To amend the Internal Revenue Code of 1986 to repeal the inclusion in gross income of Social Security benefits and tier 1 railroad retirement benefits.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Seniors Financial Security Act of 
2003''.

SEC. 2. REPEAL OF INCLUSION IN GROSS INCOME OF SOCIAL SECURITY BENEFITS 
              AND TIER 1 RAILROAD RETIREMENT BENEFITS.

    (a) In General.--Section 86 of the Internal Revenue Code of 1986 
(relating to taxation of social security and tier 1 railroad retirement 
benefits) is hereby repealed.
    (b) Technical and Conforming Amendments.--
            (1) Subparagraph (B) of section 22(c)(3) of such Code 
        (relating to treatment of certain workmen's compensation 
        benefits) is amended by striking ``any amount treated as a 
        social security benefit under section 86(d)(3)'' and inserting 
        ``if, by reason of section 224 of the Social Security Act (or 
        by reason of section 3(a)(1) of the Railroad Retirement Act of 
        1974), any benefit otherwise payable under title II of the 
        Social Security Act or the Railroad Retirement Act of 1974 is 
        reduced by reason of the receipt of a benefit under a workmen's 
        compensation act, the portion of such benefit received under 
        the workmen's compensation act which equals such reduction''.
            (2) Paragraph (3) of section 72(r) of such Code (defining 
        tier 1 railroad retirement benefit) is amended by striking 
        ``has the meaning given such term by section 86(d)(4)'' and 
        inserting ``means--
                    ``(A) the amount of the annuity under the Railroad 
                Retirement Act of 1974 equal to the amount of the 
                benefit to which the taxpayer would have been entitled 
                under the Social Security Act if all of the service 
                after December 31, 1936, of the employee (on whose 
                employment record the annuity is being paid) had been 
                included in the term `employment' as defined in the 
                Social Security Act, and
                    ``(B) a monthly annuity amount under section 
                3(f)(3) of the Railroad Retirement Act of 1974.''.
            (3) Sections 135(c)(4)(B), 137(b)(3)(B), 221(b)(2)(C)(ii), 
        and 222(b)(2)(C)(ii) of such Code are each amended by striking 
        ``86,''.
            (4) Clause (i) of section 219(g)(3)(A) of such Code is 
        amended by striking ``sections 86 and 469'' and inserting 
        ``section 469''.
            (5) Subparagraph (F) of section 469(i)(3) of such Code is 
        amended by striking clause (i) and by redesignating clauses 
        (ii), (iii), and (iv) as clauses (i), (ii), and (iii), 
        respectively.
            (6) Paragraph (8) of section 861(a) of such Code (treating 
        social security benefits as United States sourced) is hereby 
        repealed.
            (7) Paragraph (3) of section 871(a) of such Code (relating 
        to taxation of social security benefits by nonresident aliens) 
        is hereby repealed.
            (8) Subsection (g) of section 1441 of such Code (relating 
        to withholding of tax on nonresident aliens) is hereby 
        repealed.
            (9) Subparagraph (C) of section 3402(p)(1) of such Code is 
        amended by striking clause (i) and by redesignating clauses 
        (ii), (iii), and (iv) as clauses (i), (ii), and (iii), 
        respectively.
            (10) Paragraph (4) of section 6015(d) of such Code is 
        amended by striking the last sentence.
            (11) Section 6050F of such Code (relating to returns 
        relating to social security benefits) is hereby repealed.
            (12) Paragraph (1) of section 6050G(a) of such Code 
        (relating to returns relating to certain railroad retirement 
        benefits) is amended by striking ``section 86(d)(4)'' and 
        inserting ``section 72(r)(3)''.
            (13)(A) Section 6103(h) of such Code (relating to 
        disclosure) is amended by striking paragraph (5) and by 
        redesignating paragraph (6) as paragraph (5).
            (B) Paragraph (4) of section 6103(p) of such Code is 
        amended by striking ``(h)(5),'' each place it appears.
            (C) Subsection (k) of section 1113 of the Right to 
        Financial Privacy Act of 1978 is hereby repealed.
            (14) The table of sections for part II of subchapter B of 
        chapter 1 of such Code is amended by striking the item relating 
        to section 86.
            (15) The table of sections for subpart B of part III of 
        subchapter A of chapter 61 of such Code is amended by striking 
        the item relating to section 6050F.
    (c) Effective Date.--The amendments made by this section shall 
apply to benefits received after December 31, 2002, in taxable years 
ending after such date.
    (d) Trust Funds Held Harmless.--There are hereby appropriated (out 
of any money in the Treasury not otherwise appropriated) for each 
fiscal year to each fund under the Social Security Act or the Railroad 
Retirement Act of 1974 an amount equal to the reduction in the 
transfers to such fund for such fiscal year by reason of the amendments 
made by this section.

Summary: Seniors Financial Security Act of 2003 - Amends the Internal Revenue Code to repeal the tax on social security and tier 1 railroad retirement benefits.