason of subsection (a)(4) to pro-
vide health care coverage through en-
rollment in the program under title
XIX (relating to medicaid) or in the
program under title XXI (relating to
SCHIP) of the Social Security Act,
but only in the case of individuals who
are not otherwise eligible for coverage
under either such program.
‘‘(II) NOT
AFFECTING
ELIGI-
BILITY
FOR
ASSISTANCE.—An indi-
vidual shall not be treated for pur-
poses of this subsection as being eligi-
ble for coverage under either such
program (and thereby not eligible for
assistance 
under 
this 
subsection)
merely on the basis that the State
provides assistance under this sub-
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section through coverage under either
such program.
‘‘(C) LIMITATION
ON
ENTITLEMENT.—
Nothing in this subsection shall be construed as
establishing any entitlement of qualified individ-
uals to premium assistance under this sub-
section.
‘‘(D) 
CONCURRENCE
AND
CONSULTA-
TION.—In connection with any temporary
health care coverage assistance provided pursu-
ant to this paragraph—
‘‘(i) if the Secretary determines that
health care coverage premium assistance
provided through title XIX or XXI of the
Social Security Act is a substantial compo-
nent of the assistance provided, the Sec-
retary shall act in concurrence with the
Secretary of Health and Human Services,
and
‘‘(ii) in any other case, the Secretary
shall consult with the Secretary of Health
and Human Services to the extent that
such assistance affects programs adminis-
tered by or under the Secretary of Health
and Human Services.
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‘‘(E) USE OF FUNDS.—Temporary health
care coverage assistance provided pursuant to
this subsection shall supplement and may not
supplant any other State or local funds used to
provide health care coverage and may not be in-
cluded in determining the amount of non-Fed-
eral contributions required under any program.
‘‘(F) DEFINITIONS.—For purposes of this
paragraph—
‘‘(i) EXCLUDED HEALTH CARE COV-
ERAGE.—The term ‘excluded health care
coverage’ means coverage under—
‘‘(I) title XVIII of the Social Se-
curity Act,
‘‘(II) chapter 55 of title 10,
United States Code,
‘‘(III) chapter 17 of title 38,
United States Code,
‘‘(IV) chapter 89 of title 5,
United States Code (other than cov-
erage which is comparable to continu-
ation coverage under section 4980B of
the Internal Revenue Code of 1986),
or
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‘‘(V) the Indian Health Care Im-
provement Act.
Such term also includes coverage under a
qualified long-term care insurance contract
and excepted benefits described in section
733(c) of the Employee Retirement Income
Security Act of 1974.
‘‘(ii) PREMIUM.—The term ‘premium’
means, in connection with health care cov-
erage, the premium which would (but for
this section) be charged for the cost of cov-
erage.
‘‘(5) APPROPRIATIONS.—
‘‘(A) IN GENERAL.—There is hereby ap-
propriated, from any amounts in the Treasury
not otherwise appropriated, $4,000,000,000 for
the period consisting of fiscal years 2002, 2003,
and 2004 for the award of grants under sub-
section (a)(4) in accordance with this section.
‘‘(B) 
AVAILABILITY.—Amounts 
appro-
priated pursuant to subparagraph (A) for each
fiscal year—
‘‘(i) are in addition to amounts made
available under section 132(a)(2)(A) or
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any other provision of law to carry out this
section; and
‘‘(ii) 
notwithstanding 
section
189(g)(1), shall remain available for obli-
gation by the Secretary from the date of
the enactment of this subsection through
each succeeding fiscal year, except that,
notwithstanding 
section 
189(g)(2), 
no
funds are hereby available for expenditure
after June 30, 2004.’’.
TITLE X—TEMPORARY STATE
HEALTH CARE ASSISTANCE
SEC. 1001. TEMPORARY STATE HEALTH CARE ASSISTANCE.
(a) IN GENERAL.—Title XXI of the Social Security
Act is amended by adding at the end the following new
section:
‘‘SEC. 2111. TEMPORARY STATE HEALTH CARE ASSISTANCE.
‘‘(a) IN GENERAL.—For the purpose of providing al-
lotments to States under this section, there are hereby ap-
propriated, out of any funds in the Treasury not otherwise
appropriated, $4,599,667,448. Such funds shall be avail-
able for expenditure by the State through the end of 2002.
This section constitutes budget authority in advance of ap-
propriations Acts and represents the obligation of the Fed-
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eral Government to provide for the payment to States of
amounts provided under this section.
‘‘(b) ALLOTMENT.—Funds appropriated under sub-
section (a) shall be allotted by the Secretary among the
States in accordance with the following table:
‘‘State
Allotment (in
dollars)
Alabama
50,746,770
Alaska
31,934,026
Arizona
68,594,677
Arkansas
38,203,601
California
482,591,746
Colorado
37,469,775
Connecticut
60,039,005
Delaware
10,355,807
District of Columbia
18,321,834
Florida
164,619,369
Georgia
118,754,564
Hawaii
12,827,163
Idaho
13,031,700
Illinois
175,505,956
Indiana
66,067,368
Iowa
31,521,201
Kansas
27,288,967
Kentucky
82,759,133
Louisiana
83,907,301
Maine
22,650,838
Maryland
60,347,066
Massachusetts
121,971,140
Michigan
156,479,213
Minnesota
113,966,453
Mississippi
55,335,225
Missouri
74,675,436
Montana
10,224,652
Nebraska
31,582,786
Nevada
14,695,973
New Hampshire
15,482,962
New Jersey
115,880,093
New Mexico
39,204,714
New York
573,999,663
North Carolina
189,333,723
North Dakota
8,915,675
Ohio
166,006,936
Oklahoma
48,914,626
Oregon
71,160,353
Pennsylvania
227,183,255
Rhode Island
45,001,680
South Carolina
94,789,740
South Dakota
19,951,788
Tennessee
102,845,128
Texas
289,526,532
Utah
30,860,915
Vermont
10,291,090
Virginia
67,232,217
Washington
110,377,264
West Virginia
31,120,804
Wisconsin
93,089,086
Wyoming
12,030,459
‘‘(c) USE OF FUNDS.—
‘‘(1) IN GENERAL.—Funds appropriated under
this section may be used by a State only to provide
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health care items and services (other than types of
items and services for which Federal financial par-
ticipation is prohibited under this title or title XIX).
‘‘(2) LIMITATION.—Funds so appropriated may
not be used to match other Federal expenditures or
in any other manner that results in the expenditure
of Federal funds in excess of the amounts provided
under this section.
‘‘(d) PAYMENT TO STATES.—Funds made available
under this section shall be paid to the States in a form
and manner and time specified by the Secretary, based
upon the submission of such information as the Secretary
may require. There is no requirement for the expenditure
of any State funds in order to qualify for receipt of funds
under this section. The previous sections of this title shall
not apply with respect to funds provided under this sec-
tion.
‘‘(e) DEFINITION.—For purposes of this section, the
term ‘State’ means the 50 States and the District of Co-
lumbia.’’.
(b) REPEAL.—Effective as of January 1, 2003, sec-
tion 2111 of the Social Security Act, as inserted by sub-
section (a), is repealed.
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TITLE 
XI—SOCIAL 
SECURITY
HELD 
HARMLESS; 
BUDG-
ETARY TREATMENT OF ACT
SEC. 1101. NO IMPACT ON SOCIAL SECURITY TRUST FUNDS.
(a) IN GENERAL.—Nothing in this Act (or an amend-
ment made by this Act) shall be construed to alter or
amend title II of the Social Security Act (or any regulation
promulgated under that Act).
(b) TRANSFERS.—
(1) ESTIMATE OF SECRETARY.—The Secretary
of the Treasury shall annually estimate the impact
that the enactment of this Act has on the income
and balances of the trust funds established under
section 201 of the Social Security Act (42 U.S.C.
401).
(2) TRANSFER
OF
FUNDS.—If, under para-
graph (1), the Secretary of the Treasury estimates
that the enactment of this Act has a negative impact
on the income and balances of the trust funds estab-
lished under section 201 of the Social Security Act
(42 U.S.C. 401), the Secretary shall transfer, not
less frequently than quarterly, from the general reve-
nues of the Federal Government an amount suffi-
cient so as to ensure that the income and balances