In this task, you are given text for US Congressional and California state bills, your task is to generate a summary for this bill.

[Q]: SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Detroit Economic Competitiveness 
Act''.

SEC. 2. DETROIT JOBS TRUST FUND.

    (a) In General.--Subchapter A of chapter 98 of the Internal Revenue 
Code of 1986 is amended by adding at the end the following new section:

``SEC. 9512. DETROIT JOBS TRUST FUND.

    ``(a) Creation of Trust Fund.--There is established in the Treasury 
of the United States a trust fund to be known as the `Detroit Jobs 
Trust Fund', consisting of such amounts as may be appropriated or 
credited to such fund as provided in this section or section 9602(b).
    ``(b) Transfers to Trust Fund.--There are hereby appropriated to 
the Detroit Jobs Trust Fund amounts equivalent to receipts in the 
Treasury of taxes (including all income, excise, and employment taxes 
whether imposed with respect to individuals or businesses) imposed 
under this title (with respect to periods after the date of the 
enactment of this section) which are (as determined by the Secretary) 
attributable to Detroit, Michigan. The city of Detroit, Michigan, shall 
provide the Secretary such information as the Secretary may request for 
purposes of making the determinations required under this subsection. 
For purposes of this subsection, the taxes imposed on a corporation or 
other business entity shall not be treated as attributable to Detroit, 
Michigan, merely because the headquarters of such corporation or entity 
is located in Detroit, Michigan.
    ``(c) Expenditures.--
            ``(1) In general.--Except as otherwise provided in this 
        subsection, amounts in the Detroit Jobs Trust Fund shall 
        (without need of any further appropriation) be distributed 
        annually by the Secretary to the city of Detroit, Michigan, to 
        carry out the purposes described in paragraph (2).
            ``(2) Use of expenditures.--Amounts distributed to the city 
        of Detroit, Michigan, under this section shall be used for the 
        following purposes and in the following order of priority:
                    ``(A) First, of the amounts distributed with 
                respect the annual period not in excess of the Detroit 
                income tax suspension hold harmless amount, for any 
                purpose determined by the city government of Detroit, 
                Michigan.
                    ``(B) Second, for payment of principal and interest 
                on any general obligation issued by the city of 
                Detroit, Michigan (to the extent of such obligations).
                    ``(C) Third, for payment of principal and interest 
                on obligations to which section 103 applies and the 
                proceeds of which were used for the public schools of 
                the city of Detroit, Michigan (to the extent of such 
                obligations).
                    ``(D) Fourth, for jobs development, public safety, 
                education, business infrastructure, or public 
                infrastructure (to the extent consistent with the plan 
                described in paragraph (4)).
            ``(3) Restriction on distributions.--No distribution shall 
        be made by the Secretary under paragraph (1) unless--
                    ``(A) the city of Detroit, Michigan, does not 
                impose an income tax with respect to the period to 
                which such distribution relates,
                    ``(B) such city has reduced the aggregate property 
                taxes imposed by an amount not less than the reduction 
                in the payment obligations of such city by reason of 
                the payments described in paragraph (2),
                    ``(C) all prior distributions made to the city 
                under paragraph (2) were used by the city in a manner 
                consistent with the requirements of paragraph (2), and
                    ``(D) such city has provided such information to 
                the Comptroller General of the United States as the 
                Comptroller General may request to carry out section 
                2(b) of the Detroit Economic Competitiveness Act.
            ``(4) 5-year development plan.--A plan is described in this 
        paragraph if such plan--
                    ``(A) is a 5-year plan describing development goals 
                for Detroit, Michigan, and detailing how distributions 
                for purposes described in paragraph (2)(D) will be 
                spent,
                    ``(B) has been approved by simple majority vote of 
                the City Council of Detroit, Michigan (after 
                consultation with the Detroit Board of Education), and
                    ``(C) has been submitted to, and approved by, the 
                Secretary of the Treasury, the Secretary of Housing and 
                Urban Development, and the Secretary of Education.
        No distribution shall be made under paragraph (1) for a purpose 
        described in paragraph (2)(D) unless a plan described in this 
        paragraph is in effect and all prior such distributions for 
        such purposes were used in accordance with such plan.
            ``(5) Special rules during period of plan development.--
        During the period during which the plan described in paragraph 
        (4) is developed (but not in excess of the 5-month period 
        beginning on the date of the first distribution under paragraph 
        (1)), amounts distributed may be used concurrently for the 
        purposes described in subparagraphs (A), (B), and (C) of 
        paragraph (2).
            ``(6) Detroit income tax suspension hold harmless amount.--
                    ``(A) In general.--For purposes of paragraph 
                (2)(A), the term `Detroit income tax suspension hold 
                harmless amount' means the amount (as determined by the 
                Secretary) of revenue collected by the city of Detroit 
                pursuant to the income tax imposed by such city during 
                the calendar year preceding the calendar year which 
                includes the date of the enactment of this section.
                    ``(B) Cross reference.--For provision which 
                requires suspension of the Detroit income tax, see 
                paragraph (3)(A).
                    ``(C) Tax returns may still be required.--The city 
                of Detroit, Michigan, shall not be treated as failing 
                to satisfy the requirement of paragraph (3)(A) with 
                respect to any period merely because taxpayers are 
                required to file tax returns and report income with 
                respect to such period.
            ``(7) Amounts made available not to reduce other funding.--
        Amounts distributed to the city of Detroit, Michigan, under 
        this section shall supplement, and not supplant, any other 
        funding (including any Federal funding) for such city.
    ``(d) Termination.--No amount shall be distributed from, or 
appropriated to, the Detroit Jobs Trust Fund after the 5-year period 
beginning on the date of the enactment of this section. Any amounts 
remaining in such Trust Fund at the end of such period shall be 
transferred to the general fund of the Treasury. The 5-year period 
specified in this subsection shall not be renewed or extended.''.
    (b) GAO Reports.--The Comptroller General of the United States 
shall submit an annual report to Congress which--
            (1) describes the manner and purposes for which 
        distributions made from the Detroit Jobs Trust Fund have been 
        used,
            (2) describes the extent to which progress has been made 
        toward meeting the development goals under the plan described 
        in section 9512(c)(4) of the Internal Revenue Code of 1986 (as 
        added by this section) and whether such progress is consistent 
        with meeting such goals, and
            (3) includes any recommendations the Comptroller General 
        may have regarding improvements to the program described in 
        section 9512 of such Code.
The first such annual report shall be submitted not later than 90 days 
after the 1-year period beginning on the date of the enactment of this 
Act and the last such annual report shall be submitted not later than 
90 days after the date on which the Detroit Jobs Trust Fund terminates 
pursuant to section 9512(d) of such Code.
    (c) Clerical Amendment.--The table of sections for subchapter A of 
chapter 98 of the Internal Revenue Code of 1986 is amended by adding at 
the end the following new item:

``Sec. 9512. Detroit Jobs Trust Fund.''.

SEC. 3. ZERO CAPITAL GAINS RATE FOR CERTAIN NEW INVESTMENTS IN DETROIT, 
              MICHIGAN.

    (a) In General.--Subchapter Y of chapter 1 of the Internal Revenue 
Code of 1986 is amended by adding at the end the following new part:

        ``PART IV--CERTAIN NEW INVESTMENTS IN DETROIT, MICHIGAN

``Sec. 1400V. Zero capital gains rate for certain new investments in 
                            Detroit, Michigan.

``SEC. 1400V. ZERO CAPITAL GAINS RATE FOR CERTAIN NEW INVESTMENTS IN 
              DETROIT, MICHIGAN.

    ``(a) In General.--Gross income does not include any qualified 
capital gain from the sale or exchange of a specified new investment 
held for more than 1 year.
    ``(b) Specified New Investment.--For purposes of this section--
            ``(1) In general.--The term `specified new investment' 
        means--
                    ``(A) any qualified stock,
                    ``(B) any qualified partnership interest, and
                    ``(C) any qualified business property.
            ``(2) Qualified stock.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the term `qualified stock' means any 
                stock in a domestic corporation if--
                            ``(i) such stock is acquired by the 
                        taxpayer during the 1-year period beginning on 
                        the date of the enactment of this section, at 
                        its original issue (directly or through an 
                        underwriter) from the corporation solely in 
                        exchange for cash,
                            ``(ii) as of the time such stock was 
                        issued, such corporation was a specified 
                        Detroit business (or, in the case of a new 
                        corporation, such corporation was being 
                        organized for purposes of being a specified 
                        Detroit business), and
                            ``(iii) during substantially all of the 
                        taxpayer's holding period for such stock, such 
                        corporation qualified as a specified Detroit 
                        business.
                    ``(B) Redemptions.--A rule similar to the rule of 
                section 1202(c)(3) shall apply for purposes of this 
                paragraph.
            ``(3) Qualified partnership interest.--The term `qualified 
        partnership interest' means any capital or profits interest in 
        a domestic partnership if--
                    ``(A) such interest is acquired by the taxpayer 
                during the 1-year period beginning on the date of the 
                enactment of this section, from the partnership solely 
                in exchange for cash,
                    ``(B) as of the time such interest was acquired, 
                such partnership was a specified Detroit business (or, 
                in the case of a new partnership, such partnership was 
                being organized for purposes of being a specified 
                Detroit business), and
                    ``(C) during substantially all of the taxpayer's 
                holding period for such interest, such partnership 
                qualified as a specified Detroit business.
        A rule similar to the rule of paragraph (2)(B) shall apply for 
        purposes of this paragraph.
            ``(4) Qualified business property.--
                    ``(A) In general.--The term `qualified business 
                property' means tangible property if--
                            ``(i) such property was acquired by the 
                        taxpayer by purchase (as defined in section 
                        179(d)(2)) during the 1-year period beginning 
                        on the date of the enactment of this section,
                            ``(ii) the original use of such property in 
                        Detroit, Michigan, commences with the taxpayer, 
                        and
                            ``(iii) during substantially all of the 
                        taxpayer's holding period for such property, 
                        substantially all of the use of such property 
                        was in a specified Detroit business of the 
                        taxpayer.
                    ``(B) Special rule for substantial improvements.--
                The requirements of clauses (i) and (ii) of 
                subparagraph (A) shall be treated as satisfied with 
                respect to--
                            ``(i) property which is substantially 
                        improved by the taxpayer before the end of the 
                        period described in subparagraph (A)(i), and
                            ``(ii) any land on which such property is 
                        located.
                The determination of whether a property is 
                substantially improved shall be made under clause (ii) 
                of section 1400B(b)(4)(B), except that `the date of the 
                enactment of section 1400V' shall be substituted for 
                `December 31, 1997' in such clause.
    ``(c) Qualified Capital Gain.--For purposes of this section--
            ``(1) In general.--Except as otherwise provided in this 
        subsection, the term `qualified capital gain' means any gain 
        recognized on the sale or exchange of--
                    ``(A) a capital asset, or
                    ``(B) property used in the trade or business (as 
                defined in section 1231(b)).
            ``(2) Gain before enactment not qualified.--The term 
        `qualified capital gain' shall not include any gain 
        attributable to periods before the date of the enactment of 
        this section.
            ``(3) Certain rules to apply.--Rules similar to the rules 
        of paragraphs (3), (4), and (5) of section 1400B(e) shall apply 
        for purposes of this subsection.
    ``(d) Specified Detroit Business.--For purposes of this section, 
the term `specified Detroit business' means any enterprise zone 
business (as defined in section 1397C), determined--
            ``(1) without regard to subsections (b)(6) and (c)(5) 
        thereof,
            ``(2) by substituting `80 percent' for `50 percent' in 
        subsections (b)(2) and (c)(1) thereof,
            ``(3) by treating Detroit, Michigan, as an empowerment zone 
        (and by treating no area other than Detroit, Michigan, as an 
        empowerment zone).
    ``(e) Certain Rules To Apply.--For purposes of this section, rules 
similar to the rules of paragraphs (6) and (7) of subsection (b), and 
subsections (f) and (g), of section 1400B shall apply; except that for 
such purposes section 1400B(g)(2) shall be applied by substituting 
`before the date of the enactment of section 1400V' for `before January 
1, 1998, or after December 31, 2014'.
    ``(f) Regulations.--The Secretary shall prescribe such regulations 
as may be appropriate to carry out the purposes of this section, 
including regulations to prevent the abuse of the purposes of this 
section.''.
    (b) Clerical Amendment.--The table of parts for subchapter Y of 
chapter 1 of such Code is amended by adding at the end the following 
new item:

       ``Part IV. Certain New Investments in Detroit, Michigan''.

    (c) Effective Date.--The amendments made by this section shall 
apply to property acquired after the date of the enactment of this Act.
[A]: Detroit Economic Competitiveness Act - Amends the Internal Revenue Code to establish the Detroit Jobs Trust Fund to finance economic development in Detroit, Michigan. Requires the Secretary of the Treasury to make annual distributions from such Fund to the city of Detroit for payment of debt obligations and for job development, public safety, education, and business and public infrastructure. Prohibits any distributions unless the city of Detroit: (1) does not impose an income tax during a period of distribution, (2) has made specified reductions in aggregate property taxes, (3) has used prior distributions as required under this Act, (4) has provided required information to the Comptroller General (GAO), and (5) has implemented a five-year plan describing development goals for Detroit and detailing how distributions from the Trust Fund will be spent. Terminates such Fund five years after enactment of this Act.

Requires GAO to submit annual reports to Congress describing the use of distributions from the Trust Fund, the extent to which progress has been made in meeting the plan's development goals, and Comptroller General recommendations for improving the program established under this Act.

Excludes from gross income capital gain from the sale or exchange of investment property used in trade or business in Detroit.


[Q]: SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Independent Contractor Tax 
Simplification Act of 1995''.

SEC. 2. FINDINGS.

    The Congress finds that:
            (1) Simplifying the tax rules with respect to independent 
        contractors was the top vote-getter at the 1995 White House 
        Conference on Small Business. Conference delegates recommended 
        that Congress ``should recognize the legitimacy of an 
        independent contractor''. The Conference found that the current 
        common law is ``too subjective'' and called upon the Congress 
        to establish ``realistic and consistent guidelines''.
            (2) It is in the best interests of taxpayers and the 
        Federal Government to have fair and objective rules for 
        determining who is an employee and who is an independent 
        contractor.

SEC. 3. STANDARDS FOR DETERMINING WHETHER INDIVIDUALS ARE NOT 
              EMPLOYEES.

    (a) In General.--Chapter 25 of the Internal Revenue Code of 1986 
(general provisions relating to employment taxes) is amended by adding 
after section 3510 the following new section:

``SEC. 3511. STANDARDS FOR DETERMINING WHETHER INDIVIDUALS ARE NOT 
              EMPLOYEES.

    ``(a) General Rule.--For purposes of this subtitle, and 
notwithstanding any provision of this subtitle to the contrary, if the 
requirements of subsections (b), (c), and (d) are met with respect to 
any service performed by any individual, then with respect to such 
service--
            ``(1) the service provider shall not be treated as an 
        employee,
            ``(2) the service recipient shall not be treated as an 
        employer, and
            ``(3) the payor shall not be treated as an employer.
    ``(b) Service Provider Requirements With Regard to Service 
Recipient.--For the purposes of subsection (a), the requirements of 
this subsection are met if the service provider, in connection with 
performing the service--
            ``(1) has a significant investment in assets and/or 
        training,
            ``(2) incurs significant unreimbursed expenses,
            ``(3) agrees to perform the service for a particular amount 
        of time or to complete a specific result and is liable for 
        damages for early termination without cause,
            ``(4) is paid primarily on a commissioned basis, or
            ``(5) purchases products for resale.
    ``(c) Additional Service Provider Requirements With Regard to 
Others.--For the purposes of subsection (a), the requirements of this 
subsection are met if--
            ``(1) the service provider--
                    ``(A) has a principal place of business,
                    ``(B) does not primarily provide the service in the 
                service recipient's place of business, or
                    ``(C) pays a fair market rent for use of the 
                service recipient's place of business; or
            ``(2) the service provider--
                    ``(A) is not required to perform service 
                exclusively for the service recipient, and
                    ``(B) in the year involved, or in the preceding or 
                subsequent year--
                            ``(i) has performed a significant amount of 
                        service for other persons,
                            ``(ii) has offered to perform service for 
                        other persons through--
                                    ``(I) advertising,
                                    ``(II) individual written or oral 
                                solicitations,
                                    ``(III) listing with registries, 
                                agencies, brokers, and other persons in 
                                the business of providing referrals to 
                                other service recipients, or
                                    ``(IV) other similar activities, or
                            ``(iii) provides service under a business 
                        name which is registered with (or for which a 
                        license has been obtained from) a State, a 
                        political subdivision of a State, or any agency 
                        or instrumentality of 1 or more States or 
                        political subdivisions.
    ``(d) Written Document Requirements.--For purposes of subsection 
(a), the requirements of this subsection are met if the services 
performed by the individual are performed pursuant to a written 
contract between such individual and the person for whom the services 
are performed, or the payor, and such contract provides that the 
individual will not be treated as an employee with respect to such 
services for purposes of this subtitle.
    ``(e) Special Rules.--For purposes of this section--
            ``(1) If for any taxable year any service recipient or 
        payor fails to meet the applicable reporting requirements of 
        sections 6041(a), 6041A(a), or 6051 with respect to a service 
        provider, then, unless such failure is due to reasonable cause 
        and not willful neglect, this section shall not apply in 
        determining whether such service provider shall not be treated 
        as an employee of such service recipient or payor for such 
        year.
            ``(2) If the service provider is performing services 
        through an entity owned in whole or in part by such service 
        provider, then the references to `service provider' in 
        subsections (b) through (d) may include such entity, provided 
        that the written contract referred to in paragraph (1) of 
        subsection (d) may be with either the service provider or such 
        entity and need not be with both.
    ``(f) Definitions.--For the purposes of this section--
            ``(1) Service provider.--The term `service provider' means 
        any individual who performs service for another person.
            ``(2) Service recipient.--Except as provided in paragraph 
        (5), the term `service recipient' means the person for whom the 
        service provider performs such service.
            ``(3) Payor.--Except as provided in paragraph (5), the term 
        `payor' means the person who pays the service provider for the 
        performance of such service in the event that the service 
        recipients do not pay the service provider.
            ``(4) In connection with performing the service.--The term 
        `in connection with performing the service' means in connection 
        or related to--
                    ``(A) the actual service performed by the service 
                provider for the service recipients or for other 
                persons for whom the service provider has performed 
                similar service, or
                    ``(B) the operation of the service provider's trade 
                or business.
            ``(5) Exceptions.--The terms `service recipient' and 
        `payor' do not include any entity which is owned in whole or in 
        part by the service provider.''
    (b) Clerical Amendment.--The table of sections for chapter 25 of 
such Code is amended by adding at the end the following new item:

                              ``Sec. 3511. Standards for determining 
                                        whether individuals are not 
                                        employees.''
    (c) Effective Date.--The amendments made by this Act shall apply to 
services performed after December 31, 1995.
[A]: Independent Contractor Tax Simplification Act of 1995 - Amends the Internal Revenue Code to provide that, for purposes of determining the employment status of individuals as employees, a service provider shall not be treated as an employee, a service recipient shall not be treated as an employer, and a payor shall not be treated as an employer if:  (1) a service provider has a significant investment in assets and training, incurs significant unreimbursed expenses, agrees to perform the service for a specified amount of time or to complete a specific result and is responsible for damages for early termination without cause, receives payment primarily on a commission basis, or has purchased resale products; (2) the service provider has a principal place of business, does not primarily provide service in the service recipient's place of business, or pays a fair market rent for use of the recipient's place of business or does not have to perform service only for the service recipient and, in the current year or in the proceeding or subsequent years, has performed or has offered to perform a significant amount of service for other persons; and (3) the services by an individual are performed according to a written contract between the service recipient or payor which provides that the individual will not be treated as an employee.


[Q]: SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Health Opportunity Patient 
Empowerment Act of 2006''.

SEC. 2. FSA AND HRA TERMINATIONS TO FUND HSAS.

    (a) In General.--Section 106 of the Internal Revenue Code of 1986 
(relating to contributions by employer to accident and health plans) is 
amended by adding at the end the following new subsection:
    ``(e) FSA and HRA Terminations to Fund HSAs.--
            ``(1) In general.--A plan shall not fail to be treated as a 
        health flexible spending arrangement or health reimbursement 
        arrangement under this section or section 105 merely because 
        such plan provides for a qualified HSA distribution.
            ``(2) Qualified hsa distribution.--The term `qualified HSA 
        distribution' means a distribution from a health flexible 
        spending arrangement or health reimbursement arrangement to the 
        extent that such distribution--
                    ``(A) does not exceed the lesser of the balance in 
                such arrangement on September 21, 2006, or as of the 
                date of such distribution, and
                    ``(B) is contributed by the employer directly to 
                the health savings account of the employee before 
                January 1, 2012.
        Such term shall not include more than 1 distribution with 
        respect to any arrangement.
            ``(3) Additional tax for failure to maintain high 
        deductible health plan coverage.--
                    ``(A) In general.--If, at any time during the 
                testing period, the employee is not an eligible 
                individual, then the amount of the qualified HSA 
                distribution--
                            ``(i) shall be includible in the gross 
                        income of the employee for the taxable year in 
                        which occurs the first month in the testing 
                        period for which such employee is not an 
                        eligible individual, and
                            ``(ii) the tax imposed by this chapter for 
                        such taxable year on the employee shall be 
                        increased by 10 percent of the amount which is 
                        so includible.
                    ``(B) Exception for disability or death.--Clauses 
                (i) and (ii) of subparagraph (A) shall not apply if the 
                employee ceases to be an eligible individual by reason 
                of the death of the employee or the employee becoming 
                disabled (within the meaning of section 72(m)(7)).
            ``(4) Definitions and special rules.--For purposes of this 
        subsection--
                    ``(A) Testing period.--The term `testing period' 
                means the period beginning with the month in which the 
                qualified HSA distribution is contributed to the health 
                savings account and ending on the last day of the 12th 
                month following such month.
                    ``(B) Eligible individual.--The term `eligible 
                individual' has the meaning given such term by section 
                223(c)(1).
                    ``(C) Treatment as rollover contribution.--A 
                qualified HSA distribution shall be treated as a 
                rollover contribution described in section 223(f)(5).
            ``(5) Tax treatment relating to distributions.--For 
        purposes of this title--
                    ``(A) In general.--A qualified HSA distribution 
                shall be treated as a payment described in subsection 
                (d).
                    ``(B) Comparability excise tax.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), section 4980G shall not apply to 
                        qualified HSA distributions.
                            ``(ii) Failure to offer to all employees.--
                        In the case of a qualified HSA distribution to 
                        any employee, the failure to offer such 
                        distribution to any eligible individual covered 
                        under a high deductible health plan of the 
                        employer shall (notwithstanding section 
                        4980G(d)) be treated for purposes of section 
                        4980G as a failure to meet the requirements of 
                        section 4980G(b).''.
    (b) Certain FSA Coverage Disregarded Coverage.--Subparagraph (B) of 
section 223(c)(1) of such Code (relating to certain coverage 
disregarded) is amended by striking ``and'' at the end of clause (i), 
by striking the period at the end of clause (ii) and inserting ``, 
and'', and by inserting after clause (ii) the following new clause:
                            ``(iii) for taxable years beginning after 
                        December 31, 2006, coverage under a health 
                        flexible spending arrangement during any period 
                        immediately following the end of a plan year of 
                        such arrangement during which unused benefits 
                        or contributions remaining at the end of such 
                        plan year may be paid or reimbursed to plan 
                        participants for qualified benefit expenses 
                        incurred during such period if--
                                    ``(I) the balance in such 
                                arrangement at the end of such plan 
                                year is zero, or
                                    ``(II) the individual is making a 
                                qualified HSA distribution (as defined 
                                in section 106(e)) in an amount equal 
                                to the remaining balance in such 
                                arrangement as of the end of such plan 
                                year, in accordance with rules 
                                prescribed by the Secretary.''.
    (c) Application of Section.--
            (1) Subsection (a).--The amendment made by subsection (a) 
        shall apply to distributions on or after the date of the 
        enactment of this Act.
            (2) Subsection (b).--The amendment made by subsection (b) 
        shall take effect on the date of the enactment of this Act.

SEC. 3. REPEAL OF ANNUAL DEDUCTIBLE LIMITATION ON HSA CONTRIBUTIONS.

    (a) In General.--Paragraph (2) of section 223(b) of the Internal 
Revenue Code of 1986 (relating to monthly limitation) is amended--
            (1) in subparagraph (A) by striking ``the lesser of--'' and 
        all that follows and inserting ``$2,250.'', and
            (2) in subparagraph (B) by striking ``the lesser of--'' and 
        all that follows and inserting ``$4,500.''.
    (b) Conforming Amendment.--Section 223(d)(1)(A)(ii)(I) of such Code 
is amended by striking ``subsection (b)(2)(B)(ii)'' and inserting 
``subsection (b)(2)(B)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2006.

SEC. 4. MODIFICATION OF COST-OF-LIVING ADJUSTMENT.

    Paragraph (1) of section 223(g) of the Internal Revenue Code of 
1986 (relating to cost-of-living adjustment) is amended by adding at 
the end the following new flush sentence:
        ``In the case of adjustments made for any taxable year 
        beginning after 2007, section 1(f)(4) shall be applied for 
        purposes of this paragraph by substituting `March 31' for 
        `August 31', and the Secretary shall publish the adjusted 
        amounts under subsections (b)(2) and (c)(2)(A) for taxable 
        years beginning in any calendar year no later than June 1 of 
        the preceding calendar year.''.

SEC. 5. CONTRIBUTION LIMITATION NOT REDUCED FOR PART-YEAR COVERAGE.

    (a) Increase in Limit for Individuals Becoming Eligible Individuals 
After Beginning of the Year.--Subsection (b) of section 223 of the 
Internal Revenue Code of 1986 (relating to limitations) is amended by 
adding at the end the following new paragraph:
            ``(8) Increase in limit for individuals becoming eligible 
        individuals after the beginning of the year.--
                    ``(A) In general.--For purposes of computing the 
                limitation under paragraph (1) for any taxable year, an 
                individual who is an eligible individual during the 
                last month of such taxable year shall be treated--
                            ``(i) as having been an eligible individual 
                        during each of the months in such taxable year, 
                        and
                            ``(ii) as having been enrolled, during each 
                        of the months such individual is treated as an 
                        eligible individual solely by reason of clause 
                        (i), in the same high deductible health plan in 
                        which the individual was enrolled for the last 
                        month of such taxable year.
                    ``(B) Failure to maintain high deductible health 
                plan coverage.--
                            ``(i) In general.--If, at any time during 
                        the testing period, the individual is not an 
                        eligible individual, then--
                                    ``(I) gross income of the 
                                individual for the taxable year in 
                                which occurs the first month in the 
                                testing period for which such 
                                individual is not an eligible 
                                individual is increased by the 
                                aggregate amount of all contributions 
                                to the health savings account of the 
                                individual which could not have been 
                                made but for subparagraph (A), and
                                    ``(II) the tax imposed by this 
                                chapter for any taxable year on the 
                                individual shall be increased by 10 
                                percent of the amount of such increase.
                            ``(ii) Exception for disability or death.--
                        Subclauses (I) and (II) of clause (i) shall not 
                        apply if the individual ceased to be an 
                        eligible individual by reason of the death of 
                        the individual or the individual becoming 
                        disabled (within the meaning of section 
                        72(m)(7)).
                            ``(iii) Testing period.--The term `testing 
                        period' means the period beginning with the 
                        last month of the taxable year referred to in 
                        subparagraph (A) and ending on the last day of 
                        the 12th month following such month.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2006.

SEC. 6. EXCEPTION TO REQUIREMENT FOR EMPLOYERS TO MAKE COMPARABLE 
              HEALTH SAVINGS ACCOUNT CONTRIBUTIONS.

    (a) In General.--Section 4980G of the Internal Revenue Code of 1986 
(relating to failure of employer to make comparable health savings 
account contributions) is amended by adding at the end the following 
new subsection:
    ``(d) Exception.--For purposes of applying section 4980E to a 
contribution to a health savings account of an employee who is not a 
highly compensated employee (as defined in section 414(q)), highly 
compensated employees shall not be treated as comparable participating 
employees.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2006.

SEC. 7. ONE-TIME DISTRIBUTION FROM INDIVIDUAL RETIREMENT PLANS TO FUND 
              HSAS.

    (a) In General.--Subsection (d) of section 408 of the Internal 
Revenue Code of 1986 (relating to taxability of beneficiary of 
employees' trust) is amended by adding at the end the following new 
paragraph:
            ``(9) Distribution for health savings account funding.--
                    ``(A) In general.--In the case of an individual who 
                is an eligible individual (as defined in section 
                223(c)) and who elects the application of this 
                paragraph for a taxable year, gross income of the 
                individual for the taxable year does not include a 
                qualified HSA funding distribution to the extent such 
                distribution is otherwise includible in gross income.
                    ``(B) Qualified hsa funding distribution.--For 
                purposes of this paragraph, the term `qualified HSA 
                funding distribution' means a distribution from an 
                individual retirement plan (other than a plan described 
                in subsection (k) or (p)) of the employee to the extent 
                that such distribution is contributed to the health 
                savings account of the individual in a direct trustee-
                to-trustee transfer.
                    ``(C) Limitations.--
                            ``(i) Maximum dollar limitation.--The 
                        amount excluded from gross income by 
                        subparagraph (A) shall not exceed the excess 
                        of--
                                    ``(I) the annual limitation under 
                                section 223(b) computed on the basis of 
                                the type of coverage under the high 
                                deductible health plan covering the 
                                individual at the time of the qualified 
                                HSA funding distribution, over
                                    ``(II) in the case of a 
                                distribution described in clause 
                                (ii)(II), the amount of the earlier 
                                qualified HSA funding distribution.
                            ``(ii) One-time transfer.--
                                    ``(I) In general.--Except as 
                                provided in subclause (II), an 
                                individual may make an election under 
                                subparagraph (A) only for one qualified 
                                HSA funding distribution during the 
                                lifetime of the individual. Such an 
                                election, once made, shall be 
                                irrevocable.
                                    ``(II) Conversion from self-only to 
                                family coverage.--If a qualified HSA 
                                funding distribution is made during a 
                                month in a taxable year during which an 
                                individual has self-only coverage under 
                                a high deductible health plan as of the 
                                first day of the month, the individual 
                                may elect to make an additional 
                                qualified HSA funding distribution 
                                during a subsequent month in such 
                                taxable year during which the 
                                individual has family coverage under a 
                                high deductible health plan as of the 
                                first day of the subsequent month.
                    ``(D) Failure to maintain high deductible health 
                plan coverage.--
                            ``(i) In general.--If, at any time during 
                        the testing period, the individual is not an 
                        eligible individual, then the aggregate amount 
                        of all contributions to the health savings 
                        account of the individual made under 
                        subparagraph (A)--
                                    ``(I) shall be includible in the 
                                gross income of the individual for the 
                                taxable year in which occurs the first 
                                month in the testing period for which 
                                such individual is not an eligible 
                                individual, and
                                    ``(II) the tax imposed by this 
                                chapter for any taxable year on the 
                                individual shall be increased by 10 
                                percent of the amount which is so 
                                includible.
                            ``(ii) Exception for disability or death.--
                        Subclauses (I) and (II) of clause (i) shall not 
                        apply if the individual ceased to be an 
                        eligible individual by reason of the death of 
                        the individual or the individual becoming 
                        disabled (within the meaning of section 
                        72(m)(7)).
                            ``(iii) Testing period.--The term `testing 
                        period' means the period beginning with the 
                        month in which the qualified HSA funding 
                        distribution is contributed to a health savings 
                        account and ending on the last day of the 12th 
                        month following such month.
                    ``(E) Application of section 72.--Notwithstanding 
                section 72, in determining the extent to which an 
                amount is treated as otherwise includible in gross 
                income for purposes of subparagraph (A), the aggregate 
                amount distributed from an individual retirement plan 
                shall be treated as includible in gross income to the 
                extent that such amount does not exceed the aggregate 
                amount which would have been so includible if all 
                amounts from all individual retirement plans were 
                distributed. Proper adjustments shall be made in 
                applying section 72 to other distributions in such 
                taxable year and subsequent taxable years.''.
    (b) Coordination With Limitation on Contributions to HSAs.--Section 
223(b)(4) of such Code (relating to coordination with other 
contributions) is amended by striking ``and'' at the end of 
subparagraph (A), by striking the period at the end of subparagraph (B) 
and inserting ``, and'', and by inserting after subparagraph (B) the 
following new subparagraph:
                    ``(C) the aggregate amount contributed to health 
                savings accounts of such individual for such taxable 
                year under section 408(d)(9) (and such amount shall not 
                be allowed as a deduction under subsection (a)).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2006.
[A]:
Health Opportunity Patient Empowerment Act of 2006 - Amends Internal Revenue Code provisions relating to high deductible health plans and health savings accounts (HSAs).

(Sec. 2) Allows a one-time distribution of amounts in a health flexible spending arrangement or a health reimbursement arrangement to an HSA if such distribution takes place before January 1, 2012. Requires distribution amounts to be included in the gross income of any individual (except a deceased or disabled individual) who fails to maintain coverage in a high deductible health plan and imposes an additional 10% penalty tax on such amounts.

Allows certain coverage under a flexible spending arrangement for taxable years after December 31, 2006, to be disregarded for purposes of determining eligibility for high deductible health plan coverage.

(Sec. 3) Repeals the deductible limitations on tax deductions for contributions to HSAs.

(Sec. 4) Requires inflation adjustments to HSA contribution and deductible amounts to be determined at the end of the 12-month period ending on March 31 (currently, August 31). Requires the Secretary of the Treasury to publish inflation adjustments for HSA contribution and deductible amounts by June 1 of each year.

(Sec. 5) Allows individuals who establish an HSA after the beginning of a taxable year to make contributions up to the full annual limit.

(Sec. 6) Permits employers to make higher contributions to the HSAs of employees who are not highly compensated.

(Sec. 7) Allows a one-time tax-free distribution of individual retirement account (IRA) funds to an HSA. Requires distribution amounts to be included in the gross income of any individual (except a deceased or disabled individual) who fails to maintain coverage in a high deductible health plan and imposes an additional 10% penalty tax on such amounts.