Ticket to Work and Work Incentives Improvement Act of 1999
PL 106-170 (H.R.1180), enacted 12/17/1999

113 STAT. 1860 
PUBLIC LAW 106-170—DEC. 17, 1999 
Public L a w 106-170 
106th Congress 
An Act 
Dec. 17, 1999 
[H.R. 1180] 
Ticket to Work 
and Work 
Incentives 
Improvement Act 
of 1999. 
42 u s e 1305 
note. 
To amend the Social Security Act to expand the availability of health care coverage 
for working individuals with disabilities, to establish a Ticket to Work and Self-
Sufficiency Program in the Social Security Administration to provide such individ-
uals with meaningful opportunities to work, and for other purposes. 
Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the "Ticket to 
Work and Work Incentives Improvement Act of 1999". 
(b) TABLE OF CONTENTS.—The table of contents is as follows: 
Sec. 1. Short title; table of contents. 
Sec. 2. Findings and purposes. 
TITLE I—TICKET TO WORK AND SELF-SUFFICIENCY AND RELATED 
PROVISIONS 
Subtitle A—Ticket to Work and Self-Sufficiency 
Sec. 101. Establishment of the Ticket to Work and Self-Sufficiency Program. 
Subtitle B—Elimination of Work Disincentives 
Sec. 111. Work activity standard as a basis for review of an individual's disabled 
status. 
Sec. 112. Expedited reinstatement of disability benefits. 
Subtitle C—Work Incentives Planning, Assistance, and Outreach 
Sec. 121. Work incentives outreach program. 
Sec. 122. State grants for work incentives assistance to disabled beneficiaries. 
TITLE II—EXPANDED AVAILABILITY OF HEALTH CARE SERVICES 
Sec. 201. Expanding State options under the medicaid program for workers with 
disabilities. 
Sec. 202. Extending medicare coverage for OASDI disability benefit recipients. 
Sec. 203. Grants to develop and establish State infrastructures to support working 
individuals with disabilities. 
Sec. 204. Demonstration of coverage under the medicaid program of workers with 
{)otentially severe disabilities, 
ection by disabled beneficiaries to suspend medigap insurance when 
covered under a group health plan. 
TITLE III—DEMONSTRATION PROJECTS AND STUDIES 
Sec. 301. Extension of disability insurance program demonstration project author-
ity. 
Sec. 302. Demonstration projects providing for reductions in disability insurance 
benefits based on earnings. 
Sec. 303. Studies and reports. 
TITLE IV—MISCELLANEOUS AND TECHNICAL AMENDMENTS 
Sec. 401. Technical amendments relating to drug addicts and alcoholics. 
Sec. 402. Treatment of prisoners. 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1861 
Sec. 403. Revocation by members of the clergy of exemption from social security 
coverage. 
Sec. 404. Additional technical amendment relating to cooperative research or dem-
onstration projects under titles II and XVI. 
Sec. 405. Authorization for State to permit annual wage reports. 
Sec. 406. Assessment on attorneys who receive their fees via the Social Security 
Administration. 
Sec. 407. Extension of authority of State medicaid fraud control units. 
Sec. 408. Climate database modernization. 
Sec. 409. Special allowance adjustment for student loans. 
Sec. 410. Schedule for payments under SSI state supplementation agreements. 
Sec. 411. Bonus commodities. 
Sec. 412. Simplification of definition of foster child under EIC. 
Sec. 413. Delay of effective date of organ procurement and transplantation network 
final rule. 
TITLE V—TAX RELIEF EXTENSION ACT OF 1999 
Sec. 500. Short title of title. 
Subtitle A—Extensions 
Sec. 501. Allowance of nonrefundable personal credits against regular and min-
imum tax liability. 
Sec. 502. Research credit. 
Sec. 503. Subpart F exemption for active financing income. 
Sec. 504. Taxable income limit on percentage depletion for marginal production. 
Sec. 505. Work opportunity credit and welfare-to-work credit. 
Sec. 506. Employer-provided educational assistance. 
Sec. 507. Extension and modification of credit for producing electricity from certain 
renewable resources. 
Sec. 508. Extension of duty-free treatment under Generalized System of Pref-
erences. 
Sec. 509. Extension of credit for holders of qualified zone academy bonds. 
Sec. 510. Extension of first-time homebuyer credit for District of Columbia. 
Sec. 511. Extension of expensing of environmental remediation costs. 
Sec. 512. Temporary increase in amount of rum excise tax covered over to Puerto 
Rico and Virgin Islands. 
Subtitle B—Other Time-Sensitive Provisions 
Sec. 521. Advance pricing agreements treated as confidential taxpayer information. 
Sec. 522. Authority to postpone certain tax-related deadlines by reason of Y2K 
failures. 
Sec. 523. Inclusion of certain vaccines against streptococcus pneumoniae to list of 
taxable vaccines. 
Sec. 524. Delay in effective date of requirement for approved diesel or kerosene 
terminals. 
Sec. 525. Production flexibility contract payments. 
Subtitle C—Revenue Offsets 
PART I—GENERAL PROVISIONS 
Sec. 531. Modification of estimated tax safe harbor. 
Sec. 532. Clarification of tax treatment of income and loss on derivatives. 
Sec. 533. Expansion of reporting of cancellation of indebtedness income. 
Sec. 534. Limitation on conversion of character of income from constructive owner-
ship transactions. 
Sec. 535. Treatment of excess pension assets used for retiree health benefits. 
Sec. 536. Modification of installment method and repeal of installment method for 
accrual method taxpayers. 
Sec. 537. Denial of charitable contribution deduction for transfers associated with 
split-dollar insurance arrangements 
Sec. 538. Distributions by a partnership to a corporate partner of stock in another 
corporation. 
PART II—PROVISIONS RELATING TO REAL ESTATE INVESTMENT TRUSTS 
SUBPART A—^TREATMENT OF INCOME AND SERVICES PROVIDED BY TAXABLE REIT 
SUBSIDLVRIES 
Sec. 541. Modifications to asset diversification test. 
Sec. 542. Treatment of income and services provided by taxable REIT subsidiaries. 
Sec. 543. Taxable REIT subsidiary. 
Sec. 544. Limitation on earnings stripping. 
113 STAT. 1862 
PUBLIC LAW 106-170—DEC. 17, 1999 
Sec. 545. 100 percent tax on improperly allocated amounts. 
Sec. 546. Effective date. 
Sec. 547. Study relating to taxable REIT subsidiaries. 
SUBPART B—HEALTH CARE REITS 
Sec. 551. Health care REITs. 
SUBPART C—CONFORMITY WITH REGULATED INVESTMENT COMPANY RULES 
Sec. 556. Conformity with regulated investment company rules. 
SUBPART D—CLARIFICATION OF EXCEPTION FROM IMPERMISSIBLE TENANT SERVICE 
INCOME 
Sec. 561. Clarification of exception for independent operators. 
SUBPART E—MODIFICATION OF EARNINGS AND PROFITS RULES 
Sec. 566. Modification of earnings and profits rules. 
SUBPART F—MODIFICATION OF ESTIMATED TAX RULES 
Sec. 571. Modification of estimated tax rules for closely held real estate investment 
trusts. 
42 u s e 
SEC. 2. FINDINGS AND PURPOSES. 
(a) FINDINGS.—The Congress makes the following findings: 
(1) It is the policy of the United States to provide assistance 
to individuals with disabilities to lead productive work lives. 
(2) Health care is important to all Americans. 
(3) Health care is psirticularly important to individueds 
with disabilities and specied health care needs who often cannot 
afford the insurance available to them through the private 
market, are uninsurable by the plans available in the private 
sector, and are at great risk of incurring very high and economi-
cedly devastating health care costs. 
(4) Americans with significant disabiUties often are unable 
to obtain health care insurance that provides coverage of the 
services and supports that enable them to live independently 
and enter or rejoin the workforce. Personal assistemce services 
(such as attendant services, personal assistance with transpor-
tation to and from work, reader services, job coaches, and 
related assistance) remove many of the barriers between signifi-
c£int disability and work. Coverage for such services, as well 
as for prescription drugs, durable medical equipment, and basic 
health care are powerfiil and proven tools for individuals with 
significant disabilities to obtain and retain employment. 
(5) For individuals with disabilities, the fesir of losing 
health care and related services is one of the greatest barriers 
keeping the individuals from maximizing their employment, 
earning potential, and independence. 
(6) Social Security Disability Insurance and Supplemental 
Security Income beneficiaries risk losing medicare or medicaid 
coverage that is linked to their cash benefits, a risk that is 
an equal, or greater, work disincentive than the loss of cash 
benefits associated with working. 
(7) Individuals with disabilities have greater opportunities 
for employment than ever before, aided by important public 
policy initiatives such as the Americans with Disabilities Act 
of 1990 (42 U.S.C. 12101 et seq.), advancements in public 
understanding of disability, and innovations in assistive tech-
nology, medical treatment, and rehabilitation. 
(8) Despite such historic opportiuiities and the desire of 
millions of disability recipients to work and support themselves, 
fewer than one-half of one percent of Social Security Disability 
PUBLIC LAW 106-170—DEC, 17, 1999 
113 STAT. 1863 
Insurance and Supplemental Security Income beneficiaries 
leave the disability rolls and return to work. 
(9) In addition to the fear of loss of health care coverage, 
beneficiaries cite financial disincentives to work and earn 
income and lack of adequate employment training and place-
ment services as barriers to employment. 
(10) Eliminating such barriers to work by creating financial 
incentives to work and by providing individuals with disabilities 
real choice in obtaining the services and technology they need 
to find, enter, and maintain employment can greatly improve 
their short and long-term financial independence and personal 
well-being. 
(11) In addition to the enormous advantages such changes 
promise for individuals with disabilities, redesigning govern-
ment programs to help individuals with disabilities return to 
work may result in significant savings and extend the life 
of the Social Security Disability Insurance Trust Fund. 
(12) If only an additional one-half of one percent of the 
current Social Security Disability Insurance and Supplemental 
Security Income recipients were to c€;ase receiving benefits 
as a result of emplojnnent, the savings to the Social Security 
Trust Funds and to the Treasury in cash assistance would 
total $3,500,000,000 over the worklife of such individuals, far 
exceeding the cost of providing incentives and services needed 
to assist them in entering work and achieving 
financial 
independence to the best of their abilities. 
(b) PURPOSES.—The purposes of this Act are as follows: 
(1) To provide health care and employment preparation 
and placement services to individuals with disabilities that 
will enable those individuals to reduce their dependency on 
cash benefit programs. 
(2) To encourage States to adopt the option of allowing 
individuals with disabilities to purchase medicaid coverage that 
is necessary to enable such individuals to maintain employ-
ment. 
(3) To provide individuals with disabilities the option of 
maintaining medicare coverage while working. 
(4) To establish a return to work ticket program that will 
allow individuals with disabilities to seek the services necessary 
to obtain and retain employment and reduce their dependency 
on cash benefit programs. 
TITLE I—TICKET TO WORK AND SELF-
SUFFICIENCY AND REI.ATED PROVI-
SIONS 
Subtitle A—Ticket to Work and Self-
Sufficiency 
SEC. 101. ESTABLISHMENT OF THE TICKET TO WORK AND SELF-SUFFI-
CIENCY PROGRAM. 
(a) IN GENERAL.—Part A of title XI of the Social Security 
Act (42 U.S.C. 1301 et seq.) is amended by adding at the end 
the following new section: 
1320b-19. 
113 STAT. 1864 
PUBLIC LAW 106-170—DEC. 17, 1999 
"THE TICKET TO WORK AND SELF-SUFFICIENCY PROGRAM 
Establishment. 
"SEC. 1148. (a) IN GENERAL.—The Commissioner shall establish 
foo^u^in 
^ Ticket to Work and Self-Sufficiency Program, under which a 
disabled beneficisiry may use a ticket to work and self-sufficiency 
issued by the Commissioner in accordance with this section to 
obtain employment services, vocationed rehabiUtation services, or 
other support services from an emplo3anent network which is of 
the beneficiary's choice and which is willing to provide such services 
to such beneficiary. 
"(b) TICKET SYSTEM.— 
"(1) DISTRIBUTION OF TICKETS.—The Commissioner may 
issue a ticket to work and self-sufficiency to disabled bene-
ficiaries for participation in the Progrsim. 
"(2) ASSIGNMENT OF TICKETS.—A disabled beneficiary hold-
ing a ticket to work and self-sufficiency may assign the ticket 
to any employment network of the beneficiar^s choice which 
is serving under the Program £ind is willing to accept the 
assignment. 
"(3) TICKET TERMS.—^A ticket issued under paragraph (1) 
shall consist of a doctmient which evidences the Commissioner's 
agreement to pay (as provided in paragraph (4)) an emplo3mient 
network, which is serving imder the Program and to which 
such ticket is assigned by the beneficiary, for such emplo3anent 
services, vocational rehabilitation services, and other support 
services as the employment network may provide to the bene-
ficiary. 
"(4) PAYMENTS TO EMPLOYMENT NETWORKS.—The Commis-
sioner shall pay an emplo3nnent network under the Program 
in accordance with the outcome pa3anent system under sub-
section (h)(2) or under the outcome-milestone pajrment system 
under subsection (h)(3) (whichever is elected pursuant to sub-
section (h)(1)). An emplo3nnent network may not request or 
receive compensation for such services from the beneficiary. 
"(c) STATE PARTICIPATION.— 
"(1) IN GENERAL.—Each State agency administering or 
supervising the administration of the State plgin approved 
under title I of the Rehabilitation Act of 1973 (29 U.S.C. 720 
et seq.) may elect to participate in the Program as an employ-
ment network with respect to a disabled beneficiary. If the 
State agency does elect to participate in the Program, the 
State agency also shall elect to be paid luider the outcome 
payment system or the outcome-milestone pajTnent system in 
accordance with subsection (h)(1). With respect to a disabled 
beneficieiry that the State agency does not elect to have partici-
pate in the Program, the State agency shall be p£dd for services 
provided to that beneficiary under the system for pa3nnent 
applicable under section 222(d) and subsections (d) and (e) 
of section 1615. The Commissioner shall provide for periodic 
opportunities for exercising such elections. 
"(2) EFFECT OF PARTICIPATION BY STATE AGENCY.— 
"(A) STATE AGENCIES PARTICIPATING.—In any case in 
which a State agency described in paragraph (1) elects 
under that paragraph to participate in the Program, the 
emplo3anent services, vocational rehabiUtation services, and 
other support services which, upon assignment of tickets 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1865 
to work and self-sufficiency, are provided to disabled bene-
ficiaries by the State agency acting as an employment 
network 
shall be governed by plans for 
vocational 
rehabilitation services approved under title I of the 
Rehabilitation Act of 1973 (29 U.S.C. 720 et seq.). 
"(B) 
STATE AGENCIES ADMINISTERING MATERNAL AND 
CHILD HEALTH SERVICES PROGRAMS.—Subparagraph (A) 
shall not apply with respect to any State agency admin-
istering a program under title V of this Act. 
"(3) AGREEMENTS BETWEEN STATE AGENCIES AND EMPLOY-
MENT NETWORKS.—State agencies and employment networks 
shall enter into agreements regarding the conditions under 
which services will be provided when an individual is referred 
by £in employment network to a State agency for services. 
The Commissioner shall establish by regulations the timeframe 
within which such agreements must bie entered into and the 
mechanisms for dispute resolution betv/een State agencies and 
employment networks with respect to such agreements. 
"(d) RESPONSIBILITIES OF THE COMMISSIONER.— 
"(1) 
SELECTION AND QUALIFICATIONS OF PROGRAM MAN-
AGERS.—The Commissioner shall enter into agreements with 
1 or more organizations in the privEite or public sector for 
service as a program manager to assist the Commissioner in 
administering the Program. Any such program manager shall 
be selected by means of a competitive bidding process, from 
among organizations in the private or public sector with avail-
able expertise and experience in t;he field of vocational 
rehabilitation or employment services. 
"(2) TENURE, RENEWAL, AND EARLY TERMINATION.—Each 
agreement entered into under paragrjiph (1) shall provide for 
early termination upon failure to meet performance standards 
which shall be specified in the agreement and which shall 
be weighted to take into account any performance in prior 
terms. Such performance standards shall include— 
"(A) measures for ease of access by beneficiaries to 
services; and 
"(B) measures for determining the extent to which 
failures in obtaining services for beneficiaries fall within 
acceptable parameters, as determined by the Commis-
sioner. 
"(3) PRECLUSION FROM DIRECT PARTICIPATION IN DELIVERY 
OF SERVICES IN OWN SERVICE AREA.—Agreements under para-
graph (1) shall preclude— 
"(A) direct participation by a program manager in the 
delivery of employment services, vocational rehabilitation 
services, or other support servic€!S to beneficiaries in the 
service area covered by the progriim manager's agreement; 
and 
"(B) the holding by a program manager of a financial 
interest in an employment netv;rork or service provider 
which provides services in a geographic area covered under 
the program manager's agreement. 
"(4) SELECTION OF EMPLOYMENT NETWORKS.— 
"(A) IN GENERAL.—^The Commissioner shall select and 
enter into agreements with employment networks for 
service under the Program. Such employment networks 
113 STAT. 1866 
PUBLIC LAW 106-170—DEC. 17, 1999 
shall be in addition to State agencies serving as employ-
ment networks pursuant to elections under subsection (c). 
"(B) ALTERNATE PARTICIPANTS.—In any State where 
the Program is being implemented, the Commissioner shall 
enter into an agreement with any alternate participant 
that is operating under the authority of section 222(d)(2) 
in the State as of the date of the enactment of this section 
and chooses to serve as an employment network under 
the Program. 
"(5) TERMINATION OF AGREEMENTS WITH EMPLOYMENT NET-
WORKS.—The Commissioner shall terminate agreements with 
employment networks for inadequate performance, as deter-
mined by the Commissioner. 
"(6) QUALITY ASSURANCE.—The Commissioner shall provide 
for such periodic reviews as are necessary to provide for effec-
tive quality assurance in the provision of services by employ-
ment networks. The Commissioner shall solicit and consider 
the views of consumers and the program manager under which 
the employment networks serve and shall consult with pro-
viders of services to develop performance measurements. The 
Commissioner shall ensure that the results of the periodic 
reviews are made available to beneficiaries who are prospective 
service recipients as they select employment networks. The 
Commissioner shall ensure that the periodic surveys of bene-
ficiaries receiving services under the Program are designed 
to measure customer service satisfaction. 
"(7) DISPUTE RESOLUTION.—The Commissioner shall pro-
vide for a mechanism for resolving disputes between bene-
ficiaries and employment networks, between program managers 
and employment networks, and between program managers 
and providers of services. The Commissioner shall afford a 
party to such a dispute a reasonable opportunity for a full 
and fair review of the matter in dispute. 
"(e) PROGRAM MANAGERS.— 
"(1) IN GENERAL.—^A program manager shall conduct tasks 
appropriate to assist the Commissioner in carrying out the 
Commissioner's duties in administering the Program. 
"(2) RECRUITMENT OF EMPLOYMENT NETWORKS.—^A program 
manager shall recruit, and recommend for selection by the 
Commissioner, employment networks for service under the Pro-
gram. The program manager shall carry out such recruitment 
and provide such recommendations, and shall monitor all 
emplo3anent networks serving in the Program in the geographic 
area covered under the program manager's agreement, to the 
extent necessary and appropriate to ensure that adequate 
choices of services are made available to beneficiaries. Employ-
ment networks may serve under the Program only pursuant 
to an agreement entered into with the Commissioner under 
the Program incorporating the applicable provisions of this 
section and regulations thereunder, and the program manager 
shall provide and maintain assurances to the Commissioner 
that payment by the Commissioner to employment networks 
pursuant to this section is warranted based on compliance 
by such emplojonent networks with the terms of such agree-
ment and this section. The program manager shall not impose 
numerical limits on the number of employment networks to 
be recommended pursuant to this paragraph. 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1867 
"(3) FACILITATION OF ACCESS BY BENEFICIARIES TO EMPLOY-
MENT NETWORKS.—A program manager shall facilitate access 
by beneficiaries to employment networks. The program man-
ager shall ensure that each beneficiary is allowed changes 
in employment networks without being deemed to have rejected 
services under the Program. When such a change occurs, the 
program manager shall reassign the ticket based on the choice 
of the beneficiary. Upon the request of the employment network, 
the program manager shall make a determination of the alloca-
tion of the outcome or milestone-outcome payments based on 
the services provided by each employment network. The pro-
gram manager shall establish and maintain lists of employment 
networks available to beneficiaries and shall make such lists 
generally available to the public. The program manager shall 
ensure that all information provided to disabled beneficiaries 
pursuant to this paragraph is provided in accessible formats. 
"(4) ENSURING AVAILABILITY OF ADEQUATE SERVICES.—The 
program manager shall ensure that employment services, voca-
tional rehabilitation services, and other support services are 
provided to beneficiaries throughout tlie geographic area cov-
ered under the program manager's agreement, including rural 
areas. 
"(5) REASONABLE ACCESS TO SERVICES.—The program man-
ager shall take such measures as are necessary to ensure 
that sufficient emplo3anent networks are available and that 
each beneficiary receiving services under the Program has 
reasonable access to employment services, vocational rehabilita-
tion services, and other support services. Services provided 
under the Program may include case management, work incen-
tives planning, supported employment, career planning, career 
plan development, vocational assessment, job training, place-
ment, follow-up services, and such other services as may be 
specified by the Commissioner under the Program. The program 
manager shall ensure that such services are available in each 
service area. 
"(f) EMPLOYMENT NETWORKS.— 
"(1) QUALIFICATIONS FOR EMPLOYMENT NETWORKS.— 
"(A) IN GENERAL.—Each employment network serving 
under the Program shall consist of an agency or instrumen-
tality of a State (or a political subdivision thereof) or 
a private entity, that assumes responsibility for the 
coordination and delivery of services under the Program 
to individuals assigning to the employment network tickets 
to work and self-sufficiency issued under subsection (b). 
"(B) ONE-STOP DELIVERY SYSTEMS.—An employment 
network serving under the Program may consist of a one-
stop delivery system established under subtitle B of title 
I of the Workforce Investment Act of 1998 (29 U.S.C. 2811 
et seq.). 
"(C) 
COMPLIANCE 
WITH 
SELECTION 
CRITERIA.—No 
employment network may serve under the Program unless 
it meets and maintains compliance with both general selec-
tion criteria (such as professional and educational qualifica-
tions, where applicable) and specific selection criteria (such 
as substantial expertise and experience in providing rel-
evant employment services and supports). 
113 STAT. 1868 
PUBLIC LAW 106-170—DEC. 17, 1999 
Public 
information. 
"(D) SINGLE OR ASSOCIATED PROVIDERS ALLOWED.—An 
employment network shall consist of either a single pro-
vider of such services or of an association of such providers 
organized so as to combine their resources into a single 
entity. An employment network may meet the requirements 
of subsection (e)(4) by providing services directly, or by 
entering into agreements with other individuals or entities 
providing appropriate employment services, vocational 
rehabilitation services, or other support services. 
"(2) REQUIREMENTS RELATING TO PROVISION OF SERVICES.— 
Each employment network serving under the Program shall 
be required under the terms of its agreement with the Commis-
sioner to— 
"(A) serve prescribed service areas; and 
"(B) take such measures as are necessary to ensure 
that employment services, vocational rehabilitation serv-
ices, and other support services provided under the Pro-
gram by, or under agreements entered into with, the 
employment network are provided under appropriate indi-
vidual work plans that meet the requirements of subsection 
(g). 
"(3) ANNUAL FINANCIAL REPORTING.—Each employment net-
work shall meet financial reporting requirements as prescribed 
by the Commissioner. 
"(4) PERIODIC OUTCOMES REPORTING.—Each employment 
network shall prepare periodic reports, on at least an annual 
basis, itemizing for the covered period specific outcomes 
achieved with respect to specific services provided by the 
employment network. Such reports shall conform to a national 
model prescribed under this section. Each employment network 
shall provide a copy of the latest report issued by the employ-
ment network pursuant to this paragraph to each beneficiary 
upon enrollment under the Program for services to be received 
through such employment network. Upon issuance of each 
report to each beneficiary, a copy of the report shall be main-
tained in the files of the employment network. The program 
manager shall ensure that copies of all such reports issued 
under this paragraph are made available to the public under 
reasonable terms. 
"(g) INDIVIDUAL WORK PLANS.— 
"(1) REQUIREMENTS.—Each employment network shall— 
"(A) take such measures as are necessary to ensure 
that employment services, vocational rehabilitation serv-
ices, and other support services provided under the Pro-
gram by, or under agreements entered into with, the 
employment network are provided under appropriate indi-
vidual work plans that meet the requirements of subpara-
graph (C); 
"(B) develop and implement each such individual work 
plan, in partnership with each beneficiary receiving such 
services, in a manner that affords such beneficiary the 
opportunity to exercise informed choice in selecting an 
employment goal and specific services needed to achieve 
that employment goal; 
"(C) ensure that each individual work plan includes 
at least— 
PUBLIC LAW 106-170—DEC 17, 1999 
113 STAT. 1869 
"(i) a statement of the vocational goal developed 
with the beneficiary, including, as appropriate, goals 
for earnings and job advancement; 
"(ii) a statement of the services and supports that 
have been deemed necessary for the beneficiary to 
accomplish that goal; 
"(iii) a statement of any terms and conditions 
related to the provision of such services and supports; 
and 
"(iv) a statement of understanding regarding the 
beneficiary's rights under the Program (such as the 
right to retrieve the ticket to work and self-sufficiency 
if the beneficiary is dissatisfied with the services being 
provided by the employment network) and remedies 
available to the individual, including information on 
the availability of advocacy seirvices and assistance 
in resolving disputes through the State grant program 
authorized under section 1150; 
"(D) provide a beneficiary the opportunity to amend 
the individual work plan if a change in circumstances 
necessitates a change in the plan; and 
"(E) make each beneficiary's individual work plan 
available to the beneficiary in, as apj^ropriate, an accessible 
format chosen by the beneficiary. 
"(2) EFFECTIVE UPON WRITTEN APPROVAL.—A beneficiary's 
individual work plan shall take effect upon written approval 
by the beneficiary or a representative of the beneficiary and 
a representative of the employment network that, in providing 
such written approval, acknowledges assignment of the bene-
ficiary's ticket to work and self-sufficiency. 
"(h) EMPLOYMENT NETWORK PAYMENT SYSTEMS.— 
"(1) ELECTION OF PAYMENT SYSTEM BY EMPLOYMENT NET-
WORKS.— 
"(A) IN GENERAL.—The Program shall provide for pay-
ment authorized by the Commissioner to employment net-
works under either an outcome pajnnent system or an 
outcome-milestone payment system. Each employment net-
work shall elect which payment system will be utilized 
by the employment network, and, for such period of time 
as such election remains in effect, the payment system 
so elected shall be utilized exclusively in connection with 
such employment network (except as provided in subpara-
graph (B)). 
"(B) No CHANGE IN METHOD OF PAYMENT FOR BENE-
FICIARIES WITH TICKETS ALREADY ASSIGNED TO THE EMPLOY-
MENT NETWORKS.—Any election of a payment system by 
an employment network that would result in a change 
in the method of payment to the employment network 
for services provided to a beneficiary who is receiving serv-
ices from the employment network at the time of the elec-
tion shsdl not be effective with respect to payment for 
services provided to that beneficiary and the method of 
payment previously selected shall continue to apply with 
respect to such services. 
"(2) OUTCOME PAYMENT SYSTEM.— 
113 STAT. 1870 
PUBLIC LAW 106-170—DEC. 17, 1999 
"(A) IN GENERAL.—The outcome payment system shall 
consist of a payment structure governing employment net-
works electing such system under paragraph (1)(A) which 
meets the requirements of this paragraph. 
"(B) 
PAYMENTS MADE 
DURING 
OUTCOME PAYMENT 
PERIOD.—The outcome payment system shall provide for 
a schedule of payments to an employment network, in 
connection with each individual who is a beneficiary, for 
each month, during the individual's outcome payment 
period, for which benefits (described in paragraphs (3) and 
(4) of subsection (k)) are not payable to such individual 
because of work or earnings. 
"(C) COMPUTATION OF PAYMENTS TO EMPLOYMENT NET-
WORK.—The payment schedule of the outcome payment 
system shall be designed so that— 
"(i) the payment for each month during the out-
come payment period for which benefits (described in 
paragraphs (3) and (4) of subsection (k)) are not pay-
able is equal to a fixed percentage of the payment 
calculation base for the calendar year in which such 
month occurs; and 
"(ii) such fixed percentage is set at a percentage 
which does not exceed 40 percent. 
"(3) OUTCOME-MILESTONE PAYMENT SYSTEM.— 
"(A) IN GENERAL.—The outcome-milestone payment 
system shall consist of a payment structure governing 
employment networks electing such system under para-
graph (1)(A) which meets the requirements of this para-
graph. 
"(B) 
EARLY PAYMENTS UPON ATTAINMENT OF MILE-
STONES IN ADVANCE OF OUTCOME PAYMENT PERIODS.—The 
outcome-milestone payment system shall provide for 1 or 
more milestones, with respect to beneficiaries receiving 
services from an employment network under the Program, 
that are directed toward the goal of permanent employ-
ment. Such milestones shall form a part of a payment 
structure that provides, in addition to payments made 
during outcome payment periods, payments made prior 
to outcome payment periods in amounts based on the 
attainment of such milestones. 
"(C) LIMITATION ON TOTAL PAYMENTS TO EMPLOYMENT 
NETWORK.—The payment schedule of the outcome milestone 
payment system shall be designed so that the total of 
the payments to the employment network with respect 
to each beneficiary is less than, on a net present value 
basis (using an interest rate determined by the Commis-
sioner that appropriately reflects the cost of funds faced 
by providers), the total amount to which payments to the 
employment network with respect to the beneficiary would 
be limited if the emplojonent network were paid under 
the outcome payment system. 
"(4) DEFINITIONS.—In this subsection: 
"(A) PAYMENT CALCULATION BASE.—The term 'payment 
calculation base' means, for any calendar year— 
"(i) in connection with a title II disability bene-
ficiary, the average disability insurance benefit payable 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1871 
under section 223 for all beneficiaries for months 
during the preceding calendar year; and 
"(ii) in connection with a title XVI disability bene-
ficiary (who is not concurrently a title II disability 
beneficiary), the average payment of supplemental 
security income benefits based on disability payable 
under title XVI (excluding State supplementation) for 
months during the preceding calendar year to all bene-
ficiaries who have attained 18 years of age but have 
not attained 65 years of age. 
"(B) OUTCOME PAYMENT PERIOD.—The term 'outcome 
payment period' means, in connection with any individual 
who had assigned a ticket to work and self-sufficiency 
to an employment network under the Program, a period— 
"(i) beginning with the first month, ending after 
the date on which such ticket was assigned to the 
employment network, for which benefits (described in 
paragraphs (3) and (4) of subsection (k)) are not pay-
able to such individual by reason of engagement in 
substantial gainful activity or by reason of earnings 
from work activity; and 
"(ii) ending with the 60th month (consecutive or 
otherwise), ending after such date, for which such bene-
fits are not payable to such individual by reason of 
engagement in substantial gainful activity or by reason 
of earnings from work activity. 
"(5) PERIODIC REVIEW AND ALTERATIONS OF PRESCRIBED 
SCHEDULES.— 
"(A) PERCENTAGES AND PERIODS.—The Commissioner 
shall periodically review the percentage specified in para-
graph (2)(C), the total payments permissible under para-
graph (3)(C), and the period of time specified in paragraph 
(4)(B) to determine whether such percentages, such permis-
sible payments, and such period provide an adequate incen-
tive for employment networks to assist beneficiaries to 
enter the workforce, while providing for appropriate econo-
mies. The Commissioner may alter such percentage, such 
total permissible payments, or such period of time to the 
extent that the Commissioner determines, on the basis 
of the Commissioner's review under this paragraph, that 
such an alteration would better pro\ide the incentive and 
economies described in the preceding sentence. 
"(B) NUMBER AND AMOUNTS OF MILESTONE PAYMENTS.— 
The Commissioner shall periodically review the number 
and amounts of milestone payments established by the 
Commissioner pursuant to this section to determine 
whether they provide an adequate incentive for employ-
ment 
networks to assist 
beneficiaries to enter the 
workforce, taking into account information provided to the 
Commissioner by program managers, the Ticket to Work 
and Work Incentives Advisory Panel established by section 
101(f) of the Ticket to Work and Work Incentives Improve-
ment Act of 1999, and other reliable sources. The Commis-
sioner may from time to time alter the number and 
amounts of milestone payments initially established by 
the Commissioner pursuant to this section to the extent 
that the Commissioner determines that such an alteration 
69-194 - 01 - 12 :QL 3 Part 3 
113 STAT. 1872 
PUBLIC LAW 106-170—DEC. 17, 1999 
would allow an adequate incentive for employment net-
works to assist beneficiaries to enter the workforce. Such 
alteration shall be based on information provided to the 
Commissioner by program managers, the Ticket to Work 
and Work Incentives Advisory Panel established by section 
101(f) of the Ticket to Work and Work Incentives Improve-
ment Act of 1999, or other reliable sources. 
Deadline. 
"(C) REPORT ON THE ADEQUACY OF INCENTIVES.—The 
Commissioner shall submit to the Congress not later than 
36 months after the date of the enactment of the Ticket 
to Work and Work Incentives Improvement Act of 1999 
a report with recommendations for a method or methods 
to adjust payment rates under subparagraphs (A) and (B), 
that would ensure adequate incentives for the provision 
of services by employment networks o
f
— 
"(i) individuals with a need for ongoing support 
and services; 
"(ii) individuals with a need for high-cost accom-
modations; 
"(iii) individuals who earn a subminimum wage; 
and 
"(iv) individuals who work and receive partial cash 
benefits. 
The Commissioner shall consult with the Ticket to Work 
and Work Incentives Advisory Panel established under sec-
tion 101(f) of the Ticket to Work and Work Incentives 
Improvement Act of 1999 during the development and 
evaluation of the study. The Commissioner shall implement 
the necessary adjusted 
payment rates prior to 
full 
implementation of the Ticket to Work and Self-Sufficiency 
Program. 
"(i) SUSPENSION OF DISABILITY REVIEWS.—During any period 
for which an individual is using, as defined by the Commissioner, 
a ticket to work and self-sufficiency issued under this section, 
the Commissioner (and any applicable State agency) may not ini-
tiate a continuing disability review or other review under section 
221 of whether the individual is or is not under a disability or 
a review under title XVI similar to any such review under section 
221. 
"(j) AUTHORIZATIONS.— 
"(1) PAYMENTS TO EMPLOYMENT NETWORKS.— 
"(A) 
TITLE II DISABILITY BENEFICIARIES.—There 
are 
authorized to be transferred from the Federal Old-Age and 
Survivors Insurance Trust Fund and the Federal Disability 
Insurance Trust Fund each fiscal year such sums as may 
be necessary to make payments to employment networks 
under this section. Money paid from the Trust Funds under 
this section with respect to title II disability beneficiaries 
who are entitled to benefits under section 223 or who 
are entitled to benefits under section 202(d) on the basis 
of the wages and self-employment income of such bene-
ficiaries, shall be charged to the Federal Disability Insur-
ance Trust Fund, and all other money paid from the Trust 
Funds under this section shall be charged to the Federal 
Old-Age and Survivors Insurance Trust Fund. 
"(B) 
TITLE XVI DISABILITY BENEFICIARIES.—Amounts 
authorized to be appropriated to the Social Security 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1873 
Administration under section 1601 (as in effect pursuant 
to the amendments made by section 301 of the Social 
Security Amendments of 1972) shall include amounts nec-
essary to carry out the provisions of this section with 
respect to title XVI disability beneficiaries. 
"(2) ADMINISTRATIVE EXPENSES.—The costs of administering 
this section (other than payments to employment networks) 
shall be paid from amounts made available for the administra-
tion of title II and amounts made available for the administra-
tion of title XVI, and shall be allocated among such amounts 
as appropriate. 
"(k) DEFINITIONS.—In this section: 
"(1) COMMISSIONER.—The term 'Commissioner' means the 
Commissioner of Social Security. 
"(2) DISABLED BENEFICIARY.—The term 'disabled bene-
ficiary' means a title II disability beneficiary or a title XVI 
disability beneficiary. 
"(3) TITLE II DISABILITY BENEFICIARY.—The term 'title II 
disability beneficiary' means an individual entitled to disability 
insurance benefits under section 223 or to monthly insurance 
benefits under section 202 based on such individual's disability 
(as defined in section 223(d)). An individual is a title II dis-
ability beneficiary for each month for which such individual 
is entitled to such benefits. 
"(4) TITLE XVI DISABILITY BENEFICIARY.—The term 'title 
XVI disability beneficiary' means an individual eligible for 
supplemental security income benefits under title XVI on the 
basis of blindness (within the meaning of section 1614(a)(2)) 
or disability (within the meaning of section 1614(a)(3)). An 
individual is a title XVI disability beneficiary for each month 
for which such individual is eligible for such benefits. 
"(5) SUPPLEMENTAL SECURITY INCOME BENEFIT.—The term 
'supplemental security income benefit under title XVI' means 
a cash benefit under section 1611 or 1619(a), and does not 
include a State supplementary payment, administered federally 
or otherwise. 
"(1) REGULATIONS.—Not later than 1 year after the date of Deadline. 
the enactment of the Ticket to Work and Work Incentives Improve-
ment Act of 1999, the Commissioner shall prescribe such regulations 
as are necessary to carry out the provisions of this section.", 
(b) CONFORMING AMENDMENTS.— 
(1) AMENDMENTS TO TITLE II.— 
(A) Section 221(i) of the Social Security Act (42 U.S.C. 
421(i)) is amended by adding at the end the following 
new paragraph: 
"(5) For suspension of reviews under this subsection in the 
case of an individual using a ticket to work and self-sufHciency, 
see section 1148(i).". 
(B) Section 222(a) of such Act (42 U.S.C. 422(a)) is 
(C) Section 222(b) of such Act (42 U.S.C. 422(b)) is 
T*PDG3.1GQ 
(D) Section 225(b)(1) of such Act (42 U.S.C. 425(b)(1)) 
is amended by striking "a program of vocational rehabilita-
tion services" and inserting "a program consisting of the 
Ticket to Work and Self-Sufficiency Program under section 
113 STAT. 1874 
PUBLIC LAW 106-170—DEC. 17, 1999 
42 use 
1320b-19 note. 
42 use 
1320b-19 note. 
Deadline. 
1148 or another program of vocational rehabilitation serv-
ices, emplojonent services, or other support services". 
(2) AMENDMENTS TO TITLE XVI.— 
(A) Section 1615(a) of such Act (42 U.S.C. 1382d(a)) 
is amended to read as follows: 
"SEC. 1615. (a) In the case of any blind or disabled individual 
who— 
"(1) has not att£iined age 16; and 
"(2) with respect to whom benefits are paid under this 
title, 
the Commissioner of Social Security shall make provision for refer-
ral of such individual to the appropriate State agency administering 
the State program under title V.". 
(B) Section 1615(c) of such Act (42 U.S.C. 1382d(c)) 
is repealed. 
(C) Section 1631(a)(6)(A) of such Act (42 U.S.C. 
1383(a)(6)(A)) is amended by striking "a progreim of voca-
tional rehabilitation services" and inserting "a program 
consisting of the Ticket to Work and Self-Sufficiency Pro-
gram under section 1148 or another program of vocationed 
rehabilitation services, emplojrment services, or other sup-
port services". 
(D) Section 1633(c) of such Act (42 U.S.C. 1383b(c)) 
is Eimended— 
(i) by inserting "(1)" after "(c)"; and 
(ii) by adding at the end the following new para-
graph: 
"(2) For suspension of continuing disability reviews and other 
reviews under this title similEU* to reviews under section 221 in 
the case of £in individuad using a ticket to work and self-sufficiency, 
see section 1148(i).". 
(c) EFFECTIVE DATE.—Subject to subsection (d), the amend-
ments made by subsections (a) and (b) shall take effect with the 
first month following 1 year after the date of the enactment of 
this Act. 
(d) GRADUATED IMPLEMENTATION OF PROGRAM.— 
(1) IN GENERAL.—Not later than 1 year after the date 
of the enactment of this Act, the Commissioner of Social Secu-
rity shall commence implementation of the amendments made 
by this section (other than paragraphs (1)(C) and (2)(B) of 
subsection (b)) in graduated phases at phase-in sites selected 
by the Commissioner. Such phase-in sites shall be selected 
so as to ensure, prior to fiill implementation of the Ticket 
to Work and Self-Sufficiency Program, the development and 
refinement of referral processes, payment systems, computer 
linkages, management information systems, and administrative 
processes necessary to provide for full implementation of such 
amendments. Subsection (c) shall apply with respect to para-
graphs (1)(C) and (2)(B) of subsection (b) without regard to 
this subsection. 
(2) REQUIREMENTS.—Implementation of the Program at 
each phase-in site shall be carried out on a wide enough scale 
to permit a thorough evaluation of the alternative methods 
under consideration, so as to ensure that the most efficacious 
methods are determined and in place for fiill implementation 
of the Program on a timely basis. 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1875 
(3) 
FULL 
IMPLEMENTATION.—The 
Commissioner 
shall 
ensure that ability to provide tickets and services to individuals 
under the Program exists in every State as soon as practicable 
on or after the effective date specified in subsection (c) but 
not later than 3 years after such date. 
(4) ONGOING EVALUATION OF PROGRAM.— 
(A) IN GENERAL.—The Commissioner shall provide for 
independent evaluations to assess the effectiveness of the 
activities carried out under this section and the amend-
ments made thereby. Such evaluations shall address the 
cost-effectiveness of such activities, as well as the effects 
of this section and the amendments made thereby on work 
outcomes for beneficiaries receiving tickets to work and 
self-sufficiency under the Program. 
(B) CONSULTATION.—Evaluations shall be conducted 
under this paragraph after receiving relevant advice fi'om 
experts in the fields of disability, vocational rehabilitation, 
and program evaluation and individuals using tickets to 
work and self-sufficiency under the Program and in con-
sultation with the Ticket to Work and Work Incentives 
Advisory Panel established under section 101(f) of this 
Act, the Comptroller General of the United States, other 
agencies of the Federal Government, and private organiza-
tions with appropriate expertise. 
(C) METHODOLOGY.— 
(i) IMPLEMENTATION.—The Commissioner, in con-
sultation with the Ticket to Work and Work Incentives 
Advisory Panel established under section 101(f) of this 
Act, shall ensure that plans for evaluations and data 
collection methods under the Program are appro-
priately designed to obtain detailed 
employment 
information. 
(ii) SPECIFIC MATTERS TO BE ADDRESSED.—Each 
such evaluation shall address (but is not limited to)— 
(I) the annual cost (including net cost) of the 
Program and the annual cost (including net cost) 
that would have been incuried in the absence of 
the Program; 
(II) the determinants of return to work, 
including the characteristics of beneficiaries in 
receipt of tickets under the Program; 
(III) the types of emplo^^ynnent services, voca-
tional rehabilitation services, and other support 
services furnished to beneficiaries in receipt of 
tickets under the Program who return to work 
and to those who do not return to work; 
(IV) the duration of employment services, voca-
tional rehabilitation services, and other support 
services furnished to beneficiaries in receipt of 
tickets under the Program who return to work 
and the duration of such services furnished to 
those who do not return to work and the cost 
to emplo3mient networks of furnishing such serv-
ices; 
(V) the employment 
outcomes, 
including 
'
^ 
wages, occupations, benefits, and hours worked, 
of beneficiaries who return to work after receiving 
113 STAT. 1876 
PUBLIC LAW 106-170—DEC. 17, 1999 
tickets under the Program and those who return 
to work without receiving such tickets; 
(VI) the characteristics of individuals in 
possession of tickets under the Program who are 
not accepted for services and, to the extent reason-
ably determinable, the reasons for which such 
beneficiaries were not accepted for services; 
(VII) the characteristics of providers whose 
services are provided within an emplo3anent net-
work under the Program; 
(VIII) the extent (if any) to which employment 
networks display a greater willingness to provide 
services to beneficiaries with a range of disabil-
ities; 
(IX) the characteristics (including employment 
outcomes) of those beneficiaries who receive serv-
ices under the outcome payment system and of 
those beneficiaries who receive services under the 
outcome-milestone payment system; 
(X) measures of satisfaction among bene-
ficiaries in receipt of tickets under the Program; 
and 
(XI) reasons for (including comments solicited 
fi*om beneficiaries regarding) their choice not to 
use their tickets or their inability to return to 
work despite the use of their tickets. 
(D) 
PERIODIC EVALUATION REPORTS.—Following 
the 
close of the third and fifth fiscal years ending after the 
effective date under subsection (c), and prior to the close 
of the seventh fiscal year ending after such date, the 
Commissioner shall transmit to the Committee on Ways 
and Means of the House of Representatives and the Com-
mittee on Finance of the Senate a report containing the 
Commissioner's evaluation of the progress of activities con-
ducted under the provisions of this section and the amend-
ments made thereby. Each such report shall set forth the 
Commissioner's evaluation of the extent to which the Pro-
gram has been successful and the Commissioner's conclu-
sions on whether or how the Program should be modified. 
Each such report shall include such data, findings, mate-
rials, and recommendations as the Commissioner may con-
sider appropriate. 
(5) EXTENT OF STATE'S RIGHT OF FIRST REFUSAL IN ADVANCE 
OF FULL IMPLEMENTATION OF AMENDMENTS IN SUCH STATE.— 
(A) IN GENERAL.—In the case of any State in which 
the amendments made by subsection (a) have not been 
fully implemented pursuant to this subsection, the Commis-
sioner shall determine by regulation the extent to which— 
(i) the requirement under section 222(a) of the 
Social Security Act (42 U.S.C. 422(a)) for prompt refer-
rals to a State agency; and 
(ii) the authority of the Commissioner under sec-
tion 222(d)(2) of such Act (42 U.S.C. 422(d)(2)) to pro-
vide vocational rehabilitation services in such State 
by agreement or contract with other public or private 
agencies, organizations, institutions, or individuals, 
shall apply in such State. 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1877 
(B) EXISTING AGREEMENTS.—Nothing in subparagraph 
(A) or the amendments made by subsection (a) shall be 
construed to limit, impede, or othervsdse affect £iny agree-
ment entered into piu'sueint to section 222(d)(2) of the 
Social Security Act (42 U.S.C. 422(d)(2)) before the date 
of the enactment of this Act with respect to services pro-
vided pursuant to such agreement to beneficiaries receiving 
services under such agreement as of such date, except 
with respect to services (if any) to be provided after 3 
years after the effective date provided in subsection (c). 
(e) SPECIFIC REGULATIONS REQUIRED.— 
42 use 
(1) IN GENERAL.—The Commissioner of Social Security shall 
I320b-19 note. 
prescribe such regulations as are necessary to implement the 
amendments made by this section. 
(2) SPECIFIC MATTERS TO BE INCLUDEID IN REGULATIONS.— 
The matters which shall be addressed in such regulations shall 
include— 
(A) the form and manner in which tickets to work 
and self-sufficiency may be distributed to beneficiaries 
pursuant to section 1148(b)(1) of the Social Security Act; 
(B) the format and wording of such tickets, which 
shall incorporate by reference any contractual terms 
governing service by employment networks iinder the Pro-
gram; 
(C) the form £ind manner in which State agencies may 
elect participation in the Ticket to Work and Self-Suffi-
ciency Progrsim pursuant to section !L148(c)(l) of such Act 
and provision for periodic opportunities for exercising such 
elections; 
(D) the status of State agencies mider section 1148(c)(1) 
of such Act at the time that State agencies exercise elec-
tions under that section; 
(E) the terms of agreements to be entered into with 
program managers pursusuit to section 1148(d) of such 
Act, including— 
(i) the terms by which progr£im msuiagers are pre-
cluded fi"om direct participation in the delivery of serv-
ices pursuant to section 1148(d)(3) of such Act; 
(ii) stEuidards which must be met by quality assur-
ance measures referred to in pairagraph (6) of section 
1148(d) of such Act and methods of recruitment of 
emplojrment networks utilized pursuEuit to paragraph 
(2) of section 1148(e) of such Act; and 
(iii) the format luider which (Uspute resolution will 
operate under section 1148(d)(7) of such Act; 
(F) the terms of agreements to be entered into with 
employment networks pursuant to section 1148(d)(4) of 
such Act, including— 
(i) the manner in which serviice areas are specified 
pursuant to section 1148(f)(2)(A) of such Act; 
(ii) the general selection criteria and the specific 
selection criteria which are applicable to emplojmient 
networks imder section 1148(f)(1)(C) of such Act in 
selecting service providers; 
(iii) specific requirements relating to annual finan-
cial reporting by emplo5nnent networks pursuant to 
section 1148(f X3) of such Act; £uid 
113 STAT. 1878 
PUBLIC LAW 106-170—DEC. 17, 1999 
(iv) the national model to which periodic outcomes 
reporting by emplojmaent networks must conform 
under section 1148(f)(4) of such Act; 
(G) stEindards which must be met by individual work 
plans pursuant to section 1148(g) of such Act; 
(H) stsmdeirds which must be met by pa3anent systems 
required under section 1148(h) of such Act, including— 
(i) the form and manner in which elections by 
employment networks of payment systems are to be 
exercised pursuant to section 1148(h)(1)(A) of such Act; 
(ii) the terms which must be met by an outcome 
payment system under section 1148(h)(2) of such Act; 
(iii) the terms which must be met by an outcome-
milestone payment system imder section 1148(h)(3) of 
such Act; 
(iv) any revision of the percentage specified in 
paragraph (2)(C) of section 1148(h) of such Act or the 
period of time specified in paragraph (4)(B) of such 
section 1148(h) of such Act; and 
(v) annual oversight procedures for such systems; 
and 
(I) procedures for effective oversight of the Program 
by the Commissioner of Social Security, including periodic 
reviews and reporting requirements. 
42 use 
(f) THE TICKET TO WORK AND WORK INCENTIVES ADVISORY 
1320b-19 note. 
PANEL.— 
(1) ESTABLISHMENT.—There is established within the Social 
Security Administration a panel to be known as the 'Ticket 
to Work £ind Work Incentives Advisory Panel" (in this sub-
section referred to as the "Panel"). 
(2) DUTIES OF PANEL.—It shall be the duty of the Panel 
to— 
(A) advise the President, the Congress, and the 
Commissioner of Social Security on issues related to work 
incentives programs, planning, and assistance for individ-
uals with disabilities, including work incentive provisions 
under titles II, XI, XVI, XVIII, and XIX of the Social 
Security Act (42 U.S.C. 401 et seq., 1301 et seq., 1381 
et seq., 1395 et seq., 1396 et seq.); and 
(B) with respect to the Ticket to Work and Self-Suffi-
ciency Program established under section 1148 of such 
Act— 
(i) advise the Commissioner of Social Security with 
respect to establishing phase-in sites for such Program 
and fully implementing the Program thereafter, the 
refinement of access of disabled beneficiaries to employ-
ment networks, payment systems, and management 
information systems, £mid advise the Commissioner 
whether such measures are being taken to the extent 
necessary to ensxire the success of the Progrsun; 
(ii) advise the Commissioner regarding the most 
effective 
designs for research and demonstration 
projects associated with the Progremi or conducted 
pursuant to section 302 of this Act; 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1879 
(iii) advise the Commissioner on the development 
of performance measurements relating to quality assur-
ance under section 1148(d)(6) of the Social Security 
Act; and 
(iv) furnish progress reports on the Program to 
the Commissioner and each House of Congress. 
(3) MEMBERSHIP.— 
(A) NUMBER AND APPOINTMENT.—The Panel shall be 
composed of 12 members as follows: 
(i) four members appointed by the President, not 
more than two of whom may be of the same political 
party; 
(ii) two members appointed by the Speaker of the 
House of Representatives, in consultation with the 
Chairman of the Committee on Ways and Means of 
the House of Representatives; 
(iii) two members appointed hiy the minority leader 
of the House of Representatives, in consultation with 
the ranking member of the Comimittee on Ways and 
Means of the House of Representatives; 
(iv) two members appointed by the majority leader 
of the Senate, in consultation with the Chairman of 
the Committee on Finance of the Senate; and 
(v) two members appointed by the minority leader 
of the Senate, in consultation with the ranking member 
of the Committee on Finance of the Senate. 
(B) REPRESENTATION.— 
(i) IN GENERAL.—The members appointed under 
subparagraph (A) shall have «;xperience or expert 
knowledge as a recipient, provider, employer, or 
employee in the fields of, or related to, employment 
services, vocational rehabilitation services, and other 
support services. 
(ii) REQUIREMENT.—At least one-half of the mem-
bers appointed under subparagraph (A) shall be 
individuals with disabilities, or representatives of 
individuals with disabilities, with consideration given 
to current or former title II disability beneficiaries 
or title XVI disability beneficiaries (as such terms are 
defined in section 1148(k) of the Social Security Act 
(as added by subsection (a)). 
(C) TERMS.— 
(i) IN GENERAL.—Each member shall be appointed 
for a term of 4 years (or, if less, for the remaining 
life of the Panel), except as provided in clauses (ii) 
and (iii). The initial members shall be appointed not 
later than 90 days after the date of the enactment 
of this Act. 
(ii) TERMS OF INITIAL APPOINTEES.—Of the mem-
bers first appointed under each clause of subparagraph 
(A), as designated by the appointing authority for each 
such clause— 
(I) 
one-half 
of such 
members 
shall 
be 
appointed for a term of 2 years; and 
(II) the remaining members shall be appointed 
for a term of 4 years. 
113 STAT. 1880 
PUBLIC LAW 106-170—DEC. 17, 1999 
(iii) VACANCIES.—Any member appointed to fill a 
vacancy occurring before the expiration of the term 
for which the member's predecessor was appointed 
shall be appointed only for the remainder of that term. 
A member may serve after the expiration of that mem-
ber's term until a successor has taken office. A vacancy 
in the Panel shall be filled in the manner in which 
the original appointment was made. 
(D) BASIC PAY.—Members shall each be paid at a rate, 
and in a manner, that is consistent with guidelines estab-
lished under section 7 of the Federal Advisory Committee 
Act (5 U.S.C. App.). 
(E) TRAVEL EXPENSES.—Each member shall receive 
travel expenses, including per diem in lieu of subsistence, 
in accordance with sections 5702 and 5703 of title 5, United 
States Code. 
(F) QUORUM.—Eight members of the Panel shall con-
stitute a quorum but a lesser number may hold hearings. 
(G) CHAIRPERSON.—The Chairperson of the Panel shall 
be designated by the President. The term of office of the 
Chairperson shall be 4 years. 
(H) MEETINGS.—The Panel shall meet at least quar-
terly and at other times at the call of the Chairperson 
or a majority of its members. 
(4) DIRECTOR AND STAFF OF PANEL; EXPERTS AND CONSULT-
ANTS.— 
(A) DIRECTOR.—The Panel shall have a Director who 
shall be appointed by the Chairperson, and paid at a rate, 
and in a manner, that is consistent with guidelines estab-
lished under section 7 of the Federal Advisory Committee 
Act (5 U.S.C. App.). 
(B) STAFF.—Subject to rules prescribed by the Commis-
sioner of Social Security, the Director may appoint and 
fix the pay of additional personnel as the Director considers 
appropriate. 
(C) EXPERTS AND CONSULTANTS.—Subject to rules pre-
scribed by the Commissioner of Social Security, the Director 
may procure temporary and intermittent services under 
section 3109(b) of title 5, United States Code. 
(D) STAFF OF FEDERAL AGENCIES.—Upon request of 
the Panel, the head of any Federal department or agency 
may detail, on a reimbursable basis, any of the personnel 
of that department or agency to the Panel to assist it 
in carrying out its duties under this Act. 
(5) POWERS OF PANEL.— 
(A) HEARINGS AND SESSIONS.—The Panel may, for the 
purpose of carrying out its duties under this subsection, 
hold such hearings, sit and act at such times and places, 
and take such testimony and evidence as the Panel con-
siders appropriate. 
(B) POWERS OF MEMBERS AND AGENTS.—Any member 
or agent of the Panel may, if authorized by the Panel, 
take any action which the Panel is authorized to take 
by this section. 
(C) MAILS.—The Panel may use the United States 
mails in the same manner and under the same conditions 
as other departments and agencies of the United States. 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1881 
(6) REPORTS.— 
(A) INTERIM REPORTS.—The Panel shall submit to the 
President and the Congress interim reports at least 
annually. 
(B) FINAL REPORT.—The Panel shall transmit a final 
report to the President and the Congress not later than 
eight years after the date of the enactment of this Act. 
The final report shall contain a detailed statement of the 
findings and conclusions of the Panel, together with its 
recommendations for legislation and administrative actions 
which the Panel considers appropriate. 
(7) TERMINATION.—The Panel shall terminate 30 days after 
the date of the submission of its final report under paragraph 
(6)(B). 
(8) AUTHORIZATION OF APPROPRIATIONS.—There are author-
ized to be appropriated from the Federal Old-Age and Survivors 
Insurance Trust Fund, the Federal Disability Insurance Trust 
Fund, and the general fund of the Treasury, as appropriate, 
such sums as are necessary to carry out this subsection. 
Subtitle B—Elimination of Work 
Disincentives 
SEC. 111. WORK ACTIVITY STANDARD AS A BilSIS FOR REVIEW OF 
AN INDIVIDUAL'S DISABLED STATUS. 
(a) IN GENERAL.—Section 221 of the Social Security Act (42 
U.S.C. 421) is amended by adding at the end the following new 
subsection: 
"(m)(l) In any case where an individual entitled to disability 
insurance benefits under section 223 or to monthly insurance bene-
fits under section 202 based on such individual's disability (as 
defined in section 223(d)) has received such benefits for at least 
24 months— 
"(A) no continuing disability review conducted by the 
Commissioner may be scheduled for the individual solely as 
a result of the individual's work activity; 
"(B) no work activity engaged in by the individual may 
be used as evidence that the individual is no longer disabled; 
and 
"(C) no cessation of work activity by the individual may 
give rise to a presumption that the individual is unable to 
engage in work. 
"(2) An individual to which paragraph (1) applies shall continue 
to be subject to— 
"(A) continuing disability reviews on a regularly scheduled 
basis that is not triggered by work; and 
"(B) termination of benefits under this title in the event 
that the individual has earnings that exceed the level of 
earnings established by the Commissioner to represent substan-
tial gainful activity.". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
42 use 421 note. 
shall take efiiect on January 1, 2002. 
SEC. 112. EXPEDITED REINSTATEMENT OF DISABILITY BENEFITS. 
(a) OASDI BENEFITS.—Section 223 of the Social Security Act 
(42 U.S.C. 423) is amended— 
113 STAT. 1882 
PUBLIC LAW 106-170—DEC. 17, 1999 
(1) by redesignating subsection (i) as subsection (j); and 
(2) by inserting after subsection (h) the following new sub-
section: 
"Reinstatement of Entitlement 
"(i)(l)(A) Entitlement to benefits described in subparagraph 
(B)(i)(I) shall be reinstated in any case where the Commissioner 
determines that an individual described in subparagraph (B) has 
filed a request for reinstatement meeting the requirements of para-
graph (2)(A) during the period prescribed in subparagraph (C). 
Reinstatement of such entitlement shall be in accordance with 
the terms of this subsection. 
"(B) An individual is described in this subparagraph if— 
"(i) prior to the month in which the individual files a 
request for reinstatement— 
"(I) the individual was entitled to benefits under this 
section or section 202 on the basis of disability pursuant 
to an application filed therefor; and 
"(II) such entitlement terminated due to the perform-
ance of substantial gainful activity; 
"(ii) the individual is under a disability and the physical 
or mental impairment that is the basis for the finding of dis-
ability is the same as (or related to) the physical or mental 
impairment that was the basis for the finding of disability 
that gave rise to the entitlement described in clause (i); and 
"(iii) the individual's disability renders the individual 
unable to perform substantial gainful activity. 
"(C)(i) Except as provided in clause (ii), the period prescribed 
in this subparagraph with respect to an individual is 60 consecutive 
months beginning with the month following the most recent month 
for which the individual was entitled to a benefit described in 
subparagraph 
(B)(i)(I) prior 
to the 
entitlement 
termination 
described in subparagraph (B)(i)(II). 
"(ii) In the case of an individual who fails to file a reinstatement 
request within the period prescribed in clause (i), the Commissioner 
may extend the period if the Commissioner determines that the 
individual had good cause for the failure to so file. 
"(2)(A)(i) A request for reinstatement shall be filed in such 
form, and containing such information, as the Commissioner may 
prescribe. 
"(ii) A request for reinstatement shall include express declara-
tions by the individual that the individual meets the requirements 
specified in clauses (ii) and (iii) of paragraph (1)(B). 
"(B) A request for reinstatement filed in accordance with 
subparagraph (A) may constitute an application for benefits in 
the case of any individual who the Commissioner determines is 
not entitled to reinstated benefits under this subsection. 
"(3) In determining whether an individual meets the require-
ments of paragraph (l)(B)(ii), the provisions of subsection (f) shall 
apply. 
"(4)(A)(i) Subject to clause (ii), entitlement to benefits reinstated 
under this subsection shall commence with the benefit payable 
for the month in which a request for reinstatement is filed. 
"(ii) An individual whose entitlement to a benefit for any month 
would have been reinstated under this subsection had the individual 
filed a request for reinstatement before the end of such month 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1883 
shall be entitled to such benefit for such month if such request 
for reinstatement is filed before the end oi' the twelfth month 
immediately succeeding such month. 
"(B)(i) Subject to clauses (ii) and (iii), the amount of the benefit 
payable for any month pursuant to the reinstatement of entitlement 
under this subsection shall be determined in accordance with the 
provisions of this title. 
"(ii) For purposes of computing the primary insurance amount 
of an individual whose entitlement to benefits under this section 
is reinstated under this subsection, the date of onset of the individ-
ual's disability shall be the date of onset used in determining 
the individual's most recent period of disability arising in connection 
with such benefits payable on the basis of an application. 
"(iii) Benefits under this section or section 202 payable for 
any month pursuant to a request for reinstatc;ment filed in accord-
ance with paragraph (2) shall be reduced bj^ the amount of any 
provisional benefit paid to such individual for such month under 
paragraph (7). 
"(C) No benefit shall be payable pursuant to an entitlement 
reinstated under this subsection to an individual for any month 
in which the individual engages in substantial gainful activity. 
"(D) The entitlement of any individual that is reinstated under 
this subsection shall end with the benefits payable for the month 
preceding whichever of the following months is the earliest: 
"(i) The month in which the individual dies, 
"(ii) The month in which the individual attains retirement 
age. 
"(iii) The third month following the month in which the 
individual's disability ceases. 
"(5) Whenever an individual's entitlement to benefits under 
this section is reinstated under this subsection, entitlement to bene-
fits payable on the basis of such individual's w ages and self-employ-
ment income may be reinstated with respect to any person pre-
viously entitled to such benefits on the basis of an application 
if the Commissioner determines that such pcjrson satisfies all the 
requirements for entitlement to such benefits except requirements 
related to the filing of an application. The provisions of paragraph 
(4) shall apply to the reinstated entitlement of any such person 
to the same extent that they apply to the reinstated entitlement 
of such individual. 
"(6) An individual to whom benefits are payable under this 
section or section 202 pursuant to a reinstatement of entitlement 
under this subsection for 24 months (whether or not consecutive) 
shall, with respect to benefits so payable after such twenty-fourth 
month, be deemed for purposes of paragraph (l)(B)(i)(I) and the 
determination, if appropriate, of the termination month in accord-
ance with subsection (a)(1) of this section, or subsection (d)(1), 
(e)(1), or (f)(1) of section 202, to be entitled to such benefits on 
the basis of an application filed therefor. 
"(7)(A) An individual described in paragn"aph (1)(B) who files 
a request for reinstatement in accordance with the provisions of 
paragraph (2)(A) shall be entitled to provisional benefits payable 
in accordance with this paragraph, unless the Commissioner deter-
mines that the individual does not meet the requirements of para-
graph (l)(B)(i) or that the individual's declaration under paragraph 
(2)(A)(ii) is false. Any such determination by the Commissioner 
113 STAT. 1884 
PUBLIC LAW 106-170—DEC. 17, 1999 
shall be final and not subject to review under subsection (b) or 
(g) of section 205. 
"(B) The amount of a provisional benefit for a month shall 
equal the amount of the last monthly benefit payable to the indi-
vidual under this title on the basis of an application increased 
by an amount equal to the amount, if any, by which such last 
monthly benefit would have been increased as a result of the 
operation of section 215(i). 
"(C)(i) Provisional benefits shall begin with the month in which 
a request for reinstatement is filed in accordance with paragraph 
(2)(A). 
"(ii) Provisional benefits shall end with the earliest of— 
"(I) the month in which the Commissioner makes a deter-
mination regarding the individual's entitlement to reinstated 
benefits; 
"(II) the fifth month following the month described in clause 
(i); 
"(III) the month in which the individual performs substan-
tial gainful activity; or 
"(IV) the month in which the Commissioner determines 
that the individual does not meet the requirements of para-
graph (l)(B)(i) or that the individual's declaration made in 
accordance with paragraph (2)(A)(ii) is false. 
"(D) In any case in which the Commissioner determines that 
an individual is not entitled to reinstated benefits, any provisional 
benefits paid to the individual under this paragraph shall not 
be subject to recovery as an overpayment unless the Commissioner 
determines that the individual knew or should have known that 
the individual did not meet the requirements of paragraph (1)(B).". 
(b) SSI BENEFITS.— 
(1) IN GENERAL.—Section 1631 of the Social Security Act 
(42 U.S.C. 1383) is amended by adding at the end the following 
new subsection: 
"Reinstatement of Eligibility on the Basis of Blindness or Disability 
"(p)(l)(A) Eligibility for benefits under this title shall be 
reinstated in any case where the Commissioner determines that 
an individual described in subparagraph (B) has filed a request 
for reinstatement meeting the requirements of paragraph (2)(A) 
during the period prescribed in subparagraph (C). Reinstatement 
of eligibility shall be in accordance with the terms of this subsection. 
"(B) An individual is described in this subparagraph if— 
"(i) prior to the month in which the individual files a 
request for reinstatement— 
"(I) the individual was eligible for benefits under this 
title on the basis of blindness or disability pursuant to 
an application filed therefor; and 
"(II) the individual thereafter was ineligible for such 
benefits due to earned income (or earned and unearned 
income) for a period of 12 or more consecutive months; 
"(ii) the individual is blind or disabled and the physical 
or mental impairment that is the basis for the finding of blind-
ness or disability is the same as (or related to) the physical 
or mental impairment that was the basis for the finding of 
blindness or disability that gave rise to the eligibility described 
in clause (i); 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1885 
"(iii) the individual's blindness or disability renders the 
individual unable to perform substantial gainful activity; and 
"(iv) the individual satisfies the nonmedical requirements 
for eligibility for benefits under this title. 
"(C)(i) Except as provided in clause (ii), the period prescribed 
in this subparagraph with respect to an individual is 60 consecutive 
months beginning with the month following the most recent month 
for which the individual was eligible for a benefit under this title 
(including section 1619) prior to the period of ineligibility described 
in subparagraph (B)(i)(II). 
"(ii) In the case of an individual who fails to file a reinstatement 
request within the period prescribed in clause (i), the Commissioner 
may extend the period if the Commissioner determines that the 
individual had good cause for the failure to so file. 
"(2)(A)(i) A request for reinstatement shall be filed in such 
form, and containing such information, as the Commissioner may 
prescribe. 
"(ii) A request for reinstatement shall include express declara-
tions by the individual that the individual meets the requirements 
specified in clauses (ii) through (iv) of paragraph (1)(B). 
"(B) A request for reinstatement filed in accordance with 
subparagraph (A) may constitute an application for benefits in 
the case of any individual who the Commissioner determines is 
not eligible for reinstated benefits under this subsection. 
"(3) In determining whether an individual meets the require-
ments of paragraph (l)(B)(ii), the provisions of section 1614(a)(4) 
shall apply. 
"(4)(A) Eligibility for benefits reinstated under this subsection 
shall commence with the benefit payable for the month following 
the month in which a request for reinstatement is filed. 
"(B)(i) Subject to clause (ii), the amount of the benefit payable 
for any month pursuant to the reinstatement of eligibility under 
this subsection shall be determined in accordance with the provi-
sions of this title. 
"(ii) The benefit under this title payable for any month pursuant 
to a request for reinstatement filed in accordance with paragraph 
(2) shall be reduced by the amount of any provisional benefit 
paid to such individual for such month under paragraph (7). 
"(C) Except as otherwise provided in this subsection, eligibility 
for benefits under this title reinstated pursviant to a request filed 
under paragraph (2) shall be subject to the same terms and condi-
tions as eligibility established pursuant to an application filed 
therefor. 
"(5) Whenever an individual's eligibility for benefits under this 
title is reinstated under this subsection, eligibility for such benefits 
shall be reinstated with respect to the individual's spouse if such 
spouse was previously an eligible spouse oi" the individual under 
this title and the Commissioner determines that such spouse satis-
fies all the requirements for eligibility for such benefits except 
requirements related to the filing of an application. The provisions 
of paragraph (4) shall apply to the reinstated eligibility of the 
spouse to the same extent that they apply 1
:
o the reinstated eligi-
bility of such individual. 
"(6) An individual to whom benefits are payable under this 
title pursuant to a reinstatement of eligibility under this subsection 
for twenty-four months (whether or not consecutive) shall, with 
respect to benefits so payable after such twenty-fourth month, be 
113 STAT. 1886 
PUBLIC LAW 106-170—DEC. 17, 1999 
deemed for purposes of paragraph (l)(B)(i)(I) to be eligible for 
such benefits on the basis of an application filed therefor. 
"(7)(A) An individual described in paragraph (1)(B) who files 
a request for reinstatement in accordance with the provisions of 
paragraph (2)(A) shall be eligible for provisional benefits payable 
in accordance with this paragraph, unless the Commissioner deter-
mines that the individual does not meet the requirements of para-
graph (l)(B)(i) or that the individual's declaration under paragraph 
(2)(A)(ii) is false. Any such determination by the Commissioner 
shall be final and not subject to review under paragraph (1) or 
(3) of subsection (c). 
"(B)(i) Except as otherwise provided in clause (ii), the amount 
of a provisional benefit for a month shall equal the amount of 
the monthly benefit that would be payable to an eligible individual 
under this title with the same kind and amount of income. 
"(ii) If the individual has a spouse who was previously an 
eligible spouse of the individual under this title and the Commis-
sioner determines that such spouse satisfies all the requirements 
of section 1614(b) except requirements related to the filing of an 
application, the amount of a provisional benefit for a month shall 
equal the amount of the monthly benefit that would be payable 
to an eligible individual and eligible spouse under this title with 
the same kind and amount of income. 
"(C)(i) Provisional benefits shall begin with the month following 
the month in which a request for reinstatement is filed in accord-
ance with paragraph (2)(A). 
"(ii) Provisional benefits shall end with the earliest o
f
— 
"(I) the month in which the Commissioner makes a deter-
mination regarding the individual's eligibility for reinstated 
benefits; 
"(II) the fifth month following the month for which provi-
sional benefits are first payable under clause (i); or 
"(III) the month in which the Commissioner determines 
that the individual does not meet the requirements of para-
graph (l)(B)(i) or that the individual's declaration made in 
accordance with paragraph (2)(A)(ii) is false. 
"(D) In any case in which the Commissioner determines that 
an individual is not eligible for reinstated benefits, any provisional 
benefits paid to the individual under this paragraph shall not 
be subject to recovery as an overpayment unless the Commissioner 
determines that the individual knew or should have known that 
the individual did not meet the requirements of paragraph (1)(B). 
"(8) For purposes of this subsection other than paragraph (7), 
the term 'benefits under this title' includes State supplementary 
payments made pursuant to an agreement under section 1616(a) 
of this Act or section 212(b) of PubUc Law 93-66.". 
(2) CONFORMING AMENDMENTS.— 
(A) Section 1631(j)(l) of such Act (42 U.S.C. 1383(j)(l)) 
is amended by striking the period and inserting ", or has 
filed a request for reinstatement of eligibility under sub-
section (p)(2) and been determiined to be eligible for 
(B) Section 1631(j)(2)(A)(i)(I) of such Act (42 U.S.C. 
1383(j)(2)(A)(i)(I)) is amended by inserting "(other than 
pursuant to a request for reinstatement under subsection 
(p))" after "eligible". 
42 u s e 423 note. 
(c) EFFECTIVE D A T E . — 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1887 
(1) IN GENERAL.—^The amendments made by this section 
shall take effect on the first day of the thirteenth month begin-
ning after the date of the enactment of this Act. 
(2) LIMITATION.—No benefit shall be payable under title 
II or XVI on the basis of a request for reinstatement filed 
under section 223(i) or 163 l(p) of the Social Security Act (42 
U.S.C. 423(i), 1383(p)) before the effective date described in 
paragraph (1). 
Subtitle C—^Work Incentives Planning, 
Assistance, and Outreach 
SEC. 121. WORK INCENTIVES OUTREACH PROGFLAM. 
Part A of title XI of the Social Security Act (42 U.S.C. 1301 
et seq.), as amended by section 101 of this Act, is amended by 
adding after section 1148 the following new section: 
''WORK INCENTIVES OUTREACH I'ROGRAM 
"SEC. 1149. (a) ESTABLISHMENT.— 
4
2 use 
"(1) IN GENERAL.—The Commissioner, in consultation with 1320b-20. 
the Ticket to Work and Work Incentives Advisory Panel estab-
lished under section 101(f) of the Ticket to Work and Work 
Incentives Improvement Act of 1999, shiill establish a commu-
nity-based work incentives planning and assisteince program 
for the purpose of disseminating accursite information to dis-
abled beneficiaries on work incentives programs and issues 
related to such programs. 
"(2) GRANTS, COOPERATIVE AGREEMISNTS, CONTRACTS, AND 
OUTREACH.—Under the program established under this section, 
the Commissioner shall— 
"(A) establish a competitive progrEim of grsints, coopera-
tive agreements, or contracts to provide benefits planning 
and assistance, including information on the availability 
of protection and advocacy services, to disabled bene-
ficiEiries, including individuals participating in the Ticket 
to Work and Self-SufGciency Program established under 
section 1148, the program established under section 1619, 
and other programs that are designed to encouraige disabled 
beneficiaries to work; 
"(B) conduct directly, or through grants, cooperative 
agreements, or contracts, ongoing outreach efforts to dis-
abled beneficiaries (and to the families of such bene-
ficiaries) who are potentially eligible} to p£irticipate in Fed-
eral or State work incentive progrjuns that are designed 
to assist disabled beneficiaries to work, including— 
"(i) preparing 
and disseminating 
information 
explaining such programs; and 
"(ii) working in cooperation with other Federal, 
State, Eind private agencies and nonprofit organizations 
that serve disabled beneficiaries, and with agencies 
and orgEinizations that focus on vocationed rehabilita-
tion and work-related training and counseling; 
"(C) establish a corps of tredned, accessible, and respon-
sive work incentives specialists within the Social Security 
113 STAT. 1888 
PUBLIC LAW 106-170—DEC. 17, 1999 
Administration who will specialize in disability work incen-
tives under titles II and XVI for the purpose of dissemi-
nating accurate information with respect to inquiries and 
issues relating to work incentives to— 
"(i) disabled beneficiaries; 
"(ii) benefit applicants under titles II and XVI; 
and 
"(iii) individuals or entities awarded grants under 
subparagraphs (A) or (B); and 
"(D) provide— 
"(i) training for work incentives specialists and 
individuals providing planning assistance described in 
subparagraph (C); and 
"(ii) technical assistance to organizations and enti-
ties that are designed to encourage disabled bene-
ficiaries to return to work. 
"(3) COORDINATION WITH OTHER PROGRAMS.—The respon-
sibilities of the Commissioner established under this section 
shall be coordinated with other public and private programs 
that provide information and assistance regarding rehabilita-
tion services and independent living supports and benefits plan-
ning for disabled beneficiaries including the program under 
section 1619, the plans for achieving self-support program 
(PASS), and any other Federal or State work incentives pro-
grams that are designed to assist disabled beneficiaries, 
including educational agencies that provide information and 
assistance regarding rehabilitation, school-to-work programs, 
transition services (as defined in, and provided in accordance 
with, the Individuals with Disabilities Education Act (20 U.S.C. 
1400 et seq.)), a one-stop delivery system established under 
subtitle B of title I of the Workforce Investment Act of 1998 
(29 U.S.C. 2811 et seq.), and other services. 
"(b) CONDITIONS.— 
"(1) SELECTION OF ENTITIES.— 
"(A) APPLICATION.—^An entity shall submit an applica-
tion for a grant, cooperative agreement, or contract to 
provide benefits planning and assistance to the Commis-
sioner at such time, in such manner, and containing such 
information as the Commissioner may determine is nec-
essary to meet the requirements of this section. 
"(B) STATEWIDENESS.—The Commissioner shall ensure 
that the planning, assistance, and information described 
in paragraph (2) shall be available on a statewide basis. 
"(C) 
ELIGIBILITY OF STATES AND PRIVATE ORGANIZA-
TIONS.— 
"(i) IN GENERAL.—The Commissioner may award 
a grant, cooperative agreement, or contract under this 
section to a State or a private agency or organization 
(other than 
Social Security Administration 
Field 
Offices and the State agency administering the State 
medicaid program under title XIX, including any 
agency or entity described in clause (ii), that the 
Commissioner determines is qualified to provide the 
planning, assistance, and information described in 
paragraph (2)). 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1889 
"(ii) 
AGENCIES AND 
ENTITIES 
DESCRIBED.—The 
agencies and entities described in this clause are the 
following: 
"(I) Any public or private agency or organiza-
tion (including Centers for Independent Living 
established under title VII of the Rehabilitation 
Act of 1973 (29 U.S.C. 796 et seq.), protection 
and advocacy organizations, client assistance pro-
grams established in accordance with section 112 
of the Rehabilitation Act of 1973 (29 U.S.C. 732), 
and State Developmental Disabilities Councils 
established in accordance with section 124 of the 
Developmental Disabilities Assistance and Bill of 
Rights Act (42 U.S.C. 6024)) that the Commis-
sioner determines satisfies the requirements of this 
section. 
"(II) The State agency administering the State 
program funded under part A of title IV. 
"(D) 
EXCLUSION FOR CONFLICT OF INTEREST.—The 
Commissioner may not award a grant, cooperative agree-
ment, or contract under this section to any entity that 
the Commissioner determines would have a conflict of 
interest if the entity were to receive a grant, cooperative 
agreement, or contract under this section. 
"(2) SERVICES PROVIDED.—A recipiesnt of a grant, coopera-
tive agreement, or contract to provide benefits planning and 
assistance shall select individuals who will act as planners 
and provide information, guidance, and planning to disabled 
beneficiaries on the— 
"(A) availability and interrelation of any Federal or 
State work incentives programs designed to assist disabled 
beneficiaries that the individual may be eligible to partici-
pate in; 
"(B) adequacy of any health benefits coverage that 
may be offered by an employer of the individual and the 
extent to which other health benefits coverage may be 
available to the individual; and 
"(C) availability of protection and advocacy services 
for disabled beneficiaries and how to access such services. 
"(3) 
AMOUNT OF GRANTS, COOPER/^TIVE AGREEMENTS, OR 
CONTRACTS.— 
"(A) 
BASED 
ON 
POPULATION 
OF 
DISABLED 
BENE-
FICIARIES.—Subject to subparagraph (B), the Commissioner 
shall award a grant, cooperative agreement, or contract 
under this section to an entity based on the percentage 
of the population of the State where the entity is located 
who £ire disabled beneficiaries. 
"(B) LIMITATIONS.— 
"(i) PER GRANT.—No entity shall receive a grant, 
cooperative agreement, or contract under this section 
for a fiscal year that is less than $50,000 or more 
than $300,000. 
"(ii) TOTAL AMOUNT FOR ALL GRANTS, COOPERATIVE 
AGREEMENTS, AND CONTRACTS.—The total amount of 
all grants, cooperative agretjments, and 
contracts 
awarded under this section for a fiscal year may not 
exceed $23,000,000. 
113 STAT. 1890 
PUBLIC LAW 106-170—DEC. 17, 1999 
"(4) ALLOCATION OF COSTS.—The costs of carrying out this 
section shall be paid from amounts made available for the 
administration of title II and amounts made available for the 
administration of title XVI, and shall be gJlocated Eimong those 
amounts as appropriate. 
"(c) DEFINITIONS.—In this section: 
"(1) COMMISSIONER.—^The term 'Commissioner' means the 
Commissioner of Social Security. 
"(2) DISABLED BENEFICIARY.—The term 'disabled bene-
ficiary' has the meaning given that term in section 1148(kX2). 
"(d) AUTHORIZATION OF APPROPRIATIONS.—There are authorized 
to be appropriated to carry out this section $23,000,000 for each 
of the fiscal years 2000 through 2004.". 
SEC. 122. STATE GRANTS FOR WORK INCENTIVES ASSISTANCE TO DIS-
ABLED BENEFICIARIES. 
Part A of title XI of the Social Security Act (42 U.S.C. 1301 
et seq.), as amended by section 121 of this Act, is amended by 
adding after section 1149 the following new section: 
"STATE GRANTS FOR WORK INCENTIVES ASSISTANCE TO DISABLED 
BENEFICIARIES 
42 use 
"SEC. 1150. (a) IN GENERAL.—Subject to subsection (c), the 
1320b-21. 
Commissioner may make payments in each State to the protection 
and advocacy system established pursuant to part C of title I 
of the Developmental Disabilities Assisteince and Bill of Rights 
Act (42 U.S.C. 6041 et seq.) for the purpose of providing services 
to disabled beneficiaries. 
"(b) SERVICES PROVIDED.—Services provided to disabled bene-
ficisuies pursuant to a payment made under this section may 
include— 
"(1) information and advice about obtedning vocational 
rehabiUtation and emplo3rment services; and 
"(2) advocacy or other services that a disabled beneficiary 
may need to secure or regedn gainful emplojonent. 
"(c) APPLICATION.—In order to receive pajmaents under this 
section, a protection and advocacy system shall submit an appUca-
tion to the Commissioner, at such time, in such form and manner, 
and accompanied by such information and assurances as the 
Commissioner may require. 
"(d) AMOUNT OF PAYMENTS.— 
"(1) IN GENERAL.—Subject to the amount appropriated for 
a fiscal year for making pa5maents under this section, a protec-
tion and advocacy system shall not be paid an amoxuit that 
is less than— 
"(A) in the case of a protection and advocacy system 
located in a State (including the District of Columbia and 
Puerto Rico) other thsui Guam, American Samoa, the 
United States Virgin Islands, £uid the Commonwealth of 
the Northern Mariana Islands, the greater of— 
"(i) $100,000; or 
"(ii) Vs of 1 percent of the amount available for 
pajrments under this section; and 
"(B) in the case of a protection and advocacy system 
located in Guam, American Samoa, the United States Vir-
gin Islands, and the Commonwealth of the Northern Mari-
ana Islands, $50,000. 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1891 
"(2) INFLATION ADJUSTMENT.—For each fiscal year in which 
the total amount appropriated to carry out this section exceeds 
the total amount appropriated to carry out this section in 
the preceding fiscal year, the Commissioner shall increase each 
minimum payment under subparagraphs (A) and (B) of para-
graph (1) by a percentage equal to the percentage increase 
in the total amount so appropriated to carry out this section. 
"(e) ANNUAL REPORT.—Each protection and advocacy system 
that receives a payment under this section shall submit an annual 
report to the Commissioner and the Ticket to Work and Work 
Incentives Advisory Panel established under section 101(f) of the 
Ticket to Work and Work Incentives Improvement Act of 1999 
on the services provided to individuals by the system. 
"(f) FUNDING.— 
"(1) ALLOCATION OF PAYMENTS.—Payments under this sec-
tion shall be made from amounts made available for the 
administration of title II and amounts made available for the 
administration of title XVI, and shall be allocated among those 
amounts as appropriate. 
"(2) CARRYOVER.—Any amounts allotted for payment to 
a protection and advocacy system under this section for a 
fiscal year shall remain available for payment to or on behalf 
of the protection and advocacy system until the end of the 
succeeding fiscal year. 
"(g) DEFINITIONS.—In this section: 
"(1) COMMISSIONER.—The term 'Commissioner' means the 
Commissioner of Social Security. 
"(2) DISABLED BENEFICIARY.—The term 'disabled bene-
ficiary' has the meaning given that term in section 1148(k)(2). 
"(3) PROTECTION AND ADVOCACY SYSTEM.—The term 'protec-
tion and advocacy system' means a protection and advocacy 
system established pursuant to part C of title I of the Develop-
mental Disabilities Assistance and Bill of Rights Act (42 U.S.C. 
6041 et seq.). 
"(h) AUTHORIZATION OF APPROPRIATIONS.—There are authorized 
to be appropriated to carry out this section $7,000,000 for each 
of the fiscal years 2000 through 2004.". 
TITLE II—EXPANDED AVAILABILITY OF 
HEALTH CARE SERVICES 
SEC. 201. EXPANDE«^G STATE OPTIONS UNDER THE MEDICAID PRO-
GRAM FOR WORKERS WITH DISABILITIES. 
(a) IN GENERAL.— 
(1) 
STATE OPTION TO ELIMINATE 
INCOME, ASSETS, AND 
RESOURCE L I M I T A T I O N S FOR WORKERS WITH DISABILITIES BUYING 
INTO MEDICAID.—Section 1902(a)(10)(A)(ii) of the Social Security 
Act (42 U.S.C. 1396a(a)(10)(A)(ii)) is amended— 
(A) in subclause (XIII), by striking "or" at the end; 
(B) in subclause (XIV), by adding "or" at the end; 
and 
(C) by adding at the end the following new subclause: 
"(XV) who, but for earnings in excess of the 
limit 
established 
under 
section 
1905(q)(2)(B), 
would be considered to be receiving supplemental 
security income, who is at least 16, but less than 
113 STAT. 1892 
PUBLIC LAW 106-170—DEC. 17, 1999 
65, years of age, and whose assets, resources, and 
earned or unearned income (or both) do not exceed 
such Hmitations (if any) as the State may estab-
hsh;". 
(2) STATE OPTION TO PROVIDE OPPORTUNITY FOR EMPLOYED 
INDIVIDUALS WITH A MEDICALLY IMPROVED DISABILITY TO BUY 
INTO MEDICAID.— 
(A) ELIGIBILITY.—Section 1902(a)(10) (A)(ii) of the 
Social Security Act (42 U.S.C. 1396a(a)(10)(A)(ii)), as 
amended by paragraph (1), is amended— 
(i) in subclause (XIV), by striking "or" at the end; 
(ii) in subclause (XV), by adding "or" at the end; 
and 
(iii) by adding at the end the following new sub-
clause: 
"(XVI) who are employed individuals with a 
medically improved disability described in section 
1905(v)(l) and whose assets, resources, and earned 
or unearned income (or both) do not exceed such 
limitations (if any) as the State may establish, 
but only if the State provides medical assistance 
to individuals described in subclause (XV);". 
(B) DEFINITION OF EMPLOYED INDIVIDUALS WITH A MEDI-
CALLY IMPROVED DISABILITY.—Section 1905 of the Social 
Security Act (42 U.S.C. 1396d) is amended by adding at 
the end the following new subsection: 
"(v)(l) The term 'employed individual with a medically improved 
disability' means an individual who— 
"(A) is at least 16, but less than 65, years of age; 
"(B) is employed (as defined in paragraph (2)); 
"(C) ceases to be eligible for medical assistance under sec-
tion 1902(a){10)(A)(ii)(XV) because the individual, by reason 
of medical improvement, is determined at the time of a regu-
larly scheduled continuing disability review to no longer be 
eligible for benefits under section 223(d) or 1614(a)(3); and 
"(D) continues to have a severe medically determinable 
impairment, as determined under regulations of the Secretary. 
"(2) For purposes of paragraph (1), an individual is considered 
to be 'employed' if the individual— 
"(A) is earning at least the applicable minimum wage 
requirement under section 6 of the Fair Labor Standards Act 
(29 U.S.C. 206) and working at least 40 hours per month; 
or 
"(B) is engaged in a work effort that meets substantial 
and reasonable threshold criteria for hours of work, wages, 
or other measures, as defined by the State and approved by 
the Secretary.". 
(C) CONFORMING AMENDMENT.—Section 1905(a) of such 
Act (42 U.S.C. 1396d(a)) is amended in the matter pre-
ceding paragraph (1)— 
(i) in clause (x), by striking "or" at the end; 
(ii) in clause (xi), by adding "or" at the end; and 
(iii) by inserting after clause (xi), the following 
new clause: 
"(xii) employed individuals with a medically improved dis-
ability (as defined in subsection (v)),". 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1893 
(3) STATE AUTHORITY TO IMPOSE INCOME-RELATED PREMIUMS 
AND COST-SHARING.—Section 1916 of such Act (42 U.S.C. 1396o) 
is amended— 
(A) in subsection (a), by striking "The State plan" 
and inserting "Subject to subsection (g), the State plan"; 
and 
(B) by adding at the end the following new subsection: 
"(g) With respect to individuals provided medical assistance 
only under subclause (XV) or (XVI) of section 1902(a)(10)(A)(ii)— 
"(1) a State may (in a uniform manner for individuals 
described in either such subclause)— 
"(A) require such individuals to pay premiums or other 
cost-sharing charges set on a sliding scale based on income 
that the State may determine; and 
"(B) require payment of 100 percent of such premiums 
^ 
for such year in the case of such an individual who has 
income for a year that exceeds 250 percent of the income 
official poverty line (referred to in subsection (c)(1)) 
applicable to a family of the size involved, except that 
in the case of such an individual who has income for 
a year that does not exceed 450 percent of such poverty 
line, such requirement may only a]Dply to the extent such 
premiums do not exceed 7.5 percent of such income; and 
"(2) such State shall require payment of 100 percent of 
such premiums for a year by such an individual whose adjusted 
gross income (as defined in section 62 c
»
f the Internal Revenue 
Code of 1986) for such year exceeds $75,000, except that a 
State may choose to subsidize such premiums by using State 
funds which may not be federally matched under this title. 
In the case of any calendar year beginning after 2000, the dollar 
amount specified in paragraph (2) shall be increased in accordance 
with the provisions of section 215(i)(2)(A)(ii).". 
(4) PROHIBITION AGAINST SUPPLANTATION OF STATE FUNDS 
AND STATE FAILURE TO MAINTAIN EFFCtRT.—Section 1903(i) of 
such Act (42 U.S.C. 1396b(i)) is amended— 
(A) by striking the period at the end of paragraph 
(19) and inserting "; or"; and 
(B) by inserting after such paragraph the following 
new paragraph: 
"(20) with respect to amounts expended for medical assist-
ance provided to an individual described in subclause (XV) 
or (XVI) of section 1902(a)(10)(A)(ii) for a fiscal year unless 
the State demonstrates to the satisfaction of the Secretary 
that the level of State funds expended for such fiscal year 
for programs to enable working individuals with disabilities 
to work (other than for such medical assistance) is not less 
than the level expended for such proj^ams during the most 
recent State fiscal year ending before the date of the enactment 
of this paragraph.". 
(b) CONFORMING AMENDMENTS.—Section 1903(f)(4) of the Social 
Security Act (42 U.S.C. 1396b(f )(4) is amended in the matter pre-
ceding subparagraph 
(A) by inserting 
"1902(a)(10)(A)(ii)(XV), 
1902(a)(10)(A)(ii)(XVI)," before "1905(p)(l)". 
(c) GAG REPORT.—Not later than 3 years after the date of Deadline. 
the enactment of this Act, the Comptrollei- General of the United ^2 USC 1396a 
States shall submit a report to the Congress regarding the amend- 
'^°^^' 
ments made by this section that examines— 
113 STAT. 1894 
PUBLIC LAW 106-170—DEC. 17, 1999 
(1) the extent to which higher health care costs for individ-
uals with disabilities at higher income levels deter emplo3anent 
or progress in employment; 
(2) whether such individuals have health insurcince cov-
erage or could benefit from the State option established under 
such amendments to provide a medicaid Duy-in; £ind 
(3) how the States are exercising such option, including— 
(A) how such States sire exercising the 
flexibility 
afforded them with regeird to income disregards; 
(B) what income and premiimi levels have been set; 
(C) the degree to which States are subsidizing j)re-
miums above the dollar simount specified in section 
1916(g)(2) of the Social Security Act (42 U.S.C. 1396o(g)(2)); 
and 
(D) the extent to which there exists any crowd-out 
effect. 
42 use 1396a 
(d) EFFECTIVE DATE.—^The amendments made by this section 
note. 
apply to medical assistance for items and services furnished on 
or after October 1, 2000. 
SEC. 202. EXTENDING MEDICARE COVERAGE FOR OASDI DISABILITY 
BENEFIT RECIPIENTS. 
(a) IN GENERAL.—^The next to last sentence of section 226(b) 
of the Social Security Act (42 U.S.C. 426) is amended by striking 
"24" and inserting "78". 
42 use 426 note. 
(b) EFFECTIVE DATE.—^The amendment made by subsection (a) 
shedl be effective on and after October 1, 2000. 
42 use 426 note. 
(c) GAO REPORT.—Not later than 5 years after the date of 
the enactment of this Act, the Comptroller Grenergd of the United 
States shall submit a report to the Congress that— 
(1) examines the effectiveness and cost of the amendment 
made by subsection (a); 
(2) examines the necessity and effectiveness of providing 
continuation of medicare coverage under section 226(b) of the 
Social Security Act (42 U.S.C. 426(b)) to individuals whose 
annual income exceeds the contribution and benefit base (as 
determined under section 230 of such Act (42 U.S.C. 430)); 
(3) examines the viability of providing the continuation 
of medicare coverage under such section 226(b) based on a 
sliding scale premium for individuals whose annual income 
exceeds such contribution and benefit base; 
(4) examines the viability of providing the continuation 
of medicare coverage under such section 226(b) based on a 
premiiun buy-in bv the beneficiary's employer in Keu of coverage 
under private hemth insurance; 
(5) examines the interrelation between the use of the 
continuation of medicare coverage under such section 226(b) 
and the use of private health insurance coverage by individuals 
diuing the extended period; and 
(6) recommends such legislative or administrative changes 
relating to the continuation of medic£U"e coverage for recipients 
of social security disability benefits as the Comptroller General 
determines are appropriate. 
42 use 
SEC. 203. GRANTS TO DEVELOP AND ESTABLISH STATE INFRASTRUC-
1320b-22. 
TURES TO SUPPORT WORKING INDIVIDUALS WITH 
DISABILITIES. 
(a) ESTABLISHMENT.— 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1895 
(1) IN GENERAL.—The Secretary of Health and Human 
Services (in this section referred to as the "Secretary") shall 
award grants described in subsection (b) to States to support 
the design, establishment, and operation of State infrastruc-
tures that provide items and services to support working 
individuals with disabilities. 
(2) APPLICATION.—In order to be eligible for an award 
of a grant under this section, a State shall submit an application 
to the Secretary at such time, in such manner, and containing 
such information as the Secretary shall require. 
(3) DEFINITION OF STATE.—In this section, the term "State" 
means each of the 50 States, the District of Columbia, Puerto 
Rico, Guam, the United States Virgin Islands, American Samoa, 
and the Commonwealth of the Northern Mariana Islands. 
(b) GRANTS FOR INFRASTRUCTURE AND OUTREACH.— 
(1) IN GENERAL.—Out of the funds appropriated under sub-
section (e), the Secretary shall award grants to States to— 
(A) support the establishment, implementation, and 
operation of the State infrastructures described in sub-
section (a); and 
(B) conduct outreach campaigns regarding the exist-
ence of such infrastructures. 
(2) ELIGIBILITY FOR GRAI^JTS.— 
(A) IN GENERAL.—No State may receive a grant under 
this subsection unless the State demonstrates to the satis-
faction of the Secretary that the State makes personal 
assistance services available under the State plan under 
title XIX of the Social Security Act (42 U.S.C. 1396 et 
seq.) to the extent necessary to enable individuals with 
disabilities to remain employed, including individuals 
described in section 1902(a)(10)(A)(ii)(XIII) of such Act (42 
U.S.C. 1396a(a)(10)(A)(ii)(XIII)) if the State has elected 
to provide medical assistance under such plan to such 
individuals. 
(B) DEFINITIONS.—In this section: 
(i) EMPLOYED.—The term "employed" means— 
(I) earning at least the applicable minimum 
wage requirement under section 6 of the Fair 
Labor Standards Act (29 U.S.C. 206) and working 
at least 40 hours per month; or 
(II) being engaged in a work effort that meets 
substantial and reasonabk; threshold criteria for 
hours of work, wages, or other measures, as 
defined and approved by the Secretary. 
(ii) PERSONAL ASSISTANCE SERVICES.—The term 
"personal assistance services" means a range of serv-
ices, provided by 1 or more persons, designed to assist 
an individual with a disability to perform daily activi-
ties on and off the job that the: individual would typi-
cally perform if the individual did not have a disability. 
Such services shall be designed to increase the individ-
ual's control in life and ability to perform everyday 
activities on or off the job. 
(3) DETERMINATION OF AWARDS.— 
(A) IN GENERAL.—Subject to subparagraph (B), the Sec-
retary shall develop a methodology for awarding grants 
113 STAT. 1896 
PUBLIC LAW 106-170—DEC. 17, 1999 
to States under this section for a fiscal year in a manner 
that— 
(i) rewards States for their efforts in encouraging 
individuals 
described 
in paragraph 
(2)(A) to be 
employed; and 
(ii) does not provide a State that has not elected 
to provide medical assistance under title XIX of the 
Social Security Act to individuals described in section 
1902(a)(10)(A)(ii)(XIII) 
of 
that 
Act 
(42 
U.S.C. 
1396a(a)(10)(A)(ii)(XIII)) 
with 
proportionally 
more 
funds for a fiscal year than a State that has exercised 
such election. 
(B) AWARD LIMITS.— 
(i) MINIMUM AWARDS.— 
(I) IN GENERAL.—Subject to subclause (II), no 
State with an approved application under this sec-
tion shall receive a grant for a fiscal year that 
is less than $500,000. 
(II) 
PRO RATA 
REDUCTIONS.—If the 
funds 
appropriated under subsection (e) for a fiscal year 
are not sufficient to pay each State with an 
application approved under this section the min-
imum amount described in subclause (I), the Sec-
retary shall pay each such State an amount equal 
to the pro rata share of the amount made available. 
(ii) MAXIMUM AWARDS.— 
(I) STATES THAT ELECTED OPTIONAL MEDICAID 
ELIGIBILITY.—No State that has an application that 
has been approved under this section and that 
has elected to provide medical assistance under 
title XIX of the Social Security Act to individuals 
described in section 1902(a)(10)(A)(ii)(XIII) of such 
Act 
(42 U.S.C. 
1396a(a)(10)(A)(ii)(XIII)) 
shall 
receive a grant for a fiscal year that exceeds 10 
percent of the total expenditures by the State 
(including the reimbursed Federal share of such 
expenditures) for medical assistance 
provided 
under such title for such individuals, as estimated 
by the State and approved by the Secretary. 
(II) OTHER STATES.—The Secretary shall deter-
mine, consistent with the limit described in sub-
clause (I), a maximum award limit for a grant 
for a fiscal year for a State that has an application 
that has been approved under this section but 
that has not elected to provide medical assistance 
under title XIX of the Social Security Act to 
individuals 
described 
in 
section 
1902(a)(10)(A)(ii)(XIII) of that Act (42 U.S.C. 
1396a(a)(10)(A)(ii)(XIII)). 
(c) AVAILABILITY OF FUNDS.— 
(1) FUNDS AWARDED TO STATES.—Funds awarded to a State 
under a grant made under this section for a fiscal year shall 
remain available until expended. 
(2) FUNDS NOT AWARDED TO STATES.—Funds not awarded 
to States in the fiscal year for which they are appropriated 
shall remain available in succeeding fiscal years for awarding 
by the Secretary. 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1897 
(d) ANNUAL REPORT.—A State that is £iwarded a grant under 
this section shall submit an annual report to the Secretary on 
the use of funds provided under the grant. Each report shall include 
the percentage increase in the number of title II disability bene-
ficiaries, as defined in section 1148(k)(3) of the Social Security 
Act (as added by section 101(a) of this Act) in the State, and 
title XVI disability beneficiaries, as defined in section 1148(k)(4) 
of the Social Security Act (as so added) in the State who return 
to work. 
(e) APPROPRIATION.— 
(1) IN GENERAL.—Out of any funds in the Treasury not 
otherwise appropriated, there is appropriated to make grants 
under this section— 
(A) for fiscal year 2001, $20,000,000; 
(B) for fiscal year 2002, $25,000,000; 
(C) for fiscal year 2003, $30,000,000; 
(D) for fiscal year 2004, $35,000,000; 
(E) for fiscal year 2005, $40,000,000; and 
(F) for each of fiscal years 2006 through 2011, the 
amount appropriated for the preceding fiscal year increased 
by the percentage increase (if any) in the Consumer Price 
Index for All Urbein Consumers (United States city average) 
for the preceding fiscal year. 
(2) BUDGET AUTHORITY.—This subsection constitutes budget 
authority in advance of appropriations Acts and represents 
the obligation of the Federal Government to provide for the 
payment of the amounts appropriated under paragraph (1). 
(f) RECOMMENDATION.—Not later than October 1, 2010, the 
Secretary, in consultation with the Ticket to Work and Work Incen-
tives Advisory Panel established by section 101(f) of this Act, shall 
submit a recommendation to the CommittCie on Commerce of the 
House of Representatives and the Committee on Finance of the 
Senate reg£irding whether the grant prog^ram established under 
this section should be continued after fiscal year 2011. 
SEC. 204. DEMONSTRATION OF COVERAGE UNI>ER THE MEDICAID PRO-
GRAM OF WORKERS WITH 
POTENTIALLY SEVERE 
DISABILITIES. 
(a) STATE APPLICATION.—A State may apply to the Secretary 
of Health and Human Services (in this section referred to as the 
"Secretary") for approval of a demonstration project (in this section 
referred to as a "demonstration project") under which up to a 
specified maximum number of individuals who are workers with 
a potentially severe disability (as defined in subsection (b)(1)) are 
provided medical assistance equal to— 
(1) that provided under section 1905(a) of the Social Secu-
rity Act (42 U.S.C. 1396d(a)) to individuals described in section 
1902(a)(10)(A)(ii)(XIII) 
of 
that 
Act 
(42 
U.S.C. 
1396a(a)(10)(A)(ii)(XIII)); or 
(2) in the case of a State that has not elected to provide 
medical assistance under that section to such individuals, such 
medical assistance as the Secretary determines is an appro-
priate equivalent to the medical assistance described in para-
graph (1). 
(b) 
WORKER 
WITH 
A 
POTENTIALLY' 
SEVERE 
DISABILITY 
DEFINED.—For purposes of this section— 
Deadline. 
42 use 1396a 
note. 
113 STAT. 1898 
PUBLIC LAW 106-170—DEC. 17, 1999 
(1) IN GENERAL.—The term "worker with a potentially 
severe disability means, with respect to a demonstration 
project, an individual who— 
(A) is at least 16, but less than 65, years of age; 
(B) has a specific physical or mental impairment that, 
as defined by the State under the demonstration project, 
is reasonably expected, but for the receipt of items and 
services described in section 1905(a) of the Social Security 
Act (42 U.S.C. 1396d(a)), to become blind or disabled (as 
defined under section 1614(a) of the Social Security Act 
(42 U.S.C. 1382c(a))); and 
(C) is employed (as defined in paragraph (2)). 
(2) DEFINITION OF EMPLOYED.—An individual is considered 
to be "employed" if the individual— 
(A) is earning at least the applicable minimum wage 
requirement under section 6 of the Fair Labor Standards 
Act (29 U.S.C. 206) and working at least 40 hours per 
month; or 
(B) is engaged in a work effort that meets substantial 
and reasonable threshold criteria for hours of work, wages, 
or other measures, as defined under the demonstration 
project and approved by the Secretary. 
(c) APPROVAL OF DEMONSTRATION PROJECTS.— 
(1) IN GENERAL.—Subject to paragraph (3), the Secretary 
shall approve applications under subsection (a) that meet the 
requirements of paragraph (2) and such additional terms and 
conditions as the Secretary may require. The Secretary may 
waive the requirement of section 1902(a)(1) of the Social Secu-
rity Act (42 U.S.C. 1396a(a)(l)) to allow for sub-State dem-
onstrations. 
(2) TERMS AND CONDITIONS OF DEMONSTRATION PROJECTS.— 
The Secretary may not approve a demonstration project under 
this section unless the State provides assurances satisfactory 
to the Secretary that the following conditions are or will be 
met: 
(A) MAINTENANCE OF STATE EFFORT.—Federal funds 
paid to a State pursuant to this section must be used 
to supplement, but not supplant, the level of State funds 
expended for workers with potentially severe disabilities 
under programs in effect for such individuals at the time 
the demonstration project is approved under this section. 
(B) INDEPENDENT EVALUATION.—The State provides for 
an independent evaluation of the project. 
(3) LIMITATIONS ON FEDERAL FUNDING.— 
(A) APPROPRIATION.— 
(i) IN GENERAL.—Out of any funds in the Treasury 
not otherwise appropriated, there is appropriated to 
carry out this section— 
(I) $42,000,000 for each of fiscal years 2001 
through 2004; and 
(II) $41,000,000 for each of fiscal years 2005 
and 2006. 
(ii) BUDGET AUTHORITY.—Clause (i) constitutes 
budget authority in advance of appropriations Acts 
and represents the obligation of the Federal Govern-
ment to provide for the pajmient of the amounts appro-
priated under clause (i). 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1899 
(B) LIMITATION ON PAYMENTS.—In no case may— 
(i) the aggregate amount of payments made by 
the Secretary to States under this section exceed 
$250,000,000; 
(ii) the aggregate amount of payments made by 
the Secretary to States for administrative expenses 
relating to annual reports required under subsection 
(d) exceed $2,000,000 of such $250,000,000; or 
(iii) payments be provided by the Secretary for 
a fiscal year after fiscal year 2009. 
(C) FUNDS ALLOCATED TO STATES.—The Secretary shall 
allocate funds to States based on their applications and 
the availability of funds. Funds allocated to a State under 
a grant made under this section for a fiscal year shall 
remain available until expended. 
(D) FUNDS NOT ALLOCATED TO STATES.—Funds not allo-
cated to States in the fiscal year for which they are appro-
priated shall remain available in succeeding fiscal years 
for allocation by the Secretary using the allocation formula 
established under this section. 
(E) PAYMENTS TO STATES.—The Secretary shall pay 
to each State with a demonstration project approved under 
this section, from its allocation under subparagraph (C), 
an amount for each quarter equal to the Federal medical 
assistance percentage (as defined in section 1905(b) of the 
Social Security Act (42 U.S.C. 1395d(b)) of expenditures 
in the quarter for medical assistance provided to workers 
with a potentially severe disability. 
(d) ANNUAL REPORT.—A State with a demonstration project 
approved under this section shall submit an annual report to the 
Secretary on the use of funds provided under the grant. Each 
report shall include enrollment and financial statistics on— 
(1) the total population of workers, with potentially severe 
disabilities served by the demonstration project; and 
(2) each population of such workers with a specific physical 
or mental impairment described in subsection (b)(1)(B) served 
by such project. 
(e) RECOMMENDATION.—Not later than October 1, 2004, the Deadline. 
Secretary shall submit a recommendation to the Committee on 
Commerce of the House of Representatives and the Committee 
on Finance of the Senate regarding whether the demonstration 
project established under this section should be continued after 
fiscal year 2006. 
(f) STATE DEFINED.—In this section, the term "State" has the 
meaning given such term for purposes of title XIX of the Social 
Security Act (42 U.S.C. 1396 et seq.). 
SEC. 
205. ELECTION BY DISABLED BE^fEFICLARIES TO SUSPEND 
MEDIGAP INSURANCE WHEN COVERED UNDER A GROUP 
HEALTH PLAN. 
(a) IN GENERAL.—Section 1882(q) of the Social Security Act 
(42 U.S.C. 1395ss(q)) is amended— 
(1) in paragraph (5)(C), by inserting "or paragraph (6)" 
after "this paragraph"; and 
(2) by adding at the end the following new paragraph: 
"(6) Each medicare supplemental policy shall provide that 
benefits and premiums under the policy shall be suspended 
113 STAT. 1900 
PUBLIC LAW 106-170—DEC. 17, 1999 
at the request of the pohcyholder if the poHcyholder is entitled 
to benefits under section 226(b) and is covered under a group 
health plan (as defined in section 1862(b)(l)(A)(v)). If such 
suspension occurs and if the policyholder or certificate holder 
loses coverage under the group health plan, such policy shall 
be automatically reinstituted (effective as of the date of such 
loss 
of coverage) under 
terms 
described 
in 
subsection 
(n)(6)(A)(ii) as of the loss of such coverage if the policyholder 
provides notice of loss of such coverage within 90 days after 
the date of such loss.". 
42 use 1
3
9
5
S
S 
(b) EFFECTIVE DATE.—The amendments made by subsection 
note. 
(a) apply with respect to requests made after the date of the 
enactment of this Act. 
TITLE III—DEMONSTRATION PROJECTS 
AND STUDIES 
SEC. 301. EXTENSION OF DISABILITY INSURANCE PROGRAM DEM-
ONSTRATION PROJECT AUTHORITY. 
(a) EXTENSION OF AUTHORITY.—Title II of the Social Security 
Act (42 U.S.C. 401 et seq.) is amended by adding at the end 
the following new section: 
"DEMONSTRATION PROJECT AUTHORITY 
4
2 use 434. 
"SEC 234. (a) AUTHORITY.— 
"(1) IN GENERAL.—The Commissioner of Social Security 
(in this section referred to as the 'Commissioner') shall develop 
and carry out experiments and demonstration projects designed 
to determine the relative advantages and disadvantages o
f
— 
"(A) various alternative methods of treating the work 
activity of individuals entitled to disability insurance bene-
fits under section 223 or to monthly insurance benefits 
under section 202 based on such individual's disability 
(as defined in section 223(d)), including such methods as 
a reduction in benefits based on earnings, designed to 
encourage the return to work of such individuals; 
"(B) altering other limitations and conditions applicable 
to such individuals (including lengthening the trial work 
period (as defined in section 222(c)), altering the 24-month 
waiting period for hospital insurance benefits under section 
226, altering the manner in which the program under 
this title is administered, earlier referral of such individ-
uals for rehabilitation, and greater use of employers and 
others to develop, perform, and otherwise stimulate new 
forms of rehabilitation); and 
"(C) implementing sliding scale benefit offsets using 
variations in— 
"(i) the amount of the offset as a proportion of 
earned income; 
"(ii) the duration of the offset period; and 
"(iii) the method of determining the amount of 
income earned by such individuals, 
to the end that savings will accrue to the Trust Funds, or 
to otherwise promote the objectives or facilitate the administra-
tion of this title. 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1901 
"(2) AUTHORITY FOR EXPANSION OF SCOPE.—The Commis-
sioner may expand the scope of any such experiment or dem-
onstration project to include any group of appHcants for benefits 
under the program established under this title with impair-
ments that reasonably may be presumed to be disabling for 
purposes of such demonstration project, and may limit any 
such demonstration project to any such group of applicants, 
subject to the terms of such demonstration project which shall 
define the extent of any such presumption. 
"(b) 
REQUIREMENTS.—The experiments 
and 
demonstration 
projects developed under subsection (a) shall be of sufficient scope 
and shall be carried out on a wide enough scale to permit a thorough 
evaluation of the alternative methods under consideration while 
giving assurance that the results derived from the experiments 
and projects will obtain generally in the operation of the disability 
insurance program under this title without committing such pro-
gram to the adoption of any particular system either locally or 
nationally. 
"(c) 
AUTHORITY 
TO 
WAIVE CoMPLiAisfCE 
WITH 
BENEFITS 
REQUIREMENTS.—In the case of any experiment or demonstration 
project conducted under subsection (a), the Commissioner may 
waive compliance with the benefit requirements of this title and 
the requirements of section 1148 as they relate to the program 
established under this title, and the Secretary may (upon the 
request of the Commissioner) waive compliance with the benefits 
requirements of title XVIII, insofar as is necessary for a thorough 
evaluation of the alternative methods under consideration. No such 
experiment or project shall be actually placed in operation unless 
at least 90 days prior thereto a written report, prepared for purposes 
of notification and information only and containing a full and com-
plete description thereof, has been transmitted by the Commissioner 
to the Committee on Ways and Means of the? House of Representa-
tives and to the Committee on Finance of the Senate. Periodic 
reports on the progress of such experiments and demonstration 
projects shall be submitted by the Commissioner to such commit-
tees. When appropriate, such reports shall include detailed rec-
ommendations for changes in administration or law, or both, to 
carry out the objectives stated in subsection (a). 
"(d) REPORTS.— 
"(1) INTERIM REPORTS.—On or before June 9 of each year. Deadline, 
the Commissioner shall submit to the Committee on Ways 
and Means of the House of Representatives and to the Com-
mittee on Finance of the Senate an annual interim report 
on the progress of the experiments and demonstration projects 
carried out under this subsection together with any related 
data and materials that the Commissioner may consider appro-
priate. 
"(2) TERMINATION AND FINAL REPORT.—The authority under 
the preceding provisions of this section (including any waiver 
granted pursuant to subsection (c)) shall terminate 5 years 
after the date of the enactment of this Act. Not later than 
90 days after the termination of any experiment or demonstra-
tion project carried out under this section, the Commissioner 
shall submit to the Committee on Waiys and Means of the 
House of Representatives and to the (I!ommittee on Finance 
of the Senate a final report with resp(5ct to that experiment 
or demonstration project.". 
113 STAT. 1902 
PUBLIC LAW 106-170—DEC. 17, 1999 
(b) 
CONFORMING 
AMENDMENTS; 
TRANSFER 
OF 
PRIOR 
AUTHORITY.— 
(1) CONFORMING AMENDMENTS.— 
(A) 
REPEAL OF PRIOR AUTHORITY.—Paragraphs 
(1) 
through (4) of subsection (a) and subsection (c) of section 
505 of the Social Security Disability Amendments of 1980 
(42 U.S.C. 1310 note) are repealed. 
(B) CONFORMING AMENDMENT REGARDING FUNDING.— 
Section 201(k) of the Social Security Act (42 U.S.C. 401(k)) 
is amended by striking "section 505(a) of the Social Security 
Disability Amendments of 1980" and inserting "section 
234". 
42 use 1310 
(2) TRANSFER OF PRIOR AUTHORITY.—With respect to any 
"ote. 
experiment or demonstration project being conducted under 
section 505(a) of the Social Security Disability Amendments 
of 1980 (42 U.S.C. 1310 note) as of the date of the enactment 
of this Act, the authority to conduct such experiment or dem-
onstration 
project 
(including the terms 
and 
conditions 
applicable to the experiment or demonstration project) shall 
be treated as if that authority (and such terms and conditions) 
had been established under section 234 of the Social Security 
Act, as added by subsection (a). 
42 use 434 note. 
SEC. 302. DEMONSTRATION PROJECTS PROVIDING FOR REDUCTIONS 
IN 
DISABILITY 
INSURANCE 
BENEFITS 
BASED 
ON 
EARNINGS. 
(a) AUTHORITY.—The Commissioner of Social Security shall con-
duct demonstration projects for the purpose of evaluating, through 
the collection of data, a program for title II disability beneficiaries 
(as defined in section 1148(k)(3) of the Social Security Act) under 
which benefits payable under section 223 of such Act, or under 
section 202 of such Act based on the beneficiary's disability, are 
reduced by $1 for each $2 of the beneficiary's earnings that is 
above a level to be determined by the Commissioner. Such projects 
shall be conducted at a number of localities which the Commissioner 
shall determine is sufficient to adequately evaluate the appropriate-
ness of national implementation of such a program. Such projects 
shall identify reductions in Federal expenditures that may result 
from the permanent implementation of such a program. 
(b) SCOPE AND SCALE AND MATTERS TO B E DETERMINED.— 
(1) IN GENERAL.—The demonstration projects developed 
under subsection (a) shall be of sufficient duration, shall be 
of sufficient scope, and shall be carried out on a wide enough 
scale to permit a thorough evaluation of the project to 
determine— 
(A) the effects, if any, of induced entry into the project 
and reduced exit from the project; 
(B) the extent, if any, to which the project being tested 
is affected by whether it is in operation in a locality within 
an area under the administration of the Ticket to Work 
and Self-Sufficiency Program established under section 
1148 of the Social Security Act; and 
(C) the savings that accrue to the Federal Old-Age 
and Survivors Insurance Trust Fund, the Federal Disability 
Insurance Trust Fund, and other Federal programs under 
the project being tested. 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1903 
The Commissioner shall take into account advice provided by 
the Ticket to Work and Work Incentives Advisory Panel pursu-
ant to section 101(f )(2)(B)(ii) of this Act. 
(2) ADDITIONAL MATTERS.—The Commissioner shall also 
determine with respect to each project— 
(A) the annual cost (including net cost) of the project 
and the annual cost (including net cost) that would have 
been incurred in the absence of the project; 
(B) the determinants of return to work, including the 
characteristics of the beneficiaries who participate in the 
project; and 
(C) the employment outcomes, including wages, occupa-
tions, benefits, and hours worked, of beneficiaries who 
return to work as a result of participation in the project. 
The Commissioner may include within the matters evaluated 
under the project the merits of trial work: periods and periods 
of extended eligibility. 
(c) WAIVERS.—The Commissioner may waive compliance with 
the benefit provisions of title II of the Social Security Act (42 
U.S.C. 401 et seq.), and the Secretary of Health and Human Services 
may waive compliance with the benefit requirements of title XVIII 
of such Act (42 U.S.C. 1395 et seq.), insofar as is necessary for 
a thorough evaluation of the alternative methods under consider-
ation. No such project shall be actually placed in operation unless 
at least 90 days prior thereto a written report, ]3repared for purposes 
of notification and information only and containing a full and com-
plete description thereof, has been transmitted by the Commissioner 
to the Committee on Ways and Means of the Jtlouse of Representa-
tives and to the Committee on Finance of the Senate. Periodic 
reports on the progress of such projects shall be submitted by 
the Commissioner to such committees. When appropriate, such 
reports shall include detailed recommendations for changes in 
administration or law, or both, to carry out the objectives stated 
in subsection (a). 
(d) INTERIM REPORTS.—Not later than 2 years after the date 
of the enactment of this Act, and annually thereafter, the Commis-
sioner of Social Security shall submit to the Congress an interim 
report on the progress of the demonstration projects carried out 
under this subsection together with any related data and materials 
that the Commissioner of Social Security may consider appropriate. 
(e) FINAL REPORT.—The Commissioner of Social Security shall 
submit to the Congress a final report with respect to all demonstra-
tion projects carried out under this section not later than 1 year 
after their completion. 
(f) 
EXPENDITURES.—Expenditures made for 
demonstration 
projects under this section shall be made from the Federal Disability 
Insurance Trust Fund and the Federal Old-Age and Survivors Insur-
ance Trust Fund, as determined appropriate by the Commissioner 
of Social Security, and from the Federal Hospital Insurance Trust 
Fund and the Federal Supplementary Medical Insurance Trust 
Fund, as determined appropriate by the Secretary of Health and 
Human Services, to the extent provided in advance in appropriation 
Acts. 
Reports. 
Deadline. 
Deadline. 
SEC. 303. STUDIES AND REPORTS. 
(a) 
STUDY BY GENERAL ACCOUNTING 
OFFICE 
DISABILITY-RELATED EMPLOYMENT INCENTIVES.— 
OF 
EXISTING 
42 use 1201 
note. 
69-194 - 01 - 13 :QL 3 Part 3 
113 STAT. 1904 
PUBLIC LAW 106-170—DEC. 17, 1999 
(1) STUDY.—As soon as practicable after the date of the 
enactment of this Act, the Comptroller General of the United 
States shall undertake a study to assess existing tax credits 
and other disability-related employment incentives under the 
Americans with Disabilities Act of 1990 (42 U.S.C. 12101 et 
seq.) and other Federal laws. In such study, the Comptroller 
General shall specifically address the extent to which such 
credits and other incentives would encourage employers to hire 
and retain individuals with disabilities. 
Deadline. 
(2) REPORT.—Not later than 3 years after the date of the 
enactment of this Act, the Comptroller General shall transmit 
to the Committee on Ways and Means of the House of Rep-
resentatives and the Committee on Finance of the Senate a 
written report presenting the results of the Comptroller Gen-
eral's study conducted pursuant to this subsection, together 
with such recommendations for legislative or administrative 
changes as the Comptroller General determines are appro-
priate. 
42 use 401 note. 
(b) STUDY B
Y GENERAL ACCOUNTING OFFICE OF EXISTING 
COORDINATION OF THE D I AND SSI 
PROGRAMS AS THEY RELATE 
TO INDIVIDUALS ENTERING OR LEAVING CONCURRENT ENTITLE-
MENT.— 
(1) STUDY.—As soon as practicable after the date of the 
enactment of this Act, the Comptroller General of the United 
States shall undertake a study to evaluate the coordination 
under current law of the disability insurance program under 
title II of the Social Security Act (42 U.S.C. 401 et seq.) and 
the supplemental security income program under title XVI 
of such Act (42 U.S.C. 1381 et seq.), as such programs relate 
to individuals entering or leaving concurrent entitlement under 
such programs. In such study, the Comptroller General shall 
specifically address the effectiveness of work incentives under 
such programs with respect to such individuals and the 
effectiveness of coverage of such individuals under titles XVIII 
and XIX of such Act (42 U.S.C. 1395 et seq., 1396 et seq.). 
(2) REPORT.—Not later than 3 years after the date of the 
enactment of this Act, the Comptroller General shall transmit 
to the Committee on Ways and Means of the House of Rep-
resentatives and the Committee on Finance of the Senate a 
written report presenting the results of the Comptroller Gen-
eral's study conducted pursuant to this subsection, together 
with such recommendations for legislative or administrative 
changes as the Comptroller General determines are appro-
priate. 
42 use 434 note. 
(c) STUDY B
Y GENERAL ACCOUNTING OFFICE OF THE IMPACT 
OF THE 
SUBSTANTIAL GAINFUL ACTIVITY LIMIT ON RETURN TO 
WORK.— 
(1) STUDY.—As soon as practicable after the date of the 
enactment of this Act, the Comptroller General of the United 
States shall undertake a study of the substantial gainful 
activity level applicable as of that date to recipients of benefits 
under section 223 of the Social Security Act (42 U.S.C. 423) 
and under section 202 of such Act (42 U.S.C. 402) on the 
basis of a recipient having a disability, and the effect of such 
level as a disincentive for those recipients to return to work. 
In the study, the Comptroller General also shall address the 
merits of increasing the substantial gainful activity level 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1905 
applicable to such recipients of benefits and the rationale for 
not yearly indexing that level to inflation. 
(2) REPORT.—Not later than 2 years after the date of the Deadline. 
enactment of this Act, the Comptroller General shall transmit 
to the Committee on Ways and Means of the House of Rep-
resentatives and the Committee on Fiucince of the Senate a 
written report presenting the results of the Comptroller Gen-
eral's study conducted pursuant to this subsection, together 
with such recommendations for legislative or administrative 
changes as the Comptroller General determines are appro-
priate. 
(d) 
REPORT ON DISREGARDS UNDER THE D I AND SSI 
PRO-
GRAMS.—Not later than 90 days after the date of the enactment Deadline, 
of this Act, the Commissioner of Social Security shall submit to 
the Committee on Ways and Means of the Hou se of Representatives 
and the Committee on Finance of the Senate a report that— 
(1) identifies all income, assets, and resource disregards 
(imposed under statutory or regulatory authority) that are 
applicable to individuals receiving benefits under title II or 
XVI of the Social Security Act (42 U.S.C. 401 et seq., 1381 
et seq.); 
(2) with respect to each such disregard— 
(A) specifies the most recent statutory or regulatory 
modification of the disregard; and 
(B) recommends whether further statutory or regu-
latory modification of the disregard would be appropriate; 
and 
(3) with respect to the disregard described in section 
1612(b)(7) of such Act (42 U.S.C. 1382a(b)(7)) (relating to 
grants, scholarships, or fellowships received for use in pa3dng 
the cost of tuition and fees at any educational (including tech-
nical or vocational education) institution)— 
(A) identifies the number of individuals receiving bene-
fits under title XVI of such Act (42 U.S.C. 1381 et seq.) 
who have attained age 22 and have not had any portion 
of any grant, scholarship, or fellowship received for use 
in paying the cost of tuition and fees at any educational 
(including technical or vocational education) institution 
excluded fi"om their income in accordance with that section; 
(B) recommends whether the age at which such grants, 
scholarships, or fellowships are excluded from income for 
purposes of determining eligibility under title XVI of such 
Act (42 U.S.C. 1381 et seq.) should be increased to age 
25; and 
(C) recommends whether such disregard should be 
expanded to include any such grant, scholarship, or fellow-
ship received for use in paying the cost of room and board 
at any such institution. 
(e) STUDY BY THE GENERAL ACCOUNTING OFFICE OF SOCIAL 42 use 434 note. 
SECURITY ADMINISTRATION'S DISABILITY INSURANCE PROGRAM DEM-
ONSTRATION AUTHORITY.— 
(1) STUDY.—As soon as practicable after the date of the 
enactment of this Act, the Comptroller Greneral of the United 
States shall undertake a study to assess the results of the 
Social Security Administration's efforts to conduct disability 
demonstrations authorized under prior law as well as under 
113 STAT. 1906 
PUBLIC LAW 106-170—DEC. 17, 1999 
section 234 of the Social Security Act (as added by section 
301 of this Act). 
Deadline. 
(2) REPORT.—Not later than 5 years after the date of the 
enactment of this Act, the Comptroller General shall transmit 
to the Committee on Ways and Means of the House of Rep-
resentatives and the Committee on Finance of the Senate a 
written report presenting the results of the Comptroller Gen-
eral's study conducted pursuant to this section, together with 
a recommendation as to whether the demonstration authority 
authorized under section 234 of the Social Security Act (as 
added by section 301 of this Act) should be made permanent. 
TITLE IV—MISCELLANEOUS AND 
TECHNICAL AMENDMENTS 
SEC. 401. TECHNICAL AMENDMENTS RELATING TO DRUG ADDICTS AND 
ALCOHOLICS. 
(a) CLARIFICATION RELATING TO THE EFFECTIVE DATE OF THE 
DENIAL OF SOCIAL SECURITY DISABILITY BENEFITS TO DRUG ADDICTS 
AND ALCOHOLICS.—Section 105(a)(5) of the Contract with America 
Advancement Act of 1996 (42 U.S.C. 405 note) is amended— 
(1) in subparagraph (A), by striking "by the Commissioner 
of Social Security" and "by the Commissioner"; and 
(2) by adding at the end the following new subparagraph: 
"(D) For purposes of this paragraph, an individual's 
claim, with respect to benefits under title II based on 
disability, which has been denied in whole before the date 
of the enactment of this Act, may not be considered to 
be finally adjudicated before such date if, on or after such 
date— 
"(i) there is pending a request for either adminis-
trative or judicial review with respect to such claim; 
or 
"(ii) there is pending, with respect to such claim, 
a readjudication by the Commissioner of Social Secu-
rity pursuant to relief in a class action or implementa-
tion by the Commissioner of a court remand order. 
"(E) Notwithstanding the provisions of this paragraph, 
with respect to any individual for whom the Commissioner 
of Social Security does not perform the entitlement redeter-
mination before the date prescribed in subparagraph (C), 
the Commissioner shall perform such entitlement redeter-
mination in lieu of a continuing disability review whenever 
the Commissioner determines that the individual's entitle-
ment is subject to redetermination based on the preceding 
provisions of this paragraph, and the provisions of section 
223(f) shall not apply to such redetermination.". 
(b) 
CORRECTION TO EFFECTIVE DATE OF PROVISIONS CON-
CERNING REPRESENTATIVE PAYEES AND TREATMENT REFERRALS OF 
SOCIAL SECURITY BENEFICIARIES WHO ARE DRUG ADDICTS AND 
ALCOHOLICS.—Section 105(a)(5)(B) of the Contract with America 
Advancement Act of 1996 (42 U.S.C. 405 note) is amended to 
read as follows: 
"(B) The amendments made by paragraphs (2) and 
(3) shall take effect on July 1, 1996, with respect to any 
individual— 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1907 
"(i) whose claim for benefits is finally adjudicated 
on or after the date of the enactment of this Act; 
or 
"(ii) whose entitlement to benefits is based upon 
an entitlement redetermination made pursuant to 
subparagraph (C).". 
(c) EFFECTIVE DATES.—The amendments made by this section 
42 use 405 note. 
shall take effect as if included in the enact;ment of section 105 
of the Contract with America Advancement Act of 1996 (Public 
Law 104-121; 110 Stat. 852 et seq.). 
SEC. 402. TREATMENT OF PRISONERS. 
(a) 
IMPLEMENTATION OF PROHIBITION AGAINST PAYMENT OF 
TITLE II BENEFITS TO PRISONERS.— 
(1) IN GENERAL.—Section 202(x)(3) of the Social Security 
Act (42 U.S.C. 402(x)(3)) is amended— 
(A) by inserting "(A)" after "(3)"; and 
(B) by adding at the end the following new subpara-
graph: 
"(B)(i) The Commissioner shall enter into an agreement under 
this subparagraph with any interested State; or local institution 
comprising a jail, prison, penal institution, or correctional facility, 
or comprising any other institution a purpose of which is to confine 
individuals as described in paragraph (l)(A)(ii). Under such 
agreement— 
"(I) the institution shall provide to title Commissioner, on 
a monthly basis and in a manner specified by the Commis-
sioner, the names, Social Security account numbers, dates of 
birth, confinement commencement dates, and, to the extent 
available to the institution, such other identifying information 
concerning the individuals confined in the institution as the 
Commissioner may require for the purjjose of carrjdng out 
paragraph (1) and other provisions of this title; and 
"(II) the Commissioner shall pay to the institution, with 
respect to information described in subclause (I) concerning 
each individual who is confined therein as described in para-
graph (1)(A), who receives a benefit under this title for the 
month preceding the first month of such confinement, and 
whose benefit under this title is determined by the Commis-
sioner to be not payable by reason of confinement based on 
the information provided by the institution, $400 (subject to 
reduction under clause (ii)) if the institution furnishes the 
information to the Commissioner within 30 days after the date 
such individual's confinement in such institution begins, or 
$200 (subject to reduction under clause (ii)) if the institution 
fiimishes the information after 30 days after such date but 
within 90 days after such date. 
"(ii) The dollar amounts specified in clause (i)(II) shall be 
reduced by 50 percent if the Commissioner is also required to 
make a payment to the institution with resp(3ct to the same indi-
vidual under an agreement entered into under section 1611(e)(l)(I). 
"(iii) There are authorized to be transferred from the Federal 
Old-Age and Survivors Insurance Trust Fund and the Federal Dis-
ability Insurance Trust Fund, as appropriate, such sums as may 
be necessary to enable the Commissioner to make payments to 
institutions required by clause (i)(II). 
113 STAT. 1908 
PUBLIC LAW 106-170—DEC. 17, 1999 
"(iv) The Commissioner shall maintain, and shall provide on 
a reimbursable basis, information obtained pursuant to agreements 
entered into under this paragraph to any agency administering 
a Federal or federally-assisted cash, food, or medical assistance 
program for eligibility and other administrative purposes under 
such program.". 
(2) 
CONFORMING AMENDMENTS TO THE PRIVACY ACT.— 
Section 552a(a)(8)(B) of title 5, United States Code, is 
amended— 
(A) in clause (vi), by striking "or" at the end; 
(B) in clause (vii), by adding "or" at the end; and 
(C) by adding at the end the following new clause: 
"(viii) matches performed pursuant to section 
202(x)(3) or 1611(e)(1) of the Social Security Act (42 
U.S.C. 402(x)(3), 1382(e)(1));". 
(3) CONFORMING AMENDMENTS TO TITLE XVI.— 
(A) Section 1611(e)(l)(I)(i)(I) of the Social Security Act 
(42 U.S.C. 1382(e)(l)(I)(i)(I)) is amended by striking "; and" 
and inserting "and the other provisions of this title; and". 
(B) Section 1611(e)(l)(I)(ii)(II) of such Act (42 U.S.C. 
1382(e)(l)(I)(ii)(II)) is amended by striking "is authorized 
to provide, on a reimbursable basis," and inserting "shall 
maintain, and shall provide on a reimbursable basis,". 
42 use 402 note. 
(4) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to individuals whose period of confinement 
in an institution commences on or after the first day of the 
fourth month beginning after the month in which this Act 
is enacted. 
(b) ELIMINATION OF TITLE II REQUIREMENT THAT CONFINEMENT 
STEM FROM CRIME PUNISHABLE BY IMPRISONMENT FOR MORE THAN 
1 YEAR.— 
(1) IN GENERAL.—Section 202(x)(l)(A) of the Social Security 
Act (42 U.S.C. 402(x)(l)(A)) is amended— 
(A) in the matter preceding clause (i), by striking 
"during which" and inserting "ending with or during or 
beginning with or during a period of more than 30 days 
throughout all of which"; 
(B) in clause (i), by striking "an offense punishable 
by imprisonment for more than 1 year (regardless of the 
actual sentence imposed)" and inserting "a criminal 
offense"; and 
(C) in clause (iiXD, by striking "an offense punishable 
by imprisonment for more than 1 year" and inserting "a 
criminal offense". 
42 use 402 note. 
(2) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to individuals whose period of confinement 
in an institution commences on or after the first day of the 
fourth month beginning after the month in which this Act 
is enacted. 
(c) CONFORMING TITLE XVI AMENDMENTS.— 
(1) FIFTY PERCENT REDUCTION IN TITLE XVI PAYMENT IN 
CASE 
INVOLVING 
COMPARABLE TITLE 
II 
PAYMENT.—Section 
1611(e)(l)(I) of the Social Security Act (42 U.S.C. 1382(e)(l)(I)) 
is amended— 
(A) in clause (i)(II), by inserting "(subject to reduction 
under clause (ii))" after "$400" and after "$200"; 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1909 
(B) by redesignating clauses (ii) and (iii) as clauses 
(iii) and (iv) respectively; and 
(C) by inserting after clause (i) the following new 
clause: 
"(ii) The dollar amounts specified in clause (i)(II) shall be 
reduced by 50 percent if the Commissioner is also required to 
make a pa5mient to the institution with respect to the same indi-
vidual under an agreement entered into under section 202(x)(3)(B).". 
(2) EXPANSION OF CATEGORIES OF INSTITUTIONS ELIGIBLE 
TO ENTER INTO AGREEMENTS WITH THE COMMISSIONER.—Section 
1611(e)(l)(I)(i) of such Act (42 U.S.C. 1382(e)(l)(I)(i)) is amended 
in the matter preceding subclause (I) by striking "institution" 
and all that follows through "section 202(x)(l)(A)," and inserting 
"institution comprising a jail, prison, penal institution, or 
correctional facility, or with any other interested State or local 
institution a purpose of which is to confine individuals as 
described in section 202(x)(l)(A)(ii),". 
(3) ELIMINATION OF OVERLY BROAD EXEMPTION.—Section 
1611(e)(l)(I)(iii) of such Act (42 U.S.C. 1382(e)(l)(I)(iii)) (as 
redesignated by paragraph (1)(B)) is amended further— 
(A) by striking "(I) The provisions" and all that follows 
through "(II)"; and 
(B) by striking "eligibility purposes" and inserting 
"eligibility and other administrative ]Durposes under such 
program". 
(4) EFFECTIVE DATE.—The amendments made by this sub- 
42 use 1382 
section shall take effect as if included in the enactment of "ote. 
section 203(a) of the Personal Responsibility and Work Oppor-
tunity ReconciUation Act of 1996 (Pubhc Law 104-193; 110 
Stat. 2186). The reference to section 202(x)(l)(A)(ii) of the Social 
Security Act in section 1611(e)(l)(I)(i) of the Social Security 
Act, as amended by paragraph (2) of this subsection, shall 
be deemed a reference to such section 202(x)(l)(A)(ii) of such 
Act as amended by subsection (b)(1)(C) of this section, 
(d) CONTINUED DENIAL OF BENEFITS TO SEX OFFENDERS 
REMAINING CONFINED TO PUBLIC INSTITUTIONS UPON COMPLETION 
OF PRISON TERM.— 
(1) IN GENERAL.—Section 202(x)(l)(A) of the Social Security 
Act (42 U.S.C. 402(x)(l)(A)) is amended— 
(A) in clause (i), by striking "or" at the end; 
(B) in clause (ii)(IV), by striking the period and 
inserting ", or"; and 
(C) by adding at the end the following new clause: 
"(iii) immediately upon completion of confinement as 
described in clause (i) pursuant to conviction of a criminal 
offense an element of which is sexual activity, is confined 
by court order in an institution at public expense pursuant 
to a finding that the individual is a sexually dangerous person 
or a sexual predator or a similar finding.". 
(2) CONFORMING AMENDMENT.—Section 202(x)(l)(B)(ii) of 
such Act (42 U.S.C. 402(x)(l)(B)(ii)) is amended by striking 
"clause (ii)" and inserting "clauses (ii) and (iii)". 
(3) EFFECTIVE DATE.—The amendments made by this sub- 42 USC 402 note, 
section shall apply with respect to benefits for months ending 
after the date of the enactment of this Act. 
113 STAT. 1910 
PUBLIC LAW 106-170—DEC. 17, 1999 
26 u s e 1402 
SEC. 403. REVOCATION BY MEMBERS OF THE CLERGY OF EXEMPTION 
note 
FROM SOCIAL SECURITY COVERAGE. 
(a) IN GENERAL.—Notwithstanding section 1402(e)(4) of the 
Internal Revenue Code of 1986, any exemption which has been 
received under section 1402(e)(1) of such Code by a duly ordained, 
commissioned, or licensed minister of a church, a member of a 
religious order, or a Christian Science practitioner, and which is 
effective for the taxable year in which this Act is enacted, may 
be revoked by filing an application therefor (in such form and 
manner, and with such official, as may be prescribed by the 
Commissioner of Internal Revenue), if such application is filed 
no later than the due date of the Federal income tax return 
(including any extension thereof) for the applicant's second taxable 
year beginning after December 31, 1999. Any such revocation shall 
be effective (for purposes of chapter 2 of the Internal Revenue 
Code of 1986 and title II of the Social Security Act (42 U.S.C. 
401 et seq.)), as specified in the application, either with respect 
to the applicant's first taxable year beginning after December 31, 
1999, or with respect to the applicant's second taxable year begin-
ning after such date, and for all succeeding taxable years; and 
the applicant for any such revocation may not thereafter again 
file application for an exemption under such section 1402(e)(1). 
If the application is filed after the due date of the applicant's 
Federal income tax return for a taxable year and is effective with 
respect to that taxable year, it shall include or be accompanied 
by payment in full of an amount equal to the total of the taxes 
that would have been imposed by section 1401 of the Internal 
Revenue Code of 1986 with respect to all of the applicant's income 
derived in that taxable year which would have constituted net 
earnings from self-employment for purposes of chapter 2 of such 
Code (notwithstanding paragraphs (4) and (5) of section 1402(c)) 
except for the exemption under section 1402(e)(1) of such Code. 
(b) EFFECTIVE DATE.—Subsection (a) shall apply with respect 
to service performed (to the extent specified in such subsection) 
in taxable years beginning after December 31, 1999, and with 
respect to monthly insurance benefits payable under title II on 
the basis of the wages and self-employment income of any individual 
for months in or after the calendar year in which such individual's 
application for revocation (as described in such subsection) is effec-
tive (and lump-sum death payments payable under such title on 
the basis of such wages and self-employment income in the case 
of deaths occurring in or after such calendar year). 
SEC. 
404. ADDITIONAL TECHNICAL AMENDMENT RELATING TO 
COOPERATIVE 
RESEARCH 
OR 
DEMONSTRATION 
PROJECTS UNDER TITLES II AND XVI. 
(a) IN GENERAL.—-Section 1110(a)(3) of the Social Security Act 
(42 U.S.C. 1310(a)(3)) is amended by striking "title XVI" and 
inserting "title II or XVI". 
42 use 1310 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
note. 
shall take effect as if included in the enactment of the Social 
Security Independence and Program Improvements Act of 1994 
(Public Law 103-296; 108 Stat. 1464). 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1911 
SEC. 405. 
AUTHORIZATION FOR STATE TO PERMIT ANNUAL WAGE 
REPORTS. 
(a) IN GENERAL.—Section 1137(a)(3) of the Social Security Act 
(42 U.S.C. 1320b-7(a)(3)) is amended by inserting before the semi-
colon the following: ", and except that in the case of wage reports 
with respect to domestic service employment, a State may permit 
employers (as so defined) that make returns with respect to such 
employment on a calendar year basis pursiiant to section 3510 
of the Internal Revenue Code of 1986 to make such reports on 
an annual basis". 
(b) TECHNICAL AMENDMENTS.—Section 1137(a)(3) of the Social 
Security Act (42 U.S.C. 1320b-7(a)(3)) is amended— 
(1) by striking "(as defined in section 453A(a)(2)(B)(iii))"; 
and 
(2) by inserting "(as defined in section 453A(a)(2)(B))" after 
"employers" . 
(c) EFFECTIVE DATE.—The amendments made by this section 
42 use i320b-7 
shall apply to wage reports required to be submitted on and after ^°^^-
the date of the enactment of this Act. 
SEC. 406. ASSESSMENT ON ATTORNEYS WHO IRECEIVE THEIR FEES 
VIA THE SOCIAL SECURITY ADMINISTRATION. 
(a) ASSESSMENT ON ATTORNEYS.— 
(1) IN GENERAL.—Section 206 of the Social Security Act 
(42 U.S.C. 406) is amended by adding at the end the following 
new subsection: 
"(d) ASSESSMENT ON ATTORNEYS.— 
"(1) IN GENERAL.—Whenever a fee for services is required 
to be certified for payment to an attorney from a claimant's 
past-due benefits pursuant to subsection (a)(4) or (b)(1), the 
Commissioner shall impose on the attorney an assessment cal-
culated in accordance with paragraph (2). 
"(2) AMOUNT.— 
"(A) The amount of an assessment under paragraph 
(1) shall be equal to the product obtained by multipl3dng 
the amount of the representative's fee that would be 
required to be so certified by subsection (a)(4) or (b)(1) 
before the application of this subsection, by the percentage 
specified in subparagraph (B). 
"(B) The percentage specified in this subparagraph is— 
"(i) for calendar years before 2001, 6.3 percent, 
and 
"(ii) for calendar years after 2000, such percentage 
• . 
rate as the Commissioner determines is necessary in 
order to achieve full recovery of the costs of deter-
mining and certif5dng fees to attorneys from the past-
due benefits of claimants, but not in excess of 6.3 
percent. 
"(3) COLLECTION.—The Commissioner may collect the 
assessment imposed on an attorney under paragraph (1) by 
offset from the amount of the fee otherwise required by sub-
section (a)(4) or (b)(1) to be certified for payment to the attorney 
from a claimant's past-due benefits. 
"(4) 
PROHIBITION 
ON 
CLAIMANT 
REIMBURSEMENT.—An 
attorney subject to an assessment under paragraph (1) may 
not, directly 
or indirectly, request 
or otherwise 
obtain 
113 STAT. 1912 
PUBLIC LAW 106-170—DEC. 17, 1999 
reimbursement for such assessment from the claimant whose 
claim gave rise to the assessment. 
"(5) DISPOSITION OF ASSESSMENTS.—Assessments on attor-
neys collected under this subsection shall be credited to the 
Federal Old-Age and Survivors Insurance Trust Fund and the 
Federal Disability Insurance Trust Fund, as appropriate. 
"(6) AUTHORIZATION OF APPROPRIATIONS.—The assessments 
authorized under this section shall be collected and available 
for obligation only to the extent and in the amount provided 
in advance in appropriations Acts. Amounts so appropriated 
are authorized to remain available until expended, for adminis-
trative expenses in carrjdng out this title and related laws.". 
(2) CONFORMING AMENDMENTS.— 
(A) Section 206(a)(4)(A) of such Act (42 U.S.C. 
406(a)(4)(A)) is amended by inserting "and subsection (d)" 
after "subparagraph (B)". 
(B) Section 206(b)(1)(A) of such Act (42 U.S.C. 
406(b)(1)(A)) is amended by inserting ", but subject to sub-
section (d) of this section" after "section 205(i)". 
(b) ELIMINATION OF 15-DAY WAITING PERIOD FOR PAYMENT 
OF FEES.—Section 206(a)(4) of such Act (42 U.S.C. 406(a)(4)), as 
amended by subsection (a)(2)(A) of this section, is amended— 
(1) by striking "(4)(A)" and inserting "(4)"; 
(2) by striking "subparagraph (B) and"; and 
(3) by striking subparagraph (B). 
42 u s e 406 note. 
(c) G A G STUDY AND REPORT.— 
(1) STUDY.—The Comptroller General of the United States 
shall conduct a study that— 
(A) examines the costs incurred by the Social Security 
Administration in administering the provisions of sub-
section (a)(4) and (b)(1) of section 206 of the Social Security 
Act (42 U.S.C. 406) and itemizes the components of such 
costs, including the costs of determining fees to attorneys 
from the past-due benefits of claimants before the Commis-
sioner of Social Security and of certif5ang such fees; 
(B) identifies efficiencies that the Social Security 
Administration could implement to reduce such costs; 
(C) examines the feasibility and advisability of linking 
the payment of, or the amount of, the assessment under 
section 206(d) of the Social Security Act (42 U.S.C. 406(d)) 
to the timeliness of the payment of the fee to the attorney 
as certified by the Commissioner of Social Security pursu-
ant to subsection (a)(4) or (b)(1) of section 206 of such 
Act (42 U.S.C. 406); 
(D) determines whether the provisions of subsection 
(a)(4) and (b)(1) of section 206 of such Act (42 U.S.C. 
406) should be applied to claimants under title XVI of 
such Act (42 U.S.C 1381 et seq.); 
(E) determines the feasibility and advisability of 
stating fees under section 206(d) of such Act (42 U.S.C. 
406(d)) in terms of a fixed dollar amount as opposed to 
a percentage; 
(F) determines whether the dollar limit specified in 
section 
206(a)(2)(A)(ii)(II) 
of 
such 
Act 
(42 
U.S.C. 
406(a)(2)(A)(ii)(II)) should be raised; and 
(G) determines whether the assessment on attorneys 
required under section 206(d) of such Act (42 U.S.C. 406(d)) 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1913 
(as added by subsection (a)(1) of this section) impairs access 
to legal representation for claimants. 
(2) REPORT.—Not later than 1 year after the date of the Deadline. 
enactment of this Act, the Comptroller General of the United 
States shall submit a report to the Committee on Ways and 
Means of the House of Representatives and the Committee 
on Finance of the Senate on the study conducted under para-
graph (1), together with any recommendations for legislation 
that the Comptroller General determintis to be appropriate 
as a result of such study. 
(d) EFFECTIVE DATE.—The amendments made by this section 
42 USC 406 note. 
shall apply in the case of any attorney with respect to whom 
a fee for services is required to be certified for payment from 
a claimant's past-due benefits pursuant to subsection (a)(4) or (b)(1) 
of section 206 of the Social Security Act after the later o
f
— 
(1) December 31, 1999, or 
(2) the last day of the first month beginning after the 
month in which this Act is enacted. 
SEC. 407. EXTENSION OF AUTHORITY OF STATE IVIEDICAID FRAUD CON-
TROL UNITS. 
(a) EXTENSION OF AUTHORITY TO INVESTIGATE AND PROSECUTE 
FRAUD IN OTHER FEDERAL HEALTH CARE PROGRAMS.—Section 
1903(q)(3) of the Social Security Act (42 U.S.C. 1396b(q)(3)) is 
amended— 
(1) by inserting "(A)" after "in connection with"; and 
(2) by striking "title." and inserting "title; and (B) upon 
the approval of the Inspector General of the relevant Federal 
agency, any aspect of the provision of health care services 
and activities of providers of such servicers under any Federal 
health care program (as defined in section 1128B(f )(1)), if the 
suspected fraud or violation of law in suchi case or investigation 
is primarily related to the State plan under this title.". 
(b) RECOUPMENT OF FUNDS.—Section 1903(q)(5) of such Act 
(42 U.S.C. 1396b(q)(5)) is amended— 
(1) by inserting "or under any Federal health care program 
(as so defined)" after "plan"; and 
(2) by adding at the end the following: "All funds collected 
in accordance with this paragraph shall be credited exclusively 
to, and available for expenditure under, the Federal health 
care program (including the State plan under this title) that 
was subject to the activity that was the basis for the collection.". 
(c) EXTENSION OF AUTHORITY TO INVESTKGIATE AND PROSECUTE 
RESIDENT ABUSE IN NON-MEDICAID BOARD AND CARE FACILITIES.— 
Section 1903(q)(4) of such Act (42 U.S.C. 1396b(q)(4)) is amended 
to read as follows: 
"(4)(A) The entity has— 
"(i) procedures for reviewing complaints of abuse or 
neglect of patients in health care facilities which receive 
payments under the State plan under this title; 
"(ii) at the option of the entity, procedures for reviewing 
complaints of abuse or neglect of patients residing in board 
and care facilities; and 
"(iii) procedures for acting upon such complaints under 
the criminal laws of the State or foir referring such com-
plaints to other State agencies for action. 
113 STAT. 1914 
PUBLIC LAW 106-170—DEC. 17, 1999 
"(B) For purposes of this paragraph, the term 'board and 
care facihty' means a residential setting which receives pay-
ment (regardless of whether such payment is made under the 
State plan under this title) from or on behalf of two or more 
unrelated adults who reside in such facility, and for whom 
one or both of the following is provided: 
"(i) Nursing care services provided by, or under the 
supervision of, a registered nurse, licensed practical nurse, 
or licensed nursing assistant. 
"(ii) A substantial amount of personal care services 
that assist residents with the activities of daily living, 
including personal hygiene, dressing, bathing, eating, 
toileting, ambulation, transfer, positioning, self-medication, 
body care, travel to medical services, essential shopping, 
meal preparation, laundry, and housework.". 
42 use 1396b 
(d) EFFECTIVE DATE.—The amendments made by this section 
note 
take effect on the date of the enactment of this Act. 
SEC. 408. CLIMATE DATABASE MODERNIZATION. 
Notwithstanding any other provision of law, the National Oce-
anic and Atmospheric Administration shall initiate a new competi-
tive contract procurement for its multi-year program for key entry 
of valuable climate records, archive services, and database develop-
ment in accordance with existing Federal procurement laws and 
regulations. 
SEC. 409. 
SPECIAL 
ALLOWANCE 
ADJUSTMENT 
FOR 
STUDENT 
LOANS. 
(a) AMENDMENT.—Section 438(b)(2) of the Higher Education 
Act of 1965 (20 U.S.C. 1087-l(b)(2)) is amended— 
(1) in subparagraph (A), by striking "(G), and (H)" and 
inserting "(G), (H), and (I)"; 
(2) in subparagraph (B)(iv), by striking "(G), or (H)" and 
inserting "(G), (H), or (I)"; 
(3) in subparagraph (C)(ii), by striking "(G) and (H)" and 
inserting "(G), (H), and (I)"; 
(4) in the heading of subparagraph (H), by striking "JULY 
1, 2003" and inserting "JANUARY i, 2000"; 
(5) in subparagraph (H), by striking "July 1, 2003," each 
place it appears and inserting "January 1, 2000,"; and 
(6) by inserting after subparagraph (H) the following new 
subparagraph: 
"(I) LOANS DISBURSED ON OR AFTER JANUARY 1, 2000, 
AND BEFORE JULY 1, 2003.— 
"(i) IN GENERAL.—Notwithstanding subparagraphs 
(G) and (H), but subject to paragraph (4) and clauses 
(ii), (iii), and (iv) of this subparagraph, and except 
as provided in subparagraph (B), the special allowance 
paid pursuant to this subsection on loans for which 
the first disbursement is made on or after January 
1, 2000, and before July 1, 2003, shall be computed— 
"(I) by determining the average of the bond 
equivalent rates of the quotes of the 3-month 
commercial paper (financial) rates in effect for each 
of the days in such quarter as reported by the 
Federal Reserve in Publication H-15 (or its suc-
cessor) for such 3-month period; 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1915 
"(11) by subtracting the; applicable interest 
rates on such loans from such average bond equiva-
lent rate; 
"(III) by adding 2.34 percent to the resultant 
percent; and 
"(IV) by dividing the resiultant percent by 4. 
"(ii) IN SCHOOL AND GRACE PERIOD.—In the case 
of any lo£in for which the first disbursement is made 
on or after January 1, 2000, and before July 1, 2003, 
and for which the applicable rate of interest is 
described in section 427A(k)(2), clause (i)(III) of this 
subparagraph shall be applied by substituting '1.74 
percent' for '2.34 percent'. 
"(iii) PLUS LOANS.—In the case of any loan for 
which the first disbursement is made on or after 
January 1, 2000, and before July 1, 2003, £ind for 
which the applicable rate of interest is described in 
section 427A(k)(3), clause (i)(III) of this subparagraph 
shall be applied by substituting '2.64 percent' for '2.34 
percent', subject to clause (v) of this subparagraph, 
"(iv) CONSOLIDATION LOANS.—IU the case of any 
consolidation loan for which the application is received 
by an eligible lender on or after January 1, 2000, 
£md before July 1, 2003, and for which the applicable 
interest rate is determined under section 427A(k)(4), 
clause (i)(III) of this subparagrjiph shall be applied 
by substituting '2,64 percent' for '2.34 percent', subject 
to clause (vi) of this subparagraph. 
"(v) LIMITATION ON SPECIAL ALLOWANCES FOR PLUS 
LOANS.—In the case of PLUS loans made under section 
428B and first disbursed on or after January 1, 2000, 
and before July 1, 2003, for which the interest rate 
is determined under section 427A(k)(3), a special allow-
ance shall not be paid for such loan during any 12-
month period beginning on July 1 and ending on June 
30 unless, on the June 1 preceding such July 1— 
"(I) the bond equivalent rate 
of 91-day 
Treasury bills auctioned at the final auction held 
prior to such June 1 (as determined by the Sec-
retary for purposes of such section); plus 
"(II) 3.1 percent, 
exceeds 9.0 percent. 
"(vi) 
LIMITATION ON SPECIAL ALLOWANCES FOR 
CONSOLIDATION LOANS.—In the case of consolidation 
loans made under section 428C and for which the 
application is received on or after January 1, 2000, 
and before July 1, 2003, for which the interest rate 
is determined under section 427A(k)(4), a special allow-
ance shall not be paid for such loan during any 3-
month period ending March 31, June 30, September 
30, or December 31 unless— 
"(I) the average of the bond equivalent rates 
of the quotes of the 3-month commercial paper 
(financial) rates in effect for each of the days in 
such quarter as reported by the Federal Reserve 
in Publication H-15 (or its successor) for such 
3-month period; plus 
113 STAT. 1916 
PUBLIC LAW 106-170—DEC. 17, 1999 
Applicability. 
20 u s e 1087-1 
note. 
Deadlines. 
"(II) 2.64 percent, 
exceeds the rate determined under section 427A(k)(4).". 
(b) EFFECTIVE DATE.—Subparagraph (I) of section 438(b)(2) of 
the Higher Education Act of 1965 (20 U.S.C. 1087-l(b)(2)) as added 
by subsection (a) of this section shall apply with respect to any 
payment pursuant to such section with respect to any 3-month 
period beginning on or after January 1, 2000, for loans for which 
the first disbursement is made after such date. 
SEC. 410. SCHEDULE FOR PAYMENTS UNDER SSI STATE SUPPLEMEN-
TATION AGREEMENTS. 
(a) SCHEDULE FOR SSI SUPPLEMENTATION PAYMENTS.— 
(1) IN GENERAL.—Section 1616(d) of the Social Security 
Act (42 U.S.C. 1382e(d)) is amended— 
(A) in paragraph (1), by striking "at such times and 
in such installments as may be agreed upon between the 
Commissioner of Social Security and such State" and 
inserting "in accordance with paragraph (5)"; and 
(B) by adding at the end the following new paragraph: 
"(5)(A)(i) Any State which has entered into an agreement with 
the Commissioner of Social Security under this section shall remit 
the payments and fees required under this subsection with respect 
to monthly benefits paid to individuals under this title no later 
than— 
"(I) the business day preceding the date that the Commis-
sioner pays such monthly benefits; or 
"(II) with respect to such monthly benefits paid for the 
month that is the last month of the State's fiscal year, the 
fifth business day following such date. 
"(ii) The Commissioner may charge States a penalty in an 
amount equal to 5 percent of the payment and the fees due if 
the remittance is received after the date required by clause (i). 
"(B) The Cash Management Improvement Act of 1990 shall 
not apply to any payments or fees required under this subsection 
that are paid by a State before the date required by subparagraph 
(A)(i). 
"(C) Notwithstanding subparagraph (A)(i), the Commissioner 
may make supplementary payments on behalf of a State with 
funds appropriated for payment of benefits under this title, and 
subsequently to be reimbursed for such payments by the State 
at such times as the Commissioner and State may agree. Such 
authority may be exercised only if extraordinary circumstances 
affecting a State's ability to make payment when required by 
subparagraph (A)(i) are determined by the Commissioner to exist.". 
(2) AMENDMENT TO SECTION 212.—Section 212 of Public 
Law 93-66 (42 U.S.C. 1382 note) is amended— 
(A) in subsection (b)(3)(A), by striking "at such times 
and in such installments as may be agreed upon between 
the Secretary and the State" and inserting "in accordance 
with subparagraph (E)"; 
(B) by adding at the end of subsection (b)(3) the fol-
lowing new subparagraph: 
"(E)(i) Any State which has entered into an agreement with 
the Commissioner of Social Security under this section shall remit 
the pa3mients and fees required under this paragraph with respect 
to monthly benefits paid to individuals under title XVI of the 
Social Security Act no later than— 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1917 
"(I) the business day preceding the date that the Commis-
sioner pays such monthly benefits; or 
"(II) with respect to such monthly benefits paid for the 
month that is the last month of the State's fiscal year, the 
fifth business day following such date. 
"(ii) The Cash Management Improvement Act of 1990 shall 
not apply to any payments or fees required under this paragraph 
that are paid by a State before the date required by clause (i). 
"(iii) Notwithstanding clause (i), the Commissioner may make 
supplementary payments on behalf of a State with funds appro-
priated for payment of supplemental security income benefits under 
title XVI of the Social Security Act, and subsequently to be 
reimbursed for such payments by the State at such times as the 
Commissioner and State may agree. Such authority may be exer-
cised only if extraordinary circumstances affecting a State's ability 
to make payment when required by clause (i) are determined by 
the Commissioner to exist."; and 
(C) by striking "Secretary of Health, Education, and 
Welfare" and "Secretary" each place such term appear and 
inserting "Commissioner of Social Security". 
(b) EFFECTIVE DATE.—The amendments made by subsection 
(a) shall apply to payments and fees arising under an agreement 
between a State and the Commissioner of Social Security under 
section 1616 of the Social Security Act (42 U.S.C. 1382e) or under 
section 212 of PubHc Law 93-66 (42 U.S.C. 1382 note) with respect 
to monthly benefits paid to individuals under title XVI of the 
Social Security Act for months after September 2009 (October 2009 
in the case of a State with a fiscal year that coincides with the 
Federal fiscal year), without regard to whether the agreement has 
been modified to reflect such amendments or the Commissioner 
has promulgated regulations implementing such amendments. 
SEC. 411. BONUS COMMODITIES. 
Section 6(e)(1) of the Richard B. Russell National School Lunch 
Act (42 U.S.C. 1755(e)(1)) is amended— 
(1) by striking "in the form of commodity assistance" and 
inserting "in the form o
f
— 
"(A) commodity assistance"; 
(2) by striking the period at the end and inserting "; or"; 
and 
(3) by adding at the end the following: 
"(B) during the period beginning October 1, 2000, and 
ending September 30, 2009, commodities provided by the Sec-
retary under any provision of law.". 
SEC. 412. SIMPLIFICATION OF DEFINITION OF FOSTER CHILD UNDER 
EIC. 
(a) IN GENERAL.—Section 32(c)(3)(B)(iii) of the Internal Revenue 
Code of 1986 (defining eligible foster child) is amended by redesig-
nating subclauses (I) and (II) as subclauses (II) and (III), respec-
tively, and by inserting before subclause (II), as so redesignated, 
the following: 
"(I) is a brother, sister, stepbrother, or step-
sister of the taxpayer (or a descendant of any 
such relative) or is placed v\dth the taxpayer by 
an authorized placement agency,". 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 1999. 
Applicability. 
42USC1382e 
note. 
26 u s e 32. 
Applicability. 
26 u s e 32 note. 
113 STAT. 1918 
PUBLIC LAW 106-170—DEC. 17, 1999 
Deadline. 
Deadline. 
Tax Relief 
Extension Act of 
1999. 
SEC. 413. DELAY OF EFFECTIVE DATE OF ORGAN PROCUREMENT AND 
TRANSPLANTATION NETWORK FINAL RULE. 
(a) IN GENERAL.—The final rule entitled "Organ Procurement 
and Transplantation Network", promulgated by the Secretary of 
Health and Human Services on April 2, 1998 (63 Fed. Reg. 16295 
et seq.) (relating to part 121 of title 42, Code of Federal Regulations), 
together with the amendments to such rules promulgated on 
October 20, 1999 (64 Fed. Reg. 56649 et seq.) shall not become 
effective before the expiration of the 90-day period beginning on 
the date of the enactment of this Act. 
(b) NOTICE AND REVIEW.—For purposes of subsection (a): 
(1) Not later than 3 days after the date of the enactment 
of this Act, the Secretary of Health and Human Services 
(referred to in this subsection as the "Secretary") shall publish 
in the Federal Register a notice providing that the period 
within which comments on the final rule may be submitted 
to the Secretary is 60 days after the date of such publication 
of the notice. 
(2) Not later than 21 days after the expiration of such 
60-day period, the Secretary shall complete the review of the 
comments submitted pursuant to paragraph (1) and shall 
amend the final rule with any revisions appropriate according 
to the review by the Secretary of such comments. The final 
rule may be in the form of amendments to the rule referred 
to in subsection (a) that was promulgated on April 2, 1998, 
and in the form of amendments to the rule referred to in 
such subsection that was promulgated on October 20, 1999. 
TITLE V—TAX RELIEF EXTENSION ACT 
OF 1999 
26 u s e 1 note. 
SEC. 500. SHORT TITLE OF TITLE. 
1999' 
This title may be cited as the "Tax Relief Extension Act of 
Subtitle A—Extensions 
SEC. 501. ALLOWANCE OF NONREFUNDABLE PERSONAL CREDITS 
AGAINST REGULAR AND MINIMUM TAX LIABILITY. 
(a) IN GENERAL.—Subsection (a) of section 26 of the Internal 
26 use 26. 
Revenue Code of 1986 (relating to limitation based on amount 
of tax) is amended to read as follows: 
"(a) LIMITATION BASED ON AMOUNT OF TAX.— 
"(1) IN GENERAL.—The aggregate amount of credits allowed 
by this subpart for the taxable year shall not exceed the excess 
(if any) o
f
— 
"(A) the taxpayer's regular tax liability for the teixable 
year, over 
"(B) the tentative minimum tax for the taxable year 
(determined without regard to the alternative minimum 
tax foreign tax credit). 
For purposes of subparagraph (B), the taxpayer's tentative min-
imum tax for any taxable year beginning during 1999 shall 
be treated as being zero.". 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1919 
"(2) SPECIAL RULE FOR 2000 AND 2001.—For purposes of 
any taxable year beginning during 2000 or 2001, the aggregate 
amount of credits allowed by this subpart for the taxable year 
shall not exceed the sum o
f
— 
"(A) the taxpayer's regular tax liability for the taxable 
year reduced by the foreign tax credit allowable under 
section 27(a), and 
"(B) the tax imposed by section 55(a) for the taxable 
year.". 
(b) CONFORMING AMENDMENTS.— 
(1) Section 24(d)(2) of such Code is amended by striking 
"1998" and inserting "2001". 
(2) Section 904(h) of such Code is amended by adding 
at the end the following: "This subsection shall not apply to 
taxable years beginning during 2000 or 2001.". 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 1998. 
SEC. 502. RESEARCH CREDIT. 
(a) EXTENSION.— 
(1) IN GENERAL.—Paragraph (1) of section 41(h) of the 
Internal Revenue Code of 1986 (relating to termination) is 
amended— 
(A) by striking "June 30, 19Si9" and inserting "June 
30, 2004"; and 
(B) by striking the material following subparagraph 
(B). 
(2) TECHNICAL AMENDMENT.—Subparagraph (D) of section 
45C(b)(l) of such Code is amended by striking "June 30, 1999" 
and inserting "June 30, 2004". 
(3) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to amounts paid or incurred after June 
30, 1999. 
(b) 
INCREASE IN PERCENTAGES UNDE;R ALTERNATIVE INCRE-
MENTAL CREDIT.— 
(1) IN GENERAL.—Subparagraph (A) of section 41(c)(4) of 
such Code is amended— 
(A) by striking "1.65 percent" and inserting "2.65 per-
cent"; 
(B) by striking "2.2 percent" and inserting "3.2 per-
cent"; and 
(C) by striking "2.75 percent" and inserting "3.75 per-
cent". 
(2) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to taxable years beginning after June 30, 
1999. 
(c) EXTENSION OF RESEARCH CREDIT TO RESEARCH IN PUERTO 
RICO AND THE POSSESSIONS OF THE UNITED STATES.— 
(1) IN GENERAL.—Subsections (c)(6) and (d)(4)(F) of section 
41 of such Code (relating to foreign research) are each amended 
by inserting ", the Commonwealth of Puerto Rico, or any posses-
sion of the United States" after "United States". 
(2) DENIAL OF DOUBLE BENEFIT.—Section 280C(c)(l) of such 
Code is amended by inserting "or credit" after "deduction" 
each place it appears. 
26 u s e 24. 
26 u s e 904. 
Applicability. 
26 u s e 24 note. 
26 u s e 41. 
26 use 45e. 
Applicability. 
26 u s e 41 note. 
Applicability. 
26 u s e 41 note. 
26 use 280C. 
113 STAT. 1920 
PUBLIC LAW 106-170—DEC. 17, 1999 
Applicability. 
26 u s e 41 note. 
26 u s e 41 note. 
Deadline. 
(3) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to amounts paid or incurred after June 
30, 1999. 
(d) SPECIAL RULE.— 
(1) IN GENERAL.—For purposes of the Internal Revenue 
Code of 1986, the credit determined under section 41 of such 
Code which is otherwise allowable under such Code— 
(A) shall not be taken into account prior to October 
1, 2000, to the extent such credit is attributable to the 
first suspension period; and 
(B) shall not be taken into account prior to October 
1, 2001, to the extent such credit is attributable to the 
second suspension period. 
On or after the earliest date that an amount of credit may 
be taken into account, such amount may be taken into account 
through the filing of an amended return, an application for 
expedited refund, an adjustment of estimated taxes, or other 
means allowed by such Code. 
(2) SUSPENSION PERIODS.—For purposes of this subsection— 
(A) the first suspension period is the period beginning 
on July 1, 1999, and ending on September 30, 2000; and 
(B) the second suspension period is the period begin-
ning on October 1, 2000, and ending on September 30, 
2001. 
(3) EXPEDITED REFUNDS.— 
(A) IN GENERAL.—If there is an overpayment of tax 
with respect to a taxable year by reason of paragraph 
(1), the taxpayer may file an application for a tentative 
refund of such overpayment. Such application shall be in 
such manner and form, and contain such information, as 
the Secretary may prescribe. 
(B) DEADLINE FOR APPLICATIONS.—Subparagraph 
(A) 
shall apply only to an application filed before the date 
which is 1 year after the close of the suspension period 
to which the application relates. 
(C) ALLOWANCE OF ADJUSTMENTS.—Not later than 90 
days after the date on which an application is filed under 
this paragraph, the Secretary shall— 
(i) review the application; 
(ii) determine the amount of the overpayment; and 
(iii) apply, credit, or refund such overpayment, 
in a manner similar to the manner provided in section 
6411(b) of such Code. 
(D) CONSOLIDATED RETURNS.—The provisions of section 
6411(c) of such Code shall apply to an adjustment under 
this paragraph in such manner as the Secretary may pro-
vide. 
(4) CREDIT ATTRIBUTABLE TO SUSPENSION PERIOD.— 
(A) IN GENERAL.—For purposes of this subsection, in 
the case of a taxable year which includes a portion of 
the suspension period, the amount of credit determined 
under section 41 of such Code for such taxable year which 
is attributable to such period is the amount which bears 
the same ratio to the amount of credit determined under 
such section 41 for such taxable year as the number of 
months in the suspension period which are during such 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1921 
26 u s e 953, 954. 
taxable year bears to the number of months in such taxable 
M 
y e a r . 
(B) WAIVER OF ESTIMATED TAX PENALTIES.—No addition 
to tax shall be made under section 6654 or 6655 of such 
Code for any period before July 1, 1999, with respect to 
any underpayment of tax imposed by such Code to the 
extent such underpayment was created or increased by 
reason of subparagraph (A). 
(5) SECRETARY.—For purposes of this subsection, the term 
"Secretary" means the Secretary of the Treasury (or such Sec-
retary's delegate). 
SEC, 503. SUBPART F EXEMPTION FOR ACTP/E FINANCING INCOME. 
(a) IN GENERAL.—Sections 953(e)(10) and 954(h)(9) of the 
Internal Revenue Code of 1986 (relating to application) are each 
amended— 
(1) by striking "the first taxable year" and inserting "tax-
able years"; 
(2) by striking "January 1, 2000" and inserting "January 
1, 2002"; and 
(3) by striking "within which such" and inserting "within 
which any such". 
(b) TECHNICAL AMENDMENT.—Paragraph (10) of section 953(e) 
of such Code is amended by adding at the end the following new 
sentence: "If this subsection does not apply to a taxable year of 
a foreign corporation beginning after December 31, 2001 (and tax-
able years of United States shareholders ending with or within 
such taxable year), then, notwithstanding the preceding sentence, 
subsection (a) shall be applied to such taxable years in the same 
manner as it would if the taxable year of the foreign corporation 
began in 1998.". 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to taxable years beginning after December 31, 1999. 
SEC. 504. TAXABLE INCOME LIMIT ON PERCENTAGE DEPLETION FOR 
MARGINAL PRODUCTION. 
(a) IN GENERAL.—Subparagraph (H) of section 613A(c)(6) of 
the Internal Revenue Code of 1986 (relating to temporary suspen- 
26 USC 613A 
sion of taxable limit with respect to marginal production) is 
amended by striking "January 1, 2000" and inserting "January 
1, 2002". 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to t£ixable years beginning after December 31, 1999. 
SEC. 505. WORK OPPORTUNITY CREDIT / ^ D 
WELFARE-TO-WORK 
CREDIT. 
(a) TEMPORARY EXTENSION.—Sections 51(c)(4)(B) and 51A(f) 
of the Internal Revenue Code of 1986 (relating to termination) 
are each amended by striking "June 30, 1999" and inserting 
"December 31, 2001". 
(b) CLARIFICATION OF FIRST YEAR OF EMPLOYMENT.—Paragraph 
(2) of section 51(i) of such Code is amended by striking "during 
which he was not a member of a targeted group". 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to individuals who begin work: for the employer after 
June 30, 1999. 
Applicability. 
26 USC 953 note. 
26 USC 613A 
note. 
26 USC 51, 51A. 
Applicability. 
26 USC 51 note. 
113 STAT. 1922 
PUBLIC LAW 106-170—DEC. 17, 1999 
SEC. 506. EMPLOYER-PROVIDED EDUCATIONAL ASSISTANCE. 
(a) IN GENERAL.—Subsection (d) of section 127 of the Internal 
26 use 127. 
Revenue Code of 1986 (relating to termination) is amended by 
striking "May 31, 2000" and inserting "December 31, 2001". 
Applicability. 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
26 use 127 note, shall apply to courses beginning after May 31, 2000. 
SEC. 507. EXTENSION AND MODIFICATION OF CREDIT FOR PRODUCING 
ELECTRICITY FROM CERTAIN RENEWABLE RESOURCES. 
(a) 
EXTENSION 
AND MODIFICATION 
OF PLACED-IN-SERVICE 
RULES.—Paragraph (3) of section 45(c) of the Internal Revenue 
26 use 45. 
Code of 1986 is amended to read as follows: 
"(3) QUALIFIED FACILITY.— 
"(A) WIND FACILITY.—In the case of a facility using 
wind to produce electricity, the term 'qualified facility' 
means any facility owned by the taxpayer which is origi-
nally placed in service after December 31, 1993, and before 
January 1, 2002. 
"(B) CLOSED-LOOP BIOMASS FACILITY.—In the case of 
a facility using closed-loop biomass to produce electricity, 
the term 'qualified facility' means any facility owned by 
the taxpayer which is originally placed in service after 
December 31, 1992, and before January 1, 2002. 
"(C) POULTRY WASTE FACILITY.—In the case of a facility 
using poultry waste to produce electricity, the term 'quali-
fied facility' means any facility of the taxpayer which is 
originally placed in service after December 31, 1999, and 
before January 1, 2002.". 
(b) EXPANSION OF QUALIFIED ENERGY RESOURCES.— 
(1) IN GENERAL.—Section 45(c)(1) of such Code (defining 
qualified energy resources) is amended by striking "and" at 
the end of subparagraph (A), by striking the period at the 
end of subparagraph (B) and inserting ", and", and by adding 
at the end the following new subparagraph: 
"(C) poultry waste.". 
(2) DEFINITION.—Section 45(c) of such Code is amended 
by adding at the end the following new paragraph: 
"(4) POULTRY WASTE.—The term 'poultry waste' means 
poultry manure and litter, including wood shavings, straw, 
rice hulls, and other bedding material for the disposition of 
manure.". 
(c) SPECIAL RULES.—Section 45(d) of such Code (relating to 
definitions and special rules) is amended by adding at the end 
the following new paragraphs: 
"(6) 
CREDIT ELIGIBILITY IN THE CASE OF GOVERNMENT-
OWNED FACILITIES USING POULTRY WASTE.—In the case of a 
facility using poultry waste to produce electricity and owned 
by a governmental unit, the person eligible for the credit under 
subsection (a) is the lessee or the operator of such facility. 
"(7) CREDIT NOT TO APPLY TO ELECTRICITY SOLD TO UTILITIES 
UNDER CERTAIN CONTRACTS.— 
"(A) IN GENERAL.—The credit determined under sub-
section (a) shall not apply to electricity— 
"(i) produced at a qualified facility described in 
paragraph (3)(A) which is placed in service by the 
t£ixpayer after June 30,1999, and 
if-
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1923 
"(ii) sold to a utility pursuant to a contract origi-
nally entered into before January 1, 1987 (whether 
or not amended or restated after that date). 
"(B) EXCEPTION.—Subparagraph (A) shall not apply 
"(i) the prices for energy and capacity from such 
facility are established pursuant to an amendment to 
the contract referred to in subparagraph (A)(ii), 
"(ii) such amendment provides that the prices set 
forth in the contract which exceed avoided cost prices 
' 
determined at the time of delivery shall apply only 
to annual quantities of electricity (prorated for partial 
years) which do not exceed the greater o
f
— 
"(I) the average annual quantity of electricity 
sold to the utility under the contract during cal-
endar years 1994, 1995, 1996, 1997, and 1998, 
or 
"(II) the estimate of the annual electricity 
production set forth in th(3 contract, or, if there 
is no such estimate, the greatest annual quantity 
of electricity sold to the utility under the contract 
in any of the calendar years 1996, 1997, or 1998, 
and 
"(iii) such amendment provides that energy and 
capacity in excess of the limitation in clause (ii) may 
be— 
"(I) sold to the utility only at prices that do 
not exceed avoided cost prices determined at the 
time of delivery, or 
"(II) sold to a third party subject to a mutually 
agreed upon advance notice to the utility. 
For purposes of this subparagraph, avoided cost prices 
shall be determined as provided for in 18 CFR 292.304(d)(1) 
or any successor regulation.". 
(d) EFFECTIVE DATE.—The amendments made by this section 
26 use 45 note. 
shall take effect on the date of the enactment of this Act. 
SEC. 508. EXTENSION OF DUTY-FREE TREAT»IENT UNDER GENERAL-
IZED SYSTEM OF PREFERENCES. 
(a) IN GENERAL.—Section 505 of the Trade Act of 1974 (19 
U.S.C. 2465) is amended by striking "June 30, 1999" and inserting 
"September 30, 2001". 
(b) EFFECTIVE DATE.— 
19 use 2465 
(1) IN GENERAL.—The amendment made by this section 
"o^. 
applies to articles entered on or after the date of the enactment 
of this Act. 
(2) RETROACTIVE APPLICATION FOR CERTAIN LIQUIDATIONS 
AND RELIQUIDATIONS.— 
(A) GENERAL RULE.—Notwithstanding section 514 of 
the Tariff Act of 1930 or any other provision of law, and 
subject to paragraph (3), any entry— 
(i) of an article to which duty-free treatment under 
title V of the Trade Act of 1974 would have applied 
if such entry had been made on July 1, 1999, and 
such title had been in effect on July 1, 1999; and 
(ii) that was made— 
(I) after June 30, 1999; and 
113 STAT. 1924 
PUBLIC LAW 106-170—DEC. 17, 1999 
26 use 1397E. 
26 use 1400e. 
26 use 198. 
26 use 7652. 
Applicability. 
26 u s e 7652 
note. 
(II) before the date of the enactment of this 
Act, 
shall be liquidated or reliquidated as free of duty, and 
the Secretary of the Treasury shall refund any duty paid 
with respect to such entry. 
(B) ENTRY.—As used in this paragraph, the term 
"entry" includes a withdrawal from warehouse for consump-
tion. 
(3) REQUESTS.—Liquidation or reliquidation may be made 
under paragraph (2) with respect to an entry only if a request 
therefore is filed with the Customs Service, within 180 days 
after the date of the enactment of this Act, that contains 
sufficient information to enable the Customs Service— 
(A) to locate the entry; or 
(B) to reconstruct the entry if it cannot be located. 
SEC. 509. EXTENSION OF CREDIT FOR HOLDERS OF QUALIFIED ZONE 
ACADEMY BONDS. 
(a) IN GENERAL.—Section 1397E(e)(l) of the Internal Revenue 
Code of 1986 (relating to national limitation) is amended by striking 
"and 1999" and inserting ", 1999, 2000, and 2001". 
(b) LIMITATION ON CARRYOVER PERIODS.—Paragraph (4) of sec-
tion 1397E(e) of such Code is amended by adding at the end 
the following flush sentences: 
"Any carrj^orward of a limitation amount may be carried only 
to the first 2 years (3 years for carr3^orwards from 1998 or 
1999) following the unused limitation year. For purposes of 
the preceding sentence, a limitation amount shall be treated 
as used on a first-in first-out basis.". 
SEC. 510. EXTENSION OF FIRST-TIME HOMEBUYER CREDIT FOR DIS-
TRICT OF COLUMBIA. 
Section 1400C(i) of the Internal Revenue Code of 1986 is 
amended by striking "2001" and inserting "2002". 
SEC. 511. EXTENSION OF EXPENSING OF ENVIRONMENTAL REMEDI-
ATION COSTS. 
Section 198(h) of the Internal Revenue Code of 1986 is amended 
by striking "2000" and inserting "2001". 
SEC. 512. TEMPORARY INCREASE IN AMOUNT OF RUM EXCISE TAX 
COVERED OVER TO PUERTO RICO AND VIRGIN ISLANDS. 
(a) IN GENERAL.—Section 7652(f)(1) of the Internal Revenue 
Code of 1986 (relating to limitation on cover over of tax on distilled 
spirits) is amended to read as follows: 
"(1) $10.50 ($13.25 in the case of distilled spirits brought 
into the United States after June 30, 1999, and before January 
1, 2002), or". 
(b) SPECIAL COVER OVER TRANSFER RULES.—Notwithstanding 
section 7652 of the Internal Revenue Code of 1986, the following 
rules shall apply with respect to any transfer before October 1, 
2000, of amounts relating to the increase in the cover over of 
taxes by reason of the amendment made by subsection (a): 
(1) INITIAL TRANSFER OF INCREMENTAL INCREASE IN COVER 
OVER.—The Secretary of the Treasury shall, within 15 days 
after the date of the enactment of this Act, transfer an amount 
equal to the lesser o
f
— 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1925 
(A) the amount of such increcise otherwise required 
to be covered over after June 30, 1999, and before the 
date of the enactment of this Act; or 
(B) $20,000,000. 
(2) TRANSFER OF INCREMENTAL INCFLEASE FOR FISCAL YEAR 
2001.—The Secretary of the Treasury shall on October 1, 2000, 
transfer an amount equal to the excess oi"— 
(A) the amount of such increcise otherwise required 
to be covered over after June 30, 1999, and before October 
1, 2000, over 
(B) the amount of the transfer described in paragraph 
(1). 
(c) EFFECTIVE DATE.—The amendment made by subsection (a) 26 use 7652 
shall take effect on July 1, 1999. 
note. 
Subtitle B—Other Time-Sensitive 
Provisions 
SEC. 521. ADVANCE PRICING AGREEMENTS TREATED AS CONFIDEN-
TIAL TAXPAYER INFORMATION. 
(a) IN GENERAL.— 
(1) TREATMENT AS RETURN INFORMATION.—Paragraph (2) 
of section 6103(b) of the Internal Revenue Code of 1986 26USC6103. 
(defining return information) is amended by striking "and" 
at the end of subparagraph (A), by inserting "and" at the 
end of subparagraph (B), and by inserting after subparagraph 
(B) the following new subparagraph: 
"(C) any advance pricing agreement entered into by 
a taxpayer and the Secretary and any background informa-
tion related to such agreement or any application for an 
advance pricing agreement,". 
(2) EXCEPTION FROM PUBLIC INSPECTION AS WRITTEN DETER-
MINATION.—Paragraph (1) of section 6110(b) of such Code 26USC6110. 
(defining written determination) is amended by adding at the 
end the following new sentence: "Such term shall not include 
any advance pricing agreement entered into by a taxpayer 
and the Secretary and any background information related 
to such agreement or any application for an advance pricing 
agreement.". 
(3) EFFECTIVE DATE.—The amendments made by this sub- 26USC6103 
section shall take effect on the date of the enactment of this note-
Act. 
(b) 
ANNUAL REPORT REGARDING AD\^ANCE PRICING AGREE-
MENTS.— 
(1) IN GENERAL.—Not later than 90 days after the end Deadline. 
of each calendar year, the Secretary of the Treasury shall 
prepare and publish a report regarding advance pricing agree-
ments. 
(2) CONTENTS OF REPORT.—The report shall include the 
following for the calendar year to which such report relates: 
(A) Information about the structure, composition, and 
operation of the advance pricing agjeement program office. 
(B) A copy of each model advance pricing agreement. 
(C) The number of— 
(i) applications filed during such calendar year 
for advance pricing agreements; 
113 STAT. 1926 
PUBLIC LAW 106-170—DEC. 17, 1999 
(ii) advance pricing agreements executed cumula-
tively to date £ind during such calendar year; 
(iii) renewals of advance pricing 
agreements 
issued; 
(iv) pending requests for advance pricing agree-
ments; 
(v) pending renewals of advance pricing agree-
ments; 
(vi) for each of the items in clauses (ii) through 
(v), the number that are unilateral, bilateral, and 
multilateral, respectively; 
(vii) advance pricing agreements revoked or can-
celed, and the number of withdrawals from the advance 
pricing agreement program; and 
(viii) advance pricing agreements finalized or 
renewed by industry. 
(D) General descriptions o
f
— 
(i) the nature of the relationships between the 
related organizations, trades, or businesses covered by 
advance pricing agreements; 
(ii) the covered transactions and the business func-
tions performed and risks assumed by such organiza-
tions, trades, or businesses; 
(iii) the related organizations, trades, or businesses 
whose prices or results are tested to determine compli-
ance with transfer pricing methodologies prescribed 
in advance pricing agreements; 
(iv) methodologies used to evaluate tested parties 
and transactions and the circumstances leading to the 
use of those methodologies; 
(v) critical assumptions made and sources of 
comparables used; 
(vi) comparable selection criteria and the rationale 
used in determining such criteria; 
(vii) the nature of adjustments to comparables or 
tested parties; 
(viii) the nature of any ranges agreed to, including 
information regarding when no range was used and 
why, when interquartile ranges were used, and when 
there was a statistical narrowing of the comparables; 
(ix) adjustment mechanisms provided to rectify 
results that fall outside of the agreed upon advance 
pricing agreement range; 
(x) the various term lengths for advance pricing 
agreements, including rollback years, and the number 
of advance pricing agreements with each such term 
length; 
(xi) the nature of documentation required; and 
(xii) approaches for sharing of currency or other 
risks. 
(E) Statistics regarding the amount of time taken to 
complete new and renewal advance pricing agreements. 
(F) A detailed description of the Secretary of the Treas-
ury's efforts to ensure compliance with existing advance 
pricing agreements. 
(3) CONFIDENTIALITY.—The reports required by this sub-
section shall be treated as authorized by the Internal Revenue 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1927 
Code of 1986 for purposes of section 6103 of such Code, but 
the reports shall not include information— 
(A) which would not be permitted to be disclosed under 
section 6110(c) of such Code if such report were a written 
determination as defined in section 6110 of such Code; 
or 
(B) which can be associated with, or otherwise identify, 
directly or indirectly, a particular taxpayer. 
(4) FIRST REPORT.—The report for calendar year 1999 shall 
include prior calendar years after 1990. 
(c) REGULATIONS.—The Secretary of the Treasury or the Sec- 
26 use 6103. 
retary's delegate shall prescribe such regulations as may be nec-
essary or appropriate to carry out the purposes of section 
6103(b)(2)(C), and the last sentence of section 6110(b)(1), of the 
Internal Revenue Code of 1986, as added by this section. 
SEC. 522. AUTHORITY TO POSTPONE CERTAIN TAX-RELATED DEAD- 
26 USC 7508A 
LINES BY REASON OF Y2K FAILUlftES. 
note 
(a) IN GENERAL.—In the case of a taxpayer determined by 
the Secretary of the Treasury (or the Secretary's delegate) to be 
affected by a Y2K failure, the Secretary may disregard a period 
of up to 90 days in determining, under the internal revenue laws, 
in respect of any tax liability (including any interest, penalty, 
additional amount, or addition to the tax) of such taxpayer— 
(1) whether any of the acts described in paragraph (1) 
of section 7508(a) of the Internal Revenue Code of 1986 (without 
regard to the exceptions in parenthes€;s in subparagraphs (A) 
and (B)) were performed within the time prescribed therefor; 
and 
(2) the amount of any credit or refund. 
(b) APPLICABILITY OF CERTAIN RULES.—For purposes of this 
section, rules similar to the rules of subsections (b) and (e) of 
section 7508 of the Internal Revenue Code of 1986 shall apply. 
SEC. 523. INCLUSION OF CERTAIN VACCII«:S AGAINST STREPTO-
COCCUS PNEUMONIAE TO LIST OF TAXABLE VACCINES. 
(a) INCLUSION OF VACCINES.— 
(1) IN GENERAL.—Section 4132(a)(1) of the Internal Revenue 
Code of 1986 (defining taxable vaccine) is amended by adding 26 USC 4132. 
at the end the following new subparagraph: 
"(L) Any conjugate 
vaccine against 
streptococcus 
pneumoniae.". 
(2) EFFECTIVE DATE.— 
26 use 4132 
(A) SALES.—The amendment made by this subsection note 
shall apply to vaccine sales after the date of the enactment 
of this Act, but shall not take effect if subsection (b) does 
not take effect. 
(B) DELIVERIES.—For purposes of subparagraph (A), 
in the case of sales on or before the date described in 
such subparagraph for which delivery is made after such 
date, the delivery date shall be considered the sale date. 
(b) 
VACCINE 
TAX 
AND 
TRUST 
FUND 
AMENDMENTS.— 
(1) Sections 1503 and 1504 of the Vaccine Injury Compensa-
tion Program Modification Act (and the amendments made 
26 USe 4132 and 
by such sections) are hereby repealed. 
note, 9510 and 
(2) Subparagraph (A) of section 9510(c)(1) of such Code 26*USC9510 
is amended by striking "August 5, 1997" and inserting 
"December 31, 1999". 
113 STAT. 1928 
PUBLIC LAW 106-170—DEC. 17, 1999 
26 u s e 4132 
note. 
Deadline. 
26 u s e 4041 
note. 
7 u s e 7212 note. 
(3) The amendments made by this subsection shall take 
effect as if included in the provisions of the Omnibus Consoli-
dated and Emergency Supplemental Appropriations Act, 1999 
to which they relate. 
(c) REPORT.—Not later than January 31, 2000, the Comptroller 
General of the United States shall prepare and submit a report 
to the Committee on Ways and Means of the House of Representa-
tives and the Committee on Finance of the Senate on the operation 
of the Vaccine Injury Compensation Trust Fund and on the ade-
quacy of such Fund to meet future claims made under the Vaccine 
Injury Compensation Program. 
SEC. 
524. DELAY m 
EFFECTIVE DATE OF REQUIREMENT FOR 
APPROVED DIESEL OR KEROSENE TERMINALS. 
Paragraph (2) of section 1032(f) of the Taxpayer Relief Act 
of 1997 is amended by striking "July 1, 2000" and inserting 
"January 1, 2002". 
SEC. 525. PRODUCTION FLEXIBILITY CONTRACT PAYMENTS. 
Any option to accelerate the receipt of any payment under 
a production flexibility contract which is payable under the Federal 
Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 7200 
et seq.), as in effect on the date of the enactment of this Act, 
shall be disregarded in determining the taxable year for which 
such payment is properly includible in gross income for purposes 
of the Internal Revenue Code of 1986. 
26 u s e 6654. 
Applicability. 
26 u s e 6654. 
26 u s e 1221. 
Subtitle C—Revenue Offsets 
PART I—GENERAL PROVISIONS 
SEC. 531. MODIFICATION OF ESTIMATED TAX SAFE HARBOR. 
(a) IN GENERAL.—The table contained in clause (i) of section 
6654(d)(1)(C) of the Internal Revenue Code of 1986 (relating to 
limitation on use of preceding year's tax) is amended by striking 
the items relating to 1999 and 2000 and inserting the following 
new items: 
"1999 , 
2000 
108.6 
110" 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply with respect to any installment payment for taxable 
years beginning after December 31, 1999. 
SEC. 532. CLARIFICATION OF TAX TREATMENT OF INCOME AND LOSS 
ON DERIVATIVES. 
(a) IN GENERAL.—Section 1221 of the Internal Revenue Code 
of 1986 (defining capital assets) is amended— 
(1) by striking "For purposes" and inserting the following: 
"(a) IN GENERAL.—For purposes"; 
(2) by striking the period at the end of paragraph (5) 
and inserting a semicolon; and 
(3) by adding at the end the following: 
"(6) any commodities derivative financial instrument held 
by a commodities derivatives dealer, unless— 
"(A) it is established to the satisfaction of the Secretary 
that such instrument has no connection to the activities 
of such dealer as a dealer, and 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1929 
"(B) such instrument is clearly identified in such 
dealer's records as being described in subparagraph (A) 
before the close of the day on which it was acquired, origi-
nated, or entered into (or such other time as the Secretary 
may by regulations prescribe); 
"(7) any hedging transaction which is clearly identified 
as such before the close of the day on which it was acquired, 
originated, or entered into (or such other time as the Secretary 
may by regulations prescribe); or 
"(8) supplies of a type regularly used or consumed by 
the taxpayer in the ordinary course of a trade or business 
of the taxpayer. 
"(b) DEFINITIONS AND SPECIAL RULES.— 
' 
' 
"(1) COMMODITIES DERIVATIVE FINANCIAL INSTRUMENTS.— 
For purposes of subsection (a)(6)— 
"(A) COMMODITIES DERIVATIVES DEALER.—The term 
'commodities derivatives dealer' mieans a person which 
regularly offers to enter into, assume, offset, assign, or 
terminate positions in commodities derivative 
financial 
instruments with customers in the; ordinary course of a 
trade or business. 
"(B) 
COMMODITIES 
DERIVATIVE 
FINANCIAL 
INSTRUMENT.— 
"(i) IN GENERAL.—The term 'commodities deriva-
tive financial instrument' means any contract or finan-
cial instrument with respect to commodities (other than 
a share of stock in a corporation, a beneficial interest 
in a partnership or trust, a note, bond, debenture, 
or other evidence of indebtedness, or a section 1256 
contract (as defined in section 1256(b)), the value or 
settlement price of which is c;alculated by or deter-
mined by reference to a specified index. 
"(ii) SPECIFIED INDEX.—The term 'specified index' 
means any one or more or any combination o
f
— 
"(I) a fixed rate, price, or amount, or 
"(II) a variable rate, price, or amount, 
which is based on any current, objectively determinable 
financial 
or economic information with respect to 
commodities which is not within the control of any 
of the parties to the contract or instrument and is 
not unique to any of the parties'circumstances. 
"(2) HEDGING TRANSACTION.— 
"(A) IN GENERAL.—For purposes of this section, the 
term 'hedging transaction' means any transaction entered 
into by the taxpayer in the normal course of the taxpayer's 
trade or business primarily— 
"(i) to manage risk of price changes or currency 
fluctuations 
with respect to ordinary property which 
is held or to be held by the teixpayer, 
"(ii) to manage risk of interest rate or price changes 
or currency fluctuations with respect to borrowings 
made or to be made, or ordinary obligations incurred 
or to be incurred, by the taxpayer, or 
"(iii) to manage such othei: risks as the Secretary 
may prescribe in regulations. 
113 STAT. 1930 
PUBLIC LAW 106-170—DEC. 17, 1999 
"(B) TREATMENT OF NONIDENTIFICATION OR IMPROPER 
Regulations. 
IDENTIFICATION 
OF HEDGING TRANSACTIONS.—Notwith-
standing subsection (aX7), the Secretary shall prescribe 
regulations to properly characterize any income, gain, 
expense, or loss arising from a transaction— 
"(i) which is a hedging transaction but which was 
not identified as such in accordance with subsection 
(a)(7), or 
"(ii) which was so identified but is not a hedging 
transaction. 
"(3) REGULATIONS.—^The Secretary shall prescribe such 
regulations as are appropriate to carry out the purposes of 
paragraph (6) and (7) of subsection (a) in the case of trans-
actions involving related parties.". 
(b) MANAGEMENT OF RISK.— 
26 use 475. 
(1) Section 475(c)(3) of such Code is amended by striking 
"reduces" and inserting "manages". 
26 use 871. 
(2) Section 871(hX4)(C)(iv) of such Code is amended by 
striking "to reduce" and inserting "to manage". 
26 use 988. 
(3) Clauses (i) and (ii) of section 988(d)(2)(A) of such Code 
are each amended by striking "to reduce" and inserting "to 
manage". 
26 use 1256. 
(4) Paragraph (2) of section 1256(e) of such Code is 
amended to read as follows: 
"(2) DEFINITION OF HEDGING TRANSACTION.—For purposes 
of this subsection, the term 'hedging transaction' means any 
hedging transaction (as defined in section 1221(b)(2)(A)) if, 
before the close of the day on which such transaction was 
entered into (or such earlier time as the Secretary may pre-
scribe by regulations), the taxpayer clearly identifies such trans-
action as being a hedging transaction.". 
(c) CONFORMING AMENDMENTS.— 
(1) Each of the following sections of such Code are amended 
by striking "section 1221" and inserting "section 1221(a)": 
26 use 170. 
(A) Section 170(e)(3)(A). 
(B) Section 170(e)(4)(B). 
26 use 367. 
(C) Section 367(a)(3)(B)(i). 
26 use 818. 
(D) Section 818(c)(3). 
26 use 865. 
(E) Section 865(i)( 1). 
26 use 1092. 
(F) Section 1092(aX3)(B)(ii)(II). 
26 use 1231. 
(G) Subparagraphs (C) and (D) of section 1231(bXl). 
26 use 1234. 
(H) Section 1234(a)(3)(A). 
(2) Each of the following sections of such Code are amended 
by striking "section 1221(1)" and inserting "section 1221(aXl)": 
26 use 198. 
(A) Section 198(c)( l)(A)(i). 
26 use 263. 
(B) Section 263A(b)(2)(A). 
26 use 267. 
(C) Clauses (i) and (iii) of section 267(f)(3)(B). 
26 use 341. 
(D) Section 341(dX3). 
26 use 543. 
(E) Section 543(a)( lXD)(i). 
26 use 751. 
(F) Section 75 l(dX 1). 
26 use 775. 
(G) Section 775(c). 
26 use 856. 
(H) Section 856(cX2XD). 
(I) Section 856(cX3)(C). 
(J) Section 856(eXl). 
(K) Section 856( 
j)(2XB). 
26 use 857. 
(L) Section 857(bX4XBXi). 
(M) Section 857(bX6XBXiii). 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1931 
26 use 864. 
26 use 954. 
26 use 995. 
26 use 1017. 
26 use 1362. 
26 use 4662. 
26 use 7704. 
26 use 818. 
26 use 1397B 
note. 
26 use 170 note. 
26 use 6050P. 
(N) Section 864(c)(4)(B)(iii). 
(O) Section 864(d)(3)(A). 
(P) Section 864(d)(6)(A). 
(Q) Section 954(c)(l)(B)(iii). 
(R) Section 995(b)(1)(C). 
(S) Section 1017(b)(3)(E)(i). 
(T) Section 1362(d)(3)(C)(ii). 
(U) Section 4662(c)(2)(C). 
(V) Section 7704(c)(3). 
(W) Section 7704(d)(1)(D). 
(X) Section 7704(d)(1)(G). 
(Y) Section 7704(d)(5). 
(3) Section 818(b)(2) of such Code is amended by striking 
"section 1221(2)" and inserting "section 1221(a)(2)". 
(4) Section 1397B(e)(2) of such Code is amended by striking 
"section 1221(4)" and inserting "section 1221(a)(4)". 
(d) EFFECTIVE DATE.—^The amendments made by this section 
shall apply to any instrument held, acquired, or entered into, any 
transaction entered into, and supplies held or acquired on or after 
the date of the enactment of this Act. 
SEC. 533. EXPANSION OF REPORTING OF CANCELLATION OF INDEBT-
EDNESS INCOME. 
(a) IN GENERAL.—Paragraph (2) of section 6050P(c) of the 
Internal Revenue Code of 1986 (relating to definitions and special 
rules) is amended by striking "and" at the end of subparagraph 
(B), by striking the period at the end of subparagraph (C) and 
inserting ", and", and by inserting after subparagraph (C) the 
following new subparagraph: 
"(D) any organization a significant trade or business 
of which is the lending of money.". 
(b) EFFECTIVE DATE.—^The amendment made by subsection (a) 
shall apply to discharges of indebtedness after December 31, 1999. 
SEC. 534. LIMITATION ON CONVERSION OF CJHARACTER OF INCOME 
FROM CONSTRUCTIVE OWNERSHIP TRANSACTIONS. 
(a) IN GENERAL.—Part IV of subchapter P of chapter 1 of 
the Internal Revenue Code of 1986 (relating to special rules for 
determining capital gains and losses) is amended by inserting after 
section 1259 the following new section: 
"SEC. 1260. GAINS FROM CONSTRUCTIVE OWNERSHIP TRANSACTIONS. 
26 USC 1260. 
"(a) IN GENERAL.—If the taxpayer has gain from a constructive 
ownership transaction with respect to any financial asset and such 
gain would (without "regard to this section) be treated as a long-
term capital gain— 
"(1) such gain shall be treated as ordinary income to the 
extent that such gain exceeds the net underlying long-term 
capital gain, and 
"(2) to the extent such gain is treated as a long-term 
capital gain after the application of paragraph (1), the deter-
mination of the capital gain rate (or rates) applicable to such 
gain under section 1(h) shall be deteirmined on the basis of 
the respective rate (or rates) that would have been applicable 
to the net underlying long-term capital gain. 
"(b) INTEREST CHARGE ON DEFERRAL OF GAIN RECOGNITION.— 
"(1) IN GENERAL.—If any gain is treated as ordinary income 
for any taxable year by reason of subsection (a)(1), the tax 
26 USC 6050P 
note. 
113 STAT. 1932 
PUBLIC LAW 106-170—DEC. 17, 1999 
imposed by this chapter for such taxable year shall be increased 
by the amount of interest determined under paragraph (2) 
with respect to each prior taxable year during any portion 
of which the constructive ownership transaction was open. Any 
amount payable under this paragraph shall be taken into 
account in computing the amount of any deduction allowable 
to the taxpayer for interest paid or accrued during such taxable 
year. 
"(2) AMOUNT OF INTEREST.—The amount of interest deter-
mined under this paragraph with respect to a prior taxable 
year is the amount of interest which would have been imposed 
under section 6601 on the underpayment of tax for such year 
which would have resulted if the gain (which is treated as 
ordinary income by reason of subsection (a)(1)) had been 
included in gross income in the taxable years in which it 
accrued (determined by treating the income as accruing at 
a constant rate equal to the applicable Federal rate as in 
effect on the day the transaction closed). The period during 
which such interest shall accrue shall end on the due date 
(without extensions) for the return of tax imposed by this 
chapter for the taxable year in which such transaction closed. 
"(3) APPLICABLE FEDERAL RATE.—For purposes of paragraph 
(2), the applicable Federal rate is the applicable Federal rate 
determined under section 1274(d) (compounded semiannually) 
which would apply to a debt instrument with a term equal 
to the period the transaction was open. 
"(4) No CREDITS AGAINST INCREASE IN TAX.—Any increase 
in tax under paragraph (1) shall not be treated as tax imposed 
by this chapter for purposes of determining— 
"(A) the amount of any credit allowable under this 
chapter, or 
"(B) the amount of the tax imposed by section 55. 
"(c) FINANCIAL ASSET.—For purposes of this section— 
"(1) IN GENERAL.—The term 'financial asset' means— 
"(A) any equity interest in any pass-thru entity, and 
"(B) to the extent provided in regulations— 
"(i) any debt instrument, and 
"(ii) any stock in a corporation which is not a 
pass-thru entity. 
"(2) PASS-THRU ENTITY.—For purposes of paragraph (1), 
the term 'pass-thru entity' means— 
"(A) a regulated investment company, 
"(B) a real estate investment trust, 
"(C) an S corporation, 
"(D) a partnership, 
"(E) a trust, 
"(F) a common trust fund, 
"(G) a passive foreign investment company (as defined 
in section 1297 without regard to subsection (e) thereof), 
"(H) a foreign personal holding company, 
"(I) a foreign investment company (as defined in section 
1246(b)), and 
"(J) a REMIC. 
"(d) CONSTRUCTIVE OWNERSHIP TRANSACTION.—For purposes 
of this section— 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1933 
"(1) IN GENERAL.—The taxpayer shall be treated as having 
entered into a constructive ownership transaction with respect 
to any financial asset if the taxpayer— 
"(A) holds a long position under a notional principal 
contract with respect to the financial asset, 
"(B) enters into a forward or futures contract to acquire 
the financial asset, 
"(C) is the holder of a call option, and is the grantor 
of a put option, with respect to tlie financial asset and 
such options have substantially eciual strike prices and 
substantially contemporaneous matuirity dates, or 
"(D) to the extent provided in regulations prescribed 
by the Secretary, enters into one or more other transactions 
(or acquires one or more positions) that have substantially 
the same effect as a transaction described in any of the 
preceding subparagraphs. 
"(2) 
EXCEPTION FOR POSITIONS WJHICH ARE MARKED TO 
MARKET.—This section shall not apply to any constructive 
ownership transaction if all of the positions which are part 
of such transaction are marked to markiet under any provision 
of this title or the regulations thereunder. 
"(3) 
LONG 
POSITION 
UNDER NOTIONAL PRINCIPAL 
CON-
TRACT.—A person shall be treated as liolding a long position 
under a notional principal contract with respect to any financial 
asset if such person— 
"(A) has the right to be paid (or receive credit for) 
all or substantially all of the investment yield (including 
appreciation) on such financial asscit for a specified period, 
and 
"(B) is obligated to reimburse (or provide credit for) 
all or substantially all of any decline in the value of such 
financial asset. 
"(4) FORWARD CONTRACT.—The term 'forward contract' 
means any contract to acquire in the; future (or provide or 
receive credit for the future value of) any financial asset. 
"(e) NET UNDERLYING LONG-TERM CAPITAL GAIN.—For purposes 
of this section, in the case of any constructive ownership transaction 
with respect to any financial asset, the term 'net underlying long-
term capital gain' means the aggregate nest capital gain that the 
taxpayer would have had if— 
"(1) the financial asset had been acquired for fair market 
value on the date such transaction was opened and sold for 
fair market value on the date such transaction was closed, 
and 
"(2) only gains and losses that would have resulted from 
the deemed ownership under paragraph (1) were taken into 
account. 
The amount of the net underlying long-term capital gain with 
respect to any financial asset shall be treated as zero unless the 
amount thereof is established by clear and convincing evidence. 
"(f) SPECIAL RULE WHERE TAXPAYER TAKES DELIVERY.—Except 
as provided in regulations prescribed by the Secretary, if a construc-
tive ownership transaction is closed by reason of taking delivery, 
this section shall be applied as if the tajcpayer had sold all the 
contracts, options, or other positions which are part of such trans-
action for fair market value on the closing date. The amount of 
gain recognized under the preceding sentence shall not exceed the 
113 STAT. 1934 
PUBLIC LAW 106-170—DEC. 17, 1999 
amount of gain treated as ordinary income under subsection (a). 
Proper adjustments shall be made in the amount of any gain 
or loss subsequently realized for gain recognized and treated as 
ordinary income under this subsection. 
"(g) REGULATIONS.—The Secretary shall prescribe such regula-
tions as may be necessary or appropriate to carry out the purposes 
of this section, including regulations— 
"(1) to permit taxpayers to mark to market constructive 
ownership transactions in lieu of appl5dng this section, and 
"(2) to exclude certain forward contracts which do not 
convey substantially all of the economic return with respect 
to a financial asset.". 
(b) CLERICAL AMENDMENT.—The table of sections for part IV 
of subchapter P of chapter 1 of such Code is amended by adding 
at the end the following new item: 
"Sec. 1260. Gains from constructive ownership transactions.". 
26USC1260 
(c) EFFECTIVE DATE.—The amendments made by this section 
note. 
shall apply to transactions entered into after July 11, 1999. 
SEC. 535. TREATMENT OF EXCESS PENSION ASSETS USED FOR 
RETIREE HEALTH BENEFITS. 
(a) EXTENSION.— 
(1) IN GENERAL.—Paragraph (5) of section 420(b) of the 
26 use 420. 
Internal Revenue Code of 1986 (relating to expiration) is 
amended by striking "in any taxable year beginning after 
December 31, 2000" and inserting "made after December 31, 
2005". 
(2) CONFORMING AMENDMENTS.— 
(A) Section 101(e)(3) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1021(e)(3)) is 
amended by striking "January 1, 1995" and inserting "the 
date of the enactment of the Tax Relief Extension Act 
of 1999". 
(B) Section 403(c)(1) of such Act (29 U.S.C. 1103(c)(1)) 
is amended by striking "January 1, 1995" and inserting 
"the date of the enactment of the Tax Relief Extension 
Act of 1999". 
(C) Paragraph (13) of section 408(b) of such Act (29 
U.S.C. 1108(b)(13)) is amended— 
(i) by striking "in a taxable year beginning before 
January 1, 2001" and inserting "made before January 
1, 2006"; and 
(ii) by striking "January 1, 1995" and inserting 
"the date of the enactment of the Tax Relief Extension 
Act of 1999", 
(b) APPLICATION OF MINIMUM COST REQUIREMENTS.— 
(1) IN GENERAL.—Paragraph (3) of section 420(c) of the 
Internal Revenue Code of 1986 is amended to read as follows: 
"(3) MINIMUM COST REQUIREMENTS.— 
"(A) IN GENERAL.—The requirements of this paragraph 
are met if each group health plan or arrangement under 
which applicable health benefits are provided provides that 
the applicable employer cost for each taxable year during 
the cost maintenance period shall not be less than the 
higher of the applicable employer costs for each of the 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1935 
2 taxable years immediately preceding the taxable year 
of the qualified transfer. 
"(B) APPLICABLE EMPLOYER COST.—For purposes of this 
paragraph, the term 'applicable employer cost' means, with 
respect to any taxable year, the amount determined by 
dividing— 
"(i) the qualified current retiree health liabilities 
of the employer for such taxable year determined— 
"(I) without regard to any reduction under 
subsection (e)(1)(B), and 
"(II) in the case of a taxable year in which 
there was no qualified transfer, in the same 
manner as if there had been such a transfer at 
the end of the taxable year, by 
"(ii) the number of individuals to whom coverage 
for applicable health benefits was provided during such 
taxable year. 
"(C) 
ELECTION TO COMPUTE COST SEPARATELY.—An 
employer may elect to have this paragraph applied sepa-
rately with respect to individuals elig:ible for benefits under 
title XVIII of the Social Security Act at any time during 
the taxable year and with respect to individuals not so 
eligible. 
"(D) COST MAINTENANCE PERIOD.—For purposes of this 
paragraph, the term 'cost maintenance period' means the 
period of 5 taxable years beginning with the taxable year 
in which the qualified transfer occurs. If a taxable year 
is in two or more overlapping cost maintenance periods, 
this paragraph shall be applied hy taking into account 
the highest applicable employer cost required to be provided 
under subparagraph (A) for such taxaible year. 
"(E) REGULATIONS.—The Secretary shall prescribe such 
regulations as may be necessary to prevent an employer 
who significantly reduces retiree health coverage during 
the cost maintenance period from being treated as satis-
fying the minimum cost requirement of this subsection.". 
(2) CONFORMING AMENDMENTS.— 
(A) Clause (iii) of section 420(b)(1)(C) of such Code 26USC420. 
is amended by striking "benefits" and inserting "cost". 
(B) Subparagraph (D) of section 420(e)(1) of such Code 
is amended by striking "and shall not be subject to the 
minimum benefit requirements of subsection (c)(3)" and 
inserting "or in calculating applicable employer cost under 
subsection (c)(3)(B)". 
(c) EFFECTIVE DATES.— 
26 use 420 note. 
(1) IN GENERAL.—The amendments made by this section 
shall apply to qualified transfers occurring after the date of 
the enactment of this Act. 
(2) TRANSITION RULE.—If the cost maintenance period for 
any qualified transfer after the date of the enactment of this 
Act includes any portion of a benefit maintenance period for 
any qualified transfer on or before such date, the amendments 
made by subsection (b) shall not apply to such portion of the 
cost maintenance period (and such portion shall be treated 
as a benefit maintenance period). 
69-194-01- 14:QL3Part3 
113 STAT. 1936 
PUBLIC LAW 106-170—DEC. 17, 1999 
SEC. 536. MODIFICATION OF INSTALLMENT METHOD AND REPEAL OF 
INSTALLMENT METHOD FOR ACCRUAL METHOD TAX-
PAYERS. 
(a) REPEAL OF INSTALLMENT METHOD FOR ACCRUAL BASIS TAX-
PAYERS.— 
(1) IN GENERAL.—Subsection (a) of section 453 of the 
26 use 453. 
Internal Revenue Code of 1986 (relating to installment method) 
is amended to read as follows: 
"(a) USE OF INSTALLMENT METHOD.— 
"(1) IN GENERAL.—Except as otherwise provided in this 
section, income from an installment sale shall be taken into 
account for purposes of this title under the installment method. 
"(2) ACCRUAL METHOD TAXPAYER.—The installment method 
shall not apply to income from an installment sale if such 
income would be reported under an accrual method of 
accounting without regard to this section. The preceding sen-
tence shall not apply to a disposition described in subparagraph 
(A) or (B) of subsection (1)(2).". 
(2) 
CONFORMING 
AMENDMENTS.—Sections 
453(d)(1), 
453(i)(l), and 453(k) of such Code are each amended by striking 
"(a)" each place it appears and inserting "(a)(1)". 
(b) MODIFICATION OF PLEDGE RULES.—Paragraph (4) of section 
26 use 453A. 
453A(d) of such Code (relating to pledges, etc., of installment obliga-
tions) is amended by adding at the end the following: "A payment 
shall be treated as directly secured by an interest in an installment 
obligation to the extent an arrangement allows the taxpayer to 
satisfy all or a portion of the indebtedness with the installment 
obligation.". 
26 use 453 note. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to sales or other dispositions occurring on or after 
the date of the enactment of this Act. 
SEC. 537. DENIAL OF CHARITABLE CONTRIBUTION DEDUCTION FOR 
TRANSFERS ASSOCIATED WITH SPLIT-DOLLAR INSUR-
ANCE ARRANGEMENTS. 
(a) IN GENERAL.—Subsection (f) of section 170 of the Internal 
26 use 170. 
Revenue Code of 1986 (relating to disallowance of deduction in 
certain cases and special rules) is amended by adding at the end 
the following new paragraph: 
"(10) SPLIT-DOLLAR LIFE INSURANCE, ANNUITY, AND ENDOW-
MENT CONTRACTS.— 
"(A) IN GENERAL.—Nothing in this section or in section 
545(b)(2), 556(b)(2), 642(c), 2055, 2106(a)(2), or 2522 shall 
be construed to allow a deduction, and no deduction shall 
be allowed, for any transfer to or for the use of an organiza-
tion described in subsection (c) if in connection with such 
transfer— 
"(i) the organization directly or indirectly pays, 
or has previously paid, any premium on any personal 
benefit contract with respect to the transferor, or 
"(ii) there is an understanding or expectation that 
any person will directly or indirectly pay any premium 
on any personal benefit contract with respect to the 
transferor. 
"(B) PERSONAL BENEFIT CONTRACT.—For purposes of 
subparagraph (A), the term 'personal benefit contract' 
means, with respect to the transferor, any life insurance. 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1937 
annuity, or endowment contract if any direct or indirect 
beneficiary under such contract is the transferor, any 
member of the transferor's family, or any other person 
(other than an organization described in subsection (c)) 
designated by the transferor. 
"(C) APPLICATION TO CHARITABLE REMAINDER TRUSTS.— 
In the case of a transfer to a trust referred to in subpara-
graph (E), references in subparagraphs (A) and (F) to an 
organization described in subsection (c) shall be treated 
as a reference to such trust. 
"(D) 
EXCEPTION FOR CERTAIN ANNUITY CONTRACTS.— 
If, in connection with a transfer to or for the use of an 
organization described in subsection (c), such organization 
incurs an obligation to pay a charitable gift annuity (as 
defined in section 501(m)) and such organization purchases 
any annuity contract to fund such obligation, persons 
receiving payments under the charitable gift annuity shall 
not be treated for purposes of subparagraph (B) as indirect 
beneficiaries under such contract i
f
— 
"(i) such organization possesses all of the incidents 
of ownership under such contract, 
"(ii) such organization is entitled to all the pay-
ments under such contract, and 
"(iii) the timing and amount of pa3maents under 
such contract are substantially the same as the timing 
and amount of payments to each such person under 
' 
such obligation (as such obligation is in effect at the 
time of such transfer). 
"(E) 
EXCEPTION FOR CERTAIN CONTRACTS HELD BY 
CHARITABLE REMAINDER TRUSTS.—A person shall not be 
treated for purposes of subparagraph (B) as an indirect 
beneficiary under any life insurance, annuity, or. endow-
ment contract held by a charitable remainder annuity trust 
or a charitable remainder unitrust (as defined in section 
664(d)) solely by reason of being entitled to any payment 
referred to in paragraph (1)(A) or (2)(A) of section 664(d) 
if— 
"(i) such trust possesses all of the incidents of 
ownership under such contract, and 
"(ii) such trust is entitled to all the payments 
under such contract. 
"(F) EXCISE TAX ON PREMIUMS PAID.— 
"(i) IN GENERAL.—There is hereby imposed on any 
organization described in subsection (c) an excise tax 
equal to the premiums paid by such organization on 
any life insurance, annuity, or endowment contract 
if the payment of premiums on such contract is in 
connection with a transfer for which a deduction is 
not allowable under subparagi*aph (A), determined 
without regard to when such transfer is made. 
"(ii) PAYMENTS BY OTHER PERSONS.—For purposes 
of clause (i), payments made by any other person 
pursuant to an understanding or expectation referred 
to in subparagraph (A) shall be treated as made by 
the organization. 
113 STAT. 1938 
PUBLIC LAW 106-170—DEC. 17, 1999 
"(iii) REPORTING.—Any organization on which tax 
is imposed by clause (i) with respect to any premium 
shall file an annual return which includes— 
"(I) the amount of such premiums paid during 
the year and the name and TIN of each beneficiary 
under the contract to which the premium relates, 
and 
"(II) such other information as the Secretary 
may require. 
The penalties applicable to returns required under sec-
tion 6033 shall apply to returns required under this 
clause. Returns required under this clause shall be 
furnished at such time and in such manner as the 
Secretary shall by forms or regulations require. 
"(iv) CERTAIN RULES TO APPLY.—The tax imposed 
by this subparagraph shall be treated as imposed by 
chapter 42 for purposes of this title other than sub-
chapter B of chapter 42. 
"(G) SPECIAL RULE WHERE STATE REQUIRES SPECIFICA-
TION OF CHARITABLE GIFT ANNUITANT IN CONTRACT.—In 
the case of an obligation to pay a charitable gift annuity 
referred to in subparagraph (D) which is entered into under 
the laws of a State which requires, in order for the chari-
table gift annuity to be exempt from insurance regulation 
by such State, that each beneficiary under the charitable 
gift annuity be named as a beneficiary under an annuity 
contract issued by an insurance company authorized to 
transact business in such State, the requirements of clauses 
(i) and (ii) of subparagraph (D) shall be treated as met 
if— 
"(i) such State law requirement was in effect on 
February 8, 1999, 
"(ii) each such beneficiary under the charitable 
gift annuity is a bona fide resident of such State at 
the time the obligation to pay a charitable gift annuity 
is entered into, and 
"(iii) the only persons entitled to payments under 
such contract are persons entitled to payments as bene-
ficiaries under such obligation on the date such obliga-
tion is entered into. 
"(H) MEMBER OF FAMILY.—For purposes of this para-
graph, an individual's family consists of the individual's 
grandparents, the grandparents of such individual's spouse, 
the lineal descendants of such grandparents, and any 
spouse of such a lineal descendant. 
"(I) REGULATIONS.—The Secretary shall prescribe such 
regulations as may be necessary or appropriate to carry 
out the purposes of this paragraph, including regulations 
to prevent the avoidance of such purposes.". 
26 use 170 note. 
(b) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as otherwise provided in this sec-
tion, the amendment made by this section shall apply to trans-
fers made after February 8, 1999. 
(2) EXCISE TAX.—Except as provided in paragraph (3) of 
this subsection, section 170(f )(10)(F) of the Internal Revenue 
Code of 1986 (as added by this section) shall apply to premiums 
paid after the date of the enactment of this Act. 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1939 
(3) REPORTING.—Clause (iii) of such section 170(f)(10)(F) 
shall apply to premiums paid after February 8, 1999 (deter-
mined as if the tax imposed by such section applies to premiums 
paid after such date). 
SEC. 538. DISTRIBUTIONS BY A PARTNERSHIP TO A CORPORATE 
PARTNER OF STOCK IN ANOTHER CORPORATION. 
(a) IN GENERAL.—Section 732 of the Internal Revenue Code 
of 1986 (relating to basis of distributed property other than money) 
26 USC 732. 
is amended by adding at the end the following new subsection: 
"(f) 
CORRESPONDING ADJUSTMENT TO BASIS OF ASSETS OF A 
DISTRIBUTED 
CORPORATION 
CONTROLLED 
BY 
A 
CORPORATE 
PARTNER.— 
"(1) IN GENERAL.—If— 
"(A) a corporation (hereafter in this subsection referred 
to as the 'corporate partner') receivers a distribution from 
a partnership of stock in another corporation (hereafter 
in this subsection referred to as th(j 'distributed corpora-
tion'), 
"(B) the corporate partner has control of the distributed 
corporation immediately after the distribution or at any 
time thereafter, and 
"(C) the partnership's adjusted basis in such stock 
immediately before the distribution tjxceeded the corporate 
partner's adjusted basis in such stock immediately after 
the distribution, 
then an amount equal to such excess shall be applied to reduce 
(in accordance with subsection (c)) the basis of property held 
by the distributed corporation at such time (or, if the corporate 
partner does not control the distributed corporation at such 
time, at the time the corporate partner first has such control). 
"(2) EXCEPTION FOR CERTAIN DISTRIBUTIONS BEFORE CON-
TROL ACQUIRED.—Paragraph (1) shall not apply to any distribu-
tion of stock in the distributed corporatiori i
f
— 
"(A) the corporate partner does not have control of 
such corporation immediately after such distribution, and 
"(B) the corporate partner establishes to the satisfac-
tion of the Secretary that such distribution was not part 
of a plan or arrangement to acquire control of the distrib-
uted corporation. 
"(3) LIMITATIONS ON BASIS REDUCTION.— 
"(A) IN GENERAL.—The amount of the reduction under 
paragraph (1) shall not exceed the amount by which the 
sum of the aggregate adjusted bases of the property and 
the amount of money of the distributed corporation exceeds 
the corporate partner's adjusted basis in the stock of the 
distributed corporation. 
"(B) 
REDUCTION NOT TO EXCEED ADJUSTED BASIS OF 
PROPERTY.—No reduction under paragraph (1) in the basis 
of any property shall exceed the adjusted basis of such 
property (determined without regard to such reduction). 
"(4) GAIN RECOGNITION WHERE REDUCTION LIMITED.—If the 
amount of any reduction under paragrapli (1) (determined after 
the application of paragraph (3)(A)) exceeds the aggregate 
adjusted bases of the property of the distributed corporation— 
"(A) such excess shall be recognized by the corporate 
partner as long-term capital gain, and 
113 STAT. 1940 
PUBLIC LAW 106-170—DEC. 17, 1999 
"(B) the corporate partner's adjusted basis in the stock 
of the distributed corporation shall be increased by such 
excess. 
"(5) CONTROL.—For purposes of this subsection, the term 
'control' means ownership of stock meeting the requirements 
of section 1504(a)(2). 
"(6) INDIRECT DISTRIBUTIONS.—For purposes of paragraph 
(1), if a corporation acquires (other than in a distribution from 
a partnership) stock the basis of which is determined (by reason 
of being distributed from a partnership) in whole or in part 
by reference to subsection (a)(2) or (b), the corporation shall 
be treated as receiving a distribution of such stock from a 
partnership. 
"(7) SPECIAL RULE FOR STOCK IN CONTROLLED CORPORA-
TION.—If the property held by a distributed corporation is stock 
in a corporation which the distributed corporation controls, 
this subsection shall be applied to reduce the basis of the 
property of such controlled corporation. This subsection shall 
be reapplied to any property of any controlled corporation which 
is stock in a corporation which it controls. 
"(8) REGULATIONS.—The Secretary shall prescribe such 
regulations as may be necessary to carry out the purposes 
of this subsection, including regulations to avoid double 
counting and to prevent the abuse of such purposes.". 
26 u s e 732 note. 
(b) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided in paragraph (2), the 
amendment made by this section shall apply to distributions 
made after July 14, 1999. 
(2) PARTNERSHIPS IN EXISTENCE ON JULY 14, 1999.—In the 
case of a corporation which is a partner in a partnership as 
of July 14, 1999, the amendment made by this section shall 
apply to £iny distribution made (or treated as made) to such 
partner from such partnership after June 30, 2001, except 
that this paragraph shall not apply to any distribution after 
the date of the enactment of this Act unless the partner makes 
an election to have this paragraph apply to such distribution 
on the partner's return of Federal income tax for the taxable 
year in which such distribution occurs. 
PART 
II—PROVISIONS 
RELATING 
TO 
REAL 
ESTATE 
INVESTMENT 
TRUSTS 
Subpart A—Treatment of Income and Services 
Provided by Taxable REIT Subsidiaries 
SEC. 541. MODIFICATIONS TO ASSET DIVERSIFICATION TEST. 
(a) IN GENERAL.—Subparagraph (B) of section 856(c)(4) of the 
26 use 856. 
Internal Revenue Code of 1986 is amended to read as follows: 
"(B)(i) not more than 25 percent of the value of its 
total assets is represented by securities (other than those 
includible under subparagraph (A)), 
"(ii) not more than 20 percent of the value of its total 
assets is represented by securities of one or more taxable 
REIT subsidiaries, and 
"(iii) except with respect to a taxable REIT subsidiary 
and securities includible under subparagraph (A)— 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1941 
"(I) not more than 5 percent of the value of its 
total assets is represented by securities of any one 
issuer, 
"(II) the trust does not hold securities possessing 
more than 10 percent of the total voting power of 
the outstanding securities of any one issuer, and 
"(III) the trust does not hold securities having 
a value of more than 10 percent of the total value 
of the outstanding securities of any one issuer.". 
(b) EXCEPTION FOR STRAIGHT DEBT SECURITIES.—Subsection 
(c) of section 856 of such Code is amended by adding at the end 
the following new paragraph: 
"(7) STRAIGHT DEBT SAFE HARBOR IN APPLYING PARAGRAPH 
(4).—Securities of an issuer which are straight debt (as defined 
in section 1361(c)(5) without regard to subparagraph (B)(iii) 
thereof) shall not be taken into account in applying paragraph 
(4)(B)(ii)(III)if— 
"(A) the issuer is an individual, or 
"(B) the only securities of such issuer which are held 
by the trust or a taxable REIT subsidiary of the trust 
are straight debt (as so defined), or 
"(C) the issuer is a partnership and the trust holds 
at least a 20 percent profits interesit in the partnership.". 
SEC. 542. TREATMENT OF INCOME AND SERVICES PROVIDED BY TAX-
ABLE REIT SUBSIDIARIES. 
(a) INCOME FROM TAXABLE REIT SUBSIDIARIES NOT TREATED 
AS IMPERMISSIBLE TENANT SERVICE INCOME.—Clause (i) of section 
856(d)(7)(C) of the Internal Revenue Code of 1986 (relating to 
exceptions to impermissible tenant service income) is amended by 
inserting "or through a taxable REIT subsidiary of such trust" 
after "income". 
(b) CERTAIN INCOME FROM TAXABLE REIT SUBSIDIARIES NOT 
EXCLUDED FROM RENTS FROM REAL PROPERTY.— 
(1) IN GENERAL.—Subsection (d) of section 856 of such 
Code (relating to rents from real property defined) is amended 
by adding at the end the following new paragraphs: 
"(8) SPECL\L RULE FOR TAXABLE REIT SUBSIDIARIES.—For 
purposes of this subsection, amounts paid to a real estate 
investment trust by a taxable REIT subsidiary of such trust 
shall not be excluded from rents from real property by reason 
of paragraph (2)(B) if the requirements of either of the following 
subparagraphs are met: 
"(A) LIMITED RENTAL EXCEPTION.—The requirements 
of this subparagraph are met with respect to any property 
if at least 90 percent of the leased space of the property 
is rented to persons other than taxable REIT subsidiaries 
of such trust and other than persons described in section 
856(d)(2)(B). The preceding sentence shall apply only to 
the extent that the amounts paid to the trust as rents 
from real property (as defined in paragraph (1) without 
regard to paragraph (2)(B)) from such property are substan-
tially comparable to such rents made by the other tenants 
of the trust's property for comparable space. 
"(B) 
EXCEPTION FOR CERTAIN LODGING FACILITIES.— 
The requirements of this subparagraph are met with 
respect to an interest in real property which is a qualified 
113 STAT. 1942 
PUBLIC LAW 106-170—DEC. 17, 1999 
lodging facility leased by the trust to a taxable REIT sub-
sidiary of the trust if the property is operated on behalf 
of such subsidiary by a person who is an eligible inde-
pendent contractor. 
"(9) ELIGIBLE INDEPENDENT CONTRACTOR.—For purposes of 
paragraph (8)(B)— 
"(A) IN GENERAL.—The term 'eligible independent con-
tractor' means, with respect to any qualified lodging facility, 
any independent contractor if, at the time such contractor 
enters into a management agreement or other similar 
service contract with the taxable REIT subsidiary to 
operate the facility, such contractor (or any related person) 
is actively engaged in the trade or business of operating 
qualified lodging facilities for any person who is not a 
related person with respect to the real estate investment 
trust or the taxable REIT subsidiary. 
"(B) SPECIAL RULES.—Solely for purposes of this para-
graph and paragraph (8)(B), a person shall not fail to 
be treated as an independent contractor with respect to 
any qualified lodging facility by reason of any of the fol-
lowing: 
"(i) The taxable REIT subsidiary bears 
the 
expenses for the operation of the facility pursuant to 
the management agreement or other similar service 
contract. 
"(ii) The taxable REIT subsidiary receives the reve-
nues from the operation of such facility, net of expenses 
for such operation and fees payable to the operator 
pursuant to such agreement or contract. 
"(iii) The real estate investment trust receives 
income from such person with respect to another prop-
erty that is attributable to a lease of such other prop-
erty to such person that was in effect as of the later 
of— 
"(I) January 1, 1999, or 
"(II) the earliest date that any taxable REIT 
subsidiary of such trust entered into a manage-
ment agreement or other similar service contract 
with such person with respect to such qualified 
lodging facility. 
"(C) RENEWALS, ETC., OF EXISTING LEASES.—For pur-
poses of subparagraph (B)(iii)— 
"(i) a lease shall be treated as in effect on January 
1, 1999, without regard to its renewal after such date, 
so long as such renewal is pursuant to the terms 
of such lease as in effect on whichever of the dates 
under subparagraph (B)(iii) is the latest, and 
"(ii) a lease of a property entered into after which-
ever of the dates under subparagraph (B)(iii) is the 
latest shall be treated as in effect on such date if— 
"(I) on such date, a lease of such property 
from the trust was in effect, and 
"(II) under the terms of the new lease, such 
trust receives a substantially similar or lesser ben-
efit in comparison to the lease referred to in sub-
clause (I). 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1943 
"(D) QUALIFIED LODGING FACILITY.—For purposes of 
this paragraph— 
"(i) IN GENERAL.—The term 'quaUfied lodging 
facihty' means any lodging facility unless wagering 
activities are conducted at or in connection with such 
facility by any person who is engaged in the business 
of accepting wagers and who is legally authorized to 
engage in such business at or in connection with such 
facility. 
"(ii) LODGING FACILITY.—The term 'lodging facihty' 
means a hotel, motel, or other establishment more 
than one-half of the dwelling units in which are used 
on a transient basis. 
"(iii) CUSTOMARY AMENITIES AND FACILITIES.—The 
term 'lodging facility' includes customary amenities 
and facilities operated as part of, or associated with, 
the lodging facility so long as such amenities and facili-
ties are customary for other properties of a comparable 
size and class owned by other owners unrelated to 
such real estate investment trust. 
"(E) OPERATE INCLUDES MANAGE.—References in this 
paragraph to operating a property shall be treated as 
including a reference to managing the property. 
"(F) RELATED PERSON.—Persons shall be treated as 
related to each other if such persons are treated as a 
single employer under subsection (a) or (b) of section 52.". 
(2) CONFORMING AMENDMENT.—SubpEiragraph (B) of section 
856(d)(2) of such Code is amended by inserting "except as 
provided in paragraph (8)," after "(B)". 
(3) DETERMINING RENTS FROM REAL PROPERTY.— 
Applicability. 
(A)(i) Paragraph (1) of section 856(d) of such Code Effective date, 
is amended by striking "adjusted bases" each place it occurs 
and inserting "fair market values". 
(ii) The amendment made by this subparagraph shall 
26 USC 856 note. 
apply to taxable years beginning after December 31, 2000. 
(B)(i) Clause (i) of section 856(d)(2)(B) of such Code 
is amended by striking "number" and inserting "value". 
(ii) The amendment made by this subparagraph shall 
26 USC 856 note. 
apply to amounts received or accrued in taxable years 
beginning after December 31, 2000, except for amounts 
paid pursuant to leases in effect on July 12, 1999, or 
pursuant to a binding contract in effect on such date and 
at all times thereafter. 
SEC. 543. TAXABLE REIT SUBSIDIARY. 
(a) IN GENERAL.—Section 856 of the Internal Revenue Code 
of 1986 is amended by adding at the end the following new sub-
section: 
"(1) TAXABLE REIT SUBSIDIARY.—For purposes of this part— 
"(1) IN GENERAL.—The term 'taxable REIT subsidiary' 
means, with respect to a real estate investment trust, a corpora-
tion (other than a real estate investment trust) i
f
— 
"(A) such trust directly or indirectly owns stock in 
such corporation, and 
"(B) such trust and such corporation jointly elect that 
such corporation shall be treated as a taxable REIT sub-
•
^ 
sidiary of such trust for purposes of this part. 
113 STAT. 1944 
PUBLIC LAW 106-170—DEC. 17, 1999 
Such an election, once made, shall be irrevocable unless both 
such trust and corporation consent to its revocation. Such elec-
tion, and any revocation thereof, may be made without the 
consent of the Secretary. 
"(2) THIRTY-FIVE PERCENT OWNERSHIP IN ANOTHER TAXABLE 
REIT SUBSIDIARY.—The term 'taxable REIT subsidiary' includes, 
with respect to any real estate investment trust, any corpora-
tion (other than a real estate investment trust) with respect 
to which a taxable REIT subsidiary of such trust owns directly 
or indirectly— 
"(A) securities possessing more than 35 percent of the 
total voting power of the outstanding securities of such 
corporation, or 
"(B) securities having a value of more than 35 percent 
of the total value of the outstanding securities of such 
corporation. 
The preceding sentence shall not apply to a qualified REIT 
subsidiary (as defined in subsection (i)(2)). The rule of section 
856(c)(7) shall apply for purposes of subparagraph (B). 
"(3) EXCEPTIONS.—The term 'taxable REIT subsidiary' shall 
not include— 
"(A) any corporation which directly or indirectly oper-
ates or manages a lodging facility or a health care facility, 
and 
"(B) any corporation which directly or indirectly pro-
vides to any other person (under a franchise, license, or 
otherwise) rights to suiy brand name under which any 
lodging facility or health care facility is operated. 
Subparagraph (B) shall not apply to rights provided to an 
eligible independent contractor to operate or manage a lodging 
facility if such rights are held by such corporation as a 
franchisee, licensee, or in a similar capacity and such lodging 
facility is either owned by such corporation or is leased to 
such corporation from the real estate investment trust. 
"(4) DEFINITIONS.—For purposes of paragraph (3)— 
"(A) LODGING FACILITY.—The term 'lodging facility' has 
the meaning given to such term by paragraph (9)(D)(ii). 
"(B) HEALTH CARE FACILITY.—The term 'health care 
facility' has the meaning given to such term by subsection 
(e)(6)(D)(ii).". 
(b) CONFORMING AMENDMENT.—Paragraph (2) of section 856(i) 
of such Code is amended by adding at the end the following new 
sentence: "Such term shall not include a taxable REIT subsidiary.". 
SEC. 544. LIMITATION ON EARNINGS STRIPPING. 
Paragraph (3) of section 163(j) of the Internal Revenue Code 
26 use 163. 
of 1986 (relating to limitation on deduction for interest on certain 
indebtedness) is amended by striking "and" at the end of subpara-
graph (A), by striking the period at the end of subparagraph (B) 
and inserting ", and", and by adding at the end the following 
new subparagraph: 
"(C) any interest paid or accrued (directly or indirectly) 
by a taxable REIT subsidiary (as defined in section 856(1)) 
of a real estate investment trust to such trust.". 
SEC. 545. 100 PERCENT TAX ON IMPROPERLY ALLOCATED AMOUNTS. 
(a) IN GENERAL.—Subsection (b) of section 857 of the Internal 
26 use 857. 
Revenue Code of 1986 (relating to method of taxation of real estate 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1945 
investment trusts and holders of shares or certificates of beneficial 
interest) is amended by redesignating parajp-aphs (7) and (8) as 
paragraphs (8) and (9), respectively, and by inserting after para-
graph (6) the following new paragraph: 
"(7) INCOME FROM REDETERMINED RENTS, REDETERMINED 
DEDUCTIONS, AND EXCESS INTEREST.— 
"(A) IMPOSITION OF TAX.—There is hereby imposed for 
each taxable year of the real estate investment trust a 
tax equal to 100 percent of redetermined rents, redeter-
mined deductions, and excess interest. 
"(B) REDETERMINED RENTS.— 
"(i) IN GENERAL.—The term 'redetermined rents' 
means rents from real property (as defined in sub-
section 856(d)) the amount of which would (but for 
subparagraph (E)) be reduced on distribution, appor-
tionment, or allocation under section 482 to clearly 
reflect income as a result of ser\'ices furnished or ren-
' 
dered by a taxable REIT subsidiary of the real estate 
investment trust to a tenant of svich trust. 
"(ii) EXCEPTION FOR CERTAIN SERVICES.—Clause (i) 
shall not apply to amounts received directly or 
indirectly by a real estate investment trust for services 
described in paragraph (1)(B) or (7)(C)(i) of section 
, 
856(d). 
"(iii) 
EXCEPTION 
FOR DE 
MINIMIS 
AMOUNTS.— 
Clause (i) shall not apply to amounts described in 
section 856(d)(7)(A) with respect to a property to the 
extent such amounts do not exceed the one percent 
threshold described in section 856(d)(7)(B) with respect 
to such property. 
"(iv) 
EXCEPTION FOR COMPARABLY PRICED SERV-
ICES.—Clause (i) shall not apply to any service ren-
dered by a taxable REIT subsidiary of a real estate 
investment trust to a tenant of such trust if— 
"(I) such subsidiary renders a significant 
amount of similar services to persons other than 
such trust and tenants of such trust who are unre-
lated (within the meaning of section 856(d)(8)(F)) 
to such subsidiary, trust, and tenants, but 
"(II) only to the extent the charge for such 
service so rendered is substantially comparable to 
the charge for the similar services rendered to 
persons referred to in subclause (I). 
"(v) EXCEPTION FOR CERTAIN SEPARATELY CHARGED 
SERVICES.—Clause (i) shall not apply to any service 
rendered by a taxable REIT subsidiary of a real estate 
investment trust to a tenant of such trust i
f
— 
"(I) the rents paid to the trust by tenants 
(leasing at least 25 percent of the net leasable 
space in the trust's property) who are not receiving 
such service from such subsidiary are substantially 
comparable to the rents paid by tenants leasing 
comparable space who are receiving such service 
from such subsidiary, and 
"(II) the charge for suich service from such 
subsidiary is separately stated. 
113 STAT. 1946 
PUBLIC LAW 106-170—DEC. 17, 1999 
"(vi) EXCEPTION FOR CERTAIN SERVICES BASED ON 
SUBSIDIARY'S INCOME FROM THE SERVICES.—Clause (i) 
shall not apply to any service rendered by a taxable 
REIT subsidiary of a real estate investment trust to 
a tenant of such trust if the gross income of such 
subsidiary from such service is not less than 150 per-
cent of such subsidiary's direct cost in furnishing or 
rendering the service. 
"(vii) EXCEPTIONS GRANTED BY SECRETARY.—The 
Secretary may waive the tax otherwise imposed by 
subparagraph (A) if the trust establishes to the satis-
faction of the Secretary that rents charged to tenants 
were established on an arms' length basis even though 
a taxable REIT subsidiary of the trust provided serv-
ices to such tenants. 
"(C) REDETERMINED DEDUCTIONS.—The term 'redeter-
mined deductions' means deductions (other than redeter-
mined rents) of a taxable REIT subsidiary of a real estate 
investment trust if the amount of such deductions would 
(but for subparagraph (E)) be decreased on distribution, 
apportionment, or allocation under section 482 to clearly 
reflect income as between such subsidiary and such trust. 
"(D) EXCESS INTEREST.—The term 'excess interest' 
means any deductions for interest payments by a taxable 
REIT subsidiary of a real estate investment trust to such 
trust to the extent that the interest payments are in excess 
of a rate that is commercially reasonable. 
"(E) COORDINATION WITH SECTION 482.—The imposition 
of tax under subparagraph (A) shall be in lieu of any 
distribution, apportionment, or allocation under section 
482. 
"(F) REGULATORY AUTHORITY.—The Secretary shall pre-
scribe such regulations as may be necessary or appropriate 
to carry out the purposes of this paragraph. Until the 
Secretary prescribes such regulations, real estate invest-
ment trusts and their taxable REIT subsidiaries may base 
their allocations on any reasonable method.", 
(b) AMOUNT SUBJECT TO TAX NOT REQUIRED TO BE DISTRIB-
UTED.—Subparagraph (E) of section 857(b)(2) of such Code (relating 
to real estate investment trust taxable income) is amended by 
striking "paragraph (5)" and inserting "paragraphs (5) and (7)". 
26 u s e 856 note. 
SEC. 546. EFFECTIVE DATE. 
(a) IN GENERAL.—The amendments made by this subpart shall 
apply to taxable years beginning after December 31, 2000. 
(b) TRANSITIONAL RULES RELATED TO SECTION 541.— 
(1) EXISTING ARRANGEMENTS.— 
(A) IN GENERAL.—Except as otherwise provided in this 
paragraph, the amendment made by section 541 shall not 
apply to a real estate investment trust with respect to— 
(i) securities of a corporation held directly or 
indirectly by such trust on July 12, 1999; 
(ii) securities of a corporation held by an entity 
on July 12, 1999, if such trust acquires control of 
such entity pursuant to a written binding contract 
in effect on such date and at all times thereafter before 
such acquisition; 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1947 
(iii) securities received by such trust (or a suc-
cessor) in exchange for, or with respect to, securities 
described in clause (i) or (ii) in a transaction in which 
gain or loss is not recognized; and 
(iv) securities acquired directly or indirectly by 
such trust as part of a reorganization (as defined in 
section 368(a)(1) of the Internal Revenue Code of 1986) 
with respect to such trust if such securities are 
described in clause (i), (ii), or (iii) with respect to 
any other real estate investment trust. 
(B) NEW TRADE OR BUSINESS OR SUBSTANTIAL NEW 
ASSETS.—Subparagraph (A) shall cease to apply to securi-
ties of a corporation as of the first day after July 12, 
1999, on which such corporation engages in a substantial 
new line of business, or acquires Einy substantial asset, 
other than— 
(i) pursuant to a binding contract in effect on such 
date and at all times thereafter before the acquisition 
of such asset; 
(ii) in a transaction in which gain or loss is not 
recognized by reason of section 1031 or 1033 of the 
Internal Revenue Code of 1986; or 
(iii) in a reorganization (as so defined) with another 
corporation the securities of wjtiich are described in 
paragraph (1)(A) of this subsection. 
(C) LIMITATION ON TRANSITION RULES.—Subparagraph 
(A) shall cease to apply to securities of a corporation held, 
acquired, or received, directly or indirectly, by a real estate 
investment trust as of the first daj^ after July 12, 1999, 
on which such trust acquires any additional securities of 
such corporation other than— 
(i) pursuant to a binding contract in effect on July 
12, 1999, and at all times thereafter; or 
(ii) in a reorganization (as so defined) with another 
corporation the securities of which are described in 
paragraph (1)(A) of this subsection. 
(2) T A X - F R E E CONVERSION.—If— 
(A) at the time of an election for a corporation to 
become a taxable REIT subsidiary, the amendment made 
by section 541 does not apply to suchi corporation by reason 
of paragraph (1); and 
(B) such election first takes effect before January 1, 
2004, 
such election shall be treated as a reorganization qualifjdng 
under section 368(a)(1)(A) of such Code. 
SEC. 547. STUDY RELATING TO TAXABLE REIT SUBSIDLARIES. 
26 USC 856 note. 
The Secretary of the Treasury shall conduct a study to deter-
mine how many taxable REIT subsidiaries are in existence and 
the aggregate amount of tsixes paid by such subsidiaries. The Sec-
retary shall submit a report to the Congress describing the results 
of such study. 
113 STAT. 1948 
PUBLIC LAW 106-170—DEC. 17, 1999 
Subpart B—Health Care REITs 
SEC. 551. HEALTH CARE REITS. 
(a) 
SPECIAL FORECLOSURE RULE FOR HEALTH CARE 
PROP-
ERTIES.—Subsection (e) of section 856 of the Internal Revenue Code 
26 use 856. 
of 1986 (relating to special rules for foreclosure property) is amended 
by adding at the end the following new paragraph: 
"(6) 
SPECIAL RULE FOR QUALIFIED HEALTH CARE PROP-
ERTIES.—For purposes of this subsection— 
"(A) ACQUISITION AT EXPIRATION OF LEASE.—The term 
'foreclosure property' shall include any qualified health care 
property acquired by a real estate investment trust as 
the result of the termination of a lease of such property 
(other than a termination by reason of a default, or the 
imminence of a default, on the lease). 
"(B) GRACE PERIOD.—In the case of a qualified health 
care property which is foreclosure property solely by reason 
of subparagraph (A), in lieu of appl5dng paragraphs (2) 
and (3)— 
"(i) the qualified health care property shall cease 
to be foreclosure property as of the close of the second 
taxable year after the taxable year in which such trust 
acquired such property, and 
"(ii) if the real estate investment trust establishes 
to the satisfaction of the Secretary that an extension 
of the grace period in clause (i) is necessary to the 
orderly leasing or liquidation of the trust's interest 
in such qualified health care property, the Secretary 
may grant one or more extensions of the grace period 
for such qualified health care property. 
Any such extension shall not extend the grace period 
beyond the close of the 6th year after the taxable year 
in which such trust acquired such qualified health care 
property. 
"(C) INCOME FROM INDEPENDENT CONTRACTORS.—For 
purposes of applying paragraph (4)(C) with respect to quali-
fied health care property which is foreclosure property by 
reason of subparagraph (A) or paragraph (1), income 
derived or received by the trust from an independent con-
tractor shall be disregarded to the extent such income 
is attributable to— 
"(i) any lease of property in effect on the date 
the real estate investment trust acquired the qualified 
health care property (without regard to its renewal 
after such date so long as such renewal is pursuant 
to the terms of such lease as in effect on such date), 
or 
"(ii) any lease of property entered into after such 
date i
f
— 
"(I) on such date, a lease of such property 
from the trust was in effect, and 
"(II) under the terms of the new lease, such 
trust receives a substantially similar or lesser ben-
efit in comparison to the lease referred to in sub-
clause (I). 
"(D) QUALIFIED HEALTH CARE PROPERTY.— 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1949 
"(i) IN GENERAL.—The term 'qualified health care 
property' means any real property (including interests 
therein), and any personal property incident to such 
real property, which— 
"(I) is a health care facility, or 
"(11) is necessary or incidental to the use of 
r* 
a health care facility. 
"(ii) HEALTH CARE FACILITY.—For purposes of 
clause (i), the term 'health care facility' means a hos-
pital, nursing facility, assisted living facility, con-
gregate care facility, qualified continuing care facility 
(as defined in section 7872(g)(4)), or other licensed 
facility which extends medical or nursing or ancillary 
services to patients and which, immediately before the 
termination, expiration, default, or breach of the lease 
of or mortgage secured by such facility, was operated 
by a provider of such services which was eligible for 
participation in the medicare program under title XVIII 
of the Social Security Act with respect to such facility.", 
(b) EFFECTIVE DATE.—The amendment made by this section 
26 USC 856 note, 
shall apply to taxable years beginning after December 31, 2000. 
Subpart C—Conformity Witti Regulated 
Investment Company Rules 
SEC. 556. CONFORMITY WITH REGULATED USVESTMENT COMPANY 
RULES. 
(a) DISTRIBUTION REQUIREMENT.—Clauses (i) and (ii) of section 
857(a)(1)(A) of the Internal Revenue Code of 1986 (relating to 26 USC 857. 
requirements applicable to real estate investment trusts) are each 
amended by striking "95 percent (90 percent for taxable years 
beginning before January 1, 1980)" and inserting "90 percent". 
(b) IMPOSITION OF TAX.—Clause (i) of section 857(b)(5)(A) of 
such Code (relating to imposition of tax in case of failure to meet 
certain requirements) is amended by striking "95 percent (90 per-
cent in the case of taxable years beginning before January 1, 
1980)" and inserting "90 percent". 
(c) EFFECTIVE DATE.—The amendments made by this section 
26 USC 857 note. 
shall apply to taxable years beginning after December 31, 2000. 
Subpart D—Clarification of Exception From 
Impermissible Tenant Service Income 
SEC. 561. CLARIFICATION OF EXCEPTION FOR INDEPENDENT OPERA-
TORS. 
(a) IN GENERAL.—Paragraph (3) of section 856(d) of the Internal 
Revenue Code of 1986 (relating to independent contractor defined) 
26 USC 856. 
is amended by adding at the end the following flush sentence: 
"In the event that any class of stock of either the real estate 
investment trust or such person is rcigularly traded on an 
established securities market, only persons who own, directly 
or indirectly, more than 5 percent of such class of stock shall 
be taken into account as owning any of the stock of such 
class for purposes of applying the 35 percent limitation set 
forth in subparagraph (B) (but all of the outstanding stock 
113 STAT. 1950 
PUBLIC LAW 106-170—DEC. 17, 1999 
of such class shall be considered outstanding in order to com-
pute the denominator for purpose of determining the applicable 
percentage of ownership).". 
26 use 856 note. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to taxable years beginning after December 31, 2000. 
Subpart E—Modification of Earnings and Profits 
Rules 
SEC. 566. MODIFICATION OF EARNINGS AND PROFITS RULES. 
(a) RULES FOR DETERMINING WHETHER REGULATED INVESTMENT 
COMPANY HAS EARNINGS AND PROFITS FROM NON-RIC YEAR.— 
(1) IN GENERAL.—Subsection (c) of section 852 of the 
26 use 852. 
Internal Revenue Code of 1986 is amended by adding at the 
end the following new paragraph: 
"(3) DISTRIBUTIONS TO MEET REQUIREMENTS OF SUBSECTION 
(a)(2)(B).—Any distribution which is made in order to comply 
with the requirements of subsection (a)(2)(B)— 
"(A) shall be treated for purposes of this subsection 
and subsection (a)(2)(B) as made from earnings and profits 
which, but for the distribution, would result in a failure 
to meet such requirements (and allocated to such earnings 
on a first-in, first-out basis), and 
"(B) to the extent treated under subparagraph (A) as 
made from accumulated earnings and profits, shall not 
be treated as a distribution for purposes of subsection 
(b)(2)(D) and section 855.". 
(2) CONFORMING AMENDMENT.—Subparagraph (A) of section 
26 use 857. 
857(d)(3) of such Code is amended to read as follows: 
"(A) shall be treated for purposes of this subsection 
and subsection (a)(2)(B) as made from earnings and profits 
which, but for the distribution, would result in a failure 
to meet such requirements (and allocated to such earnings 
on a first-in, first-out basis), and". 
(b) CLARIFICATION OF APPLICATION OF REIT SPILLOVER DIVI-
DEND RULES TO DISTRIBUTIONS TO MEET QUALIFICATION REQUIRE-
MENT.—Subparagraph (B) of section 857(d)(3) of such Code is 
amended by inserting before the period "and section 858". 
(c) APPLICATION OF DEFICIENCY DIVIDEND PROCEDURES.—Para-
graph (1) of section 852(e) of such Code is amended by adding 
at the end the following new sentence: "If the determination under 
subparagraph (A) is solely as a result of the failure to meet the 
requirements of subsection (a)(2), the preceding sentence shall also 
apply for purposes of appl5dng subsection (a)(2) to the non-RIC 
year and the amount referred to in paragraph (2)(A)(i) shall be 
the portion of the accumulated earnings and profits which resulted 
in such failure.". 
26 use 852 note. 
(d) EFFECTIVE DATE.—The amendments made by this section 
shall apply to distributions after December 31, 2000. 
Subpart F—Modification of Estimated Tax Rules 
SEC. 571. MODIFICATION OF ESTIMATED TAX RULES FOR CLOSELY 
HELD REAL ESTATE INVESTMENT TRUSTS. 
(a) IN GENERAL.—Subsection (e) of section 6655 of the Internal 
26 use 6655. 
Revenue Code of 1986 (relating to estimated tax by corporations) 
is amended by adding at the end the following new paragraph: 
PUBLIC LAW 106-170—DEC. 17, 1999 
113 STAT. 1951 
"(5) TREATMENT OF CERTAIN REIT DIVIDENDS.— 
"(A) IN GENERAL.—Any dividend received from a closely 
held real estate investment trust by any person which 
owns (after application of subsections (d)(5) and (1)(3)(B) 
of section 856) 10 percent or more (by vote or value) of 
the stock or beneficial interests in the trust shall be taken 
into account in computing annualized income installments 
under paragraph (2) in a manner similar to the manner 
under which partnership income inclusions are taken into 
account. 
"(B) CLOSELY HELD REIT.—For purposes of subpara-
graph (A), the term 'closely held real estate investment 
trust' means a real estate investm(jnt trust with respect 
to which 5 or fewer persons own (after application of sub-
sections (d)(5) and (1)(3)(B) of section 856) 50 percent or 
more (by vote or value) of the stock or beneficial interests 
in the trust.", 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 26 use 6655 
shall apply to estimated tax payments due on or after December 
15, 1999. 
Approved December 17, 1999. 
note. 
L E G I S L A T I V E H I S T O R Y — H . R . 1180 (S. 331): 
HOUSE REPORTS: Nos. 106-220, Pt. 1 (Comm. on Commerce) and 106-478 
(Comm. of Conference). 
SENATE REPORTS: No. 106-37 accompanying S. 331 (Comm. on Finance). 
CONGRESSIONAL RECORD, Vol. 145 (1999): 
Oct. 19, considered and passed House. 
Oct. 21, considered and passed Senate, amended, in lieu of S. 331. 
Nov. 18, House agreed to conference report. 
Nov. 19, Senate agreed to conference report. 
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 35 (1999): 
Dec. 17, Presidential remarks and statement.