123
mination by the Secretary that the sum of all designations
under subsection (a) for taxable years beginning in the
second and third calendar years preceding the calendar
year is less than $5,000,000.’’.
(B) CLERICAL AMENDMENT.—The table of
parts for subchapter A of chapter 61 of such
Code is amended by adding at the end the fol-
lowing new item:
‘‘Part IX. Designation of overpayments and contributions for the
National Fund for Health Research.’’.
(C) EFFECTIVE DATE.—The amendments
made by this paragraph shall apply to taxable
years beginning after December 31, 1994.
(c) EXPENDITURES FROM FUND.—
(1) IN GENERAL.—The Secretary of the Treas-
ury shall pay annually, within 30 days after the
President signs an appropriations Act for the De-
partments of Labor, Health and Human Services,
and Education and related agencies, or by the end
of the first quarter of the fiscal year, to the Sec-
retary of Health and Human Services on behalf of
the National Institutes of Health, an amount equal
to the amount in the National Fund for Health Re-
search at the time of such payment, to enable the
Secretary to carry out the purpose of section 404F
of the Public Health Service Act, less any adminis-
124
trative expenses which may be paid under paragraph
(3).
(2) PURPOSES
FOR
EXPENDITURES
FROM
FUND.—Part A of title IV of the Public Health
Service Act (42 U.S.C. 281 et seq.) is amended by
adding at the end the following new section:
‘‘SEC. 404F. EXPENDITURES FROM THE NATIONAL FUND
FOR HEALTH RESEARCH.
‘‘(a) IN GENERAL.—From amounts received for any
fiscal year from the National Fund for Health Research,
the Secretary shall distribute—
‘‘(1) 2 percent of such amounts during any fis-
cal year to the Office of the Director of the National
Institutes of Health to be allocated at the Director’s
discretion for the following activities:
‘‘(A) for carrying out the responsibilities of
the Office of the Director, National Institutes
of Health, including the Office of Research on
Women’s Health and the Office of Research on
Minority Health, the Office of the Alternative
Medicine and the Office of Rare Diseases Re-
search; and
‘‘(B) for construction and acquisition of
equipment for or facilities of or used by the Na-
tional Institutes of Health;
125
‘‘(2) 2 percent of such amounts for transfer to
the National Center for Research Resources to carry
out section 1502 of the National Institutes of
Health Revitalization Act of 1993 concerning Bio-
medical and Behavioral Research Facilities;
‘‘(3) 1 percent of such amounts during any fis-
cal year for carrying out section 301 and part D of
title IV with respect to health information commu-
nications; and
‘‘(4) the remainder of such amounts during any
fiscal year to member institutes of the National In-
stitutes of Health and centers in the same propor-
tion to the total amount received under this section,
as the amount of annual appropriations under ap-
propriations Acts for each member institute and cen-
ter for the fiscal year bears to the total amount of
appropriations under appropriations Acts for all
member institutes and centers of the National Insti-
tutes of Health for the fiscal year.
‘‘(b) PLANS OF ALLOCATION.—The amounts trans-
ferred under subsection (a) shall be allocated by the Direc-
tor of NIH or the various directors of the institutes and
centers, as the case may be, pursuant to allocation plans
developed by the various advisory councils to such direc-
tors, after consultation with such directors.’’.
126
(3) ADMINISTRATIVE EXPENSES.—Amounts in
the National Fund for Health Research shall be
available to pay the administrative expenses of the
Department of the Treasury directly allocable to—
(A) modifying the individual income tax re-
turn forms to carry out section 6097 of the In-
ternal Revenue Code of 1986;
(B) carrying out this section with respect
to such Fund; and
(C) processing amounts received under this
section and transferring such amounts to such
Fund.
(4) TRIGGER
AND
RELEASE
OF
FUND
MON-
IES.—No expenditures shall be made pursuant to
section 4002(c) during any fiscal year in which the
annual amount appropriated for the National Insti-
tutes of Health is less than the amount so appro-
priated for the prior fiscal year.
(d) BUDGET ENFORCEMENT.—Amounts contained in
the National Fund for Health Research shall be excluded
from, and shall not be taken into account for purposes
of, any budget enforcement procedures under the Congres-
sional Budget Act of 1974 or the Balanced Budget Emer-
gency Deficit Control Act of 1985.
127
TITLE V—REVENUE PROVISIONS
SEC. 5000. AMENDMENT OF 1986 CODE.
Except as otherwise expressly provided, whenever in
this title an amendment or repeal is expressed in terms
of an amendment to, or repeal of, a section or other provi-
sion, the reference shall be considered to be made to a
section or other provision of the Internal Revenue Code
of 1986.
Subtitle A—Financing Provisions
SEC. 5001. INCREASE IN EXCISE TAXES ON TOBACCO
PRODUCTS.
(a) CIGARETTES.—Subsection (b) of section 5701 is
amended—
(1) by striking ‘‘$12 per thousand ($10 per
thousand on cigarettes removed during 1991 or
1992)’’ in paragraph (1) and inserting ‘‘$62 per
thousand’’, and
(2) by striking ‘‘$25.20 per thousand ($21 per
thousand on cigarettes removed during 1991 or
1992)’’ in paragraph (2) and inserting ‘‘$130.20 per
thousand’’.
(b) CIGARS.—Subsection (a) of section 5701 is
amended—
(1) by striking ‘‘$1.125 cents per thousand
(93.75 cents per thousand on cigars removed during
128
1991 or 1992)’’ in paragraph (1) and inserting
‘‘$51.13 per thousand’’, and
(2) by striking ‘‘equal to’’ and all that follows
in paragraph (2) and inserting ‘‘equal to 66 percent
of the price for which sold but not more than $155
per thousand.’’
(c) CIGARETTE PAPERS.—Subsection (c) of section
5701 is amended by striking ‘‘0.75 cent (0.625 cent on
cigarette papers removed during 1991 or 1992)’’ and in-
serting ‘‘3.88 cents’’.
(d) CIGARETTE TUBES.—Subsection (d) of section
5701 is amended by striking ‘‘1.5 cents (1.25 cents on
cigarette tubes removed during 1991 or 1992)’’ and in-
serting ‘‘7.76 cents’’.
(e) SMOKELESS TOBACCO.—Subsection (e) of section
5701 is amended—
(1) by striking ‘‘36 cents (30 cents on snuff re-
moved during 1991 or 1992)’’ in paragraph (1) and
inserting ‘‘$13.69’’, and
(2) by striking ‘‘12 cents (10 cents on chewing
tobacco removed during 1991 or 1992)’’ in para-
graph (2) and inserting ‘‘$5.45’’.
(f) PIPE TOBACCO.—Subsection (f) of section 5701
is amended by striking ‘‘67.5 cents (56.25 cents on pipe
129
tobacco removed during 1991 or 1992)’’ and inserting
‘‘$17.35’’.
(g) APPLICATION
OF TAX INCREASE
TO PUERTO
RICO.—Section 5701 is amended by adding at the end the
following new subsection:
‘‘(h) APPLICATION TO TAXES TO PUERTO RICO.—
Notwithstanding subsections (b) and (c) of section 7653
and any other provision of law:
‘‘(1) IN GENERAL.—On tobacco products and
cigarette papers and tubes, manufactured or im-
ported into the Commonwealth of Puerto Rico, there
is hereby imposed a tax at the rate equal to the ex-
cess of—
‘‘(A) the rate of tax applicable under this
section to like articles manufactured in the
United States, over
‘‘(B) the rate referred to in subparagraph
(A) as in effect on the day before the date of
the enactment of the Health Innovation Part-
nership Act of 1994.
‘‘(2) SHIPMENTS TO PUERTO RICO FROM THE
UNITED STATES.—Only the rates of tax in effect on
the day before the date of the enactment of this sub-
section shall be taken into account in determining
the amount of any exemption from, or credit or
130
drawback of, any tax imposed by this section on any
article shipped to the Commonwealth of Puerto Rico
from the United States.
‘‘(3) SHIPMENTS FROM PUERTO RICO TO THE
UNITED STATES.—The rates of tax taken into ac-
count under section 7652(a) with respect to tobacco
products and cigarette papers and tubes coming into
the United States from the Commonwealth of Puer-
to Rico shall be the rates of tax in effect on the day
before the date of the enactment of the Health Inno-
vation Partnership Act of 1994.
‘‘(4) DISPOSITION OF REVENUES.—The provi-
sions of section 7652(a)(3) shall not apply to any
tax imposed by reason of this subsection.’’.
(h) EFFECTIVE DATE.—The amendments made by
this section shall apply to articles removed (as defined in
section 5702(k) of the Internal Revenue Code of 1986,
as amended by this Act) after December 31, 1994.
(i) FLOOR STOCKS TAXES.—
(1) IMPOSITION OF TAX.—On tobacco products
and cigarette papers and tubes manufactured in or
imported into the United States or the Common-
wealth of Puerto Rico which are removed before any
tax-increase date, and held on such date for sale by
131
any person, there is hereby imposed a tax in an
amount equal to the excess of—
(A) the tax which would be imposed under
section 5701 of the Internal Revenue Code of
1986 on the article if the article had been re-
moved on such date, over
(B) the prior tax (if any) imposed under
section 5701 or 7652 of such Code on such ar-
ticle.
(2) AUTHORITY TO EXEMPT CIGARETTES HELD
IN VENDING MACHINES.—To the extent provided in
regulations prescribed by the Secretary, no tax shall
be imposed by paragraph (1) on cigarettes held for
retail sale on any tax-increase date, by any person
in any vending machine. If the Secretary provides
such a benefit with respect to any person, the Sec-
retary may reduce the $500 amount in paragraph
(3) with respect to such person.
(3) CREDIT AGAINST TAX.—Each person shall
be allowed as a credit against the taxes imposed by
paragraph (1) an amount equal to $500. Such credit
shall not exceed the amount of taxes imposed by
paragraph (1) on each tax-increase date for which
such person is liable.
132
(4) LIABILITY FOR TAX AND METHOD OF PAY-
MENT.—
(A) LIABILITY FOR TAX.—A person hold-
ing cigarettes on any tax-increase date, to
which any tax imposed by paragraph (1) applies
shall be liable for such tax.
(B) METHOD OF PAYMENT.—The tax im-
posed by paragraph (1) shall be paid in such
manner as the Secretary shall prescribe by reg-
ulations.
(C) TIME
FOR
PAYMENT.—The tax im-
posed by paragraph (1) shall be paid on or be-
fore the date which is 3 months after the tax-
increase date.
(5) ARTICLES
IN
FOREIGN
TRADE
ZONES.—
Notwithstanding the Act of June 18, 1934 (48 Stat.
998, 19 U.S.C. 81a) and any other provision of law,
any article which is located in a foreign trade zone
on any tax-increase date shall be subject to the tax
imposed by paragraph (1) if—
(A) internal revenue taxes have been deter-
mined, or customs duties liquidated, with re-
spect to such article before such date pursuant
to a request made under the 1st proviso of sec-
tion 3(a) of such Act, or
133
(B) such article is held on such date under
the supervision of a customs officer pursuant to
the 2d proviso of such section 3(a).
(6) DEFINITIONS.—For purposes of this sub-
section:
(A) IN GENERAL.—Terms used in this sub-
section which are also used in section 5702 of
the Internal Revenue Code of 1986 shall have
the respective meanings such terms have in
such section, as amended by this Act.
(B) SECRETARY.—The term ‘‘Secretary’’
means the Secretary of the Treasury or his del-
egate.
(C) TAX-INCREASE DATE.—The term ‘‘tax-
increase date’’ means January 1, 1995, and
July 1, 1996.
(7) CONTROLLED
GROUPS.—Rules similar to
the rules of section 5061(e)(3) of such Code shall
apply for purposes of this subsection.
(8) OTHER LAWS APPLICABLE.—All provisions
of law, including penalties, applicable with respect to
the taxes imposed by section 5701 of such Code
shall, insofar as applicable and not inconsistent with
the provisions of this subsection, apply to the floor
stocks taxes imposed by paragraph (1), to the same
134
extent as if such taxes were imposed by such section
5701. The Secretary may treat any person who bore
the ultimate burden of the tax imposed by para-
graph (1) as the person to whom a credit or refund
under such provisions may be allowed or made.
SEC. 5002. MODIFICATIONS OF CERTAIN TOBACCO TAX
PROVISIONS.
(a) EXEMPTION FOR EXPORTED TOBACCO PROD-
UCTS AND CIGARETTE PAPERS AND TUBES TO APPLY
ONLY TO ARTICLES MARKED FOR EXPORT.—
(1) Subsection (b) of section 5704 is amended
by adding at the end the following new sentence:
‘‘Tobacco products and cigarette papers and tubes
may not be transferred or removed under this sub-
section unless such products or papers and tubes
bear such marks, labels, or notices as the Secretary
shall by regulations prescribe.’’
(2) Section 5761 is amended by redesignating
subsections (c) and (d) as subsections (d) and (e),
respectively, and by inserting after subsection (b)
the following new subsection:
‘‘(c) SALE OF TOBACCO PRODUCTS AND CIGARETTE
PAPERS AND TUBES FOR EXPORT.—Except as provided
in subsections (b) and (d) of section 5704—
136
ing ‘‘The penalties imposed by subsections (b) and
(c)’’.
(5)(A) Subpart F of chapter 52 is amended by
adding at the end the following new section:
‘‘SEC. 5754. RESTRICTION ON IMPORTATION OF PRE-
VIOUSLY EXPORTED TOBACCO PRODUCTS.
‘‘(a) IN GENERAL.—Tobacco products and cigarette
papers and tubes previously exported from the United
States may be imported or brought into the United States
only as provided in section 5704(d). For purposes of this
section, section 5704(d), section 5761, and such other pro-
visions as the Secretary may specify by regulations, ref-
erences to exportation shall be treated as including a ref-
erence to shipment to the Commonwealth of Puerto Rico.
‘‘(b) CROSS REFERENCE.—
‘‘For penalty for the sale of tobacco products and
cigarette papers and tubes in the United States
which are labeled for export, see section 5761(c).’’.
(B) The table of sections for subpart F of chap-
ter 52 is amended by adding at the end the following
new item:
‘‘Sec. 5754. Restriction on importation of previously exported to-
bacco products.’’.
(b) IMPORTERS REQUIRED TO BE QUALIFIED.—
(1) Sections 5712, 5713(a), 5721, 5722,
5762(a)(1), and 5763(b) and (c) are each amended
by inserting ‘‘or importer’’ after ‘‘manufacturer’’.
137
(2) The heading of subsection (b) of section
5763 is amended by inserting ‘‘QUALIFIED IMPORT-
ERS,’’ after ‘‘MANUFACTURERS,’’.
(3) The heading for subchapter B of chapter 52
is amended by inserting ‘‘and Importers’’ after
‘‘Manufacturers’’.
(4) The item relating to subchapter B in the
table of subchapters for chapter 52 is amended by
inserting ‘‘and importers’’ after ‘‘manufacturers’’.
(c) REPEAL OF TAX-EXEMPT SALES TO EMPLOYEES
OF CIGARETTE MANUFACTURERS.—
(1) Subsection (a) of section 5704 is amend-
ed—
(A) by striking ‘‘EMPLOYEE USE OR’’ in
the heading, and
(B) by striking ‘‘for use or consumption by
employees or’’ in the text.
(2) Subsection (e) of section 5723 is amended
by striking ‘‘for use or consumption by their employ-
ees, or for experimental purposes’’ and inserting
‘‘for experimental purposes’’.
(d) REPEAL OF TAX-EXEMPT SALES TO UNITED
STATES.—Subsection (b) of section 5704 is amended by
striking ‘‘and manufacturers may similarly remove such
articles for use of the United States;’’.
138
(e) BOOKS OF 25 OR FEWER CIGARETTE PAPERS
SUBJECT TO TAX.—Subsection (c) of section 5701 is
amended by striking ‘‘On each book or set of cigarette
papers containing more than 25 papers,’’ and inserting
‘‘On cigarette papers,’’.
(f) STORAGE OF TOBACCO PRODUCTS.—Subsection
(k) of section 5702 is amended by inserting ‘‘under section
5704’’ after ‘‘internal revenue bond’’.
(g) AUTHORITY TO PRESCRIBE MINIMUM MANUFAC-
TURING
ACTIVITY
REQUIREMENTS.—Section 5712 is
amended by striking ‘‘or’’ at the end of paragraph (1),
by redesignating paragraph (2) as paragraph (3), and by
inserting after paragraph (1) the following new paragraph:
‘‘(2) the activity proposed to be carried out at
such premises does not meet such minimum capacity
or activity requirements as the Secretary may pre-
scribe, or’’.
(h) SPECIAL RULES RELATING TO PUERTO RICO
AND THE VIRGIN ISLANDS.—Section 7652 is amended by
adding at the end the following new subsection:
‘‘(h) LIMITATION ON COVER OVER OF TAX ON TO-
BACCO PRODUCTS.—For purposes of this section, with re-
spect to taxes imposed under section 5701 or this section
on any tobacco product or cigarette paper or tube, the
amount covered into the treasuries of Puerto Rico and the
139
Virgin Islands shall not exceed the rate of tax under sec-
tion 5701 in effect on the article on the day before the
date of the enactment of the Health Innovation Partner-
ship Act of 1994.’’
(i) EFFECTIVE DATE.—The amendments made by
this section shall apply to articles removed (as defined in
section 5702(k) of the Internal Revenue Code of 1986,
as amended by this Act) after December 31, 1994.
SEC. 5003. IMPOSITION OF EXCISE TAX ON MANUFACTURE
OR IMPORTATION OF ROLL-YOUR-OWN TO-
BACCO.
(a) IN GENERAL.—Section 5701 (relating to rate of
tax), as amended by section 5001, is amended by redesig-
nating subsections (g) and (h) as subsections (h) and (i)
and by inserting after subsection (f) the following new
subsection:
‘‘(g) ROLL-YOUR-OWN TOBACCO.—On roll-your-own
tobacco, manufactured in or imported into the United
States, there shall be imposed a tax of $17.35 per pound
(and a proportionate tax at the like rate on all fractional
parts of a pound).’’.
(b) ROLL-YOUR-OWN TOBACCO.—Section 5702 (re-
lating to definitions) is amended by adding at the end the
following new subsection:
140
‘‘(p) ROLL-YOUR-OWN TOBACCO.—The term ‘roll-
your-own tobacco’ means any tobacco which, because of
its appearance, type, packaging, or labeling, is suitable for
use and likely to be offered to, or purchased by, consumers
as tobacco for making cigarettes.’’.
(c) TECHNICAL AMENDMENTS.—
(1) Subsection (c) of section 5702 is amended
by striking ‘‘and pipe tobacco’’ and inserting ‘‘pipe
tobacco, and roll-your-own tobacco’’.
(2) Subsection (d) of section 5702 is amend-
ed—
(A) in the material preceding paragraph
(1), by striking ‘‘or pipe tobacco’’ and inserting
‘‘pipe tobacco, or roll-your-own tobacco’’, and
(B) by striking paragraph (1) and insert-
ing the following new paragraph:
‘‘(1) a person who produces cigars, cigarettes,
smokeless tobacco, pipe tobacco, or roll-your-own to-
bacco solely for the person’s own personal consump-
tion or use, and’’.
(3) The chapter heading for chapter 52 is
amended to read as follows:
141
‘‘CHAPTER 52—TOBACCO PRODUCTS AND
CIGARETTE PAPERS AND TUBES’’.
(4) The table of chapters for subtitle E is
amended by striking the item relating to chapter 52
and inserting the following new item:
‘‘CHAPTER 52. TOBACCO PRODUCTS AND CIGARETTE PAPERS AND
TUBES.’’
(d) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by
this section shall apply to roll-your-own tobacco re-
moved (as defined in section 5702(k) of the Internal
Revenue Code of 1986, as amended by this Act)
after December 31, 1994.
(2) TRANSITIONAL RULE.—Any person who—
(A) on the date of the enactment of this
Act is engaged in business as a manufacturer of
roll-your-own tobacco or as an importer of to-
bacco products or cigarette papers and tubes,
and
(B) before January 1, 1995, submits an
application under subchapter B of chapter 52
of such Code to engage in such business,
may, notwithstanding such subchapter B, continue
to engage in such business pending final action on
such application. Pending such final action, all pro-
visions of such chapter 52 shall apply to such appli-
142
cant in the same manner and to the same extent as
if such applicant were a holder of a permit under
such chapter 52 to engage in such business.
Subtitle B—Health Care Reform
Trust Fund
SEC. 5101. ESTABLISHMENT OF HEALTH CARE REFORM
TRUST FUND.
(a) IN GENERAL.—Subchapter A of chapter 98 (re-
lating to establishment of trust funds) is amended by add-
ing at the end the following new part:
‘‘PART II—HEALTH CARE TRUST FUND
‘‘Sec. 9551. Health Care Reform Trust Fund
‘‘SEC. 9551. HEALTH CARE REFORM TRUST FUND.
‘‘(a) CREATION OF TRUST FUND.—There is estab-
lished in the Treasury of the United States a trust fund
to be known as the ‘Health Care Reform Trust Fund’,
consisting of such amounts as may be appropriated or
credited to the Health Care Reform Trust Fund as pro-
vided in this section.
‘‘(b) TRANSFERS TO THE TRUST FUND.—There are
hereby appropriated to the Health Care Reform Trust
Fund amounts received in the Treasury under section
5701 (relating to taxes on tobacco products) to the extent
attributable to the increases in such taxes as the result
143
of the enactment of subtitle A of title V of the Health
Innovation Partnership Act of 1994.
‘‘(c) EXPENDITURES.—Amounts in the Health Care
Reform Trust Fund are appropriated as provided for in
sections 2001 and 4002 of the Health Innovation Partner-
ship Act of 1994, and title XXVII of the Public Health
Service Act, and to the extent any such amount is not
expended during any fiscal year, such amount shall be
available for such purpose for subsequent fiscal years.
‘‘(d) OTHER RULES.—
‘‘(1) INSUFFICIENT FUNDS.—If, for any fiscal
year, the sum of the amounts required to be allo-
cated under subsection (c) exceeds the amounts re-
ceived in the Health Care Reform Trust Fund, then
each of such amounts required to be so allocated
shall be reduced to an amount which bears the same
ratio to such amount as the amounts received in the
trust fund bear to the amounts required to be so al-
located (without regard to this paragraph).
‘‘(2) ALLOCATION OF EXCESS FUNDS AND IN-
TEREST.—Amounts received in the Health Care Re-
form Trust Fund in excess of the amounts required
to be allocated under subsection (c), for any fiscal
year shall be allocated ratably on the basis of the
144
amounts allocated for the fiscal year (without regard
to this paragraph).’’.
(b) CONFORMING AMENDMENT.—Subchapter A of
chapter 98 is amended by inserting after the subchapter
heading the following new items:
‘‘Part I.
General trust funds.
‘‘Part II. Health care trust fund.
‘‘PART I—GENERAL TRUST FUNDS’’.
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