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PROBLEM: TITLE I--MODIFICATION OF PROVISIONS RELATING TO DRAWBACK CLAIMS

SEC. 101. MERCHANDISE NOT CONFORMING TO SAMPLE OR SPECIFICATIONS.

Section 313(c) of the Tariff Act of 1930 (19 U.S.C. 1313(c)), is
amended to read as follows:
''(c) Merchandise Not Conforming to Sample or Specifications.--
''(1) Conditions for drawback.--Upon the exportation or
destruction under the supervision of the Customs Service of
articles or merchandise--
''(A) upon which the duties have been paid,
''(B) which has been entered or withdrawn for
consumption,
''(C) which is--
''(i) not conforming to sample or
specifications, shipped without the consent of
the consignee, or determined to be defective as
of the time of importation, or
''(ii) ultimately sold at retail and for
any reason returned to and accepted by the
importer or the claimant under the provisions
of the importer's or claimant's merchandise
warranty provision, and
''(D) which, within 3 years after the date of
importation or withdrawal, as applicable, has been
exported or destroyed under the supervision of the
Customs Service,
the full amount of the duties paid upon such merchandise, less
1 percent, shall be refunded as drawback.
''(2) Designation of import entries.--Notwithstanding
paragraph (1), for purposes of paragraph (1)(C)(ii), drawback
may be claimed by designating any entry of merchandise that was
imported within 1 year before the date of exportation or
destruction of the merchandise described in paragraph (1) under
the supervision of the Customs Service. The returned
merchandise, at the time of its importation, must be
commercially interchangeable with the merchandise designated
for drawback.
''(3) When drawback certificates not required.--For
purposes of this subsection, drawback certificates are not
required if the drawback claimant and the importer are the same
party, or if the drawback claimant is a drawback successor to
the importer as defined in subsection (s)(3).''.

SEC. 102. TIME LIMITATION ON EXPORTATION OR DESTRUCTION.

Section 313(i) of the Tariff Act of 1930 (19 U.S.C. 1313(j)), is
amended--
(1) by striking ''No'' and inserting ''Unless otherwise
provided for in this section, no''; and
(2) by inserting '', or destroyed under the supervision of
the Customs Service,'' after ''exported''.

SEC. 103. USE OF DOMESTIC MERCHANDISE ACQUIRED IN EXCHANGE FOR IMPORTED
MERCHANDISE OF SAME KIND AND QUALITY.

Section 313(k) of the Tariff Act of 1930 (19 U.S.C. 1313(k)), is
amended--
(1) by striking ''(k)'' and inserting ''(k)(1)''; and
(2) by adding at the end the following new paragraph:
''(2) For purposes of subsections (a) and (b), the use of
any domestic merchandise acquired in exchange for a drawback
product of the same kind and quality shall be treated as the
use of such drawback product if no certificate of delivery or
certificate of manufacture and delivery pertaining to such
drawback product is issued, other than that which documents the
product's manufacture and delivery. As used in this paragraph,
the term 'drawback product' means any domestically produced
product manufactured with imported merchandise that is subject
to drawback.''

SEC. 104. PACKAGING MATERIAL.

Section 313(q) of the Tariff Act of 1930 (19 U.S.C. 1313(q)), is
amended to read as follows:
''(q) Packaging Material.--
''(1) Packaging material under subsections (c) and (j).--
Packaging material, whether imported and duty paid, and claimed
for drawback under either subsection (c) or (j)(1), or imported
and duty paid, or substituted, and claimed for drawback under
subsection (j)(2), shall be eligible for drawback, upon
exportation or destruction, of 99 percent of any duty, tax, or
fee imposed under Federal law on such imported material.
''(2) Packaging material under subsections (a) and (b).--
Packaging material that is manufactured or produced under
subsection (a) or (b) shall be eligible for drawback, upon
exportation or destruction, of 99 percent of any duty, tax, or
fee imposed under Federal law on the imported or substituted
merchandise used to manufacture or produce such material.
''(3) Contents.--Packaging material described in paragraphs
(1) and (2) shall be eligible for drawback whether or not they
contain articles or merchandise, and whether or not any
articles or merchandise they contain are eligible for drawback.
''(4) Employing packaging material for its intended purpose
prior to exportation.--The use of any packaging material for
its intended purpose prior to exportation or destruction shall
not be treated as a use of such material prior to exportation
or destruction for purposes of applying subsection (a), (b), or
(c), or paragraph (1)(B) or (2)(C)(i) or subsection (j).''.

SEC. 105. LIMITATION ON LIQUIDATION.

Section 504 of the Tariff Act of 1930 (19 U.S.C. 1504) is amended--
(1) by striking subsections (a) and (b) and inserting the
following:
''(a) Liquidation.--
''(1) Entries for consumption.--Unless an entry of
merchandise for consumption is extended by statute or court
order, except as provided in section 751(a)(3), an entry of
merchandise for consumption not liquidated within 1 year from--
''(A) the date of entry of such merchandise,
''(B) the date of the final withdrawal of all such
merchandise covered by a warehouse entry,
''(C) the date of withdrawal from warehouse of such
merchandise for consumption if, pursuant to regulations
issued under section 505(a), duties may be deposited
after the filing of any entry or withdrawal from
warehouse, or
''(D) if a reconciliation is filed, or should have
been filed, the date of the filing under section 484 or
the date the reconciliation should have been filed,
shall be deemed liquidated at the rate of duty, value,
quantity, and amount of duties asserted at the time of entry by
the importer of record. Notwithstanding section 500(e), notice
of liquidation need not be given of an entry deemed liquidated.
''(2) Entries or claims for drawback.--
''(A) In general.--Except as provided in
subparagraph (B), unless an entry or claim for drawback
is extended under subsection (b) or suspended as
required by statute or court order, an entry or claim
for drawback not liquidated within 1 year from the date
of entry or claim shall be deemed liquidated at the
drawback amount asserted by the claimant at the time of
entry or claim. Notwithstanding section 500(c), notice
of liquidation need not be given of an entry deemed
liquidated.
''(B) Exception.--An entry or claim for drawback
filed before the date of the enactment of this
paragraph, the liquidation of which is not final as of
the date of the enactment of this paragraph, shall be
deemed liquidated on the date that is 1 year after the
date of the enactment of this paragraph at the drawback
amount asserted by the claimant at the time of the
entry or claim.
''(3) Payments or refunds.--Payment or refund of duties
owed pursuant to paragraph (1) or (2) shall be made to the
importer of record or drawback claimant, as the case may be,
not later than 90 days after liquidation.
''(b) Extension.--The Secretary may extend the period in which to
liquidate an entry if--
''(1) the information needed for the proper appraisement or
classification of the imported or withdrawn merchandise, or for
determining the correct drawback amount, or for ensuring
compliance with applicable law, is not available to the Customs
Service; or
''(2) the importer of record or drawback claimant, as the
case may be, requests such extension and shows good cause
therefor.
The Secretary shall give notice of an extension under this subsection
to the importer of record or drawback claimant, as the case may be, and
the surety of such importer of record or drawback claimant. Notice
shall be in such form and manner (which may include electronic
transmittal) as the Secretary shall by regulation prescribe. Any entry
the liquidation of which is extended under this subsection shall be
treated as having been liquidated at the rate of duty, value, quantity,
and amount of duty asserted at the time of entry by the importer of
record, or the drawback amount asserted at the time of entry by the
drawback claimant, at the expiration of 4 years from the applicable
date specified in subsection (a).'';
(2) in subsection (c)--
(A) by inserting ''or drawback claimant, as the
case may be,'' after ''to the importer of record''; and
(B) by inserting ''or drawback claimant'' after
''of such importer of record''; and
(3) in subsection (d), by striking the period at the end
and inserting ''or (in the case of a drawback entry or claim)
at the drawback amount asserted at the time of entry by the
drawback claimant.''.

SEC. 106. PENALTIES FOR FALSE DRAWBACK CLAIMS.

Section 593A(h) of the Tariff Act of 1930 (19 U.S.C. 1593a(h)) is
amended by striking ''subsection (g)'' and inserting ''subsections (c)
and (g)''.

SEC. 107. EFFECTIVE DATE.

(a) Sections 101, 102, 103, 104, and 106.--The amendments made by
sections 101, 102, 103, 104, and 106 shall take effect on the date of
the enactment of this Act, and shall apply to--
(1) any drawback entry filed on and after such date of
enactment; and
(2) any drawback entry filed before such date of enactment if
the liquidation of the entry is not final on such date of
enactment.
(b) Section 105.--The amendments made by section 105 shall take
effect on the date of the enactment of this Act, and shall apply to--
(1) any entry of merchandise for consumption or entry or
claim for drawback filed on and after such date of enactment;
and
(2) any entry or claim for drawback filed before such date of
enactment if the liquidation of the entry or claim is not final
on such date of enactment.

TITLE II--LIQUIDATION OR RELIQUIDATION OF CERTAIN ENTRIES

SEC. 201. LIQUIDATION OR RELIQUIDATION OF CERTAIN ENTRIES.

(a) In General.--Notwithstanding section 514 of the Tariff Act of
1930 (19 U.S.C. 1514) or any other provision of law, and subject to
subsection (b), the United States Customs Service shall, not later than
180 days after the receipt of the request described in subsection (b),
liquidate or reliquidate each entry described in subsection (d) by
applying the column 1 general rate of duty of the Harmonized Tariff
Schedule of the United States to each entry that is liquidated or
reliquidated, regardless of whether the entry was made under the column
1 special rate of duty of such schedule.
(b) Requests.--Liquidation or reliquidation may be made under
subsection (a) with respect to an entry described in subsection (d)
only upon a request therefor is filed with the Customs Service.
(c) Payment of Amounts Due.--Any amounts due to the United States
pursuant to the liquidation or reliquidation of an entry under
subsection (a) shall be paid not later than 180 days after the date of
such liquidation or reliquidation.
(d) Affected Entries.--The entries referred to in subsection (a),
filed at the ports of Laredo, Texas (designated as port of entry 2304),
Hidalgo, Texas (designated as port of entry 2305), and Wilmington,
Delaware (designated as port of entry 1103), are as follows:

------------------------------------------------------------------------
Port of Entry Date of Entry
------------------------------------------------------------------------
95300618568 2305 02/22/95
95300618576 2305 02/22/95
95300619236 2305 02/27/95
95300619277 2305 02/27/95
95300619806 2305 03/02/95
95300619871 2305 03/02/95
95300620142 2305 03/07/95
95300620176 2305 03/03/95
95300620184 2305 03/03/95
95300620911 2305 03/07/95
95300635133 2305 04/07/95
95300635141 2305 04/07/95
95300635950 2305 04/12/95
95300635968 2305 04/12/95
95300636370 2305 04/14/95
95300636388 2305 04/14/95
95300640554 2305 05/09/95
95300640653 2305 05/10/95
95300656592 2304 11/05/95
95300657665 2304 11/29/95
95300657756 2304 12/02/95
95300658358 2304 12/16/95
95300658408 2304 12/17/95
95300658572 2304 12/19/95
95300658648 2304 12/22/95
95300658754 2304 12/22/95
95300658945 2304 12/27/95
95300659018 2304 12/28/95
95300659117 2304 12/29/95
95300659208 2304 01/02/96
95300659398 2304 01/05/96
95300659513 2304 01/08/96
95300659547 2304 01/09/96
95300659679 2304 01/11/96
95300659737 2304 01/14/96
95300659794 2304 01/13/96
95300659810 2304 01/14/96
95300659844 2304 01/15/96
95300659851 2304 01/15/96
95300659901 2304 01/16/96
95300659919 2304 01/16/96
95300659935 2304 01/17/96
95300660065 2304 01/18/96
95300660107 2304 01/19/96
95300660172 2304 01/22/96
95300660180 2304 01/22/96
95300660248 2304 01/22/96
95300660362 2304 01/23/96
95300660388 2304 01/24/96
95300660560 2304 01/25/96
95300660743 2304 01/27/96
95300660818 2304 01/29/96
95300660826 2304 01/29/96
95300704053 2305 05/16/95
95300704061 2305 05/16/95
95300704889 2305 05/22/95
95300704897 2305 05/22/95
95300705886 2305 05/31/95
95300705969 2305 05/30/95
95300706900 2305 06/09/95
95300706926 2305 06/09/95
95300752656 2305 02/02/96
95300752698 2305 02/04/96
95300752805 2305 02/05/96
95300752813 2305 02/05/96
95300752870 2305 02/06/96
95300752904 2305 02/06/96
95300753001 2305 02/07/96
95300753076 2305 02/09/96
R7410350736 1103 11/29/95
R7410350769 1103 11/29/95
R7410350801 1103 11/29/95
R7410350835 1103 11/29/95
T8500081575 2305 06/16/95
T8500081591 2305 06/16/95
T8500081716 2305 06/20/95
T8500081724 2305 06/20/95
T8500081815 2305 06/27/95
T8500081823 2305 06/28/95
T8500081922 2305 06/27/95
T8500081930 2305 06/27/95
T8500082052 2305 07/01/95
T8500082060 2305 07/01/95
T8500082326 2305 07/14/95
T8500082342 2305 07/14/95
T8500082458 2305 07/22/95
T8500082482 2305 07/22/95
T8500082508 2305 07/24/95
T8500082516 2305 07/24/95
T8500082581 2305 07/30/95
T8500082599 2305 07/30/95
T8500082656 2305 08/03/95
T8500082664 2305 08/03/95
T8500082748 2305 08/09/95
T8500082797 2305 08/10/95
T8500082839 2305 08/14/95
T8500082847 2305 08/14/95
T8500084462 2305 10/22/95
------------------------------------------------------------------------

SOLUTION: Amends the Tariff Act of 1930 to revise provisions requiring a refund of duties (drawback) on articles or merchandise which has been exported or destroyed under the supervision of the Customs Service within three years after importation or withdrawal, and which, among other things, is ultimately sold at retail and for any reason returned to and accepted by the importer or the claimant under the provisions of the importer's or claimant's merchandise warranty provision. Authorizes a drawback to be claimed by designating any entry of such merchandise that was imported within one year before its exportation or destruction. Prohibits the allowance of a drawback unless the completed article is exported or destroyed under the supervision of the Customs Service within five years after its importation.Sets forth drawback requirements with regard to: (1) use of domestic merchandise acquired in exchange for imported merchandise of same kind and quality; (2) packaging material; and (3) liquidation of entries.Sets forth penalties for false drawback claims.Provides for the liquidation or reliquidation of certain entries filed at the ports of Laredo, Texas, Hidalgo, Texas, and Wilmington, Delaware.

PROBLEM: SECTION 1. SHORT TITLE.

This Act may be cited as the ''Security Contractor Accountability
Act of 2007''.

SEC. 2. LEGAL STATUS OF CONTRACT PERSONNEL.

(a) Clarification of the Military Extraterritorial Jurisdiction
Act.--
(1) Inclusion of contractors.--Subsection (a) of section
3261 of title 18, United States Code, is amended--
(A) by striking ''or'' at the end of paragraph (1);
(B) by striking the comma at the end of paragraph
(2) and inserting ''; or''; and
(C) by inserting after paragraph (2) the following:
''(3) while employed under a contract (or subcontract at
any tier) awarded by any department or agency of the United
States, where the work under such contract is carried out in an
area, or in close proximity to an area (as designated by the
Department of Defense), where the Armed Forces is conducting a
contingency operation,''.
(2) Definition.--Section 3267 of title 18, United States
Code, is amended by adding at the end the following:
''(5) The term 'contingency operation' has the meaning
given such term in section 101(a)(13) of title 10.''.
(b) Department of Justice Inspector General Report.--
(1) Report required.--Not later than 180 days after the
date of the enactment of this Act, the Inspector General of the
Department of Justice shall submit to Congress a report in
accordance with this subsection.
(2) Content of report.--The report under paragraph (1)
shall include--
(A) a description of the status of Department of
Justice investigations of alleged violations of section
3261 of title 18, United States Code, to have been
committed by contract personnel, which shall include--
(i) the number of complaints received by
the Department of Justice;
(ii) the number of investigations into
complaints opened by the Department of Justice;
(iii) the number of criminal cases opened
by the Department of Justice; and
(iv) the number and result of criminal
cases closed by the Department of Justice; and
(B) findings and recommendations about the number
of criminal cases prosecuted by the Department of
Justice involving violations of section 3261 of title
18, United States Code.
(3) Format of report.--The report under paragraph (1) shall
be submitted in unclassified format, but may contain a
classified annex as appropriate.

SEC. 3. FEDERAL BUREAU OF INVESTIGATION INVESTIGATIVE UNIT FOR
CONTINGENCY OPERATIONS.

(a) Establishment of Theater Investigative Unit.--The Director of
the Federal Bureau of Investigation shall ensure that there are
adequate personnel through the creation of Theater Investigative Units
to investigate allegations of criminal violations of section 3261 of
title 18, United States Code, by contract personnel.
(b) Responsibilities of Theater Investigative Unit.--The Theater
Investigative Unit established for a theater of operations shall--
(1) investigate reports that raise reasonable suspicion of
criminal misconduct by contract personnel;
(2) investigate reports of fatalities resulting from the
use of force by contract personnel; and
(3) upon conclusion of an investigation of alleged criminal
misconduct, refer the case to the Attorney General of the
United States for further action, as appropriate in the
discretion of the Attorney General.
(c) Responsibilities of Federal Bureau of Investigation.--
(1) Resources.--The Director of the Federal Bureau of
Investigation shall ensure that each Theater Investigative Unit
has adequate resources and personnel to carry out its
responsibilities.
(2) Notification.--The Director of the Federal Bureau of
Investigation shall notify Congress whenever a Theater
Investigative Unit is established or terminated in accordance
with this section.
(d) Responsibilities of Other Federal Agencies.--An agency
operating in an area, or in close proximity to an area (as designated
by the Department of Defense), where the Armed Forces is conducting a
contingency operation shall cooperate with and support the activities
of the Theater Investigative Unit. Any investigation carried out by the
Inspector General of an agency shall be coordinated with the activities
of the Theater Investigative Unit as appropriate.

SEC. 4. DEFINITIONS.

In this Act:
(1) Covered contract.--The term ''covered contract'' means
an agreement--
(A) that is--
(i) a prime contract awarded by an agency;
(ii) a subcontract at any tier under any
prime contract awarded by an agency; or
(iii) a task order issued under a task or
delivery order contract entered into by an
agency; and
(B) according to which the work under such
contract, subcontract, or task order is carried out in
a region outside the United States in which the Armed
Forces are conducting a contingency operation.
(2) Agency.--The term ''agency'' has the meaning given the
term ''Executive agency'' in section 105 of title 5, United
States Code.
(3) Contingency operation.--The term ''contingency
operation'' has the meaning given the term section 101(13) of
title 10, United States Code.
(4) Contractor.--The term ''contractor'' means an entity
performing a covered contract.
(5) Contract personnel.--The term ''contract personnel''
means persons assigned by a contractor (including
subcontractors at any tier) to perform work under a covered
contract.

SEC. 5. EFFECTIVE DATE.

(a) Applicability.--The provisions of this Act shall apply to all
covered contracts and all covered contract personnel in which the work
under the contract is carried out in an area, or in close proximity to
an area (as designated by the Department of Defense), where the Armed
Forces is conducting a contingency operation on or after the date of
the enactment of this Act.
(b) Immediate Effectiveness.--The provisions of this Act shall
enter into effect immediately upon the enactment of this Act.
(c) Implementation.--With respect to covered contracts and covered
contract personnel discussed in subsection (a)(1), the Director of the
Federal Bureau of Investigation, and the head of any other agency to
which this Act applies, shall have 90 days after the date of the
enactment of this Act to ensure compliance with the provisions of this
Act.

SOLUTION: Security Contractor Accountability Act of 2007 - Provides that persons who, while employed under a federal agency contract in or in close proximity to an area where the Armed Forces are conducting a contingency operation, engage in conduct that would constitute an offense punishable by imprisonment for more than one year if engaged in within U.S. jurisdiction shall be punished as provided for that offense.

Requires the Inspector General of the Department of Justice (DOJ) to report to Congress on the status of the Department's investigations of violations alleged to have been committed by contract personnel and findings and recommendations about the Department's capacity and effectiveness in prosecuting misconduct by contract personnel.

Requires the Director of the Federal Bureau of Investigation (FBI) to ensure, through the creation of Theater Investigative Units, that there are adequate personnel to investigate allegations of criminal violations by contract personnel.

PROBLEM: SECTION 1. SHORT TITLE.

This Act may be cited as the ''Estate Tax Relief Act of 2001''.

SEC. 2. MAXIMUM ESTATE AND GIFT TAX RATE REDUCED TO 45 PERCENT.

(a) In General.--The table contained in section 2001(c)(1) of the
Internal Revenue Code of 1986 is amended by striking the four highest
brackets and inserting the following:

''Over $1,500,000..............
$555,800, plus 45% of the
excess over
$1,500,000.''.
(b) Repeal of Phaseout of Graduated Rates.--
(1) In general.--Subsection (c) of section 2001 of such
Code is amended by striking paragraph (2).
(2) Conforming amendment.--Section 2001(c) is amended by
striking ''(1) In
general.--'' and moving the text 2 ems to the left.
(c) Effective Date.--The amendments made by this section shall
apply to estates of decedents dying, and gifts made, after December 31,
2000.

SEC. 3. UNIFIED CREDIT AGAINST ESTATE AND GIFT TAXES REPLACED WITH
UNIFIED EXEMPTION AMOUNT.

(a) In General.--
(1) Estate tax.--Subsection (b) of section 2001 of the
Internal Revenue Code of 1986 (relating to computation of tax)
is amended to read as follows:
''(b) Computation of Tax.--
''(1) In general.--The tax imposed by this section shall be
the amount equal to the excess (if any) of--
''(A) the tentative tax determined under paragraph
(2), over
''(B) the aggregate amount of tax which would have
been payable under chapter 12 with respect to gifts
made by the decedent after December 31, 1976, if the
provisions of subsection (c) (as in effect at the
decedent's death) had been applicable at the time of
such gifts.
''(2) Tentative tax.--For purposes of paragraph (1), the
tentative tax determined under this paragraph is a tax computed
under subsection (c) on the excess of--
''(A) the sum of--
''(i) the amount of the taxable estate, and
''(ii) the amount of the adjusted taxable
gifts, over
''(B) the exemption amount.
''(3) Exemption amount.--For purposes of paragraph (2), the
term 'exemption amount' means $10,000,000.
''(4) Adjusted taxable gifts.--For purposes of paragraph
(2), the term 'adjusted taxable gifts' means the total amount
of the taxable gifts (within the meaning of section 2503) made
by the decedent after December 31, 1976, other than gifts which
are includible in the gross estate of the decedent.''.
(2) Gift tax.--Subsection (a) of section 2502 of such Code
(relating to computation of tax) is amended to read as follows:
''(a) Computation of Tax.--
''(1) In general.--The tax imposed by section 2501 for each
calendar year shall be the amount equal to the excess (if any)
of--
''(A) the tentative tax determined under paragraph
(2) for such calendar year, over
''(B) the aggregate amount of tax that would have
been payable under this chapter with respect to gifts
made by the donor in preceding calendar periods if the
tax had been computed under the provisions of section
2001(c) as in effect for such calendar year.
''(2) Tentative tax.--For purposes of paragraph (1), the
tentative tax determined under this paragraph for a calendar
year is a tax computed under section 2001(c) on the excess of--
''(A) the aggregate sum of the taxable gifts for
such calendar year and for each of the preceding
calendar periods, over
''(B) the exemption amount under section 2001(b)(3)
for such calendar year.''.
(b) Repeal of Unified Credits.--
(1) Section 2010 of such Code (relating to unified credit
against estate tax) is hereby repealed.
(2) Section 2505 of such Code (relating to unified credit
against gift tax) is hereby repealed.
(c) Conforming Amendments.--
(1)(A) Subsection (b) of section 2011 of such Code is
amended--
(i) by striking ''adjusted'' in the table; and
(ii) by striking the last sentence.
(B) Subsection (f) of section 2011 of such Code is amended
by striking '', reduced by the amount of the unified credit
provided by section 2010''.
(2) Subsection (a) of section 2012 of such Code is amended
by striking ''and the unified credit provided by section
2010''.
(3) Subparagraph (A) of section 2013(c)(1) of such Code is
amended by striking ''2010,''.
(4) Paragraph (2) of section 2014(b) of such Code is
amended by striking ''2010, 2011,'' and inserting ''2011''.
(5) Clause (ii) of section 2056A(b)(12)(C) of such Code is
amended to read as follows:
''(ii) to treat any reduction in the tax
imposed by paragraph (1)(A) by reason of the
credit allowable under section 2010 (as in
effect on the day before the date of the
enactment of the Estate Tax Relief Act of 2001)
or the exemption amount allowable under section
2001(b) with respect to the decedent as a
credit under section 2505 (as so in effect) or
exemption under section 2501 (as the case may
be) allowable to such surviving spouse for
purposes of determining the amount of the
exemption allowable under section 2501 with
respect to taxable gifts made by the surviving
spouse during the year in which the spouse
becomes a citizen or any subsequent year,''.
(6)(A) Section 2057 of such Code is repealed and the table
of sections for part IV of subchapter A of chapter 11 of such
Code is amended by striking the item relating to section 2057.
(B) Paragraph (10) of section 2031(c) of such Code is
amended by inserting ''(as in effect on the day before the date
of the enactment of this parenthetical)'' before the period.
(7) Subsection (b) of section 2101 of such Code is amended
to read as follows:
''(b) Computation of Tax.--
''(1) In general.--The tax imposed by this section shall be
the amount equal to the excess (if any) of--
''(A) the tentative tax determined under paragraph
(2), over
''(B) a tentative tax computed under section
2001(c) on the amount of the adjusted taxable gifts.
''(2) Tentative tax.--For purposes of paragraph (1), the
tentative tax determined under this paragraph is a tax computed
under section 2001(c) on the excess of--
''(A) the sum of--
''(i) the amount of the taxable estate, and
''(ii) the amount of the adjusted taxable
gifts, over
''(B) the exemption amount for the calendar year in
which the decedent died.
''(3) Exemption amount.--
''(A) In general.--The term 'exemption amount'
means $60,000.
''(B) Residents of possessions of the united
states.--In the case of a decedent who is considered to
be a nonresident not a citizen of the United States
under section 2209, the exemption amount under this
paragraph shall be the greater of--
''(i) $60,000, or
''(ii) that proportion of $175,000 which
the value of that part of the decedent's gross
estate which at the time of his death is
situated in the United States bears to the
value of his entire gross estate wherever
situated.
''(C) Special rules.--
''(i) Coordination with treaties.--To the
extent required under any treaty obligation of
the United States, the exemption amount allowed
under this paragraph shall be equal to the
amount which bears the same ratio to the
exemption amount under section 2001(b)(3) (for
the calendar year in which the decedent died)
as the value of the part of the decedent's
gross estate which at the time of his death is
situated in the United States bears to the
value of his entire gross estate wherever
situated. For purposes of the preceding
sentence, property shall not be treated as
situated in the United States if such property
is exempt from the tax imposed by this
subchapter under any treaty obligation of the
United States.
''(ii) Coordination with gift tax exemption
and unified credit.--If an exemption has been
allowed under section 2501 (or a credit has
been allowed under section 2505 as in effect on
the day before the date of the enactment of the
Estate Tax Relief Act of 2001) with respect to
any gift made by the decedent, each dollar
amount contained in subparagraph (A) or (B) or
the exemption amount applicable under clause
(i) of this subparagraph (whichever applies)
shall be reduced by the exemption so allowed
under section 2501 (or, in the case of such a
credit, by the amount of the gift for which the
credit was so allowed).''.
(8) Section 2102 of such Code is amended by striking
subsection (c).
(9)(A) Paragraph (1) of section 2107(a) of such Code is
amended by striking ''the table contained in''.
(B) Paragraph (1) of section 2107(c) of such Code is
amended to read as follows:
''(1) Exemption amount.--For purposes of subsection (a),
the exemption amount under section 2001 shall be $60,000.''
(C) Paragraph (3) of section 2107(c) of such Code is
amended by striking the second sentence.
(D) The heading of subsection (c) of section 2107 of such
Code is amended to read as follows:
''(c) Exemption Amount and Credits.--''.
(10) Paragraph (1) of section 6018(a) of such Code is
amended by striking ''the applicable exclusion amount in effect
under section 2010(c)'' and inserting ''the exemption amount
under section 2001(b)(3)''.
(11) Subparagraph (A) of section 6601(j)(2) of such Code is
amended to read as follows:
''(A) the amount of the tentative tax which would
be determined under the rate schedule set forth in
section 2001(c) if the amount with respect to which
such tentative tax is to be computed were $1,000,000,
or''.
(12) The table of sections for part II of subchapter A of
chapter 11 of such Code is amended by striking the item
relating to section 2010.
(13) The table of sections for subchapter A of chapter 12
of such Code is amended by striking the item relating to
section 2505.
(d) Effective Date.--The amendments made by this section shall
apply to estates of decedents dying and gifts made after December 31,
2000.

SEC. 4. INCREASE IN ANNUAL GIFT EXCLUSION AMOUNT.

(a) In General.--Paragraph (1) of section 2503(b) of the Internal
Revenue Code of 1986 (relating to general exclusion from gifts) is
amended by striking ''$10,000'' and inserting ''$50,000''.
(b) Inflation Adjustment.--Paragraph (2) of section 2503(b) of such
Code is amended--
(1) by striking ''$10,000'' both places it appears and
inserting ''$50,000'',
(2) by striking ''1998'' and inserting ''2001'', and
(3) by striking ''1997'' and inserting ''2000''.
(c) Conforming Amendment.--Section 2523(i)(2) of such Code is
amended by striking ''$10,000'' and inserting ''$50,000''.
(d) Effective Date.--The amendments made by this section shall
apply to estates of decedents dying and gifts made after December 31,
2000.

SOLUTION:
Estate Tax Relief Act of 2001 - Amends the Internal Revenue Code to: (1) reduce the maximum estate and gift tax rate to 45 percent; (2) replace the unified credit against the estate and gift taxes with a unified exemption amount of $10 million; and (3) increase from $10,000 to $50,000 the annual gift exclusion amount.