An Act to reduce individual and business income taxes and to provide tax simplification and reform.
PL 95-30 (H.R.3477), enacted 05/23/1977

91 STAT. 126 
PUBLIC LAW 95-30—MAY 23, 1977 
Public Law 95-30 
95th Congress 
An Act 
May 23, 1977 
[H.R. 3477] 
Tax Reduction 
and 
Simplification 
Act of 1977. 
26 u s e 1 note. 
To reduce individual and business income taxes and to provide tax simplification 
and reform. 
Be it enacted by the Senate and House of Representatu'es 
of the 
United States of America in Congress 
assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the "Tax Reduction 
and Simplification Act of 1977". 
(b) T A B L E OF C O N T E N T S . — 
Sec. 1. Short title; table of contents. 
Sec. 2. Amendment of 1954 Code. 
TITLE I—REDUCTION AND SIMPLIFICATION OF INDIVIDUAL INCOME 
TAXES 
Sec. 101. Change in tax rates and tax tables to reflect permanent increase in 
standard deduction. 
Sec. 102. Change in definition of taxable income to reflect change in tax rates 
and tables. 
Sec. 103. Extension of individual income tax reductions. 
Sec. 104. Change in filing requirements. 
Sec. 105. Withholding tax. 
Sec. 106. EflEective dates. 
TITLE II—REDUCTION IN BUSINESS TAXES 
Sec. 201. Extension of certain corporate income tax reductions. 
Sec. 202. New jobs credit. 
TITLE III—PROVISIONS RELATING TO EFFECTIVE DATES AND OTHER 
PROVISIONS OF THE TAX REFORM ACT OF 1976 
Sec. 301. Effective date of changes in the exclusion for sick pay. 
Sec. 302. Changes in treatment of income earned abroad by United States citi-
zens living or residing abroad. 
Sec. 303. Underpayments of estimated tax. 
Sec. 304. Underwithholding. 
Sec. 305. Interest on underpayments of tax. 
Sec. 306. Use of residence as day care facility. 
Sec. 307. State legislators' travel expenses av^^ay from home. 
Sec. 308. Treatment of intangible drilling costs for purposes of the minimum 
tax. 
Sec. 309. Transfers of partial interests in property for conservation purposes. 
TITLE IV—MISCELLANEOUS PROVISIONS 
Sec. 401. Authorization of additional appropriations for the work incentive pro-
gram. 
Sec. 402. Rapid amortization of child care facilities. 
Sec. 403. Election of former retirement income credit provisions for 1976. 
Sec. 404. Postponement of effective date of changes made by the Tax Reform 
Act of 1976 in the method of accounting for certain corporations 
engaged in farming. 
Sec. 405. Withholding tax on certain gambling winnings. 
Sec. 406. Termination of 1975 special payments to certain individuals. 
Sec. 407. Payments to the governments of American Samoa, Guam, and the Vir-
gin Islands. 
Sec. 408. Withholding of county income tax on Federal employees. 
PUBLIC LAW 95-30—MAY 23, 1977 
91 STAT. 127 
TITLE V—CERTAIN SOCIAL SECURITY ACT AMENDMENTS 
Sec. 501. Clarification of garnisliment provisions. 
Sec. 502. Bonding of certain State or local employees; handling of cash receipts. 
Sec. 503. Incentive payments to States and localities. 
Sec. 504. Annual report of the Secretary. 
Sec. 505. Certain AFDC payments. 
SEC. 2. AMENDMENT OF 1954 CODE. 
E x c e p t as otherwise expressly provided, whenever in this A c t a n 
a m e n d m e n t or repeal is expressed in terms of an a m e n d m e n t to, or 
repeal of, a section or other provision, the reference shall be considered 
to be m a d e to a section or other provision of the I n t e r n a l Revenue 
Code of 1954. 
26 USC 1 et seq. 
TITLE I—REDUCTION AND SIMPLIFICA-
TION OF INDIVIDUAL INCOME TAXES 
SEC. 101. CHANGE IN TAX RATES AND TAX TABLES TO REFLECT PER-
MANENT INCREASE IN STANDARD DEDUCTION. 
(a) Cii.xNGE IN T.\x R A T E S . — S e c t i o n 1 (relating to t a x imposed) 
26 USC 1. 
is a m e n d e d to read as follows: 
"SECTION 1. TAX IMPOSED. 
" ( a ) 
]\IARRIED INDIVIDUALS F I L I N G J O I N T R E T U R N S AND SURVIVING 
S P O U S E S . — T h e r e is hereby imposed on the taxable income of— 
" ( 1 ) every m a r r i e d individual (as defined in section 143) w h o 
makes a single r e t u r n jointly with his spouse u n d e r section 6013, 
and 
" (2) every surviving spouse (as defined in section 2 ( a ) ) , 
a t a x determined in accordance with t h e following t a b l e : 
"If the taxable income is: 
The tax is: 
Not over $3,200 
No tax. 
Over $3,200 but not over $4,200 
14% of the excess over $3,200, 
Over $4,200 but not over $5,200 
$140, plus 15% of excess over 
$4,200. 
Over $5,200 but not over $6,200 
$290, plus 16% of excess over 
$5,200. 
Over $6,200 but not over $7,200 
$450, plus 17% of excess over 
$6,200. 
Over $7,200 but not over $11,200 
$620, plus 19% of excess over 
$7 200. 
Over $11,200 but not over $15,200 
$1,380, plus 22% of excess over 
$11,200. 
Over $15,200 but not over $19,200 
$2,260, plus 25% of excess over 
$15,200. 
Over $19,200 but not over $23,200 
$3,260, plus 28%o of excess over 
$19 200. 
Over $23,200 but not over $27,200 
$4,380, pius 32% of excess over 
$23,200. 
Over $27,200 but not over $31,200 
$5,660, plus 36% of excess over 
$27 200 
Over $31,200 but not over $35,200 
$7,100, plus 39% of excess over 
$31,200. 
Over $35,200 but not over $39,200 
$8,660, plus 42% of excess over 
$35,200. 
Over $39,200 but not over $43,200 
$10,340, plus 45% of excess over 
$39,200. 
Over $43,200 but not over $47,200 
$12,140, plus 48%, of excess over 
$43 200 
Over $47,200 but not over $55,200 
$14,060, plus 50% of excess over 
$47,200. 
91 STAT. 128 
PUBLIC LAW 95-30—MAY 23, 1977 
"If the taxable income is: 
The tax is: 
Over $55,200 but not over $67,200 
$18,060, plus 53% of excess over 
$55,200. 
Over $67,200 but not over $79,200 
$24,420, plus 55% of excess over 
$67,200. 
Over $79,200 but not over $91,200 
$31,020, plus 58% of excess over 
$79 200. 
Over $91,200 but not over $103,200 
$37,980, plus 60% of excess over 
$91,200. 
Over $103,200 but not over $123,200 
$45,180, plus 62% of excess over 
$103,200. 
Over $123,200 but not over $143,200 
$57,580, plus 64% of excess over 
$123,200. 
Over $143,200 but not over $163,200 
$70,380, plus 66% of excess over 
' '? 
$143,200. 
Over $163,200 but not over $183,200 
$83,580, plus 68% of excess over 
$16:^,200. 
Over $183,200 but not over $203,200 
$97,180, plus 69% of excess over 
$183,200. 
Over $203,200 
$110,980, plus 70% of excess over 
$203,200. 
" ( b ) H E A D S OF H O U S E H O L D S . — T h e r e is hereby imposed on t h e tax-
able income of every individual w h o is the head of a household 
(as 
, ,. 
defined in section 2 ( b ) ) 
a t a x determined in accordance w i t h the 
following t a b l e : 
"If the taxable income is: 
The tax is: 
Not over $2,200 
No tax. 
Over $2,200 but not over $3,200 
14% of the excess over $2,200. 
Over .$3,200 but not over $4,200 
$140, plus 1G% of excess over 
$3,200. 
Over $4,200 but not over $6,200 
$300, plus 18% of excess over 
$4,200. 
Over $6,200 but not over $8,200 
$660, plus 19% of excess over 
$6,200. 
Over $8,200 but not over $10,200 
$1,040, plus 22% of excess over 
$8,200. 
Over $10,200 but not over $12,200 
$1,480, plus 23% of excess over 
$10,200. 
Over $12,200 but not over $14,200 
$1,940, plus 25% of excess over 
$12,200. 
Over $14,200 but not over $16,200 
$2,440, plus 27% of excess over 
$14,200. 
Over $16,200 but not over $18,200 
$2,980, plus 28% of excess over 
$16,200. 
Over $18,200 but not over $20,200 
$3,540, plus 31% of excess over 
$18,200. 
Over $20,200 but not over $22,200 
$4,160, plus 32% of excess over 
$20,200. 
Over $22,200 but not over $24,200 
$4,800, plus 35% of excess over 
.$22 200 
Over $24,200 but not over $26,200 
$5,500, plus 36% of excess over 
$24 200 
Over $26,200 but not over $28,200 
$6,220, plus 38% of excess over 
$26 200. 
Over $28,200 but not over $30,200 
.$6,980, plus 41% of excess over 
S28 200 
Over $30,200 but not over $34,200 
$7,800, plus 42% of excess over 
$30,200. 
Over $34,200 but not over $38,200 
.$9,480, plus 45% of excess over 
$34 200. 
Over $38,200 but not over $40,200 
$11,280, plus 48% of excess over 
$38,200. 
Over $40,200 but not over $42,200 
$12,240, plus 51% of excess over 
$40,200. 
' Over $42,200 but not over $46,200 
$13,260, plus 52% of excess over 
$42 200. 
Over $46,200 but not over $52,200 
$15,340, plus 55% of excess over 
$46,200. 
PUBLIC LAW 95-30—MAY 23, 1977 
91 STAT. 129 
"If the taxable income is: 
The tax is: 
Over $52,200 but not over $54,200 
$18,640, plus 56% of excess over 
$52 200. 
Over $54,200 but not over $66,200 
$19,760, plus 58% of excess over 
$54,200. 
Over $66,200 but not over $72,200 
$26,720, plus 59% of excess over 
$66,200. 
Over $72,200 but not over $78,200 
$30,260, plus 61% of excess over 
$72 200. 
Over $78,200 but not over $82,200 
$33,920, plus 62% of excess over 
$78,200. 
Over $82,200 but not over $90,200 
$36,400, plus 63% of excess over 
$82,200. 
Over $90,200 but not over $102,200 
$41,440, plus 64% of excess over 
$90,200. 
Over $102,200 but not over $122,200 
$49,120, plus 66% of excess over 
$102 200. 
Over $122,200 but not over $142,200 
$62,320, plus 67% of excess over 
$122 200. 
Over $142,200 but not over $162,200 
$75,720, plus 68% of excess over 
$142 200. 
Over $162,200 but not over $182,200 
$89,320, plus 09% of excess over 
$162,200. 
Over $182,200 
$103,120, plus 70% of excess over 
$182,200. 
"(c) 
UNMARRIED INDIVIDUALS (OTHER THAN SURVIVING SPOUSES 
AND H E A D S OF H O U S E H O L D S ) . — T h e r e is hereby imposed on the taxable 
income of every individual (other t h a n a surviving spouse as defined 
in section 2 ( a ) or the head of a houseliold as defined in section 2 ( b ) ) 
w h o is not a m a r r i e d individual (as defined in section 143) a t a x 
determined in accordance w i t h the following t a b l e : 
"If the taxable income is: 
The tax is: 
Not over $2,200 
No tax. 
Over $2,200 but not over $2,700 
14% of the excess over $2,200. 
Over $2,700 but not over $3,200 
$70, plus 15% of excess over $2,700. 
Over $3,200 but not over $3,700 
$145, plus 16% of excess over 
$3,200. 
Over $3,700 but not over $4,200 
$225, plus 17% of excess over 
$3,700. 
Over $4,200 but not over $6,200 
$310, plus 19% of excess over 
$4,200. 
Over $6,200 but not over $8,200 
$690, plus 21% of excess over 
$6,200. 
Over $8,200 but not over $10,200 
$1,110, plus 24% of excess over 
$8 200 
Over $10,200 but not over $12,200 
$1,590, plus 25% of excess over 
$10,200. 
Over $12,200 but not over $14,200 
$2,090, plus 27% of excess over 
$12,200. 
Over $14,200 but not over $16,200 
$2,630, plus 29% of excess over 
$14,200. 
Over $16,200 but not over $18,200 
$3,210, plus 31% of excess over 
$16,200. 
Over $18,200 but not over $20,200 
$3,830, plus 34% of excess over 
$18,200. 
Over $20,200 but not over $22,200 
$4,510, plus 36% of excess over 
$20,200. 
Over $22,200 but not over $24,200 
$5,230, plus 38% of excess over 
$22,200. 
Over $24,200 but not over $28,200 
$5,990, plus 40% of excess over 
$24 200. 
Over $28,200 but not over $34,200 
$7,590, pius 45% of excess over 
$28,200. 
Over $34,200 but not over $40,200 
$10,290, plus 50% of excess over 
$34 200. 
Over $40,200 but not over $46,200 
$13,290, plus 55% of excess over 
$40,200. 
Over $46,200 but not over $52,200 
$16,590, plus 60% of excess over 
$46,200. 
91 STAT. 130 
PUBLIC LAW 95-30—MAY 23, 1977 
"If the taxable income is: 
The tax is: 
Over $52,200 but not over $62,200 
$20,190, plus 62% of excess over 
$52 200. 
Over $62,200 but not over $72,200 
$26,390, plus 64% of excess over 
$62,200. 
Over $72,200 but not over $82,200 
$32,790, plus 66% of excess over 
$72 200. 
Over $82,200 but not over $92,200 
$39,390, plus 68% of excess over 
$82,200. 
Over $92,200 but not over $102,200 
$46,190, plus 69% of excess over 
$92 200. 
Over $102,200 
$53,090, plus 70% of excess over 
$102,200. 
"(d) 
MARRIED INDIVIDUALS FILING SEPARATE RETURNS.—There is 
hereby imposed on the taxable income of every married individual (as 
defined in section 143) who does not make a single return jointly with 
his spouse under section 6013 a tax determined in accordance with the 
following table: 
"If the taxable income is: 
The tax is: 
Not over $1,600 
No tax. 
Over $1,600 but not over $2,100 
14% of the excess over $1,600. 
Over $2,100 but not over $2,600 
$70, plus 15% of excess over $2,100. 
Over $2,600 but not over $3,100 
$145, plus 16% of excess over 
$2,600. 
Over $3,100 but not over $3,600 
$225, plus 17% of excess over 
$3,100. 
Over $3,600 but not over $5,600 
$310, plus 19% of excess over 
$3,600. 
Over $5,600 but not over $7,600 
$690, plus 22% of excess over 
$5,600. 
Over $7,600 but not over $9,600 
$1,130, plus 25% of excess over 
$7,600. 
Over $9,600 but not over $11,600 
$1,630, plus 28% of excess over 
$9,600. 
Over $11,600 but not over $13,600 
$2,190, plus 32% of excess over 
$11,600. 
Over $13,600 but not over $15,600 
$2,830, plus 36% of excess over 
$13,600. 
Over $15,600 but not over $17,600 
$3,550, plus 39% of excess over 
$15,600. 
Over $17,600 but not over $19,600 
$4,330, plus 42% of excess over 
$17,600. 
Over $19,600 but not over $21,600 
$5,170, plus 45% of excess over 
$19,600. 
Over $21,600 but not over $23,600 
$6,070, plus 48% of excess over 
$21,600. 
Over $23,600 but not over $27,600 
$7,030, plus 50% of excess over 
$23,600. 
Over $27,600 but not over $33,600 
$9,030, plus 53% of excess over 
$27,600. 
Over $33,600 but not over $39,600 
$12,210, plus 55% of excess over 
$33,600. 
Over $39,600 but not over $45,600 
$15,510, plus 58% of excess over 
$39,600. 
Over $45,600 but not over $51,600 
$18,990, plus 60% of excess over 
$45,600. 
Over $51,600 but not over $61,600 
$22,590, plus 62% of excess over 
$51,600. 
Over $61,600 but not over $71,600 
$28,790, plus 64% of excess over 
$61,600. 
Over $71,600 but not over $81,600 
$35,190, plus 66% of excess over 
$71,600. 
Over $81,600 but not over $91,600 
$41,790, plus 68% of excess over 
$81,600. 
Over $91,600 but not over $101,600 
$48,590, plus 69% of excess over 
$91,600. 
Over $101,600 
$55,490, plus 70% of excess over 
,, 
$101,600. 
PUBLIC LAW 95-30—MAY 23, 1977 
91 STAT. 131 
" ( e ) E S T A T E S AND T R U S T S . — T h e r e is hereby imposed on t h e taxable 
income of every estate a n d t r u s t taxable u n d e r this subsection a t a x 
determined in accordance with t h e following t a b l e : 
^ i ; 
"If the taxable income is: 
The tax is: 
Not over $500 
14% of the taxable income. 
Over $500 but not over $1,000 
$70, plus 15% of excess over $500. 
Over $1,000 but not over $1,500 
$145, plus 16% of excess over 
$1,000. 
Over $1,500 but not over $2,000 
$225, plus 17% of excess over 
$1,500. 
Over $2,000 but not over $4,000 
$310, plus 19% of excess over 
$2,000. 
Over $4,000 but not over $6,000 
$690, plus 22% of excess over 
$4,000. 
Over $6,000 but not over $8,000 
$1,130, plus 25% of excess over 
$6,000. 
Over $8,000 but not over $10,000 
$1,630, plus 28% of excess over 
$8,000. 
Over $10,000 but not over $12,000 
$2,190, plus 32% of excess over 
$10,000. 
Over $12,000 but not over $14,000 
$2,830, plus 36% of excess over 
$12,000. 
Over $14,000 but not over $16,000 
$3,550, plus 39% of excess over 
$14,000. 
Over $16,000 but not over $18,000 
$4,330, plus 42% of excess over 
$16,000. 
Over $18,000 but not over $20,000 
$5,170, plus 45% of excess over 
$18 000 
Over $20,000 but not over $22,000 
$6,070, plus 48% of excess over 
$20,000. 
Over $22,000 but not over $26,000 
$7,030, plus 50% of excess over 
$22,000. 
Over $26,000 but not over $32,000 
$9,030, plus 53% of excess over 
$26,000. 
Over $32,000 but not over $38,000 
$12,210, plus 55% of excess over 
$32,000. 
Over $38,000 but not over $44,000 
$15,510, plus 58% of excess over 
$38,000. 
Over $44,000 but not over $50,000 
$18,990, plus 60% of excess over 
$44,000. 
Over $50,000 but not over $60,000 
$22,590, plus 62% of excess over 
$50,000. 
Over $60,000 but not over $70,000 
$28,790, plus 64% of excess over 
$60,000. 
Over $70,000 but not over $80,000 
$35,190, plus 66% of excess over 
$70,000. 
Over $80,000 but not over $90,000 
$41,790, plus 68% of excess over 
.<R8n.000. 
Over $90,000 but not over $100,000— $48,590, plus 69% of excess over 
$90,000. 
Over 
$100,000 
$55,490, plus 70% of excess over 
$100,000." 
(b) C H A N G E I N T A X TABLES.—Section 3 (relating to t a x tables for 
26 USC 3. 
individuals h a v i n g taxable income of less t h a n $20,000) is a m e n d e d 
to read as follows: 
"SEC. 3. TAX TABLES FOR INDIVIDUALS. 
" (a) 
I M P O S I T I O N o r T A X T A B L E T A X . — 
" ( 1 ) 
I N G E N E R A L . — I n lieu of the t a x imposed by section 1, Ante, p. 127. 
there is hereby imposed for each taxable year on the t a x table 
income of every individual whose t a x table income for such year 
does not exceed t h e ceiling a m o u n t , a t a x determined u n d e r tables, 
applicable to such taxable year, which shall be prescribed by 
91 STAT. 132 
PUBLIC LAW 95-30—MAY 23, 1977 
the Secretary. In the tables so prescribed, the amounts of tax 
shall be computed on the basis of the rates prescribed by sec-
Ante, p. 127. 
tion 1. 
"(2) 
CEILING AMOUNT DEFINED.—For purposes of paragraph 
(1), the term 'ceiling amount' means, Avith respect to any tax-
payer, the amount (not less than $20,000) determined by the Sec-
retary for the tax rate category in which such taxpayer falls. 
"(3) CERTAIN TAXPAYERS WITH LARGE NUMBER OF EXEMPTIONS.— 
The Secretary may exclude from the application of this sec-
,,j 
tion taxpayers in any tax rate category having more than the 
number of exemptions for that category determined by the 
Secretary. 
"(4) TAX TABLE INCOME DEFINED.—For purposes of this sec-
tion, the term 'tax table income' means adjusted gross income— 
• 
" ( A ) reduced by the excess itemized deductions, and 
" ( B ) increased (in the case of an individual to whom 
Post, p. 135. 
section 63(e) applies) by the unused zero bracket amount. 
"(b) SECTION INAPPLICABLE TO CERTAIN INDIVIDUALS.—This section 
shall not apply to— 
" (1) an individual to whom— 
" ( A ) section 911 (relating to earned income from sources 
without the United States), 
" ( B ) section 1201 (relating to alternative capital gains 
) 
t a x ) , 
"(C) section 1301 (relating to income averaging), or 
" ( D ) section 1348 (relating to maximum rate on personal 
service income), 
applies for the taxable year, 
"(2) an individual making a return under section 443(a)(1) 
for a period of less than 12 months on account of a change in 
annual accounting period, and 
"(3) an estate or trust. 
"(c) TAX TREATED AS IMPOSED BY SECTION 1.—For purposes of this 
title, the tax imposed by this section shall be treated as tax imposed 
by section 1. 
" ( d ) 
TAXABLE INCOME.—^Whenever it is necessary to determine the 
taxable income of an individual to whom this section applies, the 
taxable income shall be determined under section 63. 
"(e) 
CROSS REFERENCE.— 
"For computation of tax by Secretary, see section 6014." 
(c) CHANGES IN GENERAL TAX CREDIT.— 
26 use 42. 
(1) Subsection (a) of section 42 (relating to allowance of gen-
eral tax credit) is amended to read as follows: 
"(a) ALLOWANCE OF CREDIT.—In the case of an individual, there 
shall be allowed as a credit against the tax imposed by section 1, or 
against the tax imposed in lieu of the tax imposed by section 1, for 
the taxable year an amount equal to the greater of— 
"(1) 2 percent of so much of the taxpayer's taxable income for 
<, 
the taxable year (reduced by the zero bracket amount) as does 
not exceed $9,000; or 
" (2) $35 multiplied by each exemption for which the taxpayer 
is entitled to a deduction for the taxable year under section 151." 
(2) Section 42 is amended by adding at the end thereof the fol-
lowing new subsection: 
PUBLIC LAW 95-30—MAY 23, 1977 
91 STAT. 133 
"(e) 
INCOME TAX TABLES T O EEFLECT CREDIT.—The tables pre- 
' 
scribed by the Secretary under section 3 shall reflect the credit allowed ^nte, p. 131. 
by this section." 
'^-
(3) Subsection (c) of section 42 is amended to read as follows: 
26 USC 42. 
-
"(c) 
SPECIAL KULE FOR MARRIED INDIVIDUALS FILING SEPARATE 
RETURNS.— 
" (1) I N GENERAL.—In the case of a married individual who files 
,.t 
a separate return for the taxable year, the amount of the credit 
allowable under subsection (a) for the taxable year shall be the 
, 5 amount determined under paragraph (2) of subsection (a). 
Ante, p. 132. , 
"(2) MARITAL STATUS.—For purposes of this subsection, the 
determination of marital status shall be made under section 143." 
^, 
(4) The first sentence of subsection (b) of section 42 is amended 
by striking out "by this chapter" and inserting in lieu thereof 
the following: "by section 1, or the amount of the tax imposed Ante, p. 127. , 
in lieu of the tax imposed by section 1,". 
(d) TECHNICAL AND CONFORMING AMENDMENTS.— 
(1) Section 141 (relating to standard deduction), section 142 Repeals, 
(relating to individuals not eligible for standard deduction), sec- 26 USC 141, 
tion 144 (relating to election of standard deduction), and section 142. 
145 (cross reference) are hereby repealed. 
26 USC 144. 
'' 
(2) Section 21 (relating to effect of changes) is amended— 
^^ {}|^ ^™-
• • 
(A) by striking out subsections (d) and (e), 
(B) by redesignating subsection (f) as subsection (d), and 
'='' 
(C) by inserting after subsection (d) (as so redesignated) 
' '• 
the following new subsection: 
"(e) 
CHANGES MADE BY TAX REDUCTION AND SIMPLIFICATION ACT 
OF 1977.—In applying subsection (a) to a taxable year of an individ-
ual which is not a calendar year, the amendments made by sections 
101 and 102 of the Tax Reduction and Simplification Act of 1977 
shall not be treated as changes in a rate of tax." 
^^ 
(3) Section 36 (relating to credits not allowed to individuals Repeal, 
taking standard deduction) is hereby repealed. 
26 USC 36. 
(4) Section 143 (relating to determination of marital status) 
26 USC 143. > 
is amended by striking out "this part and" each place it appears. 
•
^ 
(5) (A) Paragraph (1) of section 57(a) (relating to items 
26 USC 57. 
of tax preference) is amended by striking out "excess" in the head-
ing and text and inserting in lieu thereof "adjusted". 
(B) The heading of subsection (b) of section 57, and so much 
of paragraph (1) of such subsection as precedes subparagraph 
• * 
(A), are each amended by striking out "excess" and inserting in 
lieu thereof "adjusted". 
(C) Paragraph (1) of section 57(b) isamended— 
(i) by striking out subparagraph (B), and 
--
(ii) by redesignating subparagraphs (C) through (E) as 
' 
subparagraphs (B) through (D), respectively. 
'^ 
(6) Paragraph 
(1) of section 511(b) 
(relating to tax on 26 USC 511. 
unrelated business income of charitable, etc., trusts) is amended by 
striking out "section 1 ( d ) " and inserting in lieu thereof "section 
*{' 
1(e)". 
' 
(Y) Subsection (d) of section 584 (relating to common trust 
26 USC 584. 
funds) is amended— 
(A) by inserting "and" at the end of paragraph (2), 
• 
(B) by striking out "; and" at the end of paragraph (3) 
and inserting in lieu thereof a period, and 
(C) by striking out paragraph (4). 
91 STAT. 134 
PUBLIC LAW 95-30—MAY 23, 1977 
26 use 641. 
(8) Subsection (a) of section 641 (relating to imposition of tax 
for estates and trusts) is amended by striking out "section 1 ( d ) " 
Ante, p. 131. 
and inserting in lieu thereof "section 1 (e)". 
26 use 642. 
(9) Subsection (k) of section 642 (relating to special rules for 
credits and deductions of estate or trust) is amended to read as 
follows: 
i s t«i 
"(k) 
CROSS REFERENCE.— 
"For special rule for determining the time of receipt of dividends by 
a beneficiary under section 652 or 662, see section 116(c)(3)." 
26 use 703. 
(10) Subsection (a) (2) of section 703 (relating to partnership 
,f 
income and deductions) is amended— 
(A^ by striking out subparagraph (A), and 
(B) by redesignating subparagraphs (B) through (G) as 
subparagraphs (A) through (F),respectively. 
26 use 873. 
(11) Subsection (c) of section 873 (relating to deductions in 
the case of nonresident alien individuals) is amended to read as 
follows: 
-
"(c) 
CROSS REFERENCE.— 
"For rule that certain foreign taxes are not to be taken into account in 
determining deduction or credit, see section 906(b)(1)." 
Repeal. 
(12) Paragraph (3) of section 931(d) (relating to deductions 
26 use 931. 
jn computing income from sources within possessions of the 
United States) is hereby repealed. 
26 use 6014. 
(13) Subsection (a) of section 6014 (relating to tax not com-
puted by taxpayer} is amended— 
; 
(A) by striking out "entitled to take" through "section 
] 
141(e))" in the first sentence thereof and inserting in lieu 
thereof "who does not itemize his deductions and who does 
not have an unused zero bracket amount (determined under 
Post, p. 135. 
section 63 (e)),", and 
. . 
(B) by striking out "and shall constitute an election to 
take the standard deduction" in the second sentence thereof. 
26 use 6014. 
(14) Paragraph (4) of section 6014(b) (relating to regula-
tions) is amended to read as follows: 
" (4) to cases where the taxpayer itemizes his deductions or has 
an unused zero bracket amount." 
26 use 6212. 
(15) Subparagraph (A) of section 6212(c)(2) 
(relating to 
further deficiency letters restricted) 
is amended to read as 
-t 
follows: 
I, 
" (A) Deficiency attributable to change of treatment with 
respect to itemized deductions and zero bracket amount, see 
section 63(g) (5)." 
26 use 6504. 
(16) Paragraph (2) of section 6504 (relating to cross refer-
ences) is amended to read as follows: 
"(2) Change of treatment with respect to itemized deductions and 
,' •
, 
zero bracket amount where taxpayer and his spouse make separate 
returns, see section 63(g)(5)." 
. 
(e) CLERICAL AMENDMENTS.— 
(1) The table of sections for subpart A of part I V of subchap-
-•:-' ... r' 
' 
ter A of chapter 1 (relating to credits allowable against tax) is 
amended by striking out the item relating to section 36. 
(2) The heading and table of sections for part IV of sub-
chapter B of chapter 1 (relating to standard deduction for 
individuals) are amended to read as follows: 
PUBLIC LAW 95-30—MAY 23, 1977 
91 STAT. 135 
"PART IV—DETERMINATION OF MARITAL STATUS 
"Sec. 143. Determination of marital status." 
(3) The table of parts for subchapter B of chapter 1 (relating 
to computation of taxable income) is amended by striking out 
the item relating to part I V and inserting in lieu thereof the 
following: 
"Part IV. Determination of marital status." 
SEC. 102. CHANGE IN DEFINITION OF TAXABLE INCOME TO REFLECT 
CHANGE IN TAX RATES AND TABLES. 
(a) 
TAXABLE 
INCOME 
DEFINED.—Section 63 (defining taxable 
26 USC 63. 
income) is amended to read as follows: 
"SEC. 63. TAXABLE INCOME DEFINED. 
"(a) CORPORATIONS.—For purposes of this subtitle, in the case of a 
corporation, the term 'taxable income' means gross income minus the 
deductions allowed by this chapter. 
"(b) INDIVIDUALS.—For purposes of this subtitle, in the case of an 
individual, the term 'taxable income' means adjusted gross income— 
"(1) reduced by the sum of— 
"(A) the excess itemized deductions, and 
"(B) the deductions for personal exemptions provided by 
section 151, and 
"(2) increased (in the case of an individual for whom an 
unused zero bracket amount computation is provided by subsec-
tion (e)) by the unused zero bracket amount (if any). 
"(c) EXCESS ITEMIZED DEDUCTIONS.—For purposes of this subtitle, 
the term 'excess itemized deductions' means the excess (if any) of— 
"(1) the itemized deductions, over 
"(2) the zero bracket amount. 
" ( d ) ZERO BRACKET AMOUNT.—For purposes of this subtitle, the 
term 'zero bracket amount' means— 
"(1) $3,200 in the case of— 
" ( A ) a joint return under section 6013, or 
"(B) a surviving spouse (as defined in section 2(a)), 
"(2) $2,200 in the case of an individual who is not married 
and who is not a surviving spouse (as so defined), 
" (3) $1,600 in the case of a married individual filing a separate 
return, or 
"(4) zero in any other case. 
"(e) ITNUSED ZERO BRACKET AMOUNT.— 
"(1) INDIVIDUALS FOR WHOM COMPUTATION MUST BE MADE.—A 
computation for the taxable year shall be made under this sub-
section for the following individuals: 
"(A) a married individual filing a separate return where 
either spouse itemizes deductions, 
"(B) a nonresident alien individual, 
"(C) a citizen of the United States entitled to the benefits 
of section 931 (relating to income from sources within posses-
sions of the United States), and 
"(D) an individual with respect to whom a deduction 
under section 151(e) is allowable to another taxpayer for a 
taxable year beginning in the calendar year in which the 
individual's taxable year begins. 
"Excess itemized 
deductions." 
"Zero bracket 
amount." 
91 STAT. 136 
PUBLIC LAW 95-30—MAY 23, 1977 
"(2) COMPUTATION.—For purposes of this subtitle, an individ-
ual's unused zero bracket amount for the taxable year is an 
amountequal totheexcess (if any) of— 
,, 
" ( A ) the zero bracket amount, over 
"'(B) the itemized deductions. 
In the case of an individual referred to in paragraph (1) (D), if 
such individual's earned income (as defined in section 911(b)) 
exceeds the itemized deductions, such earned income shall be 
substituted for the itemized deductions in subparagraph (B). 
"Itemized ^
^ 
''(f) 
ITEMIZED DEDUCTIONS.—For purposes of this subtitle, the 
deductions." 
term 'itemized deductions' means the deductions allowable by this 
chapter other than— 
"(1) the deductions allowable in arriving at adjusted gross 
income, and 
"(2) the deductions for pei'sonal exemptions provided by sec-
tion 151. 
"(g) 
ELECTION TO ITEMIZE.— 
"(1) I N GENERAL.—Unless an individual makes an election 
under this subsection for the taxable year, no itemized deduction 
shall be allowed for the taxable year. For purposes of this sub-
title, the determination of whether a deduction is allowable under 
this chapter shall be made without regard to the preceding 
sentence. 
"(2) W H O MAY ELECT.—Except as provided in paragraph (3), 
... 
an individual may make an election under this subsection for the 
taxable year only if such individual's itemized deductions exceed 
, . ^,. . 
• 
the zero bracket amount. 
"(3) 
CERTAIN INDIVIDUALS TREATED AS ELECTING TO ITEMIZE.^— 
An individual who has an unused zero bi-acket amount (as deter-
mined under subsection (e) (2)) shall be treated as having made 
an election under this subsection for the taxable year. 
"(4) T I M E AND MANNER or ELECTION.—Any election under this 
subsection shall be made on the taxpayer's return, and the Secre-
tary shall prescribe the manner of signifying such election on the 
return. 
. 
" (5) CHANGE or TREATMENT.—Under regulations prescribed by 
the Secretary, a change of treatment with respect to the zero 
bracket amount and itemized deductions for any taxable year may 
be made after the filing of the return for such year. If the spouse 
of the taxpayer filed a separate return for any taxable year cor-
responding to the taxable year of the taxpayer, the change shall 
not be allowed unless, in accordance with such regulations— 
" ( A ) the spouse makes a change of treatment with respect 
to the zero bracket amount and itemized deductions, for the 
taxable year covered in such separate return, consistent with 
the change of treatment sought by the taxpayer, and 
" ( B ) the taxpayer and his spouse consent in writing to 
the assessment, within such period as may be agreed on with 
the Secretary, of any deficiency, to the extent attributable to 
such change of treatment, even though at the time of the filing 
of such consent the assessment of such deficiency would other-
wise be prevented by the operation of any law or rule of law. 
PUBLIC LAW 95-30—MAY 23, 1977 
91 STAT. 137 
This paragraph shall not apply if the tax liability of the tax-
payer's spouse, for the taxable year corresponding to the taxable 
year of the taxpayer, has been compromised under section 7122. 
"(h) MARITAL STATUS.—For purposes of this section, marital status 
-- ' 
' 
shall be determined under section 143." 
(b) TECHNICAL AND CONFORMING AMENDMENTS.—• 
(1) 
Section 161 (relating to allowance of deductions) is 26 USC161. 
amended by striking out "section 63(a)" and inserting in lieu Ante, p. 135. 
thereof "section 63". 
(2) Subsection (d) of section 172 (relating to modifications in 26 USC 172. 
determining net operating loss) is amended by adding at the end 
thereof the following new paragraph: 
"(8) ZERO BRACKET AMOUNT.—In the case of a taxpayer other 
than a corporation, the zero bracket amount shall be treated as a 
deduction allowed by this chapter. For purposes of subsection 
" ( A ) the deduction provided by the preceding sentence 
shall be in lieu of any itemized deductions of the taxpayer, 
and 
"(B) such sentence shall not apply to an individual who 
elects to itemize deductions.". 
(3) Section 211 (relating to allowance of deductions) is 26 USC 211. 
amended by striking out "section 63(a)" and inserting in lieu 
thereof "section 63". 
(4) Subparagraph (C) of section 402(e) (1) (relating to impo- 26 USC 402. 
sition of separate tax on lump sum distributions) is amended by 
striking out "amount equal to one-tenth of the excess of" and 
inserting in lieu thereof "amount equal to $2,200 plus one-tenth 
of the excess of". 
(5) Clause (iii) of section 441(f)(2)(B) (relating to change 26 USC 441. 
in accounting period) is amended to read as follows: 
"(iii) if such change results in a short period to which 
subsection (b) of section 443 applies, the taxable income ^"fia. 
for such short period shall be placed on an annual basis 
' 
for purposes of such subsection by multiplying the gross 
income for such short period (minus the deductions 
allowed by this chapter for the short period, but only the 
adjusted amount of the deductions for personal exemp-
tions as described in section 443(c)) by 365, by dividing 
the result by the number of days in the short period, 
and by adding the zero bracket amount, and the tax 
shall be the same part of the tax computed on the annual 
basis as the number of days in the short period is of 
365 days." 
(6) Paragraph (1) of section 443(b) (relating to computation 26 USC 443. 
of tax on change of annual accounting period) is amended to read 
as follows: 
"(1) GENERAL RULE.—If a return is made under paragraph (1) 
'" ' 
*' 
of subsection (a), the taxable income for the short period shall 
be placed on an annual basis by multiplying the gross income for 
such short period (minus the deductions allowed by this chapter 
for the short period, but only the adjusted amount of the deduc-
tions for personal exemptions) by 12, dividing the result by the 
number of months in the short period, and adding the zero bracket 
91 STAT. 138 
PUBLIC LAW 95-30—MAY 23, 1977 
amount. The tax shall be the same part of the tax computed on 
the annual basis as the number of months in the short period is 
of 12 months." 
26 use 613A. 
(7) Paragraph (1) of section 613A(d) (relating to limitation 
on percentage depletion based on taxable income) is amended by 
inserting'' (reduced in the case of an individual by the zero bracket 
amount)" after "the taxpayer's taxable income". 
26 use 667. 
(8) Paragraph (2) of section 667(b) 
(relating to tax on 
amount deemed distributed by trust in preceding years) is 
' 5 : ;:: 
^ 
amended to read as follows: 
"(2) TREATMENT OF LOSS YEARS.—For purposes of paragraph 
(1), the taxable income of the beneficiary for any taxable year 
• 
shall be deemed to be not less than— 
"(A) in the case of a beneficiary who is an individual, the 
zero bracket amount for such year, or 
"(B) in the case of a beneficiary who is a corporation, zero." 
26 use 861. 
. =.,. 
(9) Subsection (b) of section 861 (relating to income from 
sources within the United States) is amended by adding at the 
end thereof the following new sentence: "In the case of an indi-
vidual who does not itemize deductions, an amount equal to the 
zero bracket amount shall be considered a deduction which can-
not definitely be allocated to some item or class of gross income." 
26 use 862. 
, 
(10) Subsection (b) of section 862 (relating to income from 
sources without the United States) is amended by adding at the 
* 
end thereof the following new sentence: "In the case of an indi-
vidual who does not itemize deductions, an amount equal to the 
zero bracket amount shall be considered a deduction w^hich can-
not definitely be allocated to some item or class of gross income." 
26 use 904. 
(11) Subsection (a) of section 904 (relating to limitation on 
,
, foreign tax credit) is amended by adding at the end thereof the 
following new sentence: "For purposes of the preceding sentence, 
in the case of an individual the entire taxable income shall be 
reduced by an amount equal to the zero bracket amount." 
26 use 911. 
(12) Subparagraph (B) of section 911(d)(1) 
(relating to 
computation of tax where there is earned income from sources 
without the United States) is amended to read as follows: 
Ante, p. 127. 
" ( B ) the tax imposed by section 1 or section 1201 (which-
ever is applicable) on the sum of— 
"(i) the amount of net excluded earned income, and 
" (ii) the zero bracket amount." 
26 use 1034. 
(13) Clause (i) of section 1034(b) (2) (C) (relating to limita-
tions on sales price adjustment) is amended by striking out "sec-
^rete, p. 135. 
tion 63(a)" and inserting in lieu thereof "section 63". 
26 use 1211. 
(14) Subparagraph (A) of section 1211(b) (1) (relating to 
- •'. s . 
limitation on capital losses) is amended to read as follows: 
"(A) the taxable income for the taxable year reduced (but 
not below zero) by the zero bracket amount,". 
26 use 1302. 
(15) Section 1302(b) (defining average base period income) 
is amended by adding at the end thereof the following new 
paragraph: 
" (3) TRANSITIONAL RULE FOR DETERMINING BASE PERIOD INCOME.— 
The base period income (determined under paragraph (2)) for 
any taxable year beginning before January 1, 1977, shall be 
increased by the amount of the taxpayer's zero bracket amount for 
the computation year." 
PUBLIC LAW 95-30—MAY 23, 1977 
91 STAT. 139 
(16) Subparagraph (A) of section 6654(d) (2) (relating to 26 USC 6654. 
annualized taxable income) is amended to read as follows: 
" ( A ) The taxable income shall be placed on an annualized 
basis under regulations prescribed by the Secretary.". 
SEC. 103. EXTENSION OF INDIVIDUAL INCOME TAX REDUCTIONS. 
(a) GENERAL TAX CREDIT.—Section 3(b) of the Revenue Adjust-
ment Act of 1975, as amended by section 401(a) of the Tax Reform 26 USC 42 note. 
Act of 1976, is amended by striking out "December 31, 1977" and 
inserting in lieu thereof "December 31,1978". 
(b) EARNED INCOME CREDIT.—Section 209(b) of the Tax Reduction 
Act of 1975, as amended by section 401 (c) of the Tax Reform Act of 26 USC 43 note. 
1976, is amended by striking out "January 1, 1978" and inserting in 
lieu thereof "January 1,1979". 
(c) TECHNICAL AMENDMENT.—Subsection (e) of section 401 of the 
Tax Reform Act of 1976 is amended by striking out the first sentence 26 USC 42 note, 
and inserting in lieu thereof the following new sentences: "The amend-
ments made by subsection (a) shall apply to taxable years ending after 
December 31, 1975, and shall cease to apply to taxable years ending 
after December 31, 1978. The amendments made by subsection (c) 
shall apply to taxable years ending after December 31, 1975, and 
shall cease to apply to taxable years beginning after December 31, 
1978." 
SEC. 104. CHANGE IN FILING REQUIREMENTS. 
Paragraph (1) of section 6012(a) (relating to persons required to 26 USC 6012. 
make returns of income) is amended to read as follows: 
"(1) (A) Every individual having for the taxable year a gross 
income of $750 or more, except that a return shall not be required 
of an individual (other than an individual described in sub-
paragraph (C)) — 
"(i) who is not married (determined by applying section 
143), is not a surviving spouse (as defined in section 2 ( a ) ) , 
and for the taxable year has a gross income of less than $2,950, 
"(ii) who is a surviving spouse (as so defined) and for the 
taxa^ble year has a gross income of less than $3,950, or 
"(iii) who is entitled to make a joint return under section 
6013 and whose gross income, when combined with the gross 
income of his spouse, is. for the taxable year, less than $4,700, 
but only if such individual and his spouse, at the close of the 
taxable year, had the same household as their home. 
Clause (iii) shall not apply if for the taxable year such spouse 
makes a separate return or any other taxpayer is entitled to an 
exemption for such spouse under section 151 (e). 
" ( B ) The amount specified in clause (i) or (ii) of subpara-
graph (A) shall be increased by $750 in the case of an individual 
entitled to an additional personal exemption under section 151 
(c) (1), and the amount specified in clause (iii) of subparagraph 
(A) shall be increased by $750 for each additional personal 
exemption to which the individual or his spouse is entitled under 
section 151(c). 
"(C) The exception under subparagraph (A) shall not apply 
to— 
"(i) a nonresident alien individual; 
"(ii) a citizen of the United States entitled to the benefits 
of section 931; 
91 STAT. 140 
PUBLIC LAW 95-30—MAY 23, 1977 
•'''' ' ' ' • 
"(iii) an individual making a return under section 443(a) 
(1) for a period of less than 12 months on account of a change 
^ >;:?<: 
in his annual accounting period; 
"(iv) an individual who has income (other than earned 
V . 
income) of $750 or more and who is described in section 
Ante, p. 135. 
, , ., 
63(e) (1) (D) ; or 
" (v) an estate or trust." 
SEC. 105. WITHHOLDING TAX. 
26 use 3402. 
(a) 
I N GENERAL.—Subsection (a) of section 3402 (relating to 
income taxes collected at source) is amended to read as follows: 
"(a) 
REQUIKKMENT OF WITHHOLDING.—Except as otherwise pro-
vided in this section, every employer making payment of wages shall 
deduct and withhold upon such wages a tax determined in accordance 
with tables prescribed by the Secretary. With respect to wages paid 
• 
-- 
• - " 
after INIay 31,1977, and before January 1,1979, the tables so pioscribed 
shall be the same as the tables prescribed under this subsection which 
weie in eH'ect on January 1, 1976; except that such tables shall be 
modi (led to the extent necessary so that, had they been in effect for all 
of 1977, they would reflect the full year effect of the amendments 
made by sections 101 and 102 of the Tax Reduction and Simplification 
Act of 1977. AVith respect to wages paid after December 31, 1978, 
the tables so prescribed shall be the same as the tables presci'ibed 
inider tliis subsection which were in effect on January 1, 1975, except 
: 
that such tables shall be modified to the extent necessary to reflect the 
amendments made by sections 101 and 102 of the Tax Reduction 
and Simplification Act of 1977. For purposes of applying such tables, 
the term 'the amount of wages' means the amount by which the Avages 
exceed the number of withholding exemptions claimed, multiplied by 
the amount of one such exemption as shown in the table pi-escribed 
under subsection (b) (1)." 
(b) TixMiNicAL ANo C O N F O R M I N G A M E N D M E N T S . — 
26 use 3402. 
(1) Paragraph (1) of section 3402(f) (relating to withholding 
exemptions) is amended— 
(A) by striking out "a standard deduction" in subpara-
graph (G) and inserting in lieu thereof "a zero bracket", and 
(B) by striking out "standard deduction" in the sentence 
following subparagraph (G) and inserting in lieu thereof 
"zero bracket". 
(2) Subparagraph 
(B) of section 3402(m) (1) (relating to 
, 
withholding allowances based on itemized deductions) is amended 
to read as follows: 
" ( B ) an amount equal to $3,200 ($2,200 in the case of an 
; „ - 
individual who is not married (within the meaning of section 
, 
143) and who is not a surviving spouse (as defined in section 
n' 
2 ( a ) ) ) , " 
(3) Section 3402 (m) (2) (relating to definitions) is amended— 
(A) by striking out "sections 141 and" in subparagraph 
(A) and inserting in lieu thereof "section", 
(B) by striking out "(or the amount of the standard 
_ ,. 
deduction)" in subparagraph 
(A) and inserting in lieu 
thereof "(or the zero bracket amount (within the meaning 
of section 63 ( d ) ) ) " , and 
; 
PUBLIC LAW 95-30—MAY 23, 1977 
91 STAT. 141 
: ;-^ 
(C) by striking out "(or the standard deduction)" in sub-
paragraph (C) and inserting in lieu thereof "(or the zero 
bracket amount)". 
SEC. 106. EFFECTIVE DATES. 
(a) GENERAL KUKE.—The amendments made by sections 101, 102, 26 USC 1 note, 
and 104 shall apply to taxable years beginning after December 31,1976. 
(b) WITHHOLDING AMENDMENTS.—The amendments made by sec- 26 USC 3402 
tion 105 shall apply to wages paid after April 30, 1977. 
note. 
TITLE II—REDUCTION IN BUSINESS 
TAXES 
j ^ i 
SEC. 201. EXTENSION OF CERTAIN CORPORATE INCOME TAX REDUC-
TIONS. 
The following 
provisions are each amended by striking out 
"December 31, 1977" and inserting in lieu thereof "December 31,1978" 
and by striking out "January 1, 1978" and inserting in lieu thereof 
"January 1,1979": 
(1) section 11(b) (relating to normal t a x ) ; 
26 USC 11. 
' 
(2) section 11(d) (relating to surtax exemption); 
, 
(3) section 821(a)(1) 
(relating to mutual insurance com- 26 USC 821. 
panies); and 
(4) section 821(c) (1) (A) (relating to alternative tax for cer-
tain small companies). 
SEC. 202. NEW JOBS CREDIT. 
(a) I N GENERAL.—Subpart A of part I V of subchapter A of chap-
ter 1 (relating to credits allowable) is amended by inserting after 
section 44A the following new section: 
"SEC. 44B. CREDIT FOR EMPLOYMENT OF CERTAIN NEW EMPLOYEES. 26 USC 44B. 
" (a) GENERAL RULE.—There shall be allowed as a credit against the 
tax imposed by this chapter the amount determined under subpart D of 
this part. 
"(b) REGULATIONS.—The Secretary shall prescribe such regulations 
as may be necessary to carry out the purposes of this section and sub-
part D." 
(b) RULES FOR COMPUTING CREDIT.—Part I V of subchapter A of 
chapter 1 (relating to credits against tax) is amended by adding at the 
end thereof the following new subpart: 
"Subpart D—Rules for Computing Credit for Employment of 
Certain New Employees 
"Sec. 51. Amount of credit. 
"Sec. 52. Special rules. 
_,] 
"Sec. 53. Limitation based on amount of tax. 
"SEC. 51. AMOUNT OF CREDIT. 
26 USC 51. 
" (a) DETERMINATION OF AMOUNT.—The amount of the credit allow-
able by section 44B shall be— 
Supra. 
" (1) for a taxable year beginning in 1977, an amount equal to 
50 percent of the excess of the aggregate unemployment insurance 
wages paid during 1977 over 102 percent of the aggregate unem-
ployment insurance wages paid during 1976, and 
91 STAT. 142 
PUBLIC LAW 95-30—MAY 23, 1977 
: 
"(2) for a taxable year beginning in 1978, an amount equal to 
fvf 50 percent of the excess of the aggregate unemployment insurance 
wages paid during 1978 over 102 percent of the aggregate unem-
ployment insurance wages paid during 1977. 
,^ 
' 
. 
"(b) M I N I M U M PRECEDING YEAR WAGES.—For purposes of deter-
mining the amount of the credit under subsection (a) with respect to 
j;^ 
1977 or 1978, 102 percent of the amount of the aggregate unemploy-
ment insurance wages paid during the preceding calendar year shall 
be deemed to be not less than 50 percent of the amount of such wages 
paid during 1977 or 1978, as the case may be. 
"(c) 
TOTAL WAGES MUST INCREASE.—The amount of the credit 
Ante, p. 141. 
allowable by section 44B for any taxable year shall not exceed the 
amount which would be determined for such year under subsection (a) 
(without regard to subsection (b)) if— 
"(1) the aggregate amounts taken into account as unemploy-
ment insurance wages were determined without any dollar limita-
tion, and 
"(2) '105 percent' were substituted for '102 percent' in the 
appropriate paragraph of subsection (a). 
"(d) $100,000 PER YEAR LIMITATION ON CREDIT.—Except as pro-
vided in subsection (e), the amount of the credit determined under this 
subpart for any employer (and the amount of the credit allowable by 
section 44B to any taxpayer) with respect to any calendar year shall 
not exceed $100,000. 
"(e) ADDITIONAL 10 PERCENT CREDIT FOR VOCATIONAL REHABILITA-
TION REFERRALS.— 
"(1) I N GENERAL.—The amount of the credit allowable by 
section 44B for any taxable year beginning in 1977 or 1978 (deter-
mined without regard to this subsection) shall be increased by 
an amount equal to 10 percent of the unemployment insurance 
I 
' ., 
wages paid by the employer to vocational rehabilitation referrals 
during the calendar year in which such taxable year begins. 
"(2) 
O N L Y FIRST YEAR TAKEN INTO ACCOUNT.—For purposes 
of this subsection, unemployment insurance wages may be taken 
, 
into account with respect to any individual— 
-ill,., ... 
"(A) only to the extent attributable to services rendered 
during the 1-year period beginning with his first payment 
of wages by the employer after the beginning of such indi-
vidual's rehabilitation plan, and 
" ( B ) only if such first payment occurs after December 31, 
1976. 
Iif 
"(3) ONLY FIRST $4,200 OF WAGES TAKEN INTO ACCOUNT FOR ANY 
INDIVIDUAL.—For purposes of this subsection, the unemployment 
insurance wages paid during 1978 which are taken into account 
with respect to any individual shall not exceed $4,200 reduced by 
the amount of unemployment insurance wages paid by the 
..,. ;.. 
employer to such individual during 1977. 
"(4) 20-PERCENT LIMITATION.-—The amouut of the Credit allow-
able by reason of this subsection for any taxable year shall not 
' 
exceed one-fifth of the credit determined for such year under this 
section without regard to this subsection and subsection (d). 
"(f) DEFINITIONS—For purposes of this subpart— 
PUBLIC LAW 95-30—MAY 23, 1977 
91 STAT. 143 
"(1) UNEMPLOYMENT INSUIIANCE WAGES.—Except as otherwise 
provided in this subpart, the term 'unemployment insurance 
wages' has the meaning given to the term 'wages' by section 
3306(b), except that, in the case of amounts paid during 1978, 
'$4,200' shall be substituted for '$6,000' each place it appears in 
section 3306(b). 
"(2) AGRICULTUKAL LABOR.—If the services performed by any 
employee for an employer during more than one-half of any pay 
period (within the meaning of section 3306 (d)) taken into account 
with respect to any calendar year constitute agricultural labor 
(within the meaning of section 3306(k)), the term 'unemploy-
ment insurance wages' means, with respect to the remuneration 
paid by the employer to such employee for such year, an amount 
equal to so much of such remuneration as constitutes 'wages' 
within the meaning of section 3121(a), except that the contribu-
tion and benefit base for each calendar year shall be deemed to 
be $4,200. 
"(3) RAILWAY LABOR.—If more than one-half of the remunera-
tion paid by an employer to an employee during the calendar year 
is remuneration for service described in section 3306(c) (9), the 
term 'unemployment insurance wages' means, with respect to 
such employee for such year, an amount equal to % of so much 
of the remuneration paid to such employee during such year as 
is subject to contributions under section 8(a) of the Railroad 
' 
Unemployment Insurance Act (45 U.S.C. 358(a)). 
"(4) VOCATIONAL REHABILITATION REFERRAL.—The term 'voca-
tional rehabilitation referral' means any individual who— 
"(A) has a physical or mental disability which, for such 
individual, constitutes or results in a substantial handicap 
to employment, and 
" ( B ) has been referred to the employer upon completion 
of (or while receiving) rehabilitative services pursuant to— 
"(i) an individualized written rehabilitation 
plan 
under a State plan for vocational rehabilitation services 
approved under the Rehabilitation Act of 1973, or 
29 USC 701 note. 
"(ii) a program of vocational rehabilitation carried 
out under chapter 31 of title 38, United States Code. 
38 USC 1501. 
" ( g ) 
RULES FOR APPLICATION OF SECTION.—For purposes of this 
subpart— 
"(1) REMUNERATION MUST BE FOR TRADE OR BUSINESS EMPLOY-
MENT WITHIN UNITED STATES.—Remuneration paid by an employer 
to an employee during any calendar year shall be taken into 
account only if more than one-ihalf of the remuneration so paid is 
for services performed in the United States in a trade or business 
of the employer. 
"(2) 
SPECIAL RULE FOR CERTAIN DETERMINATIONS.—Any deter-
mination as to whether paragraph (1) of this subsection, or para-
graph (2) or (3) of subsection (f), applies with respect to any 
employee for any calendar year shall be made without regard to 
subsections (a) and (b) of section 52. 
"SEC. 52. SPECIAL RULES. 
26 USC 52. 
"(a) 
CONTROLLED GROUP OF CORPORATIONS.—For purposes of this 
subpart, all employees of all corporations which are members of the 
same controlled group of corporations shall be treated as employed by 
29-194 0 - 80 - 12 
91 STAT. 144 
PUBLIC LAW 95-30—MAY 23, 1977 
Ante, p. 141. 
"Controlled 
group of 
corporations.' 
Regulations. 
Regulations. 
a single employer. In any such case, the credit (if any) allowable by 
section 44B to each such member shall be its proportionate contribu-
tion to the increase in unemployment insurance wages giving rise to 
such credit. For purposes of this subsection, the term 'controlled group 
of corporations' has the meaning given to such term by section 1563 
(a), except that— 
"(1) 'more than 50 percent' shall be substituted for 'at least 80 
percent' each place it appears in section 1563 (a) (1), and 
" (2) the determination shall be made without regard to subsec-
tions (a) (4) and (e) (3) (C) of section 1563. 
"(b) 
EMPLOYKES OF PARTNERSHIPS, PROPRIETORSHIPS, ETC., W H I C H 
ARE UNDER COMMON CONTROL.—For purposes of this subpart, under 
regulations prescribed by the Secretary— 
"(1) all employees of trades or business (whether or not incor-
porated) which are under common control shall be treated as 
. employed by a single employer, and 
"(2) the credit (if any) allowable by section 44B with resj)ect 
to each trade or business shall be its proportionate contribution 
to the increase in unemployment insurance wages giving rise to 
such credit. 
The regulations prescribed under this subsection shall be based on 
principles similar to the principles which apply in the case of subsec-
tion (a). 
"(c) 
ADJUSTMENTS FOR CERTAIN ACQUISITIONS, ETC.—Under reg-
ulations prescribed by the Secretary— 
"(1) ACQUISITIONS.—If, after December 31, 1975, an employer 
acquires the major portion of a trade or business of another person 
s .|j (hereinafter in this paragraph referred to as the 'precedessor') or 
:,v- the major portion of a separate unit of a trade or business of a 
predecessor, then, for purposes of applying this subpart for any 
;,,. 
calendar year ending after such acquisition, the amount of unem-
ployment insurance wages deemed paid by the employer during 
periods before such acquisition shall be increased by so much of 
such wages paid by the precedessor with respect to the acquired 
trade or business as is attributable to the portion of such trade or 
. - business acquired by the employer. 
" (2) DISPOSITIONS.—If, after December 31,1975— 
,,- 
,, 
"CA) an employer disposes of the major portion of any 
trade or business of the employer or the major portion of a 
separate unit of a trade or business of the employer in a trans-
action to which paragraph (1) applies, and 
, ;<. 
"(1^) the employer furnishes the acquiring person such 
V
. 
information as is necessary for the application of paragraph 
(1), 
then, for purposes of applying this subpart for any calendar year 
J.; ending after such disposition, the amount of unemployment insur-
ance wages deemed paid by the employer during periods before 
such disposition shall be decreased by so much of such wages as 
is attributable to such trade or business or separate unit. 
"(d) TAX-EXEMPT ORGANIZATIONS.—No credit shall be allowed 
under section 44B to any organization (other than a cooperatiA^e 
described in section 521) which is exempt from income tax under this 
chapter. 
PUBLIC LAW 95-30—MAY 23, 1977 
91 STAT. 145 
"(e) CHANGE I N STATUS FROM SELF-EMPLOYED TO EMPLOYEE.—If— 
"(1) during 1976 or 1977 an individual has net earnings from 
self-employment (as defined in section 1402(a)) wliicli are attrib-
utable to a trade or business, and 
"(2) for any portion of the succeeding calendar year such in-
dividual is an employee of such trade or business, 
then, for purposes of determining the credit allowable for a taxable 
year beginning in such succeeding calendar year, the employer's 
aggregate unemployment insurance wages for 1976 or 1977. as the case 
may be, shall be inci-eased by an amount equal to so much of the net 
earnings referred to in paragraph (1) as does not exceed $4,200. 
"(f) 
SUBCHAPTER S CORPORATTONS.—In the case of an electing small 
business corporation (as defined in section 1371) — 
"(1) the amount of the credit determined under this subpart 
for any taxable year shall be apportioned pro rata among the 
persons who are shareliolders of such corporation on the last day 
of such taxable year, and 
"(2) any person to whom an amount is apportioned under 
paragraph (1) shall be allowed, subject to section 53, a credit 
under section 44B for such amount. 
" ( g ) ESTATES AND T R I STS.—In the case of an estate or trust— 
"(1) the amount of the credit determined under this subpart 
for any taxable year shall be apportioned between the estate or 
trust and the beneficiaries on the basis of the income of the estate 
or trust allocable to each, 
" (2) any beneficiary to whom any amount has been apportioned 
under paragraph (1) shall be allowed, subject to section 53, a 
credit under section 44B for such amount, and 
"(3) the $100,000 amount specified in section 51(d) applicable 
to such estate or trust shall be reduced to an amount which bears 
the same ratio to $100,000 as the portion of the credit allocable to 
the estate or trust under paragraph (1) bears to the entire amount 
of such credit. 
" ( h ) LIMITATIONS W I T H 
RESPECT TO CERTAIN PERSONS.—^ITnder 
regulations prescribed by the Secretary, in the case of— 
"(1) an organization to which section 593 (relating to reserves 
for losses on loans) applies, 
"(2) a regulated investment company or a real estate invest-
;- 
ment trust subject to taxation under subchapter M (section 851 
and following), and 
"(3) a cooperative organization described in section 1381(a), 
rules similar to the rules provided in section 46(e) shall apply in deter-
mining the amount of the credit under this subpart. 
"(i) $50,000 LIMITATION IN THE CASE or MARRIED INDIVIDUALS 
FILING SEPARATE RETT^RNS.—In the case of a husband or wife who 
files a separate return, the limitation under section 51(d) shall be 
$50,000 in lieu of $100,000. This subsection shall not apply if the 
spouse of the taxpayer has no interest in a trade or business for the 
taxable year of such spouse which ends within or with the taxpayer's 
taxable year. 
"(j) 
CERTAIN SHORT TAXABLE YEARS.—If the emplover has more 
than one taxable year beginning in 1977 or 1978, the credit under this 
subpart, shall be determined for the employer's last taxable year begin-
ning in 1977 or 1978. as the case may be. 
Ante, p. 141. 
Regulations. 
91 STAT. 146 
PUBLIC LAW 95-30—MAY 23, 1977 
26 use 53. 
"SEC, 53. LIMITATION BASED ON AMOUNT OF TAX. 
"(a) GENERAL KULE.—Notwithstanding section 51, the amount of 
Ante, p. 141. 
the credit allowed by section 44B for the taxable year shall not exceed 
the amount of the tax imposed by this chapter for the taxable year, 
reduced by the sum of the credits allowable under— 
"(1) section -33 (relating to foreif^n tax credit), 
: 
"(2) section 37 (relating to credit for the elderly), 
"(3) section 38 (relating to investment in certain depreciable 
- 
property), 
• 
"(4) section 40 (relating to expenses of work incentive pro-
grams), 
" 
"(5) section 41 (relating to contributions to candidates for 
public office), 
Ante, p. 132. 
' 
"(6) section 42 (relating to general tax credit), and 
"(7) section 44A (relating to expenses for household and 
dependent care services necessary for gainful employment). 
For purposes of this subsection, any tax imposed for the taxable year by 
section 56 (relating to minimum tax for tax preferences), section 
,, 
72(m) (5) (B) (relating to 10 percent tax on premature distributions 
•' ' 
to owner-employees), section 408(f) (relating to additional tax on 
income from certain retirement accounts), section 402(e) 
(relating 
to tax on lump-sum distributions), section 531 (relating to accumu-
lated earnings tax), section 541 (relating to personal holding company 
tax), or section 1378 (relating to tax on certain capital gains of sub-
chapter S corporations), and any additional tax imposed for the tax-
able year by section 1351(d)(1) (relating to recoveries of foreign 
expropriation losses), shall not be considered tax imposed by this 
chapter for such year. 
"(b) 
SPECIAL RULE FOR PASS-THRU OF CREDIT.—In the case of 
a 
partner in a partnership, a beneficiary of an estate or trust, and a share-
holder in a subchapter S corporation, the limitation provided by sub-
section (a) for the taxable year shall not exceed a limitation separately 
computed with respect to such person's interest in such entity by tak-
ing an amount which bears the same relationship to such limitation 
as— 
"(1) that portion of the person's taxable income which is 
allocable or apportionable to the person's interest in such entity, 
bears to 
"(2) the person's taxable income for such year reduced by his 
Ante, p. 135. 
zero bracket amount (determined under section 63(d)), if any. 
"(c) 
CARRYBACK AND CARRYOVER OF UNUSED CREDIT.— 
"(1) 
ALLOWANCE OF CREDIT.—If the amount of the credit 
Ante, p. 141. 
determined under section 51 for any taxable year exceeds the lim-
itation provided by subsection (a) for such taxable year (herein-
after in this subsection referred to as the 'unused credit year'), 
such excess shall be— 
" (A) a new employee credit carryback to each of the 3 tax-
able years preceding the unused credit year, and 
-> 
; 
"(I^) ^ ^6w employee credit carryover to each of the 7 tax-
able years following the unused credit year, 
and shall be added to the amount allowable as a credit by section 
44B for such years. If any portion of such excess is a carryback to 
a taxable year beginning before January 1,1977, section 44B shall 
be deemed to have been in effect for such taxable year for purposes 
PUBLIC LAW 95-30—MAY 23, 1977 
91 STAT. 147 
of allowing such carryback as a credit under such section. The 
entire amount of the unused credit for an unused credit year shall 
be carried to the earliest of the 10 taxable years to which (by rea-
son of subparagraphs (A) and (B)) such credit may be carried, 
and then to each of the other 9 taxable years to the extent that, 
because of the limitation contained in paragraph (2), such 
. 
unused credit may not be added for a prior taxable year to which 
. *
; 
such unused credit may be carried. 
" (2) LIMITATION.—The amount of the unused credit which may 
be added under paragraph (1) for any preceding or succeeding 
taxable year shall not exceed the amount by which the limitation 
provided by subsection (a) for such taxable year exceeds the sura 
of— 
" ( A ) the credit allowable under section 44B for such tax- 
Ante, p. 141. 
able year, and 
;. .
< 
" ( B ) the amounts which, by reason of this subsection, are 
added to the amount allowatsle for such taxable year and 
which are attributable to taxable years preceding the unused 
credit year." 
'* '"• 
(c) DEDUCTION FOR WAGES PAID REDUCED BY AMOUNT OF CREDIT.— 
(1) I N GENERAL.—Part I X of subchapter B of chapter 1 (relat-
ing to items not deductible) is amended by adding at the end 
thereof the following new section: 
"SEC. 280C. PORTION OF WAGES FOR WHICH CREDIT IS CLAIMED 
26 USC 280C. 
UNDER SECTION 44B. 
"No deduction shall be allowed for that portion of the wages or sal-
aries paid or incurred for the taxable year which is equal to the amount 
of the credit allowable for the taxable year under section 44B (relating 
to credit for employment of certain new employees) determined with-
out regard to the provisions of section 53 (relating to limitation based 
Ante, p. 146. 
on amount of tax). In the case of a corporation which is a member of a 
controlled group of corporations (within the meaning of section 
52(a)) or a trade or business which is treated as being under common 
Ante, p. 143. 
control with other trades or businesses (within the meaning of section 
52(b)), this section shall be applied under rules prescribed by the 
Secretary similar to the rules applicable under subsections (a) and (b) 
of section 52.". 
(2) CLERICAL AMENDMENT.—The table of sections for such part 
is amended by adding at the end thereof the following new item: 
"Sec. 280C. Portion of wages for which credit is claimed under section 
44B." 
(d) TECHNICAL AND CONFORMING AMENDMENTS.— 
(1) CLERICAL AMENDMENTS.— 
(A) The table of sections for subpart A of part I V of sub-
chapter A of chapter 1 is amended by inserting after the item 
relating to section 44A the following new item: 
"Sec. 44B. Credit for employment of certain new employees." 
(B) The table of subparts for part I V of subchapter A of 
chapter 1 is amended by adding at the end thereof the follow-
ing new item: 
"Subpart D. Rules for computing credit for employment of certain new 
employees." 
91 STAT. 14« 
PUBLIC LAW 95-30—MAY 23, 1977 
(2) 
M I N I M U M TAX.— 
26 use 56. 
(A) Section 56(c) (defining regular tax deduction) is 
amended by striking out "and" at the end of paragraph (7), 
by striking out the period at the end of paragraph (8) and 
inserting in lieu thereof ", and", and by adding at the end 
thereof the following new paragraph: 
Anu, p. 141. 
.: 
"(9) section 44B (relating to credit for employment of certain 
new employees)." 
(B) Subparagraph (A) of section 56(e)(1) (relating to 
tax carryover for timber) is amended— 
(i) by striking out "and" at the end of clause (ii), 
(ii) by striking out "exceed" at the end of clause (iii) 
and inserting in lieu thereof "and", and 
' 
(iii) by inserting after clause (iii) the following new 
clause: 
"(iv) section 44B (relating to credit for employment 
of certain new employees), exceed". 
; 
(3) 
CORPORATE REORGANIZATIONS.— 
26 use 381. 
(A) Subsection (c) of section 381 (relating to items of the 
distributor or transferor corporation) is amended by adding 
at the end thereof the following new paragraph: 
"(26) 
CREDIT UNDER SECTION 44B FOR EMPLOYMENT OF CERTAIN 
NEW EMPLOYEES.—The acquiring corporation shall take into 
,. 
,. . „ 
,, account (to the extent proper to carry out the purposes of this 
section and section 44B. and under such regulations as may be 
prescribed by the Secretary) the items required to be taken into 
account for purposes of section 44B in respect of the distributor 
or transferor corporation." 
26 use 383. 
(B) Section 383 (relating to special limitations on unused 
investment credits, work incentive program credits, foreign 
taxes, and capital losses), as in effect for taxable years 
beginning after June 30, 1978, is amended— 
(i) by inserting "to any unused new employee credit 
Ante, p. 146. 
of the corporation under section 53(c)," after "section 
50A(b),";and 
(ii) 
by 
striking 
out 
"WORK 
INCENTIVE 
PROGRAM 
CREDITS," in the section heading and inserting in lieu thereof 
"WORK INCENTIVE PROGRAM CREDITS, NEW EMPLOYEE 
CREDITS,". 
(C) Section 383 (as in effect on the day before the date of 
the enactment of the Tax Reform Act of 1976) is amended— 
(i) by inserting "to any unused new employee credit 
of the corporation which could otherwise be carried for-
ward under section 53(c)," after "section 50A(b),"; and 
(ii) 
by 
striking 
out 
"WORK 
INCENTIVE 
PROGRAM 
CREDITS," in the section heading and inserting in lieu thereof 
"WORK INCENTIVE PROGRAM CREDITS, NEW EMPLOYEE 
CREDITS,". 
(D) The table of sections for part V of subchapter C of 
„ .' chapter 1 is amended by striking out "work incentive program 
credits," in the item relating to section 383 and inserting in 
lieu thereof "work incentive program credits, new employee 
credits,". 
PUBLIC LAW 95-30—MAY 23, 1977 
91 STAT. 149 
(4) STATUTES OF LIMITATION AND INTEREST RELATING TO NEW 
EMPLOYEE CREDIT CARRYBACK. 
; 
(A) ASSESSMENT AND COLLECTION.—Section 6501 (relating 
26 USC 6501. 
to limitations on assessment and collection) is amended by 
adding at the end thereof the following new subsection: 
" ( p ) N E W EMPLOYEE CREDIT CARRYBACKS.—In the case of a defi-
ciency attributable to the application to the taxpayer of a new employee 
credit carryback (including deficiencies which may be assessed pur-
suant to the provisions of section 6213 ( b ) ( 3 ) ) , such deficiency may be 
assessed at any time before the expiration of the period within which 
; 
a deficiency for the taxable year of the unused new employee credit 
which results in such carryback may be assessed, or, with respect to any 
portion of a new employee credit carryback from a taxable year attrib-
utable to a net operating loss carryback, an investment credit carry-
back, a work incentive program credit carryback, or a capital loss 
carryback from a subsequent taxable year, at any time before the 
expiration of the period within which a deficiency for such subsequent 
taxable year may be assessed." 
(B) CREDIT OR REFUND.—Section 6511(d) (relating to lim- 
26 USC 6511. 
itations on credit or refund) is amended by adding at the 
end thereof the following new paragraph: 
"(9) 
SPECIAL PERIOD OF LIMITATION WITH RESPECT TO NEW 
EMPLOYEE C R E D I T CARRYBACKS. 
" ( A ) PERIOD OF LIMITATIONS.—If the claim for credit or 
refund relates to an overpayment attributable to a new 
employee credit carryback, in lieu of the 3-year period of 
limitation prescribed in subsection (a), the period shall be 
that period which ends with the expiration of the 15th day of 
the 40th month (or 39th month, in the case of a corporation) 
following the end of the taxable year of the unused new 
employee credit which results in such carryback (or, with 
respect to any portion of a new employee credit carryback 
from a taxable year attributable to a net operating loss carry-
back, an investment credit carryback, a work incentive pro-
gram credit carryback, or a capital loss carryback from a sub-
sequent taxable year, the period shall be that period which 
ends with the expiration of the 15th day of the 40th month, 
or 39th month, in the case of a corporation, following the end 
of such taxable year) or the period prescribed in subsection 
(c) in respect of such taxable year, whichever expires later. 
; 
In the case of such a claim, the amount of the credit or refund 
may exceed the portion of the tax paid within the period 
provided in subsection (b) (2) or (c), whichever is applicable, 
to the extent of the amount of the overpayment attributable 
to such carryback. 
" ( B ) 
APPLICABLE RUT.ES.—If the allowance of a credit 
or refund of an overpayment of tax attributable to a new 
employee credit carryback is otherwise prevented by the oper-
ation of any law or rule of law other than section 7122, 
relating to compromises, such credit or refund may be allowed 
or made, if claim therefor is filed within the period provided 
in subparagraph (A) of this paragraph. In the case of any 
such claim for credit or refund, the determination by any 
court, including the Tax Court, in any proceeding in which 
91 STAT. 150 
PUBLIC LAW 95-30—MAY 23, 1977 
^ • 
* the decision of the court has become final shall not be con-
,,, 
, .,, 
elusive with respect to the new employee credit, and the 
effect of such credit, to the extent that such credit is affected 
by a carryback which was not in issue in such proceeding." 
26 use 6601. 
(C) 
INTEREST 
ON UNDERPAYMENTS.—Section 
6601(d) 
(relating to income tax reduced by carryback or adjustment 
for certain unused deductions) is amended by adding at the 
end thereof the following new paragraph: 
"(5) N E W EMPLOYEE CREDIT CARRYBACK.—If the credit allowed 
Anu, p. 141. 
by section 44B for any taxable year is increased by reason of a new 
employee credit carryback, such increase shall not affect the com-
putation of interest under this section for the period ending with 
the last day of the taxable year in which the new employee credit 
carryback arises, or, with respect to any portion of a new employee 
credit carryback from a taxable year attributable to a net operat-
ing loss carryback, an investment credit carryback, a work incen-
tive program credit carryback, or a capital loss carryback from a 
subsequent taxable year, such increase shall not affect the com-
' 
putation of interest under this section for the period ending with 
the last day of such subsequent taxable year." 
26 use 6611. 
(D) INTEREST ON ovERPiVYMENTS.—Section 6611(f) (relat-
ing to refund of income tax caused by carryback or adjust-
ment for certain unused deductions) is amended by adding at 
the end thereof the following new paragraph: 
"(5) 
N E W EMPLOYEE CREDIT CARRYBACK.—For purposes of 
subsection (a), if any overpayment of tax imposed by subtitle A 
results from a new employee credit carryback, such overpayment 
shall be deemed not to have been made before the close of the tax-
able year in which such new employee credit carryback arises, or, 
with respect to any portion of a new employee credit carryback 
from a taxable year attributable to a net operating loss carryback, 
an investment credit carryback, a work incentive program credit 
carryback, or a capital loss carryback from a subsequent taxable 
year, such overpayment shall be deemed not to have been made 
before the close of such subsequent taxable year." 
(5) TENTATIVE CARRYBACK ADJUSTMENTS.— 
26 use 6411. 
(A) APPLICATION FOR ADJUSTMENT.—Section 6411 (relat-
ing to quick refunds in respect of tentative carryback adjust-
ments) is amended— 
(i) by striking out "or unused work incentive pro-
gram credit" each place it appears in such section and 
inserting in lieu thereof "unused work incentive pro-
gram credit, or unused new employee credit", 
(ii) by inserting after "section 50A(b)," in the first 
sentence of subsection (a) "by a new employee credit 
Ante, p. 146. 
carryback provided in section 53(c),", 
(iii) by striking out "or a work incentive program 
carryback from" in the second sentence of subsection (a) 
and inserting in lieu thereof ", a work incentive program 
carryback, or a new employee credit carryback from", 
and 
(iv) by striking out "investment credit carryback)" 
in the second sentence of subsection (a) and inserting in 
lieu thereof "investment credit carryback, or, in the case 
PUBLIC LAW 95-30—MAY 23, 1977 
91 STAT. 151 
of a new employee credit carryback, to an investment 
credit carryback or a work incentive program carry-
back)". 
(B) 
TENTATIVE 
CARRYBACK 
ADJUSTMENT 
ASSESSMENT 
PERIOD.—Section 6501 (m) (relating to tentative carryback 
26 USC 6501. 
adjustment assessment period) is amended— 
(i) by striking out "or a work incentive program carry-
back" and inserting in lieu thereof "a w^ork incentive 
program carryback, or a new employee credit carryback", 
and 
(ii) by striking out " (j), or (o)" each place it appears 
and inserting in lieu thereof " ( j ) , (o), or (p)". 
(6) DESIGNATION OF INCOME TAX PAYMENT.—Section 6096(b) 
26 USC 6096. 
(relating to designation of income tax payments to Presidential 
Election Campaign Fund) is amended by striking out "and 44A" 
and inserting in lieu thereof "44A, and 44B". 
Ante, p. 141. 
(e) EFFECTIVE DATE.—The amendments made by this section shall 
26 USC 44B 
apply to taxable years beginning after December 31, 1976, and to °<'*®-
credit carrybacks from such years. 
TITLE III—PROVISIONS RELATING TO 
EFFECTIVE DATES AND OTHER PROVI-
SIONS OF THE TAX REFORM ACT OF 1976 
SEC. 301. EFFECTIVE DATE OF CHANGES IN THE EXCLUSION FOR SICK 
PAY. 
(a) I N GENERAL.—Section 505 of the Tax Reform Act of 1976 26USC 105note. 
(relating to changes in exclusions for sick pay and certain military, 
etc., disability pensions; certain disability income) is amended by 
adding at the end thereof the following new subsection: 
"(f) EFFECTIVE DATE FOR SUBSECTION (a).—The amendment made 
by subsection (a) shall apply to taxable years beginning 
after 
December 31, 1976.". 
(b) CONFORMING AMENDMENTS.— 
(1) Paragraph (1) of section 505(c) of such Act is amended 
26 USC 105 note. 
by striking out "1976" and inserting in lieu thereof "1977". 
(2) Paragraph (3) of such section 505(c) is amended by 
.
; 
inserting "or January 1, 1977," after "January 1, 1976,". 
.' 
* •:. 
(3) Paragraph (1) of section 505 ^d) of such Act is amended 
by striking out "1976" and inserting m lieu thereof "1977". 
(4) Paragraph (2) of such section 505 (d) is amended bv insert-
ing "or December 31, 1976," after "December 31, 1975,"*. 
(5) Subsection (d) of section 505 of such Act is amended by 
striking out "this subsection" and inserting in lieu thereof "such 
section 105(d)". 
(c) REVOCATION OF ELECTION.—Any election made under section 
26 USC 105 note. 
105(d)(7) of the Internal Revenue Code of 1954 or under section 
26 USC 105. 
505(d) of the Tax Reform Act of 1976 for a taxable year beginning 
26 USC 105 note, 
in 1976 may be revoked (in such manner as may be prescribed by 
regulations) at any time before the expiration of the period for assess- 
'; •• 
, i , 
ing a deficiency with respect to such taxable year (determined without 
regard to subsection (d) of this section). 
91 STAT. 152 
PUBLIC LAW 95-30—MAY 23, 1977 
26 use 105 note. 
26 use 105 note. 
26 use 105. 
26 use 105 note. 
26 use 911 note. 
26 use 6654 
note. 
26 use 6654, 
6655. 
26 use 3402 
note. 
26 use 3402. 
26 use 1 note. 
26 use 6601 
note. 
26 use 1. 
26 use 280A. 
(d) PERIOD FOR ASSESSING DEFICIEXCY.—In the case of any revoca-
tion made under subsection (c), the period for assessing a deficiency 
with respect to any taxable year affected by the revocation shall not 
expire before the date which is 1 year after the date of the making of 
the revocation, and, notwithstanding any law or rule of law, such 
deficiency, to the extent attributable to such revocation, may be 
assessed at any time during such 1-year period. 
(e) EFFECTIVE DATE.—The amendments made by this section shall 
take effect on October 4, 1976, but shall not apply— 
(1) with respect to any taxpayer who makes or has made an 
election under section 105(d)(7) of the Internal Revenue Code 
of 1954 or under section 505(d) of the Tax Reform Act of 1976 
(as such sections were in effect befoi-e the enactment of this Act) 
for a taxable year beginning in 1976, if such election is not revoked 
under subsection (c) of this section, and 
(2) Avith respect to any taxpayer (other than a taxpayer 
described in paragraph (1)) w^ho has an annuity starting date 
at tlie beginning of a taxable year beginning in 1976 by reason 
of the amendments made by section 505 of the Tax Reform Act 
of 1976 (as in effect before the enactment of this Act), unless 
such person elects (in such manner as the Secretary of the Treas-
ury or his delegate may by regulations prescribe) to have such 
amendments apply. 
SEC. 302. CHANGES IN TREATMENT OF INCOME EARNED ABROAD BY 
UNITED STATES CITIZENS LIVING OR RESIDING ABROAD. 
Subsection (d) of section 1011 of the Tax Reform Act of 1976 is 
amended by striking out "December 31, 1975" and inserting in lieu 
thereof "December 31, 1976". 
. 
SEC. 303. UNDERPAYMENTS OF ESTIMATED TAX. 
No addition to the tax shall be made under section 6654 or 6655 of 
the Internal Revenue Code of 1954 (relating to failure to pay esti-
mated income tax) for any period before April 16, 1977 (March 16, 
1977, in the case of a taxpayer subject to section 6655), with respect 
to any underpayment, to the extent that such underpayment was cre-
ated or increased by any provision of the Tax Reform Act of 1976. 
SEC. 304. UNDERWITHHOLDING. 
No person shall be liable in respect of any failure to deduct and 
withhold under section 3402 of the Internal Revenue Code of 1954 
(relating to income tax collected at source) on remuneration paid 
before January 1,1977, to the extent that the duty to deduct and with-
hold was created or increased by any provision of the Tax Reform Act 
of 1976. 
SEC. 305. INTEREST ON UNDERPAYMENTS OF TAX. 
No interest shall be payable for any period before April 16, 1977 
(March 16, 1977, in the case of a corporation), on any underpayment 
of a tax imposed by the Internal Revenue Code of 1954, to the extent 
that such underpayment was created or increased by any provision of 
the Tax Reform Act of 1976. 
SEC. 306. USE OF RESIDENCE AS DAY CARE FACILITY. 
(a) I x GENERAL.—Subsection (c) of section 280A (relating to 
exceptions for certain business or rental use; limitation on deductions 
for such use) is amended by redesignating paragraph (4) as paragraph 
(5) and by inserting after paragraph (3) the following new para-
graph : 
PUBLIC LAW 95-30—MAY 23, 1977 
91 STAT. 153 
" ( 4 ) 
U S E I N PROVIDING DAY CAKE SERVICES. 
"(A) I N GENERAL.—Subsection (a) shall not apply to any 
item to the extent that such item is allocable to the use 
of any portion of the dwelling unit on a regular basis in 
the taxpayer's trade or business of providing day care for 
children, for individuals who have attained age 65, or for 
individuals who are physically or mentally incaj^able of 
caring for themselves. 
" ( B ) LICENSING, ETC., Ki:QumEMENT.—Subparagraph (A) 
shall apply to items accruing for a period only if the owner or 
operator of the trade or business referred to in subparagraph 
"(i) has applied for (and such application has not 
been rejected), 
" (ii) has been granted (and such granting has not been 
revoked), or 
"(iii) is exempt from having, 
a license, cel-tification, registration, or approval as a day care 
center or as a family or group day care home under the 
provisions of any applicable State law. This subparagraph 
shall apply only to items accruing in periods beginning on 
or after the first day of the first month which begins more 
than 90 days after the date of the enactment of the Tax 
Keduction and Simplification Act of 1977. 
"(C) ALLOCATION FORMULA.-—If a portion of the taxpayer's 
dwelling unit used for the purposes described in subpara-
, :. 
graph (A) is not used exclusively for those purposes, the 
amount of the expenses attributable to that portion shall not 
exceed an amount which bears the same ratio to the total 
amount of the items allocable to such portion as the number 
of hours the portion is used for such purposes bears to the 
number of hours the portion is available for use." 
(b) CONFORMING AMENDMENT.—Paragraph (5) of section 280A(c) 
of such Code (as redesignated by subsection (a)) is amended by 
striking out "paragraph (1) or (2)" and inserting in lieu thereof 
"paragraph (1), (2),or (4)". 
(c) EFFECTIVE DATE.—The amendments made by this section shall 
apply to taxable years beginning after December 31,1975. 
SEC. 307. STATE LEGISLATORS' TRAVEL EXPENSES AWAY FROM HOME. 
Subsections (a) and (d) of section 604 of the Tax Reform Act 
of 1976 are each amended by striking out "January 1, 1976," and 
inserting in lieu thereof "January 1, 1977,". Subsection (c) of such 
section is amended by inserting "beginning before January 1, 1976," 
after "any taxable year". 
SEC. 308. TREATMENT OF INTANGIBLE DRILLING COSTS FOR PUR-
POSES OF THE MINIMUM TAX. 
(a) I N GENERAL.—Paragraph (11) of section 57(a) (relating to 26 USC 57. 
minimum tax) is amended to I'ead as follows: 
"(11) INTANGIBLE DRILLING COSTS.— 
"(A) I N GENERAL.—With respect to all oil and gas proper-
V 
ties of the taxpayer, the amount (if any) by which the 
amount of the excess intangible drilling costs arising in the 
, 
taxable year is greater than the amount of the not income of 
the taxpayer from oil and gas propeities for the taxable year. 
26 USC 280A. 
26 USC 280A 
note. 
26 USC 162 note. 
91 STAT. 154 
PUBLIC LAW 95-30—MAY 23, 1977 
" ( B ) EXCESS INTAXGIBLE DRILLING COSTS.—For purposes of 
subparagraph (A), the amount of the excess intangible drill-
ing costs arising in the taxable year is the excess of— 
"(i) the intangible drilling and development costs 
described in section 263 (c) paid or incurred in connection 
with oil and gas wells (other than costs incui-red in drill-
ing a nonproductive well) allowable under this chapter 
for the taxable year, over 
"(ii) the amount which would have been allowable 
for the taxable year if such costs had been capitalized 
and straight line recovery of intangibles (as defined in 
subsection (d)) had been used with respect to such costs. 
' 
"(C) 
NET INCOME FROM OIL AND GAS PROPERITIES.—For 
purposes of subparagraph (A), the amount of the net income 
of the taxpayer from oil and gas properties for the taxable 
year is the excess of— 
"(i) the aggregate amount of gross income (within 
* 
the meaning of section ()13(a)) from all oil and gas prop-
erties of the taxpayer i-eceived or accrued by the taxpayer 
during the taxable year, over 
"(iij the amount of any deductions allocable to such 
properties reduced by the excess desci'ibed in subpara-
graph (B) for such taxable year." 
26 use 57 note. 
(b) P^FFECTIVE DATE.—The amendment made by subsection (a) 
shall apply with respect to taxable years beginning after December 31, 
1976, and before January 1,1978. 
SEC. 309. TRANSFERS OF PARTIAL INTERESTS IN PROPERTY FOR CON-
SERVATION PURPOSES. 
26USC170. 
(a) I N GENERAL.—Clause (iii) of section 170(f)(3)(B) 
(relating 
to exceptions from denial of deduction in case of certain contributions 
of partial interests in property) is amended to read as follows: 
"(iii) a lease on, option to purchase, or easement with 
,, ,, 
: ; J 
respect to real property granted in perpetuity to an 
organization described in subsection ( b ) ( 1 ) ( A ) exclu-
sively for conservation purposes, or", 
(b) EFFECTIVE DATES.— 
26USC170note. 
(1) The amendment made by subsection (a) shall apply with 
respect to contributions or transfers made after June 13,1977, and 
before June 14,1981. 
(2) Paragraph (4) of section 2124(e) of the Tax Keform Act 
26 use 170 note. 
of 1976 is amended by striking out "June 14, 1977" and inserting 
in lieu thereof "June i4,1981". 
TITLE IV—MISCELLANEOUS 
PROVISIONS 
SEC. 401. AUTHORIZATION OF ADDITIONAL APPROPRIATIONS FOR THE 
WORK INCENTIVE PROGRAM. 
42 use 602 note. 
(a) 
MATCHING FUNDS DISREGARDED.—The Secretary of 
Health, 
Education, and Welfare and the Secretary of Labor are authorized to 
carry out the work incentive program under title I V of the Social 
42 use 601. 
Security Act from the sums appropriated pui'suant to this Act with-
out regard to the requirements for non-Federal matching funds con-
tained in sections 402(a) (19) (C), 402(a) (19) (G), 403(a)(3)(A), 
42 use 602, 
403 (d), and 435 of the Social Security Act. 
603, 635. 
PUBLIC LAW 95-30—MAY 23, 1977 
91 STAT. 155 
(b) AUTHORIZATION.—There are authorized to be appropriated to 
carry out the work incentive program under title IV of the Social 
Security Act, as modified by this Act (in addition to any sums other-
wise appropriated pursuant to title IV of such Act), $435,000,000 for 
fiscal year 1978 and $435,000,000 for fiscal year 1979. 
SEC. 402. RAPID AMORTIZATION OF CHILD CARE FACILITIES. 
(a) RAPID AMORTIZATION OF CHILD CARE FACILITIES,— 
(1) Subsection (c) of section 188 (relating to application of 
section 188) is amended by striking out "January 1, 1977" and 
inserting in lieu thereof "January 1,1982". 
(2) Subsection (b) of section i88 (relating to definition of sec-
tion 188 property) is amended by striking out "as a facility for 
on-the-job training of employees (or prospective employees) of 
the taxpayer, or". 
(8) The caption of section 188 is amended by striking out "ON-
THE-JOB TRAINING AND''. 
(4) The table of sections for part VI of subchapter B of chap-
ter 1 is amended by striking out the item relating to section 188 
and inserting in lieu thereof the following new item: 
"Sec. 188. Amortization of certain expenditures for child care facilities." 
(5) The caption of paragraph (10) of section 57(a) (relating 
to items of tax preference) is amended by striking out "ON-THE-
JOB TRAINING AND". 
(b) EFFECTIVE DATE.—The amendments made by subsection (a) 
shall apply with respect to expenditures made after December 31,1976. 
SEC. 403. ELECTION OF FORMER RETIREMENT INCOME CREDIT PROVI-
SIONS FOR 1976. 
A taxpayer may elect (at such time and in such manner as the Secre-
tary of the Treasury or his delegate shall prescribe) to determine the 
amount of his credit under section 37 of the Internal Revenue Code of 
1954 for his first taxable year beginning in 1976 under the provisions 
of such section as they existed before the amendment made by section 
503 of the Tax Reform Act of 1976. 
42 use 601. 
26 use 188. 
26 use 57. 
26 use 188 note. 
26 use 37 note. 
26 use 37. 
26 use 37. 
SEC. 404. POSTPONEMENT OF EFFECTIVE DATE OF CHANGES MADE 
BY THE TAX REFORM ACT OF 1976 IN THE METHOD OF 
ACCOUNTING FOR CERTAIN CORPORATIONS ENGAGED IN 
FARMING. 
Section 207(c)(2) of the Tax Reform Act of 1976 is amended to 26 USC 447 note, 
read as follows: 
"(2) 
EFFECTIVE DATES.— 
" ( A ) I N GENERAL.—Except as provided in subparagraph 
(B), the amendments made by paragraph (1) shall apply to 
taxable years beginning after December 31, 1976. 
I i PI 
"(B) 
SPECIAL RULE FOR CERTAIN CORPORATIONS.—In the case 
of a corporation engaged in the trade or business of farming 
and with respect to which— 
"(i) members of two families (within the meaning of 
paragraph (1) of section 447(d) of the Internal Revenue 
Code of 1954, as added by paragraph (1)) owned, on 
October 4, 1976 (directly or through the application of 
such section 447 ( d ) ) , at least 65 percent of the total com-
bined voting power of all classes of stock of such corpo- 
V 
91 STAT. 156 
PUBLIC LAW 95-30—MAY 23, 1977 
26 use 3402. 
26 use 3402 
note. 
42 use 402 note. 
42 use 402 note. 
26 use 7651 
note. 
eertification. 
ration entitled to vote, and at least 65 percent of the total 
number of shares of all other classes of stock of such 
"• ' 
corporation; or 
"(ii) members of three families (within the meaning 
of paragraph (1) of such section 447(d)) owned, on 
-r October 4, 1976 (directly or through the application of 
such section 447(d)), at least 50 percent of the total com-
bined voting power of all classes of stock of such corpora-
tion entitled to vote, and at least 50 percent of the total 
number of shares of all other classes of stock of such cor-
poration; and substantially all of the stock of such cor-
poration which was not so owned (directly or through the 
application of such section 447 ( d ) ) , by members of such 
three families was owned, on October 4, 1976, directly— 
" ( I ) by employees of the corporation or members 
of the families (within the meaning of section 267 
(c) (4) of such Code) of such employees, or 
" ( I I ) by a trust for the benefit of the employees 
of such corporation which is described in section 401 
(a) of such Code and which is exempt from taxation 
' • under section 501(a) of such Code, 
, , 
the amendments made by paragraph (1) shall apply to taxable 
years beginning after December 31,1977.". 
SEC. 405. WITHHOLDING TAX ON CERTAIN GAMBLING WINNINGS. 
(a) I N GENERAL.—Subparagraph (C) of section 8402(q) (3) of the 
Internal Kevenue Code of 1954 (relating to sweepstakes, wagering 
pools, and other lotteries) is amended to read as follows: 
"(C) 
SWEEPSTAKES, WAGERING POOLS, CERTAIN PARIMUTUEL 
POOLS, jAi ALAi, AND LOTTERIES.—Procceds of morc than $1,000 
from— 
, . . 
" (i) a wager placed in a sweepstakes, wagering pool, or 
lottery (other than a wager described in subparagraph 
"(ii) a wagering transaction in a parimutuel pool 
with respect to horse races, dog races, or jai alai if the 
amount of such proceeds is at least 300 times as large as 
the amount wagered.". 
(b) EFFECTIVE DATE.—The amendments made by this section apply 
to payments made after April 30,1977. 
SEC. 406. TERMINATION OF 1975 SPECIAL PAYMENTS TO CERTAIN 
INDIVIDUALS. 
Notwithstanding the provisions of section 702(a) of the Tax Reduc-
tion Act of 1975, no payment shall, after the date of the enactment 
of this Act, be made under that section. 
SEC. 407. PAYMENTS TO THE GOVERNMENTS OF AMERICAN SAMOA, 
GUAM, AND THE VIRGIN ISLANDS. 
(a) The Secretary of the Treasury is authorized to make separate 
payments to the government of American Samoa, the government 
of Guam, and the government of the Virgin Islands. The payment to 
the government of a particular possession shall be in an amount equal 
to the loss to that possession Avith respect to tax returns for the first 
taxable year beginning after December 31, 1976, by reason of sections 
101 and 102 of this Act. Such amount shall be determined by the 
PUBLIC LAW 95-30—MAY 23, 1977 
91 STAT. 157 
Appropriation 
authorization. 
Secretary of the Treasury upon certification to the Secretary by the 
United States Government Comptrollers for Guam and the Virgin 
Islands. 
(b) There are hereby authorized to be appropriated, out of any 
funds in the Treasury not otherwise appropriated, such sums as may 
be necessary to carry out the provisions of this section. 
SEC. 408. WITHHOLDING OF COUNTY INCOME TAX ON FEDERAL 
EMPLOYEES. 
(a) I N GENERAL.—Section 5520 of title 5, United State Code, is 
amended— 
(1) by inserting "or county" after "city" in the heading of such 
section; 
(2) by inserting "or county" after "city" each place it appears 
in subsections (a) and (b) (other than in subsection ( a ) ( 1 ) ) ; 
(8) by striking out "the city" in subsection 
(a) (1) 
and 
inserting in lieu thereof "a designated city or county officer, 
department, or instrumentality"; 
(4) by striking out "and" at the end of subsection (c) (1); 
(5) by redesignating paragraph (2) of subsection (c) as (4), Definitions 
and by inserting after paragraph (1) of such subsection the fol-
lowing new paragraphs: 
" (2) 'county' means any unit of local general government which 
is classified as a county by the Bureau of the Census and within 
the political boundaries of which 500 or more persons are regularly 
employed by all agencies of the Federal Government; 
"(3) 'ordinance' means an ordinance, order, resolution, or 
similar instrument which is duly adopted and approved by a city 
or county in accordance with the constitution and statutes of the 
State in which it is located and which has the force of law within 
such city or county; and". 
(b) CONFORMING AMENDMENT.—The table of contents of sub-
chapter I I of chapter 55 of title 5, United States Code, is amended by 
inserting "or county" after "city" in the item relating to section 5520. 
(c) EFFECTIVE DATE.—The amendments made by this section shall 
take effect on the date of the enactment of this Act. 
5 use 5520 note. 
TITLE V—CERTAIN SOCIAL SECURITY 
ACT AMENDMENTS 
SEC. 501. CLARIFICATION OF GARNISHMENT PROVISIONS. 
(a) I N GENERAL.—Section 459 of the Social Security Act is 
amended— 
(1) by striking out "(including any agency or instrumentality 
thereof and any wholly owned Federal Corporation)" and insert-
ing in lieu thereof "or the District of Columbia (including any 
agency, subdivision, or instrumentality thereof)"; and 
(2) by inserting "or the District of Columbia" immediately 
after "United States" where it appears the second time. 
(b) 
SERVICE OF PROCESS.—Section 459 of such Act is further 
amended— 
(1) by inserting " ( a ) " immediately after "SEC. 459.", and 
(2) by adding at the end thereof the following new subsections: 
"(b) Service of legal process brought for the enforcement of an 
individual's obligation to provide child support or make alimony 
42 use 659. 
91 STAT. 158 
PUBLIC LAW 95-30—MAY 23, 1977 
payments shall be accomplished by certified or registered mail, return 
receipt requested, or by personal service, upon the appropriate agent 
designated for receipt of such service of process pursuant to regula-
Infra. 
tions promulgated pursuant to section 461 (or, if no agent has been 
designated for the governmental entity having payment responsibility 
for the moneys involved, then upon the head of such governmental 
entity). Such process shall be accompanied by sufficient data to permit 
prompt identification of the individual and the moneys involved. 
"(c) No Federal employee whose duties include responding to inter-
rogatories pursuant to requirements imposed by section 461(b)(3) 
shall be subject under any law to any disciplinary action or civil or 
criminal liability or penalty for, or on account of, any disclosure of 
information made by him in connection with the carrying out of any of 
his duties which pertain (directly or indirectly) to the answering of 
any such interrogatory. 
Notice. 
"(d) Whenever any person, who is designated by law or regulation 
to accept service of process to which the United States is subject under 
this section, is eifectively served with any such process or with inter-
., 
rogatories relating to an individual's child support or alimony pay-
ment obligations, such person shall respond thereto within thirty days 
(or within such longer period as may be prescribed by applicable State 
law) after the date effective service thereof is made, and shall, as soon 
as possible but not later than fifteen days after the date effective service 
is so made of any such process, send written notice that such process has 
been so served (together with a copy thereof) to the individual whose 
moneys are affected thereby at his duty station or last-known home 
address. 
" (e) Governmental entities affected by legal processes served for the 
enforcement of an individual's child support or alimony payment 
obligations shall not be required to vary their normal pay and dis-
bursement cycles in order to comply with any such legal process. 
"(f) Neither the United States, any disbursing officer, nor govern-
mental entity shall be liable with respect to any payment made from 
at 
moneys due or payable from the United States to any individual pur-
suant to legal process regular on its face, if such payment is made in 
accordance with this section and the regulations issued to carry out 
this section.". 
(c) REGULATIONS.—Part D of title IV of such Act is further 
amended by adding at the end thereof the following new section: 
« 
REGULATIONS PERTAINING TO GARNISHMENTS 
42 use 661. 
"SEC. 461. (a) Authority to promulgate regulations for the imple-
Ante, p. 157. 
mentation of the provisions of section 459 shall, insofar as the pro-
visions of such section are applicable to moneys due from (or payable 
b y ) - 
. 
. 
. 
"(1) the executive branch of the Government (mcludmg m 
such branch, for the purposes of this subsection, the territories 
and possessions of the United States, the United States Postal 
Service, the Postal Rate Commission, any wholly owned Federal 
corporation created by an Act of Congress, and the government 
of the District of Columbia), be vested in the President (or his 
designee), 
"(2) the legislative branch of the Government, be vested jointly 
in the President pro tempore of the Senate and the Speaker of 
the House of Representatives (or their designees), and 
PUBLIC LAW 95-30—MAY 23, 1977 
91 STAT. 159 
"(3) the judicial branch of the Government, be vested in the 
Chief Justice of the United States (or his designee). 
"(b) Regulations promulgated pursuant to this section shall— 
"(1) in the case of those promulgated by the executive branch 
of the Government, include a requirement that the head of each 
agency thereof shall cause to be published, in the appendix of the 
regulations so promulgated, (A) his designation of an agent or 
agents to accept service of process, identified by title of position, 
mailing address, and telephone number, and (B) an indication of 
the data reasonably required in order for the agency promptly 
to identify the individual with respect to whose moneys the legal 
process is brought, 
j: 
"(2) in the case of regulations promulgated for the legislative 
and judicial branches of the Government set forth, in the appendix 
to the regulations so promulgated, (A) the name, position, address, 
and telephone number of the agent or agents who have been desig-
nated for service of process, and (B) an indication of the data 
reasonably required in order for such entity promptly to identify 
the individual with respect to whose moneys the legal process is 
brought, and 
"(3) provide that (A) in the case of regulations promulgated 
by the executive branch of the Government, each head of a gov-
ernmental entity (or his designee) shall respond to relevant 
interrogatories, if authorized by the law of the State in which 
legal process will issue, prior to formal issuance of such process, 
upon a showing of the applicant's entitlement to child support 
-t 
or alimony payments, and (B) in the case of regulations promul-
gated for the legislative and judicial branches of the Govern-
ment, the person or persons designated as agents for service of 
process in accordance with paragraph 
(2) shall respond to 
relevant interrogatories if authorized by the law of the State 
in which legal process will issue, prior to formal issuance of legal 
process, upon a showing of the applicant's entitlement to child 
support or alimony payments. 
" (c) In the event that a governmental entity, which is authorized 
under this section or regulations issued to carry out this section to 
accept service of process, pursuant to the provisions of subsection (a), 
is served with more than one legal process with respect to the same 
moneys due or payable to any individual, then such moneys shall be 
available to satisfy such processes on a first-come, first-served basis, 
with any such process being satisfied out of such moneys as remain 
after the satisfaction of all such processes which have been previously 
served.". 
(d) DEFINITIONS.—Part D of title IV of such Act is further 
amended by adding after section 461 (as added by subsection (c) of 
this section) the following new section: 
"DEFINITIONS 
"SEC. 462. For purposes of section 459— 
42 USC 662. 
"(a) The term 'United States' means the Federal Government of 42 USC 659. 
the United States, consisting of the legislative branch, the judicial 
branch, and the executive branch thereof, and each and every depart-
ment, agency, or instrumentality of any such branch, including the 
United States Postal Service, the Postal Rate Commission, any wholly 
- j 
»
*
: . s. 
owned Federal corporation created by an Act of Congress, any office, 
91 STAT. 160 
PUBLIC LAW 95-30—MAY 23, 1977 
commission, bureau, or other administrative subdivision or creature 
thereof, and the governments of the territories and possessions of the 
United States. 
\ 
".(b) The term 'child support', when used in reference to the legal 
obligations of an individual to provide such support, means periodic 
payments of funds for the support and maintenance of a child or chil-
dren with respect to which such individual has such an obligation, and 
(subject to and in accordance with State law) includes but is not 
limited to, payments to provide for health care, education, recreation, 
clothing, or to meet other specific needs of such a child or children; 
such term also includes attorney's fees, interest, and court costs, when 
and to the extent that the same are expressly made recoverable as such 
pursuant to a decree, order, or judgment issued in accordance with 
applicable State law by a court of competent jurisdiction. 
"(c) The term 'alimony', when used in reference to the legal obliga-
tions of an individual to provide the same, means periodic payments 
of funds for the support and maintenance of the spouse (or former 
spouse) of such individual, and (subject to and in accordance with 
State law) includes but is not limited to, separate maintenance, ali-
mony pendente lite, maintenance, and spousal support; such term also 
includes attorney's fees, interest, and court costs when and to the extent 
that the same are expressly made recoverable as such pursuant to a 
decree, order, or judgment issued in accordance with applicable State 
law by a court of competent jurisdiction. Such term does not include 
any payment or transfer of property or its value by an individual to 
his spouse or former spouse in compliance with any community prop-
erty settlement, equitable distribution of property, or other division 
of property between spouses or former spouses. 
"(d) The term 'private person' means a person who does not have 
sovereign or other special immunity or privilege which causes such 
person not to be subject to legal process. 
"(e) The term 'legal process' means any writ, order, summons, or 
other similar process in the nature of garnishment, which— 
"(1) is issued by (A) a court of competent jurisdiction within 
• any State, territory, or possession of the United States, (B) a 
court of competent jurisdiction in any foreign country with which 
the United States has entered into an agreement which requires 
the United States to honor such process, or (C) an authorized 
official pursuant to an order of such a court of competent juris-
diction or pursuant to State or local law, and 
"(2) is directed to, and the purpose of which is to compel, a 
governmental entity, which holds moneys which are otherwise 
payable to an individual, to make a payment from such moneys 
to another party in order to satisfy a legal obligation of such 
individual to provide child support or make alimony payments. 
"(f) Entitlement of an individual to anv money shall be deemed 
to be 'based upon remuneration for- employment', if such money 
consists of— 
" (1) compensation paid or payable for personal services of such 
• 
' 
, 
individual, whether such compensr.tion is denominated as wages, 
salary, commission, bonus, pay, or otherwise, and includes but is 
not limited to, severance pav, sick pay. rnd incentive pay, but does 
not include awards for making suggestions, or 
"(2) periodic benefits (including a periodic benefit as defined in 
42 use 428. 
section 228(h) (3) of this Act) or other payments to such indi-
vidual under the insurance system established by title I I of this 
PUBLIC LAW 95-30—MAY 23, 1977 
91 STAT. 161 
Act or any other system or fund established by the United States 42 USC 401. 
(as defined in subsection (a)) which provides for the payment of 
pensions, retirement oi- retired pay, annuities, dependents or sur-
vivors'benefits, or similar amounts })ayable on account of personal 
services performed by himself or any other individual (not includ-
ing any payment as compensation for death under any Federal 
program, any payment under any Federal program established 
to provide 'black lung' benefits, any payment by the Veterans' 
Administration as pension, or any payments by the Veterans' 
Administration as compensation for a service-connected disability 
or death, except any compensation paid by the Veterans' Adminis- 
, 
.. - ~ -
tration to a for-mer member of the Armed Forces who is in receipt 
* ''" 
of retired or retainer pay if such former member has waived a 
portion of his retired pay in order to receive such compensation), 
and does not consist of amounts paid, by way of reimbursement or 
otherwise, to such individual by his employer to defray expenses 
incurred by such individual in cai-rying out duties associated with 
his employment. 
"(g) In determining the amount of any moneys due from, or pay-
able by, the United States to any individual, there shall be excluded 
amounts which— 
"(1) are owed by such individual to the United States, 
•^' *
* *"'' ^-^ 
"(2) are required by law to be, and are, deducted from the 
remuneration or other payment involved, including but not limited 
' 
to. Federal employment taxes, and fines and forfeitures ordered 
- 
-' 
by court-martial, 
* " 
' 
"(3) are properly withheld for Federal, State, or local income 
tax purposes, if the withholding of such amounts is authorized or 
required by law and if amounts withheld are not greater than 
,,; 
would be the case if such individual claimed all dependents to 
, • j -;, • , 
which he was entitled (the withholding of additional amounts 
pursuant to section 3402(i) of the Internal Revenue Code of 1954 
may be permitted only when such individual presents evidence 
of a tax obligation which supports the additional withholding), 
"(4) are deducted as health insurance premiums, 
"(5) are deducted as normal retirement contributions 
(not 
including amounts deducted for supplementary coverage), or 
"(6) are deducted as normal life insurance premiums from 
salary or other remuneration for employment (not including 
. 
. 
amounts deducted for supplementary coverage).", 
(e) 
CONSUMER PROVISIONS.— 
(1) Subsection (b) of section 303 of the Consumer Credit Pro-
tection Act (15 U.S.C. 1673(b)) is amended— 
(A) by inserting " ( 1 ) " immediately after " ( b ) " , 
(B) by redesignating clauses (1), (2), and (3) thereof as 
clauses (A), (B),and (C),respectively,and 
. . 
(C) by adding at the end thereof the following new para- 
< , ,. * 
graph: 
"(2) The maxinnim part of the aggregate disposable earnings of 
an individual for any workweek which is subject to garnishment to 
enforce any order for the support of any person shall not exceed— 
" (A) where such individual is supporting his spouse or depend-
. ent child (other than a spouse or child with respect to whose sup- 
"* 
' ~ 
port such order is used), 50 per centum of such individual's 
disposable earnings for that week: and 
91 STAT. 162 
PUBLIC LAW 95-30—MAY 23, 1977 
.; » 'cU.! i;* 
" ( ^ ) where such individual is not supporting such a spouse or 
dependent child described in clause (A), 60 per centum of such 
individual's disposable earnings for that week; 
except that, with respect to the disposable earnings of any individual 
for any workweek, the 50 per centum specified in clause (A) shall be 
deemed to be 55 per centum and the 60 per centum specified in clause 
(B) shall be deemed to be 65 per centum, if and to the extent that such 
earnings are subject to garnishment to enforce a support order with 
respect to a period which is prior to the twelve-week period which ends 
with the beginning of such workweek.". 
(2) The provision of section 303(b) of the Consumer Credit 
15 use 1673. 
Protection Act which is redesignated under paragraph (1) as 
clause (A) is amended by striking out all that follows "any order" 
and inserting in lieu thereof the following: "for the support of 
: 
any person issued by a court of competent jurisdiction or in 
accordance with an administrative procedure, which is established 
by State law, which affords substantial due process, and which is 
subject to judicial review.". 
(3) Section 303(c) of such Act is amended by inserting ", and 
no State (or officer or agency thereof)," immediately after "or 
any State". 
15 use 1675. 
(4) Section 305 of such Act is amended by inserting "and (b) 
(2)" immediately after "section 303(a)" each place it appears 
therein. 
Effective date. 
(5) The amendments made by this subsection shall take effect 
15 use 1673 
Q
2
^ i]^Q |^j.g|^ (jr^y of i[^Q f^Ygi calendar month which begins after the 
^°^^- 
date of enactment of this Act. 
SEC. 502. BONDING OF CERTAIN STATE OR LOCAL EMPLOYEES; HAN-
DLING OF CASH RECEIPTS. 
42 use 654. 
(a) I N GENERAL.—Section 454 of the Social Security Act is 
amended— 
(1) by striking out "and" at the end of paragraph (12), 
(2) by striking out the period at the end of paragraph (13) 
and inserting a semicolon in lieu thereof, and 
(3) by adding at the end thereof the following new paragraphs: 
' 
"(14) comply with such bonding requirements, for employees 
who receive, disburse, handle, or have access to, cash, as the Sec-
^ 
retary shall by regulations prescribe; and 
Regulations. 
"(!''>) maintain methods of administration which are designed 
to assure that persons responsible for handling cash receipts shall 
not participate in accounting or operating functions which would 
'' 
permit them to conceal in the accounting records the misuse of cash 
receipts (except that the Secretary shall by regulations provide 
for exceptions to this requirement in the case of sparsely popu-
'• lated areas where the hiring of unreasonable additional staff would 
otherwise be necessary).". 
42 use 654note. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall take effect on the first day of the first calendar month which 
begins after the date of enactment of this Act. 
SEC. 503. INCENTIVE PAYMENTS TO STATES AND LOCALITIES. 
(a) 
I N GENERAL.^— 
42 use 658. 
(1) Section 458(a) of the Social Security Act is amended by 
striking out "parent—" and all that follows and inserting in lieu 
thereof "parent an amount equal to 15 per centum of any amount 
42 use 657. 
collected and required to be distributed as provided in section 457 
to reduce or repay assistance payments.". 
PUBLIC LAW 95-30—MAY 23, 1977 
91 STAT. 163 
(2) Section 458(b) of such Act is amended by striking out 
42 USC 658. 
"paragraphs (1) and (2) of". 
(b) EFFECTIVE DATE.—The amendments made by subsection (a) 
42 USC 658 note. 
shall be applicable with respect to amounts collected on and after 
October 1,1977. 
SEC. 504. ANNUAL REPORT OF THE SECRETARY. 
(a) REPORT.—Section 452(a) (10) of the Social Security Act is 
42 USC 652. 
amended to read as follows: 
"(10) not later than three months after the end of each fiscal 
Submittal to 
year, beginning with the year 1977, submit to the Congress a full 
Congress, 
and complete report on all activities undertaken pursuant to the 
< gj 
provisions of this part, which report shall include, but not be 
limited to, the following: 
. 
"(A) total program costs and collections set forth in 
sufficient detail to show the cost to the States and the Federal 
Government, the distribution of collections to families, State 
and local governmental units, and the Federal Government; 
and an identification of the finandal impact of the provi- 
._^ 
sions of this part; 
" ( B ) costs and staff associated with the Office of Child 
Support Enforcement; 
"(C) the number of child support cases in each State 
during each quarter of the fiscal year last ending before the 
report is submitted and during each quarter of the preceding 
'* 
fiscal 
year 
(including the transitional period 
beginning 
July 1, 1976, and ending September 30, 1976, in the case of 
the first report to which this subparagraph applies), and the 
disposition of such cases; 
"(D) the status of all State plans under this part as of the 
..f^.. end of the fiscal year last ending before the report is sub-
"I V * 
mitted, together with an explanation of any problems which 
are delaying or preventing approval of State plans under 
this part; 
.,, / 
" ( E ) data, by State, on the use of the Federal Parent 
Locator Service, and the number of locate requests submitted 
- -. 
without the absent parent's social security account number; 
" ( F ) the number of cases, by State, in which an applicant 
for or recipient of aid under a State plan approved under 
; ,. 
part A has refused to cooperate in identifying and locating 
42 USC 601. 
the absent parent and the number of cases in which refusal 
so to cooperate is based on good cause (as determined in 
accordance with the standards referred to in section 402(a) 
' 
' 
( 2 6 ) ( B ) ( i i ) ) ; 
42 USC 602. 
"(G) data, by State, on the use of Federal courts and 
on use of the Internal Revenue Service for collections, the 
number of court orders on which collections were made, the 
number of paternity determinations made and the number of 
parents located, in sufficient detail to show the cost and bene-
fits to the States and to the Federal Government; and 
^. , , 
" ( H ) the major problems encountered which have delayed 
or prevented implementation of the provisions of this part 
during the fiscal year last ending prior to the submission of 
such report.". 
91 STAT. 164 
PUBLIC LAW 95-30—MAY 23, 1977 
42 use 652 note. 
Submittal to 
Congress. 
42 use 652 note. 
42 use 651. 
42 use 652. 
42 use 603. 
42 use 657. 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) shall 
be effective in the case of reports, submitted by the Secretary of Health, 
Education, and Welfare, after 1976. 
(c) SUPPLEMENTAL REPORT.—The Secretary of Health, Education, 
and Welfare shall submit to the Congress not later than June 30,1977, 
a special supplemental report, with respect to activities undertaken 
pursuant to part T> of title I V of the Social Security Act during the 
fiscal year ending June 30, 1976, and during the transitional period 
beginning July 1, 1976, and ending September 30, 1976. Such report 
shall, with respect to such transitional period, contain all the data and 
information specified in clauses (A) through (H) of section 452(a) 
(10) of such Act (as amended by subsection (a) of this section), and 
with respect to the fiscal year ending June 30, 1976, contain all such 
data and information which was not included in the report made by 
such Secretary to the Congress on June 30, 1976, pursuant to section 
452(a) (10) of such Act, as in effect on such date. 
SEC. 505. CERTAIN AFDC PAYMENTS. 
For purposes of determining the amount payable to the State of 
Georgia under section 403(a) of the Social Security Act on account 
of expenditures made by such State as aid to families with dependent 
children under its State plan approved under part A of title I V of 
such Act during calendar quarters, beginning after June 30,1975, and 
prior to January 1, 1977, there shall be included as an offset against 
such expenditures amounts which—• 
(1) were collected as child support by the State pursuant to 
a plan approved under part D of such title IV, and 
(2) were retained by the State pursuant to, and in accordance 
with the provisions of, section 457(a)(2) or section 457(b)(1) 
of such Act. 
Intergovernment-
al Antirecession 
Assistance Act of 
1977. 
42 use 6721 
note. 
.im l*'Sl AI 
TITLE VI—INTERGOVERNMENTAL ANTI-
RECESSION ASSISTANCE 
SEC. 601. This title may be cited as the "Intergovernmental Anti-
recession Assistance Act of 1977". 
SEC. 602. (a) Subsection (b) of section 202 of the Public Works 
Employment Act of 1976 (42 U.S.C. 6722(b)) is amended to read 
as follows: 
"(b) AUTHORIZATIOX OF APPROPRIATIONS.—Subject to the provi-
sions of subsections (c) and (d) of this section, there are authorized 
to be appropriated for each of the five succeeding calendar quarters 
(beginning with the calendar quarter w^hich begins on July 1, 1977) 
for the purpose of payments under this title— 
"(1) $125,000',000, plus 
"(2) $30,000,000 multiplied by the number of whole one-tenth 
percentage points by w^hich the rate of seasonally 
adjusted 
national unemployment for the most recent calendar quarter 
which ended three months before the beginning of such 
quarter exceeded 6 per centum.", 
(b) Subsection (c) of section 202 of such Act is amended to read 
as follows: 
PUBLIC LAW 95-30—MAY 23, 1977 
91 STAT. 165 
"(c) LIMITATION ON AUTHORIZATION.—In no case shall the aggre-
gate amount authorized to be appropriated under the provisions of 
subsection (b) of this section for the five successive calendar quarters 
beginning with the calendar quarter which begins July 1,1977, exceed 
$2 250 000 000 " 
SEC' 603. (a) 'Section 203 (b) (3) (D) of the Public Works Employ-
ment Act of 1976 (42 U.S.C. 6723(b) (3) (D)) is amended by striking 
out "for the one-year period beginning on July 1, 1975" and inserting 
in lieu thereof "for the most recently completed entitlement period, 
as defined under section 141(b) of such Act". 
(b) Section 203(c)(1) of such Act is amended by striking out 
"paragraphs (3) and (5)" and inserting in lieu thereof "paragraph 
(4)". 
(c) Section 203(c) of such Act is amended by striking out para-
graph (3) and redesignating paragraphs (4) and (5) as paragraphs 
(3) and (4). 
(d) Section 203(c)(3)(B) of such Act is amended by— 
(1) inserting "or assigned" after the word "determined"; and 
I 
(2) striking out the parenthetical phrase and inserting in lieu 
thereof the following: 
"(in the case of a local government for which the Secretary 
i 
of Labor cannot determine a local unemployment rate, he 
shall assign such local government the local unemployment 
rate of the smallest unit or subunit of local government for 
' ' 
' 
which he has determined a local unemployment rate and 
within the jurisdiction of which such local government is 
located, unless— 
"(i) the Governor of the State in which such local 
government is located has provided the Secretary of 
> 
' 
•
' 
Labor with a local unemployment rate for such local 
"';'' 
government, and 
'''" 
"(ii) the Secretary of Labor finds that such local 
unemployment rate provided by the Governor has been 
determined in a manner consistent with the procedures 
and methodologies used by the Secretary of Labor in 
determining local unemployment rates, 
in which case the Secretary of Labor shall assign such local 
government the local unemployment rate provided by such 
r 
• 
Governor)". 
. (e) Section 203(c) (3) (C) of such Act is amended by— 
(1) striking out "for the one-year period beginning on July 1, 
1975" and inserting in lieu thereof "for the most recently com-
H 
pleted entitlement period, as defined under section 141 (b) of such 
Act"; and 
(2) striking out the parenthetical phrase. 
(f) Section 203(c) (3) of such Act is amended by striking out sub-
paragraph (D) and redesignating subparagraph (E) as subparagraph 
(D). 
- 
--• 
(g) Section 203(c) (3)(D)(i) of such Act is amended by striking 
out "Social and Economic Statistics Administration" and inserting in 
lieu thereof "Bureau of the Census". 
91 STAT. 166 
PUBLIC LAW 95-30—MAY 23, 1977 
Determinations. 
42 use 6723. 
Repeal. 
42 use 6726. 
42 use 6727. 
(h) Section 203(c) (3) of such Act is amended by striking out "For 
the purpose of paragraph (4) (D), the Secretary of Labor shall, not-
withstanding any of the provisions of law, continue to make determina-
tions with respect to the rate of unemployment for the purposes of 
such title VI.". 
(i) Section 206 of such Act is repealed. 
SEC. 604. Section 204 of the Public Works Employment Act of 1976 
(42 U.S.C. 6724) is amended by striking out "and for construction 
unless such supplies and materials or construction are to maintain 
basic services" and inserting in lieu thereof "or for construction, 
except for normal supplies or repairs necesary to maintain basic 
services". 
SEC. 605. Section 207 of the Public Works Employment Act of 
1976 (42 U.S.C. 6727) is amended to read as follows: 
42 use 6101 
note. 
29 use 794. 
42 use 2000a 
note. 
42 use 3601. 
31 use 1242, 
1244, 1245. 
"NONDISCRIMINATION 
"SEC. 207. (a)(1) I N GENERAL.—No person in the United States 
shall, on the ground of race, color, national origin, or sex, be excluded 
fi-om participation in, be denied the benefits of, or be subjected to 
discrimination under any program or activity of a State government 
or unit of local government, which government or unit receives funds 
made available under this title. Any prohibition against discrimina-
tion on the basis of age under the Age Discrimination Act of 1975 or 
with respect to an otherwise qualified handicapped individual as pro-
vided in section 504 of the Rehabilitation Act of 1973 shall also apply 
to any such program or activity. Any prohibition against discrimina-
tion on the basis of religion, or any exemption, from such prohibition, 
as provided in the Civil Rights Act of 1964 or title V I I I of the Act of 
April 11, 1968, commonly referred to as Civil Rights Act of 1968, shall 
also apply to any such program or activity. 
"(2) EXCEPTIONS.— 
"(A) FUNDING.—The provisions of paragraph (1) of this sub-
section shall not apply where any State government or unit of 
local government demonstrates, by clear and convincing evidence, 
that the program or activity with respect to which the allegation 
Uv of discrimination has been made is not funded in whole or in part 
. J) 
with funds made available under this title. 
" ( B ) 
CONSTRUCTION PROJECTS IN PROGRESS.—The provisions of 
paragraph (1), relating to discrimination on the basis of handi-
capped status, shall not apply with respect to construction projects 
commenced prior to January 1,1977. 
"(b) 
ENFORCEMENT AND REMEDIES.—The provisions of subsection 
(a) of this section shall be enforced by the Secretary in the same 
manner and in accordance with the same procedures as are required 
by sections 122, 124, and 125 of the State and Local Fiscal Assistance 
Act of 1972 to enforce compliance with section 122(a) of such Act. 
The Attorney General shall have the same authority, functions, and 
duties with respect to funds made available under this title as the 
Attorney General has under sections 122 (g) and (h) and 124(c) of 
such Act with respect to funds made available under that Act. Any 
perso}! aggrieved by a violation of subsection (a) of this section shall 
PUBLIC LAW 95-30—MAY 23, 1977 
91 STAT. 167 
have the same rights and remedies as a person aggrieved by a violation 
of subsection (a) of section 122 of such Act, including the rights pro-
vided under section 124(c) of such Act.". 
SEC. 606. Section 215 of the Public Works Employment Act of 1976 
(42 U.S.C. 6735) is amended by adding at the end thereof the follow-
ing new subsection: 
"(c) 
ALTERNATIVE METHODS OF ALLOCATION.—The Secretary shall, 
in consultation with the Secretary of Commerce, conduct an investi-
gation of— 
"(1) the extent to which allocations of funds provided under 
this Act might be more precisely related to true economic condi-
tions by the use of data on aggregate declines in private real wages 
and salaries; 
"(2) the extent to which other factors, such as relative tax 
effort, should also be made part of the allocation system provided 
by this Act; and 
"(3) the availability and reliability of data concerning Puerto 
Rico, Guam, the Virgin Islands, American Samoa, and the Trust 
Territory of the Pacific Islands, and the extent to which such 
territories may properly be made part of the regular allocation 
system applicable to the several States. 
The results of such investigation shall be submitted to the Congress 
not later than March 1, 1978, in order that such results may be avail-
able during congressional consideration of any extension of this Act 
beyond the fiscal year ending September 30. 1978.". 
SEC. 607. Title "ll of the Public Works Emplovment Act of 1976 
(42 U.S.C. 6721-6735) is amended by adding at the end thereof the 
followino; new section: 
31 use 1242. 
31 use 1244. 
Investigation, 
eonsultation. 
Submittal to 
eongress. 
" A U T H O R I Z A T I O N O F A P P R O P R I A T I O N S F O R PUERTO RICO, GUAM, AMERICAN 
SAMOA, AND THE VIRGIN ISLANDS 
"SEC. 216. (a) I N GENERAL.—There is hereby authorized to be appro-
priated for each of the five succeeding calendar quarters (beginning 
with the calendar quarter which begins on July 1, 1977) for the pur-
pose of making payments under this title to Puerto Rico, Guam, 
American Samoa, and the Virgin Islands, an amount equal to 1 per-
cent of the amount authorized for each such quarter under section 
202(b). 
"(b) 
ALLOCATIONS.— 
"(1) The Secretary shall allocate from the amount authorized 
under subsection (a) an amount for the purpose of making pay-
ments to such governments equal to the total authorized for the 
calendar quarter multiplied by the applicable territorial per-
centage. 
-^a 
"(2) For the purposes of this subsection, the applicable ter-
ritorial percentage is equal to the quotient resulting from the 
division of the territorial population by the sum of the territorial 
population for all territories. 
" (3) For purposes of this section— 
"(A) The term 'territory' means Puerto Rico, Guam, 
American Samoa, and the Virgin Islands. 
42 use 6736. 
42 use 6722. 
Applicable 
territorial 
percentage. 
"Territory.' 
91 STAT. 168 
PUBLIC LAW 95-30—MAY 23, 1977 
"Territorial^ 
n ,^ 
"(B) The term 'territorial population' means the most 
population." 
^^., 
recent population for each territory as determined by the 
Bureau of Census. 
"(C) The provisions of sections 203(c) (4), 204, 205, 206, 
42 use 
207, 208, 209, 210, 211, 212, and 213 shall apply to the funds 
6723-6733. 
authorized under this section. 
"(c) PAYMENTS TO LOCAL GOVERNMENTS.—The governments of the 
territories are authorized to make payments to local governments 
within their jurisdiction from sums received under this section as 
they deem appropriate.". 
Approved May 23, 1977. 
,^,. , 
LEGISLATIVE HISTORY: 
HOUSE REPORTS: No. 95-27 pt. I (Comm. on Ways and Means), and No. 95-27 pt. II 
(Comm. on Appropriations), and No. 95-263 (Comm. of Confer-
ence). 
SENATE REPORT No. 95-66 (Comm. on Finance). 
CONGRESSIONAL RECORD, Vol. 123 (1977): 
' 
Mar. 8, considered and passed House. 
Apr. 19-22, 25-29, considered and passed Senate, amended. 
May 16, House and Senate agreed to conference report and resolved amendment 
in disagreement. 
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 13, No. 22: 
May 23, Presidential statement.