H. R. 2884
One Hundred Seventh Congress
of the
United States of America
AT THE FIRST SESSION
Begun and held at the City of Washington on Wednesday,
the third day of January, two thousand and one
An Act
To amend the Internal Revenue Code of 1986 to provide tax relief for victims
of the terrorist attacks against the United States, and for other purposes.
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; ETC.
(a) SHORT TITLE.—This Act may be cited as the ‘‘Victims of
Terrorism Tax Relief Act of 2001’’.
(b) AMENDMENT OF 1986 CODE.—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
provision, 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—VICTIMS OF TERRORISM TAX RELIEF
Subtitle A—Relief Provisions for Victims of Terrorist Attacks
Sec. 101. Income taxes of victims of terrorist attacks.
Sec. 102. Exclusion of certain death benefits.
Sec. 103. Estate tax reduction.
Sec. 104. Payments by charitable organizations treated as exempt payments.
Sec. 105. Exclusion of certain cancellations of indebtedness.
Subtitle B—Other Relief Provisions
Sec. 111. Exclusion for disaster relief payments.
Sec. 112. Authority to postpone certain deadlines and required actions.
Sec. 113. Application of certain provisions to terroristic or military actions.
Sec. 114. Clarification of due date for airline excise tax deposits.
Sec. 115. Treatment of certain structured settlement payments.
Sec. 116. Personal exemption deduction for certain disability trusts.
TITLE II—DISCLOSURE OF TAX INFORMATION IN TERRORISM AND
NATIONAL SECURITY INVESTIGATIONS
Sec. 201. Disclosure of tax information in terrorism and national security investiga-
tions.
TITLE III—NO IMPACT ON SOCIAL SECURITY TRUST FUNDS
Sec. 301. No impact on social security trust funds.
H. R. 2884—2
TITLE I—VICTIMS OF TERRORISM TAX
RELIEF
Subtitle A—Relief Provisions for Victims of
Terrorist Attacks
SEC. 101. INCOME TAXES OF VICTIMS OF TERRORIST ATTACKS.
(a) IN GENERAL.—Section 692 (relating to income taxes of mem-
bers of Armed Forces on death) is amended by adding at the
end the following new subsection:
‘‘(d) INDIVIDUALS DYING AS A RESULT OF CERTAIN ATTACKS.—
‘‘(1) IN GENERAL.—In the case of a specified terrorist victim,
any tax imposed by this chapter shall not apply—
‘‘(A) with respect to the taxable year in which falls
the date of death, and
‘‘(B) with respect to any prior taxable year in the
period beginning with the last taxable year ending before
the taxable year in which the wounds, injury, or illness
referred to in paragraph (3) were incurred.
‘‘(2) $10,000 MINIMUM BENEFIT.—If, but for this paragraph,
the amount of tax not imposed by paragraph (1) with respect
to a specified terrorist victim is less than $10,000, then such
victim shall be treated as having made a payment against
the tax imposed by this chapter for such victim’s last taxable
year in an amount equal to the excess of $10,000 over the
amount of tax not so imposed.
‘‘(3) TAXATION OF CERTAIN BENEFITS.—Subject to such rules
as the Secretary may prescribe, paragraph (1) shall not apply
to the amount of any tax imposed by this chapter which would
be computed by only taking into account the items of income,
gain, or other amounts attributable to—
‘‘(A) deferred compensation which would have been
payable after death if the individual had died other than
as a specified terrorist victim, or
‘‘(B) amounts payable in the taxable year which would
not have been payable in such taxable year but for an
action taken after September 11, 2001.
‘‘(4) SPECIFIED
TERRORIST
VICTIM.—For purposes of this
subsection, the term ‘specified terrorist victim’ means any
decedent—
‘‘(A) who dies as a result of wounds or injury incurred
as a result of the terrorist attacks against the United
States on April 19, 1995, or September 11, 2001, or
‘‘(B) who dies as a result of illness incurred as a result
of an attack involving anthrax occurring on or after Sep-
tember 11, 2001, and before January 1, 2002.
Such term shall not include any individual identified by the
Attorney General to have been a participant or conspirator
in any such attack or a representative of such an individual.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 5(b)(1) is amended by inserting ‘‘and victims
of certain terrorist attacks’’ before ‘‘on death’’.
(2) Section 6013(f)(2)(B) is amended by inserting ‘‘and vic-
tims of certain terrorist attacks’’ before ‘‘on death’’.
(c) CLERICAL AMENDMENTS.—
H. R. 2884—3
(1) The heading of section 692 is amended to read as
follows:
‘‘SEC. 692. INCOME TAXES OF MEMBERS OF ARMED FORCES AND VIC-
TIMS OF CERTAIN TERRORIST ATTACKS ON DEATH.’’.
(2) The item relating to section 692 in the table of sections
for part II of subchapter J of chapter 1 is amended to read
as follows:
‘‘Sec. 692. Income taxes of members of Armed Forces and victims of certain
terrorist attacks on death.’’.
(d) EFFECTIVE DATE; WAIVER OF LIMITATIONS.—
(1) EFFECTIVE DATE.—The amendments made by this sec-
tion shall apply to taxable years ending before, on, or after
September 11, 2001.
(2) WAIVER OF LIMITATIONS.—If refund or credit of any
overpayment of tax resulting from the amendments made by
this section is prevented at any time before the close of the
1-year period beginning on the date of the enactment of this
Act by the operation of any law or rule of law (including
res judicata), such refund or credit may nevertheless be made
or allowed if claim therefor is filed before the close of such
period.
SEC. 102. EXCLUSION OF CERTAIN DEATH BENEFITS.
(a) IN GENERAL.—Section 101 (relating to certain death bene-
fits) is amended by adding at the end the following new subsection:
‘‘(i) CERTAIN EMPLOYEE DEATH BENEFITS PAYABLE BY REASON
OF DEATH OF CERTAIN TERRORIST VICTIMS.—
‘‘(1) IN GENERAL.—Gross income does not include amounts
(whether in a single sum or otherwise) paid by an employer
by reason of the death of an employee who is a specified
terrorist victim (as defined in section 692(d)(4)).
‘‘(2) LIMITATION.—
‘‘(A) IN GENERAL.—Subject to such rules as the Sec-
retary may prescribe, paragraph (1) shall not apply to
amounts which would have been payable after death if
the individual had died other than as a specified terrorist
victim (as so defined).
‘‘(B) EXCEPTION.—Subparagraph (A) shall not apply
to incidental death benefits paid from a plan described
in section 401(a) and exempt from tax under section 501(a).
‘‘(3) TREATMENT OF SELF-EMPLOYED INDIVIDUALS.—For pur-
poses of paragraph (1), the term ‘employee’ includes a self-
employed individual (as defined in section 401(c)(1)).’’.
(b) EFFECTIVE DATE; WAIVER OF LIMITATIONS.—
(1) EFFECTIVE DATE.—The amendment made by this section
shall apply to taxable years ending before, on, or after Sep-
tember 11, 2001.
(2) WAIVER OF LIMITATIONS.—If refund or credit of any
overpayment of tax resulting from the amendments made by
this section is prevented at any time before the close of the
1-year period beginning on the date of the enactment of this
Act by the operation of any law or rule of law (including
res judicata), such refund or credit may nevertheless be made
or allowed if claim therefor is filed before the close of such
period.
H. R. 2884—4
SEC. 103. ESTATE TAX REDUCTION.
(a) IN GENERAL.—Section 2201 is amended to read as follows:
‘‘SEC. 2201. COMBAT ZONE-RELATED DEATHS OF MEMBERS OF THE
ARMED FORCES AND DEATHS OF VICTIMS OF CERTAIN
TERRORIST ATTACKS.
‘‘(a) IN GENERAL.—Unless the executor elects not to have this
section apply, in applying sections 2001 and 2101 to the estate
of a qualified decedent, the rate schedule set forth in subsection
(c) shall be deemed to be the rate schedule set forth in section
2001(c).
‘‘(b) QUALIFIED DECEDENT.—For purposes of this section, the
term ‘qualified decedent’ means—
‘‘(1) any citizen or resident of the United States dying
while in active service of the Armed Forces of the United
States, if such decedent—
‘‘(A) was killed in action while serving in a combat
zone, as determined under section 112(c), or
‘‘(B) died as a result of wounds, disease, or injury
suffered while serving in a combat zone (as determined
under section 112(c)), and while in the line of duty, by
reason of a hazard to which such decedent was subjected
as an incident of such service, and
‘‘(2) any specified terrorist victim (as defined in section
692(d)(4)).
‘‘(c) RATE SCHEDULE.—
‘‘If the amount with respect to
which the tentative tax to be
computed is:
The tentative tax is:
Not over $150,000 ..............................
1 percent of the amount by which such
amount exceeds $100,000.
Over $150,000 but not over $200,000
$500 plus 2 percent of the excess over
$150,000.
Over $200,000 but not over $300,000
$1,500 plus 3 percent of the excess over
$200,000.
Over $300,000 but not over $500,000
$4,500 plus 4 percent of the excess over
$300,000.
Over $500,000 but not over $700,000
$12,500 plus 5 percent of the excess over
$500,000.
Over $700,000 but not over $900,000
$22,500 plus 6 percent of the excess over
$700,000.
Over 
$900,000 
but 
not 
over
$1,100,000.
$34,500 plus 7 percent of the excess over
$900,000.
Over 
$1,100,000 
but 
not 
over
$1,600,000.
$48,500 plus 8 percent of the excess over
$1,100,000.
Over 
$1,600,000 
but 
not 
over
$2,100,000.
$88,500 plus 9 percent of the excess over
$1,600,000.
Over 
$2,100,000 
but 
not 
over
$2,600,000.
$133,500 plus 10 percent of the excess
over $2,100,000.
Over 
$2,600,000 
but 
not 
over
$3,100,000.
$183,500 plus 11 percent of the excess
over $2,600,000.
Over 
$3,100,000 
but 
not 
over
$3,600,000.
$238,500 plus 12 percent of the excess
over $3,100,000.
Over 
$3,600,000 
but 
not 
over
$4,100,000.
$298,500 plus 13 percent of the excess
over $3,600,000.
Over 
$4,100,000 
but 
not 
over
$5,100,000.
$363,500 plus 14 percent of the excess
over $4,100,000.
Over 
$5,100,000 
but 
not 
over
$6,100,000.
$503,500 plus 15 percent of the excess
over $5,100,000.
Over 
$6,100,000 
but 
not 
over
$7,100,000.
$653,500 plus 16 percent of the excess
over $6,100,000.
Over 
$7,100,000 
but 
not 
over
$8,100,000.
$813,500 plus 17 percent of the excess
over $7,100,000.
H. R. 2884—5
‘‘If the amount with respect to
which the tentative tax to be
computed is:
The tentative tax is:
Over 
$8,100,000 
but 
not 
over
$9,100,000.
$983,500 plus 18 percent of the excess
over $8,100,000.
Over 
$9,100,000 
but 
not 
over
$10,100,000.
$1,163,500 plus 19 percent of the excess
over $9,100,000.
Over $10,100,000 ...............................
$1,353,500 plus 20 percent of the excess
over $10,100,000.
‘‘(d) DETERMINATION OF UNIFIED CREDIT.—In the case of an
estate to which this section applies, subsection (a) shall not apply
in determining the credit under section 2010.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 2011 is amended by striking subsection (d)
and by redesignating subsections (e), (f), and (g) as subsections
(d), (e), and (f), respectively.
(2) Section 2053(d)(3)(B) is amended by striking ‘‘section
2011(e)’’ and inserting ‘‘section 2011(d)’’.
(3) Paragraph (9) of section 532(c) of the Economic Growth
and Tax Relief Reconciliation Act of 2001 is repealed.
(c) CLERICAL AMENDMENT.—The item relating to section 2201
in the table of sections for subchapter C of chapter 11 is amended
to read as follows:
‘‘Sec. 2201. Combat zone-related deaths of members of the Armed Forces
and deaths of victims of certain terrorist attacks.’’.
(d) EFFECTIVE DATE; WAIVER OF LIMITATIONS.—
(1) EFFECTIVE DATE.—The amendments made by this sec-
tion shall apply to estates of decedents—
(A) dying on or after September 11, 2001; and
(B) in the case of individuals dying as a result of
the April 19, 1995, terrorist attack, dying on or after April
19, 1995.
(2) WAIVER OF LIMITATIONS.—If refund or credit of any
overpayment of tax resulting from the amendments made by
this section is prevented at any time before the close of the
1-year period beginning on the date of the enactment of this
Act by the operation of any law or rule of law (including
res judicata), such refund or credit may nevertheless be made
or allowed if claim therefor is filed before the close of such
period.
SEC. 104. PAYMENTS BY CHARITABLE ORGANIZATIONS TREATED AS
EXEMPT PAYMENTS.
(a) IN GENERAL.—For purposes of the Internal Revenue Code
of 1986—
(1) payments made by an organization described in section
501(c)(3) of such Code by reason of the death, injury, wounding,
or illness of an individual incurred as the result of the terrorist
attacks against the United States on September 11, 2001, or
an attack involving anthrax occurring on or after September
11, 2001, and before January 1, 2002, shall be treated as
related to the purpose or function constituting the basis for
such organization’s exemption under section 501 of such Code
if such payments are made in good faith using a reasonable
and objective formula which is consistently applied; and
(2) in the case of a private foundation (as defined in section
509 of such Code), any payment described in paragraph (1)
shall not be treated as made to a disqualified person for pur-
poses of section 4941 of such Code.
H. R. 2884—6
(b) EFFECTIVE DATE.—This section shall apply to payments
made on or after September 11, 2001.
SEC. 105. EXCLUSION OF CERTAIN CANCELLATIONS OF INDEBTED-
NESS.
(a) IN GENERAL.—For purposes of the Internal Revenue Code
of 1986—
(1) gross income shall not include any amount which (but
for this section) would be includible in gross income by reason
of the discharge (in whole or in part) of indebtedness of any
taxpayer if the discharge is by reason of the death of an
individual incurred as the result of the terrorist attacks against
the United States on September 11, 2001, or as the result
of illness incurred as a result of an attack involving anthrax
occurring on or after September 11, 2001, and before January
1, 2002; and
(2) return requirements under section 6050P of such Code
shall not apply to any discharge described in paragraph (1).
(b) EFFECTIVE DATE.—This section shall apply to discharges
made on or after September 11, 2001, and before January 1, 2002.
Subtitle B—Other Relief Provisions
SEC. 111. EXCLUSION FOR DISASTER RELIEF PAYMENTS.
(a) IN GENERAL.—Part III of subchapter B of chapter 1 (relating
to items specifically excluded from gross income) is amended by
redesignating section 139 as section 140 and inserting after section
138 the following new section:
‘‘SEC. 139. DISASTER RELIEF PAYMENTS.
‘‘(a) GENERAL RULE.—Gross income shall not include any
amount received by an individual as a qualified disaster relief
payment.
‘‘(b) QUALIFIED DISASTER RELIEF PAYMENT DEFINED.—For pur-
poses of this section, the term ‘qualified disaster relief payment’
means any amount paid to or for the benefit of an individual—
‘‘(1) to reimburse or pay reasonable and necessary personal,
family, living, or funeral expenses incurred as a result of a
qualified disaster,
‘‘(2) to reimburse or pay reasonable and necessary expenses
incurred for the repair or rehabilitation of a personal residence
or repair or replacement of its contents to the extent that
the need for such repair, rehabilitation, or replacement is attrib-
utable to a qualified disaster,
‘‘(3) by a person engaged in the furnishing or sale of
transportation as a common carrier by reason of the death
or personal physical injuries incurred as a result of a qualified
disaster, or
‘‘(4) if such amount is paid by a Federal, State, or local
government, or agency or instrumentality thereof, in connection
with a qualified disaster in order to promote the general wel-
fare,
but only to the extent any expense compensated by such payment
is not otherwise compensated for by insurance or otherwise.
‘‘(c) QUALIFIED DISASTER DEFINED.—For purposes of this sec-
tion, the term ‘qualified disaster’ means—
H. R. 2884—7
‘‘(1) a disaster which results from a terroristic or military
action (as defined in section 692(c)(2)),
‘‘(2) a Presidentially declared disaster (as defined in section
1033(h)(3)),
‘‘(3) a disaster which results from an accident involving
a common carrier, or from any other event, which is determined
by the Secretary to be of a catastrophic nature, or
‘‘(4) with respect to amounts described in subsection (b)(4),
a disaster which is determined by an applicable Federal, State,
or local authority (as determined by the Secretary) to warrant
assistance from the Federal, State, or local government or
agency or instrumentality thereof.
‘‘(d) COORDINATION WITH EMPLOYMENT TAXES.—For purposes
of chapter 2 and subtitle C, a qualified disaster relief payment
shall not be treated as net earnings from self-employment, wages,
or compensation subject to tax.
‘‘(e) NO RELIEF FOR CERTAIN INDIVIDUALS.—Subsections (a) and
(f) shall not apply with respect to any individual identified by
the Attorney General to have been a participant or conspirator
in a terroristic action (as so defined), or a representative of such
individual.
‘‘(f) EXCLUSION
OF CERTAIN ADDITIONAL PAYMENTS.—Gross
income shall not include any amount received as payment under
section 406 of the Air Transportation Safety and System Stabiliza-
tion Act.’’.
(b) CONFORMING AMENDMENTS.—The table of sections for part
III of subchapter B of chapter 1 is amended by striking the item
relating to section 139 and inserting the following new items:
‘‘Sec. 139. Disaster relief payments.
‘‘Sec. 140. Cross references to other Acts.’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to taxable years ending on or after September 11,
2001.
SEC. 112. AUTHORITY TO POSTPONE CERTAIN DEADLINES AND
REQUIRED ACTIONS.
(a) EXPANSION
OF AUTHORITY RELATING
TO DISASTERS
AND
TERRORISTIC
OR MILITARY ACTIONS.—Section 7508A is amended
to read as follows:
‘‘SEC. 7508A. AUTHORITY TO POSTPONE CERTAIN DEADLINES BY REA-
SON OF PRESIDENTIALLY DECLARED DISASTER OR
TERRORISTIC OR MILITARY ACTIONS.
‘‘(a) IN GENERAL.—In the case of a taxpayer determined by
the Secretary to be affected by a Presidentially declared disaster
(as defined in section 1033(h)(3)) or a terroristic or military action
(as defined in section 692(c)(2)), the Secretary may specify a period
of up to 1 year that may be disregarded in determining, under
the internal revenue laws, in respect of any tax liability of such
taxpayer—
‘‘(1) whether any of the acts described in paragraph (1)
of section 7508(a) were performed within the time prescribed
therefor (determined without regard to extension under any
other provision of this subtitle for periods after the date (deter-
mined by the Secretary) of such disaster or action),
‘‘(2) the amount of any interest, penalty, additional amount,
or addition to the tax for periods after such date, and
H. R. 2884—8
‘‘(3) the amount of any credit or refund.
‘‘(b) SPECIAL RULES REGARDING PENSIONS, ETC.—In the case
of a pension or other employee benefit plan, or any sponsor, adminis-
trator, participant, beneficiary, or other person with respect to
such plan, affected by a disaster or action described in subsection
(a), the Secretary may specify a period of up to 1 year which
may be disregarded in determining the date by which any action
is required or permitted to be completed under this title. No plan
shall be treated as failing to be operated in accordance with the
terms of the plan solely as the result of disregarding any period
by reason of the preceding sentence.
‘‘(c) SPECIAL RULES FOR OVERPAYMENTS.—The rules of section
7508(b) shall apply for purposes of this section.’’.
(b) CLARIFICATION OF SCOPE OF ACTS SECRETARY MAY POST-
PONE.—Section 7508(a)(1)(K) (relating to time to be disregarded)
is amended by striking ‘‘in regulations prescribed under this sec-
tion’’.
(c) CONFORMING AMENDMENTS TO ERISA.—
(1) Part 5 of subtitle B of title I of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1131 et seq.) is amended
by adding at the end the following new section:
‘‘SEC. 518. AUTHORITY TO POSTPONE CERTAIN DEADLINES BY REASON
OF PRESIDENTIALLY DECLARED DISASTER OR TERROR-
ISTIC OR MILITARY ACTIONS.
‘‘In the case of a pension or other employee benefit plan, or
any sponsor, administrator, participant, beneficiary, or other person
with respect to such plan, affected by a Presidentially declared
disaster (as defined in section 1033(h)(3) of the Internal Revenue
Code of 1986) or a terroristic or military action (as defined in
section 692(c)(2) of such Code), the Secretary may, notwithstanding
any other provision of law, prescribe, by notice or otherwise, a
period of up to 1 year which may be disregarded in determining
the date by which any action is required or permitted to be com-
pleted under this Act. No plan shall be treated as failing to be
operated in accordance with the terms of the plan solely as the
result of disregarding any period by reason of the preceding sen-
tence.’’.
(2) Section 4002 of Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1302) is amended by adding at the
end the following new subsection:
‘‘(i) SPECIAL RULES REGARDING DISASTERS, ETC.—In the case
of a pension or other employee benefit plan, or any sponsor, adminis-
trator, participant, beneficiary, or other person with respect to
such plan, affected by a Presidentially declared disaster (as defined
in section 1033(h)(3) of the Internal Revenue Code of 1986) or
a terroristic or military action (as defined in section 692(c)(2) of
such Code), the corporation may, notwithstanding any other provi-
sion of law, prescribe, by notice or otherwise, a period of up to
1 year which may be disregarded in determining the date by which
any action is required or permitted to be completed under this
Act. No plan shall be treated as failing to be operated in accordance
with the terms of the plan solely as the result of disregarding
any period by reason of the preceding sentence.’’.
(d) ADDITIONAL CONFORMING AMENDMENTS.—
(1) Section 6404 is amended—
(A) by striking subsection (h);
H. R. 2884—9
(B) by redesignating subsection (i) as subsection (h);
and
(C) by adding at the end the following new subsection:
‘‘(i) CROSS REFERENCE.—
‘‘For authority to suspend running of interest, etc. by reason of
Presidentially declared disaster or terroristic or military action, see
section 7508A.’’.
(2) Section 6081(c) is amended to read as follows:
‘‘(c) CROSS REFERENCES.—
‘‘For time for performing certain acts postponed by reason of war,
see section 7508, and by reason of Presidentially declared disaster
or terroristic or military action, see section 7508A.’’.
(3) Section 6161(d) is amended by adding at the end the
following new paragraph:
‘‘(3) POSTPONEMENT OF CERTAIN ACTS.—
‘‘For time for performing certain acts postponed by reason of war,
see section 7508, and by reason of Presidentially declared disaster
or terroristic or military action, see section 7508A.’’.
(e) CLERICAL AMENDMENTS.—
(1) The item relating to section 7508A in the table of
sections for chapter 77 is amended to read as follows:
‘‘Sec. 7508A. Authority to postpone certain deadlines by reason of Presi-
dentially declared disaster or terroristic or military actions.’’.
(2) The table of contents for the Employee Retirement
Income Security Act of 1974 is amended by inserting after
the item relating to section 517 the following new item:
‘‘Sec. 518. Authority to postpone certain deadlines by reason of Presi-
dentially declared disaster or terroristic or military actions.’’.
(f) EFFECTIVE DATE.—The amendments made by this section
shall apply to disasters and terroristic or military actions occurring
on or after September 11, 2001, with respect to any action of
the Secretary of the Treasury, the Secretary of Labor, or the Pension
Benefit Guaranty Corporation occurring on or after the date of
the enactment of this Act.
SEC. 113. APPLICATION OF CERTAIN PROVISIONS TO TERRORISTIC
OR MILITARY ACTIONS.
(a) DISABILITY INCOME.—Section 104(a)(5) (relating to com-
pensation for injuries or sickness) is amended by striking ‘‘a violent
attack’’ and all that follows through the period and inserting ‘‘a
terroristic or military action (as defined in section 692(c)(2)).’’.
(b) EXEMPTION FROM INCOME TAX FOR CERTAIN MILITARY OR
CIVILIAN EMPLOYEES.—Section 692(c) is amended—
(1) by striking ‘‘outside the United States’’ in paragraph
(1); and
(2) by striking ‘‘SUSTAINED OVERSEAS’’ in the heading.
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to taxable years ending on or after September 11,
2001.
SEC. 114. CLARIFICATION OF DUE DATE FOR AIRLINE EXCISE TAX
DEPOSITS.
(a) IN GENERAL.—Paragraph (3) of section 301(a) of the Air
Transportation Safety and System Stabilization Act (Public Law
107–42) is amended to read as follows:
H. R. 2884—10
‘‘(3) AIRLINE-RELATED DEPOSIT.—For purposes of this sub-
section, the term ‘airline-related deposit’ means any deposit
of taxes imposed by subchapter C of chapter 33 of such Code
(relating to transportation by air).’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall take effect as if included in section 301 of the Air Transpor-
tation Safety and System Stabilization Act (Public Law 107–42).
SEC. 115. TREATMENT OF CERTAIN STRUCTURED SETTLEMENT PAY-
MENTS.
(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 TRANSACTIONS.
‘‘(a) IMPOSITION OF TAX.—There is hereby imposed on any per-
son who acquires directly or indirectly structured settlement pay-
ment rights in a structured settlement 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 TRANSACTIONS.—
‘‘(1) IN GENERAL.—The tax under subsection (a) shall not
apply in the case of a structured settlement factoring trans-
action in which the transfer of structured settlement payment
rights is approved in advance in a qualified order.
‘‘(2) QUALIFIED ORDER.—For purposes of this section, the
term ‘qualified order’ means a final order, judgment, or decree
which—
‘‘(A) finds that the transfer described in paragraph
(1)—
‘‘(i) does not contravene any Federal or State
statute or the order of any court or responsible
administrative authority, and
‘‘(ii) is in the best interest of the payee, taking
into account the welfare and support of the payee’s
dependents, and
‘‘(B) is issued—
‘‘(i) under the authority of an applicable State
statute by an applicable State court, or
‘‘(ii) by the responsible administrative authority
(if any) which has exclusive jurisdiction over the under-
lying action or proceeding which was resolved by means
of the structured settlement.
‘‘(3) APPLICABLE STATE STATUTE.—For purposes of this sec-
tion, the term ‘applicable State statute’ means a statute pro-
viding for the entry of an order, judgment, or decree described
in paragraph (2)(A) which is enacted by—
‘‘(A) the State in which the payee of the structured
settlement is domiciled, or
‘‘(B) if there is no statute described in subparagraph
(A), the State in which either the party to the structured
settlement (including an assignee under a qualified assign-
ment under section 130) or the person issuing the funding
H. R. 2884—11
asset for the structured settlement is domiciled or has
its principal place of business.
‘‘(4) APPLICABLE
STATE
COURT.—For purposes of this
section—
‘‘(A) IN GENERAL.—The term ‘applicable State court’
means, with respect to any applicable State statute, a
court of the State which enacted such statute.
‘‘(B) SPECIAL RULE.—In the case of an applicable State
statute described in paragraph (3)(B), such term also
includes a court of the State in which the payee of the
structured settlement is domiciled.
‘‘(5) QUALIFIED ORDER DISPOSITIVE.—A qualified order shall
be treated as dispositive for purposes of the exception under
this subsection.
‘‘(c) DEFINITIONS.—For purposes of this section—
‘‘(1) STRUCTURED
SETTLEMENT.—The term ‘structured
settlement’ means an arrangement—
‘‘(A) which is established by—
‘‘(i) suit or agreement for the periodic payment
of damages excludable from the gross income of the
recipient under section 104(a)(2), or
‘‘(ii) agreement for the periodic payment of com-
pensation under any workers’ compensation law
excludable from the gross income of the recipient under
section 104(a)(1), and
‘‘(B) under which the periodic payments are—
‘‘(i) of the character described in subparagraphs
(A) and (B) of section 130(c)(2), and
‘‘(ii) payable by a person who is a party to the
suit or agreement or to the workers’ compensation
claim or by a person who has assumed the liability
for such periodic payments under a qualified assign-
ment in accordance with section 130.
‘‘(2) STRUCTURED SETTLEMENT PAYMENT RIGHTS.—The term
‘structured settlement payment rights’ means rights to receive
payments under a structured settlement.
‘‘(3) STRUCTURED SETTLEMENT FACTORING TRANSACTION.—
‘‘(A) IN GENERAL.—The term ‘structured settlement fac-
toring transaction’ means a transfer of structured settle-
ment payment rights (including portions of structured
settlement payments) made for consideration by means
of sale, assignment, pledge, or other form of encumbrance
or alienation for consideration.
‘‘(B) EXCEPTION.—Such term shall not include—
‘‘(i) the creation or perfection of a security interest
in structured settlement payment rights under a
blanket security agreement entered into with an
insured depository institution in the absence of any
action to redirect the structured settlement payments
to such institution (or agent or successor thereof) or
otherwise to enforce such blanket security interest as
against the structured settlement payment rights, or
‘‘(ii) a subsequent transfer of structured settlement
payment rights acquired in a structured settlement
factoring transaction.
‘‘(4) FACTORING DISCOUNT.—The term ‘factoring discount’
means an amount equal to the excess of—
H. R. 2884—12
‘‘(A) the aggregate undiscounted amount of structured
settlement payments being acquired in the structured
settlement factoring transaction, over
‘‘(B) the total amount actually paid by the acquirer
to the person from whom such structured settlement pay-
ments are acquired.
‘‘(5) RESPONSIBLE ADMINISTRATIVE AUTHORITY.—The term
‘responsible administrative authority’ means the administrative
authority which had jurisdiction over the underlying action
or proceeding which was resolved by means of the structured
settlement.
‘‘(6) STATE.—The term ‘State’ includes the Commonwealth
of Puerto Rico and any possession of the United States.
‘‘(d) COORDINATION WITH OTHER PROVISIONS.—
‘‘(1) IN GENERAL.—If the applicable requirements of sections
72, 104(a)(1), 104(a)(2), 130, and 461(h) were satisfied at the
time the structured settlement 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 provisions 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 following 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 settlement factoring transactions (as defined in
section 5891(c) of such Code (as so added)) entered into on
or after the 30th day following the date of the enactment
of this Act.
(2) CLARIFICATION OF EXISTING LAW.—Section 5891(d) of
such Code (as so added) shall apply to structured settlement
factoring transactions (as defined in section 5891(c) of such
Code (as so added)) entered into before, on, or after such 30th
day.
(3) TRANSITION RULE.—In the case of a structured settle-
ment factoring transaction entered into during the period begin-
ning on the 30th day following the date of the enactment
of this Act and ending on July 1, 2002, no tax shall be imposed
under section 5891(a) of such Code if—
(A) the structured settlement payee is domiciled in
a State (or possession of the United States) which has
not enacted a statute providing that the structured settle-
ment factoring transaction is ineffective unless the trans-
action has been approved by an order, judgment, or decree
of a court (or where applicable, a responsible administrative
authority) which finds that such transaction—
H. R. 2884—13
(i) does not contravene any Federal or State statute
or the order of any court (or responsible administrative
authority); and
(ii) is in the best interest of the structured settle-
ment payee or is appropriate in light of a hardship
faced by the payee; and
(B) the person acquiring the structured settlement pay-
ment rights discloses to the structured settlement payee
in advance of the structured settlement factoring trans-
action the amounts and due dates of the payments to
be transferred, the aggregate amount to be transferred,
the consideration to be received by the structured settle-
ment payee for the transferred payments, the discounted
present value of the transferred payments (including the
present value as determined in the manner described in
section 7520 of such Code), and the expenses required
under the terms of the structured settlement factoring
transaction to be paid by the structured settlement payee
or deducted from the proceeds of such transaction.
SEC. 116. PERSONAL EXEMPTION DEDUCTION FOR CERTAIN DIS-
ABILITY TRUSTS.
(a) IN GENERAL.—Subsection (b) of section 642 (relating to
deduction for personal exemption) is amended to read as follows:
‘‘(b) DEDUCTION FOR PERSONAL EXEMPTION.—
‘‘(1) ESTATES.—An estate shall be allowed a deduction of
$600.
‘‘(2) TRUSTS.—
‘‘(A) IN
GENERAL.—Except as otherwise provided in
this paragraph, a trust shall be allowed a deduction of
$100.
‘‘(B) TRUSTS
DISTRIBUTING
INCOME
CURRENTLY.—A
trust which, under its governing instrument, is required
to distribute all of its income currently shall be allowed
a deduction of $300.
‘‘(C) DISABILITY TRUSTS.—
‘‘(i) IN GENERAL.—A qualified disability trust shall
be allowed a deduction equal to the exemption amount
under section 151(d), determined—
‘‘(I) by treating such trust as an individual
described in section 151(d)(3)(C)(iii), and
‘‘(II) by applying section 67(e) (without the
reference to section 642(b)) for purposes of deter-
mining the adjusted gross income of the trust.
‘‘(ii) QUALIFIED DISABILITY TRUST.—For purposes
of clause (i), the term ‘qualified disability trust’ means
any trust if—
‘‘(I) such trust is a disability trust described
in subsection (c)(2)(B)(iv) of section 1917 of the
Social Security Act (42 U.S.C. 1396p), and
‘‘(II) all of the beneficiaries of the trust as
of the close of the taxable year are determined
by the Commissioner of Social Security to have
been disabled (within the meaning of section
1614(a)(3) of the Social Security Act, 42 U.S.C.
1382c(a)(3)) for some portion of such year.
H. R. 2884—14
A trust shall not fail to meet the requirements of
subclause (II) merely because the corpus of the trust
may revert to a person who is not so disabled after
the trust ceases to have any beneficiary who is so
disabled.
‘‘(3) DEDUCTIONS IN LIEU OF PERSONAL EXEMPTION.—The
deductions allowed by this subsection shall be in lieu of the
deductions allowed under section 151 (relating to deduction
for personal exemption).’’.
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to taxable years ending on or after September 11,
2001.
TITLE II—DISCLOSURE OF TAX INFOR-
MATION 
IN 
TERRORISM 
AND 
NA-
TIONAL SECURITY INVESTIGATIONS
SEC. 201. DISCLOSURE OF TAX INFORMATION IN TERRORISM AND
NATIONAL SECURITY INVESTIGATIONS.
(a) DISCLOSURE
WITHOUT
A
REQUEST
OF
INFORMATION
RELATING TO TERRORIST ACTIVITIES, ETC.—Paragraph (3) of section
6103(i) (relating to disclosure of return information to apprise appro-
priate officials of criminal activities or emergency circumstances)
is amended by adding at the end the following new subparagraph:
‘‘(C) TERRORIST ACTIVITIES, ETC.—
‘‘(i) IN GENERAL.—Except as provided in paragraph
(6), the Secretary may disclose in writing return
information (other than taxpayer return information)
that may be related to a terrorist incident, threat,
or activity to the extent necessary to apprise the head
of the appropriate Federal law enforcement agency
responsible for investigating or responding to such ter-
rorist incident, threat, or activity. The head of the
agency may disclose such return information to officers
and employees of such agency to the extent necessary
to investigate or respond to such terrorist incident,
threat, or activity.
‘‘(ii) DISCLOSURE
TO
THE
DEPARTMENT
OF
JUS-
TICE.—Returns and taxpayer return information may
also be disclosed to the Attorney General under clause
(i) to the extent necessary for, and solely for use in
preparing, an application under paragraph (7)(D).
‘‘(iii) TAXPAYER
IDENTITY.—For purposes of this
subparagraph, a taxpayer’s identity shall not be treated
as taxpayer return information.
‘‘(iv) TERMINATION.—No disclosure may be made
under this subparagraph after December 31, 2003.’’.
(b) DISCLOSURE UPON REQUEST OF INFORMATION RELATING TO
TERRORIST ACTIVITIES, ETC.—Subsection (i) of section 6103 (relating
to disclosure to Federal officers or employees for administration
of Federal laws not relating to tax administration) is amended
by redesignating paragraph (7) as paragraph (8) and by inserting
after paragraph (6) the following new paragraph:
‘‘(7) DISCLOSURE UPON REQUEST OF INFORMATION RELATING
TO TERRORIST ACTIVITIES, ETC.—
H. R. 2884—15
‘‘(A) DISCLOSURE TO LAW ENFORCEMENT AGENCIES.—
‘‘(i) IN GENERAL.—Except as provided in paragraph
(6), upon receipt by the Secretary of a written request
which meets the requirements of clause (iii), the Sec-
retary may disclose return information (other than tax-
payer return information) to officers and employees
of any Federal law enforcement agency who are person-
ally and directly engaged in the response to or inves-
tigation of any terrorist incident, threat, or activity.
‘‘(ii) DISCLOSURE
TO
STATE
AND
LOCAL
LAW
ENFORCEMENT AGENCIES.—The head of any Federal law
enforcement agency may disclose return information
obtained under clause (i) to officers and employees
of any State or local law enforcement agency but only
if such agency is part of a team with the Federal
law enforcement agency in such response or investiga-
tion and such information is disclosed only to officers
and employees who are personally and directly engaged
in such response or investigation.
‘‘(iii) 
REQUIREMENTS.—A 
request 
meets 
the
requirements of this clause if—
‘‘(I) the request is made by the head of any
Federal law enforcement agency (or his delegate)
involved in the response to or investigation of any
terrorist incident, threat, or activity, and
‘‘(II) the request sets forth the specific reason
or reasons why such disclosure may be relevant
to a terrorist incident, threat, or activity.
‘‘(iv) LIMITATION
ON
USE
OF
INFORMATION.—
Information disclosed under this subparagraph shall
be solely for the use of the officers and employees
to whom such information is disclosed in such response
or investigation.
‘‘(B) DISCLOSURE TO INTELLIGENCE AGENCIES.—
‘‘(i) IN GENERAL.—Except as provided in paragraph
(6), upon receipt by the Secretary of a written request
which meets the requirements of clause (ii), the Sec-
retary may disclose return information (other than tax-
payer return information) to those officers and
employees of the Department of Justice, the Depart-
ment of the Treasury, and other Federal intelligence
agencies who are personally and directly engaged in
the collection or analysis of intelligence and counter-
intelligence information or investigation concerning
any terrorist incident, threat, or activity. For purposes
of the preceding sentence, the information disclosed
under the preceding sentence shall be solely for the
use of such officers and employees in such investiga-
tion, collection, or analysis.
‘‘(ii) REQUIREMENTS.—A request meets the require-
ments of this subparagraph if the request—
‘‘(I) is made by an individual described in
clause (iii), and
‘‘(II) sets forth the specific reason or reasons
why such disclosure may be relevant to a terrorist
incident, threat, or activity.
H. R. 2884—16
‘‘(iii) REQUESTING
INDIVIDUALS.—An individual
described in this subparagraph is an individual—
‘‘(I) who is an officer or employee of the
Department of Justice or the Department of the
Treasury who is appointed by the President with
the advice and consent of the Senate or who is
the Director of the United States Secret Service,
and
‘‘(II) who is responsible for the collection and
analysis of intelligence and counterintelligence
information concerning any terrorist incident,
threat, or activity.
‘‘(iv) TAXPAYER
IDENTITY.—For purposes of this
subparagraph, a taxpayer’s identity shall not be treated
as taxpayer return information.
‘‘(C) DISCLOSURE UNDER EX PARTE ORDERS.—
‘‘(i) IN GENERAL.—Except as provided in paragraph
(6), any return or return information with respect to
any specified taxable period or periods shall, pursuant
to and upon the grant of an ex parte order by a
Federal district court judge or magistrate under clause
(ii), be open (but only to the extent necessary as pro-
vided in such order) to inspection by, or disclosure
to, officers and employees of any Federal law enforce-
ment agency or Federal intelligence agency who are
personally and directly engaged in any investigation,
response to, or analysis of intelligence and counterintel-
ligence information concerning any terrorist incident,
threat, or activity. Return or return information opened
to inspection or disclosure pursuant to the preceding
sentence shall be solely for the use of such officers
and employees in the investigation, response, or anal-
ysis, and in any judicial, administrative, or grand jury
proceedings, pertaining to such terrorist incident,
threat, or activity.
‘‘(ii) APPLICATION FOR ORDER.—The Attorney Gen-
eral, the Deputy Attorney General, the Associate
Attorney General, any Assistant Attorney General, or
any United States attorney may authorize an applica-
tion to a Federal district court judge or magistrate
for the order referred to in clause (i). Upon such
application, such judge or magistrate may grant such
order if he determines on the basis of the facts sub-
mitted by the applicant that—
‘‘(I) there is reasonable cause to believe, based
upon information believed to be reliable, that the
return or return information may be relevant to
a matter relating to such terrorist incident, threat,
or activity, and
‘‘(II) the return or return information is sought
exclusively for use in a Federal investigation, anal-
ysis, or proceeding concerning any terrorist
incident, threat, or activity.
‘‘(D) SPECIAL RULE FOR EX PARTE DISCLOSURE BY THE
IRS.—
‘‘(i) IN GENERAL.—Except as provided in paragraph
(6), the Secretary may authorize an application to a
H. R. 2884—17
Federal district court judge or magistrate for the order
referred to in subparagraph (C)(i). Upon such applica-
tion, such judge or magistrate may grant such order
if he determines on the basis of the facts submitted
by the applicant that the requirements of subpara-
graph (C)(ii)(I) are met.
‘‘(ii) LIMITATION
ON
USE
OF
INFORMATION.—
Information disclosed under clause (i)—
‘‘(I) may be disclosed only to the extent nec-
essary to apprise the head of the appropriate Fed-
eral law enforcement agency responsible for inves-
tigating or responding to a terrorist incident,
threat, or activity, and
‘‘(II) shall be solely for use in a Federal inves-
tigation, analysis, or proceeding concerning any
terrorist incident, threat, or activity.
The head of such Federal agency may disclose such
information to officers and employees of such agency
to the extent necessary to investigate or respond to
such terrorist incident, threat, or activity.
‘‘(E) TERMINATION.—No disclosure may be made under
this paragraph after December 31, 2003.’’.
(c) CONFORMING AMENDMENTS.—
(1) Section 6103(a)(2) is amended by inserting ‘‘any local
law enforcement agency receiving information under subsection
(i)(7)(A),’’ after ‘‘State,’’.
(2) Section 6103(b) is amended by adding at the end the
following new paragraph:
‘‘(11) TERRORIST INCIDENT, THREAT, OR ACTIVITY.—The term
‘terrorist incident, threat, or activity’ means an incident, threat,
or activity involving an act of domestic terrorism (as defined
in section 2331(5) of title 18, United States Code) or inter-
national terrorism (as defined in section 2331(1) of such title).’’.
(3) The heading of section 6103(i)(3) is amended by
inserting ‘‘OR TERRORIST’’ after ‘‘CRIMINAL’’.
(4) Paragraph (4) of section 6103(i) is amended—
(A) in subparagraph (A) by inserting ‘‘or (7)(C)’’ after
‘‘paragraph (1)’’; and
(B) in subparagraph (B) by striking ‘‘or (3)(A)’’ and
inserting ‘‘(3)(A) or (C), or (7)’’.
(5) Paragraph (6) of section 6103(i) is amended—
(A) by striking ‘‘(3)(A)’’ and inserting ‘‘(3)(A) or (C)’’;
and
(B) by striking ‘‘or (7)’’ and inserting ‘‘(7), or (8)’’.
(6) Section 6103(p)(3) is amended—
(A) in subparagraph (A) by striking ‘‘(7)(A)(ii)’’ and
inserting ‘‘(8)(A)(ii)’’; and
(B) in subparagraph (C) by striking ‘‘(i)(3)(B)(i)’’ and
inserting ‘‘(i)(3)(B)(i) or (7)(A)(ii)’’.
(7) Section 6103(p)(4) is amended—
(A) in the matter preceding subparagraph (A)—
(i) by striking ‘‘or (5),’’ the first place it appears
and inserting ‘‘(5), or (7),’’; and
(ii) 
by 
striking 
‘‘(i)(3)(B)(i),’’ 
and 
inserting
‘‘(i)(3)(B)(i) or (7)(A)(ii),’’; and
(B) in subparagraph (F)(ii) by striking ‘‘or (5),’’ the
first place it appears and inserting ‘‘(5) or (7),’’.
H. R. 2884—18
(8) Section 6103(p)(6)(B)(i) is amended by striking
‘‘(i)(7)(A)(ii)’’ and inserting ‘‘(i)(8)(A)(ii)’’.
(9) Section 6105(b) is amended—
(A) by striking ‘‘or’’ at the end of paragraph (2);
(B) by striking ‘‘paragraphs (1) or (2)’’ in paragraph
(3) and inserting ‘‘paragraph (1), (2), or (3)’’;
(C) by redesignating paragraph (3) as paragraph (4);
and
(D) by inserting after paragraph (2) the following new
paragraph:
‘‘(3) to the disclosure of tax convention information on
the same terms as return information may be disclosed under
paragraph (3)(C) or (7) of section 6103(i), except that in the
case of tax convention information provided by a foreign govern-
ment, no disclosure may be made under this paragraph without
the written consent of the foreign government, or’’.
(10) Section 7213(a)(2) is amended by striking ‘‘(i)(3)(B)(i),’’
and inserting ‘‘(i)(3)(B)(i) or (7)(A)(ii),’’.
(d) EFFECTIVE DATE.—The amendments made by this section
shall apply to disclosures made on or after the date of the enactment
of this Act.
TITLE III—NO IMPACT ON SOCIAL
SECURITY TRUST FUNDS
SEC. 301. NO IMPACT ON SOCIAL SECURITY TRUST FUNDS.
(a) IN GENERAL.—Nothing in this Act (or an amendment made
by this Act) shall be construed to alter or amend title II of the
Social Security Act (or any regulation promulgated under that Act).
(b) TRANSFERS.—
(1) ESTIMATE
OF
SECRETARY.—The Secretary of the
Treasury shall annually estimate the impact that the enactment
of this Act has on the income and balances of the trust funds
established under section 201 of the Social Security Act (42
U.S.C. 401).
(2) TRANSFER OF FUNDS.—If, under paragraph (1), the Sec-
retary of the Treasury estimates that the enactment of this
Act has a negative impact on the income and balances of
the trust funds established under section 201 of the Social
Security Act (42 U.S.C. 401), the Secretary shall transfer, not
less frequently than quarterly, from the general revenues of
the Federal Government an amount sufficient so as to ensure
H. R. 2884—19
that the income and balances of such trust funds are not
reduced as a result of the enactment of this Act.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.