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

Input: Consider Input: SECTION 1. SHORT TITLE.

This Act may be cited as the ''Federal Response to Energy
Emergencies Act of 2005''.

SEC. 2. UNCONSCIONABLE PRICING OF GASOLINE, OIL, NATURAL GAS, AND
PETROLEUM DISTILLATES DURING EMERGENCIES.

(a) Unconscionable Pricing.--
(1) In general.--During any energy emergency declared by
the President under section 3, it is unlawful for any person to
sell crude oil, gasoline, natural gas, or petroleum distillates
in, or for use in, the area to which that declaration applies
at a price that--
(A) is unconscionably excessive; or
(B) indicates the seller is taking unfair advantage
of the circumstances to increase prices unreasonably.
(2) Factors considered.--In determining whether a violation
of paragraph (1) has occurred, there shall be taken into
account, among other factors, whether--
(A) the amount charged represents a gross disparity
between the price of the crude oil, gasoline, natural
gas, or petroleum distillate sold and the price at
which it was offered for sale in the usual course of
the seller's business immediately prior to the energy
emergency; or
(B) the amount charged grossly exceeds the price at
which the same or similar crude oil, gasoline, natural
gas, or petroleum distillate was readily obtainable by
other purchasers in the area to which the declaration
applies.
(3) Mitigating factors.--In determining whether a violation
of paragraph (1) has occurred, there also shall be taken into
account, among other factors, whether the price at which the
crude oil, gasoline, natural gas, or petroleum distillate was
sold reasonably reflects additional costs, not within the
control of the seller, that were paid or incurred by the
seller.
(b) False Pricing Information.--It is unlawful for any person to
report information related to the wholesale price of crude oil,
gasoline, natural gas, or petroleum distillates to the Federal Trade
Commission if--
(1) that person knew, or reasonably should have known, the
information to be false or misleading;
(2) the information was required by law to be reported; and
(3) the person intended the false or misleading data to
affect data compiled by that department or agency for
statistical or analytical purposes with respect to the market
for crude oil, gasoline, natural gas, or petroleum distillates.
(c) Market Manipulation.--It is unlawful for any person, directly
or indirectly, to use or employ, in connection with the purchase or
sale of crude oil, gasoline, natural gas, or petroleum distillates at
wholesale, any manipulative or deceptive device or contrivance, in
contravention of such rules and regulations as the Federal Trade
Commission may prescribe as necessary or appropriate in the public
interest or for the protection of United States citizens.
(d) Rulemaking.--Not later than 180 days after the date of the
enactment of this Act, the Federal Trade Commission shall promulgate
rules necessary and appropriate to enforce this section.

SEC. 3. DECLARATION OF ENERGY EMERGENCY.

(a) In General.--If the President finds that the health, safety,
welfare, or economic well-being of the citizens of the United States is
at risk because of a shortage or imminent shortage of adequate supplies
of crude oil, gasoline, natural gas, or petroleum distillates due to a
disruption of the national distribution system for crude oil, gasoline,
natural gas, or petroleum distillates (including such a shortage
related to a major disaster (as defined in section 102(2) of the Robert
T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C.
5122))), or significant pricing anomalies in national or regional
energy markets for crude oil, gasoline, natural gas, or petroleum
distillates of a more than transient nature, the President may declare
that a Federal energy emergency exists.
(b) Scope and Duration.--The declaration shall apply to the Nation,
a geographical region, or 1 or more States, as determined by the
President, but may not be in effect for a period of more than 45 days.
(c) Extensions.--The President may--
(1) extend a declaration under subsection (a) for a period
of not more than 45 days; and
(2) extend such a declaration more than once.

SEC. 4. ENFORCEMENT BY THE FEDERAL TRADE COMMISSION.

(a) Enforcement by FTC.--A violation of section 2 shall be treated
as a violation of a rule defining an unfair or deceptive act or
practice prescribed under section 18(a)(1)(B) of the Federal Trade
Commission Act (15 U.S.C. 57a(a)(1)(B)). The Federal Trade Commission
shall enforce this Act in the same manner, by the same means, and with
the same jurisdiction as though all applicable terms and provisions of
the Federal Trade Commission Act were incorporated into and made a part
of this Act. In enforcing section 2(a) of this Act, the Commission
shall give priority to enforcement actions concerning companies with
total United States wholesale or retail sales of crude oil, gasoline,
and petroleum distillates in excess of $500,000,000 per year.
(b) Civil Penalties.--
(1) In general.--Notwithstanding the penalties set forth
under the Federal Trade Commission Act, any person who violates
this Act shall be subject to the following penalties:
(A) Price gouging; unjust profits.--Any person who
violates section 2(a) of this Act shall be subject to--
(i) a fine of not more than 3 times the
amount of profits gained by such person through
such violation; or
(ii) a fine of not more than $3,000,000.
(B) False information; market manipulation.--Any
person who violates section 2(b) or 2(c) of this Act
shall be subject to a civil penalty of not more than
$1,000,000.
(2) Method of assessment.--The penalties provided by
paragraph (1) shall be assessed in the same manner as civil
penalties imposed under section 5 of the Federal Trade
Commission Act (15 U.S.C. 45).
(3) Multiple offenses; mitigating factors.--In assessing
the penalty provided by subsection (a)--
(A) each day of a continuing violation shall be
considered a separate violation; and
(B) the Federal Trade Commission shall take into
consideration the seriousness of the violation and the
efforts of the person committing the violation to
remedy the harm caused by the violation in a timely
manner.

SEC. 5. CRIMINAL PENALTIES.

Any person who violates section 2 or any rule or order issued
thereunder shall be fined under title 18, United States Code--
(1) if a corporation, not to exceed $100,000,000; or
(2) if any other person, not to exceed $1,000,000, or
imprisoned for not more than 10 years, or both.

SEC. 6. ENFORCEMENT AT RETAIL LEVEL BY STATE ATTORNEYS GENERAL.

(a) In General.--A State, as parens patriae, may bring a civil
action on behalf of its residents in an appropriate district court of
the United States to enforce the provisions of section 2(a) of this
Act, or to impose the civil penalties authorized by section 4(b)(1)(B),
whenever the attorney general of the State has reason to believe that
the interests of the residents of the State have been or are being
threatened or adversely affected by a violation of this Act or a
regulation under this Act.
(b) Notice.--The State shall serve written notice to the Federal
Trade Commission of any civil action under subsection (a) prior to
initiating such civil action. The notice shall include a copy of the
complaint to be filed to initiate such civil action, except that if it
is not feasible for the State to provide such prior notice, the State
shall provide such notice immediately upon instituting such civil
action.
(c) Authority to Intervene.--Upon receiving the notice required by
subsection (b), the Federal Trade Commission may intervene in such
civil action and upon intervening--
(1) be heard on all matters arising in such civil action;
and
(2) file petitions for appeal of a decision in such civil
action.
(d) Construction.--For purposes of bringing any civil action under
subsection (a), nothing in this section shall prevent the attorney
general of a State from exercising the powers conferred on the attorney
general by the laws of such State to conduct investigations or to
administer oaths or affirmations or to compel the attendance of
witnesses or the production of documentary and other evidence.
(e) Venue; Service of Process.--In a civil action brought under
subsection (a)--
(1) the venue shall be a judicial district in which--
(A) the defendant operates;
(B) the defendant was authorized to do business; or
(C) where the defendant in the civil action is
found;
(2) process may be served without regard to the territorial
limits of the district or of the State in which the civil
action is instituted; and
(3) a person who participated with the defendant in an
alleged violation that is being litigated in the civil action
may be joined in the civil action without regard to the
residence of the person.
(f) Limitation on State Action While Federal Action Is Pending.--If
the Federal Trade Commission has instituted a civil action or an
administrative action for violation of this Act, no State attorney
general, or official or agency of a State, may bring an action under
this subsection during the pendency of that action against any
defendant named in the complaint of the Federal Trade Commission or the
other agency for any violation of this Act alleged in the complaint.
(g) Enforcement of State Law.--Nothing contained in this section
shall prohibit an authorized State official from proceeding in State
court to enforce a civil or criminal statute of such State.

SEC. 7. LOW INCOME ENERGY ASSISTANCE.

Amounts collected in fines and penalties under sections 4 or 5 of
this Act shall be deposited in a separate fund in the treasury to be
known as the Consumer Relief Trust Fund. To the extent provided for in
advance in appropriations Acts fund shall be used to provide assistance
under the Low Income Home Energy Assistance Program administered by the
Secretary of Health and Human Services.

SEC. 8. EFFECT ON OTHER LAWS.

(a) Other Authority of Federal Trade Commission.--Nothing in this
Act shall be construed to limit or affect in any way the Federal Trade
Commission's authority to bring enforcement actions or take any other
measure under the Federal Trade Commission Act (15 U.S.C. 41 et seq.)
or any other provision of law.
(b) State Law.--Nothing in this Act preempts any State law.

SEC. 9. MARKET TRANSPARENCY FOR CRUDE OIL, GASOLINE, AND PETROLEUM
DISTILLATES.

(a) In General.--The Federal Trade Commission shall facilitate
price transparency in markets for the sale of crude oil and essential
petroleum products at wholesale, having due regard for the public
interest, the integrity of those markets, fair competition, and the
protection of consumers.
(b) Marketplace Transparency.--
(1) Dissemination of information.--In carrying out this
section the Federal Trade Commission shall provide by rule for
the dissemination, on a timely basis, of information about the
availability and prices of wholesale crude oil, gasoline, and
petroleum distillates to the Federal Trade Commission, States,
wholesale buyers and sellers, and the public.
(2) Protection of public from anticompetitive activity.--In
determining the information to be made available under this
section and time to make the information available, the Federal
Trade Commission shall seek to ensure that consumers and
competitive markets are protected from the adverse effects of
potential collusion or other anticompetitive behaviors that can
be facilitated by untimely public disclosure of transaction-
specific information.
(3) Protection of market mechanisms.--The Federal Trade
Commission shall withhold from public disclosure under this
section any information the Commission determines would, if
disclosed, be detrimental to the operation of an effective
market or jeopardize system security.
(c) Information Sources.--
(1) In general.--In carrying out subsection (b), the
Federal Trade Commission may--
(A) obtain information from any market participant;
and
(B) rely on entities other than the Commission to
receive and make public the information, subject to the
disclosure rules in subsection (b)(3).
(2) Published data.--In carrying out this section, the
Federal Trade Commission shall consider the degree of price
transparency provided by existing price publishers and
providers of trade processing services, and shall rely on such
publishers and services to the maximum extent possible.
(3) Electronic information systems.--The Federal Trade
Commission may establish an electronic information system if it
determines that existing price publications are not adequately
providing price discovery or market transparency. Nothing in
this section, however, shall affect any electronic information
filing requirements in effect under this Act as of the date of
enactment of this section.
(4) De minimus exception.--The Federal Trade Commission may
not require entities who have a de minimus market presence to
comply with the reporting requirements of this section.
(d) Cooperation With Other Federal Agencies.--
(1) Memorandum of understanding.--Within 180 days after the
date of enactment of this Act, the Federal Trade Commission
shall conclude a memorandum of understanding with the Commodity
Futures Trading Commission and other appropriate agencies (if
applicable) relating to information sharing, which shall
include provisions--
(A) ensuring that information requests to markets
within the respective jurisdiction of each agency are
properly coordinated to minimize duplicative
information requests; and
(B) regarding the treatment of proprietary trading
information.
(2) CFTC jurisdiction.--Nothing in this section may be
construed to limit or affect the exclusive jurisdiction of the
Commodity Futures Trading Commission under the Commodity
Exchange Act (7 U.S.C. 1 et seq.).
(e) Rulemaking.--Within 180 days after the date of enactment of
this Act, the Federal Trade Commission shall initiate a rulemaking
proceeding to establish such rules as the Commission determines to be
necessary and appropriate to carry out this section.

SEC. 10. REPORT ON UNITED STATES ENERGY EMERGENCY PREPAREDNESS.

(a) Potential Impacts Report.--Within 30 days after the date of
enactment of this Act, the Federal Trade Commission shall transmit to
the Congress a confidential report describing the potential impact on
domestic prices of crude oil, residual fuel oil, and refined petroleum
products that would result from the disruption for periods of 1 week, 1
year, and 5 years, respectively, of not less than--
(1) 30 percent of United States oil production;
(2) 20 percent of United States refinery capacity; and
(3) 5 percent of global oil supplies.
(b) Projections and Possible Remedies.--The President shall include
in the report--
(1) projections of the impact any such disruptions would be
likely to have on the United States economy; and
(2) detailed and prioritized recommendations for remedies
under each scenario covered by the report.

SEC. 11. PROTECTIVE ACTION TO PREVENT FUTURE DISRUPTIONS OF SUPPLY.

The Secretary of Energy and the Energy Information Administration
shall review expenditures by, and activities undertaken by, companies
with total United States wholesale or retail sales of crude oil,
gasoline, and petroleum distillates in excess of $500,000,000 per year
to protect the energy supply system from terrorist attacks,
international supply disruptions, and natural disasters, and ensure a
stable and reasonably priced supply of such products to consumers in
the United States, and, not later than 180 days after the date of the
enactment of this title, shall transmit a report of their findings to
Congress. Such report shall include an assessment of the companies'
preparations for the forecasted period of more frequent and more
intense hurricane activity in the Gulf of Mexico and other vulnerable
coastal areas.

SEC. 12. AUTHORIZATION OF APPROPRIATIONS.

There are authorized to be appropriated such sums as may be
necessary to carry out the provisions of this Act.

Output: Federal Response to Energy Emergencies Act of 2005 - Declares unlawful: (1) unconscionable pricing of gasoline, oil, natural gas, and petroleum distillates during emergencies; (2) intentional reporting of false price information concerning wholesale prices of such products; and (3) market manipulation regarding the purchase or sale at wholesale of such products.

Authorizes the President to declare a federal energy emergency upon finding that the national health, safety, welfare, or economic well-being is at risk because of an actual or imminent shortage of such products due to a disruption of the national distribution system, or significant pricing anomalies in national or regional energy markets for the products.

Empowers the Federal Trade Commission (FTC) and State Attorneys General to enforce this Act.

Sets forth civil and criminal penalties for violations of this Act.

Requires fines and penalties collected under this Act to be deposited in a separate fund in the treasury to be known as the Consumer Relief Trust Fund to provide assistance under the Low Income Home Energy Assistance Program.

Directs the FTC to facilitate price transparency in wholesale markets for the sale of crude oil and essential petroleum products.

Instructs the FTC to transmit a confidential report to Congress on the potential impact on domestic prices of crude oil, residual fuel oil, and refined petroleum products that would result from the disruption for periods of one week, one year, and five years, respectively.

Directs the Secretary of Energy and the Energy Information Administration to review and report to Congress on expenditures and activities undertaken by certain size companies to protect the energy supply system from terrorist attacks, international supply disruptions, and natural disasters, and ensure a stable and reasonably priced supply of such products to consumers in the United States.

Requires such report to assess the companies' preparations for the forecasted period of more frequent and more intense hurricane activity in the Gulf of Mexico and other vulnerable coastal areas.

Input: Consider Input: SECTION 1. SHORT TITLE.

This Act may be cited as the ''China Fair Trade Act of 2010''.

SEC. 2. RECIPROCAL COMPETITIVE TRADE PRACTICES.

(a) In General.--Section 302(a)(2) of the Trade Agreements Act of
1979 (19 U.S.C. 2512(a)(2)) is amended to read as follows:
''(2) Exceptions.--
''(A) In general.--Paragraph (1) shall not apply in
the case of procurements for which--
''(i) there are no offers of products or
services of the United States or of eligible
products; or
''(ii) the offers of products or services
of the United States or of eligible products
are insufficient to fulfill the requirements of
the United States Government.
''(B) Special rule with respect to the people's
republic of china.--Subparagraph (A) shall not apply in
the case of procurements of products or services of the
People's Republic of China.''.
(b) Waiver.--Section 302(b) of the Trade Agreements Act of 1979 (19
U.S.C. 2512(b)) is amended in the matter preceding paragraph (1), by
inserting '', except in the case of the People's Republic of China,''
before ''may''.

SEC. 3. REQUIREMENTS TO BUY CERTAIN ITEMS FROM AMERICAN SOURCES.

(a) Buy American Act.--
(1) American materials required for public use.--Section
2(a) of the Buy American Act (41 U.S.C. 10a(a)) is amended by
inserting after the second sentence the following: ''The
exceptions in the previous two sentences shall not apply with
respect to articles, materials, or supplies mined, produced, or
manufactured, as the case may be, in the People's Republic of
China until such time as China becomes a party to the Agreement
on Government Procurement (described in section 101(d)(17) of
the Uruguay Round Agreements Act (19 U.S.C. 3511(d)(17)).''.
(2) Contract specifications.--Section 3(a) of the Buy
American Act (41 U.S.C. 10b(a)) is amended by striking
''exception.'' and inserting ''exception: Provided further,
That such an exception may not permit the use of articles,
materials, or supplies mined, produced, or manufactured, as the
case may be, in the People's Republic of China until such time
as China becomes a party to the Agreement on Government
Procurement (described in section 101(d)(17) of the Uruguay
Round Agreements Act (19 U.S.C. 3511(d)(17)).''.
(3) Reports.--Section 2(b)(2)(A) of the Buy American Act
(41 U.S.C. 10a(b)(2)(A)) is amended by inserting before the
semicolon the following: ''and the country in which such
articles, materials, or supplies were manufactured''.
(b) Defense Contracts for Certain Articles.--Section 2533a of title
10, United States Code, is amended by adding at the end the following
new subsection:
''(l) Inapplicability of Exceptions to Articles From the People's
Republic of China.--The exceptions to the requirement in subsection (a)
provided under subsections (c) through (h) shall not apply with respect
to items grown, reprocessed, reused, or produced in the People's
Republic of China until such time as China becomes a party to the
Agreement on Government Procurement (described in section 101(d)(17) of
the Uruguay Round Agreements Act (19 U.S.C. 3511(d)(17)).''.
(c) Requirements To Use American Iron, Steel, and Manufactured
Goods Under the American Recovery and Reinvestment Act of 2009.--
Section 1605 of the American Recovery and Reinvestment Act of 2009
(Public Law 111-5; 123 Stat. 303) is amended by adding at the end the
following new subsection:
''(e) The exceptions in subsection (b) shall not apply with respect
to iron, steel, and manufactured goods from the People's Republic of
China until such time as China becomes a party to the Agreement on
Government Procurement (described in section 101(d)(17) of the Uruguay
Round Agreements Act (19 U.S.C. 3511(d)(17)).''.

SEC. 4. REPORT ON PRODUCTIVE CAPACITY OF THE PEOPLE'S REPUBLIC OF
CHINA.

(a) In General.--Not later than 180 days, the Secretary of Commerce
shall submit to Congress a report on the productive capacity of the
major industrial sectors in the People's Republic of China.
(b) Contents.--The report required by subsection (a) shall include
an assessment of any steps taken by the Government of the People's
Republic of China to develop, expand, retract, or otherwise alter the
productive capacity of the sectors identified in the report.

SEC. 5. REPORT ON SUBSIDIES PROVIDED BY THE PEOPLE'S REPUBLIC OF CHINA
FOR RENEWABLE ENERGY PRODUCTS AND TECHNOLOGY.

(a) Report.--Not later than 180 days after the date of the
enactment of this Act, the Secretary of Energy, in consultation with
other appropriate agencies, shall report to Congress regarding the
policies of the Government of the People's Republic of China with
respect to, and the subsidies provided by the People's Republic of
China for, the development and exportation of renewable energy products
and technologies. The report shall include an analysis of the impact of
the policies and subsidies on United States manufacturers of renewable
energy products and technologies.
(b) Definitions.--
(1) Renewable energy.--The term ''renewable energy'' means
energy generated by a renewable energy resource.
(2) Renewable energy product or technology.--The term
''renewable energy product or technology'' means any product,
technology, or component of a product used in the development
or production of renewable energy.
(3) Renewable energy resource.--The term ''renewable energy
resource'' means--
(A) solar, wind, ocean, tidal, hydrokinetic, or
geothermal energy;
(B) biofuel, biomass, or hydropower; or
(C) any other renewable energy resource, as
determined by the Secretary of Energy.

Output: China Fair Trade Act of 2010 - Amends the Trade Agreements Act of 1979 to provide that certain exceptions and waivers to the prohibition on the procurement of the products of a country that is not a party to the Agreement on Government Procurement shall not apply with respect to the procurements of products or services of the People's Republic of China.

Amends the Buy American Act to declare that certain exceptions to the Act requiring only U.S. materials be used for public use shall not apply to the procurement of Chinese made products until China becomes a party to the Agreement.

Declares that certain exceptions to Buy American requirements shall not apply to the procurement of Chinese products by the Department of Defense (DOD) until China becomes a party to such Agreement.

Amends the American Recovery and Reinvestment Act of 2009 to declare that certain exceptions to Buy American requirements under such Act shall not apply to the procurement of Chinese steel and products until China becomes a party to the Agreement.

Requires the Secretary of Commerce to report to Congress on the productive capacity of the major industrial sectors in China.

Directs the Secretary of Energy to report to Congress on: (1) Chinese policies and the subsidies China provides in the development and exportation of renewable energy products and technologies; and (2) the impact such policies and subsidies have on U.S. manufacturers of such products and technologies.

Input: Consider Input: SECTION. 1. MEDICAL INCENTIVES ACCOUNTS.

(a) In General.--Part III of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 is amended by redesignating section 137
as section 138 and by inserting after section 136 the following new
section:

''SEC. 137. MEDICAL INCENTIVES ACCOUNTS.

''(a) Exclusion.--Gross income of an employee shall not include any
amount contributed during the taxable year by the employer to a medical
incentives account of such employee.
''(b) Limitations.--
''(1) Maximum exclusion.--
''(A) In general.--Subsection (a) shall not apply
to contributions for the taxable year in excess of
$3,000.
''(B) Medical care cost adjustment.--
''(i) In general.--In the case of any
taxable year beginning in a calendar year after
1994, the dollar amount in subparagraph (A)
shall be increased for such calendar year by
the medical care cost adjustment for such
calendar year.
''(ii) Medical care cost adjustment.--For
purposes of clause (i), the medical care cost
adjustment for any calendar year is the
percentage (if any) by which--
''(I) the medical care component of
the Consumer Price Index (as defined in
section 1(f)(5)) for August of the
preceding calendar year, exceeds
''(II) such component for August of
1993.
If any increase under the preceding sentence is
not a multiple of $50, such increase shall be
rounded to the nearest multiple of $50.
''(2) Employee must have employer-provided health
insurance.--Subsection (a) shall not apply to any employee
unless--
''(A) such employee is covered under insurance
which constitutes medical care (as defined in section
213(d)), and
''(B) any portion of the cost of such insurance is
provided by such employee's employer.
''(c) Definitions.--For purposes of this section--
''(1) Medical incentives account.--The term 'medical
incentives account' means a trust created or organized in the
United States exclusively for the purpose of paying (or
reimbursing) the medical expenses of the account beneficiary,
the spouse of such beneficiary, or any dependent (as defined in
section 152) of such beneficiary, but only if the written
governing instrument creating the trust meets the following
requirements:
''(A) No contribution will be accepted unless it is
in cash, and contributions will not be accepted for the
taxable year in excess of the limitation under
subsection (b)(1).
''(B) The trustee is a bank (as defined in section
408(n)) or another person who demonstrates to the
satisfaction of the Secretary that the manner in which
such person will administer the trust will be
consistent with the requirements of this section.
''(C) The interest of an individual in the balance
in his account is nonforfeitable.
''(D) No part of the trust assets will be invested
in life insurance contracts.
''(E) The assets of the trust will not be
commingled with other property except in a common trust
fund or common investment fund.
''(2) Medical expenses.--The term 'medical expenses' means,
with respect to the account beneficiary, the amount paid by
such beneficiary during the taxable year which would be
allowable as a deduction for the taxable year under section 213
but for the threshold based on adjusted gross income.
''(3) Account beneficiary.--The term 'account beneficiary'
means the employee for whose benefit the medical incentives
account is established.
''(d) Tax Treatment of Distributions.--
''(1) In general.--Any amount paid or distributed out of a
medical incentives account shall be included in the gross
income of the account beneficiary unless such amount is used
exclusively to pay (or reimburse) the medical expenses of such
beneficiary, the spouse of such beneficiary, or any dependent
(as defined in section 152) of such beneficiary. The preceding
sentence shall not apply to the extent that the aggregate of
such payments and distributions during any taxable year which
are not so used does not exceed the account balance as of the
close of the preceding taxable year.
''(2) Penalty for amounts included in income.--If any
amount is includible in the gross income of the account
beneficiary for any taxable year, such beneficiary's tax
imposed by this chapter shall be increased by 10 percent of the
amount so includible.
''(e) Tax Treatment of Accounts.--
''(1) Exemption from tax.--Any medical incentives account
is exempt from taxation under this subtitle unless such account
has ceased to be a medical incentives account by reason of
paragraph (2) or (3). Notwithstanding the preceding sentence,
any such account shall be subject to the taxes imposed by
section 511 (relating to imposition of tax on unrelated
business income of charitable, etc. organizations).
''(2) Account terminates if individual engages in
prohibited transaction.--
''(A) In general.--If, during any taxable year of
the individual for whose benefit the medical incentives
account was established, such individual engages in any
transaction prohibited by section 4975 with respect to
the account, the account ceases to be a medical
incentives account as of the first day of that taxable
year.
''(B) Account treated as distributing all its
assets.--In any case in which any account ceases to be
a medical incentives account by reason of subparagraph
(A) on the first day of any taxable year, paragraph (1)
of subsection (d) shall be applied as if there were a
distribution on such first day in an amount equal to
the fair market value (on such first day) of all assets
in the account (on such first day) and no portion of
such distribution were used to pay medical expenses.
''(3) Effect of pledging account as security.--If, during
any taxable year, the individual for whose benefit a medical
incentives account was established uses the account or any
portion thereof as security for a loan, the portion so used is
treated as distributed to that individual and not used to pay
medical expenses.
''(f) Custodial Accounts.--For purposes of this section, a
custodial account shall be treated as a trust if--
''(1) the assets of such account are held by a bank (as
defined in section 408(n)) or another person who demonstrates
to the satisfaction of the Secretary that the manner in which
he will administer the account will be consistent with the
requirements of this section, and
''(2) the custodial account would, except for the fact that
it is not a trust, constitute a medical incentives account
described in subsection (c).
For purposes of this title, in the case of a custodial account treated
as a trust by reason of the preceding sentence, the custodian of such
account shall be treated as the trustee thereof.
''(g) Reports.--The trustee of a medical incentives account shall
make such reports regarding such account to the Secretary and to the
individual for whose benefit the account is maintained with respect to
contributions, distributions, and such other matters as the Secretary
may require under regulations. The reports required by this subsection
shall be filed at such time and in such manner and furnished to such
individuals at such time and in such manner as may be required by those
regulations.''
(b) Exclusion Applies for Employment Tax Purposes.--
(1) Social security taxes.--
(A) Paragraph (20) of section 3121(a) of such Code
is amended by striking ''or 132'' and inserting ''132,
or 137''.
(B) Paragraph (17) of section 209(a) of the Social
Security Act is amended by striking ''or 132'' and
inserting ''132, or 137''.
(2) Railroad retirement tax.--Paragraph (5) of section
3231(e) of such Code is amended by striking ''or 132'' and
inserting ''132, or 137''.
(3) Unemployment tax.--Paragraph (16) of section 3306(b) of
such Code is amended by striking ''or 132'' and inserting
''132, or 137''.
(4) Withholding tax.--Paragraph (19) of section 3401(a) of
such Code is amended by striking ''or 132'' and inserting '',
132, or 137''.
(c) Tax on Prohibited Transactions.--Section 4975 of such Code
(relating to prohibited transactions) is amended--
(1) by adding at the end of subsection (c) the following
new paragraph:
''(4) Special rule for medical incentives accounts.--An
individual for whose benefit a medical incentives account
(within the meaning of section 137(c)) is established shall be
exempt from the tax imposed by this section with respect to any
transaction concerning such account (which would otherwise be
taxable under this section) if, with respect to such
transaction, the account ceases to be a medical incentives
account by reason of the application of section 137(e)(2)(A) to
such account.'', and
(2) by inserting ''or a medical incentives account
described in section 137(c)'' in subsection (e)(1) after
''described in section 408(a)''.
(d) Failure To Provide Reports on Medical Incentives Accounts.--
Section 6693 of such Code (relating to failure to provide reports on
individual retirement account or annuities) is amended--
(1) by inserting ''or on medical incentives accounts''
after ''annuities'' in the heading of such section, and
(2) by adding at the end of subsection (a) the following:
''The person required by section 137(g) to file a report
regarding a medical incentives account at the time and in the
manner required by such section shall pay a penalty of $50 for
each failure unless it is shown that such failure is due to
reasonable cause.''
(e) Clerical Amendments.--
(1) The table of sections for part III of subchapter B of
chapter 1 of such Code is amended by striking the last item and
inserting the following:

''Sec. 137. Medical incentives accounts.
''Sec. 138. Cross references to other
Acts.''
(2) The table of sections for subchapter B of chapter 68 of
such Code is amended by inserting ''or on medical incentives
accounts'' after ''annuities'' in the item relating to section
6693.
(f) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the close of the calendar year
which includes the date of the enactment of this Act.
Output: Amends the Internal Revenue Code to exclude from the gross income of an employee amounts contributed by an employer to a medical incentives account.