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SECTION 1. SHORT TITLE.

This Act may be cited as the ''Federal Activities Inventory Reform
Act of 1998''.
SEC. 2. ANNUAL LISTS OF GOVERNMENT ACTIVITIES NOT INHERENTLY
GOVERNMENTAL IN NATURE.
(a) Lists Required.--Not later than the end of the third quarter of
each fiscal year, the head of each executive agency shall submit to the
Director of the Office of Management and Budget a list of activities
performed by Federal Government sources for the executive agency that,
in the judgment of the head of the executive agency, are not inherently
governmental functions. The entry for an activity on the list shall
include the following:
(1) The fiscal year for which the activity first appeared on a
list prepared under this section.
(2) The number of full-time employees (or its equivalent) that
are necessary for the performance of the activity by a Federal
Government source.
(3) The name of a Federal Government employee responsible for
the activity from whom additional information about the activity
may be obtained.
(b) OMB Review and Consultation.--The Director of the Office of
Management and Budget shall review the executive agency's list for a
fiscal year and consult with the head of the executive agency regarding
the content of the final list for that fiscal year.
(c) Public Availability of Lists.--
(1) Publication.--Upon the completion of the review and
consultation regarding a list of an executive agency--
(A) the head of the executive agency shall promptly
transmit a copy of the list to Congress and make the list
available to the public; and
(B) the Director of the Office of Management and Budget
shall promptly publish in the Federal Register a notice that
the list is available to the public.
(2) Changes.--If the list changes after the publication of the
notice as a result of the resolution of a challenge under section
3, the head of the executive agency shall promptly--
(A) make each such change available to the public and
transmit a copy of the change to Congress; and
(B) publish in the Federal Register a notice that the
change is available to the public.
(d) Competition Required.--Within a reasonable time after the date
on which a notice of the public availability of a list is published
under subsection (c), the head of the executive agency concerned shall
review the activities on the list. Each time that the head of the
executive agency considers contracting with a private sector source for
the performance of such an activity, the head of the executive agency
shall use a competitive process to select the source (except as may
otherwise be provided in a law other than this Act, an Executive order,
regulations, or any executive branch circular setting forth
requirements or guidance that is issued by competent executive
authority). The Director of the Office of Management and Budget shall
issue guidance for the administration of this subsection.
(e) Realistic and Fair Cost Comparisons.--For the purpose of
determining whether to contract with a source in the private sector for
the performance of an executive agency activity on the list on the
basis of a comparison of the costs of procuring services from such a
source with the costs of performing that activity by the executive
agency, the head of the executive agency shall ensure that all costs
(including the costs of quality assurance, technical monitoring of the
performance of such function, liability insurance, employee retirement
and disability benefits, and all other overhead costs) are considered
and that the costs considered are realistic and fair.

SEC. 3. CHALLENGES TO THE LIST.

(a) Challenge Authorized.--An interested party may submit to an
executive agency a challenge of an omission of a particular activity
from, or an inclusion of a particular activity on, a list for which a
notice of public availability has been published under section 2.
(b) Interested Party Defined.--For the purposes of this section,
the term ''interested party'', with respect to an activity referred to
in subsection (a), means the following:
(1) A private sector source that--
(A) is an actual or prospective offeror for any contract,
or other form of agreement, to perform the activity; and
(B) has a direct economic interest in performing the
activity that would be adversely affected by a determination
not to procure the performance of the activity from a private
sector source.
(2) A representative of any business or professional
association that includes within its membership private sector
sources referred to in paragraph (1).
(3) An officer or employee of an organization within an
executive agency that is an actual or prospective offeror to
perform the activity.
(4) The head of any labor organization referred to in section
7103(a)(4) of title 5, United States Code, that includes within its
membership officers or employees of an organization referred to in
paragraph (3).
(c) Time for Submission.--A challenge to a list shall be submitted
to the executive agency concerned within 30 days after the publication
of the notice of the public availability of the list under section 2.
(d) Initial Decision.--Within 28 days after an executive agency
receives a challenge, an official designated by the head of the
executive agency shall--
(1) decide the challenge; and
(2) transmit to the party submitting the challenge a written
notification of the decision together with a discussion of the
rationale for the decision and an explanation of the party's right
to appeal under subsection (e).
(e) Appeal.--
(1) Authorization of appeal.--An interested party may appeal an
adverse decision of the official to the head of the executive
agency within 10 days after receiving a notification of the
decision under subsection (d).
(2) Decision on appeal.--Within 10 days after the head of an
executive agency receives an appeal of a decision under paragraph
(1), the head of the executive agency shall decide the appeal and
transmit to the party submitting the appeal a written notification
of the decision together with a discussion of the rationale for the
decision.

SEC. 4. APPLICABILITY.

(a) Executive Agencies Covered.--Except as provided in subsection
(b), this Act applies to the following executive agencies:
(1) Executive department.--An executive department named in
section 101 of title 5, United States Code.
(2) Military department.--A military department named in
section 102 of title 5, United States Code.
(3) Independent establishment.--An independent establishment,
as defined in section 104 of title 5, United States Code.
(b) Exceptions.--This Act does not apply to or with respect to the
following:
(1) General accounting office.--The General Accounting Office.
(2) Government corporation.--A Government corporation or a
Government controlled corporation, as those terms are defined in
section 103 of title 5, United States Code.
(3) Nonappropriated funds instrumentality.--A part of a
department or agency if all of the employees of that part of the
department or agency are employees referred to in section 2105(c)
of title 5, United States Code.
(4) Certain depot-level maintenance and repair.--Depot-level
maintenance and repair of the Department of Defense (as defined in
section 2460 of title 10, United States Code).

SEC. 5. DEFINITIONS.

In this Act:
(1) Federal government source.--The term ''Federal Government
source'', with respect to performance of an activity, means any
organization within an executive agency that uses Federal
Government employees to perform the activity.
(2) Inherently governmental function.--
(A) Definition.--The term ''inherently governmental
function'' means a function that is so intimately related to
the public interest as to require performance by Federal
Government employees.
(B) Functions included.--The term includes activities that
require either the exercise of discretion in applying Federal
Government authority or the making of value judgments in making
decisions for the Federal Government, including judgments
relating to monetary transactions and entitlements. An
inherently governmental function involves, among other things,
the interpretation and execution of the laws of the United
States so as--
(i) to bind the United States to take or not to take
some action by contract, policy, regulation, authorization,
order, or otherwise;
(ii) to determine, protect, and advance United States
economic, political, territorial, property, or other
interests by military or diplomatic action, civil or
criminal judicial proceedings, contract management, or
otherwise;
(iii) to significantly affect the life, liberty, or
property of private persons;
(iv) to commission, appoint, direct, or control
officers or employees of the United States; or
(v) to exert ultimate control over the acquisition,
use, or disposition of the property, real or personal,
tangible or intangible, of the United States, including the
collection, control, or disbursement of appropriated and
other Federal funds.
(C) Functions excluded.--The term does not normally
include--
(i) gathering information for or providing advice,
opinions, recommendations, or ideas to Federal Government
officials; or
(ii) any function that is primarily ministerial and
internal in nature (such as building security, mail
operations, operation of cafeterias, housekeeping,
facilities operations and maintenance, warehouse
operations, motor vehicle fleet management operations, or
other routine electrical or mechanical services).

SEC. 6. EFFECTIVE DATE.

This Act shall take effect on October 1, 1998.

Speaker of the House of Representatives.

Vice President of the United States and
President of the Senate.
Federal Activities Inventory Reform Act of 1998 - Directs the head of each executive agency to submit to the Director of the Office of Management and Budget, not later than the end of the third quarter of each fiscal year, a list of activities performed by Federal Government sources for the agency that, in the judgment of the head of the executive agency, are not inherently governmental functions.
Requires: (1) the Director to review the agency's list and consult with the agency head regarding the contents of the final list for the fiscal year; (2) the agency head to transmit a copy of the list to the Congress and make the list publicly available; (3) the Director to publish in the Federal Register a notice that the list is publicly available; and (4) the agency head to publish a notice regarding, make available to the public, and transmit to the Congress, any subsequent change to the list.
Requires the agency head to: (1) review the activities on the list within a reasonable time after such a notice of its availability is published; and (2) use a competitive process (with specified exceptions) and ensure that all costs are considered each time that he or she considers contracting with a private sector source for the performance of an activity on the list.
(Sec. 3) Permits an interested party to submit to an agency a challenge of an omission of a particular activity from, or an inclusion of a particular activity on, a list for which a notice has been published. Sets forth procedures governing filing challenges, agency decisions on challenges, appealing such decisions, and agency decisions on such appeals.
(Sec. 4) Provides that this Act shall not apply to or with respect to: (1) the General Accounting Office; (2) Government corporations and Government controlled corporations; (3) a part of a department or agency if all of the employees of that part are employees paid from nonappropriated funds of certain instrumentalities of the United States under the jurisdiction of the armed forces; and (4) depot-level maintenance and repair of the Department of Defense.

SECTION 1. SHORT TITLE.

This Act may be cited as the ''Independent Ethics Commission Act of
2007''.

SEC. 2. ESTABLISHMENT OF INDEPENDENT ETHICS COMMISSION.

(a) Establishment.--There is established an independent ethics
commission within the House of Representatives to be known as the
Independent Ethics Committee (in this Act referred to as the
''Commission'').
(b) Membership and Terms of Office.--(1) The Commission shall
consist of 9 commissioners, 4 appointed by the Speaker and 4 by the
minority leader of the House, and one selected by the affirmative vote
of two-thirds of the 8 appointed commissioners for a term of 5 years.
No commissioner may serve for more than 5 years.
(2) Commissioners shall be appointed for terms of 5 years, except
that of the commissioners first appointed, 2 appointed by the Speaker
and 2 by the minority leader shall be for 3-year terms and 2 appointed
by the Speaker and 2 by the minority leader shall be for 4-year terms
as designated by the Speaker and the minority leader at the time of
appointment.
(c) Qualifications.--Only former Federal judges shall be eligible
for appointment to the Commission.
(1) Disqualifications for appointments.--
(A) Lobbying.--No individual who has been a
lobbyist registered under the Lobbying Disclosure Act
of 1995 or engages in, or is otherwise employed in,
lobbying of the Congress or who is an agent of a
foreign principal registered under the Foreign Agents
Registration Act within the 4-year period immediately
preceding appointment shall be eligible for appointment
to, or service on, the Commission.
(B) Incompatible office.--No member of the
Commission appointed under subsection (b) may be a
Member of the House of Representatives or Senator.
(2) Vacancies.--A vacancy on the Commission shall be filled
in the manner in which the original appointment was made.
(d) Compensation.--Members shall each be entitled to receive the
daily equivalent of the maximum annual rate of basic pay in effect for
Level III of the Executive Schedule for each day (including travel
time) during which they are engaged in the actual performance of duties
vested in the Commission.
(e) Quorum.--A majority of the members of the Commission shall
constitute a quorum.
(f) Meetings.--The Commission shall meet at the call a majority of
its members.

SEC. 3. DUTIES OF COMMISSION.

(a) Duties.--The Commission is authorized--
(1) to receive, monitor, and oversee financial disclosure
and other reports filed by Members of the House and officers
and employees of the House under the Ethics in Government Act
of 1978, and reports filed by registered lobbyists under the
Lobbying Disclosure Act of 1995;
(2) to investigate any alleged violation, by a Member,
officer, or employee of the House of Representatives, of any
rule or other standard of conduct applicable to the conduct of
such Member, officer, or employee under House rules in the
performance of his duties or the discharge of his
responsibilities;
(3) to present a case of probable ethics violations to the
Committee on Standards of Official Conduct of the House of
Representatives;
(4) to make recommendations to the Committee on Standards
of Official Conduct of the House of Representatives that it
report to the appropriate Federal or State authorities any
substantial evidence of a violation by a Member, officer, or
employee of the House of Representatives of any law applicable
to the performance of his duties or the discharge of his
responsibilities, which may have been disclosed in an
investigation by the Office;
(5) to provide information and informal guidance to
Members, officers and employees of the House of Representatives
regarding any rules and other standards of conduct applicable
to such individuals in their official capacities, and develop
and carry out periodic educational briefings for Members,
officers, and employees of the House of Representatives on
those laws, rules, regulations, or other standards; and
(6) to give consideration to the request of any Member,
officer, or employee of the House of Representatives for a
formal advisory opinion or other formal ruling, subject to the
review of the Committee on Standards of Official Conduct of the
House of Representatives, as applicable, with respect to the
general propriety of any current or proposed conduct of such
Member, officer, or employee and, with appropriate deletions to
assure the privacy of the individual concerned, to publish such
opinion for the guidance of other Members, officers, and
employees of the House of Representatives.

SEC. 4. POWERS OF COMMISSION.

(a) Hearings and Evidence.--The Commission may for the purpose of
carrying out this Act--
(1) hold such hearings and sit and act at such times and
places, take such testimony, receive such evidence, administer
such oaths; and
(2) subject to subsection (b), require, by subpoena or
otherwise, the attendance and testimony of such witnesses and
the production of such books, records, correspondence,
memoranda, papers, and documents, as the Commission may
determine advisable.
(b) Subpoenas.--A subpoena may be issued only with a majority of
the Commission.
(c) Obtaining Information.--Upon request of the Commission, the
head of any agency or instrumentality of the Government shall furnish
information deemed necessary by the Commission to enable it to carry
out its duties.
(d) Referrals to the Department of Justice.--Whenever the
Commission has reason to believe that a violation of the Lobbying
Disclosure Act of 1995 may have occurred, that matter may be referred
to the Department of Justice for it to investigate.
(e) General Audits.--The Commission shall have the authority to
conduct general audits of filings under the Lobbying Disclosure Act of
1995.

SEC. 5. INVESTIGATIONS AND INTERACTION WITH THE HOUSE COMMITTEE ON
STANDARDS OF OFFICIAL CONDUCT.

(a) Notification.--Whenever the Commission determines that there
are sufficient grounds to conduct an investigation--
(1) the Commission shall notify the Committee on Standards
of Official Conduct of this determination;
(2) the applicable committee may overrule the determination
of the Commission if, within 10 legislative days--
(A) the committee by an affirmative, roll-call vote
of two-thirds of the full committee votes to overrule
the determination of the Commission;
(B) the committee issues a public report detailing
its reasoning for overruling the Commission;
(C) the vote of each member of the committee on
such roll-call vote is included in the report;
(D) dissenting members are allowed to issue their
own report detailing their reasons for disagreeing with
the majority vote; and
(E) if the committee votes to overrule the
determination of the Commission pursuant to
subparagraph (B), the Commission may publish and make
available to the general public a report detailing the
reasons that the Commission concluded there were
sufficient grounds to conduct an investigation.
(b) Conducting Investigations.--(1) If the Commission determines
that there are sufficient grounds to conduct an investigation and his
determination is not overruled under subsection (a)(5), the Commission
shall conduct an investigation to determine if probable cause exists
that a violation occurred.
(2) As part of an investigation, the Commission may--
(A) administer oaths;
(B) issue subpoenas;
(C) compel the attendance of witnesses and the production
of papers, books, accounts, documents, and testimony; and
(D) take the deposition of witnesses.
(3) If a person disobeys or refuses to comply with a subpoena, or
if a witness refuses to testify to a matter, he may be held in contempt
of Congress.
(c) Presentation of Case to House Committee on Standards of
Official Conduct.--(1) If the Commission determines, upon conclusion of
an investigation, that probable cause exists that an ethics violation
has occurred, the Commission shall notify the Committee on Standards of
Official Conduct of the House of Representatives of this determination.
(2) The committee may overrule the determination of the Commission
if, within 10 legislative days--
(A) the committee by an affirmative, roll-call vote of two-
thirds of the full committee votes to overrule the
determination of the Commission;
(B) the committee issues a public report detailing its
reasoning for overruling the Commission;
(C) the vote of each member of the committee on such roll-
call vote is included in the report; and
(D) dissenting members are allowed to issue their own
report detailing their reasons for disagreeing with the
majority vote.
(3) If the committee votes to overrule the determination of the
Commission pursuant to paragraph (2), the Commission may publish and
make available to the general public a report detailing the reasons
that he concluded there were sufficient grounds to present such case to
the committee.
(4)(A) If the Commission determines there is probable cause that an
ethics violation has occurred and the Commission's determination is not
overruled, the Commission shall present the case and evidence to the
Committee on Standards of Official Conduct of the House of
Representatives to hear and make a determination pursuant to its rules.
(B) The committee shall vote upon whether the individual who is the
subject of the investigation has violated any rules or other standards
of conduct applicable to that individual in his official capacity. Such
votes shall be a roll-call vote of the full committee, a quorum being
present. The committee shall issue a public report which shall include
the vote of each member of the committee on such roll-call vote.
Dissenting members may issue their own report detailing their own
reasons for disagreeing with the majority vote.
(d) Sanctions.--Whenever the Committee on Standards of Official
Conduct of the House of Representatives finds that an ethics violation
has occurred the Commission shall recommend appropriate sanctions to
the committee and whether a matter should be referred to the Department
of Justice for investigation.

SEC. 6. PROCEDURAL RULES.

(a) Majority Approval.--No report or recommendation relating to the
official conduct of a Member, officer, or employee of the House of
Representatives shall be made by the Commission, and no investigation
of such conduct shall be undertaken by the Commission, unless approved
by the affirmative vote of a majority of the members of the Commission.
(b) Investigations.--Except in the case of an investigation
undertaken by the Commission on its own initiative, the Commission may
undertake an investigation relating to the official conduct of an
individual Member, officer, or employee of the House of Representatives
only--
(1) upon receipt of a complaint, in writing and under oath,
made by or submitted to a Member of the House of
Representatives and transmitted to the Commission by such
Member, or
(2) upon receipt of a complaint from the chairman of the
Committee on Standards of Official Conduct of the House of
Representatives, in writing and under oath, made by that
committee.
(c) Prohibition of Certain Investigations.--No investigation shall
be undertaken by the Commission of any alleged violation of a law,
rule, regulation, or standard of conduct not in effect at the time of
the alleged violation.
(d) Disclosure.--No information or testimony received, or the
contents of a complaint or the fact of its filing, shall be publicly
disclosed by any member of the Commission or staff of the Commission
unless specifically authorized in each instance by a vote of the
Commission.

SEC. 7. STAFF OF COMMISSION.

The Commission may appoint and fix the compensation of such staff
as the Commission considers necessary to perform its duties. The
Commission shall be appointed jointly by the Speaker and minority
leader and shall be paid at a rate not to exceed the rate of basic pay
payable for Level III of the Executive Schedule.

SEC. 8. AMENDMENTS TO THE RULES OF THE HOUSE TO CHANGE THE DUTIES OF
THE COMMITTEE ON STANDARDS OF OFFICIAL CONDUCT.

(a) House Rules Amendments.--Clause 3 of rule XI of the Rules of
the House of Representatives is amended as follows:
(1) In paragraph (a), strike subparagraphs (1), (2), and
(3), and redesignate subparagraphs (4), (5), and (6), as
subparagraphs (1), (2), and (3), respectively.
(2)(A) Paragraph (b)(1) is amended by striking ''(A)'', by
striking ''a resolution, report, recommendation, or'' and
inserting ''an'', and by striking '', or, except as provided in
subparagraph (2), undertake an investigation'', and by striking
subdivision (B).
(B) Paragraph (b) is further amended by striking
subparagraphs (2), (3), (4), and (5) and by redesignating
subparagraphs (6) and (7) as subparagraphs (2) and (3),
respectively.
(3) Strike paragraphs (j) (k), (l), (m), (n), (o), (p), and
(q).
(b) Conforming Amendments.--Section 803 of the Ethics Reform Act of
1989 (2 U.S.C. 29d) is amended by striking subsections (c) and (d).

SEC. 9. ACTION ON COMMISSION RECOMMENDATIONS.

(a) Printing of Reports in Congressional Record.--Upon receipt by
the Committee on Standards of Official Conduct of the House of
Representatives of any report of the Commission, the Speaker of the
House of Representatives shall have the report printed in the
Congressional Record.
(b) House Consideration of Independent Ethics Commission
Recommendations.--Within 14 calendar days after a report referred to in
subsection (a) is printed in the Congressional Record, that portion of
the report recommending action by the House of Representatives
respecting any alleged violation, by a Member, officer, or employee of
the House of Representatives, of any law, rule, regulation, or other
standard of conduct applicable to the conduct of such Member, officer,
or employee in the performance of his duties or the discharge of his
responsibilities shall be introduced (by request) in the House by the
Speaker of the House, for himself and the minority leader of the House
in the form of a resolution. This resolution shall constitute a
question of privilege under rule IX of the Rules of the House of
Representatives. Any Member favoring the resolution may call it up as a
question of privilege but only on the third day after the calendar date
upon which such Member announces to the House his intention to do so.

SEC. 10. EFFECTIVE DATE.

This Act shall take effect upon the date of its enactment, except
that sections 3, 4, and 8 shall not take effect immediately prior to
noon January 3, 2009.
Independent Ethics Commission Act of 2007 - Establishes within the House of Representatives an Independent Ethics Commission composed only of former federal judges.

SECTION 1. SHORT TITLE.

This Act may be cited as the ''Start-Up Success Accounts Act of
2001''.

SEC. 2. START-UP SUCCESS ACCOUNTS.

(a) In General.--Subpart C of part II of subchapter E of chapter 1
of the Internal Revenue Code of 1986 (relating to taxable year for
which deductions taken) is amended by inserting after section 468B the
following new section:

''SEC. 468C. START-UP SUCCESS ACCOUNTS.

''(a) Deduction Allowed.--In the case of a taxpayer which is an
eligible small business, there shall be allowed as a deduction for any
taxable year the amount paid in cash by such taxpayer to a Start-up
Success Account (hereafter in this section also referred to as an 'SUSA
Account').
''(b) Limitation.--
''(1) In general.--The amount which a taxpayer may pay into
the SUSA Account for any taxable year shall not exceed
whichever of the following is the least:
''(A) 20 percent of so much of the taxable income
of the taxpayer (determined without regard to this
section) which is attributable to any trade or
business.
''(B) $50,000.
''(C) $100,000, reduced by the aggregate amount
paid by the taxpayer (and all related persons) into
SUSA accounts for all prior taxable years.
''(2) Deduction allowed only during startup period.--No
deduction shall be allowed under this section with respect to
any eligible small business for any taxable year after the 5th
taxable year that such business (or any predecessor) is engaged
in a trade or business.
''(3) Dollar limitation on controlled groups.--
''(A) In general.--For purposes of paragraph (1)--
''(i) all component members of a controlled
group shall be treated as one taxpayer, and
''(ii) the Secretary shall apportion the
dollar limitations contained in paragraph (1)
among the component members of such controlled
group in such manner as he shall by regulations
prescribe.
''(B) Controlled group defined.--For purposes of
subparagraph (A), the term 'controlled group' has the
meaning given such term by section 1563(a); except
that, for such purposes, 'more than 50 percent' shall
be substituted for 'at least 80 percent' each place it
appears in section 1563(a)(1).
''(4) Partnerships and s corporations.--In the case of a
partnership, the limitation under paragraph (1) shall apply
with respect to the partnership and each partner. A similar
rule shall apply in the case of an S corporation and its
shareholders.
''(5) Related persons.--For purposes of paragraph (1)(C), a
person (hereinafter in this paragraph referred to as the
'related person') is related to any person if the related
person bears a relationship to such person specified in section
267(b) or 707(b)(1), or the related person and such person are
engaged in trades or businesses under common control (within
the meaning of subsections (a) and (b) of section 52. For
purposes of the preceding sentence, in applying section 267(b)
or 707(b)(1), '10 percent' shall be substituted for '50
percent'.
''(c) Eligible Small Business.--
''(1) In general.--For purposes of this section, the term
'eligible small business' means, with respect to any taxable
year, any person actively engaged in a trade or business if for
all prior taxable years beginning after December 31, 1999, the
taxpayer (or any predecessor) met the $2,000,000 gross receipts
test of paragraph (2). In the case of a taxpayer to which section 469
applies, such term shall not include any trade or business which is a
passive activity (within the meaning of section 469(c)) of the
taxpayer.
''(2) $2,000,000 gross receipts tests.--A person meets the
$2,000,000 gross receipts tests of this paragraph for any prior
taxable year if such person would meet the test of section
448(c) were such section applied by substituting '$2,000,000'
for '$5,000,000'.
''(d) Start-up Success Account.--For purposes of this section--
''(1) In general.--The terms 'Start-up Success Account' and
'SUSA Account' means a trust created or organized in the United
States for the exclusive benefit of an eligible small business,
but only if the written governing instrument creating the trust
meets the following requirements:
''(A) No contribution will be accepted for any
taxable year in excess of the amount allowed as a
deduction under subsection (a) for such year.
''(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 assets of the trust consist entirely of
cash or of obligations which have adequate stated
interest (as defined in section 1274(c)(2)) and which
pay such interest not less often than annually.
''(D) All income of the trust is distributed
currently to the grantor.
''(E) The assets of the trust will not be
commingled with other property except in a common trust
fund or common investment fund.
''(2) Account taxed as grantor trust.--The grantor of an
SUSA Account shall be treated for purposes of this title as the
owner of such Account and shall be subject to tax thereon in
accordance with subpart E of part I of subchapter J of this
chapter (relating to grantors and others treated as substantial
owners).
''(e) Inclusion of Amounts Distributed.--
''(1) In general.--Except as provided in paragraph (2),
there shall be includible in the gross income of the taxpayer
for any taxable year--
''(A) any amount distributed from an SUSA Account
of the taxpayer during such taxable year (to the extent
not previously included in gross income), and
''(B) any deemed distribution under--
''(i) subsection (f)(1) (relating to
deposits not distributed within 5 years),
''(ii) subsection (f)(2) (relating to
cessation in trade or business), and
''(iii) subparagraph (A) or (B) of
subsection (f)(3) (relating to prohibited
transactions and pledging account as security).
''(2) Exceptions.--Gross income shall not include the
distribution of any contribution paid during a taxable year to
an SUSA Account to the extent that such contribution exceeds
the limitation applicable under subsection (b) if requirements
similar to the requirements of section 408(d)(4) are met.
''(3) Exclusion from self-employment tax.--Amounts included
in gross income under this subsection shall not be included in
determining net earnings from self-employment under section
1402.
''(f) Special Rules.--
''(1) Tax on deposits in account which are not distributed
within 5 years.--
''(A) In general.--If, at the close of any taxable
year, there is a nonqualified balance in any SUSA
Account--
''(i) there shall be deemed distributed
from such Account during such taxable year an
amount equal to such balance, and
''(ii) the taxpayer's tax imposed by this
chapter for such taxable year shall be
increased by 10 percent of such deemed
distribution.
The preceding sentence shall not apply if an amount
equal to such nonqualified balance is distributed from
such Account to the taxpayer before the due date
(including extensions) for filing the return of tax
imposed by this chapter for such year (or, if earlier,
the date the taxpayer files such return for such year).
''(B) Nonqualified balance.--For purposes of
subparagraph (A), the term 'nonqualified balance' means
any balance in the Account on the last day of the
taxable year which is attributable to amounts deposited
in such Account before the 4th preceding taxable year.
''(C) Ordering rule.--For purposes of this
paragraph, distributions from an SUSA Account shall be
treated as made from deposits in the order in which
such deposits were made, beginning with the earliest
deposits.
''(2) Cessation in trade or business.--At the close of the
first disqualification period after a period for which the
taxpayer was engaged in the trade or business referred to in
subsection (a), there shall be deemed distributed from the SUSA
Account (if any) of the taxpayer an amount equal to the balance
in such Account at the close of such disqualification period.
For purposes of the preceding sentence, the term
'disqualification period' means any period of 2 consecutive
taxable years for which the taxpayer is not engaged in the
trade or business referred to in subsection (a).
''(3) Certain rules to apply.--Rules similar to the
following rules shall apply for purposes of this section:
''(A) Section 408(e)(2) (relating to loss of
exemption of account where individual engages in
prohibited transaction).
''(B) Section 408(e)(4) (relating to effect of
pledging account as security).
''(C) Section 408(g) (relating to community
property laws).
''(D) Section 408(h) (relating to custodial
accounts).
''(4) Time when payments deemed made.--For purposes of this
section, a taxpayer shall be deemed to have made a payment to
an SUSA Account on the last day of a taxable year if such
payment is made on account of such taxable year and is made
within 3/2\ months after the close of such taxable year.
''(g) Reports.--The trustee of an SUSA Account shall make such
reports regarding such Account to the Secretary and to the person 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 persons at
such time and in such manner as may be required by those
regulations.''.
(b) Tax on Excess Contributions.--
(1) Subsection (a) of section 4973 of such Code (relating
to tax on certain excess contributions) is amended by striking
''or'' at the end of paragraph (3), by redesignating paragraph
(4) as paragraph (5), and by inserting after paragraph (3) the
following new paragraph:
''(4) an SUSA Account (within the meaning of section
468C(d)), or''.
(2) Section 4973 of such Code is amended by adding at the
end the following new subsection:
''(g) Excess Contributions to SUSA Accounts.--For purposes of this
section, in the case of SUSA Accounts (within the meaning of section
468C(d)), the term 'excess contributions' means the amount by which the
amount contributed for the taxable year to the Account exceeds the
amount which may be contributed to the Account under section 468C(b)
for such taxable year. For purposes of this subsection, any
contribution which is distributed out of the SUSA Account in a
distribution to which section 468C(e)(2)(B) applies shall be treated as
an amount not contributed.''.
(c) Tax on Prohibited Transactions.--
(1) Subsection (c) of section 4975 of such Code (relating
to prohibited transactions) is amended by adding at the end the
following new paragraph:
''(6) Special rule for susa accounts.--A person for whose
benefit an SUSA Account (within the meaning of section 468C(d))
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 an SUSA
Account by reason of the application of section 468C(f)(3)(A)
to such Account.''.
(2) Paragraph (1) of section 4975(e) of such Code is
amended by redesignating subparagraphs (E) and (F) as
subparagraphs (F) and (G), respectively, and by inserting after
subparagraph (D) the following new subparagraph:
''(E) an SUSA Account described in section
468C(d),''.
(d) Failure To Provide Reports on SUSA Accounts.--Paragraph (2) of
section 6693(a) of such Code (relating to failure to provide reports on
certain tax-favored accounts or annuities) is amended by redesignating
subparagraphs (C) and (D) as subparagraphs (D) and (E), respectively,
and by inserting after subparagraph (B) the following new subparagraph:
''(C) section 468C(g) (relating to SUSA
Accounts),''.
(e) Clerical Amendment.--The table of sections for subpart C of
part II of subchapter E of chapter 1 of such Code is amended by
inserting after the item relating to section 468B the following new
item:

''Sec. 468C. Start-up Success
Accounts.''.
(f) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
Start-Up Success Accounts Act of 2001 - Amends the Internal Revenue Code to allow a limited deduction, to an eligible small business taxpayer during its start-up period, for amounts paid in cash by such a taxpayer to a Start-up Success Account.