I
107TH CONGRESS
2D SESSION
H. R. 3666
To amend the Internal Revenue Code of 1986 to provide tax incentives
for economic recovery and to provide assistance to displaced workers.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 29, 2002
Mr. THUNE introduced the following bill; which was referred to the Committee
on Ways and Means, and in addition to the Committee on Education and
the Workforce, for a period to be subsequently determined by the Speak-
er, in each case for consideration of such provisions as fall within the ju-
risdiction of the committee concerned
A BILL
To amend the Internal Revenue Code of 1986 to provide
tax incentives for economic recovery and to provide as-
sistance 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
‘‘Job Creation and Economic Security Act of 2002’’.
(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.—The table of contents for
this Act is as follows:
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 PROVISION
Sec. 201. Special depreciation allowance for certain property acquired after
September 10, 2001, and before September 11, 2004.
TITLE III—UNEMPLOYMENT ASSISTANCE
Sec. 301. Short title.
Sec. 302. Federal-State agreements.
Sec. 303. Temporary extended unemployment compensation account.
Sec. 304. Payments to States having agreements for the payment of temporary
extended unemployment compensation.
Sec. 305. Financing provisions.
Sec. 306. Fraud and overpayments.
Sec. 307. Definitions.
Sec. 308. Applicability.
Sec. 309. Special Reed Act transfer in fiscal year 2002.
TITLE IV—DISPLACED WORKER HEALTH INSURANCE CREDIT
Sec. 401. Displaced worker health insurance credit.
Sec. 402. Advance payment of displaced worker health insurance credit.
TITLE V—EMPLOYMENT AND TRAINING ASSISTANCE AND
TEMPORARY HEALTH CARE COVERAGE ASSISTANCE
Sec. 501. Employment and training assistance and temporary health care cov-
erage assistance.
TITLE VI—VALUE-ADDED AGRICULTURE
Sec. 601. Small ethanol producer credit.
Sec. 602. Cooperative marketing includes value-added processing through ani-
mals.
Sec. 603. Declaratory judgment remedy relating to status and classification of
farmers’ cooperatives.
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 Job Creation and Eco-
nomic Security Act of 2002)’’.
(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 PROVISION
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
taxable year, this subsection shall not
apply to all property in such class placed
in service during such taxable year.
‘‘(iii) QUALIFIED
LEASEHOLD
IM-
PROVEMENT PROPERTY.—The term ‘quali-
fied property’ shall not include any quali-
fied leasehold improvement property (as
defined in section 168(e)(6)).
‘‘(D) 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 (iii) 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 September 11, 2004.
‘‘(ii) SALE-LEASEBACKS.—For pur-
poses 
of 
subparagraph 
(A)(ii), 
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).
‘‘(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.
(3) are not receiving compensation with respect
to such week under the unemployment compensation
law of Canada; and
(4) filed an initial claim for regular compensa-
tion on or after March 15, 2001.
(c) EXHAUSTION OF BENEFITS.—For purposes of
subsection (b)(1), an individual shall be deemed to have
exhausted such individual’s rights to regular compensation
under a State law when—
(1) no payments of regular compensation can
be made under such law because such individual has
received all regular compensation available to such
individual based on employment or wages during
such individual’s base period; or
(2) such individual’s rights to such compensa-
tion have been terminated by reason of the expira-
tion of the benefit year with respect to which such
rights existed.
(d) WEEKLY BENEFIT AMOUNT, ETC.—For purposes
of any agreement under this title—
(1) the amount of temporary extended unem-
ployment compensation which shall be payable to
any individual for any week of total unemployment
shall be equal to the amount of the regular com-
pensation (including dependents’ allowances) payable
(3) the maximum amount of temporary ex-
tended unemployment compensation payable to any
individual for whom a temporary extended unem-
ployment compensation account is established under
section 303 shall not exceed the amount established
in such account for such individual.
(e) ELECTION
BY STATES.—Notwithstanding any
other provision of Federal law (and if State law permits),
the Governor of a State that is in an extended benefit pe-
riod may provide for the payment of temporary extended
unemployment compensation in lieu of extended com-
pensation to individuals who otherwise meet the require-
ments of this section. Such an election shall not require
a State to trigger off an extended benefit period.
SEC. 303. TEMPORARY EXTENDED UNEMPLOYMENT COM-
PENSATION ACCOUNT.
(a) IN GENERAL.—Any agreement under this title
shall provide that the State will establish, for each eligible
individual who files an application for temporary extended
unemployment compensation, a temporary extended un-
employment compensation account with respect to such in-
dividual’s benefit year.
(b) AMOUNT IN ACCOUNT.—
(1) IN GENERAL.—The amount established in
an account under subsection (a) shall be equal to the
lesser of—
(A) 50 percent of the total amount of reg-
ular compensation (including dependents’ allow-
ances) payable to the individual during the indi-
vidual’s benefit year under such law, or
(B) 13 times the individual’s average week-
ly benefit amount for the benefit year.
(2) REDUCTION FOR EXTENDED BENEFITS.—
The amount in an account under paragraph (1)
shall be reduced (but not below zero) by the aggre-
gate amount of extended compensation (if any) re-
ceived by such individual relating to the same ben-
efit year under the Federal-State Extended Unem-
ployment Compensation Act of 1970 (26 U.S.C.
3304 note).
(3) WEEKLY BENEFIT AMOUNT.—For purposes
of this subsection, an individual’s weekly benefit
amount for any week is the amount of regular com-
pensation (including dependents’ allowances) under
the State law payable to such individual for such
week for total unemployment.
SEC. 304. PAYMENTS TO STATES HAVING AGREEMENTS FOR
THE PAYMENT OF TEMPORARY EXTENDED
UNEMPLOYMENT COMPENSATION.
(a) GENERAL RULE.—There shall be paid to each
State that has entered into an agreement under this title
an amount equal to 100 percent of the temporary extended
unemployment compensation paid to individuals by the
State pursuant to such agreement.
(b) TREATMENT
OF REIMBURSABLE COMPENSA-
TION.—No payment shall be made to any State under this
section in respect of any compensation to the extent the
State is entitled to reimbursement in respect of such com-
pensation under the provisions of any Federal law other
than this title or chapter 85 of title 5, United States Code.
A State shall not be entitled to any reimbursement under
such chapter 85 in respect of any compensation to the ex-
tent the State is entitled to reimbursement under this title
in respect of such compensation.
(c) DETERMINATION OF AMOUNT.—Sums payable to
any State by reason of such State having an agreement
under this title shall be payable, either in advance or by
way of reimbursement (as may be determined by the Sec-
retary), in such amounts as the Secretary estimates the
State will be entitled to receive under this title for each
calendar month, reduced or increased, as the case may be,
by any amount by which the Secretary finds that the Sec-
retary’s estimates for any prior calendar month were
greater or less than the amounts which should have been
paid to the State. Such estimates may be made on the
basis of such statistical, sampling, or other method as may
be agreed upon by the Secretary and the State agency of
the State involved.
SEC. 305. FINANCING PROVISIONS.
(a) IN GENERAL.—Funds in the extended unemploy-
ment compensation account (as established by section
905(a) of the Social Security Act (42 U.S.C. 1105(a)) of
the Unemployment Trust Fund (as established by section
904(a) of such Act (42 U.S.C. 1104(a)) shall be used for
the making of payments to States having agreements en-
tered into under this title.
(b) CERTIFICATION.—The Secretary shall from time
to time certify to the Secretary of the Treasury for pay-
ment to each State the sums payable to such State under
this title. The Secretary of the Treasury, prior to audit
or settlement by the General Accounting Office, shall
make payments to the State in accordance with such cer-
tification, by transfers from the extended unemployment
compensation account (as so established) to the account
of such State in the Unemployment Trust Fund (as so
established).
(c) ASSISTANCE
TO STATES.—There are appro-
priated out of the employment security administration ac-
count (as established by section 901(a) of the Social Secu-
rity Act (42 U.S.C. 1101(a)) of the Unemployment Trust
Fund, without fiscal year limitation, such funds as may
be necessary for purposes of assisting States (as provided
in title III of the Social Security Act (42 U.S.C. 501 et
seq.)) in meeting the costs of administration of agree-
ments under this title.
(d) APPROPRIATIONS
FOR CERTAIN PAYMENTS.—
There are appropriated from the general fund of the
Treasury, without fiscal year limitation, to the extended
unemployment compensation account (as so established)
of the Unemployment Trust Fund (as so established) such
sums as the Secretary estimates to be necessary to make
the payments under this section in respect of—
(1) compensation payable under chapter 85 of
title 5, United States Code; and
(2) compensation payable on the basis of serv-
ices to which section 3309(a)(1) of the Internal Rev-
enue Code of 1986 applies.
Amounts appropriated pursuant to the preceding sentence
shall not be required to be repaid.
SEC. 306. FRAUD AND OVERPAYMENTS.
(a) IN GENERAL.—If an individual knowingly has
made, or caused to be made by another, a false statement
or representation of a material fact, or knowingly has
failed, or caused another to fail, to disclose a material fact,
and as a result of such false statement or representation
or of such nondisclosure such individual has received an
amount of temporary extended unemployment compensa-
tion under this title to which he was not entitled, such
individual—
(1) shall be ineligible for further temporary ex-
tended unemployment compensation under this title
in accordance with the provisions of the applicable
State unemployment compensation law relating to
fraud in connection with a claim for unemployment
compensation; and
(2) shall be subject to prosecution under section
1001 of title 18, United States Code.
(b) REPAYMENT.—In the case of individuals who
have received amounts of temporary extended unemploy-
ment compensation under this title to which they were not
entitled, the State shall require such individuals to repay
the amounts of such temporary extended unemployment
compensation to the State agency, except that the State
agency may waive such repayment if it determines that—
SEC. 309. SPECIAL REED ACT TRANSFER IN FISCAL YEAR
2002.
(a) REPEAL OF CERTAIN PROVISIONS ADDED BY
THE BALANCED BUDGET ACT OF 1997.—
(1) IN GENERAL.—The following provisions of
section 903 of the Social Security Act (42 U.S.C.
1103) are repealed:
(A) Paragraph (3) of subsection (a).
(B) The last sentence of subsection (c)(2).
(2) SAVINGS PROVISION.—Any amounts trans-
ferred before the date of enactment of this Act
under the provision repealed by paragraph (1)(A)
shall remain subject to section 903 of the Social Se-
curity Act, as last in effect before such date of en-
actment.
(b) SPECIAL TRANSFER IN FISCAL YEAR 2002.—
Section 903 of the Social Security Act is amended by add-
ing at the end the following:
‘‘Special Transfer in Fiscal Year 2002
‘‘(d)(1) The Secretary of the Treasury shall transfer
(as of the date determined under paragraph (5)) from the
Federal unemployment account to the account of each
State in the Unemployment Trust Fund the amount deter-
mined with respect to such State under paragraph (2).
‘‘(2) The amount to be transferred under this sub-
section to a State account shall (as determined by the Sec-
retary of Labor and certified by such Secretary to the Sec-
retary of the Treasury) be equal to—
‘‘(A) the amount which would have been re-
quired to have been transferred under this section to
such account at the beginning of fiscal year 2002
if—
‘‘(i) section 309(a)(1) of the Temporary
Extended Unemployment Compensation Act of
2002 had been enacted before the close of fiscal
year 2001, and
‘‘(ii) section 5402 of Public Law 105–33
(relating to increase in Federal unemployment
account ceiling) had not been enacted,
minus
‘‘(B) the amount which was in fact transferred
under this section to such account at the beginning
of fiscal year 2002.
‘‘(3)(A) Except as provided in paragraph (4),
amounts transferred to a State account pursuant to this
subsection may be used only in the payment of cash
benefits—
‘‘(i) to individuals with respect to their unem-
ployment, and
‘‘(ii) which are allowable under subparagraph
(B) or (C).
‘‘(B)(i) At the option of the State, cash benefits
under this paragraph may include amounts which shall be
payable as—
‘‘(I) regular compensation, or
‘‘(II) additional compensation, upon the exhaus-
tion of any temporary extended unemployment com-
pensation (if such State has entered into an agree-
ment under the Temporary Extended Unemployment
Compensation Act of 2002), for individuals eligible
for regular compensation under the unemployment
compensation law of such State.
‘‘(ii) Any additional compensation under clause (i)
may not be taken into account for purposes of any deter-
mination relating to the amount of any extended com-
pensation for which an individual might be eligible.
‘‘(C)(i) At the option of the State, cash benefits
under this paragraph may include amounts which shall be
payable to 1 or more categories of individuals not other-
wise eligible for regular compensation under the unem-
ployment compensation law of such State, including those
described in clause (iii).
‘‘(ii) The benefits paid under this subparagraph to
any individual may not, for any period of unemployment,
exceed the maximum amount of regular compensation au-
thorized under the unemployment compensation law of
such State for that same period, plus any additional com-
pensation (described in subparagraph (B)(i)) which could
have been paid with respect to that amount.
‘‘(iii) The categories of individuals described in this
clause include the following:
‘‘(I) Individuals who are seeking, or available
for, only part-time (and not full-time) work.
‘‘(II) Individuals who would be eligible for reg-
ular compensation under the unemployment com-
pensation law of such State under an alternative
base period.
‘‘(D) Amounts transferred to a State account under
this subsection may be used in the payment of cash bene-
fits to individuals only for weeks of unemployment begin-
ning after the date of enactment of this subsection.
‘‘(4) Amounts transferred to a State account under
this subsection may be used for the administration of its
unemployment compensation law and public employment
offices (including in connection with benefits described in
paragraph (3) and any recipients thereof), subject to the
same conditions as set forth in subsection (c)(2) (exclud-
ing subparagraph (B) thereof, and deeming the reference
to ‘subsections (a) and (b)’ in subparagraph (D) thereof
to include this subsection).
‘‘(5) Transfers under this subsection shall be made
within 10 days after the date of enactment of this para-
graph.’’
(c) LIMITATIONS ON TRANSFERS.—Section 903(b) of
the Social Security Act shall apply to transfers under sec-
tion 903(d) of such Act (as amended by this section). For
purposes of the preceding sentence, such section 903(b)
shall be deemed to be amended as follows:
(1) By substituting ‘‘the transfer date described
in subsection (d)(5)’’ for ‘‘October 1 of any fiscal
year’’.
(2) By substituting ‘‘remain in the Federal un-
employment account’’ for ‘‘be transferred to the
Federal unemployment account as of the beginning
of such October 1’’.
(3) By substituting ‘‘fiscal year 2002 (after the
transfer date described in subsection (d)(5))’’ for
‘‘the fiscal year beginning on such October 1’’.
(4) By substituting ‘‘under subsection (d)’’ for
‘‘as of October 1 of such fiscal year’’.
(5) By substituting ‘‘(as of the close of fiscal
year 2002)’’ for ‘‘(as of the close of such fiscal
year)’’.
(d) 
TECHNICAL
AMENDMENTS.—(1) 
Sections
3304(a)(4)(B) and 3306(f)(2) of the Internal Revenue
Code of 1986 are amended by inserting ‘‘or 903(d)(4)’’
before ‘‘of the Social Security Act’’.
(2) Section 303(a)(5) of the Social Security Act is
amended in the second proviso by inserting ‘‘or 903(d)(4)’’
after ‘‘903(c)(2)’’.
(e) REGULATIONS.—The Secretary of Labor may
prescribe any operating instructions or regulations nec-
essary to carry out this section and the amendments made
by this section.
TITLE IV—DISPLACED WORKER
HEALTH INSURANCE CREDIT
SEC. 401. DISPLACED WORKER HEALTH INSURANCE CRED-
IT.
(a) IN GENERAL.—Subchapter B of chapter 65 is
amended by inserting after section 6428 the following new
section:
‘‘SEC. 6429. DISPLACED WORKER HEALTH INSURANCE
CREDIT.
‘‘(a) IN GENERAL.—In the case of an individual,
there shall be allowed as a credit against the tax imposed
by subtitle A an amount equal to 60 percent of the amount
paid during the taxable year for coverage for the taxpayer,
the taxpayer’s spouse, and dependents of the taxpayer
under qualified health insurance during eligible coverage
months.
‘‘(b) ONLY 12 ELIGIBLE COVERAGE MONTHS.—The
number of eligible coverage months taken into account
under subsection (a) for all taxable years shall not exceed
12.
‘‘(c) ELIGIBLE COVERAGE MONTH.—For purposes of
this section—
‘‘(1) IN GENERAL.—The term ‘eligible coverage
month’ means any month during 2002 or 2003 if,
as of the first day of such month—
‘‘(A) the taxpayer is unemployed,
‘‘(B) the taxpayer is covered by qualified
health insurance,
‘‘(C) the premium for coverage under such
insurance for such month is paid by the tax-
payer, and
‘‘(D) the taxpayer does not have other
specified coverage.
‘‘(2) SPECIAL RULES.—
‘‘(A) TREATMENT
OF
FIRST
MONTH
OF
EMPLOYMENT.—The taxpayer shall be treated
as meeting the requirement of paragraph (1)(A)
for the first month beginning on or after the
date that the taxpayer ceases to be unemployed
by reason of beginning work for an employer.
‘‘(B) INITIAL
CLAIM
MUST
BE
AFTER
MARCH
15, 2001.—The taxpayer shall not be
treated as meeting the requirement of para-
graph (1)(A) with respect to any unemployment
if the initial claim for regular compensation for
such unemployment is filed on or before March
15, 2001.
‘‘(C) JOINT RETURNS.—In the case of a
joint return, the requirements of paragraph (1)
shall be treated as met if at least 1 spouse sat-
isfies such requirements.
‘‘(3) OTHER SPECIFIED COVERAGE.—For pur-
poses of this subsection, an individual has other
specified coverage for any month if, as of the first
day of such month—
‘‘(A) SUBSIDIZED COVERAGE.—
‘‘(i) IN GENERAL.—Such individual is
covered under any qualified health insur-
ance under which at least 50 percent of
the cost of coverage (determined under sec-
tion 4980B) is paid or incurred by an em-
ployer (or former employer) of the tax-
payer or the taxpayer’s spouse.
‘‘(ii) 
TREATMENT
OF
CAFETERIA
PLANS
AND
FLEXIBLE
SPENDING
AC-
COUNTS.—For purposes of clause (i), the
cost of benefits—
‘‘(I) which are chosen under a
cafeteria plan (as defined in section
125(d)), or provided under a flexible
spending or similar arrangement, of
such an employer, and
‘‘(II) which are not includible in
gross income under section 106,
shall be treated as borne by such employer.
‘‘(B) COVERAGE UNDER MEDICARE, MED-
ICAID, OR SCHIP.—Such individual—
‘‘(i) is entitled to benefits under part
A of title XVIII of the Social Security Act
or is enrolled under part B of such title, or
‘‘(ii) is enrolled in the program under
title XIX or XXI of such Act.
‘‘(C) CERTAIN
OTHER
COVERAGE.—Such
individual—
‘‘(i) is enrolled in a health benefits
plan under chapter 89 of title 5, United
States Code, or
‘‘(ii) is entitled to receive benefits
under chapter 55 of title 10, United States
Code.
‘‘(4) DETERMINATION
OF
UNEMPLOYMENT.—
For purposes of paragraph (1), an individual shall
be treated as unemployed during any period—
‘‘(A) for which such individual is receiving
unemployment compensation (as defined in sec-
tion 85(b)), or
‘‘(B) for which such individual is certified
by a State agency (or by any other entity des-
ignated by the Secretary) as otherwise being en-
titled to receive unemployment compensation
(as so defined) but for—
‘‘(i) the termination of the period dur-
ing which such compensation was payable,
or
‘‘(ii) an exhaustion of such individ-
ual’s rights to such compensation.
‘‘(d) QUALIFIED HEALTH INSURANCE.—For pur-
poses of this section, the term ‘qualified health insurance’
means insurance which constitutes medical care; except
that such term shall not include any insurance if substan-
tially all of its coverage is of excepted benefits described
in section 9832(c).
‘‘(e) COORDINATION WITH ADVANCE PAYMENTS OF
CREDIT.—
‘‘(1) RECAPTURE
OF
EXCESS
ADVANCE
PAY-
MENTS.—If any payment is made by the Secretary
under section 7527 during any calendar year to a
provider of qualified health insurance for an indi-
vidual, then the tax imposed by this chapter for the
individual’s last taxable year beginning in such cal-
endar year shall be increased by the aggregate
amount of such payments.
‘‘(2) 
RECONCILIATION
OF
PAYMENTS
AD-
VANCED AND CREDIT ALLOWED.—Any increase in
tax under paragraph (1) shall not be treated as tax
imposed by this chapter for purposes of determining
the amount of any credit (other than the credit al-
lowed by subsection (a)) allowable under part IV of
subchapter A of chapter 1.
‘‘(f) SPECIAL RULES.—
‘‘(1) COORDINATION
WITH
OTHER
DEDUC-
TIONS.—Amounts taken into account under sub-
section (a) shall not be taken into account in deter-
mining any deduction allowed under section 162(l)
or 213.
‘‘(2) MSA DISTRIBUTIONS.—Amounts distrib-
uted from an Archer MSA (as defined in section
220(d)) shall not be taken into account under sub-
section (a).
‘‘(3) DENIAL OF CREDIT TO DEPENDENTS.—No
credit shall be allowed under this section to any indi-
vidual with respect to whom a deduction under sec-
tion 151 is allowable to another taxpayer for a tax-
able year beginning in the calendar year in which
such individual’s taxable year begins.
‘‘(4) CREDIT TREATED AS REFUNDABLE CRED-
IT.—For purposes of this title, the credit allowed
under this section shall be treated as a credit allow-
able under subpart C of part IV of subchapter A of
chapter 1.
‘‘(5) REGULATIONS.—The Secretary may pre-
scribe such regulations and other guidance as may
be necessary or appropriate to carry out this section
and section 7527.’’.
(b) INCREASED ACCESS TO HEALTH INSURANCE FOR
INDIVIDUALS ELIGIBLE
FOR TAX CREDIT.—Notwith-
standing any other provision of law, in applying section
2741 of the Public Health Service Act (42 U.S.C. 300gg–
41)) and any alternative State mechanism under section
2744 of such Act (42 U.S.C.300gg–44)), in determining
who is an eligible individual (as defined in section 2741(b)
of such Act) in the case of an individual who may be cov-
ered by insurance for which credit is allowable under sec-
tion 6429 of the Internal Revenue Code of 1986 for an
eligible coverage month, if the individual seeks to obtain
health insurance coverage under such section during an
eligible coverage month under such section—
(1) paragraph (1) of such section 2741(b) shall
be applied as if any reference to 18 months is
deemed a reference to 12 months, and
(2) paragraphs (4) and (5) of such section
2741(b) shall not apply.
(c) INFORMATION REPORTING.—
(1) IN GENERAL.—Subpart B of part III of
subchapter A of chapter 61 (relating to information
concerning transactions with other persons) is
amended by inserting after section 6050S the fol-
lowing new section:
‘‘SEC. 6050T. RETURNS RELATING TO DISPLACED WORKER
HEALTH INSURANCE CREDIT.
‘‘(a) 
REQUIREMENT
OF
REPORTING.—Every
person—
‘‘(1) who, in connection with a trade or busi-
ness conducted by such person, receives payments
during any calendar year from any individual for
coverage of such individual or any other individual
under qualified health insurance (as defined in sec-
tion 6429(d)), and
‘‘(2) who claims a reimbursement for an ad-
vance credit amount,
shall, at such time as the Secretary may prescribe, make
the return described in subsection (b) with respect to each
individual from whom such payments were received or for
whom such a reimbursement is claimed.
‘‘(b) FORM AND MANNER OF RETURNS.—A return
is described in this subsection if such return—
‘‘(1) is in such form as the Secretary may pre-
scribe, and
‘‘(2) contains—
‘‘(A) the name, address, and TIN of each
individual referred to in subsection (a),
‘‘(B) the aggregate of the advance credit
amounts provided to such individual and for
which reimbursement is claimed,
‘‘(C) the number of months for which such
advance credit amounts are so provided, and
‘‘(D) such other information as the Sec-
retary may prescribe.
‘‘(c) STATEMENTS TO BE FURNISHED TO INDIVID-
UALS WITH RESPECT TO WHOM INFORMATION IS RE-
QUIRED.—Every person required to make a return under
subsection (a) shall furnish to each individual whose name
is required to be set forth in such return a written state-
ment showing—
‘‘(1) the name and address of the person re-
quired to make such return and the phone number
of the information contact for such person, and
‘‘(2) the information required to be shown on
the return with respect to such individual.
The written statement required under the preceding sen-
tence shall be furnished on or before January 31 of the
year following the calendar year for which the return
under subsection (a) is required to be made.
‘‘(d) ADVANCE CREDIT AMOUNT.—For purposes of
this section, the term ‘advance credit amount’ means an
amount for which the person can claim a reimbursement
pursuant to a program established by the Secretary under
section 7527.’’
(2) ASSESSABLE PENALTIES.—
(A) 
Subparagraph 
(B) 
of 
section
6724(d)(1) (relating to definitions) is amended
by redesignating clauses (xi) through (xvii) as
clauses (xii) through (xviii), respectively, and by
inserting after clause (x) the following new
clause:
‘‘(xi) section 6050T (relating to re-
turns relating to displaced worker health
insurance credit),’’.
(B) Paragraph (2) of section 6724(d) is
amended by striking ‘‘or’’ at the end of sub-
paragraph (Z), by striking the period at the end
of subparagraph (AA) and inserting ‘‘, or’’, and
by adding after subparagraph (AA) the fol-
lowing new subparagraph:
‘‘(BB) section 6050T (relating to returns
relating to displaced worker health insurance
credit).’’returns relating to payments for quali-
fied health insurance).’’
(3) CLERICAL AMENDMENT.—The table of sec-
tions for subpart B of part III of subchapter A of
chapter 61 is amended by inserting after the item
relating to section 6050S the following new item:
‘‘Sec. 6050T. Returns relating to displaced worker health insur-
ance credit.’’
(d) CONFORMING AMENDMENTS.—
(1) Paragraph (2) of section 1324(b) of title
31, United States Code, is amended by inserting be-
fore the period ‘‘, or from section 6429 of such
Code’’.
(2) The table of sections for subchapter B of
chapter 65 is amended by adding at the end the fol-
lowing new item:
‘‘Sec. 6429. Displaced worker health insurance credit.’’
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
SEC. 402. ADVANCE PAYMENT OF DISPLACED WORKER
HEALTH INSURANCE CREDIT.
(a) IN GENERAL.—Chapter 77 (relating to miscella-
neous provisions) is amended by adding at the end the
following new section:
‘‘SEC. 7527. ADVANCE PAYMENT OF DISPLACED WORKER
HEALTH INSURANCE CREDIT.
‘‘(a) GENERAL RULE.—The Secretary shall establish
a program for making payments on behalf of eligible indi-
viduals to providers of health insurance for such individ-
uals.
‘‘(b) ELIGIBLE INDIVIDUAL.—For purposes of this
section, the term ‘eligible individual’ means any individual
for whom a qualified health insurance credit eligibility cer-
tificate is in effect.
‘‘(c) QUALIFIED HEALTH INSURANCE CREDIT ELIGI-
BILITY CERTIFICATE.—For purposes of this section, a
qualified health insurance credit eligibility certificate is a