I
107TH CONGRESS
1ST SESSION
H. R. 3529
To provide tax incentives for economic recovery and assistance to displaced
workers.
IN THE HOUSE OF REPRESENTATIVES
DECEMBER 19, 2001
Mr. THOMAS introduced the following bill; which was referred to the Com-
mittee on Ways and Means, and in addition to the Committees on Edu-
cation and the Workforce, Energy and Commerce, and the Budget, for
a period to be subsequently determined by the Speaker, in each case for
consideration of such provisions as fall within the jurisdiction of the com-
mittee concerned.
DECEMBER 19, 2001
Committees on Ways and Means, Education and the Workforce, Energy and
Commerce, and the Budget discharged; considered and passed
A BILL
To provide tax incentives for economic recovery and
assistance to displaced workers.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; ETC.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Economic Security and Worker Assistance Act of 2001’’.
(b) REFERENCES TO INTERNAL REVENUE CODE OF
1986.—Except as otherwise expressly provided, whenever
in this Act 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.
(c) TABLE OF CONTENTS.—
Sec. 1. Short title; etc.
TITLE I—INDIVIDUAL PROVISIONS
Sec. 101. Supplemental stimulus payments.
Sec. 102. Acceleration of 25 percent individual income tax rate.
TITLE II—BUSINESS PROVISIONS
Sec. 201. Special depreciation allowance for certain property acquired after
September 10, 2001, and before September 11, 2004.
Sec. 202. Temporary increase in expensing under section 179.
Sec. 203. Alternative minimum tax reform.
Sec. 204. Carryback of certain net operating losses allowed for 5 years.
Sec. 205. Recovery period for depreciation of certain leasehold improvements.
TITLE III—EXTENSIONS OF CERTAIN EXPIRING PROVISIONS
Subtitle A—Extensions
Sec. 301. Allowance of nonrefundable personal credits against regular and min-
imum tax liability.
Sec. 302. Credit for qualified electric vehicles.
Sec. 303. Credit for electricity produced from renewable resources.
Sec. 304. Work opportunity credit.
Sec. 305. Welfare-to-work credit.
Sec. 306. Deduction for clean-fuel vehicles and certain refueling property.
Sec. 307. Taxable income limit on percentage depletion for oil and natural gas
produced from marginal properties.
Sec. 308. Qualified zone academy bonds.
Sec. 309. Cover over of tax on distilled spirits.
Sec. 310. Parity in the application of certain limits to mental health benefits.
Sec. 311. Temporary special rules for taxation of life insurance companies.
Sec. 312. Availability of medical savings accounts.
Sec. 313. Incentives for Indian employment and property on Indian reserva-
tions.
Sec. 314. Subpart F exemption for active financing.
Sec. 315. Repeal of requirement for approved diesel or kerosene terminals.
Subtitle B—Temporary Assistance for Needy Families
Sec. 321. Reauthorization of TANF supplemental grants for population in-
creases for fiscal year 2002.
Sec. 322. 1-year extension of contingency fund under the TANF program.
TITLE IV—TAX BENEFITS FOR AREA OF NEW YORK CITY
DAMAGED IN TERRORIST ATTACKS ON SEPTEMBER 11, 2001
Sec. 401. Tax benefits for area of New York City damaged in terrorist attacks
on September 11, 2001.
TITLE V—RELIEF PROVISIONS FOR VICTIMS OF TERRORIST AT-
TACKS, PRESIDENTIALLY DECLARED DISASTERS, AND CERTAIN
OTHER DISASTERS
Subtitle A—Relief Provisions for Victims of Terrorist Attacks
Sec. 501. Income taxes of victims of terrorist attacks.
Sec. 502. Exclusion of certain death benefits.
Sec. 503. Estate tax reduction.
Sec. 504. Payments by charitable organizations treated as exempt payments.
Sec. 505. Exclusion of certain cancellations of indebtedness.
Subtitle B—Other Relief Provisions
Sec. 511. Exclusion for disaster relief payments.
Sec. 512. Authority to postpone certain deadlines and required actions.
Sec. 513. Application of certain provisions to terroristic or military actions.
Sec. 514. Clarification of due date for airline excise tax deposits.
Sec. 515. Treatment of certain structured settlement payments.
Sec. 516. Personal exemption deduction for certain disability trusts.
Sec. 517. Disclosure of tax information in terrorism and national security in-
vestigations.
TITLE VI—MISCELLANEOUS AND TECHNICAL PROVISIONS
Subtitle A—General Miscellaneous Provisions
Sec. 601. Allowance of electronic 1099’s.
Sec. 602. Excluded cancellation of indebtedness income of S corporation not to
result in adjustment to basis of stock of shareholders.
Sec. 603. Limitation on use of nonaccrual experience method of accounting.
Sec. 604. Exclusion for foster care payments to apply to payments by qualified
placement agencies.
Sec. 605. Interest rate range for additional funding requirements.
Sec. 606. Adjusted gross income determined by taking into account certain ex-
penses of elementary and secondary school teachers.
Subtitle B—Technical Corrections
Sec. 611. Amendments related to Economic Growth and Tax Relief Reconcili-
ation Act of 2001.
Sec. 612. Amendments related to Community Renewal Tax Relief Act of 2000.
Sec. 613. Amendments related to the Tax Relief Extension Act of 1999.
Sec. 614. Amendments related to the Taxpayer Relief Act of 1997.
Sec. 615. Amendment related to the Balanced Budget Act of 1997.
Sec. 616. Other technical corrections.
Sec. 617. Clerical amendments.
Sec. 618. Additional corrections.
TITLE VII—UNEMPLOYMENT ASSISTANCE
Sec. 701. Short title.
Sec. 702. Federal-State agreements.
Sec. 703. Temporary extended unemployment compensation account.
Sec. 704. Payments to States having agreements for the payment of temporary
extended unemployment compensation.
Sec. 705. Financing provisions.
Sec. 706. Fraud and overpayments.
Sec. 707. Definitions.
Sec. 708. Applicability.
Sec. 709. Special Reed Act transfer in fiscal year 2002.
TITLE VIII—DISPLACED WORKER HEALTH INSURANCE CREDIT
Sec. 801. Displaced worker health insurance credit.
Sec. 802. Advance payment of displaced worker health insurance credit.
TITLE IX—EMPLOYMENT AND TRAINING ASSISTANCE AND
TEMPORARY HEALTH CARE COVERAGE ASSISTANCE
Sec. 901. Employment and training assistance and temporary health care cov-
erage assistance.
TITLE X—TEMPORARY STATE HEALTH CARE ASSISTANCE
Sec. 1001. Temporary State health care assistance.
TITLE XI—SOCIAL SECURITY HELD HARMLESS; BUDGETARY
TREATMENT OF ACT
Sec. 1101. No impact on social security trust funds.
Sec. 1102. Emergency designation.
TITLE I—INDIVIDUAL
PROVISIONS
SEC. 101. SUPPLEMENTAL STIMULUS PAYMENTS.
(a) IN GENERAL.—Section 6428 (relating to accel-
eration of 10 percent income tax rate bracket benefit for
2001) is amended by adding at the end the following new
subsection:
‘‘(f) SUPPLEMENTAL STIMULUS PAYMENTS.—
‘‘(1) IN GENERAL.—Each individual who was
an eligible individual for such individual’s first tax-
able year beginning in 2000 and who, before October
16, 2001, filed a return of tax imposed by subtitle
A for such taxable year shall be treated as having
made a payment against the tax imposed by chapter
1 for such first taxable year in an amount equal to
the supplemental refund amount for such taxable
year.
‘‘(2) SUPPLEMENTAL
REFUND
AMOUNT.—For
purposes of this subsection, the supplemental refund
amount is an amount equal to the excess (if any)
of—
‘‘(A)(i) $600 in the case of taxpayers to
whom section 1(a) applies,
‘‘(ii) $500 in the case of taxpayers to
whom section 1(b) applies, and
‘‘(iii) $300 in the case of taxpayers to
whom subsections (c) or (d) of section 1 ap-
plies, over
‘‘(B) 
the 
taxpayer’s 
advance 
refund
amount under subsection (e).
‘‘(3) TIMING
OF
PAYMENTS.—In the case of
any overpayment attributable to this subsection, the
Secretary shall, subject to the provisions of this title,
refund or credit such overpayment as rapidly as pos-
sible.
‘‘(4) NO INTEREST.—No interest shall be al-
lowed on any overpayment attributable to this sub-
section.’’
(b) CONFORMING AMENDMENTS.—
(1) Subparagraph (A) of section 6428(d)(1) is
amended by striking ‘‘subsection (e)’’ and inserting
‘‘subsections (e) and (f)’’.
(2) Subparagraph (B) of section 6428(d)(1) is
amended by striking ‘‘subsection (e)’’ and inserting
‘‘subsection (e) or (f)’’.
(3) Paragraph (3) of section 6428(e) is amend-
ed by inserting before the period ‘‘(or, if earlier, the
date of the enactment of the Economic Security and
Worker Assistance Act of 2001)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
SEC. 102. ACCELERATION OF 25 PERCENT INDIVIDUAL IN-
COME TAX RATE.
(a) IN GENERAL.—The table contained in paragraph
(2) of section 1(i) (relating to reductions in rates after
June 30, 2001) is amended—
(1) 
by 
striking 
‘‘27.0%’’ 
and 
inserting
‘‘25.0%’’, and
(2) 
by 
striking 
‘‘26.0%’’ 
and 
inserting
‘‘25.0%’’.
(b) REDUCTION NOT TO INCREASE MINIMUM TAX.—
(1) Subparagraph (A) of section 55(d)(1) is
amended by striking ‘‘($49,000 in the case of tax-
able years beginning in 2001, 2002, 2003, and
2004)’’ and inserting ‘‘($49,000 in the case of tax-
able years beginning in 2001, $52,200 in the case of
taxable years beginning in 2002 or 2003, and
$50,700 in the case of taxable years beginning in
2004)’’.
(2) Subparagraph (B) of section 55(d)(1) is
amended by striking ‘‘($35,750 in the case of tax-
able years beginning in 2001, 2002, 2003, and
2004)’’ and inserting ‘‘($35,750 in the case of tax-
able years beginning in 2001, $37,350 in the case of
taxable years beginning in 2002 or 2003, and
$36,600 in the case of taxable years beginning in
2004)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
(d) SECTION 15 NOT TO APPLY.—No amendment
made by this section shall be treated as a change in a
rate of tax for purposes of section 15 of the Internal Rev-
enue Code of 1986 .
TITLE II—BUSINESS PROVISIONS
SEC. 201. SPECIAL DEPRECIATION ALLOWANCE FOR CER-
TAIN 
PROPERTY 
ACQUIRED 
AFTER 
SEP-
TEMBER 10, 2001, AND BEFORE SEPTEMBER
11, 2004.
(a) IN GENERAL.—Section 168 (relating to acceler-
ated cost recovery system) is amended by adding at the
end the following new subsection:
‘‘(k) SPECIAL ALLOWANCE FOR CERTAIN PROPERTY
ACQUIRED AFTER SEPTEMBER 10, 2001, AND BEFORE
SEPTEMBER 11, 2004.—
‘‘(1) ADDITIONAL ALLOWANCE.—In the case of
any qualified property—
‘‘(A) the depreciation deduction provided
by section 167(a) for the taxable year in which
such property is placed in service shall include
an allowance equal to 30 percent of the ad-
justed basis of the qualified property, and
‘‘(B) the adjusted basis of the qualified
property shall be reduced by the amount of
such deduction before computing the amount
otherwise allowable as a depreciation deduction
under this chapter for such taxable year and
any subsequent taxable year.
‘‘(2) QUALIFIED PROPERTY.—For purposes of
this subsection—
‘‘(A) IN
GENERAL.—The term ‘qualified
property’ means property—
‘‘(i)(I) to which this section applies
which has a recovery period of 20 years or
less or which is water utility property, or
‘‘(II) which is computer software (as
defined in section 167(f)(1)(B)) for which
a deduction is allowable under section
167(a) without regard to this subsection,
‘‘(ii) the original use of which com-
mences with the taxpayer after September
10, 2001,
‘‘(iii) which is—
‘‘(I) acquired by the taxpayer
after September 10, 2001, and before
September 11, 2004, but only if no
written binding contract for the acqui-
sition was in effect before September
11, 2001, or
‘‘(II) acquired by the taxpayer
pursuant to a written binding contract
which was entered into after Sep-
tember 10, 2001, and before Sep-
tember 11, 2004, and
‘‘(iv) which is placed in service by the
taxpayer before January 1, 2005, or, in
the case of property described in subpara-
graph (B), before January 1, 2006.
‘‘(B) CERTAIN PROPERTY HAVING LONGER
PRODUCTION PERIODS TREATED AS QUALIFIED
PROPERTY.—
‘‘(i) IN GENERAL.—The term ‘quali-
fied property’ includes property—
‘‘(I) which meets the require-
ments of clauses (i), (ii), and (iii) of
subparagraph (A),
‘‘(II) which has a recovery period
of at least 10 years or is transpor-
tation property, and
‘‘(III) which is subject to section
263A by reason of clause (ii) or (iii)
of subsection (f)(1)(B) thereof.
‘‘(ii) ONLY PRE-SEPTEMBER 11, 2004,
BASIS ELIGIBLE FOR ADDITIONAL ALLOW-
ANCE.—In the case of property which is
qualified property solely by reason of
clause (i), paragraph (1) shall apply only
to the extent of the adjusted basis thereof
attributable to manufacture, construction,
or production before September 11, 2004.
‘‘(iii) TRANSPORTATION PROPERTY.—
For purposes of this subparagraph, the
term ‘transportation property’ means tan-
gible personal property used in the trade
or business of transporting persons or
property.
‘‘(C) EXCEPTIONS.—
‘‘(i) 
ALTERNATIVE
DEPRECIATION
PROPERTY.—The term ‘qualified property’
shall not include any property to which the
alternative depreciation system under sub-
section (g) applies, determined—
‘‘(I) without regard to paragraph
(7) of subsection (g) (relating to elec-
tion to have system apply), and
‘‘(II) after application of section
280F(b) (relating to listed property
with limited business use).
‘‘(ii) ELECTION OUT.—If a taxpayer
makes an election under this clause with
respect to any class of property for any
‘‘(II) sold and leased back by
such person within 3 months after the
date such property was originally
placed in service,
such property shall be treated as originally
placed in service not earlier than the date
on which such property is used under the
leaseback referred to in subclause (II).
‘‘(E) 
COORDINATION
WITH
SECTION
280F.—For purposes of section 280F—
‘‘(i) AUTOMOBILES.—In the case of a
passenger automobile (as defined in section
280F(d)(5)) which is qualified property,
the Secretary shall increase the limitation
under section 280F(a)(1)(A)(i) by $4,600.
‘‘(ii) LISTED PROPERTY.—The deduc-
tion allowable under paragraph (1) shall be
taken into account in computing any re-
capture 
amount 
under 
section
280F(b)(2).’’
(b) ALLOWANCE AGAINST ALTERNATIVE MINIMUM
TAX.—
(1) IN GENERAL.—Section 56(a)(1)(A) (relat-
ing to depreciation adjustment for alternative min-
imum tax) is amended by adding at the end the fol-
lowing new clause:
‘‘(iii) ADDITIONAL
ALLOWANCE
FOR
CERTAIN PROPERTY ACQUIRED AFTER SEP-
TEMBER
10, 
2001, 
AND
BEFORE
SEP-
TEMBER
11, 2004.—The deduction under
section 168(k) shall be allowed.’’
(2) CONFORMING AMENDMENT.—Clause (i) of
section 56(a)(1)(A) is amended by striking ‘‘clause
(ii)’’ both places it appears and inserting ‘‘clauses
(ii) and (iii)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to property placed in service after
September 10, 2001, in taxable years ending after such
date.
SEC. 202. TEMPORARY INCREASE IN EXPENSING UNDER
SECTION 179.
(a) IN GENERAL.—The table contained in section
179(b)(1) (relating to dollar limitation) is amended to
read as follows:
‘‘If the taxable year
The applicable
begins in:
amount is:
2001 .......................................................................
$24,000
2002 or 2003 .........................................................
$35,000
2004 or thereafter .................................................
$25,000.’’
(b) TEMPORARY INCREASE IN AMOUNT OF PROP-
ERTY TRIGGERING PHASEOUT OF MAXIMUM BENEFIT.—
Paragraph (2) of section 179(b) is amended by inserting
before the period ‘‘($325,000 in the case of taxable years
beginning during 2002 or 2003)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
SEC. 203. ALTERNATIVE MINIMUM TAX REFORM.
(a) REPEAL OF PREFERENCE FOR DEPRECIATION.—
(1) Paragraph (1) of section 56(a) is amended
by adding at the end the following new subpara-
graph:
‘‘(E) 
TERMINATION.—This 
paragraph
shall not apply to property placed in service in
taxable years beginning after December 31,
2001.’’
(2) Paragraph (5) of section 56(a) is amended
by adding at the end: ‘‘This paragraph shall not
apply to property placed in service in taxable years
beginning after December 31, 2001.’’
(b) REPEAL OF 90 PERCENT LIMITATION ON FOR-
EIGN TAX CREDITS.—
(1) Subsection (a) of section 59 is amended by
striking paragraph (2) and by redesignating para-
graphs (3) and (4) as paragraphs (2) and (3), re-
spectively.
(2) Subclause (II) of section 53(d)(1)(B)(i) is
amended by striking ‘‘and if section 59(a)(2) did not
apply’’.
(c) REPEAL OF 90 PERCENT LIMITATION ON NET
OPERATING LOSS DEDUCTION.—Subparagraph (A) of
section 56(d)(1), as amended by section 204, is amended
to read as follows:
‘‘(A) the amount of such deduction shall
not exceed alternative minimum taxable income
determined without regard to such deduction,
and’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
SEC. 204. CARRYBACK OF CERTAIN NET OPERATING
LOSSES ALLOWED FOR 5 YEARS.
(a) IN GENERAL.—Paragraph (1) of section 172(b)
(relating to years to which loss may be carried) is amended
by adding at the end the following new subparagraph:
‘‘(H) In the case of a taxpayer which has
a net operating loss for any taxable year ending
during 2001 or 2002, subparagraph (A)(i) shall
be applied by substituting ‘5’ for ‘2’ and sub-
paragraph (F) shall not apply.’’
(b) 
ELECTION
TO
DISREGARD
5-YEAR
CARRYBACK.—Section 172 (relating to net operating loss
deduction) is amended by redesignating subsection (j) as
subsection (k) and by inserting after subjection (i) the fol-
lowing new subsection:
‘‘(j) ELECTION TO DISREGARD 5-YEAR CARRYBACK
FOR CERTAIN NET OPERATING LOSSES.—Any taxpayer
entitled to a 5-year carryback under subsection (b)(1)(H)
from any loss year may elect to have the carryback period
with respect to such loss year determined without regard
to subsection (b)(1)(H). Such election shall be made in
such manner as may be prescribed by the Secretary and
shall be made by the due date (including extensions of
time) for filing the taxpayer’s return for the taxable year
of the net operating loss. Such election, once made for any
taxable year, shall be irrevocable for such taxable year.’’
(c) TEMPORARY SUSPENSION OF 90 PERCENT LIMIT
ON CERTAIN NOL CARRYBACKS.—
(1) IN GENERAL.—Subparagraph (A) of section
56(d)(1) (relating to general rule defining alter-
native tax net operating loss deduction) is amended
to read as follows:
‘‘(A) the amount of such deduction shall
not exceed the sum of—
‘‘(i) the lesser of—
‘‘(I) the amount of such deduc-
tion attributable to net operating
losses (other than the deduction at-
tributable to carrybacks described in
clause (ii)(I)), or
‘‘(II) 90 percent of alternative
minimum taxable income determined
without regard to such deduction, plus
‘‘(ii) the lesser of—
‘‘(I) the amount of such deduc-
tion attributable to carrybacks of net
operating losses for taxable years end-
ing during 2001 or 2002, or
‘‘(II) alternative minimum tax-
able income determined without re-
gard to such deduction reduced by the
amount determined under clause (i),
and’’.
(2) EFFECTIVE DATE.—The amendment made
by this subsection shall apply to taxable years begin-
ning before January 1, 2002.
(d) EFFECTIVE DATE.—Except as provided in sub-
section (c), the amendments made by this section shall
apply to net operating losses for taxable years ending after
December 31, 2000.
‘‘(ii) such portion is to be occupied ex-
clusively by the lessee (or any sublessee) of
such portion, and
‘‘(iii) such improvement is placed in
service more than 3 years after the date
the building was first placed in service.
‘‘(B) CERTAIN
IMPROVEMENTS
NOT
IN-
CLUDED.—Such term shall not include any im-
provement for which the expenditure is attrib-
utable to—
‘‘(i) the enlargement of the building,
‘‘(ii) any elevator or escalator,
‘‘(iii) any structural component bene-
fiting a common area, and
‘‘(iv) the internal structural frame-
work of the building.
‘‘(C) DEFINITIONS AND SPECIAL RULES.—
For purposes of this paragraph—
‘‘(i) COMMITMENT TO LEASE TREAT-
ED
AS
LEASE.—A commitment to enter
into a lease shall be treated as a lease, and
the parties to such commitment shall be
treated as lessor and lessee, respectively.
‘‘(ii) RELATED PERSONS.—A lease be-
tween related persons shall not be consid-
ered a lease. For purposes of the preceding
sentence, 
the 
term 
‘related 
persons’
means—
‘‘(I) members of an affiliated
group (as defined in section 1504),
and
‘‘(II) persons having a relation-
ship described in subsection (b) of
section 267; except that, for purposes
of this clause, the phrase ‘80 percent
or more’ shall be substituted for the
phrase ‘more than 50 percent’ each
place it appears in such subsection.
‘‘(D) IMPROVEMENTS MADE BY LESSOR.—
‘‘(i) IN GENERAL.—In the case of an
improvement made by the person who was
the lessor of such improvement when such
improvement was placed in service, such
improvement shall be qualified leasehold
improvement property (if at all) only so
long as such improvement is held by such
person.
‘‘(ii) EXCEPTION
FOR
CHANGES
IN
FORM
OF
BUSINESS.—Property shall not
cease to be qualified leasehold improve-
ment property under clause (i) by reason
of—
‘‘(I) death,
‘‘(II) a transaction to which sec-
tion 381(a) applies, or
‘‘(III) a mere change in the form
of conducting the trade or business so
long as the property is retained in
such trade or business as qualified
leasehold improvement property and
the taxpayer retains a substantial in-
terest in such trade or business.
‘‘(iii) TREATMENT
OF
FAILURES
TO
MAINTAIN
SUBSTANTIAL
INTEREST
IN
TRADE OR BUSINESS.—In the case of prop-
erty to which clause (ii)(III) would apply
but for the failure of the taxpayer to retain
a substantial interest in a trade or busi-
ness, the remaining adjusted basis of such
property shall be depreciated under this
section over 39 years.’’
(c) REQUIREMENT TO USE STRAIGHT LINE METH-
OD.—Paragraph (3) of section 168(b) is amended by add-
ing at the end the following new subparagraph:
‘‘(G) 
Qualified 
leasehold 
improvement
property described in subsection (e)(6).’’
(d) ALTERNATIVE SYSTEM.—The table contained in
section 168(g)(3)(B) is amended by adding at the end the
following new item:
‘‘(E)(iv) .................................................................................
15’’.
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to qualified leasehold improvement
property placed in service after September 10, 2001.
TITLE III—EXTENSIONS OF
CERTAIN EXPIRING PROVISIONS
Subtitle A—Extensions
SEC. 301. ALLOWANCE OF NONREFUNDABLE PERSONAL
CREDITS AGAINST REGULAR AND MINIMUM
TAX LIABILITY.
(a) IN GENERAL.—Paragraph (2) of section 26(a) is
amended—
(1) by striking ‘‘RULE FOR 2000 AND 2001.—’’
and inserting ‘‘RULE
FOR
2000, 2001, 2002, AND
2003.—’’, and
(2) by striking ‘‘during 2000 or 2001,’’ and in-
serting ‘‘during 2000, 2001, 2002, or 2003,’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 904(h) is amended by striking ‘‘dur-
ing 2000 or 2001’’ and inserting ‘‘during 2000,
2001, 2002, or 2003’’.
(2) The amendments made by sections 201(b),
202(f), and 618(b) of the Economic Growth and Tax
Relief Reconciliation Act of 2001 shall not apply to
taxable years beginning during 2002 and 2003.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
SEC. 302. CREDIT FOR QUALIFIED ELECTRIC VEHICLES.
(a) IN GENERAL.—Section 30 is amended—
(1) in subsection (b)(2)—
(A) by striking ‘‘December 31, 2001,’’ and
inserting ‘‘December 31, 2003,’’, and
(B) in subparagraphs (A), (B), and (C), by
striking ‘‘2002’’, ‘‘2003’’, and ‘‘2004’’, respec-
tively, and inserting ‘‘2004’’, ‘‘2005’’, and
‘‘2006’’, respectively, and
(2) in subsection (e), by striking ‘‘December 31,
2004’’ and inserting ‘‘December 31, 2006’’.
(b) CONFORMING AMENDMENTS.—
(1) Subparagraph (C) of section 280F(a)(1) is
amended by adding at the end the following new
clause
‘‘(iii) 
APPLICATION
OF
SUBPARA-
GRAPH.—This subparagraph shall apply to
property placed in service after August 5,
1997, and before January 1, 2007.’’
(2) Subsection (b) of section 971 of the Tax-
payer Relief Act of 1997 is amended by striking
‘‘and before January 1, 2005’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
SEC. 303. CREDIT FOR ELECTRICITY PRODUCED FROM RE-
NEWABLE RESOURCES.
(a) IN GENERAL.—Subparagraphs (A), (B), and (C)
of section 45(c)(3) are each amended by striking ‘‘2002’’
and inserting ‘‘2004’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall take effect on the date of the enact-
ment of this Act.
SEC. 304. WORK OPPORTUNITY CREDIT.
(a) IN GENERAL.—Subparagraph (B) of section
51(c)(4) is amended by striking ‘‘2001’’ and inserting
‘‘2003’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to individuals who begin work
for the employer after December 31, 2001.
SEC. 305. WELFARE-TO-WORK CREDIT.
(a) IN GENERAL.—Subsection (f) of section 51A is
amended by striking ‘‘2001’’ and inserting ‘‘2003’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to individuals who begin work
for the employer after December 31, 2001.
SEC. 306. DEDUCTION FOR CLEAN-FUEL VEHICLES AND
CERTAIN REFUELING PROPERTY.
(a) IN GENERAL.—Section 179A is amended—
(1) in subsection (b)(1)(B)—
(A) by striking ‘‘December 31, 2001,’’ and
inserting ‘‘December 31, 2003,’’, and
(B) in clauses (i), (ii), and (iii), by striking
‘‘2002’’, ‘‘2003’’, and ‘‘2004’’, respectively, and
inserting ‘‘2004’’, ‘‘2005’’, and ‘‘2006’’, respec-
tively, and
(2) in subsection (f), by striking ‘‘December 31,
2004’’ and inserting ‘‘December 31, 2006’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall take effect on the date of the enact-
ment of this Act.
SEC. 307. TAXABLE INCOME LIMIT ON PERCENTAGE DEPLE-
TION FOR OIL AND NATURAL GAS PRODUCED
FROM MARGINAL PROPERTIES.
(a) IN GENERAL.—Subparagraph (H) of section
613A(c)(6) is amended by striking ‘‘2002’’ and inserting
‘‘2004’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to taxable years beginning after
December 31, 2001.
SEC. 308. QUALIFIED ZONE ACADEMY BONDS.
(a) 
IN
GENERAL.—Paragraph 
(1) 
of 
section
1397E(e) is amended by striking ‘‘2000, and 2001’’ and
inserting ‘‘2000, 2001, 2002, and 2003’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on the date of the enact-
ment of this Act.
SEC. 309. COVER OVER OF TAX ON DISTILLED SPIRITS.
(a) IN GENERAL.—Paragraph (1) of section 7652(f)
is amended by striking ‘‘January 1, 2002’’ and inserting
‘‘January 1, 2004’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on the date of the enact-
ment of this Act.
SEC. 310. PARITY IN THE APPLICATION OF CERTAIN LIMITS
TO MENTAL HEALTH BENEFITS.
(a) IN GENERAL.—Subsection (f) of section 9812, as
amended by the Departments of Labor, Health and
Human Services, and Education, and Related Agencies
Appropriations Act, 2002, is amended to read as follows:
‘‘(f) APPLICATION OF SECTION.—This section shall
not apply to benefits for services furnished—
‘‘(1) on or after September 30, 2001, and be-
fore January 1, 2002, and
‘‘(2) after December 31, 2003.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to plan years beginning after
December 31, 2000.
SEC. 311. TEMPORARY SPECIAL RULES FOR TAXATION OF
LIFE INSURANCE COMPANIES.
(a) REDUCTION IN MUTUAL LIFE INSURANCE COM-
PANY DEDUCTIONS NOT TO APPLY IN CERTAIN YEARS.—
Section 809 (relating to reduction in certain deductions
of material life insurance companies) is amended by add-
ing at the end the following:
‘‘(j) DIFFERENTIAL EARNINGS RATE TREATED AS
ZERO FOR CERTAIN YEARS.—Notwithstanding subsection
(c) or (f), the differential earnings rate shall be treated
as zero for purposes of computing both the differential
earnings amount and the recomputed differential earnings
amount for a mutual life insurance company’s taxable
years beginning in 2001, 2002, or 2003.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years beginning after
December 31, 2000.
SEC. 312. AVAILABILITY OF MEDICAL SAVINGS ACCOUNTS.
(a) IN GENERAL.—Paragraphs (2) and (3)(B) of sec-
tion 220(i) (defining cut-off year) are each amended by
striking ‘‘2002’’ each place it appears and inserting
‘‘2003’’.
(b) CONFORMING AMENDMENTS.—
(1) Paragraph (2) of section 220(j) is amended
by striking ‘‘1998, 1999, or 2001’’ each place it ap-
pears and inserting ‘‘1998, 1999, 2001, or 2002’’.
(2) Subparagraph (A) of section 220(j)(4) is
amended by striking ‘‘and 2001’’ and inserting
‘‘2001, and 2002’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
SEC. 313. INCENTIVES FOR INDIAN EMPLOYMENT AND
PROPERTY ON INDIAN RESERVATIONS.
(a) EMPLOYMENT.—Subsection (f) of section 45A is
amended by striking ‘‘December 31, 2003’’ and inserting
‘‘December 31, 2004’’.
(b) PROPERTY.—Paragraph (8) of section 168(j) is
amended by striking ‘‘December 31, 2003’’ and inserting
‘‘December 31, 2004’’.
SEC. 314. SUBPART F EXEMPTION FOR ACTIVE FINANCING.
(a) IN GENERAL.—
(1) Section 953(e)(10) is amended—
(A) by striking ‘‘January 1, 2002’’ and in-
serting ‘‘January 1, 2007’’, and
(B) by striking ‘‘December 31, 2001’’ and
inserting ‘‘December 31, 2006’’.
(2) Section 954(h)(9) is amended by striking
‘‘January 1, 2002’’ and inserting ‘‘January 1,
2007’’.
(b) LIFE INSURANCE AND ANNUITY CONTRACTS.—
(1) IN GENERAL.—Subparagraph (B) of section
954(i)(4) is amended to read as follows:
‘‘(B) LIFE INSURANCE AND ANNUITY CON-
TRACTS.—
‘‘(i) IN
GENERAL.—Except as pro-
vided in clause (ii), the amount of the re-
serve of a qualifying insurance company or
qualifying insurance company branch for
any life insurance or annuity contract shall
be equal to the greater of—
‘‘(I) the net surrender value of
such contract (as defined in section
807(e)(1)(A)), or
‘‘(II) 
the 
reserve 
determined
under paragraph (5).
‘‘(ii) RULING
REQUEST, ETC.—The
amount of the reserve under clause (i)
shall be the foreign statement reserve for
the contract (less any catastrophe, defi-
ciency, equalization, or similar reserves), if,
pursuant to a ruling request submitted by
the taxpayer or as provided in published
guidance, the Secretary determines that
the factors taken into account in deter-
mining the foreign statement reserve pro-
vide an appropriate means of measuring
income.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
SEC. 315. REPEAL OF REQUIREMENT FOR APPROVED DIE-
SEL OR KEROSENE TERMINALS.
(a) IN GENERAL.—Subsection (e) of section 4101 is
hereby repealed.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on January 1, 2002.
Subtitle B—Temporary Assistance
for Needy Families
SEC. 321. REAUTHORIZATION OF TANF SUPPLEMENTAL
GRANTS FOR POPULATION INCREASES FOR
FISCAL YEAR 2002.
Section 403(a)(3) of the Social Security Act (42
U.S.C. 603(a)(3)) is amended by adding at the end the
following:
‘‘(H) REAUTHORIZATION OF GRANTS FOR
FISCAL YEAR 2002.—Notwithstanding any other
provision of this paragraph—
‘‘(i) any State that was a qualifying
State under this paragraph for fiscal year
2001 or any prior fiscal year shall be enti-
tled to receive from the Secretary for fiscal
year 2002 a grant in an amount equal to
the amount required to be paid to the
State under this paragraph for the most
recent fiscal year in which the State was a
qualifying State;
‘‘(ii) subparagraph (G) shall be ap-
plied as if ‘2002’ were substituted for
‘2001’; and
‘‘(iii) out of any money in the Treas-
ury of the United States not otherwise ap-
propriated, there are appropriated for fis-
cal year 2002 such sums as are necessary
for grants under this subparagraph.’’.
SEC. 322. 1-YEAR EXTENSION OF CONTINGENCY FUND
UNDER THE TANF PROGRAM.
Section 403(b) of the Social Security Act (42 U.S.C.
603(b)) is amended—
(1) in paragraph (2), by striking ‘‘and 2001’’
and inserting ‘‘2001, and 2002’’; and
(2) in paragraph (3)(C)(ii), by striking ‘‘2001’’
and inserting ‘‘2002’’.
TITLE IV—TAX BENEFITS FOR
AREA OF NEW YORK CITY
DAMAGED IN TERRORIST AT-
TACKS 
ON 
SEPTEMBER 
11,
2001
SEC. 401. TAX BENEFITS FOR AREA OF NEW YORK CITY
DAMAGED IN TERRORIST ATTACKS ON SEP-
TEMBER 11, 2001.
(a) IN GENERAL.—Chapter 1 is amended by adding
at the end the following new subchapter:
‘‘Subchapter Y—New York Liberty Zone
Benefits
‘‘Sec. 1400L. Tax benefits for New York Liberty Zone.
‘‘SEC. 1400L. TAX BENEFITS FOR NEW YORK LIBERTY ZONE.
‘‘(a) SPECIAL ALLOWANCE FOR CERTAIN PROPERTY
ACQUIRED AFTER SEPTEMBER 10, 2001.—
‘‘(1) ADDITIONAL ALLOWANCE.—In the case of
any qualified New York Liberty Zone property—
‘‘(A) the depreciation deduction provided
by section 167(a) for the taxable year in which
such property is placed in service shall include
an allowance equal to 30 percent of the ad-
justed basis of such property, and
‘‘(B) the adjusted basis of the qualified
New York Liberty Zone property shall be re-
duced by the amount of such deduction before
computing the amount otherwise allowable as a
depreciation deduction under this chapter for
such taxable year and any subsequent taxable
year.
‘‘(2) QUALIFIED
NEW
YORK
LIBERTY
ZONE
PROPERTY.—For purposes of this subsection—
‘‘(A) IN
GENERAL.—The term ‘qualified
New York Liberty Zone property’ means
property—
‘‘(i)(I) to which section 168 applies
(other than railroad grading and tunnel
bores), or
‘‘(II) which is computer software (as
defined in section 167(f)(1)(B)) for which
a deduction is allowable under section
167(a) without regard to this subsection,
‘‘(ii) substantially all of the use of
which is in the New York Liberty Zone
and is in the active conduct of a trade or
business by the taxpayer in such Zone,
‘‘(iii) the original use of which in the
New York Liberty Zone commences with
the taxpayer after September 10, 2001,
‘‘(iv) which is acquired by the tax-
payer by purchase (as defined in section
179(d)) after September 10, 2001, but
only if no written binding contract for the
acquisition was in effect before September
11, 2001, and
‘‘(v) which is placed in service by the
taxpayer on or before the termination date.
The term ‘termination date’ means December
31, 2006 (December 31, 2009, in the case of
nonresidential real property and residential
rental property).
‘‘(B) EXCEPTIONS.—
‘‘(i) 
ALTERNATIVE
DEPRECIATION
PROPERTY.—The term ‘qualified New York
Liberty Zone property’ shall not include
any property to which the alternative de-
preciation system under section 168(g) ap-
plies, determined—
‘‘(I) without regard to paragraph
(7) of section 168(g) (relating to elec-
tion to have system apply), and
‘‘(II) after application of section
280F(b) (relating to listed property
with limited business use).
‘‘(ii) 30 PERCENT
ADDITIONAL
AL-
LOWANCE
PROPERTY.—Such term shall
not include property to which section
168(k) applies.
‘‘(iii) QUALIFIED
LEASEHOLD
IM-
PROVEMENT PROPERTY.—Such term shall
not include any qualified leasehold im-
provement property (as defined in section
168(e)(6)).
‘‘(iv) ELECTION OUT.—If a taxpayer
makes an election under this clause with
respect to any class of property for any
taxable year, this subsection shall not
apply to all property in such class placed
in service during such taxable year.
‘‘(C) SPECIAL RULES.—
‘‘(i) 
SELF-CONSTRUCTED
PROP-
ERTY.—In the case of a taxpayer manufac-
turing, constructing, or producing property
for the taxpayer’s own use, the require-
ments of clause (iv) of subparagraph (A)
shall be treated as met if the taxpayer be-
gins manufacturing, constructing, or pro-
ducing the property after September 10,
2001, and before the termination date.
‘‘(ii) SALE-LEASEBACKS.—For pur-
poses 
of 
subparagraph 
(A)(iii), 
if
property—
‘‘(I) is originally placed in service
after September 10, 2001, by a per-
son, and
‘‘(II) sold and leased back by
such person within 3 months after the
date such property was originally
placed in service,
such property shall be treated as originally
placed in service not earlier than the date
on which such property is used under the
leaseback referred to in subclause (II).
‘‘(D) ALLOWANCE AGAINST ALTERNATIVE
MINIMUM TAX.—The deduction allowed by this
subsection shall be allowed in determining alter-
native minimum taxable income under section
55.
‘‘(b) 5-YEAR RECOVERY PERIOD FOR DEPRECIATION
OF CERTAIN LEASEHOLD IMPROVEMENTS.—
‘‘(1) IN
GENERAL.—For purposes of section
168, the term ‘5-year property’ includes any quali-
fied New York Liberty Zone leasehold improvement
property.
‘‘(2) QUALIFIED
NEW
YORK
LIBERTY
ZONE
LEASEHOLD
IMPROVEMENT
PROPERTY.—For pur-
poses of this section, the term ‘qualified New York
Liberty Zone leasehold improvement property’
means qualified leasehold improvement property (as
defined in section 168(e)(6)) if—
‘‘(A) such building is located in the New
York Liberty Zone,
‘‘(B) such improvement is placed in service
after September 10, 2001, and before January
1, 2007, and
‘‘(C) no written binding contract for such
improvement was in effect before September 11,
2001.
‘‘(3) REQUIREMENT
TO
USE
STRAIGHT
LINE
METHOD.—The 
applicable 
depreciation 
method
under section 168 shall be the straight line method
in the case of qualified New York Liberty Zone
leasehold improvement property.
‘‘(4) 9-YEAR RECOVERY PERIOD UNDER ALTER-
NATIVE SYSTEM.—For purposes of section 168(g),
the class life of qualified New York Liberty Zone
leasehold improvement property shall be 9 years.
‘‘(c) INCREASE
IN EXPENSING UNDER SECTION
179.—
‘‘(1) IN
GENERAL.—For purposes of section
179—
‘‘(A) the limitation under section 179(b)(1)
shall be increased by the lesser of—
‘‘(i) $35,000, or
‘‘(ii) the cost of section 179 property
which is qualified New York Liberty Zone
property placed in service during the tax-
able year, and
‘‘(B) the amount taken into account under
section 179(b)(2) with respect to any section
179 property which is qualified New York Lib-
erty Zone property shall be 50 percent of the
cost thereof.
‘‘(2) RECAPTURE.—Rules similar to the rules
under section 179(d)(10) shall apply with respect to
any qualified New York Liberty Zone property which
ceases to be used in the New York Liberty Zone.
‘‘(d) TAX-EXEMPT BOND FINANCING.—
‘‘(1) IN GENERAL.—For purposes of this title,
any qualified New York Liberty Bond shall be treat-
ed as an exempt facility bond.
‘‘(2) QUALIFIED NEW YORK LIBERTY BOND.—
For purposes of this subsection, the term ‘qualified
New York Liberty Bond’ means any bond issued as
part of an issue if—
‘‘(A) 95 percent or more of the net pro-
ceeds (as defined in section 150(a)(3)) of such
issue are to be used for qualified project costs,
‘‘(B) such bond is issued by the State of
New York or any political subdivision thereof,
of the Air Transportation Safety and System Stabilization
Act (Public Law 107–42).
SEC. 515. TREATMENT OF CERTAIN STRUCTURED SETTLE-
MENT PAYMENTS.
(a) IN GENERAL.—Subtitle E is amended by adding
at the end the following new chapter:
‘‘CHAPTER 55—STRUCTURED
SETTLEMENT FACTORING TRANSACTIONS
‘‘Sec. 5891. Structured settlement factoring transactions.
‘‘SEC. 5891. STRUCTURED SETTLEMENT FACTORING TRANS-
ACTIONS.
‘‘(a) IMPOSITION OF TAX.—There is hereby imposed
on any person who acquires directly or indirectly struc-
tured settlement payment rights in a structured settle-
ment factoring transaction a tax equal to 40 percent of
the factoring discount as determined under subsection
(c)(4) with respect to such factoring transaction.
‘‘(b) EXCEPTION FOR CERTAIN APPROVED TRANS-
ACTIONS.—
‘‘(1) IN GENERAL.—The tax under subsection
(a) shall not apply in the case of a structured settle-
ment factoring transaction in which the transfer of
structured settlement payment rights is approved in
advance in a qualified order.
‘‘(d) COORDINATION WITH OTHER PROVISIONS.—
‘‘(1) IN GENERAL.—If the applicable require-
ments of sections 72, 104(a)(1), 104(a)(2), 130, and
461(h) were satisfied at the time the structured set-
tlement involving structured settlement payment
rights was entered into, the subsequent occurrence
of a structured settlement factoring transaction shall
not affect the application of the provisions of such
sections to the parties to the structured settlement
(including an assignee under a qualified assignment
under section 130) in any taxable year.
‘‘(2) NO WITHHOLDING OF TAX.—The provi-
sions of section 3405 regarding withholding of tax
shall not apply to the person making the payments
in the event of a structured settlement factoring
transaction.’’.
(b) CLERICAL AMENDMENT.—The table of chapters
for subtitle E is amended by adding at the end the fol-
lowing new item:
‘‘Chapter 55. Structured settlement factoring transactions.’’.
(c) EFFECTIVE DATES.—
(1) IN GENERAL.—The amendments made by
this section (other than the provisions of section
5891(d) of the Internal Revenue Code of 1986, as
added by this section) shall apply to structured set-
tlement factoring transactions (as defined in section