(2) The amendments made by sections 201(b),
202(f), and 618(f) of the Economic Growth and Tax
Relief Reconciliation Act of 2001 shall not apply to
taxable years beginning during 2002 and 2003.
(c) TECHNICAL CORRECTION.—Section 24(d)(1)(B)
is amended by striking ‘‘amount of credit allowed by this
section’’ and inserting ‘‘aggregate amount of credits al-
lowed by this subpart’’.
(d) EFFECTIVE DATES.—
(1) The amendments made by subsections (a)
and (b) shall apply to taxable years beginning after
December 31, 2001.
(2) The amendment made by subsection (c)
shall apply to taxable years beginning after Decem-
ber 31, 2000.
SEC. 302. CREDIT FOR QUALIFIED ELECTRIC VEHICLES.
(a) IN GENERAL.—Section 30 is amended—
(1) in subsection (b)(2)—
(A) by striking ‘‘December 31, 2001,’’ and
inserting ‘‘December 31, 2003,’’, and
(B) in subparagraphs (A), (B), and (C), by
striking ‘‘2002’’, ‘‘2003’’, and ‘‘2004’’, respec-
tively, and inserting ‘‘2004’’, ‘‘2005’’, and
‘‘2006’’, respectively, and
(2) in subsection (e), by striking ‘‘December 31,
2004’’ and inserting ‘‘December 31, 2006’’.
(b) CONFORMING AMENDMENTS.—
(1) Subparagraph (C) of section 280F(a)(1) is
amended by adding at the end the following new
clause
‘‘(iii) 
APPLICATION
OF
SUBPARA-
GRAPH.—This subparagraph shall apply to
property placed in service after August 5,
1997, and before January 1, 2007.’’.
(2) Subsection (b) of section 971 of the Tax-
payer Relief Act of 1997 is amended by striking
‘‘and before January 1, 2005’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
SEC. 303. CREDIT FOR ELECTRICITY PRODUCED FROM RE-
NEWABLE RESOURCES.
(a) IN GENERAL.—Subparagraphs (A), (B), and (C)
of section 45(c)(3) are each amended by striking ‘‘2002’’
and inserting ‘‘2004’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall take effect on the date of the enact-
ment of this Act.
SEC. 304. WORK OPPORTUNITY CREDIT.
(a) IN GENERAL.—Subparagraph (B) of section
51(c)(4) is amended by striking ‘‘2001’’ and inserting
‘‘2003’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to individuals who begin work
for the employer after December 31, 2001.
SEC. 305. WELFARE-TO-WORK CREDIT.
(a) IN GENERAL.—Subsection (f) of section 51A is
amended by striking ‘‘2001’’ and inserting ‘‘2003’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to individuals who begin work
for the employer after December 31, 2001.
SEC. 306. DEDUCTION FOR CLEAN-FUEL VEHICLES AND
CERTAIN REFUELING PROPERTY.
(a) IN GENERAL.—Section 179A is amended—
(1) in subsection (b)(1)(B)—
(A) by striking ‘‘December 31, 2001,’’ and
inserting ‘‘December 31, 2003,’’, and
(B) in clauses (i), (ii), and (iii), by striking
‘‘2002’’, ‘‘2003’’, and ‘‘2004’’, respectively, and
inserting ‘‘2004’’, ‘‘2005’’, and ‘‘2006’’, respec-
tively, and
(2) in subsection (f), by striking ‘‘December 31,
2004’’ and inserting ‘‘December 31, 2006’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall take effect on the date of the enact-
ment of this Act.
SEC. 307. TAXABLE INCOME LIMIT ON PERCENTAGE DEPLE-
TION FOR OIL AND NATURAL GAS PRODUCED
FROM MARGINAL PROPERTIES.
(a) IN GENERAL.—Subparagraph (H) of section
613A(c)(6) is amended by striking ‘‘2002’’ and inserting
‘‘2004’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to taxable years beginning after
December 31, 2001.
SEC. 308. QUALIFIED ZONE ACADEMY BONDS.
(a) 
IN
GENERAL.—Paragraph 
(1) 
of 
section
1397E(e) is amended by striking ‘‘2000, and 2001’’ and
inserting ‘‘2000, 2001, 2002, and 2003’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on the date of the enact-
ment of this Act.
SEC. 309. COVER OVER OF TAX ON DISTILLED SPIRITS.
(a) IN GENERAL.—Paragraph (1) of section 7652(f)
is amended by striking ‘‘January 1, 2002’’ and inserting
‘‘January 1, 2004’’.
(1) Paragraph (2) of section 220(j) is amended
by striking ‘‘1998, 1999, or 2001’’ each place it ap-
pears and inserting ‘‘1998, 1999, 2001, or 2002’’.
(2) Subparagraph (A) of section 220(j)(4) is
amended by striking ‘‘and 2001’’ and inserting
‘‘2001, and 2002’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
Subtitle C—Permanent Extensions
SEC. 331. SUBPART F EXEMPTION FOR ACTIVE FINANCING.
(a) IN GENERAL.—
(1) Section 953(e)(10) is amended—
(A) by striking ‘‘, and before January 1,
2002,’’, and
(B) by striking the second sentence.
(2) Section 954(h)(9) is amended by striking ‘‘,
and before January 1, 2002,’’.
(b) LIFE INSURANCE AND ANNUITY CONTRACTS.—
(1) IN GENERAL.—Subparagraph (B) of section
954(i)(4) is amended to read as follows:
‘‘(B) LIFE INSURANCE AND ANNUITY CON-
TRACTS.—
‘‘(i) IN
GENERAL.—Except as pro-
vided in clause (ii), the amount of the re-
serve of a qualifying insurance company or
qualifying insurance company branch for
any life insurance or annuity contract shall
be equal to the greater of—
‘‘(I) the net surrender value of
such contract (as defined in section
807(e)(1)(A)), or
‘‘(II) 
the 
reserve 
determined
under paragraph (5).
‘‘(ii) RULING REQUEST.—The amount
of the reserve under clause (i) shall be the
foreign statement reserve for the contract
(less any catastrophe, deficiency, equali-
zation, or similar reserves), if, pursuant to
a ruling request submitted by the taxpayer,
the Secretary determines that the factors
taken into account in determining the for-
eign statement reserve provide an appro-
priate means of measuring income.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
Subtitle D—Other Provisions
SEC. 341. EXCLUDED CANCELLATION OF INDEBTEDNESS
INCOME OF S CORPORATION NOT TO RESULT
IN ADJUSTMENT TO BASIS OF STOCK OF
SHAREHOLDERS.
(a) IN GENERAL.—Subparagraph (A) of section
108(d)(7) (relating to certain provisions to be applied at
corporate level) is amended by inserting before the period
‘‘, including by not taking into account under section
1366(a) any amount excluded under subsection (a) of this
section’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to discharges of indebtedness after
October 11, 2001, in taxable years ending after such date.
SEC. 342. LIMITATION ON USE OF NONACCRUAL EXPERI-
ENCE METHOD OF ACCOUNTING.
(a) IN GENERAL.—Paragraph (5) of section 448(d)
is amended to read as follows:
‘‘(5) SPECIAL RULE FOR CERTAIN SERVICES.—
‘‘(A) IN
GENERAL.—In the case of any
person using an accrual method of accounting
with respect to amounts to be received for the
performance of services by such person, such
person shall not be required to accrue any por-
tion of such amounts which (on the basis of
such person’s experience) will not be collected
if—
‘‘(i) such services are in fields referred
to in paragraph (2)(A), or
‘‘(ii) such person meets the gross re-
ceipts test of subsection (c) for all prior
taxable years.
‘‘(B) EXCEPTION.—This paragraph shall
not apply to any amount if interest is required
to be paid on such amount or there is any pen-
alty for failure to timely pay such amount.
‘‘(C) REGULATIONS.—The Secretary shall
prescribe regulations to permit taxpayers to de-
termine amounts referred to in subparagraph
(A) using computations or formulas which,
based on experience, accurately reflect the
amount of income that will not be collected by
such person. A taxpayer may adopt, or request
consent of the Secretary to change to, a com-
putation or formula that clearly reflects the tax-
payer’s experience. A request under the pre-
ceding sentence shall be approved only if such
computation or formula clearly reflects the tax-
payer’s experience.’’.
(b) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by
this section shall apply to taxable years ending after
the date of the enactment of this Act.
(2) CHANGE IN METHOD OF ACCOUNTING.—In
the case of any taxpayer required by the amend-
ments made by this section to change its method of
accounting for its first taxable year ending after the
date of the enactment of this Act—
(A) such change shall be treated as initi-
ated by the taxpayer,
(B) such change shall be treated as made
with the consent of the Secretary of the Treas-
ury, and
(C) the net amount of the adjustments re-
quired to be taken into account by the taxpayer
under section 481 of the Internal Revenue Code
of 1986 shall be taken into account over a pe-
riod of 4 years (or if less, the number of taxable
years that the taxpayer used the method per-
mitted under section 448(d)(5) of such Code as
in effect before the date of the enactment of
this Act) beginning with such first taxable year.
TITLE IV—SUPPLEMENTAL
REBATE; OTHER PROVISIONS
SEC. 401. SUPPLEMENTAL REBATE.
(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 REBATE.—
‘‘(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 striking ‘‘December 31, 2001’’ and inserting
‘‘the date of the enactment of the Economic Security
and Recovery Act of 2001’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
SEC. 402. 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)(A)) 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
section 402(a)(1) of the Economic Security and Re-
covery Act of 2001 had been enacted before the close
of fiscal year 2001, 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 regular or additional compensation for individ-
uals eligible for regular compensation under the unemploy-
ment 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.
‘‘(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 bene-
fits (described in subparagraph (B)(i)) which could have
been paid with respect to that amount.
‘‘(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—
‘‘(i) beginning after the date of enactment of
this subsection, and
‘‘(ii) ending on or before March 11, 2003.
‘‘(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—
‘‘(A) shall be made on such date as the Sec-
retary of Labor (in consultation with the Secretary
of the Treasury) shall determine, but in no event
later than 10 days after the date of enactment of
this subsection, and
‘‘(B) may, notwithstanding any other provision
of this subsection, be made only to the extent that
they do not to exceed—
‘‘(i) the balance in the Federal unemploy-
ment account as of the date determined under
subparagraph (A), or
‘‘(ii) the total amount that was transferred
under this section to the Federal unemployment
account at the beginning of fiscal year 2002,
whichever is less.’’
(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)(A)’’ 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)(A))’’ 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 V—HEALTH CARE ASSIST-
ANCE FOR THE UNEMPLOYED
SEC. 501. HEALTH CARE ASSISTANCE FOR THE UNEM-
PLOYED.
Title XX of the Social Security Act (42 U.S.C. 1397–
1397f) is amended by adding at the end the following:
‘‘SEC. 2008. GRANTS FOR HEALTH CARE ASSISTANCE FOR
THE UNEMPLOYED.
‘‘(a) FUNDING.—For purposes of section 2003, the
amount specified in section 2003(c) for fiscal year 2002
is increased by $3,000,000,000.
‘‘(b) USE OF FUNDS.—Notwithstanding any other
provision of this title, to the extent that an amount paid
to a State under section 2002 is attributable to funds
made available by reason of subsection (a) of this
section—
‘‘(1) the State shall use the amount to assist an
unemployed individual who is not eligible for Federal
health coverage to purchase health care coverage for
the individual or any member of the family of the in-
dividual who is not so eligible; and
‘‘(2) the amount—
‘‘(A) shall be used to supplement, not sup-
plant, any other Federal, State, or local funds
that are used for the provision of health care
coverage; and
‘‘(B) may not be included in determining
the amount of non-Federal contributions re-
quired under any program.
‘‘(c) DEFINITIONS.—In this section:
‘‘(1) UNEMPLOYED
INDIVIDUAL.—The term
‘unemployed individual’ means an individual who—
‘‘(A) is without a job (determined in ac-
cordance with the criteria used by the Bureau
of Labor Statistics of the Department of Labor
in defining individuals as unemployed);
‘‘(B) is seeking and available for work; and
‘‘(C) has or had a benefit year (within the
meaning of section 205 of the Federal-State
Extended Unemployment Compensation Act of
1970) beginning on or after January 1, 2001.
‘‘(2) FEDERAL HEALTH COVERAGE.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), the term ‘Federal health coverage’
means coverage under any medical care pro-
gram described in—
‘‘(i) title XVIII, XIX, or XXI of this
Act (other than under section 1928);
‘‘(ii) chapter 55 of title 10, United
States Code;
‘‘(iii) chapter 17 of title 38, United
States Code;
‘‘(iv) chapter 89 of title 5, United
States Code (other than coverage which is
comparable to continuation coverage under
section 4980B of the Internal Revenue
Code of 1986); or
‘‘(v) the Indian Health Care Improve-
ment Act.
‘‘(B) SPECIAL RULE.—Such term does not
include coverage under a qualified long-term
care insurance contract.’’.
Passed the House of Representatives October 24,
2001.
Attest:
Clerk.
107TH CONGRESS
1ST SESSION
H. R. 3090
AN ACT
To provide tax incentives for economic recovery.