‘‘(A) who has not attained age 18 as of the
time of the adoption, or
‘‘(B) who is physically or mentally incapa-
ble of caring for himself.
‘‘(4) CHILD WITH SPECIAL NEEDS.—The term
‘child with special needs’ means any child if—
‘‘(A) a State has determined that the child
cannot or should not be returned to the home
of his parents, and
‘‘(B) such State has determined that there
exists with respect to the child a specific factor
or condition (such as his ethnic background,
age, or membership in a minority or sibling
group, or the presence of factors such as medi-
cal conditions or physical, mental, or emotional
handicaps) because of which it is reasonable to
conclude that such child cannot be placed with
adoptive parents without providing adoption as-
sistance.
‘‘(e) SPECIAL RULES FOR FOREIGN ADOPTIONS.—In
the case of a foreign adoption—
‘‘(1) subsection (a) shall not apply to any quali-
fied adoption expense with respect to such adoption
unless such adoption becomes final, and
‘‘(2) any such expense which is paid or incurred
before the taxable year in which such adoption be-
comes final shall be taken into account under this
section as if such expense were paid or incurred dur-
ing such year.
‘‘(f) MARRIED COUPLES MUST FILE JOINT RE-
TURNS.—Rules similar to the rules of paragraphs (2), (3),
and (4) of section 21(e) shall apply for purposes of this
section.
‘‘(g) BASIS ADJUSTMENTS.—For purposes of this
subtitle, if a credit is allowed under this section for any
expenditure with respect to any property, the increase in
the basis of such property which would (but for this sub-
section) result from such expenditure shall be reduced by
the amount of the credit so allowed.
‘‘(h) REGULATIONS.—The Secretary shall prescribe
such regulations as may be appropriate to carry out this
section and section 137, including regulations which treat
unmarried individuals who pay or incur qualified adoption
expenses with respect to the same child as 1 taxpayer for
purposes of applying the dollar limitation in subsection
(b)(1) of this section and in section 137(b)(1).’’.
(b) EXCLUSION OF AMOUNTS RECEIVED UNDER EM-
PLOYER’S ADOPTION ASSISTANCE PROGRAMS.—Part III
of subchapter B of chapter 1 of such Code (relating to
items specifically excluded from gross income) is amended
by redesignating section 137 as section 138 and by insert-
ing after section 136 the following new section:
‘‘SEC. 137. ADOPTION ASSISTANCE PROGRAMS.
‘‘(a) IN GENERAL.—Gross income of an employee
does not include amounts paid or expenses incurred by the
employer for qualified adoption expenses in connection
with the adoption of a child by an employee if such
amounts are furnished pursuant to an adoption assistance
program.
‘‘(b) LIMITATIONS.—
‘‘(1) DOLLAR
LIMITATION.—The aggregate
amount excludable from gross income under sub-
section (a) for all taxable years with respect to the
adoption of a child by the taxpayer shall not exceed
$5,000.
‘‘(2) INCOME
LIMITATION.—The amount ex-
cludable from gross income under subsection (a) for
any taxable year shall be reduced (but not below
zero) by an amount which bears the same ratio to
the amount so excludable (determined without re-
gard to this paragraph but with regard to paragraph
(1)) as—
‘‘(A) the amount (if any) by which the tax-
payer’s adjusted gross income exceeds $75,000,
bears to
‘‘(B) $40,000.
‘‘(3) DETERMINATION OF ADJUSTED GROSS IN-
COME.—For purposes of paragraph (2), adjusted
gross income shall be determined—
‘‘(A) without regard to this section and
sections 911, 931, and 933, and
‘‘(B) after the application of sections 86,
135, 219, and 469.
‘‘(c) ADOPTION ASSISTANCE PROGRAM.—For pur-
poses of this section, an adoption assistance program is
a plan of an employer—
‘‘(1) under which the employer provides employ-
ees with adoption assistance, and
‘‘(2) which meets requirements similar to the
requirements of paragraphs (2), (3), and (5) of sec-
tion 127(b).
An adoption reimbursement program operated under sec-
tion 1052 of title 10, United States Code (relating to
armed forces) or section 514 of title 14, United States
Code (relating to members of the Coast Guard) shall be
treated as an adoption assistance program for purposes
of this section.
‘‘(d) QUALIFIED ADOPTION EXPENSES.—For pur-
poses of this section, the term ‘qualified adoption ex-
penses’ has the meaning given such term by section 23(d).
‘‘(e) CERTAIN RULES TO APPLY.—Rules similar to
the rules of subsections (e) and (g) of section 23 shall
apply for purposes of this section.’’.
(c) CONFORMING AMENDMENTS.—
(1) Sections 86(b)(2)(A) and 135(c)(4)(A) of
such Code are each amended by inserting ‘‘137,’’ be-
fore ‘‘911’’.
(2) Clause (i) of section 219(g)(3)(A) of such
Code is amended by inserting ‘‘, 137,’’ before ‘‘and
911’’.
(3) Clause (ii) of section 469(i)(3)(E) of such
Code is amended to read as follows:
‘‘(ii) the amounts excludable from
gross income under sections 135 and
137,’’.
(4) Subsection (a) of section 1016 of such Code
is amended by striking ‘‘and’’ at the end of para-
graph (24), by striking the period at the end of
paragraph (25) and inserting ‘‘, and’’, and by add-
ing at the end the following new paragraph:
‘‘(26) to the extent provided in sections 23(g)
and 137(e).’’
‘‘(18) not later than January 1, 1997, provides
that neither the State nor any other entity in the
State that receives funds from the Federal Govern-
ment and is involved in adoption or foster care
placements may—
‘‘(A) deny to any person the opportunity to
become an adoptive or a foster parent, on the
basis of the race, color, or national origin of the
person, or of the child, involved; or
‘‘(B) delay or deny the placement of a
child for adoption or into foster care, on the
basis of the race, color, or national origin of the
adoptive or foster parent, or the child, in-
volved.’’.
(b) ENFORCEMENT.—Section 474 of such Act (42
U.S.C. 674) is amended by adding at the end the follow-
ing:
‘‘(d)(1) If a State’s program operated under this part
is found, as a result of a review conducted under section
1123, to have violated section 471(a)(18) during a quarter
with respect to any person, then, notwithstanding sub-
section (a) of this section and any regulations promulgated
under section 1123(b)(3), the Secretary shall reduce the
amount otherwise payable to the State under this part,
for the quarter and for each subsequent quarter before
the 1st quarter for which the State program is found, as
a result of such a review, not to have violated section
471(a)(18) with respect to any person, by—
‘‘(A) 2 percent of such otherwise payable
amount, in the case of the 1st such finding with re-
spect to the State;
‘‘(B) 5 percent of such otherwise payable
amount, in the case of the 2nd such finding with re-
spect to the State; or
‘‘(C) 10 percent of such otherwise payable
amount, in the case of the 3rd or subsequent such
finding with respect to the State.
‘‘(2) Any other entity which is in a State that receives
funds under this part and which violates section
471(a)(18) during a quarter with respect to any person
shall remit to the Secretary all funds that were paid by
the State to the entity during the quarter from such funds.
‘‘(3)(A) Any individual who is aggrieved by a viola-
tion of section 471(a)(18) by a State or other entity may
bring an action seeking relief from the State or other en-
tity in any United States district court.
‘‘(B) An action under this paragraph may not be
brought more than 2 years after the date the alleged viola-
tion occurred.
‘‘(4) This subsection shall not be construed to affect
the application of the Indian Child Welfare Act of 1978.’’.
(c) CIVIL RIGHTS.—
(1) PROHIBITED CONDUCT.—A person or gov-
ernment that is involved in adoption or foster care
placements may not—
(A) deny to any individual the opportunity
to become an adoptive or a foster parent, on the
basis of the race, color, or national origin of the
individual, or of the child, involved; or
(B) delay or deny the placement of a child
for adoption or into foster care, on the basis of
the race, color, or national origin of the adop-
tive or foster parent, or the child, involved.
(2) ENFORCEMENT.—Noncompliance with para-
graph (1) is deemed a violation of title VI of the
Civil Rights Act of 1964.
(3) NO EFFECT ON THE INDIAN CHILD WEL-
FARE ACT OF 1978.—This subsection shall not be
construed to affect the application of the Indian
Child Welfare Act of 1978.
(d) CONFORMING REPEAL.—Section 553 of the How-
ard M. Metzenbaum Multiethnic Placement Act of 1994
(42 U.S.C. 5115a) is repealed.
TITLE III—CHILD CUSTODY PRO-
CEEDINGS AFFECTED BY THE
INDIAN CHILD WELFARE ACT
OF 1978
SEC. 301. INAPPLICABILITY OF THE INDIAN CHILD WEL-
FARE ACT OF 1978 TO CHILD CUSTODY PRO-
CEEDINGS INVOLVING A CHILD WHOSE PAR-
ENTS DO NOT MAINTAIN AFFILIATION WITH
THEIR INDIAN TRIBE.
Title I of the Indian Child Welfare Act of 1978 (25
U.S.C. 1911 et seq.) is amended by adding at the end
the following:
‘‘SEC. 114. (a) This title does not apply to any child
custody proceeding involving a child who does not reside
or is not domiciled within a reservation unless—
‘‘(1) at least one of the child’s biological par-
ents is of Indian descent; and
‘‘(2) at least one of the child’s biological par-
ents maintains significant social, cultural, or politi-
cal affiliation with the Indian tribe of which either
parent is a member.
‘‘(b) The factual determination as to whether a bio-
logical parent maintains significant social, cultural, or po-
litical affiliation with the Indian tribe of which either par-
ent is a member shall be based on such affiliation as of
the time of the child custody proceeding.
‘‘(c) The determination that this title does not apply
pursuant to subsection (a) is final, and, thereafter, this
title shall not be the basis for determining jurisdiction over
any child custody proceeding involving the child.’’.
SEC. 302. MEMBERSHIP AND CHILD CUSTODY PROCEED-
INGS.
Title I of the Indian Child Welfare Act of 1978 (25
U.S.C. 1911 et seq.), as amended by section 301 of this
title, is further amended by adding at the end the follow-
ing:
‘‘SEC. 115. (a) A person who attains the age of 18
years before becoming a member of an Indian tribe may
become a member of an Indian tribe only upon the per-
son’s written consent.
‘‘(b) For the purposes of any child custody proceeding
involving an Indian child, membership in an Indian tribe
shall be effective from the actual date of admission to
membership in the Indian tribe and shall not be given ret-
roactive effect.’’.
SEC. 303. EFFECTIVE DATE.
The amendments made by this title shall take effect
on the date of the enactment of this Act and shall apply
with respect to any child custody proceeding in which a
final decree has not been entered as of such date.
TITLE IV—REVENUE OFFSETS
SEC. 400. 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—Exclusion for Energy
Conservation Subsidies Limited
to Subsidies With Respect to
Dwelling Units
SEC. 401. EXCLUSION FOR ENERGY CONSERVATION SUB-
SIDIES LIMITED TO SUBSIDIES WITH RE-
SPECT TO DWELLING UNITS.
(a) IN GENERAL.—Paragraph (1) of section 136(c)
(defining energy conservation measure) is amended by
striking ‘‘energy demand—’’ and all that follows and in-
serting ‘‘energy demand with respect to a dwelling unit.’’
(b) CONFORMING AMENDMENTS.—
(1) Subsection (a) of section 136 is amended to
read as follows: