H. R. 6081—14 
‘‘(20) any benefit or payment which is excludable from 
the gross income of the employee under section 139B(b).’’. 
(c) WAGE WITHHOLDING.—Section 3401(a) (defining wages) is 
amended by striking ‘‘or’’ at the end of paragraph (21), by striking 
the period at the end of paragraph (22) and inserting ‘‘; or’’, and 
by inserting after paragraph (22) the following new paragraph: 
‘‘(23) for any benefit or payment which is excludable from 
the gross income of the employee under section 139B(b).’’. 
(d) EFFECTIVE DATE.—The amendments made by this section 
shall take effect as if included in section 5 of the Mortgage Forgive-
ness Debt Relief Act of 2007. 
TITLE II—IMPROVEMENTS IN 
SUPPLEMENTAL SECURITY INCOME 
SEC. 201. TREATMENT OF UNIFORMED SERVICE CASH REMUNERATION 
AS EARNED INCOME. 
(a) IN GENERAL.—Section 1612(a)(1)(A) of the Social Security 
Act (42 U.S.C. 1382a(a)(1)(A)) is amended by inserting ‘‘(and, in 
the case of cash remuneration paid for service as a member of 
a uniformed service (other than payments described in paragraph 
(2)(H) of this subsection or subsection (b)(20)), without regard to 
the limitations contained in section 209(d))’’ before the semicolon. 
(b) CERTAIN HOUSING PAYMENTS TREATED AS IN-KIND SUPPORT 
AND MAINTENANCE.—Section 1612(a)(2) of such Act (42 U.S.C. 
1382a(a)(2)) is amended— 
(1) by striking ‘‘and’’ at the end of subparagraph (F); 
(2) by striking the period at the end of subparagraph (G) 
and inserting ‘‘; and’’; and 
(3) by adding at the end the following: 
‘‘(H) payments to or on behalf of a member of a uni-
formed service for housing of the member (and his or 
her dependents, if any) on a facility of a uniformed service, 
including payments provided under section 403 of title 
37, United States Code, for housing that is acquired or 
constructed under subchapter IV of chapter 169 of title 
10 of such Code, or any related provision of law, and 
any such payments shall be treated as support and mainte-
nance in kind subject to subparagraph (A) of this para-
graph.’’. 
SEC. 202. STATE ANNUITIES FOR CERTAIN VETERANS TO BE DIS-
REGARDED IN DETERMINING SUPPLEMENTAL SECURITY 
INCOME BENEFITS. 
(a) INCOME DISREGARD.—Section 1612(b) of the Social Security 
Act (42 U.S.C. 1382a(b)) is amended— 
(1) by striking ‘‘and’’ at the end of paragraph (22); 
(2) by striking the period at the end of paragraph (23) 
and inserting ‘‘; and’’; and 
(3) by adding at the end the following: 
‘‘(24) any annuity paid by a State to the individual (or 
such spouse) on the basis of the individual’s being a veteran 
(as defined in section 101 of title 38, United States Code), 
and blind, disabled, or aged.’’. 
(b) RESOURCE DISREGARD.—Section 1613(a) of such Act (42 
U.S.C. 1382b(a)) is amended—
H. R. 6081—15 
(1) by striking ‘‘and’’ at the end of paragraph (14); 
(2) by striking the period at the end of paragraph (15) 
and inserting ‘‘; and’’; and 
(3) by inserting after paragraph (15) the following: 
‘‘(16) for the month of receipt and every month thereafter, 
any annuity paid by a State to the individual (or such spouse) 
on the basis of the individual’s being a veteran (as defined 
in section 101 of title 38, United States Code), and blind, 
disabled, or aged.’’. 
SEC. 203. EXCLUSION OF AMERICORPS BENEFITS FOR PURPOSES OF 
DETERMINING SUPPLEMENTAL SECURITY INCOME ELIGI-
BILITY AND BENEFIT AMOUNTS. 
Section 1612(b) of the Social Security Act (42 U.S.C. 1382a(b)), 
as amended by section 202(a) of this Act, is amended— 
(1) in paragraph (23), by striking ‘‘and’’ at the end; 
(2) in paragraph (24), by striking the period and inserting 
‘‘; and’’; and 
(3) by adding at the end the following: 
‘‘(25) any benefit (whether cash or in-kind) conferred upon 
(or paid on behalf of) a
participant in an AmeriCorps position 
approved by the Corporation for
National and Community 
Service under section 123 of the National and Community 
Service Act of 1990 (42 U.S.C. 12573).’’. 
SEC. 204. EFFECTIVE DATE. 
The amendments made by this title shall be effective with 
respect to benefits payable for months beginning after 60 days 
after the date of the enactment of this Act. 
TITLE III—REVENUE PROVISIONS 
SEC. 301. REVISION OF TAX RULES ON EXPATRIATION. 
(a) IN GENERAL.—Subpart A of part II of subchapter N of 
chapter 1 is amended by inserting after section 877 the following 
new section: 
‘‘SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION. 
‘‘(a) GENERAL RULES.—For purposes of this subtitle— 
‘‘(1) MARK TO MARKET.—All property of a covered expatriate 
shall be treated as sold on the day before the expatriation 
date for its fair market value. 
‘‘(2) RECOGNITION OF GAIN OR LOSS.—In the case of any 
sale under paragraph (1)— 
‘‘(A) notwithstanding any other provision of this title, 
any gain arising from such sale shall be taken into account 
for the taxable year of the sale, and 
‘‘(B) any loss arising from such sale shall be taken 
into account for the taxable year of the sale to the extent 
otherwise provided by this title, except that section 1091 
shall not apply to any such loss. 
Proper adjustment shall be made in the amount of any gain 
or loss subsequently realized for gain or loss taken into account 
under the preceding sentence, determined without regard to 
paragraph (3). 
‘‘(3) EXCLUSION FOR CERTAIN GAIN.—
H. R. 6081—16 
‘‘(A) IN GENERAL.—The amount which would (but for 
this paragraph) be includible in the gross income of any 
individual by reason of paragraph (1) shall be reduced 
(but not below zero) by $600,000. 
‘‘(B) ADJUSTMENT FOR INFLATION.— 
‘‘(i) IN GENERAL.—In the case of any taxable year 
beginning in a calendar year after 2008, the dollar 
amount in subparagraph (A) shall be increased by an 
amount equal to— 
‘‘(I) such dollar amount, multiplied by 
‘‘(II) the cost-of-living adjustment determined 
under section 1(f)(3) for the calendar year in which 
the taxable year begins, by substituting ‘calendar 
year 2007’ for ‘calendar year 1992’ in subparagraph 
(B) thereof. 
‘‘(ii) ROUNDING.—If any amount as adjusted under 
clause (i) is not a multiple of $1,000, such amount 
shall be rounded to the nearest multiple of $1,000. 
‘‘(b) ELECTION TO DEFER TAX.— 
‘‘(1) IN GENERAL.—If the taxpayer elects the application 
of this subsection with respect to any property treated as sold 
by reason of subsection (a), the time for payment of the addi-
tional tax attributable to such property shall be extended until 
the due date of the return for the taxable year in which such 
property is disposed of (or, in the case of property disposed 
of in a transaction in which gain is not recognized in whole 
or in part, until such other date as the Secretary may prescribe). 
‘‘(2) DETERMINATION OF TAX WITH RESPECT TO PROPERTY.— 
For purposes of paragraph (1), the additional tax attributable 
to any property is an amount which bears the same ratio 
to the additional tax imposed by this chapter for the taxable 
year solely by reason of subsection (a) as the gain taken into 
account under subsection (a) with respect to such property 
bears to the total gain taken into account under subsection 
(a) with respect to all property to which subsection (a) applies. 
‘‘(3) TERMINATION OF EXTENSION.—The due date for pay-
ment of tax may not be extended under this subsection later 
than the due date for the return of tax imposed by this chapter 
for the taxable year which includes the date of death of the 
expatriate (or, if earlier, the time that the security provided 
with respect to the property fails to meet the requirements 
of paragraph (4), unless the taxpayer corrects such failure 
within the time specified by the Secretary). 
‘‘(4) SECURITY.— 
‘‘(A) IN GENERAL.—No election may be made under 
paragraph (1) with respect to any property unless adequate 
security is provided with respect to such property. 
‘‘(B) ADEQUATE SECURITY.—For purposes of subpara-
graph (A), security with respect to any property shall be 
treated as adequate security if— 
‘‘(i) it is a bond which is furnished to, and accepted 
by, the Secretary, which is conditioned on the payment 
of tax (and interest thereon), and which meets the 
requirements of section 6325, or 
‘‘(ii) it is another form of security for such payment 
(including letters of credit) that meets such require-
ments as the Secretary may prescribe.
H. R. 6081—17 
‘‘(5) WAIVER OF CERTAIN RIGHTS.—No election may be made 
under paragraph (1) unless the taxpayer makes an irrevocable 
waiver of any right under any treaty of the United States 
which would preclude assessment or collection of any tax 
imposed by reason of this section. 
‘‘(6) ELECTIONS.—An election under paragraph (1) shall 
only apply to property described in the election and, once made, 
is irrevocable. 
‘‘(7) INTEREST.—For purposes of section 6601, the last date 
for the payment of tax shall be determined without regard 
to the election under this subsection. 
‘‘(c) EXCEPTION FOR CERTAIN PROPERTY.—Subsection (a) shall 
not apply to— 
‘‘(1) any deferred compensation item (as defined in sub-
section (d)(4)), 
‘‘(2) any specified tax deferred account (as defined in sub-
section (e)(2)), and 
‘‘(3) any interest in a nongrantor trust (as defined in sub-
section (f)(3)). 
‘‘(d) TREATMENT OF DEFERRED COMPENSATION ITEMS.— 
‘‘(1) WITHHOLDING ON ELIGIBLE DEFERRED COMPENSATION 
ITEMS.— 
‘‘(A) IN GENERAL.—In the case of any eligible deferred 
compensation item, the payor shall deduct and withhold 
from any taxable payment to a covered expatriate with 
respect to such item a tax equal to 30 percent thereof. 
‘‘(B) TAXABLE PAYMENT.—For purposes of subparagraph 
(A), the term ‘taxable payment’ means with respect to 
a covered expatriate any payment to the extent it would 
be includible in the gross income of the covered expatriate 
if such expatriate continued to be subject to tax as a 
citizen or resident of the United States. A deferred com-
pensation item shall be taken into account as a payment 
under the preceding sentence when such item would be 
so includible. 
‘‘(2) OTHER DEFERRED COMPENSATION ITEMS.—In the case 
of any deferred compensation item which is not an eligible 
deferred compensation item— 
‘‘(A)(i) with respect to any deferred compensation item 
to which clause (ii) does not apply, an amount equal to 
the present value of the covered expatriate’s accrued benefit 
shall be treated as having been received by such individual 
on the day before the expatriation date as a distribution 
under the plan, and 
‘‘(ii) with respect to any deferred compensation item 
referred to in paragraph (4)(D), the rights of the covered 
expatriate to such item shall be treated as becoming 
transferable and not subject to a substantial risk of for-
feiture on the day before the expatriation date, 
‘‘(B) no early distribution tax shall apply by reason 
of such treatment, and 
‘‘(C) appropriate adjustments shall be made to subse-
quent distributions from the plan to reflect such treatment. 
‘‘(3) ELIGIBLE DEFERRED COMPENSATION ITEMS.—For pur-
poses of this subsection, the term ‘eligible deferred compensa-
tion item’ means any deferred compensation item with respect 
to which—
H. R. 6081—18 
‘‘(A) the payor of such item is— 
‘‘(i) a United States person, or 
‘‘(ii) a person who is not a United States person 
but who elects to be treated as a United States person 
for purposes of paragraph (1) and meets such require-
ments as the Secretary may provide to ensure that 
the payor will meet the requirements of paragraph 
(1), and 
‘‘(B) the covered expatriate— 
‘‘(i) notifies the payor of his status as a covered 
expatriate, and 
‘‘(ii) makes an irrevocable waiver of any right to 
claim any reduction under any treaty with the United 
States in withholding on such item. 
‘‘(4) DEFERRED COMPENSATION ITEM.—For purposes of this 
subsection, the term ‘deferred compensation item’ means— 
‘‘(A) any interest in a plan or arrangement described 
in section 219(g)(5), 
‘‘(B) any interest in a foreign pension plan or similar 
retirement arrangement or program, 
‘‘(C) any item of deferred compensation, and 
‘‘(D) any property, or right to property, which the indi-
vidual is entitled to receive in connection with the perform-
ance of services to the extent not previously taken into 
account under section 83 or in accordance with section 
83. 
‘‘(5) EXCEPTION.—Paragraphs (1) and (2) shall not apply 
to any deferred compensation item to the extent attributable 
to services performed outside the United States while the cov-
ered expatriate was not a citizen or resident of the United 
States. 
‘‘(6) SPECIAL RULES.— 
‘‘(A) APPLICATION
OF
WITHHOLDING
RULES.—Rules 
similar to the rules of subchapter B of chapter 3 shall 
apply for purposes of this subsection. 
‘‘(B) APPLICATION OF TAX.—Any item subject to the 
withholding tax imposed under paragraph (1) shall be sub-
ject to tax under section 871. 
‘‘(C) 
COORDINATION
WITH
OTHER
WITHHOLDING 
REQUIREMENTS.—Any item subject to withholding under 
paragraph (1) shall not be subject to withholding under 
section 1441 or chapter 24. 
‘‘(e) TREATMENT OF SPECIFIED TAX DEFERRED ACCOUNTS.— 
‘‘(1) ACCOUNT TREATED AS DISTRIBUTED.—In the case of 
any interest in a specified tax deferred account held by a 
covered expatriate on the day before the expatriation date— 
‘‘(A) the covered expatriate shall be treated as receiving 
a distribution of his entire interest in such account on 
the day before the expatriation date, 
‘‘(B) no early distribution tax shall apply by reason 
of such treatment, and 
‘‘(C) appropriate adjustments shall be made to subse-
quent distributions from the account to reflect such treat-
ment. 
‘‘(2) SPECIFIED TAX DEFERRED ACCOUNT.—For purposes of 
paragraph (1), the term ‘specified tax deferred account’ means 
an individual retirement plan (as defined in section 7701(a)(37))
H. R. 6081—19 
other than any arrangement described in subsection (k) or 
(p) of section 408, a qualified tuition program (as defined in 
section 529), a Coverdell education savings account (as defined 
in section 530), a health savings account (as defined in section 
223), and an Archer MSA (as defined in section 220). 
‘‘(f) SPECIAL RULES FOR NONGRANTOR TRUSTS.— 
‘‘(1) IN GENERAL.—In the case of a distribution (directly 
or indirectly) of any property from a nongrantor trust to a 
covered expatriate— 
‘‘(A) the trustee shall deduct and withhold from such 
distribution an amount equal to 30 percent of the taxable 
portion of the distribution, and 
‘‘(B) if the fair market value of such property exceeds 
its adjusted basis in the hands of the trust, gain shall 
be recognized to the trust as if such property were sold 
to the expatriate at its fair market value. 
‘‘(2) TAXABLE PORTION.—For purposes of this subsection, 
the term ‘taxable portion’ means, with respect to any distribu-
tion, that portion of the distribution which would be includible 
in the gross income of the covered expatriate if such expatriate 
continued to be subject to tax as a citizen or resident of the 
United States. 
‘‘(3) NONGRANTOR TRUST.—For purposes of this subsection, 
the term ‘nongrantor trust’ means the portion of any trust 
that the individual is not considered the owner of under subpart 
E of part I of subchapter J. The determination under the 
preceding sentence shall be made immediately before the 
expatriation date. 
‘‘(4) SPECIAL RULES RELATING TO WITHHOLDING.—For pur-
poses of this subsection— 
‘‘(A) rules similar to the rules of subsection (d)(6) shall 
apply, and 
‘‘(B) the covered expatriate shall be treated as having 
waived any right to claim any reduction under any treaty 
with the United States in withholding on any distribution 
to which paragraph (1)(A) applies unless the covered expa-
triate agrees to such other treatment as the Secretary 
determines appropriate. 
‘‘(5) APPLICATION.—This subsection shall apply to a non-
grantor trust only if the covered expatriate was a beneficiary 
of the trust on the day before the expatriation date. 
‘‘(g) DEFINITIONS AND SPECIAL RULES RELATING TO EXPATRIA-
TION.—For purposes of this section— 
‘‘(1) COVERED EXPATRIATE.— 
‘‘(A) IN GENERAL.—The term ‘covered expatriate’ means 
an expatriate who meets the requirements of subparagraph 
(A), (B), or (C) of section 877(a)(2). 
‘‘(B) EXCEPTIONS.—An individual shall not be treated 
as meeting the requirements of subparagraph (A) or (B) 
of section 877(a)(2) if— 
‘‘(i) the individual— 
‘‘(I) became at birth a citizen of the United 
States and a citizen of another country and, as 
of the expatriation date, continues to be a citizen 
of, and is taxed as a resident of, such other country, 
and
H. R. 6081—20 
‘‘(II) has been a resident of the United States 
(as defined in section 7701(b)(1)(A)(ii)) for not more 
than 10 taxable years during the 15-taxable year 
period ending with the taxable year during which 
the expatriation date occurs, or 
‘‘(ii)(I) the individual’s relinquishment of United 
States citizenship occurs before such individual attains 
age 181⁄2, and 
‘‘(II) the individual has been a resident of the 
United States (as so defined) for not more than 10 
taxable years before the date of relinquishment. 
‘‘(C) COVERED EXPATRIATES ALSO SUBJECT TO TAX AS 
CITIZENS OR RESIDENTS.—In the case of any covered expa-
triate who is subject to tax as a citizen or resident of 
the United States for any period beginning after the 
expatriation date, such individual shall not be treated as 
a covered expatriate during such period for purposes of 
subsections (d)(1) and (f) and section 2801. 
‘‘(2) EXPATRIATE.—The term ‘expatriate’ means— 
‘‘(A) any United States citizen who relinquishes his 
citizenship, and 
‘‘(B) any long-term resident of the United States who 
ceases to be a lawful permanent resident of the United 
States (within the meaning of section 7701(b)(6)). 
‘‘(3) EXPATRIATION
DATE.—The term ‘expatriation date’ 
means— 
‘‘(A) the date an individual relinquishes United States 
citizenship, or 
‘‘(B) in the case of a long-term resident of the United 
States, the date on which the individual ceases to be a 
lawful permanent resident of the United States (within 
the meaning of section 7701(b)(6)). 
‘‘(4) RELINQUISHMENT OF CITIZENSHIP.—A citizen shall be 
treated as relinquishing his United States citizenship on the 
earliest of— 
‘‘(A) the date the individual renounces his United 
States nationality before a diplomatic or consular officer 
of the United States pursuant to paragraph (5) of section 
349(a) of the Immigration and Nationality Act (8 U.S.C. 
1481(a)(5)), 
‘‘(B) the date the individual furnishes to the United 
States Department of State a signed statement of voluntary 
relinquishment of United States nationality confirming the 
performance of an act of expatriation specified in paragraph 
(1), (2), (3), or (4) of section 349(a) of the Immigration 
and Nationality Act (8 U.S.C. 1481(a)(1)–(4)), 
‘‘(C) the date the United States Department of State 
issues to the individual a certificate of loss of nationality, 
or 
‘‘(D) the date a court of the United States cancels 
a naturalized citizen’s certificate of naturalization. 
Subparagraph (A) or (B) shall not apply to any individual 
unless the renunciation or voluntary relinquishment is subse-
quently approved by the issuance to the individual of a certifi-
cate of loss of nationality by the United States Department 
of State.
H. R. 6081—21 
‘‘(5) LONG-TERM RESIDENT.—The term ‘long-term resident’ 
has the meaning given to such term by section 877(e)(2). 
‘‘(6) EARLY DISTRIBUTION TAX.—The term ‘early distribution 
tax’ means any increase in tax imposed under section 72(t), 
220(e)(4), 223(f)(4), 409A(a)(1)(B), 529(c)(6), or 530(d)(4). 
‘‘(h) OTHER RULES.— 
‘‘(1) TERMINATION OF DEFERRALS, ETC.—In the case of any 
covered expatriate, notwithstanding any other provision of this 
title— 
‘‘(A) any time period for acquiring property which 
would result in the reduction in the amount of gain recog-
nized with respect to property disposed of by the taxpayer 
shall terminate on the day before the expatriation date, 
and 
‘‘(B) any extension of time for payment of tax shall 
cease to apply on the day before the expatriation date 
and the unpaid portion of such tax shall be due and payable 
at the time and in the manner prescribed by the Secretary. 
‘‘(2) STEP-UP IN BASIS.—Solely for purposes of determining 
any tax imposed by reason of subsection (a), property which 
was held by an individual on the date the individual first 
became a resident of the United States (within the meaning 
of section 7701(b)) shall be treated as having a basis on such 
date of not less than the fair market value of such property 
on such date. The preceding sentence shall not apply if the 
individual elects not to have such sentence apply. Such an 
election, once made, shall be irrevocable. 
‘‘(3) COORDINATION WITH SECTION 684.—If the expatriation 
of any individual would result in the recognition of gain under 
section 684, this section shall be applied after the application 
of section 684. 
‘‘(i) REGULATIONS.—The Secretary shall prescribe such regula-
tions as may be necessary or appropriate to carry out the purposes 
of this section.’’. 
(b) TAX ON GIFTS AND BEQUESTS RECEIVED BY UNITED STATES 
CITIZENS AND RESIDENTS FROM EXPATRIATES.— 
(1) IN GENERAL.—Subtitle B (relating to estate and gift 
taxes) is amended by inserting after chapter 14 the following 
new chapter: 
‘‘CHAPTER 15—GIFTS AND BEQUESTS FROM 
EXPATRIATES 
‘‘Sec. 2801. Imposition of tax. 
‘‘SEC. 2801. IMPOSITION OF TAX. 
‘‘(a) IN GENERAL.—If, during any calendar year, any United 
States citizen or resident receives any covered gift or bequest, 
there is hereby imposed a tax equal to the product of— 
‘‘(1) the highest rate of tax specified in the table contained 
in section 2001(c) as in effect on the date of such receipt 
(or, if greater, the highest rate of tax specified in the table 
applicable under section 2502(a) as in effect on the date), and 
‘‘(2) the value of such covered gift or bequest. 
‘‘(b) TAX TO BE PAID BY RECIPIENT.—The tax imposed by sub-
section (a) on any covered gift or bequest shall be paid by the 
person receiving such gift or bequest.
H. R. 6081—22 
‘‘(c) EXCEPTION FOR CERTAIN GIFTS.—Subsection (a) shall apply 
only to the extent that the value of covered gifts and bequests 
received by any person during the calendar year exceeds the dollar 
amount in effect under section 2503(b) for such calendar year. 
‘‘(d) TAX REDUCED
BY FOREIGN GIFT
OR ESTATE TAX.—The 
tax imposed by subsection (a) on any covered gift or bequest shall 
be reduced by the amount of any gift or estate tax paid to a 
foreign country with respect to such covered gift or bequest. 
‘‘(e) COVERED GIFT OR BEQUEST.— 
‘‘(1) IN GENERAL.—For purposes of this chapter, the term 
‘covered gift or bequest’ means— 
‘‘(A) any property acquired by gift directly or indirectly 
from an individual who, at the time of such acquisition, 
is a covered expatriate, and 
‘‘(B) any property acquired directly or indirectly by 
reason of the death of an individual who, immediately 
before such death, was a covered expatriate. 
‘‘(2) EXCEPTIONS FOR TRANSFERS OTHERWISE SUBJECT TO 
ESTATE OR GIFT TAX.—Such term shall not include— 
‘‘(A) any property shown on a timely filed return of 
tax imposed by chapter 12 which is a taxable gift by the 
covered expatriate, and 
‘‘(B) any property included in the gross estate of the 
covered expatriate for purposes of chapter 11 and shown 
on a timely filed return of tax imposed by chapter 11 
of the estate of the covered expatriate. 
‘‘(3) EXCEPTIONS FOR TRANSFERS TO SPOUSE OR CHARITY.— 
Such term shall not include any property with respect to which 
a deduction would be allowed under section 2055, 2056, 2522, 
or 2523, whichever is appropriate, if the decedent or donor 
were a United States person. 
‘‘(4) TRANSFERS IN TRUST.— 
‘‘(A) DOMESTIC TRUSTS.—In the case of a covered gift 
or bequest made to a domestic trust— 
‘‘(i) subsection (a) shall apply in the same manner 
as if such trust were a United States citizen, and 
‘‘(ii) the tax imposed by subsection (a) on such 
gift or bequest shall be paid by such trust. 
‘‘(B) FOREIGN TRUSTS.— 
‘‘(i) IN
GENERAL.—In the case of a covered gift 
or bequest made to a foreign trust, subsection (a) shall 
apply to any distribution attributable to such gift or 
bequest from such trust (whether from income or cor-
pus) to a United States citizen or resident in the same 
manner as if such distribution were a covered gift 
or bequest. 
‘‘(ii) DEDUCTION
FOR
TAX
PAID
BY
RECIPIENT.— 
There shall be allowed as a deduction under section 
164 the amount of tax imposed by this section which 
is paid or accrued by a United States citizen or resident 
by reason of a distribution from a foreign trust, but 
only to the extent such tax is imposed on the portion 
of such distribution which is included in the gross 
income of such citizen or resident. 
‘‘(iii) ELECTION
TO
BE
TREATED
AS
DOMESTIC 
TRUST.—Solely for purposes of this section, a foreign 
trust may elect to be treated as a domestic trust.
H. R. 6081—23 
Such an election may be revoked with the consent 
of the Secretary. 
‘‘(f) COVERED EXPATRIATE.—For purposes of this section, the 
term ‘covered expatriate’ has the meaning given to such term by 
section 877A(g)(1).’’. 
(2) CLERICAL AMENDMENT.—The table of chapters for sub-
title B is amended by inserting after the item relating to 
chapter 14 the following new item: 
‘‘CHAPTER 15. GIFTS AND BEQUESTS FROM EXPATRIATES.’’. 
(c) DEFINITION OF TERMINATION OF UNITED STATES CITIZEN-
SHIP.— 
(1) IN GENERAL.—Section 7701(a) is amended by adding 
at the end the following new paragraph: 
‘‘(50) TERMINATION OF UNITED STATES CITIZENSHIP.— 
‘‘(A) IN
GENERAL.—An individual shall not cease to 
be treated as a United States citizen before the date on 
which the individual’s citizenship is treated as relinquished 
under section 877A(g)(4). 
‘‘(B) DUAL CITIZENS.—Under regulations prescribed by 
the Secretary, subparagraph (A) shall not apply to an indi-
vidual who became at birth a citizen of the United States 
and a citizen of another country.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Paragraph (1) of section 877(e) is amended to read 
as follows: 
‘‘(1) IN GENERAL.—Any long-term resident of the United 
States who ceases to be a lawful permanent resident of the 
United States (within the meaning of section 7701(b)(6)) shall 
be treated for purposes of this section and sections 2107, 2501, 
and 6039G in the same manner as if such resident were a 
citizen of the United States who lost United States citizenship 
on the date of such cessation or commencement.’’. 
(B) Paragraph (6) of section 7701(b) is amended by 
adding at the end the following flush sentence: 
‘‘An individual shall cease to be treated as a lawful permanent 
resident of the United States if such individual commences 
to be treated as a resident of a foreign country under the 
provisions of a tax treaty between the United States and the 
foreign country, does not waive the benefits of such treaty 
applicable to residents of the foreign country, and notifies the 
Secretary of the commencement of such treatment.’’. 
(C) Section 7701 is amended by striking subsection 
(n) and by redesignating subsections (o) and (p) as sub-
sections (n) and (o), respectively. 
(d) TERMINATION OF SECTION 877.—Section 877 is amended 
by adding at the end the following new subsection: 
‘‘(h) TERMINATION.—This section shall not apply to any indi-
vidual whose expatriation date (as defined in section 877A(g)(3)) 
is on or after the date of the enactment of this subsection.’’. 
(e) INFORMATION RETURNS.—Section 6039G is amended— 
(1) by inserting ‘‘or 877A’’ after ‘‘section 877(b)’’ in sub-
section (a), and 
(2) by inserting ‘‘or 877A’’ after ‘‘section 877(a)’’ in sub-
section (d).
H. R. 6081—24 
(f) CLERICAL AMENDMENT.—The table of sections for subpart 
A of part II of subchapter N of chapter 1 is amended by inserting 
after the item relating to section 877 the following new item: 
‘‘Sec. 877A. Tax responsibilities of expatriation.’’. 
(g) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in this subsection, 
the amendments made by this section shall apply to any indi-
vidual whose expatriation date (as so defined) is on or after 
the date of the enactment of this Act. 
(2) GIFTS AND BEQUESTS.—Chapter 15 of the Internal Rev-
enue Code of 1986 (as added by subsection (b)) shall apply 
to covered gifts and bequests (as defined in section 2801 of 
such Code, as so added) received on or after the date of the 
enactment of this Act from transferors (or from the estates 
of transferors) whose expatriation date is on or after such 
date of enactment. 
SEC. 302. CERTAIN DOMESTICALLY CONTROLLED FOREIGN PERSONS 
PERFORMING SERVICES UNDER CONTRACT WITH UNITED 
STATES 
GOVERNMENT 
TREATED 
AS 
AMERICAN 
EMPLOYERS. 
(a) FICA TAXES.—Section 3121 (relating to definitions) is 
amended by adding at the end the following new subsection: 
‘‘(z) TREATMENT OF CERTAIN FOREIGN PERSONS AS AMERICAN 
EMPLOYERS.— 
‘‘(1) IN
GENERAL.—If any employee of a foreign person 
is performing services in connection with a contract between 
the United States Government (or any instrumentality thereof) 
and any member of any domestically controlled group of entities 
which includes such foreign person, such foreign person shall 
be treated for purposes of this chapter as an American employer 
with respect to such services performed by such employee. 
‘‘(2) DOMESTICALLY CONTROLLED GROUP OF ENTITIES.—For 
purposes of this subsection— 
‘‘(A) IN GENERAL.—The term ‘domestically controlled 
group of entities’ means a controlled group of entities the 
common parent of which is a domestic corporation. 
‘‘(B) CONTROLLED GROUP OF ENTITIES.—The term ‘con-
trolled group of entities’ means a controlled group of cor-
porations as defined in section 1563(a)(1), except that— 
‘‘(i) ‘more than 50 percent’ shall be substituted 
for ‘at least 80 percent’ each place it appears therein, 
and 
‘‘(ii) the determination shall be made without 
regard to subsections (a)(4) and (b)(2) of section 1563. 
A partnership or any other entity (other than a corporation) 
shall be treated as a member of a controlled group of 
entities if such entity is controlled (within the meaning 
of section 954(d)(3)) by members of such group (including 
any entity treated as a member of such group by reason 
of this sentence). 
‘‘(3) LIABILITY OF COMMON PARENT.—In the case of a foreign 
person who is a member of any domestically controlled group 
of entities, the common parent of such group shall be jointly 
and severally liable for any tax under this chapter for which 
such foreign person is liable by reason of this subsection, and
H. R. 6081—25 
for any penalty imposed on such person by this title with 
respect to any failure to pay such tax or to file any return 
or statement with respect to such tax or wages subject to 
such tax. No deduction shall be allowed under this title for 
any liability imposed by the preceding sentence. 
‘‘(4) PROVISIONS PREVENTING DOUBLE TAXATION.— 
‘‘(A) AGREEMENTS.—Paragraph (1) shall not apply to 
any services which are covered by an agreement under 
subsection (l). 
‘‘(B) EQUIVALENT FOREIGN TAXATION.—Paragraph (1) 
shall not apply to any services if the employer establishes 
to the satisfaction of the Secretary that the remuneration 
paid by such employer for such services is subject to a 
tax imposed by a foreign country which is substantially 
equivalent to the taxes imposed by this chapter. 
‘‘(5) CROSS REFERENCE.—For relief from taxes in cases cov-
ered by certain international agreements, see sections 3101(c) 
and 3111(c).’’. 
(b) SOCIAL SECURITY BENEFITS.—Subsection (e) of section 210 
of the Social Security Act (42 U.S.C. 410(e)) is amended— 
(1) by striking ‘‘(e) The term’’ and inserting ‘‘(e)(1) The 
term’’, 
(2) by redesignating clauses (1) through (6) as clauses 
(A) through (F), respectively, and 
(3) by adding at the end the following new paragraph: 
‘‘(2)(A) If any employee of a foreign person is performing serv-
ices in connection with a contract between the United States 
Government (or any instrumentality thereof) and any member of 
any domestically controlled group of entities which includes such 
foreign person, such foreign person shall be treated as an American 
employer with respect to such services performed by such employee. 
‘‘(B) For purposes of this paragraph— 
‘‘(i) The term ‘domestically controlled group of entities’ 
means a controlled group of entities the common parent of 
which is a domestic corporation. 
‘‘(ii) The term ‘controlled group of entities’ means a con-
trolled group of corporations as defined in section 1563(a)(1) 
of the Internal Revenue Code of 1986, except that— 
‘‘(I) ‘more than 50 percent’ shall be substituted for 
‘at least 80 percent’ each place it appears therein, and 
‘‘(II) the determination shall be made without regard 
to subsections (a)(4) and (b)(2) of section 1563 of such 
Code. 
A partnership or any other entity (other than a corporation) 
shall be treated as a member of a controlled group of entities 
if such entity is controlled (within the meaning of section 
954(d)(3) of such Code) by members of such group (including 
any entity treated as a member of such group by reason of 
this sentence). 
‘‘(C) Subparagraph (A) shall not apply to any services to which 
paragraph (1) of section 3121(z) of the Internal Revenue Code 
of 1986 does not apply by reason of paragraph (4) of such section.’’. 
(c) EFFECTIVE DATE.—The amendment made by this section 
shall apply to services performed in calendar months beginning 
more than 30 days after the date of the enactment of this Act.
H. R. 6081—26 
SEC. 303. INCREASE IN MINIMUM PENALTY ON FAILURE TO FILE A 
RETURN OF TAX. 
(a) IN GENERAL.—Subsection (a) of section 6651 is amended 
by striking ‘‘$100’’ in the last sentence and inserting ‘‘$135’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to returns required to be filed after December 31, 
2008. 
TITLE IV—PARITY IN THE APPLICATION 
OF 
CERTAIN 
LIMITS 
TO 
MENTAL 
HEALTH BENEFITS 
SEC. 401. PARITY IN THE APPLICATION OF CERTAIN LIMITS TO 
MENTAL HEALTH BENEFITS. 
(a) INTERNAL REVENUE CODE OF 1986.—Subsection (f) of section 
9812 is amended— 
(1) by striking ‘‘and’’ at the end of paragraph (2), and 
(2) by striking paragraph (3) and inserting the following 
new paragraphs: 
‘‘(3) on or after January 1, 2008, and before the date 
of the enactment of the Heroes Earnings Assistance and Relief 
Tax Act of 2008, and 
‘‘(4) after December 31, 2008.’’. 
(b) EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974.— 
Subsection (f) of section 712 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1185a(f)) is amended by striking 
‘‘services furnished after December 31, 2007’’ and inserting ‘‘services 
furnished— 
‘‘(1) on or after January 1, 2008, and before the date 
of the enactment of the Heroes Earnings Assistance and Relief 
Tax Act of 2008, and 
‘‘(2) after December 31, 2008.’’.
H. R. 6081—27 
(c) PUBLIC HEALTH SERVICE ACT.—Subsection (f) of section 
2705 of the Public Health Service Act (42 U.S.C. 300gg-5(f)) is 
amended by striking ‘‘services furnished after December 31, 2007’’ 
and inserting ‘‘services furnished— 
‘‘(1) on or after January 1, 2008, and before the date 
of the enactment of the Heroes Earnings Assistance and Relief 
Tax Act of 2008, and 
‘‘(2) after December 31, 2008.’’. 
Speaker of the House of Representatives. 
Vice President of the United States and
President of the Senate.