Public Law 100-688, 102 Stat. 4139
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SEC. 1001. SHORT TITLE.
This title may be cited as the "Ocean Dumping Ban Act "33 USC 1401
note" of 1988".
SEC. 1002. ESTABLISHMENT OF FEES AND PENALTIES FOR OCEAN DUMPING OF
SEWAGE SLUDGE AND INDUSTRIAL WASTE.
The Marine Protection, Research, and Sanctuaries Act of 1972 (33 U.
S.C. 1401 et seq.) is amended by striking the second section 104A "33
USC 1414a" and inserting in lieu thereof the following:
"SEC. 104B. "33 USC 1414b" OCEAN DUMPING OF SEWAGE SLUDGE AND
INDUSTRIAL WASTE.
"(a) TERMINATION OF DUMPING. --
"(1) PROHIBITIONS ON DUMPING. -- Notwithstanding any other
provision of law --
"(A) on and after the 270th day after the date of the enactment
of this section, no person (including a person described in
section 104A(a)(1)(C)) shall dump into ocean waters, or transport
for the purpose of dumping into ocean waters, sewage sludge or
industrial waste, unless such person --
"(i) has entered into a compliance agreement or enforcement
agreement which meets the requirements of subsection (c)(2) or
(3), as applicable; and
"(ii) has obtained a permit issued under section 102 which
authorizes such transportation and dumping; and
"(B) after December 31, 1991, it shall be unlawful for any
person to dump into ocean waters, or to transport for the purposes
of dumping into ocean waters, sewage sludge or industrial waste.
"(2) PROHIBITION ON NEW ENTRANTS. -- The Administrator shall
not issue any permit under this Act which authorizes a person to
dump into ocean waters, or to transport for the purposes of
dumping into ocean waters, sewage sludge or industrial waste,
unless that person was authorized by a permit issued under section
102 or by a court order to dump into ocean waters, sewage sludge
or industrial waste on September 1, 1988.
"(b) SPECIAL DUMPING FEES. --
"(1) IN GENERAL. -- Subject to paragraph (4), any person who
dumps into ocean waters, or transports for the purpose of dumping
into ocean waters, sewage sludge or industrial waste shall be
liable for a fee equal to --
"(A) $100 for each dry ton (or equivalent) of sewage sludge or
industrial waste transported or dumped by the person on or after
the 270th day after the date of the enactment of this section and
before January 1, 1990;
"(B) $150 for each dry ton (or equivalent) of sewage sludge or
industrial waste transported or dumped by the person on or after
January 1, 1990, and before January 1, 1991; and
"(C) $200 for each dry ton (or equivalent) of sewage sludge or
industrial waste transported or dumped by the person on or after
January 1, 1991, and before January 1, 1992.
"(2) PAYMENT OF FEES. -- Of the amount of fees under paragraph
(1) for which a person is liable, such person --
"(A) shall pay into a trust account established by the person
in accordance with subsection (e) a sum equal to 85 percent of
such amount;
"(B) shall pay to the Administrator a sum equal to $15 per dry
ton (or equivalent) of sewage sludge and industrial waste
transported or dumped by such person, for use for agency
activities as provided in subsection (f)(1);
"(C) subject to paragraph (5), shall pay into the Clean Oceans
Fund established by the State in which the person is located a sum
equal to 50 percent of the balance of such amount after
application of subparagraphs (A) and (B); and
"(D) subject to paragraph (5), shall pay to the State in which
the person is located a sum equal to the balance of such amount
after application of subparagraphs (A), (B), and (C), for deposit
into the water pollution control revolving fund established by the
State under title VI of the Federal Water Pollution Control Act,
as provided in subsection (f)(2).
"(3) SCHEDULE FOR PAYMENT. -- Fees under this subsection shall
be paid on a quarterly basis.
"(4) WAIVER OF FEES. -- (A) The Administrator shall waive all
fees under this subsection, other than the portion of fees
required to be paid to the Administrator under paragraph (2)(B)
for agency activities, for any person who has entered into a
compliance agreement which meets the requirements of subsection
(c)(2).
"(B) The Administrator shall reimpose fees under this
subsection for a person for whom such fees are waived under
subparagraph (A) if the Administrator determines that --
"(i) the person has failed to comply with the terms of a
compliance agreement which the person entered into under
subsection (c)(2); and
"(ii) such failure is likely to result in the person not being
able to terminate by December 31, 1991, dumping of sewage sludge
or industrial waste into ocean waters.
"(C) The Administrator may waive fees reimposed for a person
under subparagraph (B) if the Administrator determines that the
person has returned to compliance with a compliance agreement
which the person entered into under subsection (c)(2).
"(5) PAYMENTS PRIOR TO ESTABLISHMENT OF ACCOUNT. -- (A) In any
case in which a State has not established a Clean Oceans Fund or a
water pollution control revolving fund under title VI of the
Federal Water Pollution Control Act, fees required to be paid by a
person in that State under paragraph (2)(C) or (D), as applicable,
shall be paid to the Administrator.
"(B) Amounts paid to the Administrator pursuant to this
paragraph shall be held by the Administrator in escrow until the
establishment of the fund into which such amounts are required to
be paid under paragraph (2), or until the last day of the 1-year
period beginning on the date of such payment, whichever is
earlier, and thereafter --
"(i) if such fund has been established, shall be paid by the
Administrator into the fund; or
"(ii) if such fund has not been established, shall revert to
the general fund of the Treasury.
"(c) COMPLIANCE AGREEMENTS AND ENFORCEMENT AGREEMENTS. --
"(1) IN GENERAL. -- As a condition of issuing a permit under
section 102 which authorizes a person to transport or dump sewage
sludge or industrial waste, the Administrator shall require that,
before the issuance of such permit, the person and the State in
which the person is located enter into with the Administrator --
"(A) a compliance agreement which meets the requirements of
paragraph (2); or
"(B) an enforcement agreement which meets the requirements of
paragraph (3).
"(2) COMPLIANCE AGREEMENTS. -- An agreement shall be a
compliance agreement for purposes of this section only if --
"(A) it includes a plan negotiated by the person, the State in
which the person is located, and the Administrator that will, in
the opinion of the Administrator, if adhered to by the person in
good faith, result in the phasing out and termination of ocean
dumping, and transportation for the purpose of ocean dumping, of
sewage sludge and industrial waste by such person by not later
than December 31, 1991, through the design, construction, and full
implementation of an alternative system for the management of
sewage sludge and industrial waste transported or dumped by the
person;
"(B) it includes a schedule which --
"(i) in the opinion of the Administrator, specifies reasonable
dates by which the person shall complete the various activities
that are necessary for the timely implementation of the
alternative system referred to in subparagraph (A); and
"(ii) meets the requirements of paragraph (4);
"(C) it requires the person to notify in a timely manner the
Administrator and the Governor of the State of any problems the
person has in complying with the schedule referred to in
subparagraph (B);
"(D) it requires the Administrator and the Governor of the
State to evaluate on an ongoing basis the compliance of the person
with the schedule referred to in subparagraph (B);
"(E) it requires the person to pay in accordance with this
section all fees and penalties the person is liable for under this
section; and
"(F) it authorizes the person to use interim measures before
completion of the alternative system referred to in subparagraph
(A).
"(3) ENFORCEMENT AGREEMENTS. -- An agreement shall be an
enforcement agreement for purposes of this section only if --
"(A) it includes a plan negotiated by the person, the State in
which the person is located, and the Administrator that will, in
the opinion of the Administrator, if adhered to by the person in
good faith, result in the phasing out and termination of ocean
dumping, and transportation for the purpose of ocean dumping, of
sewage sludge and industrial waste by such person through the
design, construction, and full implementation of an alternative
system for the management of sewage sludge and industrial waste
transported or dumped by the person;
"(B) it includes a schedule which --
"(i) in the opinion of the Administrator, specifies reasonable
dates by which the person shall complete the various activities
that are necessary for the timely implementation of the
alternative system referred to in subparagraph (A); and
"(ii) meets the requirements of paragraph (4);
"(C) it requires the person to notify in a timely manner the
Administrator and the Governor of the State of any problems the
person has in complying with the schedule referred to in
subparagraph (B);
"(D) it requires the Administrator and the Governor of the
State to evaluate on an ongoing basis the compliance of the person
with the schedule referred to in subparagraph (B);
"(E) it requires the person to pay in accordance with this
section all fees and penalties the person is liable for under this
section; and
"(F) it authorizes the person to use interim measures before
completion of the alternative system referred to in subparagraph
(A).
"(4) SCHEDULES. -- A schedule included in a compliance
agreement pursuant to paragraph (2)(B) or an enforcement agreement
pursuant to paragraph (3)(B) shall establish deadlines for --
"(A) preparation of engineering designs and related
specifications for the alternative system referred to in paragraph
(2)(A) or paragraph (3)(A), as applicable;
"(B) compliance with appropriate Federal, State, and local
statutes, regulations, and ordinances;
"(C) site and equipment acquisitions for such alternative
system;
"(D) construction and testing of such alternative system;
"(E) operation of such alternative system at full capacity;
and
"(F) any other activities, including interim measures, that the
Administrator considers necessary or appropriate.
"(5) CLEAN OCEANS FUNDS. -- (A) Each State that is a party to
a compliance agreement or an enforcement agreement under this
subsection shall establish an interest bearing account, to be
known as a Clean Oceans Fund, into which a person shall pay fees
and penalties in accordance with subsections (b)(2)(C) and (d)(
2)(C)(i), respectively.
"(B) A State which establishes a Clean Oceans Fund pursuant to
this paragraph shall allocate and pay from the fund each year, to
each person in the State which has entered into a compliance
agreement or enforcement agreement under this subsection, a
portion of amounts in the fund on the last day of that year which
is equal to the sum of --
"(i) amounts paid by the person into the fund in that year as
fees pursuant to subsection (b)(2)(C) and as penalties pursuant to
subsection (d)(2)(C)(i);
"(ii) amounts paid by the Administrator into the fund in that
year as fees held in escrow for the person pursuant to subsection
(b)(5)(B); and
"(iii) interest on such amounts.
"(C) Amounts allocated and paid to a person pursuant to
subparagraph (B) --
"(i) shall be used for the purposes described in subsection
(e)(2)(B); and
"(ii) may be used for matching Federal grants.
"(D) A Clean Oceans Fund established by a State pursuant to
this paragraph shall be subject to such accounting, reporting, and
other requirements as may be established by the Administrator to
assure accountability of payments into and out of the fund.
"(6) PUBLIC PARTICIPATION. -- The Administrator shall provide
an opportunity for public comment regarding the establishment and
implementation of compliance agreements and enforcement agreements
enter into pursuant to this section.
"(d) PENALTIES. --
"(1) IN GENERAL. -- In lieu of any other civil penalty under
this Act, any person who has entered into a compliance agreement
or enforcement agreement under subsection (c) and who dumps or
transports sewage sludge or industrial waste in violation of
subsection (a)(1)(B) shall be liable for a civil penalty, to be
assessed by the Administrator, as follows:
"(A) For each dry ton (or equivalent) of sewage sludge or
industrial waste dumped or transported by the person in violation
of this subsection in calendar year 1992, $600.
"(B) For each dry ton (or equivalent) of sewage sludge or
industrial waste dumped or transported by the person in violation
of this subsection in any year after calendar year 1992, a sum
equal to --
"(i) the amount of penalty per dry ton (or equivalent) for a
violation occurring in the preceding calendar year, plus
"(ii) a percentage of such amount equal to 10 percent of such
amount, plus an additional 1 percent of such amount for each full
calendar year since December 31, 1991.
"(2) PAYMENT OF PENALTY. -- Of the amount of penalties under
paragraph (1) for which a person is liable, such person --
"(A) shall pay into a trust account established by the person
in accordance with subsection (e) a sum which is a percentage of
such amount equal to --
"(i) 90 percent of such amount, reduced by
"(ii) 5 percent of such amount for each full calendar year
since December 31, 1991;
"(B) shall pay to the Administrator a sum equal to $15 per dry
ton (or equivalent) of sewage sludge and industrial waste
transported or dumped by such person in that year, for use for
agency activities as provided in subsection (f)(1);
"(C) for violations in any year before calendar year 1995 --
"(i) subject to paragraph (4), shall pay into the Clean Oceans
Fund established by the State in which the person is located a sum
equal to 50 percent of the balance of such amount; and
"(ii) subject to paragraph (4), shall pay to the State in which
the person is located a sum equal to the portion of such amount
which is not paid as provided in subparagraphs (A), (B), and (C),
for deposit into the water pollution control revolving fund
established by the State under title VI of the Federal Water
Pollution Control Act, as provided in subsection (f)(2); and
"(D) for violations in any year after calendar year 1994, shall
pay to the State in which the person is located a sum equal to the
balance of such amount, for use by the State for providing
assistance under subsection (f)(3).
"(3) SCHEDULE FOR PAYMENT. -- Penalties under this subsection
shall be paid on a quarterly basis.
"(4) PAYMENTS PRIOR TO ESTABLISHMENT OF ACCOUNT. -- In any
case in which a State has not established a Clean Oceans Fund or a
water pollution control revolving fund under title VI of the
Federal Water Pollution Control Act, penalties required to be paid
by a person in that State under paragraph (2(C)(i) or (ii), as
applicable, shall be paid to the Administrator for holding and
payment or reversion, as applicable, in the same manner as fees
are held and paid or revert under subsection (b)(5).
"(e) TRUST ACCOUNT. --
"(1) IN GENERAL. -- A person who enters into a compliance
agreement or an enforcement agreement under subsection (c) shall
establish a trust account for the payment and use of fees and
penalties under this section.
"(2) TRUST ACCOUNT REQUIREMENTS. -- An account shall be a
trust account for purposes of this subsection only if it meets, to
the satisfaction of the Administrator, the following requirements:
"(A) Amounts in the account may be used only with the
concurrence of the person who establishes the account and the
Administrator; except that the person may use amounts in the
account for a purpose authorized by subparagraph (B) after 60 days
after notification of the Administrator if the Administrator does
not disapprove such use before the end of such 60-day period.
"(B) Amounts in the account may be used only for projects which
will identify, develop, and implement --
"(i) an alternative system, and any interim measures, for the
management of sewage sludge and industrial waste, including but
not limited to any such system or measures utilizing resource
recovery, recycling, thermal reduction, or composting techniques;
or
"(ii) improvements in pretreatment, treatment, and storage
techniques for sewage sludge and industrial waste to facilitate
the implementation of such alternative system or interim measures.
"(C) Upon a finding by the Administrator that a person did not
pay fees or penalties into an account as required by this section,
or did not use amounts in the account in accordance with this
subsection, the balance of the amounts in the account shall be
paid to the State in which the person is located, for deposit into
the water pollution control revolving fund established by the
State under title VI of the Federal Water Pollution Control Act,
as provided in subsection (f)(2).
"(3) USE OF UNEXPENDED AMOUNTS. -- Upon a determination by the
Administrator that a person has terminated ocean dumping of sewage
sludge or industrial waste, the balance of amounts in an account
established by the person under this subsection shall be paid to
the person for use --
"(A) for debts incurred by the person in complying with this
Act or the Federal Water Pollution Control Act;
"(B) in meeting the requirements of the Federal Water Pollution
Control Act (33 U.S.C. 1251 et seq.) which apply to the person,
including operations and maintenance; and
"(C) for matching Federal grants.
"(4) USE FOR MATCHING FEDERAL GRANTS. -- Amounts in a trust
account under this subsection may be used for matching Federal
grants.
"(f) USE OF FEES AND PENALTIES. --
"(1) AGENCY ACTIVITIES. -- Of the total amount of fees and
penalties paid to the Administrator in a fiscal year pursuant to
subsections (b)(2)(B) and (d)(2)(B), respectively --
"(A) not to exceed one-third of such total amount shall be used
by the Administrator for --
"(i) costs incurred or expected to be incurred in undertaking
activities directly associated with the issuance under this Act of
permits for the transportation or dumping of sewage sludge and
industrial waste, including the costs of any environmental
assessment of the direct effects of dumping under the permits;
"(ii) preparation of reports under subsection (i); and
"(iii) such other research, studies, and projects the
Administrator considers necessary for, and consistent with, the
development and implementation of alternative systems for the
management of sewage sludge and industrial waste;
"(B) not to exceed one-third of such total amount shall be
transferred to the Secretary of the department in which the Coast
Guard is operating for use for --
"(i) Coast Guard surveillance of transportation and dumping of
sewage sludge and industrial waste subject to this Act; and
"(ii) such enforcement activities conducted by the Coast Guard
with respect to such transportation and dumping as may be
necessary to ensure to the maximum extent practicable complete
compliance with the requirements of this Act; and
"(C) not to exceed one-third of such total amount shall be
transferred to the Under Secretary of Commerce for Oceans and
Atmosphere for use for --
"(i) monitoring, research, and related activities consistent
with the program developed pursuant to subsection (j)(1); and
"(ii) preparing annual reports to the Congress pursuant to
subsection (j)(4) which describe the results of such monitoring,
research, and activities.
"(2) DEPOSITS INTO STATE WATER POLLUTION CONTROL REVOLVING
FUND. -- (A) Amounts paid to a State pursuant to subsection (b)(
2)(D), (d)(2)(C)(ii), or (e)(2)(C) shall be deposited into the
water pollution control revolving fund established by the State
pursuant to title VI of the Federal Water Pollution Control Act.
"(B) Amounts deposited into a State water pollution control
revolving fund pursuant to this paragraph --
"(i) shall not be used by the State to provide assistance to
the person who paid such amounts for development or implementation
of any alternative system;
"(ii) shall not be considered to be State matching amounts
under title VI of the Federal Water Pollution Control Act; and
"(iii) shall not be subject to State matching requirements
under such title.
"(3) PENALTY PAYMENTS TO STATES AFTER 1994. -- (A) Amounts
paid to a State as penalties pursuant to subsection (d)(2)(D) may
be used by the State --
"(i) for providing assistance to any person in the State --
"(I) for implementing a management program under section 319 of
the Federal Water Pollution Control Act;
"(II) for developing and implementing a conservation and
management plan under section 320 of such Act; or
"(III) for implementing technologies and management practices
necessary for controlling pollutant inputs adversely affecting the
New York Bight, as such inputs are identified in the New York
Bight Restoration Plan prepared under section 2301 of the Marine
Plastic Pollution Research and Control Act of 1987; and
"(ii) for providing assistance to any person in the State who
was not required to pay such penalties for construction of
treatment works (as defined in section 212 of the Federal Water
Pollution Control Act) which are publicly owned.
"(B) Amounts paid to a State as penalties pursuant to
subsection (d)(2)(D) which are not used in accordance with
subparagraph (A) shall be deposited into the water pollution
control revolving fund established by the State under title IV of
the Federal Water Pollution Control Act. Amounts deposited into
such a fund pursuant to this subparagraph --
"(i) shall not be used by the State to provide assistance to
the person who paid such amounts;
"(ii) shall not be considered to be State matching amounts
under title VI of the Federal Water Pollution Control Act; and
"(iii) shall not be subject to State matching requirements
under such title.
"(4) DEPOSITS INTO TREASURY AS OFFSETTING COLLECTIONS. --
Amounts of fees and penalties paid to the Administrator pursuant
to subsection (b)(2)(B) or (d)(2)(B) which are used by an agency
in accordance with paragraph (1 shall be deposited into the
Treasury as offsetting collections of the agency.
"(g) ENFORCEMENT. --
"(1) IN GENERAL. -- Whenever, on the basis of any information
available, the Administrator finds that a person is dumping or
transporting sewage sludge or industrial waste in violation of
subsection (a)(1), the Administrator shall issue an order
requiring such person to terminate such dumping or transporting
(as applicable) until such person --
"(A) enters into a compliance agreement or an enforcement
agreement under subsection (c); and
"(B) obtains a permit under section 102 which authorizes such
dumping or transporting.
"(2) REQUIREMENTS OF ORDER. -- Any order issued by the
Administrator under this subsection --
"(A) shall be delivered by personal service to the person named
in the order;
"(B) shall state with reasonable specificity the nature of the
violation for which the order is issued; and
"(C) shall require that the person named in the order, as a
condition of dumping into ocean waters, or transporting for the
purpose of dumping into ocean waters, sewage sludge or industrial
waste --
"(i) shall enter into a compliance agreement or an enforcement
agreement under subsection (c); and
"(ii) shall obtain a permit under section 102 which authorizes
such dumping or transporting.
(3) ACTIONS. -- The Administrator may request the Attorney
General to commence a civil action for appropriate relief,
including a temporary or permanent injunction and the imposition
of civil penalties authorized by subsection (d)(1), for any
violation of subsection (a)(1) or of an order issued by the
Administrator under this section. Such an action may be brought
in the district court of the United States for the district in
which the defendant is located, resides, or is doing business, and
such court shall have jurisdiction to restrain such violation and
require compliance with subsection (a)(1) and any such order.
"(h) STATE PROGRESS REPORTS. --
(1) IN GENERAL. -- The Governor of each State that is a party
to a compliance agreement or an enforcement agreement under
subsection (c) shall submit to the Administrator on September 30
of 1989 and of every year thereafter until the Administrator
determines that ocean dumping of sewage sludge and industrial
waste by persons located in that State has terminated, a report
which describes --
"(A) the efforts of each person located in the State to comply
with a compliance agreement or enforcement agreement entered into
by the person pursuant to subsection (c), including the extent to
which such person has complied with deadlines established by the
schedule included in such agreement;
"(B) activity of the State regarding permits for the
construction and operation of each alternative system; and
"(C) an accounting of amounts paid into and withdrawn from a
Clean Oceans Fund established by the State.
"(2) FAILURE TO SUBMIT REPORT. -- If a State fails to submit a
report in accordance with this subsection, the Administrator shall
withhold funds reserved for such State under section 205(g) of the
Federal Water Pollution Control Act (33 U.S.C. 1285(g)). Funds
withheld pursuant to this paragraph may, at the discretion of the
Administrator, be restored to a State upon compliance with this
subsection.
"(i) EPA PROGRESS REPORTS. --
"(1) IN GENERAL. -- Not later than December 31 of 1989 and of
each year thereafter until the Administrator determines that ocean
dumping of sewage sludge and industrial waste has terminated, the
Administrator shall prepare and submit to the Congrss a report on
--
"(A) progress being made by persons issued permits under
section 102 for transportation or dumping of sewage sludge or
industrial waste in developing alternative systems for managing
sewage sludge and industrial waste;
"(B) the efforts of each such person to comply with a
compliance agreement or enforcement agreement entered into by the
person pursuant to subsection (c), including the extent to which
such person has complied with deadlines established by the
schedule included in such agreement;
"(C) progress being made by the Administrator and others in
identifying and implementing alternative systems for the
management of sewage sludge and industrial waste; and
"(D) progress being made toward the termination of ocean
dumping of sewage sludge and industrial waste.
"(2) REFERRAL TO CONGRESSIONAL COMMITTEES. -- Each report
submitted to the Congress under this subsection shall be referred
to each standing committee of the House of Representatives and of
the Senate having jurisdiction over any part of the subject matter
of the report.
"(j) ENVIRONMENTAL MONITORING. --
"(1) IN GENERAL. -- The Administrator, in cooperation with the
Under Secretary of Commerce for Oceans and Atmosphere, shall
design a program for monitoring environmental conditions --
"(A) at the Apex site (as that term is defined in section
104A);
"(B) at the site designated by the Administrator under section
102(c) and known as the '106-Mile Ocean Waste Dump Site' (as
described in F.R. 19005);
"(C) at the site at which industrial waste is dumped; and
"(D) within the potential area of influence of the sewage
sludge and industrial waste dumped at those sites.
"(2) PROGRAM REQUIREMENTS. -- The program designed under
paragraph (1) shall include, but is not limited to --
"(A) sampling of an appropriate number of fish and shellfish
species and other organisms to assess the effects of environmental
conditions on living marine organisms in these areas; and
"(B) use of satellite and other advanced technologies in
conducting the program.
"(3) MONITORING ACTIVITIES. -- The Administrator and the Under
Secretary of Commerce for Oceans and Atmosphere shall each conduct
monitoring activities consistent with the program designed under
paragraph (1).
"(4) REPORTS. -- (A) Not later than 1 year after the date of
the enactment of this section, the Administrator, in cooperation
with the Under Secretary of Commerce for Oceans and Atmosphere,
shall submit to the Congress a report describing the program
designed pursuant to paragraph (1).
"(B) Not later than December 31 of each year after the
submission of a report under subparagraph (A), the Administrator
and the Under Secretary of Commerce for Oceans and Atmosphere
shall report to the Congress the results of monitoring activities
conducted during the previous year under the program designed
pursuant to paragraph (1).
"(k) DEFINITIONS. -- For purposes of this section --
"(1) the term 'alternative system' means any method for the
management of sewage sludge or industrial waste which does not
require a permit under this Act;
"(2) the term 'Clean Oceans Fund' means such a fund established
by a State in accordance with subsection (c)(5);
"(3) the term 'excluded material' means --
"(A) any dredged material discharged by the United States Army
Corps of Engineers or discharged pursuant to a permit issued by
the Secretary in accordance with section 103; and
"(B) any waste from a tuna cannery operation located in
American Samoa or Puerto Rico discharged pursuant to a permit
issued by the Administrator under section 102;
"(4) the term 'industrial waste' means any solid, semisolid, or
liquid waste generated by a manufacturing or processing plant,
other than an excluded material;
"(5) the term 'interim measure' means any short-term method for
the management of sewage sludge or industrial waste, which --
"(A) is used before implementation of an alternative system;
and
"(B) does not require a permit under this Act; and
"(6) the term 'sewage sludge' means any solid, semisolid, or
liquid waste generated by a wastewater treatment plant, other than
an excluded material.
SEC. 1003. CONFORMING AMENDMENTS.
(a) PUBLIC LAW 95-153. -- Section 4 of Public Law 95-153 (33 U.S.C.
1412a) is amended --
(1) by striking subsection (a);
(2) by striking subsection (b);
(3) by redesignating subsection (c), and any reference thereto,
as subsection (a);
(4) in subsection (a) (as so redesignated) by striking "After"
and inserting "Notwithstanding section 104B of the Marine
Protection, Research, and Sanctuaries Act of 1972, after";
(5) in subsection (a) (as so redesignated) by striking "such
title I" and inserting "title I of such Act";
(6) by striking subsection (d); and
(7) by adding at the end the following:
"(b) For purposes of this section, the term 'industrial waste' means
any solid, semisolid, or liquid waste generated by a manufacturing or
processing plant.".
(b) ALTERNATIVES ASSESSMENT. -- Section 2301(b)(8) of the Marine
Plastic Pollution Research and Control Act "33 USC 2267 note" of 1987 is
amended by striking "dumping of municipal sludge and".
(c) PRELIMINARY REPORT ON ALTERNATIVES. -- Section 2303 of the
Marine Plastic Pollution Research and Control Act "33 USC 2267 note" of
1987 is amended --
(1) by striking subsection (b), and
(2) redesignating subsections (c), (d), and (e), and any
reference thereto, as subsections (b), (c), and (d), respectively.
SEC. 1004. ENFORCEMENT MONITORING REPORT.
Not later than 6 months after the date of the enactment of this Act,
the Administrator of the Environmental Protection Agency (hereinafter in
this title referred to as the "Administrator"), in consultation with the
Secretary of Transportation, shall submit a report to the Congress which
outlines progress made in using electronic monitoring equipment, and
other means to monitor and prevent dumping of sewage sludge outside the
site designated by the Administrator under section 102(c) and known as
the "106-Mile Ocean Waste Dump Site" (as described in 49 F.R. 19005),
and by vessels in transit to that site.
SEC. 1005. PROHIBITION ON DISPOSAL OF SEWAGE SLUDGE AT LANDFILLS ON
STATEN ISLAND.
The Marine Protection, Research, and Sanctuaries Act of 1972 (33 U.
S.C. 1401 et seq.), as amended by this Act, is amended by inserting
after section 104B the following:
"SEC. 104C. "33 USC 1414c" PROHIBITION ON DISPOSAL OF SEWAGE SLUDGE
AT LANDFILLS ON STATEN ISLAND.
"(a) IN GENERAL. -- No person shall dispose of sewage sludge at any
landfill located on Staten Island, New York.
"(b) EXCLUSION FROM PENALTIES. --
"(1) IN GENERAL. -- Subject to paragraph (2), a person who
violates this section shall not be subject to any penalty under
this Act.
"(2) INJUNCTION. -- Paragraph (1) shall not prohibit the
bringing of an action for, or the granting of, an injunction under
section 105 with respect to a violation of this section.
"(c) DEFINITION. -- For purposes of this section, the term 'sewage
sludge' has the meaning such term has in section 104B.".
SEC. 1006. USE OF STATE WATER POLLUTION CONTROL REVOLVING FUND
GRANTS FOR DEVELOPING ALTERNATIVE SYSTEMS.
(a) GENERAL REQUIREMENT. -- Notwithstanding the provisions of title
VI of the Federal Water Pollution Control Act, each of the States of New
York and New Jersey shall use 10 percent of the amount of a grant
payment made to such State under such title for each of the fiscal years
1990 and 1991 and 10 percent of the State's contribution associated with
such grant payment in the 6-month period beginning on the date of
receipt of such grant payment for making loans and providing other
assistance as described in section 603(d) of the Federal Water Pollution
Control Act to any governmental entity in such State which has entered
into a compliance agreement or enforcement agreement under section 104B
of the Marine Protection, Research, and Sanctuaries Act of 1972 for
identifying, developing, and implementing pursuant to such section
alternative systems for management of sewage sludge.
(b) LIMITATION. -- If, after the last day of the 6-month period
beginning on the date of receipt of a grant payment by the State of New
York or New Jersey under title VI of the Federal Water Pollution Control
Act for each of fiscal years 1990 and 1991, 10 percent of the amount of
such grant payment and the State's contribution associated with such
grant payment has not been used for providing assistance described in
subsection (a) as a result of insufficient applications for such
assistance from persons eligible for such assistance, the 10 percent
limitations set forth in subsection (a) shall not be applicable with
respect to such grant payment and associated State contribution.
SEC. 1007. OCEAN DISCHARGES.
(a IN GENERAL. -- Within 6 months after the date of the enactment of
this Act, the Administrator shall transmit to the Congress a report on
the implementation of section 403(c) of the Federal Water Pollution
Control Act (33 U.S.C. 1343(c)).
(b) REPORT CONTENTS. -- The report under this section shall contain
--
(1) an accounting of discharges into the waters of the
territorial sea, the contiguous zone, and the ocean, including --
(A) the total number of discharges;
(B) the location, source, volume, and potential environmental
effects of each discharge;
(C) the date of original issuance, review, and reissuance of
each discharge permit; and
(D) the number of discharges that have been determined by the
Administrator to be in compliance with the ocean discharge
criteria regulations promulgated pursuant to section 403(c) of the
Federal Water Pollution Control Act;
(2) a schedule for implementing section 403(c) of such Act and
achieving compliance with guidelines promulgated under such
section as expeditiously as practicable, and an estimate of the
resources required to meet such schedule; and
(3) recommendations for any additional legislative authorities
needed to achieve compliance with such guidelines.
SEC. 1008. CLERICAL AMENDMENT RELATING TO GREAT LAKES WATER QUALITY
AGREEMENT OF 1978.
Section 118 of the Federal Water Pollution Control Act (33 U.S.C.
1268) is amended by inserting ", as amended by the Water Quality
Agreement of 1987 and any other agreements and amendments," immediately
after "the Great Lakes Water Quality Agreement of 1978" each place that
term appears.
SEC. 2001. DESIGNATION OF AREAS.
Section 320(a)(2)(B) of the Federal Water Pollution Control Act "33
USC 1330" is amended --
(1) by inserting "Massachusetts Bay, Massachusetts (including
Cape Cod Bay and Boston Harbor);" after "Buzzards Bay,
Massachusetts;";
(2) by striking "and" before "Galveston Bay, Texas"; and
(3) by inserting after "Galveston Bay, Texas;" the following:
"; Barataria-Terrebonne Bay estuary complex, Louisiana; Indian
River Lagoon, Florida; and Peconic Bay, New York".
SEC. 3101. SHORT TITLE.
This subtitle may be cited as the "United States Public Vessel
Medical Waste Anti-Dumping Act "33 USC 2501 note of 1988".
SEC. 3102. "33 USC 2501" FINDINGS.
The Congress finds the following:
(1) The washing ashore of potentially infectious medical wastes
from public vessels of the United States may pose serious and
widespread risks to public health and to the welfare of coastal
communities.
(2) Current Federal law provides inadequate protections against
the disposal of such wastes from such vessels into ocean waters.
(3) Operators of such vessels must take immediate action to
stop disposing of such wastes into ocean waters.
SEC. 3103. "33 USC 2502" DEFINITIONS.
For the purposes of this subtitle:
(1) POTENTIALLY INFECTIOUS MEDICAL WASTE. -- The term
"potentially infectious medical waste" includes isolation wastes;
infectious agents; human blood and blood products; pathological
wastes; sharps; body parts; contaminated bedding; surgical
wastes; and other disposable medical equipment and material that
may pose a risk to the public health, welfare or the marine
environment.
(2) PUBLIC VESSEL. -- The term "public vessel" means a vessel
of any type whatsoever (including hydrofoils, air-cushion
vehicles, submersibles, floating craft whether propelled or not,
and fixed or floating platforms) that is owned, or demise
chartered, and operated by the United States Government, and is
not engaged in commercial service.
SEC. 3104. "33 USC 2503" PROHIBITION.
After 6 months after the date of the enactment of this Act, no public
vessel shall dispose of potentially infectious medical waste into ocean
waters unless --
(1)(A) the health or safety of individuals on board the vessel
is threatened; or
(B) during time of war or a declared national emergency;
(2) the waste is disposed of beyond 50 nautical miles from the
nearest land; and
(3)(A) in the case of a public vessel which is not a
submersible, the waste is sterilized, properly packaged, and
sufficiently weighted to prevent the waste from coming ashore
after disposal; and
(B) in the case of a public vessel which is a submersible, the
waste is properly packaged and sufficiently weighted to prevent
the waste from coming ashore after disposal.
SEC. 3105. "33 USC 2504" GUIDANCE.
Not later than 3 months after the date of the enactment of this Act,
the Secretary of Defense and the head of each affected agency, in
consultation with the Administrator of the Environmental Protection
Agency, shall each issue guidance for public vessels under the
jurisdiction of their agency regarding implementation of section 3104.
SEC. 3201. AMENDMENTS TO MARINE PROTECTION, RESEARCH, AND
SANCTUARIES ACT OF 1972.
(a) DEFINITION. -- Section 3 of the Marine Protection, Research, and
Sanctuaries Act of 1972 (22 U.S.C. 1402 is amended --
(1) by redesignating subsection (k) and (l), and any reference
thereto, as subsections (l) and (m), respectively; and
(2) by inserting after subsection (j) the following:
"(k) 'Medical waste' means isolation wastes; infectious agents;
human blood and blood products; pathological wastes; sharps; body
parts; contaminated bedding; surgical wastes and potentially
contaminated laboratory wastes; dialysis wastes; and such additional
medical items as the Administrator shall prescribe by regulation.".
(b) PROHIBITION. -- Subsection (a) of section 102 of the Marine
Protection, Research, and Sanctuaries Act of 1972 (33 U.S.C. 1412(a)) is
amended in the first sentence --
(1) by striking "biological warfare agents and" and inserting
"biological warfare agents,"; and
(2) by inserting "and medical waste," after "radioactive
waste,".
(c) CIVIL PENALTIES. -- Section 105(a) of the Marine Protection,
Research, and Sanctuaries Act of 1972 (33 U.S.C. 1415a)) is amended by
inserting after the first sentence the following: "In addition, any
person who violates this title or any regulation issued under this title
by engaging in activity involving the dumping of medical waste shall be
liable for a civil penalty of not more than $125,000 for each violation,
to be assessed by the Administrator after written notice and an
opportunity for a hearing.".
(d) CRIMINAL PENALTIES AND FORFEITURES. -- Section 105(b) of the
Marine Protection, Research, and Sanctuaries Act of 1972 (33 U.S.C.
1415(b)) is amended --
(1) by inserting "(1) before "In addition"; and
(2) by adding at the end the following:
"(2) In addition to any action which may be brought under subsection
(a), any person --
"(A) who knowingly violates any provision of this title by
engaging in activity involving the dumping into ocean waters of
medical waste shall upon conviction be fined not more than
$25,000, or imprisoned for not more than 5 years, or both; and
"(B) convicted of a violation involving such activity shall
forfeit to the United States any property constituting or derived
from any proceeds the person obtained, directly or indirectly, as
a result of such violation, and any of the property of the person
which was used, or intended to be used in any manner or part, to
commit or to facilitate the commission of the violation.".
SEC. 3202. AMENDMENTS TO FEDERAL WATER POLLUTION CONTROL ACT.
(a) DEFINITION. -- Section 502 of the Federal Water Pollution
Control Act (33 U.S.C. 1362) is amended by adding at the end the
following:
"(20) The term 'medical waste' means isolation wastes;
infectious agents; human blood and blood products; pathological
wastes; sharps; body parts; contaminated bedding; surgical
wastes and potentially contaminated laboratory wastes; dialysis
wastes; and such additional medical items as the Administrator
shall prescribe by regulation.".
(b) PROHIBITION. -- Section 301(f) of the Federal Water Pollution
Control Act (33 U.S.C. 1311(f)) is amended by striking "or high-level
radioactive waste" and inserting ", any high-level radioactive waste, or
any medical waste,".
SEC. 4001. "33 USC 2601 note" SHORT TITLE.
This title may be cited as the "Shore Protection Act of 1988".
SEC. 4101. "33 USC 2601" DEFINITIONS.
In this title --
(1) "Administrator" means the Administrator of the
Environmental Protection Agency.
(2) "coastal waters" means --
(A) the territorial sea of the United States;
(B) the Great Lakes and their connecting waters;
(C) the marine and estuarine waters of the United States up to
the head of tidal influence; and
(D) the Exclusive Economic Zone as established by Presidential
Proclamation Number 5030, dated March 10, 1983.
(3) "municipal or commercial waste" means solid waste (as
defined in section 1004 of the Solid Waste Disposal Act (42 U.S.
C. 6903)) except --
(A) solid waste identified and listed under section 3001 of the
Solid Waste Disposal Act (42 U.S.C. 6921);
(B) waste generated by the vessel during normal operations;
(C) debris solely from construction activities;
(D) sewage sludge subject to regulation under title I of the
Marine Protection, Research, and Sanctuaries Act of 1972 (33 U.S.
C. 1401 et seq.); and
(E) dredged or fill material subject to regulation under title
I of the Marine Protection, Research, and Sanctuaries Act of 1972
(33 U.S.C. 1401 et seq.), the Federal Water Pollution Control Act
(33 U.S.C. 1251 et seq.), or the Rivers and Harbors Appropriation
Act of 1899 (33 U.S.C. 401 et seq.).
(4) "person" means an individual, trust, firm, joint stock
company, corporation (including a government corporation),
partnership, association, State, municipality, commission,
political subdivision of a State, or any interstate body.
(5) "receiving facility" means a facility or operation where
municipal or commercial waste is unloaded from a vessel.
(6) "United States", when used in a geographic sense, means the
States of the United States, Puerto Rico, the District of
Columbia, the Virgin Islands, American Samoa, Guam, the Northern
Mariana Islands, and any other territory or possession of the
United States.
(7) "waste source" means a facility or vessel from which
municipal or commercial waste is loaded into a vessel, including
any rolling stock or motor vehicles from which that waste is
directly loaded.
SEC. 4102. "33 USC 2602" VESSEL PERMITS AND NUMBERS.
(a) IN GENERAL. -- A vessel (except a public vessel as defined in
section 2101 of title 46, United States Code) may not transport
municipal or commercial waste in coastal waters without --
(1) a permit for that vessel from the Secretary of
Transportation; and
(2) displaying a number or other marking on the vessel as
prescribed by the Secretary under chapter 123 or section 12502(b)
of title 46, United States Code.
(b) PERMIT APPLICATIONS. -- Application for a permit required by
subsection (a) of this section shall be made by the vessel owner or
operator and include --
(1) the name, address, and telephone number of the vessel owner
and operator;
(2) the vessel's name and identification number;
(3) the vessel's area of operation;
(4) the vessel's transport capacity;
(5) a history of the types of cargo transported by that vessel
during the previous year, including identifying the type of
municipal or commercial waste transported as --
(A) municipal waste;
(B) commercial waste;
(C) medical waste; or
(D) waste of another character.
(6) any other information the Secretary may require; and
(7) an acknowledgement.
(c) EFFECTIVE DATE OF PERMITS. -- A permit issued under this section
--
(1) is effective 30 days after the date on which it was issued;
(2) may be issued only for a period of not more than 5 years
after the effective date of the permit;
(3) may be renewed for periods of not more than 5 years only by
the vessel owner or operator that applied for the original permit;
and
(4) is terminated when the vessel is sold.
(d) DENIAL OF PERMITS. -- The Secretary may, or at the request of
the Administrator shall, deny the issuance of a permit for any vessel if
the owner or operator of the vessel has a record of a pattern of serious
violations of --
(1) this subtitle;
(2) the Solid Waste Disposal Act (42 U.S.C. 6901 et seq.);
(3) the Marine Protection, Research, and Sanctuaries Act of
1972 (33 U.S.C. 1401 et seq.);
(4) the Rivers and Harbors Appropriation Act of 1899 (33 U.S.
C. 401 et seq.); or
(5) the Federal Water Pollution Control Act (33 U.S.C. 1251 et
seq.).
(e) PERMIT DECISION. -- The Secretary, after consultation with the
Administrator, shall issue or deny a vessel permit under this section
within 30 days after receiving a complete application. On denying the
issuance of the permit for a vessel the Secretary shall --
(1) notify the applicant of the denial and the reasons for the
denial; and
(2) provide an opportunity for a hearing on the denial.
(f) MAINTAINING PERMIT. --
(1) IN GENERAL. -- The permit issued for a vessel under this
title shall be maintained in a manner prescribed by the Secretary.
(2) ENDORSEMENTS. -- If a vessel is a documented vessel, the
Secretary may endorse a permit on the vessel's certificate of
documentation.
(g) VESSEL INFORMATION SYSTEM. -- The Secretary may include
information in a permit in the vessel information system maintained
under chapter 125 of title 46, United States Code.
SEC. 4103. "33 USC 2603" WASTE HANDLING PRACTICES.
(a) IN GENERAL. --
(1) LOADING. -- The owner or operator of the waste source
shall take all reasonable steps to assure that all municipal or
commercial waste is loaded onto a vessel in a manner that assures
that waste deposited in coastal waters is minimized.
(2) SECURING. -- The owner or operator of a vessel shall
assure that all municipal or commercial waste loaded onto the
vessel is secured by netting or other means to assure that waste
will not be deposited into coastal waters during transport.
(3) OFFLOADING. -- The owner or operator of the receiving
facility shall take all reasonable steps to assure that any
municipal or commercial waste is offloaded from a vessel in a
manner that assures that waste deposited into coastal waters is
minimized.
(4) CLEANING UP. -- The owner or operator of any waste source
or receiving facility shall provide adequate control measures to
clean up any municipal or commercial waste which is deposited into
coastal waters.
(b) REGULATIONS. -- The Administrator, in consultation with the
Secretary of Transportation, shall prescribe regulations --
(1) requiring that waste sources, receiving facilities, and
vessels provide the means and facilities to assure that the waste
will not be deposited into coastal waters during loading,
offloading, and transport;
(2) requiring, as appropriate, the submission and adoption by
each responsible party of an operation and maintenance manual
identifying procedures to be used to prevent, report, and clean up
any deposit of municipal or commercial waste into coastal waters,
including record keeping requirements; and
(3) if the Administrator determines that tracking systems are
required to assure adequate enforcement of laws preventing the
deposit of municipal or commercial waste into coastal waters,
requiring installation of the appropriate systems within 18 months
after the Administrator makes that determination.
SEC. 4104. "33 USC 2604" SUSPENSION, REVOCATION, AND INJUNCTIONS.
(a) SUSPENSION AND REVOCATION. -- After notice and opportunity for a
hearing, the Secretary of Transportation may, and at the request of the
Administrator shall, suspend or revoke a permit issued to a vessel under
this title for a violation of this title or a regulation prescribed
under this title.
(b) INJUNCTIONS. -- The Secretary or the Administrator may bring a
civil action to enjoin any operation in violation of this title or a
regulation prescribed under this title in the district court of the
United States for the district in which the violation occurred.
SEC. 4105. "33 USC 2605" ENFORCEMENT.
(a) GENERAL AUTHORITY. -- The Secretary of Transportation shall
enforce this title under section 89 of title 14, United States Code.
The Secretary may authorize other officers or employees of the United
States Government to enforce this title under that section.
(b) PERIODIC EXAMINATIONS. -- The Secretary shall conduct periodic
examinations of vessels operating under this title transporting
municipal or commercial waste to determine that each of these vessels
has a permit issued under section 4102 of this Act.
(c) REFUSAL OF CLEARANCE. -- The Secretary of the Treasury may
refuse the clearance required by section 4197 of the Revised Statutes of
the United States (46 App. U.S.C. 91), to any vessel subject to this
title which does not have a permit required under section 4102 of this
Act.
(d) DENIAL OF ENTRY AND DETENTION. -- If a vessel does not comply
with this title, the Secretary of Transportation may --
(1) deny entry to any place in the United States; and
(2) detain at the place in the United States from which it is
about to depart.
(e) PERSISTENT VIOLATORS. -- The Administrator shall conduct an
investigation of the owner or operator of a vessel or facility if the
owner has 5 or more separate violations during a 6-month period.
SEC. 4106. "33 USC 2606" SUBPENA AUTHORITY.
(a) GENERAL AUTHORITY. -- In an investigation under this title, the
attendance and testimony of witnesses, including parties in interest,
and the production of any evidence may be compelled by subpena. The
subpena authority granted by this section is coextensive with that of a
district court of the United States, in civil matters, for the district
in which the investigation is conducted.
(b) SUBPENA AUTHORITY. -- An official designated by the Secretary of
Transportation or Administrator to conduct an investigation under this
part may issue subpenas as provided in this section and administer oaths
to witnesses.
(c) FAILURE TO COMPLY. -- When a person fails to obey a subpena
issued under this section, the district court of the United States for
the district in which the investigation is conducted or in which the
person failing to obey is found, shall on proper application issue an
order directing that person to comply with the subpena. The court may
punish as contempt any disobedience of its order.
(d) WITNESS FEES. -- A witness complying with a subpena issued under
this section may be paid for actual travel and attendance at the rate
provided for witnesses in the district courts of the United States.
SEC. 4107. "33 USC 2607" FEES.
The Secretary of Transportation may collect a fee under section 9701
of title 31, United States Code, of not more than $1,000, from each
person to whom a permit is issued under this subtitle for a permitting
system and to maintain information.
SEC. 4108. "33 USC 2608" CIVIL PENALTY PROCEDURES.
(a) GENERAL PROCEDURES. -- After notice and an opportunity for a
hearing, a person found by the Secretary of Transportation to have
violated this title or a regulation prescribed under this title for
which a civil penalty is provided, is liable to the United States
Government for the civil penalty provided. The amount of the civil
penalty shall be assessed by the Secretary by written notice. In
determining the amount of the penalty, the Secretary shall consider the
nature, circumstances, extent, and gravity of the prohibited acts
committed and, with respect to the violator, the degree of culpability,
any history of prior offenses, ability to pay, and other matters that
justice requires.
(b) COMPROMISING PENALTIES. -- The Secretary may compromise, modify,
or remit, with or without consideration, a civil penalty under this
title until the assessment is referred to the Attorney General.
(c) REFERRAL TO THE ATTORNEY GENERAL. -- If a person fails to pay an
assessment of a civil penalty after it has become final, the Secretary
may refer the matter to the Attorney General for collection in an
appropriate district court of the United States.
(d) REFUND OF PENALTY. -- The Secretary may refund or remit a civil
penalty collected under this title if --
(1) application has been made for refund or remission of the
penalty within one year from the date of payment; and
(2) the Secretary finds that the penalty was unlawfully,
improperly, or excessively imposed.
SEC. 4109. "33 USC 2609" PENALTIES.
(a) GENERAL PENALTY. -- Except as provided in subsection (b) of this
section, a person violating this title is liable to the United States
Government for a civil penalty of not more than $25,000. Each day of a
continuing violation is a separate violation. A vessel involved in the
violation also is liable in rem for the penalty.
(b) OPERATING WITHOUT A PERMIT. -- A person violating section 4102
of this Act is liable to the United States Government for a civil
penalty of not more than $10,000. Each day of a continuing violation is
a separate violation. A vessel involved in the violation also is liable
in rem for the penalty.
(c) CRIMINAL PENALTY. -- Any person that knowingly violates, or that
knowingly aids, abets, authorizes, or instigates a violation of this
title, shall be fined under title 18, United States Code, imprisoned for
not more than 3 years, or both.
(d) PAYMENTS FOR INFORMATION. -- The court, the Secretary of
Transportation, or the Administrator, as the case may be, may pay up to
one-half of a fine or penalty to any person giving information leading
to the assessment of the fine or penalty.
SEC. 4201. "33 USC 2621" STUDY AND RECOMMENDATIONS.
(a) STUDY. -- The Administrator, in consultation with the Secretary
of Transportation, shall conduct a study to determine the need for, and
effectiveness of additional tracking systems for vessels to assure that
municipal or commercial waste is not deposited in coastal waters. In
conducting this study, the Administrator shall use the data collected
from its permitting and enforcement activities under this title. In
determining the effectiveness of tracking systems, the Administrator
shall rely on the information provided by the Secretary under subsection
(b) of this section. The report shall include a recommendation whether
additional tracking systems are needed. This study shall be submitted
to Congress within 24 months after the date of enactment of this title.
(b) RECOMMENDATIONS. -- The Secretary shall provide recommendations
to the Administrator concerning the various tracking systems that might
be applicable to vessels transporting municipal or commercial waste
which the Secretary currently is studying. The Secretary shall consider
the relative effectiveness of various systems and the relative costs of
the systems both to the United States Government and to the vessel
owner.
SEC. 4202. "33 USC 2622" RELATION TO OTHER LAWS.
(a) EFFECT ON FEDERAL AND STATE LAWS. -- This title does not affect
the application of any other Federal or State law, statutory or common,
including the Marine Protection, Research, and Sanctuaries Act of 1972
(33 U.S.C. 1401 et seq.) and the Solid Waste Disposal Act (42 U.S.C.
6901 et seq.).
(b) EFFECT ON FOREIGN VESSELS. -- This title shall be carried out
with respect to foreign vessels consistent with the obligations of the
United States under international law.
SEC. 4203. "33 USC 2623" AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated $1,500,000 for each of the
fiscal years 1989 and 1990, to carry out this title.
SEC. 4204. APPLICATIONS AND EFFECTIVE DATES.
(a) APPLICATIONS. -- "33 USC 2602 note" The Secretary shall make
vessel applications for permits to be issued under section 4102 of this
Act publicly available within 60 days after the date of enactment of
this Act.
(b) EFFECTIVE DATE FOR PERMITS. -- Section 4102(a) of this Act "33
USC 2602 note" is effective 240 days after the date of enactment of this
Act.
(c) EFFECTIVE DATE FOR HANDLING PRACTICES. -- Section 4103 "33 USC
2603 note" of this Act takes effect 60 days after the date of enactment
of this Act.
Approved November 18, 1988.
LEGISLATIVE HISTORY -- S. 2030 (H.R. 5430):
HOUSE REPORTS: No. 100-1090 (Comm. of Conference).
SENATE REPORTS: No. 100-431 (Comm. on Environment and Public Works).
CONGRESSIONAL RECORD, Vol. 134 (1988): Aug. 9, considered and passed
Senate. Oct. 3, 4, H.R. 5430 considered and passed House; proceedings
vacated and S. 2030, amended, passed in lieu. Oct. 18, Senate agreed to
conference report. Oct. 19, House agreed to conference report.
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 24 (1988): Nov.
18, Presidential statement.
Public Law 100-687, 102 Stat. 4105
Veterans' Appeals and to provide for judicial review of
certain final decisions of the Board of Veterans'
Appeals; to provide for the payment of reasonable fees
to attorneys for rendering legal representation to
individuals claiming benefits under laws administered by
the Veterans' Administration; to increase the rates of
compensation payable to veterans with service-connected
disabilities; and to make various improvements in
veterans' health, rehabilitation, and memorial affairs
programs; and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; REFERENCES TO TITLE 38, UNITED STATES
CODE.
(a) SHORT TITLE. -- This division may be cited as the "Veterans'
Judicial Review Act" "38 USC 101 note".
(b) REFERENCES. -- Except as otherwise expressly provided, whenever
in this Act an amendment or repeal is expressed in terms of an amendment
to, or repeal of, a section or other provision, the reference shall be
considered to be made to a section or other provision of title 38,
United States Code.
SEC. 101. DECISIONS BY ADMINISTRATOR.
(a) MATTERS TO BE DECIDED BY ADMINISTRATOR. -- Subsection (a) of
section 211 is amended to read as follows:
"(a)(1) The Administrator shall decide all questions of law and fact
necessary to a decision by the Administrator under a law that affects
the provision of benefits by the Administrator to veterans or the
dependents or survivors of veterans. Subject to paragraph (2) of this
subsection, the decision of the Administrator as to any such question
shall be final and conclusive and may not be reviewed by any other
official or by any court, whether by an action in the nature of mandamus
or otherwise.
"(2) The second sentence of paragraph (1) of this subsection does not
apply to --
"(A) matters subject to section 223 of this title;
"(B) matters covered by sections 775 and 784 of this title;
"(C) matters arising under chapter 37 of this title; and
"(D) matters covered by chapter 72 of this title.".
(b) CONFORMING AMENDMENT. -- Section 4004(a) is amended by striking
out "All questions on claims involving benefits under laws administered
by the Veterans' Administration" and inserting in lieu thereof "All
questions in a matter which under section 211(a) of this title is
subject to decision by the Administrator".
SEC. 102. VETERANS' ADMINISTRATION RULEMAKING.
(a) APA PROCEDURES. -- (1) Chapter 3 is amended by inserting after
section 222 the following new section:
"Section 223. Rulemaking: procedures and judicial review
"(a) In applying section 552(a)(1) of title 5 to the Veterans'
Administration, the Administrator shall ensure that subparagraphs (C),
(D), and (E) of that section are complied with, particularly with
respect to opinions and interpretations of the General Counsel.
"(b) The provisions of section 553 of title 5 shall apply, without
regard to subsection (a)(2) of that section, to matters relating to
loans, grants, or benefits under a law administered by the
Administrator.
"(c) An action of the Administrator to which section 552(a)(1) or 553
of title 5 (or both) refers (other than an action relating to the
adoption or revision of the schedule of ratings for disabilities adopted
under section 355 of this title) is subject to judicial review. Such
review shall be in accordance with chapter 7 of title 5 and may be
sought only in the United States Court of Appeals for the Federal
Circuit. However, if such review is sought in connection with an appeal
brought under the provisions of chapter 72 of this title, the provisions
of that chapter shall apply rather than the provisions of chapter 7 of
title 5.".
(2) The table of sections at the beginning of such chapter is amended
by inserting after the item relating to section 222 the following new
item:
"223. Rulemaking: procedures and judicial review.".
(b) REPORT ON IMPLEMENTATION. -- Not later than May 1, 1989, the
Administrator shall submit to the Committees on Veterans' Affairs of the
Senate and the House of Representatives a report on the implementation
of section 223(a) of title 38, United States Code, as added by
subsection (a)(1). Such report shall set forth the actions the
Administrator is taking to ensure that such section is carried out.
SEC. 103. VETERANS' ADMINISTRATION ADJUDICATION PROCEDURES.
(a) IN GENERAL. -- (1) Chapter 51 is amended by adding at the end of
subchapter I the following new sections:
"Section 3007. Burden of proof; benefit of the doubt
"(a) Except when otherwise provided by the Administrator in
accordance with the provisions of this title, a person who submits a
claim for benefits under a law administered by the Veterans'
Administration shall have the burden of submitting evidence sufficient
to justify a belief by a fair and impartial individual that the claim is
well grounded. The Administrator shall assist such a claimant in
developing the facts pertinent to the claim. Such assistance shall
include requesting information as described in section 3006 of this
title.
"(b) When, after consideration of all evidence and material of record
in a case before the Veterans' Administration with respect to benefits
under laws administered by the Veterans' Administration, there is an
approximate balance of positive and negative evidence regarding the
merits of an issue material to the determination of the matter, the
benefit of the doubt in resolving each such issue shall be given to the
claimant. Nothing in this subsection shall be construed as shifting
from the claimant to the Administrator the burden specified in
subsection (a) of this section.
"Section 3008. Reopening disallowed claims
"If new and material evidence is presented or secured with respect to
a claim which has been disallowed, the Administrator shall reopen the
claim and review the former disposition of the claim.".
"Section 3009. Independent medical opinions
"(a) When, in the judgment of the Administrator, expert medical
opinion, in addition to that available within the Veterans'
Administration, is warranted by the medical complexity or controversy
involved in a case being considered by the Veterans' Administration, the
Administrator may secure an advisory medical opinion from one or more
independent medical experts who are not employees of the Veterans'
Administration.
"(b) The Administrator shall make necessary arrangements with
recognized medical schools, universities, or clinics to furnish such
advisory medical opinions. Any such arrangement shall provide that the
actual selection of the expert or experts to give the advisory opinion
in an individual case shall be made by an appropriate official of such
institution.
"(c) The Administrator shall furnish a claimant with notice that an
advisory medical opinion has been requested under this section with
respect to the claimant's case and shall furnish the claimant with a
copy of such opinion when it is received by the Administrator.".
(2) The table of sections at the beginning of such chapter is amended
by adding after the item relating to section 3006 the following new
items:
"3007. Burden of proof; benefit of the doubt.
"3008. Reopening disallowed claims.
"3009. Independent medical opinions.".
(b) CONFORMING AMENDMENTS. -- Section 4009 is amended --
(1) in subsection (a), by striking out "is authorized to" and
inserting in lieu thereof "may";
(2) in subsection (b) --
(A) by striking out "Such arrangement will" and inserting in
lieu thereof "Any such arrangement shall"; and
(B) by striking out "any individual case will" and inserting in
lieu thereof "an individual case shall"; and
(3) by adding at the end the following new subsection:
"(c) The Board shall furnish a claimant with notice that an advisory
medical opinion has been requested under this section with respect to
the claimant's case and shall furnish the claimant with a copy of such
opinion when it is received by the Board.".
(c) TECHNICAL AMENDMENTS. -- (1) The items relating to chapter 51 in
the table of chapters before part I, and in the table of chapters at the
beginning of part IV, are amended by striking out "Applications" and
inserting in lieu thereof "Claims".
(2) The heading of chapter 51 is amended to read as follows:
(3) The item relating to subchapter I in the table of sections at the
beginning of chapter 51 is amended by striking out "APPLICATIONS" and
inserting in lieu thereof "CLAIMS".
(4) The heading of subchapter I of chapter 51 is amended to read as
follows:
SEC. 104. ATTORNEYS FEES.
(a) REVISION OF ATTORNEY FEE LIMITATION. -- Section 3404 of title
38, United States Code, is amended by striking out subsection (c) and
inserting in lieu thereof the following:
"(c)(1) In connection with a proceeding before the Veterans'
Administration with respect to benefits under laws administered by the
Veterans' Administration, a fee may not be charged, allowed, or paid for
services of agents and attorneys with respect to services provided
before the date on which the Board of Veterans' Appeals first makes a
final decision in the case. Such a fee may be charged, allowed, or paid
in the case of services provided after such date only if an agent or
attorney is retained with respect to such case before the end of the
one-year period beginning on that date. The limitation in the preceding
sentence does not apply to services provided with respect to proceedings
before a court.
"(2) A person who, acting as agent or attorney in a case referred to
in paragraph (1) of this subsection, represents a person before the
Veterans' Administration or the Board of Veterans' Appeals after the
Board first makes a final decision in the case shall file a copy of any
fee agreement between them with the Board at such time as may be
specified by the Board. The Board, upon its own motion or the request
of either party, may review such a fee agreement and may order a
reduction in the fee called for in the agreement if the Board finds that
the fee is excessive or unreasonable. A finding or order of the Board
under the preceding sentence may be reviewed by the United States Court
of Veterans Appeals under section 4063(d) of this title.
"(d)(1) When a claimant and an attorney have entered into a fee
agreement described in paragraph (2) of this subsection, the total fee
kpayable to the attorney may not exceed 20 percent of the total amount
of any past-due benefits awarded on the basis of the claim.
"(2)(A) A fee agreement referred to in paragraph (1) of this
subsection is one under which (i) the amount of the fee payable to the
attorney is to be paid to the attorney by the Administrator directly
from any past-due benefits awarded on the basis of the claim, and (ii)
the amount of the fee is contingent on whether or not the matter is
resolved in a manner favorable to the claimant.
"(B) For purposes of subparagraph (A) of this paragraph, a claim
shall be considered to have been resolved in a manner favorable to the
claimant if all or any part of the relief sought is granted. 4"(3) To
the extent that past-due benefits are awarded in any proceeding before
the Administrator, the Board of Veterans' Appeals, or the United States
Court of Veterans Appeals, the Administrator may direct that payment of
any attorneys' fee under a fee arrangement described in paragraph (1) of
this subsection be made out of such past-due benefits. In no event may
the Administrator withhold for the purpose of such payment any portion
of benefits payable for a period after the date of the final decision of
the Administrator, the Board of Veterans' Appeals, or Court of Veterans
Appeals making (or ordering the making of) the award.".
(b) VIOLATION TO BE A MISDEMEANOR. -- Section 3405 of such title is
amended by striking out "shall be fined not more than $500 or imprisoned
at hard labor for not more than two years, or both" and inserting in
lieu thereof "shall be fined as provided in title 18, or imprisoned not
more than one year, or both".
SEC. 201. APPOINTMENT AND REMOVAL OF THE CHAIRMAN AND MEMBERS.
(a) IN GENERAL. -- Subsection (b) of section 4001 is amended to read
as follows:
"(b)(1) The Chairman shall be appointed by the President, by and with
the advice and consent of the Senate, for a term of six years. The
Chairman may be removed by the President for misconduct, inefficiency,
neglect of duty, or engaging in the practice of law or for physical or
mental disability which, in the opinion of the President, prevents the
proper execution of the Chairman's duties. The Chairman may not be
removed from office by the President on any other grounds. Any such
removal may only be made after notice and opportunity for hearing.
"(2)(A) The other members of the Board (including the Vice Chairman)
shall be appointed by the Administrator, with the approval of the
President, based upon recommendations of the Chairman. Each such member
shall be appointed for a term of nine years.
"(B) A member of the Board (other than the Chairman) may be removed
by the Administrator upon the recommendation of the Chairman. In the
case of a removal that would be covered by section 7521 of title 5 in
the case of an administrative law judge, a removal of a member of the
Board under this paragraph shall be carried out subject to the same
requirements as apply to removal of an administrative law judge under
that section. Section 554(a)(2) of title 5 shall not apply to a removal
action under this subparagraph. In such a removal action, a member
shall have the rights set out in section 7513(b) of such title. 4"(3)
Members (including the Chairman) may be appointed under this subsection
to more than one term.
"(4) The Administrator shall designate one member of the Board as
Vice Chairman. The Vice Chairman shall perform such functions as the
Chairman may specify. Such member shall serve as Vice Chairman at the
pleasure of the Administrator.".
(b) SALARY OF CHAIRMAN. -- (1) Section 5315 of title 5, United
States Code, is amended by adding at the end the following:
"Chairman, Board of Veterans' Appeals.".
(2) The amendment made by paragraph (1) shall take effect when the
President "5 USC 5315 note" first appoints an individual as Chairman of
the Board of Veterans' Appeals under section 4001(b)(1) of title 38,
United States Code (as amended by subsection (a)).
(c) TRANSITION TO NEW BOARD. -- "38 USC 4001 note" (1) Appointments
of members of the Board of Veterans' Appeals under subsection (b)(2) of
section 4001 of title 38, United States Code (as amended by subsection
(a)), may not be made until a Chairman is appointed under subsection
(b)(1) of that section.
(2) An individual who is serving as a member of the Board on the date
of the enactment of this Act may continue to serve as a member until the
earlier of --
(A) the date on which the individual's successor (as designated
by the Administrator) is appointed under subsection (b)(2) of that
section, or
(B) the end of the 180-day period beginning on the day after
the date on which the Chairman is appointed under subsection (b)(
1) of such section.
(d) INITIAL TERMS OF OFFICE. -- "38 USC 4001 note" Notwithstanding
the second sentence of section 4001(b)(2) of title 38, United States
Code (as amended by subsection (a)), specifying the term for which
members of the Board of Veterans' Appeals shall be appointed, of the
members first appointed under that section --
(A) 22 shall be appointed for a term of three years;
(B) 22 shall be appointed for a term of six years; and
(C) 22 shall be appointed for a term of nine years,
as determined by the Administrator at the time of the initial
appointments.
SEC. 202. DETERMINATIONS BY THE BOARD.
(a) MAJORITY VOTE IN SECTIONS. -- Section 4003 is amended to read as
follows:
"Section 4003. Determinations by the Board
"(a) Decisions by a section of the Board shall be made by a majority
of the members of the section. The decision of the section is final
unless the Chairman orders reconsideration of the case.
"(b) If the Chairman orders reconsideration in a case, the case shall
upon reconsideration be heard by an expanded section of the Board. When
a case is heard by an expanded section of the Board after such a motion
for reconsideration, the decision of a majority of the members of the
expanded section shall constitute the final decision of the Board.
"(c) Notwithstanding subsections (a) and (b) of this section, the
Board on its own motion may correct an obvious error in the record.".
(b) RESOURCES TO DISPOSE OF APPEALS IN A TIMELY MANNER. -- Section
4001(a) is amended --
(1) by inserting "and" after "Vice Chairman,";
(2) by striking out "necessary, and" and inserting in lieu
thereof "necessary in order to conduct hearings and dispose of
appeals properly before the Board in a timely manner. The Board
shall have"; and
(3) by adding at the end the following new sentence: "The
Board shall have sufficient personnel under the preceding sentence
to enable the Board to conduct hearings and consider and dispose
of appeals properly before the Board in a timely manner.".
SEC. 203. DECISIONS OF THE BOARD.
(a) DECISIONS BASED ON THE RECORD. -- Section 4004(a) is amended by
adding at the end the following new sentences: "The Board shall decide
any such appeal only after affording the claimant an opportunity for a
hearing. Decisions of the Board shall be based on the entire record in
the proceeding and upon consideration of all evidence and material of
record and applicable provisions of law and regulation.".
(b) CONFORMING AMENDMENT. -- Section 4005(d)(5) is amended by
striking out "will base its decision on the entire record and".
SEC. 204. REOPENING OF DISALLOWED CLAIMS.
Subsection (b) of section 4004 is amended to read as follows:
"(b) Except as provided in section 3008 of this title, when a claim
is disallowed by the Board, the claim may not thereafter be reopened and
allowed and a claim based upon the same factual basis may not e
considered.".
SEC. 205. NOTICE AND CONTENT OF DECISIONS.
Section 4004 is amended by striking out subsection (d) and inserting
in lieu thereof the following:
"(d) Each decision of the Board shall include --
"(1) a written statement of the Board's findings and
conclusions, and the reasons or bases for those findings and
conclusions, on all material issues of fact and law presented on
the record; and
"(2) an order granting appropriate relief or denying relief.
"(e) After reaching a decision in a case, the Board shall promptly
mail a copy of its written decision to the claimant and the claimant's
authorized representative (if any) at the last known address of the
claimant and at the last known address of such representative (if
any).".
SEC. 206. STATEMENT OF THE CASE.
(a) MATTERS TO BE INCLUDED. -- Paragraph (1) of section 4005(d) is
amended in the second sentence by striking out "will prepare" and all
that follows and inserting in lieu thereof the following: "shall
prepare a statement of the case. A statement of the case shall include
the following:
"(A) A summary of the evidence in the case pertinent to the
issue or issues with which disagreement has been expressed.
"(B) A citation to pertinent laws and regulations and a
discussion of how such laws and regulations affect the agency's
decision.
"(C) The decision on each issue and a summary of the reasons
for such decision.".
(b) PROHIBITION AGAINST PRESUMPTION OF AGREEMENT. -- Paragraph (4)
of such section is amended to read as follows:
"(4) The claimant in any case may not be presumed to agree with any
statement of fact contained in the statement of the case to which the
claimant does not specifically express agreement.".
SEC. 207. TRAVELING SECTIONS OF THE BOARD.
(a) IN GENERAL. -- Chapter 71 is further amended by adding at the
end the following new section:
"Section 4010. Traveling sections
"A claimant may request a hearing before a traveling section of the
Board. Any such hearing shall be scheduled for hearing before such a
section within the area served by a regional office of the Veterans'
Administration in the order in which the requests for hearing are
received by the Veterans' Administration with respect to hearings in
that area.".
(b) CLERICAL AMENDMENT. -- The table of sections at the beginning of
such chapter is amended by adding at the end the following new item:
"4010. Traveling sections.".
SEC. 208. ANNUAL REPORT ON BOARD ACTIVITIES AND RESOURCES.
Section 4001 is amended by adding at the end the following new
subsection:
"(d)(1) After the end of each fiscal year, the Chairman shall prepare
a report on the activities of the Board during that fiscal year and the
projected activities of the Board for the fiscal year during which the
report is prepared and the next fiscal year. Such report shall be
included in the documents providing detailed information on the budget
for the Veterans' Administration that the President's budget submission
for any fiscal year pursuant to section 1105 of title 31.
"(2) Each such report shall include, with respect to the preceding
fiscal year, information specifying --
"(A) the number of cases appealed to the Board during that
year;
"(B) the number of cases pending before the Board at the
beginning and at the end of that year;
"(C) the number of such cases which were filed during each of
the 36 months preceding the current fiscal year;
"(D) the average length of time a case was before the Board
between the time of the filing of an appeal and the disposition
during the preceding fiscal year; and
"(E) the number of members of the Board at the end of the year
and the number of professional, administrative, clerical,
stenographic, and other personnel employed by the Board at the end
of the preceding fiscal year.
"(3) The projections in each such report for the current fiscal year
and for the next fiscal year shall include (for each such year) --
"(A) an estimate of the number of cases to be appealed to the
Board; and
"(B) an evaluation of the ability of the Board (based on
existing and projected personnel levels) to ensure timely
disposition of such appeals as required by section 4003(d) of this
title.".
SEC. 209. LIMITATIONS ON AWARDING PERFORMANCE INCENTIVES TO BOARD
MEMBERS.
Section 4001 (as amended by section 208) is further amended by adding
at the end the following new subsection:
"(e) A performance incentive that is authorized by law for officers
and employees of the Federal Government may be awarded to a member of
the Board (including a temporary or acting member) by reason of that
member's service on the Board only if the Chairman of the Board
determines that such member should be awarded that incentive. A
determination by the Chairman for such purpose shall be made taking into
consideration the quality of performance of the Board member.".
SEC. 301. UNITED STATES COURT OF VETERANS APPEALS.
(a) ESTABLISHMENT OF COURT. -- Part V is amended by inserting after
chapter 71 the following new chapter:
"Sec.
"4051. Status.
"4052. Jurisdiction; finality of decisions.
"4053. Composition.
"4054. Organization.
"4055. Offices.
"4056. Times and places of sessions.
"4061. Scope of review.
"4062. Fee for filing appeals.
"4063. Representation of parties; fee agreements.
"4064. Rules of practice and procedure.
"4065. Contempt authority; assistance to the Court.
"4066. Notice of appeal.
"4067. Decisions.
"4068. Availability of proceedings.
"4069. Publication of decisions.
"4081. Employees.
"4082. Budget and expenditures.
"4083. Disposition of fees.
"4084. Fee for transcript of record.
"4085. Practice fee.
"4091. Date when United States Court of Veterans Appeals decision
becomes final.
"4092. Review by United States Court of Appeals for the Federal
Circuit.
"Section 4051. Status
"There is hereby established, under Article I of the Constitution of
the United States, a court of record to be known as the United States
Court of Veterans Appeals.
"Section 4052. Jurisdiction; finality of decisions
"(a) The Court of Veterans Appeals shall have exclusive jurisdiction
to review decisions of the Board of Veterans' Appeals. The Administrator
may not seek review of any such decision. The court shall have power to
affirm, modify, or reverse a decision of the Board or to remand the
matter, as appropriate.
"(b) Review in the Court shall be on the record of proceedings before
the Administrator and the Board. The extent of the review shall be
limited to the scope provided in section 4061 of this title. The Court
may not review the schedule of ratings for disabilities adopted under
section 355 of this title or any action of the Administrator in adopting
or revising that schedule.
"(c) Decisions by the Court are subject to review as provided in
section 4092 of this title.
"Section 4053. Composition.
"(a) The Court of Veterans Appeals shall be composed of a chief judge
and at least two and not more than six associate judges.
"(b) The judges of the Court shall be appointed by the President, by
and with the advice and consent of the Senate, solely on the grounds of
fitness to perform the duties of the office. A person may not be
appointed to the Court who is not a member in good standing of the bar
of a Federal court or of the highest court of a State. Not more than
the number equal to the next whole number greater than one-half of the
number of judges of the Court may be members of the same political
party.
"(c) The term of office of the judges of the Court of Veterans
Appeals shall be 15 years.
"(d) The chief judge is the head of the Court.
"(e)(1) The chief judge of the Court shall receive a salary at the
same rate as is received by judges of the United States Courts of
Appeals.
"(2) Each judge of the Court, other than the chief judge, shall
receive a salary at the same rate as is received by judges of the United
States district courts.
"(f)(1) A judge of the Court may be removed from office by the
President on grounds of misconduct, neglect of duty, engaging in the
practice of law, or physical or mental disability which, in the opinion
of the President, prevents the proper execution of the judge's duties.
A judge of the Court may not be removed from office by the President on
any other ground.
"(2) Before a judge may be removed from office under this subsection,
the judge shall be provided with a full specification of the reasons for
the removal and an opportunity to be heard. 4"Section 4054.
Organization
"(a) The Court of Veterans Appeals shall have a seal which shall be
judicially noticed.
"(b) The Court may hear cases by judges sitting alone or in panels,
as determined pursuant to procedures established by the Court. Any such
panel shall have not less than three judges. The Court shall establish
procedures for the assignment of the judges of the Court to such panels
and for the designation of the chief of each such panel.
"(c)(1) A majority of the judges of the Court shall constitute a
quorum for the transaction of the business of the Court. A vacancy in
the Court shall not impair the powers or affect the duties of the Court
or of the remaining judges of the Court.
"(2) A majority of the judges of a panel of the Court shall
constitute a quorum for the transaction of the business of the panel. A
vacancy in a panel of the Court shall not impair the powers or affect
the duties of the panel or of the remaining judges of the panel.
"Section 4055. Offices
"The principal office of the Court of Veterans Appeals shall be in
the District of Columbia, but the Court may sit at any place within the
United States.
"Section 4056. Times and places of sessions
"The times and places of sessions of the Court of Veterans Appeals
shall be prescribed by the chief judge.
"Section 4061. Scope of review
"(a) In any action brought under this chapter, the Court of Veterans
Appeals, to the extent necessary to its decision and when presented,
shall --
"(1) decide all relevant questions of law, interpret
constitutional, statutory, and regulatory provisions, and
determine the meaning or applicablity of the terms of an action of
the Administrator;
"(2) compel action of the Administrator unlawfully withheld;
"(3) hold unlawful and set aside decisions, findings (other
than those described in clause (4) of this subsection),
conclusions, rules, and regulations issued or adopted by the
Administrator, the Board of Veterans' Appeals, or the Chairman of
the Board found to be --
"(A) arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law;
"(B) contrary to constitutional right, power, privilege, or
immunity;
"(C) in excess of statutory jurisdiction, authority, or
limitations, or in violation of a statutory right; or
"(D) without observance of procedure required by law; and
"(4) in the case of a finding of material fact made in reaching
a decision in a case before the Veterans' Administration with
respect to benefits under laws administered by the Veterans'
Administration, hold unlawful and set aside such finding if the
finding is clearly erroneous.
"(b) In making the determinations under subsection (a) of this
section, the Court shall take due account of the rule of prejudicial
error.
"(c) In no event shall findings of fact made by the Administrator or
the Board of Veterans' Appeals be subject to trial de novo by the court.
"(d) When a final decision of the Board of Veterans' Appeals is
adverse to a party and the sole stated basis for such decision is the
failure of the party to comply with any applicable regulation prescribed
by the Administrator, the Court shall review only questions raised as to
compliance with and the validity of the regulation.
"Section 4062. Fee for filing appeals
"(a) The Court of Veterans Appeals may impose a fee of not more than
$50 for the filing of any appeal with the Court. The Court shall
establish procedures under which such a fee may be waived in the case of
an appeal filed by or on behalf of a person who demonstrates that the
requirement that such fee be paid will impose a hardship on that person.
A decision as to such a waiver is final and may not be reviewed in any
other court.
"(b) The Court may from time to time adjust the maximum amount
permitted for a fee imposed under subsection (a) of this section based
upon inflation and similar fees charged by other courts established
under Article I of the Constitution.
"Section 4063. Representation of parties; fee agreements
"(a) The Administrator shall be represented before the Court of
Veterans Appeals by the General Counsel of the Veterans' Administration.
"(b) Representation of appellants shall be in accordance with the
rules of practice prescribed by the Court under section 4064 of this
title. In addition to members of the bar admitted to practice before
the Court in accordance with such rules of practice, the Court may allow
other persons to practice before the Court who meet standards of
proficiency prescribed in such rules of practice.
"(c) A person who represents an appellant before the Court shall file
a copy of any fee agreement between the appellant and that person with
the Court at the time the appeal is filed. The Court, on its own motion
or the motion of any party, may review such a fee agreement.
"(d) In reviewing a fee agreement under subsection (c) of this
section or under section 3404(c)(2) of this title, the Court may affirm
the finding or order of the Board and may order a reduction in the fee
called for in the agreement if it finds that the fee is excessive or
unreasonable. An order of the Court under this subsection is final and
may not be reviewed in any other court. 4"Section 4064. Rules of
practice and procedure
"(a) The proceedings of the Court of Veterans Appeals shall be
conducted in accordance with such rules of practice and procedure as the
Court prescribes.
"(b) The mailing of a pleading, decision, order, notice, or process
in respect of proceedings before the Court shall be held sufficient
service of such pleading, decision, order, notice, or process if it is
properly addressed to the address furnished by the appellant on the
notice of appeal filed under section 4066 of this title.
"Section 4065. Contempt authority; assistance to the Court
"(a) The Court shall have power to punish by fine or imprisonment
such contempt of its authority as --
"(1) misbehavior of any person in its presence or so near
thereto as to obstruct the administration of justice;
"(2) misbehavior of any of its officers in their official
transactions; or
"(3) disobedience or resistance to its lawful writ, process,
order, rule, decree, or command.
"(b) The Court shall have such assistance in the carrying out of its
lawful writ, process, order, rule, decree, or command as is available to
a court of the United States. The United States marshal for a district
in which the Court is sitting shall, if requested by the chief judge of
the Court, attend any session of the Court in that district.
"Section 4066. Notice of appeal
"(a) In order to obtain review by the Court of Veterans Appeals of a
final decision of the Board of Veterans' Appeals, a person adversely
affected by that action must file a notice of appeal with the Court.
Any such notice must be filed within 120 days after the date on which
notice of the decision is mailed pursuant to section 4004(e) of this
title.
"(b) The appellant shall also furnish the Administrator with a copy
of such notice, but a failure to do so shall not constitute a failure of
timely compliance with subsection (a) of this section.
"Section 4067. Decisions
"(a) A decision upon a proceeding before the Court of Veterans
Appeals shall be made as quickly as practicable. In a case heard by a
panel of the Court, the decision shall be made by a majority vote of the
panel in accordance with the rules of the Court. The decision of the
judge or panel hearing the case so made shall be the decision of the
Court except as provided in subsection (d) of this section.
"(b) The Court shall include in its decision a statement of its
conclusions of law and determinations as to factual matters.
"(c) A judge or panel shall make a determination upon any proceeding
before the Court, and any motion in connection with such a proceeding,
that is assigned to the judge or panel. The judge or panel shall make a
report of any such determination which constitutes the judge or panel's
final disposition of the proceeding.
"(d)(1) In the case of a proceeding determined by a single judge of
the Court, the decision of the judge shall become the decision of the
Court unless before the end of the 30-day period beginning on the date
of the decision by the judge the Court, upon the motion of either party
or on its own initiative, directs that the decision be reviewed by a
panel of the Court. In such a case, the decision of the judge initially
deciding the case shall not be a part of the record.
"(2 In the case of a proceeding determined by a panel of the Court,
the decision of the panel shall become the decision of the Court unless
before the end of the 30-day period beginning on the date of the
decision by the panel the Court, upon the motion of either party or on
its own initiative, directs that the decision be reviewed by an expanded
panel of the Court (or the Court en banc). In such a case, the decision
of the panel initially deciding the case shall not be a part of the
record.
"(e) The Court shall designate in its decision in any case those
specific records of the Government on which it relied (if any) in making
its decision. The Administrator shall preserve records so designated
for not less than the period of time designated by the Administrator of
the National Archives and Records Administration.
"Section 4068. Availability of proceedings
"(a) Except as provided in subsection (b) of this section, all
decisions of the Court of Veterans Appeals and all briefs, motions,
documents, and exhibits received by the Court (including a transcript of
the stenographic report of the hearings) shall be public records open to
the inspection of the public.
"(b)(1) The Court may make any provision which is necessary to
prevent the disclosure of confidential information, including a
provision that any such document or information be placed under seal to
be opened only as directed by the Court.
"(2) After the decision of the Court in a proceeding becomes final,
the Court shall permit the withdrawal by the party entitled thereto of
originals of books, documents, and records, and of models, diagrams, and
other exhibits, submitted to the Court before the Court may, on its own
motion, make such other disposition thereof as it considers advisable.
"Section 4069. Publication of decisions
"(a) The Court of Veterans Appeals shall provide for the publication
of decisions of the Court in such form and manner as may be best adapted
for public information and use. The Court may make such exceptions, or
may authorize the chief judge to make such exceptions, to the
requirement for publication in the preceding sentence as may be
appropriate.
"(b) Such authorized publication shall be competent evidence of the
decisions of the Court of Veterans Appeals therein contained in all
courts of the United States and of the several States without any
further proof or authentication thereof.
"(c) Such publications shall be subject to sale in the same manner
and upon the same terms as other public documents.
"Section 4081. Employees
"The Court of Veterans Appeals may appoint such employees as may be
necessary to execute the functions vested in the Court. Such
appointments shall be made in accordance with the provisions of title 5
governing appointment in the competitive service, except that the Court
may classify such positions based upon the classification of comparable
positions in the judicial branch. The basic pay of such employees shall
be fixed in accordance with subchapter III of chapter 53 of title 5.
"Section 4082. Budget and expenditures
"(a) The budget of the Court of Veterans Appeals as submitted by the
Court for inclusion in the budget of the President for any fiscal year
shall be included in that budget without review within the executive
branch.
"(b) The Court may make such expenditures (including expenditures for
personal services and rent at the seat of Government and elsewhere, and
for law books, books of reference, and periodicals) as may be necessary
to execute efficiently the functions vested in the Court.
"(c) All expenditures of the Court shall be allowed and paid upon
presentation of itemized vouchers signed by the certifying officer
designated by the chief judge. Except as provided in section 4805 of
this title, all such expenditures shall be paid out of moneys
appropriated for purposes of the Court.
"Section 4083. Disposition of fees
"Except for amounts received pursuant to section 4085 of this title,
all fees received by the Court of Veterans Appeals shall be covered into
the Treasury as miscellaneous receipts.
"Section 4084. Fee for transcript of record
"The Court of Veterans Appeals may fix a fee, not in excess of the
fee authorized by law to be charged and collected therefor by the clerks
of the district courts, for comparing, or for preparing and comparing, a
transcript of the record of any proceeding before the Court, or for
copying any record, entry, or other paper and the comparison and
certification thereof.
"Section 4085. Practice fee
"(a) The Court of Veterans Appeals may impose a periodic registration
fee on persons admitted to practice before the Court. The frequency and
amount of such fee shall be determined by the Court, except that such
amount may not exceed $30 per year.
"(b) Amounts received by the Court under subsection (a) of this
section shall be available to the Court for the purposes of (1)
employing independent counsel to pursue disciplinary matters, and (2)
defraying administrative costs for the implementation of the standards
of proficiency prescribed for practice before the Court.
"Section 4091. Date when United States Court of Veterans Appeals
decision becomes final
"(a) A decision of the United States Court of Veterans Appeals shall
become final upon the expiration of the time allowed for filing, under
section 4092 of this title, a notice of appeal from such decision, if no
such notice is duly filed within such time. If such a notice is filed
within such time, such a decision shall become final --
"(1) upon the expiration of the time allowed for filing a
petition for certiorari with the Supreme Court of the United
States, if the decision of the Court of Veterans Appeals is
affirmed or the appeal is dismissed by the United States Court of
Appeals for the Federal Circuit and no petition for certiorari is
duly filed;
"(2) upon the denial of a petition for certiorari, if the
decision of the Court of Veterans Appeals is affirmed or the
appeal is dismissed by the United States Court of Appeals for the
Federal Circuit; or
"(3) upon the expiration of 30 days from the date of issuance
of the mandate of the Supreme Court, if that Court directs that
the decision of the Court of Veterans Appeals be affirmed or the
appeal dismissed.
"(b)(1) If the Supreme Court directs that the decision of the Court
of Veterans Appeals be modified or reversed, the decision of the Court
of Veterans Appeals rendered in accordance with the mandate of the
Supreme Court shall become final upon the expiration of 30 days from the
time it was rendered, unless within such 30 days either the
Administrator or the petitioner has instituted proceedings to have such
decision corrected to accord with the mandate, in which event the
decision of the Court of Veterans Appeals shall become final when so
corrected.
"(2) If the decision of the Court of Veterans Appeals is modified or
reversed by the United States Court of Appeals for the Federal Circuit
and if --
"(A) the time allowed for filing a petition for certiorari has
expired and no such petition has been duly filed, or
"(B) the petition for certiorari has been denied, or
"(C) the decision of the United States Court of Appeals for the
Federal Circuit has been affirmed by the Supreme Court,
then the decision of the Court of Veterans Appeals rendered in
accordance with the mandate of the United States Court of Appeals for
the Federal Circuit shall become final upon the expiration of 30 days
from the time such decisioni of the Court of Veterans Appeals was
rendered, unless within such 30 days either the Administrator or the
petitioner has instituted proceedings to have such decision corrected so
that it will accord with the mandate, in which event the decision of the
Court of Veterans Appeals shall become final when so corrected.
"(c) If the Supreme Court orders a rehearing, or if the case is
remanded by the United States Court of Appeals for the Federal Circuit
to the Court of Veterans Appeals for a rehearing, and if --
"(1) the time allowed for filing a petition for certiorari has
expired and no such petition has been duly filed, or
"(2) the petition for certiorari has been denied, or
"(3) the decision of the United States Court of Appeals for the
Federal Circuit has been affirmed by the Supreme Court,
then the decision of the Court of Veterans Appeals rendered upon such
rehearing shall become final in the same manner as though no prior
decision of the Court of Veterans Appeals has been rendered.
"(d) As used in this section, the term 'mandate', in case a mandate
has been recalled before the expiration of 30 days from the date of
issuance thereof, means the final mandate.
"Section 4092. Review by United States Court of Appeals for the
Federal Circuit
"(a) After a decision of the United States Court of Veterans Appeals
is entered in a case, any party to the case may obtain a review of the
decision with respect to the validity of any statute or regulation
(other than a refusal to review the schedule of ratings for disabilities
adopted under section 355 of this title) or any interpretation thereof
(other than a determination as to a factual matter) that was relied on
by the Court in making the decision. Such a review shall be obtained by
filing a notice of appeal with the Court of Veterans Appeals within the
time and in the manner prescribed for appeal to United States courts of
appeals from United States district courts.
"(b)(1) When a judge or panel of the Court of Veterans Appeals, in
making an order not otherwise appealable under this section, determines
that a controlling question of law is involved with respect to which
there is a substantial ground for difference of opinion and that there
is in fact a disagreement between the appellant and the Administrator
with respect to that question of law and that the ultimate termination
of the case may be materially advanced by the immediate consideration of
that question, the judge or panel shall notify the chief judge of that
determination. Upon receiving such a notification, the chief judge
shall certify that such a question is presented, and any party to the
case may then petition the Court of Appeals for the Federal Circuit to
decide the question. That court may permit an interlocutory appeal to
be taken on that question if such a petition is filed with it within 10
days after the certification by the chief judge of the Court of Veterans
Appeals. Neither the application for, nor the granting of, an appeal
under this paragraph shall stay proceedings in the Court of Veterans
Appeals, unless a stay is ordered by a judge of the Court of Veterans
Appeals or by the Court of Appeals for the Federal Circuit.
"(2) For purposes of subsections (d) and (e) of this section, an
order described in this paragraph shall be treated as a decision of the
Court of Veterans Appeals.
"(c) The United States Courts of Appeals for the Federal Circuit
shall have exclusive jurisdiction to review and decide any challenge to
the validity of any statute or regulation or any interpretation thereof
brought under this section, and to interpret constitutional and
statutory provisions, to the extent presented and necessary to a
decision. The judgment of such court shall be final subject to review
by the Supreme Court upon certiorari, in the manner provided in section
1254 of title 28.
"(d)(1) The Court of Appeals for the Federal Circuit shall decide all
relevant questions of law, including interpreting constitutional and
statutory provisions. The court shall hold unlawful and set aside any
statute or regulation or any interpretation thereof (other than a
determination as to a factual matter) that was relied upon in the
decision of the Court of Veterans Appeals that the Court of Appeals for
the Federal Circuit finds to be --
"(A) arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law;
"(B) contrary to constitutional right, power, privilege, or
immunity;
"(C) in excess of statutory jurisdiction, authority, or
limitations, or in violation of a statutory right; or
"(D) without observance of procedure required by law.
"(2) Except to the extent that an appeal under this chapter presents
a constitutional issue, the Court of Appeals may not review (A) a
challenge to a factual determination, or (B) a challenge to a law or
regulation as applied to the facts of a particular case.
"(e)(1) Upon such review, the Court of Appeals for the Federal
Circuit shall have power to affirm or, if the decision of the Court of
Veterans Appeals is not in accordance with law, to modify or reverse the
decision of the Court of Veterans Appeals or to remand the matter, as
appropriate.
"(2) Rules for review of decisions of the Court of Veterans Appeals
shall be those prescribed by the Supreme Court under section 2072 of
title 28.".
(b) CLERICAL AMENDMENT. -- The tables of chapters before part I and
at the beginning of part V are each amended by inserting after the item
relating to chapter 71 the following new item:
"72. Court of Veterans Appeals ......................... 4051".
SEC. 302. "38 USC 4053 note" INITIAL APPOINTMENT OF JUDGES TO COURT
OF VETERANS APPEALS
(a) CHIEF JUDGE TO BE APPOINTED FIRST. -- The President may not
appoint an individual to be an associate judge of the United States
Court of Veterans Appeals under section 4053(b) of title 38, United
States Code, as added by section 301, until the chief judge of such
Court has been appointed. The President shall, during the period
beginning on January 21, 1989, and ending on April 1, 1989, nominate an
individual for appointment to the position of chief judge of such Court.
(b) JUDGES. -- Subject to subsection (a), judges of the Court of
Veterans Appeals may be appointed after February 1, 1989.
SEC. 303. "38 USC 4055 note" FACILITY FOR PRINCIPAL OFFICE OF COURT.
In the implementation of section 4055 of title 38, United States Code
(as added by section 301), the principal office of the Court of Veterans
Appeals shall initially be located, if practicable, in a facility
existing on the date of the enactment of this Act that, as determined by
the Administrative Office of the United States Courts, would facilitate
maximum efficiency and economy in the operation of the Court. The
Administrative Office of the United States Courts shall take into
consideration the convenience of the location of such facility to needed
library resources, clerical and administrative support equipment and
personnel, and other resources available for shared use by the Court and
other courts or agencies of the Federal Government.
SEC. 401. "38 USC 4051 note" EFFECTIVE DATES.
(a) GENERAL EFFECTIVE DATE. -- Except as otherwise provided in this
section, this division (and the amendments made by this Act) shall take
effect on September 1, 1989.
(b) EFFECTIVE DATE FOR CERTAIN TRANSITION PROVISIONS. -- The
amendment made by section 201(a) shall take effect on February 1, 1989.
(c) DATE OF ENACTMENT. -- Sections 201 (other than subsection a)),
208, 209, 302, and 303, and the amendments made by those sections, shall
take effect on the date of the enactment of this Act.
(d) BOARD OF VETERANS' APPEALS. -- Sections 202 through 207 shall
take effect on January 1, 1989.
(e) COMMENCEMENT OF OPERATION OF COURT OF VETERANS APPEALS. --
Notwithstanding subsection (a), the United States Court of Veterans
Appeals established pursuant to chapter 72 of title 38, United States
Code (as added by section 301) shall not begin to operate until at least
three judges have been appointed to the court.
SEC. 402. "38 USC 4051 note" APPLICABILITY TO CASES AFTER DATE OF
ENACTMENT.
Chapter 72 of title 38, United States Code, as added by section 301,
shall apply with respect to any case in which a notice of disagreement
is filed under section 4005 of title 38, United States Code, on or after
the date of the enactment of this Act.
SEC. 403. "38 USC 3404 note" APPLICABILITY TO ATTORNEYS FEES.
The amendment to section 3404(c) of title 38, United States Code,
made by section 104a) shall apply only with respect to services of
agents and attorneys in cases in which a notice of disagreement is filed
with the Veterans' Administration on or after the date of the enactment
of this division.
SEC. 1001. SHORT TITLE; REFERENCES TO TITLE 38, UNITED STATES
CODE.
(a) SHORT TITLE. -- This division may be cited as the "Veterans'
Benefits Improvement Act "38 USC 101 note" of 1988".
(b) REFERENCES. -- Except as otherwise expressly provided, whenever
in this division an amendment or repeal is expressed in terms of an
amendment to, or repeal of, a section or other provision, the reference
shall be considered to be made to a section or other provision of title
38, United States Code.
SEC. 1002. "38 USC 101 note" DEFINITION OF ADMINISTRATOR.
For purposes of this division, the term "Administrator" means the
Administrator of Veterans' Affairs.
SEC. 1101. DISABILITY COMPENSATION.
(a) IN GENERAL. -- Section 314 is amended --
(1) by striking out "$71" in subsection (a) and inserting in
lieu thereof "$73";
(2) by striking out "$133" in subsection (b) and inserting in
lieu thereof "$138";
(3) by striking out "$202" in subsection (c) and inserting in
lieu thereof "$210";
(4) by striking out "$289" in subsection (d) and inserting in
lieu thereof "$300";
(5) by striking out "$410" in subsection (e) and inserting in
lieu thereof "$426";
(6) by striking out "$516" in subsection (f) and inserting in
lieu thereof "$537";
(7) by striking out "$652" in subsection (g) and inserting in
lieu thereof "$678";
(8) by striking out "$754" in subsection (h) and inserting in
lieu thereof "$784";
(9) by striking out "$849" in subsection (i) and inserting in
lieu thereof "$883";
(10) by striking out "$1,411" in subsection (j) and inserting
in lieu thereof "$1,468";
(11) by striking out "$1,754" and $2,459" in subsection (k) and
inserting in lieu thereof "$1,825" and "$2,559", respectively;
(12) by striking out "$1,754" in subsection (l) and inserting
in lieu thereof "$1,825";
(13) by striking out "$1,933" in subsection (m) and inserting
in lieu thereof "$2,012";
(14) by striking out "$2,199" in subsection (n) and inserting
in lieu thereof "$2,289";
(15) by striking out "$2,459" each place it appears in
subsections (o) and (p) and inserting in lieu thereof "$2,559";
(16) by striking out "$1,055" and "$1,572" in subsection (r)
and inserting in lieu thereof "$1,098" and $1,636", respectively;
and
(17) by striking out "$1,579" in subsection (s) and inserting
in lieu thereof "$1,643".
(b) SPECIAL RULE. -- "38 USC 314 note" The Administrator may adjust
administratively, consistent with the increases authorized by this
section, the rates of disability compensation payable to persons within
the purview of section 10 of Public Law 85-857 who are not in receipt of
compensation payable pursuant to chapter 11 of title 38, United States
Code.
SEC. 1102. ADDITIONAL COMPENSATION FOR DEPENDENTS.
Section 315(1) is amended --
(1) by striking out "$85" in clause (A) and inserting in lieu
thereof "$88";
(2) by striking out "$143" and "$45" in clause (B) and
inserting in lieu thereof "$148" and "$46" respectively;
(3) by striking out "$59" and "$45" in clause (C) and inserting
in lieu thereof "$61" and "$46", respectively;
(4) by striking out "$69" in clause (D) and inserting in lieu
thereof "$71";
(5) by striking out "$155" in clause (E) and inserting in lieu
thereof "$161"; and
(6) by striking out "$131" in clause (F) and inserting in lieu
thereof "$136".
SEC. 1103. CLOTHING ALLOWANCE FOR CERTAIN DISABLED VETERANS.
Section 362 is amended by striking out "$380" and inserting in lieu
thereof "$395".
SEC. 1104. DEPENDENCY AND INDEMNITY COMPENSATION FOR SURVIVING
SPOUSES.
Section 411 is amended --
(1) by striking out the table in subsection (a) and inserting
in lieu thereof the following:
(2) by striking out "$60" in subsection (b) and inserting in
lieu thereof "$62";
(3) by striking out "$155" in subsection (c) and inserting in
lieu thereof "$161"; and
(4) by striking out "$76" in subsection (d) and inserting in
lieu thereof "$79".
SEC. 1105. DEPENDENCY AND INDEMNITY COMPENSATION FOR CHILDREN.
(a) DIC FOR ORPHAN CHILDREN. -- Section 413(a) is amended --
(1) by striking out "$261" in clause (1) and inserting in lieu
thereof "$271";
(2) by striking out "$376" in clause (2) and inserting in lieu
thereof "$391";
(3) by striking out "$486" in clause (3) and inserting in lieu
thereof "$505"; and
(4) by striking out "$486" and "$97" in clause (4) and
inserting in lieu thereof "$505" and "$100", respectively.
(b) SUPPLEMENTAL DIC FOR DISABLED ADULT CHILDREN. -- Section 414 is
amended --
(1) by striking out "$155" in subsection (a) and inserting in
lieu thereof "$161";
(2) by striking out "$261" in subsection (b) and inserting in
lieu thereof "$271"; and
(3) by striking out "$133" in subsection (c) and inserting in
lieu thereof "$138".
SEC. 1106. "38 USC 314 note" EFFECTIVE DATE FOR RATE INCREASES.
The amendments made by this title shall take effect on December 1,
1988.
SEC. 1201. FUNDING FOR AGENT ORANGE BLOOD TESTING.
Funds appropriated to the Veterans' Administration in Public Law
98-181 for medical and prosthetic research and obligated through the
Centers for Disease Control for a contract for the conduct of an
epidemiological study relating to exposure of veterans to the herbicide
known as Agent Orange shall, upon the cancellation of that contract, be
available for obligation until September 30, 1989, in the amounts of --
(1) $3,000,000 for payment of expended of the Department of the
Air Force in connection with blood tests of individuals who, while
serving in the Air Force, participated in the spraying of Agent
Orange in Vietnam during the Vietnam era; and
(2) $1,000,000 for payment of expenses of a survey of
scientific evidence, studies, and literature relating to health
effects of possible exposure to toxic chemicals contained in
herbicides used in the Republic of Vietnam during the Vietnam era,
which survey shall be conducted by an independent scientific
entity under contract to the Veterans Administration pursuant to a
law enacted after the date of the enactment of this Act.
SEC. 1202. EXTENSION OF HEALTH-CARE ELIGIBILITY BASED ON AGENT
ORANGE OR IONIZING RADIATION EXPOSURE
Section 610(e)(3) is amended by striking out "September 30, 1989" and
inserting in lieu thereof "December 31, 1990".
SEC. 1203. TREATMENT FOR NEEDS-BASED BENEFITS PURPOSES OF AMOUNTS
RECEIVED UNDER AGENT ORANGE LITIGATION SETTLEMENT.
Any payment received by any person pursuant to the settlement in the
case of In re Agent Orange Product Liability Litigation in the United
States District Court for the Eastern District of New York (MDL No.
381) shall be treated for purposes of laws administered by the Veterans'
Administration as reimbursement for prior unreimbursed medical expenses,
and no such payment shall be countable as income for any such purpose.
SEC. 1204. "38 USC 241 note" OUTREACH SERVICES.
(a) ONGOING OUTREACH PROGRAM. -- The Administrator shall conduct an
active, continuous outreach program for furnishing to veterans of active
military, naval, or air service who served in the Republic of Vietnam
during the Vietnam era information relating to --
(1) the health risks (if any) resulting from exposure during
that service to dioxin or any other toxic agent in herbicides used
in support of United States and allied military operations in the
Republic of Vietnam during the Vietnam era, as such information on
health risks becomes known; and
(2) services and benefits available to such veterans with
respect to such health risks.
(b) INFORMATION IN AGENT ORANGE REGISTRY. -- The Administrator shall
take reasonable actions to organize and update the information contained
in the Veterans' Administration Agent Orange Registry in a manner that
enables the Administrator promptly to notify a veteran of any increased
health risk for such veteran resulting from exposure of such veteran to
dioxin or any other toxic agent referred to in subsection (a) during the
Vietnam-era service in the Republic of Vietnam whenever the
Administrator determines, on the basis of physical examination or other
pertinent information, that such veteran is subject to such an increased
health risk.
SEC. 1205. RANCH HAND STUDY.
(a) ADVISORY COMMITTEE PERSONNEL AND SUPPORT. -- (1) After February
28, 1989, not less than one-third of the total number of members of the
Ranch Hand Advisory Committee shall be individuals selected by the
Secretary of Health and Human Services from among scientists who are
recommended by veterans' organizations for membership on the committee
and are determined by the Secretary to be qualified for service on the
committee.
(2) A scientist shall be considered to be qualified for service on
the Ranch Hand Advisory Committee if (A) othe scientist has earned a
doctor of medicine degree or a doctorate or other advanced degree from
an institution of higher education in a field relevant to the
responsibilities of the Advisory Committee and has written one or more
articles relevant to those responsibilities which have appeared in
scientific publications following a peer-review process, or (B) the
scientist has qualifications equivalent to those set forth in clause
(A).
(b) CHAIRMAN. -- After February 28, 1989, the Chairman of the Ranch
Hand Advisory Committee may be an officer or employee of the Federal
Government (other than by reason of service as a member of the Advisory
Committee) only if the Secretary of Health and Human Services
determines, after affirmatively seeking to recruit a chairman who is not
an officer or employee of the Federal Government. The Secretary shall
report any such determination to the Committees on Veterans' Affairs of
the Senate and the House of Representatives.
(c) SCHEDULE OF REPORTS. -- (1) Not later than 90 days after the
date of the enactment of this Act, the Secretary of Defense shall submit
to the Committees on Veterans' Affairs and the Committees on Armed
Services of the Senate and the House of Representatives a schedule of
reports to be prepared by the Secretary of the Air Force or the
Secretary of Defense on the progress and findings of the Ranch Hand
Study.
(2) Each report referred to in paragraph (1) shall include the
following:
(A) A discussion of the progress made in the Ranch Hand Study
during the period covered by the report.
(B) A summary of the scientific activities conducted during
that period and the findings resulting from those activities, to
be prepared by the scientists conducting those activities.
(3) Such a report need not contain (A) a discussion of progress
discussed in any other report prepared by the Department of Defense
(under this section or otherwise) regarding the Ranch Hand Study, or (B)
a scientific summary included in any other such report, unless
modification of such discussion or summary is appropriate for
completeness, accuracy, and currency.
(4) The Secretary of Defense shall submit to the committees referred
to in paragraph (1) a copy of each report referred to that paragraph.
(d) DEFINITIONS. -- For purposes of this section:
(1) The term "Ranch Hand Advisory Committee" means the
committee known as the "Advisory Committee on Special Studies
Relating to the Possible Long-Term Health Effects of Phenoxy
Herbicides and Contaminants" established by the Secretary of
Defense to monitor the conduct of the Ranch Hand Study.
(2) The term "Ranch Hand Study" means the special study
conducted by the Secretary of the Air Force relating to the
possible long-term health effects of phenoxy herbicides and
contaminants on Air Force personnel who participated in Operation
Ranch Hand in the Republic of Vietnam during the Vietnam era.
SEC. 1301. TEMPORARY PROGRAMS OF TRIAL WORK PERIODS AND
VOCATIONAL-REHABILITATION EVALUATIONS.
(a) THREE-YEAR EXTENSION. -- Subsection (a)(2)(B) of section 363 is
amended by striking out "January 31, 1989" and inserting in lieu thereof
"January 31, 1992".
(b) VOLUNTARY PARTICIPATION. -- Subsection (c) of such section is
amended --
(1) by striking out paragraphs (2), (3), and (4);
(2) by striking out "(1)(A) Except as provided in paragraph (4)
of this subsection, in" and inserting in lieu thereof "(1) In";
and
(3) in paragraph (1) --
(A) by redesignating clauses (i), (ii), and (iii) as clauses
(A), (B), and (C), respectively; and
(B) by striking out subparagraph (B) and inserting in lieu
thereof the following:
"(2) After providing the notice required under paragraph (1) of this
subsection, the Administrator shall offer the veteran the opportunity
for an evaluation under section 1506(a) of this title.".
SEC. 1302. FUNDING OF EDUCATIONAL AND VOCATIONAL COUNSELING
SERVICES.
(a) IN GENERAL. -- Subchapter II of chapter 36 is amended by adding
at the end the following new section:
"Section 1797. Funding of contract educational and vocational
counseling
"(a) Subject to subsection (b) of this section, educational or
vocational counseling services obtained by the Veterans' Administration
by contract and provided to an individual applying for or receiving
benefits under section 524 or chapter 30, 32, 34, or 35 of this title,
or otherwise available, to the Veterans' Administration for payment of
readjustment benefits.
"(b) Payments under this section shall not exceed $5,000,000 in any
fiscal year.".
(b) CLERICAL AMENDMENT. -- The table of sections at the beginning of
chapter 36 is amended by inserting after the item relating to section
1796 the following new item:
"1797. Funding of contract educational and vocational counseling.".
SEC. 1303. VOCATIONAL TRAINING FOR PENSION RECIPIENTS.
(a) ELIGIBILITY. -- Subsection (a)(2) of section 524 is amended by
striking out "who is awarded pension during the program period" and
inserting in lieu thereof "is awarded pension during the program period,
or a veteran who was awarded pension before the beginning of the program
period,".
(b) EXTENSION OF PROGRAM PERIOD. -- Subsections (a)(4) and (b)(4)(
A) of such section are each amended by striking out "January 31, 1989"
and inserting in lieu thereof "January 31, 1992".
(c) HEALTH-CARE ELIGIBILITY. -- Section 525(b)(2) is amended by
striking out "January 31, 1989" and inserting in lieu thereof "January
31, 1992".
SEC. 1401. LIFE INSURANCE PROGRAMS.
(a) AUTHORITY FOR PAYMENT OF INTEREST ON INSURANCE SETTLEMENTS. --
(1) Subchapter I of chapter 19 is amended by adding at the end the
following new section:
"Section 728. Authority for payment of interest on settlements
"(a) Subject to subsection (b) of this section, the Administrator may
pay interest on the proceeds of a participating National Service Life
Insurance, Veterans' Special Life Insurance, and Veterans Reopened
Insurance policy from the date the policy matures to the date of payment
of the proceeds to the beneficiary or, in the case of an endowment
policy, to the policyholder.
"(b)(1) The Administrator may pay interest under subsection (a) of
this section only if the Administrator determines that the payment of
such interest is administratively and actuarially sound for the
settlement option involved.
"(2) Interest paid under subsection (a) of this section shall be at
the rate that is established by the Administrator for dividends held on
credit or deposit in policyholders' accounts under the insurance program
involved.".
(2) Subchapter II of chapter 19 is amended by adding at the end the
following new section:
"Section 763. Authority for payment of interest on settlements
"(a) Subject to subsection (b) of this section, the Administrator may
pay interest on the proceeds of a United States Government Life
Insurance policy from the date the policy matures to the date of payment
of the proceeds to the beneficiary or, in the case of an endowment
policy, to the policyholder.
"(b)(1) The Administrator may pay interest under subsection (a) of
this section only if the Administrator determines that the payment of
such interest is administratively and actuarially sound for the
settlement option involved.
"(2) Interest paid under subsection (a) shall be at the rate that is
established by the Administrator for dividends held on credit or deposit
in policyholders' accounts.".
(3) The amendments "38 USC 728 note" made by this subsection shall
take effect with respect to insurance policies maturing after the date
of the enactment of this Act.
(b) AUTHORITY TO ADJUST DISCOUNT RATES FOR ADVANCE PAYMENT OF
PREMIUMS. -- (1) Subchapter I of chapter 19, as amended by subsection
(a)(1), is further amended by adding at the end the following new
section:
"Section 729. Authority to adjust premium discount rates
"(a) Notwithstanding sections 702, 723, and 725 of this title and
subject to subsection (b) of this section, the Administrator may from
time to time adjust the discount rates for premiums paid in advance on
National Service Life Insurance, Veterans' Special Life Insurance, and
Veterans Reopened Insurance.
"(b)(1) In adjusting a discount rate pursuant to subsection (a) of
this section, the Administrator may not set such rate at a rate lower
than the rate authorized for the program of insurance involved under
section 702, 723, or 725 of this title.
"(2) The Administrator may make an adjustment under subsection (a) of
this section only if the Administrator determines that the adjustment is
administratively and actuarially sound for the program of insurance
involved.".
(2) The amendment "38 USC 729 note" made by paragraph (1) shall take
effect with respect to premiums paid after the date of the enactment of
this Act.
(c) CLERICAL AMENDMENTS. -- The table of sections at the beginning
of chapter 19 is amended --
(1) by inserting after the item relating to section 727 the
following new items:
"728. Authority for payment of interest on settlements.
"729. Authority to adjust premium discount rates.";
and
(2) by inserting after the item relating to section 762 the
following new item:
"763. Authority for payment of interest on settlements.".
SEC. 1402. INCOME EXCLUSION FOR CASUALTY LOSS REIMBURSEMENTS.
(a) PARENTS DIC. -- Clause (I) of section 415(f)(1) is amended to
read as follows:
"(I) reimbursements of any kind for any casualty loss (as
defined in regulations which the Administrator shall prescribe),
but the amount excluded under this clause may not exceed the
greater of the fair market value or the reasonable replacement
value of the property involved at the time immediately preceding
the loss;".
(b) PENSION. -- Clause (5) of section 503(a) is amended to read as
follows:
"(5) reimbursements of any kind for any casualty loss (as
defined in regulations which the Administrator shall prescribe),
but the amount excluded under this clause may not exceed the
greater of the fair market value or reasonable replacement value
of the property involved at the time immediately preceding the
loss;".
SEC. 1403. RECODIFICATION OF PROVISIONS RELATING TO CERTAIN BENEFITS
FOR SURVIVORS OF CERTAIN VETERANS.
(a) IN GENERAL. -- (1) Subchapter II of chapter 13 is amended by
adding at the end the following new section:
"Section 418. Benefits for survivors of certain veterans rated
totally disabled at time of death
"(a) The Administrator shall pay benefits under this chapter to the
surviving spouse and to the children of a deceased veteran described in
subsection (b) of this section in the same manner as if the veteran's
death were service connected.
"(b) A deceased veteran referred to in subsection (a) of this section
is a veteran who dies, not as the result of the veteran's own willful
misconduct, and who was in receipt of or entitled to receive (or but for
the receipt of retired or retirement pay was entitled to receive)
compensation at the time of death for a service-connected disability
that either --
"(1) was continuously rated totally disabling for a period of
10 or more years immediately preceding death; or
"(2) if so rated for a lesser period, was so rated continuously
for a period of not less than five years from the date of such
veteran's discharge or other release from active duty.
"(c) Benefits may not be paid under this chapter by reason of this
section to a surviving spouse of a veteran unless --
"(1) the surviving spouse was married to the veteran for two
years or more immediately preceding the veteran's death; or
"(2) a child was born of the marriage or was born to them
before the marriage.
"(d) If a surviving spouse or a child receives any money or property
of value pursuant to an award in a judicial proceeding based upon, or a
settlement or compromise of, any cause of action for damages for the
death of a veteran described in subsection (a) of this section, benefits
under this chapter payable to such surviving spouse or child by virtue
of this section shall not be paid for any month following a month in
which any such money or property is received until such time as the
total amount of such benefits that would otherwise have been payable
equals the total of the amount of the money received and the fair market
value of the property received.
"(e) For purposes of sections 1448(d) and 1450(c) of title 10,
eligibility for benefits under this chapter by virtue of this section
shall be deemed eligibility for dependency and indemnity compensation
under section 411(a) of this title.".
(2) The table of sections at the beginning of chapter 13 is amended
by inserting after the item relating to section 417 the following new
item:
"418. Benefits for survivors of certain veterans rated totally
disabled at time of death.".
(b) CONFORMING AMENDMENTS. -- Section 410 is amended by striking out
subsection (b) and redesignating subsection (c) as subsection (b).
SEC. 1404. "38 USC 210 note" SPECIFICATION IN BUDGET SUBMISSIONS OF
FUNDS FOR CERTAIN VETERANS BENEFITS.
(a) BUDGET INFORMATION. -- In the documentation providing detailed
information on the budgets for the Veterans' Administration and the
Department of Labor that the Administrator and the Secretary of Labor,
respectively, submit to the Congress in conjunction with the President's
budget submission for each fiscal year pursuant to section 1105 of title
31, United States Code, the Administrator and the Secretary shall
identify, to the maximum extent feasible, the estimated amount in each
of the appropriation requests for Veterans' Administration accounts and
Department of Labor accounts, respectively, that is to be obligated for
the furnishing of each of the following services or benefits only to, or
with respect to, veterans who performed active military, naval, or air
service in combat with the enemy or in a theatre of combat operations
during a period of war or other hostilities:
(1) Employment services and other employment benefits under
programs administered by the Secretary of Labor.
(2) Compensation under chapter 11 of title 38, United States
Code.
(3) Dependency and Indemnity Compensation under chapter 13 of
such title.
(4) Pension under chapter 15 of such title.
(5) Inpatient hospital care under chapter 17 of such title.
(6) Outpatient medical care under chapter 17 of such title.
(7) Nursing home care under chapter 17 of such title.
(8) Domiciliary care under chapter 17 of such title.
(9) Readjustment counseling services under section 612A of such
title.
(10) Insurance under chapter 19 of such title.
(11) Specially adapted housing for disabled veterans under
chapter 21 of such title.
(12) Burial benefits under chapter 23 of such title.
(13) Educational assistance under chapters 30, 32, and 34 of
such title and chapter 106 of title 10, United States Code.
(14) Vocational rehabilitation services under chapter 31 of
title 38, United States Code.
(15) Survivors' and dependents' educational assistance under
chapter 35 of such title.
(16) Home loan benefits under chapter 37 of such title.
(17) Automobiles and adaptive equipment under chapter 39 of
such title.
(b) REPORT ON FEASIBILITY. -- If the Administrator or the Secretary
of Labor determines that, with respect to any services or benefits
referred to in subsection (a), it is not feasible to identify an
estimated dollar amount to be obligated for furnishing such services or
benefits only to veterans described in that subsection for any fiscal
year, the Administrator and the Secretary shall, with respect to an
appropriation request for such fiscal year relating to such services or
benefits, report to the Committees on Veterans' Affairs of the Senate
and the House of Representatives the reasons for the infeasibility. The
report shall be submitted contemporaneously with the budget submission
for such fiscal year. The report shall specify (1) the information,
systems, equipment, or personnel that would be required in order for it
to be feasible for the Administrator or the Secretary to identify such
amount, and (2) the actions to be taken in order to ensure that it will
be feasible to make such an estimate in connection with the submission
of the budget request for the next fiscal year.
SEC. 1501. READJUSTMENT COUNSELING FACILITIES.
(a) RELOCATIONS FOR CIRCUMSTANCES BEYOND CONTROL OF VETERANS'
ADMINISTRATION. -- Section 612A(g)(1) is amended --
(1) in subparagraph (A), by striking out "The" and inserting in
lieu thereof "Except as provided in subparagraph (C) of this
paragraph, the"; and
(2) by adding at the end the following new subparagraph:
"(C) The Administrator may relocate a center in existence on January
1, 1988, without regard to the national plan (including any revision to
such plan) if such relocation is to a new location away from a Veterans'
Administration general health-care facility when such relocation is
necessitated by circumstances beyond the control of the Veterans'
Administration. Such a relocation may be carried out only after the end
of the 30-day period beginning on the date on which the Administrator
notifies the Committees on Veterans' Affairs of the Senate and the House
of Representatives of the proposed relocation, of the circumstances
making it necessary, and of the reason for the selection of the new site
for the center.".
(b) AUTHORIZATION FOR RELOCATION OF CERTAIN FACILITIES. -- "38 USC
612A note" The requirements of section 612A(g)(1) of title 38, United
States Code, shall not apply with respect to the relocation of 17
Veterans' Administration Readjustment Counseling Service Vet Centers
from their locations away from general Veterans' Administration
health-care facilities to other such locations, as described in letters
dated July 25, 1988, from the Chief Medical Director of the Veterans'
Administration to the Chairmen of the Committees on Veterans' Affairs of
the Senate and the House of Representatives.
SEC. 1502. CONTRACTS AND GRANTS FOR MEDICAL CARE FOR VETERANS IN THE
PHILIPPINES.
(a) ONE-YEAR EXTENSION. -- Subsections (a) and (b)(1) of section 632
are each amended by striking out "September 30, 1989" and inserting in
lieu thereof "September 30, 1990".
(b) INCREASE IN ANNUAL AUTHORIZATION. -- Subsection (b)(1) of such
section is further amended by striking out "$500,000" and inserting in
lieu thereof "$1,000,000,".
(c) REPORTS. -- (1) Not later than February 1, 1989, and not later
than February 1, 1990, the Administrator shall submit to the Committees
on Veterans' Affairs of the Senate and House of Representatives a report
containing detailed information describing the use of funds provided to
the Republic of the Philippines under section 632(b) of title 38, United
States Code, during the preceding fiscal year.
(2) Not later than May 1, 1989, the Administrator shall submit to
those committees a report with respect to the furnishing of health-care
services to United States veterans in the Republic of the Philippines.
That report shall include the following:
(A) Information for each of fiscal years 1986, 1987, and 1988
(shown in total and separately for veterans being furnished care
or treatment for service-connected disabilities and veterans being
furnished care or treatment for non-service-connected
disabilities) as to --
(i) the number of United States veterans furnished care at
Veterans' Administration expense pursuant to sections 624 and
632(a) of title 38, United States Code;
(ii) the numbers of inpatient days of care and outpatient
visits to furnished for United States veterans; and
(iii) the amounts of such care and visits so furnished at the
Veterans Memorial Medical Center or at other facilities in the
Republic of the Philippines.
(B) An analysis comparing (i) the cost-effectiveness of
furnishing care and treatment to such veterans through the
Veterans Memorial Medical Center or other facilities in the
Republic of the Philippines, and (ii) the quality of care
available at the Center and such other facilities.
(C) A projection of the needs for care and treatment of United
States veterans in the Republic of the Philippines during each of
fiscal years 1990, 1991, 1992, and 1993.
(D) A projection of the needs of the Veterans Memorial Medical
Center for each of those fiscal years for the replacement and
upgrading of equipment and the rehabilitation of the physical
plant and facilities in order to maintain the provision of an
appropriate quality of care for United States veterans at the
Veterans Memorial Medical Center.
(E) The plans of the Veterans' Administration for meeting the
needs for care and treatment of United States veterans residing in
the Philippines.
(F) Any planned administrative action, and any recommendation
for legislation, that the Administrator considers appropriate.
(3) The report under paragraph (2) shall include any comment the
Secretary of State may wish to make on the contents of the report.
SEC. 1503. TECHNICAL CORRECTIONS.
(a) CORRECTIONS NECESSITATED BY AMENDMENTS MADE BY PUBLIC LAW
100-322. -- (1) Section 603(a)(2)(B) is amended --
(A) by striking out "612(a)(4)" and inserting in lieu thereof
"paragraph (2), (3), or (4) of section 612(a)"; and
(B) by striking out "612(a)(5)" and inserting in lieu thereof
"612(a)(5)(B)".
(2) Section 4114(a) is amended --
(A) in paragraph (1) --
(i) in clause (A), by inserting "pharmacists, occupational
therapists," after "vocational nurses,"; and
(ii) in clause (B), by inserting "pharmacists and occupational
therapists," after "vocational nurses,"; and
(B) in paragraph (3)(D), by striking out "the category" and all
that follows through "vocational nurses" and inserting in lieu
thereof "a category of personnel described in such section
4104(3)".
(3) Subsections (c) and (d) of section 4323 are each amended by
striking out "section 4322(f)" and inserting in lieu thereof "section
4322(e)".
(4) Section 4324 is amended --
(A) in subsection (a)(2) --
(i) by striking out "completion" and all that follows through
"quarter" and inserting in lieu thereof "participation in the
program";
(ii) by inserting "or is payable" after "paid"; and
(iii) by inserting before the period at the end the following:
", reduced by the proportion that the number of days served for
completion of the service obligation bears to the total number of
days in the participant's period of obligated service"; and
(B) in subsection (b) --
(i) by striking out paragraph (1); and
(ii) by striking out "(2)".
(b) EFFECTIVE DATE. -- "38 USC 603 note" The amendments made by
subsection (a)(1) shall apply with respect to the furnishing of medical
services by contract to veterans who apply to the Veterans'
Administration for medical services after June 30, 1988.
(c) RATIFICATION. -- "38 USC 603 note" Any action of the
Administrator in contracting with facilities other than Veterans'
Administration facilities for the furnishing of medical services (as
defined in section 601(6) of title 38, United States Code), for the
purpose described in section 612(a)(5)(B) of such title, to an
individual described in paragraph (2) or (3) of section 612 of title 38,
United States Code, who applied to the Veterans' Administration for such
services during the period beginning on July 1, 1988, and ending on the
date of enactment of this Act is hereby ratified.
SEC. 1504. LAND TRANSFER, RUTHERFORD, TENNESSEE.
(a) AUTHORITY. -- Subject to subsections (b) and (c) and any
conditions required by the Administrator under subsection (d), the
Administrator shall transfer all right, title, and interest of the
United States in and to a tract of land consisting of (not to exceed)
seven acres, together with improvements thereon, in the Southeast corner
of the Alvin C. York Veterans' Administration Medical Center in
Rutherford County, Tennessee. Such transfer shall be made without
consideration. Such transfer shall be made without regard to section
5022(a)(2)(A) of title 38, United States Code.
(b) PERMITTED USE. -- The transfer under subsection (a) may be made
only if it is subject to the condition that the property transferred be
used by the State of Tennessee for a nursing care facility in accordance
with the conditions and limitations applicable to State home facilities
constructed with assistance under subchapter III of chapter 81 of title
38, United States Code, and that if such property is used at any time
for any other purpose, all right, title, and interest in the property
shall revert to the United States.
(c) AVAILABILITY OF RESOURCES. -- The transfer under subsection (a)
may be made only if the Administrator has determined that the State of
Tennessee has provided sufficient assurance that it has the resources
(including any resources which are reasonably likely to be available to
the State under subchapter III of chapter 81 of title 38, United States
Code and section 641 of such title) necessary to construct and operate a
State home nursing facility.
(d) ADDITIONAL CONDITIONS. -- The transfer under subsection (a)
shall be made under such additional terms and conditions as the
Administrator considers appropriate to protect the interests of the
United States.
SEC. 1505. TRANSFERS OF EXCESS PROPERTIES FOR STATE HOME FACILITY
USES.
Section 5022(a) is amended --
(1) in paragraph (2)(A), by striking out "The" and inserting in
lieu thereof "Except as provided in paragraph (3) of this
subsection, the"; and
(2) by adding at the end the following new paragraph:
"(3)(A) Subject to subparagraph (B) of this paragraph, the
Administrator may, without regard to paragraph (2) of this subsection or
any other provision of law relating to the disposition of real property
by the United States, transfer to a State for use as the site of a State
home nursing-home or domiciliary facility real property described in
subparagraph (E) of the paragraph which the Administrator determines to
be excess to the needs of the Veterans' Administration.
"(B) A transfer of real property may not be made under this paragraph
unless --
"(i) the Administrator has determined that the State has
provided sufficient assurance that it has the resources (including
any resources which are reasonably likely to be available to the
State under subchapter III of chapter 81 of this title and section
641 of this title) necessary to construct and operate a State home
nursing or domiciliary care facility; and
"(ii) the transfer is made subject to the conditions (I) that
the property be used by the State for a nursing-home or
domiciliary care facility in accordance with the conditions and
limitations applicable to State home facilities constructed with
assistance under subchapter III of chapter 81 of this title, and
(II) that, if the property is used at any time for any other
purpose, all right, title, and interest in and to the property
shall revert to the United States.
"(C) A transfer of real property may not be made under this paragraph
until --
"(i) the Administrator submits to the Committees on Veterans'
Affairs of the Senate and House of Representatives, not later than
June 1 of the year in which the transfer is proposed to be made
(or the year preceding that year) a report providing notice of the
proposed transfer; and
"(ii) a period of 90 consecutive days elapses after the report
is received by those committees.
"(D) A transfer under this paragraph shall be made under such
additional terms and conditions as the Administrator considers
appropriate to protect the interests of the United States.
"(E) Real property described in this subparagraph is real property
that is owned by the United States and administered by the Veterans'
Administration.".
SEC. 1506. CONVERSION OF NON-PHYSICIAN MEDICAL CENTER DIRECTORS TO
SENIOR EXECUTIVE SERVICE.
(a) CONVERSION. -- Section 4101(e) is amended by striking out "and
persons appointed under section 4103(a)(8) of this title".
(b) CONFORMING AMENDMENTS. -- (1) Section 4103(a) is amended --
(A) by striking out paragraph (8); and
(B) by redesignating paragraph (9) as paragraph (8).
(2) Section 4107(c) is amended to read as follows:
"(c) Notwithstanding the provisions of section 4101(e) of this title,
any person appointed under section 4103 of this title who is not
eligible for special pay under section 4118 of this title shall be
deemed to be a career appointee for the purposes of sections 4507 and
5384 of title 5.".
(c) APPLICABILITY TO CURRENT DIRECTORS. -- "38 USC 4103 note" (1)
Except as provided in paragraph (2), each person who, on the day before
the date of enactment of this Act, holds an appointment as a director
under section 4103(a)(8) of title 38, United States Code, shall, on such
date of enactment, become a career appointee in the Senior Executive
Service established pursuant to chapter 31 of title 5, United States
Code. The preceding sentence applies without regard to the provisions
of subsections (b), (c), and (e) of section 3393 of title 5, United
States Code, or any other provision of law. The provisions of section
3393(d) of such title shall not apply to a director who becomes a career
appointee pursuant to this paragraph.
(2) Any person who, on the day before the date of the enactment of
this Act, holds an appointment as such a director may, not later than 60
days after such enactment date, elect to retaini the terms and
conditions of that appointment for as long as that person continues to
serve as such a director.
(d) PRESERVATION OF PAY. -- "38 USC 4103 note" This section and the
amendments made by this section shall not result in a reduction in the
rate of pay payable to any person.
SEC. 1507. PROCUREMENT THROUGH LOCAL CONTRACTS.
(a) EFFECTIVE DATES OF PROVISIONS ENACTED IN PUBLIC LAW 100-322. --
Section 403(b)(1) of the Veterans' Benefits and Services Act of 1988 "38
USC 5025 note" (Public Law 100-322; 102 Stat. 545) is amended by
striking out "Subsection (b)(1)" and inserting in lieu thereof
"Subsections (a), (b)(1), and (b)(2)".
(b) TRANSITION TO CERTAIN REPORT REQUIREMENTS. -- Section 5025(d) is
amended --
(1) in paragraph (1), by inserting "(beginning in 1992)" after
"of each year"; after "of each year"; and
(3) by adding at the end the following new paragraph:
"(3) Not later than February 1 of each year from 1989 through 1992,
the Administrator shall submit to the Committees on Veterans' Affairs of
the Senate and the House of Representatives a report on the experience
in carrying out this section during the preceding fiscal year. The
first such report shall contain information showing the percentage
(measured by cost) of the total of all health-care items procured by the
Veterans' Administration during fiscal year 1988 that were procured
through local contracts. The other reports under this paragraph shall
contain information showing the percentage (measured by cost) of the
total of all health-care items procured by the Veterans' Administration,
and by each Veterans' Administration medical center, during the fiscal
year covered by the report that were purchased through local contracts
and, in the case of each medical center at which the percentage was
greater than 20 percent, an explanation of the reasons why that
occurred.".
(c) DEFINITION OF HEALTH-CARE ITEM. -- Section 5025(e)(1) is amended
--
(1) by striking out "65, 66, or 73" and inserting in lieu
thereof "65 or 66"; and
(2) by inserting after the first sentence the following new
sentence: "Effective December 1, 1992, such term also includes
any item listed in, or (as determined by the Administrator) of the
same nature as an item listed in, Federal Supply Classification
(FSC) Group 73.".
SEC. 1508. STANDARDIZATION OF COVERAGE OF MEDICAL AND PHARMACEUTICAL
ITEMS.
Section 402 of the Veterans' Benefits and Services Act of 1988
(Public Law 100-322; 102 Stat. 543) "38 USC 5025 note" is amended in
the first sentence by striking out "medical and pharmaceutical items"
and inserting in lieu thereof "health-care items (as defined in section
5025(e)(1) of title 38, United States Code)".
SEC. 1509. TECHNICAL CLARIFICATION OF PERIOD OF CLINICAL EVALUATION
OF ALCOHOL AND DRUG ABUSE PROGRAM.
Section 620A(f)(1) (as amended by section 502 of the Veterans'
Benefits and Programs Improvement Act of 1988) is amended by striking
out "before October 1, 1997" and inserting in lieu thereof "during the
period beginning on December 1, 1988, and ending on October 1, 1997".
SEC. 1601. EXTENSION OF AUTHORIZATION OF APPROPRIATIONS FOR STATE
CEMETERY GRANT PROGRAM.
Paragraph (2) of section 1008(a) is amended by striking out "four"
the second place it appears and inserting in lieu thereof "nine".
SEC. 1602. "36 USC 125b" PACIFIC WAR MEMORIAL AND OTHER HISTORICAL
AND MEMORIAL SITES ON CORREGIDOR IN THE REPUBLIC OF THE PHILIPPINES.
(a) OPERATION BY ABMC. -- Subject to subsection (b) and to the
agreement referred to in such subsection, the American Battle Monuments
Commission shall restore, operate, and maintain the Pacific War Memorial
and other historical and memorial sites on Corregidor in the Republic of
the Philippines.
(b) CONDITION. -- The Commission may carry out this section only
after an agreement has been entered into between the Republic of the
Philippines and the United States with respect to the restoration,
operation, and maintenance of the Memorial and other historical and
memorial sites referred to in subsection (a).
(c) PERSONNEL. -- The Commission may employ personnel as may be
necessary to carry out this section.
(d) USE OF OTHER AGENCIES. -- Departments, agencies, and other
instrumentalities of the United States are authorized to assist the
Commission, on a reimbursable basis, in carrying out this section.
(e) FUNDING. -- The American Battle Monuments Commission shall carry
out this section with private funds except to the extent funds are
appropriated pursuant to subsection (h).
(f) AUTHORITY TO SOLICIT FUNDS. -- For the purpose of carrying out
this section, the Commission may solicit and accept private
contributions and shall deposit such contributions in the fund
established by subsection (g).
(g) FUND. -- (1) There is hereby established in the Treasury a fund
which shall be available to the American Battle Monuments Commission
only for carrying out this section. The fund shall consist of --
(A) amounts deposited into, and interest and proceeds credited
to, the fund under paragraph (2); and
(B) obligations obtained under paragraph (3).
(2) The Chairman of the Commission shall deposit into the fund the
amounts that are accepted under subsection (f). The Secretary of the
Treasury shall credit to the fund the interest on, and the proceeds from
sale or redemption of, obligations held in the fund.
(3) The Secretary of the Treasury shall invest any portion of the
fund that, as determined by the Chairman of the Commission, is not
required to meet current expenses. Each investment shall be made in an
interest-bearing obligation of the United States or an obligation
guaranteed as to principal and interest by the United States that, as
determined by the Chairman of the Commission, has a maturity suitable
for the fund.
(4) Amounts in the fund that are in excess of the costs of carrying
out this section, as determined by the Chairman of the Commission, shall
be deposited in the Treasury as miscellaneous receipts to reimburse the
United States for funds appropriated pursuant to subsection (h).
(h) AUTHORIZATION OF FUNDING. -- There are hereby authorized to be
appropriated --
(1) $6,000,000 for site preparation, design, planning,
construction, and associated administrative costs for the
restoration of the Memorial and other historical and memorial
sites referred to in subsection (a); and
(2) such sums as may be necessary for the operation and
maintenance of such Memorial and other historical and memorial
sites.
Approved November 18, 1988.
(2) in paragraph (2), by inserting "(beginning in 1993"
LEGISLATIVE HISTORY -- S. 11 (H.R. 5288):
HOUSE REPORTS: No. 100-963, Pt. 1, accompanying H.R. 5288 (Comm. on
Veterans' Affairs).
SENATE REPORTS: No. 100-418 (Comm. on Veterans' Affairs).
CONGRESSIONAL RECORDS, Vol. 134 (1988): July 11, considered and
passed Senate. Oct. 3, H.R. 5288 considered and passed House;
proceedings vacated and S. 11, amended, passed in lieu. Oct. 18, Senate
concurred in certain House amendment with an amendment and disagreed to
another. Oct. 19, House receded and concurred in Senate amendment with
amendments. Oct. 20, Senate concurred in House amendments.
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 24 (1988): Nov.
18, Presidential statement.
Public Law 100-686, 102 Stat. 4104
Whereas the Actors' Fund of America has given over 100 years of
dedicated service to the entire entertainment world;
Whereas the Fund's services are not restricted to actors but are
available to any bona fide professional in the entertainment community
who works in any capacity in the areas of ballet, opera, circus,
variety, motion pictures, radio, television, and the legitimate stage;
Whereas the Actors' Fund provides its members with a wide variety of
services and benefits, including financial assistance, educational and
career guidance, blood banks, funeral and burial assistance,
psychological counseling, home nursing care, and the use of the renowned
Actors' Fund Home, a retirement residence in Englewood, New Jersey;
Whereas the Fund's new extended facility provides members with the
finest possible nursing care;
Whereas the efforts of the officers and board members of the Actors'
Fund have been aided by the cooperation and financial support of members
of the entertainment community, who support the Fund with bequests,
donations, and endowments, and by giving special performances for the
benefit of the Fund; and
Whereas since 1882 the Actors' Fund of America has been actively and
productively concerned with the dignity and well-being of all members of
the entertainment community: Now, therefore, be it
Resolved by the Senate and House of Representatives of the United
States of America in Congress assembled, That April 1989 is designated
as "Actors' Fund of America Appreciation Month", and the President is
authorized and requested to issue a proclamation saluting the
accomplishments of the Fund and calling upon the people of the United
States to observe the month with appropriate ceremonies and activities.
Approved November 18, 1988.
LEGISLATIVE HISTORY -- H.J. Res. 650:
CONGRESSIONAL RECORD, Vol. 134 (1988): Sept. 16, considered and
passed House. Oct. 21, considered and passed Senate.
Public Law 100-685, 102 Stat. 4083
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, That this Act may be
cited as the "National Aeronautics and Space Administration
Authorization Act, Fiscal Year 1989".
SEC. 101. "42 USC 2451 note" Congress finds that --
(1) in accordance with section 106 of the National Aeronautics
and Space Administration Authorization Act of 1988 (Public Law
100-147), a space station, hereafter referred to as the United
States International Space Station, shall be constructed in order
to establish a permanent presence for man in space for the
following purposes --
(A) the conduct of scientific experiments, applications
experiments, and engineering experiments;
(B) the servicing, rehabilitation, and construction of
satellites and space vehicles;
(C) the development and demonstration of commercial products
and processes; and
(D) the establishment of a space base for other civilian and
commercial space activities including an outpost for further
exploration of the solar system;
(2) expendable launch vehicles should be used to launch those
payloads that do not require the presence of man;
(3) the space shuttle launches should be used to fulfill the
Nation's needs for manned access to space;
(4) preeminence in space and aeronautics is key to the national
security and economic well being of the United States;
(5) United States space policy needs long-range goals and
direction in order to provide understanding for near-term space
projects and programs;
(6) over the next five years, the National Aeronautics and
Space Administration, hereafter referred to as the
"Administration", should pursue leadership in science through an
aggressive set of major and moderate missions while maintaining a
robust series of cost effective missions that can provide frequent
flight opportunities to the scientific community;
(7) over the next five years the Administration should prepare
for the transition to the United States International Space
Station of those science and technology programs that can be most
efficiently and effectively conducted on that facility;
(8) the Administration should encourage the United States
private sector investment in space and, to the maximum extent
practicable provide frequent flight opportunities for the
development of technologies, processes and products that benefit
from the space environment;
(9) the Administration should enhance the existing space
transportation capability through a robust mixed fleet of manned
and unmanned vehicles in order to increase the reliability,
productivity, and efficiency and reduce the cost of the Nation's
access to space;
(10) the United States faces an increasingly successful foreign
challenge to its traditional preeminent position in aeronautics
which is rapidly reducing its lead in both civil and military
aircraft;
(11) NASA's personnel are an integral component and resource
for the Nation's space program, and an innovative personnel system
should be developed;
(12) the establishment of a permanent presence in space leading
ultimately to space settlements is fully consistent with the goals
of the National Aeronautics and Space Act of 1958;
(13) the United States civil space activities should contribute
significantly to enhancing the Nation's scientific and
technological leadership, economy, pride, and sense of well-being,
as well as United States world prestige and leadership;
(14) civil sector activities should be comprised of a balanced
strategy of research, development, operations, and technology for
science, exploration, and appropriate applications;
(15) assured access to space, sufficient to achieve all United
States space goals, is an essential element of United States space
policy, and the United States space transportation systems must
provide a balanced, robust, and flexible capability with
sufficient resiliency to allow continued operation despite
failures in any single system;
(16) the goals of the United States space transportation system
are --
(A) to achieve and maintain safe and reliable access to,
transportation in, and return from, space;
(B) to exploit the unique attributes of manned and unmanned
launch and recovery systems;
(C) to encourage, to the maximum extent feasible, the
development and use of United States private sector space
transportation capabilities; and
(D) to reduce the costs of space transportation and related
services;
(17) recognizing that communications advancements are critical
to all United States space activities, the Administration should
continue research and development efforts for future advances in
space communications technologies;
(18) the goal of aeronautical research and technology
development and validation activities should be to contribute to a
national technology base that will enhance United States
preeminence in civil and military aviation and improve the safety
and efficiency of the United States air transportation system;
and
(19) aeronautical research and technology development and
validation activities should --
(A) emphasize emerging technologies with potential for
breakthrough advances;
(B) consist of --
(i) fundamental research in all aeronautical disciplines, aimed
at greater understanding of aeronautical phenomena and development
of new aeronautical concepts; and
(ii) technology development and validation activities aimed at
laboratory-scale development and proof-of-concept demonstration of
selected concepts with high payoff potential;
(C) assure maintenance of robust aeronautical laboratories,
including a first-rate technical staff and modern national
facilities for the conduct of research and testing activities;
(D) be conducted with the close, active participation of the
United States aircraft industry so as to accelerate the transfer
of research results to aviation products;
(E) include providing technical assistance and facility support
to other government agencies and United States industry;
(F) include conducting joint projects with other government
agencies where such projects contribute materially to the goals
set forth in this section;
(G) assure strong participation of United States universities
both in carrying out aeronautical research and training future
aeronautical research personnel; and
(H) be conducted, where practical, so that United States
industry receives research results before foreign competitors.
SEC. 102. In consideration of Senate Report No. 100-429 and House of
Representatives Report No. 100-650, the Administrator shall, by March
15, 1989, submit to the Committee on Science, Space, and Technology of
the House of Representatives and the Committee on Commerce, Science, and
Transportation of the Senate a 5-year Capital Development Plan
including, but not limited to, the following:
(1) Economic assumptions and budgetary requirements for
fulfilling the objectives of such plan.
(2) Estimates of total expenditures needed to maintain the
operation of the national launch systems, related tracking and
data services, civil service requirements, and all other current
services.
(3) A detailed operating plan for fiscal year 1989 and program
plans for fiscal years 1990 through 1993 setting forth specific
program priorities, objectives, schedules, and milestones.
(4) Estimates of total projected investments in space hardware,
facilities, and other capital improvements needed to fulfill the
objectives of such plan.
SEC. 103. It is the sense of the House of Representatives that the
budget for the National Aeronautics and Space Administration should
increase substantially over the five years following the date of
enactment of this Act with a goal of at least 15 percent growth per
annum in order to --
(1) rededicate the United States space program to the goal of
leadership in critical areas of space science, space technology,
space exploration, aeronautics, space applications, and space
commercialization;
(2) reverse the dramatic decline in real spending for such
program since the achievements of the Apollo program;
(3) forge a robust national space program that maintains a
healthy balance between manned and unmanned space activities and
recognizes the mutually reinforcing benefits of both;
(4) continue with the development and deployment of a
permanently manned space station; and
(5) enhance United States preeminence in civil and military
aviation and improve the safety and efficiency of the United
States air transportation system.
SEC. 104. "31 USC 1105 note" Commencing in fiscal year 1990 and
every year thereafter, the President shall submit to Congress a budget
request for the National Aeronautics and Space Administration for the
immediate fiscal year and the following fiscal year, and include budget
estimates for the third fiscal year.
SEC. 201. (a) There is hereby authorized to be appropriated to the
National Aeronautics and Space Administration for fiscal year 1989,
except as otherwise stated:
(1) For "Research and development" for the following programs:
(A) United States International Space Station, $900,000,000 for
fiscal year 1989, $2,130,200,000 for fiscal year 1990, and
$2,912,500,000 for fiscal year 1991.
(B)(i) Space transportation capability development,
$606,600,000.
(ii) In addition to the funds authorized pursuant to this
section, there are authorized to be appropriated for space
transportation capability development any additional funds
transferred to the Administration from any other agency pursuant
to a fiscal year 1989 appropriations Act.
(C) Physics and astronomy, $761,600,000.
(D) Life sciences, $91,700,000.
(E) Planetary exploration, $410,300,000.
(F) Space applications, $628,300,000.
(G) Technology utilization, $19,100,000; provided, however,
that the Administrator shall contract for implementation of the
Industrial Applications Center located in Oklahoma through the
National Aeronautics and Space Administration's Rural Technology
Applications Team.
(H) Commercial use of space, $38,800,000.
(I) Aeronautical research and technology, $404,200,000.
(J) Transatmospheric research and technology, $69,400,000.
(K) Space research and technology, $350,900,000.
(L) Safety, reliability, and quality assurance, $22,400,000.
(M) Tracking and data advanced systems, $18,800,000.
(2) For "Space flight, control and data communications" for the
following programs:
(A) Space shuttle production and operational capability,
$1,335,500,000, of which $51,000,000 is provided for the advanced
solid rocket motor program.
(B)(i) Space transportation operations, $2,365,400,000,
including such funds as may be necessary to ensure the
availability of ammonium perchlorate for the production of solid
rocket motors.
(ii) In addition to the funds authorized pursuant to this
section, there are authorized to be appropriated for space
transportation operations any additional funds transferred to the
National Aeronautics and Space Administration from any other gency
pursuant to a fiscal year 1989 appropriations Act.
(C) Space and ground network communications and data systems,
$985,300,000.
(3) For "Construction of facilities", including land
acquisition as follows:
(A) Modifications to processing Technology Facility for Space
Station, Marshall Space Flight Center, $3,700,000.
(B) Construction of Addition for Space Systems Automated
Integration and Assembly Facility, Johnson Space Center,
$9,200,000.
(C) Replacement of High Pressure Gas Storage Vessels, National
Space Technology Laboratory, $3,500,000.
(D) Increase Chiller Capacity, LC-39 Utility Annex, Kennedy
Space Center, $2,300,000.
(E) Rehabilitation of PAD, A, L-C 39, Kennedy Space Center,
$4,600,000.
(F) Refurbish Atmospheric Reentry Materials and Structures
Evaluation Facility, Johnson Space Center, $4,900,000.
(G) Modification for Advanced Engine Development, Test Stand
116, Marshall Space Flight Center, $13,500,000.
(H) Modifications to Orbiter Modification and Refurbishment
Facility (OMRF) for Safing and Deservicing, Kennedy Space Center,
$2,800,000.
(I) Modification to the X-Ray Calibration Facility (XRCF),
Marshall Space Flight Center, $11,400,000.
(J) Construction of Auxiliary Chiller Facility, Johnson Space
Center, $7,800,000.
(K) Modernization of Space Environment Simulator, Goddard Space
Flight Center, $2,800,000.
(L) Modifications for Utility Reliability, Goddard Space Flight
Center, $3,100,000.
(M) Refurbishment of 25-Foot Space Simulator, Jet Propulsion
Laboratory, $12,000,000.
(N) Repair and Modification of 12-Foot Pressure Wind Tunnel,
Ames Research Center, $36,500,000.
(O) Rehabilitation and Modifications to 10x10 Supersonic Wind
Tunnel, Lewis Research Center, $14,500,000.
(P) Refurbishment to Hypersonic Facilities Complex, Langley
Research Center, $12,800,000.
(Q) Refurbishment of Electric Power Laboratory, Lewis Research
Center, $6,100,000.
(R) Construction of National Resource Protection at various
locations, $2,600,000.
(S) Repair of facilities at various locations, not in excess of
$750,000 per project, $27,000,000.
(T) Rehabilitation and modification of facilities at various
locations, not in excess of $750,000 per project, $34,000,000.
(U) Minor construction of new facilities and additions to
existing facilities at various locations, not in excess of
$500,000 per project, $9,000,000.
(V) Environmental compliance and restoration, $26,000,000.
(W) Facility planning and design not otherwise provided for,
$20,000,000.
(X) Construction of an advanced solid rocket motor facility,
$27,000,000.
Of the amounts authorized pursuant to subparagraphs (S) through
(W), the Administrator may obligate up to $5,600,000 in order to
expand the Launch Complex-39 Operation Support Building at the
Kennedy Space Center. Notwithstanding subparagraphs (A) through
(X), the total amount authorized by this paragraph shall not
exceed $290,100,000.
(4) For "Research and program management", $1,915,000,000.
(b) Notwithstanding the provisions of subsection (e), appropriations
authorized in this title for "Research and development" and "Space
flight, control and data communications" may be used for (1) any items
of a capital nature (other than acquisition of land) which may be
required at locations other than installations of the Administration for
the performance of research and development contracts, and (2) for
grants to nonprofit institutions of higher education, or to nonprofit
organizations whose primary purpose is the conduct of scientific
research, for purchase or construction of additional research
facilities; and title to such facilities shall be vested in the United
States unless the Administrator of the National Aeronautics and Space
Administration (hereafter in this title referred to as the
'Administrator') determines that the national program of aeronautical
and space activities will best be served by vesting title in any such
grantee institution or organization. Each such grant shall be made
under such conditions as the Administrator shall determine to be
required to ensure that the United States will receive therefrom benefit
adequate to justify the making of that grant. None of the funds
appropriated for "Research and development" and "Space flight, control
and data communications" pursuant to this title may be used in
accordance with this subsection for the construction of any major
facility, the estimated cost of which, including collateral equipment,
exceeds $500,000, unless the Administrator or the Administrator's
designee has notified the President of the Senate and the Speaker of the
House of Representatives and the Committee on Commerce, Science, and
Transportation of the Senate and the Committee on Science, Space, and
Technology of the House of Representatives of the nature, location, and
estimated cost of such facility.
(c) When so specified and to the extent provided in an appropriation
Act, "42 USC 2459a" (1) any amount appropriated for "Research and
development", for "Space flight, control and data communications", or
for "Construction of facilities" may remain available without fiscal
year limitation, and (2) maintenance and operation of facilities, and
support services contracts may be entered into under the "Research and
program management" appropriation for periods not in excess of twelve
months beginning at any time during the fiscal year.
(d) Appropriations made pursuant to subsection (a)(4) may be used,
but not to exceed $35,000, for scientific consultation or extraordinary
expenses upon the approval or authority of the Administrator, and the
Administrator's determination shall be final and conclusive upon the
accounting officers of the Government.
(e)(1) Funds appropriated pursuant to subsection (a)(1), (2), and (4)
may be used for the construction of new facilities and additions to,
repair, rehabilitation, or modification of existing facilities, provided
the cost of each such project, including collateral equipment, does not
exceed $100,000.
(2) Funds appropriated pursuant to subsection (a)(1) and (2)
may be used for unforeseen programmatic facility project needs, provided
the cost of each such project, including collateral equipment, does not
exceed $500,000.
(3) Funds appropriated pursuant to subsection (a)(4) may be used for
such work on facilities controlled by the General Services
Administration, provided the cost of each such project, including
collateral equipment, does not exceed $500,000.
(f) Of the amounts authorized pursuant to subsection (a)(1) through
(4), up to $8,000,000 may be made available for the National Space Grant
College and Fellowship program established under the National
Aeronautics and Space Administration Authorization Act of 1988 (Public
Law 100-147).
SEC. 202. Authorization is hereby granted whereby any of the amounts
prescribed in section 201(a)(3)(A) through (X) --
(1) may be varied upward 10 percent, in the discretion of the
Administrator or the Administrator's designee, or
(2) following a report by the Administrator or the
Administrator's designee to the Committee on Science, Space, and
Technology of the House of Representatives and the Committee on
Commerce, Science, and Transportation of the Senate on the
circumstances of such, may be varied upward 25 percent to meet
unusual cost variations.
The total cost of all work authorized under paragraphs (1) and (2)
shall not exceed the total of the amounts specified in section 201(a)
(3)(A) through (X).
SEC. 203. Where the Administrator determines that new developments
or scientific or engineering changes in the national program of
aeronautical and space activities have occurred; and that such changes
require the use of additional funds for the purposes of construction,
expansion, or modification of facilities at any location; and that
deferral of such action until the enactment of the next authorization
Act would be inconsistent with the interest of the Nation in
aeronautical and space activities; the Administrator may transfer not
to exceed 1/2 of 1 percent of the funds appropriated pursuant to section
201(a)(1) or (2) to the "Construction of facilities" appropriation for
such purposes. The Administrator may also use up to $10,000,000 of the
amounts authorized under section 201(a)(3) for such purposes. The funds
so made available pursuant to this section may be expended to acquire,
construct, convert, rehabilitate, or install permanent or temporary
public works, including land acquisition, site preparation,
appurtenances, utilities, and equipment. No such funds may be obligated
until a period of 30 days has passed after the Administrator or the
Administrator's designee has transmitted to the Committee on Science,
Space and Technology of the House of Representatives and the Committee
on Commerce, Science, and Transportation of the Senate a written report
describing the nature of the construction, its cost, and the reasons
therefor.
SEC. 204. Notwithstanding any other provision of this Act --
(1) no amount appropriated pursuant to this Act may be used for
any program deleted by the Congress from requests as originally
made to either the House Committee on Science, Space, and
Technology or the Senate Committee on Commerce, Science, and
Transportation;
(2) no amount appropriated pursuant to this Act may be used for
any program in excess of the amount actually authorized for that
particular program by section 201(a)(1), (2), and (4); and
(3) no amount appropriated pursuant to this Act may be used for
any program which has not been presented to either such committee,
unless a period of thirty days has passed after the receipt by the
Speaker of the House of Representatives and the President of the Senate
and each such committee, of notice given by the Administrator or his
designee containing a full and complete statement of the action proposed
to be taken and the facts and circumstances relied upon in support of
such proposed action.
SEC. 205. "42 USC 2459 note" It is the sense of the Congress that it
is in the national interest that consideration be given to the widest
geographical distribution of Federal research funds whenever feasible,
and that the National Aeronautics and Space Administration should
explore ways and means of distributing its research and development
funds whenever feasible.
SEC. 206. Section 304 of the National Aeronautics and Space Act of
1958 "42 USC 2456a" is amended by adding at the end the following new
subsection:
"(f) Under regulations to be prescribed by the Administrator and
approved by the Attorney General of the United States, those employees
of the Administration and its contractors and subcontractors authorized
to carry firearms under subsection (e) may arrest without warrant for
any offense against the United States committed in their presence, or
for any felony cognizable under the laws of the United States if they
have reasonable grounds to believe that the person to be arrested has
committed or is committing such felony. Persons granted authority to
make arrests by this subsection may exercise that authority only while
guarding and protecting property owned or leased by, or under the
control of, the United States under the administration and control of
the Administration or one of its contractors or subcontractors, at
facilities owned by or contracted to the Administration.".
SEC. 207. If, after evaluation of proposals received in response to
the request for proposals for an advanced solid rocket motor required by
section 121(b) of the National Aeronautics and Space Administration
Authorization Act of 1988 (Public Law 100-147; 101 Stat. 868), the
Administrator determines that it is in the best interests of the United
States to select a proposal offering a privately financed and
non-Government-owned production facility to be constructed on a
Government or non-Government site, funds otherwise authorized in section
201(a)(3)(X) of this Act for the construction of a Government-owned
production facility on a Government-owned site shall be available,
without fiscal year limitation, for that purpose.
SEC. 208. (a) The Administrator shall contract with the National
Academy of Sciences to undertake a review of the Nation's microgravity
research capability and issue a report addressing --
(1) the scientific and commercial value to the Nation of
achieving a man-tended capability through a Commercially Developed
Space Facility (CDSF) prior to man-tended operations of the space
station;
(2) the technical characteristics of a CDSF that would enable
its optimum use;
(3) the anticipated microgravity research and manufacturing
requirements of commercial users and the Government;
(4) the extent to which existing and proposed facilities could
support these requirements;
(5) the likelihood that a CDSF would become commercially
self-sustaining and an estimate of when that could occur;
(6) the state of space automation technology and its relevance
to the capabilities required for a CDSF;
(7) how a decision by the Government to lease facilities on a
CDSF might affect the viability of other proposed commercial
microgravity research facilities; and
(8) the effect a commitment to the CDSF would have on the
current space transportation system launch schedule.
(b) The Administrator shall contract with the National Academy of
Public Administration to --
(1) estimate the developmental, operational, and other costs to
the Government associated with a CDSF;
(2) consider the practicability of various financial options by
which the Government could participate in a CDSF, including
leasing, lease-purchase, and purchase;
(3) consider, as regards the lease option, instead of providing
for a flat level of lease obligations, the practicability of
reducing on a yearly basis the level of Government lease
operations during the years of operation of a CDSF; and
(4) consider, as regards the lease option, the practicability
of making the minimum levels of Government lease obligations in
the years of operation of a CDSF contingent on the attachment, by
the CDSF operator, of certain minimum levels of irrevocable
contract commitments with entities other than the United States
Government.
(c) Based on the above reports, the Administrator shall provide a
report to the House Committee on Science, Space, and Technology and the
Senate Committee on Commerce, Science, and Transportation with policy
options related to a CDSF and microgravity facilities, to be delivered
no later than May 15, 1989.
SEC. 209. (a) The Administrator shall award to a domestic firm a
contract that, under the use of competitive procedures, would be awarded
to a foreign firm, if --
(1) the final product of the domestic firm will be completely
assembled in the United States;
(2) when completely assembled, not less than 50 percent of the
final product of the domestic firm will be domestically produced;
and
(3) the difference between the bids submitted by the foreign
and domestic firms is not more than 6 percent.
(b) This section shall not apply to the extent to which --
(1) such applicability would not be in the public interest;
(2) compelling national security considerations require
otherwise; or
(3) the United States Trade Representative determines that such
an award would be in violation of the General Agreement on Tariffs
and Trade or an international agreement to which the United States
is a party.
(c) For purposes of this section --
(1) the term "domestic firm" means a business entity that is
organized under the laws of the United States and that conducts
business operations in the United States; and
(2) the term "foreign firm" means a business entity not
described in paragraph (1).
(d) This section shall apply only to contracts for which --
(1) amounts are made available pursuant to this Act; and
(2) solicitations for bids are issued after the date of the
enactment of this Act.
SEC. 210. (a) It is the sense of Congress that the Administrator
should establish a multilateral working group of representatives from
the space agencies of appropriate spacefaring nations, including the
Union of Soviet Socialist Republics, and from appropriate international
entities, to explore the technological and procedural principles that
would be necessary to achieve an international space docking capability,
and the establishment of international docking interface standards for
addressing requirements for compatible interfaces for docking,
communications, and life support systems, and also space rescue missions
which could particularly benefit from the use of such a capability.
(b) Within 6 months after the date of the enactment of this Act, the
Administrator shall advise the Congress on the status of establishing an
International Space Docking Working Group as recommended in subsection
(a).
SEC. 211. The National Space Technology Laboratories of the National
Aeronautics and Space Administration located in Bay St. Louis,
Mississippi, is named and designated as the "John C. Stennis Space
Center". Any reference in a law, map, regulation, document, record, or
other paper of the United States to such center shall be held to be a
reference to the "John C. Stennis Space Center".
SEC. 212. The Administrator, in coordination with the Secretary of
Energy, for the purpose of outer solar system exploration, may request
and receive such quantities of nuclear fuel as are necessary only for
the specific mission, on terms and at costs as may be agreed upon.
Nothing in this section authorizes the providing of such nuclear fuel on
those terms for any other purpose or its diversion for any other use.
SEC. 213. Section 24 of the Commercial Space Launch Act (49 App. U.
S.C. 2623) is amended by adding at the end thereof the following:
"There is authorized to be appropriated to the Secretary to carry out
this Act $3,827,000 for fiscal year 1989.".
SEC. 214. Section 102(c) of the National Aeronautics and Space Act
of 1958 (42 U.S.C. 2451(c)) is amended --
(1) by striking "and" at the end of paragraph (7);
(2) by striking the period at the end of paragraph (8) and
inserting in lieu thereof "; and"; and
(3) by adding at the end the following new paragraph:
"(9) The preservation of the United States preeminent position
in aeronautics and space through research and technology
development related to associated manufacturing processes.".
SEC. 215. 42 USC 2459 note" (a) No funds authorized to be
appropriated under this Act, or under any other Act authorizing
appropriations for fiscal year 1989 through 1993 for the Administration,
shall be obligated or expended unless the Administration has in place,
and will continue to administer in good faith, a written policy designed
to ensure that all of its workplaces are free from the illegal use,
possession, or distribution of controlled substances (as defined in the
Controlled Substances Act) by the officers and employees of the
Administration.
(b) No funds authorized to be appropriated to the Administration for
fiscal years 1989 through 1993 shall be available for payment in
connection with any grant, contract, or other agreement, unless the
recipient of such grant, contractor, or party to such agreement, as the
case may be, has in place and will continue to administer in good faith
a written policy, adopted by the board of directors or other government
authority of such recipient, contractor, or party, satisfactory to the
Administrator of the Administration, designed to ensure that all of the
workplaces of such recipient, contractor, or party are free from the
illegal use, possession, or distribution of controlled substances (as
defined in the Controlled Substances Act) by the officers and employees
of such recipient, contractor, or party.
(c) The provisions of this section, and the provisions of the Steel
and Aluminum Energy Conservation and Technology Competitiveness Act of
1988, the National Institute of Standards and Technology Authorization
Act for Fiscal Years 1989, the National Science Foundation Authorization
Act for Fiscal Years 1989 and 1990, and the National Nutrition
Monitoring and Related Research Act of 1988, relating to a drug-free
workplace, shall not be effective until January 16, 1989.
SEC. 216. (a) The Administrator may, without regard to section 321
of the Act of June 30, 1932 (40 U.S.C. 303b), and on such terms as the
Administrator may deem to be appropriate, lease, for a term not to
exceed 99 years, real property located at the Lewis Research Center in
Cuyahoga County, to the State of Ohio, or a subdivision or agent
thereof, or to a corporation or foundation organized exclusively for
educational or scientific purposes which is exempt from taxation under
section 501(c)(3) of the Internal Revenue Code of 1986 (26 U.S.C. 501
(c)(3), or to any other not-for-profit entity, for the purpose of the
construction and operation thereon of an Institute whose purpose is the
conduct of aeronautical and space research, the education and training
of aeronautical and space engineers, and the transfer of aeronautical
and space technology between the United States public and private
sectors. This lease shall be renewable for additional periods in the
discretion of the Administrator.
(b) Subject to the availability of appropriations therefor, the
Administrator may enter into agreements, on such terms as the
Administrator may deem to be appropriate, with the State of Ohio, or a
subdivision or agent therefor, or with a corporation or foundation
organized exclusively for educational or scientific purposes which is
exempt from taxation under section 501(c)(3) of the Internal Revenue
Code of 1986 (26 U.S.C. 501(c)(3)), or to any other not-for-profit
entity, pursuant to which the Administration may provide administrative,
maintenance, instructional, and other appropriate support, with or
without reimbursement, to an Institute whose purpose is the conduct of
aeronautical and space research, the education and training of
aeronautical and space engineers, and the transfer of aeronautical and
space technology between the United States public and private sectors.
(c) The Administrator may redelegate the authority conferred in
subsections (a) and (b), to such subordinate officers and employees as
the Administrator may designate.
SEC. 217. "42 USC 2451 note" (a) The Congress declares that the
extension of human life beyond Earth's atmosphere, leading ultimately to
the establishment of space settlements, will fulfill the purposes of
advancing science, exploration, and development and will enhance the
general welfare.
(b) In pursuit of the establishment of an International Space Year in
1992 pursuant to Public Law 99-170, the United States shall exercise
leadership and mobilize the international community in furtherance of
increasing mankind's knowledge and exploration of the solar system.
(c) Once every 2 years after the date of the enactment of this Act,
the National Aeronautics and Space Administration shall submit a report
to the President and to the Congress which --
(1) provides a review of all activities undertaken under this
section including an analysis of the focused research and
development activities on the Space Station, Moon, and other
outposts that are necessary to accomplish a manned mission to
Mars;
(2) analyzes ways in which current science and technology can
be applied in the establishment of space settlements;
(3) identifies scientific and technological capacity for
establishing space settlements, including a description of what
steps must be taken to develop such capacity;
(4) examines alternative space settlement locations and
architectures;
(5) examines the status of technologies necessary for
extraterrestrial resource development and use and energy
production;
(6) reviews the ways in which the existence of space
settlements would enhance science, exploration, and development;
(7) reviews mechanisms and institutional options which could
foster a broad-based plan for international cooperation in
establishing space settlements;
(8) analyzes the economics of financing space settlements,
especially with respect to private sector and international
participation;
(9) discusses sociological factors involved in space settlement
such as psychology, political science, and legal issues; and
(10) addresses such other topics as the National Aeronautics
and Space Administration considers appropriate.
SEC. 218. No civil space station authorized under section 201(a)(
1)(A) of this Act may be used to carry or place in orbit any nuclear
weapon or any other weapon of mass destruction, to install any such
weapon on any celestial body, or to station any such weapon in space in
any other manner. This civil space station may be used only for
peaceful purposes.
SEC. 219. Section 201 of the National Institute of Standards and
Technology Authorization Act "15 USC 3704 note" for Fiscal Year 1989 is
amended by adding at the end the following new subsection:
"(f) COMMERCIAL SPACE PROGRAMS. -- Nothing in this section
authorizes the Department to establish an Office of Commercial Space
Programs or to place such an office into the Technology Administration
without prior authorization of the Congress.".
SEC. 301. The Administrator should develop an aggressive and
balanced plan of science and applications including but not limited to
--
(1) the robotic exploration of other solar system bodies;
(2) the study and observation of other celestial bodies and
phenomena at spectral wave lengths and resolutions that will
enhance our understanding of the universe;
(3) the enhanced study and monitoring of Earth as an
interacting system;
(4) the development of a full understanding of the behavior of
biological systems in the space environment; and
(5) the development of a full understanding of physics and
chemistry of the macroscopic behavior of materials in the
microgravity environment.
SEC. 302. The Administrator should develop an aggressive and
balanced plan of space research and technology including but not limited
to --
(1) fundamental and innovative research as the seedbed for
enabling technologies for future civil space missions;
(2) focused technology programs keyed to long-range, high
priority civil space missions;
(3) technology research and demonstrations, extending
laboratory activities from Earth to space-based facilities such as
the Space Shuttle, Space Station, orbital platforms, and
eventually the Moon and other planetary bodies; and
(4) cooperation with, and service to, other space program
sectors with advanced technology and use of ground and space-based
facilities.
SEC. 303. The Administrator should develop a plan in pursuit of the
continued manned exploration of the solar system and low-Earth orbit,
including but not limited to --
(1) the establishment of an operational United States
International Space Station that shall be permanently manned; and
(2) the development of those technologies and systems required
for manned exploration of space beyond earth orbit.
SEC. 304. The Administrator should develop a plan to improve the
manned and unmanned space transportation system including --
(1) the continued enhancement of the space shuttle and its
ground system in order to increase safety and efficiency and
reduce costs;
(2) the completion of the development of a heavy-life
expendable launch vehicle if consistent with mission requirements
of the Administration, the Department of Defense, and other
Federal agencies; and
(3) the initiation of preliminary design activities for the
next generation of a manned space launch system beyond the space
shuttle.
SEC. 305. The Administrator should develop a plan in pursuit of --
(1) a vigorous program in aeronautics research and technology
development and validation, emphasizing emerging technologies with
the potential for breakthrough advances to enhance United States
preeminence in civil and military aviation; and
(2) in cooperation with the Department of Defense, a technology
development program (with an option for a flight demonstration in
1995) to improve the feasibility of an air-breathing hypersonic
aerospaceplane capable of single-stage-to-orbit operation and
hypersonic cruise in the atmosphere.
SEC. 401. There are authorized to be appropriated to the Department
of Commerce to enable the National Oceanic and Atmospheric
Administration to carry out the operations and research duties of the
National Weather Service under law, $279,000,000 for fiscal year 1989.
Moneys appropriated pursuant to this authorization shall be used to fund
those duties relating to National Weather Service operations and
research specified by the Act of 1890, the Act of 1974, and any other
law involving such duties. Such duties include meteorological,
hydrological, and oceanographic public warnings and forecasts, as well
as applied research in support of such warnings and forecasts.
SEC. 402. (a) There are authorized to be appropriated to the
Department of Commerce to enable the National Oceanic and Atmospheric
Administration to carry out its public warning and forecast systems
duties under law, $98,500,000 for fiscal year 1989. Moneys appropriated
pursuant to this authorization shall be used to fund those duties
relating to public warnings and forecast systems specified by the Act of
1890, the Act of 1947, and any other law involving such duties. Such
duties include the development, acquisition, and implementation of major
public warning and forecast systems.
(b) In procuring information processing and telecommunications
services of the National Oceanic and Atmospheric Administration for the
Advanced Weather Interactive Processing System, the Secretary of
Commerce (hereafter in this title referred to as the "Secretary") may
provide, in the contract or contracts for such services, for the payment
for contingent liability of the Federal Government which may accrue in
the event that the Government decides to terminate the contract before
the expiration of the multiyear contract period. Such contract or
contracts for such services shall limit the payments which the Federal
Government is allowed to make under such contract or contracts to
amounts provided in advance in appropriation Acts.
SEC. 403. (a) There are authorized to be appropriated to the
Department of Commerce to enable the National Oceanic and Atmospheric
Administration to carry out its climate and air quality research duties
under law, $51,000,000 for fiscal year 1989. Moneys appropriated
pursuant to this authorization shall be used to fund those duties
relating to climate and air quality research specified by the Act of
1890, the Act of 1947, and any other law involving such duties. Such
duties include the interannual and seasonal climate research long-term
climate and air quality research, and the National Climate Program.
(b) Of the sums authorized under subsection (a) of this section
$3,238,000 for fiscal year 1989 are authorized to be appropriated for
the activities under the National Climate Program Act (15 U.S.C. 2901 et
seq.).
(c) Of the sums authorized under subsection (a) of this section,
$12,000,000 for fiscal year 1989 are authorized to be appropriated to
establish a program for the purposes of studying climate and global
change. Such program shall augment and integrate existing programs of
the National Oceanic and Atmospheric Administration and shall include
global observations, monitoring, and data and information management
relating to the study of changes in the Earth's climatic system,
fundamental research on critical oceanic and atmosphere processes, and
climate prediction and diagnostics.
SEC. 404. There are authorized to be appropriated to the Department
of Commerce to enable the National Oceanic and Atmospheric
Administration to carry out its atmospheric research duties under law,
$44,000,000 for fiscal year 1989. Moneys appropriated pursuant to this
authorization shall be used to fund those duties relating to atmospheric
research specified by the Act of 1890 and by any other law involving
such duties. Such duties include research for developing improved
production capabilities for atmospheric processes, as well as
solar-terrestrial services and research.
SEC. 405. (a) There are authorized to be appropriated to the
Department of Commerce to enable the National Oceanic and Atmospheric
Administration to carry out its satellite observing systems duties under
law, $383,000,000 for fiscal year 1989. Moneys appropriated pursuant to
this authorization shall be used to fund those duties relating to data
and information services specified by the Act of 1890 and by any other
law involving such duties. Such duties include spacecraft procurement,
launch, and associated ground station system changes involving polar
orbiting and geostationary environmental satellites and land
remote-sensing satellites, as well as the operation of such satellites.
(b) The authorization provided for under subsection (a) of this
section shall be in addition to moneys authorized under the Land
Remote-Sensing Commercialization Act of 1984 (15 U.S.C. 4201 et seq.)
for the purpose of carrying out such duties relating to satellite
observing systems.
SEC. 406. There are authorized to be appropriated to the Department
of Commerce to enable the National Oceanic and Atmospheric
Administration to carry out its data and information services duties
under law, $25,000,000 for fiscal year 1989. Moneys appropriated
pursuant to this authorization shall be used to fund those duties
relating to data and information services specified by the Act of 1890
and by any other law involving such duties. Such duties include climate
data services, ocean data services, geophysical data services, and
environmental assessment and information services.
SEC. 407. "15 USC 313 note" (a) The Secretary shall prepare and
submit to the Congress, not later than 90 days after the date of
enactment of this Act, a 10-year strategic plan for the comprehensive
modernization of the National Weather Service. The strategic plan shall
set forth basic service improvement objectives of the modernization as
well as the critical new technological components and the associated
operational changes necessary to fulfill the objectives of weather and
flood warning service improvements.
(b) The Secretary shall prepare and submit to the Congress, by the
beginning of the fiscal year immediately following the fiscal year in
which the strategic plan required by subsection (a) of this section is
submitted, a National Implementation Plan for modernization of the
National Weather Service. The National Implementation Plan shall set
forth the schedules for necessary actions to accomplish the objectives
described in the strategic plan, and the National Implementation Plan
shall include --
(1) detailed requirements for new technologies, facilities,
staffing levels, and funding, for each of the two fiscal years
immediately following the fiscal year in which such National
Implementation Plan is submitted, in accordance with the overall
schedule for modernization;
(2) special measures to test, evaluate, and demonstrate key
elements of the Modernized National Weather Service operations
prior to national implementation, including a multistation
operational demonstration which tests the performance of all
components of the modernization in an integrated manner for a
sustained period; and
(3) detailed plans and funding for meteorological research to
be accomplished under this title to assure that new techniques in
forecasting will be developed to utilize the new technologies
being implemented in the modernization.
(c) The Secretary shall submit a revised National Implementation Plan
to the Congress at the beginning of each successive fiscal year after
the fiscal year in which the initial National Implementation Plan is
submitted.
(d) In reviewing and revising the National Implementation Plan, the
Secretary shall consult, as appropriate, with other Federal and public
agencies responsible for providing or utilizing weather services.
SEC. 408. "15 USC 313 note" (a) The Secretary shall not close,
consolidate, automate, or relocate any Weather Service Office or Weather
Service Forecast Office pursuant to the implementation of the strategic
plan required by section 407, except in accordance with this section.
(b) The Secretary may not close, consolidate, automate, or relocate
any such office unless the Secretary has certified to the Committee on
Commerce, Science, and Transportation of the Senate and the Committee on
Science, Space, and Technology of the House of Representatives that such
action will not result in any degradation of weather services provided
to the affected area. Such certification shall include --
(1) a detailed comparison of the services provided to the
affected area and the services to be provided after such action;
(2) any recent or expected modernization of National Weather
Service operations which will enhance services in the affected
area; and
(3) evidence, based upon observational demonstration of
modernized National Weather Service operations, which supports the
conclusion that no degradation in services wil result from such
action.
SEC. 409. "15 USC 1534" (a) Except as otherwise provided in this
section, the Secretary is authorized to assess fees, based on fair
market value, for access to environmental data archived by the National
Environmental Satellite, Data, and Information Service of the National
Oceanic and Atmospheric Administration.
(b)(1) The Secretary shall provide data described in subsection (a)
to Federal, State, and local government agencies, to universities, and
to other nonprofit institutions at the cost of reproduction and
transmission, if such data is to be used for research and not for
commercial purposes.
(2) The Secretary shall waive the assessment of fees under subsection
(a) as necessary to continue to provide data to foreign governments and
international organizations on a data exchange basis or as otherwise
provided by international agreement.
(c) The initial schedule of any fees assessed under this section, and
any subsequent amendment to such schedule, shall be published by the
Secretary in the Federal Register at least 30 days before such fees will
take effect. The initial schedule shall remain in effect without
amendment for the three-year period beginning on the date that fees
under the schedule take effect.
(d) Any assessment of fees under this section shall meet the
following requirements:
(1) No fees shall be assessed under this section until after
September 30, 1989.
(2) With respect to the first one-year period during which the
initial fee schedule is in effect, fees shall be assessed at no
more than one-third of the fair market value specified in
subsection (a).
(3) With respect to the second one-year period during which the
initial fee schedule is in effect, fees shall be assessed at not
more than two-thirds of such fair market value.
(4) With respect to the third one-year period during which the
initial fee schedule is in effect, and with respect to any period
thereafter, fees shall be assessed at no more than the full amount
of such fair market value.
(e) Fees collected under this section shall be available to the
National Environmental Satellite, Data, and Information Service for
expenses incurred in the operation of its data archive centers.
(f) The Secretary shall, not later than 90 days after the date of
enactment of this Act, submit to the Committee on Commerce, Science, and
Transportation of the Senate and the Committee on Science, Space, and
Technology of the House of Representatives a report which sets forth --
(1) any plan of the Secretary for assessing fees under this
section, including the methodology and bases by which the amount
of such fees shall be determined, and the estimated revenues
therefrom; and
(2) any plan of the Secretary for using revenues generated from
such fees, as well as other resources, to improve the capability
of the National Environmental Satellite, Data, and Information
Service to collect, manage, process, archive, and disseminate the
increasing amounts of data generated from satellites, radars, and
other technologies.
(g) The authority of the Secretary to assess fees under this section
shall be in addition to, and shall not be construed to limit, the
authority under any other law to assess fees relating to the
environmental data activities of the National Oceanic and Atmospheric
Administration.
SEC. 410. "42 USC 7454 note" The Secretary, in consultation with the
Secretary of State, the Administrator of the National Aeronautics and
Space Administration, and appropriate non-Federal organizations, shall
submit to the Committee on Commerce, Science, and Transportation of the
Senate and the Committee on Science, Space, and Technology of the House
of Representatives a plan to construct and operate a worldwide system of
ground-based remote sensors to monitor the stratospheric levels of
chemicals which can affect the level of ozone in the stratosphere and to
use these results to improve our understanding of the possible changes
in stratospheric ozone that are the consequences of human activities.
The plan shall include time lines for construction and operation of the
system, a description of the roles of the National Oceanic and
Atmospheric Administration and the National Aeronautics and Space
Administration, non-Federal organizations, other nations, and
international organizations in constructing and operating the system,
and estimates of the costs to construct and operate the system. The
plan shall be submitted not later than July 1, 1989.
SEC. 411. It is the sense of the Congress that the global change
program represents a significant opportunity for international
cooperation and that it is in the best interests of the United States to
maintain a separate civilian polar meteorological satellite program to
facilitate data sharing with foreign participants in the global change
program.
SEC. 412. None of the funds authorized under this title shall be
used to move from Kansas City, Missouri, the National Weather Service
Training Center currently located at Kansas City, nor to close such
Center, nor to contract out any function or activity performed by
Federal employees as of the date of enactment of this Act.
SEC. 413. For the purposes of this title, the term --
(1) "Act of 1890" means the Act entitled "An Act to increase
the efficiency and reduce the expenses of the Signal Corps of the
Army, and to transfer the Weather Bureau to the Department of
Agriculture", approved October 1, 1890 (26 Stat. 653); and
(2) "Act of 1947" means the Act entitled "An Act to define the
functions and duties of the Coast and Geodetic Survey, and for
other purposes", approved August 6, 1947 (33 U.S.C. 883a et seq.).
SEC. 414. "42 USC 8906" (a)(1) The National Weather Service of the
National Oceanic and Atmospheric Administration shall maintain an
updated data base describing the acid content in precipitation in the
United States, using information from Federal acid precipitation
monitoring sites.
(2) Such data shall be available to interested parties by Weather
Service Forecast Offices in the National Weather Service, or through
such other facilities or means as the Assistant Administrator for
Weather Services, National Oceanic and Atmospheric Administration, shall
direct, for those areas of the United States where and at such time as
such information is presently available, within 120 days after the date
of the enactment of this Act.
(3) Where other Federal agencies collect such data in the course of
carrying out their statutory missions, the heads of those agencies and
the Administrator of the National Oceanic and Atmospheric Administration
shall arrange for the transfer of such data to the National Weather
Service.
(b) Nothing in this section shall be construed to require any Federal
agency to establish any new acid precipitation monitoring site.
SEC. 501. "42 USC 2471" (a) Effective February 1, 1989, there is
established in the Executive Office of the President the National Space
Council, which shall be chaired by the Vice President.
(b) By March 1, 1989, the President shall submit to the Congress a
report that outlines the composition and functions of the National Space
Council.
(c) The Council may employ a staff of not more than seven persons,
which is to be headed by a civilian executive secretary, who shall be
appointed by the President.
SEC. 601. FINDINGS. -- The Congress finds as follows:
(1) Research is needed to establish a more scientific approach
for --
(A) identifying future staffing requirements for the air
traffic control system; and
(B) developing tools needed for meeting those requirements.
(2) The Federal Aviation Administration and the National
Aeronautics and Space Administration each have unique expertise
and facilities for conducting research into the man-machine
interface problems associated with a highly automated air traffic
control system.
SEC. 602. STUDY ON INCREASED AUTOMATION. --
(1) IN GENERAL. -- In order to develop the tools necessary for
establishing appropriate selection criteria and training
methodologies for the next generation of air traffic controllers,
the Administrator of the Federal Aviation Administration shall
conduct research to study the effect of automation on the
performance of the next generation of air traffic controllers and
the air traffic control system.
(2) CONTENT. -- Research conducted under paragraph (1) shall
include investigation of the following:
(A) Methods for improving and accelerating future air traffic
controller training through the application of advanced training
techniques, including use of simulation technology.
(B) The role of future automation in the air traffic control
system and its physical and psychological effects on air traffic
controllers.
(C) The attributes and aptitudes needed to function well in a
highly automated air traffic control system, and development of
appropriate testing methods for identifying individuals possessing
those attributes and aptitudes.
(D) Innovative methods for training potential air traffic
controllers to enhance the benefits of automation and maximize the
effectiveness of the air traffic control system.
(E) New technologies and procedures for exploiting automated
communication systems, including Mode S Transponders, to improve
information transfers between air traffic controllers and aircraft
pilots.
(3) REPORT. -- Not later than 6 months after the date of the
enactment of this Act, the Administrator of the Federal Aviation
Administration shall report to the Congress the Administrator's
plans for conducting research under this section.
SEC. 603. AGREEMENT WITH ADMINISTRATOR OF NASA. --
(1) IN GENERAL. -- The Administrator of the Federal Aviation
Administration may enter into an agreement with the Administrator
of the National Aeronautics and Space Administration for use of
their unique human factor facilities and expertise in conducting
research activities to study the human factor aspects of the
highly automated environment for the next generation of air
traffic controllers.
(2) CONTENT. -- Research under this section shall include
investigation of the following:
(A) Human perceptual capabilities and the effect of
computer-aided decision making on the workload and performance of
air traffic controllers.
(B) Information management techniques for advanced air traffic
control display systems.
(C) Air traffic controller workload and performance measures,
including development of predictive models.
SEC. 604. AUTHORIZATION OF APPROPRIATIONS. -- For conducting
research under this title there are authorized to be appropriated, from
amounts in the Airport and Airway Trust Fund which are available for
research and development, such sums as may be necessary.
Approved November 17, 1988.
LEGISLATIVE HISTORY -- S. 2209 (H.R. 4561):
HOUSE REPORTS: No. 100-650 accompanying H.R. 4561 (Comm. on Science,
Space, and Technology).
SENATE REPORTS: No. 100-429 (Comm. on Commerce, Science, and
Transportation).
CONGRESSIONAL RECORD, Vol. 134 (1988): June 2, H.R. 4561 considered
and passed House. Aug. 9, S. 2209 considered and passed Senate. Oct.
19, considered and passed House, amended. Oct. 21, Senate concurred in
House amendment.
Public Law 100-684, 102 Stat. 4082
Whereas the crew of the space shuttle Challenger was dedicated to
stimulating the interest of American children in space flight and
science generally;
Whereas the members of the Challenger crew gave their lives trying to
benefit the education of American children;
Whereas a fitting tribute to that effort and to the sacrifice of the
Challenger crew and their families is needed;
Whereas an appropriate form for such a tribute would be to expand
educational opportunities in science by the creation of a center that
will offer children and teachers activities and information derived from
American space research; and
Whereas the Challenger Center is the only institution expressly
established by the immediate families of the crew of the Challenger for
the above-named purposes, and is intended to be the living expression of
the Nation's commemoration of the Challenger crew: Now, therefore, be
it
Resolved by the Senate and House of Representatives of the United
States of America in Congress assembled, That January 28, 1989, is
designated as "National Challenger Center Day" and the President is
authorized and requested to issue a proclamation calling on the people
of the United States to observe such day --
(1) by resolving that in the course of their regular activities
the people of the United States will remember both the Challenger
astronauts who died while serving their country, and the
importance of the Challenger Center is honoring the
accomplishments of the Challenger crew by continuing their goal of
the expansion of interest and ability in space and science
education; and
(2) with other appropriate ceremonies and activities.
Approved November 17, 1988.
LEGISLATIVE HISTORY -- S.J. Res. 365:
CONGRESSIONAL RECORD, Vol. 134 (1988): Oct. 7, considered and passed
Senate. Oct. 21, considered and passed House.
Public Law 100-683, 102 Stat. 4081
Whereas the Office of United States Marshal was created by Act of the
First Congress which became law on September 24, 1789;
Whereas for more than a century after the establishment of the United
States Government in 1789, United States marshals provided the only
nationwide civilian police power available to the President, Congress,
and the courts;
Whereas United States marshals have played a crucial role in most of
the major episodes in America's history, from the Whiskey Rebellion of
1794, to the Reconstruction era following the Civil War and the
enforcement of the Civil Rights Acts of the 1960's;
Whereas more than three hundred United States marshals and deputy
marshals have given their lives in the course of carrying out their law
enforcement responsibilities;
Whereas United States marshals and their deputies are today charged
with responsibilities essential to the operation of the Federal justice
system, including the provision of security for the Federal courts and
the protection of judicial officers, the pursuit and arrest of fugitives
from justice, the enforcement of the orders of the court, and the
management of seized criminal assets; and
Whereas through their consistent and tenacious dedication to duty
since 1789, United States marshals and their deputies have made and
continue to make immeasurable contributions to the rule of law and the
protection of human rights through law in the United States: Now,
therefore, be it
Resolved by the Senate and House of Representatives of the United
States of America in Congress assembled, That September 24, 1989, is
designated as "United States Marshals Bicentennial Day", and the
President is authorized and requested to issue a proclamation calling
upon the people of the United States to observe that day with
appropriate ceremonies and activities.
Approved November 17, 1988.
LEGISLATIVE HISTORY -- S.J. Res. 352:
CONGRESSIONAL RECORD, Vol. 134 (1988): Oct. 7, considered and passed
Senate. Oct. 21, considered and passed House.
Public Law 100-682, 102 Stat. 4079
Whereas traffic accidents cause more violent deaths in the United
States than any other cause, approximately 46,000 in 1986;
Whereas traffic accidents cause thousands of serious injuries in the
United States each year;
Whereas almost 50 percent of all drivers killed in single vehicle
collisions and over 38.7 percent of all drivers fatally injured in 1986
had blood alcohol concentrations above the legal limit of .10;
Whereas the United States Surgeon General has reported that life
expectancy has risen for every age group over the past 75 years except
for Americans 15 to 24 years old, whose death rate, the leading cause of
which is drunk driving, is higher now than it was 20 years ago;
Whereas the total societal cost of drunk driving has been estimated
at more than $26,000,000,000 per year, which does not include the human
suffering that can never be measured;
Whereas there are increasing reports of driving after drug use and
accidents involving drivers who have used marijuana or other illegal
drugs;
Whereas driving after the use of therapeutic drugs, either alone or
in combination with alcohol, contrary to the advice of physician,
pharmacist, or manufacturer, may create a safety hazard on the roads;
Whereas more research is needed on the effect of drugs either alone
or in combination with alcohol, on driving ability and the incidence of
traffic accidents;
Whereas an increased public awareness of the gravity of the problem
of drugged driving may warn drug users to refrain from driving and may
stimulate interest in increasing necessary research on the effect of
drugs on driving ability and the incidence of traffic accidents;
Whereas the public, particularly through the work of citizens groups,
is demanding a solution to the problem of drunk and drugged driving;
Whereas the Presidential Commission on Drunk Driving, appointed to
heighten public awareness and stimulate the pursuit of solutions,
provided vital recommendations for remedies for the problem of drunk
driving;
Whereas the National Commission Against Drunk Driving was established
to assist State and local governments and the private sector to
implement these recommendations;
Whereas most States have appointed task forces to examine existing
drunk driving programs and make recommendations for a renewed,
comprehensive approach, and in many cases, their recommendations are
leading to enactment of new laws, along with strict enforcement;
Whereas the best defense against the drunk or drugged driver is the
use of safety belts and consistent safety belt usage by all drivers and
passengers would save as many as 10,000 lives each year;
Whereas an increase in the public awareness of the problem of drunk
and drugged driving may contribute to a change in society's attitude
toward the drunk or drugged driver and help sustain current efforts to
develop comprehensive solutions at the State and local levels;
Whereas the Christmas and New Year holiday period, with more drivers
on the roads and an increased number of social functions, is a
particularly appropriate time to focus national attention on this
critical problem;
Whereas designation of National Drunk and Drugged Driving Awareness
Week in each of the last 6 years stimulated many activities and programs
by groups in both the private and public sectors aimed at curbing drunk
and drugged driving in the high-risk Christmas and New Year holiday
period and thereafter; and
Whereas the activities and programs during National Drunk and Drugged
Driving Awareness Week have heightened the awareness of the American
public to the danger of drunk and drugged driving: Now, therefore, be
it
Resolved by the Senate and House of Representatives of the United
States of America in Congress assembled, That the period commencing
December 11, 1988, through December 17, 1988, is designated as "National
Drunk and Drugged Driving Awareness Week" and the President is
authorized and requested to issue a proclamation calling upon the people
of the United States to observe the week with appropriate ceremonies and
activities.
Approved November 17, 1988.
LEGISLATIVE HISTORY -- S.J. Res. 332:
CONGRESSIONAL RECORD, Vol. 134 (1988): July 26, considered and
passed Senate. Oct. 21, considered and passed House.
Public Law 100-681, 102 Stat. 4078
Whereas on January 28, 1986, the seven crew members of the space
shuttle Challenger, Commander Francis R. Scobee, Pilot Michael J.
Smith, Mission Specialist Ellison S. Onizuka, Mission Specialist Ronald
E. McNair, Mission Specialist Judith Resnik, Payload Specialist Gregory
B. Jarvis, Teacher-Observer S. Christa McAuliffe, were killed in a
tragic explosion shortly after liftoff;
Whereas each of the crew members of the Challenger was a true
American hero who represented the best and the brightest that our Nation
has to offer;
Whereas the crew of the Challenger gave their lives while striving
for an excellence of technology, of goal, and of personal achievement
which fills all Americans with a sense of pride in their fellow human
beings and countrymen;
Whereas the most appropriate tribute we could pay the crew of the
Challenger is a national day when Americans would dedicate themselves in
all their endeavors to the pursuit of excellence which makes our country
great;
Whereas the American spirit is most responsive to a living tribute in
which all citizens can participate and be enriched by such
participation; and
Whereas this is a day for which our national character cries out:
Now, therefore, be it
Resolved by the Senate and House of Representatives of the United
States of America in Congress assembled, That January 28, 1989, is
designated as a "National Day of Excellence". The President is
authorized and requested to issue a proclamation calling on the people
of the United States to observe that day --
(1) by resolving that in the course of their regular activities
they will pursue the spirit of excellence represented by the crew
of the space shuttle Challenger; and
(2) with appropriate ceremonies and activities.
Approved November 17, 1988.
LEGISLATIVE HISTORY -- S.J. Res. 327:
CONGRESSIONAL RECORD, Vol. 134 (1988): Oct. 7, considered and passed
Senate. Oct. 21, considered and passed House.
Public Law 100-680, 102 Stat. 4073
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SEC. 1. SHORT TITLE.
This Act "15 USC 5101 note" may be cited as the "Steel and Aluminum
Energy Conservation and Technology Competitiveness Act of 1988".
SEC. 2. "15 USC 5101" FINDINGS AND PURPOSES.
(a) FINDINGS. -- The Congress finds that --
(1) maintaining viable domestic steel, aluminum, copper, and
other metals industries is vital to the national security and
economic well being of the United States; and
(2) the promotion of technology competitiveness and energy
conservation in the American steel and aluminum industries by the
Federal Government through a program of joint research and
development will help maintain viable domestic steel and aluminum
industries.
(b) PURPOSES. -- The purposes of this Act are to --
(1) increase the energy efficiency and enhance the
competitiveness of American steel, aluminum, and copper industries
by providing Federal incentives for the establishment of
public-private sector research and development partnerships to
undertake scientific research and development to develop advanced
technologies utilizing the expertise of the steel, aluminum,
copper, and other metals industries, Government-owned laboratories
of the Department of Energy and the National Institute of
Standards and Technology, universities, State development
agencies, and others; and
(2) continue steel research and development initiative efforts
begun under title II of the Interior and Related Agencies portion
of the joint resolution entitled "Joint Resolution making further
continuing appropriations for the fiscal year 1986, and for other
purposes", approved December 19, 1985 (Public Law 99-190).
SEC. 3. "15 USC 5102" DEFINITIONS.
As used in this Act --
(1) the term "Secretary" means the Secretary of Energy;
(2) the term "domestic company" means a company which is
substantially involved in the United States domestic production,
processing, or use of steel, aluminum, copper, or other metals and
has a substantial percentage of its operations located within the
United States;
(3) the terms "management plan" and "plan" mean the Steel
Initiative Management Plan issued on April 1, 1987, by the
Department of Energy, which establishes the management framework
for the steel research and development initiative, and updates to
that plan; and
(4) the term "research plan" means the Steel Initiative
Research Plan issued in April 1988 by the Department of Energy,
and updates to that plan.
SEC. 4. "15 USC 5103" ESTABLISHMENT OF SCIENTIFIC RESEARCH AND
DEVELOPMENT PROGRAM TO DEVELOP COMPETITIVE MANUFACTURING TECHNOLOGIES
AND INCREASE ENERGY EFFICIENCY IN THE STEEL AND ALUMINUM INDUSTRIES.
(a) GENERAL AUTHORITY. -- The Secretary, pursuant to the authority
provided under provisions of the Federal Nonnuclear Research and
Development Act of 1974 (42 U.S.C. 5901, et seq.), shall reestablish an
industrial energy conservation and competitive technology program to
conduct scientific research and development of steel and aluminum
technologies to carry out the purposes of this Act. Such program shall
provide the financial and technical assistance and other incentives
which, in the judgment of the Secretary, are necessary to carry out the
purposes of this Act.
(b) MANAGEMENT PLAN. -- Within 6 months after the date of enactment
of this Act, the Secretary shall publish an update of the management
plan to expand the steel research and development initiative to include
aluminum and to carry out the purposes of this Act. The Secretary, from
time to time, may further update the management plan. The management
plan shall be subject to the following conditions:
(1) For newly initiated research and development proposals
submitted under the revised management plan, the non-Federal
financial share shall equal at least 30 percent of the total cost
of any project.
(2) Existing facilities, equipment, supplies, and other
property may be included in the non-Federal share under this
section only when they are directly relevant to the project.
(3) The knowledge resulting from research and development
activities conducted under this Act shall be developed for the
benefit of the domestic companies who provide financial resources
to the program.
(4) The Secretary, for a period of up to 5 years after the
development of information that --
(A) results from research and development activities conducted
under this Act; and
(B) would be a trade secret or commercial or financial
information that is privileged or confidential, as described in
section 5(a), if the information had been obtained from a domestic
company,
may provide appropriate protections against the dissemination
of such information, including exemption from subchapter II of
chapter 5 of title 5, United States Code.
(5) The plan shall assure basic research support, for the
research carried out under the research plan, from independent
laboratories, universities, and nonprofit organizations, by
coordinating activities under the research plan with the basic
research efforts of the Department of Energy, such as the Energy
Conversion and Utilization Technologies Program and the Materials
Processing and Sensor and Controls programs within the Office of
Industrial Programs.
(c) PRIORITIES. -- Within 6 months after the date of enactment of
this Act, the Secretary shall publish an update of the research plan.
In reviewing research and development activities for possible inclusion
in the research plan, the Secretary shall consider the following:
(1) STEEL PROJECTS. --
(A) The direct production of liquid steel from domestic
materials.
(B) The production of near-net shape forms from liquid, powder,
or solid steel.
(C) The development of universal grades of steel.
(D) The application of automatic processing technology.
(E) The removal of residual elements from steel scrap.
(F) The treatment and storage of waste materials and other
byproducts from steel production and processing.
(G) The development of super-plastic steel processing.
(H) The development of advanced coatings for sheet steels.
(I) The development of technologies and equipment related to
the production of steel that enhance the protection of the
environment and the safety and health of workers.
(J) Other steel technologies which, in the judgment of the
Secretary, further the purposes of this Act.
(2) ALUMINUM AND OTHER PROJECTS. --
(A) The production of aluminum.
(B) The application of automatic processing technology.
(C) The treatment and storage of waste materials and other
byproducts from aluminum production and processing.
(D) The manufacture of aluminum mill products.
(E) Aluminum recycling technologies.
(F) The development of technologies and equipment related to
the production of aluminum that enhance the protection of the
environment and the safety and health of workers.
(G) Aluminum, copper, and other metals technologies which, in
the judgment of the Secretary, further the purposes of this Act.
(d) INDUSTRY PARTICIPATION AND REVIEW. -- The Secretary shall
arrange for participation and review by representatives of each affected
industry and by labor in the updating of the management and research
plans and in the evaluation of the progress of research and development
activities for their industry conducted under this Act.
SEC. 5. "15 USC 5104" PROTECTION OF PROPRIETARY RIGHTS.
(a) PROPRIETARY RIGHTS. -- No trade secrets or commercial or
financial information that is privileged or confidential under the
meaning of section 552(b)(4) of title 5, United States Code, which is
obtained from a domestic company shall be disclosed in the conduct of
the management plan or research plan, or as a result of activities under
this Act.
(b) PATENT RIGHTS VESTED IN THE UNITED STATES. -- All patent rights
from inventions developed under the management plan or the research plan
implemented pursuant to this Act shall be vested in accordance with
section 9 of the Federal Nonnuclear Energy Research and Development Act
of 1974 (42 U.S.C. 5901).
SEC. 6. "15 USC 5105" COORDINATION.
The Secretary shall coordinate the research and development conducted
under this Act with other research and development being conducted by
the Department of Energy and other Federal agencies in order to increase
efficiency and avoid duplication of effort.
SEC. 7. "15 USC 5106" EXPANDED STEEL AND ALUMINUM RESEARCH PROGRAM
IN NATIONAL INSTITUTE OF STANDARDS AND TECHNOLOGY.
The National Institute of Standards and Technology, through its
Institute for Materials Science and Engineering and, as appropriate, in
coordination with the Department of Energy and other Federal agencies,
shall conduct an expanded program of steel and aluminum research to
provide necessary instrumentation and measurement research and
development in support of activities conducted under this Act.
SEC. 8. "15 USC 5107" REPORTS.
The Secretary shall prepare and submit annually to the President and
the Congress at the close of each fiscal year a complete report of the
research and development activities carried out under this Act during
the fiscal year involved, including the actual and anticipated
obligation of funds, for such activities, together with such
recommendations as the Secretary may consider appropriate for further
legislative, administrative, and other actions, including actions by the
American steel, aluminum, copper, and other metals industries, which
should be taken in order to achieve the purposes of this Act. The report
submitted at the close of fiscal year 1991 shall also contain a complete
summary of activities under the management plan and the research plan
from the first year of their operation, along with an analysis of the
extent to which they have succeeded in accomplishing the purposes of
this Act.
SEC. 9. "15 USC 5108" AUTHORIZATION OF APPROPRIATIONS.
(a) TO THE SECRETARY. -- (1) There are authorized to be appropriated
to the Secretary, to carry out the functions of the Department of Energy
under this Act, $2,000,000 for fiscal year 1989, $20,000,000 for fiscal
year 1990, and $25,000,000 for fiscal year 1991.
(2) Funds previously appropriated for the steel research and
development initiative --
(A) under title II of the Interior and Related Agencies portion
of the joint resolution entitled "Joint Resolution making further
continuing appropriations for the fiscal year 1986, and for other
purposes", approved December 19, 1985 (Public Law 99-190); or
(B) under subsequent appropriation Acts,
which remain available under the terms of such Acts may be used for
the purposes of this Act.
(b) TO THE INSTITUTE. -- There are authorized to be appropriated to
the Director of the National Institute of Standards and Technology to
carry out the functions of the Institute under this Act, $3,000,000 for
each of the fiscal years 1989, 1990, and 1991.
SEC. 10. "15 USC 5109" RELATION OF EXISTING PROGRAM.
Proposals received by the Department of Energy before the date of
enactment of this Act may be carried out without regard to changes in
the management plan and research plan required by this Act.
SEC. 11. "15 USC 5110" DRUG-FREE WORKPLACE.
(a) No department, agency, or instrumentality of the United States
receiving funds authorized to be appropriated under this Act for fiscal
year 1989, fiscal year 1990, or fiscal year 1991, or under any other Act
authorizing appropriations for fiscal year 1989, fiscal year 1990, or
fiscal year 1991, shall obligate or spend any such funds, unless such
department, agency, or instrumentality has in place, and will continue
to administer in good faith, a written policy designed to ensure that
all of its work places are free from the illegal use, possession, or
distribution of controlled substances (as defined in the Controlled
Substances Act) by the officers and employees of such department,
agency, or instrumentality.
(b) No funds so authorized to be appropriated to any such department,
agency, or instrumentality shall be available for payment in connection
with any grant, contract, or other agreement, unless the recipient of
such grant, contract, or party to such agreement, as the case may be,
has in place and will continue to administer in good faith a written
policy, adopted by such recipient, contractor, or party's board of
directors or other govrning authority, satisfactory to the head of the
department, agency, or instrumentality making such payment, designed to
ensure that all of the workplace of such recipient, contractor, or party
are free from the illegal use, possession, or distribution of controlled
substances (as defined in the Controlled Substances Act) by the officers
and employees of such recipient, contractor, or party.
Approved November 17, 1988.
LEGISLATIVE HISTORY -- S. 2470:
HOUSE REPORTS: No. 100-1061 (Comm. on Science, Space, and
Technology).
SENATE REPORTS: No. 100-443 (Comm. on Energy and Natural Resources).
CONGRESSIONAL RECORD, Vol. 134 (1988): Aug. 9, considered and passed
Senate. Oct. 12, considered and passed House, amended. Oct. 21, Senate
concurred in House amendment.
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 24 (1988): Nov.
17, Presidential statement.
Public Law 100-679, 102 Stat. 4055
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act "41 USC 401 note" may be cited as the "Office of Federal
Procurement Policy Act Amendments of 1988".
SEC. 2. POLICY; FINDINGS AND PURPOSE.
(a) POLICY. -- Section 2 of the Office of Federal Procurement Policy
Act (41 U.S.C. 401) is amended by striking out "the Congress" and
inserting "the United States Government".
(b) FINDINGS AND PURPOSE. -- Section 3 of the Office of Federal
Procurement Policy Act (41 U.S.C.) 402 is amended in subsection (a) by
inserting "Government-wide" before "procurement policies".
SEC. 3. AUTHORITY AND FUNCTIONS OF THE OFPP ADMINISTRATOR.
(a) IN GENERAL. -- Section 6 of the Office of Federal Procurement
Policy Act (41 U.S.C. 405) is amended --
(1) in subsection (a), by striking out "which shall be
implemented in the single system of Government-wide procurement
regulations and shall be" and inserting a period and the
following: "These policies shall be implemented in a single
Government-wide procurement regulation called the Federal
Acquisition Regulation and shall be";
(2) in subsection (b) --
(A) by inserting after "timely manner" the following: ",
including any such regulations, procedures, and forms as are
necessary to implement prescribed policy initiated by the
Administrator under subsection (a),"; and
(B) by striking out "may" and inserting "shall";
(3) in subsection (d) by striking out paragraphs (4) and (5)
and inserting the following:
"(4)(A) providing for and directing the activities of the
computer-based Federal Procurement Data System (including
recommending to the Administrator of General Services a sufficient
budget for such activities) which shall be located in the General
Services Administration, in order to adequately collect, develop,
and disseminate procurement data; and
"(B) ensuring executive agency compliance with the record
requirements of section 19;
"(5) providing for and directing the activities of the Federal
Acquisition Institute (including recommending to the Administrator
of General Services a sufficient budget for such activities),
which shall be located in the General Services Administration, in
order to --
"(A) foster and promote Government-wide career management
programs for a professional procurement work force; and
"(B) promote and coordinate Government-wide research and
studies to improve the procurement process and the laws, policies,
methods, regulations, procedures, and forms relating to
procurement by the executive agencies;"; and
(4) in subsection (f) by striking out "The Director of the
Office of Management and Budget" and inserting "The Administrator,
with the concurrence of the Director of the Office of Management
and Budget, and with consultation with the head of the agency or
agencies concerned,".
(b) REAUTHORIZATION. -- Section 11 of such Act (41 U.S.C. 410) is
amended by striking out "for each of the three succeeding fiscal years"
and inserting "such sums as may be necessary for each succeeding fiscal
year".
(c) CONFORMING AMENDMENT. -- Section 4 of such Act "41 USC 403" is
amended by striking out paragraph (4) and redesignating paragraphs (5)
through (11) as paragraphs (4) through (10), respectively.
SEC. 4. FEDERAL ACQUISITION REGULATORY COUNCIL.
The Office of Federal Procurement Policy Act is further amended by
adding at the end the following:
"SEC. 25. (a) ESTABLISHMENT. -- "41 USC 421" There is established a
Federal Acquisition Regulatory Council (hereinafter in this section
referred to as the 'Council') to assist in the direction and
coordination of Government-wide procurement policy and Government-wide
procurement regulatory activities in the Federal Government.
"(b) MEMBERSHIP. -- (1) The Council shall consist of the
Administrator for Federal Procurement Policy and --
"(A) the Secretary of Defense,
"(B) the Administrator of National Aeronautics and Space; and
"(C) the Administrator of General Services.
"(2) Notwithstanding section 205(d) of the Federal Property and
Administrative Services Act of 1949, the officials specified in
subparagraphs (A), (B), and (C) of paragraph (1) may designate to serve
on and attend meetings of the Council in place of that official (A) the
official assigned by statute with the responsibility for acquisition
policy in each of their respective agencies; or (B) if no official of
such agency is assigned by statute with the responsibility for
acquisition policy for that agency, the official designated pursuant to
section 16(3) of this Act. No other official or employee may be
designated to serve on the Council.
"(c) FUNCTIONS. -- (1) Subject to the provisions of section 6 of
this Act, the General Services Administration, the Department of
Defense, and the National Aeronautics and Space Administration, pursuant
to their respective authorities under title III of the Federal Property
and Administrative Services Act of 1949 (41 U.S.C. 251, et seq.),
chapters 4 and 137 of title 10, United States Code, and the National
Aeronautics and Space Act of 1958 (42 U.S.C. 2451, et seq.), shall
jointly issue and maintain in accordance with subsection (f) of this
section a single Government-wide procurement regulation, to be known as
the 'Federal Acquisition Regulation'.
"(2) Any other regulations relating to procurement issued by an
executive agency shall be limited to (A) regulations essential to
implement Government-wide policies and procedures within the agency, and
(B) additional policies and procedures required to satisfy the specific
and unique needs of the agency.
"(3) The Administrator, in consultation with the Council, shall
ensure that procurement regulations promulgated by executive agencies
are consistent with the Federal Acquisition Regulation and in accordance
with the policies set forth in section 2 of this Act or any policies
issued pursuant to section 6(a) of this Act.
"(4)(A) Under procedures established by the Administrator, a person
may request the Administrator to review any regulation relating to
procurement on the basis that such regulation is inconsistent with the
Federal Acquisition Regulation.
"(B) Unless the request is frivolous or does not, on its face, state
a valid basis for such review, the Administrator shall complete such a
review not later than 60 days after receiving the request. The time for
completion of the review may be extended if the Administrator determines
that an additional period of review is required. The Administrator
shall advise the requester of the reasons for the extension and the date
by which the review will be completed.
"(5) If the Administrator determines that a regulation relating to
procurement is inconsistent with the Federal Acquisition Regulation or
that the regulation should otherwise be revised to remove an
inconsistency with any policies issued under section 6(a) of this Act or
the policies set forth in section 2 of this Act, the Administrator shall
rescind or deny the promulgation of the regulation or take such other
action authorized under section 6 as may be necessary to remove the
inconsistency. If the Administrator determines that such a Regulation
or such policies, should be revised to improve compliance with such
Regulation or policies, the Administrator shall take such action
authorized under section 6 as may be necessary and appropriate.
"(6) The decisions of the Administrator shall be in writing and made
publicly available. The Administrator shall provide a listing of such
decisions in the annual report to Congress required by section 8 of this
Act.
"(d) ADDITIONAL RESPONSIBILITIES OF MEMBERSHIP. -- Subject to the
authority, direction, and control of the head of the agency concerned,
each official who represents an agency on the Council pursuant to
subsection (b) shall --
"(1) approve or disapprove all regulations that are, after 60
days after the date of enactment of this section, proposed for
public comment, promulgated in final form, or otherwise made
effective by such agency relating to procurement before such
regulation may be promulgated in final form, or otherwise made
effective, except that such official may grant an interim
approval, without review, for not more than 60 days for a
procurement regulation in urgent and compelling circumstances;
10 "(2) carry out the responsibilities of such agency set forth
in chapter 35 of title 44, United States Code, for each
information collection request (as that term is defined in section
3502(11) of title 44, United States Code) that relates to
procurement rules or regulations; and
"(3) eliminate or reduce (A) any redundant or unnecessary
levels of review and approval, in the procurement system of such
agency, and (B) redundant or unnecessary procurement regulations
which are unique to that agency.
The authority to review and approve or disapprove regulations under
paragraph (1) of this subsection may not be delegated to any person
outside the office of the official who represents the agency on the
Council pursuant to subsection (b).
"(e) GOVERNING POLICIES. -- All actions of the Council and of
members of the Council shall be in accordance with and furtherance of
the policies of section 2 and the policies prescribed under section 6(
a) of this Act.
"(f) GENERAL AUTHORITY WITH RESPECT TO FAR. -- Subject to section
6(b), the Council shall manage, coordinate, control, and monitor the
maintenance of, and issuance of and changes in, the Federal Acquisition
Regulation.
"(g) REPORTS. -- The Administrator for Federal Procurement Policy
shall --
"(1) publish a report within 6 months after the date of
enactment of this section and every 6 months thereafter relating
to the development of procurement regulations to be issued in
accordance with subsection (c) of this section;
"(2) include in each report published under paragraph (1) --
"(A) the status of each such regulation;
"(B) a description of those regulations which are required by
statute;
"(C) a description of the methods by which public comment was
sought with regard to each proposed regulation in accordance with
section 22 of this Act, and to the extent appropriate, sections
3504(h) and 3507 of title 44, United States Code;
"(D) regulatory activities completed and initiated since the
last report;
"(E) regulations, policies, procedures, practices, and forms
that are under consideration or review by the Office of Federal
Procurement Policy;
"(F) whether the regulations have paperwork requirements;
"(G) the progress made in promulgating and implementing the
Federal Acquisition Regulation; and
"(H) such other matters as the Administration determines would
be useful; and
"(3) report to Congress within 180 days after the date of the
enactment of this section, in consultation with the Administrator
of the Office of Information and Regulatory Affairs, regarding --
"(A) the extent of the paperwork burden created by the Federal
procurement process, and
"(B) the extent to which the Federal procurement system can be
streamlined to reduce unnecessary paperwork while at the same time
maintaining recordkeeping and reporting requirements necessary to
ensure the integrity and accountability of the system.".
SEC. 5. COST ACCOUNTING STANDARDS BOARD.
(a) AMENDMENT. -- The Office of Federal Procurement Policy Act is
further amended by adding at the end thereof the following:
"SEC. 26. (a) ESTABLISHMENT; MEMBERSHIP; TERMS. -- "41 USC 422"
(1) There is established within the Office of the Federal Procurement
Policy an independent board to be known as the 'Cost Accounting
Standards Board' (hereinafter referred to as the 'Board'). The Board
shall consist of 5 members, including the Administrator, who shall serve
as Chairman, and 4 members, all of whom shall have experience in
Government contract cost accounting, and who shall be appointed as
follows:
"(A) two representatives of the Federal Government --
"(i) one of whom shall be a representative of the Department of
Defense and be appointed by the Secretary of Defense; and
"(ii) one of whom shall be an officer or employee of the
General Services Administration appointed by the Administrator of
General Services; and
"(B) two individuals from the private sector, each of whom
shall be appointed by the Administrator and --
"(i) one of whom shall be a representative of industry; and
"(ii) one of whom shall be particularly knowledgeable about
cost accounting problems and systems.
"(2)(A) The term of office of each of the members of the Board, other
than the Administrator for Federal Procurement Policy, shall be 4 years,
except that --
"(i) of the initial members, two shall be appointed for terms
of two years, one shall be appointed for a term of three years,
and one shall be appointed for a term of four years;
"(ii) any member appointed to fill a vacancy in the Board shall
serve for the remainder of the term for which his predecessor was
appointed; and
"(iii) no individual who is appointed under paragraph (1)(A) of
this subsection shall continue to serve after ceasing to be an
officer or employee of the agency from which he or she was
appointed.
"(B) A vacancy on the Board shall be filled in the same manner in
which the original appointment was made.
"(C) The initial members of the Board shall be appointed within 120
days after the date of enactment of this section.
"(b) SENIOR STAFF. -- The Administrator, after consultation with the
Board, may appoint an executive secretary and two additional staff
members without regard to the provisions of title 5, United States Code,
governing appointments in the competitive service, and may pay such
employees without regard to the provisions of chapter 51 and subchapter
III of chapter 53 of such title relating to classification and General
Schedule pay rates, except that no individual so appointed may receive
pay in excess of the annual rate of basic pay payable for GS-18 of the
General Schedule.
"(c) OTHER STAFF. -- The Administrator may appoint, fix the
compensation, and remove additional employees of the Board under the
applicable provisions of title 5, United States Code.
"(d) DETAILED AND TEMPORARY PERSONNEL. -- (1) The Board may use,
without reimbursement, any personnel of a Federal agency (with the
consent of the head of the agency concerned) to serve on advisory
committees and task forces to assist the Board in carrying out the
functions and responsibilities of the Board under this section.
"(2) The Administrator, after consultation with the Board, may
procure temporary and intermittent services under section 3109(b) of
title 5, United States Code, of personnel for the purpose of serving on
advisory committees and task forces to assist the Board in carrying out
the functions and responsibilities of the Board under this section.
"(e) COMPENSATION. -- Except as otherwise provided in subsection
(a), the members of the Board who are officers or employees of the
Federal Government, and officers and employees of other agencies of the
Federal Government who are used under subsection (d)(1), shall receive
no additional compensation for services, but shall continue to be
compensated by the employing Department or agency of such officer or
employee. Each member of the Board appointed from private life shall
receive compensation at a rate not to exceed the daily equivalent of the
rate prescribed for level IV of the Executive Schedule for each day
(including travel time) in which the member is engaged in the actual
performance of duties vested in the Board. Individuals hired under
subsection (d)(2) may receive compensation at rates fixed by the
Administrator, but not to exceed the daily equivalent of the rate
prescribed for level V of the Federal Executive Salary Schedule under
section 5316 of title 5, United States Code, for each day (including
travel time) in which such appointees are properly engaged in the actual
performance of duties under this section. While serving away from homes
or the regular place of business, Board members and other appointees
serving on an intermittent basis under this section shall be allowed
travel expenses in accordance with section 5703 of title 5, United
States Code.
"(f) COST ACCOUNTING STANDARDS AUTHORITY. -- (1) The Board shall
have the exclusive authority to make, promulgate, amend, and rescind
cost accounting standards and interpretations thereof designed to
achieve uniformity and consistency in the cost accounting standards
governing measurement, assignment, and allocation of costs to contracts
with the United States.
"(2) Cost accounting standards promulgated under this section shall
be mandatory for use by all executive agencies and by contractors and
subcontractors in estimating, accumulating, and reporting costs in
connection with pricing and administration of, and settlement of
disputes concerning, all negotiated prime contract and subcontract
procurements with the United States in excess of $500,000, other than
contracts or subcontracts where the price negotiated is based on (A)
established catalog or market prices of commercial items sold in
substantial quantities to the general public, or (B) prices set by law
or regulation.
"(3) Not later than 180 days after the date of enactment of this
section, the Administrator, after consultation with the Board, shall
prescribe rules and procedures governing actions of the Board under this
section. Such rules and procedures shall require that any cost
accounting standard promulgated, amended, or rescinded (and
interpretations thereof) shall be adopted by majority vote of the Board
members.
"(4) The Board is authorized --
"(A) to exempt classes or categories of contractors and
subcontractors from the requirements of this section; and
"(B) to establish procedures for the waiver of the requirements
of this section with respect to individual contracts and
subcontracts.
"(g) REQUIREMENTS FOR STANDARDS. -- (1) Prior to the promulgation
under this section of cost accounting standards and interpretations
thereof, the Board shall --
"(A) take into account, after consultation and discussions with
the Comptroller General and professional accounting organizations,
contractors, and other interested parties --
"(i) the probable costs of implementation, including
inflationary effects, if any, compared to the probable benefits;
"(ii) the advantages, disadvantages, and improvements
anticipated in the pricing and administration of, and settlement
of disputes concerning, contracts; and
"(iii) the scope of, and alternatives available to, the action
proposed to be taken;
"(B) prepare and publish a report in the Federal Register on
the issues reviewed under paragraph (1)(A);
"(C)(i) publish an advanced notice of proposed rulemaking in
the Federal Register in order to solicit comments on the report
prepared pursuant to subparagraph (B);
"(ii) provide all parties affected a period of not less than 60
days after such publication to submit their views and comments;
and
"(iii) during this 60-day period, consult with the Comptroller
General and consider any recommendation the Comptroller General
may make; and
"(D) publish a notice of such proposed rulemaking in the
Federal Register and provide all parties affected a period of not
less than 60 days after such publication to submit their views and
comments.
"(2) Rules, regulations, cost accounting standards, and modifications
thereof promulgated or amended under this section shall have the full
force and effect of law, and shall become effective within 120 days
after publication in the Federal Register in final form, unless the
Board determines a longer period is necessary. Implementation dates for
contractors and subcontractors shall be determined by the Board, but in
no event shall such dates be later than the beginning of the second
fiscal year of the contractor or subcontractor after the standard
becomes effective. Rules, regulations, cost accounting standards, and
modifications thereof promulgated or amended under this section shall be
accompanied by prefatory comments and by illustrations, if necessary.
"(3) The functions exercised under this section are excluded from the
operation of sections 551, 553 through 559, and 701 through 706 of title
5, United States Code.
"(h) IMPLEMENTING REGULATIONS. -- (1) The Board shall promulgate
rules and regulations for the implementation of cost accounting
standards promulgated or interpreted under subsection (f). Such
regulations shall be incorporated into the Federal Acquisition
Regulation and shall require contractors and subcontractors as a
condition of contracting with the United States to --
"(A) disclose in writing their cost accounting practices,
including methods of distinguishing direct costs from indirect
costs and the basis used for allocating indirect costs; and
"(B) agree to a contract price adjustment, with interest, for
any increased costs paid to such contractor or subcontractor by
the United States by reason of a change in the contractor's or
subcontractor's cost accounting practices or by reason of a
failure by the contractor or subcontractor to comply with
applicable cost accounting standards.
"(2) If the United States and a contractor or subcontractor fail to
agree on a contract price adjustment, including whether the contractor
or subcontractor has complied with the applicable cost accounting
standards, the disagreement will constitute a dispute under the Contract
Disputes Act (41 U.S.C. 601).
"(3) Any contract price adjustment undertaken pursuant to paragraph
(1)(B) shall be made, where applicable, on relevant contracts between
the United States and the contractor that are subject to the cost
accounting standards so as to protect the United States from payment, in
the aggregate, of increased costs (as defined by the Board). In no case
shall the Government recover costs greater than the increased cost (as
defined by the Board) to the Government, in the aggregate, on the
relevant contracts subject to the price adjustment, unless the
contractor made a change in its cost accounting practices of which it
was unaware or should have been aware at the time of the price
negotiation and which it failed to disclose to the Government.
"(4) The interest rate applicable to any contract price adjustment
shall be the annual rate of interest established under section 6621 of
the Internal Revenue Code of 1986, 26 U.S.C. 6621) for such period.
Such interest shall accrue from the time payments of the increased costs
were made to the contractor or subcontractor to the time the United
States receives full compensation for the price adjustment.
"(i) REPORTS TO CONGRESS. -- The Board shall report to the Congress
not later than one year after the date of enactment of this section, and
annually thereafter, with respect to the activities and operations of
the Board under this section, together with such recommendations as it
considers appropriate.
"(i) EFFECT ON OTHER STANDARDS AND REGULATIONS. -- (1) All cost
accounting standards, waivers, exemptions, interpretations,
modifications, rules, and regulations promulgated by the Cost Accounting
Standards Board under section 719 of the Defense Production Act of 1950
(50 U.S.C. App. 2168) shall remain in effect unless and until amended,
superseded, or rescinded by the Board pursuant to this section.
"(2) Existing cost accounting standards referred to in paragraph (1)
shall be subject to the provisions of this Act in the same manner as if
promulgated by the Board under this Act.
"(3) The Administrator, under the authority set forth in section 6 of
this Act, shall ensure that no regulation or proposed regulation of an
executive agency is inconsistent with a cost accounting standard
promulgated or amended under this section by rescinding or denying the
promulgation of any such inconsistent regulation or proposed regulation
and taking such other action authorized under section 6 as may be
appropriate.
"(4) Costs which are the subject of cost accounting standards
promulgated under this section shall not be subject to regulations that
are established by another executive agency that differ from such
standards with respect to the measurement, assignment, and allocation of
such costs.
"(k) EXAMINATIONS. -- For the purpose of determining whether a
contractor or subcontractor has complied with cost accounting standards
promulgated under this section and has followed consistently the
contractor's or subcontractor's disclosed cost accounting practices, any
authorized representative of the head of the agency concerned, of the
offices of inspector general established pursuant to the Inspector
General Act of 1978, or of the Comptroller General of the United States
shall have the right to examine and make copies of any documents,
papers, or records of such contractor or subcontractor relating to
compliance with such cost accounting standards.
"(l) AUTHORIZATION OF APPROPRIATIONS. -- There are authorized to be
appropriated such sums as may be necessary to carry out the provisions
of this section.".
(b) CONFORMING AMENDMENT. -- Section 719 of the Defense Production
Act of 1950 (50 U.S.C. App. 2168) is repealed.
SEC. 6. PROCUREMENT INTEGRITY.
(a) AMENDMENT. -- The Office of Federal Procurement Policy Act is
further amended by adding at the end the following:
"SEC. 27. (a) PROHIBITED CONDUCT BY COMPETING CONTRACTORS. -- "41
USC 423" During the conduct of any Federal agency procurement of
property or services, no competing contractor or any officer, employee,
representative, agent, or consultant of any competing contractor shall
knowingly --
"(1) make, directly or indirectly, any offer or promise of
future employment or business opportunity to, or engage, directly
or indirectly, in any discussion of future employment or business
opportunity with, any procurement official of such agency;
"(2) offer, give, or promise to offer or give, directly or
indirectly, any money, gratuity, or other thing of value to any
procurement official of such agency; or
"(3) solicit or obtain, directly or indirectly, from any
officer or employee of such agency, prior to the award of a
contract any proprietary or source selection information regarding
such procurement.
"(b) PROHIBITED CONDUCT BY PROCUREMENT OFFICIALS. -- During the
conduct of any Federal agency procurement of property or services, no
procurement official of such agency shall knowingly --
"(1) solicit or accept, directly or indirectly, any promise of
future employment or business opportunity from, or engage,
directly or indirectly, in any discussion of future employment or
business opportunity with, any officer, employee, representative,
agent, or consultant of a competing contractor;
"(2) ask for, demand, exact, solicit, seek, accept, receive, or
agree to receive, directly or indirectly, any money, gratuity, or
other thing of value from any officer, employee, representative,
agent, or consultant of any competing contractor for such
procurement; or
"(3) disclose any proprietary or source selection information
regarding such procurement directly or indirectly to any person
other than a person authorized by the head of such agency or the
contracting officer to receive such information.
"(c) DISCLOSURE TO UNAUTHORIZED PERSONS. -- During the conduct of
any Federal agency procurement of property or services, no person who is
given authorized or unauthorized access to proprietary or source
selection information regarding such procurement, shall knowingly
disclose such information, directly or indirectly, to any person other
than a person authorized by the head of such agency or the contracting
officer to receive such information.
"(d) CERTIFICATION AND ENFORCEMENT MATTERS. -- (1) A Federal agency
may not award a contract for the procurement of property or services to
any competing contractor, or agree to any modification or extension of a
contract, unless the officer or employee of such contractor responsible
for the offer or bid for such contract, or the modification of extension
of such contract, as the case may be --
"(A)(i) certifies in writing to the contracting officer
responsible for such contract that such officer or employee of the
competing contractor has no information concerning a violation or
possible violation of subsection (a), (b), (c), or (e), or
applicable implementing regulations, pertaining to such
procurement; or
"(ii) discloses to such contracting officer any and all such
information and certifies in writing to such contracting officer
that any and all such information has been disclosed; and
"(B) certifies in writing to such contracting officer that each
officer, employee, agent, representative, and consultant of such
competing contractor who has participated personally and
substantially in the preparation or submission of such bid or
offer, or in such modification or extension of such contract, as
the case may be, has certified to such competing contractor that
he or she --
"(i) is familiar with, and will comply with, the requirements
of subsection (a) and applicable implementing regulations; and
"(ii) will report immediately to the officer or employee of the
competing contractor responsible for the offer or bid for any
contract or the modification or extension of such contract, as the
case may be, any information concerning a violation or possible
violation of subsection (a), (b), (c), or (e), or such applicable
implementing regulations, pertaining to such procurement.
"(2) A Federal agency may not award a contract for the procurement of
property or services, or agree to any modification or extension of any
such contract, unless the contracting officer responsible for such
procurement --
"(A) certifies in writing to the head of such agency that the
contracting officer has no information concerning a violation or
possible violation of subsection (a), (b), (c), or (e), or
applicable implementing regulations, pertaining to such
procurement; or
"(B) discloses to the head of such agency any and all such
information and certifies in writing that any and all such
information has been disclosed.
"(3) The head of a Federal agency may require any procurement
official or any competing contractor, at any time during the conduct of
any Federal agency procurement of property or services --
"(A) to certify in writing to the head of such agency that such
procurement official or the officer or employee of the competing
contractor responsible for the offer or bid for such contract or
the modification or extension of such contract, as the case may
be, has no information concerning a violation or possible
violation of subsection (a), (b), (c), or (e), or applicable
implementing regulations, pertaining to such procurement; or
"(B) to disclose to the head of such agency any and all such
information and to certify in writing that any and all such
information has been disclosed.
"(4) If a procurement official leaves the Government during
the conduct of such a procurement, such official shall certify
that he or she understands the continuing obligation not to
disclose proprietary or source selection information.
"(5) For the purposes of enforcing the requirements of this section,
the contracting officer responsible for the conduct of a procurement
shall maintain, as part of the procurement file --
"(A) all certifications made by procurement officials and
competing contractors with regard to such procurement, as required
by this subsection; and
"(B) a record of all persons who have been authorized by the
head of the agency or the contracting officer to have access to
proprietary or source selection information regarding such
procurement.
"(6) Any person making a certification required by this subsection
shall be notified of the applicability of section 1001 of title 18,
United States Code, to false, fictitious, or fraudulent statements in
such certification.
"(7)(A) This subsection applies only to contracts, extensions, and
modifications in excess of $100,000.
"(B) This subsection need not be applied to a contract --
"(i) with a foreign government or an international organization
that is not required to be awarded using competitive procedures
pursuant to section 303(c)(4) of the Federal Property and
Administrative Services Act of 1949 or section 2304(c)(4) of title
10, United States Code; or
"(ii) in an exceptional case, when the head of the Federal
agency concerned determines in writing that this subsection should
be waived pursuant to procedures and criteria established in
implementing regulations issued pursuant to subsection (m) and
notifies the Congress in writing of such determination.
The authority to make determinations under clause (ii) of this
subparagraph may not be delegated.
"(e) RESTRICTIONS ON GOVERNMENT OFFICIALS AND EMPLOYEES. -- No
Government official or employee, civilian, or military, who has
participated personally and substantially in the conduct of any Federal
agency procurement or who has personally reviewed and approved the
award, modification, or extension of any contract for such procurement
shall --
"(1) participate in any manner, as an officer, employee, agent,
or representative of a competing contractor, in any negotiations
leading to the award, modification, or extension of a contract for
such procurement, or
"(2) participate personally and substantially on behalf of the
competing contractor in the performance of such contract,
during the period ending 2 years after the last date such individual
participated personally and substantially in the conduct of such
procurement or personally reviewed and approved the award, modification,
or extension of any contract for such procurement.
"(f) CONTRACTUAL PENALTIES. -- (1) Regulations issued pursuant to
subsection (m) shall require that each contract awarded by a Federal
agency contain a clause specified in such regulation that provides
appropriate contractual penalties for conduct of any competing
contractor prohibited by subsection (a) and for any such conduct of any
officer, employee, agent, representative, or consultant of such
contractor.
"(2) The following remedies are authorized to be included in, and
shall be considered in the development of such regulations:
"(A) Denial of payment of all or any portion of the profit
component of amounts otherwise payable to the contractor by the
Federal agency under the contract and recovery of all or any
portion of the profit component of amounts paid to the contractor
by the Federal agency under the contract.
"(B) Termination of the contract for default.
"(C) Any other appropriate penalty.
"(g) ADMINISTRATIVE ACTIONS. -- (1) If an agency receives a
disclosure of information pursuant to subsection (d) or otherwise
receives or obtains information providing a reasonable basis to believe
that an officer, employee, agent, representative, or consultant of a
competing contractor has knowingly violated the requirements of this
section --
"(A) in the case of a procurement in which a contract has not
been awarded, the agency shall determine whether to terminate the
procurement or take other appropriate actions;
"(B) in the case of a procurement with respect to which a
contract has been awarded, the agency shall determine whether to
void or rescind the contract, to terminate the contract for
default, to impose sanctions upon the contractor, or to permit the
contractor to continue to perform the contract, subject to review
in accordance with, and to the extent provided in, the Contract
Disputes Act of 1978, or to take other appropriate actions; and
"(C) if the agency determines that such a knowing violation has
occurred, the agency, pursuant to procedures specified in the
Federal Acquisition Regulation --
"(i) may impose an immediate suspension, and
"(ii) shall determine whether to initiate a debarment
proceeding,
against the competing contractor or other person who committed
such violation.
"(2) Any procurement official of a Federal agency who engages in
conduct prohibited by subsection (b) or (c) shall be subject to removal
or other appropriate adverse personnel action pursuant to the procedures
specified in chapter 75 of title 5, United States Code, or other
applicable law or regulation.
"(3) The actions taken under paragraph (1) or (2) may be suspended by
the agency head upon the request of the Attorney General pending the
disposition of any civil or criminal actions pursuant to subsections (h)
and (i).
"(h) CIVIL PENALTIES. -- Any person who engages in conduct
prohibited by subsection (a), (b), (c), or (e) shall be subject to the
imposition of a civil fine in a civil action brought by the United
States in an appropriate district court of the United States. The
amount of any such civil fine for such violation may not exceed --
"(1) $100,000 in the case of an individual; or
"(2) $1,000,000 in the case of a competing contractor (other
than an individual).
"(i) CRIMINAL PENALTIES. -- Whoever, during the conduct of a Federal
agency procurement of property or services --
"(1) being a competing contractor or an officer, employee,
representative, agent, or consultant of a competing contractor,
knowingly and willfully solicits or obtains, directly or
indirectly, from any officer or employee of such agency any
proprietary or source selection information (as such terms are
defined in subsection (n) and in regulations prescribed pursuant
to subsection (m)), or
"(2) being an officer or employee of such agency, knowingly and
willfully discloses or promises to disclose, directly or
indirectly, to any competing contractor or any officer, employee,
representative, agent, or consultant of a competing contractor any
proprietary or source selection information,
shall be imprisoned for not more than 5 years, or fined in accordance
with title 18, United States Code, or both.
"(j) TRAINING. -- The head of each Federal agency shall establish a
procurement ethics program for its procurement officials. The program
shall, at a minimum --
"(1) provide for the distribution of written explanations of
the provisions of subsection (b) to such procurement officials;
and
"(2) require each such procurement official, as a condition of
serving as a procurement official, to certify that he or she is
familiar with the provisions of subsection (b), and will not
engage in any conduct prohibited by such subsection, and will
report immediately to the contracting officer any information
concerning a violation or possible violation of subsection (a),
(b), (c), or (e), or applicable implementing regulations.
"(k) REMEDIES NOT EXCLUSIVE. -- Nothing in this subsection shall be
construed to limit the applicability of the requirements, sanctions,
contract penalties, and remedies established under any other law, but no
agency shall be relieved of the obligation to carry out the requirements
of this section because such agency has also applied such other
requirements, sanctions, contract penalties, or remedies.
"(l) NO AUTHORITY TO WITHHOLD INFORMATION. -- Nothing in this
section shall be construed to authorize the withholding of any
information from the Congress, any committee or subcommittee thereof, a
Federal agency, any board of contract appeals of a Federal agency, the
Comptroller General, or an Inspector General of a Federal agency.
"(m) IMPLEMENTING REGULATIONS AND GUIDELINES. -- Government-wide
regulations and guidelines deemed appropriate to carry out this section
shall be issued in the Federal Acquisition Regulation within 180 days
after the date of enactment of this section.
"(n) DEFINITIONS. -- As used in this section:
"(1) The term 'during the conduct of any Federal agency
procurement of property or services' means the period beginning
with the development, preparation, and issuance of a procurement
solicitation, and concluding with the award, modification, or
extension of a contract, and includes the evaluation of bids or
proposals, selection of sources, and conduct of negotiations.
"(2) The term 'competing contractor', with respect to any
procurement (including any procurement using procedures other than
competitive procedures) of property or services, means any entity
that is, or is reasonably likely to become, a competitor for or
recipient of a contract or subcontract under such procurement, and
includes any other person acting on behalf of such an entity.
"(3)(A) The term 'procurement official' means any civilian or
military official or employee of an agency who has participated
personally and substantially in the conduct of the agency
procurement concerned, including all officials and employees who
are responsible for reviewing or approving the procurement, as
further defined by applicable implementing regulations.
"(B) For purposes of subparagraph (A), the term 'employee of an
agency' includes a contractor, subcontractor, consultant, expert,
or adviser (other than a competing contractor) acting on behalf
of, or providing advice to, the agency with respect to any phase
of the agency procurement concerned.
"(4) The term 'contracting officer' means any official or
employee of a Federal agency who has been authorized by the agency
head or his or her designee to enter into, administer, or
terminate contracts and make related determinations and findings.
"(5) The term 'Federal agency' has the meaning provided by
section 3(b) of the Federal Property and Administrative Services
Act of 1949 (40 U.S.C. 472(b)).
"(6) The term 'proprietary information' means --
"(A) information contained in a bid or proposal;
"(B) cost or pricing data; or
"(C) any other information submitted to the Government by a
contractor and designated as proprietary, in accordance with law
or regulation, by the contractor, the head of the agency, or the
contracting officer.
"(7) The term 'source selection information' means information
determined by the head of the agency or the contracting officer to
be information --
"(A) the disclosure of which to a competing contractor would
jeopardize the integrity or successful completion of the
procurement concerned; and
"(B) which is required by statute, regulation, or order to be
secured in a source selection file or other restricted facility to
prevent such disclosure;
as further defined by regulations issued pursuant to subsection
(m) of this section.".
(b) EFFECTIVE DATE. -- "41 USC 423 note" The amendment made by
subsection (a) shall take effect 180 days after the date of enactment of
this Act.
SEC. 7. "41 USC 405 note" PROFIT METHODOLOGY STUDY.
(a) IN GENERAL. -- The Administrator shall conduct a study to
develop a consistent methodology which executive agencies should use for
measuring the profits earned by government contractors on procurements,
other than procurements where the price is based on adequate price
competition or on established catalog or market prices of commercial
items sold in substantial quantities to the general public.
(b) CONTRACTORS' FINANCIAL DATA. -- The methodology developed under
subsection (a) shall include adequate procedures for verifying and
maintaining the confidentiality of contractors' financial data.
SEC. 8. DEFINITION OF ARCHITECTURAL AND ENGINEERING SERVICES.
Section 901 of the Federal Property and Administrative Services Act
of 1949 (40 U.S.C. 541) is amended by striking out paragraph (3) and
inserting the following:
"(3) The term 'architectural and engineering services' means --
"(A) professional services of an architectural or engineering
nature, as defined by State law, if applicable, which are required
to be performed or approved by a person licensed, registered, or
certified to provide such services as described in this paragraph;
"(B) professional services of an architectural or engineering
nature performed by contract that are associated with research,
planning, development, design, construction, alteration, or repair
of real property; and
"(C) such other professional services of an architectural or
engineering nature, or incidental services, which members of the
architectural and engineering professions (and individuals in
their employ) may logically or justifiably perform, including
studies, investigations, surveying and mapping, tests,
evaluations, consultations, comprehensive planning, program
management, conceptual designs, plans and specifications, value
engineering, construction phase services, soils engineering,
drawing reviews, preparation of operating and maintenance manuals,
and other related services.".
SEC. 9. ESTABLISHMENT OF THE COMMERCIAL PRODUCTS ADVOCATE.
The Office of Federal Procurement Policy Act is further amended by
adding at the end thereof the following:
"SEC. 28. "41 USC 424" There is established in the Office of Federal
Procurement Policy the position of Advocate for the Acquisition of
Commercial Products. The Advocate shall report directly to the
Administrator. The Advocate for Acquisition of Commercial Products
shall --
"(1) review all proposed procurement regulations and report to
the Administrator as to whether such regulations will encourage or
discourage the acquisition of commercial products by Federal
agencies;
"(2) provide recommendations to the Administrator as to which
procurement regulations should be rescinded or modified to
encourage the acquisition of commercial products; and
"(3) provide recommendations to the Administrator as to methods
of simplifying procurement regulations governing acquisition of
commercial products, including the most efficient method to apply,
modify, or waive the certification requirements of section 27 of
this Act with respect to contracts for such products.".
SEC. 10. STUDY AND REPORT BY THE ADMINISTRATOR FOR FEDERAL
PROCUREMENT POLICY.
No later than April 1, 1989, the Administrator for Federal
Procurement Policy, in consultation with the Comptroller General, shall
conduct a study and submit a report to the Committee on Governmental
Affairs of the Senate and the Committee on Government Operations of the
House of Representatives --
(1) on the extent to which the data collected by the Federal
Procurement Data System is adequate for the management, oversight,
and evaluation of Federal procurement; and
(2) which shall include any appropriate recommendations for
improvements of such system.
SEC. 11. ELEVATION OF PRESIDENTIAL APPOINTEES WITHIN THE OFFICE OF
MANAGEMENT AND BUDGET.
(a) EXECUTIVE SCHEDULE, LEVEL I. -- Section 5312 of title 5, United
States Code, is amended by adding at the end thereof the following:
"Director of the Office of Management and Budget.".
(b) EXECUTIVE SCHEDULE, LEVEL II. -- Section 5313 of title 5, United
States Code, is amended --
(1) by adding at the end thereof the following:
"Deputy Director of the Office of Management and Budget.";
and
(2) by striking out "Director of the Office of Management and
Budget.".
(c) EXECUTIVE SCHEDULE, LEVEL III. -- Section 5314 of title 5,
United States Code, is amended --
(1) by adding at the end thereof the following:
"Administrator for Federal Procurement Policy.
"Administrator, Office of Information and Regulatory Affairs,
Office of Management and Budget."; and
(2) by striking out "Deputy Director of the Office of
Management and Budget.".
(d) EXECUTIVE SCHEDULE, LEVEL IV. -- Section 5315 of title 5, United
States Code, is amended --
(1) by striking out "Administrator for Federal Procurement
Policy."; and
(2) by striking out "Administrator, Office of Information and
Regulatory Affairs, Office of Management and Budget.".
(e) EFFECTIVE DATE. -- "5 USC 5312 note" The amendments made by this
section shall be effective on January 20, 1989.
SEC. 12. TRAVEL EXPENSES UNDER CERTAIN GOVERNMENT CONTRACTS.
Section 24 of the Office of Federal Procurement Policy Act (41 U.S.
C. 420) is amended --
(1) by redesignating such section as subsection (a) of section
24; and
(2) by adding at the end thereof the following new subsection:
"(b)(1) The provisions of subsection (a) shall not apply to any
agreement between an executive agency and a State institution, or an
executive agency and a nonprofit institution, entered into for the
purpose for conducting federally sponsored research and related
activities.
"(2) Under any agreement described under paragraph (1), costs
incurred by personnel for travel, including costs of lodging, other
subsistence, and incidental expenses, shall be considered reasonable and
allowable only to the extent that such costs do not exceed --
"(A) charges normally allowed by the respective institution in
its regular operations as a result of an institutional policy;
and
"(B) the limits and principles as are provided for by
government-wide regulation of such costs established by the
Director of the Office of Management and Budget.
"(3) The regulation under paragraph (2)(B) shall specifically provide
that in the absence of an institutional policy regarding travel costs,
the rates and amounts established under subchapter I of chapter 57 of
title 5, United States Code, or by the Administrator of General Services
or the President (or his designee) pursuant to any provisions of such
subchapter shall apply to agreements between an executive agency and a
State institution, or an executive agency and a nonprofit institution,
entered into for the purpose of conducting federally sponsored research
and related activities.".
SEC. 13. FEDERAL EMPLOYEE BENEFITS FOR CERTAIN EMPLOYEES OF FORMER
PRESIDENTS AND VICE PRESIDENTS.
(a) RETIREMENT BENEFITS. -- (1) Section 8331(1) of title 5, United
States Code, is amended by --
(A) striking out "and" at the end of subparagraph (I);
(B) by inserting "and" after the semicolon at the end of
subparagraph (J); and
(C) inserting after subparagraph (J) the following new
subparagraph:
"(K) an individual appointed to a position on the office staff
of a former President, or a former Vice President under section 4
of the Presidential Transition Act of 1963, as amended (78 Stat.
153), who immediately before the date of such appointment was an
employee as defined under any other subparagraph of this
paragraph;".
(2) Section 8401(11) of title 5, United States Code, is amended by
striking out "or (J)" and inserting in lieu thereof "(J), or (K)".
(b) LIFE INSURANCE. -- Section 8701(a) of title 5, United States
Code, is amended by --
(1) striking out "and" at the end of paragraph (8);
(2) by inserting "and" after the semicolon at the end of
paragraph (9); and
(3) inserting after paragraph (9) the following new paragraph:
"(10) an individual appointed to a position on the office staff
of a former President, or a former Vice President under section 4
of the Presidential Transition Act of 1963, as amended (78 Stat.
153), who immediately before the date of such appointment was an
employee as defined under any other paragraph of this
subsection;".
(c) HEALTH BENEFITS. -- Section 8901(1) of title 5, United States
Code, is amended by --
(1) striking out "and" at the end of subparagraph (F); and
(2) inserting after subparagraph (G) the following new
subparagraphs:
"(H) an individual appointed to a position on the office staff
of a former President under section 1(b) of the Act of August 25,
1958 (72 Stat. 838); and
"(I) an individual appointed to a position on the office staff
of a former President, or a former Vice President under section 4
of the Presidential Transition Act of 1963, as amended (78 Stat.
153), who immediately before the date of such appointment was an
employee as defined under any other subparagraph of this
paragraph;".
Approved November 17, 1988.
LEGISLATIVE HISTORY -- S. 2215 (H.R. 3345):
HOUSE REPORTS: No. 100-911 accompanying H.R. 3345 (Comm. on
Government Operations).
SENATE REPORTS: No. 100-424 (Comm. on Governmental Affairs).
CONGRESSIONAL RECORD, Vol. 134 (1988): Aug. 11, considered and
passed Senate. Sept. 13, H.R. 3345 considered and passed House;
proceedings vacated and S. 2215, amended, passed in lieu. Oct. 19,
Senate concurred in House amendment with an amendment. Oct. 20, House
concurred in Senate amendment.
Public Law 100-678, 102 Stat. 4049
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act "40 USC 601 note" may be cited as the "Public Buildings
Amendments of 1988".
SEC. 2. INCREASED THRESHOLD FOR APPROVAL PROCESS.
Sections 4(b) and 7(a) of the Public Buildings Act of 1959 (40 U.S.
C. 603(b) and 606(a)) are amended by striking out "$500,000" each place
it appears and inserting in lieu thereof "$1,500,000".
SEC. 3. LIMITATIONS ON LEASING AUTHORITY.
(a) LIMITATION ON APPROPRIATIONS FOR LEASING CERTAIN SPACE. --
Section 7(a) of the Public Buildings Act of 1959 (40 U.S.C. 606(a)) is
amended by inserting after the second sentence the following new
sentence: "No appropriation shall be made to alter any building, or
part thereof, which is under lease by the United States for use for a
public purpose if the cost of such alteration would exceed $750,000
unless such alteration has been approved by resolutions adopted by the
Committee on Environment and Public Works of the Senate and the
Committee on Public Works and Transportation of the House of
Representatives.".
(b) LIMITATION ON LEASING CERTAIN SPACE. -- Section 7 of such Act
(40 U.S.C. 606) is amended by adding at the end thereof the following
new subsection:
"(e) LIMITATION ON LEASING CERTAIN SPACE. --
"(1) GENERAL RULE. -- The Administrator may not lease any
space to accommodate --
"(A) computer and telecommunications operations;
"(B) secure or sensitive activities related to the national
defense or security, except in any case in which it would be
inappropriate to locate such activities in a public building or
other facility identified with the United States Government; or
"(C) a permanent courtroom, judicial chamber, or administrative
office for any United States court;
if the average rental cost of leasing such space would exceed
$1,500,000.
"(2) EXCEPTION. -- The Administrator may lease any space with
respect to which paragraph (1) applies if the Administrator first
determines, for reasons set forth in writing, that leasing such
space is necessary to meet requirements which cannot be met in
public buildings and submits such reasons to the Committee on
Environment and Public Works of the Senate and the Committee on
Public Works and Transportation of the House of Representatives.".
SEC. 4. DOLLAR AMOUNT ADJUSTMENT.
Section 7 of the Public Buildings Act of 1959 (40 U.S.C. 606) is
further amended by adding at the end the following new subsection:
"(f) DOLLAR AMOUNT ADJUSTMENT. -- Any dollar amount referred to in
this section and section 4(b) of this Act may be adjusted by the
Administrator annually to reflect a percentage increase or decrease in
construction costs during the preceding calendar year, as determined by
the composite index of construction costs of the Department of Commerce.
Any such adjustment shall be expeditiously reported to the Committee on
Environment and Public Works of the Senate and the Committee on Public
Works and Transportation of the House of Representatives.".
SEC. 5. STATE ADMINISTRATION; SPECIAL RULES FOR LEASED BUILDINGS.
The Public Buildings Act of 1959 (40 U.S.C. 601-616) is amended by
adding at the end thereof the following new sections:
"SEC. 19. "40 USC 617" STATE ADMINISTRATION OF CRIMINAL AND HEALTH
AND SAFETY LAWS.
"Notwithstanding any other provision of law, the Administrator may,
whenever the Administrator considers it desirable, assign to a State, or
to a commonwealth, territory, or possession of the United States, all or
part of the authority of the United States to administer criminal laws
and health and safety laws with respect to lands or interests in lands
under the control of the Administrator located in such State,
commonwealth, territory, or possession. Assignment of authority under
this section may be accomplished by filing with the chief executive
officer of such State, commonwealth, territory, or possession a notice
of assignment to take effect upon acceptance thereof, or in such other
manner as may be prescribed by the laws of the State, commonwealth,
territory, or possession in which such lands or interests in lands are
located.
"SEC. 20. "40 USC 618" SPECIAL RULES FOR LEASED BUILDINGS.
"(a) SPECIFICATIONS. -- Notwithstanding the provisions of section
210(h)(1) of the Federal Property and Administrative Services Act of
1949, the Administrator shall not make any agreement or undertake any
commitment which will result in the construction of any building which
is to be constructed for lease to, and for predominant use by, the
United States until the Administrator has established detailed
specification requirements for such building.
"(b) COMPETITIVE PROCEDURES. -- The Administrator may acquire a
leasehold interest in any building which is constructed for lease to,
and for predominant use by, the United States only by the use of
competitive procedures required by section 303 of the Federal Property
and Administrative Services Act of 1949 (41 U.S.C. 253).
"(c) INSPECTIONS. -- The Administrator shall inspect every building
to be constructed for lease to, and for predominant use by, the United
States during the construction of such building in order to determine
that the specifications established for such building are complied with.
"(d) ENFORCEMENT. --
"(1) POST-CONSTRUCTION EVALUATION. -- Upon completion of a
building constructed for lease to, and for predominant use by, the
United States, the Administrator shall evaluate such building for
the purpose of determining the extent, if any, of failure to
comply with the specifications referred to in subsection (a).
"(2) CONTRACT CLAUSE. -- The Administrator shall ensure that
any contract entered into for a building described in paragraph
(1) shall contain provisions permitting a reduction of rent during
any period when such building is not in compliance with such
specifications.".
SEC. 6. COMPLIANCE WITH NATIONALLY RECOGNIZED CODES.
(a) IN GENERAL. -- The Public Buildings Act of 1959 (40 U.S.C.
601-616) is further amended by adding at the end the following new
section:
"SEC. 21. COMPLIANCE WITH NATIONALLY RECOGNIZED CODES.
"(a) BUILDING CODES. -- "40 USC 619" Each building constructed or
altered by the General Services Administration or any other Federal
agency shall be constructed or altered, to the maximum extent feasible
as determined by the Administrator or the head of such Federal agency,
in compliance with one of the nationally recognized model building codes
and with other applicable nationally recognized codes. Such other codes
shall include, but not be limited to, electrical codes, fire and life
safety codes, and plumbing codes, as determined appropriate by the
Administrator. In carrying out this subsection, the Administrator or
the head of the Federal agency authorized to construct or alter the
building shall use the latest edition of the nationally recognized codes
referred to in this subsection.
"(b) ZONING LAWS. -- Each building constructed or altered by the
General Services Administration or any other Federal agency shall be
constructed or altered only after consideration of all requirements
(other than procedural requirements) of --
"(1) zoning laws, and
"(2) laws relating to landscaping, open space, minimum distance
of a building from the property line, maximum height of a
building, historic preservation, and esthetic qualities of a
building, and other similar laws,
of a State or a political subdivision of a State which would apply to
the building if it were not a building constructed or altered by a
Federal agency.
"(c) SPECIAL RULES. --
"(1) STATE AND LOCAL GOVERNMENT CONSULTATION, REVIEW, AND
INSPECTIONS. -- For purposes of meeting the requirements of
subsections (a) and (b) with respect to a building, the
Administrator or the head of the Federal agency authorized to
construct or alter the building shall --
"(A) in preparing plans for the building, consult with
appropriate officials of the State or political subdivision, or
both, in which the building will be located;
"(B) upon request, submit such plans in a timely manner to such
officials for review by such officials for a reasonable period of
time not exceeding 30 days; and
"(C) permit inspection by such officials during construction or
alteration of the building, in accordance with the customary
schedule of inspections for construction or alteration of
buildings in the locality, if such officials provide to the
Administrator or the head of the Federal agency, as the case may
be --
"(i) a copy of such schedule before construction of the
building is begun; and
"(ii) reasonable notice of their intention to conduct any
inspection before conducting such inspection.
"(2) LIMITATION ON STATE RESPONSIBILITIES. -- Nothing in this
section shall impose an obligation on any State or political
subdivision to take any action under paragraph (1).
"(d) STATE AND LOCAL GOVERNMENT RECOMMENDATIONS. -- Appropriate
officials of a State or a political subdivision of a State may make
recommendations to the Administrator or the head of the Federal agency
authorized to construct or alter a building concerning measures
necessary to meet the requirements of subsections (a) and (b). Such
officials may also make recommendations to the Administrator or the head
of the Federal agency concerning measures which should be taken in the
construction or alteration of the building to take into account local
conditions. The Administrator or the head of the Federal agency shall
give due consideration to any such recommendations. 4"(e) EFFECT OF
NONCOMPLIANCE. -- No action may be brought against the United States
and no fine or penalty may be imposed against the United States for
failure to meet the requirements of subsection (a), (b), or (c) of this
section or for failure to carry out any recommendation under subsection
(d). 4"(f) LIMITATION ON LIABILITY. -- The United States and its
contractors shall not be required to pay any amount for any action taken
by a State or a political subdivision of a State to carry out this
section (including reviewing plans, carrying out on-site inspections,
issuing building permits, and making recommendations).
"(g) APPLICABILITY TO CERTAIN BUILDINGS. -- This section applies to
any project for construction or alteration of a building for which funds
are first appropriated for a fiscal year beginning after September 30,
1989.
"(h) NATIONAL SECURITY WAIVER. -- This section shall not apply with
respect to any building if the Administrator or the head of the Federal
agency authorized to construct or alter the building determines that the
application of this section to the building would adversely affect
national security. A determination under this subsection shall not be
subject to administrative or judicial review.".
(b) NOTIFICATION OF FEDERAL AGENCIES. -- "40 USC 619 note" Not later
than 180 days after the date of the enactment of this section, the
Administrator of General Services shall notify the heads of all Federal
agencies of the requirements of section 21 of the Public Buildings Act
of 1959.
SEC. 7. LIMITATION ON MAXIMUM RENTAL RATE.
Section 322 of the Act of June 30, 1932 (47 Stat. 412; 40 U.S.C.
278a), is repealed.
SEC. 8. PROTECTION OF FEDERAL PROPERTY.
(a) REFERENCE TO GSA. -- The Act of June 1, 1948 (62 Stat. 281; 40
U.S.C. 318-318d) is amended --
(1) by striking out "Federal Works Agency" each place it
appears and inserting in lieu thereof "General Services
Administration"; and
(2) by striking out "Federal Works Administrator" each place it
appears and inserting in lieu thereof "Administrator of General
Services".
(b) INCLUSION OF LEASED PROPERTY. -- The first section of such Act
(40 U.S.C. 318) is amended to read as follows:
"SECTION 1. SPECIAL POLICE.
"(a) APPOINTMENT. -- The Administrator of General Services, or
officials of the General Services Administration duly authorized by the
Administrator, may appoint uniformed guards of such Administration as
special policemen without additional compensation for duty in connection
with the policing of all buildings and areas owned or occupied by the
United States and under the charge and control of the Administrator.
"(b) POWERS. -- Special policemen appointed under this section shall
have the same powers as sheriffs and constables upon property referred
to in subsection (a) to enforce the laws enacted for the protection of
persons and property, and to prevent breaches of the peace, to suppress
affrays or unlawful assemblies, and to enforce any rules and regulations
promulgated by the Administrator of General Services or such duly
authorized officials of the General Services Administration for the
property under their jurisdiction; except that the jurisdiction and
policing powers of such special policemen shall not extend to the
service of civil process.".
(c) CONFORMING AMENDMENTS. --
(1) SECTION 2. -- Section 2 of such Act (40 U.S.C. 318a) is
amended by striking out "Federal property" each place it appears
and inserting in lieu thereof "property".
(2) SECTION 3. -- Section 3 of such Act (40 U.S.C. 318b) is
amended by striking out "and over which the United States has
acquired exclusive or concurrent criminal jurisdiction".
SEC. 9. "40 USC 601 note" CERTAIN OTHER AUTHORITIES.
Nothing in this Act (including any amendment made by this Act) shall
be construed to affect the authorities granted in sections 5, 6, and 8
of the Central Intelligence Agency Act of 1949 (50 U.S.C. 403f, 403g,
and 403j).
SEC. 10. TECHNICAL AMENDMENT.
The Act entitled "An Act to designate the United States Post Office
and Courthouse in Pendleton, Oregon, as the 'John F. Kilkenny United
States Post Office and Courthouse'", approved October 17, 1984 (Public
Law 98-492; 98 Stat. 2271), is amended by striking out "Dorian" and
inserting in lieu thereof "Dorion".
SEC. 11. NAMINGS.
(a) LAWTON CHILES, JR. FEDERAL BUILDING, LAKELAND, FLORIDA. --
(1) DESIGNATION. -- The Federal Building to be constructed in
Lakeland, Florida, that will replace the existing Federal Building
in Lakeland, Florida, shall be known and designated as the "Lawton
Chiles, Jr. Federal Building".
(2) LEGAL REFERENCES. -- Any reference in any law, regulation,
document, record, map, or other paper of the United States to the
building designated by paragraph (1) is deemed to be a reference
to the "Lawton Chiles, Jr. Federal Building".
(3) EFFECTIVE DATE. -- This subsection shall take effect on
whichever of the following occurs later:
(A) The date of the enactment of this Act.
(B) January 3, 1989.
(b) ROBERT A. YOUNG FEDERAL BUILDING, ST. LOUIS, MISSOURI. --
(1) DESIGNATION. -- The Federal building located at 405 South
Tucker Boulevard, St. Louis, Missouri, shall be known and
designated as the "Robert A. Young Federal Building".
(2) LEGAL REFERENCES. -- Any reference in a law, map,
regulation, document, record, or other paper of the United States
to the Federal building referred to in paragraph (1) shall be
deemed to be a reference to the "Robert A. Young Federal
Building".
Approved November 17, 1988.
LEGISLATIVE HISTORY -- S. 2186 (H.R. 2790):
HOUSE REPORTS: No. 100-474, Pt. 1, accompanying H.R. 2790 (Comm. on
Public Works and Transportation).
SENATE REPORTS: No. 100-322 (Comm. on Environment and Public Works).
CONGRESSIONAL RECORD: Vol. 133 (1987): Dec. 14, H.R. 2790
considered and passed House. Vol. 134 (1988): May 18, S. 2186
considered and passed Senate. Oct. 19, considered and passed House,
amended. Oct. 21, Senate concurred in House amendment.
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 24 (1988): Nov.
17, Presidential statement.
Public Law 100-677, 102 Stat. 4047
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. "16 USC 1274 note" SALMON AND SNAKE RIVERS.
(a) The Federal Energy Regulatory Commission shall not issue any
preliminary permit, license, or exemption from licensing for the
construction of any dam, diversion or bypass under the Federal Power Act
(41 Stat. 1063), as amended, on:
(1) the Salmon River, Idaho, from Long Tom Bar to the
confluence of the Snake River, or
(2) the Snake River, Idaho, from the eastward extension of the
north boundary of section 1, township 5 north, range 47 east,
Willamette Meridian to the pool formed behind Lower Granite Dam.
(b) In order to further the purposes of the Wild and Scenic Rivers
Act (82 Stat. 906), as amended, and to protect the values for which
certain portions of the Salmon River, Idaho and the Snake River, Idaho
were designated as components of the system, no dam may be constructed
on the segments of the Salmon or Snake Rivers referred to in subsection
(a).
SEC. 2. LAKE TOBESOFKEE.
In the case of any hydroelectric power project located or proposed to
be located at Lake Tobesofkee in Bibb County, Georgia, the provisions of
the Federal Power Act shall continue to apply, except that the Federal
Energy Regulatory Commission shall not issue any permit, license, or
exemption under that Act or under any other provision of law
administered by the Commission to any person or public or private entity
for such project or for any transmission or other facilities used in
connection with, or appurtenant to, such project without having obtained
the prior consent of the governing body of Bibb County.
Approved November 17, 1988.
LEGISLATIVE HISTORY -- S. 2102:
SENATE REPORTS: No. 100-468 (Comm. on Energy and Natural Resources).
CONGRESSIONAL RECORD, Vol. 134 (1988): Aug. 11, considered and
passed Senate. Oct. 20, considered and passed House, amended. Oct. 21,
Senate concurred in House amendment.
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 24 (1988) Nov.
17, Presidential statement.
Public Law 100-676, 102 Stat. 4012
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE. -- This Act "33 USC 2201 note" may be cited as the
"Water Resources Development Act of 1988".
(b) TABLE OF CONTENTS.
Sec. 1. Short title; table of contents.
Sec. 2. Secretary defined.
Sec. 3. Project authorizations.
Sec. 4. Project modifications.
Sec. 5. Comments on certain changes in operations of reservoirs.
Sec. 6. Operation of certain projects to enhance recreation.
Sec. 7. Collaborative research and development.
Sec. 8. Innovative technology.
Sec. 9. Technical assistance demonstration program.
Sec. 10. Periodic statements.
Sec. 11. Simulation model of South Central Florida hydrologic
ecosystem.
Sec. 12. Section 215 reimbursement limitation per project.
Sec. 13. Additional 10 percent payment over 30 years for
construction of harbors.
Sec. 14. Compliance with flood plain management and insurance
programs.
Sec. 15. Federal repayment district.
Sec. 16. Abandoned and wrecked vessels.
Sec. 17. Flood warning and response system.
Sec. 18. Small boat harbor, Buffalo Harbor, New York.
Sec. 19. Lakeport Lake, California.
Sec. 20. Sacramento, California.
Sec. 21. Mississippi River headwaters reservoirs.
Sec. 22. Hearding Island inlet, Duluth Harbor, Minnesota.
Sec. 23. Louisiana water supply.
Sec. 24. Contained spoil disposal facilities in the Great Lakes and
their connecting channels.
Sec. 25. South pier to Charlevoix Harbor, Charlevoix, Michigan.
Sec. 26. Coyote and Berryessa Creeks, California.
Sec. 27. Land conveyance, Whittier Narrows Dam, Los Angeles County,
California.
Sec. 28. Land conveyance in Ottawa, Illinois.
Sec. 29. Land transfer in Whitman County, Washington.
Sec. 30. Lesage/Greenbottom Swamp, West Virginia.
Sec. 31. Portuguese and Bucana Rivers, Puerto Rico.
Sec. 32. Alternatives to mud dump for disposal of dredged material.
Sec. 33. Missouri River between Fort Peck Dam, Montana, and Gavins
Point Dam, South Dakota and Nebraska.
Sec. 34. New York Harbor drift removal project.
Sec. 35. Placement of dredged beach quality sand on beaches.
Sec. 36. Restoration, Ventura to Pierpont Beach, California.
Sec. 37. William G. Stone lock tolls.
Sec. 38. Declaration of nonavailability for portions of the Delaware
River.
Sec. 39. Declaration of nonnavigability for portions of Coney Island
Creek and Gravesend Bay, New York.
Sec. 40. Extension of modified water delivery schedules, Everglades
National Park.
Sec. 41. Period of environmental demonstration program.
Sec. 42. Federal hydroelectric power modernization study.
Sec. 43. Water quality effects of hydroelectric facilities.
Sec. 44. GAO review of civil works program.
Sec. 45. Des Plaines River wetlands demonstration project
authorization.
Sec. 46. Kissimmee River, Florida.
Sec. 47. Water resources studies.
Sec. 48. Division laboratory.
Sec. 49. Water resources management planning service for the Hudson
River Basin.
Sec. 50. Technical resource service, Red River Basin, Minnesota and
North Dakota.
Sec. 51. Correction of descriptions.
Sec. 52. Project deauthorizations.
Sec. 53. Namings.
Sec. 54. Declaration of nonnavigability of bodies of water in
Ridgefield, New Jersey.
SEC. 2. "33 USC 2201 note" SECRETARY DEFINED.
For purposes of this Act, the term "Secretary" means the Secretary of
the Army.
SEC. 3. PROJECT AUTHORIZATIONS.
(a) AUTHORIZATION OF CONSTRUCTION. -- Except as otherwise provided
in this subsection, the following projects for water resources
development and conservation and other purposes are authorized to be
carried out by the Secretary substantially in accordance with the plans
and subject to the conditions recommended in the respective reports
designated in this subsection:
(1) LOWER MISSION CREEK, SANTA BARBARA, CALIFORNIA. -- The
project for flood control, Lower Mission Creek, Santa Barbara,
California: Report of the Chief of Engineers, dated March 25,
1988, at a total cost of $10,420,000, with an estimated first
Federal cost of $5,909,000, and an estimated first non-Federal
cost of $4,511,000.
(2) FT. PIERCE HARBOR, FLORIDA. -- The project for navigation,
Ft. Pierce Harbor, Florida: Report of the Chief of engineers,
dated December 14, 1987, at a total cost of $6,742,000, with an
estimated first Federal cost of $4,319,000, and an estimated first
non-Federal cost of $2,423,000.
(3) NASSAU COUNTY, FLORIDA. -- The project for beach erosion
control, Nassau County (Amelia Island), Florida: Report of the
Chief of Engineers, dated May 19, 1986, at a total cost of
$5,753,000, with an estimated first Federal cost of $4,619,000,
and an estimated first non-Federal cost of $1,134,000.
(4) PORT SUTTON CHANNEL, FLORIDA. -- The project for
navigation, Port Sutton Channel, Florida: Report of the Chief of
Engineers, dated March 28, 1988, at a total cost of $2,670,000,
with an estimated first Federal cost of $1,155,000,
7 and an estimated first non-Federal cost of $1,515,000; except
that construction of such project may not be initiated until the
Secretary determines that such project serves more than one
beneficiary.
(5) CHICAGOLAND UNDERFLOW PLAN, ILLINOIS. -- The project for
flood control, Chicagoland Underflow Plan, Illinois: Report of
the Chief of Engineers, dated March 25, 1988, at a total cost of
$419,000,000, with an estimated first Federal cost of
$314,250,000, and an estimated first non-Federal cost of
$104,750,000.
(6) LOWER OHIO RIVER, ILLINOIS AND KENTUCKY. -- The project
for navigation, Lower Ohio River, Locks and Dams 52 and 53,
Illinois and Kentucky: Report of the Chief of Engineers, dated
August 20, 1986, at a total cost of $775,000,000, with a first
Federal cost of $775,000,000, and with the costs of construction
of the project to be paid one-half from amounts appropriated from
the general fund of the Treasury and one-half from amounts
appropriated from the Inland Waterways Trust Fund.
(7) HAZARD, KENTUCKY. -- The project for flood control,
Hazard, Kentucky: Report of the Chief of Engineers, dated October
30, 1986, at a total cost of $7,450,000, with an estimated first
Federal cost of $5,590,000, and an estimated first non-Federal
cost of $1,860,000.
(8) MISSISSIPPI AND LOUISIANA ESTUARINE AREAS, MISSISSIPPI AND
LOUISIANA. -- The project for environmental enhancement,
Mississippi and Louisiana Estuarine Areas, Mississippi and
Louisiana: Report of the Chief of Engineers, dated May 19, 1986,
at a total cost of $59,300,000.
(9) WOLF AND JORDAN RIVERS, MISSISSIPPI. -- The project for
navigation, Wolf and Jordan Rivers and Bayou Portage, Mississippi:
Report of the Chief of Engineers, dated June 10, 1987, at a total
cost of $2,290,000, with an estimated first Federal cost of
$1,620,000 and an estimated first non-Federal cost of $670,000.
(10) TRUCKEE MEADOWS, NEVADA. -- The project for flood
control, Truckee Meadows, Nevada: Report of the Chief of
Engineers, dated July 25, 1986, at a total cost of
7$78,400,000, with an estimated first Federal cost of
$39,200,000 and an estimated first non-Federal cost of
$39,200,000; except that the Secretary is authorized to carry out
fish and wildlife enhancement as a purpose of such project,
including fish and wildlife enhancement measures described in the
District Engineer's Report, dated July 1985, at an additional
total cost of $4,140,000.
(11) WEST COLUMBUS, OHIO. -- The project for flood control,
Scioto River, West Columbus, Ohio: Report of the Chief of
Engineers, dated February 9, 1988, at a total cost of $31,562,000,
with an estimated first Federal cost of $23,671,000, and an
estimated first non-Federal cost of $7,891,000.
(12) DELAWARE RIVER, PENNSYLVANIA AND DELAWARE. -- The project
for navigation, Delaware River, Philadelphia to Wilmington,
Pennsylvania and Delaware: Report of the Chief of Engineers,
dated June 15, 1986, at as total cost of $17,200,000, with an
estimated first Federal cost of $9,100,000 and an estimated first
non-Federal cost of $8,100,000.
(13) CYPRESS CREEK, TEXAS. -- The project for flood control,
Cypress Creek, Texas: Report of the Chief of Engineers, dated
October 12, 1987, at a total project cost of $114,200,000, with an
estimated first Federal cost of $84,900,000 and an estimated first
non-Federal cost of $29,300,000.
(14) FALFURRIAS, TEXAS. -- The project for flood control,
Falfurrias, Texas: Report of the Chief of Engineers, dated March
15, 1988, at a total cost of $31,800,000, with an estimated first
Federal cost of $15,900,000, and an estimated first non-Federal
cost of $15,900,000.
(15) GUADALUPE RIVER, TEXAS. -- The project for navigation,
Guadalupe River to Victoria, Texas: Report of the Chief of
Engineers, dated September 1, 1987, at a total cost of
$23,900,000, with an estimated first Federal cost of $15,100,000,
and an estimated first non-Federal cost of $8,800,000.
(16) MCGRATH CREEK, WICHITA FALLS, TEXAS. -- The project for
flood control, McGrath Creek, Wichita Falls, Texas: Report of the
Chief of engineers, dated March 25, 1988, at a total cost of
$9,100,000, with an estimated first Federal cost of $6,800,000 and
an estimated first non-Federal cost of $2,300,000.
(b) MAXIMUM COST OF PROJECTS. -- Section 902 "33 USC 2280" of the
Water Resources Development Act of 1986 (100 Stat. 4183) is amended --
(1) by striking out "in this Act, or an amendment made by this
Act, for a project" and inserting in lieu thereof "with respect to
a project for water resources development and conservation and
related purposes authorized to be carried out by the Secretary in
this Act or in a law enacted after the date of the enactment of
this Act, including the Water Resources Development Act of 1988,
or in an amendment made by this Act or any later law with respect
to such a project";
(2) in paragraph (1) by inserting ", in any later law," after
"in this Act" and by inserting "or any later law" after "by this
Act";
(3) in paragraph (2)(A) by inserting "or any later law" after
"of this Act"; and
(4) in paragraph (2)(B) by inserting "or any later law" after
"by this Act".
SEC. 4. PROJECT MODIFICATIONS.
(a) BEAVER LAKE, ARKANSAS. --
(1) AMENDMENTS. -- Section 843 of the Water Resources
Development Act of 1986 (100 Stat. 4176-4177) is amended --
(A) by inserting "and the Chief of the Soil Conservation
Service" after "the Environmental Protection Agency"; and
(B) by inserting "including best management practices," before
"at a total cost".
(2) CONTINUATION OF PLANNING AND DESIGN. -- Using funds made
available for the Beaver Lake project, Arkansas, pursuant to the
Energy and Water Development Appropriations Act, 1989, the
Secretary is directed to continue overall planning and design for
such project, including the development of implementation plans
for individual parcels of land within the drainage basin which
contribute to water quality degradation and impairment of water
supply uses at Beaver Lake.
(b) WEST MEMPHIS AND VICINITY, ARKANSAS. -- The project for flood
control, West Memphis and vicinity, Arkansas, authorized by section
401(a) of the Water Resources Development Act of 1986 (100 Stat. 4112)
is modified to provide that non-Federal cooperation for such project may
be provided by levee districts, drainage districts, or any unit of a
State, county, or local government.
(c) KING HARBOR, REDONDO BEACH, CALIFORNIA. -- Section 809 of the
Water Resources Development Act of 1986 (100 Stat. 4168) is amended by
striking out the last sentence and inserting in lieu thereof the
following: "The non-Federal share of the cost of work undertaken
pursuant to this section shall be in accordance with title I of this
Act.".
(d) LOS ANGELES AND LONG BEACH HARBORS, SAN PEDRO BAY, CALIFORNIA.
-- The navigation project for Los Angeles and Long Beach Harbors, San
Pedro Bay, California, authorized by section 201 of the Water Resources
Development Act of 1986 (100 Stat. 4091), is modified to provide that,
if non-Federal interests carry out any work associated with such project
which is later recommended by the Chief of Engineers and approved by the
Secretary, the Secretary may credit such non-Federal interests an amount
equal to the Federal share of the cost of such work, without interest.
In analyzing costs and benefits of such project, the Secretary shall
consider the costs and benefits produced by any work which is carried
out under the preceding sentence by non-Federal interests and which the
Secretary determines is compatible with such project. The feasibility
report for such project shall include consideration and evaluation of
the following proposed project features: Long Beach Main Channel,
Channel to Los Angeles Pier 300, Channels to Los Angeles Pier 400, Long
Beach Pier "K" Channel, and Los Angeles Crude Transshipment Terminal
Channel.
(e) LOS ANGELES RIVER, CALIFORNIA. -- The Secretary is directed to
perform maintenance dredging of the existing Federal project at the
mouth of the Los Angeles River, California, to the authorized depth of
20 feet for the purpose of maintaining the flood control basin and
navigation safety.
(f) SUNSET HARBOR, CALIFORNIA. -- The demonstration project at
Sunset Harbor, California, authorized by section 1119(b) of the Water
Resources Development Act of 1986 (100 Stat. 4238), is modified to
include wetland restoration as a purpose of such demonstration project.
All costs allocated to such wetland restoration shall be paid by
non-Federal interests in accordance with section 916 of such Act.
(g) INDIANA SHORELINE EROSION, INDIANA. -- The undesignated
paragraph of section 501(a) of the Water Resources Development Act of
1986 under the heading "INDIANA SHORELINE, INDIANA" (100 Stat. 4135) is
amended by striking out "with an estimated first Federal cost of
$5,000,000." and inserting in lieu thereof "with the Federal share of
the cost of this project to be determined in accordance with title I of
this Act.".
(h) STUMPY LAKE, LOUISIANA. -- The project for mitigation of fish
and wildlife losses Red River Waterway, Louisiana, authorized by section
601(a) of the Water Resources Development Act of 1986 (100 Stat. 4142),
is modified to authorize the Secretary to obtain, on a priority basis,
up to 300 acres in the area of Stumpy Lake as part of such project.
Such modification shall not increase the total authorization for land
acquisition for such project.
(i) ANNAPOLIS HARBOR, MARYLAND. -- The project for navigation,
Annapolis Harbor, Maryland, is modified to authorize and direct the
Secretary to realign by nonstructural, nondredging measures the channel
in such project, as determined necessary by the Secretary, for the
purpose of promoting more efficient mooring operations in Annapolis
Harbor.
(j) DEAL ISLAND, MARYLAND. -- The Secretary may pay the remaining
cost for the navigation project for Deal Island, Maryland (Lower
Thorofare), authorized under section 107 of the River and Harbor Act of
1960, estimated at $277,000, plus any interest due the construction
contractor.
(k) REDWOOD RIVER, MARSHALL, MINNESOTA. -- The project for flood
control, Redwood River, Marshall, Minnesota, authorized by section 401(
a) of the Water Resources Development Act of 1986 (100 Stat. 4117), is
modified to authorize the Secretary to construct the project
substantially in accordance with the General Design Memorandum, dated
April 1987, at a total cost of $6,900,000, with an estimated first
Federal cost of $5,000,000 and an estimated first non-Federal cost of
$1,900,000.
(l) ROOT RIVER BASIN, MINNESOTA. -- The undesignated paragraph of
section 401(a) of the Water Resources Development Act of 1986 under the
heading "ROOT RIVER BASIN, MINNESOTA" (100 Stat. 4117) is amended by
adding at the end thereof the following new sentence: "Nothing in this
paragraph precludes the Secretary from carrying out the project under
section 205 of the Flood Control Act of 1948 (33 U.S.C. 701s).".
(m) ROSEAU RIVER, MINNESOTA. -- The project for flood control,
Roseau River, Minnesota, authorized by the Flood control Act of 1965, is
modified to authorize and direct the Secretary to construct as
authorized, or to construct under section 205 of the Flood Control Act
of 1948 (33 U.S.C. 701s), the 6-mile flood control levee in the vicinity
of Duxby, Minnesota, beginning at a point approximately 2 miles
upstream, substantially in accordance with the recommendations of the
Chief of Engineers contained in House Document Numbered 282, 89th
Congress, at an estimated total cost of $360,000, and with an estimated
first Federal cost of $270,000 and an estimated first non-Federal cost
of $90,000. In analyzing costs and benefits of such project, the
Secretary shall consider the costs and benefits produced by any work
which is carried out under such section 205 and which the Secretary
determines is compatible with such project.
(n) GULFPORT HARBOR, MISSISSIPPI. --
(1) IN GENERAL. -- The project for navigation, Gulfport
Harbor, Mississippi, authorized by section 202(a) of the Water
Resources Development Act of 1986 (100 Stat. 4094-4095) is
modified to authorize the Secretary to dispose, in accordance with
all provisions of Federal law, of dredged material --
(A) from construction, operation, and maintenance of such
project in open waters of the Gulf of Mexico;
(B) from construction of such project by thin layer disposal in
the Mississippi Sound under the demonstration program carried out
under paragraph (2);
(C) from operation and maintenance of such project by disposal
in the Mississippi Sound under a plan developed by the Secretary
and approved by the Administrator of the Environmental Protection
Agency if the Secretary, after consultation with the study team
established under paragraph (3), determines that the report
submitted under paragraph (2)(H) indicates that there will be no
unacceptable adverse environmental impacts from such disposal;
and
(D) from construction, operation, and maintenance of such
project as fill in connection with a pier extension project for
such Harbor carried out under a permit issued before, on, or after
the date of the enactment of this Act under section 404 of the
Federal Water Pollution Control Act.
(2) DEMONSTRATION PROGRAM. --
(A) PURPOSES. -- During construction of the Gulfport Harbor
navigation project, the Secretary shall carry out a demonstration
program for the purpose of evaluating the costs and benefits of
thin layer disposal in the Mississippi Sound of dredged material
from construction of harbor improvements, including any operation
and maintenance materials that may be removed during construction,
and for determining whether or not there are unacceptable adverse
effects from such disposal --
(i) on human health or welfare, including but not limited to
plankton, fish, shellfish, wildlife, shorelines, and beaches;
(ii) on marine life (including the transfer, concentration, and
dispersal of pollutants or their byproducts through biological,
physical, and chemical processes), changes in marine ecosystem
diversity, productivity, and stability, and species and community
population changes;
(iii) on esthetic, recreation, and economic values; and
(iv) on alternative uses of oceans, such as mineral
exploitation and scientific study.
In addition, the Secretary shall determine through such program
the persistence and permanence of any such adverse effects and
methods of mitigating any such adverse effects.
(B) PLANNING. -- Within 4 months after the date of the
enactment of this Act, the Secretary, in consultation with the
study team established under paragraph (3, shall develop a plan
for carrying out the demonstration program under this paragraph.
Such plan shall, at a minimum, establish predisposal monitoring
requirements, thin layer disposal locations, the amounts of
dredged material necessary for carrying out such demonstration
program, the duration of thin layer disposal under such
demonstration program, the compatibility of the receiving habitat
with thin layer dredged material disposal, requirements for
minimizing demonstration program impacts, the depth of thin layer
disposal, and the scope of the post disposal monitoring.
(C) LIMITATIONS ON MATERIALS FROM PROJECT. -- The Secretary in
carrying out the demonstration program under this paragraph shall
use suitable material removed during construction of the Gulfport
Harbor navigation project. The amount of material used shall be
of sufficient quantity to determine the effects of thin layer
disposal in near shore areas of (i) dredged materials from
construction of harbor improvements, and (ii) any materials from
operation and maintenance of harbor improvements dredged during
the period of such construction; except that the total amount of
material to be used shall be limited to the lesser of 3,000,000
cubic yards of dredged material or the amount determined under the
plan developed under subparagraph (B).
(D) CONSULTATION REQUIREMENT. -- In conducting the
demonstration program under this paragraph, the Secretary shall
consult the study team established under paragraph (3).
(E) POST DISPOSAL MONITORING. -- The demonstration program
under this paragraph shall include monitoring of the near shore
areas at which dredged material is disposed of under such program
during the period determined under the plan developed under
subparagraph (B).
(F) APPLICABILITY OF FEDERAL LAW. -- The demonstration program
under this paragraph shall be carried out in accordance with all
applicable provisions of Federal law, including section 404(c) of
the Federal Water Pollution Control Act.
(G) COST SHARING. -- The demonstration program carried out
under this paragraph shall be subject to cost sharing under title
I of the Water Resources Development Act of 1986. All costs of
such program, other than dredging and disposal of dredged material
costs, shall not be included for purposes of calculating the
economic costs and benefits of the navigation project for Gulfport
Harbor, Mississippi.
(H) REPORT TO CONGRESS AND EPA. -- Within 1 year after the
date of completion of the demonstration program under this
paragraph, the Secretary, after consultation with the study team
established under paragraph (3), shall transmit to Congress and to
the Administrator of the Environmental Protection Agency a report
on the results of such demonstration program together with
recommendations concerning thin layer disposal in near shore areas
of dredged material from construction, operation, and maintenance
of future navigation projects.
(I) APPROVAL OR DISAPPROVAL OF RECOMMENDATIONS. -- Not later
than 30 days after the date of receipt of the report and
recommendations under subparagraph (H), the Administrator of the
Environmental Protection Agency shall approve or disapprove the
recommendations and shall notify Congress and the Secretary of
such approval or disapproval. If the Administrator disapproves
the recommendations, not later than 30 days after the date of such
disapproval, the Administrator shall notify Congress and the
Secretary of the reasons for such disapproval together with
recommendations for modifications which could be made to the
recommendations to take into account such reasons. If the
Administrator fails to approve or disapprove the recommendations
transmitted under subparagraph (H) within the 30-day period, the
recommendations shall be deemed to be approved.
(3) STUDY TEAM. -- The Secretary shall establish a study team
to assist the Secretary in planning, carrying out, monitoring, and
reporting on the demonstration program and the results of such
program under this subsection. Such team shall be appointed by
the Secretary and shall consist of representatives of the Corps of
Engineers, the Environmental Protection Agency, interested Federal
and State resource agencies, and the local sponsor of the
demonstration program. Members of the study team who are not
officers or employees of the United States shall serve without
compensation. Members of the study team who are officers or
employees of the United States shall receive no additional pay by
reason of their service on the study team.
(4) THIN LAYER DISPOSAL DEFINED. -- For purposes of this
subsection, the term "thin layer disposal" means the deliberate
placement of a 6- to 12-inch layer of dredged material in a
specific bottom area. In no case shall such layer exceed a
maximum of 12 inches of thickness.
(o) BRUSH CREEK AND TRIBUTARIES, MISSOURI AND KANSAS. -- The project
for flood control, Brush Creek and tributaries, Missouri and Kansas,
authorized by section 401(a) of the Water Resources Development Act of
1986 (100 Stat. 4118), is modified to authorize the Secretary to provide
to the non-Federal interests providing local cooperation for such
project services (including the provision of services by contract) in
the design and construction of upstream and downstream non-Federal
extensions to such project --
(1) if the non-Federal interests provide, in advance of
obligation of Federal funds for such design and construction,
amounts sufficient to cover all costs of such services;
(2) if, prior to construction of such extensions, the
non-Fedeal interests obtain all necessary Federal and State
permits; and
(3) if the non-Federal interests agree to hold and save the
United States free from damages due to the planning, design,
construction, operation, or maintenance of such extensions.
Construction costs, operation, and maintenance of such extensions
shall be a non-Federal responsibility and shall not be considered part
of the Brush Creek flood control project for any purpose.
(p) LIBBY DAM, MONTANA. -- The project for Libby Dam, Lake Koocanusa
Reservoir, Montana, is modified (1) to authorize the Secretary, in
consultation with the Secretary of Agriculture, to undertake measures to
alleviate low water impact on existing facilities at such project,
including provision of low water access to Lake Koocanusa, Montana, and
provision of additional planned public recreation sites along the
reservoir, and (2) to direct the Secretary to protect Indian
archaeological sites which are exposed during the course of operations
of such project, at an estimated total cost of $750,000. The Secretary
shall coordinate with the Kootenai Tribes in monitoring exposed
archaeological sites to prevent pillaging, in preserving artifacts
onsite, and in facilitating curation at the tribal curation center in
Pablo Montana when onsite preservation is not warranted.
(q) SEA BRIGHT TO MONMOUTH BEACH, NEW JERSEY. -- Section 854 of the
Water Resources Development Act of 1986 (100 Stat. 4179-4180) is amended
to read as follows:
"SEC. 854. SANDY HOOK TO BARNEGAT INLET, NEW JERSEY.
"(a) Subject to section 903(a) of this Act, the project for beach
erosion control, Sandy Hook to Barnegat Inlet, New Jersey, authorized by
the River and Harbor Act of 1958, is modified to provide that the first
Federal construction increment of the Ocean Township to Sandy Hook reach
of such project shall consist of a berm of approximately 100 feet at Sea
Bright and Monmouth Beach extending to and including a feeder beach in
the vicinity of Long Beach substantially in accordance with the plan
recommended in the draft General Design Memorandum entitled 'Atlantic
Coast of New Jersey, Sandy Hook to Barnegat Inlet, Beach Erosion Control
Project, Section 1 -- Sea Bright to Ocean Township, New Jersey', dated
May 1988, at a total initial cost for such increment of $91,000,000 and
an annual cost of $1,200,000 for periodic beach nourishment over the
life of such increment.
"(b) The non-Fedeal share of the costs of construction and
maintenance of the increment referred to in subsection (a) shall be --
"(1) for the first $40,000,000 in costs, the amounts expended
by non-Federal interests for reconstruction of the seawall at Sea
Bright and Monmouth Beach, New Jersey; and
"(2) for costs in excess of $40,000,000, a non-Federal share
which is in accordance with title I of this Act.
"(c) Before initiation of construction of any increment of the
project for beach erosion control, Sandy Hook to Barnegat Inlet, New
Jersey, non-Federal interests shall agree to provide public access to
the beach for which such increment of the project is authorized in
accordance with all requirements of State law and regulations.".
(r) WYOMING VALLEY, PENNSYLVANIA. -- The project for flood control,
Wyoming Valley, Pennsylvania, authorized by section 401(a) of the Water
Resources Development Act of 1986 (100 Stat. 1424), is modified to
authorize the Secretary to study the feasibility of constructing an
inflatable dam on the Susquehanna River in the vicinity of Wilkes Barre,
Pennsylvania.
(s) BLAIR AND SITCUM WATERWAYS, WASHINGTON. -- The undesignated
paragraph of section 202(a) of the Water Resources Development Act of
1986 under the heading "BLAIR AND SITCUM WATERWAYS, TACOMA HARBOR,
WASHINGTON" (100 Stat. 4096) is amended by striking out "$38,200,000"
and all that follows through "$12,000,000;" and inserting in lieu
thereof "$51,000,000;".
(t) WYNOOCHEE LAKE, WASHINGTON. --
(1) IN GENERAL. -- To demonstrate the feasibility of
non-Federal operation, maintenance, repair, and rehabilitation of
a Federal multi-purpose water resources project, the project for
Wynoochee Lake, Wynoochee River, Washington, authorized by section
203 of the Flood Control Act of 1962 (76 Stat. 1193), is modified
to authorize the Secretary to permit the city of Aberdeen,
Washington, to operate, maintain, repair, and rehabilitate the
project (hereinafter in this subsection referred to as "OMR&R")
after September 30, 1988.
(2) LIMITATIONS ON OMR&R. -- OMR&R by the city of Aberdeen
shall be --
(A) subject to such terms and conditions as the Secretary shall
establish by regulation to ensure that OMR&R is consistent with
the project's authorized purposes, including fish and wildlife
mitigation; and
(B) consistent with the long-term value and viability of the
project's physical facilities.
In issuing such regulations, the Secretary shall evaluate the
effect of such regulations on the project costs payable by the
city.
(3) CONDITIONS. -- OMR&R by the city of Aberdeen under this
subsection shall be subject to the following conditions:
(A) Title to real and personal property of the project shall
remain in the United States, and the city shall not impair such
title.
(B) The city shall hold and save the United States free from
any damages which result from OMR&R by the city, except for
damages due to the fault or negligence of the United States or its
contractors.
(C) Upon due cause as determined by the Secretary and after
notice to the city, the Secretary may resume OMR&R and the city
shall be responsible to pay the percentage of the OMR&R costs of
the project incurred thereafter and related to water supply
storage as described in the original project contract.
(D) The Secretary shall modify the project contract to forgive
future OMR&R payment obligations of the city to the extent that
the city is performing project OMR&R in accordance with this
subsection and the regulations issued under this subsection.
(E) The Secretary shall transfer to the city responsibility for
OMR&R of the project in a safe and cost-effective manner.
(4) REPORT TO CONGRESS. -- Not later than 1 year after the
date of the enactment of this Act, the Secretary shall transmit to
the Committee on Environment and Public Works of the Senate and
the Committee on Public Works and Transportation of the House of
Representatives a report on the implementation of this subsection.
SEC. 5. "33 USC 2312" COMMENTS ON CERTAIN CHANGES IN OPERATIONS OF
RESERVOIRS.
Before the Secretary may make changes in the operation of any
reservoir which will result in or require a reallocation of storage
space in such reservoir or will significantly affect any project
purpose, the Secretary shall provide an opportuinity for public review
and comment.
SEC. 6. OPERATION OF CERTAIN PROJECTS TO ENHANCE RECREATION.
(a) ENHANCEMENT OF RECREATION. -- The Secretary shall ensure, to the
extent compatible with other project purposes, that each water resources
project referred to in this subsection is operated in such manner as
will protect and enhance recreation associated with such project. The
Secretary is authorized to manage project lands at each such project in
such manner as will improve opportunities for recreation at the project.
Such activities shall be included as authorized project purposes of
each project. Nothing in this subsection shall be construed to affect
the authority or discretion of the Secretary with respect to carrying
out other authorized project purposes or to comply with other
requirements or obligations of the Secretary which are legally binding
as of the date of the enactment of this Act. The provisions of this
subsection shall apply to the following projects:
(1) Beechfork Lake, West Virginia.
(2) Bluestone Lake, West Virginia.
(3) East Lynn Lake, West Virginia.
(4) Francis E. Walter Dam, Pennsylvania.
(5) Jennings Randolph Lake (Bloomington Dam), Maryland and West
Virginia.
(6) R.D. Bailey Lake, West Virginia.
(7) Savage River Dam, Maryland.
(8) Youghiogheny River Lake, Pennsylvania and Maryland.
(9) Summersville Lake, West Virginia.
(10) Sutton Lake, West Virginia.
(11) Stonewall Jackson Lake, West Virginia.
(b) RECREATION DEFINED. -- As used in this section, in addition to
recreation on lands associated with the project, the term "recreation"
includes (but shall not be limited to) downstream whitewater recreation
which is dependent on project operations, recreational fishing, and
boating on water at the project.
SEC. 7. "33 USC 2313" COLLABORATIVE RESEARCH AND DEVELOPMENT.
(a) IN GENERAL. -- For the purpose of improving the state of
engineering and construction in the United States and consistent with
the mission of the Army Corps of Engineers, the Secretary is authorized
to utilize Army Corps of Engineers laboratories and research centers to
undertake, on a cost-shared basis, collaborative research and
development with non-Federal entities, including State and local
government, colleges and universities, and corporations, partnerships,
sole proprietorships, and trade associations which are incorporated or
established under the laws of any of the several States of the United
States or the District of Columbia.
(b) ADMINISTRATIVE PROVISIONS. -- In carrying out this section, the
Secretary may consider the recommendations of a non-Federal entity in
identifying appropriate research or development projects and may enter
into a cooperative research and development agreement, as defined in
section 12 of the Stevenson-Wydler Technology Innovation Act of 1980 (15
U.S.C. 3710a); except that in such agreement, the Secretary may agree
to provide not more than 50 percent of the cost of any research or
development project selected by the Secretary under this section. Not
less than 5 percent of the non-Federal entity's share of the cost of any
such project shall be paid in cash.
(c) APPLICABILITY OF OTHER LAWS. -- The research, development, or
utilization of any technology pursuant to an agreement under subsection
(b), including the terms under which such technology may be licensed and
the resulting royalties may be distributed, shall be subject to the
provisions of the Stevenson-Wydler Technology Innovation Act of 1980 (15
U.S.C. 3701-3714).
(d) AUTHORIZATION OF APPROPRIATIONS. -- To carry out the purposes of
this section, there is authorized to be appropriated to the Secretary of
the Army civil works funds $3,000,000 for fiscal year 1989, $4,000,000
for fiscal year 1990, $5,000,000 for fiscal year 1991, and $6,000,000
for each fiscal year thereafter.
(e) ADDITIONAL FUNDING. -- Notwithstanding the third proviso under
the heading "GENERAL INVESTIGATIONS" of title I of the Energy and Water
Development Appropriations Act, 1989 (102 Stat. 857), an additional
$3,000,000 of the funds appropriated under such heading shall be
available to the Secretary for obligation to carry out the purposes of
this section in fiscal year 1989.
SEC. 8. "33 USC 2314" INNOVATIVE TECHNOLOGY.
(a) USE. -- The Secretary shall, whenever feasible, seek to promote
long- and short-term cost savings, increased efficiency, reliability,
and safety, and improved environmental results through the use of
innovative technology in all phases of water resources development
projects and programs under the Secretary's jurisdiction. To further
this goal, Congress encourages the Secretary to --
(1) use procurement and contracting procedures that encourage
innovative project design, construction, rehabilitation, repair,
and operation and maintenance technologies;
(2) frequently review technical and design criteria to remove
or modify unnecessary impediments to innovation;
(3) increase timely exchange of technical information with
universities, private companies, government agencies, and
individuals;
(4) foster design competition; and
(5) encourage greater participation by non-Federal project
sponsors in the development and implementation of projects.
(b) REPORTS. -- Within 2 years after the date of the enactment of
this Act, and thereafter at the Secretary's discretion, the Secretary
shall provide Congress with a report on the results of, and
recommendtions to increase, the development and use of innovative
technology in water resources development projects under the Secretary's
jurisdiction. Such report shall also contain information regarding
innovative technologies which the Secretary has considered and rejected
for use in water resources development projects under the Secretary's
jurisdiction.
(c) INNOVATIVE TECHNOLOGY DEFINED. -- For the purpose of this
section, the term "innovative technology" means designs, materials, or
methods which the Secretary determines are previously undemonstrated or
are too new to be considered standard practice.
SEC. 9. "33 USC 2314 note" TECHNICAL ASSISTANCE DEMONSTRATION
PROGRAM.
(a) IN GENERAL. -- The Secretary is authorized to undertake a
demonstration program for a 2-year period, which shall begin within 6
months after the date of the enactment of this Act, to provide technical
assistance, on a nonexclusive basis, to any United States firm which is
competing for, or has been awarded, a contract for the planning, design,
or construction of a project outside the United States, if the United
States firm provides, in advance of fiscal obligation by the United
States, funds to cover all costs of such assistance. In determining
whether to provide such assistance, the Secretary shall consider the
effects on the Department of the Army civil works mission, personnel,
and facilities. Prior to the Secretary providing such assistance, a
United States firm must --
(1) certify to the Secretary that such assistance is not
otherwise reasonably and expeditiously available; and
(2) agree to hold and save the United States free from damages
due to the planning, design, construction, operation, or
maintenance of the project.
(b) FEDERAL EMPLOYEES' INVENTIONS. -- As to an invention made or
conceived by a Federal employee while providing assistance pursuant to
this section, if the Secretary decides not to retain all rights in such
invention, the Secretary may --
(1) grant or agree to grant in advance, to a United States
firm, a patent license or assignment, or an option thereto,
retaining a nonexclusive, nontransferable, irrevocable, paid-up
license to practice the invention or have the invention practiced
throughout the world by or on behalf of the United States and such
other rights as the Secretary deems appropriate; or
(2) waive, subject to reservation by the United States of a
nonexclusive, irrevocable, paid-up license to practice the
invention or have the invention practiced throughout the world by
or on behalf of the United States, in advance, in whole, or in
part, any right which the United States may have to such
invention.
(c) PROTECTION OF CONFIDENTIAL INFORMATION. -- Information of a
confidential nature, such as proprietary or classified information,
provided to a United States firm pursuant to this section shall be
protected. Such information may be released by a United States firm
only after written approval by the Secretary.
(d) REPORT. -- Within 6 months after the end of the demonstration
program authorized by this section, the Secretary shall submit to
Congress a report on the results of such demonstration program.
(e) DEFINITIONS. -- For purposes of this section --
(1) UNITED STATES FIRM. -- The term "United States firm" means
a corporation, partnership, limited partnership, or sole
proprietorship that is incorporated or established under the laws
of any of the United States with its principal place of business
in the United States.
(2) UNITED STATES. -- The term "United States", when used in a
geographical sense, means the several States of the United States
and the District of Columbia.
SEC. 10. "33 USC 2315" PERIODIC STATEMENTS.
Upon receipt of a request from a non-Federal sponsor of a water
resources development project under construction by the Secretary, the
Secretary shall provide such sponsor with periodic statements of project
expenditures. Such statements shall include an estimate of all Federal
and non-Federal funds expended by the Secretary, including overhead
expenditures, the purpose for expenditures, and a schedule of
anticipated expenditures during the remaining period of construction.
Statements shall be provided to the sponsor at intervals of no greater
than 6 months.
SEC. 11. SIMULATION MODEL OF SOUTH CENTRAL FLORIDA HYDROLOGIC
ECOSYSTEM.
(a) IN GENERAL. -- The Secretary, in cooperation with affected
Federal, State, and local agencies and other interested persons, may
develop and operate a simulation model of the central and southern
Florida hydrologic ecosystem for use in predicting the effects --
(1) of modifications to the flood control project for central
and southern Florida, authorized by the Flood Control Act of 1948,
(2) of changes in the operation of such project, and
(3) of other human activities conducted in the vicinity of such
ecosystem which individually or in the aggregate will
significantly affect the ecology of such ecosystem,
on the flow, characteristics, quality, and quantity of surface and
ground water in such ecosystem and on plants and wildlife within such
ecosystem. Such model shall be capable of producing information which
is applicable for use in evaluating the impact of issuance of proposed
permits under section 10 of the Act of March 3, 1899 (30 Stat. 1151; 33
U.S.C. 403), commonly known as the River and Harbors Appropriation Act
of 1899, and under section 404 of the Federal Water Pollution Control
Act.
(b) AVAILABILITY TO STATE AND LOCAL AGENCIES. -- The Secretary shall
allow Federal, State, and local agencies to use, on a nonreimbursable
basis, the simulation model developed under this section.
(c) COST SHARING. -- The Federal share of the cost of developing and
operating the simulation model under this section shall be 75 percent.
SEC. 12. SECTION 215 REIMBURSEMENT LIMITATION PER PROJECT.
Section 215(a) of the Flood Control Act of 1968 (42 U.S.C. 1962d-5a(
a)) is amended by inserting after "$3,000,000" the following: "or 1
percent of the total project cost, whichever is greater; except that
the amount of actual Federal reimbursement, including reductions in
contributions, for such project may not exceed $5,000,000 in any fiscal
year.".
SEC. 13. ADDITIONAL 10 PERCENT PAYMENT OVER 30 YEARS FOR
CONSTRUCTION OF HARBORS.
(a) RELOCATION COSTS. -- Section 101(a) of the Water Resources
Development Act of 1986 (33 U.S.C. 2211(a)) is amended by striking out
paragraph (2) and inserting in lieu thereof the following new paragraph:
"(2) ADDITIONAL 10 PERCENT PAYMENT OVER 30 YEARS. -- The
non-Federal interests for a project to which paragraph (1) applies
shall pay an additional 10 percent of the cost of the general
navigation features of the project in cash over a period not to
exceed 30 years, at an interest rate determined pursuant to
section 106. The value of lands, easements, rights-of-way,
relocations, and dredged materials disposal areas provided under
paragraph (3) and the costs of relocations borne by the
non-Federal interests under paragraph (4) shall be credited toward
the payment required under this paragraph.".
(b) RETROACTIVE EFFECTIVE DATE. -- The amendment "33 USC 2211 note"
made by subsection (a) shall take effect on November 17, 1986.
SEC. 14. COMPLIANCE WITH FLOOD PLAIN MANAGEMENT AND INSURANCE
PROGRAMS.
Section 402 of the Water Resources Development Act of 1986 (33 U.S.
C. 701b-12) is amended by inserting "or any project for hurricane or
storm damage reduction" after "local flood protection".
SEC. 15. FEDERAL REPAYMENT DISTRICT.
Section 916(a) of the Water Resources Development Act of 1986 (33 U.
S.C. 2291) is amended by striking out "include the power to collect" and
all that follows through the period at the end of the last sentence and
inserting in lieu thereof "have the power to recover benefits through
any cost-recovery approach that is consistent with State law and
satisfies the applicable cost-recovery requirement under subsection
(b).".
SEC. 16. ABANDONED AND WRECKED VESSELS.
Section 1115 of the Water Resources Development Act of 1986 (100
Stat. 4235) is amended by striking out the last period and inserting in
lieu thereof the following: ": Provided, That, in furtherance of the
work authorized by paragraph (3) hereof, and conditioned on successful
removal of the A. Regina, the Secretary of the Army is hereby authorized
to transfer upon such conditions as he shall deem fit the title to a
Delong Pier Jack-Up Barge Type A, serial number BPA6814, directly to any
entity, including any private corporation to be used to assist in the
removal of the wreck of the said A. Regina. Procedures otherwise
governing the disposal of government property, shall not apply to the
above authorized transfer of title. The foregoing actions shall be at
no cost to the United States, and shall constitute full compliance by
the Secretary of the Army with the requirement of paragraph (3)
hereof.".
SEC. 17. FLOOD WARNING AND RESPONSE SYSTEM.
(a) PROJECT. -- The Secretary, in cooperation with other Federal
agencies and the Susquehanna River Basin Commission, is authorized to
design and implement a comprehensive flood warning and response system
to serve communities and flood prone areas along Juanita River and
tributaries in the State of Pennsylvania consistent with the cost
sharing policies of the Water Resources Development Act of 1986.
(b) AUTHORIZATION OF APPROPRIATION. -- There is authorized to be
appropriated to carry out this section $2,000,000 for fiscal years
beginning after September 30, 1988.
SEC. 18. SMALL BOAT HARBOR, BUFFALO HARBOR, NEW YORK.
The Secretary may undertake such emergency repairs as the Secretary
determines necessary to preserve the existing dike at the Small Boat
Harbor, Buffalo Harbor, New York, at a total cost of $2,000,000, except
that the Federal share may not exceed $1,000,000.
SEC. 19. LAKEPORT LAKE, CALIFORNIA.
(a) PROJECT REAUTHORIZATION. -- Subject to section 1001(a) of the
Water Resources Development Act of 1986, the project for flood control,
Lakeport Lake, California, as authorized by the Flood Control Act of
1965 on the day before the date of the enactment of the Water Resources
Development Act of 1986, is authorized.
(b) REPEAL OF DEAUTHORIZATION. -- Section 1003 of the Water
Resources Development Act of 1986 (100 Stat. 4222-4223) is repealed.
SEC. 20. SACRAMENTO, CALIFORNIA.
The President, in submitting his budget for fiscal year 1990, shall
include a schedule for completing the feasibility study on Northern
California Streams, American River Watershed, as expeditiously as
practicable and an estimate of the resources required to meet such
schedule.
SEC. 21. MISSISSIPPI RIVER HEADWATERS RESERVOIRS.
(a) GENERAL RULE. -- Notwithstanding any other provision of law, the
Secretary is directed to maintain water levels in the Mississippi River
headwaters reservoirs within the following operating limits:
Winnibigoshish 1296.94 feet -- 1303.14 feet; Leech 1293.20 feet --
1297.94 feet; Pokegama 1270.42 feet -- 1276.42 feet; Sandy 1214.31
feet -- 1218.31 feet; Pine 1227.32 feet -- 1234.82 feet; and Gull
1192.75 feet -- 1194.75 feet. Such water levels shall be measured using
the National Geodetic Vertical Datum.
(b) EXCEPTION. -- The Secretary may operate the headwaters
reservoirs below the minimum or above the maximum water levels
established in subsection (a) in accordance with a contingency plan
which the Secretary develops after consulting with the Governor of
Minnesota and affected landowners and commercial and recreational users.
The Secretary shall transmit such plan to Congress within 6 months
after the date of the enactment of this Act. The Secretary shall report
to Congress at least 14 days prior to operating any such headwaters
reservoir below the minimum or above the maximum water level limits
specified in subsection (a).
SEC. 22. HEARDING ISLAND INLET, DULUTH HARBOR, MINNESOTA.
The Secretary is authorized to dredge the Hearding Island Inlet,
Duluth Harbor, Minnesota, for the purpose of increasing water
circulation and reducing stagnant water conditions, at a total cost of
$500,000.
SEC. 23. LOUISIANA WATER SUPPLY.
The Secretary is directed to review periodically the water supply
problems related to drought which may be experienced at the Bayou
Lafourche water supply reservoir in Louisiana and to respond as
appropriate under the authority granted by section 5 of the Act entitled
"An Act authorizing the construction of certain public works on rivers
and harbors for flood control, and for other purposes", approved August
18, 1941 (55 Stat. 650; 33 U.S.C. 701n).
SEC. 24. CONTAINED SPOIL DISPOSAL FACILITIES IN THE GREAT LAKES AND
THEIR CONNECTING CHANNELS.
(a) PERIOD FOR DEPOSITING DREDGED MATERIALS. -- Section 123 of the
River and Harbor Act of 1970 (33 U.S.C. 1293a) is amended by adding at
the end thereof the following new subsection:
"(j) PERIOD FOR DEPOSITING DREDGED MATERIALS. -- The Secretary of
the Army, acting through the Chief of Engineers is authorized to
continue to deposit dredged materials into a contained spoil disposal
facility constructed under this section until the Secretary determines
that such facility is no longer needed for such purpose or that such
facility is completely full.".
(b) STUDY AND MONITORING PROGRAM. -- Such section is further amended
by adding at the end thereof the following new subsection:
"(k) STUDY AND MONITORING PROGRAM. --
"(1) STUDY. -- The Secretary of the Army, acting through the
Chief of Engineers, shall conduct a study of the materials
disposed of in contained spoil disposal facilities constructed
under this section for the purpose of determining whether or not
toxic pollutants are present in such facilities and for the
purpose of determining the concentration levels of each of such
pollutants in such facilities.
"(2) REPORT. -- Not later than 1 year after the date of the
enactment of this subsection, the Secretary shall transmit to
Congress a report on the results of the study conducted under
paragraph (1).
"(3) INSPECTION AND MONITORING PROGRAM. -- The Secretary shall
conduct a program to inspect and monitor contained spoil disposal
facilities constructed under this section for the purpose of
determining whether or not toxic pollutants are leaking from such
facilities.
"(4) TOXIC POLLUTANT DEFINED. -- For purposes of this
subsection, the term 'toxic pollutant' means those toxic
pollutants referred to in sections 301(b)(2)(C) and 301(b)(2)(D)
of the Federal Water Pollution Control Act and such other
pollutants as the Secretary, in consultation with the
Administrator of the Environmental Protection Agency, determines
are appropriate based on their effects on human health and the
environment.".
SEC. 25. SOUTH PIER TO CHARLEVOIX HARBOR, CHARLEVOIX, MICHIGAN.
The Secretary shall take such action as may be necessary to restore
recreational uses established prior to May 1, 1988, or provide
comparable recreational uses at the South Pier to Charlevoix Harbor
project, Charlevoix, Michigan, in order to mitigate any adverse impact
on recreational uses resulting from reconstruction of the South Pier.
Costs incurred by the Secretary to carry out this section shall be
allocated among authorized project purposes in accordance with
applicable cost allocation procedures and shall be subject to cost
sharing or reimbursement to the same extent as other project costs are
shared or reimbursed.
SEC. 26. COYOTE AND BERRYESSA CREEKS, CALIFORNIA.
The Secretary is directed to include in the feasibility report for
the project for flood control, Coyote and Berryessa Creeks, California:
Report of the Board of Engineers for Rivers and Harbors, dated May 11,
1988, recommendations for reimbursement of local interests for work
undertaken after the date of the enactment of this Act which is integral
to the Federal project as recommended in the feasibility study. Such
reimbursement shall not exceed $3,000,000 and shall be made at such time
as the federally funded work is carried out.
SEC. 27. LAND CONVEYANCE, WHITTIER NARROWS DAM, LOS ANGELES COUNTY,
CALIFORNIA.
(a) AUTHORITY TO CONVEY. -- Subject to the provisions of this
subsection, the Secretary may convey to the city of South El Monte,
California, approximately 7.778 acres of real property, together with
improvements thereon, located within the Whittier Narrows Flood Control
Basin, south of the Pomona Freeway (Highway 60) and east of Santa Anita
Avenue, in the city of South El Monte, California.
(b) CONSIDERATION. -- In consideration for the conveyance authorized
by subsection (a), the Secretary may accept real property in the Los
Angeles area or cash, or both. The value of the consideration for the
conveyance may not be less than the fair market value of the property
conveyed by the United States, as determined by the Secretary. Any
funds received by the Secretary under this section shall be deposited
into the general fund of the Treasury.
(c) CONDITIONS. -- The Secretary may make the conveyance described
in subsection (a) only if --
(1) the city of South El Monte, California, grants the United
States a perpetual easement that enables the Federal Government to
carry out necessary flood control activities with respect to such
real property;
(2) such city agrees to use suitable property located directly
adjacent to the Whittier Narrows Park, which will be acquired by
such city through an exchange for such real property, for parking
in connection with recreational activities in the Whittier Narrows
Recreational Area, as the Secretary considers appropriate; and
(3) the Secretary determines that the Secretary does not need
fee simple title to such real property for operation of the
project.
(d) ADDITIONAL TERMS. -- The Secretary may impose such additional
terms and conditions on the conveyance authorized by subsection (a) as
the Secretary considers appropriate to protect the interests of the
United States.
(e) LEGAL DESCRIPTION OF REAL PROPERTY. -- The exact acreage and
legal description of the real property described in subsection (a) shall
be determined by a survey which is satisfactory to the Secretary. The
cost of such survey shall be borne by the city of South El Monte,
California.
SEC. 28. LAND CONVEYANCE, OTTAWA, ILLINOIS.
(a) IN GENERAL. -- Subject to the provisions of this section, the
Secretary shall convey to the city of Ottawa, Illinois, by quitclaim
deed any right, title, and interest of the United States to
approximately 5.3 acres of land located at the junction of the Fox and
Illinois Rivers in such city.
(b) TERMS AND CONDITIONS. -- The conveyance by the United States
under this section shall be subject to the condition that the city of
Ottawa, Illinois, its successors and assigns, agrees to hold the United
States harmless from all claims arising from or through the operations
of the lands conveyed by the United States. The Secretary may impose
such additional terms and conditions on the conveyance as the Secretary
considers appropriate to protect the interests of the United States;
except that the Secretary may not impose any term or condition which
restricts the use of the lands conveyed by the United States under this
section.
(c) LEGAL DESCRIPTION OF REAL PROPERTY. -- The exact acreage and
legal description of the real property described in subsection (a) shall
be determined by a survey which is satisfactory to the Secretary. The
cost of the survey shall be borne by the city of Ottawa, Illinois.
SEC. 29. LAND TRANSFER IN WHITMAN COUNTY, WASHINGTON.
(a) EXCHANGE OF LAND. -- The Secretary shall exchange approximately
171 acres of land acquired by the United States for the Lower Granite
Lock and Dam project, Washington, authorized as part of the navigation
project for the Snake River, Oregon, Washington, and Idaho by section 2
of the River and Harbor Act of March 2, 1945 (59 Stat. 21), for a tract
of land owned by the Port of Whitman County, Washington, which the
Secretary determines is suitable for wildlife mitigation purposes. Such
exchange shall be made with regard to the values of the lands being
exchanged.
(b) TERMS AND CONDITIONS. -- The land of the United States exchanged
under subsection (a) shall be subject to a reversionary interest in the
United States if such land is used for any purpose other than port or
industrial purposes. Such exchange shall also be subject to such other
terms, conditions, reservations, and restrictions as the Secretary
determines necessary for the development, maintenance, and operation of
the Lower Granite Lock and Dam project referred to in subsection (a) and
to protect the interests of the United States.
(c) LEGAL DESCRIPTIONS AND SURVEYS. -- The exact acreages and legal
descriptions of the lands exchanged under subsection (a) shall be
determined by such surveys as the Secretary determines are necessary.
The cost of such surveys shall be paid by the Port of Whitman County,
Washington.
SEC. 30. LESAGE/GREENBOTTOM SWAMP, WEST VIRGINIA.
(a) LIMITATION ON LAND CONVEYANCE. -- The Secretary shall not convey
title to all or any part of the Lesage/Greenbottom Swamp to the State of
West Virginia.
(b) LESAGE/GREENBOTTOM SWAMP DEFINED. -- For purposes of this
section, the term "Lesage/Greenbottom Swamp" means the land located in
Cabell and Mason Counties, West Virginia, acquired or to be acquired by
the United States for fish and wildlife mitigation purposes in
connection with the Gallipolis Locks and Dam replacement project
authorized by section 301(a) of the Water Resources Development Act of
1986 (100 Stat. 4110).
(c) LIMITATION ON STATUTORY CONSTRUCTION. -- Nothing in this section
shall be construed as affecting the authority of the Secretary to carry
out the Gallipolis Locks and Dam replacement project authorized by
section 301(a) of the Water Resources Development Act of 1986 (100 Stat.
4110).
SEC. 31. PORTUGUESE AND BUCANA RIVERS, PUERTO RICO.
The Secretary is authorized to pay tuition expenses of suitable,
English-taught primary and secondary education in Puerto Rico for the
child or children of any Federal employee when such expenses are
incurred after the date of the enactment of this Act and while the
employee is temporarily residing and employed in Puerto Rico for the
construction of the Portuguese and Bucana Rivers, Puerto Rico, project.
SEC. 32. ALTERNATIVES TO MUD DUMP FOR DISPOSAL OF DREDGED MATERIAL.
Section 211 of the Water Resources Development Act of 1986 (100 Stat.
4106; 33 U.S.C. 2239) is amended by redesignating subsections (d), (e),
(f), and (g), and any references thereto, as subsections (e), (f), (g),
and (h), respectively, and by inserting after subsection (c) the
following new subsection:
"(d) DESIGNATION PLAN. -- Not later than 120 days after the date of
the enactment of the Water Resources Development Act of 1988, the
Administrator shall submit to the Committee on Environment and Public
Works of the Senate and the Committee on Public Works and Transportation
of the House of Representatives his plan for designating one or more
sites under subsection (a). The plan shall specify the actions
necessary to comply with subsection (a), the funding requirements
associated with these actions, and the dates by which the Administrator
expects to complete each of these actions. The plan also shall specify
actions which the Administrator may be able to take to expedite the
designation of any sites under subsection (a).".
SEC. 33. MISSOURI RIVER BETWEEN FORT PECK DAM, MONTANA, AND GAVINS
POINT DAM, SOUTH DAKOTA AND NEBRASKA.
Section 9 of the Act entitled "An Act authorizing the construction of
certain public works on rivers and harbors for flood control, and for
other purposes", approved December 22, 1944 (58 Stat. 891), is amended
by adding at the end thereof the following new subsection:
"(f) The Secretary of the Army is directed to undertake such
measures, including maintenance and rehabilitation of existing
structures, which the Secretary determines are needed to alleviate bank
erosion and related problems associated with reservoir releases along
the Missouri River between Fort Peck Dam, Montana, and a point 58 miles
downstream of Gavins Point Dam, South Dakota, and Nebraska. The cost of
such measures may not exceed $3,000,000 per fiscal year.
Notwithstanding any other provision of law, the costs of these measures,
including the costs of necessary real estate interests and structural
features, shall be apportioned among project proposes as a joint-use
operation and maintenance expense. In lieu of structural measures, the
Secretary may acquire interests in affected areas, as the Secretary
deems appropriate, from willing sellers.".
SEC. 34. NEW YORK HARBOR DRIFT REMOVAL PROJECT.
Section 91 of the Water Resources Development Act of 1974 (88 Stat.
39) is amended by striking out "$30,500,000" and inserting in lieu
thereof "$6,000,000 annually".
SEC. 35. PLACEMENT OF DREDGED BEACH QUALITY SAND ON BEACHES.
Section 145 of the Water Resources Development Act of 1976 (33 U.S.
C. 426j) is amended by adding at the end thereof the following new
sentence: "In carrying out this section, the Secretary shall give
consideration to the State's schedule for providing its share of funds
for placing such sand on the beaches of such State and shall, to the
maximum extent practicable, accommodate such schedule.".
SEC. 36. RESTORATION, VENTURA TO PIERPONT BEACH, CALIFORNIA.
The Secretary shall make such emergency repairs as are required to
restore groin number 1 of the Ventura to Pierpoint Beach erosion control
project to its original configuration as authorized pursuant to House
Document 87-458, except that the Federal cost shall not exceed $300,000.
SEC. 37. WILLIAM G. STONE LOCK TOLLS.
Section 1150(b) of the Water Resources Development Act of 1986 (100
Stat. 4255) is amended by striking out "Yolo County, California" and
inserting in lieu thereof the following: "the city of West Sacramento,
California".
SEC. 38. "33 USC 59j-1" DECLARATION OF NONNAVIGABILITY FOR PORTIONS
OF THE DELAWARE RIVER.
(a) AREA TO BE DECLARED NON-NAVIGABLE; PUBLIC INTEREST. -- Unless
the Secretary finds, after consultation with local and regional public
officials (including local and regional public planning organizations),
that the proposed projects in Philadelphia, Pennsylvania, to be
undertaken within the boundaries described below, are not in the public
interest then, subject to subsections (b) and (c) of this section, those
portions of the Delaware River, bounded and described as follows, are
declared to be non-navigable waters of the United States:
(1) LIBERTY LANDING.
All that certain lot or piece of ground together with the
improvements thereon erected, situate in the 1st ward of the city of
Philadelphia and described according to a plan of property by John
Stefanco, Surveyor and Regulator of the Second Survey District, dated
November 4, 1974 and revised December 18, 1974:
Beginning at an interior point formed by the intersection of the
following two courses and distances: (1) north 14 degrees 46 minutes 39
seconds east, the distance of 781.002 feet northwardly from the
northerly side of Reed Street (50 feet wide bearing south 75 degrees 13
minutes 21 seconds east); (2) south 75 degrees 20 minutes 21 seconds
east, the distance of 231.805 feet eastwardly from the easterly side of
Delaware Avenue (150 feet wide bearing north 14 degrees 39 minutes 39
seconds east); thence extending from said point of beginning north 0
degree 49 minutes 15 seconds west, the distance of 160.856 feet to a
point; thence extending north 79 degrees 53 minutes 04 seconds east,
the distance of 24.808 feet to a point; thence extending north 10
degrees 03 minutes west, the distance of 15.0 feet to a point; thence
extending south 79 degrees 53 minutes 04 seconds west, the distance of
22.723 feet to a point; thence extending north 4 degrees 56 minutes 56
seconds west, the distance of 99.228 feet to a point; thence extending
south 80 degrees 53 minutes 04 seconds west, the distance of 7.0 feet to
a point on an arc; thence extending along an arc curving to the right
having a radius of 698.835 feet, a central angle of 11 degrees 29
minutes 44 seconds, an arc distance of 140.211 feet to a point of
tangency; thence extending north 0 degree 44 minutes 16 seconds west,
the distance of 57.302 feet to a point on the former centre line of
former Washington Avenue (100 feet wide), thence extending along the
said centre line of former Washington Avenue and crossing the bed of a
30-foot-wide private driveway and the bulkhead line, (approved by the
Secretary of War, September 10, 1940); south 75 degrees 13 minutes 21
seconds east, the distance of 940.350 feet to a point on the pierhead
line (approved by the Secretary of War, September 10, 1940); thence
extending along the said pierhead line, south 1 degree 32 minutes 57
seconds east, the distance of 422.516 feet to a point; thence extending
north 75 degrees 13 minutes 21 seconds west, recrossing the said
Bulkhead line; the distance of 690.031 feet to a point; thence
extending north 6 degrees 35 minutes 30 seconds west, the distance of
58.388 feet to a point; thence extending south 79 degrees 54 minutes
west, the distance of 19.120 feet to a point; thence extending south 10
degrees 6 minutes east, the distance of 4.10 feet to a point; thence
extending south 79 degrees 54 minutes west, and crossing the bed of the
aforementioned 30-foot-wide private driveway, the distance of 196.802
feet to the First mentioned point and place of beginning.
Containing in total area 374,026.6 square feet -- 8.58647 acres
description of 30-foot-wide private driveway within the property of Pier
53 south.
All that certain lot or piece of ground described as a 30-foot-wide
private driveway as shown on a plan of property, situate in the 1st ward
of the city of Philadelphia, by John Stefanco, Surveyor and Regulator of
the Second Survey District, dated November 4, 1974 and revised December
18, 1974.
Beginning at an interior point formed by the intersection of the
following 2 courses and distances: (1) north 14 degrees 46 minutes 39
seconds east, the distance of 802.293 feet northwardly from the
northerly side of Reed Street (50 feet wide bearing south 75 degrees 13
minutes 21 seconds east), (2) south 75 degrees 20 minutes 21 seconds
east, the distance of 277.764 feet eastwardly from the easterly side of
Delaware Avenue (150 feet wide bearing north 14 degrees 39 minutes 39
seconds east); thence extending from said point of beginning north 10
degrees 3 minutes west, the distance of 173.758 feet to a point; thence
extending north 14 degrees 52 minutes 4 seconds east, the distance of
180.551 feet to a point; thence extending north 17 degrees 35 minutes 1
second west, the distance of 101.949 feet to a point on the centre line
of former Washington Avenue (100 feet wide); thence extending along
said former centre line of Washington Avenue, south 75 degrees 13
minutes 21 seconds east, the distance of 35.516 feet to a point; thence
extending south 17 degrees 35 minutes 1 second east, the distance of
91.669 feet to a point; thence extending south 14 degrees 52 minutes 4
seconds west, the distance of 182.653 feet to a point; thence extending
south 10 degrees 3 minutes east, the distance of 167.104 feet to a
point; thence extending south 79 degrees 54 minutes west, the distance
of 30.000 feet to the first mentioned point and place of beginning. Area
of 30-foot-wide private driveway is 13,465.2 square feet -- 0.309.12
acres.
All that certain lot or piece of ground with the buildings and
improvements thereon erected, situate in the first ward of the city of
Philadelphia and described according to a Plan of Property by Evans
Sparks, Surveyor and Regulator of the Second Survey District, dated
February 23, 1988 as follows: Parcel "A".
Beginning at a point on the easterly side of Delaware Avenue (150
feet wide), located northwardly the distance of 1,100 feet 7 3/8 inches
from the point of intersection of the northerly side of Tasker Street
(50 feet wide) and the easterly side of the said Delaware Avenue;
thence extending north 14 degrees 39 minutes 39 seconds east along the
said easterly side of Delaware Avenue, the distance of 975 feet 1 inch
to an angle point; thence continuing along the said easterly side of
Delaware Avenue north 14 degrees 35 minutes 09 seconds east, the
distance of 50 feet 0 inch to a point on the center line of former
Washington Avenue (100 feet wide), stricken from the city plan; thence
extending south 75 degrees 14 minutes 21 seconds east along the center
line of the said former Washington Avenue, the distance of 151 feet 4
7/8 inches to a point on the westerly side of a 30-foot-wide driveway
easement; thence extending south 17 degrees 35 minutes 01 second east
along the said driveway easement, the distance of 102 feet 0 inch to an
angle point; thence continuing along the said driveway easement south
14 degrees 52 minutes 04 seconds west, the distance of 180 feet 6 5/8
inches to an angle point; thence still continuing along the said
driveway easement south 10 degrees 03 minutes 00 seconds east, the
distance of 131 feet 7 1/8 inches to a point; thence extending south 14
degrees 39 minutes 39 seconds west along a line, the distance of 638
feet 11 inches to a point; thence extending north 75 degrees 14 minutes
21 seconds west, along a line, the distance of 260 feet 1 1/2 inches to
a point on the easterly side of said Delaware Avenue, being the first
mentioned point and place of beginning.
Containing an area 246,456 square feet or 5.6579 acres.
All that certain lot or piece of ground with the buildings and
improvements thereon erected, situate in the first ward of the city of
Philadelphia and described according to a Plan of Property by Evans
Sparks, Surveyor and Regulator of the Second Survey District, dated
February 23, 1988 as follows: Parcel "B".
Beginning at a point on the easterly side of Delaware Avenue (150
feet wide), located northwardly the distance of 1,038 feet 1 7/8 inches
from the point of intersection of the northerly side of Tasker Street
(50 feet wide) and the easterly side of the said Delaware Avenue;
thence extending north 14 degrees 39 minutes 39 seconds east along the
said easterly side of Delaware Avenue, the distance of 62 feet 5 1/2
inches to a point; thence extending south 75 degrees 14 minutes 21
seconds east along a line, the distance of 260 feet 1 1/2 inches to a
point; thence extending north 14 degrees 39 minutes 39 seconds east
along a line, the distance of 638 feet 11 inches to a point on the
westerly side of a 30 feet wide driveway easement; thence extending
south 10 degrees 03 minutes 00 seconds east along the said driveway
easement, the distance of 42 feet 2 inches to a point; thence extending
north 79 degrees 54 minutes 00 seconds east crossing the said driveway
easement, the distance of 146 feet 2 1/2 inches to a point; thence
extending north 10 degrees 06 minutes 00 seconds west, the distance of 4
feet 1 1/4 inches to a point; thence extending north 79 degrees 54
minutes 00 seconds east, the distance of 19 feet 1 1/2 inches to a
point; thence extending south 6 degrees 35 minutes 30 seconds east, the
distance of 58 feet 4 5/8 inches to a point; thence extending south 75
degrees 13 minutes 21 seconds east, crossing the bulkhead line approved
by the Secretary of War, Skeptember 10, 1940; August 9, 1909, and
January 20, 1891, the distance of 690 feet 1 5/8 inches to a point on
the pierhead line of the Delaware River approved by the Secretary of
War, September 10, 1940; August 9, 1909, and January 20, 1891; thence
extending along the said pierhead line south 1 degree 32 minutes 57
seconds east, the distance of 386 feet 4 1/8 inches to a point; thence
continuing along the said pierhead line, south 8 degrees 55 minutes 55.5
seconds east, the distance of 491 feet 11 1/4 inches to a point on the
northerly side of Reed Street (50 feet wide) stricken from city plan and
vacated and reserved as a right-of-way for drainage, water main and gas
purposes; thence extending along same, north 75 degrees 13 minutes 21
seconds west, recrossing the said bulkhead line and 30-foot-wide
driveway easement the distance of 632 feet 1 1/2 inches to a point on
the westerly side of said driveway easement; thence extending north 12
degrees 24 minutes 31 seconds west, along said driveway easement, the
distance of 136 feet 0 1/4 inch to a point; thence extending north 14
degrees 50 minutes 59 seconds east, partly along a 25-foot-wide driveway
easement, the distance of 21 feet 0 1/8 inch to a point; thence
extending north 75 degrees 13 minutes 21 seconds west, the distance of
492 feet 11 1/3 inches to a point; thence extending south 14 degrees 46
minutes 39 seconds west, the distance of 51 feet 3 1/8 inches to a
point; thence extending north 64 degrees 29 minutes 30 seconds west,
the distance of 259 feet 9 5/8 inches to the easterly side of said
Delaware Avenue, being the first mentioned point and place of beginning.
Containing in area 785,683 square feet or 18.0368 acres.
(2) MARINA TOWERS AND WORLD TRADE CENTER -- PIER 25 NORTH.
All that certain lot or piece of ground situate in the 5th ward, city
of Philadelphia, Commonwealth of Pennsylvania, described in accordance
with a Plan of Property made for Old City Harbor Associates Developers,
by Lawrence J. Cleary, Surveyor and Regulator, Third Survey District
dated March 26, 1981 as follows to wit:
Beginning at a point on the easterly line of Delaware Avenue (150
feet wide) located 27 degrees 52 minutes 00 seconds west, the distance
of 119 feet 8 7/8 inches from a point of intersection of the easterly
line of the said Delaware Avenue with the southerly line of Willow
Street (50 feet wide) produced; thence extending along the easterly
line of the said Delaware Avenue, the two following courses and
distances: (1) north 27 degrees 52 minutes 00 seconds east, the
distance of 162 feet 8 1/8 inches to an angle point; (2) north 15
degrees 16 minutes 00 seconds east, the distance of 95 feet 5 3/8 inches
to a point; thence extending south 73 degrees 55 minutes 50 seconds
east, the distance of 18 feet 5 7/8 inches to a point on the bulkhead
line of the Delaware River approved by the Secretary of War September
10, 1940, thence further extending south 73 degrees 55 minutes 50
seconds east, the distance of 515 feet 9 3/8 inches to a point on the
pierhead line of the Delaware River approved by the Secretary of War
September 10, 1940; thence extending the following two courses and
distances along the said pierhead line of the Delaware River (approved
by the Secretary of War September 10, 1940): (1) south 29 degrees, 05
minutes 21 seconds west, the distance of 133 feet 8 7/8 inches to an
angle point; (2) south 19 degrees 41 minutes 36 seconds west, the
distance of 117 feet 2 1/2 inches to a point; thence extending north 74
degrees 44 minutes 00 seconds west, the distance of 504 feet 10 inches
to a point on the said bulkhead line of the Delaware River (approved by
the Secretary of War September 10, 1940); thence further extending
north 74 degrees 44 minutes 00 seconds west, the distance of 23 feet 10
5/8 inches to the first mentioned point and place beginning.
Being parcels number 1 (known as pier 25 north), number 2 and number
3 and containing in total area 130,281.6 square feet.
(3) MARINE TRADE CENTER -- PIER 24 NORTH.
Description of a property located on the easterly side of Delaware
Avenue. Northwardly from the south house line of Callowhill Street
produced (pier numbered 24 north).
All that certain lot or piece of ground situate in the fifth ward of
the city of Philadelphia and described in accordance with a Survey and
Plan of Property made November 16, 1985 by Lawrence J. Cleary, Surveyor
and Regulator, Third Survey District, and revised March 22, 1988 by him.
Beginning at a point of intersection of the easterly side of Delaware
Avenue (150 feet wide) and the south house line of Callowhill Street
(formerly 50 feet wide) produced; thence extending north 27 degrees 52
minutes 00 seconds east along the said side of Delaware Avenue, the
distance of 340 feet 3 inches to a point; thence extending south 74
degrees 44 minutes 00 seconds east the distance of 23 feet 10 5/8 inches
to a point on the bulkhead line of the Delaware River approved by the
Secretary of War, September 10, 1940; thence extending south 74 degrees
44 minutes 00 seconds east the distance of 528 feet 8 5/8 inches to a
point on the pierhead line of the Delaware River approved by the
Secretary of War, September 10, 1940; thence extending south 19 degrees
41 minutes 36 seconds west along the said pierhead line the distance of
289 feet 9 1/2 inches to a point on the said south house line of
Callowhill Street produced; thence extending north 78 degrees 58
minutes 50 seconds west along the south house line of said Callowhill
Street produced the distance of 522 feet 8 3/4 inches to a point on the
said bulkhead line; thence continuing along the said south house line
of Callowhill Street produced north 78 degrees 58 minutes 50 seconds
west the distance of 59 feet 5 1/4 inches to the first mentioned point
and place of beginning.
Containing in area 171,171 square feet (3.9295 acres).
(4) NATIONAL SUGAR COMPANY "SUGAR HOUSE".
Description and Recital -- block 6 north 6 lot 17 -- all that certain
land.
Situate in the 5th ward of the city of Philadelphia, Pennsylvania and
more particularly described as follows:
Beginning at a point on the southeasterly side of Penn Street (60
feet wide) which point is measured south 43 degrees 30 minutes west
along the said southeasterly side of Penn Street the distance of 282
feet 6 inches from a point formed by an intersection of the said
southeasterly side of Penn Street and the southwesterly side of Laurel
Street (50 feet wide); thence extending from said point of beginning
south 46 degrees 30 minutes east the distance of 738 feet 8 1/2 inches
to a point on the Delaware River pierhead line established January 5,
1894, approved by Secretary of War September 10, 1940; thence extending
south 48 degrees 13 minutes 7 seconds west along the Delaware River
pierhead line the distance of 188 feet 3 1/8 inches to a point; thence
extending north 46 degrees 30 minutes west partly passing within the bed
of a 10-foot-wide alley by deed (which extends northwestwardly to the
said southeasterly side of Penn Street) the distance of 723 feet 2 5/8
inches to a point on the said southeasterly side of Penn Street; thence
extending north 43 degrees 30 minutes east along the said southeasterly
side of Penn Street and crossing the bed of the said 10-foot-wide alley
by deed the distance of 187 feet 7 1/2 inches to a point, being the
first mentioned point and place of beginning.
Containing 3.148 acres, more or less, as surveyed on June 29, 1981,
by Lawrence J. Cleary, Surveyor and Regulator of the 3rd District.
Together with 1,736 linear feet of track thereupon erected, made or
being and all and every of the rights, alleys, ways, waters, privileges,
appurtenances and advantages to the same belonging, or in anywise
appertaining. Being known as pier 40 noth.
Being the same premises which Ralph Heller, an individual by deed
dated November 4, 1981, and recorded in Philadelphia County, in deed
book EFP 345 page 531 conveyed unto pier 40 north associates, a Penna.
Limited partnership, its successors and assigns, as partnership property
for the uses and purposes of said pertnership.
All that certain lot or piece of ground situate in the fifth ward of
the city of Philadelphia and described in accordance with a Topographic
Survey and Plan of Property made May 23, 1988, by Lawrence J. Cleary,
Surveyor and Regulator of the Third Survey District:
Beginning at the point formed by the intersection of the easterly
side of Penn Street (60 feet wide), and the southerly side of former
Laurel Street (50 feet wide), stricken and reserved for drainage;
thence extending south 46 degrees 30 minutes 00 seconds east, along the
said southerly side of former said Laurel Street, the distance of 190
feet 9 inches to a point on the bulkhead line established January 5,
1894, and approved by the Secretary of War, September 10, 1940; thence
extending south 46 degree 30 minutes 00 seconds east the distance of 571
feet 3 1/4 inches to a point on the pierhead line established January 5,
1894, and approved by the Secretary of War, September 10, 1940; thence
extending south 48 degrees 13 minutes 07 seconds west along the said
pierhead line the distance of 283 feet 5 1/2 inches to a point; thence
extending north 46 degrees 30 minutes 00 seconds west leaving said
pierhead line the distance of 546 feet 11 5/8 inches to a point on the
aforementioned bulkhead line established January 5, 1894, and approved
by the Secretary of War, September 10, 1940; thence extending north 46
degrees 30 minutes 00 seconds west the distance of 191 feet 8 7/8 inches
to a point on the easterly side of said Penn Street; thence extending
north 43 degrees 30 minutes 00 seconds east along the easterly side of
said Penn Street the distance of 282 feet 6 inches to the first
mentioned point and place of beginning.
All that certain lot or piece of ground situate in the fifth ward of
the city of Philadelphia and described in accordance with a Survey and
Plan of Property made March 7, 1985 by Lawrence J. Cleary, Surveyor and
Regulator of the Third Survey District:
Beginning at a point of intersection formed by the northeasterly side
of Shackamaxon Street (60 feet wide) and the southeasterly side of Penn
Street (50 feet wide); thence extending south 22 degrees 26 minutes 57
seconds east along the northeasterly side of the bed of former
Shackamaxon Street (reserved for drainage purposes), the distance of 170
feet 8 5/8 inches to a point on the bulkhead line of the Delaware River
(established January 5, 1894 -- approved by the Secretary of War,
September 10, 1940); thence further extending south 22 degrees 26
minutes 57 seconds east along the northeasterly side of the bed of
former Shackamaxon Street (subject to a right-of-way for sewer
maintenance as provided in ordinance), the distance of 623 feet 6 3/8
inches to a point on the pierhead line of the Delaware River
(established January 5, 1894 -- approved by the Secretary of War,
September 10, 1940); thence extending south 54 degrees 04 minutes 10
seconds west along the said pierhead line (being also the southeasterly
head of the said former Shackamaxon Street), the distance of 61 feet 8
5/8 inches to an angle point; thence extending south 48 degrees 11
minutes 38 seconds west along the said pierhead line the distance of 385
feet 11 1/2 inches to a point on the northeasterly side of Laurel Street
(50 feet wide) produced; thence extending north 46 degrees 29 minutes
00 seconds west along the northeasterly side of the said Laurel Street
produced, the distance of 575 feet 6 7/8 inches to a point on the said
bulkhead line; thence further extending north 46 degrees 29 minutes 00
seconds west along the northeasterly side of the said Laurel Street, the
distance of 190 feet 7 inches to a point on the southeasterly side of
Penn Street (60 feet wide); thence extending north 43 degrees 30
minutes 00 seconds east along the southeasterly side of the aforesaid
Penn Street, the distance of 543 feet 0 3/4 inch to an angle point;
thence extending north 63 degrees 51 minutes 33 seconds east along the
southeasterly side of said Penn Street (50 feet wide), the distance of
240 feet 9 inches to the first mentioned point and place of beginning.
(5) RIVERCENTER.
Beginning at the point of intersection of the northeasterly side of
Dyott Street (100 feet wide) with the bulkhead line established by the
Secretary of War, September 10, 1940; thence from said point of
beginning leaving the side of Dyott Street and extending along the
bulkhead line the following five (5) courses and distances --
(1) north 64 degrees 18 minutes 09 seconds east 829 feet 10
inches to a point;
(2) south 48 degrees 30 minutes 57 seconds east 53 feet 5 5/8
inches to a point;
(3) north 64 degrees 40 minutes 52 seconds east 936 feet 8 5/8
inches to a point;
(4) north 32 degrees 24 minutes 26 seconds west 149 feet 2 1/4
inches to a point;
(5) north 64 degrees 04 minutes 09 seconds east crossing a 60
foot drainage right-of-way 296 feet 3 3/4 inches to a point on the
southwesterly side of pier #20;
thence extending along said southwesterly side of pier #20 15 feet
distant and parallel with the aforementioned drainage right-of-way south
25 degrees 02 minutes 08 seconds east 586 feet 6 3/8 inches to a point
on the pierhead line established by the Secretary of War, September 10,
1940; thence extending along the pierhead line south 64 degrees 16
minutes 52 seconds west 2,021 feet 10 inches to a point on the
northeasterly side of Dyott Street; thence extending along said
northeasterly side of Dyott Street north 30 degrees 02 minutes 52
seconds west 484 feet 9 3/8 inches to the point and place of beginning.
The Secretary shall make the public interest determination separately
for each proposed project, using reasonable discretion, within 150 days
after submission of appropriate plans for each proposed project.
(b) LIMITS ON APPLICABILITHY; REGULATORY REQUIREMENTS. -- The
declaration under subsection (a) shall apply only to those parts of the
areas described in subsection (a) of this section which are or will be
bulkheaded and filled or otherwise occupied by permanent structures,
including marina facilities. All such work is subject to all applicable
Federal statutes and regulations, including, but not necessarily limited
to, sections 9 and 10 of the Act of March 3, 1899 (30 Stat. 1151; 33
U.S.C. 401 and 403), commonly known as the River and Harbors
Appropriation Act of 1899, section 404 of the Federal Water Pollution
Control Act, and the National Environmental Policy Act of 1969.
(c) EXPIRATION DATE. -- If, 20 years from the date of the enactment
of this Act, any area or part thereof described in subsection (a) of
this section is not bulkheaded or filled or occupied by permanent
structures, including marine facilities, in accordance with the
requirements set out in subsection (b) of this section, or if work in
connection with any activity permitted in subsection (b) is not
commenced within 5 years after issuance of such permits, then the
declaration of non-navigability for such area or part thereof shall
expire.
SEC. 39. "33 USC 59y" DECLARATION OF NONNAVIGABILITY FOR PORTIONS OF
CONEY ISLAND CREEK AND GRAVESEND BAY, NEW YORK.
(a) AREA TO BE DECLARED NON-NAVIGABLE; PUBLIC INTEREST. -- Unless
the Secretary finds, after consultation with local and regional public
officials (including local and regional public planning organizations),
that the proposed projects to be undertaken within the boundaries in the
portions of Coney Island Creek and Gravesend Bay, New York, described
below, are not in the public interest then, subject to subsections (b)
and (c) of this section, those portions of such Creek and Bay, bounded
and described as follows, are declared to be non-navigable waters of the
United States:
Beginning at the corner formed by the intersection of the
Westerly Line of Cropsey Avenue, and the Northernmost United
States Pierhead Line of Coney Island Creek.
Running thence south 12 degrees 41 minutes 03 seconds E and
along the westerly line of Cropsey Avenue, 98.72 feet to the
northerly channel line as shown on Corps of Engineers Map Numbered
. 150 and on Survey by Rogers and Giollorenzo Numbered 13959 dated
October 31, 1986.
Running thence in a westerly direction and along the said
northerly channel line the following bearings and distances:
South 48 degrees 59 minutes 27 seconds west, 118.77 feet;
south 37 degrees 07 minutes 01 seconds west, 232.00 feet; south
23 degrees 17 minutes 10 seconds west, 430.03 feet; south 31
degrees 25 minutes 46 seconds west, 210.95 feet; south 79 degrees
22 minutes 49 seconds west, 244.18 feet; north 55 degrees 00
minutes 29 seconds west, 183.10 feet; north 41 degrees 47 minutes
04 seconds west, 315.16 feet;
North 41 degrees 17u minutes 43 seconds west, 492.47 feet to
the said Pierhead Line; thence north 73 degrees 58 minutes 40
seconds west and along said pierhead line, 2,665.25 feet to the
intersection of the United States bulkhead line;
Thence north 0 degree 19 minutes 35 seconds west and along the
United States Bulkhead line 1,138.50 feet to the intersection of
the westerly prolongation of the center line of 26th Avenue,
Thence north 58 degrees 25 minutes 06 seconds east and along
the center line of said 26th Avenue, 2,320.85 feet to the westerly
line of Cropsey Avenue, then southeasterly and along the southerly
line of Cropsey Avenue the following bearings and distances:
South 31 degrees 34 minutes 54 seconds east, 4,124.59 feet;
and
South 12 degrees 41 minutes 03 seconds east, 710.74 feet to the
point or place of beginning.
Coordinates and bearings are in the system as established by the
United States Coast and Geodetic Survey for the Borough of Brooklyn.
The Secretary shall make the public interest determination separately
for each proposed project, using reasonable discretion, within 150 days
after submission of appropriate plans for each proposed project.
(b) LIMITS ON APPLICABILITY; REGULATORY REQUIREMENTS. -- The
declaration under subsection (a) shall apply only to those parts of the
areas described in subsection (a) of this section which are or will be
bulkheaded and filled or otherwise occupied by permanent structures,
including marina facilties. All such work is subject to all applicable
Federal statutes and regulations, including, but not necessarily limited
to sections 9 and 10 of the Act of March 3, 1899 (30 Stat. 1151; 33
U.S.C. 401 and 403), commonly known as the River and Harbors
Appropriation Act of 1899, section 404 of the Federal Water Pollution
Control Act, and the National Environmental Policy Act of 1969.
(c) EXPIRATION DATE. -- If, 20 years from the date of the enactment
of this Act, any area or part thereof described in subsection (a) of
this section is not bulkheaded or filled or occupied by permanent
structures, including marina facilities, in accordance with the
requirements set out in subsection (b) of this section, or if work in
connection with any activity permitted in subsection (b) is not
commenced within 5 years after issuance of such permits, then the
declaration of non-navigability for such area or part thereof shall
expire.
SEC. 40. EXTENSION OF MODIFIED WATER DELIVERY SCHEDULES, EVERGLADES
NATIONAL PARK.
The first sentence of section 1302 of the Supplemental Appropriations
Act, 1984 (97 Stat. 1292-1293) is amended by striking out "January 1,
1989" and inserting in lieu thereof "January 1, 1992".
SEC. 41. PERIOD OF ENVIRONMENTAL DEMONSTRATION PROGRAM.
(a) EXTENSION OF PERIOD. -- Section 1135(b) of the Water Resources
Development Act of 1986 (33 U.S.C. 2294 note) is amended by striking out
"two-year period" and inserting in lieu thereof "5-year period".
(b) REPORTS. -- Section 1135(d) of such Act is amended by striking
out "two years" and inserting in lieu thereof "5 years".
SEC. 42. "42 USC 1962d-5g note" FEDERAL HYDROELECTRIC POWER
MODERNIZATION STUDY.
(a) STUDY. -- The Secretary shall conduct a study of the need to
modernize and upgrade the federally owned and operated hydroelectric
power system.
(b) REPORT. -- Not later than 2 years after the date of the
enactment of this section, the Secretary shall transmit to Congress a
report on the results of the study conducted under subsection (a)
together with recommendations.
SEC. 43. "42 USC 1962d-5g note" WATER QUALITY EFFECTS OF
HYDROELECTRIC FACILITIES.
(a) STUDY. -- The Secretary, in cooperation with the Administrator
of the Environmental Protection Agency, shall undertake a study of the
water quality effects of hydroelectric facilities owned and operated by
the Corps of Engineers. Such study shall be transmitted to Congress
within 2 years of the date of the enactment of this Act and shall
consider and include information for each such Corps of Engineers
hydroelectric facility pertaining to: relevant water quality standards
including dissolved oxygen; water quality monitoring data; possible
options and projected costs of measures required to improve the quality
of water released from each such facility where justified; and
recommendations with respect to such study results.
(b) LIMITATIONS. -- Nothing in this section shall convey to any
agency of the Federal Government any new authority with respect to the
allocation or release of water from Federal reservoirs. Further,
nothing in this section is designed or intended to affect any present or
future legal actions or proceedings.
SEC. 44. GAO REVIEW OF CIVIL WORKS PROGRAM.
The Comptroller General of the United States General Accounting
Office is authorized and directed to conduct a review of the Civil Works
Program of the United States Army Corps of Engineers. This management
and administration review shall be transmitted to Congress, together
with any recommendations which the Comptroller General may make.
SEC. 45. "33 USC 2300 note" DES PLAINES RIVER WETLANDS DEMONSTRATION
PROJECT AUTHORIZATION.
(a) RESTORATION OF WETLANDS. -- The Secretary is authorized to carry
out a project to construct, and engage in other activities, necessary
for the restoration of wetlands, of sufficient scale, for research and
demonstration purposes adjacent to the Des Plaines River in Wadsworth,
Illinois. The non-Federal interest shall agree --
(1) to provide, without cost to the United States, all lands,
easements, and rights-of-ways necessary for construction and
subsequent research and demonstration work;
(2) to hold and save the United States free from damages due to
construction, operation, and maintenance of the project, except
damages due to the fault or negligence of the United States or its
contractors; and
(3) after the completion of the research work, to operate and
maintain the restored wetlands in accordance with good management
practices.
The value of the non-Federal lands, easements, rights-of-way, and
relocations provided by the non-Federal interests, shall be credited
toward the non-Federal share of project construction costs. The
non-Federal share of project construction costs shall be 25 percent.
(b) AUTHORIZATION OF APPROPRIATION. -- There are authorized to be
appropriated to the Secretary $2,200,000 for the period of fiscal years
1990 through 1994 to carry out this section.
(c) PURPOSES. -- The project authorized by this section shall --
(1) define the wetland functions expected to be restored and
maintained giving due consideration to site specific climatic,
topographic, hydrologic, and edaphic conditions;
(2) conduct research to establish the critical relationships
between the land, water, and biotic factors responsible for the
defined wetland functions;
(3) establish and report design and construction procedures
necessary to create the defined wetland functions throughout
similar climatic areas and identify and report these wetland
functions;
(4) create or restore sustainable wetlands which will serve as
examples of the benefits and aesthetics of wetland landscapes;
and
(5) secure the long-term commitment from a State or local
agency for the maintenance of the wetlands following the research
work.
(d) REPORT. -- The Secretary shall report to Congress on the degree
of progress achieved in carrying out the project under this section.
SEC. 46. KISSIMMEE RIVER, FLORIDA.
The Secretary is directed to proceed with work on the Kissimmee River
demonstration project, Florida, pursuant to section 1135 of the Water
Resources Development Act of 1986.
SEC. 47. WATER RESOURCES STUDIES.
(a) INTERNAL DRAINAGE SYSTEM, FROG POND AGRICULTURAL AREA, FLORIDA.
-- The Secretary shall conduct a study for the purpose of determining
the need for an internal drainage system in the Frog Pond agricultural
area of south Dade County, Florida. Within 1 year after the date of the
enactment of this Act, the Secretary shall submit to Congress a
reconnaissance report on the need for such system.
(b) BARTLETT, ILLINOIS. -- Before issuing a permit under section 404
of the Federal Water Pollution Control Act for a proposed municipal
landfill in the vicinity of Bartlett, Illinois, the Secretary shall
consider the impact of such landfill on the Newark Valley Aquifer and on
the ability of water from such Aquifer to dilute for purposes of
drinking water supply naturally occurring radium in groundwater. Before
issuing such permit the Secretary shall consult with the Administrator
of the Environmental Protection Agency with respect to the impact of
such landfill on the Newark Valley Aquifer. Such consultation shall
occur within 45 days after the date of the issuance, when and if made,
of the Illinois water quality certification of such landfill pursuant to
section 401 of such Act and shall include the Administrator's analysis
of the permit record of the Illinois Environmental Protection Agency
with respect to the water quality impacts of such landfill. Within 90
days of receiving a completed application for a permit under section 404
of such Act, including such Illinois water quality certification, the
Secretary shall report to Congress on the impact of such landfill on the
Newark Valley Aquifer. The provisions of this subsection shall not
constitute an affirmative requirement for the Secretary to expand upon
the existing permit record as prepared by the Illinois Environmental
Protection Agency.
(c) BLUESTONE LAKE, WEST VIRGINIA. --
(1) IN GENERAL. -- The Secretary, in cooperation with the
Secretary of the Interior, is authorized and directed to conduct a
study and prepare a report on modifying the operation of the
Bluestone Lake project, West Virginia, in order to facilitate the
protection and enhancement of biological resources and
recreational use of waters downstream from the project. Specific
consideration shall be given in the study to all feasible means of
improving flows from such project during periods when flows from
the lake are less than 3,000 cubic feet per second, except that
the study shall not consider project operation adjustments which
entail major construction modifications at the project.
(2) NOTICE AND COMMENTS. -- The Secretary shall publish notice
of the proposed study under this subsection in the Federal
Register within 3 months after the date of the enactment of this
Act and shall consider any written comments regarding the scope of
the study which are submitted during the 60-day period after
publication of such notice.
(3) FINAL REPORT. -- Not later than 18 months after the date
of the enactment of this Act, the final report on the results of
the study under this subsection shall be transmitted to Congress.
(d) "33 USC 988 note" GREAT LAKES AND SAINT LAWRENCE SEAWAY. --
(1) STUDY OF FINANCING NAGIVATIONAL IMPROVEMENTS. -- The
Secretary, in cooperation with other Federal agencies and private
persons, is authorized and directed to contract with an
independent party to conduct a study of cost recovery options and
alternative methods of financing navigational improvements on the
Great Lakes connecting channels and Saint Lawrence Seaway,
including modernization of the Eisenhower and Snell Locks of the
Saint Lawrence Seaway.
(2) REPORT. -- Not later than 18 months after the date of the
enactment of this Act, the Secretary shall transmit to Congress a
report on the results of the study carried out under this
subsection together with recommendations.
(3) COST SHARING. -- The non-Federal share of the cost of the
study under this subsection shall be 50 percent; except that not
more than 1/2 of such non-Federal share may be made by the
provision of services, materials, supplies, or other in-kind
services necessary to carry out the study.
SEC. 48. DIVISION LABORATORY.
The Secretary is authorized to construct a new division laboratory at
an estimated cost of $2,400,000, for the United States Army Engineer
Division, Ohio River. Such laboratory shall be constructed on a
suitable site, which the Secretary is authorized to acquire for such
purpose.
SEC. 49. WATER RESOURCES MANAGEMENT PLANNING SERVICE FOR THE HUDSON
RIVER BASIN.
The Secretary is directed to establish a water resources management
and planning service for the Hudson River Basin in New York and New
Jersey. There is authorized to be appropriated $400,000 annually for
the purpose of providing the two States a full range of services for the
development and implementation of State and local water resource
initiatives.
SEC. 50. TECHNICAL RESOURCE SERVICE, RED RIVER BASIN, MINNESOTA AND
NORTH DAKOTA.
The Secretary is directed to establish a Technical Resource Service
for the Red River Basin in Minnesota and North Dakota. There is
authorized to be appropriated $500,000 annually for the purpose of
providing to such States a full range of technical services for the
development and implementation of State and local water and related land
resources initiatives within the Red River Basin and sub-basins. The
Technical Resource Service is to be provided in addition to related
services provided under authority of section 206 of the River and Harbor
and Flood Control Act of 1960 and section 22 of the Water Resources
Development Act of 1974.
SEC. 51. CORRECTION OF DESCRIPTIONS.
(a) HUDSON RIVER, NEW YORK. -- That portion of Public Law 100-202
designated as the Energy and Water Development Appropriation Act, 1988
is amended by striking out the undesignated paragraph beginning "The
following portion of the Hudson River" and ending "the States of New
York and New Jersey." (101 Stat. 1329-109) and inserting in lieu thereof
the following:
"The following portion of the Hudson River in the Borough of
Manhattan, New York County, State of New York, is hereby declared not to
be part of the federally authorized Channel Deepening Project; that
portion of the Hudson River and land thereunder more particularly
bounded and described as follows: Beginning at a point in the United
States Pierhead Line approved by the Secretary of War on July 31, 1941,
such point having a coordinate of north 4,677.56 feet and west 11,407.92
feet and running: (1) northerly along such Pierhead Line on a bearing
of north 21 degrees 01 minutes 53 seconds west for a distance of 700
feet to a point; thence (2) westerly at right angles to such Pierhead
Line on a bearing of south 68 degrees 58 minutes 07 seconds west for a
distance of 200 feet to a point; thence (3) southerly and parallel with
such Pierhead Line on a bearing of south 21 degrees 101 minutes 53
seconds east for a distance of 700 feet to a point; thence (4) easterly
at right angles to such Pierhead Line on a bearing of north 68 degrees
58 minutes 07 seconds east for a distance of 200 feet to the point of
beginning. Bearings and coordinates are in the system used on the
Borough Survey, Borough President's Office, Manhattan. This declaration
shall apply to all or any part of such described area used or needed for
New York harbor passenger ferry boat service as such may be operated by
or contracted for operation by a bistate agency created by compact
between the States of New York and New Jersey.".
(b) MIANUS RIVER, CONNECTICUT. -- Section 1006(b) of the Water
Resources Development Act of 1986 (100 Stat. 4223) is amended --
(1) in paragraph (2) by striking out "coordinates N14296.251"
and inserting in lieu thereof "coordinate: N14296.41"; and
(2) in paragraph (3) --
(A) by striking out "64 seconds West" and inserting in lieu
thereof "54 seconds West"; and
(B) by striking out "coordinate: N13970.8" and inserting in
lieu thereof "coordinate: N13970.81".
SEC. 52. PROJECT DEAUTHORIZATIONS.
(a) 33 USC 579a note" EXTENSION OF LIMITATION ON PERIOD OF
AUTHORIZATION. --
(1) PROJECTS IN THIS ACT. -- The provisions of section 1001(
a) and section 1001(c) of the Water Resources Development Act of
1986 shall apply to the projects authorized for construction by
this Act, except that the 5-year period during which funds must be
obligated to prevent deauthorization shall begin on the date of
the enactment of this Act.
(2) PROJECTS THEREAFTER. -- The provisions of section 1001(a)
and section 1001(c) of the Water Resources Development Act of 1986
shall also apply to projects authorized for construction
subsequent to this Act, except that the 5-year period during which
funds must be obligated to prevent deauthorization shall begin on
the date of the authorization of such projects.
(b) SPECIFIED PROJECTS. -- The following projects are not authorized
after the date of the enactment of this Act, except with respect to any
portion of such a project which portion has been completed before such
date of enactment or is under construction on such date of enactment:
(1) ROCKLAND LAKE, TEXAS. -- The Rockland Lake water resources
project, Texas, authorized by section 2 of the Act entitled "An
Act authorizing the construction, repair, and preservation of
certain public work on rivers and harbors, and for other
purposes", approved March 2, 1945 (59 Stat. 18).
(2) WHITE RIVER NAVIGATION TO BATESVILLE, ARKANSAS. -- The
project for navigation, White River Navigation to Batesville,
Arkansas, authorized by section 601(a) of the Water Resources
Development Act of 1986 (100 Stat. 4139).
(3) CHICAGO RIVER TURNING BASIN, CHICAGO HARBOR, ILLINOIS. --
The inner basin of Chicago Harbor, Illinois, known as the Chicago
River Turning Basin, authorized by the first section of the Act
entitled "An Act making appropriations for the repair,
preservation, and completion of certain public works on rivers and
harbors, and for other purposes, for the fiscal year ending June
30, 1871", approved July 11, 1870 (16 Stat. 226).
(c) ALGOMA, WISCONSIN, OUTER HARBOR. --
(1) DEAUTHORIZATION. -- Except as provided in paragraph (2),
the outer harbor basin feature of the navigation project for
Algoma, Wisconsin, authorized by the Act entitled "An Act making
appropriations for construction, repair, and preservation of
certain public works on rivers and harbors, and for other
purposes", approved March 2, 1907 (34 Stat. 1101), is not
authorized after the date of the enactment of this Act.
(2) RETENTION OF MAINTENANCE RESPONSIBILITIES FOR BREAKWATERS
AND CHANNEL. -- The Secretary shall retain all responsibilities
of the Secretary existing on the date of the enactment of this Act
for maintenance of the breakwaters and channel of the harbor at
Algoma, Wisconsin.
(d) CONTINUATION OF PROJECT AUTHORIZATIONS. -- Notwithstanding
section 1001(b)(1) of the Water Resources Development Act of 1986 (33
U.S.C. 579a(b)(1)) --
(1) the navigation project for Monterey Harbor (Monterey Bay,
California, authorized by section 101 of the River and Harbor Act
of 1960 (74 Stat. 483),
(2) the navigation project for the North Branch of the Chicago
River, Illinois, authorized by the first section of the Act
entitled "An Act authorizing the construction, repair, and
preservation of certain public works on rivers and harbors, and
for other purposes", approved July 24, 1946 (60 Stat. 636),
(3) the element of the Missouri River Basin Project authorized
by section 228 of the River and Harbor Act of 1970, and
(4) the navigation project for the James River, Virginia,
authorized by section 101 of the River and Harbor Act of 1962 (76
Stat. 1174),
shall remain authorized after December 31, 1989. Such projects and
elements shall not be authorized for construction after the last day of
the 5-year period beginning on the date of the enactment of this Act
unless during such period funds have been obligated for construction,
including planning and designing, of such projects and elements.
(e) NOTICE. -- The Secretary shall publish in the Federal Register
notice as to any project which would no longer have been authorized
pursuant to the provisions of section 1001 of the Water Resources
Development Act of 1986 or subsection (a) of this section but remains
authorized due to enactment of law by Congress.
SEC. 53. NAMINGS.
(a) VENTURA HARBOR. --
(1) DESIGNATION. -- The harbor commonly known as Ventura
Marina, located in Ventura County, California, and adopted and
authorized by section 101 of Public Law 90-483, shall hereafter be
known and designated as "Ventura Harbor".
(2) LEGAL REFERENCES. -- A reference in any law, map,
regulation, document, record, or other paper of the United States
to such Harbor shall be deemed to be a reference to "Ventura
Harbor".
(b) ELVIS STAHR HARBOR, PORT OF HICKMAN. --
(1) DESIGNATION. -- The harbor located on the Mississippi
River at Hickman, Kentucky, known as the Port of Hickman, shall
hereafter be known and designated as the "Elvis Stahr Harbor, Port
of Hickman".
(2) LEGAL REFERENCE. -- A reference in any law, map,
regulation, document, record, or other paper of the United States
to such harbor shall hereafter be deemed to be a reference to the
"Elvis Stahr Harbor, Port of Hickman".
(c) ED JONES BOAT RAMP. --
(1) DESIGNATION. -- The boat ramp to be constructed on the
Mississippi River in Lauderdale County, Tennessee, shall be known
and designated as the "Ed Jones Boat Ramp".
(2) LEGAL REFERENCE. -- A reference in any law, map,
regulation, document, record, or other paper of the United States
to such boat ramp shall be deemed to be a reference to "the Ed
Jones Boat Ramp".
SEC. 54. "33 USC 59z" DECLARATION OF NONNAVIGABILITY OF BODIES OF
WATER IN RIDGEFIELD, NEW JERSEY.
The three bodies of water located at block 4004, lots 1 and 2, and
block 4003, lot 1, in the Borough of Ridgefield, County of Bergen, New
Jersey, which have their mouths at the Hackensack River at 40 degrees 49
minutes 58 seconds north latitude and 74 degrees 01 minute 46 seconds
west longitude, 40 degrees 49 minutes 46 seconds north latitude and 74
degrees 01 minute 55 seconds west longitude, and 40 degrees 49 minutes
35 seconds north latitude and 74 degrees 02 minutes 04 seconds west
longitude, respectively, and the body of water located at block 4006,
lot 1, in the Borough of Ridgefield, County of Bergen, New Jersey, which
has its mouth at the Hackensack River at 40 degrees 49 minutes 15
seconds north latitude and 74 degrees 01 minute 52 seconds west
longitude, are declared to be nonnavigable waterways of the United
States within the meaning of the General Bridge Act of 1946 (33 U.S.C.
525 et seq.) and section 9 of the Act of March 3, 1899 (30 Stat. 1151;
33 U.S.C. 401), commonly known as the River and Harbors Appropriation
Act of 1899.
Approved November 17, 1988.
LEGISLATIVE HISTORY -- S. 2100 (H.R. 5247):
HOUSE REPORTS: No. 100-1098 (Comm. of Conference).
SENATE REPORTS: No. 100-313 (Comm. on Environment and Public Works).
CONGRESSIONAL RECORD, Vol. 134 (1988): Apr. 26, considered and
passed Senate. Sept. 30, considered and passed House, amended, in lieu
of H.R. 5247. Oct. 20, Senate agreed to conference report. Oct. 21,
House agreed to conference report.
Public Law 100-675, 102 Stat. 4000
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SEC. 101. SHORT TITLE.
This title may be cited as the "San Luis Rey Indian Water Rights
Settlement Act".
SEC. 102. DEFINITIONS.
For purposes of this title:
(1) BANDS. -- The term "Bands" means the La Jolla, Rincon, San
Pasqual, Pauma, and Pala Bands of Mission Indians which are
recognized by the Secretary of the Interior as the governing
bodies of their respective reservations in San Diego County,
California.
(2) FUND. -- The term "Fund" means the San Luis Rey Tribal
Development Fund established by section 105.
(3) INDIAN WATER AUTHORITY. -- The term "Indian Water
Authority" means the San Luis Rey River Indian Water Authority, an
intertribal Indian entity established by the Bands.
(4) LOCAL ENTITIES. -- The term "local entities" means the
city of Escondido, California; the Escondido Mutual Water
Company; and the Vista Irrigation District.
(5) SETTLEMENT AGREEMENT. -- The term "settlement agreement"
means the agreement to be entered into by the United States, the
Bands, and the local entities which will resolve all claims,
controversies, and issues involved in all the pending proceedings
among the parties.
(6) SECRETARY. -- The term "Secretary" means the Secretary of
the Interior.
(7) SUPPLEMENTAL WATER. -- The term "supplemental water" means
water from a source other than the San Luis Rey River.
SEC. 103. CONGRESSIONAL FINDINGS; LOCAL CONTRIBUTIONS; PURPOSE.
(a) FINDINGS. -- The Congress finds the following:
(1) The Reservations established by the United States for the
La Jolla, Rincon, San Pasqual, Pauma, and Pala Bands of Mission
Indians on or near the San Luis Rey River in San Diego County,
California, need a reliable source of water.
(2) Diversions of water from the San Luis Rey River for the
benefit of the local entities commenced in the early 1890s and
continue to be an important source of supply to those communities.
(3) The inadequacy of the San Luis Rey River to supply the
needs of both the Bands and the local entities has given rise to
litigation to determine the rights of various parties to water
from the San Luis Rey River.
(4) The pendency of the litigation has --
(A) severely impaired the Bands' efforts to achieve economic
development on their respective reservations,
(B) contributed to the continuation of high rates of
unemployment among the members of the Bands,
(C) increased the extent to which the Bands are financially
dependent on the Federal Government, and
(D) impeded the Bands and the local entities from taking
effective action to develop and conserve scarce water resources
and to preserve those resources for their highest and best uses.
(5) In the absence of a negotiated settlement --
(A) the litigation, which was initiated almost 20 years ago, is
likely to continue for many years,
(B) the economy of the region and the development of the
reservations will continue to be adversely affected by the water
rights dispute, and
(C) the implementation of a plan for improved water management
and conservation will continue to be delayed.
(6) An agreement in principle has been reached under which a
comprehensive settlement of the litigation would be achieved, the
Bands' claims would be fairly and justly resolved, the Federal
Government's trust responsibility to the Bands would be fulfilled,
and the local entities and the Bands would make fair and
reasonable contributions.
(7) The United States should contribute to the settlement by
providing funding and delivery of water from a supplemental
source. Water developed through conjunctive use of groundwater on
public lands in southern California or water to be reclaimed from
lining the previously unlined portions of the All American Canal
can provide an appropriate supplemental water source.
(b) PURPOSE. -- It is the purpose of this title to provide for the
settlement of the reserved water rights claims of the La Jolla, Rincon,
San Pasqual, Pauma, and Pala Bands of Mission Indians in San Diego
County, California, in a fair and just manner which --
(1) provides the Bands with a reliable water supply sufficient
to meet their present and future needs;
(2) promotes conservation and the wise use of scarce water
resources in the upper San Luis Rey River System;
(3) establishes the basis for a mutually beneficial, lasting,
and cooperative partnership among the Bands and the local entities
to replace the adversary relationships that have existed for
several decades; and
(4) fosters the development of an independent economic base for
the Bands.
SEC. 104. SETTLEMENT OF WATER RIGHTS DISPUTE.
Sections 106 and 109 of this Act shall take effect only when --
(1) the United States; the city of Escondido, California; the
Escondido Mutual Water Company; the Vista Irrigation District;
and the La Jolla, Rincon, San Pasqual, Pauma, and Pala Bands of
Mission Indians have entered into a settlement agreement providing
for the complete resolution of all claims, controversies, and
issues involved in all of the pending proceedings among the
parties in the United States District Court for the Southern
District of California and the Federal Energy Regulatory
Commission; and
(2) stipulated judgments or other appropriate final
dispositions have been entered in said proceedings.
SEC. 105. SAN LUIS REY TRIBAL DEVELOPMENT FUND.
(a) ESTABLISHMENT OF FUND. -- There is hereby established within the
Treasury of the United States the "San Luis Rey Tribal Development
Fund".
(b) AUTHORIZATION OF APPROPRIATIONS. --
(1) There is authorized to be appropriated to the San Luis Rey
Tribal Development Fund $30,000,000, together with interest
accruing from the date of enactment of this Act at a rate
determined by the Secretary of the Treasury taking into
consideration the average market yield on outstanding Federal
obligations of comparable maturity. Following execution of the
settlement agreement, judgments, and other appropriate final
dispositions specified in section 104, the Secretary of the
Treasury shall allocate and make available such monies from the
trust fund as are requested by the Indian Water Authority.
(2) Any monies not allocated to the Indian Water Authority and
remaining in the fund authorized by this section shall be invested
by the Secretary of the Treasury in interest-bearing deposits and
securities in accordance with the Act of June 24, 1938 (25 U.S.C.
162a). Such interest shall be made available to the Indian Water
Authority in the same manner as the monies identified in paragraph
(1).
SEC. 106. DUTIES OF THE UNITED STATES FOR DEVELOPMENT OF
SUPPLEMENTAL WATER.
(a) OBLIGATION TO ARRANGE FOR DEVELOPMENT OF WATER FOR BANDS AND
LOCAL ENTITIES. -- To provide a supplemental water supply for the
benefit of the Bands and the local entities, subject to the provisions
of the settlement agreement, the Secretary is authorized and directed
to:
(1) arrange for the development of not more than a total of
16,000 acre-feet per year of supplemental water from public lands
within the State of California outside the service area of the
Central Valley Project; or
(2) arrange to obtain not more than a total of 16,000 acre-feet
per year either from water conserved by the works authorized in
title II of this Act, or through contract with the Metropolitan
Water District of Southern California.
Nothing in this section or any other provision of this title shall
authorize the construction of any new dams, reservoirs or surface water
storage facilities.
(b) AUTHORITY TO UTILIZE EXISTING PROGRAMS AND PUBLIC LANDS. -- To
carry out the provisions of subsection (a), the Secretary may, subject
to the rights and interests of other parties and to the extent
consistent with the requirements of the laws of the State of California
and such other laws as may be applicable:
(1) utilize existing programs and authorities; and
(2) permit water to be pumped from beneath public lands and, in
conjunction therewith, authorize a program to recharge some or all
of the groundwater that is so pumped.
(c) TERMS AND CONDITIONS OF WATER DELIVERIES. -- Such supplemental
water shall be provided for use by the Bands on their reservation and
the local entities in their service areas pursuant to the terms of the
settlement agreement and shall be delivered at locations, on a schedule
and under terms and conditions to be agreed upon by the Secretary, the
Indian Water Authority, the local entities and any agencies
participating in the delivery of the water. It may be exchanged for
water from other sources for use on the Bands' reservations or in the
local entities' service areas.
(d) COST OF DEVELOPING AND DELIVERING WATER. -- The cost of
developing and delivering supplemental water pursuant to this section
shall not be borne by the United States, and no Federal appropriations
are authorized for this purpose.
(e) REPORT TO CONGRESS. -- Notwithstanding the provisions of section
104, within nine months following enactment of this Act, the Secretary
shall report to the Committee on Interior and Insular Affairs of the
House of Representatives and to the Committee on Energy and Natural
Resources and the Select Committee on Indian Affairs of the Senate on
(1) the Secretary's recommendations for providing a supplemental water
source including a description of the works, their costs and impacts,
and the method of financing; and (2) the proposed form of contract for
delivery of supplemental water to the Bands and the local entities.
When 60 calendar days have elapsed following submission of the
Secretary's report, the Secretary shall execute the necessary contracts
and carry out the recommended program unless otherwise directed by the
Congress.
SEC. 107. ESTABLISHMENT, STATUS, AND GENERAL POWERS OF SAN LUIS REY
RIVER INDIAN WATER AUTHORITY.
(a) ESTABLISHMENT OF INDIAN WATER AUTHORITY APPROVED AND RECOGNIZED.
--
(1) IN GENERAL. -- The establishment by the Bands of the San
Luis Rey River Indian Water Authority as a permanent intertribal
entity pursuant to duly adopted ordinances and the power of the
Indian Water Authority to act for the Bands are hereby recognized
and approved.
(2) LIMITATION ON POWER TO AMEND OR MODIFY ORDINANCES. -- Any
proposed modification or repeal of any ordinance referred to in
paragraph (1) must be approved by the Secretary, except that no
such approval may be granted unless the Secretary finds that the
proposed modification or repeal will not interfere with or impair
the ability of the Indian Water Authority to carry out its
responsibilities and obligations pursuant to this Act and the
settlement agreement.
(b) STATUS AND GENERAL POWERS OF INDIAN WATER AUTHORITY. --
(1) STATUS AS INDIAN ORGANIZATION. -- To the extent provided
in the ordinances of the Bands which established the Indian Water
Authority, such Authority shall be treated as an Indian entity
under Federal law with which the United States has a trust
relationship.
(2) POWER TO ENTER INTO AGREEMENTS. -- The Indian Water
Authority may enter into such agreements as it may deem necessary
to implement the provisions of this title and the settlement
agreement.
(3) INVESTMENT POWER. -- Notwithstanding paragraph (1) or any
other provision of law, the Indian Water Authority shall have
complete discretion to invest and manage its own funds: Provided,
That the United States shall not bear any obligation or liability
regarding the investment, management or use of such funds.
(4) LIMITATION ON SPENDING AUTHORITY. -- All funds of the
Indian Water Authority which are not required for administrative
or operational expenses of the Authority or to fulfill obligations
of the Authority under this title, the settlement agreement, or
any other agreement entered into by the Indian Water Authority
shall be invested or used for economic development of the Bands,
the Bands' reservation lands, and their members. Such funds may
not be used for per capita payments to members of any Band.
(c) INDIAN WATER AUTHORITY TREATED AS TRIBAL GOVERNMENT FOR CERTAIN
PURPOSES. -- The Indian Water Authority shall be considered to be an
Indian tribal government for purposes of section 7871(a)(4) of the
Internal Revenue Code of 1986.
SEC. 108. DELEGATION OF AUTHORITY.
The Secretary and the Attorney General of the United States, acting
on behalf of the United States, and the Bands, acting through their duly
authorized governing bodies, are authorized to enter into the settlement
agreement. The Secretary is authorized to enter into such agreements
and to take such measures as the Secretary may deem necessary or
appropriate to fulfill the provisions of this title.
SEC. 109. AUTHORITY OF THE FEDERAL ENERGY REGULATORY COMMISSION AND
THE SECRETARY OF THE INTERIOR OVER POWER FACILITIES AND GOVERNMENT AND
INDIAN LANDS.
(a) POWER FACILITIES. -- Any license issued under the Act of June
10, 1920 (16 U.S.C. 791a et seq., commonly referred to as Part I of the
Federal Power Act) for any part of the system that diverts the waters of
the San Luis Rey River originating above the intake to the Escondido
Canal --
(1) shall be subject to all of the terms, conditions, and
provisions of the settlement agreement and this title; and
(2) shall not in any way interfere with, impair or affect the
ability of the Bands, the local entities and the United States to
implement, perform, and comply fully with all of the terms,
conditions, and provisions of the settlement agreement.
(b) INDIAN AND GOVERNMENT LANDS. -- Notwithstanding any provision of
Part I of the Federal Power Act to the contrary, the Secretary is
exclusively authorized, subject to subsection (c), to lease, grant
rights-of-way across, or transfer title to, any Indian tribal or
allotted land, or any other land subject to the authority of the
Secretary, which is used, or may be useful, in connection with the
operation, maikntenance, repair, or replacement of the system to divert,
convey, and store the waters of the San Luis Rey River originating above
the intake to the Escondido Canal or the supplemental water supplied by
the Secretary under this Act.
(c) APPROVAL BY INDIAN BANDS; COMPENSATION TO INDIAN OWNERS. -- Any
disposition of Indian tribal or allotted land by the Secretary under the
subsection (b) shall be subject to the approval of the governing Indian
Band. Any individual Indian owner or allottee whose land is disposed of
by any action of the Secretary under subsection (b) shall be entitled to
receive just compensation.
SEC. 110. RULES OF CONSTRUCTION.
(a) EMINENT DOMAIN. -- No provision of this title shall be construed
as authorizing the acquisition by the Federal Government of any water or
power supply or any water conveyance or power transmission facility
through the power of eminent domain or any other nonconsensual
arrangement.
(b) STATUS AND AUTHORITY OF INDIAN WATER AUTHORITY. -- No provision
of this title shall be construed as creating any implication with
respect to the status or authority which the Indian Water Authority
would have under any other law or rule of law in the absence of this
title.
SEC. 111. COMPLIANCE WITH BUDGET ACT.
To the extent any provision of this title provides new spending
authority described in section 401(c)(2)(A) of the Congressional Budget
Act of 1974, such authority shall be effective for any fiscal year only
to such extent or in such amounts as are provided in advance in
appropriation Acts.
SEC. 201. CONGRESSIONAL FINDINGS.
Congress hereby finds and declares that:
(1) The Boulder Canyon Project Act ("Project Act") was enacted
to conserve the waters of the lower Colorado River for a number of
public purposes, including the storage and delivery of water for
reclamation of public lands and other uses exclusively within the
United States.
(2) The Secretary of the Interior ("Secretary") was authorized
by the Project Act to construct what is now Hoover Dam, Lake Mead,
and the All American Canal and "to contract for the storage of
water in said reservoir and for the delivery thereof at such
points on the river and on said canal as may be agreed upon . . .
".
(3) The Project Act provides that "no person shall have or be
entitled to have the use for any purpose of the water stored as
aforesaid except by contract" and in California the Secretary has
entered into water delivery contracts with public agencies.
(4) The Secretary's water delivery contracts incorporate the
Seven Party Agreement of August 18, 1931, under which water that
is not applied to beneficial use by a California Contractor is
available for use by the California Contractor with the next
priority.
(5) The available supply of Colorado River water in California
is insufficient to meet the priorities set forth in the Seven
Party Agreement.
(6) The Secretary's water delivery contracts with the
California Contractors provide that the total beneficial
consumptive use under the first three priorities established in
the contracts shall not exceed 3.85 million acre-feet of water per
year.
(7) The rights of all California Contractors are defined by the
Project Act, their contracts, and decisions and decrees of the
United States Supreme Court.
(8) The Secretary has promulgated regulations pursuant to his
authority under the Project Act establishing procedures to assure
that deliveries of Colorado River water to each user will not
exceed those reasonably required for its beneficial use.
(9) The Secretary has constructed the All American Canal and
delivers water to the Imperial Irrigation District and Coachella
Valley Water District under water delivery contracts by which
those districts are entitled to receive deliveries of water in
amounts reasonably required for potable and irrigation purposes.
(10) Studies conducted by the Secretary show that significant
quantities of water currently delivered into the All American
Canal and its Coachella Branch are lost by seepage from the canals
and that such losses could be reduced or eliminated by lining
these canals.
SEC. 202. DEFINITIONS.
As used in this title, the term --
(1) "All American Canal Service Area" shall mean the Imperial
Service Area and the Coachella Service Area as defined in the
Imperial Irrigation District and Coachella Valley Water District
water delivery contracts with the Secretary dated December 1,
1932, and October 14, 1934, respectively.
(2) "California Contractors" shall mean the Palo Verde
Irrigation District; Imperial Irrigation District; Coachella
Valley Water District; and, The Metropolitan Water District of
Southern California.
(3) "Participating Contractor" shall mean a California
Contractor who elects to participate in, and fund, all or a
portion of the works described in section 203 of this title.
(4) "Project Act" shall mean the Boulder Canyon Project Act (45
Stat. 1057; 43 U.S.C. 617-617t).
(5) "Secretary" shall mean the Secretary of the Interior.
(6) "Seven Party Agreement" shall mean that agreement dated
August 18, 1931, providing the schedule of priorities for use of
the waters of the Colorado River within California as published in
section 6 of the General Regulations of the Secretary of the
Interior dated September 28, 1931, and incorporated in the
Secretary's water delivery contracts with the California
Contractors.
(7) "Works" shall mean the facilities and measures specified in
section 203(a) of this title.
SEC. 203. AUTHORIZATION OF PROJECT.
(a) CANAL LINING AUTHORIZED. -- The Secretary, in order to reduce
the seepage of water, is authorized to --
(1) construct a new lined canal or to line the previously
unlined portions of the All American Canal from the vicinity of
Pilot Knob to Drop 4 and its Coachella Branch from Siphon 7 to
Siphon 32, or construct seepage recovery facilities in the
vicinity of Pilot Knob to Drop 4, including measures to protect
public safety; and
(2) implement measures for the replacement of incidental fish
and wildlife values adjacent to the canals foregone as a result of
the lining of the canal or mitigation of resulting impacts on fish
and wildlife resources from construction of a new canal, or a
portion thereof. Such measures shall be on an acre-for-acre
basis, based on ecological equivalency, and shall be implemented
concurrent with construction of the works. The Secretary shall
make available such public lands as he deems appropriate to meet
the requirements of this subsection. The Secretary is authorized
to develop ground water, with a priority given to nonpotable
sources, from public lands to supply water for fish and wildlife
purposes.
(b) OPERATION AND MAINTENANCE DETERMINATION. -- The Secretary shall
determine the impact of the works on the cost of operation and
maintenance and the existing regulating and storage capacity of the All
American Canal and its Coachella Branch. If the works result in any
added operation and maintenance costs which exceed the benefits derived
from increasing the regulating and storage capacity of the canals to the
Imperial Irrigation District or the Coachella Valley Water District, the
Secretary shall include such costs in the funding agreement for the
works.
(c) CONSTRUCTION AND FUNDING AGREEMENT. -- The Secretary, subject to
the provision of section 205 of this title, may enter into an agreement
or agreements with one or more of the California Contractors for the
construction or funding of all or a portion of the works authorized in
subsection (a) of this section. The Secretary shall ensure that such
agreement or agreements include provisions setting forth --
(1) the responsibilities of the parties to the agreement for
funding and assisting with implementing all the duties of the
Secretary identified in subsections (a) and (b) of this section;
(2) the obligation of the Participating Contractors to pay the
additional costs identified in subsection (b) of this section as a
result of the works;
(3) the procedures and requirement for approval and acceptance
by the Secretary of such works, including approval of the quality
of construction, measures to protect the public health and safety,
mitigation or replacement, as appropriate, of fish and wildlife
resources or values, and procedures for operation, maintenance,
and protection of such works;
(4) the rights, responsibilities, and liabilities of each party
to the agreement;
(5) the term of such agreements which shall not exceed 55 years
and may be renewed if consented to by Imperial Irrigation District
and Coachella Valley Water District according to their respective
interests in the conserved water. If the funding agreements are
not renewed, the Participating Contractors shall be compensated by
the Imperial Irrigation District or the Coachella Valley Water
District for their participation in the cost of the works. Such
compensation shall be equal to the replacement value of the works
less depreciation. Such depreciated value is to be based upon an
engineering analysis by the Secretary of the remaining useful life
of the works at the expiration of the funding agreements;
(6) the obligation of the Participating Contractors or the
United States for repair or other corrective action which would
not have occurred in the absence of the works in the case of
earthquake or other acts of God;
(7) the obligation of the Participating Contractors or the
United States to hold harmless Imperial Irrigation District and
Coachella Valley Water District for liability to third parties
which occurs after the Secretary accepts the works and would not
have occurred in the absence of the works; and
(8) the requirement that the remaining net obligations due the
United States for construction of the All American Canal owed on
the date of enactment of this Act be paid by the Participating
Contractors.
(d) TITLE TO THE WORKS. -- A Participating Contractor shall not
receive title to any works constructed pursuant to this section by
virtue of its participation in the funding for the works. Title to all
such works shall remain with the United States. Upon completion of the
works and upon request by an All American Canal Contractor (City of San
Diego, Imperial Irrigation District, or Coachella Valley Water District)
for transfer of title of the All American Canal, its Coachella Branch,
and appurtenant structures below Syphon Drop (including the works
constructed pursuant to this section), the Secretary shall, within 90
days, take such necessary action as the Secretary deems appropriate to
complete transfer of title to the requesting contractor, according to
the contractor's respective interest unless the Secretary determines
that such transfer would impair any existing rights of other All
American Canal contractors, the rights or obligations of the United
States, or would inhibit the Secretary's ability to fulfill his
responsibility under the Project Act or other applicable law.
(e) AUTHORIZATION OF APPROPRIATIONS. --
(1) No Federal funds are authorized to be appropriated to the
Secretary for construction of the works described in subsection
(a)(1) of this section.
(2) The Secretary is authorized to receive funds in advance
from one or more Participating Contractors pursuant to the
Contributed Funds Act of March 4, 1921 (41 Stat. 1401) under terms
and conditions acceptable to the Secretary in order to carry out
the Secretary's responsibilities under subsections (a), (b), and
(c) of this section.
SEC. 204. USE OF CONSERVED WATER.
(a) SECRETARIAL DETERMINATION. -- The Secretary shall determine the
quantity of water conserved by the works and may revise such
determination at reasonable intervals based on such information as the
Secretary deems appropriate. Such initial determination and subsequent
revision shall be made in consultation with the California Contractors.
(b) BENEFICIAL USE IN CALIFORNIA. --
(1) The water identified in subsection (a) of this section
shall be made available, subject to the approval requirement
established in section 203(c)(3), for consumptive use by
California Contractors within their service areas according to
their priorities under the Seven Party Agreement.
(2) If the water identified in subsection (a) of this section
is used during the term of the funding agreements by (A) a
California Contractor other than a Participating Contractor, or
(B) by a Participating Contractor in an amount in excess of its
proportionate share as measured by the amount of its contributed
funds in relation to the total contributed funds, such contractor
shall reimburse the Participating Contractors for the annualized
amounts of their respective contributions which funded the
conservation of water so used, any added costs of operation and
maintenance as determined in section 203(b), and related
mitigation costs under section 203(a)(2). Such reimbursement
shall be based on the costs each Participating Contractor incurs
in contributing funds and its total contribution, and the life of
the works.
SEC. 205. IMPLEMENTATION.
The authorities contained in this title shall take effect upon
enactment and the Secretary is authorized to proceed with all
preconstruction activities. For a period not to exceed 15 months
thereafter, or such additional period as the Secretary and the Imperial
Irrigation District, the Coachella Valley Water District, and the
Metropolitan Water District of Southern California may agree, the
Secretary shall provide to the Imperial Irrigation District the
opportunity to become the sole Participating Contractor for the works on
the All American Canal from Pilot Knob to Drop 4, and assume all
non-Federal obligations to finance the works. After the expiration of
the 15-month period or any extension thereto, the Secretary is
authorized to enter into agreements with the California Contractors as
provided in section 203(c) of this Act.
SEC. 206. PROTECTION OF EXISTING WATER USES.
As of the effective date of this Act, any action of the Secretary to
use, sell, grant, dispose, lease or provide rights-of-way across Federal
public domain lands located within the All American Canal Service Area
shall include the following conditions: (1) those lands within the
boundary of the Imperial Irrigation District as of July 1, 1988, as
shown in Imperial Irrigation District Drawing 7534, excluding Federal
lands without a history of irrigation or other water using purposes;
(2) those lands within the Imperial Irrigation District Service Area as
shown on General Map of Imperial Irrigation District dated January 1988
(Imperial Irrigation District No. 27F0189) with a history of irrigation
or other water using purposes; and (3) those lands within the Coachella
Valley Water District's Improvement District No. 1 shall have a priority
for irrigation or other water using purposes over the lands benefiting
from the action of the Secretary: Provided, That rights to use water on
lands having such priority may be transferred for use on lands having a
lower priority if such transfer does not deprive other lands with the
higher priority of Colorado River water that can be put to reasonable
and beneficial use.
SEC. 207. WATER CONSERVATION STUDY.
(a) PREPARATION AND TRANSMITTAL. -- Any agreement entered into
pursuant to section 203 between the Secretary and The Metropolitan Water
District of Southern California (hereafter referred to as the
"District") shall require, prior to the initiation of construction but
in no case later than two years from the date of enactment of this Act,
the preparation and transmittal to the Secretary by the District of a
water conservation study as described in this section, together with the
conclusions and recommendations of the District.
(b) PURPOSE. -- The purpose of the study required by this section
shall be the evaluation of various pricing options within the District's
service area, an estimation of demand elasticity for each of the
principal categories of end use of water within the District's service
area, and the estimation of the quantity of water saved under the
various options evaluated.
(c) PRICING ALTERNATIVES. -- Such study shall include a thorough
evaluation of all the pricing alternatives, alone and in various
combinations, that could be employed by the District, including but not
limited to --
(1) recovery of all costs through water rates;
(2) seasonal rate differentials;
(3) dry year surcharges;
(4) increasing block rates; and
(5) marginal cost pricing.
(b) PUBLIC REVIEW AND COMMENT. -- Not less than 90 days prior to its
transmittal to the Secretary, the study, together with the District's
preliminary conclusions and recommendations and all supporting
documentation, shall be available for public review and comment,
including the transcripts of public hearings which shall be held during
the course of the study. All significant comments, and the District's
response thereto, shall accompany the study transmitted to the
Secretary.
(e) LIMITATION ON INITIATION OF CONSTRUCTION. -- Prior to the
initiation of construction, the Secretary shall determine that the
requirements of this section have been satisfied. Nothing in this
section shall be deemed to authorize the Secretary to require the
implementation of any policies or recommendations contained in the
study.
SEC. 208. SALTON SEA NATIONAL WILDLIFE REFUGE.
Within 90 days from the date of enactment of this title, the
Secretary is directed to prepare and submit a report to the Congress
which describes the current condition of habitat at the Salton Sea
National Wildlife Refuge, California. The report shall also --
(1) assess water quality conditions within the refuge;
(2) identify actions which could be undertaken to improve
habitat at the refuge;
(3) describe the status of wildlife, including waterfowl
populations, and how wildlife populations have fluctuated or
otherwise changed over the past ten years; and
(4) describe current and future water requirements of the
refuge, the availability of funds for water purchases, and steps
which may be necessary to acquire additional water supplies, if
needed.
SEC. 209. RELATION TO RECLAMATION LAW.
No contract or agreement entered into pursuant to this title shall be
deemed to be a new or amended contract for the purposes of section
203(a) of the Reclamation Reform Act of 1982 (Public Law 97-293, 96
Stat. 1263).
Approved November 17, 1988.
LEGISLATIVE HISTORY -- S. 795:
HOUSE REPORTS: No. 100-780 (Comm. on Interior and Insular Affairs).
SENATE REPORTS: No. 100-47 and No. 100-254 (both from Select Comm.
on Indian Affairs).
CONGRESSIONAL RECORD: Vol. 133 (1987): Dec. 19, considered and
passed Senate. Vol. 134 (1988): Oct, 3, 4, considered and passed
House, amended. Oct. 19, Senate concurred in House amendment with an
amendment. Oct. 20, House concurred in Senate amendment.
Public Law 100-674, 102 Stat. 3996
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act "2 USC 801 note" may be cited as the "Congressional Award
Act Amendments of 1988".
SEC. 2. AMENDMENTS TO THE CONGRESSIONAL AWARD ACT.
(a) ANNUAL REPORTS. -- Section 3(e) of the Congressional Award Act
(2 U.S.C. 802(e)) is amended --
(1) by redesignating paragraph (6) as paragraph (8); and
(2) by inserting after paragraph (5) the following new
paragraphs:
"(6) A detailed description of the goals and objectives of the
Board and the role of Congressional participation in fulfilling
those goals and objectives.
"(7) Plans for activities to be conducted during the remainder
of the duration of the program, consistent with the functions and
requirements established under this Act.".
(b) MEMBERSHIP OF THE BOARD. -- Section 4 of the Congressional Award
Act (2 U.S.C. 803) is amended --
(1) in subsection (a)(1) --
(A) by striking "thirty-three" and inserting "25";
(B) by striking "Eight" each place it appears and inserting
"Six";
(C) by inserting ", 1 of whom shall be a member of the
Congressional Award Association" before the period in each of
subparagraphs (A) and (D); and
(D) by inserting ", 1 of whom shall be a representative of a
local Congressional Award Council" before the period in each of
subparagraphs (B) and (C); and
10 (2) by amending subsection (d) to read as follows:
"(d)(1) A meeting of the Board may be convened only if --
"(A) notice of the meeting was provided to each member in
accordance with the bylaws; and
"(B) not less than 11 members are present for the meeting at
the time given in the notice.
"(2) A majority of the members present when a meeting is convened
shall constitute a quorum for the remainder of the meeting.".
(c) POWERS, FUNCTIONS, AND LIMITATIONS. -- (1) The heading of
section 7 of the Congressional Award Act (2 U.S.C. 806) is amended to
read as follows:
(2) Section 7 of the Congressional Award Act (2 U.S.C. 806) is
amended --
(A) by redesignating subsections (b) through (g) as subsections
(c) through (h), respectively; and
(B) by inserting after subsection (a) the following new
subsection:
"(b)(1) The Board shall establish such functions and procedures as
may be necessary to carry out the provisions of this Act.
"(2) The functions established by the Board under paragraph (1) shall
include --
"(A) communication with local Congressional Award Councils
concerning the Congressional Award Program;
"(B) provision, upon the request of any local Congressional
Award Council, of such technical assistance as may be necessary to
assist such council with its responsibilities, including the
provision of medals, the preparation and provision of
applications, guidance on disposition of applications,
arrangements with respect to local award ceremonies, and other
responsibilities of such council;
"(C) conducting of outreach activities to establish new State
and local Congressional Award Councils, particularly in inner-city
areas and rural areas;
"(D) fundraising;
"(E) conducting of an annual Gold Medal Awards ceremony in the
District of Columbia;
"(F) consideration of implementation of the provisions of this
Act relating to scholarships; and
"(G) carrying out of duties relating to management of the
national office of the Congressional Award Program, including
supervision of office personnel and of the office budget.".
(d) REPORTS AND TERMINATION OF BOARD. -- Section 9 of the
Congressional Award Act is amended to read as follows:
"SEC. 9. (a) Except as provided in subsection (b), "2 USC 808" the
Board shall terminate on November 15, 1989.
"(b)(1) If the Board fails to submit any report required by
subsection (c), the Board shall terminate within 30 days of the failure.
"(2) Unless the Board is in compliance with subsection (b) of section
7 not later than September 30, 1989, the Board shall terminate on
October 30, 1989.
"(3) If the Board makes the certification required by subsection (d),
the Board shall terminate on September 30, 1990.
"(c)(1) The Board shall submit to the appropriate committees of the
Congress 4 reports that each include at least --
"(A) a description of all fundraising activities conducted by
the Board during --
"(i) in the case of the first report, the period beginning on
the date of the enactment of the Congressional Award Act
Amendments of 1988 and ending on the date of the report; and
"(ii) in the case of the second, third, and final reports, the
period beginning on the date the previous report was submitted
under this subsection and ending on the date of the report;
"(B) a description of the fiscal position of the Board as of
the date of the report, including --
"(i) available cash;
"(ii) outstanding debts; and
"(iii) prospective operating expenses;
"(C) proposed fundraising activities to be carried out during
the period beginning on the date of the report and ending on the
date of the succeeding report;
"(D) the number and location of Congressional Award Councils
established since the previous report in States or congressional
districts where no such councils previously existed; and
"(E) any evidence of contacts between the Board or the
Congressional Award Foundation and any congressionial office,
including copies of any correspondence between the Board or the
Congressional Award Foundation and any congressional office.
"(2) The reports required by paragraph (1) shall be submitted as
follows:
"(A) The first report shall be submitted not later than January
1, 1989.
"(B) The second report shall be submitted not later than April
1, 1989.
"(C) The third report shall be submitted not later than July 1,
1989.
"(D) The final report shall be submitted not later than
September 30, 1989.
"(3) The date of the submission of a report under this subsection
shall be considered to be the date of the report is registered to be
mailed by certified mail, return receipt requested.
"(d) Not later than September 30, 1989, the Director shall certify to
the congressional leadership that the Board complied with the
requirements of this section in a timely manner.
"(e) Within 30 days of the submission of each report required under
subsection (c) and the submission of the certification required under
subsection (d), the Comptroller General of the United States shall
submit to the appropriate committees of the Congress a report verifying
the information submitted in the report or certification, as
appropriate.
"(f) Prior to termination of the Board under this section, the Board
shall take such actions as may be required to provide for the
dissolution of any corporation established by the Board under section
7(h). The Board shall set forth, in its bylaws, the procedures for
dissolution to be followed by the Board.".
(e) CONFORMING AMENDMENT. -- Section 8(a) "2 USC 807" is amended by
striking "section 7(g)" and inserting "section 7(h)".
SEC. 3. "2 USC 803 note" TRANSITION PROVISIONS.
Not later than 120 days after the date of the enactment of this Act,
the congressional leadership shall appoint members to fill vacancies on
the Congressional Award Board in accordance with section 4(a) of the
Congressional Award Act (as amended by section 2(b)). In filling such
vacancies, the congressional leadership shall first appoint members from
the Congressional Award Association and local Congressional Award
Councils in accordance with section 4(a) of the Congressional Award Act
(as amended by section 2(b)).
SEC. 4. REPORT.
(a) IN GENERAL. -- The Congressional Award Board shall submit to the
appropriate committees and subcommittees of the Congress a report that
describes in detail --
(1) the goals and objectives of the Board;
(2 the role of Congressional participation in fulfilling such
goals and objectives; and
(3) plans for activities to be conducted during the remainder
of the duration of the Congressional Award Program established
under section 3 of the Congressional Award Act, consistent with
the duties and requirements established under such Act.
(b) TIME FOR REPORT. -- The report required by subsection (a) shall
be submitted not later than 180 days after the date of the enactment of
this Act.
Approved November 17, 1988.
LEGISLATIVE HISTORY -- H.R. 5315:
CONGRESSIONAL RECORD, Vol. 134 (1988): Oct. 3, 4, considered and
passed House. Oct. 19, considered and passed Senate.
Public Law 100-673, 102 Stat. 3992
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act "31 USC 5112 note" may be cited as the "Bicentennial of the
United States Congress Commemorative Coin Act".
SEC. 2. "31 USC 5112 note" SPECIFICATIONS OF COINS.
(a) FIVE DOLLAR GOLD COINS. --
(1) ISSUANCE. -- The Secretary of the Treasury (hereinafter in
this Act referred to as the "Secretary") shall mint and issue not
more than 1,000,000 five dollar coins each of which shall --
(A) weigh 8.359 grams;
(B) have a diameter of .850 inches; and
(C) be composed of 80 percent gold and 10 percent alloy.
(2) DESIGN. -- The design of the five dollar coins shall, in
accordance with section 4, be emblematic of the Bicentennial of
the United States Congress. Each five dollar coins shall bear a
designation of the value of the coin, an inscription of the year
"1989", and inscriptions of the words "Liberty", "In God We
Trust", "United States of America", and "E Pluribus Unum".
(b) ONE DOLLAR SILVER COINS. --
(1) ISSUANCE. -- The Secretary shall mint and issue not more
than 3,000,000 one dollar coins each of which shall --
(A) weigh 26.73 grams;
(B) have a diameter of 1.500 inches; and
(C) be composed of 90 percent silver and 10 percent copper.
(2) DESIGN. -- The design of the one dollar coins shall, in
accordance with section 4, be emblematic of the Bicentennial of
the United States Congress. Each one dollar coin shall bear a
designation of the value of the coin, an inscription of the year
"1989", and inscriptions of the words "Liberty", "In God We
Trust", "United States of America", and "E Pluribus Unum".
(c) HALF-DOLLAR CLAD COINS. --
(1) ISSUANCE. -- The Secretary shall issue not more than
4,000,000 half dollar coins each of which shall --
(A) weigh 11.34 grams;
(B) have a diameter of 1.205 inches; and
(C) be minted to the specifications for half dollar coins
contained in section 5112(b) of title 31, United States Code.
(2) DESIGN. -- The design of the half dollar coins shall, in
accordance with section 4, be emblematic of the Bicentennial of
the United States Congress. On each half dollar coin shall be a
designation of the value of the coin, an inscription of the year
"1989", and inscriptions of the words "Liberty", "In God We
Trust", "United States of America", and "E Pluribus Unum".
(d) LEGAL TENDER. -- The coins minted under this Act shall be legal
tender as provided in section 5103 of title 31, United States Code.
(e) NUMISMATIC ITEMS. -- For purposes of section 5132(a)(1) of title
31, United States Code, all coins minted under this Act shall be
considered to be numismatic items.
SEC. 3. "31 USC 5112 note" SOURCES OF BULLION.
(a) GOLD. -- The Secretary shall obtain gold for minting coins under
this Act pursuant to the authority of the Secretary under existing law.
(b) SILVER. -- The Secretary shall obtain silver for minting coins
under this Act only from stockpiles established under the Strategic and
Critical Minerals Stock Piling Act (50 U.S.C. 98 et seq.).
SEC. 4. "31 USC 5112 note" DESIGN OF COINS.
The design for each coin authorized by this Act shall be selected by
the Secretary after consultation with the Speaker of the House of
Representatives, the President pro tempore of the Senate, and the
Commission of Fine Arts.
SEC. 5. "31 USC 5112 note" ISSUANCE OF COINS.
(a) FIVE DOLLAR COINS. -- The five dollar coins minted under this
Act may be issued in uncirculated and proof qualities and shall be
struck at the United States Mint at West Point, New York.
(b) ONE DOLLAR AND HALF DOLLAR COINS. -- The one dollar and half
dollar coins minted under this Act may be issued in uncirculated and
proof qualities, except that not more than one facility of the United
States Mint may be used to strike any particular combination of
denomination and quality.
(c) COMMENCEMENT OF ISSUANCE. -- The Secretary may issue the coins
minted under this Act beginning January 1, 1989.
(d) TERMINATION OF AUTHORITY. -- Coins may not be minted under this
Act after June 30, 1990.
(e) CONTRACTS. -- Any contract to be made by the Secretary involving
the promotion, advertising, or marketing of any coins authorized under
this Act shall be valid only upon approval by the United States Capitol
Preservation Commission.
SEC. 6. "31 USC 5112 note" SALE OF COINS.
(a) IN GENERAL. -- Notwithstanding any other provision of law, the
Secretary shall sell the coins minted under this Act at a price equal to
the face value, plus the cost of designing and issuing the coins
(including labor, materials, dies, use of machinery, and overhead
expenses).
(b) BULK SALES. -- The Secretary shall make any bulk sales of the
coins minted under this Act at a reasonable discount to reflect the
lower costs of such sales.
(c) PREPAID ORDERS. -- The Secretary shall accept prepaid orders for
the coins minted under this Act prior to the issuance of such coins.
Sale prices with respect to such prepaid orders shall be at a reasonable
discount.
(d) SURCHARGES. -- All sales of coins minted under this Act shall
include a surcharge of $35 per coin for the five dollar coins, $7 per
coin for the one dollar coins, and $1 per coin for the half dollar
coins.
SEC. 7. "31 USC 5112 note" FINANCIAL ASSURANCES.
(a) NO NET COST TO THE GOVERNMENT. -- The Secretary shall take such
actions as may be necessary to ensure that minting and issuing coins
under this Act will not result in any net cost to the United States
Government.
(b) PAYMENT FOR COINS. -- A coin shall not be issued under this Act
unless the Secretary has received --
(1) full payment for the coin;
(2) security satisfactory to the Secretary to indemnify the
United States for full payment; or
(3) a guarantee of full payment satisfactory to the Secretary
from a depository institution whose deposits are insured by the
Federal Deposit Insurance Corporation, the Federal Savings and
Loan Insurance Corporation, or the National Credit Union
Administration Board.
SEC. 8. "31 USC 5112 note" USE OF SURCHARGES.
(a) USE OF SURCHARGES. -- Fifty percent of the first $40,000,000 in
surcharges that are received by the Secretary from the sale of coins
minted under this Act shall be deposited in the Capitol Preservation
Fund and be available to the United States Capitol Preservation
Commission. The balance of the surcharges received by the Secretary
shall be deposited in the general fund of the Treasury for the sole
purpose of reducing the national debt.
(b) RESTRICTIONS ON USE OF SURCHARGES. --
(1) PROHIBITION ON REPRESENTATIONAL EXPENSES. -- No amount
received by the Commission from the Capitol Preservation Fund may
be used to pay representational expenses of the Commission.
(2) LIMITATIONS ON REIMBURSEMENTS. -- A member of an advisory
board established by the Commission shall be entitled to receive
per diem, travel and transportation expenses in the same manner as
an employee serving intermittently in the Government service may
receive under section 5703 of title 5, United States Code.
(c) REPORT REQUIRED. -- The Commission shall submit a report of
expenditures to the Clerk of the House of Representatives not later than
February 28 for the last six months of the preceding year and not later
than August 31 for the first six months of the current year. The Clerk
shall promptly transmit the reports to the Public Printer for printing
in the Congressional Record.
SEC. 9. "31 USC 5112 note" GENERAL WAIVER OF PROCUREMENT
REGULATIONS.
(a) IN GENERAL. -- Except as provided in subsection (b), no
provision of law governing procurement or public contracts shall be
applicable to the procurement of goods and services necessary for
carrying out the provisions of this Act.
(b) EQUAL EMPLOYMENT OPPORTUNITY. -- Subsection (a) shall not
relieve any person entering into a contract under the authority of this
Act from complying with any law relating to equal employment
opportunity.
Approved November 17, 1988.
LEGISLATIVE HISTORY -- H.R. 5280:
CONGRESSIONAL RECORD, Vol. 134 (1988): Oct. 3, 4, considered and
passed House. Oct. 7, considered and passed Senate, amended. Oct. 20,
House concurred in Senate amendments with an amendment. Senate
concurred in House amendment.
Public Law 100-672, 102 Stat. 3991
Whereas travel and tourism is the third largest retail industry and
the second largest private employer in the United States, generating
more than five million five hundred thousand jobs and indirectly
employing another two million two hundred thousand Americans;
Whereas total travel expenditures in the United States amount to
nearly $270,000,000,000 annually, or about 6.4 per centum of the gross
national product;
Whereas tourism is an essential American export, as more than
twenty-eight million foreign travelers spent approximately
$19,000,000,000 in the United States in 1987;
Whereas development and promotion of tourism have brought new
industries, jobs, and economic revitalization to cities and regions
across the United States;
Whereas tourism contributes substantially to personal growth,
education, appreciation of intercultural differences, and the
enhancement of international understanding and good will; and
Whereas the abundant natural and manmade attractions of the United
States and the hospitality of the American people establish the United
States as the preeminent destination for both foreign and domestic
travelers: Now, therefore, be it
Resolved by the Senate and House of Representatives of the United
States of America in Congress assembled, That the week beginning on the
second Sunday in May 1989 is designated as "National Tourism Week". The
President is authorized and requested to issue a proclamation calling on
the people of the United States to observe that week with appropriate
ceremonies and activities.
Approved November 16, 1988.
LEGISLATIVE HISTORY -- S.J. Res. 325:
CONGRESSIONAL RECORD, Vol. 134 (1988): July 26, considered and
passed Senate. Oct. 21, considered and passed House.
Public Law 100-671, 102 Stat. 3990
Whereas Lupus Erythematosus is a disease which affects over five
hundred thousand Americans, mostly women in their child-bearing years;
Whereas Lupus is an immune system disorder of unknown cause which
affects the joints, skin, and almost any vital organ;
Whereas although Lupus can be controlled reasonably well in most
people, it can be fatal in some instances; and
Whereas the commitment to research and educational efforts to develop
a greater understanding about Lupus should be continued: Now,
therefore, be it
Resolved by the Senate and House of Representatives of the United
States of America in Congress assembled, That the month of October 1988
is designated as "National Lupus Awareness Month", and the President is
authorized and requested to issue a proclamation calling upon the people
of the United States to observe the month with appropriate programs,
ceremonies, and activities.
Approved November 16, 1988.
LEGISLATIVE HISTORY -- S.J. Res. 303:
CONGRESSIONAL RECORD, Vol. 134 (1988): July 26, considered and
passed Senate. Oct. 21, considered and passed House.
Public Law 100-670, 102 Stat. 3971
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND REFERENCE TO ACT.
(a) SHORT TITLE. -- This Act "21 USC 301 note" may be cited as the
"Generic Animal Drug and Patent Term Restoration Act".
(b) REFERENCE. --
(1) Whenever in title I (other than in section 107(b)) an
amendment or repeal is expressed in terms of an amendment to, or
repeal of, a section or other provision, the reference shall be
considered to be made to a section or other provision of the
Federal Food, Drug, and Cosmetic Act.
(2) Whenever in title II an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other
provision, the reference shall be considered to be made to a
section or other provision of title 35 of the United States Code.
SEC. 101. ABBREVIATED NEW ANIMAL DRUG APPLICATIONS.
(a) GENERAL RULE. -- Section 512(b) (21 U.S.C. 360b) is amended --
(1) by inserting "(1)" after "(b)",
(2) by redesignating clauses (1) through (8) as clauses (A)
through (H), respectively, and
(3) by adding at the end the following:
"(2) Any person may file with the Secretary an abbreviated
application for the removal of a new animal drug. An abbreviated
application shall contain the information required by subsection (n).".
(b) APPLICATION REQUIREMENTS. -- Section 512 is amended by striking
out subsection (n) and inserting in lieu thereof the following:
"(n)(1) An abbreviated application for a new animal drug shall
contain --
"(A)(i) except as provided in clause (ii), information to show
that the conditions of use or similar limitations (whether in the
labeling or published pursuant to subsection (i)) prescribed,
recommended, or suggested in the labeling proposed for the new
animal drug have been previously approved for a new animal drug
listed under paragraph (4) (hereinafter in this subsection
referred to as an 'approved new animal drug'), and
"(ii) information to show that the withdrawal period at which
residues of the new animal drug will be consistent with the
tolerances established for the approved new animal drug is the
same as the withdrawal period previously established for the
approved new animal drug or, if the withdrawal period is proposed
to be different, information showing that the residues of the new
animal drug at the proposed different withdrawal period will be
consistent with the tolerances established for the approved new
animal drug;
"(B)(i) information to show that the active ingredients of the
new animal drug are the same as those of the approved new animal
drug, and
"(ii) if the approved new animal drug has more than one active
ingredient, and if one of the active ingredients of the new animal
drug is different from one of the active ingredients of the
approved new animal drug and the application is filed pursuant to
the approval of a petition filed under paragraph (3) --
"(I) information to show that the other active ingredients of
the new animal drug are the same as the active ingredients of the
approved new animal drug,
"(II) information to show either that the different active
ingredient is an active ingredient of another approved new animal
drug or of an animal drug which does not meet the requirements of
section 201(w), and
"(III) such other information respecting the different active
ingredients as the Secretary may require;
"(C)(i) if the approved new animal drug is permitted to be used
with one or more animal drugs in animal feed, information to show
that the proposed uses of the new animal drug with other animal
drugs in animal feed are the same as the uses of the approved new
animal drug, and
"(ii) if the approved new animal drug is permitted to be used
with one or more other animal drugs in animal feed, and one of the
other animal drugs proposed for use with the new animal drug in
animal feed is different from one of the other animal drugs
permitted to be used in animal feed with the approved new animal
drug, and the application is filed pursuant to the approval of a
petition filed under paragraph (3) --
"(I) information to show either that the different animal drug
proposed for use with the approved new animal drug in animal feed
is an approved new animal drug permitted to be used in animal feed
or does not meet the requirements of section 201(w) when used with
another animal drug in animal feed,
"(II) information to show that other animal drugs proposed for
use with the new animal drug in animal feed are the same as the
other animal drugs permitted to be used with the approved new
animal drug, and
"(III) such other information respecting the different animal
drug or combination with respect to which the petition was filed
as the Secretary may require,
"(D) information to show that the route of administration, the
dosage form, and the strength of the new animal drug are the same
as those of the approved new animal drug or, if the route of
administration, the dosage form, or the strength of the new animal
drug is different and the application is filed pursuant to the
approval of a petition filed under paragraph (3), such information
respecting the route of administration, dosage form, or strength
with respect to which the petition was filed as the Secretary may
require;
"(E) information to show that the new animal drug is
bioequivalent to the approved new animal drug, except that if the
application is filed pursuant to the approval of a petition filed
under paragraph (3) for the purposes described in subparagraph (B)
or (C), information to show that the active ingredients of the new
animal drug are of the same pharmacological or therapeutic class
as the pharmacological or therapeutic class of the approved new
animal drug and that the same animal drug can be expected to have
the same therapeutic effect as the approved new animal drug when
used in accordance with the labeling;
"(F) information to show that the labeling proposed for the new
animal drug is the same as the labeling approved for the approved
new animal drug except for changes required because of differences
approved under a petition filed under paragraph (3), because of a
different withdrawal period, or because the new animal drug and
the approved new animal drug are produced or distributed by
different manufacturers;
"(G) the items specified in clauses (B) through (F) of
subsection (b)(1);
"(H) a certification, in the opinion of the applicant and to
the best of his knowledge, with respect to each patent which
claims the approved new animal drug or which claims a use for such
approved new animal drug for which the applicant is seeking
approval under this subsection and for which information is
required to be filed under subsection (b)(1) or (c)(3) --
"(i) that such patent information has not been filed,
"(ii) that such patent has expired,
"(iii) of the date on which such patent will expire, or
"(iv) that such patent is invalid or will not be infringed by
the manufacture, use, or sale of the new animal drug for which the
application is filed; and
"(I) if with respect to the approved new animal drug
information was filed under subsection (b)(1) or (c)(3) for a
method of use patent which does not claim a use for which the
applicant is seeking approval of an application under subsection
(c)(2), a statement that the method of use patent does not claim
such a use.
The Secretary may not require that an abbreviated application contain
information in addition to that required by subparagraphs (A) through
(H).
"(2)(A) An applicant who makes a certification described in paragraph
(1)(G)(iv) shall include in the application a statement that the
applicant will give the notice required by subparagraph (B) to --
"(i) each owner of the patent which is the subject of the
certification or the representative of such owner designated to
receive such notice, and
"(ii) the holder of the approved application under subsection
(c)(1) for the drug which is claimed by the patent or a use of
which is claimed by the patent or the representative of such
holder designated to receive such notice.
"(B) The notice referred to in subparagraph (A) shall state that an
application, which contains data from bioequivalence studies, has been
filed under this subsection for the drug with respect to which the
certification is made to obtain approval to engage in the commercial
manufacture, use, or sale of such drug before the expiration of the
patent referred to in the certification. Such notice shall include a
detailed statement of the factual and legal basis of the applicant's
opinion that the patent is not valid or will not be infringed.
"(C) If an application is amended to include a certification
described in paragraph (1)(G)(iv), the notice required by subparagraph
(B) shall be given when the amended application is filed.
"(3) If a person wants to submit an abbreviated application for a new
animal drug --
"(A) whose active ingredients, route of administration, dosage
form, or strength differ from that of an approved new animal drug,
or
"(B) whose use with other animal drugs in animal feed differs
from that of an approved new animal drug,
such person shall submit a petition to the Secretary seeking
permission to file such an application. The Secretary shall approve a
petition for a new animal drug unless the Secretary finds that --
"(C) investigations must be conducted to show the safety and
effectiveness, in animals to be treated with the drug, of the
active ingredients, route of administration, dosage form,
strength, or use with other animal drugs in animal feed which
differ from the approved new animal drug, or
"(D) investigations must be conducted to show the safety for
human consumption of any residues in food resulting from the
proposed active ingredients, route of administration, dosage form,
strength, or use with other animal drugs in animal feed for the
new animal drug which is different from the active ingredients,
route of administration, dosage form, strength, or use with other
animal drugs in animal feed of the approved new animal drug.
The Secretary shall approve or disapprove a petition submitted under
this paragraph within 90 days of the date the petition is submitted.
"(4)(A)(i) Within 60 days of the date of the enactment of this
subsection, the Secretary shall publish and make available to the public
a list in alphabetical order of the official and proprietary name of
each new animal drug which has been approved for safety and
effectiveness before the date of the enactment of this subsection.
"(ii) Every 30 days after the publication of the first list under
clause (i) the Secretary shall revise the list to include each new
animal drug which has been approved for safety and effectiveness under
subsection (c) during the 30 day period.
"(iii) When patent information submitted under subsection (b)(1) or
(c)(3) respecting a new animal drug included on the list is to be
published by the Secretary, the Secretary shall, in revisions made under
clause (ii), include such information for such drug.
"(B) A new animal drug approved for safety and effectiveness before
the date of the enactment of this subsection or approved for safety and
effectiveness under subsection (c) shall, for purposes of this
subsection, be considered to have been published under subparagraph (A)
on the date of its approval or the date of enactment, whichever is
later.
"(C) If the approval of a new animal drug was withdrawn or suspended
under subsection (c)(2)(G) or for grounds described in subsection (e) or
if the Secretary determines that a drug has been withdrawn from sale for
safety or effectiveness reasons, it may not be published in the list
under subparagraph (A) or, if the withdrawal or suspension occurred
after its publication in such list, it shall be immediately removed from
such list --
"(i) for the same period as the withdrawal or suspension under
subsection (c)(2)(G) or (e), or
"(ii) if the listed drug has been withdrawn from sale, for the
period of withdrawal from sale or, if earlier, the period ending
on the date the Secretary determines that the withdrawal from sale
is not for safety or effectiveness reasons.
A notice of the removal shall be published in the Federal Register.
"(5) If an application contains the information required by clauses
(A), (G), and (H) of subsection (b)(1) and such information --
"(A) is relied on by the applicant for the approval of the
application, and
"(B) is not information derived either from investigations,
studies, or tests conducted by or for the applicant or for which
the applicant had obtained a right of reference or use from the
person by or for whom the investigations, studies, or tests were
conducted,
such application shall be considered to be an application filed under
subsection (b)(2).
"(o) For purposes of this section, the term 'patent' means a patent
issued by the Patent and Trademark Office of the Department of
Commerce.".
(c) APPLICATION APPROVAL. -- Section 512(c) "21 USC 360b" is amended
(1) by inserting "(1)" after "(c)", by redesignating clauses (1) and (2)
as clauses (A) and (B), and by adding at the end the following:
"(2)(A) Subject to subparagraph (C), the Secretary shall approve an
abbreviated application for a drug unless the Secretary finds --
"(i) the methods used in, or the facilities and controls used
for, the manufacture, processing, and packing of the drug are
inadequate to assure and preserve its identity, strength, quality,
and purity;
"(ii) the conditions of use prescribed, recommended, or
suggested in the proposed labeling are not reasonably certain to
be followed in practice or, except as provided subparagraph (B),
information submitted with the application is insufficient to show
that each of the proposed conditions of use or similar limitations
(whether in the labeling or published pursuant to subsection (i))
have been previously approved for the approved new animal drug
referred to in the application;
"(iii) information submitted with the application is
insufficient to show that the active ingredients are the same as
those of the approved new animal drug referred to in the
application;
"(iv)(I) if the application is for a drug whose active
ingredients, route of administration, dosage form, strength, or
use with other animal drugs in animal feed is the same as the
active ingredients, route of administration, dosage form,
strength, or use with other animal drugs in animal feed of the
approved new animal drug referred to in the application,
information submitted in the application is insufficient to show
that the active ingredients, route of administration, dosage form,
strength, or use with other animal drugs in animal feed is the
same as that of the approved new animal drug, or
"(II) if the application is for a drug whose active
ingredients, route of administration, dosage form, strength, or
use with other animal drugs in animal feed is different from that
of the approved new animal drug referred to in the application, no
petition to file an application for the drug with the different
active ingredients, route of administration, dosage form,
strength, or use with other animal drugs in animal feed was
approved under subsection (n)(3);
"(v) if the application was filed pursuant to the approval of a
petition under subsection (n)(3), the application did not contain
the information required by the Secretary respecting the active
ingredients, route of administration, dosage form, strength, or
use with other animal drugs in animal feed which is not the same;
"(vi) information submitted in the application is insufficient
to show that the drug is bioequivalent to the approved new animal
drug referred to in the application, or if the application is
filed under a petition approved pursuant to subsection (n)(3),
information submitted in the application is insufficient to show
that the active ingredients of the new animal drug are of the same
pharmacological or therapeutic class as the pharmacological or
therapeutic class of the approved new animal drug and that the new
animal drug can be expected to have the same therapeutic effect as
the approved new animal drug when used in accordance with the
labeling;
"(vii) information submitted in the application is insufficient
to show that the labeling proposed for the drug is the same as the
labeling approved for the approved new animal drug referred to in
the application except for changes required because of differences
approved under a petition filed under subsection (n)(3), because
of a different withdrawal period, or because the drug and the
approved new animal drug are produced or distributed by different
manufacturers;
"(viii) information submitted in the application or any other
information available to the Secretary shows that (I) the inactive
ingredients of the drug are unsafe for use under the conditions
prescribed, recommended, or suggested in the labeling proposed for
the drug, (II) the composition of the drug is unsafe under such
conditions because of the type of quantity of inactive ingredients
included or the manner in which the inactive ingredients are
included, or (III) in the case of a drug for food producing
animals, the inactive ingredients of the drug or its composition
may be unsafe with respect to human food safety;
"(ix) the approval under subsection (b)(1) of the approved new
animal drug referred to in the application filed under subsection
(b)(2) has been withdrawn or suspended for grounds described in
paragraph (1) of subsection (e), the Secretary has published a
notice of a hearing to withdraw approval of the approved new
animal drug for such grounds, the approval under this paragraph of
the new animal drug for which the application under subsection
(b)(2) was filed has been withdrawn or suspended under
subparagraph (G) for such grounds, or the Secretary has determined
that the approved new animal drug has been withdrawn from sale for
safety or effectiveness reasons;
"(x) the application does not meet any other requirement of
subsection (n); or
"(xi) the application contains an untrue statement of material
fact.
"(B) If the Secretary finds that a new animal drug for which an
application is submitted under subsection (b)(2) is bioequivalent to the
approved new animal drug referred to in such application and that
residues of the new animal drug are consistent with the tolerances
established for such approved new animal drug but at a withdrawal period
which is different than the withdrawal period approved for such approved
new animal drug, the Secretary may establish, on the basis of
information submitted, such different withdrawal period as the
withdrawal period for the new animal drug for purposes of the approval
of such application for such drug.
"(C) Within 180 days of the initial receipt of an application under
subsection (b)(2) or within such additional period as may be agreed upon
by the Secretary and the applicant, the Secretary shall approve or
disapprove the application.
"(D) The approval of an application filed under subsection (b)(2)
shall be made effective on the last applicable date determined under the
following:
"(i) If the applicant only made a certification described in
clause (i) or (ii) of subsection (n)(1)(G) or in both such
clauses, the approval may be made effective immediately.
"(ii) If the applicant made a certification described in clause
(iii) of subsection (n)(1)(G), the approval may be made effective
on the date certified under clause (iii).
"(iii) If the applicant made a certification described in
clause (iv) of subsection (n)(1)(G), the approval shall be made
effective immediately unless an action is brought for infringement
of a patent which is the subject of the certification before the
expiration of 45 days from the date the notice provided under
subsection (n)(2)(B)(i) is received. If such an action is brought
before the expiration of such days, the approval shall be made
effective upon the expiration of the 30 month period beginning on
the date of the receipt of the notice provided under subsection
(n)(2)(B) or such shorter or longer period as the court may order
because either party to the action failed to reasonably cooperate
in expediting the action, except that if before the expiration of
such period --
"(I) the court decides that such patent is invalid or not
infringed, the approval shall be made effective on the date of the
court decision,
"(II) the court decides that such patent has been infringed,
the approval shall be made effective on such date as the court
orders under section 271(e)(4)(A) of title 35, United States Code,
or
"(III) the court grants a preliminary injunction prohibiting
the applicant from engaging in the commercial manufacture or sale
of the drug until the court decides the issues of patent validity
and infringement and if the court decides that such patent is
invalid or not infringed, the approval shall be made effective on
the date of such court decision.
In such an action, each of the parties shall reasonably
cooperate in expediting the action. Until the expiration of 45
days from the date the notice made under subsection (n)(2)(B) is
received, no action may be brought under section 2201 of title 28,
United States Code, for a declaratory judgment with respect to the
patent. Any action brought under section 2201 shall be brought in
the judicial district where the defendant has its principal place
of business or a regular and established place of business.
"(iv) If the application contains a certification described in
clause (iv) of subsection (n)(1)(G) and is for a drug for which a
previous application has been filed under this subsection
containing such a certification, the application shall be made
effective not earlier than 180 days after --
"(I) the date the Secretary receives notice from the applicant
under the previous application of the first commercial marketing
of the drug under the previous application, or
"(II) the date of a decision of a court in an action described
in subclause (III) holding the patent which is the subject of the
certification to be invalid or not infringed,
whichever is earlier.
"(E) If the Secretary decides to disapprove an application, the
Secretary shall give the applicant notice of an opportunity for a
hearing before the Secretary on the question of whether such application
is approvable. If the applicant elects to accept the opportunity for
hearing by written request within 30 days after such notice, such
hearing shall commence not more than 90 days after the expiration of
such 30 days unless the Secretary and the applicant otherwise agree.
Any such hearing shall thereafter be conducted on an expedited basis and
the Secretary's order thereon shall be issued within 90 days after the
date fixed by the Secretary for filing final briefs.
"(F)(i) If an application submitted under subsection (b)(1) for a
drug, no active ingredient (including any ester or salt of the active
ingredient) of which has been approved in any other application under
subsection (b)(1), is approved after the date of the enactment of this
paragraph, no application may be submitted under subsection (b)(2) which
refers to the drug for which the subsection (b)(1) application was
submitted before the expiration of 5 years from the date of the approval
of the application under subsection (b)(1), except that such an
application may be submitted under subsection (b)(2) after the
expiration of 4 years from the date of the approval of the subsection
(b)(1) application if it contains a certification of patent invalidity
or noninfringement described in clause (iv) of subsection (n)(1)(G).
The approval of such an application shall be made effective in
accordance with subparagraph (B) except that, if an action for patent
infringement is commenced during the one-year period beginning 48 months
after the date of the approval of the subsection (b) application, the 30
month period referred to in subparagraph (C)(iii) shall be extended by
such amount of time (if any) which is required for seven and one-half
years to have elapsed from the date of approval of the subsection (b)
application.
"(ii) If an application submitted under subsection (b)(1) for a drug,
which includes an active ingredient (including any ester or salt of the
active ingredient) that has been approved in another application
approved under such subsection, is approved after the date of enactment
of this paragraph and if such application contains reports of new
clinical or field investigations (other than bioequivalence or residue
studies) and, in the case of food producing animals, human food safety
studies (other than bioequivalence or residue studies) essential to the
approval of the application and conducted or sponsored by the applicant,
the Secretary may not make the approval of an application submitted
under subsection (b)(2) for the conditions of approval of such drug in
the subsection (b)(1) application effective before the expiration of 3
years from the date of the approval of the application under subsection
(b)(1) for such drug.
"(iii) If a supplement to an application approved under subsection
(b)(1) is approved after the date of enactment of this paragraph and the
supplement contains reports of new clinical or field investigations
(other than bioequivalence or residue studies) and, in the case of food
producing animals, human food safety studies (other than bioequivalence
or residue studies) essential to the approval of the supplement and
conducted or sponsored by the person submitting the supplement, the
Secretary may not make the approval of an application submitted under
subsection (b)(2) for a change approved in the supplement effective
before the expiration of 3 years from the date of the approval of the
supplement.
"(iv) An applicant under subsection (b)(1) who comes within the
provisions of clause (i) of this subparagraph as a result of an
application which seeks approval for a use solely in non-food producing
animals, may elect, within 10 days of receiving such approval, to waive
clause (i) of this subparagraph, in which event the limitation on
approval of applications submitted under subsection (b)(2) set forth in
clause (ii) of this subparagraph shall be applicable to the subsection
(b)(1) application.
"(v) If an application (including any supplement to a new animal drug
application) submitted under subsection (b)(1) for a new animal drug for
a food-producing animal use, which includes an active ingredient
(including any ester or salt of the active ingredient) which has been
the subject of a waiver under subparagraph (B)(iv) is approved after the
date of enactment of this paragraph, and if the application contains
reports of clinical or field investigations or human food safety studies
(other than bioequivalence or residue studies) essential to the new
approval of the application and conducted or sponsored by the applicant,
the Secretary may not make the approval of an application (including any
supplement to such application) submitted under subsection (b)(2) for
the new conditions of approval of such drug in the subsection (b)(1)
application effective before the expiration of five years from the date
of approval of the application under subsection (b)(1) for such drug.
The provisions of this paragraph shall apply only to the first approval
for a food-producing animal use for the same applicant after the waiver
under subparagraph (B)(iv).
"(G) If an approved application submitted under subsection (b)(2) for
a new animal drug refers to a drug the approval of which was withdrawn
or suspended for grounds described in paragraph (1) or (2) of subsection
(e) or was withdrawn or suspended under this subparagraph or which, as
determined by the Secretary, has been withdrawn from sale for safety or
effectiveness reasons, the approval of the drug under this paragraph
shall be withdrawn or suspended --
"(i) for the same period as the withdrawal or suspension under
subsection (e) or this subparagraph, or
"(ii) if the approved new animal drug has been withdrawn from
sale, for the period of withdrawal from sale or, if earlier, the
period ending on the date the Secretary determines that the
withdrawal from sale is not for safety or effectiveness reasons.
"(H) For purposes of this paragraph:
"(i) The term 'bioequivalence' means the rate and extent to
which the active ingredient or therapeutic ingredient is absorbed
from a new animal drug and becomes available at the site of drug
action.
"(ii) A new animal drug shall be considered to be bioequivalent
to the approved new animal drug referred to in its application
under subsection (n) if --
"(I) the rate and extent of absorption of the drug do not show
a significant difference from the date and extent of absorption of
the approved new animal drug referred to in the application when
administered at the same dose of the active ingredient under
similar experimental conditions in either a single dose or
multiple doses;
"(II) the extent of absorption of the drug does not show a
significant difference from the extent of absorption of the
approved new animal drug referred to in the application when
administered at the same dose of the active ingredient under
similar experimental conditions in either a single dose or
multiple doses and the difference from the approved new animal
drug in the rate of absorption of the drug is intentional, is
reflected in its proposed labeling, is not essential to the
attainment of effective drug concentrations in use, and is
considered scientifically insignificant for the drug in attaining
the intended purposes of its use and preserving human food safety;
or
"(III) in any case in which the Secretary determines that the
measurement of the rate and extent of absorption or excretion of
the new animal drug in biological fluids is inappropriate or
impractical, an appropriate acute pharmacological effects test or
other test of the new animal drug and, when deemed scientifically
necessary, of the approved new animal drug referred to in the
application in the species to be tested or in an appropriate
animal model does not show a significant difference between the
new animal drug and such approved new animal drug when
administered at the same dose under similar experimental
conditions.
If the approved new animal drug referred to in the application
for a new animal drug under subsection (n) is approved for use in
more than one animal species, the bioequivalency information
described in subclause (I), (II), and (III) shall be obtained for
one species, or if the Secretary deems appropriate based on
scientific principles, shall be obtained for more than one
species. The Secretary may prescribe the dose to be used in
determining bioequivalency under subclause (I), (II), or (III).
To assure that the residues of the new animal drug will be
consistent with the established tolerances for the approved new
animal drug referred to in the application under subsection (b)(
2) upon the expiration of the withdrawal period contained in the
application for the new animal drug, the Secretary shall require
bioequivalency data or residue depletion studies of the new animal
drug or such other data or studies as the Secretary considers
appropriate based on scientific principles. If the Secretary
requires one or more residue studies under the preceding sentence,
the Secretary may not require that the assay methodology used to
determine the withdrawal period of the new animal drug be more
rigorous than the methodology used to determine the withdrawal
period for the approved new animal drug referred to in the
application. If such studies are required and if the approved new
animal drug, referred to in the application for the new animal
drug for which such studies are required, is approved for use in
more than one animal species, such studies shall be conducted for
one species, or if the Secretary deems appropriate based on
scientific principles, shall be conducted for more than one
species.".
SEC. 102. PATENT INFORMATION.
(a) SECTION 512(). -- Section 512(b)(1) of such Act "21 USC 360b" is
amended by adding at the end the following: "The applicant shall file
with the application the patent number and the expiration date of any
patent which claims the new animal drug for which the applicant filed
the application or which claims a method of using such drug and with
respect to which a claim of patent infringement could reasonably be
asserted if a person not licensed by the owner engaged in the
manufacture, use, or sale of the drug. If an application is filed under
this subsection for a drug and a patent which claims such drug or a
method of using such drug is issued after the filing date but before
approval of the application, the applicant shall amend the application
to include the information required by the preceding sentence. Upon
approval of the application, the Secretary shall publish information
submitted under the two preceding sentences.".
(b) OTHER SECTIONS. --
(1) Section 512(c) "21 USC 360b" is amended by adding at the
end the following:
"(3) If the patent information described in subsection (b)(1) could
not be filed with the submission of an application under subsection
(b)(1) because the application was filed before the patent information
was required under subsection (b)(1) or a patent was issued after the
application was approved under such subsection, the holder of an
approved application shall file with the Secretary the patent number and
the expiration date of any patent which claims the new animal drug for
which the application was filed or which claims a method of using such
drug and with respect to which a claim of patent infringement could
reasonably be asserted if a person not licensed by the owner engaged in
the manufacture, use, or sale of the drug. If the holder of an approved
application could not file patent information under subsection (b)(1)
because it was not required at the time the application was approved,
the holder shall file such information under this subsection not later
than 30 days after the date of the enactment of this sentence, and if
the holder of an approved application could not file patent information
under subsection (b)(1) because no patent had been issued when an
application was filed or approved, the holder shall file such
information under this subsection not later than 30 days after the date
the patent involved is issued. Upon the submission of patent
information under this subsection, the Secretary shall publish it.".
(2) The first sentence of section 512(d)(1) "21 USC 360b" is
amended by redesignating subparagraphs (G) and (H) as subparagraphs (H)
and (I), respectively and by inserting after subparagraph (F) the
following:
"(G) the application failed to contain the patent information
prescribed by subsection (b)(1);".
(3) The second sentence of section 512(d)(1) "21 USC 360b" is
amended by striking out "(H)" and inserting in lieu thereof "(G)".
(4) The first sentence of section 512(e)(1) "21 USC 360b" is
amended by redesignating subparagraphs (D) and (E) as
subparagraphs (E) and (F), respectively, and by inserting after
subparagraph (C) the following:
"(D) the patent information prescribed by subsection (c)(3) was
not filed within 30 days after the receipt of written notice from
the Secretary specifying the failure to file such information;".
SEC. 103. "21 USC 360b note" REGULATIONS.
(a) GENERAL RULE. -- The Secretary of Health and Human Services
shall promulgate, in accordance with the notice and comment requirements
of section 553 of title 5, United States Code, such regulations as may
be necessary for the administration of section 512 of the Federal Food,
Drug, and Cosmetic Act, as amended by sections 101 through 103 of this
title, within one year of the date of enactment of this Act.
(b) TRANSITION. -- During the period beginning 60 days after the
date of enactment of this Act and ending on the date regulations
promulgated under subsection (a) take effect, abbreviated new animal
drug applications may be submitted in accordance with the provisions of
section 314.55 and part 320 of title 21 of the Code of Federal
Regulations and shall be considered as suitable for any drug which has
been approved for safety and effectiveness under section 512(c) of the
Federal Food, Drug, and Cosmetic Act before the date of enactment of
this Act. If any such provision of section 314.55 or part 320 is
inconsistent with the requirements of section 512 of the Federal Food,
Drug, and Cosmetic Act (as amended by this title), the Secretary shall
consider the application under the applicable requirements of section
512 (as so amended).
SEC. 104. SAFETY AND EFFECTIVENESS DATA.
Section 512 (as amended by section 101(b) of this title) is amended
by adding at the end the following:
"(p)(1) Safety and effectiveness data and information which has been
submitted in an application filed under subsection (b)(1) for a drug and
which has not previously been disclosed to the public shall be made
available to the public, upon request, unless extraordinary
circumstances are shown --
"(A) if no work is being or will be undertaken to have the
application approved,
"(B) if the Secretary has determined that the application is
not approvable and that all legal appeals have been exhausted,
"(C) if approval of the application under subsection (c) is
withdrawn and all legal appeals have been exhausted,
"(D) if the Secretary has determined that such drug is not a
new drug, or
"(E) upon the effective date of the approval of the first
application filed under subsection (b)(2) which refers to such
drug or upon the date upon which the approval of an application
filed under subsection (b)(2) which refers to such drug could be
made effective if such an application had been filed.
"(2) Any request for data and information pursuant to paragraph (1)
shall include a verified statement by the person making the request that
any data or information received under such paragraph shall not be
disclosed by such person to any other person --
"(A) for the purpose of, or as part of a plan, scheme, or
device for, obtaining the right to make, use, or market, or
making, using, or marketing, outside the United States, the drug
identified in the application filed under subsection (b)(1), and
"(B) without obtaining from any person to whom the data and
information is disclosed an identical verified statement, a copy
of which is to be provided by such person to the Secretary, which
meets the requirements of this paragraph.".
SEC. 105. VETERINARY PRESCRIPTION DRUGS.
Section 503 (21 U.S.C. 353) is amended by adding at the end thereof
the following new subsection:
"(c)(1)(A) A drug intended for use by animals other than man which --
10"(i) because of its toxicity or other potentiality for
harmful effect, or the method of its use, or the collateral
measures necessary for its use, is not safe for animal use except
under the professional supervision of a licensed veterinarian, or
"(ii) is limited by an approved application under subsection
(b) of section 512 to use under the professional supervision of a
licensed veterinarian,
shall be dispensed only by or upon the lawful written or oral order
of a licensed veterinarian in the course of the veterinarian's
professional practice.
"(B) For purposes of subparagraph (A), an order is lawful if the
order --
"(i) is a prescription or other order authorized by law,
"(ii) is, if an oral order, promptly reduced to writing by the
person lawfully filling the order, and filed by that person, and
"(iii) is refilled only if authorized in the original order or
in a subsequent oral order promptly reduced to writing by the
person lawfully filling the order, and filed by that person.
"(C) The act of dispensing a drug contrary to the provisions of this
paragraph shall be deemed to be an act which results in the drug being
misbranded while held for sale.
"(2) Any drug when dispensed in accordance with paragraph (1) of this
subsection --
"(A) shall be exempt from the requirements of section 502,
except subsections (a), (g), (h), (i)(2), (i)(3), and (p) of such
section, and
"(B) shall be exempt from the packaging requirements of
subsections (g), (h), and (n) of such section, if --
"(i) when dispensed by a licensed veterinarian, the drug bears
a label containing the name and address of the practitioner and
any directions for use and cautionary statements specified by the
practitioner, or
"(ii) when dispensed by filling the lawful order of a licensed
veterinarian, the drug bears a label containing the name and
address of the dispenser, the serial number and date of the order
or of its filling, the name of the licensed veterinarian, and the
directions for use and cautionary statements, if any, contained in
such order.
The preceding sentence shall not apply to any drug dispensed in the
course of the conduct of a business of dispensing drugs pursuant to
diagnosis by mail.
"(3) The Secretary may by regulation exempt drugs for animals other
than man subject to section 512 from the requirements of paragraph (1)
when such requirements are not necessary for the protection of the
public health.
"(4) A drug which is subject to paragraph (1) shall be deemed to be
misbranded if at any time prior to dispensing its label fails to bear
the statement 'Caution: Federal law restricts this drug to use by or on
the order of a licensed veterinarian.'. A drug to which paragraph (1)
does not apply shall be deemed to be misbranded if at any time prior to
dispensing its label bears the statement specified in the preceding
sentence.".
SEC. 106. "21 USC 360b note" DRUGS PRIMARILY MANUFACTURED USING
BIOTECHNOLOGY.
Notwithstanding section 512(b)(2) of the Federal Food, Drug, and
Cosmetic Act, the Secretary of Health and Human Services may not approve
an abbreviated application submitted under such section for a new animal
drug which is primarily manufactured using recombinant DNA, recombinant
RNA, hybridoma technology, or other processes involving site specific
genetic manipulation techniques.
SEC. 107. CONFORMING AMENDMENTS.
(a) BATCH CERTIFICATION. --
(1) Section 201(w) (21 U.S.C. 321(w)) is amended by striking
out "; or" at the end of paragraph (2) and inserting in lieu
thereof a period and by striking out paragraph (3).
(2) Section 512(a)(1) (21 U.S.C. 360b(a)(1)) is amended by
inserting "and" at the end of subparagraph (A), by striking out ",
and" at the end of subparagraph (B) and inserting in lieu thereof
a period, and by striking out subparagraph (C).
(b) TITLE 28. -- Section 2201(b) of title 28, United States Code, is
amended by inserting "or 512" after "505".
SEC. 108. "21 USC 360b note" EFFECTIVE DATE.
The Secretary of Health and Human Services may not make an approval
of an application submitted under section 512(b)(2) of the Federal Food,
Drug, and Cosmetic Act (21 U.S.C. 360b(b)(2)) effective before January
1, 1991.
SEC. 201. EXTENSION OF PATENT TERM.
(a) SECTION 156(a)(5). -- "35 USC 156" Section 156(a)(5) is amended
--
(1) by inserting "or (C)" after "subparagraph (B)" in
subparagraph (A),
(2) by striking out "or" at the end of subparagraph (A), and
(3) by striking out the period at the end of subparagraph (B)
and inserting "; or" and the following:
"(C) for purposes of subparagraph (A), in the case of a patent
which --
"(i) claims a new animal drug or a veterinary biological
product which (I) is not covered by the claims in any other patent
which has been extended, and (II) has received permission for the
commercial marketing or use in non-food-producing animals and in
food-producing animals, and
"(ii) was not extended on the basis of the regulatory review
period for use in non-food-producing animals,
the permission for the commercial marketing or use of the drug
or product after the regulatory review period for use in
food-producing animals is the first permitted commercial marketing
or use of the drug or product for administration to a
food-producing animal.".
(b) SECTION 156(b). -- "35 USC 156" Section 156(b) is amended to
read as follows:
"(b) The rights derived from any patent the term of which is extended
under this section shall during the period during which the term of the
patent is extended --
"(1) in the case of a patent which claims a product be limited
to any use approved for the product --
"(A) before the expiration of the term of the patent --
"(i) under the provision of law under which the applicable
regulatory review occurred, or
"(ii) under the provision of law under which any regulatory
review described in paragraph (1), (4), or (5) of subsection (g)
occurred, and
"(B) on or after the expiration of the regulatory review period
on which the extension of the patent was based;
"(2) in the case of a patent which claims a method of using a
product, be limited to any use claimed by the patent and approved
for the product --
"(A) before the expiration of the term of the patent --
"(i) under any provision of law under which an applicable
regulatory review occurred, and
"(ii) under the provision of law under which any regulatory
review described in paragraph (1), (4), or (5) of subsection (g)
occurred, and
"(B) on or after the expiration of the regulatory review period
upon which the extension of the patent was based; and
"(3) in the case of a patent which claims a method of
manufacturing a product, be limited to the method of manufacturing
as used to make --
"(A) the approved product, or
"(B) the product if it has been subject to a regulatory review
period described in paragraphs (1), (4), or (5) of subsection (g).
As used in this subsection, the term 'product' includes an approved
product.".
(c) SECTION 156(c)(2). Section 156(c)(2) is amended by striking out
"and (3)(B)(i)" and inserting in lieu thereof "(3)(B)(i), (4)(B)(i), and
(5)(B)(i)".
(d) SECTION 156(d)(1)(C). -- Section 156(d)(1)(C) is amended by
inserting "or the Secretary of Agriculture" after "Services".
(e) SECTION 156(d)(2)(A). -- Section 156(d)(2)(A) is amended to read
as follows:
"(2)(A) Within 60 days of the submittal of an application for
extension of the term of a patent under paragraph (1), the Commissioner
shall notify --
"(i) the Secretary of Agriculture if the patent claims a drug
product or a method of using or manufacturing a drug product and
the drug product is subject to the Virus-Serum-Toxin Act, and
"(ii) the Secretary of Health and Human Services if the patent
claims any other drug product, a medical device, or a food
additive or color additive or a method of using or manufacturing
such a product, device, or additive and if the product, device,
and additive are subject to the Federal Food, Drug, and Cosmetic
Act,
of the extension application and shall submit to the Secretary who is
so notified a copy of the application. Not later than 30 days after the
receipt of an application from the Commissioner, the Secretary receiving
the application shall review the dates contained in the application
pursuant to paragraph (1)(C) and determine the applicable regulatory
review period, shall notify the Commissioner of the determination, and
shall publish in the Federal Register a notice of such determination.".
(f) SECTION 156(d)(2)(B). -- "35 USC 156" Section 156(d)(2)(B) is
amended to read as follows:
"(B)(i) If a petition is submitted to the Secretary making the
determination under subparagraph (A), not later than 180 days after the
publication of the determination under subparagraph (A), upon which it
may reasonably be determined that the applicant did not act with due
diligence during the applicable regulatory review period, the Secretary
making the determination shall, in accordance with regulations
promulgated by such Secretary, determine if the applicant acted with due
diligence during the applicable regulatory review period. The Secretary
making the determination shall make such determination not later than 90
days after the receipt of such a petition. For a drug product, device,
or additive subject to the Federal Food, Drug, and Cosmetic Act or the
Public Health Service Act, the Secretary may not delegate the authority
to make the determination prescribed by this clause to an office below
the Office of the Commissioner of Food and Drugs. For a product subject
to the Virus-Serum-Toxin Act, the Secretary of Agriculture may not
delegate the authority to make the determination prescribed by this
clause to an office below the office of the Assistant Secretary for
Marketing and Inspection Services.
"(ii) The Secretary making a determination under clause (i) shall
notify the Commissioner of the determination and shall publish in the
Federal Register a notice of such determination together with the
factual and legal basis for such determination. Any interested person
may request, within the 60-day period beginning on the publication of a
determination, the Secretary making the determination to hold an
informal hearing on the determination. If such a request is made within
such period, such Secretary shall hold such hearing not later than 30
days after the date of the request, or at the request of the person
making the request, not later than 60 days after such date. The
Secretary who is holding the hearing shall provide notice of the hearing
to the owner of the patent involved and to any interested person and
provide the owner and any interested person an opportunity to
participate in the hearing. Within 30 days after the completion of the
hearing, such Secretary shall affirm or revise the determination which
was the subject of the hearing and shall notify the Commissioner of any
revision of the determination and shall publish any such revision in the
Federal Register.".
(g) SECTION 156(f). Section 156(f) is amended --
(1) by striking out "human" in paragraph (1)(A) and by amending
paragraph (2) to read as follows:
"(2) The term 'drug product' means the active ingredient of --
"(A) a new drug, antibiotic drug, or human biological product
(as those terms are used in the Federal Food, Drug, and Cosmetic
Act and the Public Health Service Act), or
"(B) a new animal drug or veterinary biological product (as
those terms are used in the Federal Food, Drug, and Cosmetic Act
and the Virus-Serum-Toxin Act) which is not primarily manufactured
using recombinant DNA, recombinant RNA, hybridoma technology, or
other processes involving site specific genetic manipulation
techniques,
including any salt or ester of the active ingredient, as a
single entity or in combination with another active ingredient.",
(2) by amending subparagraphs (B) and (C) of paragraph (4) to
read as follows:
"(B) Any reference to section 503, 505, 507, 512, or 515 is a
reference to section 503, 505, 507, 512, or 515 of the Federal
Food, Drug, and Cosmetic Act.
"(C) Any reference to the Virus-Serum-Toxin Act is a reference
to the Act of March 4, 1913 (21 U.S.C. 151-158).", and
(3) by adding at the end the following:
"(7) The term 'date of enactment' as used in this section means
September 24, 1984, for a human drug product, a medical device,
food additive, or color additive.
"(8) The term 'date of enactment' as used in this section means
the date of enactment of the Generic Animal Drug and Patent Term
Restoration Act for an animal drug or a veterinary biological
product.".
(h) SECTION 156(g). --
(1) Paragraph (1) of section 156(g) "35 USC 156" is amended --
(A) in subparagraph (A), by striking out "human drug product"
and inserting in lieu thereof "new drug, antibiotic drug, or human
biological product",
(B) in subparagraph (B) --
(i) by striking out "human drug product" in the matter before
clause (i) and inserting in lieu thereof "new drug, antibiotic
drug, or human biological product", and
(ii) by striking out "human drug product" in clauses (i) and
(ii) and inserting in lieu thereof "product".
(2) Paragraph (1)(A) of section 156(g) is amended by striking
out "paragraph (4)" and inserting in lieu thereof "paragraph (6)".
(3) Paragraphs (2)(A) and (3)(A) are each amended by striking
out "paragraph (4)" and inserting in lieu thereof
7 "paragraph (6)".
(4) Section 156(g) is amended by redesignating paragraph (4) as
paragraph (6) and by inserting after paragraph (3) the following:
10"(4)(A) In the case of a product which is a new animal drug,
the term means the period described in subparagraph (B) to which
the limitation described in paragraph (6) applies.
"(B) The regulatory review period for a new animal drug product
is the sum of --
"(i) the period beginning on the earlier of the date a major
health or environmental effects test on the drug was initiated or
the date an exemption under subsection (j) of section 512 became
effective for the approved new animal drug product and ending on
the date an application was initially submitted for such animal
drug product under section 512, and
"(ii) the period beginning on the date the application was
initially submitted for the approved animal drug product under
subsection (b) of section 512 and ending on the date such
application was approved under such section.
"(5)(A) In the case of a product which is a veterinary
biological product, the term means the period described in
subparagraph (B) to which the limitation described in paragraph
(6) applies.
"(B) The regulatory period for a veterinary biological product
is the sum of --
"(i) the period beginning on the date the authority to prepare
an experimental biological product under the Virus-Serum-Toxin Act
became effective and ending on the date an application for a
license was submitted under the Virus-Serum-Toxin Act, and
"(ii) the period beginning on the date an application for a
license was initially submitted for approval under the
Virus-Serum-Toxin Act and ending on the date such license was
issued.".
(5) Paragraph (6) (as so redesignated) of section 156(g) "35
USC 156" is amended --
(A) by striking out "paragraph (1)(B) was submitted" in
subparagraph (B)(i) and inserting in lieu thereof "paragraph (1)(
B) or (4)(B) was submitted and no request for the authority
described in paragraph (5)(B) was submitted",
(B) by striking out "paragraph (2)" in subparagraph (B)(ii) and
inserting in lieu thereof "paragraph (2)(B) or (4)(B)", and
(C) in subparagraph (C), by inserting before the period the
following: "or in the case of an approved product which is a new
animal drug or veterinary biological product (as those terms are
used in the Federal Food, Drug, and Cosmetic Act or the
Virus-Serum-Toxin Act), three years".
(i) SECTION 271(e). --
(1) Section 271(e)(1) is amended --
(A) by inserting before the last close parenthesis the
following: "which is primarily manufactured using recombinant
DNA, recombinant RNA, hybridoma technology, or other processes
involving site specific genetic manipulation techniques", and
(B) by inserting before the period the following: "or
veterinary biological products".
(2) Section 271(e)(2) is amended to read as follows:
"(2) It shall be an act of infringement to submit --
"(A) an application under section 505(j) of the Federal Food,
Drug, and Cosmetic Act or described in section 505(b)(2) of such
Act for a drug claimed in a patent or the use of which is claimed
in a patent, or
"(B) an application under section 512 of such Act or under the
Act of March 4, 1913 (21 U.S.C. 151-158) for a drug or veterinary
biological product which is not primarily manufactured using
recombinant DNA, recombinant RNA, hybridoma technology, or other
processes involving site specific genetic manipulation techniques
and which is claimed in a patent or the use of which is claimed in
a patent,
if the purpose of such submission is to obtain approval under such
Act to engage in the commercial manufacture, use, or sale of a drug or
veterinary biological product claimed in a patent or the use of which is
claimed in a patent before the expiration of such patent.".
(2) Section 271(e)(4) "35 USC 271" is amended by inserting "or
veterinary biological product" after "drug" each place it occurs.
Approved November 16, 1988.
LEGISLATIVE HISTORY -- S. 2843 (H.R. 4982):
HOUSE REPORTS: No. 100-972, Pt. 1 (Comm. on Energy and Commerce) and
Pt. 2 (Comm. on the Judiciary), both accompanying H.R. 4982.
CONGRESSIONAL RECORD, Vol. 134 (1988): Oct. 6, H.R. 4982 considered
and passed House. Oct. 13, S. 2843 considered and passed Senate and
House.
Public Law 100-669, 102 Stat. 3969
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. Chapter 1 of title 9, United States Code, is amended by
adding at the end thereof the following new section:
"Section 15. "9 USC 15" Inapplicability of the Act of State doctrine
"Enforcement of arbitral agreements, confirmation of arbitral awards,
and execution upon judgments based on orders confirming such awards
shall not be refused on the basis of the Act of State doctrine.".
SEC. 2. Section 1605(a) of title 28, United States Code, is amended
by --
(1) striking out "or" at the end of paragraph (4);
(2) striking out the period at the end of paragraph (5) and
inserting in lieu thereof "; or"; and
(3) adding at the end thereof the following:
"(6) in which the action is brought, either to enforce an
agreement made by the foreign State with or for the benefit of a
private party to submit to arbitration all or any differences
which have arisen or which may arise between the parties with
respect to a defined legal relationship, whether contractual or
not, concerning a subject matter capable of settlement by
arbitration under the laws of the United States, or to confirm an
award made pursuant to such an agreement to arbitrate, if (A) the
arbitration takes place or is intended to take place in the United
States, (B) the agreement or award is or may be governed by a
treaty or other international agreement in force for the United
States calling for the recognition and enforcement of arbitral
awards, (C) the underlying claim, save for the agreement to
arbitrate, could have been brought in a United States court under
this section or section 1607, or (D) paragraph (1) of this
subsection is otherwise applicable.".
SEC. 3. Section 1610(a) of title 28, United States Code, is amended
by --
(1) striking out the period at the end of paragraph (5) and
inserting in lieu thereof ", or"; and
(2) adding at the end thereof the following:
"(6) the judgment is based on an order confirming an arbitral
award rendered against the foreign State, provided that attachment
in aid of execution, or execution, would not be inconsistent with
any provision in the arbitral agreement.".
Approved November 16, 1988.
LEGISLATIVE HISTORY -- S. 2204:
CONGRESSIONAL RECORD, Vol. 134 (1988): Sept. 30, considered and
passed Senate. Oct. 20, considered in House. Oct. 21, considered and
passed House, amended. Senate concurred in House amendment.
Public Law 100-668, 102 Stat. 3961
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, That this Act "16 USC 90
note" may be cited as the "Washington Park Wilderness Act of 1988".
SEC. 101. DESIGNATION.
(a) WILDERNESS. -- "16 USC 1132 note" In furtherance of the purposes
of the Wilderness Act (16 U.S.C. 1131 et seq.; 78 Stat. 890), certain
lands in the Olympic National Park, Washington, which --
(1) comprise approximately eight hundred and seventy-six
thousand six hundred and sixty-nine acres of wilderness, and
approximately three hundred and seventy-eight acres of potential
wilderness additions, and
(2 are depicted on a map entitled "Wilderness Boundary, Olympic
National Park, Washington", numbered 149/60,051A and dated August
1988,
are hereby designated as wilderness and therefore as components of
the National Wilderness Preservation System. Such lands shall be known
as the Olympic Wilderness.
SEC. 102. WOLF CREEK POWERLINE.
The Secretary is authorized to upgrade, maintain and replace, as
necessary, the Wolf Creek underground powerline to Hurricane Ridge:
Provided, That to the extent practicable, such maintenance and operation
shall be conducted in such a manner as to remain consistent with
wilderness management.
SEC. 103. PAYMENT TO CLALLAM COUNTY.
There is hereby authorized to be appropriated not to exceed $155,000
to the Secretary of the Interior to make a payment to the Clallam County
Historical Society and Museum of Port Angeles, Washington, to compensate
the Society for its possessory interest in the National Park Service
Visitor Center, Pioneer Memorial Museum, Olympic National Park,
Washington. Upon relinquishment by the Clallam County Historical
Society of all interests and use in the facility, the Secretary of the
Interior shall make payment to the Clallam County Historical Society and
acceptance of payment shall be considered full and just compensation for
the Society's participation in the construction of the Pioneer Memorial
Museum.
SEC. 104. GENERAL PROVISIONS.
(a) MISDEMEANOR PENALTIES. -- Section 3 of the Act of March 6, 1942
"16 USC 256b" (56 Stat. 136; 16 U.S.C. 256(b)) is revised by deleting
all after the phrase "or situated therein," and inserting the following:
"shall be deemed guilty of a class B misdemeanor in accordance with
provisions of title 18 of the United States Code.".
(b) FORFEITURE OF PROPERTY. -- Section 4 of the Act of March 6, 1942
(56 Stat. 135; 16 U.S.C. 256c) is hereby revised to read as follows:
"SEC. 4. All guns, bows, traps, nets, seines, fishing tackle,
clothing, teams, horses, machinery, logging equipment, motor vehicles,
aircraft, boats, or means of transportation of every nature or
description used by any person or persons or organizations within the
limits of the park when engaged in or attempting to engage in killing,
trapping, ensnaring, taking or capturing such wild birds, fish or
animals, or taking, destroying or damaging such trees, plants, or
mineral deposits contrary to the provisions of this Act or the rules and
regulations promulgated by the Secretary of the Interior shall be
forfeited to the United States and may be seized by the officers in the
park and held pending prosecution of any person or persons or
organization arrested under or charged with violating the provisions of
this Act, and upon conviction under this Act of such persons or
organizations using said guns, bows, traps, nets, seines, fishing
tackle, clothing, teams, horses, machinery, logging equipment, motor
vehicles, aircraft, boats, or other means of transportation of every
nature and description used by any person or persons or organization,
such forfeiture shall be adjudicated as a penalty in addition to the
other punishment prescribed in this Act. Such forfeited property shall
be disposed of and accounted for by and under the authority of the
Secretary of the Interior: Provided, That the forfeiture of teams,
horses, machinery, logging equipment, motor vehicles, aircraft, boats,
or other means of transportation shall be in the discretion of the
Court.".
(c) TECHNICAL CORRECTIONS TO BOUNDARIES. -- The Act of November 7,
1986 (Public Law 99-635; 100 Stat. 3527) revising the boundaries of
Olympic National Park is hereby amended as follows:
(1) In Section 1(a)(2) "16 USC 251n" after "48 degrees 23
minutes north and 47 degrees" strike "38" and insert in lieu
thereof "34".
(2) In section 1(a)(2) after "all surveyed and unsurveyed
islands", insert ", above the point of lowest low tide,"; and at
the end of the paragraph, strike "north;" and insert "north:
Provided, That such lands as are identified in this paragraph
shall continue to be open to fishing and to the taking of
shellfish in conformity with the laws and regulations of the State
of Washington;".
(3) In section 1(b) after "numbered 149/60,030A, sheets 1
through" strike "10" and insert in lieu thereof "9";
(4) In section 2(a) "16 USC 251n note" after "within section
15, township", strike "15" and insert in lieu thereof "24";
(5) In section 2(a) after "Provided, however, That the
Secretary of Agriculture shall" strike "not"; and
(6) Section 4 "16 USC 251n note" is renumbered as section 5 and
a new section 4 is inserted as follows:
"SEC. 4. Effective upon acceptance thereof by the State of
Washington, the jurisdiction which the United States acquired over those
lands excluded from the boundaries of Olympic National Park by this Act
is hereby retroceded to the State.".
SEC. 105. KALALOCH VISITOR CENTER.
The Secretary is directed to complete a study for the location of a
year round visitor center in the Kalaloch area of Olympic National Park.
Such study shall include the location, size and cost estimates for the
design, planning and construction of the visitor center and support
facilities. The study shall be submitted to the Committee on Interior
and Insular Affairs of the United States House of Representatives and to
the Committee on Energy and Natural Resources of the United States
Senate by March 1, 1989. The Secretary is authorized to construct such
visitor center subject to the appropriation of funds.
SEC. 201. DESIGNATION.
(a) WILDERNESS. -- "16 USC 1132 note" In furtherance of the purposes
of the Wilderness Act (16 U.S.C. 1131 et seq.; 78 Stat. 890), certain
lands in the North Cascades National Park, Ross Lake National Recreation
Area, and Lake Chelan National Recreation Area, Washington, which --
(1) comprise approximately six hundred and thirty-four thousand
six hundred and fourteen acres of wilderness, and approximately
five thousand two hundred and twenty-six acres of potential
wilderness additions, and
(2) are depicted on a map entitled "Wilderness Boundary, North
Cascades National Park Service Complex, Washington", numbered
168-60-186 and dated August 1988,
are hereby designated as wilderness and therefore as components of
the National Wilderness Preservation System. Such lands shall be known
as the Stephen Mather Wilderness.
SEC. 202. HYDROELECTRIC PROJECTS.
Section 505 of the Act of October 2, 1968 (82 Stat. 930; 16 U.S.C.
90d-4) is amended as follows: strike "in the recreation areas", and
insert in lieu thereof "in the lands and waters within the Skagit River
Hydroelectric Project, Federal Energy and Regulatory Commission Project
553, including the proposed Copper Creek, High Ross, and Thunder Creek
elements of the Project; and the Newhalem Project, Federal Energy and
Regulatory Commission Project 2705, within the Ross Lake National
Recreation Area; the lands and waters within the Lake Chelan Project,
Federal Energy and Regulatory Commission Project 637; the Company Creek
small hydroelectric project at Stehekin within the Lake Chelan National
Recreation Area; and existing hydrologic monitoring stations necessary
for the proper operation of the hydroelectric projects listed herein".
SEC. 203. LAND ACQUISITION FOR ADMINISTRATIVE FACILITIES.
Section 301(a) of the Act of October 2, 1968 (82 Stat. 927; 16 U.S.
C. 90b) is hereby amended to add a new subsection as follows:
"(b) The Secretary is hereby authorized to acquire, with the consent
of the owner, lands outside of the authorized boundaries of North
Cascades National Park Service Complex for the purpose of construction
and operation of a backcountry information center not to exceed five
acres. The Secretary of the Interior is further authorized to acquire
with the consent of the owner, lands for the construction of a
headquarters and administrative site or sites, for the North Cascades
National Park, Ross Lake National Recreation Area, and Lake Chelan
National Recreation Area not to exceed ten acres. The lands so acquired
shall be managed as part of the park.".
SEC. 204. AUTHORIZATION OF APPROPRIATIONS.
There are hereby authorized to be appropriated to the Secretary of
the Interior such sums as may be necessary to complete the land
acquisitions authorized pursuant to section 203 of this Act.
SEC. 205. RENEWABLE NATURAL RESOURCE USE IN RECREATION AREAS.
Section 402(a) of the Act of October 2, 1968 (82 Stat. 928; 16 U.S.
C. 90c-1) is hereby amended to read as follows:
"The Secretary shall administer the recreation areas in a manner
which in his judgment will best provide for (1) public outdoor
recreation benefits and (2) conservation of scenic, scientific,
historic, and other values contributing to public enjoyment. Within
that portion of the Lake Chelan National Recreation Area which is not
designated as wilderness, such management, utilization, and disposal of
renewable natural resources and the continuation of existing uses and
developments as will promote, or are compatible with, or do not
significantly impair public recreation and conservation of the scenic,
scientific, historic, or other values contributing to public enjoyment,
are authorized. In administering the recreation areas, the Secretary
may utilize such statutory authorities pertaining to the administration
of the national park system, and such statutory authorities otherwise
available to him for the conservation and management of natural
resources as he deems appropriate for recreation and preservation
purposes and for resource development compatible therewith. Within the
Ross Lake National Recreation Area the removal and disposal of trees
within power line rights-of-way are authorized as necessary to protect
transmission lines, towers, and equipment;": Provided, That to the
extent practicable, such removal and disposal of trees shall be
conducted in such a manner as to protect scenic viewsheds.".
SEC. 206. MINERAL RESOURCE USE IN RECREATION AREAS.
Section 402(b) of the Act of October 2, 1968 (82 Stat. 928; 16 U.S.
C. 90c-1b) "16 USC 90c-1" is hereby amended to read as follows:
"The lands within the recreation areas, subject to valid existing
rights, are hereby withdrawn from all forms of appropriation or disposal
under the public land laws, including location, entry, and patent under
the United States mining laws, and disposition under the United States
mineral leasing laws: Provided, however, That within that portion of
the Lake Chelan National Recreation Area which is not designated as
wilderness, sand, rock and gravel may be made available for sale to the
residents of Stehekin for local use to long as such sale and disposal
does not have significant adverse effects on the administration of the
Lake Chelan National Recreation Area.".
SEC. 301. "16 USC 1132 note" DESIGNATION.
(a) WILDERNESS. -- In furtherance of the purposes of the Wilderness
Act (16 U.S.C. 1131 et seq.; 78 Stat. 890), certain lands in the Mount
Rainier National Park, Washington, which --
(1) comprise approximately two hundred and sixteen thousand
eight hundred and fifty-five acres of wilderness, and
(2) are depicted on a map entitled "Wilderness Boundary, Mount
Rainier National Park, Washington", numbered 105-20,014A and dated
July 1988,
are hereby designated as wilderness and therefore as components of
the National Wilderness Preservation System. Such lands shall be known
as the Mount Rainier Wilderness.
SEC. 302. "16 USC 110c" BOUNDARY ADJUSTMENTS.
(a) PARK BOUNDARY ADJUSTMENTS. -- The boundaries of the Mount
Rainier National Park as established in the Act of March 2, 1899 (30
Stat. 993, as amended; (16 U.S.C. 91-110b), are further revised to add
to the Park approximately two hundred and forty acres, and to exclude
from the park approximately thirty-one and one-half acres, as generally
depicted on the map entitled "Mount Rainier National Park Proposed 1987
Boundary Adjustments", numbered 105-80,010B and dated January 1987,
which shall be on file and available for public inspection in the
Washington office of the National Park Service, United States Department
of the Interior and at Mount Rainier National Park.
(b) FOREST BOUNDARY ADJUSTMENT. -- The boundaries of the Snoqualmie
National Forest and of the Gifford Pinchot National Forest, are hereby
revised to include in the Snoqualmie National Forest approximately
thirty-one and one-half acres, to exclude from the Snoqualmie National
Forest approximately thirty acres, and to exclude from the Gifford
Pinchot National Forest approximately two hundred and ten acres, as
generally depicted on a map entitled "Mount Rainier National Park
Proposed 1987 Boundary Adjustments", numbered 105-80,010B, and dated
January 1987, which shall be on file and available for public inspection
in the Washington, District of Columbia office of the Forest Service,
United States Department of Agriculture and at the Snoqualmie and
Gifford Pinchot National Forests.
(c) ADMINISTRATION OF PARK LAND. -- (1) Federal lands, and interests
therein formerly within the boundary of the Snoqualmie National Forest
and the Gifford Pinchot National Forest, which are included within the
boundary of the Mount Rainier National Park pursuant to this Act are,
subject to valid existing rights, hereby transferred to the
administrative jurisdiction of the Secretary of the Interior for
administration as part of the Park, and shall be subject to all the laws
and regulations of the Park.
(2) The Secretary of the Interior is authorized to accept either
concurrent or exclusive jurisdiction over lands and waters included
within Mount Rainier National Park by this Act. The Secretary shall
notify in writing the Governor of the State of Washington of the
acceptance of any such jurisdiction ceded to the United States by the
State. The existing exclusive Federal jurisdiction, where it exists in
the Park, shall remain in effect until such time as the Secretary and
the Governor shall agree upon the terms and conditions of concurrent
legislative jurisdiction for said Park pursuant to section 320(i) of the
Act of October 21, 1976 (90 Stat. 2741).
(3) AUTHORIZATION OF LAND ACQUISITION. -- The Secretary of the
Interior is authorized to acquire from willing sellers by donation,
purchase with donated or appropriated funds, exchange, bequest, or
otherwise all non-Federal lands, waters, and interests therein included
within the boundary of the Mount Rainier National Park pursuant to this
Act.
(d) ADMINISTRATION OF FOREST LAND. -- (1) Federal lands, and
interests therein formerly within the boundary of the Mount Rainier
National Park, which are excluded therefrom and are included within the
boundaries of the Snoqualmie National Forest pursuant to this Act are,
subject to valid existing rights, hereby transferred to the
administrative jurisdiction of the Secretary of Agriculture for
administration as part of the Forest, and shall be subject to all the
laws and regulations applicable to the National Forest System.
(2) For the purposes of section 7 of the Land and Water Conservation
Fund Act of 1965 (78 Stat. 903, as amended; 16 U.S.C. 4601-9), the
boundaries of the Snoqualmie National Forest and the Gifford Pinchot
National Forest, as modified pursuant to this Act, shall be treated as
if they were the boundaries of those national forests on January 1,
1965.
(3) Effective upon acceptance thereof by the State of Washington, the
jurisdiction which the United States acquired over those lands excluded
from the boundaries of the Mount Rainier National Park by this Act is
hereby retroceded to the State.
SEC. 303. PARADISE POWERLINE.
The Secretary is authorized to upgrade, maintain and replace as
necessary, the Paradise powerline from Longmire to Paradise: Provided,
That to the extent practicable, such maintenance and operation shall be
conducted in such a manner as to protect scenic viewsheds.
(a) ADMINISTRATION. -- (1) Subject to valid existing rights, the
wilderness areas designated under titles I, II, and III of this Act
shall be administered by the Secretary of the Interior in accordance
with the provisions of the Wilderness Act governing areas designated as
wilderness, except that reference to the Secretary of Agriculture shall
be deemed, where appropriate, to be a reference to the Secretary of the
Interior, and any reference to the effective date of the Wilderness Act
shall be deemed, where appropriate, to be a reference to the effective
date of this Act.
(2) Lands designated as potential wilderness additions shall be
administered by the Secretary of the Interior insofar as practicable as
wilderness until such time as said lands are designated as wilderness.
Any lands designated as potential wilderness additions, upon publication
in the Federal Register of a notice by the Secretary of the Interior
that all uses thereon that are inconsistent with the Wilderness Act have
ceased or that non-Federal interests in land have been acquired, shall
thereby be designated as wilderness and managed accordingly.
(3) Congress does not intend that wilderness areas designated under
this Act lead to the creation of protective perimeters or buffer zones
around such wilderness areas. The fact that nonwilderness activities or
uses can be seen or heard from areas within the wilderness shall not, of
itself, preclude such activities or uses up to the boundary of the
wilderness area.
(b) MAP AND DESCRIPTION. (1) As soon as practicable after the
effective date of this Act, the Secretary of the Interior shall file
maps of the wilderness areas and legal descriptions of its boundaries
with the Committee on Energy and Natural Resources of the United States
Senate, and the Committee on Interior and Insular Affairs of the United
States House of Representatives. Such maps and legal descriptions shall
have the same force and effect as if included in this Act, except that
correction of clerical and typographical errors in the maps and legal
descriptions may be made. Such maps and legal descriptions of the
boundaries shall be on file and available for public inspection in the
office of the Director of the National Park Service, Department of the
Interior, and in the office of the appropriate Superintendent.
(2) Boundaries adjacent to paved and unpaved roads shall be drawn as
narrowly as is practicable to allow for necessary maintenance and
repairs to existing roads. Such boundaries should not, in general,
exceed two hundred feet from the centerline of paved roads and one
hundred feet from the centerlines of unpaved roads: Provided, however,
That larger boundaries may be drawn only as the Secretary deems
necessary to exclude from the wilderness existing developments,
improvements, and structures adjacent to existing roads, as well as
areas needed to maintain and repair existing roads: Provided further,
That to the extent practicable, undeveloped areas adjacent to all roads
shall be managed as if designated as wilderness.
SEC. 501. WILD AND SCENIC RIVERS.
Section 3(a), paragraph (60), of the Wild and Scenic Rivers Act, "16
USC 1274" which designates the Klickitat River in the State of
Washington as a component of the National Wild and Scenic Rivers System,
is amended to add the following sentence at the end of the paragraph:
"The boundaries of the designated portions of the Klickitat River
shall be as generally depicted on a map dated November, 1987, "16 USC
1274" and entitled 'Klickitat National Recreation River, River
Management Area: Final Boundary', which is on file in the office of the
Chief, Forest Service, Washington, District of Columbia.".
SEC. 502. RESERVATION OF WATER RIGHTS.
Subject to valid existing rights, within the areas designated as
wilderness by this Act, Congress hereby expressly reserves such water
rights as necessary, for the purposes for which such areas are so
designated. The priority date of such rights shall be the date of
enactment of this Act.
Approved November 16, 1988.
LEGISLATIVE HISTORY -- S. 2165 (H.R. 4146):
HOUSE REPORTS: No. 100-961 accompanying H.R. 4146 (Comm. on Interior
and Insular Affairs).
SENATE REPORTS: No. 100-512 (Comm. on Energy and Natural Resources).
CONGRESSIONAL RECORD, Vol. 134 (1988): Sept. 26, H.R. 4146
considered and passed House. Oct. 18, considered and passed Senate,
amended. S. 2165 considered and passed Senate. Oct. 19, S. 2165
considered and passed House.
Public Law 100-667, 102 Stat. 3935
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SEC. 101. "15 USC 1051 note" SHORT TITLE.
This title may be cited as the "Trademark Law Revision Act of 1988".
SEC. 102. REFERENCE TO THE TRADEMARK ACT OF 1946.
Except as otherwise expressly provided, whenever in this title an
amendment is expressed in terms of an amendment to a section or other
provision, the reference shall be considered to be made to a section or
other provision of the Act entitled "An Act to provide for the
registration and protection of trademarks used in commerce, to carry out
the provisions of certain international conventions, and for other
purposes", approved July 5, 1946 (15 U.S.C. 1051 and following)
(commonly referred to as the "Trademark Act of 1946").
SEC. 103. APPLICATION TO REGISTER TRADEMARKS.
Section 1 (15 U.S.C. 1051) is amended --
(1) in the matter before subsection (a), by striking out "may
register his" and inserting in lieu thereof "may apply to register
his or her";
(2) by redesignating paragraphs (1), (2), and (3) of subsection
(a) as subparagraphs (A), (B), and (C), respectively;
(3) by redesignating subsections (a), (b), and (c) as
paragraphs (1), (2), and (3), respectively;
(4) by inserting "(a)" after "SECTION 1.";
(5) in subsection (a)(1)(A), as redesignated by this section --
(A) by striking out "applied to" and inserting in lieu thereof
"used on or in connection with"; and
(B) by striking out "goods in connection" and inserting in lieu
thereof "goods on or in connection";
(6) in subsection (a)(1)(C), as redesignated by this section,
by striking out "actually";
(7) in subsection (a)(2), as redesignated by this section, by
striking out "filing" and inserting in lieu thereof "prescribed";
(8) by redesignating subsection (d) as subsection (e); and
(9) by inserting before subsection (e), as redesignated by
paragraph (8) of this section, the following:
"(b) A person who has a bona fide intention, under circumstances
showing the good faith of such person, to use a trademark in commerce
may apply to register the trademark under this Act on the principal
register hereby established:
"(1) By filing in the Patent and Trademark Office --
"(A) a written application, in such form as may be prescribed
by the Commissioner, verified by the applicant, or by a member of
the firm or an officer of the corporation or association applying,
specifying applicant's domicile and citizenship, applicant's bona
fide intention to use the mark in commerce, the goods on or in
connection with which the applicant has a bona fide intention to
use the mark and the mode or manner in which the mark is intended
to be used on or in connection with such goods, including a
statement to the effect that the person making the verification
believes himself or herself, or the firm, corporation, or
association in whose behalf he or she makes the verification, to
be entitled to use the mark in commerce, and that no other person,
firm, corporation, or association, to the best of his or her
knowledge and belief, has the right to use such mark in commerce
either in the identical form of the mark or in such near
resemblance to the mark as to be likely, when used on or in
connection with the goods of such other person, to cause
confusion, or to cause mistake, or to deceive; however, except
for applications filed pursuant to section 44, no mark shall be
registered until the applicant has met the requirements of
subsection (d) of this section; and
(B) a drawing of the mark.
"(2) By paying in the Patent and Trademark Office the
prescribed fee.
"(3) By complying with such rules or regulations, not
inconsistent with law, as may be prescribed by the Commissioner.
"(c) At any time during examination of an application filed under
subsection (b), an applicant who has made use of the mark in commerce
may claim the benefits of such use for purposes of this Act, by amending
his or her application to bring it into conformity with the requirements
of subsection (a).
"(d)(1) Within six months after the date on which the notice of
allowance with respect to a mark is issued under section 13(b)(2) to an
applicant under subsection (b) of this section, the applicant shall file
in the Patent and Trademark Office, together with such number of
specimens or facsimiles of the mark as used in commerce as may be
required by the Commissioner and payment of the prescribed fee, a
verified statement that the mark is in use in commerce and specifying
the date of the applicant's first use of the mark in commerce, those
goods or services specified in the notice of allowance on or in
connection with which the mark is used in commerce, and the mode or
manner in which the mark is used on or in connection with such goods or
services. Subject to examination and acceptance of the statement of
use, the mark shall be registered in the Patent and Trademark Office, a
certificate of registration shall be issued for those goods or services
recited in the statement of use for which the mark is entitled to
registration, and notice of registration shall be published in the
Official Gazette of the Patent and Trademark Office. Such examination
may include an examination of the factors set forth in subsections (a)
through (e) of section 2. The notice of registration shall specify the
goods or services for which the mark is registered.
"(2) The Commissioner shall extend, for one additional 6-month
period, the time for filing the statement of use under paragraph (1),
upon written request of the applicant before the expiration of the
6-month period provided in paragraph (1). In addition to an extension
under the preceding sentence, the Commissioner may, upon a showing of
good cause by the applicant, further extend the time for filing the
statement of use under paragraph (1) for periods aggregating not more
than 24 months, pursuant to written request of the applicant made before
the expiration of the last extension granted under this paragraph. Any
request for an extension under this paragraph shall be accompanied by a
verified statement that the applicant has a continued bona fide
intention to use the mark in commerce and specifying those goods or
services identified in the notice of allowance on or in connection with
which the applicant has a continued bona fide intention to use the mark
in commerce. Any request for an extension under this paragraph shall be
accompanied by payment of the prescribed fee. The Commissioner shall
issue regulations setting forth guidelines for determining what
constitutes good cause for purposes of this paragraph.
"(3) The Commissioner shall notify any applicant who files a
statement of use of the acceptance or refusal thereof and, if the
statement of use is refused, the reasons for the refusal. An applicant
may amend the statement of use.
"(4) The failure to timely file a verified statement of use under
this subsection shall result in abandonment of the application.".
SEC. 104. TRADEMARKS REGISTRABLE ON PRINCIPAL REGISTER.
Section 2 (15 U.S.C. 1052) is amended --
(1) by amending subsection (d) to read as follows:
"(d) Consists of or comprises a mark which so resembles a mark
registered in the Patent and Trademark Office, or a mark or trade name
previously used in the United States by another and not abandoned, as to
be likely, when used on or in connection with the goods of the
applicant, to cause confusion, or to cause mistake, or to deceive:
Provided, That if the Commissioner determines that confusion, mistake,
or deception is not likely to result from the continued use by more than
one person of the same or similar marks under conditions and limitations
as to the mode or place of use of the marks or the goods on or in
connection with which such marks are used, concurrent registrations may
be issued to such persons when they have become entitled to use such
marks as a result of their concurrent lawful use in commerce prior to
(1) the earliest of the filing dates of the applications pending or of
any registration issued under this Act; (2) July 5, 1947, in the case
of registrations previously issued under the Act of March 3, 1881, or
February 20, 1905, and continuing in full force and effect on that date;
or (3) July 5, 1947, in the case of applications filed under the Act of
February 20, 1905, and registered after July 5, 1947. Use prior to the
filing date of any pending application or a registration shall not be
required when the owner of such application or registration consents to
the grant of a concurrent registration to the applicant. Concurrent
registrations may also be issued by the Commissioner when a court of
competent jurisdiction has finally determined that more than one person
is entitled to use the same or similar marks in commerce. In issuing
concurrent registrations, the Commissioner shall prescribe conditions
and limitations as to the mode or place of use of the mark or the goods
on or in connection with which such mark is registered to the respective
persons.";
(2) in subsection (e) by striking out "applied to" each place
it appears and inserting in lieu thereof "used on or in connection
with"; and
(3) in subsection (f) --
(A) by striking out "applied to and inserting in lieu thereof
"used on or in connection with"; and
(B) by striking out "five years" and all that follows through
the end of the subsection and inserting in lieu thereof "five
years before the date on which the claim of distinctiveness is
made.".
SEC. 105. SERVICE MARKS REGISTRABLE.
Section 3 (15 U.S.C. 1053) is amended --
(1) in the first sentence --
(A) by striking out "used in commerce"; and
(B) by striking out ", except when and all that follows through
"mark is used"; and
(2) by striking out the second sentence.
SEC. 106. COLLECTIVE AND CERTIFICATION MARKS REGISTRABLE.
Section 4 (15 U.S.C. 1054) is amended --
(1) in the first sentence --
(A) by striking out "origin used in commerce," and inserting in
lieu thereof "origin,"; and
(B) by striking out "except when" and inserting in lieu thereof
"except in the case of certification marks when"; and
(2) by striking out the second sentence.
SEC. 107. USE BY RELATED COMPANIES.
Section 5 (15 U.S.C. 1055) is amended by adding at the end thereof
the following: "If first use of a mark by a person is controlled by the
registrant or applicant for registration of the mark with respect to the
nature and quality of the goods or services, such first use shall inure
to the benefit of the registrant or applicant, as the case may be.".
SEC. 108. DISCLAIMER OF UNREGISTRABLE MATTER.
Section 6(b) (15 U.S.C. 1056(b)) is amended by striking out
"paragraph (d)" and inserting in lieu thereof "subsection (e)".
SEC. 109. CERTIFICATE OF REGISTRATION ON THE PRINCIPAL REGISTER.
Section 7 (15 U.S.C. 1057) is amended --
(1) by amending subsection (b) to read as follows:
"(b) A certificate of registration of a mark upon the principal
register provided by this Act shall be prima facie evidence of the
validity of the registered mark and of the registration of the mark, of
the registrant's ownership of the mark, and of the registrant's
exclusive right to use the registered mark in commerce on or in
connection with the goods or services specified in the certificate,
subject to any conditions or limitations stated in the certificate.";
(2) by redesignating subsections (c), (d), (e), (f), and (g) as
subsections (d), (e), (f), (g), and (h), respectively;
(3) by inserting after subsection (b) the following:
"(c) Contingent on the registration of a mark on the principal
register provided by this Act, the filing of the application to register
such mark shall constitute constructive use of the mark, conferring a
right of priority, nationwide in effect, on or in connection with the
goods or services specified in the registration against any other person
except for a person whose mark has not been abandoned and who, prior to
such filing --
"(1) has used the mark;
"(2) has filed an application to register the mark which is
pending or has resulted in registration of the mark; or
"(3) has filed a foreign application to register the mark on
the basis of which he or she has acquired a right of priority, and
timely files an application under section 44(d) to register the
mark which is pending or has resulted in registration of the
mark.";
(4) in subsection (d), as redesignated by paragraph (2) of this
section, by striking out "fee herein provided" and inserting in
lieu thereof "prescribed fee";
(5) in subsection (f), as redesignated by paragraph (2) of this
section, by striking out "fee required by law" and inserting in
lieu thereof "prescribed fee; and
(6) in subsection (h), as redesignated by paragraph (2) of this
section, by striking out "required fee and inserting in lieu
thereof "prescribed fee".
SEC. 110. DURATION OF REGISTRATION.
Section 8(a) (15 U.S.C. 1058(a)) is amended --
(1) by striking out "twenty" and inserting in lieu thereof
"ten"; and
(2) by striking out "showing that said mark is in use in
commerce or showing that its" and inserting in lieu thereof
"setting forth those goods or services recited in the registration
on or in connection with which the mark is in use in commerce and
attaching to the affidavit a specimen or facsimile showing current
use of the mark, or showing that any".
SEC. 111. RENEWAL OF REGISTRATION.
Section 9 (15 U.S.C. 1059) is amended --
(1) in subsection (a) by striking out "twenty" and inserting in
lieu thereof "ten"; and
(2) in subsection (c) by striking out "1(d) hereof" and
inserting in lieu thereof "1(e) of this Act".
SEC. 112. ASSIGNMENT.
Section 10 (15 U.S.C. 1060) is amended --
(1) in the first sentence by striking out "and in any such
assignment" and inserting in lieu thereof the following: ".
However, no application to register a mark under section 1(b)
shall be assignable prior to the filing of the verified statement
of use under section 1(d), except to a successor to the business
of the applicant, or portion thereof, to which the mark pertains,
if that business is ongoing and existing. In any assignment
authorized by this section"; and
(2) in the last paragraph by striking out "1(d) hereof and
inserting in lieu thereof "1(e) of this Act".
SEC. 113. EXAMINATION OF APPLICATION.
Section 12(a) (15 U.S.C. 1062a)) is amended --
(1) by striking out "fee herein provided" and inserting in lieu
thereof "prescribed fee"; and
(2) by striking out "to registration, the" and inserting in
lieu thereof "to registration, or would be entitled to
registration upon the acceptance of the statement of use required
by section 1(d) of this Act, the".
SEC. 114. OPPOSITION TO MARKS.
Section 13 (15 U.S.C. 1063) is amended --
(1) by inserting "(a)" before "Any person";
(2) by striking out "required fee" and inserting in lieu
thereof "prescribed fee; and
(3) by adding at the end thereof the following:
"(b) Unless registration is successfully opposed --
"(1) a mark entitled to registration on the principal register
based on an application filed under section 1(a) or pursuant to
section 44 shall be registered in the Patent and Trademark Office,
a certificate of registration shall be issued, and notice of the
registration shall be published in the Official Gazette of the
Patent and Trademark Office; or
"(2) a notice of allowance shall be issued to the applicant if
the applicant applied for registration under section 1(b).".
SEC. 115. CANCELLATION OF REGISTRATIONS.
Section 14 (15 U.S.C. 1064) is amended --
(1) in the matter preceding subsection (a) --
(A) by inserting "as follows" after "be filed"; and
(B) by striking out "1905 -- " and inserting in lieu thereof
"1905";
(2) in subsection (a) --
(A) by striking out "(a) within" and inserting in lieu thereof
"(1) Within"; and
(B) by striking out "; or" and inserting in lieu thereof a
period;
(3) in subsection (b) --
(A) by striking out "(b) within" and inserting in lieu thereof
"(2) Within"; and
(B) by striking out "; or" and inserting in lieu thereof a
period;
(4) by amending subsection (c) to read as follows:
"(3) At any time if the registered mark becomes the generic
name for the goods or services, or a portion thereof, for which it
is registered, or has been abandoned, or its registration was
obtained fraudulently or contrary to the provisions of section 4
or of subsection (a), (b), or (c) of section 2 for a registration
under this Act, or contrary to similar prohibitory provisions of
such prior Acts for a registration under such Acts, or if the
registered mark is being used by, or with the permission of, the
registrant so as to misrepresent the source of the goods or
services on or in connection with which the mark is used. If the
registered mark becomes the generic name for less than all of the
goods or services for which it is registered, a petition to cancel
the registration for only those goods or services may be filed. A
registered mark shall not be deemed to be the generic name of
goods or services solely because such mark is also used as a name
of or to identify a unique product or service. The primary
significance of the registered mark to the relevant public rather
than purchaser motivation shall be the test for determining
whether the registered mark has become the generic name of goods
or services on or in connection with which it has been used.";
(5) in subsection (d) --
(A) by striking out "(d) at" and inserting in lieu thereof "(4)
At"; and
(B) by striking out "; or" and inserting in lieu thereof a
period;
(6) in subsection (e) --
(A) by striking out "(e) at" and inserting in lieu thereof "(5)
At"; and
(B) by striking out "(1)", "(2)", "(3)", and "(4)" and
inserting in lieu thereof "(A)", "(B)", "(C)", and "(D)",
respectively; and
(7) in the proviso at the end of the section by striking out
"subsections (c) and (e)" and inserting in lieu thereof
"paragraphs (3) and (5)".
SEC. 116. INCONTESTABILITY OF RIGHT TO USE MARK.
Section 15 (15 U.S.C. 1065) is amended --
(1) by striking out "subsections (c) and (e)" and inserting in
lieu thereof "paragraphs (3) and (5)";
(2) in paragraph (3) by striking out "subsections (1) and (2)
hereof" and inserting in lieu thereof "paragraphs (1) and (2) of
this section"; and
(3) in paragraph (4) by striking out "the common descriptive
name of any article or substance, patented or otherwise" and
inserting in lieu thereof "the generic name for the goods or
services or a portion thereof, for which it is registered".
SEC. 117. INTERFERENCE.
Section 16 (15 U.S.C. 1066) is amended by striking out "applied to
the goods or when used in connection with the services" and inserting in
lieu thereof used on or in connection with the goods or services".
SEC. 118. ACTION OF COMMISSIONER IN PROCEEDINGS.
Section 18 (15 U.S.C. 1068) is amended --
(1) by striking out "or restrict" and inserting in lieu thereof
"the registration, in whole or in part, may modify the application
or registration by limiting the goods or services specified
therein, may otherwise restrict or rectify with respect to the
register";
(2) by striking out "or may refuse" and inserting in lieu
thereof "may refuse; and
(3) adding at the end thereof the following: "However, no
final judgment shall be entered in favor of an applicant under
section 1(b) before the mark is registered, if such applicant
cannot prevail without establishing constructive use pursuant to
section 7(c).".
SEC. 119. APPLICATION OF EQUITABLE PRINCIPLES.
Section 19 (15 U.S.C. 1069) is amended by striking out the second
sentence.
SEC. 120. APPEALS.
Sec. 21 (15 U.S.C. 1071) is amended --
(1) in subsection (a)(1) --
(A) by striking out "section 21(b) hereof" each place it
appears and inserting in lieu thereof "subsection (b) of this
section";
(B) by striking out "section 21(a)(2) hereof" and inserting in
lieu thereof "paragraph (2) of this subsection"; and
(C) by striking out "said section 21(b)" and inserting in lieu
thereof "subsection (b) of this section";
(2) in subsection (a)(4), by adding at the end thereof the
following: "However, no final judgment shall be entered in favor
of an applicant under section 1(b) before the mark is registered,
if such applicant cannot prevail without establishing constructive
use pursuant to section 7(c).";
(3) in subsection (b)(1) --
(A) by striking out "section 21(a) hereof" and inserting in
lieu thereof "subsection (a) of this section";
(B) by striking out "section 21(a)" and inserting in lieu
thereof "subsection (a) of this section"; and
(C) by adding at the end thereof the following: "However, no
final judgment shall be entered in favor of an applicant under
section 1(b) before the mark is registered, if such applicant
cannot prevail without establishing constructive use pursuant to
section 7(c."; and
(4) in subsection (b)(3), by striking out "(3)" and all that
follows through the end of the first sentence and inserting in
lieu thereof the following:
"(3) In any case where there is no adverse party, a copy of the
complaint shall be served on the Commissioner, and, unless the court
finds the expenses to be unreasonable, all the expenses of the
proceedings shall be paid by the party bringing the case, whether the
final decision is in favor of such party or not.".
SEC. 121. SUPPLEMENTAL REGISTER.
Section 23 (15 U.S.C. 1091) is amended --
(1) by inserting "(a)" before "In addition" in the first
paragraph;
(2) by inserting "(b) before "Upon the" in the second
paragraph;
(3) by inserting "(c)" before "For the purposes" in the third
paragraph;
(4) in subsection (a), as designated by paragraph (1) of this
section --
(A) by striking out "paragraphs (a)," and inserting in lieu
thereof "subsections (a),",
(B) by striking out "have been in lawful use in commerce by the
proprietor thereof, upon" and inserting in lieu thereof "are in
lawful use in commerce by the owner thereof, on";
(C) by striking out "for the year preceding the filing of the
application"; and
(D) by inserting before "section 1" the following:
"subsections (a) and (e) of";
(5) in subsection (b), as designated by paragraph (2) of this
section, by striking out "fee herein provided" and inserting in
lieu thereof "prescribed fee"; and
(6) by striking out the last paragraph.
SEC. 122. CANCELLATION ON SUPPLEMENTAL REGISTER.
Section 24 (15 U.S.C. 1092 is amended --
(1) by striking out "verified" in the second sentence;
(2) by striking out "was not entitled to register the mark at
the time of his application for registration thereof," and
inserting in lieu thereof "is not entitled to registration,";
(3) by striking out "is not used by the registrant or"; and
(4) by adding at the end thereof the following: "However, no
final judgment shall be entered in favor of an applicant under
section 1(b) before the mark is registered, if such applicant
cannot prevail without establishing constructive use pursuant to
section 7(c).".
SEC. 123. PROVISIONS OF ACT APPLICABLE TO SUPPLEMENTAL REGISTER.
Section 26 (15 U.S.C. 1094) is amended --
(1) by inserting "1(b)," after "sections"; and
(2) by inserting "7(c)," after "7(b)".
SEC. 124. REGISTRATION ON PRINCIPAL REGISTER NOT PRECLUDED.
Section 27 (15 U.S.C. 1095) is amended by adding at the end thereof
the following: "Registration of a mark on the supplemental register
shall not constitute an admission that the mark has not acquired
distinctiveness.".
SEC. 125. NOTICE OF REGISTRATION.
Section 29 (15 U.S.C. 1111) is amended by striking out "as used".
SEC. 126. CLASSIFICATION OF GOODS AND SERVICES.
Section 30 (15 U.S.C. 1112) is amended --
(1) by inserting "or registrant's" after "applicant's";
(2) by striking out "may file an application" and inserting in
lieu thereof "may apply";
(3) by striking out "goods and services upon or in connection
with which he is actually using the mark:" and inserting in lieu
thereof "goods or services on or in connection with which he or
she is using or has a bona fide intention to use the mark in
commerce:"; and
(4) by amending the proviso to read as follows: "Provided,
That if the Commissioner by regulation permits the filing of an
application for the registration of a mark for goods or services
which fall within a plurality of classes, a fee equaling the sum
of the fees for filing an application in each class shall be paid,
and the Commissioner may issue a single certificate of
registration for such mark.".
SEC. 127. INNOCENT INFRINGEMENT AND VIOLATIONS OF SECTION 43(a).
Section 32(2) (15 U.S.C. 1114(2)) is amended to read as follows:
"(2) Notwithstanding any other provision of this Act, the remedies
given to the owner of a right infringed under this Act or to a person
bringing an action under section 43(a) shall be limited as follows:
"(A) Where an infringer or violator is engaged solely in the
business of printing the mark or violating matter for others and
establishes that he or she was an innocent infringer or innocent
violator, the owner of the right infringed or person bringing the
action under section 43(a) shall be entitled as against such
infringer or violator only to an injunction against future
printing.
"(B) Where the infringement or violation complained of is
contained in or is part of paid advertising matter in a newspaper,
magazine, or other similar periodical or in an electronic
communication as defined in section 2510(12) of title 18, United
States Code, the remedies of the owner of the right infringed or
person bringing the action under section 43(a) as against the
publisher or distributor of such newspaper, magazine, or other
similar periodical or electronic communication shall be limited to
an injunction against the presentation of such advertising matter
in future issues of such newspapers, magazines, or other similar
periodicals or in future transmissions of such electronic
communications. The limitations of this subparagraph shall apply
only to innocent infringers and innocent violators.
"(C) Injunctive relief shall not be available to the owner of
the right infringed or person bringing the action under section
43(a) with respect to an issue of a newspaper, magazine, or other
similar periodical or an electronic communication containing
infringing matter or violating matter where restraining the
dissemination of such infringing matter or violating matter in any
particular issue of such periodical or in an electronic
communication would delay the delivery of such issue or
transmission of such electronic communication after the regular
time for such delivery or transmission, and such delay would be
due to the method by which publication and distribution of such
periodical or transmission of such electronic communication is
customarily conducted in accordance with sound business practice,
and not due to any method or device adopted to evade this section
or to prevent or delay the issuance of an injunction or
restraining order with respect to such infringing matter or
violating matter.
"(D) As used in this paragraph --
"(i) the term 'violator' means a person who violates section
43(a); and
"(ii) the term 'violating matter' means matter that is the
subject of a violation under section 43(a).".
SEC. 128. REMEDIES. 4(a) PRIMA FACIE EVIDENCE OF EXCLUSIVE RIGHT TO
USE MARK. -- Section 33(a) (15 U.S.C. 1115(a)) is amended --
(1) by inserting "the validity of the registered mark and of
the registration of the mark, of the registrant's ownership of the
mark, and of the" after "prima facie evidence of";
(2) by inserting "or in connection with" after "in commerce
on";
(3) by striking out "an opposing party" and inserting in lieu
thereof "another person"; and
(4) by inserting ", including those set forth in subsection
(b)," after "or defect".
(b) CONCLUSIVE EVIDENCE OF EXCLUSIVE RIGHT TO USE MARK. -- Section
33(b) (15 U.S.C. 1115(b)) is amended --
(1) in subsection (b) by amending the matter before paragraph
(1) to read as follows:
"(b) To the extent that the right to use the registered mark has
become incontestable under section 15, the registration shall be
conclusive evidence of the validity of the registered mark and of the
registration of the mark, of the registrant's ownership of the mark, and
of the registrant's exclusive right to use the registered mark in
commerce. Such conclusive evidence shall relate to the exclusive right
to use the mark on or in connection with the goods or services specified
in the affidavit filed under the provisions of section 15, or in the
renewal application filed under the provisions of section 9 if the goods
or services specified in the renewal are fewer in number, subject to any
conditions or limitations in the registration or in such affidavit or
renewal application. Such conclusive evidence of the right to use the
registered mark shall be subject to proof of infringement as defined in
section 32, and shall be subject to the following defenses or defects:";
(2) in paragraph (3) by inserting "on or" after "goods or
services";
(3) in paragraph (4) --
(A) by striking out "trade or service"; and
(B) by striking out "to users";
(4) in paragraph (5) by striking out "registration of the mark
under this Act or" and inserting in lieu thereof "(A) the date of
constructive use of the mark established pursuant to section 7(
c), (B) the registration of the mark under this Act if the
application for registration is filed before the effective date of
the Trademark Law Revision Act of 1988, or (C)";
(5) in paragraph (7) by striking out the period and inserting
in lieu thereof "; or"; and
(6) by adding at the end of the subsection the following:
"(8) That equitable principles, including laches, estoppel, and
acquiescence, are applicable.".
(c) INJUNCTIONS. -- Section 34(a) (15 U.S.C. 1116(a)) is amended in
the first sentence by inserting "or to prevent a violation under section
43(a)" after "Office".
(d) NOTICE OF SUIT TO COMMISSIONER. -- Section 34(c) (15 U.S.C.
1116(c)) is amended --
(1) by striking out "proceeding arising" and inserting in lieu
thereof "proceeding involving a mark registered"; and
(2) by striking out "decision is rendered, appeal taken or a
decree issued" and inserting in lieu thereof "judgment is entered
or an appeal is taken".
(e) CIVIL ACTIONS ARISING FROM USE OF COUNTERFEIT MARKS. -- Section
34(d)(1)(B) (15 U.S.C. 1116(d)(1)(B)) is amended by inserting "on or"
after "designation used".
SEC. 129. RECOVERY FOR VIOLATION OF RIGHTS.
Section 35(a) (15 U.S.C. 1117(a)) is amended in the first sentence by
inserting ", or a violation under section 43(a)," after "Office".
SEC. 130. DESTRUCTION OF INFRINGING ARTICLES.
Section 36 (15 U.S.C. 1118) is amended in the first sentence --
(1) by inserting ", or a violation under section 43(a)," after
"Office"; and
(2) by inserting after "registered mark" the following: "or,
in the case of a violation of section 43(a), the word, term, name,
symbol, device, combination thereof, designation, description, or
representation that is the subject of the violation,".
SEC. 131. JURISDICTION.
(a) JURISDICTION OF COURTS. -- Section 39 (15 U.S.C. 1121) is
amended by inserting "(a)" after "SEC. 39.".
(b) CERTAIN ACTIONS BY STATES PRECLUDED. -- Section 39a (15 U.S.C.
1121a) is amended --
(1) by striking out "SEC. 39a." "15 USC 1121a, 1121" and
inserting in lieu thereof "(b)"; and
(2) by striking out "servicemarks" each place it appears and
inserting in lieu thereof "service marks".
SEC. 132. UNREGISTERED MARKS, DESCRIPTIONS, AND REPRESENTATIONS.
Section 43(a) (15 U.S.C. 1125(a)) is amended to read as follows:
"(a) Any person who, on or in connection with any goods or services,
or any container for goods, uses in commerce any word, term, name,
symbol, or device, or any combination thereof, or any false designation
of origin, false or misleading description of fact, or false or
misleading representation of fact, which --
"(1) is likely to cause confusion, or to cause mistake, or to
deceive as to the affiliation, connection, or association of such
person with another person, or as to the origin, sponsorship, or
approval of his or her goods, services, or commercial activities
by another person, or
"(2) in commercial advertising or promotion, misrepresents the
nature, characteristics, qualities, or geographic origin of his or
her or another person's goods, services, or commercial activities,
shall be liable in a civil action by any person who believes that he
or she is or is likely to be damaged by such act.".
SEC. 133. INTERNATIONAL MATTERS.
Section 44 (15 U.S.C. 1126) is amended --
(1) in subsections (c), (d), (f), (g), and (h) by striking out
"paragraph (b)" each place it appears and inserting in lieu
thereof "subsection (b)";
(2) in subsection (a) by striking out "herein prescribed" and
inserting in lieu thereof "required in this Act";
(3) in subsection (d) by striking out "sections 1, 2, 3, 4, or
23" and inserting in lieu thereof "section 1, 3, 4, 23, or 44(
e)";
(4) in subsection (d)(2) by striking out "but use in commerce
need not be alleged" and inserting in lieu thereof "including a
statement that the applicant has a bona fide intention to use the
mark in commerce";
(5) in subsection (d)(3) by striking out "foreing" and
inserting in lieu thereof "foreign";
(6) in subsection (e) by adding at the end thereof the
following: "The application must state the applicant's bona fide
intention to use the mark in commerce, but use in commerce shall
not be required prior to registration.";
(7) in subsection (f) by striking out "paragraphs (c), (d),"
and inserting in lieu thereof "subsections (c), (d),"; and
(8) in subsection (i) by striking out "paragraph (b) hereof"
and inserting in lieu thereof "subsection (b) of this section".
SEC. 134. CONSTRUCTION AND DEFINITIONS.
Section 45 (15 U.S.C. 1127) is amended --
(1) by amending the paragraph defining "related company" to
read as follows:
"The term 'related company' means any person whose use of a mark is
controlled by the owner of the mark with respect to the nature and
quality of the goods or services on or in connection with which the mark
is used.";
(2) by amending the paragraph defining "trade name" and
"commercial name" to read as follows:
"The terms 'trade name' and 'commercial name' mean any name used by a
person to identify his or her business or vocation.";
(3) by amending the paragraph defining "trademark" to read as
follows:
4"The term 'trademark' includes any word, name, symbol, or device, or
any combination thereof --
"(1) used by a person, or
"(2) which a person has a bona fide intention to use in
commerce and applies to register on the principal register
established by this Act,
to identify and distinguish his or her goods, including a unique
product, from those manufactured or sold by others and to indicate the
source of the goods, even if that source is unknown.";
(4) by amending the paragraph defining "service mark" to read
as follows:
"The term 'service mark' means any word, name, symbol, or device, or
any combination thereof --
"(1) used by a person, or
"(2) which a person has a bona fide intention to use in
commerce and applies to register on the principal register
established by this Act,
to identify and distinguish the services of one person, including a
unique service, from the services of others and to indicate the source
of the services, even if that source is unknown. Titles, character
names, and other distinctive features of radio or television programs
may be registered as service marks notwithstanding that they, or the
programs, may advertise the goods of the sponsor.";
(5) by amending the paragraph defining "certification mark" to
read as follows:
"The term 'certification mark' means any word, name, symbol, or
device, or any combination thereof --
"(1) used by a person other than its owner, or
"(2) which its owner has a bona fide intention to permit a
person other than the owner to use in commerce and files an
application to register on the principal register established by
this Act,
to certify regional or other origin, material, mode of manufacture,
quality, accuracy, or other characteristics of such person's goods or
services or that the work or labor on the goods or services was
performed by members of a union or other organization.";
(6) by amending the paragraph defining "collective mark" to
read as follows:
"The term 'collective mark' means a trademark or service mark --
"(1) used by the members of a cooperative, an association, or
other collective group or organization, or
"(2) which such cooperative, association, or other collective
group or organization has a bona fide intention to use in commerce
and applies to register on the principal register established by
this Act,
and includes marks indicating membership in a union, an association,
or other organization.";
(7) by amending the paragraph defining "mark" to read as
follows:
"The term 'mark' includes any trademark, service mark,
collective mark, or certification mark.";
(8) by amending the matter which appears between the paragraph
defining "mark", and the paragraph defining "colorable imitation"
to read as follows:
"The term 'use in commerce' means the bona fide use of a mark in the
ordinary course of trade, and not made merely to reserve a right in a
mark. For purposes of this Act, a mark shall be deemed to be in use in
commerce --
"(1) on goods when --
"(A) it is placed in any manner on the goods or their
containers or the displays associated therewith or on the tags or
labels affixed thereto, or if the nature of the goods makes such
placement impracticable, then on documents associated with the
goods or their sale, and
"(B) the goods are sold or transported in commerce, and
"(2) on services when it is used or displayed in the sale or
advertising of services and the services are rendered in commerce,
or the services are rendered in more than one State or in the
United States and a foreign country and the person rendering the
services is engaged in commerce in connection with the services.
"A mark shall be deemed to be 'abandoned' when either of the
following occurs:
"(1) When its use has been discontinued with intent not to
resume such use. Intent not to resume may be inferred from
circumstances. Nonuse for two consecutive years shall be prima
facie evidence of abandonment. 'Use' of a mark means the bona
fide use of that mark made in the ordinary course of trade, and
not made merely to reserve a right in a mark.
"(2) When any course of conduct of the owner, including acts of
omission as well as commission, causes the mark to become the
generic name for the goods or services on or in connection with
which it is used or otherwise to lose its significance as a mark.
Purchaser motivation shall not be a test for determining
abandonment under this paragraph.".
SEC. 135. PENDING APPLICATIONS.
The Trademark Act of 1946 is amended by adding at the end thereof the
following:
"SEC. 51. "15 USC 1058 note" All certificates of registration based
upon applications for registration pending in the Patent and Trademark
Office on the effective date of the Trademark Law Revision Act of 1988
shall remain in force for a period of 10 years.".
SEC. 136. "15 USC 1051 note" EFFECTIVE DATE.
This title and the amendments made by this title shall become
effective on the date which is one year after the date of enactment of
this Act.
SEC. 201. SHORT TITLE.
This title may be cited as the "Satellite Home Viewer Act of 1988"
"17 USC 101 note".
SEC. 202. AMENDMENTS TO TITLE 17, UNITED STATES CODE
Title 17, United States Code, is amended as follows:
(1) Section 111 of title 17, United States Code, is amended --
(A) in subsection (a) --
(i) in paragraph (3) by striking "or" at the end;
(ii) by redesignating paragraph (4) as paragraph (5); and
(iii) by inserting the following after paragraph (3):
"(4) the secondary transmission is made by a satellite carrier
for private home viewing pursuant to a statutory license under
section 119; or"; and
"(B) in subsection (d)(1)(A) by inserting before "Such
statement" the following:
"In determining the total number of subscribers and the gross
amounts paid to the cable system for the basic service of
providing secondary transmissions of primary broadcast
transmitters, the system shall not include subscribers and amounts
collected from subscribers receiving secondary transmissions for
private home viewing pursuant to section 119.".
(2) Chapter 1 of title 17, United States Code, is amended by
adding at the end the following new section:
"Section 119. Limitations on exclusive rights: Secondary
transmissions of superstations and network stations for private home
viewing
"(a) SECONDARY TRANSMISSIONS BY SATELLITE CARRIERS. --
"(1) SUPERSTATIONS. -- Subject to the provisions of paragraphs
(3), (4), and (6) of this subsection, secondary transmissions of a
primary transmission made by a superstation and embodying a
performance or display of a work shall be subject to statutory
licensing under this section if the secondary transmission is made
by a satellite carrier to the public for private home viewing, and
the carrier makes a direct or indirect charge for each
retransmission service to each household receiving the secondary
transmission or to a distributor that has contracted with the
carrier for direct or indirect delivery of the secondary
transmission to the public for private home viewing.
"(2) NETWORK STATIONS. --
"(A) IN GENERAL. -- Subject to the provisions of subparagraphs
(B) and (C) of this paragraph and paragraphs (3), (4), (5), and
(6) of this subsection, secondary transmissions of programming
contained in a primary transmission made by a network station and
embodying a performance or display of a work shall be subject to
statutory licensing under this section if the secondary
transmission is made by a satellite carrier to the public for
private home viewing, and the carrier makes a direct or indirect
charge for such retransmission service to each subscriber
receiving the secondary transmission.
"(B) SECONDARY TRANSMISSIONS TO UNSERVED HOUSEHOLDS. -- The
statutory license provided for in subparagraph (A) shall be
limited to secondary transmissions to persons who reside in
unserved households.
"(C) SUBMISSION OF SUBSCRIBER LISTS TO NETWORKS. -- A
satellite carrier that makes secondary transmissions of a primary
transmission made by a network station pursuant to subparagraph
(A) shall, 90 days after the effective date of the Satellite Home
Viewer Act of 1988, or 90 days after commencing such secondary
transmissions, whichever is later, submit to the network that owns
or is affiliated with the network station a list identifying (by
street address, including county and zip code) all subscribers to
which the satellite carrier currently makes secondary
transmissions of that primary transmission. Thereafter, on the
15th of each month, the satellite carrier shall submit to the
network a list identifying (by street address, including county
and zip code) any persons who have been added or dropped as such
subscribers since the last submission under this subparagraph.
Such subscriber information submitted by a satellite carrier may
be used only for purposes of monitoring compliance by the
satellite carrier with this subsection. The submission
requirements of this subparagraph shall apply to a satellite
carrier only if the network to whom the submissions are to be made
places on file with the Register of Copyrights, on or after the
effective date of the Satellite Home Viewer Act of 1988, a
document identifying the name and address of the person to whom
such submissions are to be made. The Register shall maintain for
public inspection a file of all such documents.
"(3) NONCOMPLIANCE WITH REPORTING AND PAYMENT REQUIREMENTS. --
Notwithstanding the provisions of paragraphs (1) and (2), the
willful or repeated secondary transmission to the public by a
satellite carrier of a primary transmission made by a superstation
or a network station and embodying a performance or display of a
work is actionable as an act of infringement under section 501,
and is fully subject to the remedies provided by sections 502
through 506 and 509, where the satellite carrier has not deposited
the statement of account and royalty fee required by subsection
(b), or has failed to make the submissions to networks required by
paragraph (2)(C).
"(4) WILLFUL ALTERATIONS. -- Notwithstanding the provisions of
paragraphs (1) and (2), the secondary transmission to the public
by a satellite carrier of a primary transmission made by a
superstation or a network station and embodying a performance or
display of a work is actionable as an act of infringement under
section 501, and is fully subject to the remedies provided by
sections 502 through 506 and sections 509 and 510, if the content
of the particular program in which the performance or display is
embodied, or any commercial advertising or station announcement
transmitted by the primary transmitter during, or immediately
before or after, the transmission of such program, is in any way
willfully altered by the satellite carrier through changes,
deletions, or additions, or is combined with programming from any
other broadcast signal.
"(5) VIOLATION OF TERRITORIAL RESTRICTIONS ON STATUTORY LICENSE
FOR NETWORK STATIONS. --
"(A) INDIVIDUAL VIOLATIONS. -- The willful or repeated
secondary transmission by a satellite carrier of a primary
transmission made by a network station and embodying a performance
or display of a work to a subscriber who does not reside in an
unserved household is actionable as an act of infringement under
section 501 and is fully subject to the remedies provided by
sections 502 through 506 and 509, except that --
"(i) no damages shall be awarded for such act of infringement
if the satellite carrier took corrective action by promptly
withdrawing service from the ineligible subscriber, and
"(ii) any statutory damages shall not exceed $5 for such
subscriber for each month during which the violation occurred.
"(B) PATTERN OF VIOLATIONS. -- If a satellite carrier engages
in a willful or repeated pattern or practice of delivering a
primary transmission made by a network station and embodying a
performance or display of a work to subscribers who do not reside
in unserved households, then in addition to the remedies set forth
in subparagraph (A) --
"(i) if the pattern or practice has been carried out on a
substantially nationwide basis, the court shall order a permanent
injunction barring the secondary transmission by the satellite
carrier, for private home viewing, of the primary transmissions of
any primary network station affiliated with the same network, and
the court may order statutory damages of not to exceed $250,000
for each 6-month period during which the pattern or practice was
carried out; and
"(ii) if the pattern or practice has been carried out on a
local or regional basis, the court shall order a permanent
injunction barring the secondary transmission, for private home
viewing in that locality or region, by the satellite carrier of
the primary transmissions of any primary network station
affiliated with the same network, and the court may order
statutory damages of not to exceed $250,000 for each 6-month
period during which the pattern or practice was carried out.
"(C) PREVIOUS SUBSCRIBERS EXCLUDED. -- Subparagraphs (A) and
(B) do not apply to secondary transmissions by a satellite carrier
to persons who subscribed to receive such secondary transmissions
from the satellite carrier or a distributor before the date of the
enactment of the Satellite Home Viewer Act of 1988.
"(6) DISCRIMINATION BY A SATELLITE CARRIER. Notwithstanding
the provisions of paragraph (1), the willful or repeated secondary
transmission to the public by a satellite carrier of a primary
transmission made by a superstation or a network station and
embodying a performance or display of a work is actionable as an
act of infringement under section 501, and is fully subject to the
remedies provided by sections 502 through 506 and 509, if the
satellite carrier unlawfully discriminates against a distributor.
"(7) GEOGRAPHIC LIMITATION ON SECONDARY TRANSMISSIONS. -- The
statutory license created by this section shall apply only to
secondary transmissions to households located in the United
States.
"(b) STATUTORY LICENSE FOR SECONDARY TRANSMISSIONS FOR PRIVATE HOME
VIEWING. --
"(1) DEPOSITS WITH THE REGISTER OF COPYRIGHTS. -- A satellite
carrier whose secondary transmissions are subject to statutory
licensing under subsection (a) shall, on a semiannual basis,
deposit with the Register of Copyrights, in accordance with
requirements that the Register shall, after consultation with the
Copyright Royalty Tribunal, prescribe by regulation --
"(A) a statement of account, covering the preceding 6-month
period, specifying the names and locations of all superstations
and network stations whose signals were transmitted, at any time
during that period, to subscribers for private home viewing as
described in subsections (a)(1) and (a)(2), the total number of
subscribers that received such transmissions, and such other data
as the Register of Copyrights may, after consultation with the
Copyright Royalty Tribunal, from time to time prescribe by
regulation; and
"(B) a royalty fee for that 6-month period, computed by --
"(i) multiplying the total number of subscribers receiving each
secondary transmission of a superstation during each calendar
month by 12 cents;
"(ii) multiplying the number of subscribers receiving each
secondary transmission of a network station during each calendar
month by 3 cents; and
"(iii) adding together the totals computed under clauses (i)
and (ii).
"(2) INVESTMENT OF FEES. -- The Register of Copyrights shall
receive all fees deposited under this section and, after deducting
the reasonable costs incurred by the Copyright Office under this
section (other than the costs deducted under paragraph (4)), shall
deposit the balance in the Treasury of the United States, in such
manner as the Secretary of the Treasury directs. All funds held
by the Secretary of the Treasury shall be invested in
interest-bearing securities of the United States for later
distribution with interest by the Copyright Royalty Tribunal as
provided by this title.
"(3) PERSONS TO WHOM FEES ARE DISTRIBUTED. -- The royalty fees
deposited under paragraph (2) shall, in accordance with the
procedures provided by paragraph (4), be distributed to those
copyright owners whose works were included in a secondary
transmission for private home viewing made by a satellite carrier
during the applicable 6-month accounting period and who file a
claim with the Copyright Royalty Tribunal under paragraph (4).
"(4) PROCEDURES FOR DISTRIBUTION. -- The royalty fees
deposited under paragraph (2) shall be distributed in accordance
with the following procedures:
"(A) FILING OF CLAIMS FOR FEES. -- During the month of July in
each year, each person claiming to be entitled to statutory
license fees for secondary transmissions for private home viewing
shall file a claim with the Copyright Royalty Tribunal, in
accordance with requirements that the Tribunal shall prescribe by
regulation. For purposes of this paragraph, any claimants may
agree among themselves as to the proportionate division of
statutory license fees among them, may lump their claims together
and file them jointly or as a single claim, or may designate a
common agent to receive payment on their behalf.
"(B) DETERMINATION OF CONTROVERSY; DISTRIBUTIONS. -- After
the first day of August of each year, the Copyright Royalty
Tribunal shall determine whether there exists a controversy
concerning the distribution of royalty fees. If the Tribunal
determines that no such controversy exists, the Tribunal shall,
after deducting reasonable administrative costs under this
paragraph, distribute such fees to the copyright owners entitled
to receive them, or to their designated agents. If the Tribunal
finds the existence of a controversy, the Tribunal shall, pursuant
to chapter 8 of this title, conduct a proceeding to determine the
distribution of royalty fees.
"(C) WITHHOLDING OF FEES DURING CONTROVERSY. -- During the
pendency of any proceeding under this subsection, the Copyright
Royalty Tribunal shall withhold from distribution an amount
sufficient to satisfy all claims with respect to which a
controversy exists, but shall have discretion to proceed to
distribute any amounts that are not in controversy.
"(c) DETERMINATION OF ROYALTY FEES. --
"(1) APPLICABILITY AND DETERMINATION OF ROYALTY FEES. -- The
rate of the royalty fee payable under subsection (b)(1)(B) shall
be effective until December 31, 1992, unless a royalty fee is
established under paragraph (2), (3), or (4) of this subsection.
After that date, the fee shall be determined either in accordance
with the voluntary negotation procedure specified in paragraph (2)
or in accordance with the compulsory arbitration procedure
specified in paragraphs (3) and (4).
"(2) FEE SET BY VOLUNTARY NEGOTIATION. --
"(A) NOTICE OF INITIATION OF PROCEEDINGS. -- On or before July
1, 1991, the Copyright Royalty Tribunal shall cause notice to be
published in the Federal Register of the initiation of voluntary
negotiationi proceedings for the purpose of determining the
royalty fee to be paid by satellite carriers under subsection
(b)(1)(B).
"(B) NEGOTIATIONS. -- Satellite carriers, distributors, and
copyright owners entitled to royalty fees under this section shall
negotiate in good faith in an effort to reach a voluntary
agreement or voluntary agreements for the payment of royalty fees.
Any such satellite carriers, distributors, and copyright owners
may at any time negotiate and agree to the royalty fee, and may
designate common agents to negotiate, agree to, or pay such fees.
If the parties fail to identify common agents, the Copyright
Royalty Tribunal shall do so, after requesting recommendations
from the parties to the negotiation proceeding. The parties to
each negotiation proceeding shall bear the entire cost thereof.
"(C) AGREEMENTS BINDING ON PARTIES; FILING OF AGREEMENTS. --
Voluntary agreements negotiated at any time in accordance with
this paragraph shall be binding upon all satellite carriers,
distributors, and copyright owners that are parties thereto.
Copies of such agreements shall be filed with the Copyright Office
within 30 days after execution in accordance with regulations that
the Register of Copyrights shall prescribe.
"(D) PERIOD AGREEMENT IS IN EFFECT. -- The obligation to pay
the royalty fees established under a voluntary agreement which has
been filed with the Copyright Office in accordance with this
paragraph shall become effective on the date specified in the
agreement, and shall remain in effect until December 31, 1994.
"(3) FEE SET BY COMPULSORY ARBITRATION. --
"(A) NOTICE OF INITIATION OF PROCEEDINGS. -- On or before
December 31, 1991, the Copyright Royalty Tribunal shall cause
notice to be published in the Federal Register of the initiation
of arbitration proceedings for the purpose of determining a
reasonable royalty fee to be paid under subsection (b)(1)(B) by
satellite carriers who are not parties to a voluntary agreement
filed with the Copyright Office in accordance with paragraph (2).
Such notice shall include the names and qualifications of
potential arbitrators chosen by the Tribunal from a list of
available arbitrators obtained from the American Arbitration
Association or such similar organization as the Tribunal shall
select.
"(B) SELECTION OF ARBITRATION PANEL. -- Not later than 10 days
after publication of the notice initiating an arbitration
proceeding, and in accordance with procedures to be specified by
the Copyright Royalty Tribunal, one arbitrator shall be selected
from the published list by copyright owners who claim to be
entitled to royalty fees under subsection (b)(4) and who are not
party to a voluntary agreement filed with the Copyright Office in
accordance with paragraph (2), and one arbitrator shall be
selected from the published list by satellite carriers and
distributors who are not parties to such a voluntary agreement.
The two arbitrators so selected shall, within 10 days after their
selection, choose a third arbitrator from the same list, who shall
serve as chairperson of the arbitrators. If either group fail to
agree upon the selection of an arbitrator, or if the arbitrators
selected by such groups fail to agree upon the selection of a
chairperson, the Copyright Royalty Tribunal shall promptly select
the arbitrator or chairperson, respectively. The arbitrators
selected under this subparagraph shall constitute an Arbitration
Panel.
"(C) ARBITRATION PROCEEDING. -- The Arbitration Panel shall
conduct an arbitration proceeding in accordance with such
procedures as it may adopt. The Panel shall act on the basis of a
fully documented written record. Any copyright owner who claims
to be entitled to royalty fees under subsection (b)(4), any
satellite carrier, and any distributor, who is not party to a
voluntary agreement filed with the Copyright Office in accordance
with paragraph (2), may submit relevant information and proposals
to the Panel. The parties to the proceeding shall bear the entire
cost thereof in such manner and proportion as the Panel shall
direct.
"(D) FACTORS FOR DETERMINING ROYALTY FEES. -- In determining
royalty fees under this paragraph, the Arbitration Panel shall
consider the approximate average cost to a cable system for the
right to secondarily transmit to the public a primary transmission
made by a broadcast station, the fee established under any
voluntary agreement filed with the Copyright Office in accordance
with paragraph (2), and the last fee proposed by the parties,
before proceedings under this paragraph, for the secondary
transmission of superstations or network stations for private home
viewing. The fee shall also be calculated to achieve the
following objectives:
"(i) To maximize the availability of creative works to the
public.
"(ii) To afford the copyright owner a fair return for his or
her creative work and the copyright user a fair income under
existing economic conditions.
"(iii) To reflect the relative roles of the copyright owner and
the copyright user in the product made available to the public
with respect to relative creative contribution, technological
contribution, capital investment, cost, risk, and contribution to
the opening of new markets for creative expression and media for
their communication.
"(iv) To minimize any disruptive impact on the structure of the
industries involved and on generally prevailing industry
practices.
"(E) REPORT TO COPYRIGHT ROYALTY TRIBUNAL. -- Not later than
60 days after publication of the notice initiating an arbitration
proceeding, the Arbitration Panel shall report to the Copyright
Royalty Tribunal its determination concerning the royalty fee.
Such report shall be accompanied by the written record, and shall
set forth the facts that the Panel found relevant to its
determination and the reasons why its determination is consistent
with the criteria set forth in subparagraph (D).
"(F) ACTION BY COPYRIGHT ROYALTY TRIBUNAL. -- Within 60 days
after receiving the report of the Arbitration Panel under
subparagraph (E), the Copyright Royalty Tribunal shall adopt or
reject the determination of the Panel. The Tribunal shall adopt
the determination of the Panel unless the Tribunal finds that the
determination is clearly inconsistent with the criteria set forth
in subparagraph (D). If the Tribunal rejects the determination of
the Panel, the Tribunal shall, before the end of that 60-day
period, and after full examination of the record created in the
arbitration proceeding, issue an order, consistent with the
criteria set forth in subparagraph (D), setting the royalty fee
under this paragraph. The Tribunal shall cause to be published in
the Federal Register the determination of the Panel, and the
decision of the Tribunal with respect to the determination
(including any order issued under the preceding sentence). The
Tribunal shall also publicize such determination and decision in
such other manner as the Tribunal considers appropriate. The
Tribunal shall also make the report of the Arbitration Panel and
the accompanying record available for public inspection and
copying.
"(G) PERIOD DURING WHICH DECISION OF PANEL OR ORDER OF TRIBUNAL
EFFECTIVE. -- The obligation to pay the royalty fee established
under a determination of the Arbitration Panel which is confirmed
by the Copyright Royalty Tribunal in accordance with this
paragraph, or established by any order issued under subparagraph
(F), shall become effective on the date when the decision of the
Tribunal is published in the Federal Register under subparagraph
(F), and shall remain in effect until modified in accordance with
paragraph (4), or until December 31, 1994.
"(H) PERSONS SUBJECT TO ROYALTY FEE. -- The royalty fee
adopted or ordered under subparagraph (F) shall be binding on all
satellite carriers, distributors, and copyright owners, who are
not party to a voluntary agreement filed with the Copyright Office
under paragraph (2).
"(4) JUDICIAL REVIEW. -- Any decision of the Copyright Royalty
Tribunal under paragraph (3) with respect to a determination of
the Arbitration Panel may be appealed, by any aggrieved party who
would be bound by the determination, to the United States Court of
Appeals for the District of Columbia Circuit, within 30 days after
the publication of the decision in the Federal Register. The
pendency of an appeal under this paragraph shall not relieve
satellite carriers of the obligation under subsection (b)(1) to
deposit the statement of account and royalty fees specified in
that subsection. The court shall have jurisdiction to modify or
vacate a decision of the Tribunal only if it finds, on the basis
of the record before the Tribunal and the statutory criteria set
forth in paragraph (3)(D), that the Arbitration Panel or the
Tribunal acted in an arbitrary manner. If the court modifies the
decision of the Tribunal, the court shall have jurisdiction to
enter its own determination with respect to royalty fees, to order
the repayment of any excess fees deposited under subsection
(b)(1)(B), and to order the payment of any underpaid fees, and the
interest pertaining respectively thereto, in accordance with its
final judgment. The court may further vacate the decision of the
Tribunal and remand the case for arbitration proceedings in
accordance with paragraph (3).
"(d) DEFINITIONS. -- As used in this section --
"(1) DISTRIBUTOR. -- The term 'distributor' means an entity
which contracts to distribute secondary transmissions from a
satellite carrier and, either as a single channel or in a package
with other programming, provides the secondary transmission either
directly to individual subscribers for private home viewing or
indirectly through other program distribution entities.
"(2) NETWORK STATION. -- The term 'network station' has the
meaning given that term in section 111(f) of this title, and
includes any translator station or terrestrial satellite station
that rebroadcasts all or substantially all of the programming
broadcast by a network station.
"(3) PRIMARY NETWORK STATION. -- The term 'primary network
station' means a network station that broadcasts or rebroadcasts
the basic programming service of a particular national network.
"(4) PRIMARY TRANSMISSION. -- The term 'primary transmission'
has the meaning given that term in section 111(f) of this title.
"(5) PRIVATE HOME VIEWING. -- The term 'private home viewing'
means the viewing, for private use in a household by means of
satellite reception equipment which is operated by an individual
in that household and which serves only such household, of a
secondary transmission delivered by a satellite carrier of a
primary transmission of a television station licensed by the
Federal Communications Commission.
"(6) SATELLITE CARRIER. -- The term 'satellite carrier' means
an entity that uses the facilities of a satellite or satellite
service licensed by the Federal Communications Commission, to
establish and operate channel of communications for
point-to-multipoint distribution of television station signals,
and that owns or leases a capacity or service on a satellite in
order to provide such point-to-multipoint distribution, except to
the extent that such entity provides such distribution pursuant to
tariff under the Communications Act of 1934, other than for
private home viewing.
"(7) SECONDARY TRANSMISSION. -- The term 'secondary
transmission' has the meaning given that term in section 111(f) of
this title.
"(8) SUBSCRIBER. -- The term 'subscriber' means an individual
who receives a secondary transmission service for private home
viewing by means of a secondary transmission from a satellite
carrier and pays a fee for the service, directly or indirectly, to
the satellite carrier or to a distributor.
"(9) SUPERSTATION. -- The term 'superstation' means a
television broadcast station, other than a network station,
licensed by the Federal Communications Commission that is
secondarily transmitted by a satellite carrier.
"(10) UNSERVED HOUSEHOLD. -- The term 'unserved household',
with respect to a particular television network, means a household
that --
"(A) cannot receive, through the use of a conventional outdoor
rooftop receiving antenna, an over-the-air signal of grade B
intensity (as defined by the Federal Communications Commission) of
a primary network station affiliated with that network, and
"(B) has not, within 90 days before the date on which that
household subscribes, either initially or on renewal, to receive
secondary transmissions by a satellite carrier of a network
station affiliated with that network, subscribed to a cable system
that provides the signal of a primary network station affiliated
with that network.
"(e) EXCLUSIVITY OF THIS SECTION WITH RESPECT TO SECONDARY
TRANSMISSIONS OF BROADCAST STATIONS BY SATELLITE TO MEMBERS OF THE
PUBLIC. -- No provision of section 111 of this title or any other law
(other than this section) shall be construed to contain any
authorization, exemption, or license through which secondary
transmissions by satellite carrier for private home viewing of
programming contained in a primary transmission made by a superstation
or a network station may be made without obtaining the consent of the
copyright owner.".
(3) Section 501 of title 17, United States Code, is amended by
adding at the end the following:
"(e) With respect to any secondary transmission that is made by a
satellite carrier of a primary transmission embodying the performance or
display of a work and is actionable as an act of infringement under
section 119(a)(5), a network station holding a copyright or other
license to transmit or perform the same version of that work shall, for
purposes of subsection (b) of this section, be treated as a legal or
beneficial owner if such secondary transmission occurs within the local
service area of that station.".
(4) Section 801(b)(3) of title 17, United States Code, is
amended by striking "and 116" and inserting ", 116, and 119(b)".
(5) Section 804(d) of title 17, United States Code, is amended
by striking "sections 111 or 116" and inserting "section 111, 116,
or 119".
(6) The table of sections at the beginning of chapter 1 of
title 17, United States Code, is amended by adding at the end the
following new item:
"119. Limitations on exclusive rights: Secondary transmissions of
superstations and network stations for private home viewing.".
SEC. 203. SYNDICATED EXCLUSIVITY; REPORT ON DISCRIMINATION.
Title VII of The Communications Act of 1934 (47 U.S.C. 601 et seq.)
is amended by adding at the end the following:
"SEC. 712. (a) "47 USC 612" The Federal Communications Commission
shall, within 120 days after the effective date of the Satellite Home
Viewer Act of 1988, initiate a combined inquiry and rulemaking
proceeding for the purpose of --
"(1) determining the feasibility of imposing syndicated
exclusivity rules with respect to the delivery of syndicated
programming (as defined by the Commission) for private home
viewing of secondary transmissions by satellite of broadcast
station signals similar to the rules issued by the Commission with
respect to syndicated exclusivity and cable television; and
"(2) adopting such rules if the Commission considers the
imposition of such rules to be feasible.
"(b) In the event that the Commission adopts such rules, any willful
and repeated secondary transmission made by a satellite carrier to the
public of a primary transmission embodying the performance or display of
a work which violates such Commission rules shall be subject to the
remedies, sanctions, and penalties provided by title V and section 705
of this Act.
"SEC. 713. "47 USC 613" The Federal Communications Commission shall,
within 1 year after the effective date of the Satellite Home Viewer Act
of 1988, prepare and submit to the Committee on Commerce, Science, and
Transportation of the Senate and the Committee on Energy and Commerce of
the House of Representatives a report on whether, and the extent to
which, there exists discrimination described in section 119(a)(6) of
title 17, United States Code.".
SEC. 204. INQUIRY ON ENCRYPTION STANDARD.
Section 705 of the Communication Act of 1934 (47 U.S.C. 605) is
amended by adding at the end thereof the following:
"(f) Within 6 months after the date of enactment of the Satellite
Home Viewer Act of 1988, the Federal Communications Commission shall
initiate an inquiry concerning the need for a universal encryption
standard that permits decryption of satellite cable programming intended
for private viewing. In conducting such inquiry, the Commission shall
take into account --
"(1) consumer costs and benefits of any such standard,
including consumer investment in equipment in operation;
"(2) incorporation of technological enhancements, including
advanced television formats;
"(3) whether any such standard would effectively prevent
present and future unauthorized decryption of satellite cable
programming;
"(4) the costs and benefits of any such standard on other
authorized users of encrypted satellite cable programming,
including cable systems and satellite master antenna television
systems;
"(5) the effect of any such standard on competition in the
manufacture of decryption equipment; and
"(6) the impact of the time delay associated with the
Commission procedures necessary for establishment of such
standards.
"(g) If the Commission finds, based on the information gathered from
the inquiry required by subsection (f), that a universal encryption
standard is necessary and in the public interest, the Commission shall
initiate a rulemaking to establish such a standard.".
SEC. 205. PIRACY OF SATELLITE CABLE PROGRAMMING.
Section 705 of the Communications Act of 1934 (47 U.S.C. 605) is
amended --
(1) in subsection (c) --
(A) by striking "and" at the end of paragraph (4);
(B) by striking the period at the end of paragraph (5) and
inserting "; and"; and
(C) by adding at the end the following:
"(6) the term 'any person aggrieved' shall include any person
with proprietary rights in the intercepted communication by wire
or radio, including wholesale or retail distributors of satellite
cable programming, and, in the case of a violation of paragraph
(4) of subsection (d), shall also include any person engaged in
the lawful manufacture, distribution, or sale of equipment
necessary to authorize or receive satellite cable programming.";
(2) in subsection (d)(1), by striking "$1,000" and inserting
"$2,000";
(3) in paragraph (2) of subsection (d), by striking "$25,000"
and all that follows through the end of that paragraph and
inserting "$50,000 or imprisoned for not more than 2 years, or
both, for the first such conviction and shall be fined not more
than $100,000 or imprisoned for not more than 5 years, or both,
for any subsequent conviction.";
(4) in subsection (d)(3)(A), by inserting "or paragraph (4) of
subsection (d)" immediately after "subsection (a)";
(5) in subsection (d)(3)(B) by striking "may" the first time it
appears;
(6) in subsection (d)(3)(B)(i), by inserting "may" immediately
before "grant";
(7) in subsection (d)(3)(B)(ii), by inserting "may" immediately
before "award";
(8) in subsection (d)(3)(B)(iii), by inserting "shall"
immediately before "direct";
(9) in subsection (d)(3)(C)(i)(II) --
(A) by inserting "of subsection (a)" immediately after
"violation";
(B) by striking "$250" and inserting "$1,000"; and
(C) by inserting immediately before the period the following:
", and for each violation of paragraph (4) of this subsection
involved in the action an aggrieved party may recover statutory
damages in a sum not less than $10,000, or more than $100,000, as
the court considers just";
(10) in subsection (d)(3)(C)(ii), by striking "$50,000" and
inserting "$100,000 for each violation of subsection (a)";
(11) in subsection (d)(3)(C)(iii), by striking "$100" and
inserting "$250"; and
(12) by striking paragraph (4) of subsection (d) and inserting
the following:
"(4) Any person who manufactures, assembles, modified, imports,
exports, sells, or distributes any electronic, mechanical, or other
device or equipment, knowing or having reason to know that the device or
equipment is primarily of assistance in the unauthorized decryption of
satellite cable programming, or is intended for any other activity
prohibited by subsection (a), shall be fined not more than $500,000 for
each violation, or imprisoned for not more than 5 years for each
violation, or both. For purposes of all penalties and remedies
established for violations of this paragraph, the prohibited activity
established herein as it applies to each such device shall be deemed a
separate violation.".
SEC. 206. "17 USC 119 note" EFFECTIVE DATE.
This title and the amendments made by this title take effect on
January 1, 1989, except that the authority of the Register of Copyrights
to issue regulations pursuant to section 119(b)(1) of title 17, United
States Code, as added by section 202 of this Act, takes effect on the
date of the enactment of this Act.
SEC. 207. "17 USC 119 note" TERMINATION.
This title and the amendments made by this title (other than the
amendments made by section 205) cease to be effective on December 31,
1994.
Approved November 16, 1988.
LEGISLATIVE HISTORY -- S. 1883 (H.R. 5372):
HOUSE REPORTS: No. 100-1028 accompanying H.R. 5372 (Comm. on the
Judiciary).
SENATE REPORTS: No. 100-515 (Comm. on the Judiciary).
CONGRESSIONAL RECORD, Vol. 134 (1988): May 13, considered and passed
Senate. Oct. 19, considered and passed House, amended. Oct. 20, Senate
concurred in House amendment.
Public Law 100-666, 102 Stat. 3929
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. This Act "25 USC 640d note" may be cited as the "Navajo
and Hopi Indian Relocation Amendments of 1988".
SEC. 2. Subsection (a) of section 25 of Public Law 93-531 (25 U.S.
C. 640d-24(a)) is amended --
(1) by striking out "$7,700,000" in paragraph (4) and inserting
in lieu thereof "$13,000,000", and
(2) by striking out "$15,000,000 annually for fiscal years 1983
through 1987" in paragraph (8) and inserting in lieu thereof
"$30,000,000 annually for fiscal years 1989, 1990, and 1991".
SEC. 3. Subsection (b) of section 27 of Public Law 93-531 (25 U.S.
C. 640d-25) is amended to read as follows:
"(b) Funds appropriated under the authority of subsection (a) may be
used by the Commissioner for grants, contracts, or expenditures which
significantly assist the Commissioner or assist the Navajo Tribe or Hopi
Tribe in meeting the burdens imposed by this Act.".
SEC. 4. (a) Section 12 of Public Law 93-531 (25 U.S.C. 640d-11) is
amended to read as follows:
"(a) There is hereby established as an independent entity in the
executive branch the Office of Navajo and Hopi Indian Relocation which
shall be under the direction of the Commissioner on Navajo and Hopi
Relocation (hereinafter in this Act referred to as the 'Commissioner').
"(b)(1) The Commissioner shall be appointed by the President by and
with the advice and consent of the Senate.
"(2) The term of office of the Commissioner shall be 2 years. An
individual may be appointed Commissioner for more than one term.
"(3) The Commissioner shall be a full time employee of the United
States and shall be paid at the rate of GS-18 of the General Schedule
under section 5332 of title 5, United States Code.
"(c)(1)(A) Except as otherwise provided by the Navajo and Hopi Indian
Relocation Amendments of 1988, the Commissioner shall have all the
powers and be responsible for all the duties that the Navajo and Hopi
Indian Relocation Commission had before the enactment of such
amendments.
"(B) All funds appropriated to the Navajo and Hopi Indian Relocation
Commission before the date on which the first Commissioner on Navajo and
Hopi Indian Relocation is confirmed by the Senate that have not been
expended on such date shall become available to the Office of Navajo and
Hopi Indian Relocation on such date and shall remain available without
fiscal year limitation.
"(2) There are hereby transferred to the Commissioner, on January 31,
1989 --
"(A) all powers and duties of the Bureau of Indian Affairs
derived from Public Law 99-190 (99 Stat. at 1236) that relate to
the relocation of members of the Navajo Tribe from lands
partitioned to the Hopi Tribe, and
"(B) all funds appropriated for activities relating to such
relocation pursuant to Public Law 99-190 (99 Stat. at
1236): Provided, That such funds shall be used by the
Commissioner for the purpose for which such funds were
appropriated to the Bureau of Indian Affairs.
"(d)(1) The Commissioner shall have the power to --
"(A) appoint and fix the compensation of such staff and
personnel as he deems necessary, without regard to the provisions
of title 5, United States Code, governing appointments on the
competitive service, and without regard to chapter 51 and
subchapter III of chapter 53 of such title relating to
classification and General Schedule pay rates, but at rates not in
excess of the maximum rate for GS-18 of the General Schedule under
section 5332 of such title; and
"(B) procure temporary and intermittent services to the same
extent as is authorized by section 3109 of title 5, United States
Code, but at rates not to exceed $200 a day for individuals.
"(2) The authority of the Commissioner to enter into contracts for
the provision of legal services for the Commissioner or for the Office
of Navajo and Hopi Indian Relocation shall be subject to the
availability of funds provided for such purpose by appropriations Acts.
"(3) There are authorized to be appropriated for each fiscal year
$100,000 to fund contracts described in paragraph (2).
"(e)(1) The Commissioner is authorized to provide for the
administrative, fiscal, and housekeeping services of the Office of
Navajo and Hopi Indian Relocation and is authorized to call upon any
department or agency of the United States to assist him in implementing
the relocation plan, except that the control over and responsibility for
completing relocation shall remain in the Commissioner. In any case in
which the Office calls upon any such department or agency for assistance
under this section, such department or agency shall provide reasonable
assistance so requested.
"(2) On failure of any agency to provide reasonable assistance as
required under paragraph (1) of this subsection, the Commissioner shall
report such failure to the Congress.
"(f) The Office of Navajo and Hopi Indian Relocation shall cease to
exist when the President determines that its functions have been fully
discharged.".
(b) Public Law 93-531 "25 USC 640d et seq." is amended by striking
out "the Commission" each place it appears and inserting in lieu thereof
"the Commissioner".
(c)(1) Notwithstanding any other provisions of law or any amendment
made by this Act -- "25 USC 640d-11 note"
(A) the Navajo and Hopi Indian Relocation Commission shall --
(i) continue to exist until the date on which the first
Commissioner is confirmed by the Senate,
(ii) have the same structure, powers and responsibilities such
Commission had before the enactment of this Act, and
(iii) assume responsibility for the powers and duties
transferred to such Commissioner under section 12(c)(2) of Public
Law 93-531, as amended by this Act, until the Commissioner is
confirmed,
(B) the existing Commissioners shall serve until the new
Commissioner is confirmed by the Senate, and
(C) the existing personnel of the Commission shall be
transferred to the new Office of Navajo and Hopi Indian
Relocation.
(2) The Navajo and Hopi Relocation Commission shall become known as
the Office of Navajo and Hopi Indian Relocation on the date on which the
first Commissioner is confirmed by the Senate.
(d) Section 13 of Public Law 93-531 (25 U.S.C. 640d-12) is amended to
read as follows:
"(a) By no later than the date that is 6 months after the date on
which the first Commissioner is confirmed by the Senate, the
Commissioner shall prepare and submit to the Congress a report
concerning the relocation of households and members thereof of each
tribe and their personal property, including livestock, from lands
partitioned to the other tribe pursuant to this Act.
"(b) The report required under subsection (a) shall contain, among
other matters, the following:
"(1) the names of all members of the Navajo Tribe who reside
within the areas partitioned to the Hopi Tribe and the names of
all members of the Hopi Tribe who reside within the areas
partitioned to the Navajo Tribe;
"(2) the names of all other members of the Navajo Tribe, and
other members of the Hopi Tribe, who are eligible for benefits
provided under this Act and who have not received all the benefits
for which such members are eligible under this Act;
"(3) the fair market value of the habitations and improvements
owned by the heads of households identified by the Commissioner is
being among the persons named in clause (1) of this subsectionj;
and
"(4) a report on how funds in the Navajo Rehabilitation Trust
Funds will be expended to carry out the purposes described in
section 32(d).".
SEC. 5. Public Law 93-531 is amended by adding at the end thereof
the following new section:
"SEC. 31. (a) Except as provided in subsection (b), "25 USC 640d-29"
no person or entity who has entered into a contract with the
Commissioner to provide services under this Act may engage in activities
designed to influence Federal legislation on any issue relating to the
relocation required under this Act.
"(b) Subsection (a) shall not apply to the Navajo Tribe or the Hopi
Tribe, except that such tribes shall not spend any funds received from
the Office in any activities designed to influence Federal
legislation.".
SEC. 6. Subsection (f) of section 10 of Public Law 93-531 (25 U.S.
C. 640d-9(f)) is amended --
(1) by striking out "Any development" and inserting in lieu
thereof "(1) Any development", and
(2) by adding at the end thereof the following new paragraphs:
"(2) Each Indian tribe which receives a written request for the
consent of the Indian tribe to a particular improvement, construction,
or other development on the lands to which paragraph (1) applies shall
respond in writing to such request by no later than the date that is 30
days after the date on which the Indian tribe receives the request. If
the Indian tribe refuse to consent to the improvement, construction, or
other development, the response shall include the reasons why consent is
being refused.
"(3)(A) Paragraph (1) shall not apply to any improvdement,
construction, or other development if --
"(i) such improvement, construction, or development does not
involve new housing construction, and
"(ii) after the Navajo Tribe or Hopi Tribe has refused to
consent to such improvement, construction, or development (or
after the close of the 30-day period described in paragraph (2),
if the Indian tribe does not respond within such period in writing
to a written request for such consent), the Secretary of the
Interior determines that such improvement, construction, or
development is necessary for the health or safety of the Navajo
Tribe, the Hopi Tribe, or any individual who is a member of either
tribe.
"(B) If a written request for a determination described in
subparagraph (A)(ii) is submitted to the Secretary of the Interior after
the Navajo Tribe or Hopi Tribe has refused to consent to any
improvement, construction, or development (or after the close of the
30-day period described in paragraph (2), if the Indian tribe does not
respond within such period in writing to a written request for such
consent), the Secretary shall, by no later than the date that is 45 days
after the date on which such request is submitted to the Secretary,
determine whether such improvement, construction, or development is
necessary for the health or safety of the Navajo Tribe, the Hopi Tribe,
or any individual who is a member of either Tribe.
"(C) Any development that is undertaken pursuant to this section
shall be without prejudice to the rights of the parties in the civil
action pending before the United States District Court for the District
of Arizona commenced pursuant to section 8 of this Act, as amended.".
SEC. 7. Public Law 93-531 is amended by adding at the end thereof
the following new section:
"SEC. 32. (a) "25 USC 640d-30" There is hereby established in the
Treasury of the United States a trust fund to be known as the 'Navajo
Rehabilitation Trust Fund', which shall consist of the funds transferred
under subsection (b) and of the funds appropriated pursuant to
subsection (f) and any interest or investment income accrued on such
funds.
"(b) All of the net income derived by the Navajo Tribe from the
surface and mineral estates of lands located in New Mexico that are
acquired for the benefit of the Navajo Tribe under section 11 shall be
deposited into the Navajo Rehabilitation Trust Fund.
"(c) The Secretary shall be the trustee of the Navajo Rehabilitation
Trust Fund and shall be responsible for investment of the funds in such
Trust Fund.
"(d) Funds in the Navajo Rehabilitation Trust Fund, including any
interest or investment accruing thereon, shall be available to the
Navajo Tribe, with the approval of the Secretary, solely for purposes
which will contribute to the continuing rehabilitation and improvement
of the economic, educational, and social condition of families, and
Navajo communities, that have been affected by --
"(1) the decision in the Healing case, or related proceedings,
"(2) the provision of this Act, or
"(3) the establishment by the Secretary of the Interior of
grazing district number 6 as land for the exclusive use of the
Hopi Tribe.
"(e) The Navajo Rehabilitation Trust Fund shall terminate when, upon
petition by the Navajo Tribe, the Secretary determines that the goals of
the Trust Fund have been met and the United States has been reimbursed
for funds appropriated under subsection (f). All funds in the Trust
Fund on such date shall be transferred to the general trust funds of the
Navajo Tribe.
"(f) There is hereby authorized to be appropriated for the Navajo
Rehabilitation Trust Fund not exceed $10,000,000 in each of fiscal years
1990, 1991, 1992, 1993, 1994 and 1995. The income from the land
referred to in subsection (b) of this section shall be used to reimburse
the General Fund of the United States Treasury for amounts appropriated
to the Fund.".
SEC. 8. Subsection (h) of section 11 of Public Law 93-531 (25 U.S.
C. 640d-10(h)) is amended by striking out "the date of this subsection
who are awaiting relocation under this Act" and inserting in lieu
thereof "the date of enactment of this Act: Provided, That the sole
authority for final planning decisions regarding the development of
lands acquired pursuant to this Act shall rest with the Commissioner
until such time as the Commissioner has discharged his statutory
responsibility under this Act".
SEC. 9. (a) Subsection (e) of section 8 of Public Law 93-531 (25 U.
S.C. 640d-7(e)) is amended by inserting a comma and the words "San Juan
Southern Paiute" after the word "Navajo".
(b) Section 8 of Public Law 93-531 is amended by adding at the end
thereof the following new subsection:
"(f)(1) Any funds made available for the San Juan Southern Paiute
Tribe to pay for attorney's fees shall be paid directly to the tribe's
attorneys of record until such tribe is acknowledged as an Indian tribe
by the United States: Provided, That the tribe's eligibility for such
payments shall cease once a decision by the Secretary of the Interior
declining to acknowledge such tribe becomes final and no longer
appealable.
"(2) Nothing in this subsection shall be interpreted as a
congressional acknowledgement of the San Juan Southern Paiute as an
Indian tribe or as affecting in any way the San Juan Southern Paiute
Tribe's Petition for Recognition currently pending with the Secretary of
the Interior.
"(3) There is hereby authorized to be appropriated not to exceed
$250,000 to pay for the legal expenses incurred by the Southern Paiute
Tribe on legal action arising under this section prior to enactment of
the Navajo and Hopi Indian Relocation Amendments of 1988.".
SEC. 10. Section 15 of Public Law 93-531 "25 USC 640d-14" is amended
by adding the following new subsection (g) at the end thereof:
"(g) Notwithstanding any other provision of law, appeals from any
eligibility determination of the Relocation Commission, irrespective of
the amount in controversy, shall be brought in the United States
District Court for the District of Arizona.".
Approved November 16, 1988.
LEGISLATIVE HISTORY -- S. 1236:
HOUSE REPORTS: No. 100-1032 (Comm. on Interior and Insular Affairs).
SENATE REPORTS: No. 100-425 (Select Comm. on Indian Affairs).
CONGRESSIONAL RECORD, Vol. 134 (1988): Aug. 8, considered and passed
Senate. Oct. 3, 4, considered and passed House, amended. Oct. 13,
Senate concurred in House amendments.
Public Law 100-665, 102 Stat. 3927
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, That (a) subsection
(b)(1) of section 1 of Public Law 96-581, "94 Stat. 3371" relating to
land conveyances in the State of Arizona, is amended by striking out
"Any conveyances" land inserting in lieu thereof "Except as provided in
subsection (c), any conveyances".
(b) Subsection (c) of section 1 "94 Stat. 3372" is amended to read as
follows:
"(c)(1) Of the tract of land described in subsection (a) of this
section, the Secretary shall offer to sell at the fair market value as
determined on December 23, 1980, to the Flagstaff Medical Regional
Center, Flagstaff, Arizona, not to exceed 18.25 acres immediately
adjacent to said Flagstaff Medical Regional Center and shall convey,
without consideration, except for administrative costs associated with
the preparation of title and legal description, to the city of
Flagstaff, Arizona, 134.57 acres, under special use permit in effect on
the date of enactment of this Act to the city of Flagstaff.
"(2) Title to any real property acquired by the city of Flagstaff
pursuant to this section shall revert to the United States if the city
attempts to convey or otherwise transfer ownership of any portion of
such property to any other party or attempts to encumber such title, or
if the town permits the use of any portion of such property for any
purpose incompatible with the purposes specified in paragraph (3) of
this section.
"(3) Real property conveyed to the city of Flagstaff pursuant to this
section shall be used for public open space, park and recreational
purposes.
"(4) Except for any land to be conveyed to the Flagstaff Medical
Regional Center and the city of Flagstaff, the Secretary shall solicit
public offers for the remaining lands and improvements authorized under
subsection (a) of this section. All offers shall be publicly opened at
the time and place stated in the solicitation in accordance with the
administrative requirements of the Secretary. The Secretary shall
consider price and land values before entering into agreements or land
exchanges with any party whose offer conforming to the solicitation
notice is determined by the Secretary to be the most advantageous to the
Government. Notwithstanding any other provision of this Act, the
Secretary may reject any offer if the Secretary determines that such
rejection is in the public interest.".
Approved November 16, 1988.
LEGISLATIVE HISTORY -- S. 253:
SENATE REPORTS: No. 100-174 (Comm. on Energy and Natural Resources).
CONGRESSIONAL RECORD: Vol. 133 (1987): Oct. 1, considered and
passed Senate. Vol. 134 (1988): Oct. 21, considered and passed House.
Public Law 100-664, 102 Stat. 3926
Whereas there are nearly 4,000,000 acres of publicly owned grasslands
located in 14 States across the United States;
Whereas these national grasslands are managed according to the
principles of land conservation, multiple-use of land, promotion of
development of grassland agriculture and sustained-yield management of
forage, fish, wildlife, timber, water, and recreational resources;
Whereas millions of Americans and visitors to our Nation enjoy our
national grasslands for camping, hiking, fishing, boating, hunting,
snow-mobiling, biking, cross-country skiing, and many other outdoor
activities each year;
Whereas our national grasslands continue to provide employment and
local stability to rural America and contribute approximately
$750,000,000 to the gross national product of our Nation from livestock
grazing, energy, environmental, tourism, and recreation industries;
Whereas our national grasslands contain an abundant storehouse of
historical, archaeological, and anthropological artifacts unique to
North America;
Whereas our national grasslands comprise a unique ecosystem providing
our Nation with water, minerals, soils, plants, and animals in a habitat
not found elsewhere; and
Whereas our national grasslands provide a model demonstrating for the
public the principles of conservation, cooperation, multiple-use of the
land, and an appreciation of natural resources: Now, therefore, be it
Resolved by the Senate and House of Representatives of the United
States of America in Congress assembled, That the week of June 18
through June 24, 1989, is designated "National Grasslands Week". The
President is authorized and requested to issue a proclamation calling
upon the people of the United States to observe this week with
appropriate ceremonies and activities.
Approved November 15, 1988.
LEGISLATIVE HISTORY -- S.J. Res. 386:
CONGRESSIONAL RECORD, Vol. 134 (1988): Oct. 7, considered and passed
Senate. Oct. 21, considered and passed House.
Public Law 100-663, 102 Stat. 3925
Whereas April 9, 1988, marks the 25th anniversary of the granting of
honorary citizenship to Sir Winston Churchill by the United States;
Whereas Sir Winston Churchill was born on November 30, 1874;
Whereas Sir Winston Churchill's mother, Jennie Jerome Churchill, was
an American, thereby making Sir Winston Churchill a son of America
though a subject of Great Britain;
Whereas Sir Winston Churchill inspired the world with his commitment
to the ideals of freedom, not only during peace time but during the
darkest moments of World War II;
Whereas Sir Winston Churchill recognized the importance of
understanding history and the relevance of history to the present day;
and
Whereas Sir Winston Churchill made significant contributions to the
modern world: Now, therefore, be it
Resolved by the Senate and House of Representatives of the United
States of America in Congress assembled, That November 27 through
December 3, 1988, is designated as "National Sir Winston Churchill
Recognition Week", and the President is authorized and requested to
issue a proclamation calling upon the people of the United States to
observe such week with appropriate ceremonies and activities.
Approved November 15, 1988.
LEGISLATIVE HISTORY -- S.J. Res. 340:
CONGRESSIONAL RECORD, Vol. 134 (1988): Oct. 20, considered and
passed Senate. Oct. 21, considered and passed House.
Public Law 100-662, 102 Stat. 3924
Whereas books and reading are the basic nourishment of a growing mind
and the foundation of a child's future education and enrichment;
Whereas developing children into readers today is the best way to
ensuring a literate and informed citizenry tomorrow;
Whereas the Book Industry Study Group and others have reported a
decline in book reading among young people in recent years; and
Whereas since 1983 the National Commission on Excellence, the
Commission on Reading, and the Librarian of Congress have urged this
Nation to give renewed attention to encouraging a love of books and
reading among our young people: Now, therefore, be it
Resolved by the Senate and House of Representatives of the United
States of America in Congress assembled, That 1989 is designated the
"Year of the Young Reader", and the President is authorized and
requested to issue a proclamation encouraging parents, educators,
librarians, government officials, members of the book community,
corporations, associations, and the people of the United States to
observe such year with appropriate programs, ceremonies, and activities
aimed at giving our children and young adults the gift, the joy, and the
promise of reading.
Approved November 15, 1988.
LEGISLATIVE HISTORY -- S.J. Res. 315:
CONGRESSIONAL RECORD, Vol. 134 (1988): July 26, considered and
passed Senate. Oct. 21, considered and passed House.
Public Law 100-661, 102 Stat. 3923
Whereas every year thousands of parents lose children to miscarriage,
stillbirth, or infant death;
Whereas an increase in the public's awareness of pregnancy loss and
infant death will expand the opportunities for parents who suffer the
tragedy of infant loss to share their grief and constructively deal with
their feelings of stress and loneliness;
Whereas while many groups have been formed at the local level to
address the problems these parents face, a greater national effort must
be made to provide comfort and assistance to parents who suffer the
tragedy of pregnancy loss or infant death; and
Whereas the designation of a special month will bring much-needed
attention to the devastating emotional effects of pregnancy loss and
infant death: Now, therefore, be it
Resolved by the Senate and House of Representatives of the United
States of America in Congress assembled, That October 1988 is designated
as "Pregnancy and Infant Loss Awareness Month", and the President is
authorized and requested to issue a proclamation calling upon the people
of the United States to observe this month with appropriate ceremonies
and activities.
Approved November 15, 1988.
LEGISLATIVE HISTORY -- S.J. Res. 314:
CONGRESSIONAL RECORD, Vol. 134 (1988): Sept. 28, considered and
passed Senate. Oct. 21, considered and passed House.
Public Law 100-660, 102 Stat. 3922
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. "40 USC 1003 note" ESTABLISHMENT OF MEMORIAL.
(a) IN GENERAL. -- The Vietnam Women's Memorial Project, Inc., is
authorized to establish a memorial on Federal land in the District of
Columbia or its environs to honor women who served in the Armed Forces
of the United States in the Republic of Vietnam during the Vietnam era.
(b) COMPLIANCE WITH STANDARDS FOR COMMEMORATIVE WORKS. -- The
establishment of the memorial shall be in accordance with the Act
entitled "An Act to provide standards for placement of commemorative
works on certain Federal lands in the District of Columbia and its
environs, and for other purposes", approved November 14, 1986 (40 U.S.
C. 1001 et seq.).
SEC. 2. PAYMENT OF EXPENSES.
The United States shall not pay any expenses of the establishment of
the memorial.
SEC. 3. SENSE OF THE CONGRESS.
It is the sense of the Congress, with respect to location of the
memorial in accordance with the Act referred to in section 1(b), that it
would be most fitting and appropriate to place the memorial within the
2.2 acre site of the Vietnam Veterans Memorial in the District of
Columbia.
Approved November 15, 1988.
LEGISLATIVE HISTORY -- S. 2042:
HOUSE REPORTS: No. 100-948 (Comm. on House Administration).
SENATE REPORTS: No. 100-371 (Comm. on Energy and Natural Resources).
CONGRESSIONAL RECORD, Vol. 134 (1988): June 14, considered and
passed Senate. Sept. 23, considered and passed House, amended. Oct.
12, Senate concurred in House amendments with amendments. Oct. 21, House
disagreed to Senate amendments. Senate receded from its amendments.
Public Law 100-659, 102 Stat. 3910
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act "28 USC 1 note" may be cited as the "Retirement and
Survivors' Annuities for Bankruptcy Judges and Magistrates Act of 1988".
SEC. 2. BASIC RETIREMENT PROGRAM.
(a) NEW RETIREMENT SYSTEM. -- Chapter 17 of title 28, United States
Code, is amended by adding at the end the following new section:
"Section 377. Retirement of bankruptcy judges and magistrates
"(a) RETIREMENT BASED ON YEARS OF SERVICE. -- A bankruptcy judge or
magistrate to whom this section applies and who retires from office
after attaining the age of 65 years and serving at least 14 years,
whether continuously or otherwise, as such bankruptcy judge or
magistrate shall, subject to subsection (f), be entitled to receive,
during the remainder of the judge's or magistrate's lifetime, an annuity
equal to the salary being received at the time the judge or magistrate
leaves office.
"(b) RETIREMENT UPON FAILURE OF REAPPOINTMENT. -- A bankruptcy judge
or magistrate to whom this section applies, who is not reappointed
following the expiration of the term of office of such judge or
magistrate, and who retires upon the completion of the term shall,
subject to subsection (f), be entitled to receive, upon attaining the
age of 65 years and during the remainder of such bankruptcy judge's or
magistrate's lifetime, an annuity equal to that portion of the salary
being received at the time the judge or magistrate leaves office which
the aggregate number of years of service, not to exceed 14, bears to 14,
if --
"(1) such judge or magistrate has served at least 1 full term
as a bankruptcy judge or magistrate, and
"(2) not earlier than 9 months before the date on which the
term of office of such judge or magistrate expires, and not later
than 6 months before such date, such judge or magistrate notified
the appointing authority in writing that such judge or magistrate
was willing to accept reappointment to the position in which such
judge or magistrate was serving.
For purposes of this subsection, in the case of a bankruptcy judge,
the written notice required by paragraph (2) shall be given to the chief
judge of the circuit in which such bankruptcy judge is serving and, in
the case of a magistrate, such notice shall be given to the chief judge
of the district court in which the magistrate is serving.
"(c) SERVICE OF AT LEAST 8 YEARS. -- A bankruptcy judge or
magistrate to whom this section applies and who retires after serving at
least 8 years, whether continuously or otherwise, as such a bankruptcy
judge or magistrate shall, subject to subsection (f), be entitled to
receive, upon attaining the age of 65 years and during the remainder of
the judge's or magistrate's lifetime, an annuity equal to that portion
of the salary being received at the time the judge or magistrate leaves
office which the aggregate number of years of service, not to exceed 14,
bears to 14. Such annuity shall be reduced by 1/6 of 1 percent for each
full month such bankruptcy judge or magistrate was under the age of 65
at the time the judge or magistrate left office, except that such
reduction shall not exceed 20 percent.
"(d) RETIREMENT FOR DISABILITY. -- A bankruptcy judge or magistrate
to whom this section applies, who has served at least 5 years, whether
continuously or otherwise, as such a bankruptcy judge or magistrate, and
who retires or is removed from office upon the sole ground of mental or
physical disability shall, subject to subsection (f), be entitled to
receive, during the remainder of the judge's or magistrate's lifetime,
an annuity equal to 40 percent of the salary being received at the time
of retirement or removal or, in the case of a judge or magistrate who
has served for at least 10 years, an amount equal to that proportion of
the salary being received at the time of retirement or removal which the
aggregate number of years of service, not to exceed 14, bears to 14.
"(e) COST-OF-LIVING ADJUSTMENTS. -- A bankruptcy judge or magistrate
who is entitled to an annuity under this section is also entitled to a
cost-of-living adjustment in such annuity, calculated and payable in the
same manner as adjustments under section 8340(b) of title 5, except that
any such annuity, as increased under this subsection, may not exceed the
salary then payable for the position from which the judge or magistrate
retired or was removed.
"(f) ELECTION; ANNUITY IN LIEU OF OTHER ANNUITIES. -- A bankruptcy
judge or magistrate shall be entitled to an annuity under this section
if the judge or magistrate elects an annuity under this section by
notifying the Director of the Administrative Office of the United States
Courts. A bankruptcy judge or magistrate who elects to receive an
annuity under this section shall not be entitled to receive any annuity
to which such judge or magistrate would otherwise have been entitled
under subchapter III of chapter 83, or under chapter 84 (except for
subchapters III and VII), of title 5.
"(g) CALCULATION OF SERVICE. -- (1) For purposes of calculating an
annuity under this section --
"(A) full-time service as a bankruptcy judge or magistrate to
whom this section applies may be credited; and
"(B) each month of service shall be credited as one-twelfth of
a year, and the fractional part of any month shall not be
credited.
"(2)(A) In the case of an individual who is a bankruptcy judge to
whom this section applies, and who retires under this section or who is
removed from office under subsection (d) upon the sole ground of mental
or physical disability, any service of that individual as a United
States magistrate to whom this section applies, and any service of that
individual as a full-time judicial officer who performed the duties of a
magistrate and a bankruptcy judge at the same time, shall be included
for purposes of calculating years of service under subsection (a), (b),
(c), or (d), as the case may be.
"(B) In the case of an individual who is a magistrate to whom this
section applies and who retires under this section or who is removed
from office under subsection (d) upon the sole ground of mental or
physical disability, any service of that individual as a bankruptcy
judge to whom this section applies, and any service of that individual
as a full-time judicial officer who performed the duties of magistrate
and a bankruptcy judge at the same time, shall be included for purposes
of calculating years of service under subsection (a), (b), (c), or (d),
as the case may be.
"(h) COVERED POSITIONS AND SERVICE. -- This section applies to --
"(1) any bankruptcy judge appointed under --
"(A) section 152 of this title;
"(B) section 34 of the Bankruptcy Act before the repeal of that
Act by section 401 of the Act of November 6, 1978 (Public Law
95-598; 92 Stat. 2682); or
"(C) section 404 of the Act of November 6, 1978 (Public Law
95-598; 92 Stat. 2549); and
"(2) any United States magistrate appointed under section 631
of this title,
only with respect to service in or after October 1, 1979, as such a
bankruptcy judge or magistrate.
"(i) PAYMENTS PURSUANT TO COURT ORDER. -- (1) Payments under this
section which would otherwise be made to a bankruptcy judge or
magistrate based upon his or her service shall be paid (in whole or in
part) by the Director of the Administrative Office of the United States
Courts to another person if and to the extent expressly provided for in
the terms of any court decree of divorce, annulment, or legal
separation, or the terms of any court order or court-approved property
settlement agreement incident to any court decree of divorce, annulment,
or legal separation. Any payment under this paragraph to a person bars
recovery by any other person.
"(2) Paragraph (1) shall apply only to payments made by the Director
of the Administrative Office of the United States Courts aftr the date
of receipt by the Director of written notice of such decree, order, or
agreement, and such additional information as the Director may
prescribe.
"(3) As used in this subsection, the term 'court' means any court of
any State, the District of Columbia, the Commonwealth of Puerto Rico,
Guam, the Northern Mariana Islands, or the Virgin Islands, and any
Indian tribal court or courts of Indian offense.
"(j) DEDUCTIONS, CONTRIBUTIONS, AND DEPOSITS. --
"(1) DEDUCTIONS. -- Beginning with the next pay period after
the Director of the Administrative Office of the United States
Courts receives a notice under subsection (f) that a bankruptcy
judge or magistrate has elected an annuity under this section, the
Director shall deduct and withhold 1 percent of the salary of such
bankruptcy judge or magistrate. Amounts shall be so deducted and
withheld in a manner determined by the Director. Amounts deducted
and withheld under this subsection shall be deposited in the
Treasury of the United States to the credit of the Judicial
Officers' Retirement Fund. Deductions under this subsection from
the salary of a bankruptcy judge or magistrate shall terminate
upon the retirement of the bankruptcy judge or magistrate or upon
completing 14 years of service for which contributions under this
section have been made, whether continuously or otherwise, as
calculated under subsection (g), whichever occurs first.
"(2) CONSENT TO DEDUCTIONS; DISCHARGE OF CLAIMS. -- Each
bankruptcy judge or magistrate who makes an election under
subsection (f) shall be deemed to consent and agree to the
deductions from salary which are made under paragraph (1).
Payment of such salary less such deductions (and any deductions
made under section 376 of this title) is a full and complete
discharge and acquittance of all claims and demands for all
services rendered by such bankruptcy judge or magistrate during
the period covered by such payment, except the right to those
benefits to which the bankruptcy judge or magistrate is entitled
under this section (and section 376).
"(k) DEPOSITS FOR PRIOR SERVICE. -- Each bankruptcy judge or
magistrate who makes an election under subsection (f) may deposit, for
service performed before such election for which contributions may be
made under this section, an amount equal to 1 percent of the salary
received for that service. Credit for any period covered by that
service may not be allowed for purposes of an annuity under this section
until a deposit under this subsection has been made for that period.
"(l) INDIVIDUAL RETIREMENT RECORDS. -- The amounts deducted and
withheld under subsection (j), and the amounts deposited under
subsection (k), shall be credited to individual accounts in the name of
each bankruptcy judge or magistrate from whom such amounts are received,
for credit to the Judicial Officers' Retirement Fund.
"(m) ANNUITIES AFFECTED IN CERTAIN CASES. --
"(1) PRACTICING LAW AFTER RETIREMENT. --
"(A) FORFEITURE OF ANNUITY. -- Subject to subparagraph (B),
any bankruptcy judge or magistrate who retires under this section
and who thereafter practices law shall forfeit all rights to an
annuity under this section for all periods beginning on or after
the first day on which he or she so practices law.
"(B) FORFEITURES NOT TO APPLY WHERE INDIVIDUAL ELECTS TO FREEZE
AMOUNT OF ANNUITY. -- (i) If a bankruptcy judge or magistrate
makes an election to practice law after retirement under this
section --
"(I) subparagraph (A) shall not apply to such bankruptcy judge
or magistrate beginning on the date such election takes effect,
and
"(II) the annuity payable under this section to such bankruptcy
judge or magistrate, for periods beginning on or after the date
such election takes effect, shall be equal to the annuity to which
such bankruptcy judge or magistrate is entitled on the day before
such effective date.
"(ii) An election under clause (i) --
"(I) may be made by a bankruptcy judge or magistrate eligible
for retirement under this section, and
"(II) shall be filed with the Director of the Administrative
Office of the United States Courts.
Such an election, once it takes effect, shall be irrevocable.
"(iii) Any election under this subparagraph shall take effect
on the first day of the first month following the month in which
the election is made.
"(2) RECALL NOT PERMITTED. -- Any bankruptcy judge or
magistrate who retires under this section and who thereafter
practices law shall not be eligible for recall under section 155(
b), 375, or 636(h) of this title.
"(3) ACCEPTING OTHER EMPLOYMENT. -- Any bankruptcy judge or
magistrate who retires under this section and thereafter accepts
compensation for civil office or employment under the United
States Government (other than for the performance of functions as
a bankruptcy judge or magistrate under section 155(b), 375, or
636(h) of this title) shall forfeit all rights to an annuity under
this section for the period for which such compensation is
received. For purposes of this paragraph, the term 'compensation'
includes retired pay or salary received in retired status.
"(n) LUMP-SUM PAYMENTS. --
"(1) ELIGIBILITY. -- (A) Subject to paragraph (2), an
individual who serves as a bankruptcy judge or magistrate and --
"(i) who leaves office and is not reappointed as a bankruptcy
judge or magistrate for at least 31 consecutive days;
"(ii) who files an application with the Administrative Office
of the United States Courts for payment of the lump-sum credit;
"(iii) is not serving as a bankruptcy judge or magistrate at
the time of filing of the application; and
"(iv) will not become eligible to receive an annuity under this
section within 31 days after filing the application;
is entitled to be paid the lump-sum credit. Payment of the
lump-sum credit voids all rights to an annuity under this section
based on the service on which the lump-sum credit is based, until
that individual resumes office as a bankruptcy judge or
magistrate.
"(B) Lump-sum benefits authorized by subparagraphs (C), (D),
and (E) of this paragraph shall be paid to the person or persons
surviving the bankruptcy judge or magistrate and alive on the date
title to the payment arises, in the order of precedence set forth
in subsection (o) of section 376 of this title, and in accordance
with the last two sentences of that subsection. For purposes of
the preceding sentence, the term 'judicial official' as used in
subsection (o) of section 376 shall be deemed to mean 'bankruptcy
judge or magistrate'.
"(C) If a bankruptcy judge or magistrate dies before receiving
an annuity under this section, the lump-sum credit shall be paid.
"(D) If all annuity rights under this section based on the
service of a deceased bankruptcy judge or magistrate terminate
before the total annuity paid equals the lump-sum credit, the
difference shall be paid.
"(E) If a bankruptcy judge or magistrate who is receiving an
annuity under this section dies, annuity accrued and unpaid shall
be paid.
"(F) Annuity accrued and unpaid on the termination, except by
death, of the annuity of a bankruptcy judge or magistrate shall be
paid to that individual.
"(G) Subject to paragraph (2), a bankruptcy judge or magistrate
who forfeits rights to an annuity under subsection (m)(3) before
the total annuity paid equals the lump-sum credit;, shall be
entitled to be paid the difference if the bankruptcy judge or
magistrate files an application with the Administrative Office of
the United States Courts for payment of that difference. A
payment under this subparagraph voids all rights to an annuity on
which the payment is based.
"(2) SPOUSES AND FORMER SPOUSES. -- (A) Payment of the
lump-sum credit under paragraph (1)(A) or a payment under
paragraph (1)(G) --
"(i) may be made only if any current spouse and any former
spouse of the bankruptcy judge or magistrate are notified of the
bankruptcy judge's or magistrate's application; and
"(ii) shall be subject to the terms of a court decree of
divorce, annulment, or legal sepration or any court or court
approved property settlement agreement incident to such decree, if
--
"(I) the decree, order, or agreement expressly relates to any
portion of the lump-sum credit or other payment involved; and
"(II) payment of the lump-sum credit or other payment would
extinguish entitlement of the bankruptcy judge's or magistrate's
spouse or former spouse to any portion of an annuity under
subsection (i).
"(B) Notification of a spouse or former spouse under this
paragraph shall be made in accordance with such requirements as
the Director of the Administrative Office of the United States
Courts shall by regulation prescribe. The Director may provide
under such regulations that subparagraph (A)(i) may be waived with
respect to a spouse or former spouse if the bankruptcy judge or
magistrate establishes to the satisfaction of the Director that
the whereabouts of such spouse or former spouse cannot be
determined.
"(C) The Director shall prescribe regulations under which this
paragraph shall be applied in any case in which the Director
receives two or more orders or decrees described in subparagraph
(A).
"(3) DEFINITION. -- For purposes of this subsection, the term
'lump-sum credit' means the unrefunded amount consisting of --
"(A) retirement deductions made under this section from the
salary of a bankruptcy judge or magistrate;
"(B) amounts deposited under subsection (k) by a bankruptcy
judge or magistrate covering earlier service; and
"(C) interest on the deductions and deposits which, for any
calendar year, shall be equal to the overall average yield to the
Judicial Officers' Retirement Fund during the preceding fiscal
year from all obligations purchased by the Secretary of the
Treasury during such fiscal year under subsection (o);
but does not include interest --
"(i) if the service covered thereby aggregates 1 year or less;
or
"(ii) for the fractional part of a month in the total service.
"(o) JUDICIAL OFFICERS' RETIREMENT FUND. --
"(1) ESTABLISHMENT. -- There is established in the Treasury a
fund which shall be known as the 'Judicial Officers' Retirement
Fund'. The Fund is appropriated for the payment of annuities,
refunds, and other payments under this section.
"(2) INVESTMENT OF FUND. -- The Secretary of the Treasury
shall invest, in interest bearing securities of the United States,
such currently available portions of the Judicial Officers'
Retirement Fund as are not immediately required for payments from
the Fund. The income derived from these investments constitutes a
part of the Fund.
"(3) UNFUNDED LIABILITY. -- (A) There are authorized to be
appropriated to the Judicial Officers' Retirement Fund amounts
required to reduce to zero the unfunded liability of the Fund.
"(B) For purposes of subparagraph (A), the term 'unfunded
liability' means the estimated excess, determined on an annual
basis in accordance with the provisions of section 9503 of title
31, of the present value of all benefits payable from the Judicial
Officers' Retirement Fund over the sum of --
"(i) the present value of deductions to be withheld under this
section from the future basic pay of bankruptcy judges and
magistrates; plus
"(ii) the balance in the Fund as of the date the unfunded
liability is determined.
In making any determination under this subparagraph, the
Comptroller General shall use the applicable information contained
in the reports filed pursuant to section 9503 of title 31, with
respect to the retirement annuities provided for in this section.
"(C) There are authorized to be appropriated such sums as may
be necessary to carry out this paragraph.".
(b) CONFORMING AMENDMENT. -- The table of sections at the beginning
of chapter 17 of title 28, United States Code, is amended by adding at
the end the following new item:
"377. Retirement of bankruptcy judges and magistrates.".
(c) "28 USC 377 note" INCUMBENT JUDGES AND MAGISTRATES. --
(1 RETIREMENT ANNUITY UNDER TITLE 5 AND SECTION 377 OF TITLE
28. -- A bankruptcy judge or United States magistrate in active
service on the effective date of this Act shall, subject to
paragraph (2, be entitled, in lieu of the annuity otherwise
provided under the amendments made by this section, to --
(A) an annuity under subchapter III of chapter 83, or under
chapter 84, of title 5, United States Code, as the case may be,
for creditable service before the date on which service would
begin to be credited for purposes of subparagraph (B), and
(B) an annuity calculated under subsection (b) or (c) and
subsection (g) of section 377 of title 28, United States Code, as
added by this section, for any service as a full-time bankruptcy
judge or magistrate on or after October 1, 1979 (as specified in
the election pursuant to paragraph (2)) for which deductions and
deposits are made under subsections (j) and (k) of such section
377, as applicable, without regard to the minimum number of years
of service as such a bankruptcy judge or magistrate, except that
--
(i) in the case of a judge or magistrate who retired with less
than 8 years of service, the annuity under subsection (c) of
section 377 of title 28, United States Code, shall be equal to
that proportion of the salary being received at the time the judge
or magistrate leaves office which the years of service bears to
14, subject to a reduction in accordance with subsection (c) of
such section 377 if the bankruptcy judge or magistrate is under
age 65 at the time he or she leaves office, and
(ii) the aggregate amount of the annuity initially payable on
retirement under this subsection may not exceed the rate of pay
for the bankruptcy judge or magistrate which is in effect on the
day before the retirement becomes effective.
(2) FILING OF NOTICE OF ELECTION. -- A bankruptcy judge or
magistrate shall be entitled to an annuity under this subsection
only if the judge or magistrate files a notice of that election
with the Director of the Administrative Office of the United
States Courts specifying the date on which service would begin to
be credited under section 377 of title 28, United States Code, in
lieu of chapter 83 or chapter 84 of title 5, United States Code.
(3) LUMP-SUM CREDIT UNDER TITLE 5. -- A bankruptcy judge or
magistrate who makes an election under paragraph (2 shall be
entitled to a lump-sum credit under section 8342 or 8424 of title
5, United States Code, as the case may be, for any service which
is covered under section 377 of title 28, United States Code, as
added by this section, pursuant to that election, and with respect
to which any contributions were made by the judge or magistrate
under the applicable provisions of title 5, United States Code.
(4) RECALL. -- With respect to any bankruptcy judge or
magistrate receiving an annuity under this subsection who is
recalled to serve under section 375 of title 28, United States
Code --
(A) the amount of compensation which such recalled judge or
magistrate receives under subsection (c) of such section shall be
calculated on the basis of the annuity received under this
subsection; and
(B) such recalled judge or magistrate may serve as a reemployed
annuitant to the extent permitted by subsection (e) of section 375
of such title.
Section 377(m)(3) of title 28, United States Code, as added by
subsection (a) of this section, shall not apply with respect to
service as a reemployed annuitant described in subparagraph (B).
SEC. 3. JUDICIAL SURVIVORS' ANNUITIES.
(a) ANNUITIES FOR SURVIVORS OF BANKRUPTCY JUDGES AND MAGISTRATES
RETIRING UNDER NEW SYSTEM. -- Section 376 of title 28, United States
Code, is amended as follows:
(1) Subsection (a)(1) is amended --
(A) by striking out "or" at the end of subparagraph (D);
(B) by adding "or" at the end of subparagraph (E);
(C) by inserting after subparagraph (E) the following
"(F) a full-time bankruptcy judge or a full-time United States
magistrate;"; and
(D) by striking out "; or (iv) October 1, 1986;" and inserting
in lieu thereof ", (iv) October 1, 1986, or (v) the date of the
enactment of the Retirement and Survivors' Annuities for
Bankruptcy Judges and Magistrates Act of 1988, in the case of a
full-time bankruptcy judge or United States magistrate in active
service on that date;".
(2) Subsection (a)(2) is amended --
(A) by striking out "and" at the end of subparagraph (D);
(B) by adding "and" at the end of subparagraph (E); and
(C) by adding at the end the following:
"(F) in the case of a bankruptcy judge or United States
magistrate, an annuity paid under section 377 of this title;".
(3) Subsection (b) is amended in the last sentence --
(A) by inserting after "deductions" the following: "(and any
deductions made under section 377 of this title or under
subchapter III of chapter 83, or chapter 84, of title 5)"; and
(B) by inserting before the period the following: "(and under
section 377 of this title or under subchapter III of chapter 83,
or chapter 84, of title 5)".
(b) "28 USC 376 note" SURVIVORS' ANNUITIES FOR INCUMBENTS. -- In the
case of a bankruptcy judge or magistrate who elects an annuity under
section 2c), only service for which an annuity under subsection (b) or
(c) and subsection (g) of section 377 of title 28, United States Code,
as added by section 2 of this Act, is calculated under section 2( c) may
be used in the computation of an annuity under section 376 of title 38,
United States Code, as amended by subsection (a) of this section.
SEC. 4. AMENDMENTS RELATED TO RECALL.
(a) RECALL OF BANKRUPTCY JUDGES. -- Section 155(b) of title 28,
United States Code, is amended --
(1) by inserting "section 377 of this title or in" after
"annuity in"; and
(2) by inserting "which are applicable to such judge" after
"title 5".
(b) ALTERNATIVE RECALL OF CERTAIN JUDGES AND MAGISTRATES. -- Section
375 of title 28, United States Code, is amended --
(1) in subsection (a) by inserting "under the provisions of
section 377 of title or" after "has retired";
(2) in subsection (c) --
(A) by inserting "under the provisions of section 377 of this
title or" after "annuity provided"; and
(B) by adding at the end thereof the following: "The annuity
of a bankruptcy judge or magistrate who completes that 5-year
period of service, whose certification is not renewed, and who
retired under section 377 of this title shall be equal to the
salary in effect, at the end of that 5-year period, for the office
from which he or she retired."; and
(3) in subsection (g) by inserting "who retired under the
applicable provisions of title 5" after "section".
(c) RECALL OF MAGISTRATES. -- Section 636(h) of title 28, United
States Code, is amended in the second sentence --
(1) by inserting "section 377 of this title or in" after
"annuity set forth in"; and
(2) by inserting "which are applicable to such magistrate"
after "title 5".
SEC. 5. TECHNICAL AMENDMENTS.
Section 631(e) of title 28, United States Code, is amended --
(1) by striking out "(j)" and inserting in lieu thereof "(k)";
(2) by striking out "(i)" and inserting in lieu thereof "(j)";
and
(3) by striking out "(h)" and inserting in lieu thereof "(i)".
SEC. 6. CONFORMING AMENDMENTS.
(a) ADMINISTRATIVE OFFICE OF THE UNITED STATES COURTS. -- Section
604(a) of title 28, United States Code (relating to the duties of the
Director of the Administrative Office of the United States Courts) is
amended --
(1) in paragraph (7) by inserting "bankruptcy judges, United
States magistrates," after "United States,";
(2) by redesignating paragraph (18) as paragraph (19); and
(3) by inserting after paragraph (17) the following:
"(18) Regulate and pay annuities to bankruptcy judges and
United States magistrates in accordance with section 377 of this
title and paragraphs (1)(B) and (2) of section 2(c) of the
Retirement and Survivors' Annuities for Bankruptcy Judges and
Magistrates Act of 1988;".
(b) CIVIL SERVICE RETIREMENT SYSTEM. -- Section 8334(i) of title 5,
United States Code, is amended by adding at the end the following new
paragraph:
"(4) Notwithstanding any other provision of law, a bankruptcy judge
or magistrate who is covered by section 377 of title 28 or section 2(c)
of the Retirement and Survivors' Annuities for Bankruptcy Judges and
Magistrates Act of 1988 shall not be subject to deductions and
contributions to the Fund, if the judge or magistrate notifies the
Director of the Administrative Office of the United States Courts of an
election of a retirement annuity under those provisions. Upon such an
election, the judge or magistrate shall be entitled to a lump-sum credit
under section 8342(a) of this title.".
(c) FEDERAL EMPLOYEES RETIREMENT SYSTEM. -- Section 8402 of title 5,
United States Code, is amended by adding at the end the following new
subsection:
"(e) A bankruptcy judge or magistrate who is covered by section 377
of title 28 or section 2(c) of the Retirement and Survivors' Annuities
for Bankruptcy Judges and Magistrates Act of 1988 shall be excluded from
the operation of this chapter, other than subchapters III and VII of
such chapter, if the judge or magistrate notifies the Director of the
Administrative Office of the United States Courts of an election of a
retirement annuity under those provisions. Upon such election, the
judge or magistrate shall be entitled to a lump-sum credit under section
8424 of this title.".
SEC. 7. THRIFT SAVINGS PLAN.
(a) PARTICIPATION IN THE PLAN. -- Subchapter III of chapter 84 of
title 5, United States Code, is amended by adding at the end the
following:
"Section 8440a. Bankruptcy judges and magistrates
"(a)(1) A bankruptcy judge or magistrate who is covered by section
377 of title 28 or section 2(c) of the Retirement and Survivors'
Annuities for Bankruptcy Judges and Magistrates Act of 1988 may elect to
contribute an amount of such individual's basic pay to the Thrift
Savings Fund. 4"(2) An election may be made under paragraph (1) only
during a period provided under section 8432(b) for individuals subject
to this chapter.
"(b)(1) Except as otherwise provided in this subsection, the
provisions of this subchapter and subchapter VII shall apply with
respect to bankruptcy judges and magistrates who make contributions to
the Thrift Savings Fund under subsection (a) of this section.
"(2) The amount contributed by a bankruptcy judge or magistrate for
any pay period shall not exceed 5 percent of basic pay for such pay
period.
"(3) No contributions shall be made under section 8432(c) of this
title for the benefit of a bankruptcy judge or magistrate making
contributions under subsection (a) of this section.
"(4)(A) Section 8433(b) of this title applies to a bankruptcy judge
or magistrate who elects to make contributions to the Thrift Savings
Fund under subsection (a) of this section and who retires entitled to an
immediate annuity under section 377 of title 28 (including a disability
annuity under subsection (d) of such section) or section 2( c) of the
Retirement and Survivors' Annuities for Bankruptcy Judges and
Magistrates Act of 1988.
"(B) Section 8433(c) of this title applies to any bankruptcy judge or
magistrate who elects to make contributions to the Thrift Savings Fund
under subsection (a) of this section and who retires before attaining
age 65 but is entitled, upon attaining age 65, to an annuity under
section 377 of title 28 or section 2(c) of the Retirement and Survivors'
Annuities for Bankruptcy Judges and Magistrates Act of 1988; except
that the period described in paragraph (3) of section 8433(c) commences
on or after the date on which payment of the bankruptcy judge's or
magistrate's annuity under section 377 of title 28 commences.
"(C) Section 8433(d) of this title applies to any bankruptcy judge or
magistrate who elects to make contributions to the Thrift Savings Fund
under subsection (a) of this section and who retires before becoming
entitled to an immediate annuity, or an annuity upon attaining age 65,
under section 377 of title 28 or section 2(c) of the Retirement and
Survivors' Annuities for Bankruptcy Judges and Magistrates Act of 1988.
"(5) With respect to bankruptcy judges and magistrates to whom this
section applies, retirement under section 377 of title 28 is a
separation from service for purposes of this subchapter and subchapter
VII.
"(6) For purposes of this section, the terms 'retirement' and
'retire' include removal from office under section 377(d) of title 28 on
the sole ground of mental or physical disability.
"(7) Sums contributed pursuant to this section by bankruptcy judges
or magistrates, as well as all previous contributions to the Thrift
Savings Fund by those bankruptcy judges and magistrates, and earnings
attributable to such sums and contributions, may be invested and
reinvested only in the Government Securities Investment Fund established
under section 8438(b)(1)(A) of this title.
"(8) In the case of a bankruptcy judge or magistrate who receives a
distribution from the Thrift Savings Plan and who later receives an
annuity under section 377 of title 28, that annuity shall be offset by
an amount equal to the amount which represents the Government's
contribution to that person's Thrift Savings Account, without regard to
earnings attributable to that amount. Where such an offset would exceed
50 percent of the annuity to be received in the first year, the offset
may be divided equally over the first 2 years in which that person
receives the annuity.".
(b) CONFORMING AMENDMENT. -- The table of sections at the beginning
of chapter 84 of title 5, United States Code, is amended by adding at
the end the following:
"8440a. Bankruptcy judges and magistrates.".
SEC. 8. "28 USC 377 note" REPORT TO CONGRESS.
The Director of the Administrative Office of the United States Courts
shall, not later than 5 years after the date of the enactment of this
Act, submit a report to the Congress on the financial operation of the
retirement annuity program established under this Act and the amendments
made by this Act. The report shall, in particular, include a discussion
of the deductions from salary and deposits made for contributions to the
annuity program and the need for continuing the deductions at the level
established under the amendments made by this Act.
SEC. 9. "28 USC 377 note" EFFECTIVE DATE.
(a) IN GENERAL. -- Subject to subsection (b), this Act and the
amendments made by this Act shall take effect on the date of the
enactment of this Act and shall apply to bankruptcy judges and
magistrates who retire on or after the date of the enactment of this
Act.
(b) EXCEPTION FOR JUDGES AND MAGISTRATES RETIRING ON OR AFTER JULY
31, 1987. -- A bankruptcy judge or magistrate who left office on or
after July 31, 1987, and before the date of the enactment of this Act
may elect to receive an annuity, or to participate in the Judicial
Survivors' Annuity System, under the amendments made by this Act if such
bankruptcy judge or magistrate, within 60 days after so leaving office,
accepted office or employment with the United States Government or a
State government or was eligible at the time he or she left office for
an immediate annuity under title 5, United States Code. Any election
under this subsection shall not be valid unless it is made within 6
months after the date of the enactment of this Act and under the same
conditions as other persons who may make elections under the amendments
made by this Act, except that any such person who makes an election
under this subsection shall not receive a lump-sum credit under section
8342 or 8424 of title 5, United States Code, for prior service and shall
not be required to make contributions for prior years of creditable
service.
Approved November 15, 1988.
LEGISLATIVE HISTORY -- S. 1630 (H.R. 4340):
HOUSE REPORTS No. 100-638, Pt. 1, accompanying H.R. 4340 (Comm. on
the Judiciary) and No. 100-1072 (Comm. of Conference).
SENATE REPORTS: No. 100-293 (Comm. on the Judiciary).
CONGRESSIONAL RECORD, Vol. 134 (1988): Mar. 3, considered and passed
Senate. July 11, H.R. 4340 considered and passed House; proceedings
vacated and S. 1630, amended, passed in lieu. Oct. 7, Senate agreed to
conference report. Oct. 19, House agreed to conference report.
Public Law 100-658, 102 Stat. 3908
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. "8 USC 1101 note" SHORT TITLE.
This Act may be cited as the "Immigration Amendments of 1988".
SEC. 2. 2-YEAR EXTENSION OF SECTION 314 OF THE IMMIGRATION REFORM
AND CONTROL ACT OF 1986.
(a) IN GENERAL. -- Section 314(a) of the Immigration Reform and
Control Act "8 USC 1153 note" of 1986 is amended by inserting "and
15,000 visa numbers in each of fiscal years 1989 and 1990" after "5,000
visa numbers in each of fiscal years 1987 and 1988".
(b) ADMINISTRATION. -- In carrying out the amendment "8 USC 1153
note" made by subsection (a), the Secretary of State shall continue to
use the list of qualified immigrants established under section 314 of
the Immigration Reform and Control Act of 1986 before the date of the
enactment of this Act, and may continue to carry out such section under
the regulations in effect (as of the date of July 1, 1988) under part 43
of title 33 of the Code of Federal Regulations.
SEC. 3. 8 USC 1153 note" MAKING VISAS AVAILABLE TO IMMIGRANTS FROM
UNDERREPRESENTED COUNTRIES TO ENHANCE DIVERSITY IN IMMIGRATION.
(a) AUTHORITY OF ADDITIONAL VISAS. -- Notwithstanding the numerical
limitations in section 201(a) of the Immigration and Nationality Act
(relating to worldwide level of immigration), but subject to the
numerical limitations in section 202 of such Act (relating to per
country numerical limitations), there shall be made available to
qualified immigrants who are natives of underrepresented countries
10,000 visa numbers in each of fiscal years 1990 and 1991.
(b) DISTRIBUTION OF VISA NUMBERS. -- The Secretary of State shall
provide for making visa numbers provided under subsection (a) available
in the same manner as visa numbers were made available to qualified
immigrants under section 203(a)(7) of the Immigration and Nationality
Act, except that such visas shall be made available strictly in a random
order among those who qualify during an application period established
by the Secretary of State and except that if more than one petition is
submitted with respect to any alien all such petitions submitted with
respect to the alien shall be voided.
(c) WAIVER OF LABOR CERTIFICATION. -- Section 212(a)(14) of the
Immigration and Nationality Act shall not apply in the determination of
an immigrant's eligibility to receive any visa made available under this
section or in the admission of such an immigrant issued a visa under
this section.
(d) APPLICATION OF DEFINITIONS OF IMMIGRATION AND NATIONALITY ACT.
-- Except as otherwise specifically provided in this section, the
definitions contained in the Immigration and Nationality Act shall apply
in the administration of this section. Nothing in this section shall be
held to repeal, amend, alter, modify, affect, or restrict the powers,
duties, functions, or authority of the Attorney General in the
administration and enforcement of such Act or any other law relating to
immigration, nationality, or naturalization.
(e) UNDERREPRESENTED COUNTRY DEFINED. -- In this section, the term
"underrepresented country" means a foreign state natives of which used,
during fiscal year 1988, less than 25 percent of the maximum number of
immigrant visa numbers otherwise available to it in that fiscal year
under section 202(a) of the Immigration and Nationality Act. In
applying the previous sentence, there shall not be taken into account
visa numbers issued under section 314 of the Immigration Reform and
Control Act of 1986.
SEC. 4. "8 USC 1101 note" EXTENSION OF H-1 STATUS FOR CERTAIN
REGISTERED NURSES THROUGH DECEMBER 31, 1989.
The Attorney General shall provide for the extension through December
31, 1989, of nonimmigrant status under section 101(a)(15)(H)( i) of the
Immigration and Nationality Act for an alien to perform temporarily
services as a registered nurse in the case of an alien who has had such
status for a period of at least 5 years if --
(1) such status has not expired as of the date of the enactment
of this Act but would otherwise expire during 1988 or 1989, due
only to the time limitation with respect to such status; or
(2)(A) the alien's status as such a nonimmigrant expired during
the period beginning on January 1, 1987, and ending on the date of
the enactment of this Act, due only to the time limitation with
respect to such status,
(B) the alien is present in the United States as of the date of
the enactment of this Act,
(C) the alien has been employed as a registered nurse in the
United States since the date of expiration of such status, and
(D) in the case of an alien whose status expired during 1987,
the alien's employer has filed with the Immigration and
Naturalization Service, before the date of the enactment of this
Act, an appeal of a petition filed in connection with the alien's
application for extension of such status.
Approved November 15, 1988.
LEGISLATIVE HISTORY -- H.R. 5115:
HOUSE REPORTS: No. 100-1038 (Comm. on the Judiciary.
CONGRESSIONAL RECORD, Vol. 134 (1988): Oct. 5, considered and passed
House. Oct. 21, considered and passed Senate.
Public Law 100-657, 102 Stat. 3900
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act "49 USC app. 2601 note" may be cited as the "Commercial
Space Launch Act Amendments of 1988".
SEC. 2. "49 USC app. 2601 note" FINDINGS.
The Congress finds that --
(1) a United States commercial space launch industry is an
essential component of national efforts to assure access to space
for Government and commercial users;
(2) the Federal Government should encourage, facilitate, and
promote the use of the United States commercial space launch
industry in order to continue United States aerospace preeminence;
(3) the United States commercial space launch industry must be
competitive in the international marketplace;
(4) Federal Government policies should recognize the
responsibility of the United States under international treaty for
activities conducted by United States citizens in space; and
(5) the United States must maintain a competitive edge in
international commercial space transportation by ensuring
continued research in launch vehicle component technology and
development.
SEC. 3. DEFINITIONS.
Section 4 of the Commercial Space Launch Act (49 U.S.C. App. 2603) is
amended --
(1) in paragraph (10) by striking "and" at the end;
(2) by redesignating paragraph (11) as paragraph (12); and
(3) by inserting immediately after paragraph (10) the following
new paragraph:
"(11) 'third party' means any person or entity other than --
"(A) the United States, its agencies, or its contractors or
subcontractors involved in launch services;
"(B) the licensee or transferee;
"(C) the licensee's or transferee's contractors,
subcontractors, or customers involved in launch services; or
"(D) any such customer's contractors or subcontractors involved
in launch services; and".
SEC. 4. PRIVATE ACQUISITION OF GOVERNMENT PROPERTY AND SERVICES.
(a) Section 15(a) of the Commercial Space Launch Act (49 U.S.C. App.
2614(a)) is amended by adding at the end the following: "In taking such
actions, the Secretary shall consider the commercial availability, on
reasonable terms and conditions, of substantially equivalent launch
property or launch services from a domestic source.".
(b) Section 15(b)(1) of the Commercial Space Launch Act (49 U.S.C.
App. 2614(b)(1) is amended by adding at the end the following: "For
purposes of this paragraph, the term 'direct costs' means the actual
costs that can be unambiguously associated with a commercial launch
effort, and would not be borne by the United States Government in the
absence of a commercial launch effort.".
(c) Section 15 of the Commercial Space Launch Act (49 U.S.C. App.
2614) is amended by adding at the end the following new subsection:
"(d) The head of any Federal agency or department may collect payment
for activities involved in the production of a launch vehicle or its
payload for launch if such activities were agreed to by the owners or
manufacturers of such launch vehicle or payload.".
SEC. 5. INSURANCE REQUIREMENTSS OF LICENSEE.
(a) Section 16 of the Commercial Space Launch Act (49 U.S.C. App.
2615) is amended to read as follows:
"SEC. 16. (a)(1)(A) Each license issued or transferred under this
Act shall require the licensee or transferee --
"(i) to obtain liability insurance; or
"(ii) to demonstrate financial responsibility,
in an amount sufficient to compensate the maximum probable loss (as
determined by the Secretary, after consultation with the Administrator
of the National Aeronautics and Space Administration, the Secretary of
the Air Force, and the heads of other appropriate agencies) from claims
by a third party for death, bodily injury, or loss of or damage to
property resulting from activities carried out under the license in
connection with any particular launch. In no event shall a licensee or
transferee be required to obtain insurance or demonstrate financial
responsibility under this subparagraph, with respect to the aggregate of
such claims arising out of any particular launch, in an amount which
exceeds (I) $500,000,000 or (II) the maximum liability insurance
available on the world market at a reasonable cost, if such insurance is
less than the amount in subclause (I).
"(B) Each license issued or transferred under this Act shall require
the licensee or transferee --
"(i) to obtain liability insurance; or
"(ii) to demonstrate financial responsibility,
in an amount sufficient to compensate the maximum probable loss (as
determined by the Secretary, after consultation with the Administrator
of the National Aeronautics and Space Administration, the Secretary of
the Air Force, and the heads of other appropriate agencies) from claims
against any person by the United States for loss of or damage to
property of the United States resulting from activities carried out
under the license in connection with any particular launch. In no event
shall a licensee or transferee be required to obtain insurance or
demonstrate financial responsibility under this subparagraph, with
respect to the aggregate of such claims arising out of any particular
launch, in an amount which exceeds (I) $100,000,000 or (II) the maximum
liability insurance available on the world market at a reasonable cost,
if such insurance is less than the amount in subclause (I).
"(C) Each license issued or transferred under this Act shall require
the licensee or transferee to enter into reciprocal waivers of claims
with its contractors, subcontractors, and customers, and the contractors
and subcontractors of such customers, involved in launch services, under
which each party to each such waiver agrees to be responsible for any
property damage or loss it sustains or for any personal injury to, death
of, or property damage or loss sustained by its own employees resulting
from activities carried out under the license.
"(D) The Secretary, on behalf of the United States, it agencies
involved in launch services, and contractors and subcontractors involved
in launch services, shall enter into reciprocal waivers of claims with
the licensee or transferee, its contractors, subcontractors, and
customers, and the contractors and subcontractors of such customers,
involved in launch services, under which each party to each such waiver
agrees to be responsible for any property damage or loss it sustains or
for any personal injury to, death of, or property damage or loss
sustained by its own employees resulting from activities carried out
under the license. Any such waiver shall apply only to the extent that
claims exceed the amount of insurance or demonstration of financial
responsibility required under subparagraph (B). After consultation with
the Administrator of the National Aeronautics and Space Administration
and the Secretary of the Air Force, the Secretary may also waive, on
behalf of the United States and any Federal agency, the right to recover
any damages for loss of or damage to property of the United States to
the extent insurance is not available by reason of policy exclusions
which are determined by the Secretary to be usual for the type of
insurance involved.
"(2) Any insurance policy obtained, or demonstration of financial
responsibility made, pursuant to a requirement described in paragraph
(1) shall protect the United States, its agencies, personnel,
contractors, and subcontractors, and all contractors, subcontractors,
and customers of the licensee or transferee, and all contractors and
subcontractors of such customers, involved in providing the launch
services, to the extent of their potential liabilities, at no cost to
the United States.
"(3) The Secretary shall determine the maximum probable loss under
paragraph (1)(A) and (B) associated with activities under a license,
within 90 days after a licensee or transferee has required such a
determination and has submitted all information the Secretary requires
to make such a determination. The Secretary shall amend such
determination as warranted by new information. Within 12 months after
the date of enactment of the Commercial Space Launch Act Amendments of
1988, and within each 12-month period thereafter, the Secretary shall
submit to the Committee on Commerce, Science, and Transportation of the
Senate and the Committee on Science, Space, and Technology of the House
of Representatives a report on the current determinations with respect
to all issued licenses and the reasons for those determinations.
"(4) Within 6 months after the date of enactment of the Commercial
Space Launch Act Amendments of 1988, and within each 12-month period
thereafter, the Secretary shall review the amounts specified in
paragraph (1)(A)(I) and (B)(I), and shall submit a report to the
Congress which, if appropriate, contains a proposed adjustment to such
amounts to conform with altered liability expectations and availability
of insurance on the world market. Such proposed adjustment shall take
effect 30 days after the submission of such report.
"(b)(1) To the extent provided in advance in appropriations Acts or
to the extent there is enacted additional legislative authority to
provide for the payment of claims as submitted in the compensation plan
outlined in paragraph (4), the Secretary shall provide for the payment
by the United States of successful claims (including reasonable expenses
of litigation or settlement) of a third party against the licensee or
transferrr, or its contractors, subcontractors, or customers, or the
contractors or subcontractors of such customers, resulting from
activities carried out pursuant to a license issued or transferred under
this Act for death, bodily injury, or loss of or damage to property
resulting from activities carried out under the license, but only to the
extent that the aggregate of such successful claims arising out of any
particular launch --
"(A) is in excess of the amount of insurance or demonstration
of financial responsibilities required under subsection (a)(1)(
A); and
"(B) is not in excess of the level that is $1,500,000,000 (plus
any additional sums necessary to reflect inflation occurring after
January 1, 1989) above such amount.
The Secretary shall not provide for payment of any part of such claim
for which the death, bodily injury, or loss of or damage to property has
resulted from willful misconduct by the licensee or transferee. To the
extent insurance required pursuant to subsection (a)(1)(A) is not
available to cover any such successful third party liability claim by
reason of insurance policy exclusions determined by the Secretary to be
usual for the type of insurance involved, the Secretary may provide for
the payment of such excluded claims without regard to the limitation
expressed in subparagraph (A).
"(2) The payment of claims under paragraph (1) shall be subject to --
"(A) notice to the United States of any claim, or suit
associated with such claim, against a party described in paragraph
(1) for death, bodily injury, or loss of or damage to property;
"(B) participation or assistance in the defense by the United
States, at its election, of that claim or suit; and
"(C) approval by the Secretary of that portion of any
settlement which is to be paid out of appropriated funds of the
United States.
"(3) The Secretary may withhold payment under paragraph (1) if the
Secretary certifies that the amount is not just and reasonable, except
that the amount of any claim determined by the final judgment of a court
of competent jurisdiction shall be deemed by the Secretary to be just
and reasonable.
"(4)(A) If as a result of activities carried out under a license
issued or transferred under this Act the aggregate of the claims arising
out of a particular launch are likely to exceed the amount of insurance
or demonstration of financial responsibility required under the license,
the Secretary shall (i) make a survey of the causes and extent of damage
and (ii) expeditiously submit to the Congress a report setting forth the
results of such survey.
"(B) Not later than 90 days after any determination by a court
indicating that the liability for the aggregate of claims arising out of
a particular launch under such a license may exceed the amount of
insurance or demonstration of financial responsibility required under
the license, the President, on the recommendation of the Secretary,
shall submit to the Congress a compensation plan or plans that (i)
outlines the aggregate dollar value of such claims; (ii) recommends
sources of funding to pay for these claims; and (iii) includes any
legislative language required to implement the compensation plan or
plans if additional legislative authority is required. No compensation
plan for a single event or incident may exceed the aggregate of
$1,500,000,000.
"(C) Any compensation plan transmitted to the Congress pursuant to
subparagraph (B) shall bear an identification number and shall be
transmitted to both Houses of Congress on the same day and to each House
while it is in session.
"(D)(i) The provisions of this subparagraph shall apply with respect
to consideration in the Senate of any such compensation plan and to
Senate action on such compensation plan.
"(ii) Any such compensation plan that requires additional
appropriations or additional legislative authority must be considered by
the Senate pursuant to this subparagraph within 60 calendar days of
continuous session of Congress on the date on which such plan is
transmitted to the Congress.
"(iii) For the purposes of this subparagraph, the term 'resolution'
means only a joint resolution of Congress the matter after the resolving
clause of which is as follows: "That the . . . approves the
compensation plan numbered . . . submitted to the Congress on . . . , 19
. . . .', the first blank space therein being filled with the name of
the resolving House and the other blank spaces being appropriately
filled; but does not include a resolution which includes more than one
compensation plan.
"(iv) A resolution once introduced with respect to a compensation
plan shall immediately be referred to a committee (and all resolutions
with respect to the same compensation plan shall be referred to the same
committee) by the President of the Senate.
"(v)(I) If the committee of the Senate to which a resolution with
respect to a compensation plan has been referred has not reported it at
the end of 20 calendar days after its referral, it shall be in order to
move either to discharge the committee from further consideration of
such resolution or to discharge the committee from further consideration
with respect to such compensation plan which has been referred to the
committee.
"(II) A motion to discharge may be made only by an individual
favoring the resolution, shall be highly privileged (except that it may
not be made after the committee has reported a resolution with respect
to the same compensation plan), and debate thereon shall be limited to
not more than one hour, to be divided equally between those favoring and
those opposing the resolution. An amendment to the motion shall not be
in order, and it shall not be in order to move to reconsider the vote by
which the motion was agreed to or disagreed to.
"(III) If the motion to discharge is agreed to or disagreed to, the
motion may not be renewed, nor may another motion to discharge the
commmittee be made with respect to any other resolution with respect to
the same compensation plan.
"(vi)(I) When the committee has reported, or has been discharged from
further consideration of, a resolution, it shall be at any time
thereafter in order (even though a previous motion to the same effect
has been disagreed to) to move to proceed to the consideration of the
resolution. The motion shall be highly privileged and shall not be
debatable. An amendment to the motion shall not be in order, and it
shall not be in order to move to reconsider the vote by which the motion
was agreed to or disagreed to.
"(II) Debate on the resolution referred to in subclause (I) of this
clause shall be limited to not more than 10 hours, which shall be
divided equally between those favoring and those opposing such
resolution. A motion further to limit debate shall not be debatable.
An amendment to, or motion to recommit, the resolution shall not be in
order, and it shall not be in order to move to reconsider the vote by
which such resolution was agreed to or disagreed to.
"(vii)(I) Motions to postpone, made with respect to the discharge
from committee, or the consideration of a resolution or motions to
proceed to the consideration of other business, shall be decided without
debate.
"(II) Appeals from the decision of the Chair relating to the
application of the rules of the Senate to the procedures relating to
resolution shall be decided without debate.
"(5) The provisions of paragraphs (1) through (4) shall apply only to
each license issued or transferred under this Act for which a complete
and valid application has been received by the Secretary prior to the
date that is 5 years following the date of enactment of the Commercial
Space Launch Act Amendments of 1988.
"(c) The head of any Federal agency or department shall collect
insurance proceeds or any other payment owed for the loss of or damage
to Government property under its jurisdiction or control resulting from
activities carried out under a license issued or transferred under this
Act. Such proceeds or other payment shall be credited to the current
applicable appropriations, funds, or accounts of that agency or
department.".
(b) Section 15(c) of the Commercial Space Launch Act (49 U.S.C. App.
2614(c)) is amended to read as follows:
"(c) Consistent with the requirements of this Act, the Secretary
shall establish requirements for proof of financial responsibility and
such other assurances as may be necessary to protect the United States
and its agencies and personnel from liability, death, bodily injury, or
loss of or damage to property as a result of a launch or operation of a
launch site involving Government facilities or personnel. The Secretary
may not under this subsection relieve the United States of liability for
death, bodily injury, or loss of or damage to property resulting from
the willful misconduct of the United States or its agents.".
SEC. 6. "49 USC app. 2615 note" UNITED STATES LAUNCH INCENTIVES FOR
CERTAIN SATELLITES.
(a) The requirements of subsection (a)(1)(B) of section 16 of the
Commercial Space Launch Act (49 U.S.C. App. 2615), as amended by this
Act, shall not apply to eligible satellites.
(b) To the extent approved in appropriations Acts, the United States
shall not require payment for the provision of launch services in
connection with the commercial launch of an eligible satellite.
(c) For purposes of this section, the term "eligible satellite" means
a satellite that --
(1) was under construction on August 15, 1986;
(2) was the subject of a launch services agreement or contract
with the National Aeronautics and Space Administration, which as
of August 15, 1986, was in effect and not yet carried out; and
(3) is licensed for launch under the Commercial Space Launch
Act.
SEC. 7. PREEMPTION OF SCHEDULED LAUNCHES.
Section 15(b) of the Commercial Space Launch Act (49 U.S.C. App.
2614(b)) is amended by adding at the end the following new paragraph:
"(4)(A) The Secretary, with the cooperation of the Secretary of
Defense and the Administrator of the National Aeronautics and Space
Administration, shall take steps to ensure that the launches of payloads
with respect to which a launch date commitment from the United States
has been obtained for a launch licensed under this Act are not preempted
from access to United States launch sites or launch property, except in
cases of imperative national need. Any determination of imperative
national need shall be made by the Secretary of Defense or the
Administrator of the National Aeronautics and Space Administration, in
consultation with the Secretary, and shall not be delegated. A licensee
or transferee preempted from access to a launch site or launch property
shall not be required to pay to the United States any amount for launch
services solely attributable to the scheduled launch prevented by such
preemption.
"(B) The Secretary of Defense or the Administrator of the National
Aeronautics and Space Administration, in cooperation with the Secretary,
as the case may be, shall report to the Congress within 7 days after any
determination of imperative national need under subparagraph (A),
including an explanation of the circumstances justifying such
determination and a schedule for ensuring the prompt launching of a
preempted payload."
SEC. 8. STUDY OF PROCESS FOR SCHEDULING LAUNCHES.
The Secretary of Transportation, in cooperation with the Secretary of
Defense and the Administrator of the National Aeronautics and Space
Administration, and in consultation with representatives of the space
launch and satellite industry, shall study ways and means of scheduling
Government and commercial payloads on commercial launch vehicles at
Government launch sites in a manner which --
(1) makes the best practicable use of the launch property of
the United States; and
(2) assures that the launch property of the United States that
is available for commercial use will be available on a
commercially reasonable basis,
consistent with the objectives of the Commercial Space Launch Act.
The Secretary shall report the results of such study to the Congress
within 90 days after the date of enactment of this Act.
SEC. 9. COMMERCIAL SPACE LAUNCH SERVICE COMPETITION.
It is the sense of the Congress that the United States should explore
ways and means of developing a dialogue with appropriate foreign
government representatives to seek the development of guidelines for
access to launch services by satellite builders and users in a manner
that assures the conduct of reasonable and fair international
competition in commercial space activities.
SEC. 10. LAUNCH VEHICLE RESEARCH AND DEVELOPMENT.
The Administrator of the National Aeronautics and Space
Administration shall, in consultation with representatives of the space
launch and satellite industry, design a program for the support of
research into launch systems component technologies, for the purpose of
developing higher performance and lower cost United States launch
vehicle technologies and systems available for the launch of commercial
and Government spacecraft into orbit. The Administrator shall submit a
report outlining such program to the Congress within 60 days after the
date of enactment of this Act.
SEC. 11. "49 USC app. 2603 note" APPLICABILITY TO LICENSES.
This Act, and the amendments made by this Act, shall apply to all
licenses issued under the Commercial Space Launch Act before, on, or
after the date of enactment of this Act.
Approved November 15, 1988.
LEGISLATIVE HISTORY -- H.R. 4399:
HOUSE REPORTS: No. 100-639 (Comm. on Science, Space, and
Technology).
SENATE REPORTS: No. 100-593 (Comm. on Commerce, Science, and
Transportation).
CONGRESSIONAL RECORD, Vol. 134 (1988): May 24, considered and passed
House. Oct. 14, considered and passed Senate, amended. Oct. 21, House
concurred in Senate amendment.
Public Law 100-656, 102 Stat. 3853
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE. -- This Act "15 USC 631 note" may be cited as the
"Business Opportunity Development Reform Act of 1988".
(b) TABLE OF CONTENTS. --
Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
Sec. 101. Findings and purposes.
Sec. 201. Program admission.
Sec. 202. Time limitations.
Sec. 203. Grandfathering.
Sec. 204. Business development objectives.
Sec. 205. Business plans.
Sec. 206. Eligibility reviews.
Sec. 207. Eligibility of native Hawaiians.
Sec. 208. Termination and graduation of standards.
Sec. 209. Economic disadvantage.
Sec. 301. Stages of program participation.
Sec. 302. Loans.
Sec. 303. Contractual assistance.
Sec. 304. Subcontracting assistance.
Sec. 401. Political appointees.
Sec. 402. Prohibited actions and employee responsibilities.
Sec. 403. Politically motivated activities.
Sec. 404. Reports by program participants.
Sec. 405. False representations.
Sec. 406. Congressionally requested investigations.
Sec. 407. Contract performance.
Sec. 408. Data collection.
Sec. 409. Due process rights.
Sec. 410. Employee training and evaluation.
Sec. 501. Planning 8(a) contract activity.
Sec. 502. Annual contracting goals.
Sec. 503. Presidential report on contracting goals.
Sec. 504. General Accounting Office report.
Sec. 505. Commission on minority business development.
Sec. 601. Relationship with other procurement programs.
Sec. 602. Indian tribe exemption.
Sec. 603. Directors of small and disadvantaged business utilization.
Sec. 701. Short title.
Sec. 702. Findings.
Sec. 711. Small Business Competitiveness Demonstration Program.
Sec. 712. Enhanced small business participation goals.
Sec. 713. Procurements procedures.
Sec. 714. Reporting.
Sec. 715. Test plan and policy direction.
Sec. 716. Report to Congress.
Sec. 717. Designated industry groups.
Sec. 718. Definitions.
Sec. 721. Alternative program for clothing and textiles.
Sec. 722. Expanding small business participating in dredging.
Sec. 731. Technical amendment.
Sec. 732. Repealer.
Sec. 741. Segmentation of industry category.
Sec. 742. Definition of architectural and engineering services.
Sec. 801. Regulations.
Sec. 802. Authorizations.
Sec. 803. Effective dates.
SEC. 2. "15 USC 636 note" DEFINITIONS.
For the purposes of this Act --
(1) the term "Administration" means the Small Business
Administration;
(2) the term "Administrator" means the Administrator of the
Small Business Administration, unless otherwise indicated;
(3) the term "disadvantaged owners" means those individuals
upon whom eligibility is based for participation in the Program
and the award of subcontracts pursuant to section 8(a) of the
Small Business Act (15 U.S.C. 637(a));
(4) the term "minority owned businesses" means business
concerns that are at least 51 percent owned and controlled by one
or more individuals who belong to those groups described or
identified pursuant to section 2(e)(1)(C) of the Small Business
Act (15 U.S.C. 631(e)(1)(C));
(5) the term "Program" means the Small Business and Capital
Ownership Development Program established by section 7(j)(10) of
the Small Business Act (15 U.S.C. 636(j)(10));
(6) the term "Program Participant" means a small business
concern participating in the Program; and
(7) the term "Program Participation Term" means the fixed
period of time assigned to a Program Participant pursuant to
section 7(j)(10)(A)(i) of the Small Business Act (15 U.S.C. 636(
j)(10)(A)(i)) prior to the date of enactment of this Act.
SEC. 101. "15 USC 636 note" FINDINGS AND PURPOSES.
(a) FINDINGS. -- The Congress finds that --
(1) the Capital Ownership Development Program administered by
the Small Business Administration and the award of contracts
pursuant to section 8(a) of the Small Business Act remain a
primary tool for improving opportunities for small business
concerns owned and controlled by socially and economically
disadvantaged individuals in the Federal procurement process and
bringing such concerns into the nation's economic mainstream;
(2) although some progress has resulted from the Program, it
has generally failed to meet its objectives, which remain as valid
now as when the Program was initiated;
(3) too few concerns that have exited the Program have been
prepared to compete successfully in the open marketplace on
competitive procurements, and many concerns have developed an
unhealthy dependency on sole-source contracts by the time they are
required to leave the Program;
(4) the application and certification process for admitting new
participants to the Program is inordinately lengthy and
burdensome;
(5) the Administration has often not efficiently and equitably
administered and managed the Program in a manner that provided
clear lines of responsibility for implementing and monitoring many
of the administrative duties under the Program;
(6) the Administration and some program participants have given
insufficient attention and support to the business development
goals of the Program and instead have focused almost entirely on
the size of contract awards or the number of firms certified to
participate in the Program;
(7) many Federal procuring agencies have failed to identify and
offer the necessary amount of contract support in order to allow
for diversification and growth of disadvantaged businesses
participating in the Program;
(8) contract support as well as business development expenses
have been misused both by the Administration and Program
participants and have not been equitably distributed pursuant to
objective criteria;
(9) the widespread perception of undue political influence in
the operation and administration of the Program has significantly
contributed to the Program's poor image and has deterred
utilization of the Program by socially and economically
disadvantaged concerns and by Federal procuring agencies; and
(10) it is imperative that increased competition and other
substantial reforms be accomplished in the Program in order to
promote the Congressionally mandated business development
objectives and purposes.
(b) PURPOSES. -- The purposes of this Act therefore are to --
(1) affirm that the Capital Ownership Development Program and
the section 8(a) authority shall be used exclusively for business
development purposes to help small businesses owned and controlled
by the socially and economically disadvantaged to compete on an
equal basis in the mainstream of the American economy;
(2) affirm that the measure of success of the Capital Ownership
Development Program, and the section 8(a) authority, shall be the
number of competitive firms that exit the Program without being
unreasonably reliant on section 8(a) contracts and that are able
to compete on an equal basis in the mainstream of the American
economy;
(3) ensure that program benefits accrue to individuals who are
both socially and economically disadvantaged;
(4) increase the number of small businesses owned and
controlled by such individuals from which the United States may
purchase products and services (including construction work); and
(5) ensure integrity, competence, and efficiency in the
administration of business development services and the Federal
contracting opportunities made available to eligible small
businesses.
SEC. 201. PROGRAM ADMISSION.
(a) ELIGIBILITY OF PARTICIPANTS. -- Section 7(j)(11) of the Small
Business Act (15 U.S.C. 636(j)(11)) is amended by striking out "(11)"
and inserting in lieu thereof "(11)(A)" and by adding the following new
subparagraphs:
"(B) Except as provided in section 602(d) of the Business Opportunity
Development Reform Act of 1988, any individual upon whom eligibility is
based pursuant to section 8(a)(4), shall be permitted to assert such
eligibility for only one small business concern. Notwithstanding the
provisions of the preceding sentence, no individual who was determined
pursuant to section 8(a) to be socially and economically disadvantaged
before the effective date of this subparagraph shall be permitted to
assert such disadvantage with respect to any other concern making
application for certification after such effective date.
"(C) No concern, previously eligible for the award of scontracts
pursuant to section 8(a), shall be subsequently recertified for program
participation if its prior participation in the program was concluded
for any of the reasons described in paragraph (10)(E).
"(D) A concern eligible for the award of contracts pursuant to this
subsection shall remain eligible for such contracts if there is a
transfer of ownership and control (as defined pursuant to section 8(a)(
4)) to individuals who are determined to be socially and economically
disadvantaged pursuant to section 8(a). In the event of such a
transfer, the concern, if not terminated or graduated, shall be eligible
for a period of continued participation in the program not to exceed the
time limitations prescribed in paragraph (15).
"(E) There is established a Division of Program Certification and
Eligibility (hereinafter referred to in this paragraph as the
"Division") that shall be made part of the Office of the Associate
Administrator for Minority Small Business and Capital Ownership
Development. The Division shall be headed by a Director who shall
report directly to such Associate Administrator. The Division shall
establish field offices within such regional offices of the
Administration as may be necessary to perform efficiently its functions
and responsibilities.
"(F) Subject to the provisions of section 8(a)(9), the functions and
responsibility of the Division are to --
"(i) receive, review and evaluate applications for
certification pursuant to paragraphs (4), (5), (6) and (7) of
section 8(a);
"(ii) advise each program applicant within 15 days after the
receipt of an application as to whether such application is
complete and suitable for evaluation and, if not, what matters
must be rectified;
"(iii) render recommendations on such applications to the
Associate Administrator for Minority Small Business and Capital
Ownership Development;
"(iv) review and evaluate financial statements and other
submissions from concerns participating in the program established
by paragraph (10) to ascertain continued eligibility to receive
subcontracts pursuant to section 8(a);
"(v) make a request for the initiation of termination or
graduation proceedings, as appropriate, with the Associate
Administrator for Minority Small Business and Capital Ownership
Development;
"(vi) decide protests from applicants that have been denied
program admission;
"(vii) decide protests regarding the status of a concern as a
disadvantaged concern for purposes of any program or activity
conducted under the authority of subsection (d) of section 8, or
any other provision of Federal law that references such subsection
for a definition of program eligibility; and
"(viii) implement such policy directives as may be issued by
the Associate Administrator for Minority Small Business and
Capital Ownership Development pursuant to subparagraph (H)
regarding, among other things, the geographic distribution of
concerns to be admitted to the program and the industrial make-up
of such concerns.
"(G) An applicant shall not be denied admission into the program
established by paragraph (10) due solely to a determination by the
Division that specific contract opportunities are unavailable to assist
in the development of such concern unless --
"(i) the Government has not previously procured and is unlikely
to procure the types of products or services offered by the
concern; or
"(ii) the purchases of such products or services by the Federal
Government will not be in quantities sufficient to support the
developmental needs of the applicant and other Program
participants providing the same or similar items or services.
"(H) Thirty days before the conclusion of each fiscal year, the
Director of the Division shall review all concerns that have been
admitted into the Program during the preceding 12-month period. The
review shall ascertain the number of entrants, their geographic
distribution and industrial classification. The Director shall also
estimate the expected growth of the Program during the next fiscal year
and the number of additional Business Opportunity Specialists, if any,
that will be needed to meet the anticipated demand for the Program. The
findings and conclusions of the Director shall be reported to the
Associate Administrator for Minority Small Business and Capital
Ownership Development by September 30 of each year. Based on such
report and such additional data as may be relevant, the Associate
Administrator shall, by October 31 of each year, issue policy and
program directives applicable to such fiscal year that --
"(i) establish priorities for the solicitation of program
applications from underrepresented regions and industry
categories;
"(ii) assign staffing levels and allocate other program
resources as necessary to meet program needs; and
"(iii) establish priorities in the processing and admission of
new Program Participants as may be necessary to achieve an
equitable geographic distribution of concerns and a distribution
of concerns across all industry categories in proportions needed
to increase significantly contract awards to small business
concerns owned and controlled by socially and economically
disadvantaged individuals. When considering such increase the
Administration shall give due consideration to those industrial
categories where Federal purchases have been substantial but where
the participation rate of such concerns has been limited.".
(b) OUTREACH. -- Section 8(a)(10) of the Small Business Act (15 U.
S.C. 637(a)(10)) is amended by adding at the end thereof the following:
"Such program shall make a sustained and substantial effort to solicit
applications for certification from small business concerns located in
areas of concentrated unemployment or underemployment or within labor
surplus areas and within States having relatively few Program
Participants and from small disadvantaged business concerns in industry
categories that have not substantially participated in the award of
contracts let under the authority of this subsection.".
SEC. 202. TIME LIMITATIONS.
Section 7(j) of the Small Business Act (15 U.S.C. 636(j)) is further
amended by adding the following new paragraph:
"(15) Subject to the provisions of paragraph (10)(C), a small
business concern may receive developmental assistance under the Program
and contracts under section 8(a) for a total period of not longer than
nine years, measured from the date of its certification under the
authority of such section, of which --
"(A) no more than four years may be spent in the developmental
stage of Program Participation; and
"(B) no more than five years may be spent in the transitional
stage of Program Participation.".
SEC. 203. GRANDFATHERING.
Section 7(j)(10) of the Small Business Act (15 U.S.C. 636(j)(10)) is
amended by adding the following new subparagraph:
"(D)(i) A small business concern participating in any program
or activity conducted under the authority of this paragraph or
eligible for the award of contracts pursuant to section 8(a) on
September 1, 1988, shall be permitted continued participation and
eligibility in such program or activity for a period of time which
is the greater of --
"(I) 9 years less the number of years since the award of its
first contract pursuant to section 8(a); or
"(II) its original fixed program participation term (plus any
extension thereof) assigned prior to the effective date of this
paragraph plus eighteen months.
"(ii) Nothing contained in this subparagraph shall be deemed to
prevent the Administration from instituting a termination or
graduation pursuant to subparagraph (F) or (H) for issues
unrelated to the expiration of any time period limitation.".
SEC. 204. BUSINESS DEVELOPMENT OBJECTIVES.
(a) PROGRAM PURPOSES. -- (1) Section 2(c)(2)(B) of the Small
Business Act (15 U.S.C. 631(c)(2)(B)) is amended to read as follows:
"(B) It is therefore the purpose of the programs authorized by
section 7(j) of this Act to --
"(i) foster business ownership and development by individuals
in groups that own and control little productive capital; and
"(ii) promote the competitive viability of such firms in the
marketplace by creating a small business and capital ownership
development program to provide such available financial,
technical, and management assistance as may be necessary.".
(2) Section 2(e)(2) (15 U.S.C. 631(e)(2)) of the Act is amended to
read as follows:
"(2) It is therefore the purpose of section 8(a) to --
"(A) promote the business development of small business
concerns owned and controlled by socially and economically
disadvantaged individuals so that such concerns can compete on an
equal basis in the American economy;
"(B) promote the competitive viability of such concerns in the
marketplace by providing such available contract, financial,
technical, and management assistance as may be necessary; and
"(C) clarify and expand the program for the procurement by the
United States of articles, supplies, services, materials, and
construction work from small business concerns owned by socially
and economically disadvantaged individuals.".
(b) TECHNICAL AMENDMENT. -- Section 2(c)(2)(A)(v) of the Act is
amended by striking "sole source".
SEC. 205. BUSINESS PLANS.
(a) IN GENERAL. -- Section 7(j)(10)(A)(i) of the Small Business Act
(15 U.S.C. 636(j)(10)(A)(i)) is amended to read as follows:
"(i) assist small business concerns participating in the
Program (either through public or private organizations) to
develop and maintain comprehensive business plans which sets forth
the Program Participant's specific business targets, objectives,
and goals developed and maintained in conformity with subparagraph
(D).".
(b) CONTENTS OF PLAN. -- Section 7(j)(10) of such Act is further
amended --
(1) by striking subparagraph (C),
(2) by redesignating subparagraph (D) (as added by section 203
of this Act) as subparagraph (C), and
(3) by adding after subparagraph (C), as redesignated, the
following new subparagraph:
"(D)(i) Promptly after certification under paragraph (11) a
Program Participant shall submit a business plan (hereinafter
referred to as the "plan") as described in clause (ii) of this
subparagraph for review by the business opportunity specialist
assigned to assist such Program Participant. The plan may be a
revision of a preliminary business plan submitted by the Program
Participant or required by the Administration as a part of the
application for certification under this section and shall be
designed to result in the Program Participant eliminating the
conditions or circumstances upon which the Administration
determined eligibility pursuant to section 8(a)(6). Such plan,
and subsequent modifications submitted under clause (iii) of this
subparagraph, shall be approved by the business opportunity
specialist prior to the Program Participant being eligible for
award of a contract pursuant to section 8(a).
"(ii) The plans submitted under this subparagraph shall include
the following:
"(I) An analysis of market potential, competitive environment,
and other business analyses estimating the Program Participant's
prospects for profitable operations during the term of program
participation and after graduation.
"(II) An analysis of the Program Participant's strengths and
weaknesses with particular attention to correcting any financial,
managerial, technical, or personnel conditions which are likely to
impede small business concerns from receiving contracts other than
those awarded under section 8(a).
"(III) Specific targets, objectives, and goals, for the
business development of the Program Participant during the next
and succeeding years utilizing the results of the analyses
conducted pursuant to subclauses (I) and (II).
"(IV) A transition management plan outlining specific steps to
assure profitable business operations after graduation (to be
incorporated into the Program Participant's plan during the first
year of the transitional stage of Program participation).
"(V) Estimates of contract awards pursuant to section 8(a) and
from other sources, which the Program Participant will require to
meet the specific targets, objectives, and goals for the years
covered by its plan. The estimates established shall be
consistent with the provisions of subparagraph (I) and section 8(
a).
"(iii) Each Program Participant shall annually review its
currently approved plan with its Business Opportunity Specialist
and modify such plan as may be appropriate. Any modified plan
shall be submitted to the Administration for approval. The
currently approved plan shall be considered valid until such time
as a modified plan is approved by the Business Opportunity
Specialist. Annual reviews pertaining to years in the
transitional stage of program participation shall require, as
appropriate, a written verification that such Program Participant
has complied with the requirements of subparagraph (I).
"(iv) Each Program Participant shall annually forecast its
needs for contract awards under section 8(a) for the next program
year and the succeeding program year during the review of its
business plan, conducted pursuant to clause (iii). Such forecast
shall be known as the section 8(a) contract support level and
shall be included in the Program Participant's business plan.
Such forecast shall include --
"(I) the aggregate dollar value of contract support to be
sought on a noncompetitive basis under section 8(a), reflecting
compliance with the requirements of subparagraph (I),
"(II) the types of contract opportunities being sought,
identified by Standard Industrial Classification (SIC) Code or
otherwise,
"(III) an estimate of the dollar value of contract support to
be sought on a competitive basis, and
"(IV) such other information as may be requested by the
Business Opportunity Specialist to provide effective business
development assistance to the Program Participant.".
SEC. 206. ELIGIBILITY REVIEWS.
Section 7(j)(10) of the Small Business Act (15 U.S.C. 636(j)(10)) is
further amended by adding at the end thereof the following new
subparagraph:
"(J)(i) The Administration shall conduct an evaluation of a
Program Participant's eligibility for continued participation in
the Program whenever it receives specific and credible information
alleging that such Program Participant no longer meets the
requirements for Program eligibility. Upon making a finding that
a Program Participant is no longer eligible, the Administration
shall initiate a termination proceeding in accordance with
subparagraph (F). A Program Participant's eligibility for award
of any contract under the authority of section 8(a) may be
suspended or terminated pursuant to subpart 9.4 of title 48, Code
of Federal Regulations (or any successor regulation).
"(ii) Except as provided under section 602 of the Business
Opportunity Development Reform Act of 1988, no award shall be made
pursuant to section 8(a) to other than a small business concern.".
SEC. 207. ELIGIBILITY OF NATIVE HAWAIIANS.
(a) IN GENERAL. -- Section 8(a) of the Small Business Act (15 U.S.
C. 637(a)) is amended by adding the following new paragraph:
"(15) For purposes of this subsection, the term 'Native Hawaiian
organizations' means any community service organization serving Native
Hawaiians in the State of Hawaii which --
"(A) is a not-for-profit organization chartered by the State of
Hawaii,
"(B) is controlled by Native Hawaiians, and
"(C) whose business activities will principally benefit such
Native Hawaiians.".
(b) TECHNICAL AMENDMENT. -- Section 2(e)(1)(C) of such Act (15 U.S.
C. 631(e)(2)(C)) is amended by inserting "Native Hawaiian
Organizations," after "Asian Pacific Americans,".
(c) CLARIFICATION OF DEFINITION OF "SOCIALLY AND ECONOMICALLY
DISADVANTAGED SMALL BUSINESS CONCERN". -- Paragraph (4) of section 8(
a) of such Act (15 U.S.C. 637(a)(4)) is amended to read as follows:
"(4)(A) For purposes of this section, the term 'socially and
economically disadvantaged small business concern' means any small
business concern which meets the requirements of subparagraph (B) and --
"(i) which is at least 51 per centum owned by --
"(I) one or more socially and economically disadvantaged
individuals,
"(II) an economically disadvantaged Indian tribe, or
"(III) an economically disadvantaged Native Hawaiian
organization, or
"(ii) in the case of any publicly owned business, at least 51
per centum of the stock of which is owned by --
"(I) one or more socially and economically disadvantaged
individuals,
"(II) an economically disadvantaged Indian tribe, or
"(III) an economically disadvantaged Native Hawaiian
organization.
"(B) A small business concern meets the requirements of this
subparagraph if the management and daily business operations of such
small business concern are controlled by one or more --
"(i) socially and economically disadvantaged individuals
described in subparagraph (A)(i)(I) or subparagraph (A)(ii)(I),
"(ii) members of an economically disadvantaged Indian tribe
described in subparagraph (A)(i)(II) or subparagraph (A)(ii)(II),
or
"(iii) Native Hawaiian organizations described in subparagraph
(A)(i)(III) or subparagraph (A)(ii)(III).".
SEC. 208. TERMINATION AND GRADUATION STANDARDS.
Section 7(j)(10) of the Small Business Act (15 U.S.C. 636(j)(10)), is
further amended by adding at the end thereof the following new
subparagraphs:
"(E) A small business concern participating in the program
conducted under the authority of this paragraph and eligible for
the award of contracts pursuant to section 8(a) shall be denied
all such assistance if such concern --
"(i) voluntarily elects not to continue participation;
"(ii) participates in the Program for a period in excess of the
time limits prescribed by paragraph (15);
"(iii) is terminated pursuant to a termination proceeding
conducted in accordance with section 8(a)(9); or
"(iv) is graduated pursuant to a graduation proceeding
conducted in accordance with section 8(a)(9).
"(F) For the purposes of sections 7(j) and 8(a), the terms
'terminated' or 'termination' shall mean the total denial
"(F) For the purposes of this Act, sections 7(j) and 8(a), the
terms 'terminated' or 'termination' shall mean the total denial or
suspension of assistance provided pursuant to this paragraph or
section 8(a) prior to the graduation of the participating small
business concern pursuant to subparagraph (H) or the expiration of
the maximum program participation in terms prescribed by paragraph
(15). An action for termination shall be based upon good cause,
including --
"(i) the failure by such concern to maintain its eligibility
for Program participation;
"(ii) the failure of the concern to engage in business
practices that will promote its competitiveness within a
reasonable period of time as evidenced by, among other indicators,
a pattern of unjustified delinquent performance or terminations
for default with respect to contracts awarded under the authority
of section 8(a);
"(iii) a demonstrated pattern of failing to make required
submissions or responses to the Administration in a timely manner;
"(iv) the willful violation of any rule or regulation of the
Administration pertaining to material issues;
"(v) the debarment of the concern or its disadvantaged owners
by any agency pursuant to subpart 9.4 of title 48, Code of Federal
Regulations (or any successor regulation); or
"(vi) the conviction of the disadvantaged owner or an officer
of the concern for any offense indicating a lack of business
integrity including any conviction for embezzlement, theft,
forgery, bribery, falsification or violation of section 16. For
purposes of this clause, no termination action shall be taken with
respect to a disadvantaged owner solely because of the conviction
of an officer of the concern (who is other than a disadvantaged
owner) unless such owner conspired with, abetted, or otherwise
knowingly acquiesced in the activity or omission that was the
basis of such officer's conviction.
"(G) The Director of the Division may initiate a termination
proceeding by recommending such action to the Associate
Administrator for Minority Small Business and Capital Ownership
Development. Whenever the Associate Administrator, or a designee
of such officer, determines such termination is appropriate,
within 15 days after making such a determination the Program
Participant shall be provided a written notice of intent to
terminate, specifying the reasons for such action. No Program
Participant shall be terminated from the Program pursuant to
subparagraph (F) without first being afforded an opportunity for a
hearing in accordance with section 8(a)(9).
"(H) For the purposes of sections 7(j) and 8(a) the term
'graduated' or 'graduation' means that the Program Participant is
recognized as successfully completing the program by substantially
achieving the targets, objectives, and goals contained in the
concern's business plan thereby demonstrating its ability to
compete in the marketplace without assistance under this section
or section 8(a).".
SEC. 209. ECONOMIC DISADVANTAGE.
(a) ECONOMIC DISADVANTAGE. -- Section 8(a)(6) of the Small Business
Act (15 U.S.C. 637(a)(6)) is amended --
(1) by striking out "(6)" and inserting in lieu thereof "(6)(
A)", and
(2) by adding at the end the following new subparagraphs:
"(B) Each Program Participant shall annually submit to the
Administration --
"(i) a personal financial statement for each disadvantaged
owner;
"(ii) a record of all payments made by the Program Participant
to each of its disadvantaged owners or to any person or entity
affiliated with such owners; and
"(iii) such other information as the Administration may deem
necessary to make the determinations required by this paragraph.
"(C)(i) Whenever, on the basis of information provided by a Program
Participant pursuant to subparagraph (B) or otherwise, the
Administration has reason to believe that the standards to establish
economic disadvantage pursuant to (A) have not been met, the
Administration shall conduct a review to determine whether such Program
Participant and its disadvantaged owners continue to be impaired in
their ability to compete in the free enterprise system due to diminished
capital and credit opportunities when compared to other concerns in the
same business area, which are not socially disadvantaged.
"(ii) If the Administration determines, pursuant to such review, that
a Program Participant and its disadvantaged owners are no longer
economically disadvantaged for the purpose of receiving assistance under
this subsection, the Program Participant shall be graduated pursuant to
section 7(j)(10)(H) subject to the right to a hearing as provided for
under paragraph (9).
"(D)(i) Whenever, on the basis of information provided by a Program
Participant pursuant to subparagraph (B) or otherwise, the
Administration has reason to believe that the amount of funds or other
assets withdrawn from a Program Participant for the personal benefit of
its disadvantaged owners or any person or entity affiliated with such
owners may have been unduly excessive, the Administration shall conduct
a review to determine whether such withdrawal of funds or other assets
was detrimental to the achievement of the targets, objectives, and goals
contained in such Program Participant's business plan.
"(ii) If the Administration determines, pursuant to such review, that
funds or other assets have been withdrawn to the detriment of the
Program Participant's business, the Administration shall --
"(I) initiate a proceeding to terminate the Program Participant
pursuant to section 7(j)(10)(F), subject to the right to a hearing
under paragraph (9); or
"(II) require an appropriate reinvestment of funds or other
assets and such other steps as the Administration may deem
necessary to ensure the protection of the concern.
"(E) Whenever the Administration computes personal net worth for any
purpose under this paragraph, it shall exclude from such computation --
"(i) the value of investments that disadvantaged owners have in
their concerns, except that such value shall be taken into account
under this paragraph when comparing such concerns to other
concerns in the same business area that are owned by other than
socially disadvantaged persons;
"(ii) the equity that disadvantaged owners have in their
primary personal residences, except that any portion of such
equity that is attributable to unduly excessive withdrawals from a
Program Participant or a concern applying for program
participation shall be taken into account.".
(b) CERTIFICATION. -- Section 8(a)(4) of the Small Business Act (15
U.S.C. 637(a)(4)(A)) is further amended by adding the following new
subparagraph:
"(C) Each Program Participant shall certify, on an annual basis, that
it meets the requirements of this paragraph regarding ownership and
control."
SEC. 301. STAGES OF PROGRAM PARTICIPATION.
(a) IN GENERAL. -- Section 7(j) of the Small Business Act (15 U.S.
C. 636(j)) is amended by adding at the end thereof the following new
paragraph:
"(12)(A) The Administration shall segment the Capital Ownership
Development Program into two stages: a development stage; and a
transitional stage.
"(B) The developmental stage of program participation shall be
designed to assist the concern to overcome its economic disadvantage by
providing such assistance as may be necessary and appropriate to access
its markets and to strengthen its financial and managerial skills.
"(C) The transitional stage of program participation shall be
designed to overcome, insofar as practicable, the remainaing elements of
economic disadvantage and to prepare such concern for graduation from
the program.".
(b) DEVELOPMENTAL STAGE OF PROGRAM PARTICIPATION. -- Such section is
further amended by adding at the end thereof the following new
paragraph:
"(13) A Program Participant, if otherwise eligible, shall be
qualified to receive the following assistance during the stages of
program participation specified in paragraph 12:
"(A) Contract support pursuant to section 8(a).
"(B) Financial assistance pursuant to section 7(a)(20).
"(C) A maximum of two exemptions from the requirements of
section 1(a) of the Act entitled 'An Act providing conditions for
the purchase of supplies and the making of contracts by the United
States, and for other purposes', approved June 30, 1936 (49 Stat.
2036), which exemptions shall apply only to contracts awarded
pursuant to section (8)(a) and shall only be used to allow for
contingent agreements by a small business concern to acquire the
machinery, equipment, facilities, or labor needed to perform such
contracts. No exemption shall be made pursuant to this
subparagraph if the contract to which it pertains has an
anticipated value in excess of $10,000,000. This subparagraph
shall cease to be effective on October 1, 1992.
"(D) A maximum of five exemptions from the requirements of the
Act entitled 'An Act requiring contracts for the construction,
alteration and repair of any public building or public work of the
United States to be accompanied by a performance bond protecting
the United States and by an additional bond for the protection of
persons furnishing material and labor for the construction,
alteration, or repair of said public buildings or public works',
approved August 24, 1935 (49 Stat. 793), which exemptions shall
apply only to contracts awarded pursuant to section 8(a), except
that, such exemptions may be granted under this subparagraph only
if --
"(i) the Administration finds that such concern is unable to
obtain the requisite bond or bonds from a surety and that no
surety is willing to issue a bond subject to the guarantee
provision of title IV of the Small Business Investment Act of 1958
(15 U.S.C. 692 et seq.);
"(ii) the Administration and the agency providing the
contracting opportunity have provided for the protection of
persons furnishing materials or labor to the Program Participant
by arranging for the direct disbursement of funds due to such
persons by the procuring agency or through any bank the deposits
of which are insured by the Federal Deposit Insurance Corporation;
and
"(iii) the contract to which it pertains does not exceed
$3,000,000 in amount. This subparagraph shall cease to be
effective on October 1, 1992.
"(E) Financial assistance whereby the Administration may
purchase in whole or in part, and on behalf of such concerns,
skills training or upgrading for employees or potential employees
of such concerns. Such financial assistance may be made without
regard to section 18(a), shall be made by way of reimbursement to
the training provider, and shall have such adjustments as may be
necessary to provide for overpayments or underpayments. For
purposes of this subparagraph the term 'training provider' shall
mean an institution of higher education, a community or vocational
college, or an institution eligible to provide skills training or
upgrading under the Job Training Partnership Act (29 U.S.C. 1501
et seq.). The Administration shall, in consultation with the
Secretary of Labor, promulgate rules and regulations to implement
this subparagraph that establish acceptable training and upgrading
performance standards and provide for such monitoring or audit
requirements as may be necessary to ensure the integrity of the
training effort. No financial assistance shall be granted under
the subparagraph unless the Administrator determines that --
"(i) such concern has documented that it has first explored the
use of existing cost-free or cost-subsidized training programs
offered by public and private sector agencies working with
programs of employment and training and economic development;
"(ii) no more than five employees or potential employees of
such concern are recipients of any benefits under this
subparagraph at any one time;
"(iii) no more than $2,500 shall be made available for any one
employee or potential employee;
"(iv) the length of training or upgrading financed by this
subparagraph shall be no less than one month nor more than six
months;
"(v) such concern has given adequate assurance it will employ
the trainee or upgraded employee for at least six months after the
training or upgrading financed by this subparagraph has been
completed and each trainee or upgraded employee has provided a
similar assurance to remain within the employ of such concern for
such period; if such concern, trainee, or upgraded employee
breaches this agreement, the Administration shall be entitled to
and shall make diligent efforts to obtain from the violating party
the repayment of all funds expended on behalf of the violating
party, such repayment shall be made to the Administration together
with such interest and costs of collection as may be reasonable;
the violating party shall be barred from receiving any further
assistance under this subparagraph;
"(vi) the training to be financed may take place either at such
concern's facilities or at those of the training provider; and
"(vii) such concern will maintain such records as the
Administration deems appropriate to ensure that the provisions of
this paragraph and any other applicable law have not been
violated.
"(F) The transfer of technology or surplus property owned by
the United States to such a concern. Activities designed to
effect such transfer shall be developed in cooperation with the
heads of Federal agencies and shall include the transfer by grant,
license, or sale of such technology or property to such a concern.
Such property may be transferred to Program Participants on a
priority basis. Technology or property transferred under this
subparagraph shall be used by the concern during the normal
conduct of its business operation and shall not be sold or
transferred to any other party (other than the Government) during
such concern's term of participation in the Program and for one
year thereafter.
"(G) Training assistance whereby the Administration shall
conduct training sessions to assist individuals and enterprises
eligible to receive contracts under section 8(a) in the
development of business principles and strategies to enhance their
ability to successfully compete for contracts in the marketplace.
"(H) Joint ventures, leader-follower arrangements, and teaming
agreements between the Program Participant and other Program
Participants and other business concerns with respect to
contracting opportunities for the research, development,
full-scale engineering or production of major systems. Such
activities shall be undertaken on the basis of programs developed
by the agency responsible for the procurement of the major system,
with the assistance of the Administration.
"(I) Transitional management business planning training and
technical assistance.
"(J) Program Participants in the developmental stage of Program
participation shall be eligible for the assistance provided by
subparagraphs (A), (B), (C), (D), (E), (F), and (G).
(c) TRANSITIONAL STAGE OF PROGRAM PARTICIPATION. -- Such section is
further amended by adding at the end the following new paragraph:
"(14) Program Participants in the transitional stage of Program
participation shall be eligible for the assistance provided by
subparagraphs (A), (B), (F), (G), (H), and (I) of paragraph (13).
SEC. 302. LOANS.
Section 7(a) of the Small Business Act (15 U.S.C. 636(a)) is amended
by adding at the end thereof the following new paragraph:
"(20)(A) The Administration is empowered to make loans either
directly or in cooperation with banks or other financial institutions
through agreements to participate on an immediate or deferred
(guaranteed) basis to small business concerns eligible for assistance
under subsection (j)(10) and section 8(a). Such assistance may be
provided only if the Administration determines that --
"(i) the type and amount of such assistance requested by such
concern is not otherwise available on reasonable terms from other
sources;
"(ii) with such assistance such concern has a reasonable
prospect for operating soundly and profitably within a reasonable
period of time;
"(iii) the proceeds of such assistance will be used within a
reasonable time for plant construction, conversion, or expansion,
including the acquisition of equipment, facilties, machinery,
supplies, or material or to supply such concern with working
capital to be used in the manufacture of articles, equipment,
supplies, or material for defense or civilian production or as may
be necessary to insure a well-balanced national economy; and
"(iv) such assistance is of such sound value as reasonably to
assure that the terms under which it is provided will not be
breached by the small business concern.
"(B)(i) No loan shall be made under this paragraph if the total
amount outstanding and committed (by participation or otherwise) to the
borrower would exceed $750,000.
"(ii) Subject to the provisions of clause (i), in agreements to
participate in loans on a deferred (guaranteed) basis, participation by
the Administration shall be not less than 85 per centum of the balance
of the financing outstanding at the time of disbursement.
"(iii) The rate of interest on financings made on a deferred
(guaranteed) basis shall be legal and reasonable.
"(iv) Financings made pursuant to this paragraph shall be subject to
the following limitations:
"(I) No immediate participation may be purchased unless it is
shown that a deferred participation is not available.
"(II) No direct financing may be made unless it is shown that a
participation is unavailable.
"(C) A direct loan or the Administration's share of an immediate
participation loan made pursuant to this paragraph shall be any secured
debt instrument --
"(i) that is subordinated by its terms to all other borrowings
of the issuer;
"(ii) the rate of interest on which shall not exceed the
current average market yield on outstanding marketable obligations
of the United States with remaining periods to maturity comparable
to the average maturities of such loan and adjusted to the nearest
one-eighth of 1 per centum;
"(iii) the term of which is not more than twenty-five years;
and
"(iv) the principal on which amortized at such rate as may be
deemed appropriate by the Administration, and the interest on
which is payable not less often than annually.".
SEC. 303. CONTRACTUAL ASSISTANCE.
(a) COMPETITIVE BUSINESS MIX. -- Section 7(j)(10) of the Small
Business Act "15 USC 636" (15 U.S.C. 363(j)(10)), is further amended by
adding at the end thereof the following new subparagraph:
"(i) During the developmental stage of its participation in the
Program, a Program Participant shall take all reasonable efforts
within its control to attain the targets contained in its business
plan for contracts awarded other than pursuant to section 8(a)
(hereinafter referred to as 'business activity targets.'). Such
efforts shall be made a part of the business plan and shall be
sufficient in scope and duration to satisfy the Administration
that the Program Participant will engage a reasonable marketing
strategy that will maximize its potential to achieve its business
activity targets.
"(ii) During the transitional stage of the Program a Program
Participant shall be subject to regulations regarding business
activity targets that are promulgated by the Administration
pursuant to clause (iii).
"(iii) The regulations referred to in clause (ii) shall:
"(I) establish business activity targets applicable to Program
Participants during the fifth year and each succeeding year of
Program Participation; such targets, for such period of time,
shall reflect a reasonably consistent increase in contracts
awarded other than pursuant to section 8(a), expressed as a
percentage of total sales; when promulgating business activity
targets the Administration may establish modified targets for
Program Participants that have participated in the Program for a
period of longer than four years on the effective date of this
subparagraph;
"(II) require a Program Participant to attain its business
activity targets;
"(III) provide that, before the receipt of any contract to be
awarded pursuant to section 8(a), the Program Participant (if it
is in the transitional stage) must certify that it has complied
with the regulations promulgated pursuant to subclause (II), or
that it is in compliance with such remedial measures as may have
been ordered pursuant to regulations issued under subsection (V);
"(IV) require the Administration to review each Program
Participant's performance regarding attainment of business
activity targets during periodic reviews of such Participant's
business plan; and
"(V) authorize the Administration to take appropriate remedial
measures with respect to a Program Participant that has failed to
attain a required business activity target for the purpose of
reducing such Participant's dependence on contracts awarded
pursuant to section 8(a); such remedial actions may include, but
are not limited to assisting the Program Participant to expand the
dollar volume of its competitive business activity or limiting the
dollar volume of contracts awarded to the Program Participant
pursuant to section 8(a); except for actions that would
constitute a termination, remedial measures taken pursuant to this
subclause shall not be reviewable pursuant to seciton 8( a)(9).".
(b) COMPETITIVE THRESHOLDS. -- Section 8(a)(1) of the Act (15 U.S.
C. 637(a)(1)) is amended by adding at the end thereof the following new
subparagraph:
"(D)(i) A contract opportunity offered for award pursuant to
this subsection shall be awarded on the basis of competition
restricted to eligible program participants if --
"(I) there is a reasonable expectation that at least two
eligible Program Participants will submit offers and that award
can be made at a fair market price, and
"(II) the anticip0ated award price of the contract (including
options) will exceed $5,000,000 in the case of a contract
opportunity assigned a standard industrial classification code for
manufacturing and $3,000,000 (including options) in the case of
all other contract opportunities.
"(ii) The Associate Administrator for Minority Small Business
and Capital Ownership Development, on a nondelegable basis, is
authorized to approve a request from an agency to award a contract
opportunity under this subsection on the basis of a competition
restricted to eligible Program Participants even if the
anticipated award price is not expected to exceed the dollar
amounts specified in clause (i)(II). Such approvals shall be
granted only on a limited basis.".
(c) CONTRACT MATCHING. -- Section 8(a) of the Act (15 U.S.C. 637(
a)), is further amended by adding at the end thereof the following new
paragraph:
"(16)(A) The Administration shall award sole source contracts under
this section to any small business concern recommended by the procuring
agency offering the contract opportunity if --
"(i) the Program Participant is determined to be a responsible
contractor with respect to performance of such contract
opportunity;
"(ii) the award of such contract would be consistent with the
Program Participant's business plan; and
"(iii) the award of the contract would not result in the
Program Participant exceeding the requirements established by
section 7(j)(10)(I).
"(B) To the maximum extent practicable, the Administration shall
promote the equitable geographic distribution of sole source contracts
awarded pursuant to this subsection.".
(d) CONTRACT SELECTION APPEALS AND DOCUMENTATION. -- Section 8(a)(
1)(A) of the Small Business Act (15 U.S.C. 637(a)(1)(A)) is amended by
inserting after the sentence ending "the Administrator." the following:
"Not later than 5 days from the date the Administration is notified of a
procurement officer's adverse decision, the Administration may notify
the contracting officer of the intent to appeal such adverse decision,
and within 15 days of such date the Administrator shall file a written
request for a reconsideration of the adverse decision with the Secretary
of the department or agency head. For the purposes of this subparagraph,
a procurement officer's adverse decision includes a decision not to make
available for award pursuant to this subsection a particular procurement
requirement or the failure to agree on the terms and conditions of a
contract to be awarded noncompetitively under the authority of this
subsection. UPon receipt of the notice of intent to appeal, the
Secretary of the department or the agency head shall suspend further
action regarding the procurement until a written decision on the
Administrator's request for reconsideration has been issued by such
Secretary of agency head, unless such officer makes a written
determination that urgent and compelling circumstances which
significantly affect interests of the United States will not permit
waiting for a reconsideration of the adverse decision. If the
Administrator's request for reconsideration is denied, the SEcretary of
the department or agency head shall specify the reasons why the selected
firm was determined to be incapable to perform the procurement
requirement, and the findings supporting such determination, which shall
be made a part of the contract file for the requirement.".
(e) FAIR MARKET PRICE. -- Section 8(a)(3) of the Act (15 U.S.C.
637(a)(3)) is amended to read as follows:
"(3)(A) Any Program Participant selected by the Administration to
perform a contract to be let noncompetitively pursuant to this
subsection shall, when practicable, participate in any negotiation of
the terms and conditions of such contract.
"(B)(i) For purposes of paragraph (1) a 'fair market price' shall be
determined by the agency offering the procurement requirement to the
Administration, in accordance with clauses (ii) and (iii).
"(ii) The estimate of a current fair market price for a new
procurement requirement, or a requirement that does not have a
satisfactory procurement history, shall be derived from a price or cost
analysis. Such analysis may take into account prevailing market
conditions, commercial prices for similar products or services, or data
obtained from any other agency. Such analysis shall consider such cost
or pricing data as may be timely submitted by the Administration.
"(iii) The estimate of a current fair market price for a procurement
requirement that has a satisfactory procurement history shall be based
on recent award prices adjusted to insure comparability. Such
adjustments shall take into account differences in quantities,
performance times, plans, specifications, transportation costs,
packaging and packing costs, labor and materials costs, overhead costs,
and any other additional costs which may be deemed appropriate.
"(C) An agency offering a procurement requirement for potential award
pursuant to this subsection shall, upon the request of the
Administration, promptly submit to the Administration a written
statement detailing the method used by the agency to estimate the
current fair market price for such contract, identifying the
information, studies, analyses, and other data used by such agency. The
agency's estimate of the current fair market price (and any supporting
data furnished to the Administration) shall not be disclosed to any
potential offeror (other than the Administration).
"(D) A small business concern selected by the Administration to
perform or negotiate a contract to be let pursuant to this subsection
may request the Administration to protest the agency's estimate of the
fair market price for such contract pursuant to paragraph (1)(A).".
(f) OPTIONS. -- (1) The Small Business Administration "15 USC 637
note" shall make substantial and sustained efforts to achieve a maximum
ten-day period as the average processing time for approving options and
modifications to contracts awarded pursuant to section 8(a) of the Small
Business Act (15 U.S.C. 637(a)) and submitted to such Administration for
approval.
(2) Within sixty days after the date of enactment of this Act,
the Small Business Administration, and the appropriate Federal agency,
shall make substantial and sustained efforts to negotiate contract
modifications for fair market price for any and all unpriced options
contained in contracts previously awarded pursuant to section 8(a) of
the Small Business Act (15 U.S.C. 637(a)) with the contractor that was
initially awarded such contract.
(3) During the period of time described in paragraph (2), such
agencies shall refrain from procuring such requirements from alternative
sources except that, no delay may be incurred pursuant to this paragraph
that would cause substantial harm to a public interest.
(4) The Small Business Administration shall take appropriate actions,
including publication in the Federal Register, to advise small business
concerns and Federal agencies of the requirements of this subsection.
(5) The Administration shall, to the maximum extent practicable,
minimize delay, eliminate excess regulation, and require only such
paperwork as may be necessary to effect the orderly and efficient
management of the Program established by section 7(j)(10) of the Small
Business Act (15 U.S.C. 636(j)(10)) and the award of contracts pursuant
to section 8(a) of such Act (15 U.S.C. 637(a)).
(g) STANDARD INDUSTRIAL CLASSIFICATION CODE LIMITATIONS. -- Section
8(a)(7) of the Act (15 U.S.C. 637(a)(7)) is amended by --
(1) inserting "(A)" after "(7)"; and
(2) adding the following new subparagraph:
"(B) Limitations established by the Administration in its regulations
and procedures restricting the award of contracts pursuant to this
subsection to a limited number of standard industrial classification
codes in an approved business plan shall not be applied in a manner that
inhibits the logical business progression by a participating small
business concern into areas of industrial endeavor where such concern
has the potential for success.".
(h) NON-MANUFACTURER RULE. -- Section 8(a) of the Act (15 U.S.C.
637(a)) is further amended by adding the following new paragraph:
"(17)(A) An otherwise responsible business concern that is in
compliance with the requirements of subparagraph (B) shall not be denied
the opportunity to submit and have considered its offer for any
procurement contract for the supply of a product to be let pursuant to
this subsection or subsection (a) of section 15 solely because such
concern is other than the actual manufacturer or processer of the
product to be supplied under the contract.
"(B) To be in compliance with the requirements referred to in
subparagraph (A), such a business concern shall --
"(i) be primarily engaged in the wholesale or retail trade;
"(ii) be a regular dealer, as defined pursuant to section 35(
a) of title 41, United States Code (popularly referred to as the
Walsh-Healey Public Contracts Act), in the product to be offered
the Government or be specifically exempted from such section by
section 7(j)(13)(C); and
"(iii) represent that it will supply the product of a domestic
small business manufacturer or processor, except that, the
Administrator may waive the application of the clause, as it
pertains to the furnishing of a product manufactured or processed
by a small business, for any class of products for which there are
no small business manufacturers or processors in the Federal
market."
SEC. 304. SUBCONTRACTING ASSISTANCE.
(a) ENCOURAGING COMPLIANCE. -- Section 8(d)(4) of the Small Business
Act (15 U.S.C. 637(d)(4)) is amended by adding at the end thereof the
following new subparagraph:
"(F)(i) Each contract subject to the requirements of this paragraph
or paragraph (5) shall contain a clause for the payment of liquidated
damages upon a finding that a prime contractor has failed to make a good
faith effort to comply with the requirements imposed on such contractor
by this subsection.
"(ii) The contractor shall be afforded an opportunity to demonstrate
a good faith effort regarding compliance prior to the contracting
officer's final decision regarding the imposition of damages and the
amount thereof. The final decision of a contracting officer regarding
the contractor's obligation to pay such damages, or the amounts thereof,
shall be subject to the Contract Disputes Act of 1978 (41 U.S. C.
601-613).
"(iii) Each agency shall ensure that the goals offered by the
apparent successful bidder or offeror are attainable in relation to --
"(I) the subcontracting opportunities available to the
contractor, commensurate with the efficient and economical
performance of the contract;
"(II) the pool of eligible subcontractors available to fulfill
the subcontracting opportunities; and
"(III) the actual performance of such contractor in fulfilling
the subcontracting goals specified in prior plans.".
(b) LIQUIDATED DAMAGES CLAUSE. -- "15 USC 637 note" The contract
clause required by section 8(d)(4)(F) of the Small Business Act (as
added by subsection (a)) shall be made part of the Federal Acquisition
Regulation and promulgated pursuant to section 22 of the Office of
Federal Procurement Policy Act (41 U.S.C. 418b).
SEC. 401. STATUS OF THE ASSOCIATE ADMINISTRATOR FOR MINORITY SMALL
BUSINESS AND CAPITAL OWNERSHIP DEVELOPMENT.
(a) IN GENERAL. -- In Section 4(b)(1) of the Small Business Act (15
U.S.C. 633(b)(1)) is amended by inserting immediately after "Associate
Administrator for Minority Small Business and Capital Ownership
Development" the following: "who shall be an employee in the
competitive service or in the Senior Executive Service and a career
appointee".
(b) CAREER POSITION. -- "15 USC 633 note" The position of Associate
Administrator for Minority Small Business and Capital Ownership
Development referred to in paragraph (1) of section 4(b) of the Act
shall be a career reserved position.
SEC. 402. PROHIBITED ACTIONS AND EMPLOYEE RESPONSIBILITIES.
Section 8(a) of the Small Business Act (15 U.S.C. 637(a)) is further
amended by adding at the end thereof the following new paragraph:
"(18)(A) No person within the employ of the Administration shall,
during the term of such employment and for a period of two years after
such employment has been terminated, engage in any activity or
transaction specified in subparagraph (B) with respect to any Program
Participant certified during such person's term of employment, if such
person participated personally (either directly or indirectly) in
decision-making responsibilities relating to such Program Participant or
with respect to the administration of any assistance provided to Program
Participants generally under this subsection, section 7(j)(10), or
section 7(a)(20).
"(B) The activities and transactions prohibited by subparagraph (A)
include --
"(i) the buying, selling, or receiving (except by inheritance)
of any legal or beneficial ownership of stock or any other
ownership interest or the right to acquire any such interest;
"(ii) the entering into or execution of an written or oral
agreement (whether or not legally enforceable) to purchase or
otherwise obtain any right or interest described in clause (i);
or
"(iii) the receipt of any other benefit or right that may be an
incident of ownership.
"(C)(i) The employees designated in clause (ii) shall annually submit
a written certification to the Administration regarding compliance with
the requirements of this paragraph.
"(ii) The employees referred to in clause (i) are --
"(I) regional administrators;
"(II) district directors;
"(III) the Associate Administrator for Minority Small Business
and Capital Ownership Development;
"(IV) employees whose principal duties relate to the award of
contracts or the provision of other assistance pursuant to this
subsection or section 7(j)(10); and
"(V) such other employees as the Administrator may deem
appropriate.
"(iii) Any present or former employee of the Administration who
violates this paragraph shall be subject to a civil penalty, assessed by
the Attorney General, that shall not exceed 300 per centum of the
maximum amount of gain such employee realized or could have realized as
a result of engaging in those activities and transactions prescribed by
subparagraph (B).
"(iv) In addition to any other remedy or sanction provided for under
law or regulation, any person who falsely certifies pursuant to clause
(i) shall be subject to a civil penalty under the Program Fraud Civil
Remedies Act of 1986 (31 U.S.C. 3801-3812)."
SEC. 403. POLITICALLY MOTIVATED ACTIVITIES.
Section 8(a) of the Small Business Act (15 U.S.C. 637(a)) is amended
by adding at the end the following:
"(19)(A) Any employee of the Administration who has authority to
take, direct others to take, recommend, or approve any action with
respect to any program or activity conducted pursuant to this subsection
or section 7(j), shall not, with respect to any such action, exercise or
threaten to exercise such authority on the basis of the political
activity or affiliation of any party. Employees of the Administration
shall expeditiously report to the Inspector General of the
Administration any such action for which such employee's participation
has been solicitated or directed.
"(B) Any employee who willfully and knowingly violates subparagraph
(A) shall be subject to disciplinary action, imposed by the
Administrator, which may consist of separation from service, reduction
in grade, suspension, or reprimand.
"(C) Subparagraph (A) shall not apply to any action taken as a
penalty or other enforcement of a violation of any law, rule, or
regulation prohibiting or restricting political activity.
"(D) The prohibitions of subparagraph (A), and remedial measures
provided for under subparagraphs (B) and (C) with regard to such
prohibitions, shall be in addition to, and not in lieu of, any other
prohibitions, measures, or liabilities that may arise under any other
provision of law.".
SEC. 404. REPORTS BY PROGRAM PARTICIPANTS.
Section 8(a) of the Small Business Act (15 U.S.C. 637(a)) is further
amended by adding at the end thereof the following new paragraph:
"(20)(A) Small business concerns participating in the Program under
section 7(j)(10) and eligible to receive contracts pursuant to this
section shall semiannually report to their assigned business opportunity
specialist the following:
"(i) A listing of any agents, representatives, attorneys,
accountants, consultants, and other parties (other than employees)
receiving compensation to assist in obtaining a Federal contract
for such Program Participant.
"(ii) The amount of compensation received by any person listed
under clause (i) during the relevant reporting period and a
description of the activities performed in return for such
compensation.
"(B) The Business Opportunity Specialist shall promptly review and
forward such report to the Associate Administrator for Minority Small
Business and Capital Ownership Development. Any report that raises a
suspicion of improper activity shall be reported immediately to the
Inspector General of the Administration.
"(C) The failure to submit a report pursuant to the requirements of
this subsection and applicable regulations shall be considered 'good
cause' for the initiation of a termination proceeding pursuant to
section 7(j)(10)(F).".
SEC. 405. FALSE REPRESENTATIONS.
(a) PENALTY FOR MISREPRESENTATION. -- Section 16(d) of the Small
Business Act (15 U.S.C. 645(d)) is amended to read as follows:
"(d)(1) Whoever misrepresents the status of any concern or person as
a 'small business concern' or 'small business concern owned and
controlled by socially and economically disadvantaged individuals', in
order to obtain for oneself or another any --
"(A) prime contract to be awarded pursuant to section 9 or 15;
"(B) subcontract to be awarded pursuant to section 8(a);
"(C) subcontract that is to be included as part or all of a
goal contained in a subcontracting plan required pursuant to
section 8(d); or
"(D) prime or subcontract to be awarded as a result, or in
furtherance of, any other provision of Federal law that
specifically references section 8(d) for a definition of program
eligibility, shall be subject to the penalties and remedies
described in paragraph (2).
"(2) Any person who violates paragraph (1) shall --
"(A) be punished by a fine of not more than $500,000 or by
imprisonment for not more than 10 years, or both;
"(B) be subject to the administrative remedies prescribed by
the Program Fraud Civil Remedies Act of 1986 (31 U.S.C.
3801-3812);
"(C) be subject to suspension and debarment as specified in
subpart 9.4 of title 48, Code of Federal Regulations (or any
successor regulation) on the basis that such misrepresentation
indicates a lack of business integrity that seriously and directly
affects the present responsibility to perform any contract awarded
by the Federal Government or a subcontract under such a contract;
and
"(D) be ineligible for participation in any program or activity
conducted under the authority of this Act or the Small Business
Investment Act of 1958 (15 U.S.C. 661 et seq.) for a period not to
exceed 3 years.".
(b) MISREPRESENTATION OF SECTION 7 COMPLIANCE. -- Section 16 of the
Small Business Act (15 U.S.C. 645) is amended by adding at the end
thereof the following new subsection:
"(f) Whoever falsely certifies past compliance with the requirements
of section 7(j)(10)(I) of this Act shall be subject to the penalties
prescribed in subsection (d).".
SEC. 406. CONGRESSIONALLY REQUESTED INVESTIGATIONS.
(e) INSPECTOR GENERAL INVESTIGATIONS. -- Section 10(e) of the Small
Business Act (15 U.S.C. 639(e)) is amended by --
(1) inserting "and the Inspector General of the Administration"
immediately after "Administration", and
(2) adding the following new paragraph:
"(2) The Committee on Small Business of either the Senate or the
House of Representatives may request that the Office of the Inspector
General of the Administration conduct an investigation of any program or
activity conducted under the authority of section 7(j) or 8(a). Not
later than thirty days after the receipt of such a request, the
Inspector General shall inform the committee, in writing of the
disposition of the matter by such office.".
SEC. 407. CONTRACT PERFORMANCE.
Section 8(a) of the Small Business Act (15 U.S.C. 637(a)) is further
amended by adding the following new paragraph:
"(21)(A) Subject to the provisions of subparagraph (B), a contract
(including options) awarded pursuant to this subsection shall be
performed by the concern that initially received such contract.
Notwithstanding the provisions of the preceding sentence, if the owner
or owners upon whom eligibility was based relinquish ownership or
control of such concern, or enter into any agreement to relinquish such
ownership or control, such contract or option shall be terminated for
the convenience of the Government, except that no repurchase costs or
other damages may be assessed against such concerns due solely to the
provisions of this subparagraph.
"(B) The Administrator may, as a matter of discretion and on a
nondelegable basis, waive the requirements of subparagraph (A) if
requested to do so prior to the actual relinquishment of ownership or
control. In addition to the requirement of the preceding sentence, a
waiver may be given only if any of the following conditions exist:
"(i) When it is necessary for the owners of the concern to
surrender partial control of such concern on a temporary basis in
order to obtain equity financing.
"(ii) The head of the contracting agency for which the contract
is being performed certifies that termination of the contract
would severely impair attainment of the agency's program
objectives or missions;
"(iii) Ownership and control of the concern that is performing
the contract will pass to another small business concern that is a
program participant, but only if the acquiring firm would
otherwise be eligible to receive the award directly pursuant to
subsection (a);
"(iv) The individuals upon whom eligibility was based are no
longer able to exercise control of the concern due to incapacity
or death; or
"(v) When, in order to raise equity capital, it is necessary
for the disadvantaged owners of the concern to relinquish
ownership of a majority of the voting stock of such concern, but
only if --
"(I) such concern has exited the Capital Ownership Development
Program;
"(II) the disadvantaged owners will maintain ownership of the
largest single outstanding block of voting stock (including stock
held by affiliated parties); and
"(III) the disadvantaged owners will maintain control of daily
business operations.
"(C) Concerns performing contracts awarded pursuant to this
subsection shall be required to notify the Administration immediately
upon entering an agreement (either oral or in writing) to transfer all
or part of its stock or other ownership interest to any other party.
"(D) Notwithstanding any other provision of law, for the purposes of
determining ownership and control of a concern under this section, any
potential ownership interests held by investment companies licensed
under the Small Business Investment Act of 1958 shall be treated in the
same manner as interests held by the individuals upon whom eligibility
is based.".
SEC. 408. DATA COLLECTION.
Section 7(j) of the Small Business Act (15 U.S.C. 636(j)) is further
amended by adding the following new paragraph:
"(16)(A) The Administrator shall develop and implement a process for
the systematic collection of data on the operations of the Program
established pursuant to paragraph (10).
"(B) Not later than April 30 of each year, the Administrator shall
submit a report to the Congress on the Program that shall include the
following:
"(i) The average personal net worth of individuals who own and
control concerns that were initially certified for participation
in the Program during the immediately preceding fiscal year. The
Administrator shall also indicate the dollar distribution of net
worths, at $50,000 increments, of all such individuals found to be
socially and economically disadvantaged. For the first report
required pursuant to this paragraph the Administrator shall also
provide the data specified in the preceding sentence for all
eligible individuals in the Program as of the effective date of
this paragraph.
"(ii) A description and estimate of the benefits and costs that
have accrued to the economy and the Government in the immediately
preceding fiscal year due to the operations of those business
concerns that were performing contracts awarded pursuant to
section 8(a).
"(iii) A compilation and evaluation of those business concerns
that have exited the Program during the immediately preceding
three fiscal years. Such compilation and evaluation shall detail
the number of concerns actively engaged in business operations,
those that have ceased or substantially curtailed such operations,
including the reasons for such actions, and those concerns that
have been acquired by other firms or organizations owned and
controlled by other than socially and economically disadvantaged
individuals. For those businesses that have continued operations
after they exited the Program, the Administrator shall also
separately detail the benefits and costs that have accrued to the
economy during the immediately preceding fiscal year due to the
operations of such concerns.
"(iv) A listing of all participants in the Program during the
preceding fiscal year identifying, by State and by Region, for
each firm: the name of the concern, the race or ethnicity, and
gender of the disadvantaged owners, the dollar value of all
contracts received in the preceding year, the dollar amount of
advance payments received by each concern pursuant to contracts
awarded under section 8(a), and a description including (if
appropriate) an estimate of the dollar value of all benefits
received pursuant to paragraphs (13) and (14) and section 7(a)(
20) during such year.
"(v) The total dollar value of contracts and options awarded
during the preceding fiscal year pursuant to section 8(a) and such
amount expressed as a percentage of total sales of (I) all firms
participating in the Program during such year; and (II) of firms
in each of the nine years of program participation.
"(vi) A description of such additional resources or program
authorities as may be required to provide the types of services
needed over the next two-year period to service the expected
portfolio of firms certified pursuant to section 8(a).
"(vii) The total dollar value of contracts and options awarded
pursuant to section 8(a), at such dollar increments as the
Administrator deems appropriate, for each four digit standard
industrial classification code under which such contracts and
options were classified.
"(C) The first report required by subparagraph (B) shall pertain to
fiscal year 1990.".
SEC. 409. DUE PROCESS RIGHTS.
Paragraph (9) of section 8(a) of the Small Business Act (15 U.S.C.
637(a)(9)) is amended to read as follows:
"(9)(A) Subject to the provisions of subparagraph (E), the
Administrator, prior to taking any action described in subparagraph
(B), shall provide the small business concern that is the subject
of such action, an opportunity for a hearing on the record, in
accordance with chapter 5 of title 5, United States Code.
"(B) The actions referred to in subparagraph (A) are --
"(i) denial of program admission based upon a negative
determination pursuant to paragraph (4), (5), or (6);
"(ii) a termination pursuant to section 7(j)(10)(F);
"(iii) a graduation pursuant to section 7(j)(10)(H); and
"(iv) the denial of a request to issue a waiver pursuant to
paragraph (21)(B).
"(C) The Administrator's proposed action, in any proceeding conducted
under the authority of this paragraph, shall be sustained unless it is
found to be arbitrary, capricious, or contrary to law.
"(D) A decision rendered pursuant to this paragraph shall be the
final decision of the Administration and shall be binding upon the
Administration and those within its employ.
"(E) The adjudicator selected to preside over a proceeding conducted
under the authority of this paragraph shall decline to accept
jurisdiction over any matter that --
"(i) does not, on its face, allege facts that, if proven to be
true, would warrant reversal or modification of the
Administration's position;
"(ii) is untimely filed;
"(iii) is not filed in accordance with the rules of procedure
governing such proceedings; or
"(iv) has been decided by or is the subject of an adjudication
before a court of competent jurisdiction over such matters.
"(F) Proceedings conducted pursuant to the authority of this
paragraph shall be completed and a decision rendered, insofar as
practicable, within ninety days after a petition for a hearing is filed
with the adjudicating office.".
SEC. 410. "15 USC 636 note" EMPLOYEE TRAINING AND EVALUATION.
(a) TRAINING REQUIREMENTS FOR BUSINESS SPECIALISTS. -- (1) In each
Small Business Administration field office responsible for assisting one
or more Program Participants there shall be a position designated as a
Business Opportunity Specialist. To the maximum extent practicable the
Administration shall assure that an adequate number of Business
Opportunity Specialists are assigned to each district office to carry
out the responsibilities of sections 7(j) and 8(a) of the Small Business
Act (15 U.S.C. 636(j), 637(a)) and to assist Program Participants.
(2) The Administration shall take such actions as may be appropriate
to ensure that any person employed as a Business Opportunity Specialist
receives adequate periodic training to assure such employee is capable
of assisting Program Participants to fully utilize the Program and to
meet the requirements of the Small Business Act, as amended by this Act.
(b) PILOT PROGRAM. -- (1) Within 180 days after the effective date
of this subsection the Administrator shall designate three regions of
the Administration to conduct a pilot program pursuant to the provisions
of this subsection. The designated regions shall contain approximately
30 per centum of the total number of Program Participants as of the time
of designation.
(2) A Business Opportunity Specialist employed in a Region designated
pursuant to paragraph (1), in addition to other assigned duties and
responsibilities, shall --
(A) conduct contract negotiations on behalf of the
Administration for contracts awarded pursuant to section 8(a) of
the Small Business Act (15 U.S.C. 637(a)) when performance will be
rendered by one or more firms in such Specialist's assigned
portfolio;
(B) facilitate and otherwise assist such firms in negotiating
for the receipt of contracts to be let pursuant to such section.
(3) The Administration shall take such actions as may be appropriate
to train and qualify such Specialists to perform the negotiations
rewquired pursuant to paragraph (2).
(4) To the extent practicable, the Administrator shall ensure that
the performance appraisal system applicable to a Business Opportunity
Specialist employed in a region designated pursuant to paragraph (1)
affords substantial recognition to how well such Specialist's assigned
portfolio of concerns participating in the program established by
section 7(j)(10) of the Small Business Act (15 U.S.C. 636(j)(10)) are
achieving competitiveness and furthering the business development
purposes of the program.
(5) The Administration shall establish personnel positions for
Business Opportunity Specialists employed in the regions designated
pursuant to paragraph (1) that are classified at a grade level of the
General Schedule that are sufficient, in the opinion of the
Administrator, to attract and retain highly qualified personnel.
(c) REPORT AND PILOT PROGRAM TERMINATION. -- (1) Within 120 days
after the termination of the pilot program conducted pursuant to
subsection (b), the Administration shall issue a report to the
Committees on Small Business of the Senate and of the House of
Representatives on the effectiveness of the pilot. Such report shall
contain such recommendations for administrative or legislative change as
may be appropriate.
(2) The pilot program conducted pursuant to subsection (a) shall be
terminated three years after the date on which the Committees on Small
Business of the Senate and of the House of Representatives receive
written notification from the Administrator that the pilot is in full
operation in each of the three designated pilot regions.
SEC. 501. PLANNING SECTION 8(a) CONTRACT ACTIVITY.
Section 8(a)(12) of the Small Business Act (15 U.S.C. 637(a)(12)) is
amended to read as follows:
"(12)(A) The Administration shall require each concern eligible to
receive subcontracts pursuant to this subsection to annually prepare and
submit to the Administration a capability statement. Such statement
shall briefly describe such concern's various contract performance
capabilities and shall contain the name and telephone number of the
Business Opportunity Specialist assigned such concern. The
Administration shall separate such statements by those primarily
dependent upon local contract support and those primarily requiring a
national marketing effort. Statements primarily dependent upon local
contract support shall be disseminated to appropriate buying activities
in the marketing area of the concern. The remaining statements shall be
disseminated to the Directors of Small and Disadvantaged Business
Utilization for the appropriate agencies who shall further distribute
such statements to buying activities with such agencies that may
purchase the types of items or services described on the capability
statements.
"(B) Contracting activities receiving capability statements shall,
within 60 days after receipt, contact the relevant Business Opportunity
Specialist to indicate the number, type, and approximate dollar value of
contract opportunities that such activities may be awarding over the
succeeding 12-month period and which may be appropriate to consider for
award to those concerns for which it has received capability statements.
"(C) Each executive agency reporting to the Federal Procurement Data
System contract actions with an aggregate value in excess of $50,000,000
in fiscal year 1988, or in any succeeding fiscal year, shall prepare a
forecast of expected contract opportunities or classes of contract
opportunities for the next and succeeding fiscal years that small
business concerns, including those owned and controlled by socially and
economically disadvantaged individuals, are capable of performing. Such
forecast shall be periodically revised during such year. To the extent
such information is available, the agency forecasts shall specify:
"(i) The approximate number of individual contract
opportunities (and the number of opportunities within a class).
"(ii) The approximate dollar value, or range of dollar values,
for each contract opportunity or class of contract opportunities.
"(iii) The anticipated time (by fiscal year quarter) for the
issuance of a procurement request.
"(iv) The activity responsible for the award and administration
of the contract.
"(D) The head of each executive agency subject to the provisions of
subparagraph (C) shall within 10 days of completion furnish such
forecasts to --
"(i) the Director of the Office of Small and Disadvantaged
Business Utilization, established pursuant to section 15(k) for
such agency; and
"(ii) the Administrator.
"(E) The information reported pursuant to (D) may be limited to
classes of items and services for which there are substantial annual
purchases.
"(F) Such forecasts shall be available to small business concerns.".
SEC. 502. ANNUAL CONTRACTING GOALS.
Section 15(g) of the Small Business Act (15 U.S.C. 644(g)) is amended
--
(1) by striking out "The head" and inserting in lieu thereof
"(2) The head";
(2) by redesignating paragraphs (1) and (2) as subparagraphs
(A) and (B), respectively, and
(3) by adding at the beginning the following new paragraph:
"(1) The President shall annually establish Government-wide goals for
procurement contracts awarded to small business concerns and small
business concerns owned and controlled by socially and economically
disadvantaged individuals. The Government-wide goal for participation
by small business concerns shall be established at not less than 20
percent of the total value of all prime contract awards for each fiscal
year. The Government-wide goal for participation by small business
concerns owned and controlled by socially and economically disadvantaged
individuals shall be established at not less than 5 percent of the total
value of all prime contract and subcontract awards for each fiscal year.
Notwithstanding the Government-wide goal, each agency shall have an
annual goal that presents, for that agency, the maximum practicable
opportunity for small business concerns and small business concerns
owned and controlled by socially and economically disadvantaged
individuals to participate in the performance of contracts let by such
agency. The Administration and the Administrator of the Office of
Federal Procurement Policy shall, when exercising their authority
pursuant to paragraph (2), insure that the cumulative annual prime
contract goals for all agencies meet or exceed the annual
Government-wide prime contract goal established by the President
pursuant to this paragraph.".
SEC. 503. PRESIDENTIAL REPORT ON CONTRACTING GOALS.
Section 15(h) of the Small Business Act (15 U.S.C. 644(h)) is amended
--
(1) by striking out "(h)" and inserting in lieu thereof "(h)(
1)",
(2) by striking out the last sentence of subsection (h)(1), and
(3) by adding at the end thereof the following new paragraph:
4"(2) The Administration shall annually compile and analyze the reports
submitted by the individual agencies pursuant to paragraph (1) and shall
submit them to the President. The Administration's submission to the
President shall include the following:
"(A) The Government-wide goals for participation by small
business concerns and small business concerns owned and controlled
by socially and economically disadvantaged and the performance in
attaining such goals.
"(B) The goals in effect for each agency and the agency's
performance in attaining such goals.
"(C) An analysis of any failure to achieve the Government-wide
goals or any individual agency goals and the actions planned by
such agency (and approved by the Administration) to achieve the
goals in the succeeding fiscal year.
"(D) The number and dollar value of contracts awarded to small
business concerns and small business concerns owned and controlled
by socially and economically disadvantaged individuals through --
"(i) noncompetitive negotiation,
"(ii) competition restricted to small business concerns owned
and controlled by socially and economically disadvantaged
individuals,
"(iii) competition restricted to small business concerns, and
"(iv) unrestricted competitions,
for each agency and on a Government-wide basis.
"(E) The number and dollar value of subcontracts awarded to
small business concerns and small business concerns owned and
controlled by socially and economically disadvantaged individuals.
"(F) The number and dollar value of prime contracts and
subcontracts awarded to women-owned small business enterprises.
"(3) The President shall include the information required by
paragraph (2) in each annual report to the Congress on the state of
small business prepared pursuant to section 303(a) of the Small Business
Economic Policy Act of 1980 (15 U.S.C. 631b(a)).".
SEC. 504. "15 USC 636 note" GENERAL ACCOUNTING OFFICE REPORT.
(a) IN GENERAL. -- (1) The Comptroller General of the United States
shall conduct a review of the operation of the Minority Small Business
and Capital Ownership Development Program authorized by section 7(j)(
10) (15 U.S.C. 636(j)(10)) and the contract assistance provided pursuant
to section 8(a) (15 U.S.C. 637(a)) of the Small Business Act commencing
within 180 days of the enactment of this Act and concluding on September
30, 1991.
(2) The review shall report on the implementation of the provisions
of this Act by the Small Business Administration and the various
executive departments and agencies providing contracting opportunities
to the Program. In addition to such other matters as the Comptroller
General may choose to include, the review shall report on the
implementation of the Act's provisions relating to --
(A) the certification of Program Participants by the
Administration;
(B) the development and maintenance of business development
plans required by this Act;
(C) the amount and types of business management and technical
assistance provided to Program Participants, including transition
management assistance, and the criteria by which the effectiveness
of such assistance is measured by the Administration;
(D) the type and amount of financial assistance provided
through the programs authorized by the Small Business Act and the
Small Business Investment Act of 1958;
(E) Program Participants' dependence on contracts awarded
noncompetitively under the authority of section 8(a) of the Small
Business Act (15 U.S.C. 637(a)) and the rate of increase in the
percentage of competitively awarded contracts in the firms'
business mix as Program Participants approach graduation;
(F) the competitive award of contracts within the Program,
determining the number, dollar value, and source selection method
used for the various contract opportunities required to be awarded
competitively and those for which competition was discretionary;
(G) the noncompetitive award of contracts to Program
Participants; the effect on the distribution of Program awards
among individual Program Participants; and Program Participants
located in each of the several States; and the Administration's
use of the authority to direct contracts to Program Participants
in the interest of maintaining equitable contract distributions;
(H) delay in the award of contracts flowing from protests,
either of a prospective awardee's continued Program eligibility or
the conduct of a competition restricted to Program Participants;
(I) limitations on the transfer of contracts to a Program
Participant incident to transferring ownership and control of the
business;
(J) reporting by Program Participants concerning the use of
consultants and other non-employees to assist in obtaining Federal
contracts; and
(K) data collection and data management by the Administration
relating to the program.
(3) The Comptroller General shall prepare a report summarizing the
findings of the review described in paragraph (2), and make such
recommendations for the improved implementation of this Act as may be
appropriate. The report shall be transmitted to the Committees on Small
Business of the Senate and House of Rep resentatives by February 1,
1992.
SEC. 505. "15 USC 636 note" COMMISSION ON MINORITY BUSINESS
DEVELOPMENT.
(a) ESTABLISHMENT. -- There is established a Commission to be known
as the "Commission on Minority Business Development" (hereinafter in
this title referred to as the "Commission").
(b) DUTIES. -- (1) The Commission shall --
(A) review and conduct an assessment of the operations of all
Federal programs intended to promote and foster the development of
minority owned businesses to ascertain whether the purposes and
objectives of such program are being realized. Such review and
assessment shall include, among other things, an evaluation of the
issues described in this subsection;
(B) review and assess the overall effectiveness of the Small
Business and Capital Ownership Development Program established
pursuant to 7(j)(10) of the Small Business Act (15 U.S.C. 636(j)(
10)) including --
(i) the procedure whereby the Administration certifies concerns
pursuant to section 8(a) of the Small Business Act (15 U.S.C.
637(a)), including, the average time for the processing of
applications, the criteria for program admission, and the
geographic and industrial distribution of new program entrants;
(ii) the developmental assistance provided under the Small
Business Act to such concerns and whether such assistance has been
of benefit to program participants and whether modifications,
additions, or deletions to such assistance should be provided to
further the purposes of the program; such evaluation shall also
include an analysis of whether program benefits, including
contract awards, have been equitably distributed among all program
participants and whether all regions of the Nation have benefitted
from the program in proportion to their respective numbers of
minority owned businesses;
(iii) the system established by this Act for competing
contracts pursuant to section 8(a) of the Small Business Act (15
U.S.C. 637(a)) and whether improved methods could be used,
consistent with the purposes of the program, to better impart
competitive skills, prevent program abuse, and promote the
equitable distribution of awards;
(iv) the appropriate maximum term for program participation;
such evaluation shall take into account relevant industry data,
the developmental cycles of particular industries, and the
financial, managerial and technological needs of such concerns to
become competitive; a study shall be conducted relating to the
fixed program term allowed under statute and the advisability of
adopting alternative terms based on Standard Industrial
Classification Codes or other economic indices;
(v) the data collection system maintained by the Administration
to gather information relative to the program and whether such
system is producing reliable data needed for effective management
and control of the program;
(vi) various techniques that may be used to increase the
participation rate of Federal agencies (as defined pursuant to
section 224 of Public Law 95-507) in the program, to further the
compliance of contractors with section 8(d) of the Small Business
Act (15 U.S.C. 637(d)), and to properly coordinate the program
with the operations of other Federal programs and activities
designed to assist small business concerns owned and controlled by
the socially and economically disadvantaged; and
(vii) the laws and regulatory procedures designed to protect
against program abuse and if additional safeguards are necessary
to protect the integrity of the program;
(C) review and assess the programs described in subparagraph
(B) and whether the congressional purposes for such programs are
being achieved in a manner that is consistent with the intent of
other programs established under Federal law to promote the
development of small business concerns; and
(D) review and assess --
(i) the policies and procedures of major procurement agencies
with respect to setting goals by contractors (and subcontractors)
under section 8(d) of the Small Business Act (15 U.S.C. 637(d)) to
encourage subcontracting opportunities for small business concerns
and small business concerns owned and controlled by socially and
economically disadvantaged individuals;
(ii) the performance of a sample of contractors (and
subcontractors) in attaining the goals established in their
subcontracting plans and in making greater use of small business
concerns and small business concerns owned and controlled by
socially and economically disadvantaged individuals;
(iii) the extent to which liquidated damages have been assessed
under subcontracting plans and whether the inclusion of a
liquidated damage clause furthers the purposes of the
subcontracting program; and
(iv) the special circumstances of contractors providing
commercial products.
(2)(A) Based upon its review, the Commission shall issue an interim
report and a final report to the Congress and to the President.
(B) The interim report shall be issued by December 31, 1990, and
shall detail the methodology pursued to evaluate each issue described in
subparagraphs (A) and (B) of paragraph (1). The Commission shall also
indicate those changes in law or regulation, if any, that should be
considered immediately in order to protect the integrity of the Program
and further the legitimate interests of Program Participants.
(C) The final report shall be issued within 1 year after the interim
report and shall contain detailed findings, conclusions, and
recommendations for such changes in law or regulation as may be
necessary to further the growth and development of minority businesses.
Such findings, conclusions, and recommendations shall be stated for each
issue described udner each such subparagraph.
(c) MEMBERSHIP. -- (1) The Commission shall be composed of fourteen
members to be selected as follows:
(A)(i) The Administrator of the Small Business Administration,
or a designee of the Administrator.
(ii) The Under Secretary of Defense for Acquisition.
(iii) The Secretary of Commerce (or such Secretary's Deputy).
(iv) The Secretary of Transportation (or such Secretary's
Deputy).
(B) Two members shall be representatives of trade or business
associations whose membership are primarily small business
concerns owned and controlled by socially and economically
disadvantaged individuals.
(C) Four members shall be chief executive officers, or
individuals of similar position, from major domestic corporations
two of which shall be minority businesses.
(D) Four members shall be from leading educational institutions
in business administration and management, two of which shall be
from historically Black colleges or universities and minority
institutions (as defined by the Secretary of Education pursuant to
the General Education Provisions Act (20 U. S.C. 1221 et seq.).
(2) Appointments under subparagraphs (B), (C), and (D) of paragraph
(1) shall be made by the President. No more than one-half of the
members appointed under each such subparagraph shall be of the same
political party. No appointed member shall be an officer or employee of
the Federal Government nor of the Congress.
(3) Members appointed under such subparagraphs shall be appointed for
the term of the Commission except if any such appointee becomes an
officer or employee of the Federal Government or of the Congress, such
individual may continue as a member of the Commission for not longer
than the thirty-day period beginning on the date such individual becomes
such an officer or employee.
(4) A vacancy on the Commission shall be filled in the manner in
which the original appointment was made.
(5) Members of the Commission shall serve without pay for such
membership, except members of the Commission shall be entitled to
reimbursement for travel, subsistence, and other necessary expenses
incurred by them in carrying out the functions of the Commission, in the
same manner as persons employed intermittently in the Federal Government
are allowed expenses udner section 5703 of title 5, United States Code.
(6)(A) Four members of the Commission shall constitute a quorum for
the receipt of testimony and other evidence.
(B) A majority of the Commission shall constitute a quorum for the
approval of a report submitted pursuant to paragraph 2.
(C) The Commission shall meet not less than four times a year.
Meetings shall be at the call of the Chairperson.
(7) The Chairperson and Vice Chairperson of the Commission shall be
designated by the President and term of office for such Chairperson and
Vice Chairperson shall be at the discretion of the President.
(d) DIRECTOR AND STAFF. -- (1)(A) The Commission shall have a
Director who shall be appointed by the Chairperson. Upon recommendation
by the Director, the Chairperson may appoint and fix the pay of four
additional personnel.
(B) The Director and staff of the Commission may be appointed without
regard to section 531(b) of title 5, United States Code, and without
regard to the provisions of such title governing appointments in the
competitive service, and may be paid without regard to the provisions of
chapter 51 and subchapter III of chapter 53 of such title relating to
classification and General Schedule pay rates, except that no individual
so appointed may receive pay in excess of the annual rate of basic pay
payable for GS-18 of the General Schedule.
(2) The Commission may procure temporary and intermittent services
under section 3109(b) of title 5 of the United States Code, but at rates
for individuals not to exceed the daily equivalent of the maximum annual
rate of basic pay payable for GS-18 of the General Schedule.
(3) Upon request of the Chairperson, the head of any Federal
department or agency may detail, on a reimbursable basis, any of the
personnel of such agency to the Commission to assist the Commission in
carrying out its duties under this title without regard to section 3341
of title 5 of the United States Code.
(e) POWERS. -- (1) The Commission may, for the purpose of carrying
out this title sit and act at such times and places, hold such hearings,
take such testimony, receive such evidence, and consider such
information as the Commission considers appropriate. The Commission may
administer oaths or affirmations for the receipt of such testimony.
(2) Any member or person within the employ of the Commission may, if
so authorized by the Commission, take any action which the Commission is
authorized to take under this section.
(3) Except as otherwise prohibited by law, the Commission may secure
directly from any department or agency of the United States information
necessary to enable it to carry out its duties under this Act. Upon the
request of the Chairperson of the Commission, the head of such
department or agency shall promptly furnish such information to the
Commission.
(4) The Commission may use the United States mails in the same manner
and under the same conditions as departments and agencies of the United
States.
(5) The Administrator of the General Services Administration shall
provide to the Commission, on a reimbursable basis, such administrative
support services as the Commission may request. In addition, the
Administrator shall, as appropriate, provide to the Commission, upon
request, access to and use of such Federal facilities as may be
necessary for the conduct of its business.
(f) TERMINATION. -- The Commission shall cease to exist on the date
that it transmits its final report to the Congress and to the President.
(g) AUTHORIZATION. -- There are authorized to be appropriated such
sums as may be necessary to carry out this title and they may remain
available until the Commission is terminated. New spending authority or
authority to enter contracts as authorized in the section shall be
effective only to such extent and in such amounts as are provided in
advance in appropriation Acts.
(h) REPEALER. -- Subparagraph (A) of section 7(j)(3) of the Small
Business Act (15 U.S.C. 636(j)(3)(A)) is repealed.
SEC. 601. RELATIONSHIP WITH OTHER PROCUREMENT PROGRAMS.
Section 15(m) of the Small Business Act (15 U.S.C. 644(m)) is amended
to read as follows:
"(m)(1) Each agency subject to the requirements of section 1207 of
the National Defense Authorization Act for Fiscal Year 1987 (10 U.S.C.
2301 note) shall, when implementing such requirements --
"(A) establish policies and procedure that insure that there
will be no reduction in the number of dollar value of contracts
awarded pursuant to this section and section 8(a) in order to
achieve any goal or other program objective; and
"(B) assure that such requirements will not alter or change the
procurement process used to implement this section or section
8(a).
"(2) All procurement center representatives (including those referred
to in subsection (k)(6)), in addition to such other duties as may be
assigned by the Administrator, shall --
"(A) monitor the performance of the procurement activities to
which they are assigned to ascertain the degree of compliance with
the requirements of paragraph (1);
"(B) report to their immediate supervisors all instances of
noncompliance with such requirement; and
"(C) increase, insofar as possible, the number and dollar value
of procurements that may be used for the programs established
under this section, section 8(a), and section 1207 of the National
Defense Authorization Act for Fiscal Year 1987 (10 U.S.C. 2301
note).".
SEC. 602. "15 USC 637 note" INDIAN TRIBE EXEMPTIONS.
(a) COMPETITIVE THRESHOLDS. -- Section 8(a)(16) of the Small
Business Act as added by section 303 of this Act, shall not apply to
Program Participants that are owned and controlled by economically
disadvantaged Indian tribes, as defined pursuant to paragraphs (4) and
(13) of section 8(a) of the Small Business Act (15 U.S.C. 637(a)(4) and
(13)).
(b) JOINT VENTURES. -- The Administration is authorized to award a
contract pursuant to section 8(a) of the Small Business Act (15 U.S.C.
637(a)) to a joint venture notwithstanding the size status of such joint
venture if --
(1) a party to the joint venture is a Program Participant that
is owned and controlled by an economically disadvantaged Indian
tribe (as defined pursuant to paragraphs (4) and (13) of section
8(a) of the Small Business Act (15 U.S.C. 637(a)(4) and (13));
and
(2) such Program Participant:
(A) owns 51 per centum or more of such joint venture;
(B) is located on the reservation of such tribe;
(C) performs most of its activities on such reservation; and
(D) employs members of such tribe for at least 50 per centum of
its total workforce.
(c) LIMITATIONS. -- A Program Participant, as a party to a joint
venture shall receive no more than two contracts due solely to the
provisions of subsection (b).
(d) ELIGIBILITY OF MORE THAN ONE CONCERN. -- The Administration may
permit more than one small business concern owned by a socially and
economically disadvantaged Indian tribe to be eligible for assistance
pursuant to this section 7(j)(10) and section 8(a) of the Small Business
Act (15 U.S.C. 636(j)(10) and 637(a)) if --
(1) the Indian tribe does not own another firm in the same
industry which has been determined to be eligible to receive
contracts under this program, and
(2) the individuals responsible for the management and faily
operations of the concern do not manage more than two Program
Participants.
(e) SUNSET. -- Subsection (b) shall cease to be effective
after September 30, 1991.
SEC. 603. DIRECTORS OF SMALL AND DISADVANTAGED BUSINESS UTILIZATION.
Section 15(k) of the Small Business Act "15 USC 644" is amended by --
(1) amending paragraph (3) to read as follows:
"(3) be responsible only to, and report directly to, the head
of such agency or to the deputy of such head, except that the
director for the Office of the Secretary of Defense shall be
responsible only to, and report directly to, such Secretary or the
Secretary's designee;";
(2) striking "and" at the end of paragraph (7);
(3) striking the period at the end of paragraph (8) and
inserting in lieu thereof ", and"; and
(4) adding at the end thereof the following new paragraph:
"(9) make recommendations to contracting officers as to whether
a particular contract requirement should be awarded pursuant to
subsection (a), or section 8(a) of this Act or section 1207 of
Public Law 99-661. Such recommendations shall be made with due
regard to the requirements of subsection (m), and the failure of
the contracting officer to accept any such recommendations shall
be documented and included within the appropriate contract file.".
SEC. 701. SHORT TITLE.
This title may be cited as the "Small Business Competitiveness
Demonstration Program Act of 1988".
SEC. 702. FINDINGS.
The Congress finds that --
(1) many small business concerns have repeatedly demonstrated
their ability to fulfill a broad range of Government requirements
for products, services (including research, development,
technical, and professional services, and construction, through
the Federal procurement process;
(2) various Congressional mandated reforms to the Federal
procurement process, including the Competition in Contracting Act
of 1984, the Defense Procurement Reform Act of 1984, and the Small
Business and Federal Procurement Competition Enhancement Act of
1984, were designed to eliminate obstacles to competition and
thereby to broaden small business participation; and
(3) traditional agency efforts to implement the mandate for
small business participation in a fair proportion of Federal
procurements as required by section 15(a) of the Small Business
Act have resulted in --
(A) a concentration of procurement contract awards in a limited
number of industry categories, often dominated by small business
concerns, through the use of set-asides, for the purpose of
assuring the attainment of the agency's overall small business
contracting goals; and
(B) inadequate efforts to expand small business participation
in agency procurements of products or services which have
historically demonstrated low rates of small business
participation despite substantial potential for expanded small
business participation.
SEC. 711. SMALL BUSINESS COMPETITIVENESS DEMONSTRATION PROGRAM.
(a) ESTABLISHMENT. -- There is established a Small Business
Competitiveness Demonstration Program (hereafter referred to as "the
Program") pursuant to section 15 of the Office of Federal Procurement
Policy Act (41 U.S.C. 413) to provide for the testing of innovative
procurement methods and procedures. The Administrator of Federal
Procurement Policy shall designate the Administrator of the Small
Business Administration as the executive agent responsible for
conducting the test.
(b) PURPOSES. -- The purposes of the Program are to demonstrate
whether --
(1) the competitive capabilities of small business firms in
certain industry categories will enable them to successfully
compete on an unrestricted basis for Federal contracting
opportunities,
(2) the use of targeted goaling and management techniques by
procuring agencies, in conjunction with the Small Business
Administration, can expand small business participation in Federal
contracting opportunities which have been historically low,
despite adequate numbers of qualified small business contractors
in the economy, and
(3) expanded use of full and open competition, as specified by
the Competition in Contracting Act of 1984 (10 U.S.C. 2302(3) and
41 U.S.C. 403(7)), adversely affects small business participation
in certain industry categories, taking into consideration the
numerical dominance of small firms, the size and scope of most
contracting opportunities, and the competitive capabilities of
small firms.
(c) PROGRAM TERM. -- The Program shall be conducted over a period of
4 years, beginning on January 1, 1989, and ending on December 31, 1992.
(d) APPLICATION. -- The Program shall apply to contract
solicitations for the procurement of services in industry groups
designated in section 717.
SEC. 712. ENHANCED SMALL BUSINESS PARTICIPATION GOALS.
(a) ENHANCED GOALS FOR DESIGNATED INDUSTRY GROUPS. -- Each
participating agency shall establish an annual small business
participation goal that is 40 percent of the dollar value of the
contract awards for each of the designated industry groups. In
attaining its small business participation goal for contract awards for
each of the designated industry groups, each participating agency shall
make a good faith effort to assure that emerging small business concerns
are awarded not less than 15 percent of the dollar value of the contract
awards for each of the designated industry groups.
(b) SPECIAL ASSISTANCE FOR EMERGING SMALL BUSINESS CONCERNS. --
(1) SMALL BUSINESS RESERVE. -- During the term of the Program,
all contract opportunities in the industry groups designated in
section 718 shall be reserved for exclusive competition among
emerging small business concerns in accordance with the
competition standard specified in section 15(j) of the Small
Business Act (15 U.S.C. 644(j)), if the estimated award value of
the contract is equal to or less than the greater of:
(A) $25,000, or
(B) such larger dollar amount established pursuant to paragraph
(2).
(2) ADJUSTMENTS TO THE SMALL BUSINESSS RESERVE. -- If the goal
of awarding emerging small business concerns 15 percent of the
total dollar value of contracts in a designated industry category
is determined not to have been attained, upon the review of award
data conducted in accordance with subsection (d)(1) of this
section, the Administrator for Federal Procurement Policy, to
ensure attainment of such goal, shall prescribe, on a semiannual
asis, appropriate adjustments to the dollar threshold for contract
opportunities in such designated industry category below which
competition shall be conducted exclusively among emerging small
business concerns.
(3) SMALL BUSINESS SMALL PURCHASE RESERVE. -- The requirements
of this subsection dealing with the reserve amount shall apply
notwithstanding the amount specified in section 15(j) of the Small
Business Act (15 U.S.C. 644(j)).
(4) EXCLUSION OF MODIFICATIONS TO EXISTING CONTRACTS ABOVE THE
SMALL PURCHASE THRESHOLD. -- Any modification or follow-on award
to a contract having an initial award value in excess of $25,000
shall not be subject to the limitations on competition required by
this subsection.
(c) TARGETING INDUSTRY CATEGORIES WITH LIMITED SMALL BUSINESS
PARTICIPATION. -- (1) Concurrent with the term of the Small Business
Competitiveness Demonstration Program, the head of each participating
agency shall implement a program to expand small business participation
in the agency's acquisition of selected products and services in 10
industry categories which have historically demonstrated low rates of
small business participation. The products and services to be targeted
for the small business participation expansion program and the special
goals for such program, shall be developed in conjunction with the
Administrator of the Small Business Administration, and shall be subject
to the requirements of section 15(g) of the Small Business Act (15
U.S.C. 644(g)).
(2) The products or services selected for the small business
participation expansion program shall be drawn from industry categories
that:
(A) also are the recipients of substantial purchases by the
Federal Government;
(B) have less than 10 percent of such annual purchases made
from small business concerns; and
(C) have significant amounts of small business productive
capacity that have not been utilized by the Government.
(3) In developing its small business participation expansion program,
each participating agency shall:
(A) prepare, and furnish to the Administration, a detailed,
time-phased strategy (with incremental numerical goals); and
(B) encourage and promote joint ventures, teaming agreements
and other similar arrangements, which permit small business
concerns to effectively compete for contract solicitations for
which an individual small business concern would lack the
requisite capacity or capability needed to establish
responsibility for the award of a contract.
(d) MONITORING AGENCY PERFORMANCE. --
(1) Participating agencies shall monitor the attainment of
their small business participation goals on a quarterly basis.
The initial review by each participating agency shall be completed
not later than June 30, 1989, based on the data for the period
January 1 through March 31, 1989. Thereafter, each review shall
be based on the aggregate of contract award data from the 4
quarters preceding the date of the review for which data is
available.
(2) All awards to small business concerns (including small
business concerns owned and controlled by socially and
economically disadvantaged individuals) shall be counted toward
attainment of the goals specified in subsection (a) of this
section.
(3) Modifications to a participating agency's solicitation
practices, pursuant to section 713(b), shall be made at the
beginning of the quarter following each review, if the rate of
small business participation is less than 40 percent of the
contract awards.
SEC. 713. PROCUREMENT PROCEDURES.
(a) FULL AND OPEN COMPETITION. -- Except as provided in subsections
(b) and (c), each contract opportunity with an anticipated value of
$25,000 or more for the procurement of services from firms in the
designated industry groups (unless set aside pursuant to section 8(a) of
the Small Business Act (15 U.S.C. 637(a)) or section 1207 of the
National Defense Authorization Act for Fiscal Year 1987) shall be
solicited on an unrestricted basis during the term of the Program, if
the participating agency has attained its small business participation
goal pursuant to section 712(a). Any regulatory requirements which are
inconsistent with this provision shall be waived.
(b) RESTRICTED COMPETITION. -- If a participating agency has failed
to attain its small business participation goal under section 712(a),
subsequent contracting opportunities, which are in excess of the reserve
thresholds specified pursuant to section 712(b) shall be solicited
through a competition restricted to eligible small business concerns
pursuant to section 15(a) of the Small Business Act (15 U.S.C. 644(a))
to the extent necessary for such agency to attain its goal. Such
modifications in the participating agency's solicitation practices shall
be made as soon as practicable, but not later than the beginning of the
quarter following completion of the review made pursuant to section
712(d) indicating that changes to solicitation practices are required.
Such participating agency shall comply with the requirements of
subsection (a) upon determining that its contract awards to small
business concerns meet the required goals.
(c) RELATIONSHIP WITH THE COMPETITION IN CONTRACTING ACT OF 1984. --
Subsections (a) and (b) shall not be construed to supersede the
application of the Competition in Contracting Act of 1984 (98 Stat.
1175).
SEC. 714. REPORTING.
(a) AWARDS OF $25,000 OR LESS. -- During the term of the Small
Business Competitiveness Demonstration Program, each award of $25,000 or
less made by a participating agency for the procurement of a service in
any of the designated industry categories shall be reported to the
Federal Procurement Data Center in the same manner as if the purchase
were in excess of $25,000.
(b) SUBCONTRACTING ACTIVITY. -- The Administrator for Federal
Procurement Policy shall devise and implement, during the term of the
Program, a simplified system to test the collection, reporting, and
monitoring of data on subcontract awards to small business concerns and
small business concerns owned and controlled by socially and
economically disadvantaged individuals for --
(1) services in each of the designated industry groups; and
(2) products or services from industry categories selected for
participation in the small business participation expansion
program, pursuant to section 712(c).
(c) SIZE OF SMALL BUSINESS CONCERNS. -- During the term of the
Program, each participating agency shall collect data pertaining to the
size of the small business concern receiving any award for the
procurement of --
(1) services in each of the designated industry groups; and
(2) products or services from industry categories selected for
participation in the small business participation expansion
program, pursuant to section 712(d).
SEC. 715. TEST PLAN AND POLICY DIRECTION.
(a) TEST PLAN. -- The Administrator for Federal Procurement Policy
may further specify the manner and conduct of the test activities
required by this title through a test plan issued pursuant to section 15
of the Office of Federal Procurement Policy Act (41
U.S.C. 413).
(b) POLICY DIRECTION. -- The Administrator for Federal Procurement
Policy, in cooperation with the Administrator of the Small Business
Administration, shall issue a policy directive (which shall be binding
on all participating agencies) to ensure consistent Government-wide
implementation of this title in the Federal Acquisition Regulation,
title 48 of the Code of Federal Regulations, issued pursuant to the
Office of Federal Procurement Policy Act.
SEC. 716. REPORT TO CONGRESS.
(a) IN GENERAL. -- Within 180 days after fiscal year 1991 data is
available from the Federal Procurement Data Center, the Administrator
for Federal Procurement Policy shall report the results of the Small
Business Competitiveness Demonstration Program to the Committees on
Small Business of the Senate and House of Representatives, to the
Committee on Governmental Affairs of the Senate, and to the Committee on
Government Operations of the House of Representatives. The views of the
Administrator of the Small Business Administration shall be included in
the report.
(b) ANALYSIS OF PROGRAM. -- The report shall include a section
prepared by the Administrator of the Small Business Administration
specifying the results of the intensive goaling and management program
conducted to expand small business participation in agency acquisitions
of selected products and services.
(c) RECOMMENDATIONS. -- To the extent the results of the Program
demonstrate sufficiently high small business participation based on
unrestricted contract competition in the designated industry groups, the
report shall include recommendations (if appropriate) for changes in
legislation or modifications of procurement regulations aimed at
increasing reliance on unrestricted competition if high rates of small
business participation in the Federal procurement market can be
maintained.
SEC. 717. DESIGNATED INDUSTRY GROUPS.
(a) IN GENERAL. -- For the purposes of participation in this
Program, the designated industry groups are --
(1) construction (excluding dredging);
(2) refuse systems and related services;
(3) architectural and engineering services (including surveying
and mapping); and
(4) non-nuclear ship repair.
(b) CONSTRUCTION. -- Construction shall include contract awards
assigned one of the standard industrial classification codes that
comprise --
(1) Major Group 15 (Building Construction -- General
Contractors and Operative Builders),
(2) Major Group 16 (Construction Other Than Building
Construction -- General Contractors and Dredging), and
(3) Major Group 17 (Construction -- Special Trade Contractors).
(c) REFUSE. -- Refuse systems and related services shall include
contract awards assigned to standard industrial classification code 4212
or 4953.
(d) ARCHITECTURAL AND ENGINEERING. -- Architectural and engineering
services (including surveying and mapping) shall include contract awards
assigned to standard industrial classification code 7389 (if identified
as pertaining to mapping services), 8711, 8712, or 8713.
(e) ALTERNATIVE DATA. -- In the event that standard industrial
classification codes are not assigned to individual contract awards
reported to the Federal Procurement Data Center by January 1, 1989, the
Program may be conducted on the basis of the product and service codes
used to report data pertaining to such contract awards, related to the
maximum practicable extent to the standard industrial classification
code for the service being provided by the contractor.
SEC. 718. DEFINITIONS.
(a) DESIGNATED INDUSTRY GROUPS. -- "Designated industry groups"
means the groups specified in section 717 for participation in the Small
Business Competitiveness Demonstration Program.
(b) EMERGING SMALL BUSINESS CONCERN. -- "Emerging small business
concern" means a small business concern whose size is no greater than 50
percent of the numerical size standard applicable to the standard
industrial classification code assigned to a contracting opportunity.
(c) PARTICIPATING AGENCY. -- "Participating agency" shall have the
same meaning as the term "executive agency" in section (4)(1) of the
Office of Federal Procurement Policy Act (41 U.S.C. 403(1)). The
Administrator for Federal Procurement Policy is authorized to specify as
part of the Program test plan the list of executive agencies designated
to participate in the Program, which shall include:
(1) the Department of Agriculture,
(2) the Department of Defense (with the Department of the Army,
the Department of the Navy, the Department of the Air Force, and
the defense agencies reporting separately),
(3) the Department of Energy,
(4) the Department of Health and Human Services,
(5) the Department of Transportation,
(6) the Environmental Protection Agency,
(7) the General Services Administration (the Public Building
Service reporting separately),
(8) the National Aeronautics and Space Administration, and
(9) the Veterans Administration.
The Administrator for Federal Procurement Policy is authorized to
require any participating agencies to report spearately in any manner
deemed appropriate to enhance the attainment of the test activities
authorized by this title.
(d) SMALL BUSINESS PARTICIPATION. -- "Small business participation"
shall include the aggregate dollar value of every procurement contract
award made to a small business concern, without regard to whether such
award was based on restricted or unrestricted competition, or was made
on a sole source basis.
(e) STANDARD INDUSTRIAL CLASSIFICATION CODE. -- "Standard industrial
classification code" means a four digit code assigned to an industry
category in the Standard Industrial Classification Manual published by
the Office of Management and Budget in effect on the date of enactment
of this Act.
SEC. 721. ALTERNATIVE PROGRAM FOR CLOTHING AND TEXTILES.
(a) ESTABLISHMENT. -- Subject to the requirements of subsection (b),
of the total dollar amount of contracts for each standard industrial
classification code for clothing and textiles awarded by the Defense
Logistics Agency for each of the fiscal years 1989, 1990, and 1991:
(1) To the maximum extent practicable, 50 percent shall not be
restricted by the size status of the competing business concerns.
(2) To the maximum extent practicable, 50 percent shall be made
available for award pursuant to --
(A) section 8(a) of the Small Business Act (15 U.S.C. 637(a));
(B) section 1207 of the National Defense Authorization Act for
Fiscal Year 1987; and
(C) section 15(a) of the Small Business Act (15 U.S.C. 644(
a)), if the criteria for such awards are met pursuant to part 19.5
(Set-Asides for Small Business) of title 48, Code of Federal
Regulations, as in effect on September 1, 1988.
(b) COMPUTATION. -- In order to calculate the percent limitation
established pursuant to subsection (a), the Department may establish,
after consultation with the Small Business Administration, major
groupings of standard industrial classification codes that are closely
related and apply such limitations to such groupings.
SEC. 722. EXPANDING SMALL BUSINESS PARTICIPATION IN DREDGING.
(a) ESTABLISHMENT. -- During fiscal years 1989, 1990, 1991, and
1992, the Secretary of the Army (hereafter in this section referred to
as the "Secretary") shall conduct a program to expand the participation
of small business concerns and emerging small business concerns in
contracting opportunities for dredging.
(b) ENHANCED GOALS. -- Of the total dollar value of contracts for
dredging, the Department of the Army (hereafter in this section referred
to as the "Department") shall make every reasonable effort to award to
small business concerns:
(1) 20 percent during fiscal year 1989, including 5 percent of
the total dollar value of contracts which is reserved for emerging
small business concerns;
(2) 25 percent during fiscal year 1990, including 7.5 percent
of the total dollar value of contracts which is reserved for
emerging small business concerns;
(3) 30 percent during fiscal year 1991, including 10 percent of
the total dollar value of contracts which is reserved for emerging
small business concerns; and
(4) 30 percent during fiscal year 1992, including 10 percent of
the total dollar value of contracts which is reserved for emerging
small business concerns.
Subcontract awards may be counted towards the attainment of such
goals, provided that there is available a system for the collection of
data relating to the award of subcontracts under dredging contracts
awarded by the Department.
(c) CONTRACT AWARD PROCEDURES. -- (1) Except as provided in
paragraphs (2) and (3), the Department shall solicit and award contracts
for dredging through full and open competition in conformity with
section 2304 of title 10, United States Code, section 15 of the Small
Business Act (15 U.S.C. 644), and the implementing procurement
regulations promulgated in conformity with section 6 of the Office of
Federal Procurement Policy Act (41 U.S.C. 405). Nothing herein shall
impair the award of contracts pursuant to section 8(a) of the Small
Business Act (15 U.S.C. 637(a)) or section 1207 of the National Defense
Authorization Act for Fiscal Year 1987.
(2) Contracting opportunities for dredging shall be reserved for
competition among emerging small business concerns if their estimated
award value is below an amount to be specified by the Administrator for
Federal Procurement Policy (hereafter in this section referred to as the
"Administrator"), upon the recommendation of the Secretary. Such
reserve amount shall be established by the Administrator at the start of
the program at a level which can reasonably be expected to result in the
Department attaining the applicable participation goal for emerging
small business concerns. Such reserve threshold shall be reviewed by
the Secretary and adjusted by the Administrator to the extent necessary
on a semiannual basis beginning after the end of the second quarter of
fiscal year 1989 on the basis of the aggregate of contract awards for
the four fiscal year quarters preceding the date of the review.
(3) The Secretary shall restrict for competition among all eligible
small business concerns such additional contracting opportunities for
dredging in such numbers and at such estimated award values as can
reasonably be expected to result in the Department attaining the
applicable participation goal for small business concerns generally.
(d) ACQUISITION STRATEGIES TO FOSTER SMALL BUSINESS PARTICIPATION.
-- (1) In attaining the goals for participation by small business
concerns and emerging small business concerns, the Secretary is
encouraged to: 10 (A) specify contract requirements and contractual
terms and
conditions that are conducive to competition by small business
concerns and emerging small business concerns, consistent with the
mission or program requirements of the Department;
(B) joint ventures, teaming agreements, and other similar
arrangements, which permit small business concerns to effectively
compete for contract opportunities for which an individual firm
would lack the requisite capacity or capability needed to
establish responsibility for the award of a contract; and
(C) subcontracting through plans negotiated and enforced
pursuant to section 8(d) of the Small Business Act (15 U.S.C.
637(d)) or solicitation requirements specifying minimum
percentages of subcontracting for the purpose of determining the
responsiveness of an offer.
(2) During the term of the program, data shall be collected
pertaining to the actual size of the firm receiving an award as a small
business concern or an emerging small business concern.
(e) SIZE STANDARD. -- For the purposes of the program established by
subsection (a), the size standard pertaining to standard industrial
classification code 1629 (Dredging and Surface Cleanup Activities) in
effect on October 1, 1988 shall remain in effect until September 30,
1990.
(f) REPORTS. --
(1) The Secretary shall furnish a report to the Committees on
Small Business of the Senate and House of Representatives, the
Administrator of the Small Business Administration, and the
Administrator for Federal Procurement Policy within 120 days after
September 30, 1992.
(2) Interim reports shall be submitted annually within 90 days
after the close of each of the fiscal years 1989, 1990, and 1991.
The Secretary may include recommendations regarding adjustments to
the Department's participation goals for small business concerns
and emerging small business concerns and to the applicable size
standard, if the Secretary determines that such goals cannot
reasonably be attained from the pool of firms meeting the current
size standard.
(3) The Secretary of Defense shall issue reports to the
Congress on the operations of the program established pursuant to
this section. Such reports shall detail the effects of the
program on the mobilization base and on small business concerns
and small business concerns owned and controlled by socially and
economically disadvantaged individuals. Interim reports shall be
submitted every six months during the term of the program to the
Committees on Armed Services and Small Business of the House of
Representatives and the Senate.
SEC. 731. "15 USC 644 note" TECHNICAL AMENDMENT.
Section 809(a)(2) of title VIII, division A of Public Law 100-180
(101 Stat. 1130, December 4, 1987) is amended by striking out "October
1, 1988" and inserting in lieu thereof "October 1, 1989.
SEC. 732. REPEALER.
Paragraphs (2) through (5) of subsection 3(a) of the Small Business
Act "15 USC 632 note" (15 U.S.C. 632(a)(2)-(5)) are repealed. Any
numerical size standard that pertains to any of the designated industry
groups, and that is in effect on September 30, 1988, shall remain in
effect for the duration of the Program.
SEC. 741. "15 USC 644 note" SEGMENTATION OF INDUSTRY CATEGORY.
The Small Business Administration, pursuant to the authority of
section 15(a) of the Small Business Act (15 U.S.C. 644(a)), shall
segment the industry category of shipbuilding and ship repair, as
follows:
(1) nuclear shipbuilding and repair;
(2) non-nuclear shipbuilding; and
(3) non-nuclear ship repair, which shall be further segmented
by, at least, East Coast and West Coast facilities.
SEC. 742. DEFINITION OF ARCHITECTURAL AND ENGINEERING SERVICES.
Section 901 of the Federal Property and Administrative Services Act
(40 U.S.C. 541) is amended by striking out paragraph (3) and inserting
the following: 10"(3) The term 'architectural and engineering services'
means --
"(A) professional services of an architectural or engineering
nature, as defined by State law, if applicable, which are required
to be performed or approved by a person licensed, registered, or
certified to provide such services as described in this paragraph;
"(B) professional services of an architectural or engineering
nature performed by contract that are associated with research,
planning, development, design, construction, alteration, or repair
of real property; and
"(C) such other professional services of an architectural or
engineering nature, or incidental services, which members of the
architectural and engineering professions (and individuals in
their employ) may logically or justifiably perform, including
studies, investigations, surveying and mapping, tests,
evaluations, consultations, comprehensive planning, program
management, conceptual design, plans and specifications, value
engineering, construction phase services, soils engineering,
drawing reviews, preparation of operating and maintenance manuals,
and other related services.".
SEC. 801. "15 USC 636 note" REGULATIONS.
The Small Business Administration shall --
(1) within 60 days after the date of enactment of this Act
conduct meetings of present and potential participants in the
program established by section 7(j)(10) of the Small Business Act,
as amended by this Act, to ascertain and consider public comment
on the nature and extent of regulations needed to implement this
Act;
(2) within one hundred and twenty days after the date of
enactment of this Act, publish in the Federal Register proposed
rules and regulations implementing this Act; and
(3) within two hundred and ten days after the date of enactment
of this Act, publish in the Federal Register final rules and
regulations implementing this Act.
SEC. 802. AUTHORIZATIONS.
(a) BUSINESS OPPORTUNITY SPECIALISTS. -- There is hereby authorized
to be appropriated for each of fiscal years 1989 and 1990 the sum of
$3,500,000 to provide for the employment, salaries and expenses of 70
additional Business Opportunity Specialists to carry out the duties
described in sections 201 and 410 of this Act.
(b) TRAINING OF BUSINESS OPPORTUNITY SPECIALISTS. -- There is hereby
authorized to be appropriated for each of fiscal years 1989 and 1990 the
sum of $500,000 to conduct the training and obtain the qualifications
for Business Opportunity Specialists described in section 410.
(c) TRADITIONAL PROCUREMENT CENTER REPRESENTATIVES. -- There is
hereby authorized to be appropriated for each of fiscal years 1989 and
1990 the sum of $735,000 to employ 15 additional Procurement Center
Representatives.
(d) BUSINESS LOANS. -- There is hereby authorized to be appropriated
to the Business Loan and Investment Fund, established under section
4(c)(1) of the Small Business Act (15 U.S.C. 633(a)(1)), the sum of
$10,000,000 each year for fiscal years 1989 and 1990 for both direct and
guaranteed loans made pursuant to section 7(a)(20) of the Small Business
Act, as added by section 302 of this Act.
(e) JOB TRAINING. -- There is hereby authorized to be appropriated
the sum of $2,000,000 for fiscal year 1990 for the job training program
established by section 7(j)(13)(E) of the Small Business Act (15 U.S.C.
636(j)(13)(E)), as added by section 301(b) of this Act.
(f) LIMITATION. -- "15 USC 636 note" (1) Any nw credit authority or
authority to enter into contracts provided for in this Act is to be
effective for any fiscal year only to such extent or in such amounts as
are provided in appropriation Acts.
(2) No funds are authorized to be appropriated in subsequent
appropriation Acts to the Administration for the purpose of making
grants of financial assistance under the so called "Business Development
Expense" program to any firm participating in the programs authorized by
section 7(j)(10) or section 8(a) of the Small Business Act (15 U.S.C.
636(j)(10) and 637(a)).
SEC. 803. "15 USC 631 note" EFFECTIVE DATES.
(a) IN GENERAL. -- Except as otherwise provided, the following
provisions (and the amendments made by such provisions shall take effect
on the date of the enactment of this Act:
(1) Sections 1 and 2.
(2) Section 101.
(3) Sections 202, 203, 204, 206, and 207.
(4) Sections 301(a) and 303(d), (e), and (f).
(5) Sections 405, 406, 408, and 410.
(6) Sections 504 and 505.
(7) Sections 601 and 603.
(8) Titles VII and VIII.
(9) Sections 7(j)(13)(G) and 7(j)(13)(I) of the Small Business
Act (as added by section 301(b)).
(b) SPECIAL RULES. -- (1) Except as otherwise provided, the
following sections (and the amendments made by such sections shall take
effect on June 1, 1989:
(A) Sections 201, 205, and 208.
(B) Sections 301(b), 301(c), 303(a), 303(c), 303(g), 303(h),
and 304.
(C) Sections 401, 402, 403, 404, and 409.
(D) Section 602.
(2) Section 407 shall take effect with respect to contracts entered
into on or after June 1, 1989.
(3) The following sections (and the amendments made by such sections)
shall take effect on October 1, 1989:
(A) Section 209.
(B) Sections 302 and 303(b).
(C) Sections 501, 502, and 503.
(D) Section 7(j)(13)(E) of the Small Business Act (as added by
section 301(b) of this Act).
Approved November 15, 1988.
LEGISLATIVE HISTORY -- H.R. 1807 (S. 1993):
HOUSE REPORTS: No. 100-460 (Comm. on Small Business) and No.
100-1070 (Comm. of Conference).
SENATE REPORTS: No. 100-394 accompanying S. 1993 (Comm. on Small
Business).
CONGRESSIONAL RECORD: Vol. 133 (1987): Dec. 1, considered and
passed House. Vol. 134 (1988): July 7, H.R. 1807 considered and passed
Senate, amended, in lieu of S. 1993. Oct. 12, House agreed to
conference report. Oct. 18, Senate agreed to conference report.
Public Law 100-655, 102 Stat. 3849
Whereas the President has declared AIDS as the number one public
health enemy;
Whereas the Secretary of Health and Human Services has projected
that, by the end of 1991, the cumulative total of all AIDS cases in the
United States will reach 270,000 and result in nearly 180,000 deaths;
Whereas information, education, and public health measures are the
Nation's primary weapons in prevention and control of the spread of
AIDS;
Whereas if the AIDS epidemic is not controlled through a major
national educational, informational, and public health effort, the
devastating human and economic impact on society will be unprecedented
in modern times;
Whereas informing and educating the American public, including the
youth of today, about AIDS is crucial to preventing and controlling the
spread of AIDS: Now, therefore, be it
Resolved by the Senate and House of Representatives of the United
States of America in Congress assembled, That the month of October 1988
is designated as "National AIDS Awareness and Prevention Month", and the
President is authorized and requested to issue a proclamation calling
upon the people of the United States to observe such month with
appropriate activities.
SECTION 101. "36 USC 4101" The National Mining Hall of Fame and
Museum, organized and incorporated under the laws of Colorado, is hereby
recognized as such and is granted a charter.
SEC. 102. "36 USC 4102" The National Mining Hall of Fame and Museum
(hereafter in this title referred to as the "corporation"), shall have
only those powers granted to it through its bylaws and articles of
incorporation filed in the State or States in which it is incorporated
and subject to the laws of such State or States.
SEC. 103. 36 USC 4103" The objects and purposes of the corporation
are those provided in its articles of incorporation including --
(1) to honor citizens, mining leaders, miners, prospectors,
teachers, scientists, engineers, inventors, governmental leaders,
and other individuals, who have helped to make this Nation great
by their outstanding contributions to the establishment,
development, advancement, or improvement of mining in the United
States of America;
(2) to perpetuate the memory of such individuals and record
their contributions and achievements by the erection and
maintenance of such buildings, monuments, and edifices as may be
deemed appropriate as a lasting memorial;
(3) to foster, promote, and encourage a better understanding of
the origins and growth of mining, especially in the United States,
and the part mining has played in changing the economic, social,
and scientific aspects of our Nation;
(4) to establish and maintain a library and museum for
collecting and preserving for posterity, the history of those
honored by the corporation, together with a documentation of their
accomplishments and contributions to mining, including such items
as mining pictures, paintings, books, papers, documents,
scientific data, relics, mementos, artifacts, and things relating
to such items;
(5) to cooperate with other mining organizations which are
actively engaged and interested in similar projects; and
(6) to engage in any and all activities incidental thereto or
necessary, suitable, or proper for the accomplishment of any of
the purposes set forth in this section.
SEC. 104. "36 USC 4104" Eligibility for membership in the
corporation and the rights and privileges of members shall be as
provided in the bylaws of the corporation.
SEC. 105. "36 USC 4105" The board of directors of the corporation
and the responsibilities thereof shall be as provided in the articles of
incorporation of the corporation and in conformity with the laws of the
State or States in which it is incorporated.
SEC. 105. "36 USC 4106" The officers of the corporation, and the
election of such officers shall be as is provided in the articles of
incorporation of the corporation and in conformity with the laws of the
State or States wherein it is incorporated.
SEC. 107. "36 USC 4107" (a) No part of the income or assets of the
corporation shall inure to any member, officer, or director of the
corporation or be distributed to any such person during the life of this
charter. Nothing in this subsection shall be construed to prevent the
payment of reasonable compensation to the officers of the corporation or
reimbursement for actual necessary expenses in amounts approved by the
board of directors.
(b) The corporation shall not make any loan to any officer, director,
or employee of the corporation.
(c) The corporation and any officer and director of the corporation,
acting as such officer or director, shall not contribute to, support, or
otherwise participate in any political activity or in any manner attempt
to influence legislation.
(d) The corporation shall have no power to issue any shares of stock
nor to declare or pay any dividends.
(e) The corporation shall not claim congressional approval or Federal
Government authority for any of its activities.
(f) The corporation shall retain and maintain its status as a
corporation organized and incorporated under the laws of the State of
Colorado.
SEC. 108. "36 USC 4108" The corporation shall be liable for the acts
of its officers and agents when acting within the scope of their
authority.
SEC. 109. "36 USC 4109" With respect to service of process, the
corporation shall comply with the laws of the States in which it is
incorporated and those States in which it carries on its activities in
furtherance of its corporate purposes.
SEC. 110. "36 USC 4110" The corporation shall keep correct and
complete books and records of account and shall keep minutes of any
proceeding of the corporation involving any of its members, the board of
directors, or any committee having authority under the board of
directors. The corporation shall keep at its principal office a record
of the names and addresses of all members having the right of vote. All
books and records of such corporation may be inspected by any member
having the right to vote, or by any agent or attorney of such member,
for any proper purpose, at any reasonable time. Nothing in this section
shall be construed to contravene any applicable State law.
SEC. 111. The first section of the Act entitled "An Act to provide
for audit of accounts of private corporations established under Federal
law", approved August 30, 1964 (36 U.S.C. 1101), is amended by adding at
the end thereof the following:
"(60) The National Mining Hall of Fame and Museum".
SEC. 112. "36 USC 4111" The corporation shall report annually to the
Congress concerning the activities of the corporation during the
preceding fiscal year. Such annual report shall be submitted at the
same time as is the report of the audit required by section 111 of this
title. The report shall not be printed as a public document.
SEC. 113. "36 USC 4112" The right to alter, amend, or repeal this
title is expressly reserved to the Congress.
SEC. 114. "36 USC 4113" For purposes of this title, the term "State"
includes the District of Columbia, the Commonwealth of Puerto Rico, and
the territories and possessions of the United States.
SEC. 115. "36 USC 4114" The corporation shall maintain its status as
an organization exempt from taxation as provided in the Internal Revenue
Code of 1954.
SEC. 116. "36 USC 4115" If the corporation fails to comply with any
of the restrictions or other provisions of this title, the charter
granted by this title shall expire.
Approved November 14, 1988.
LEGISLATIVE HISTORY -- S.J. Res. 192:
CONGRESSIONAL RECORD, Vol. 134 (1988): Oct. 5, considered and passed
Senate. Oct. 21, considered and passed House.
Public Law 100-654, 102 Stat. 3837
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act "5 USC 8901 note" may be cited as the "Federal Employees
Health Benefits Amendments Act of 1988".
SEC. 101. AUTHORITY TO IMPOSE DEBARMENT AND OTHER SANCTIONS.
(a) IN GENERAL. -- Title 5, United States Code, is amended by
inserting after section 8902 the following:
"Section 8902a. Debarment and other sanctions
"(a)(1) For the purpose of this section --
"(A) the term 'provider of health care services or supplies' or
'provider' means a physician, hospital, or other individual or
entity which furnishes health care services or supplies;
"(B) the term 'individual covered under this chapter' or
'covered individual' means an employee, annuitant, family member,
or former spouse covered by a health benefits plan described by
section 8903 or 8903a; and
"(C) an individual or entity shall be considered to have been
'convicted' of a criminal offense if --
"(i) a judgment of conviction for such offense has been entered
against the individual or entity by a Federal, State, or local
court;
"(ii) there has been a finding of guilt against the individual
or entity by a Federal, State, or local court with respect to such
offense;
"(iii) a plea of guilty or nolo contendere by the individual or
entity has been accepted by a Federal, State, or local court with
respect to such offense; or
"(iv) in the case of an individual, the individual has entered
a first offender or other program pursuant to which a judgment of
conviction for such offense has been withheld;
without regard to the pendency or outcome of any appeal (other
than a judgment of acquittal based on innocence) or request for
relief on behalf of the individual or entity.
"(2)(A) Notwithstanding section 8902(j) or any other provision of
this chapter, if, under subsection (b) or (c), a provider is barred from
participating in the program under this chapter, no payment may be made
by a carrier pursuant to any contract under this chapter (either to such
provider or by reimbursement) for any service or supply furnished by
such provider during the period of the debarment.
"(B) Each contract under this chapter shall contain such provisions
as may be necessary to carry out subparagraph (A) and the other
provisions of this section.
"(b) The Office of Personnel Management may bar the following
providers of health care services or supplies from participating in the
program under this chapter:
"(1) Any provider that has been convicted, under Federal or
State law, of a criminal offense relating to fraud, corruption,
breach of fiduciary responsibility, or other financial misconduct
in connection with the delivery of a health care service or
supply.
"(2) Any provider that has been convicted, under Federal or
State law, of a criminal offense relating to neglect or abuse of
patients in connection with the delivery of a health care service
or supply.
"(3) Any provider that has been convicted, under Federal or
State law, in connection with the interference with or obstruction
of an investigation or prosecution of a criminal offense described
in paragraph (1) or (2).
"(4) Any provider that has been convicted, under Federal or
State law, of a criminal offense relating to the unlawful
manufacture, distribution, prescription, or dispensing of a
controlled substance.
"(5) Any provider --
"(A) whose license to provide health care services or supplies
has been revoked, suspended, restricted, or not renewed, by a
State licensing authority for reasons relating to the provider's
professional competence, professional performance, or financial
integrity; or
"(B) that surrendered such a license while a formal
disciplinary proceeding was pending before such an authority, if
the proceeding concerned the provider's professional competence,
professional performance, or financial integrity.
"(c) Whenever the Office determines --
"(1) in connection with a claim presented under this chapter,
that a provider of health care services or supplies --
"(A) has charged for health care services or supplies that the
provider knows or should have known were not provided as claimed;
or
"(B) has charged for health care services or supplies in an
amount substantially in excess of such provider's customary
charges for such services or supplies, or charged for health care
services or supplies which are substantially in excess of the
needs of the covered individual or which are of a quality that
fails to meet professionally recognized standards for such
services or supplies;
"(2) that a provider of health care services or supplies has
knowingly made, or caused to be made, any false statement or
misrepresentation of a material fact which is reflected in a claim
presented under this chapter; or
"(3) that a provider of health care services or supplies has
knowingly failed to provide any information required by a carrier
or by the Office to determine whether a payment of reimbursement
is payable under this chapter or the amount of any such payment or
reimbursement;
the Office may, in addition to any other penalties that may be
prescribed by law, and after consultation with the Attorney General,
impose a civil monetary penalty of not more than $10,000 for any item or
service involved. In addition, such a provider shall be subject to an
assessment of not more than twice the amount claimed for each such item
or service. In addition, the Office may make a determination in the
same proceeding to bar such provider from participating in the program
under this chapter.
"(d) The Office --
"(1) may not initiate any debarment proceeding against a
provider, based on such provider's having been convicted of a
criminal offense, later than 6 years after the date on which such
provider is so convicted; and
"(2) may not initiate any action relating to a civil penalty,
assessment, or debarment under this section, in connection with
any claim, later than 6 years after the date the claim is
presented, as determined under regulations prescribed by the
Office.
"(e) In making a determination relating to the appropriateness of
imposing or the period of any debarment under this section, or the
appropriateness of imposing or the amount of any civil penalty or
assessment under this section, the Office shall take into account --
"(1) the nature of any claims involved and the circumstances
under which they were presented;
"(2) the degree of culpability, history of prior offenses or
improper conduct of the provider involved; and
"(3) such other matters as justice may require.
"(f)(1) The debarment of a provider under subsection (b) or (c) shall
be effective at such time and upon such reasonable notice to such
provider, and to carriers and covered individuals, as may be specified
in regulations prescribed by the Office.
"(2)(A) Except as provided in subparagraph (B), a debarment shall be
effective with respect to any health care services or supplies furnished
by a provider on or after the effective date of such provider's
debarment.
"(B) A debarment shall not apply with respect to inpatient
institutional services furnished to an individual who was admitted to
the institution before the date the debarment would otherwise become
effective until the passage of 30 days after such date, unless the
Office determines that the health or safety of the individual receiving
those services warrants that a shorter period, or that no such period,
be afforded.
"(3) Any notice referred to in paragraph (1) shall specify the date
as of which debarment becomes effective and the minimum period of time
for which such debarment is to remain effective.
"(4)(A) A provider barred from participating in the program under
this chapter may, after the expiration of the minimum period of
debarment referred to in paragraph (3), apply to the Office, in such
manner as the Office may by regulation prescribe, for termination of the
debarment.
"(B) The Office may --
"(i) terminate the debarment of a provider, pursuant to an
application filed by such provider after the end of the minimum
debarment period, if the Office determines, based on the conduct
of the applicant, that --
"(I) there is no basis under subsection (b) or (c) for
continuing the debarment; and
"(II) there are reasonable assurances that the types of actions
which formed the basis for the original debarment have not
recurred and will not recur; or
"(ii) notwithstanding any provision of subparagraph (A),
terminate the debarment of a provider, pursuant to an application
filed by such provider before the end of the minimum debarment
period, if the Office determines that --
"(I) based on the conduct of the applicant, the requirements of
subclauses (I) and (II) of clause (i) have been met; and
"(II) early termination under this clause is warranted based on
the fact that the provider is the sole community provider or the
sole source of essential specialized services in a community, or
other similar circumstances.
"(5) The Office shall --
"(A) promptly notify the appropriate State or local agency or
authority having responsibility for the licensing or certification
of a provider barred from participation in the program under this
chapter of the fact of the debarment, as well as the reasons for
such debarment;
"(B) request that appropriate investigations be made and
sanctions invoked in accordance with applicable law and policy;
and
"(C) request that the State or local agency or authority keep
the Office fully and currently informed with respect to any
actions taken in response to the request.
"(6) The Office shall, upon written request and payment of a
reasonable charge to defray the cost of complying with such request,
furnish a current list of any providers barred from participating in the
program under this chapter, including the minimum period of time
remaining under the terms of each provider's debarment.
"(g)(1) The Office may not make a determination under subsection (b)
or (c) adverse to a provider of health care services or supplies until
such provider has been given written notice and an opportunity for a
hearing on the record. A provider is entitled to be represented by
counsel, to present witnesses, and to cross-examine witnesses against
the provider in any such hearing.
"(2) Notwithstanding section 8912, any person adversely affected by a
final decision under paragraph (1) may obtain review of such decision in
the United States Court of Appeals for the Federal Circuit. A written
petition requesting that the decision be modified or set aside must be
filed within 60 days after the date on which such person is notified of
such decision.
"(3) Matters that were raised or that could have been raised in a
hearing under paragraph (1) or an appeal under paragraph (2) may not be
raised as a defense to a civil action by the United States to collect a
penalty or assessment imposed under this section.
"(h) A civil action to recover civil monetary penalties or
assessments under subsection (c) shall be brought by the Attorney
General in the name of the United States, and may be brought in the
United States district court for the district where the claim involved
was presented or where the person subject to the penalty resides.
Amounts recovered under this section shall be paid to the Office for
deposit into the Employees Health Benefits Fund.
"(i) The Office shall prescribe regulations under which, with respect
to services or supplies furnished by a debarred provider to a covered
individual during the period of such provider's debarment, payment or
reimbursement under this chapter may be made, notwithstanding the fact
of such debarment, if such individual did not know or could not
reasonably be expected to have known of the debarment. In any such
instance, the carrier involved shall take appropriate measures to ensure
that the individual is informed of the debarment and the minimum period
of time remaining under the terms of the debarment.".
(b) CHAPTER ANALYSIS. -- The analysis for chapter 89 of title 5,
United States Code, is amended by inserting after the item relating to
section 8902 the following:
"8902a. Debarment and other sanctions.".
SEC. 102. "5 USC 8902a note" APPLICABILITY; PRIOR CONDUCT.
(a) APPLICABILITY. -- The amendments made by this title shall be
effective with respect to any calendar year beginning, and contracts
entered into or renewed for any calendar year beginning, after the date
of the enactment of this Act.
(b) PRIOR CONDUCT NOT TO BE CONSIDERED. -- In carrying out section
8902a of title 5, United States Code, as added by this title, no
debarment, civil monetary penalty, or assessment may be imposed under
such section based on any criminal or other conduct occurring before the
beginning of the first calendar year which begins after the date of the
enactment of this Act.
SEC. 201. AUTHORITY TO CONTINUE COVERAGE.
(a) AUTHORITY. --
(1) IN GENERAL. -- Chapter 89 of title 5, United States Code,
is amended by inserting after section 8905 the following:
Section 8905a. Continued coverage
"(a) Any individual described in paragraph (1) or (2) of subsection
(b) may elect to continue coverage under this chapter in accordance with
the provisions of this section.
"(b) This section applies with respect to --
"(1) any employee who --
"(A) is separated from service, whether voluntarily or
involuntarily, except that if the separation is involuntary, this
section shall not apply if the separation is for gross misconduct
(as defined under regulations which the Office of Personnel
Management shall prescribe); and
"(B) would not otherwise be eligible for any benefits under
this chapter (determined without regard to any temporary extension
of coverage and without regard to any benefits available under a
nongroup contract); and
"(2) any individual who --
"(A) ceases to meet the requirements for being considered an
unmarried dependent child under this chapter;
"(d)(1)(A) An individual receiving continued coverage under this
section shall be required to pay currently into the Employees Health
Benefits Fund, under arrangements satisfactory to the Office, an amount
equal to the sum of --
"(i) the employee and agency contributions which would be
required in the case of an employee enrolled in the same health
benefits plan and level of benefits; and
"(ii) an amount, determined under regulations prescribed by the
Office, necessary for administrative expenses, but not to exceed 2
percent of the total amount under clause (i).
"(B) Payments under this section to the Fund shall --
"(i) in the case of an individual whose continued coverage is
based on such individual's separation, be made through the agency
which last employed such individual; or
"(ii) in the case of an individual whose continued coverage is
based on a change in circumstances referred to in subsection (c)(
2)(B), be made through --
"(I) the Office, if, at the time coverage would (but for this
section) otherwise have been discontinued, the individual was
covered as the child of an annuitant; or
"(II) if, at the time referred to in subclause (I), the
individual was covered as the child of an employee, the employee's
employing agency as of such time.
"(2) If an individual elects to continue coverage under this section
before the end of the applicable period under subsection (c)(2), but
after such individual's coverage under this chapter (including any
temporary extensions of coverage) expires, coverage shall be restored
retroactively, with appropriate contributions (determined in accordance
with paragraph (1)) and claims (if any), to the same extent and effect
as though no break in coverage had occurred.
"(3)(A) An individual making an election under subsection (c)(2)(B)
may, at such individual's option, elect coverage either as an individual
or, if appropriate, for self and family.
"(B) For the purpose of this paragraph, members of an individual's
family shall be determined in the same way as would apply under this
chapter in the case of an enrolled employee.
"(C) Nothing in this paragraph shall be considered to limit an
individual making an election under subsection (c)(2)(A) to coverage for
self alone.
"(e)(1) Continued coverage under this section may not extend beyond
--
"(A) in the case of an individual whose continued coverage is
based on separation from service, the date which is 18 months
after the effective date of the separation; or
"(B) in the case of an individual whose continued coverage is
based on ceasing to meet the requirements for being considered an
unmarried dependent child, the date which is 36 months after the
date on which the individual first ceases to meet those
requirements, subject to paragraph (2).
"(2) In the case of an individual who --
"(A) ceases to meet the requirements for being considered an
unmarried dependent child;
"(B) as of the day before so ceasing to meet the requirements
referred to in subparagraph (A), was covered as the child of a
former employee receiving continued coverage under this section
based on the former employee's separation from service; and
"(C) so ceases to meet the requirements referred to in
subparagraph (A) before the end of the 18-month period beginning
on the date of the former employee's separation from service,
extended coverage under this section may not extend beyond the date
which is 36 months after the separation date referred to in subparagraph
(C).
"(f)(1) The Office shall prescribe regulations under which, in
addition to any individual otherwise eligible for continued coverage
under this section, and to the extent practicable, continued coverage
may also, upon appropriate written application, be afforded under this
section --
"(A) to any individual who --
"(i) if subparagraphs (A) and (C) of paragraph (10) of section
8901 were disregarded, would be eligible to be considered a former
spouse within the meaning of such paragraph; but
"(ii) would not, but for this subsection, be eligible to be so
considered; and
"(B) to any individual whose coverage as a family member would
otherwise terminate as a result of a legal separation.
"(2) The terms and conditions for coverage under the regulations
shall include --
"(A) consistent with subsection (c), any necessary notification
provisions, and provisions under which an election period of at
least 60 days' duration is afforded;
"(B) terms and conditions identical to those under subsection
(d), except that contributions to the Employees Health Benefits
Fund shall be made through such agency as the Office by regulation
prescribes;
"(C) provisions relating to the termination of continued
coverage, except that continued coverage under this section may
not (subject to paragraph (3)) extend beyond the date which is 36
months after the date on which the qualifying event under this
subsection the date of divorce, annulment, or legal separation, as
the case may be occurs; and
"(D) provisions designed to ensure that any coverage pursuant
to this subsection does not adversely affect any eligibility for
coverage which the individual involved might otherwise have under
this chapter (including as a result of any change in personal
circumstances) if this subsection had not been enacted.
"(3) In the case of an individual --
"(A) who becomes eligible for continued coverage under this
subsection based on a divorce, annulment, or legal separation from
a person who, as of the day before the date of the divorce,
annulment, or legal separation (as the case may be) was receiving
continued coverage under this section for self and family based on
such person's separation from service; and
"(B) whose divorce, annulment, or legal separation (as the case
may be) occurs before the end of the 18-month period beginning on
the date of the separation from service referred to in
subparagraph (A),
extended coverage under this section may not extend beyond the date
which is 36 months after the date of the separation from service, as
referred to in subparagraph (A).".
(2) TABLE OF SECTIONS. -- The table of sections for chapter 89
of title 5, United States Code, is amended by inserting after the
item relating to section 8905 the following:
"8905a. Continued coverage.".
(b) OPTION TO CONVERT TO A NONGROUP CONTRACT AFTER CONTINUED COVERAGE
ENDS. -- Section 8902(g) of title 5, United States Code, is amended by
striking "or former spouse" each place it appears and inserting "former
spouse, or person having continued coverage under section 8905a of this
title".
(c) CHANGE OF COVERAGE BASED ON CHANGE IN FAMILY STATUS. -- Section
8905(e) of title 5, United States Code, is amended by striking "or
former spouse" and inserting "former spouse, or person having continued
coverage under section 8905a of this title".
(d) OPEN SEASON. -- Section 8905(f) of title 5, United States Code,
is amended --
(1) by striking "or former spouse" each place it appears and
inserting "former spouse, or person having continued coverage
under section 8905a of this title"; and
(2) by adding at the end the following:
"(3)(A) In addition to any informational requirements otherwise
applicable under this chapter, the regulations shall include provisions
to ensure that each employee eligible to enroll in a health benefits
plan under this chapter (whether actually enrolled or not) is notified
in writing as to the rights afforded under section 8905a of this title.
"(B) Notification under this paragraph shall be provided by employing
agencies at an appropriate point in time before each period under
paragraph (1) so that employees may be aware of their rights under
section 8905a of this title when making enrollment decisions during such
period.
SEC. 202. TECHNICAL AND CONFORMING AMENDMENTS.
(a) Sections 8902(j), 8902(k)(1), and 8909(d) of title 5, United
States Code, are amended by striking "or former spouse" each place it
appears and inserting "former spouse, or person having continued
coverage under section 8905a of this title".
(b) Section 8903(1) of title 5, United States Code, is amended --
(1) by striking "or former spouses," and inserting "former
spouses, or persons having continued coverage under section 8905a
of this title,"; and
(2) by striking "or former spouse." and inserting "former
spouse, or person having continued coverage under section 8905a of
this title.".
(c) Section 8905(d) of title 5, United States Code, is amended to
read as follows:
"(d) If an employee, annuitant, or other individual eligible to
enroll in a health benefits plan under this chapter has a spouse who is
also eligible to enroll, either spouse, but not both, may enroll for
self and family, or each spouse may enroll as an individual. However,
an individual may not be enrolled both as an employee, annuitant, or
other individual eligible to enroll and as a member of the family.".
SEC. 203. "5 USC 8902 note" APPLICABILITY.
(a) IN GENERAL. -- The amendments made by this title shall apply
with respect to --
(1) any calendar year beginning, and contracts entered into or
renewed for any calendar year beginning, after the end of the
9-month period beginning on the date of the enactment of this Act;
and
(2) any qualifying event occurring on or after the first day of
the first calendar year beginning after the end of the 9-month
period referred to in paragraph (1).
(b) DEFINITION. -- For the purpose of this section, the term
"qualifying event" means any of the following events:
(1) A separation from Government service.
(2) A divorce, annulment, or legal separation.
(3) Any change in circumstances which causes an individual to
become ineligible to be considered an unmarried dependent child
under chapter 89 of such title.
SEC. 301. HEALTH INSURANCE COVERAGE FOR TEMPORARY EMPLOYEES.
(a) IN GENERAL. -- Chapter 89 of title 5, United States Code, is
amended by inserting after section 8906 the following new section:
"Section 8906a. Temporary employees
"(a)(1) The Office of Personnel Management shall prescribe
regulations to provide for offering health benefits plans to temporary
employees (who meet the requirements of paragraph (2)) under the
provisions of this chapter.
"(2) To be eligible to participate in a health benefits plan
offered under this section a temporary employee shall have completed 1
year of current continuous employment, excluding any break in service of
5 days or less.
"(b) Notwithstanding the provisions of section 8906 --
"(1) any temporary employee enrolled in a health benefits plan
under this section shall have an amount withheld from the pay of
such employee, as determined by the Office of Personnel
Management, equal to --
"(A) the amount withheld from the pay of an employee under the
provisions of section 8906; and
"(B) the amount of the Government contribution for an employee
under section 8906; and
"(2) the employing agency of any such temporary employee shall
not pay the Government contribution under the provisions of
section 8906.".
(b) CONFORMING AMENDMENT. -- The table of sections for chapter 89 of
title 5, United States Code, is amended by inserting after the item
relating to section 8906 the following:
"8906a. Temporary employees.".
(c) REGULATIONS. -- Section 8913(b) of title 5, United States Code,
is amended --
(1) in paragraph (2) by striking out "or" at the end thereof;
(2) in paragraph (3) by striking out the period and inserting
in lieu thereof a semicolon and or"; and
(3) by adding at the end thereof the following new paragraph:
"(4) an employee who is employed on a temporary basis and is
eligible under section 8906a(a).".
(d) EFFECTIVE DATE. -- The amendments "5 USC 8906a note" made by
this section shall be effective 120 days after the date of enactment of
this section.
SEC. 401. CONTRIBUTIONS BY JUSTICES AND JUDGES TO THE THRIFT SAVINGS
FUND.
(a) IN GENERAL. -- Subchapter III of chapter 84 of title 5, United
States Code, is amended by adding at the end thereof the following new
section:
"Section 8440a. Justices and judges
"(a)(1) A justice or judge of the United States as defined by section
451 of title 28 may elect to contribute an amount of such individual's
basic pay to the Thrift Savings Fund. Basic pay does not include an
annuity or salary received by a justice or judge who has retired under
section 371(a) or (b) or section 372(a) of title 28, United States Code.
"(2) An election may be made under paragraph (1) only during a period
provided under section 8432(b) for individuals subject to chapter 84 of
this title: Provided, however, That a justice or judge may make the
first such election within 60 days of the effective date of this
section.
"(b)(1) Except as otherwise provided in this subsection, the
provisions of subchapters III and VII of chapter 84 of this title shall
apply with respect to justices and judges making contributions to the
Thrift Savings Fund.
"(2) The amount contributed by a justice or judge shall not exceed 5
percent of basic pay.
"(3) No contributions shall be made for the benefit of a justice or
judge under section 8432(c) of this title.
"(4) Section 8433(b) of this title applies with respect to elections
available to any justice or judge who retires under section 371(a) or
(b) or section 372(a) of title 28. Retirement under section 371(a) or
(b) or section 372(a) of title 28 is a separation from service for the
purposes of subchapters III and VII of chapter 84 of this title.
"(5) Section 8433(d) of this title applies to any justice or judge
who resigns withsout having met the age and service requirements set
forth in section 371(c) of title 28.
"(6) Sums contributed under this section and earnings attributable to
such sums may be invested and reinvested only in the Government
Securities Investment Fund established under section 8438(b)(1)(A) of
this title.
"(7) The provisions of section 8351(b)(7) of this title shall govern
the rights of spouses of justices or judges contributing to the Thrift
Savings Fund under this section.".
(b) CONFORMING AMENDMENT. -- The table of sections for chapter 84 of
title 5, United States Code, is amended by inserting after the item
relating to section 8440 the following:
"8440a. Justices and judges.".
SEC. 402. DESIGNATION OF LEWIS E. MOORE, SR., POST OFFICE BUILDING.
The United States Post Office Building located at 525 Royal Parkway
in Nashville, Tennessee, is designated as the "Lewis E. Moore, Sr., Post
Office Building". Any reference to such building in a law, rule, map,
document, record, or other paper of the United States shall be
considered to be a reference to the "Lewis E. Moore, Sr., Post Office
Building".
Approved November 14, 1988.
LEGISLATIVE HISTORY -- H.R. 5102:
HOUSE REPORTS: No. 100-917 (Comm. on Post Office and Civil Service).
CONGRESSIONAL RECORD, Vol. 134 (1988): Sept. 16, considered and
passed House. Oct. 14, considered and passed Senate, amended. Oct. 19,
House concurred in Senate amendment.
Public Law 100-653, 102 Stat. 3825
Be it enacted by the Senate and House of representatives of the
United States of America in Congress assembled,
SEC. 101. PROHIBITED ACTS.
Section 3 of the Lacey Act Amendments of 1981 (16 U.S.C. 3372) is
amended --
(1) in subsection (a)(1) (16 U.S.C. 3372(a)(1)) by striking
"taken or possessed" and inserting in lieu thereof "taken,
possessed, transported, or sold";
(2 by striking subsection (a)(4) (16 U.S.C. 3372(a)(4)) and
redesignating subsection (a)(5) as subsection (a)(4); and
(3) by adding at the end thereof the following:
"(c) SALE AND PURCHASE OF GUIDING AND OUTFITTING SERVICES AND INVALID
LICENSES AND PERMITS. --
"(1) SALE. -- It is deemed to be a sale of fish or wildlife in
violation of this Act for a person for money or other
consideration to offer or provide --
"(A) guiding, outfitting, or other services; or
"(B) a hunting or fishing license or permit;
for the illegal taking, acquiring, receiving, transporting, or
possessing of fish or wildlife.
"(2) PURCHASE. -- It is deemed to be a purchase of fish or
wildlife in violation of this Act for a person to obtain for money
or other consideration --
"(A) guiding, outfitting, or other services; or
"(B) a hunting or fishing license or permit;
for the illegal taking, acquiring, receiving, transporting, or
possessing of fish or wildlife.
"(d) FALSE LABELING OFFENSES. -- It is unlawful for any person to
make or submit any false record, account, or label for, or any false
identification of, any fish, wildlife, or plant which has been, or is
intended to be --
"(1) imported, exported, transported, sold, purchased, or
received from any foreign country; or
"(2) transported in interstate or foreign commerce.".
SEC. 102. PENALTY.
(a) CIVIL PENALTY. -- Paragraph (1) of section 4(a) of the Lacey Act
Amendments of 1981 (16 U.S.C. 3373(a)(1)) is amended by inserting "and
any person who knowingly violates section 3(d), after "any underlying
law, treaty, or regulation,".
(b) CRIMINAL PENALTY. -- Subsection (d) of section 4 of the Lacey
Act Amendments of 1981 (16 U.S.C. 3373(d)) is amended by adding at the
end the following:
"(3) Any person who knowingly violates section 3(d) --
"(A) shall be fined under title 18, United States Code, or
imprisoned for not more than 5 years, or both, if the offense
involves --
"(i) the importation or exportation of fish or wildlife or
plants; or
"(ii) the sale or purchase, offer of sale or purchase, or
commission of an act with intent to sell or purchase fish or
wildlife or plants with a market value greater than $350; and
"(B) shall be fined under title 18, United States Code, or
imprisoned for not more than 1 year, or both, if the offense does
not involve conduct described in subparagraph (A).".
(c) CONFORMING AMENDMENTS. -- "16 USC 3373" Section 4 is amended in
subsections (a)(1), (d)(1)(A), (d)(1)(B), and (d)(2) by striking "(other
than section 3(b))" each place those words appear and inserting in lieu
thereof "(other than subsections (b) and (d) of section 3)".
SEC. 103. REVIEW OF CIVIL PENALTY.
The first sentence of subsection (c) of section 4 of the Lacey Act
Amendments of 1981 (16 U.S.C. 3373(c)) is amended to read as follows:
"(c) REVIEW OF CIVIL PENALTY. -- Any person against whom a civil
penalty is assessed under this section may obtain review thereof in the
appropriate District Court of the United States by filing a complaint in
such court within 30 days after the date of such order and by
simultaneously serving a copy of the complaint by certified mail on the
Secretary, the Attorney General, and the appropriate United States
attorney.".
SEC. 104. ENFORCEMENT POWERS.
Subsection (b) of section 6 of the Lacey Act Amendments of 1981 (16
U.S.C. 3375(b)) is amended in the first sentence by striking all after
the first clause and before the proviso and inserting the following:
"may, when enforcing this Act, make an arrest without a warrant, in
accordance with any guidelines which may be issued by the Attorney
General, for any offense under the laws of the United States committed
in the person's presence, or for the commission of any felony under the
laws of the United States, if the person has reasonable grounds to
believe that the person to be arrested has committed or is committing a
felony; may search and seize, with or without a warrant, in accordance
with any guidelines which may be issued by the Attorney General;".
SEC. 201. STATE USE OF AMOUNTS FROM STAMP FEES.
Section 203(b)(3) of Public Law 86-797 (commonly known as the Sikes
Act; 16 U.S.C. 670i(b)(3)) is amended to read as follows:
"(3) Except for expenses incurred in the printing, issuing, or
selling of such stamps, the fees collected for such stamps by the State
agency shall be utilized in carrying out conservation and rehabilitation
programs implemented under this title in the State concerned. Such fees
may be used by the State agency to acquire lands or interests therein
from willing sellers or donors to provide public access to program lands
that have no existing public access for enhancement of outdoor
recreation and wildlife conservation: Provided, That the Secretary of
Agriculture and the Secretary of the Interior maintain such access, or
ensure that maintenance is provided for such access, through or to lands
within their respective jurisdiction.".
SEC. 202. AUTHORIZATION OF APPROPRIATIONS.
(a) AUTHORIZATION OF APPROPRIATIONS FOR CONSERVATION PROGRAMS ON
MILITARY RESERVATIONS. -- Subsections (b) and (c) of section 106 of
Public Law 86-797 (16 U.S.C. 670f(b) and (c)) are each amended by
striking "and 1988," and inserting in lieu thereof "1988, 1989, 1990,
1991, 1992, and 1993,".
(b) AUTHORIZATION OF APPROPRIATIONS FOR CONSERVATION PROGRAMS ON
PUBLIC LANDS. -- Subsections (a) and (b) of section 209 of Public Law
86-797 (16 U.S.C. 670o(a) and (b)) are each amended by striking "and
1988," and inserting in lieu thereof "1988, 1989, 1990, 1991, 1992, and
1993,".
HUNTING STAMP ACT AMENDMENT
SEC. 301. WETLANDS LOAN FUND EXTENSION.
The first section of the Act entitled "An Act to promote the
conservation of migratory waterfowl by the acquisition of wetlands, and
for other essential waterfowl habitat, and for other purposes, approved
October 4, 1961 (16 U.S.C. 715k-3, is amended by striking "at the close
of September 30, 1988," and inserting in lieu thereof "when all amounts
authorized to be appropriated have been expended,".
SEC. 302. MIGRATORY BIRD HUNTING STAMP ACT AMENDMENT.
Section 5 of the Act of March 16, 1934 (commonly known as the
Migratory Bird Hunting Stamp Act; 16 U.S.C. 718e(c)) is amended in the
second sentence by inserting after "paid the following: ", after
deducting expenses for marketing,".
SEC. 401. CONVEYANCE.
Subject to section 403, the Secretary of the Interior shall convey,
without consideration, to the University of Georgia all right, title,
and interest of the United States in and to the property described in
section 402, for use by the University of Georgia in its fishery
research and extension program.
SEC. 402. DESCRIPTION OF PROPERTY.
The property referred to in section 401 is a tract of land comprising
approximately 63 acres, and improvements thereto, located in lots 25 and
48 of the 11th District, 3rd Section, Whitfield County, Georgia, as
generally depicted in the legal description of the Cohutta Fish Hatchery
contained in Appendix A of the Memorandum of Agreement between the
United States Fish and Wildlife Service and the University of Georgia,
Agreement No. 14-16-0004-83-926, dated September 29, 1983.
SEC. 403. REVERSIONARY INTEREST OF THE UNITED STATES.
The property conveyed under section 401 of this title shall continue
to be reserved, maintained, and utilized by the University of Georgia in
its fishery research and extension program. If any of the property is
used for any other purpose, the title to such property shall revert to
the United States.
SEC. 404. NAMING OF BO GINN NATIONAL FISH HATCHERY AND AQUARIUM.
The fish hatchery and aquarium known as the Millen National Fish
Hatchery, located on Georgia State Highway 25 north of Millen, Georgia,
shall be known as the "Bo Ginn National Fish Hatchery and Aquarium".
Any reference in any law, map, regulation, document, record, or other
paper of the United States to such hatchery and aquarium is deemed to be
a reference to the "Bo Ginn National Fish Hatchery and Aquarium".
SEC. 405. CONVEYANCE OF FISH HATCHERY TO THE COMMONWEALTH OF
KENTUCKY.
Notwithstanding any other provision of law and within 180 days of the
date of enactment of this Act, the Secretary of the Interior shall
convey, without reimbursement, to the Commonwealth of Kentucky, all of
the right, title, and interest, including the water rights, of the
United States in and to the fish hatchery property located approximately
14 miles due north of the city of Frankfort in Franklin County, Kentucky
and known as the Frankfort National Fish Hatchery, consisting of 114.2
acres, more or less, of land together with any improvements and related
personal property thereon. The property conveyed by this Act shall be
used by the Kentucky Department of Fish and Wildlife Resources as a part
of the Kentucky fishery resources management program and if it is used
for any other purpose, title to such property shall revert to the United
States.
SEC. 406. CONVEYANCE OF FISH HATCHERY TO THE STATE OF NEW HAMPSHIRE.
Notwithstanding any other provision of law, the Secretary of the
Interior shall convey, without reimbursement, to the State of New
Hampshire no later than December 31, 1988, all of the right, title, and
interest of the United States in and to those improvements and related
personal property under the Secretary's jurisdiction, including
buildings, structures and equipment, associated with the United States'
facility known as the Berlin National Fish Hatchery and located in the
northwest corner of Berlin township, Coos County, New Hampshire. The
improvements and related personal property conveyed shall be used by the
New Hampshire Fish and Game Department as a part of the New Hampshire
fishery resources management program and if they are used for any other
purpose, title to such property shall revert to the United States.
SEC. 407. CONVEYANCE OF FISH HATCHERY TO THE STATE OF WISCONSIN.
Notwithstanding any other provision of law and within 180 days of the
date of enactment of this Act, the Secretary of the Interior shall
convey, without reimbursement, to the State of Wisconsin, all of the
right, title, and interest, including the easements and water rights, of
the United States in and to the fish hatchery property located in the
Town of Lake Mills, Wisconsin, and known as the Lake Mills National Fish
Hatchery, consisting of the land together with any improvements and
related personal property thereon. The property conveyed by this Act
shall be used by the Wisconsin Department of Natural Resources as a part
of the Wisconsin fishery resources management program and if it is used
for any other purpose, title to such property shall revert to the United
States.
SEC. 501. ADDITIONAL LANDS.
(a) AUTHORIZATION. -- The Secretary of the Interior is authorized to
acquire certain additional lands adjacent to the Kilauea Point National
Wildlife Refuge on Kauai, Hawaii, which shall become part of the Kilauea
Point National Wildlife Refuge upon acquisition by the Secretary.
(b) DESCRIPTION OF LANDS. -- The lands to be acquired pursuant to
subsection (a) are --
(1) Crater Hill, comprising approximately 101.1 acres; and
(2) Mokolea Point, comprising 37.6 acres.
SEC. 502. CONSTRUCTION AND ENHANCEMENT PROJECTS.
(a) IN GENERAL. -- Within the Kilauea Point National Wildlife Refuge
(upon acquisition of the lands described in section 501), the Secretary
of the Interior may --
(1) construct and maintain access foot trails, including
pedestrian viewing trails, to provide for public access;
(2) construct an access road for these lands to facilitate law
enforcement and ensure public safety;
(3) acquire, or construct, and maintain a fence to provide for
wildlife protection;
(4) conduct native plant restoration and wildlife enhancement
activities; and
(5) establish a recreation area in the vicinity of Kahili Bay.
(b) CONSTRUCTION REQUIREMENT. -- Trails and access roads constructed
under this section shall be constructed in a manner consistent with
preserving the wild and scenic beauty of the wildlife refuge.
SEC. 503. AUTHORIZATION OF FUNDING.
There is hereby authorized to be appropriated $2,600,000 to carry out
the provisions of this title.
SEC. 601. TRAVEL EXPENSES FOR TASK FORCE MEMBERS.
Section 4(i) of the Act entitled "An Act to provide for the
restoration of the fishery resources of the Klamath River Basin, and for
other purposes" (approved October 27, 1986; 16 U.S.C. 460ss-3(i)) is
amended to read as follows:
"(i) EXPENSES. --
"(1) TRAVEL EXPENSES. -- While away from their homes or
regular places of business in the performance of services for the
Task Force, Task Force members shall be allowed travel expenses,
including a per diem allowance in lieu of subsistence, in the same
manner as persons employed intermittently in the Government
service are allowed travel expenses under section 5703 of title 5
of the United States Code. Any Task Force member who is an
employee of an agency or governmental unit and is eligible for
travel expenses from that agency or unit for performing services
for the Task Force is not eligible for travel expenses under this
paragraph.
"(2) LIMITATION ON SPENDING AUTHORITY. -- No money authorized
to be appropriated under section 6 may be used to reimburse any
agency or governmental unit (whose employees are Task Force
members) for time spent by any such employee performing Task Force
duties.".
SEC. 602. PROCEDURES OF COUNCIL AND TASK FORCE.
(a) COUNCIL PROCEDURES. -- Section 3(g)(1) of such Act of October
27, 1986 (16 U.S.C. 460ss-2(g)(1)) is amended to read as follows:
"(1) PROCEDURES. -- The Council shall establish practices and
procedures for the carrying out of its functions under subsection
(b). The procedures shall include requirements that --
"(A) a quorum of the Council must be present before business
may be transacted; and
"(B) no comprehensive plan or recommendation referred to in
subsection (b)(1)(A) or (B) may be adopted by the Council except
by the unanimous vote of all members present and voting.".
(b) TASK FORCE PROCEDURES. -- Section 4(f)(1) of such Act of October
27, 1986 (16 U.S.C. 460ss-3(f)(1)) is amended to read as follows:
"(1) PROCEDURES. -- The Task Force shall establish practices
and procedures for the carrying out of its functions under
subsection (b). The procedures shall include the requirement that
a quorum of the Task Force must be present before business may be
transacted.".
SEC. 603. CONFORMING AND TECHNICAL AMENDMENTS.
Such Act of October 27, 1986, is further amended as follows:
(1) Sections 3(i) and 4(h) are each amended by striking out "or
the State of California" and inserting ", the State of California,
or the State of Oregon".
(2) Section 3(j)(1) is amended by adding at the end thereof the
following new sentence: "Any Council member who is an employee of
an agency or governmental unit and is eligible for travel expenses
from that agency or unit for performing services for the Council
is not eligible for travel expenses under this paragraph.".
(3) The first sentence of section 6(a) "16 USC 460ss-5" is
amended by inserting before the period the following: "and for
the payment of travel expenses under sections 3(j) and 4(i)".
(4) Section 6(b)(3) is amended by striking out "volunteers" and
all that follows thereafter and inserting "volunteers.".
SEC. 604. SHORT TITLE.
Such Act of October 27, 1986, is further amended by adding at the end
thereof the following new section:
"SEC. 8. SHORT TITLE.
"This Act "16 USC 460ss note" may be cited as the 'Klamath River
Basin Fishery Resources Restoration Act'.".
SEC. 701. JOINT FEDERAL-STATE STUDY AND RECOMMENDATIONS.
(a) IN GENERAL. --
(1) STUDY. -- Subject to section 703, the Director of the
United States Fish and Wildlife Service (hereinafter in this title
referred to as the "Director") and the Secretary of the Army
(hereinafter in this title referred to as the "Secretary") shall
--
(A) jointly undertake a comprehensive study of the fishery
resources and fishery habitats of the Russian River (California)
basin (hereinafter in this Act referred to as the "basin") and, on
the basis of such study, develop goals and short-term and
long-term recommended actions for maximizing the restoration and
conservation of such resources and habitats;
(B) invite the Director of the Department of Fish and Game of
the State of California to participate in undertaking the study
and developing recommended actions; and
(C) submit the study and recommended goals and actions to
Congress before October 1, 1991.
(2) PARTICIPATION OF DIRECTOR OF CALIFORNIA DEPARTMENT OF FISH
AND GAME. -- If there is an affirmative response to the
invitation extended under paragraph (1)(B), the Director of the
Department of Fish and Game of the State of California is
authorized to participate jointly with the Director and the
Secretary in undertaking the study and developinng recommended
goals and actions.
(b) MEMORANDUM OF UNDERSTANDING. -- The Director, the Secretary, and
the Director of the Department of Fish and Game of the State of
California, if a joint participant, shall enter into a memorandum of
understanding which shall set forth the respective responsibilities of
each of the agencies in carrying out the study under this title. The
United States Fish and Wildlife Service shall be the lead agency for
purposes of carrying out this title.
(c) CONSULTATION. -- In carrying out this title, the Director and
the Secretary shall, to the maximum extent practicable, consult with the
National Marine Fisheries Service, appropriate commercial and
recreational fishing interests, affected local governments, and (if the
joint participation referred to in subsection (a)(2 is not effected) the
Director of the Department of Fish and Game of the State of California.
SEC. 702. STUDY CONTENTS.
The study referred to in section 701 shall include, but is not
limited to, the following:
(1) DESCRIPTION OF FISHERY RESOURCES AND HABITATS. -- A
description of the fishery resources and fishery habitats of the
basin that is based, to the maximum extent practicable, on new
stream surveys and other field data collected expressly for the
study. The description shall include, but not be limited to --
(A) an identification, and an estimate of the extent of
utilization, of the existing spawning and rearing areas in the
mainstem and tributaries;
(B) an evaluation of the quality and quantity of gravels in the
spawning areas in the mainstem and tributaries;
(C) estimates of the instream flow needs for steelhead and
chinook salmon in the mainstem and tributaries;
(D) population estimates of all fish species in the basin that
are of sport or commercial value;
(E) an evaluation of the effectiveness of screens on water
diversions along the mainstem and tributaries; and
(F) an identification of alternative bank stabilization methods
which would allow for growth of shade producing riparian
vegetation.
(2) DESCRIPTION OF BASIN AND ANALYSIS. -- A description of the
basin and an analysis of how its characteristics, and current and
planned land and water use practices within the basin, have
affected, and can be expected to affect, the fishery resources and
fishery habitats of the basin.
(3) HISTORICAL ACCOUNT OF FISHERY RESOURCES AND HABITATS AND
ANALYSIS. -- A historical account of the fishery resources and
fishery habitats of the basin and an analysis of the current
status and the trends of such resources and habitats, including an
analysis of the existing and projected problems facing such
resources and habitats.
(4) EVALUATION OF INFORMATION. -- An evaluation of the
adequacy of the information that is currently available, and
specification of the additional kinds and quantity of information
that must be obtained, for purposes of carrying out the
conservation and restoration of the fishery resources and the
fishery habitats of the basin.
(5) FEDERAL, STATE, AND LOCAL GOVERNMENT ROLES. -- A
discussion of the respective roles of the Federal, State, and
local government authorities that pertain to the conservation and
restoration of the fishery resources and fishery habitats of the
basin, with particular attention being given to the fishery
management plans and responsibilities of such authorities and the
relationship of such plans with applicable private fishery
management plans.
SEC. 703. COST SHARING.
(a) REQUIREMENT FOR SHARING. -- The State of California may not
jointly participate in undertaking the study referred to in section 701
or in developing goals and recommended actions unless the Director is
satisfied that the State of California will pay, on a basis considered
timely and appropriate by the Director and from non-Federal sources,
one-third of the cost of the study.
(b) IN-KIND CONTRIBUTIONS. -- In addition to cash outlays, the
Director shall consider as payment by the State of California under
subsection (a) the value of in-kind contributions and personal property
provided by, or on behalf of, the State for purposes of carrying out the
study. Valuations made by the Director under this subsection are final
and not subject to judicial review.
(c) IN-KIND CONTRIBUTIONS. -- For purposes of subsection (b),
in-kind contributions may be in the form of personal services rendered
by volunteers.
(d) REGULATIONS. -- The Director shall by regulation establish --
(1) the training, experience, and other qualifications which
such volunteers must have in order for their services to be
considered as in-kind contributions; and
(2) the standards under which the Director will determine the
value of in-kind contributions and real and personal property for
purposes of subsection (b).
(e) LIMITATION. -- The Director may not consider the expenditure,
either directly, or indirectly, with respect to the study of Federal
moneys received by the State of California or any local government of
such State to be a financial contribution from a non-Federal source to
carry out the study.
SEC. 704. AUTHORIZATION OF APPROPRIATIONS.
For carrying out this Act there are authorized to be appropriated to
the Director and to the Secretary a total of not more than $2,000,000
for fiscal years 1990 and 1991.
SEC. 801. AUTHORIZATION OF APPROPRIATIONS.
Section 11 of the Fish and Wildlife Conservation Act of 1980 (16 U.
S.C. 2910) is amended by striking "and 1988." and inserting in lieu
thereof "1988, 1989, and 1990.".
SEC. 802. FEDERAL CONSERVATION OF MIGRATORY NONGAME BIRDS.
After section 12 of the Fish and Wildlife Conservation Act of 1980
(16 U.S.C. 2910), add the following new section:
"SEC. 13. "16 USC 2912" FEDERAL CONSERVATION OF MIGRATORY NONGAME
BIRDS.
"(a) CONSERVATION ACTIVITIES. -- The Secretary shall undertake the
following research and conservation activities, in coordination with
other Federal, State, international and private organizations, to assist
in fulfilling his responsibilities to conserve migratory nongame birds
under existing authorities provided by the Migratory Bird Treaty Act and
Migratory Bird Conservation Act (16 U.S.C. 701-715) and section 8A(e) of
the Endangered Species Act (16 U.S.C. 1537A(e)) implementing the
Convention on Nature Protection and Wildlife Preservation in the Western
Hemisphere:
"(1) monitor and assess population trends and status of
species, subspecies, and populations of all migratory nongame
birds;
"(2) identify the effects of environmental changes and human
activities on species, subspecies, and populations of all
migratory nongame birds;
"(3) identify species, subspecies, and populations of all
migratory nongame birds that, without additional conservation
actions, are likely to become candidates for listing under the
Endangered Species Act of 1973, as amended (16 U.S.C. 1531-1543);
and
"(4) identify conservation actions to assure that species,
subspecies, and populations of migratory nongame birds identified
under paragraph (3 do not reach the point at which the measures
provided pursuant to the Endangered Species Act of 1973, as
amended (16 U.S.C. 1531-1543) become necessary.
"(b) REPORTS. -- Within one year after the date of enactment of this
Act, and at five-year intervals thereafter, the Secretary shall prepare
a report that presents the results of the activities taken pursuant to
subsection (a) of this section and that describes any efforts to carry
out those conservation actions identified pursuant to paragraph (4) of
subsection (a) of this section. Such reports shall be submitted to the
Committee on Environment and Public Works of the United States Senate
and to the Committee on Merchant Marine and Fisheries of the United
States House of Representatives.".
SEC. 901. "16 USC 742m" RELINQUISHMENT OF EXCLUSIVE LEGISLATIVE
JURISDICTION.
Notwithstanding any other provision of law, the Secretary of the
Interior, acting through the Director of the United States Fish and
Wildlife Service, may relinquish to a State, or to a Commonwealth,
territory, or possession of the United States, the exclusive legislative
jurisdiction of the United States over all or part of any United States
Fish and Wildlife Service lands or interests therein, including but not
limited to National Wildlife Refuge System and National Fish Hatchery
System lands, in that State, Commonwealth, territory, or possession.
Relinquishment of exclusive legislative jurisdiction under this
subsection may be accomplished (1) by filing with the Governor (or, if
none, the chief executive officer) of the State, Commonwealth,
territory, or possession concerned, a notice of relinquishment to take
effect upon acceptance thereof, or (2) as the laws of the State,
Commonwealth, territory, or possession may otherwise provide.
SEC. 902. REMOVAL OF THE A. REGINA.
Section 1115 of the Water Resources Development Act of 1986, Public
Law 99-662 (1986), 100 Stat. 4235, shall be amended by striking the
final period thereof and by adding thereafter the following: ":
Provided, That, in furtherance of the work authorized by paragraph (3)
hereof, and conditioned on successful removal of the A. Regina, the
Secretary of the Army is hereby authorized to transfer upon such
conditions as he shall deem fit the title to a Delong Pier Jack-Up Barge
Type A, serial number BPA6814, directly to any entity, including any
private corporation to be used to assist in the removal of the wreck of
the said A. Regina. Procedures otherwise governing the disposal of
government property, shall not apply to the above authorized transfer of
title. The foregoing actions shall be at no cost to the United States,
and shall constitute full compliance by the Secretary of the Army with
the requirement of paragraph (3) hereof.".
SEC. 903. AMENDMENT TO THE NATIONAL FISH AND WILDLIFE FOUNDATION
ESTABLISHMENT ACT.
Section 5 of the Act of March 26, 1984 (16 U.S.C. 3704), otherwise
known as the "National Fish and Wildlife Foundation Establishment Act",
is amended by inserting the following at the end of section 5:
"Notwithstanding any other provision of this section, the Secretary of
the Interior is authorized to continue to provide facilities, and
necessary support services for such facilities, to the National Fish and
Wildlife Foundation after March 26, 1989, on a space available,
reimbursable cost basis.".
SEC. 904. AMENDMENT TO THE NATIONAL WILDLIFE REFUGE SYSTEM
ADMINISTRATION ACT OF 1966.
Subsection (e) of section 4 of the Act of October 15, 1966 (16 U.S.
C. 668dd(e)), otherwise known as the "National Wildlife Refuge System
Administration Act of 1966", is amended by striking "thereunder" and all
that follows through the end of the sentence and inserting in lieu
thereof "thereunder shall be fined under title 18, United States Code,
or imprisoned for not more than 1 year, or both.".
SEC. 905. TECHNICAL CORRECTION.
Section 9(d)(1)(A) of the Endangered Species Act of 1973 (16 U.S.C.
1538(d)(1)(A)), as amended by the African Elephant Conservation Act, is
amended further by striking "recreational purposes); or" and inserting
in lieu thereof "recreational purposes) or plants; or".
SEC. 1001. SHORT TITLE.
This title may be cited as the "Massachusetts Bay Protection Act "33
USC 1251 note" of 1988".
SEC. 1002. "33 USC 1330 note" DEFINITION.
For purposes of this title, the term "Massachusetts Bay" includes
Massachusetts Bay, Cape Cod Bay, and Boston Harbor, consisting of an
area extending from Cape Ann, Massachusetts south to the northern reach
of Cape Cod, Massachusetts.
SEC. 1003. "33 USC 1330 note" FINDINGS AND PURPOSE.
(a) FINDINGS. -- The Congress finds and declares that --
(1) Massachusetts Bay comprises a single major estuarine and
oceanographic system extending from Cape Ann, Massachusetts south
to the northern reaches of Cape Cod, encompassing Boston Harbor,
Massachusetts Bay, and Cape Cod Bay;
(2) several major riverine systems, including the Charles,
Neponset, and Mystic Rivers, drain the watersheds of eastern
Massachusetts into the Bay;
(3) the shorelines of Massachusetts Bay, first occupied in the
middle 1600's, are home to over 4 million people and support a
thriving industrial and recreational economy;
(4) Massachusetts Bay supports important commercial fisheries,
including lobsters, finfish, and shellfisheries, and is home to or
frequented by several endangered species and marine mammals;
(5) Massachusetts Bay also constitutes an important
recreational resource, providing fishing, swimming, and boating
opportunities to the region;
6) rapidly expanding coastal populations and pollution pose
increasing threats to the long-term health and integrity of
Massachusetts Bay;
(7) while the cleanup of Boston Harbor will contribute
significantly to improving the overall environmental quality of
Massachusetts Bay, expanded efforts encompassing the entire
ecosystem will be necessary to ensure its long-term health;
(8) the concerted efforts of all levels of Government, the
private sector, and the public at large will be necessary to
protect and enhance the environmental integrity of Massachusetts
Bay; and
(9) the designation of Massachusetts Bay as an Estuary of
National Significance and the development of a comprehensive plan
for protecting and restoring the Bay may contribute significantly
to its long-term health and environmental integrity.
(b) PURPOSE. -- The purpose of this title is to protect and enhance
the environmental quality of Massachusetts Bay by providing for its
designation as an Estuary of National Significance and by providing for
the preparation of a comprehensive restoration plan for the Bay.
SEC. 1004. DESIGNATION AS ESTUARY OF NATIONAL SIGNIFICANCE.
Section 320(a)(2)(B) of the Federal Water Pollution Control Act (33
U.S.C. 1330(a)(2)(B)) is amended by inserting "Massachusetts Bay,
Massachusetts (including Cape Cod Bay and Boston Harbor);" after
"Buzzards Bay, Massachusetts;".
SEC. 1005. "33 USC 1330 note" FUNDING SOURCES.
Within one year of enactment, the Administrator of the United States
Environmental Protection Agency and the Governor of Massachusetts shall
undertake to identify and make available sources of funding to support
activities pertaining to Massachusetts Bay undertaken pursuant to or
authorized by section 320 of the Clean Water Act, and shall make every
effort to coordinate existing research, monitoring or control efforts
with such activities.
Approved November 14, 1988.
LEGISLATIVE HISTORY -- H.R. 4030:
HOUSE REPORTS: No. 100-732 (Comm. on Merchant Marine and Fisheries).
SENATE REPORTS: No. 100-563 (Comm. on Environment and Public Works).
CONGRESSIONAL RECORD, Vol. 134 (1988): July 26, considered and
passed House. Oct. 14, considered and passed Senate, amended. Oct. 19,
House concurred in Senate amendments.
Public Law 100-652, 102 Stat. 3823
Corps of the Public Health Service Centennial Day".
Whereas the commissioned corps of the Public Health Service of the
United States has compiled an exceptional record of service to the
health of the people of the United States and the world through
concerted efforts at disease prevention, health promotion, environmental
intervention, disease control, biomedical research, health care
delivery, health program management, policy development, and
implementation;
Whereas the commissioned corps of the Public Health Service has been
instrumental in the achievement of many innovations and breakthroughs
throughout the field of health care;
Whereas, because of diverse and varied training and background, the
commissioned corps of the Public Health Service have maintained a highly
effective, mobile, and adaptive cadre of health and medical experts that
have performed efficiently during emergencies, epidemics, and other
adverse situations with courage, proficiency, and valor;
Whereas the officers of the commissioned corps of the Public Health
Service have worked to eradicate diseases such as pellagra and smallpox
and improved the health of mothers, children, and handicapped
individuals through significant accomplishments such as the control of
tuberculosis and the development of protective vaccines;
Whereas the officers of the commissioned corps of the Public Health
Service have worked to increase the protection of consumers through the
Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.) and the
Mental Health Systems Act (42 U.S.C. 9401 et seq.) and provided health
care services for the Merchant Marine, the Coast Guard, the Bureau of
Prisons, American Indians, and Native Alaskans;
Whereas on January 4, 1989, the commissioned corps of the Public
Health Service celebrates the completion of its first century of
existence and begins its second century with the goal of further
measures such as achieving a drug-free society and eradicating the
disease of acquired immune deficiency syndrome: Now, therefore, be it
Resolved by the Senate and House of Representatives of the United
States of America in Congress assembled, That January 4, 1989, is
designated as "National Commissioned Corps of the Public Health Service
Centennial Day". The President of the United States is authorized and
requested to issue a proclamation calling upon the people of the United
States to observe the day with appropriate ceremonies and activities.
Approved November 10, 1988.
LEGISLATIVE HISTORY -- S.J. Res. 395 (H.J. Res. 672:
CONGRESSIONAL RECORD, Vol. 134 (1988): Oct. 21, H.J. Res.
considered and passed House. S.J. Res. 395 considered and passed Senate
and House.
Public Law 100-651, 102 Stat. 3822
Whereas there are over 2,000,000 professional and volunteer
firefighters in the United States;
Whereas firefighters responded to over 2,300,000 fires and 8,700,000
emergencies other than fires in 1984;
Whereas fires annually cause approximately 6,000 deaths and
$10,000,000,000 worth of property damage;
Whereas firefighters have given their lives and risked injury to
preserve the lives of others and to protect our Nation's property;
Whereas the contributions and sacrifices of our valiant firefighters
often go unreported and are inadequately recognized by the public; and
Whereas the work of firefighters deserves the attention and gratitude
of all Americans: Now, therefore, be it
Resolved by the Senate and House of Representatives of the United
States of America in Congress assembled, That November 12, 1988, is
designated as "National Firefighters Day", and the President is
authorized and requested to issue a proclamation calling upon the people
of the United States to observe such day with appropriate ceremonies and
activities.
Approved November 10, 1988.
LEGISLATIVE HISTORY -- H.J. Res. 649
CONGRESSIONAL RECORD, Vol. 134 (1988): Oct. 21, considered and
passed House and Senate.
Public Law 100-650, 102 Stat. 3819
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act "12 USC 3201 note" may be referred to as the Management
Interlocks Revision Act of 1988".
SEC. 2. AFFILIATION THRESHOLD.
Section 202(3)(B) of the Depository Institution Management Interlocks
Act (12 U.S.C. 3201(3)(B)) is amended by striking "50 per centum" each
place such term appears and inserting in lieu thereof "25 percent".
SEC. 3. EXCLUSION OF CERTAIN ADVISORY AND HONORARY DIRECTORS.
Section 202(4) of the Depository Institution Management Interlocks
Act (12 U.S.C. 3201(4)) is amended by striking out "(including an
advisory or honorary director)" and inserting in lieu thereof
"(including an advisory or honorary director, except in the case of a
depository institution with total assets of less than $100,000,000)".
SEC. 4. EXCEPTION FOR FAILED OR FAILING INSTITUTIONS WHICH ARE
ACQUIRED.
Section 205 of the Depository Institution Management Interlocks Act
(12 U.S.C. 3204) is amended by adding at the end thereof the following
new paragraph:
"(7) A depository institution or a depository holding company
which --
"(A) is closed or is in danger of closing, as determined by the
appropriate Federal depository institutions regulatory agency in
accordance with regulations prescribed by such agency; and
"(B) is acquired by another depository institution or
depository holding company,
during the 5-year period beginning on the date of the
acquisition of the depository institution or depository holding
company described in subparagraph (A).".
SEC. 5. LIMITED EXCEPTION FOR DIVERSIFIED SAVINGS AND LOAN HOLDING
COMPANIES.
(a) EXCEPTION ESTABLISHED. -- Section 205 of the Depository
Institution Management Interlocks Act (12 U.S.C. 3204) is amended by
inserting after paragraph (7) (as added by section 4 of this Act) the
following new paragraph:
"(8)(A) A diversified savings and loan holding company (as
defined in section 408(a)(1)(F) of the National Housing Act) with
respect to the service of a director of such company who is also a
director of any nonaffiliated depository institution or depository
holding company (including a savings and loan holding company) if
--
"(i) notice of the proposed dual service is given by such
diversified savings and loan holding company to --
"(I) the appropriate Federal depository institutions regulatory
agency for such company; and
"(II) the appropriate Federal depository institutions
regulatory agency for the nonaffiliated depository institution or
depository holding company of which such person is also a
director,
not less than 60 days before such dual service is proposed to
begin; and
"(ii) the proposed dual service is not disapproved by any such
appropriate Federal depository institutions regulatory agency
before the end of such 60-day period.
"(B) Any appropriate Federal depository institutions regulatory
agency may disapprove, under subparagraph (A)(ii), a notice of
proposed dual service by any individual if such agency finds that
--
"(i) the dual service cannot be structured or limited so as to
preclude the dual service's resulting in a monopoly or substantial
lessening of competition in financial services in any part of the
United States;
"(ii) the dual service would lead to substantial conflicts of
interest or unsafe or unsound practices; or
"(iii) the diversified savings and loan holding company has
neglected, failed, or refused to furnish all the information
required by such agency.
"(C) Any appropriate Federal depository institutions regulatory
agency may, at any time after the end of the 60-day period
referred to in subparagraph (A), require that any dual service by
any individual which was not disapproved by such agency during
such period be terminated if a change in circumstances occurs with
respect to any depository institution or depository holding
company of which such individual is a director that would have
provided a basis for disapproval of the dual service during such
period.".
(b) APPROPRIATE FEDERAL DEPOSITORY INSTITUTIONS REGULATORY AGENCY
DEFINED. --
(1) IN GENERAL. -- Section 202 "12 USC 3201" of the Depository
Institution Management Interlocks Act (12 U.S.C. 3202 is amended
--
A) by adding at the end thereof the following new paragraph:
"(6) the term 'appropriate Federal depository institutions
regulatory agency' means, with respect to any depository
institution or depository holding company, the agency referred to
in section 209 in connection with such institution or company.";
(B) by striking out "and" at the end of paragraph (4); and
(C) by striking out the period at the end of paragraph (5) and
inserting in lieu thereof "; and".
(2) CONFORMING AMENDMENT. -- Section 206(a) of the Depository
Institution Management Interlocks Act (12 U.S.C. 3205(a)) is
amended by striking out "banking agency (as set forth in section
209)" and inserting in lieu thereof "depository institutions
regulatory agency".
SEC. 6. EXTENSION OF GRANDFATHER CLAUSE.
Subsections (a) and (b) of section 206 of the Depository Institution
Management Interlocks Act (12 U.S.C. 3205) are each amended by striking
"ten years" and inserting in lieu thereof "15 years".
Approved November 10, 1988.
LEGISLATIVE HISTORY -- H.R. 4879:
CONGRESSIONAL RECORD, Vol. 134 (1988): Oct. 6, considered and passed
House. Oct. 21, considered and passed Senate.
Public Law 100-649, 102 Stat. 3816
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the "Undetectable Firearms Act of 1988.
SEC. 2. "18 USC 921 note" UNDETECTABLE FIREARMS.
(a) PROHIBITIONS. -- Section 922 of title 18, United States Code, is
amended by adding at the end the following:
"(p)(1) It shall be unlawful for any person to manufacture, import,
sell, ship, deliver, possess, transfer, or receive any firearm --
"(A) that, after removal of grips, stocks, and magazines, is
not as detectable as the Security Exemplar, by walk-through metal
detectors calibrated and operated to detect the Security Exemplar;
or
"(B) any major component of which, when subjected to inspection
by the types of x-ray machines commonly used at airports, does not
generate an image that accurately depicts the shape of the
component. Barium sulfate or other compounds may be used in the
fabrication of the component.
"(2) For purposes of this subsection --
"(A) the term 'firearm' does not include the frame or receiver
of any such weapon;;
"(B) the term 'major component' means, with respect to a
firearm, the barrel, the slide or cylinder, or the frame or
receiver of the firearm; and
"(C) the term 'Security Exemplar' means an object, to be
fabricated at the direction of the Secretary, that is --
"(i) constructed of, during the 12-month period beginning on
the date of the enactment of this subsection, 3.7 ounces of
material type 17-4 PH stainless steel in a shape resembling a
handgun; and
"(ii) suitable for testing and calibrating metal detectors:
Provided, however, That at the close of such 12-month period,
and at appropriate times thereafter the Secretary shall promulgate
regulations to permit the manufacture, importation, sale,
shipment, delivery, possession, transfer, or receipt of firearms
previously prohibited under this subparagraph that are as
detectable as a 'Security Exemplar' which contains 3.7 ounces of
material type 17-4 PH stainless steel, in a shape resembling a
handgun, or such lesser amount as is detectable in view of
advances in state-of-the-art developments in weapons detection
technology.
"(3) Under such rules and regulations as the Secretary shall
prescribe, this subsection shall not apply to the manufacture,
possession, transfer, receipt, shipment, or delivery of a firearm by a
licensed manufacturer or any person acting pursuant to a contract with a
licensed manufacturer, for the purpose of examining and testing such
firearm to determine whether paragraph (1) applies to such firearms.
The Secretary shall ensure that rules and regulations adopted pursuant
to this paragraph do not impair the manufacture of prototype firearms or
the development of new technology.
"(4) The Secretary shall permit the conditional importation of a
firearm by a licensed importer or licensed manufacturer, for examination
and testing to determine whether or not the unconditional importation of
such firearm would violate this subsection.
"(5) This subsection shall not apply to any firearm which --
"(A) has been certified by the Secretary of Defense or the
Director of Central Intelligence, after consultation with the
Secretary and the Administrator of the Federal Aviation
Administration, as necessary for military or intelligence
applications; and
"(B) is manufactured for and sold exclusively to military or
intelligence agencies of the United States.
"(6) This subsection shall not apply with respect to any firearm
manufactured in, imported into, or possessed in the United States before
the date of the enactment of the Undetectable Firearms Act of 1988.".
(b) PENALTY. -- Section 924 of title 18, United States Code, is
amended --
(1) in subsection (a)(1), by striking "or (c)" and inserting in
lieu thereof ", (c), or (f)"; and
(2) by adding at the end the following:
"(f) In the case of a person who knowingly violates section 922(p),
such person shall be fined under this title, or imprisoned not more than
5 years, or both.".
(c) CONFORMING AMENDMENTS. -- Section 925 of title 18, United States
Code, is amended --
(1) in subsection (a), by inserting after chapter" the
following: ", except for provisions relating to firearms subject
to the prohibitions of section 922(p),"; and
(2) by adding at the end the following:
"(f) The Secretary shall not authorize, under subsection (d), the
importation of any firearm the importation of which is prohibited by
section 922(p).".
(d) "49 USC app. 1356 note" RESEARCH AND DEVELOPMENT OF IMPROVED
AIRPORT SECURITY SYSTEMS. -- The Administrator of the Federal Aviation
Administration shall conduct such research and development as may be
necessary to improve the effectiveness of airport security metal
detectors and airport security x-ray systems in detecting firearms that,
during the 10-year period beginning on the effective date of this Act,
are subject to the prohibitions of section 922(p) of title 18, United
States Code.
(e) STUDIES TO IDENTIFY EQUIPMENT CAPABLE OF DISTINGUISHING SECURITY
EXEMPLAR FROM OTHER METAL OBJECTS LIKELY TO BE CARRIED ON ONE'S PERSON.
-- The Attorney General, the Secretary of the Treasury, and the
Secretary of Transportation shall each conduct studies to identify
available state-of-the-art equipment capable of detecting the Security
Exemplar (as defined in section 922(p)(2)(C) of title 18, United States
Code) "18 USC 922 note" and distinguishing the Security Exemplar from
innocuous metal objects likely to be carried on one's person. Such
studies shall be completed within 6 months after the date of the
enactment of this Act and shall include a schedule providing for the
installation of such equipment at the earliest practicable time at
security checkpoints maintained or regulated by the agency conducting
the study. Such equipment shall be installed in accordance with each
schedule. In addition, such studies may include recommendations, where
appropriate, concerning the use of secondary security equipment and
procedures to enhance detection capability at security checkpoints.
(f) EFFECTIVE DATE AND SUNSET PROVISION. -- "18 USC 922 note"
(1) EFFECTIVE DATE. -- This Act and the amendments made by
this Act shall take effect on the 30th day beginning after the
date of the enactment of this Act.
(2) 10-YEAR SUNSET. -- Effective 10 years after the effective
date of this Act --
(A) subsection (p) of section 922 of title 18, United States
Code, is hereby repealed;
(B) subsection (f) of section 924 of such title is hereby
repealed;
(C) subsection (f) of section 925 of such title is hereby
repealed;
(D) section 924(a)(1) of such title is amended by striking ",
(c), or (f)" and inserting in lieu thereof "or (c)"; and
(E) section 925(a) of such title is amended by striking ",
except for provisions relating to firearms subject to the
prohibitions of section 922(p),".
Approved November 10, 1988.
LEGISLATIVE HISTORY -- H.R. 4445 (S. 2180):
HOUSE REPORTS: No. 100-612 (Comm. on the Judiciary).
CONGRESSIONAL RECORD, Vol. 134 (1988): May 10, considered and passed
House. May 25, considered and passed Senate, amended, in lieu of S.
2180. Oct. 20, House concurred in Senate amendment with an amendment.
Oct. 21, Senate concurred in House amendment with an amendment. House
concurred in Senate amendment.
Public Law 100-648, 102 Stat. 3813
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE. -- This Act may be cited as the "Recreation
and Public Purposes Amendment Act of 1988".
SEC. 2. AMENDMENT. -- Section 3 of the Act of June 14, 1926, as
amended (43 U.S.C. 869-2) "43 USC 869 note" is redesignated as
subsection 3(a) and the following new subsections are added at the end
thereof:
"(b) NEW DISPOSAL SITES. -- (1) Notwithstanding the provisions of
subsection (a) of this section, if the Secretary receives an application
for conveyance of land under this Act for the express purpose of solid
waste disposal or for another purpose which the Secretary finds may
include the disposal, placement, or release of any hazardous substance,
the Secretary may convey such land subject only to the provisions of
this subsection.
"(2) Prior to issuance of any conveyance of land under this
subsection the Secretary shall investigate the land covered by an
application for such conveyance to determine whether or not any
hazardous substancwe is present on such land. Such investigation shall
include a review of any available records as to the use of such land and
all appropriate analysis of the soil, water and air associated with such
land. No land shall be conveyed under this subsection if such
investigation indicates that any hazardous substance is present on such
land.
"(3) No application for conveyance under this subsection shall be
acted on by the Secretary until the applicant has furnished evidence,
satisfactory to the Secretary, that a copy of the application and
information concerning the proposed use of the land covered by the
application has been provided to the Environmental Protection Agency and
to all other State and Federal agencies with responsibility for
enforcement of State and Federal laws applicable to lands used for the
disposal, placement, or release of solid waste or any hazardous
substance.
"(4) No application for conveyance under this subsection shall be
acted on by the Secretary until the applicant has given a warranty that
use of the land covered by the application will be consistent with all
applicable State and Federal laws, including laws dealing with the
disposal, placement, or release of hazardous substances, and that the
applicant will hold the United States harmless from any liability that
may arise out of any violation of any such law.
"(5) A conveyance under this subsection shall be made to the extent
that the applicant has demonstrated to the Secretary that the land
covered by an application meets all applicable State and local
requirements and is appropriate in character and reasonable in acreage
in order to meet an existing or reasonably anticipated need for solid
waste disposal or for another proposed use that the Secretary finds may
include the disposal, placement, or release of any hazardous substance.
"(6) A conveyance under this subsection shall be subject to the
following conditions:
"(A) Except as otherwise provided in subparagraphs (B) and (D)
of this paragraph, the document of conveyance shall provide that
the lands conveyed under this subsection shall revert to the
United States, unless substantially all of the lands have been
used, on or before the date five years after the date of
conveyance, for the purpose or purposes specified in the
application, or for other use or uses authorized under section 3(
a) with the consent of the Secretary.
"(B) In the event that at any time after such conveyance any
portion of such lands has not been used for the purpose or
purposes specified in the application, and the party to whom such
lands were conveyed by the Secretary shall transfer ownership of
such unused portion to any other party, the party to whom such
lands were conveyed by the Secretary shall be liable to pay the
Secretary, on behalf of the United States, the fair market value
of such transferred portion as of the date of such transfer,
including the value of any improvements thereon. Subject to
appropriations, all amounts received by the Secretary under this
subparagraph shall be retained by the Secretary and used for the
management of public lands and shall remain available until
expended.
"(C) Pricing for conveyances of land under subsection shall be
in accordance with the provisions of section 2 of this Act, except
that no compensation shall be required for the inclusion of only
the limited reverter specified in this paragraph.
"(D) Each patent issued under this subsection shall specify
that no portion of the lands covered by such patent shall under
any circumstances revert to the United States if such portion has
been used for solid waste disposal or for any other purpose that
the Secretary finds may result in the disposal, placement, or
release of any hazardous substance.
"(7) For purposes of this section the term 'hazardous substance' has
the same meaning as such term has when used in the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. 9601
et seq.).
"(c) EXISTING DISPOSAL SITES. -- (1) Upon the application or with
the concurrence of any party to whom the Secretary, prior to the date of
enactment of this subsection, conveyed land under this Act, the
Secretary may recnounce the reversionary interests of the United States
in such land, or portion thereof, if the Secretary finds that such land,
or portion thereof, has been used for solid waste disposal or for any
other purpose which the Secretary finds may result in the disposal,
placement, or release of any hazardous substance, and the Secretary may
rescind any portion of any patent or other instrument of conveyance
inconsistent with such renunciation. After such renunciation, affected
lands shall not under any circumstances revert to the United States by
the operation of law, and shall cease to be subject to the provisions of
subsection (a) of this section.
"(2) Upon the application or with the concurrence of a party to whom
the Secretary, prior to the date of enactment of this subsection, leased
lands pursuant to this Act, the Secretary may convey in fee the lands
covered by such lease or any portion thereof which have been used for
solid waste disposal or for any other purpose that the Secretary finds
may result in the disposal, placement, or release of any hazardous
substance. Notwithstanding any other provision of this Act, a patent
issued pursuant to this paragraph shall not contain a reverter provision
and the lands covered by such patent shall not under any circumstances
revert to the United States by operation of law after the issuance of
such patent and shall not be subject to the provisions of subsection (a)
of this section.".
SEC. 3. "43 USC 869-2 note" SAVINGS CLAUSE. -- Nothing in this Act
or the amendments made thereby shall be construed to affect the
applicability and operation of the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. 9601 et seq.) as amended, and
the Resource Conservation and Recovery Act of 1976 (42 U. S.C. 6901 et
seq.), as amended.
SEC. 4. "43 USC 869-2 note" CONGRESSIONAL REVIEW. -- (a) The
Secretary shall not make any conveyance of land or renunciation of
reversionary interests under this Act until he has published in the
Federal Register regulations implementing this Act and until sixty days
(not counting days on which the House of Representatives or the Senate
has adjourned for more than three days) after these regulations have
been submitted to the Committee on Energy and Natural Resources of the
Senate and the Committee on Interior and Insular Affairs of the House of
Representatives.
(b) During the first three years after enactment of this Act the
Secretary shall not make any conveyance of land or renunciation of
reversionary interests under this Act until thirty days (not counting
days on which the House of Representatives or the Senate has adjourned
for more than three days) after notice of intention to do so has been
submitted to the Committee on Energy and Natural Resources of the Senate
and the Committee on Interior and Insular Affairs of the House of
Representatives.
Approved November 10, 1988.
LEGISLATIVE HISTORY -- H.R. 4362:
HOUSE REPORTS: No. 100-934 (Comm. on Interior and Insular Affairs).
CONGRESSIONAL RECORD, Vol. 134 1988): Sept. 20, considered and
passed House. Oct. 21, considered and passed Senate, amended. House
concurred in Senate amendment.
Public Law 100-647, 102 Stat. 3342
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; ETC.
(a) SHORT TITLE. -- This Act "26 USC 1 note" may be cited as the
"Technical and Miscellaneous Revenue Act of 1988".
(b) DEFINITIONS. -- For purposes of this Act --
(1) 1986 CODE. -- The term "1986 Code" means the Internal
Revenue Code of 1986.
(2) REFORM ACT -- Except where incompatible with the intent,
the term "Reform Act" means the Tax Reform Act of 1986.
(c) CLERICAL AMENDMENT. -- Paragraph (29) of section 7701(a) of the
1986 Code is amended by striking out "of 1954" and inserting in lieu
thereof "of 1986".
(d) TABLE OF CONTENTS. --
Sec. 1001. Amendments related to title I of the Reform Act.
Sec. 1002. Amendments related to title II of the Reform Act.
Sec. 1003. Amendments related to title III of the Reform Act.
Sec. 1004. Amendments related to title IV of the Reform Act.
Sec. 1005. Amendments related to title V of the Reform Act.
Sec. 1006. Amendments related to title VI of the Reform Act.
Sec. 1007. Amendments related to title VII of the Reform Act.
Sec. 1008. Amendments related to title VIII of the Reform Act.
Sec. 1009. Amendments related to title IX of the Reform Act.
Sec. 1010. Amendments related to title X of the Reform Act.
Sec. 1011. Amendments related to parts I and II of subtitle A of
title XI of the Reform Act.
Sec. 1011A. Amendments related to parts III and IV of subtitle A of
title XI of the Reform Act.
Sec. 1011B. Amendments related to subtitles B and C of title XI of
the Reform Act.
Sec. 1012. Amendments related to title XII of the Reform Act.
Sec. 1013. Amendments related to title XIII of the Reform Act.
Sec. 1014. Amendments related to title XIV of the Reform Act.
Sec. 1015. Amendments related to title XV of the Reform Act.
Sec. 1016. Amendments related to title XVI of the Reform Act.
Sec. 1017. Amendments related to title XVII of the Reform Act.
Sec. 1018. Amendments related to title XVIII of the Reform Act.
Sec. 1019. Effective date.
Sec. 2001. Amendments related to Superfund Revenue Act of 1986.
Sec. 2002. Amendments related to Harbor Maintenance Revenue Act of
1986.
Sec. 2003. Amendments related to Omnibus Budget Reconciliation Act
of 1986.
Sec. 2004. Amendments related to the Revenue Act of 1987.
Sec. 2005. Amendments related to Pension Protection Act and full
funding limitations.
Sec. 2006. Amendments related to section 9201 of the Omnibus Budget
Reconciliation Act of 1987.
Sec. 3001. Tax-free purchases of certain fuels.
Sec. 3002. Expedited refund for certain fuels used in nontaxable
uses.
Sec. 3003. Marine retailers treated as producers.
Sec. 3011. Failure to satisfy continuation requirements of group
health plans.
Sec. 3021. Modifications to discrimination rules applicable to
certain employee benefit plans.
Sec. 3031. Estate tax valuation freezes.
Sec. 3041. Federal tax treatment of income derived by Indians from
exercise of fishing rights secured by treaty, etc.
Sec. 3402. State tax treatment of income derived by Indians from
exercise of fishing rights secured by treaty, etc.
Sec. 3403. Conforming amendments relating to old-age, survivors, and
disability insurance program.
Sec. 3044. Effective date; no inference created.
Sec. 4001. Extension and modification of exclusion for
employer-provided education assistance.
Sec. 4002. Extension and modification of exclusion of amounts
received under group legal services plans.
Sec. 4003. Carryover of post-1987 low-income housing credit dollar
amounts permitted.
Sec. 4004. Simplification of rule where partnership holds qualified
low-income building.
Sec. 4005. Provisions relating to mortgage revenue bonds and
mortgage credit certificates.
Sec. 4006. Extension of certain business energy credits.
Sec. 4007. Extension of credit for increasing research activities.
Sec. 4008. Denial of deduction for 50 percent of amounts allowed as
a research credit.
Sec. 4009. Allocation of research and experimental expenditures.
Sec. 4010. Extension and modification of targeted jobs credit.
Sec. 4011. Treatment of publicly offered regulated investment
companies under 2-percent floor.
Sec. 4012. Extension and modification of provisions relating to
financial institutions.
Sec. 5001. Corporate estimated tax payments.
Sec. 5011. Limitation on unreasonable mortality and other expense
charges under section 7702.
Sec. 5012. Treatment of modified endowment contracts.
Sec. 5013. Valuation of group-term life insurance.
Sec. 5014. Study.
Sec. 5021. Repeal of rules permitting loss transfers by Alaska
Native Corporations.
Sec. 5031. Valuation tables.
Sec. 5032. Rate schedule for tax on estates of nonresidents not
citizens.
Sec. 5033. Disallowance of marital deduction where spouse is not
citizen of United States.
Sec. 5041. Long-term contract provisions.
Sec. 5051. Treatment of certain pooled financing bonds.
Sec. 5052. Treasury regulations relating to student loan bonds.
Sec. 5053. Restrictions on bonds used to provide residential rental
property for family units.
Sec. 5061. Imposition of excise tax on manufacture or importation of
pipe tobacco.
Sec. 5062. Modification of distilled spirits tax credit for flavors
content.
Sec. 5071. Increase in penalty for bad checks.
Sec. 5072. Time for payment of tax on reversion of pension plan
assets.
Sec. 5073. Denial of deduction for certain residential telephone
service.
Sec. 5074. Partnership reporting of unrelated business taxable
income.
Sec. 5075. Options subject to wash sale rules.
Sec. 5076. Interest charge on installment sales of certain property.
Sec. 5077. Applications of net operating loss rules to stock
acquired by an employee stock ownership plan.
Sec. 6001. Treatment of certain amounts paid to or for the benefit
of an institution of higher education.
Sec. 6002. Nonrecognition of gain where one spouse dies before
occupying new residence.
Sec. 6003. Meals on certain vessels and offshore oil platforms
exempt from 80 percent limitation on deduction for meals.
Sec. 6004. Treatment of certain innocent spouses.
Sec. 6005. Interim treatment of certain amounts awarded to Christa
McAuliffe Fellows.
Sec. 6006. Election to claim certain unearned income of child on
parent's return.
Sec. 6007. Jury duty pay remitted to an individual's employer
allowed as a deduction in computing gross income.
Sec. 6008. Business use of automobiles by rural mail carriers.
Sec. 6009. Exclusion from gross income for income from United States
savings bonds used to pay tuition and fees.
Sec. 6010. Modification of additional exemption for student
dependents.
Sec. 6011. Principal residence capital gains exclusion.
Sec. 6026. Amendments to uniform capitalization rules.
Sec. 6027. Treatment of single purpose agricultural or horticultural
structures.
Sec. 6028. Treatment of property used in the farming business.
Sec. 6029. Treatment of certain trees.
Sec. 6030. One-year deferral of proceeds from live-stock sold on
account of drought.
Sec. 6031. Certain repledges permitted.
Sec. 6032. Treatment of indirect holdings through trusts under
section 448 of the 1986 Code.
Sec. 6033. Disaster assistance act payments included in special rule
for taxable year of inclusion.
Sec. 6051. Provisions relating to benefits under discriminatory
plans.
Sec. 6052. Modifications of discrimination rules applicable to
certain annuity contracts.
Sec. 6053. Required distribution beginning date for governmental and
church plans.
Sec. 6054. Section 415 limitation for State and local plans.
Sec. 6055. Minimum participation standards.
Sec. 6056. Study of effect of minimum participation rule on
employers required to provide certain retirement benefits.
Sec. 6057. Prohibition on collectibles not to include State coins.
Sec. 6058. Application of fundings rules to multiple employer plans.
Sec. 6059. Application of section 415 limitations to police and
firefighters.
Sec. 6060. Excise tax on disposition of stock by an ESOP not to
apply to certain forced dispositions.
Sec. 6061. Loans to acquire employer securities.
Sec. 6062. Effective date of section 415 limitations of collectively
bargained agreements.
Sec. 6063. Treatment of pre-1989 elections for dependent care
assistance under cafeteria plans.
Sec. 6064. Modifications to section 457.
Sec. 6065. Exception for governmental plans.
Sec. 6066. Air transportation of cargo and of passengers treated as
same service for purposes of fringe benefits inclusion.
Sec. 6067. Special rule for applying spin-off rules to bridge banks.
Sec. 6068. Income averaging allowed to lump-sum distributions of
alternate payees.
Sec. 6069. Increase in employer reversion tax.
Sec. 6070. Definition of part-time employee for purposes of section
89.
Sec. 6071. Rural telephone cooperatives permitted to have qualified
cash or deferred arrangements.
Sec. 6072. Study of treatment of certain technical personnel.
Sec. 6076. Treatment of certain workers' compensation funds.
Sec. 6077. Special estimated tax payments.
Sec. 6078. Church self-funded death benefit plans treated as life
insurance.
Sec. 6079. Treatment of structured settlements.
Sec. 6080. Variable contracts invested in government securities
permitted.
Sec. 6101. Authority to prescribe tolerances for the volume of wine
in bottles for purposes of the excise tax on wine.
Sec. 6102. Wholesale distributors to administer claims for refund of
gasoline tax.
Sec. 6103. Authority to exempt articles from excise tax on heavy
trucks and trailers where benefit accrues to United States.
Sec. 6104. Application of reduced gasoline tax rate to blenders.
Sec. 6105. Certain educational institutions exempt from user fees on
permits for industrial use of specially denatured distilled spirits.
Sec. 6106. Small procedures exempt from occupational tax on
distilled spirits plants.
Sec. 6107. Quarterly payment of archery excise tax.
Sec. 6108. Extension of time for enacting authorizing legislation
relating to the oil spill liability trust fund.
Sec. 6109. Donated cargo exempt from harbor maintenance tax.
Sec. 6110. Relay cargo.
Sec. 6111. Clarification of meaning of manufacturing under truck
excise tax.
Sec. 6126. Dual resident companies.
Sec. 6127. Election to be treated as qualified electing fund to be
made by taxpayer.
Sec. 6128. Treatment of certain United States affiliate obligations.
Sec. 6129. Treatment of certain insurance branches of foreign
corporations.
Sec. 6130. Treatment of certain instruments under foreign currency
rules.
Sec. 6131. Treatment of insurance companies under chain deficit
rule.
Sec. 6132. Virgin Islands treated as qualified Caribbean basin
country.
Sec. 6133. Treatment of certain United States obligations held by
possession banks.
Sec. 6134. Treatment of certain gambling winnings received by
nonresident aliens.
Sec. 6135. Election to be treated as domestic corporation.
Sec. 6136. Tax exemption for ENJEBI community trust fund.
Sec. 6137. Application of section 912 to judicial employees.
Sec. 6138. Study of definition of United States resident.
Sec. 6139. Sunset of treaty provisions.
Sec. 6140. Treatment of certain awards by the district court of
Guam.
Sec. 6151. Treatment of certain rents under section 2032A.
Sec. 6152. Clarification of treatment of joint and survivor
annuities under Qtip rules.
Sec. 6176. Clarification of small issue bond definition of
manufacturing facility.
Sec. 6177. Rules applicable to tax and revenue anticipation bonds.
Sec. 6178. Amendment to mortgage bond purchase price regulations.
Sec. 6179. Application of security interest test to bond financing
of hazardous waste clean-up activities.
Sec. 6180. Tax-exempt financing for certain rail facilities.
Sec. 6181. Rules relating to rebat on earnings on bona fide debt
service fund.
Sec. 6182. Bonds issued by volunteer fire departments.
Sec. 6183. Disregard of pooled financings in determination of
qualification for small issuer exception.
Sec. 6201. Certain games of chance not treated as unrelated trade or
business.
Sec. 6202. Purchase of insurance by cooperative hospital service
organizations.
Sec. 6203. Cancellation of certain debts originated by or guaranteed
by the United States not taken into account in determining tax exempt
status of certain organizations.
Sec. 6204. Determination of operating foundation status for certain
purposes.
Sec. 6226. Short title.
Sec. 6227. Disclosure of rights of taxpayers.
Sec. 6228. Procedures involving taxpayer interviews.
Sec. 6229. Taxpayers may rely on written advice of Internal Revenue
Service.
Sec. 6230. Taxpayer assistance orders.
Sec. 6231. Basis for evaluation of Internal Revenue Service
employees.
Sec. 6232. Procedures relating to Internal Revenue Service
regulations.
Sec. 6233. Content of tax due, deficiency, and other notices.
Sec. 6234. Installment payment of tax liability.
Sec. 6235. Assistant Commissioner for taxpayer services.
Sec. 6236. Levy and distraint.
Sec. 6237. Review of jeopardy levy and assessment procedures.
Sec. 6238. Administrative appeal of liens.
Sec. 6239. Awarding costs and certain fees in administrative and
court proceedings.
Sec. 6240. Civil cause of action for damages sustained due to
failure to release lien.
Sec. 6241. Civil cause of action for damages sustained due to
certain unauthorized actions by internal revenue service.
Sec. 6242. Assessable penalty for improper disclosure or use of
information by preparers of returns.
Sec. 6243. Jurisdiction to restrain certain premature assessments.
Sec. 6244. Jurisdiction to enforce overpayment determinations.
Sec. 6245. Jurisdiction to review certain sales of seized property.
Sec. 6246. Jurisdiction to redetermine interest on deficiencies.
Sec. 6247. Jurisdiction to modify decisions in certain estate tax
cases.
Sec. 6251. Exchange of information.
Sec. 6252. Provisions relating to previously required studies.
Sec. 6253. Repeal of secretarial authority to prescribe class lives.
Sec. 6254. Amendments related to Crude Oil Windfall Profit Tax Act
of 1980.
Sec. 6276. Authority to pay refunds to certain fiduciaries of
insolvent members of affiliated groups.
Sec. 6277. Application of net operating loss limitations to
bankruptcy reorganizations.
Sec. 6278. Application of section 7503 of 1986 Code for purposes of
section 10222(b) of Revenue Act of 1987.
Sec. 6279. Interest earned by brokers or dealers not taken into
account as personal holding company income.
Sec. 6280. Treatment of certain bank holding companies.
Sec. 6281. Authority to waive appraisal requirement for certain
charitable contributions of property.
Sec. 6282. Distributions by cooperative housing corporations.
Sec. 6301. Repeal of limit on long-term bonds.
Sec. 6302. One-year extension of credit for producing fuel from a
nonconventional source.
Sec. 6303. Certain discharge of debt income not included in adjusted
book income.
Sec. 6304. Nonconventional fuels credit.
Sec. 6305. Treatment of certain family services providers.
Sec. 7001. Short title.
Sec. 7002. References to Railroad Unemployment Insurance Act.
Sec. 7101. Amendments relating to definition of "compensation".
Sec. 7102. Contribution adjustments.
Sec. 7103. Administrative expenses.
Sec. 7104. Notification to employer.
Sec. 7105. Annual report.
Sec. 7106. Amendments relating to railroad unemployment repayment
tax.
Sec. 7107. GAO study of fraud and payment errors.
Sec. 7108. One-year extension of time limit for filing report by
Commission on Railroad Retirement Reform.
Sec. 7201. Waiting period for benefits and benefit increases.
Sec. 7202. Qualifying condition.
Sec. 7203. Increase in maximum permitted subsidiary remuneration.
Sec. 7301. Additional lump sum payment in certain cases.
Sec. 7302. Deletion of last person service as a disqualification.
Sec. 7303. Earnings of disability annuitants.
Sec. 7304. Allowance of credit for military service.
Sec. 8001. Interim disability benefits in cases of delayed final
decisions.
Sec. 8002. Application of earnings test in year of individual's
death.
Sec. 8003. Phaseout of reduction in windfall benefits.
Sec. 8004. Denial of benefits to individuals deported or ordered
deported on the basis of associations with the Nazi Government of
Germany during World War II.
Sec. 8005. Modifications in the term of office of public members of
the board of trustees of the social security trust funds.
Sec. 8006. Continuation of disability benefits during appeal.
Sec. 8007. Exemption from social security for employers and
employees who are both members of certain religious faiths.
Sec. 8008. Blood donor locator service.
Sec. 8009. Requirement of social security account number as a
condition for receipt of social security benefits.
Sec. 8010. Substitution of certificate of election for application
to establish entitlement for certain reduced widow's and widower's
benefits.
Sec. 8011. Calculation of the windfall benefit guarantee amount
based on pension amounts payable in the first month of concurrent
entitlement rather than concurrent eligibility.
Sec. 8012. Consolidation of reports on continuing disability
reviews.
Sec. 8013. Exclusion of employees separated from employment before
January 1, 1989, from rule including as wages taxable under FICA certain
payments for group-term life insurance.
Sec. 8014. Clarification of applicability of Government pension
offset to certain Federal employees.
Sec. 8015. Amendments to rules governing social security coverage of
Federal employment.
Sec. 8016. Technical corrections in OASDI provisions.
Sec. 8017. Certain cash wages paid to seasonal agricultural laborers
excluded from OASDI coverage.
Sec. 8018. Certain employer pension contributions not included in
FICA wage base.
Sec. 8019. Reports regarding certain disability-related benefits.
Sec. 8101. Extension of prohibition against implementation of
certain proposed regulations.
Sec. 8102. Review of policy governing use of AFDC funds to meet
emergency needs of families eligible for AFDC through emergency
assistance or special needs payments; report to Congress.
Sec. 8103. Disregard of certain housing assistance payments in
determining income and resources under SSI program.
Sec. 8104. Foster care independent living initiatives.
Sec. 8105. Technical corrections to Family Support Act of 1988.
Sec. 8201. Delay in reporting date for National Commission on
Children.
Sec. 8301. Self-employment demonstration project.
Sec. 8401. Extension of disproportionate share provisions.
Sec. 8402. Maintenance of bad debt collection policy.
Sec. 8403. Application of wage indices in case of areas affected by
section 4005(a)(1) of OBRA of 1987.
Sec. 8404. Demonstration projects with respect to chronic
ventilator-dependent units in hospitals.
Sec. 8405. Election of personnel policy for PROPAC employees.
Sec. 8411. Elimination of waivers of 50:50 rule for HMO enrollment.
Sec. 8412. Increase in authorization for the patient outcome
assessment research program.
Sec. 8413. Delay in reporting deadline for the United States
Bipartisan Commission on Comprehensive Health Care.
Sec. 8421. Budget neutrality adjustment for certified registered
nurse anesthetists.
Sec. 8422. Coverage of psychologists' services when provided
off-site as part of a treatment plan.
Sec. 8423. Nonapplication of certain requirements to physical
therapists in independent practice.
Sec. 8424. Functions of physician payment review commission.
Sec. 8425. Moratorium on laboratory payment demonstration extended.
Sec. 8426. Study of trip fees for clinical laboratories.
Sec. 8431. Delay in issuance of final regulations concerning the use
of voluntary contributions and provider-paid taxes by States to receive
Federal matching funds.
Sec. 8432. Medicaid long-term care waiver program.
Sec. 8433. Extension of time period for submission of correction and
reduction plans for certain intermediate care facilities for the
mentally retarded.
Sec. 8434. Correction relating to medicare buy-in.
Sec. 8435. Clarification of Federal financial participation for
case-management services.
Sec. 8436. Determination of premium amounts for extended medical
assistance.
Sec. 9001. Trade technical amendments.
Sec. 9002. Foreign trade zones.
Sec. 9003. Report on the small business innovation research program.
Sec. 9004. Extension of certain existing suspensions of duty and
duty reductions.
Sec. 10001. Short title.
Sec. 10002. Addition to Manassas Battlefield Park.
Sec. 10003. Visual protection.
Sec. 10004. Highway relocation.
SEC. 1001. AMENDMENTS RELATED TO TITLE I OF THE REFORM ACT.
(a) AMENDMENTS RELATED TO SECTION 101 OF THE REFORM ACT. --
(1) Paragraph (2) of section 6867(b) of the 1986 Code is
amended by striking out "at a 50-percent rate" and inserting in
lieu thereof "at the highest rate of tax specified in section 1".
(2)(A) Section 531 of the 1986 Code is amended to read as
follows:
"SEC. 531. IMPOSITION OF ACCUMULATED EARNINGS TAX.
"In addition to other taxes imposed by this chapter, there is hereby
imposed for each taxable year on the accumulated taxable income (as
defined in section 535) of each corporation described in section 532, an
accumulated earnings tax equal to 28 percent of the accumulated taxable
income."
(B) The amendment "26 USC 531 note" made by subparagraph (A)
shall apply to taxable years beginning after December 31, 1987.
Such amendment shall not be treated as a change in a rate of tax
for purposes of section 15 of the 1986 Code.
(3) The last sentence of section 1(g)(2) of the 1986 Code is
amended by inserting before the period at the end thereof the
following: "and subparagraph (B) shall be applied as if a
deduction for a personal exemption were allowable under section
151 to such individual for such individual's spouse."
(b) AMENDMENTS RELATED TO SECTION 102 OF THE REFORM ACT. --
(1) Paragraph (5) of section 63(c) of the 1986 Code is amended
--
(A) by striking out "the standard deduction applicable" and
inserting in lieu thereof "the basic standard deduction
applicable", and
(B) by striking out "STANDARD DEDUCTION" in the paragraph
heading and inserting in lieu thereof "BASIC STANDARD DEDUCTION".
(2) Subclause (I) of section 6012(a)(1)(C)(i) of the 1986 Code
is amended to read as follows:
"(I) income (other than earned income) in excess of the sum of
the amount in effect under section 63(c)(5)(A) plus the additional
standard deduction (if any) to which the individual is entitled,
or".
(3)(A) Subparagraph (A) of section 62(a)(2) of the 1986 Code is
amended by adding at the end thereof the following new sentence:
"The fact that the reimbursement may be provided by a third party
shall not be determinative of whether or not the preceding
sentence applies."
(B) Paragraph (2) of section 527(e) of the 1986 Code (defining
exempt function) is amended by adding at the end thereof the
following new sentence: "Such term includes the making of
expenditures relating to an office described in the preceding
sentence which, if incurred by the individual, would be allowable
as a deduction under section 162(a)."
(c) AMENDMENT RELATED TO SECTION 111 OF THE REFORM ACT. -- Paragraph
(3) of section 32(i) of the 1986 Code is amended to read as follows:
"(3) ROUNDING. -- If any dollar amount after being increased
under paragraph (1) is not a multiple of $10, such dollar amount
shall be rounded to the nearest multiple of $10 (or, if such
dollar amount is a multiple of $5, such dollar amount shall be
increased to the next higher multiple of $10)."
(d) AMENDMENTS RELATED TO SECTION 123 OF THE REFORM ACT. --
(1)(A) Clause (ii) of section 4941(d)(2)(G) of the 1986 Code is
amended to read as follows:
"(ii) scholarships and fellowship grants which would be subject
to the provisions of section 117(a) (as in effect on the day
before the date of the enactment of the Tax Reform Act of 1986)
and are to be used for study at an educational organization
described in section 170(b)(1)(A)(ii),".
(B) Paragraph (1) of section 4945(g) of the 1986 Code is
amended to read as follows:
"(1) the grant constitutes a scholarship or fellowship grant
which would be subject to the provisions of section 117(a) (as in
effect on the day before the date of the enactment of the Tax
Reform Act of 1986) and is to be used for study at an educational
organization described in section 170(b)(1)(A)(ii),".
(2)(A) The second sentence of section 1441(b) of the 1986 Code
is amended to read as follows: "The items of income referred to
in subsection (a) from which tax shall be deducted and withheld at
the rate of 14 percent are amounts which are received by a
nonresident alien individual who is temporarily present in the
United States as a nonimmigrant under subparagraph (F), (J), or
(M) of section 101(a)(15) of the Immigration and Nationality Act
and which are --
"(1) incident to a qualified scholarship to which section 117(
a) applies, but only to the extent includible in gross income; or
"(2) in the case of an individual who is not a candidate for a
degree at an educational organization described in 170(b)(1)(A)(
ii), granted by --
"(A) an organization described in section 501(c)(3) which is
exempt from tax under section 501(a),
"(B) a foreign government,
"(C) an international organization, or a binational or
multinational educational and cultural foundation or commission
created or continued pursuant to the Mutual Educational and
Cultural Exchange Act of 1961, or
"(D) the United States, or an instrumentality or agency
thereof, or a State, or a possession of the United States, or any
political subdivision thereof, or the District of Columbia,
as a scholarship or fellowship for study, training, or research
in the United States."
(B) Subsection (c) of section 871 of the 1986 Code is amended
--
(i) by striking out "section 1441(b)(1) or (2)" and inserting
in lieu thereof "the second sentence of section 1441(b)"; and
(ii) by striking out "(F) or (J)" each place it appears and
inserting in lieu thereof "(F), (J), or (M)".
(C) The following provisions of the 1986 Code are each amended
by striking out "(F) or (J)" each place it appears and inserting
in lieu thereof "(F), (J), or (M)":
(i) Section 3121(b)(19).
(ii) Section 3231(e)(1).
(iii) Section 3306(c)(19).
(D) Clause (i)(I) of section 7701(b)(5)(D) of the 1986 Code is
amended by striking out "subparagraph (F)" and inserting in lieu
thereof "subparagraph (F) or (M)".
(E) Section 210(a)(19) of the Social Security Act "42 USC 410"
is amended by striking out "(F) or (J)" each place it appears and
inserting in lieu thereof "(F), (J), or (M)".
(e) AMENDMENT RELATED TO SECTION 131 OF THE REFORM ACT. -- Subsection
(f) of section 86 of the 1986 Code is amended by inserting "and" at the
end of paragraph (3), by striking out paragraph (4), and by
redesignating paragraph (5) as paragraph (4).
(f) AMENDMENTS RELATED TO SECTION 132 OF THE REFORM ACT. --
(1) Section 67 of the 1986 Code is amended by adding at the end
thereof the following new subsection:
"(f) COORDINATION WITH OTHER LIMITATION. -- This section shall be
applied before the application of the dollar limitation of the last
sentence of section 162(a) (relating to trade or business expenses)."
(2) Paragraph (4) of section 67(b) of the 1986 Code is amended
--
(A) by striking out "deduction" and inserting in lieu thereof
"deductions", and
(B) by inserting before the comma at the end thereof "and
section 642(c) (relating to deduction for amounts paid or
permanently set aside for a charitable purpose)".
(3) Subsection (e) of section 67 of the 1986 Code is amended to
read as follows:
"(e) DETERMINATION OF ADJUSTED GROSS INCOME IN CASE OF ESTATES AND
TRUSTS. -- For purposes of this section, the adjusted gross income of
an estate or trust shall be computed in the same manner as in the case
of an individual, except that -- 10"(1) the deductions for costs which
are paid or incurred in
connection with the administration of the estate or trust and
which would not have been incurred if the property were not held
in such trust or estate, and
"(2) the deductions allowable under sections 642(b), 651, and
661,
shall be treated as allowable in arriving at adjusted gross income.
Under regulations, appropriate adjustments shall be made in the
application of part I of subchapter J of this chapter to take into
account the provisions of this section."
(4) Subsection (c) of section 67 of the 1986 Code is amended by
striking out the last sentence and inserting in lieu thereof the
following: "The preceding sentence shall not apply --
"(1) with respect to cooperatives and real estate investment
trusts, and
"(2) except as provided in regulations, with respect to estates
and trusts."
(g) AMENDMENTS RELATED TO SECTION 142 OF THE REFORM ACT. --
(1) Subparagraph (A) of section 274(n)(2) of the 1986 Code is
amended to read as follows:
"(A) such expense is described in paragraph (2), (3), (4), (7),
(8), or (9) of subsection (e),".
(2) Paragraph (2) of section 274(k) of the 1986 Code is amended
to read as follows:
"(2) EXCEPTIONS. -- Paragraph (1) shall not apply to --
"(A) any expense described in paragraph (2), (3), (4), (7),
(8), or (9) of subsection (e), and
"(B) any other expense to the extent provided in regulations."
(3) Clause (ii) of section 274(m)(1)(B) of the 1986 Code is
amended to read as follows:
"(ii) any expense described in paragraph (2), (3), (4), (7),
(8), or (9) of subsection (e).".
(4)(A) Paragraph (2) of section 274(n) of the 1986 Code is
amended --
(i) by striking "or" at the end of subparagraph (C),
(ii) by striking the period at the end of subparagraph (D) and
insrting ", or", and
(iii) by adding at the end thereof the following:
"(E) in the case of an employer who pays or reimburses moving
expenses of an employee, such expenses are includible in the
income of the employee under section 82.
In the case of the employee, the exception of subparagraph (A)
shall not apply to expenses described in subparagraph (E)."
(B) The following provisions of the 1986 Code are each amended
by striking out "section 217" and inserting in lieu thereof
"section 217 (determined without regard to section 274(n))":
(i) Section 3121(a)(11).
(ii) Section 3306(b)(9).
(iii) Section 3401(a)(15).
(C) Section 209(k) of the Social Security Act "42 USC 409" is
amended by striking out "section 217 of the Internal Revenue Code
of 1954" and inserting in lieu thereof "section 217 of the
Internal Revenue Code of 1986 (determined without regard to
section 274(n) of such Code)".
(5) Paragraphs (1) and (2) of section 274(h) of the 1986 Code
are each amended by striking out "trade or business that" and
inserting in lieu thereof "trade or business and that".
(h) AMENDMENTS RELATED TO SECTION 143 OF THE REFORM ACT. --
(1) Paragraph (5) of section 280A(c) of the 1986 Code amended
by adding at the end thereof the following new sentence: "Any
amount taken into account for any taxable year under the preceding
sentence shall be subject to the limitation of the 1st sentence of
this paragraph whether or not the dwelling unit is used as a
residence during such taxable year."
(2) Clause (ii) of section 280A(c)(5)(B) of the 1986 Code is
amended by striking out "trade or business" and inserting in lieu
thereof "trade or business (or rental activity)".
(3) Section 183(e)(2) of the 1986 Code is amended by striking
out "2" and inserting in lieu thereof "3 (or 2 if applicable)".
SEC. 1002. AMENDMENTS RELATED TO TITLE II OF THE REFORM ACT.
(a) AMENDMENTS RELATED TO SECTION 201 OF THE REFORM ACT. --
(1) Subsection (d) of section 1250 of the 1986 Code is amended
by striking out paragraph (11).
(2) Subparagraph (B) of section 201(d)(14) of the Reform Act
"26 USC 7701" is amended by striking out "section 168(c)(2)(F)"
and inserting in lieu thereof "within the meaning of section 168(
c)(2)(F)".
(3) Paragraph (4) of section 312(k) of the 1986 Code is amended
by striking out "paragraphs (1) and (3)" and inserting in lieu
thereof "paragraph (1)".
(4) Paragraph (4) of section 46(e) of the 1986 Code is amended
--
(A) by striking out "168(j)(6)" in subparagraph (B) and
inserting in lieu thereof "168(i)(3)",
(B) by striking out "paragraphs (8) and (9) of section 168(j)"
in subparagraph (D) and inserting in lieu thereof "paragraphs (5)
and (6) of section 168(h)".
(C) by striking out "168(j)" in subparagraph (E) and inserting
in lieu thereof "168(h)", and
(D) by striking out "168(j)(4)" in subparagraph (E) and
inserting in lieu thereof "168(h)(2)".
(5) Clause (i) of section 168(d)(3)(A) of the 1986 Code is
amended by striking out "and which are".
(6)(A) Subparagraph (B) of section 168(f)(5) of the 1986 Code
is amended --
(i) by striking out "1st full taxable year" in clause (ii) and
inserting in lieu thereof "1st taxable year", and
(ii) by striking out "or" at the end of clause (i), by striking
out the period at the end of clause (ii) and inserting in lieu
thereof ", or", and by adding at the end thereof the following new
clause:
"(iii) any property to which this section (as amended by the
Tax Reform Act of 1986) applied in the hands of the transferor."
(B) Paragraph (5) of section 168(f) of the 1986 Code is amended
by adding at the end thereof the following new subparagraph:
"(C) SPECIAL RULE. -- In the case of any property to which
this section would apply but for this paragraph, the depreciation
deduction under section 167 shall be determined under the
provisions of this section as in effect before the amendments made
by section 201 of the Tax Reform Act of 1986."
(7)(A) Subparagraph (A) of section 168(i)(7) of the 1986 Code
is amended by adding at the end thereof the following new
sentence: "In any case where this section as in effect before the
amendments made by section 201 of the Tax Reform Act of 1986
applied to the property in the hands of the transferor, the
reference in the preceding sentence to this section shall be
treated as a reference to this section as so in effect."
(B) Subparagraph (B) of section 168(i)(7) of the 1986 Code is
amended to read as follows:
"(B) TRANSACTIONS COVERED. -- The transactions described in
this subparagraph are --
"(i) any transaction described in section 332, 351, 361, 371(
a), 374(a), 721, or 731, and
10 "(ii) any transaction between members of the same affiliated
group during any taxable year for which a consolidated return is
made by such group.
Subparagraph (A) shall not apply in the case of a termination
of a partnership under section 708(b)(1)(B).".
(C) Subparagraph (D) of section 168(i)(7) of the 1986 Code is
hereby repealed.
(8) Subparagraph (B) of section 168(h)(2) of the 1986 Code is
amended to read as follows:
"(B) EXCEPTION FOR CERTAIN PROPERTY SUBJECT TO UNITED STATES
TAX AND USED BY FOREIGN PERSON OR ENTITY. -- Clause (iii) of
subparagraph (A) shall not apply with respect to any property if
more than 50 percent of the gross income for the taxable year
derived by the foreign person or entity from the use of such
property is --
"(i) subject to tax under this chapter, or
"(ii) included under section 951 in the gross income of a
United States shareholder for the taxable year with or within
which ends the taxable year of the controlled foreign corporation
in which such income was derived.
For purposes of the preceding sentence, any exclusion or
exemption shall not apply for purposes of determining the amount
of the gross income so derived, but shall apply for purposes of
determining the portion of such gross income subject to tax under
this chapter."
(9) Subsection (a) of section 178 of the 1986 Code is amended
by striking out "the deduction allowable to a lessee of a lease
for any taxable year for amortization under section 167, 169, 179,
185, 190, 193, or 194" and inserting in lieu thereof "the
deduction allowable to a lessee for exhaustion, wear and tear,
obsolescence, or amortization".
(10) Subparagraph (A) of section 280F(d)(3) of the 1986 Code is
amended by striking out "any recovery deduction" and inserting in
lieu thereof "any depreciation deduction".
(11)(A) Paragraph (2) of section 168(b) of the 1986 Code is
amended to read as follows:
"(2) 150 PERCENT DECLINING BALANCE METHOD IN CERTAIN CASES. --
Paragraph (1) shall be applied by substituting '150 percent' for
'200 percent' in the case of --
"(A) any 15-year or 20-year property, or
"(B) any property (other than property described in paragraph
(3)) with respect to which the taxpayer elects under paragraph (5)
to have the provisions of this paragraph apply."
(B) Paragraph (5) of section 168(b) of the 1986 Code is amended
by striking out "under paragraph (3)(C)" and inserting in lieu
thereof "under paragraph (2)(B) or (3)(C)".
(C) Subsection (c) of section 168 of the 1986 Code is amended
to read as follows:
"(c) APPLICABLE RECOVERY PERIOD. -- For purposes of this section --
"(1) IN GENERAL. -- Except as provided in paragraph (2), the
applicable recovery period shall be determined in accordance with
the following table:
"(2) PROPERTY FOR WHICH 150 PERCENT METHOD SELECTED. -- In the
case of property to which an election under subsection (b)( 2)(B)
applies, the applicable recovery period shall be determined under
the table contained in subsection (g)(2)(C)."
(12) Clause (i) of section 56(a)(1)(C) of the 1986 Code is
amended by striking out "do not apply" and inserting in lieu
thereof "do not apply by reason of section 203, 204, or 251(d) of
such Act".
(13) The heading of paragraph (24) of section 381(c) of the
1986 Code is amended by striking out "RECOVERY ALLOWANCE FOR
RECOVERY PROPERTY" and inserting in lieu thereof "DEPRECIATION
DEDUCTION".
(14) Paragraph (5) of section 48(a) of the 1986 Code is amended
--
(A) by striking out "168(i)(4)(C)" and inserting in lieu
thereof "168(h)(2)(C)",
(B) by striking out "168(j)(4)(A)(iii)" and inserting in lieu
thereof "168(h)(2)(A)(iii)",
(C) by striking out "168(j)(4)(B)" and inserting in lieu
thereof "168(h)(2)(B)",
(D) by striking out "168(j)(6)" and inserting in lieu thereof
"168(i)(3),
(E) by striking out "168(j)(3)(C)(ii)" and inserting in lieu
thereof "168(h)(1)(C)(ii)",
(F) by striking out "paragraphs (8) and (9) of section 168(j)"
and inserting in lieu thereof "paragraphs (5) and (6) of section
168(h)", and
(G) by striking out subparagraph (E) and inserting in lieu
thereof the following:
"(E) CROSS REFERENCE. --
"For provision providing special rules for the application of
this paragraph and paragraph (4), see section 168(h)."
(15) The last sentence of section 46(e)(3) of the 1986 Code is
amended --
(A) by striking out "recovery property (within the meaning of
section 168)" and inserting in lieu thereof "property to which
section 168 applies",
(B) by striking out "present class life" and inserting in lieu
thereof "class life", and
(C) by striking out "168(g)(2)" and inserting in lieu thereof
"168(i)(1)".
(16)(A) Subsection (s) of section 48 of the 1986 Code is
amended by adding at the end thereof the following new paragraph:
"(9) TERMINATION. -- This subsection shall not apply to any
property placed in service after December 31, 1985, unless such
property is transition property (as defined in section 49(e)(
1))."
(B) Paragraph (4) of section 168(f) of the 1986 Code is amended
to read as follows:
"(4) SOUND RECORDINGS. -- Any works which result from the
fixation of a series of musical, spoken, or other sounds,
regardless of the nature of the material (such as discs, tapes, or
other phonorecordings) in which such sounds are embodied."
(17) Paragraph (7) of section 46(c) of the 1986 Code is amended
--
(A) by striking out "recovery property" and inserting in lieu
thereof "property to which section 168 applies",
(B) by striking out "168(c)" each place it appears and
inserting in lieu thereof "168(e)",
(C) by striking out "168(f)(3)(B)" and inserting in lieu
thereof "168(f)(3)(B) (as in effect on the day before the date of
the enactment of the Tax Reform Act of 1986)", and
(D) by striking out "RECOVERY PROPERTY" in the paragraph
heading and inserting in lieu thereof "PROPERTY TO WHICH SECTION
168 APPLIES".
(18) Paragraph (1) of section 47(d) of the 1986 Code is amended
by striking out "section 48(c)(8)(C)" and inserting in lieu
thereof "section 46(c)(8)(C)".
(19) Paragraph (1) of section 179(d) of the 1986 Code is
amended by striking out "recovery property" and inserting in lieu
thereof "tangible property (to which section 168 applies)".
(20) Section 48 of the 1986 Code is amended by redesignating
the subsection (s) relating to cross references as subsection (t).
(21) Clause (v) of section 168(e)(3)(B) of the 1986 Code is
amended by striking out "any property" and inserting in lieu
thereof "any section 1245 property".
(22) The last sentence of section 167(l)(3)(G) of the 1986 Code
is amended by striking out "section 168(e)(3)(C)" and inserting in
lieu thereof "section 168(i)(9)(B)".
(23)(A) Subparagraph (B) of section 168(d)(3) of the 1986 Code
is amended to read as follows:
"(B) CERTAIN PROPERTY NOT TAKEN INTO ACCOUNT. -- For purposes
of subparagraph (A), there shall not be taken into account --
"(i) any nonresidential real property and residential rental
property, and
"(ii) any other property placed in service and disposed of
during the same taxable year."
(B) Clause (ii) of section 168(d)(3)(B) of the 1986 Code "26
USC 168 note" (as added by subparagraph (A)) shall apply to
taxable years beginning after March 31, 1988, unless the taxpayer
elects, at such time and in such manner as the Secretary of the
Treasury or his delegate may prescribe, to have such clause apply
to taxable years beginning on or before such date.
(24) Subsection (a) of section 167 of the 1986 Code is amended
by striking out the last sentence.
(25) Subparagraph (B) of section 46(d)(1) of the 1986 Code is
amended --
(A) by striking out "recovery property (within the meaning of
section 168)" in clause (i) and inserting in lieu thereof
"property to which section 168 applies", and
(B) by striking out "which is not recovery property (within the
meaning of section 168)" in clause (ii) and inserting in lieu
thereof "to which section 168 does not apply".
(26)(A) Subparagraph (E) of section 47(a)(5) of the 1986 Code
is amended by adding at the end thereof the following new clause:
"(v) TREATMENT AS RECOVERY PROPERTY. -- Any reference in this
paragraph to recovery property shall be treated as including a
reference to any property to which section 168 (as amended by the
Tax Reform Act of 1986) applies."
(B) Subparagraph (D) of section 47(a)(5) of the 1986 Code is
amended by striking out the last sentence.
(C) Clause (iii) of section 47(a)(5)(E) of the 1986 Code is
amended by striking out "section 168(c)" and inserting in lieu
thereof "section 168(e)".
(27) Subparagraph (A) of section 47(a)(9) of the 1986 Code is
amended by striking out "section 168(j)(4)(C)" and inserting in
lieu thereof "section 168(h)(2)".
(28) Clause (i) of section 47(d)(3)(C) of the 1986 Code is
amended --
(A) by striking out "present class life (as defined in section
168(g)(2))" and inserting in lieu thereof "class life (as defined
in section 168(i)(1))", and
(B) by striking out "no present class life" and inserting in
lieu thereof "no class life".
(29) Paragraph (1) of section 48(a) of the 1986 Code is amended
by striking out "recovery property (within the meaning of section
168)" in the material following subparagraph (G) and inserting in
lieu thereof "property to which section 168 applies".
(30) Subparagraph (C) of section 48(l)(2) of the 1986 Code is
amended by striking out "which is recovery property (within the
meaning of section 168)" and inserting in lieu thereof "to which
section 168 applies".
(31) Subsection (d) of section 167 of the 1986 Code is amended
by striking out "recovery property defined in section 168" and
inserting in lieu thereof "property to which section 168 applies".
(b) AMENDMENTS RELATED TO SECTION 202 OF THE REFORM ACT. --
(1) Paragraph (3) of section 179(b) of the 1986 Code is amended
to read as follows:
"(3) LIMITATION BASED ON INCOME FROM TRADE OR BUSINESS. --
"(A) IN GENERAL. -- The amount allowed as a deduction under
subsection (a) for any taxable year (determined after the
application of paragraphs (1) and (2)) shall not exceed the
aggregate amount of taxable income of the taxpayer for such
taxable year which is derived from the active conduct by the
taxpayer of any trade or business during such taxable year.
"(B) CARRYOVER OF DISALLOWED DEDUCTION. -- The amount
allowable as a deduction under subsection (a) for any taxable year
shall be increased by the lesser of --
"(i) the aggregate amount disallowed under subparagraph (A) for
all prior taxable years (to the extent not previously allowed as a
deduction by reason of this subparagraph), or
"(ii) the excess (if any) of --
"(I) the limitation of paragraphs (1) and (2) (or if lesser,
the aggregate amount of taxable income referred to in subparagraph
(A)), over
"(II) the amount allowable as a deduction under subsection (a)
for such taxable year without regard to this subparagraph.
"(C) COMPUTATION OF TAXABLE INCOME. -- For purposes of this
paragraph, taxable income derived from the conduct of a trade or
business shall be computed without regard to the deduction
allowable under this section."
(2) Paragraph (1) of section 280F(d) of the 1986 Code is
amended by striking out "subsections (a) and (b)" and inserting in
lieu thereof "subsections (a) and (b), and the limitation of
paragraph (3) of this subsection,".
(c) AMENDMENTS RELATED TO SECTION 203 OF THE REFORM ACT. --
(1) Subparagraph (B) of section 203(a)(1) of the Reform Act "26
USC 168 note" is amended by adding at the end thereof the
following new sentence: "No election may be made under this
subparagraph with respect to property to which section 168 of the
Internal Revenue Code of 1986 would not apply by reason of section
168(f)(5) of such Code if such property were placed in service
after December 31, 1986."
(2) Subsection (d) of section 203 of the Reform Act is amended
--
(A) by striking out "the case of any taxable year" and
inserting in lieu thereof "the case of any taxable year beginning
before October 1, 1987", and
(B) by adding at the end thereof the following new sentence:
"The preceding sentence shall only apply to property which would
be taken into account if such amendments did apply."
(3) Notwithstanding section 203 of the Reform Act, "26 USC 168
note" the amendments made by section 201 of the Reform Act shall
apply to any real property which was acquired before January 1,
1987, and was converted on or after such date from personal use to
a use for which depreciation is allowable.
(4) Paragraph (1) of section 203(b) of the Reform Act is
amended by adding at the end thereof the following new sentence:
"For purposes of this paragraph, all members of the same
affiliated group of corporations (within the meaning of section
1504 of the Internal Revenue Code of 1986) filing a consolidated
return shall be treated as one taxpayer."
(5) Paragraph (1) of section 203(c) of the Reform Act is
amended by striking out "Subparagraph" and inserting in lieu
thereof "Except as otherwise provided in this subsection or
section 204, surparagraph".
(6) Clause (i) of section 203(b)(2)(C) of the Reform Act is
amended by striking out "shall be the class life" and inserting in
lieu thereof "applies shall be the class life".
(7) Paragraph (3) of section 203(b) of the Reform Act is
amended --
(A) by inserting before the comma at the end of subparagraph
(A) "(or would have met such requirements if placed in service by
such person)", and
(B) by inserting ", or is leased to such person," before "not
later than".
(8) Paragraph (2) of section 203(a) of the Reform Act is
amended to read as follows:
"(2) SECTION 202. --
"(A) IN GENERAL. -- The amendments made by section 202 shall
apply to property placed in service after December 31, 1986, in
taxable years ending after such date.
"(B) SPECIAL RULE FOR FISCAL YEARS INCLUDING JANUARY 1, 1987.
-- In the case of any taxable year (other than a calendar year)
which includes January 1, 1987, for purposes of applying the
amendments made by section 202 to property placed in service
during such taxable year and after December 31, 1986 --
"(i) the limitation of section 179(b)(1) of the Internal
Revenue Code of 1986 (as amended by section 202) shall be reduced
by the aggregate deduction under section 179 (as in effect on the
day before the date of the enactment of the Tax Reform Act of
1986) for section 179 property placed in service during such
taxable year and before January 1, 1987,
"(ii) the limitation of section 179(b)(2) of such Code (as so
amended) shall be applied by taking into account the cost of all
section 179 property placed in service during such taxable year,
and
"(iii) the limitation of section 179(b)(3) of such Code shall
be applied by taking into account the taxable income for the
entire taxable year reduced by the amount of any deduction under
section 179 of such Code for property placed in service during
such taxable year and before January 1, 1987."
(d) AMENDMENTS RELATED TO SECTION 204 OF THE REFORM ACT. --
(1) Subparagraph (B) of section 204(a)(1) of the Reform Act "26
USC 168 note" is amended by striking out "and" at the end of
clause (ii), by striking out the period at the end of clause (iii)
and inserting in lieu thereof ", and", and by inserting after
clause (iii) the following new clause:
"(iv) described in subparagraph (F) or (H)."
(2) Subparagraph (C) of section 204(a)(1) of the Reform Act is
amended by striking out the last sentence and inserting in lieu
thereof the following:
"For purposes of this subparagraph, section 203(b)(2) shall be
applied by substituting 'January 1, 1994' for 'January 1, 1991'
each place it appears."
(3) Subparagraph (E) of section 204(a)(1) of the Reform Act is
amended by striking out the last sentence and inserting in lieu
thereof the following: "For purposes of this subparagraph,
section 203(b)(2) shall be applied by substituting 'January 1,
1998' for 'January 1, 1991' each place it appears."
(4) Subparagraph (F) of section 204(a)(1) of the Reform Act is
amended --
(A) by striking out "paragraph" and inserting in lieu thereof
"subparagraph",
(B) by striking out ", or" at the end of clause (iii) and
inserting in lieu thereof a period, and
(C) by striking out so much of clause (iv) as precedes
subclause (I) thereof and inserting in lieu thereof the following:
"A project is also described in this subparagraph if it is a
mixed-use development which is -- ".
(5) The last sentence of section 204(a)(1)(F) of the Reform Act
is amended --
(A) by striking out "subsection (b)(2)" and inserting in lieu
thereof "section 203(b)(2)", and
(B) by striking out "1993" and inserting in lieu thereof
"1998".
(6) Subparagraph (H) of section 204(a)(1) of the Reform Act is
amended by striking out "July 1, 1986" and inserting in lieu
thereof "June 30, 1986".
(7)(A) Paragraph (4) of section 204(a) of the Reform Act is
amended to read as follows:
"(4) PROPERTY TREATED UNDER PRIOR TAX ACTS. -- The amendments
made by section 201 shall not apply --
"(A) to property described in section 12(c)(2) (as amended by
the Technical and Miscellaneous Revenue Act of 1988), 31(g)(5), or
31(g)(17)(J) of the Tax Reform Act of 1984,
"(B) to property described in section 209(d)(1)(B) of the Tax
Equity and Fiscal Responsibility Act of 1982, as amended by the
Tax Reform Act of 1984, and
"(C) to property described in section 216(b)(3) of the Tax
Equity and Fiscal Responsibility Act of 1982."
(B) Paragraph (2) of section 12(c) of the Tax Reform Act of
1984 "26 USC 168 note" is amended by striking out "which is placed
in service before January 1, 1988".
(8) Subparagraph (K) of section 204(a)(5) of the Reform Act "26
USC 168 note" is amended --
(A) by striking out "either" in the matter preceding clause
(i),
(B) by striking out "super calendar" in clause (i) and
inserting in lieu thereof "supercalendered",
(C) by striking out "were incurred" in clause (i) and inserting
in lieu thereof "was incurred", and
(D) by inserting "the project" before "involves" in clause (v).
(9) Paragraph (5) of section 204(a) of the Reform Act is
amended by adding at the end thereof the following new
subparagraph:
"(Z) A project is described in this subparagraph if --
"(i) such project involves a fiber optic network of at least
475 miles passing through Minnesota and Wisconsin; and
10"(ii) before January 1, 1986, at least $15,000,000 was
expended or committed for electronic equipment or fiber optic
cable to be used in constructing the network."
(10)(A) Paragraph (8) of section 204(a) of the Reform Act is
amended by striking out the period at the end of subparagraph (C)
and inserting in lieu thereof a comma, and by adding at the end
thereof the following new subparagraphs:
"(D) a bond volume carryforward election was made for the
facility and the facility is for Chattanooga, Knoxville, or
Kingsport, Tennessee, or
"(E) such facility is to serve Haverhill, Massachusetts."
(B) Paragraph (8) of section 204(a) of the Reform Act is
amended by striking out ", and section 203(c),".
(11) Paragraph (10) of section 204(a) of the Reform Act is
amended --
(A) by striking out "either" in the material preceding
subparagraph (A),
(B) by striking out "wastewater treatment facility" in
subparagraph (C) and inserting in lieu thereof "wastewater
treatment facility serving Greenville, South Carolina", and
(C) by striking out "the letter of intent and service agreement
described in subparagraph (A)(2) of this paragraph" in
subparagraph (D) and inserting in lieu thereof "such letter of
intent and service agreement".
(12) Paragraph (11) of section 204(a) of the Reform Act is
amended --
(A) by striking out "Kansas, Florida, Georgia, or Texas" in
subparagraph (A) and inserting in lieu thereof "the United
States",
(B) by striking out "the purchase" in subparagraph (C) and
inserting in lieu thereof "the purchaser", and
(C) by striking out the last sentence.
(13) Paragraph (14) of section 204(a) of the Reform Act "26 USC
168 note" is amended by striking out the period at the end of
subparagraph (E) and inserting in lieu thereof a comma, and by
inserting after subparagraph (E) the following:
"(F) the project has a planned scheduled capacity of
approximately 38,000 kilowatts, the project property is placed in
service before January 1, 1991, and the project is operated,
established, or constructed pursuant to certain agreements, the
negotiation of which began before 1986, with public or municipal
utilities conducting business in Massachusetts, or
"(G) the Board of Regents of Oklahoma State University took
official action on July 25, 1986, with respect to the project.
In the case of the project described in subparagraph (F),
section 203(b)(2)(A) shall be applied by substituting 'January 1,
1991' for 'January 1, 1989'."
(14) Paragraph (15) of section 204(a) of the Reform Act is
amended --
(A) by adding "located in New Mexico" after "to a project",
(B) by striking out "$72,000" and inserting in lieu thereof
"$72,000,000", and
(C) by striking out the last sentence and inserting in lieu
thereof the following:
"For purposes of this paragraph, section 203(b)(2) shall be
applied by substituting 'January 1, 1996' for 'January 1, 1991'
each place it appears."
(15) Paragraph (24) of section 204(a) of the Reform Act is
amended by adding at the end thereof the following new
subparagraphs:
"(E) The amendments made by section 201 shall not apply to the
Muskegon, Michigan, Cross-Lake Ferry project having a projected
cost of approximately $7,200,000.
"(F) The amendments made by section 201 shall not apply to a
new automobile carrier vessel, the contract price for which is no
greater than $28,000,000, and which will be constructed for and
placed in service by OSG Car Carriers, Inc., to transport, under
the United States flag and with an American crew, foreign
automobiles to North America in a case where negotiations for such
transportation arrangements commenced in 1985, and definitive
transportation contracts were awarded before June 1986."
(16) Paragraph (25) of section 204(a) of the Reform Act is
amended by striking out "wood energy products" and inserting in
lieu thereof "wood energy projects".
(17) Paragraph (27) of section 204(a) of the Reform Act is
amended --
(A) in subparagraph (B), by striking out "525,000" and
inserting in lieu thereof "540,000",
(B) in subparagraph (C) --
(i) by striking out "$32,000,000" and inserting in lieu thereof
"$22,000,000", and
(ii) by striking out "before" and inserting in lieu thereof
"on",
(C) in subparagraph (D), by striking out "and 7th Avenue", and
(D) in subparagraph (H), by striking out "$62,000" and
inserting in lieu thereof "$62,600,000".
(18) Paragraph (27) of section 204(a) of the Reform Act "26 USC
168 note" is amended by adding at the end thereof the following:
"(I) A 600,000 square foot mixed use building known as Flushing
Center with respect to which a letter of intent was executed on
March 26, 1986.
In the case of the building described in subparagraph (I),
section 203(b)(2)(A) shall be applied by substituting 'January 1,
1993' for the applicable date which would otherwise apply."
(19) Paragraph (31) of section 204(a) of the Reform Act is
amended by striking out "$10,200,000" and inserting in lieu
thereof "$10,500,000".
(20) Paragraph (32) of section 204(a) of the Reform Act is
amended --
(A) in subparagraph (A) --
(i) by striking out "July 30, 1984" and inserting in lieu
thereof "December 26, 1985",
(ii) by striking out "February 28, 1985" and inserting in lieu
thereof "July 2, 1986", and
(iii) by striking out "on June 17, 1985" and inserting in lieu
thereof "in May 1985",
(B) in subparagraph (B) --
(i) by striking out "August 30, 1984" and inserting in lieu
thereof "December 26, 1985",
(ii) by striking out "May 4, 1985" and inserting in lieu
thereof "July 2, 1986", and
(iii) by striking out "on July 3, 1985" and inserting in lieu
thereof "in July 1985",
(C) in subparagraph (E) --
(i) by striking out "$2,200,000" and inserting in lieu thereof
"$5,000,000",
(ii) by striking out "on January 27, 1986" and inserting "in
1986", and
(iii) by inserting "in Masontown, Pennsylvania," after "plant",
(D) by amending subparagraph (K) to read as follows:
"(K) A 250 megawatt coal-fired electric plant in northeastern
Nevada estimated to cost $600,000,000 and known as the Thousand
Springs project, on which the Sierra Pacific Power Company, a
subsidiary of Sierra Pacific Resources, began in 1980 work to
design, finance, construct, and operate (and section 203(b)(2)
shall be applied with respect to such plant by substituting
'January 1, 1995' for 'January 1, 1991'),",
(E) in subparagraph (L), by inserting "in connection with"
after "housing",
(F) by amending subparagraph (M) to read as follows:
"(M) property which is part of the Kenosha Downtown
Redevelopment Project and which is financed with the proceeds of
bonds issued pursuant to section 1317(6)(W),",
(G) in subparagraph (O), by striking out "New Orleans,
Louisiana" and inserting in lieu thereof "Pensacola, Florida", and
(H) in subparagraph (S) --
(i) by insrting "to be" before "placed",
(ii) by inserting "Coal" before "Company",
(iii) by insrting "(or any subsidiary thereof)" after
"Company", and
(iv) by striking out "on December 31, 1985" and inserting in
lieu thereof "by December 31, 1985".
(21) Subparagraph (T) of section 204(a)(32) of the Reform Act
"26 USC 168 note" is amended to read as follows:
"(T) a portion of a fiber optics network placed in service by
LDX NET after December 31, 1988, but only to the extent the cost
of such portion does not exceed $25,000,000,".
(22) Subparagraph (U) of section 204(a)(32) of the Reform Act
is amended by striking out "placed in service" and inserting in
lieu thereof "constructed".
(23) Subparagraph (x) of section 204(a)(32) of the Reform Act
is amended by striking out "the home rule city and the State
housing finance agency adopted inducement resolutions on December
20, 1985" and inserting in lieu thereof "the home rule city on
December 4, 1985, and the State housing finance agency on December
20, 1985, adopted inducement resolutions".
(24) Subparagraph (C) of paragraph (33) of section 204(a) of
the Reform Act is amended to read as follows:
"(C)(i) a waste-to-energy project in Derry, New Hampshire,
costing approximately $60,000,000, and
"(ii) a waste-to-energy project in Manchester, New Hampshire,
costing approximately $60,000,000,".
(25) Paragraph (33) of section 204(a) of the Reform Act is
amended by striking out "and" at the end of subparagraph (J), by
striking out the period at the end of subparagraph (K) and
inserting in lieu thereof ", and", and by inserting after
subparagraph (K) the following:
"(L) a cogeneration facility to be built at a paper company in
Turners Falls, Massachusetts, with respect to which a letter of
intent was executed on behalf of the paper company on September
26, 1985."
(26) Subsection (a) of section 204 of the Reform Act is amended
by adding at the end thereof the following new paragraphs:
"(34) The amendments made by section 201 shall not apply to an
approximately 240,000 square foot beverage container manufacturing
plant located in Batesville, Mississippi, or plant equipment used
exclusively on the plant premises if --
"(A) a 2-year supply contract was signed by the taxpayer and a
customer on November 1, 1985,
"(B) such contract further obligated the customer to purchase
beverage containers for an additional 5-year period if physical
signs of construction of the plant are present before September
1986,
"(C) ground clearing for such plant began before August 1986,
and
"(D) construction is completed, the equipment is installed, and
operations are commenced before July 1, 1987.
"(35) The amendments made by section 201 shall not apply to any
property which is part of the multifamily housing at the Columbia
Point Project in Boston, Massachusetts. A project shall be
treated as not described in the preceding sentence and as not
described in section 252(f)(1)(D) unless such project includes at
substantially all times throughout the compliance period (within
the meaning of section 42(i)(1) of the Internal Revenue Code of
1986), a facility which provides health services to the residents
of such project for fees commensurate with the ability of such
individuals to pay for such services.
"(36) The amendments made by section 201 shall not apply to any
ethanol facility located in Blair, Nebraska, if --
"(A) in July of 1984 an initial binding construction contract
was entered into for such facility,
"(B) in June of 1986, certain Department of Energy recommended
contract changes required a change of contractor, and
"(C) in September of 1986, a new contract to construct such
facility, consistent with such recommended changes, was entered
into.
"(37) The amendments made by section 201 shall not apply to any
property which is part of a sewage treatment facility if, prior to
January 1, 1986, the City of Conyers, Georgia, selected a
privatizer to construct such facility, received a guaranteed
maximum price bid for the construction of such facility, signed a
letter of intent and began substantial negotiations of a service
agreement with respect to such facility.
"(38) The amendments made by section 201 shall not apply to --
"(A) a $28,000,000 wood resource complex for which construction
was authorized by the Board of Directors on August 9, 1985,
"(B) an electrical cogeneration plant in Bethel, Maine which is
to generate 2 megawatts of electricity from the burning of wood
residues, with respect to which a contract was entered into on
July 10, 1984, and with respect to which $200,000 of the expected
$2,000,000 cost had been committed before June 15, 1986,
"(C) a mixed income housing project in Portland, Maine which is
known as the Back Bay Tower and which is expected to cost
$17,300,000,
"(D) the Eastman Place project and office building in
Rochester, New York, which is projected to cost $20,000,000, with
respect to which an inducement resolution was adopted in December
1986, and for which a binding contract of $500,000 was entered
into on April 30, 1986,
"(E) the Marquis Two project in Atlanta, Georgia which has a
total budget of $72,000,000 and the construction phase of which
began under a contract entered into on March 26, 1986,
"(F) a 166-unit continuing care retirement center in New
Orleans, Louisiana, the construction contract for which was signed
on February 12, 1986, and is for a maximum amount not to exceed
$8,500,000,
"(G) the expansion of the capacity of an oil refining facility
in Rosemont, Minnesota from 137,000 to 207,000 barrels per day
which is expected to be completed by December 31, 1990, and
"(H) a project in Ransom, Pennsylvania which will burn coal
waste (known as 'culm') with an approximate cost of $64,000,000
and for which a certification from the Federal Energy Regulatory
Commission was received on March 11, 1986.
"(39) The amendments made by section 201 shall not apply to any
facility for the manufacture of an improved particle board if a
binding contract to purchase such equipment was executed March 3,
1986, such equipment will be placed in service by January 1, 1988,
and such facility is located in or near Moncure, North Carolina."
(27) Subsection (b) of section 204 of the Reform Act "26 USC
168 note" is amended by inserting "(as amended by the Tax Reform
Act of 1984)" immediately before the period at the end thereof.
(28) Subparagraph (A) of section 204(c)(1) of the Reform Act is
amended by inserting "located in Pennsylvania and" before
"constructed pursuant".
(29) Paragraph (3) of section 204(c) of the Reform Act is
amended --
(A) by striking out "for the applicable date" and inserting in
lieu thereof "(or, in the case of a project described in
subparagraph (B), by substituting 'April 1, 1992') for the
applicable date",
(B) by striking out "before April 1, 1986" in subparagraph (A)
and inserting in lieu thereof "on or before April 1, 1986", and
(C) by adding at the end thereof the following:
"In the case of an aircraft described in subparagraph (A),
section 203(b)(1)(A) shall be applied by substituting 'April 1,
1986' for 'March 1, 1986' and section 49(e)(1)(B) of the Internal
Revenue Code of 1986 shall not apply."
(30)(A) Paragraph (4) of section 204(c) of the Reform Act is
amended by striking out all that precedes subparagraph (L) and
inserting in lieu thereof the following:
"(4) The amendments made by section 201 shall not apply to a
limited amount of the following property or a limited amount of
property set forth in a submission before September 16, 1986, by
the following taxpayers:
"(A) Arena project, Michigan, but only with respect to
$78,000,000 of investments.
"(B) Campbell Soup Company, Pennsylvania, California, North
Carolina, Ohio, Maryland, Florida, Nebraska, Michigan, South
Carolina, Texas, New Jersey, and Delaware, but only with respect
to $9,329,000 of regular investment tax credits.
"(C) The Southeast Overtown/Park West development, Florida, but
only with respect to $200,000,000 of investments.
"(D) Equipment placed in service and operated by Leggett and
Platt before July 1, 1987, but only with respect to $2,000,000 of
regular investment tax credits, and subsections (c) and (d) of
section 49 of the Internal Revenue Code of 1986 shall not apply to
such equipment.
"(E) East Bank Housing Project.
"(F) $1,561,215 of investments by Standard Telephone Company.
"(G) Five aircraft placed in service before January 1, 1987, by
Presidential Air.
"(H) A rehabilitation project by Ann Arbor Railroad, but only
with respect to $2,900,000 of investments.
"(I) Property that is part of a cogeneration project located in
Ada, Michigan, but only with respect to $30,000,000 of
investments.
"(J) Anchor Store Project, Michigan, but only with respect to
$21,000,000 of investments.
"(K) A waste-fired electrical generating facility of Biogen
Power, but only with respect to $34,000,000 of investments."
(B) Paragraph (4) of section 204(c) of the Reform Act "26 USC
168 note" is amended by striking out all that follows subparagraph
(L) and inserting in lieu thereof the following:
"(M) Interests of Samuel A. Hardage (whether owned individually
or in partnership form).
"(N) Two aircraft of Mesa Airlines with an aggregate cost of
$5,723,484.
"(O) Yarn-spinning equipment used at Spray Cotton Mills, but
only with respect to $3,000,000 of investments.
"(P) 328 units of low-income housing at Angelus Plaza, but only
with respect to $20,500,000 of investments.
"(Q) One aircraft of Continental Aviation Services with a cost
of approximately $15,000,000 that was purchased pursuant to a
contract entered into during March of 1983 and that is placed in
service by December 31, 1988".
(31) Paragraph (29) of section 204(a) of the Reform Act is
amended --
(A) by striking out "January 18" in subparagraph (A) and
inserting in lieu thereof "January 25", and
(B) by striking out "law suits filed on June 22, 1984, and
November 21, 1985" in subparagraph (B) and inserting in lieu
thereof "a law suit filed on October 25, 1985".
(32) Subparagraph (J) of section 204(a)(33) of the Reform Act,
as amended by paragraph (25), is amended to read as follows:
"(J) A 25.85 megawatt alternative energy facility located in
Deblois, Maine, with respect to which certification by the Federal
Energy Regulatory Commission was made on April 3, 1986,".
(33) Paragraph (3) of section 204(c) of the Reform Act is
amended --
(A) by inserting "and" at the end of subparagraph (B),
(B) by striking out subparagraph (C), and
(C) by redesignating subparagraph (D) as subparagraph (C).
(34) Subclause (II) of section 204(a)(5)(J)(ii) of the Reform
Act is amended to read as follows:
"(II) the Board of Directors of an automobile manufacturer
approved a written plan for the conversion of existing facilities
to produce new models of a vehicle not currently produced in the
United States, such facilities will be placed in service by July
1, 1987, and such Board action occurred in July 1985 with respect
to a $602,000,000 expenditure, a $438,000,000 expenditure, and a
$321,000,000 expenditure."
(35) Subparagraph (T) of section 204(a)(5) of the Reform Act is
amended to read as follows:
"(T) A project is described in this subparagraph if it is a
plant facility on Alaska's North Slope which is placed in service
before January 1, 1988, and --
"(i) the approximate cost of which is $675,000,000, of which
approximately $400,000,000 was spent on off-site construction,
"(ii) the approximate cost of which is $445,000,000, of which
approximately $400,000,000 was spent on off-site construction and
more than 50 percent of the project cost was spent prior to
December 31, 1985, or
"(iii) the approximate cost of which is $375,000,000, of which
approximately $260,000,000 was spent on off-site construction."
(e) AMENDMENTS RELATING TO SECTION 211 OF THE REFORM ACT. --
(1) Paragraph (1) of section 49(d) of the 1986 Code is amended
to read as follows:
"(1) IN GENERAL. -- In the case of periods after December 31,
1985, with respect to so much of the credit determined under
section 46(a) with respect to transition property as is
attributable to the regular investment credit (as defined in
subsection (c)(5)(B)) --
"(A) paragraphs (1), (2), and (7) of section 48(q) and section
48(d)(5) shall be applied by substituting '100 percent' for '50
percent' each place it appears, and
"(B) sections 48(q)(4) and 196(d) shall not apply."
(2) Subparagraph (B) of section 49(c)(4) of the 1986 Code is
amended to read as follows:
"(B) NO CARRYBACK FOR YEARS STRADDLING JULY 1, 1987; GROSS UP
OF CARRYFORWARDS. -- In any case to which paragraph (3) applies
--
"(i) the amount of the reduction under paragraph (3) may not be
carried back to any taxable year, but
"(ii) there shall be added to the carryforwards from the
taxable year (before applying paragraph (2)) an amount equal to
the amount which bears the same ratio to the carryforwards from
such taxable year (determined without regard to this clause) as --
"(I) the applicable percentage, bears to
"(II) 1 minus the applicable percentage."
(3) Clause (i) of section 49(c)(5)(B) of the 1986 Code is
amended to read as follows:
"(i) IN GENERAL. -- The term 'regular investment credit' means
the credit determined under section 46(a) to the extent
attributable to the regular percentage."
(4) Paragraph (1) of section 211(e) of the Reform Act "26 USC
49 note" is amended by adding at the end thereof the following new
sentence: "Section 49(c) of the Internal Revenue Code of 1986 (as
added by subsection (a)) shall apply to taxable years ending after
June 30, 1987, and to amounts carried to such taxable years."
(5) Paragraph (4)(A) of section 211(e) of the Reform Act is
amended --
(A) by striking out "Paragraphs (c) and (d) of section 49 of
the Internal Revenue Code of 1954" and inserting in lieu thereof
"Subsections (c) and (d) of section 49 of the Internal Revenue
Code of 1986", and
(B) by striking out "1935" and inserting in lieu thereof
"1985".
(6) Paragraph (4)(B) of section 211(e) of the Reform Act "26
USC 49 note" is amended by striking out "shall be treated as
transition property and subsections (c) and (d) of section 49 of
such Code shall not apply to such property".
(7) Paragraph (4) of section 211(e) of the Reform Act is
amended by adding at the end thereof the following new
subparagraphs:
"(C) Any solid waste disposal facility which will process and
incinerate solid waste of one or more public or private entities
including Dakota County, Minnesota, and with respect to which a
bond carryforward from 1985 was elected in an amount equal to
$12,500,000 shall be treated as transition property within the
meaning of section 49(e) of the Internal Revenue Code of 1986.
"(D) For purposes of section 49 of such Code, the following
property shall be treated as transition property:
"(i) 2 catamarans built by a shipbuilder incorporated in the
State of Washington in 1964, the contracts for which were signed
on April 22, 1986 and November 12, 1985, and 1 barge built by such
shipbuilder the contract for which was signed on August 7, 1985.
"(ii) 2 large passenger ocean-going United States flag cruise
ships with a passenger rated capacity of up to 250 which are built
by the shipbuilder described in clause (i), which are the first
such ships built in the United States since 1952, and which were
designed at the request of a Pacific Coast cruise line pursuant to
a contract entered into in October 1985. This clause shall apply
only to that portion of the cost of each ship which does not
exceed $40,000,000.
"(iii) Property placed in service during 1986 by Satellite
Industries, Inc., with headquarters in Minneapolis, Minnesota, to
the extent that the cost of such property does not exceed
$1,950,000.
"(E) Subsections (c) and (d) of section 49 of such Code shall
not apply to property described in section 204(a)(4) of this Act."
(8)(A) Subsection (d) of section 38 is amended to read as
follows:
"(d) ORDERING RULES. -- For purposes of sections 46(7), 47(a), 196(
a), and any other provision of this title where it is necessary to
ascertain the extent to which the credits determined under any section
referred to in subsection (b) are used in a taxable year or as a
carryback or carryforward --
"(1) IN GENERAL. -- The order in which such credits are used
shall be determined on the basis of the order in which they are
listed in subsection (b) as of the close of the taxable year in
which the credit is used.
"(2) COMPONENTS OF INVESTMENT CREDIT. -- The order in which
credits attributable to a percentage referred to in section 46(a)
are used shall be determined on the basis of the order in which
such percentages are listed in section 46(a) as of the close of
the taxable year in which the credit is used.
"(3) CREDITS NO LONGER LISTED. -- For purposes of this
subsection --
"(A) the credit allowable by section 40, as in effect on the
day before the date of the enactment of the Tax Reform Act of
1984, (relating to expenses of work incentive programs) and the
credit allowable by section 41(a), as in effect on the day before
the date of the enactment of the Tax Reform Act of 1986, (relating
to employee stock ownership credit) shall be treated as referred
to in that order after the last paragraph of subsection (b), and
"(B) the employee plan percentage (as defined in section 46(
a)(2)(E), as in effect on the day before the date of the enactment
of the Tax Reform Act of 1984) shall be treated as referred to
after section 46(a)(2)."
(B) Subparagraph (C) of section 49(c)(5) of the 1986 Code is
hereby repealed.
(C) The amendments "26 USC 38 note" made by this paragraph
shall apply to taxable years beginning after December 31, 1983,
and to carrybacks from such years.
(f) AMENDMENTS RELATED TO SECTION 212 OF THE REFORM ACT. --
(1) Paragraph (2) of section 212(f) of the Reform Act "26 USC
38 note" is amended by striking out so much of such paragraph as
precedes subparagraph (A) and insert in lieu thereof the
following:
"(2) SPECIAL RULE. -- In the case of the LTV Corporation, in
lieu of the requirements of paragraph (1) -- ".
(2) Subclause (I) of section 212(f)(2)(B)(i) of the Reform Act
is amended by striking out "such involvement begins" and inserting
in lieu thereof "when the corporation receives the refund".
(3) Subsection (g) of section 212 of the Reform Act is amended
by adding at the end thereof the following new paragraph:
"(3) SPECIAL RULE FOR RESTRUCTURING. -- In the case of any
corporation, any restructuring shall not limit, increase, or
otherwise affect the benefits which would have been available
under this section but for such restructuring."
(4) Section 212 of the Reform Act is amended by adding at the
end thereof the following new subsection:
"(h) TENTATIVE REFUNDS. -- Rules similar to the rules of section
6425 of the Internal Revenue Code of 1986 shall apply to any overpayment
resulting from the application of this section."
(5) Subparagraph (B) of section 212(g)(2) of the Reform Act is
amended by striking out "determined under" and inserting in lieu
thereof "determined for periods before January 1, 1986, under".
(6) Section 212(f) of the Reform Act is amended by adding at
the end thereof the following new paragraph:
"(3) In the case of a qualified corporation, no offset to any
refund under this section may be made by reason of any tax imposed
by section 4971 of the Internal Revenue Code of 1986 (or any
interest or penalty attributable to any such tax), and the date on
which any such refund is to be paid shall be determined without
regard to such corporation's status under title 11, United States
Code."
(g) AMENDMENT RELATED TO SECTION 213 OF THE REFORM ACT. --
Subparagraph (B) of section 213(e)(2) of the Reform Act "26 USC 38 note"
is amended by striking out "determined under" and inserting in lieu
thereof "determined for periods before January 1, 1986, under".
(h) AMENDMENTS RELATED TO SECTION 231 OF THE REFORM ACT. --
(1) Subsection (g) of section 41 of the 1986 Code is amended by
adding at the end thereof the following new sentence: "If the
amount determined under subsection (a) for any taxable year
exceeds the limitation of the preceding sentence, such amount may
be carried to other taxable years under the rules of section 39;
except that the limitation of the preceding sentence shall be
taken into account in lieu of the limitation of section 38(c) in
applying section 39."
(2) Subsection (c) of section 6411 of the 1986 Code is amended
by striking out "unused research credit,".
(3) Section 936(h)(5)(C)(i)(IV)(c) of the 1986 Code is amended
--
(A) by striking out "section 30" and inserting in lieu thereof
"section 41", and
(B) by striking out "section 30(f)" and inserting in lieu
thereof "section 41(f)".
(i) AMENDMENTS RELATED TO SECTIONS 241 AND 242 OF THE REFORM ACT. --
(1) Section 167 of the 1986 Code is amended by redesignating
subsection (r) as subsection (s) and by inserting after subsection
(q) the following new subsection:
"(r) TRADEMARK OR TRADE NAME EXPENDITURES NOT DEPRECIABLE. --
"(1) IN GENERAL. -- No depreciation deduction shall be
allowable under this section (and no depreciation or amortization
deduction shall be allowable under any other provision of this
subtitle) with respect to any trademark or trade name expenditure.
"(2) TRADEMARK OR TRADE NAME EXPENDITURE. -- For purposes of
this subsection, the term 'trademark or trade name expenditure'
means any expenditure which is directly connected with the
acquisition, protection, expansion, registration (Federal, State,
or foreign), or defense of a trademark or trade name."
(2)(A) Paragraph (1) of section 168(c) of the 1986 Code (as
amended by section 102(a) is amended by adding at the end thereof
the following new item:
"Any railroad grading or tunnel bore ........... 50 years."
(B)(i) Paragraph (3) of section 168(b) of the 1986 Code is
amended by redesignating subparagraph (C) as subparagraph (D) and
by inserting after subparagraph (B) the following new
subparagraph:
"(C) Any railroad grading or tunnel bore."
(ii) Paragraph (5) of section 168(b) of the 1986 Code (as
amended by section 102(a)) is amended by striking out "(3)(C)" and
inserting in lieu thereof "(3)(D)".
(C) Subsection (e) of section 168 of the 1986 Code is amended
by adding at the end thereof the following new paragraph:
"(4) RAILROAD GRADING OR TUNNEL BORE. -- The term 'railroad
grading or tunnel bore' means all improvements resulting from
excavations (including tunneling), construction of embankments,
clearings, diversions of roads and streams, sodding of slopes, and
from similar work necessary to provide, construct, reconstruct,
alter, protect, improve, replace, or restore a roadbed or
right-of-way for railroad track."
(D) Paragraph (2) of section 168(d) of the 1986 Code is amended
by striking out "and" at the end of subparagraph (A), by inserting
"and" at the end of subparagraph (B), and by inserting after
subparagraph (B) the following new subparagraph:
"(C) any railroad grading or tunnel bore,".
(E) Clause (i) of section 168(d)(3)(B) of the 1986 Code (as
amended by section 102(a)) is amended by striking out "and
residential rental property" and insrting in lieu thereof
"residential rental property, and railroad grading or tunnel
bore".
(F) The table contained in paragraph (2)(C) of section 168(g)
of the 1986 Code is amended by adding at the end thereof the
following new item:
"(iv) Any railroad grading or tunnel bore ........ 50 years."
(G) Subparagraph (E) of section 168(i)(1) of the 1986 Code is
amended by adding at the end thereof the following new clause:
"(iii) SPECIAL RULE FOR RAILROAD GRADING OR TUNNEL BORES. -- In
the case of any property which is a railroad grading or tunnel
bore --
"(I) such property shall be treated as an assigned property,
"(II) the recovery period applicable to such property shall be
treated as an assigned item, and
"(III) clause (ii) of subparagraph (D) shall not apply."
(H) The table contained in subparagraph (A) of section 467(e)(
3) of the 1986 Code is amended by adding at the end thereof the
following new item:
"Any railroad grading or tunnel bore ................ 50 years."
(I) Paragraph (3) of section 1245(a) of the 1986 Code is
amended by striking out "or" at the end of subparagraph (D), by
striking out the period at the end of subparagraph (E), and
inserting in lieu thereof ", or", and by adding at the end thereof
the following new subparagraph:
"(F) any railroad grading or tunnel bore (as defined in section
168(e)(4)).
(j) AMENDMENTS RELATED TO SECTION 243 OF THE REFORM ACT. --
(1) Section 243 of the Reform Act "26 USC 165 note" (related to
deduction of bus and freight forwarder operating authority) is
amended by redesignating subsection (d) as subsection (e) and by
inserting after subsection (c) the following new subsection:
"(d) APPLICATION OF SECTION 334(b)(2). -- For purposes of
subsections (a) and (b), the reference to section 334(b)(2) in section
266(c)(2)(A)(ii) of the Economic Recovery Tax Act of 1986 shall be a
reference to such section as in effect before its repeal."
(2) The heading of subparagraph (A) of section 243(b)(2) of the
Reform Act is amended by striking out "TO BEGIN IN 1987".
(k) AMENDMENTS RELATED TO SECTION 251 OF THE REFORM ACT. --
(1) Paragraph (2)(B) of section 251(d) of the Reform Act "26
USC 46 note" is amended by striking out clause (i) and
redesignating clauses (ii) and (iii) as clauses (i) and (ii),
respectively.
(2) Subparagraph (P) of section 251(d)(3) of the Reform Act is
amended by striking out "San Francisco" and inserting in lieu
thereof "San Jose, California".
(3) Paragraph (4) of section 251(d) of the Reform Act is
amended --
(A) by striking out "Lakeland marbel Arcade" in subparagraph
(K) and inserting in lieu thereof "Marble Arcade office building",
(B) by striking out "and" at the end of subparagraph (Y), and
(C) by striking out subparagraph (Z) and inserting in lieu
thereof the following:
"(Z) the Bigelow-Hartford Carpet Mill in Enfield, Connecticut,
"(AA) properties abutting 125th street in New York County from
7th Avenue west to Morningside and the pier area on the Hudson
River at the end of such 125th Street,
"(BB) the City of Los Angeles Central Library project pursuant
to an agreement dated December 28, 1983,
"(CC) the Warehouse Row project in Chattanooga, Tennessee,
"(DD) any project described in section 204(a)(1)(F) of this
Act,
"(EE) the Wood Street Commons project in Pittsburgh,
Pennsylvania,
"(FF) any project described in section 803(d)(6) of this Act,
"(GG) Union Station, Indianapolis, Indiana,
"(HH) the Mattress Factory project in Pittsburgh, Pennsylvania,
"(II) Union Station in Providence, Rhode Island,
"(JJ) South Pack Plaza, Asheville, North Carolina,
"(KK) Old Louisville Trust Project, Louisville, Kentucky,
"(LL) Stewarts Rehabilitation Project, Louisville, Kentucky,
"(MM) Bernheim Officenter, Louisville, Kentucky,
"(NN) Springville Mill Project, Rockville, Connecticut, and
"(OO) the D.J. Stewart Company Building, State and Main
Streets, Rockford, Illinois."
(4) Subsection (d) of section 251 of the Reform Act "26 USC 46
note" is amended by striking out paragraph (6) and inserting in
lieu thereof the following:
"(6) EXPENSING OF REHABILITATION EXPENSES FOR THE FRANKFORD
ARSENAL. -- In the case of any expenditures paid or incurred in
connection with improvements (including repairs and maintenance)
of the Frankford Arsenal pursuant to a contract and partnership
agreement during the 8-year period specified in the contract or
agreement, all such expenditures to be made during the period 1986
through and including 1993 shall --
"(A) be treated as made (and allowable as a deduction) during
1986,
"(B) be treated as qualified rehabilitation expenditures made
during 1986, and
"(C) be allocated in accordance with the partnership agreement
regardless of when the interest in the partnership was acquired,
except that --
"(i) if the taxpayer is not the original holder of such
interest, no person (other than the taxpayer) had claimed any
benefits by reason of this paragraph,
"(ii) no interest under section 6611 of the 1986 Code on any
refund of income taxes which is solely attributable to this
paragraph shall be paid for the period --
"(I) beginning on the date which is 45 days after the later of
April 15, 1987, or the date on which the return for such taxes was
filed, and
"(II) ending on the date the taxpayer acquired the interest in
the partnership, and
"(iii) if the expenditures to be made under this provision are
not paid or incurred before January 1, 1994, then the tax imposed
by chapter 1 of such Code for the taxpayer's last taxable year
beginning in 1993 shall be increased by the amount of the tax
benefits by reason of this paragraph which are attributable to the
expenditures not so paid or incurred.
"(7) SPECIAL RULE. -- In the case of the rehabilitation of the
Willard Hotel in Washington, D.C., section 205(c)(1)(B)(ii) of the
Tax Equity and Fiscal Responsibility Act of 1982 shall be applied
by substituting '1987' for '1986'."
(5) Subparagraph (B) of section 251(d)(3) of the Reform Act "26
USC 46 note" is amended by striking out "Pontabla" and inserting
in lieu thereof "Pontalba".
(6) Subparagraph (T) of section 251(d)(4) of the Reform Act is
amended by striking out "Louisville" and inserting in lieu thereof
"Covington".
(l) AMENDMENTS RELATED TO SECTION 252 OF THE REFORM ACT. --
(1)(A) Subparagraph (A) of section 42(b)(2) of the 1986 Code is
amended by striking out "for the month" and all that follows and
inserting in lieu thereof "for the earlier of --
"(i) the month in which such building is placed in service, or
"(ii) at the election of the taxpayer --
"(I) the month in which the taxpayer and the housing credit
agency enter into an agreement with respect to such building
(which is binding on such agency, the taxpayer, and all successors
in interest) as to the housing credit dollar amount to be
allocated to such building, or
"(II) in the case of any building to which subsection (h)(4)(
B) applies, the month in which the tax-exempt obligations are
issued.
A month may be elected under clause (ii) only if the election
is made not later than the 5th day after the close of such month.
Such an election, once made, shall be irrevocable."
(B) Clause (ii) of section 42(b)(2)(C) of the 1986 Code is
amended by striking out "the month in which the building was
placed in service" and inserting in lieu thereof "the month
applicable under clause (i) or (ii) of subparagraph (A)".
(2)(A) Subparagraph (A) of section 42(c)(2) of the 1986 Code
(defining qualified low-income building) is amended to read as
follows:
"(A) which is part of a qualified low-income housing project at
all times during the period --
"(i) beginning on the 1st day in the compliance period on which
such building is part of such a project, and
"(ii) ending on the last day of the compliance period with
respect to such building, and".
(B) Paragraph (1) of section 42(f) of the 1986 Code (defining
credit period) is amended by striking out "beginning with" and all
that follows and inserting in lieu thereof "beginning with --
"(A) the taxable year in which the building is placed in
service, or
"(B) at the election of the taxpayer, the succeeding taxable
year,
but only if the building is a qualified low-income building as
of the close of the 1st year of such period. The election under
subparagraph (B), once made, shall be irrevocable."
(3) Clause (ii) of section 42(d)(2)(D) of the 1986 Code is
amended to read as follows:
"(ii) SPECIAL RULES FOR CERTAIN TRANSFERS. -- For purposes of
determining under subparagraph (B)(ii) when a building was last
placed in service, there shall not be taken into account any
placement in service --
"(I) in connection with the acquisition of the building in a
transaction in which the basis of the building in the hands of the
person acquiring it is determined in whole or in part by reference
to the adjusted basis of such building in the hands of the person
from whom acquired,
"(II) by a person whose basis in such building is determined
under section 1014(a) (relating to property acquired from a
decedent),
"(III) by any governmental unit or qualified non-profit
organization (as defined in subsection (h)(5)) if the requirements
of subparagraph (B)(ii) are met with respect to the placement in
service by such unit or organization and all the income from such
property is exempt from Federal income taxation, or
"(IV) by any person who acquired such building by foreclosure
(or by instrument in lieu of foreclosure) of any purchase-money
security interest held by such person if the requirements of
subparagraph (B)(ii) are met with respect to the placement in
service by such person and such building is resold within 12
months after the date such building is placed in service by such
person after such foreclosure.
(4) Paragraph (3) of section 42(d) of the 1986 Code is amended
to read as follows:
"(3) ELIGIBLE BASIS REDUCED WHERE DISPROPORTIONATE STANDARDS
FOR UNITS. --
"(A) IN GENERAL. -- Except as provided in subparagraph (B),
the eligible basis of any building shall be reduced by an amount
equal to the portion of the adjusted basis of the building which
is attributable to residential rental units in the building which
are not low-income units and which are above the average quality
standard of the low-income units in the building.
"(B) EXCEPTION WHERE TAXPAYER ELECTS TO EXCLUDE EXCESS COSTS.
--
"(i) IN GENERAL. -- Subparagraph (A) shall not apply with
respect to a residential rental unit in a building which is not a
low-income unit if --
"(I) the excess described in clause (ii) with respect to such
unit is not greater than 15 percent of the cost described in
clause (ii)(II), and
"(II) the taxpayer elects to exclude from the eligible basis of
such building the excess described in clause (ii) with respect to
such unit.
"(ii) EXCESS. -- The excess described in this clause with
respect to any unit is the excess of --
"(I) the cost of such unit, over
"(II) the amount which would be the cost of such unit if the
average cost per square foot of low-income units in the building
were substituted for the cost per square foot of such unit.
The Secretary may by regulation provide for the determination
of the excess under this clause on a basis other than square foot
costs."
(5) Subparagraph (A) of section 42(d)(5) of the 1986 Code is
amended by inserting before the period "(increased, in the case of
an existing building before the period "(increased, in the case of
an existing building which meets the requirements of paragraph
(2)(B), by the amounts described in paragraph (2)(A)( i)(II))".
(6)(A) Paragraph (5) of section 42(d) of the 1986 Code is
amended by adding at the end thereof the following new
subparagraph:
"(C) ELIGIBLE BASIS NOT TO INCLUDE EXPENDITURES WHERE 167(k)
ELECTED. -- The eligible basis of any building shall not include
any portion of its adjusted basis which is attributable to amounts
with respect to which an election is made under section 167(k)."
(B) Subparagraph (A) of section 42(d)(5) of the 1986 Code is
amended by striking out "subparagraph (B)" and inserting in lieu
thereof "subparagraphs (B) and (C)".
(7) Subparagraph (A) of section 42(d)(6) of the 1986 Code is
amended by inserting "or" at the end of clause (i), by striking
out ", or" at the end of clause (ii) and inserting in lieu thereof
a period, and by striking out clause (iii).
10(8) Clause (ii) of section 42(d)(6)(B) of the 1986 Code
(defining federally assisted building) is amended by striking out
"of 1934".
(9)(A) Paragraph (3) of section 42(f) of the 1986 Code is
amended to read as follows:
"(3) DETERMINATION OF APPLICABLE PERCENTAGE WITH RESPECT TO
INCREASES IN QUALIFIED BASIS AFTER 1ST YEAR OF CREDIT PERIOD. --
"(A) IN GENERAL. -- In the case of any building which was a
qualified low-income building as of the close of the 1st year of
the credit period, if --
"(i) as of the close of any taxable year in the compliance
period (after the 1st year of the credit period) the qualified
basis of such building exceeds
"(ii) the qualified basis of such building as of the close of
the 1st year of the credit period,
the applicable percentage which shall apply under subsection
(a) for the taxable year to such excess shall be the percentage
equal to 2/3 of the applicable percentage which (after the
application of subsection (h)) would but for this paragraph apply
to such basis.
"(B) 1ST YEAR COMPUTATION APPLIES. -- A rule similar to the
rule of paragraph (2)(A) shall apply to any increase in qualified
basis to which subparagraph (A) applies for the 1st year of such
increase."
(B) Paragraph (3) of section 42(b) of the 1986 Code is amended
to read as follows:
"(3) CROSS REFERENCES. --
"(A) For treatment of certain rehabilitation expenditures as
separate new buildings, see subsection (e).
"(B) For determination of applicable percentage for increases
in qualified basis after the 1st year of the credit period, see
subsection (f)(3).
"(C) For authority of housing credit agency to limit applicable
percentage and qualified basis which may be taken into account
under this section with respect to any building, see subsection
(h)(6)."
(10) Subparagraph (B) of section 42(g)(2) of the 1986 Code
(defining gross rent) is amended by striking out "Federal rental
assistance" and inserting in lieu thereof "rental assistance".
(11) Paragraph (2) of section 42(g) of the 1986 Code is amended
by adding at the end thereof the following new subparagraph:
"(C) UNITS WHERE FEDERAL RENTAL ASSISTANCE IS REDUCED AS
TENANT'S INCOME INCREASES. -- If the gross rent with respect to a
residential unit exceeds the limitation under subparagraph (A) by
reason of the fact that the income of the occupants thereof
exceeds the income limitation applicable under paragraph (1), such
unit shall, nevertheless, be treated as a rent-restricted unit for
purposes of paragraph (1) if --
"(i) a Federal rental assistance payment described in
subparagraph (B)(i) is made with respect to such unit or its
occupants, and
"(ii) the sum of such payment and the gross rent with respect
to such unit does not exceed the sum of the amount of such payment
which would be made and the gross rent which would be payable with
respect to such unit if --
"(I) the income of the occupants thereof did not exceed the
income limitation applicable under paragraph (1), and
"(II) such units were rent-restricted within the meaning of
subparagraph (A).
The preceding sentence shall apply to any unit only if the
result described in clause (ii) is required by Federal statute as
of the date of the enactment of this subparagraph and as of the
date the Federal rental assistance payment is made."
(12) Paragraph (3) of section 42(g) of the 1986 Code is amended
to read as follows:
"(3) DATE FOR MEETING REQUIREMENTS. --
"(A) IN GENERAL. -- Except as otherwise provided in this
paragraph, a building shall be treated as a qualified low-income
building only if the project (of which such building is a part)
meets the requirements of paragraph (1) not later than the close
of the 12-month period beginning on the date the building is
placed in service.
"(B) BUILDINGS WHICH RELY ON LATER BUILDINGS FOR QUALIFICATION.
--
"(i) IN GENERAL. -- In determining whether a building
(hereinafter in this subparagraph referred to as the 'prior
building') is a qualified low-income building, the taxpayer may
take into account 1 or more additional buildings placed in service
during the 12-month period described in subparagraph (A) with
respect to the prior building only if the taxpayer elects to apply
clause (ii) with respect to each additional building taken into
account.
"(ii) TREATMENT OF ELECTED BUILDINGS. -- In the case of a
building which the taxpayer elects to take into account under
clause (i), the period under subparagraph (A) for such building
shall end at the close of the 12-month period applicable to the
prior building.
"(iii) DATE PRIOR BUILDING IS TREATED AS PLACED IN SERVICE. --
For purposes of determining the credit period and the compliance
period for the prior building, the prior building shall be treated
for purposes of this section as placed in service on the most
recent date any additional building elected by the taxpayer (with
respect to such prior building) was placed in service.
"(C) SPECIAL RULE. -- A building --
"(i) other than the 1st building placed in service as part of a
project, and
"(ii) other than a building which is placed in service during
the 12-month period described in subparagraph (A) with respect to
a prior building which becomes a qualified low-income building,
shall in no event be treated as a qualified low-income building
unless the project is a qualified low-income housing project
(without regard to such building) on the date such building is
placed in service."
(13) Paragraph (4) of section 42(g) of the 1986 Code is amended
by inserting before the period "; except that, in applying such
provisions (other than section 142(d)(4)(B)(iii)) for such
purposes, the term 'gross rent' shall have the meaning given such
term by paragraph (2)(B) of this subsection".
(14)(A) Paragraph (1) of section 42(h) of the 1986 Code is
amended to read as follows:
"(1) CREDIT MAY NOT EXCEED CREDIT AMOUNT ALLOCATED TO BUILDING.
--
"(A) IN GENERAL. -- The amount of the credit determined under
this section for any taxable year with respect to any building
shall not exceed the housing credit dollar amount allocated to
such building under this subsection.
"(B) TIME FOR MAKING ALLOCATION. -- Except in the case of an
allocation which meets the requirements of subparagraph (C) or
(D), an allocation shall be taken into account under subparagraph
(A) only if it is made not later than the close of the calendar
year in which the building is placed in service.
"(C) EXCEPTION WHERE BINDING COMMITMENT. -- An allocation
meets the requirements of this subparagraph if there is a binding
commitment (not later than the close of the calendar year in which
the building is placed in service) by the housing credit agency to
allocate a specified housing credit dollar amount to such building
beginning in a specified later taxable year.
"(D) EXCEPTION WHERE INCREASE IN QUALIFIED BASIS. --
"(i) IN GENERAL. -- An allocation meets the requirements of
this subparagraph if such allocation is made not later than the
close of the calendar year in which ends the taxable year to which
it will 1st apply but only to the extent the amount of such
allocation does not exceed the limitation under clause (ii).
"(ii) LIMITATION. -- The limitation under this clause is the
amount of credit allowable under this section (without regard to
this subsection) for a taxable year with respect to an increase in
the qualified basis of the building equal to the excess of --
"(I) the qualified basis of such building as of the close of
the 1st taxable year to which such allocation will apply, over
"(II) the qualified basis of such building as of the close of
the 1st taxable year to which the most recent prior housing credit
allocation with respect to such building applied.
"(iii) HOUSING CREDIT DOLLAR AMOUNT REDUCED BY FULL ALLOCATION.
-- Notwithstanding clause (i), the full amount of the allocation
shall be taken into account under paragraph (2)".
(B) Clause (ii) of section 42(h)(6)(B) of the 1986 Code is
hereby repealed.
(15) Subparagraph (A) of section 42(h)(4) of the 1986 Code is
amended by striking out "financed" and all that follows and
inserting in lieu thereof "financed by any obligation the interest
on which is exempt from tax under section 103 if --
"(i) such obligation is taken into account under section 146,
and
"(ii) principal payments on such financing are applied within a
reasonable period to redeem obligations the proceeds of which were
used to provide such financing."
(16) Paragraph (5) of section 42(h) of the 1986 Code is amended
by redesignating subparagraph (D) as subparagraph (E) and by
inserting after subparagraph (C) the following new subparagraph:
"(D) TREATMENT OF CERTAIN SUBSIDIARIES. --
"(i) IN GENERAL. -- For purposes of this paragraph, a
qualified nonprofit organization shall be treated as satisfying
the material participation test of subparagraph (B) if any
qualified corporation in which such organization holds stock
satisfies such test.
"(ii) QUALIFIED CORPORATION. -- For purposes of clause (ii),
the term 'qualified corporation' means any corporation if 100
percent of the stock of such corporation is held by 1 or more
qualified nonprofit organizations at all times during the period
such corporation is in existence."
(17) Subparagraph (D) of section 42(h)(6) of the 1986 Code is
amended to read as follows:
"(D) CREDIT REDUCED IF ALLOCATED CREDIT DOLLAR AMOUNT IS LESS
THAN CREDIT WHICH WOULD BE ALLOCABLE WITHOUT REGARD TO PLACED IN
SERVICE CONVENTION, ETC. --
"(i) IN GENERAL. -- The amount of the credit determined under
this section with respect to any building shall not exceed the
clause (ii) percentage of the amount of the credit which would
(but for this subparagraph) be determined under this section with
respect to such building.
"(ii) DETERMINATION OF PERCENTAGE. -- For purposes of clause
(i), the clause (ii) percentage with respect to any building is
the percentage which --
"(I) the housing credit dollar amount allocated to such
building bears to
"(II) the credit amount determined in accordance with clause
(iii).
10"(iii) DETERMINATION OF CREDIT AMOUNT. -- The credit amount
determined in accordance with this clause is the amount of the
credit which would (but for this subparagraph) be determined under
this section with respect to the building if --
"(I) this section were applied without regard to paragraphs
(2)(A) and (3)(B) of subsection (f), and
"(II) subsection (f)(3)(A) were applied without regard to 'the
percentage equal to 2/3 of'."
(18) Paragraph (6) of section 42(h) of the 1986 Code is amended
by adding at the end thereof the following new subparagraph:
"(E) HOUSING CREDIT AGENCY TO SPECIFY APPLICABLE PERCENTAGE AND
MAXIMUM QUALIFIED BASIS. -- In allocating a housing credit dollar
amount to any building, the housing credit agency shall specify
the applicable percentage and the maximum qualified basis which
may be taken into account under this section with respect to such
building. The applicable percentage and maximum qualified basis
so specified shall not exceed the applicable percentage and
qualified basis determined under this section without regard to
this subsection."
(19)(A) Subparagraph (A) of section 42(i)(2) of the 1986 Code
is amended --
(i) by inserting "or any prior taxable year" after "such
taxable year",
(ii) by striking out "there is outstanding" and inserting in
lieu thereof "there is or was outstanding", and
(iii) by striking out "are used" and inserting in lieu thereof
"are or were used".
(B) Subparagraph (B) of section 42(i)(2) of the 1986 Code is
amended to read as follows:
"(B) ELECTION TO REDUCE ELIGIBLE BASIS BY BALANCE OF LOAN OR
PROCEEDS OF OBLIGATIONS. -- A loan or tax-exempt obligation shall
not be taken into account under subparagraph (A) if the taxpayer
elects to exclude from the eligible basis of the building for
purposes of subsection (d) --
"(i) in the case of a loan, the principal amount of such loan,
and
"(ii) in the case of a tax-exempt obligation, the proceeds of
such obligation."
(C) Paragraph (2) of section 42(i) of the 1986 Code is amended
by redesignating subparagraph (C) as subparagraph (D) and by
inserting after subparagraph (B) the following new subparagraph:
"(C) SPECIAL RULE FOR SUBSIDIZED CONSTRUCTION FINANCING. --
Subparagraph (A) shall not apply to any tax-exempt obligation or
below market Federal loan used to provide construction financing
for any building if --
"(i) such obligation or loan (when issued or made) identified
the building for which the proceeds of such obligation or loan
would be used, and
"(ii) such obligation is redeemed, and such loan is repaid,
before such building is placed in service."
(D) Subparagraph (D) of section 42(i)(2) of the 1986 Code is
amended by striking out "subparagraph (A)" and inserting in lieu
thereof "this paragraph".
(20) Paragraph (4) of section 42(j) of the 1986 Code is amended
by adding at the end thereof the following new subparagraph:
"(F) NO RECAPTURE WHERE DE MINIMIS CHANGES IN FLOOR SPACE. --
The Secretary may provide that the increase in tax under this
subsection shall not apply with respect to any building if --
"(i) such increase results from a de minimis change in the
floor space fraction under subsection (c)(1), and
"(ii) the building is a qualified low-income building after
such change."
(21) Clause (i) of section 42(j)(5)(B) of the 1986 Code is
amended to read as follows:
"(i) not more than 1/2 the capital interests, and more than 1/
2 the profit interests, in which are owned by a group of 35 or
more partners each of whom is a natural person or an estate, and".
(22) Paragraph (6) of section 42(j) of the 1986 Code is amended
--
(A) by inserting "(OR INTEREST THEREIN)" after "BUILDING" in
the heading, and
(B) by inserting "or an interest therein" after "disposition of
a building" in the text.
(23) Subparagraph (B) of section 42(k)(2) of the 1986 Code is
amended by inserting before the period at the end thereof the
following: ", except that this subparagraph shall not apply in
the case of a federally assisted building described in subsection
(d)(6)(B) if --
"(i) a security interest in such building is not permitted by a
Federal agency holding or insuring the mortgage secured by such
building, and
"(ii) the proceeds from the financing (if any) are applied to
acquire or improve such building."
(24)(A) Subsection (l) of section 42 of the 1986 Code is
amended by redesignating paragraph (2) as paragraph (3) and by
inserting after paragraph (1) the following new paragraph:
"(2) ANNUAL REPORTS TO THE SECRETARY. -- The Secretary may
require taxpayers to submit an information return (at such time
and in such form and manner as the Secretary prescribes) for each
taxable year setting forth --
"(A) the qualified basis for the taxable year of each qualified
low-income building of the taxpayer,
"(B) the information described in paragraph (1)(C) for the
taxable year, and
"(C) such other information as the Secretary may require.
The penalty under section 6652(j) shall apply to any failure to
submit the return required by the Secretary under the preceding
sentence on the date prescribed therefor."
(B) The subsection heading of subsection (l) of section 42 is
amended to read as follows:
"(l) CERTIFICATIONS AND OTHER REPORTS TO SECRETARY. -- ".
(25) Paragraph (1) of section 42(n) of the 1986 Code is amended
by inserting before the period at the end thereof the following:
", and, except for any building described in paragraph (2)(B),
subsection (h)(4) shall not apply to any building placed in
service after 1989".
(26) Subsection (d) of section 39 of the 1986 Code is amended
by adding at the end the following new paragraph:
"(4) NO CARRYBACK OF LOW-INCOME HOUSING CREDIT BEFORE 1987. --
No portion of the unused business credit for any taxable year
which is attributable to the credit determined under section 42
(relating to low-income housing credit) may be carried back to a
taxable year ending before January 1, 1987."
(27) Paragraph (1) of section 55(c) of the 1986 Code (defining
regular tax) is amended by striking out "section 42(j)" and
inserting in lieu thereof "subsection (j) or (k) of section 42".
(28) Subparagraph (A) of section 252(f)(1) of the Reform Act
"26 USC 42 note" is amended by striking out "and" at the end of
clause (i), by striking out the period at the end of clause (ii)
and inserting in lieu thereof a comma, and by inserting after
clause (ii) the following new clauses:
"(iii) the eligible basis of such building shall be treated,
for purposes of section 42(h)(4)(A) of such Code, as if it were
financed by an obligation the interest on which is exempt from tax
under section 103 of such Code and which is taken into account
under section 146 of such Code, and
"(iv) the amendments made by section 803 shall not apply."
(29) Subparagraph (E) of section 252(f)(1) of the Reform Act is
amended by striking out "maximum annual additional credit" and
inserting in lieu thereof "maximum present value of additional
credits".
(30) Subparagraph (E) of section 252(f)(2) of the Reform Act is
amended by adding at the end thereof the following new sentence:
"The preceding sentence shall apply to any building only to the
extent of the portion of the additional housing credit dollar
amount (allocated to such agency under subparagraph (A)) allocated
to such building."
(31) Subsection (f) of section 252 of the Reform Act is amended
by adding at the end thereof the following new paragraph:
"(5) TRANSITIONAL RULE. -- In the case of any rehabilitation
expenditures incurred with respect to units located in the
neighborhood strategy area within the community development block
grant program in Ft. Wayne, Indiana --
"(A) the amendments made by this section shall not apply, and
"(B) paragraph (1) of section 167(k) of the Internal Revenue
Code of 1986, shall be applied as if it did not contain the phrase
'and before January 1, 1987'.
The number of units to which the preceding sentence applies
shall not exceed 150."
(32) Subsection (g) of section 42 of the 1986 Code is amended
by adding at the end thereof the following new paragraph:
"(6) SPECIAL RULE WHERE DE MINIMIS EQUITY CONTRIBUTION. --
Property shall not be treated as failing to be residential rental
property for purposes of this section merely because the occupant
of a residential unit in the project pays (on a voluntary basis)
to the lessor a de minimis amount to be held toward the purchase
by such occupant of a residential unit in such project if --
"(A) all amounts so paid are refunded to the occupant on the
cessation of his occupancy of a unit in the project, and
"(B) the purchase of the unit is not permitted until after the
close of the compliance period with respect to the building in
which the unit is located.
Any amount paid to the lessor as described in the preceding
sentence shall be included in gross rent under paragraph (2) for
purposes of determining whether the unit is rent-restricted."
(m) AMENDMENTS RELATED TO SECTION 261 OF THE REFORM ACT. --
(1) Subparagraph (A) of section 7518(g)(6) of the 1986 Code, is
amended by striking out "section 1(i)" and inserting in lieu
thereof "section 1(j)".
(2) Subparagraph (A) of section 607(h)(6) of the Merchant
Marine Act, "46 USC app. 1177" 1936 is amended by striking out
"section 1(i)" and inserting in lieu thereof "section 1(j)".
SEC. 1003. AMENDMENTS RELATED TO TITLE III OF THE REFORM ACT.
(a) AMENDMENTS RELATED TO SECTION 301 OF THE REFORM ACT. --
(1) Subparagraph (B) of section 172(d)(4) of the 1986 Code is
amended by striking out ", (2)(B),".
(2) Paragraph (1) of section 3402(m) of the 1986 Code is
amended by striking out "section 62" (other than paragraph (13)
thereof)" and inserting in lieu thereof "section 62(a) (other than
paragraph (10) thereof))".
(3) Paragraph (2) of section 1212(b) of the 1986 Code is
amended to read as follows:
"(2) TREATMENT OF AMOUNTS ALLOWED UNDER SECTION 1211(b)(1) OR
(2). --
"(A) IN GENERAL. -- For purposes of determining the excess
referred to in subparagraph (A) or (B) of paragraph (1), there
shall be treated as a short-term capital gain in the taxable year
an amount equal to the lesser of --
"(i) the amount allowed for the taxable year under paragraph
(1) or (2) of section 1211(b), or
"(ii) the adjusted taxable income for such taxable year.
"(B) ADJUSTED TAXABLE INCOME. -- For purposes of subparagraph
(A), the term 'adjusted taxable income' means taxable income
increased by the sum of --
"(i) the amount allowed for the taxable year under paragraph
(1) or (2) of section 1211(b), and
"(ii) the deduction allowed for such year under section 151 or
any deduction in lieu thereof.
For purposes of the preceding sentence, any excess of the
deductions allowed for the taxable year over the gross income for
such year shall be taken into account as negative taxable income."
(b) AMENDMENTS RELATED TO SECTION 302 OF THE REFORM ACT. --
(1) Section 302 of the Reform Act "26 USC 1 note" is amended by
striking out subsection (c).
(2)(A) Paragraph (2) of section 904(b) of the 1986 Code is
amended to read as follows:
"(2) CAPITAL GAINS. -- For purposes of this section --
"(A) IN GENERAL. -- Taxable income from sources outside the
United States shall include gain from the sale or exchange of
capital assets only to the extent of foreign source capital gain
net income.
"(B) SPECIAL RULES WHERE CAPITAL GAIN RATE DIFFERENTIAL. -- In
the case of any taxable year for which there is a capital gain
rate differential --
"(i) in lieu of applying subparagraph (A), the taxable income
from sources outside the United States shall include gain from the
sale or exchange of capital assets only in an amount equal to
foreign source capital gain net income reduced by the rate
differential portion of foreign source net capital gain,
"(ii) the entire taxable income shall include gain from the
sale or exchange of capital assets only in an amount equal to
capital gain net income reduced by the rate differential portion
of net capital gain, and
"(iii) for purposes of determining taxable income from sources
outside the United States, any net capital loss (and any amount
which is a short-term capital loss under section 1212(a)) from
sources outside the United States to the extent taken into account
in determining capital gain net income for the taxable year shall
be reduced by an amount equal to the rate differential portion of
the excess of net capital gain from sources within the United
States over net capital gain."
(B) Paragraph (3) of section 904(b) of the 1986 Code is amended
by striking out subparagraph (D) and inserting in lieu thereof the
following new subparagraphs:
"(D) CAPITAL GAIN RATE DIFFERENTIAL. -- There is a capital
gain rate differential for any taxable year if --
"(i) in the case of a taxpayer other than a corporation,
subsection (j) of section 1 applies to such taxable year, or
"(ii) in the case of a corporation, any rate of tax imposed by
section 11, 511, or 831(a) or (b) (whichever applies) exceeds the
alternative rate of tax under section 1201(a) (determined without
regard to the last sentence of section 11(b)).
"(E) RATE DIFFERENTIAL PORTION. --
"(i) IN GENERAL. -- The rate differential portion of foreign
source net capital gain, net capital gain, or the excess of net
capital gain from sources within the United States over net
capital gain, as the case may be, is the same proportion of such
amount as --
"(I) the excess of the highest applicable tax rate over the
alternative tax rate, bears to
"(II) the highest applicable tax rate.
"(ii) HIGHEST APPLICABLE TAX RATE. -- For purposes of clause
(i), the term 'highest applicable tax rate' means --
"(I) in the case of a taxpayer other than a corporation, the
highest rate of tax set forth in subsection (a), (b), (c), (d), or
(e) of section 1 (whichever applies), or
"(II) in the case of a corporation, the highest rate of tax
specified in section 11(b).
"(iii) ALTERNATIVE TAX RATE. -- For purposes of clause (i),
the term 'alternative tax rate' means --
"(I) in the case of a taxpayer other than a corporation, the
alternative rate of tax determined under section 1(j), or
"(II) in the case of a corporation, the alternative rate of tax
under section 1201(a)."
(3) Effective for taxable years beginning after December 31,
1987, paragraph (1) of section 1445(e) of the 1986 Code is amended
by striking out "34 percent" and inserting in lieu thereof "34
percent (or, to the extent provided in regulations, 28 percent)".
(c) AMENDMENTS RELATED TO SECTION 311 OF THE REFORM ACT. --
(1) Subsection (a) of section 1201 of the 1986 Code is amended
by striking out "831(a)" and inserting in lieu thereof "831(a) or
(b)".
(2) Subsection (c) of section 311 of the Reform Act "26 USC
1201 note" is amended by inserting before the period at the end
thereof the following: "; except that the amendment made by
subsection (b)(4) shall apply to payments made after December 31,
1986".
(3) Subparagraph (D) of section 593(b)(2) of the 1986 Code is
amended by striking out "and" at the end of clause (iii), by
striking out the period at the end of clause (iv) and inserting in
lieu thereof ", and", and by adding at the end thereof the
following new clause:
"(v) if there is a capital gain rate differential (as defined
in section 904(b)(3)(D)) for the taxable year, by excluding from
gross income the rate differential portion (within the meaning of
section 904(b)(3)(E)) of the lesser of --
"(I) the net long-term capital gain for the taxable year, or
"(II) the net long-term capital gain for the taxable year from
the sale or exchange of property other than property described in
clause (iii)."
(d) AMENDMENT RELATED TO SECTION 321 OF THE REFORM ACT. --
(1)(A) Subsection (b) of section 422A of the 1986 Code is
amended by adding at the end thereof the following new sentence:
"Such term shall not include any option if (as of the time the option
is granted) the terms of such option provide that it will not be treated
as an incentive stock option."
(B) In the case of an option granted after December 31, 1986,
and on or before the date of the enactment of this Act, "26 USC
422A note" such option shall not be treated as an incentive stock
option if the terms of such option are amended before the date 90
days after such date of enactment to provide that such option will
not be treated as an incentive stock option.
(2)(A) Section 422A of the 1986 Code is amended by adding at
the end thereof the following new subsection:
"(d) $100,000 PER YEAR LIMITATION. --
"(1) IN GENERAL. -- To the extent that the aggregate fair
market value of stock with respect to which incentive stock
options (determined without regard to this subsection) are
exercisable for the 1st time by any individual during any calendar
year (under all plans of the individual's employer corporation and
its parent and subsidiary corporations) exceeds $100,000, such
options shall be treated as options which are not incentive stock
options.
"(2) ORDERING RULE. -- Paragraph (1) shall be applied by
taking options into account in the order in which they were
granted.
"(3) DETERMINATION OF FAIR MARKET VALUE. -- For purposes of
paragraph (1), the fair market value of any stock shall be
determined as of the time the option with respect to such stock is
granted."
(B) Subsection (b) of section 422A of the 1986 Code is amended
by adding "and" at the end of paragraph (5), by striking out ";
and" at the end of paragraph (6) and inserting in lieu thereof a
period, and by striking out paragraph (7).
(C) Paragraph (1) of section 422A(c) of the 1986 Code is
amended by striking out "paragraph (7) of subsection (b)" and
inserting in lieu thereof "subsection (d)".
SEC. 1004. AMENDMENTS RELATED TO TITLE IV OF THE REFORM ACT.
(a) AMENDMENTS RELATED TO SECTION 405 OF THE REFORM ACT. --
(1) Paragraph (1) of section 108(a) of the 1986 Code is amended
by striking out "or" at the end of subparagraph (A), by striking
out the period at the end of subparagraph (B) and inserting in
lieu thereof ", or" and by adding at the end thereof the following
new subparagraph:
"(C) the indebtedness discharged is qualified farm
indebtedness."
(2) Paragraph (2) of section 108(a) of the 1986 Code is amended
to read as follows:
"(2) COORDINATION OF EXCLUSIONS. --
"(A) TITLE 11 EXCLUSION TAKES PRECEDENCE. -- Subparagraphs (B)
and (C) of paragraph (1) shall not apply to a discharge which
occurs in a title 11 case.
"(B) INSOLVENCY EXCLUSION TAKES PRECEDENCE OVER QUALIFIED FARM
EXCLUSION. -- Subparagraph (C) of paragraph (1) shall not apply
to a discharge to the extent the taxpayer is insolvent."
(3) Subsection (b) of section 108 of the 1986 Code is amended
--
(A) by striking out "subparagraph (A) or (B)" in paragraph (1)
and inserting in lieu thereof "subparagraph (A), (B), or
7(C)", and
(B) by striking out "IN TITLE 11 CASE OR INSOLVENCY" in the
subsection heading.
(4) Subsection (g) of section 108 of the 1986 Code is amended
to read as follows:
"(g) SPECIAL RULES FOR DISCHARGE OF QUALIFIED FARM INDEBTEDNESS. --
"(1) DISCHARGE MUST BE BY QUALIFIED PERSON. --
"(A) IN GENERAL. -- Subparagraph (C) of subsection (a)(1)
shall apply only if the discharge is by a qualified person.
"(B) QUALIFIED PERSON. -- For purposes of subparagraph (A),
the term 'qualified person' has the meaning given to such term by
section 46(c)(8)(D)(iv); except that such term shall include any
Federal, State, or local government or agency or instrumentality
thereof.
"(2) QUALIFIED FARM INDEBTEDNESS. -- For purposes of this
section, indebtedness of a taxpayer shall be treated as qualified
farm indebtedness if --
"(A) such indebtedness was incurred directly in connection with
the operation by the taxpayer of the trade or business of farming,
and
"(B) 50 percent or more of the aggregate gross receipts of the
taxpayer for the 3 taxable years preceding the taxable year in
which the discharge of such indebtedness occurs is attributable to
the trade or business of farming.
"(3) AMOUNT EXCLUDED CANNOT EXCEED SUM OF TAX ATTRIBUTES AND
BUSINESS AND INVESTMENT ASSETS. --
"(A) IN GENERAL. -- The amount excluded under subparagraph (C)
of subsection (a)(1) shall not exceed the sum of --
"(i) the adjusted tax attributes of the taxpayer, and
"(ii) the aggregate adjusted bases of qualified property held
by the taxpayer as of the beginning of the taxable year following
the taxable year in which the discharge occurs.
"(B) ADJUSTED TAX ATTRIBUTES. -- For purposes of subparagraph
(A), the term 'adjusted tax attributes' means the sum of the tax
attributes described in subparagraphs (A), (B), (C), and (E) of
subsection (b)(2) determined by taking into account $3 for each $1
of the attributes described in subparagraphs (B) and (E) of
subsection (b)(2).
"(C) QUALIFIED PROPERTY. -- For purposes of this paragraph,
the term 'qualified property' means any property which is used or
is held for use in a trade or business or for the production of
income.
"(D) COORDINATION WITH INSOLVENCY EXCLUSION. -- For purposes
of this paragraph, the adjusted basis of any qualified property
and the amount of the adjusted tax attributes shall be determined
after any reduction under subsection (b) by reason of amounts
excluded from gross income under subsection (a)(1)(B)."
(5) Paragraph (4) of section 1017(b) of the 1986 Code is
amended to read as follows:
"(4) SPECIAL RULES FOR QUALIFIED FARM INDEBTEDNESS. --
"(A) IN GENERAL. -- Any amount which under subsection (b)(2)(
D) of section 108 is to be applied to reduce basis and which is
attributable to an amount excluded under subsection (a)(1)(C) of
section 108 --
"(i) shall be applied only to reduce the basis of qualified
property held by the taxpayer, and
"(ii) shall be applied to reduce the basis of qualified
property in the following order:
"(I) First the basis of qualified property which is depreciable
property.
"(II) Second the basis of qualified property which is land used
or held for use in the trade or business of farming.
"(III) Then the basis of other qualified property.
"(B) QUALIFIED PROPERTY. -- For purposes of this paragraph,
the term 'qualified property' has the meaning given to such term
by section 108(g)(3)(C).
"(C) CERTAIN RULES MADE APPLICABLE. -- Rules similar to the
rules of subparagraph (C), (D), and (E) of paragraph (3) shall
apply for purposes of this paragraph and section 108(g)."
(6)(A) Paragraphs (6) and (7) of section 108(d) of the 1986
Code are each amended by striking out "subsections (a) and (b)"
and inserting in lieu thereof "subsections (a), (b), and (g)".
(B) The subsection heading for section 108(d) of the 1986 Code
is amended by striking out "SUBSECTIONS (a), AND (b)" and
inserting in lieu thereof "SUBSECTIONS (a), (b), AND (G)".
(C) The headings for paragraphs (6) and (7)(A) of section 108(
d) of the 1986 Code are each amended by striking out "SUBSECTIONS
(a) AND (b)" and inserting in lieu thereof "SUBSECTIONS (a), (b),
AND (g)".
(b) AMENDMENT RELATED TO SECTION 406 OF THE REFORM ACT. -- Section
406 of the Reform Act "26 USC 1202 note" is amended --
(1) by inserting "before October 1, 1987," after "from the
sale", and
(2) by striking out "to the extent such gain" and all that
follows down through the period at the end thereof and inserting
in lieu thereof "to the extent such gain is properly taken into
account under the taxpayer's method of accounting during 1987.".
(c) AMENDMENT RELATED TO SECTION 413 OF THE REFORM ACT. -- Subsection
(a) of section 1254 of the 1986 Code is amended by adding at the end
thereof the following new paragraph:
"(4) ADJUSTMENT FOR AMOUNTS INCLUDED IN GROSS INCOME UNDER
SECTION 617(b)(1)(A). -- The amount of the expenditures referred
to in paragraph (1)(A)(i) shall be properly adjusted for amounts
included in gross income under section 617(b)(1)(A)."
SEC. 1005. AMENDMENTS RELATED TO TITLE V OF THE REFORM ACT.
(a) AMENDMENTS RELATED TO SECTION 501 OF THE REFORM ACT. --
(1) Clause (ii) of section 469(e)(1)(A) of the 1986 Code
(relating to certain income not treated as income from passive
activity) is amended by inserting "not derived in the ordinary
course of a trade or business which is" after "gain or loss".
(2)(A) Subparagraph (A) of section 469(g)(1) of the 1986 Code
(relating to disposition of interests in passive activities in
fully taxable transactions) is amended to read as follows:
"(A) IN GENERAL. -- If all gain or loss realized on such
disposition is recognized, the excess of --
"(i) the sum of --
"(I) any loss from such activity for such taxable year
(determined after application of subsection (b)), plus
"(II) any loss realized on such disposition, over
"(ii) net income or gain for such taxable year from all passive
activities (determined without regard to losses described in
clause (i)),
shall be treated as a loss which is not from a passive
activity."
(B) Subparagraph (C) of section 469(g)(1) of the 1986 Code is
amended to read as follows:
"(C) INCOME FROM PRIOR YEARS. -- To the extent provided in
regulations, income or gain from the activity for preceding
taxable years shall be taken into account under subparagraph (A)(
ii) for the taxable year to the extent necessary to prevent the
avoidance of this section."
(3) Subparagraph (A) of section 469(g)(2) of the 1986 Code is
amended --
(A) by striking out "paragraph (1)" and inserting in lieu
thereof "paragraph (1)(A)"; and
(B) by striking out "such losses" the first place it appears
and inserting in lieu thereof "losses described in paragraph (1)(
A)".
(4) Section 469(g)(3) of the 1986 Code is amended --
(A) by striking out "realized (or to be realized)" and
inserting in lieu thereof "(realized or to be realized", and
(B) by inserting a closing parenthesis after "completed".
(5) Paragraph (4) of section 469(h) of the 1986 Code (relating
to certain closely held C corporations and personal service
corporations) is amended by inserting "only" before "if".
(6) Paragraph (1) of section 469(i) of the 1986 Code (relating
to $25,000 offset for rental real estate activities) is amended by
striking out "in the taxable year in which such portion of such
loss or credit arose" and inserting in lieu thereof "in such
taxable year (and if any portion of such loss or credit arose in
another taxable year, in such other taxable year)".
(7) Subparagraph (C) of section 468(i)(6) of the 1986 Code
(relating to interest as a limited partner) is amended by striking
out "No" and inserting in lieu thereof "Except as provided in
regulations, no".
(8) Subparagraph (A) of section 469(j)(6) of the 1986 Code
(relating to special rule for gifts) is amended by inserting "with
respect to which a deduction has not been allowed by reason of
subsection (a)" before ", and".
(9) Section 469(j) of the 1986 Code (relating to definitions
and special rules) is amended by adding at the end thereof the
following new paragraphs:
"(10) COORDINATION WITH SECTION 280A. -- If a passive activity
involves the use of a dwelling unit to which section 280A(c)(5)
applies for any taxable year, any income, deduction, gain, or loss
allocable to such use shall not be taken into account for purposes
of this section for such taxable year.
"(11) AGGREGATION OF MEMBERS OF AFFILIATED GROUPS. -- Except
as provided in regulations, all members of an affiliated group
which files a consolidated return shall be treated as 1
corporation."
(10) Section 501(c) of the Reform Act "26 USC 469 note" is
amended by adding at the end thereof the following new paragraph:
"(4) INCOME FROM SALES OF PASSIVE ACTIVITIES IN TAXABLE YEARS
BEGINNING BEFORE JANUARY 1, 1987. -- If --
"(A) gain is recognized in a taxable year beginning after
December 31, 1986, from a sale or exchange of an interest in an
activity in a taxable year beginning before January 1, 1987, and
"(B) such gain would have been treated as gain from a passive
activity had section 469 of the Internal Revenue Code of 1986 (as
added by this section) been in effect for the taxable year in
which the sale or exchange occurred and for all succeeding taxable
years,
then such gain shall be treated as gain from a passive activity
for purposes of such section."
(11) Subsection (j) of section 469 of the 1986 Code is amended
by adding at the end thereof the following new paragraph:
"(12) SPECIAL RULE FOR DISTRIBUTIONS BY ESTATES OR TRUSTS. --
If any interest in a passive activity is distributed by an estate
or trust --
"(A) the basis of such interest immediately before such
distribution shall be increased by the amount of any passive
activity losses allocable to such interest, and
"(B) such losses shall not be allowable as a deduction for any
taxable year."
(12) Subsection (m) of section 469 of the 1986 Code, as
redesignated by section 10211 of the Revenue Act of 1987, is
amended by striking all that precedes subparagraph (B) of
paragraph (3) thereof and inserting in lieu thereof the following:
"(m) PHASE-IN OF DISALLOWANCE OF LOSSES AND CREDITS FOR INTEREST HELD
BEFORE DATE OF ENACTMENT. --
"(1) IN GENERAL. -- In the case of any passive activity loss
or passive activity credit for any taxable year beginning in
calendar years 1987 through 1990, subsection (a) shall not apply
to the applicable percentage of that portion of such loss (or such
credit) which is attributable to pre-enactment interests.
"(2) APPLICABLE PERCENTAGE. -- For purposes of this
subsection, the applicable percentage shall be determined in
accordance with the following table:
"(3) PORTION OF LOSS OR CREDIT ATTRIBUTABLE TO PRE-ENACTMENT
INTERESTS. -- For purposes of this subsection --
"(A) IN GENERAL. -- The portion of the passive activity loss
(or passive activity credit) for any taxable year which is
attributable to preenactment interests is the lesser of --
"(i) the amount of the passive activity loss (or passive
activity credit) which is disallowed for the taxable year under
subsection (a) (without regard to this subsection), or
"(ii) the amount of the passive activity loss (or passive
activity credit) which would be disallowed for the taxable year
(without regard to this subsection and without regard to any
amount allocable to an activity for the taxable year under
subsection (b)) taking into account only pre-enactment interests."
(b) AMENDMENTS RELATED TO SECTION 502 OF THE REFORM ACT. --
(1) Subparagraph (A) of section 502(d)(1) of the Reform Act "26
USC 469 note" (defining qualified investor) is amended to read as
follows:
"(A) if --
"(i) in the case of a project placed in service on or before
August 16, 1986, such person held an interest in such project on
August 16, 1986, and such person made his initial investment after
December 31, 1983, or
"(ii) in the case of a project placed in service after August
16, 1986, such person made his initial investment after December
31, 1983, and such person held an interest in such project on
December 31, 1986, and".
(2) Subsection (d) of section 502 of the Reform Act "26 USC 469
note" (defining qualified investor) is amended by adding after
paragraph (2) the following new paragraph:
"(3) SPECIAL RULES FOR CERTAIN PARTNERSHIPS. -- In the case of
any property which is held by a partnership --
"(A) which placed such property in service on or after December
31, 1985, and before August 17, 1986, and continuously held such
property through the close of the taxable year for which the
determination is being made, and
"(B) which was not treated as a new partnership or as
terminated at any time on or after the date on which such property
was placed in service and through the close of the taxable year
for which the determination is being made,
paragraph (1)(A)(i) shall be applied by substituting 'December
31, 1988' for 'August 16, 1986' the 2nd place it appears."
(3) The subsection (d) of section 502 of the Reform Act which
related to special rules is redesignated as subsection (e).
(c) AMENDMENTS RELATED TO SECTION 511 OF THE REFORM ACT. --
(1) Subparagraph (A) of section 163(d)(3) of the 1986 Code
7(defining investment interest) is amended by striking out
"incurred or continued to purchase or carry" and inserting in lieu
thereof "properly allocable to".
(2) Subparagraph (B) of section 163(d)(4) of the 1986 Code is
amended to read as follows:
"(B) INVESTMENT INCOME. -- The term 'investment income' means
the sum of --
"(i) gross income (other than gain taken into account under
clause (ii) from property held for investment, and
"(ii) any net gain attributable to the disposition of property
held for investment."
(3) Subparagraph (A) of section 163(d)(6) of the 1986 Code is
amended to read as follows:
"(A) IN GENERAL. -- The amount of interest paid or accrued
during any such taxable year which is disallowed under this
subsection shall not exceed the sum of --
10"(i) the amount which would be disallowed under this
subsection if --
"(I) paragraph (1) were applied by substituting 'the sum of the
ceiling amount and the net investment income' for 'the net
investment income', and
"(II) paragraphs (4)(E) and (5)(A)(ii) did not apply, and
"(ii) the applicable percentage of the excess of --
"(I) the amount which (without regard to this paragraph) is not
allowable as a deduction under this subsection for the taxable
year, over
"(II) the amount described in clause (i).
The preceding sentence shall not apply to any interest treated
as paid or accrued during the taxable year under paragraph (2)."
(4) Subparagraph (A) of section 163(h)(2) of the 1986 Code is
amended by striking out "incurred or continued in connection with
the conduct of" and inserting in lieu thereof "properly allocable
to".
(5) Subparagraph (C) of section 163(h)(3) of the 1986 Code
(defining qualified residence interest) is amended to read as
follows:
"(C) COST NOT LESS THAN BALANCE OF INDEBTEDNESS INCURRED ON OR
BEFORE AUGUST 16, 1986. --
"(i) IN GENERAL. -- The amount under subparagraph (B)(ii)(I)
at any time after August 16, 1986, shall not be less than the
outstanding principal amount (as of such time) of indebtedness --
"(I) which was incurred on or before August 16, 1986, and which
was secured by the qualified residence on August 16, 1986, or
"(II) which is secured by the qualified residence and was
incurred after August 16, 1986, to refinance indebtedness
described in subclause (I) (or refinanced indebtedness meeting the
requirements of this subclause) to the extent (immediately after
the refinancing) the principal amount of the indebtedness
resulting from the refinancing does not exceed the principal
amount of the refinanced indebtedness (immediately before the
refinancing).
"(ii) LIMITATION ON PERIOD OF REFINANCING. -- Subclause (II)
of clause (i) shall not apply to any indebtedness after --
"(I) the expiration of the term of the indebtedness described
in clause (i)(I), or
"(II) if the principal of the indebtedness described in clause
(i)(I) is not amortized over its term, the expiration of the term
of the 1st refinancing of such indebtedness (or if earlier, the
date which is 30 years after the date of such refinancing)."
(6)(A) The heading for section 163(h)(5) of the 1986 Code is
amended to read as follows:
"(5) OTHER DEFINITIONS AND SPECIAL RULES. -- For purposes of
this subsection -- ".
(B) Paragraph (5) of section 163(h) of the 1986 Code is amended
--
(i) by striking out "For purposes of this subsection -- " in
subparagraph (A), and
(ii) by striking out "For purposes of this paragraph, any" in
subparagraph (B) and inserting in lieu thereof "Any".
(7) Clause (iii) of section 163(h)(5)(A) of the 1986 Code is
amended by striking out "USED OR" in the heading thereof and by
striking out "or use".
(8) Section 163(h)(5) of the 1986 Code is amended by adding at
the end thereof the following new subparagraphs:
"(C) UNENFORCEABLE SECURITY INTERESTS. -- Indebtedness shall
not fail to be treated as secured by any property solely because,
under any applicable State or local homestead or other debtor
protection law in effect on August 16, 1986, the security interest
is ineffective or the enforceability of the security interest is
restricted.
"(D) SPECIAL RULES FOR ESTATES AND TRUSTS. -- For purposes of
determining whether any interest paid or accrued by an estate or
trust is qualified residence interest, any residence held by such
estate or trust shall be treated as a qualified residence of such
estate or trust if such estate or trust establishes that such
residence is a qualified residence of a beneficiary who has a
present interest in such estate or trust or an interest in the
residuary of such estate or trust."
(9) Paragraph (6) of section 163(h) of the 1986 Code is amended
by striking out "subsection" the 3rd place it appears and
inserting in lieu thereof "paragraph".
(10) Paragraph (2)(A) of section 511(d) of the Reform Act is
amended to read as follows:
"(2)(A) Sections 467(c)(5) and 1255(b)(2) are each amended by
striking out '163(d),'."
(11) If -- "26 USC 469 note"
(A) any amount was disallowed as a deduction under section
163(d) of the Internal Revenue Code of 1954 (as in effect on the
day before the date of the enactment of the Reform Act),
(B) such amount would (but for this paragraph) be treated as
investment interest paid or accrued by the taxpayer in the
taxpayer's first taxable year beginning after December 31, 1986,
and
(C) the taxpayer makes an election under this paragraph at such
time and in such manner as the Secretary of the Treasury or his
delegate shall prescribe,
to the extent such amount is attributable to an activity
subject to the limitations of section 469 of the 1986 Code, such
amount shall not be treated as investment interest but shall be
treated as a deduction allocable to such activity for such first
taxable year. Subsection (m) of section 469 of the 1986 Code and
section 501(c)(2) of the Reform Act shall not apply to any amount
so treated.
(12) Subparagraph (E) of section 163(h)(2) of the 1986 Code is
amended by inserting before the period "or under section 6166A (as
in effect before its repeal by the Economic Recovery Tax Act of
1981)".
(13) For purposes of applying the amendments "26 USC 163 note"
made by this subsection and the amendments made by section 10102
of the Revenue Act of 1987, the provisions of this subsection
shall be treated as having been enacted immediately before the
enactment of the Revenue Act of 1987.
(14)(A) For purposes of applying section 163(h) "26 USC 163
note" of the 1986 Code to any taxable year beginning during 1987,
if, incident to a divorce or legal separation --
(i) an individual acquires the interest of a spouse or former
spouse in a qualified residence in a transfer to which section
1041 of the 1986 Code applies, and
(ii) such individual incurs indebtedness which is secured by
such qualified residence,
the amount determined under paragraph (3)(B)(ii)(I) of section
163(h) of the 1986 Code (as in effect before the amendments made
by the Revenue Act of 1987) with respect to such qualified
residence shall be increased by the amount determined under
subparagraph (B).
(B) The amount determined under this subparagraph shall be
equal to the excess (if any) of --
(i) the lesser of the amount of the indebtedness described in
subparagraph (A)(ii), or the fair market value of the spouse's or
former spouse's interest in the qualified residence as of the time
of the transfer, over
(ii) the basis of the spouse or former spouse in such interest
in such residence (adjusted only by the cost of any improvements
to such residence).
(15) Clause (i) of section 7872(d)(1)(E) of the 1986 Code is
amended by striking out "section 163(d)(3)" and inserting in lieu
thereof "section 163(d)(4)".
SEC. 1006. AMENDMENTS RELATED TO TITLE VI OF THE REFORM ACT.
(a) AMENDMENT RELATED TO SECTION 601 OF THE REFORM ACT. -- Section
15 of the 1986 Code is amended by adding at the end thereof the
following new subsection:
"(e) REFERENCES TO HIGHEST RATE. -- If the change referred to in
subsection (a) involves a change in the highest rate of tax imposed by
section 1 or 11(b), any reference in this chapter to such highest rate
(other than in a provision imposing a tax by reference to such rate)
shall be treated as a reference to the weighted average of the highest
rates before and after the change determined on the basis of the
respective portions of the taxable year before the date of the change
and on or after the date of the change."
(b) AMENDMENTS RELATED TO SECTIONS 611 AND 612 OF THE REFORM ACT. --
"26 USC 245 note"
(1) In the case of dividends received or accrued during 1987 --
(A) subparagraph (B) of section 245(c)(1) of the 1986 Code
shall be applied by substituting "80 percent" for the percentage
specified therein, and
(B) subparagraph (B) of section 861(a)(2) of the 1986 Code
shall be applied by substituting "100/80ths" for the fraction
specified therein.
(2) Paragraph (3) of section 854(b) of the 1986 Code is amended
to read as follows:
"(3) AGGREGATE DIVIDENDS. -- For purposes of this subsection
--
"(A) IN GENERAL. -- In computing the amount of aggregate
dividends received, there shall only be taken into acocunt
dividends received from domestic corporations.
"(B) DIVIDENDS. -- For purposes of subparagraphs (A), the term
'dividend' shall not include any distribution from --
"(i) a corporation which, for the taxable year of the
corporation in which the distribution is made, or for the next
preceding taxable year of the corporation, is a corporation exempt
from tax under section 501 (relating to certain charitable, etc.,
organizations) or section 521 (relating to farmers' cooperative
associations), or
"(ii) a real estate investment trust which, for the taxable
year of the trust in which the dividend is paid, qualified under
part II of subchapter M (section 856 and following).
"(C) LIMITATIONS ON DIVIDENDS FROM REGULATED INVESTMENT
COMPANIES. -- In determining the amount of any dividend for
purposes of this paragraph, a dividend received from a regulated
investment company shall be subject to the limitations prescribed
in this section."
(c) AMENDMENTS RELATED TO SECTION 614 OF THE REFORM ACT. --
(1) Section 1059(d) of the 1986 Code (relating to extension to
certain property distributions) is amended by striking out
paragraph (5) and redesignating paragraphs (6) and (7) as
paragraphs (5) and (6), respectively.
(2) Section 1059(d)(5) of the 1986 Code (defining dividend
announcement date), as redesignated by paragraph (1), is amended
by inserting "amount or" before "payment".
(3) Section 1059(d)(6) of the 1986 Code (relating to exception
where stock held during entire existence of corporation), as
redesignated by paragraph (1), is amended to read as follows:
"(6) EXCEPTION WHERE STOCK HELD DURING ENTIRE EXISTENCE OF
CORPORATION. --
"(A) IN GENERAL. -- Subsection (a) shall not apply to any
extraordinary dividend with respect to any share of stock of a
corporation if --
"(i) such stock was held by the taxpayer during the entire
period such corporation was in existence, and
"(ii) except as provided in regulations, no earnings and
profits of such corporation were attributable to transfers of
property from (or earnings and profits of) a corporation which is
not a qualified corporation.
"(B) QUALIFIED CORPORATION. -- For purposes of subparagraph
(A), the term 'qualified corporation' means any corporation
(including a predecessor corporation) --
"(i) with respect to which the taxpayer holds directly or
indirectly during the entire period of such corporation's
existence at least the same ownership interest as the taxpayer
holds in the corporation distributing the extraordinary dividend,
and
"(ii) which has no earnings and profits --
"(I) which were earned by, or
"(II) which are attributable to gain on property which accrued
during a period the corporation holding the property was --
a corporation not described in clause (i).
"(C) APPLICATION OF PARAGRAPH. -- This paragraph shall not
apply to any extraordinary dividend to the extent such application
is inconsistent with the purposes of this section."
(4) Paragraph (1) of section 1059(e) of the 1986 Code (relating
to treatment of partial liquidation) is amended by striking out
"for purposes of this section (without regard to the holding
period of the stock)" and inserting in lieu thereof: "to which
paragraphs (1) and (2) of subsection (a) apply without regard to
the period the taxpayer held such stock".
(5) Paragraph (2) of section 1059(e) of the 1986 Code (relating
to qualifying dividends) is amended to read as follows:
"(2) QUALIFYING DIVIDENDS. --
"(A) IN GENERAL. -- Except as provided in regulations, the
term 'extraordinary dividend' does not include any qualifying
dividend (within the meaning of section 243).
"(B) EXCEPTION. -- Subparagraph (A) shall not apply to any
portion of a dividend which is attributable to earnings and
profits which --
"(i) were earned by a corporation during a period it was not a
member of the affiliated group, or
"(ii) are attributable to gain on property which accrued during
a period the corporation holding the property was not a member of
the affiliated group."
(6) Subparagraph (A) of section 1059(e)(3) of the 1986 Code
(relating to qualified preferred dividends) is amended to read as
follows:
"(A) IN GENERAL. -- In the case of 1 or more qualified
preferred dividends with respect to any share of stock --
"(i) this section shall not apply to such dividends if the
taxpayer holds such stock for more than 5 years, and
"(ii) if the taxpayer disposes of such stock before it has been
held for more than 5 years, the aggregate reduction under
subsection (a)(1) with respect to such dividends shall not be
greater than the excess (if any) of --
"(I) the qualified preferred dividends paid with respect to
such stock during the period the taxpayer held such stock, over
"(II) the qualified preferred dividends which would have been
paid during such period on the basis of the stated rate of
return."
(7) Clause (i) of section 1059(e)(3)(C) of the 1986 Code is
amended --
(A) by striking out "any dividend payable" and inserting in
lieu thereof "any fixed dividend payable", and
(B) by adding at the end thereof the following new sentence:
"Such term shall not include any dividend payable with respect
to any share of stock if the actual rate of return on such stock
exceeds 15 percent."
(8) Subparagraph (B) of section 1059(e)(3) of the 1986 Code is
amended --
(A) by striking out "subparagraph (A)" and the material
preceding clause (i) and inserting in lieu thereof "this
paragraph", and
(B) by striking out "subparagraph (B)(i)(II)" in clause (ii)
and inserting in lieu thereof "clause (i)(II)".
(9) Subsection (f) of section 1059 of the 1986 Code is amended
by inserting before the period at the end thereof the following:
"and in the case of stock held by pass-thru entities".
(d) AMENDMENTS RELATED TO SECTION 621 OF THE REFORM ACT. --
(1)(A) Section 382(e)(2) of the 1986 Code is amended --
(i) by inserting "or other corporate contraction" after
"redemption" each place it appears, and
(ii) by inserting "OR OTHER CORPORATE CONTRACTION" after
"REDEMPTION" in the heading thereof.
(B) Clause (ii) of section 382(h)(3)(A) of the 1986 Code is
amended --
(i) by inserting "or other corporate contraction" after
"redemption" each place it appears, and
(ii) by inserting "OR OTHER CORPORATE CONTRACTIONS" after
"REDEMPTIONS" in the heading thereof.
(C) Section 382(m) of the 1986 Code is amended by inserting
"and" at the end of paragraph (3), by striking out paragraph (4),
and by redesignating pragraph (5) as paragraph (4).
(D) The amendments made by this paragraph "26 USC 382 note"
shall apply with respect to ownership changes after June 10, 1987.
(2) Section 382(g)(4)(C) of the 1986 Code is amended by
inserting "rules similar to" before "the rules".
(3)(A) Section 382(h)(1)(C) of the 1986 Code is amended to read
as follows:
"(C) SPECIAL RULES FOR CERTAIN SECTION 338 GAINS. -- If an
election under section 338 is made in connection with an ownership
change and the net unrealized built-in gain is zero by reason of
paragraph (3)(B), then, with respect to such change, the section
382 limitation for the post-change year in which gain is
recognized by reason of such election shall be increased by the
lesser of --
"(i) the recognized built-in gains by reason of such election,
or
"(ii) the net unrealized built-in gain (determined without
regard to paragraph (3)(B))."
(B) Paragraph (5) of section 382(h) of the 1986 Code is amended
by striking out "recognized built-in gains and losses" and
inserting in lieu thereof "recognized built-in gains to the extent
such gains increased the section 382 limitation for the year (or
recognized built-in losses to the extent such losses are treated
as pre-change losses)".
(4) Section 382(i)(3) of the 1986 Code is amended --
(A) by inserting "the earlier of" before "the 1st day", and
(B) by inserting "or the taxable year in which the transaction
being tested occurs" after "1st post-change year".
(5)(A) Section 382(k)(1) of the 1986 Code is amended by
inserting "or having a net operating loss for the taxable year in
which the ownership change occurs" after "carryover".
(B) Section 382(k)(2) of the 1986 Code is amended to read as
follows:
"(2) OLD LOSS CORPORATION. -- The term 'old loss corporation'
means any corporation --
"(A) with respect to which there is an ownership change, and
"(B) which (before the ownership change) was a loss
corporation."
(6) Section 382(l)(3)(A) of the 1986 Code is amended by
striking out "and" at the end of clause (iii), and by striking out
clause (iv) and inserting in lieu thereof the following new
clauses:
"(iv) except to the extent provided in regulations, an option
to acquire stock shall be treated as exercised if such exercise
results in an ownership change, and
"(v) in attributing stock from an entity under paragraph (2) of
section 318(a), there shall not be taken into account --
"(I) in the case of attribution from a corporation, stock which
is not treated as stock for purposes of this section, or
"(II) in the case of attribution from another entity, an
interest in such entity similar to stock described in subclause
(I)."
(7) Clause (ii) of section 382(l)(5)(A) of the 1986 Code is
amended by striking out "immediately after such ownership change"
and inserting in lieu thereof "after such ownership change and as
a result of being shareholders or creditors immediately before
such change".
(8) Section 382(l)(5)(F) of the 1986 Code is amended --
(A) by inserting "'1504(a)(2)(B)' for '1504(a)(2)' and" after
"substituting" in clause (i)(I), and
(B) by striking out "deposits described in subclause (II)" in
clause (ii)(III) and inserting in lieu thereof "the amount of
deposits in the new loss corporation immediately after the
change".
(9) Paragraph (6) of section 382(l) of the 1986 Code is amended
by striking out "shall be the value of the new loss corporation
immediately after the ownership change" and inserting in lieu
thereof "shall reflect the increase (if any) in value of the old
loss corporation resulting from any surrender or cancellation of
creditors' claims in the transaction".
(10) Section 382(l) of the 1986 Code is amended by adding at
the end thereof the following new paragraph:
"(8) PREDECESSOR AND SUCCESSOR ENTITIES. -- Except as provided
in regulations, any entity and any predecessor or successor
entities of such entity shall be treated as 1 entity."
(11) Paragraph (1) of section 621(f) of the Reform Act "26 USC
382 note" is amended to read as follows:
"(1) AMENDMENTS MADE BY SUBSECTIONS (a), (b), and (c). --
"(A) IN GENERAL. --
"(i) CHANGES AFTER 1986. -- The amendments made by subsections
(a), (b), and (c) shall apply to any ownership change after
December 31, 1986.
"(ii) PLANS OF REORGANIZATION ADOPTED BEFORE 1987. -- For
purposes of clause (i), any equity structure shift pursuant to a
plan of reorganization adopted before January 1, 1987, shall be
treated as occurring when such plan was adopted.
"(B) TERMINATION OF OLD SECTION 382. -- Except in a case
described in any of the following paragraphs --
"(i) section 382(a) of the Internal Revenue Code of 1954 (as in
effect before the amendment made by subsection (a) and the
amendments made by section 806 of the Tax Reform Act of 1976)
shall not apply to any increase in percentage points occurring
after December 31, 1988, and
"(ii) section 382(b) of such Code (as so in effect) shall not
apply to any reorganization occurring pursuant to a plan of
reorganization adopted after December 31, 1986.
In no event shall sections 382(a) and (b) of such Code (as so
in effect) apply to any ownership change described in subparagraph
(A).
"(C) COORDINATION WITH SECTION 382(i). -- For purposes of
section 382(i) of the Internal Revenue Code of 1986 (as added by
this section), any equity structure shift pursuant to a plan of
reorganization adopted before January 1, 1987, shall be treated as
occurring when such plan was adopted."
(12)(A) Section 621(f)(2)(C) of the Reform Act is amended by
inserting "and reincorporated in Delaware in 1987," after "1924,".
(B) Clause (ii) of section 621(f)(2)(C) of the Reform Act is
amended to read as follows:
"(ii) the amendments made by subsections (e) and (f) of section
806 of the Tax Reform Act of 1976 shall not apply to such debt
restructuring, except that the amendment treated as part of such
subsections under section 59(b) of the Tax Reform Act of 1984
(relating to qualified workouts) shall apply to such debt
restructuring."
(13) Subparagraph (D) of section 621(f)(2) of the Reform Act
"26 USC 382 note" is amended --
(A) by striking out "or reorganization", and
(B) by adding at the end thereof the following new sentence:
"For purposes of the preceding sentence, in applying section 382
(as so in effect), if a person has a warrant to acquire stock,
such stock shall be considered as owned by such person."
(14) Section 621(f)(3) of the Reform Act is amended by striking
out "after December 31, 1986".
(15) Paragraph (4) of section 621(f) of the Reform Act is
amended by striking out the last sentence and inserting in lieu
thereof the following:
"Any regulations prescribed under section 382 of the Internal
Revenue Code of 1986 (as added by subsection (a)) which have the
effect of treating a group of shareholders as a separate 5-percent
shareholder by reason of a public offering shall not apply to any
public offering before January 1, 1989, for the benefit of
institutions described in section 591 of such Code. Unless the
corporation otherwise elects, an underwriter of any offering of
stock in a corporation before September 19, 1986 (January 1, 1989,
in the case of an offering for the benefit of an institution
described in the preceding sentence), shall not be treated as
acquiring any stock of such corporation by reason of a firm
commitment underwriting to the extent the stock is disposed of
pursuant to the offering (but in no event later than 60 days after
the initial offering)."
(16) Subparagraph (A) of section 621(f)(7) of the Reform Act is
amended by striking out "the parent corporation referred to in
section 203(d)(13)(B)" and inserting in lieu thereof "a parent
corporation incorporated in March 1980 under the laws of
Delaware".
(17)(A) Subsection (e) of section 382 of the 1986 Code is
amended by adding at the end thereof the following new paragraph:
"(3) TREATMENT OF FOREIGN CORPORATIONS. -- Except as otherwise
provided in regulations, in determining the value of any old loss
corporation which is a foreign corporation, there shall be taken
into account only items treated as connected with the conduct of a
trade or business in the United States."
(B) The amendment made by subparagraph (A) "26 USC 382 note"
shall apply to any ownership change after June 10, 1987. For
purposes of the preceding sentence, any equity structure shift
pursuant to a plan of reorganization adopted on or before June 10,
1987, shall be treated as occurring when such plan was adopted.
(18) Subparagraph (C) of section 382(l)(5) of the 1986 Code is
amended to read as follows:
"(C) REDUCTION OF TAX ATTRIBUTES WHERE DISCHARGE OF
INDEBTEDNESS. --
"(i) IN GENERAL. -- In any case to which subparagraph (A)
applies, 50 percent of the amount which, but for the application
of section 108(e)(10)(B), would have been applied to reduce tax
attributes under section 108(b) shall be so applied.
"(ii) CLARIFICATION WITH SUBPARAGRAPH (B). -- In applying
clause (i), there shall not be taken into account any indebtedness
for interest described in subparagraph (B)."
(19) Subparagraph (E) of section 382(l)(5) of the 1986 Code is
amended by striking out so much of such subparagraph as precedes
clause (i) thereof and inserting in lieu thereof the following:
"(E) ONLY CERTAIN STOCK TAKEN INTO ACCOUNT. -- For purposes of
subparagraph (A)(ii), stock transferred to a creditor shall be
taken into account only to the extent such stock is transferred in
satisfaction of indebtedness and only if such indebtedness -- ".
(20) Paragraph (4) of section 382(h) of the 1986 Code is
amended --
(A) by inserting before the comma at the end of subparagraph
(A) the following: "(or to the extent the amount so disallowed is
attributable to capital losses, under rules similar to the rules
for the carrying forward of net capital losses)", and
(B) by striking out "TREATED AS A NET OPERATING LOSS" in the
paragraph heading and inserting in lieu thereof "ALLOWED AS A
CARRYFORWARD".
(21) Paragraph (1) of section 382(g) of the 1986 Code is
amended --
(A) by striking out "new loss corporation" and inserting in
lieu thereof "loss corporation", and
(B) by striking out "old loss corporation" and inserting in
lieu thereof "loss corporation".
(22) Paragraph (6) of section 382(h) of the 1986 Code is
amended to read as follows:
"(6) TREATMENT OF CERTAIN BUILT-IN ITEMS. --
"(A) INCOME ITEMS. -- Any item of income which is properly
taken into account during the recognition period but which is
attributable to periods before the change date shall be treated as
a recognized built-in gain for the taxable year in which it is
properly taken into account.
"(B) DEDUCTION ITEMS. -- Any amount which is allowable as a
deduction during the recognition period but which is attributable
to periods before the change date shall be treated as a recognized
built-in loss for the taxable year for which it is allowed as a
deduction.
"(C) ADJUSTMENTS. -- The amount of the net unrealized built-in
gain or loss shall be properly adjusted for amounts treated as
recognized built-in gains or losses under this paragraph."
(23) Paragraph (9) of section 382(h) of the 1986 Code is
amended by striking out "is transferred" and inserting in lieu
thereof "was acquired (or is subsequently transferred)".
(24) Subsection (m) of section 382 of the 1986 Code (as amended
by paragraph (1)) is amended by striking out "and" at the end of
paragraph (3), by striking out the period at the end of paragraph
(4) and inserting in lieu thereof ", and", and by adding at the
end thereof the following:
"(5) providing, in the case of any group of corporations
described in section 1563(a) (determined by substituting '50
percent' for '80 percent' each place it appears and determined
without regard to paragraph (4) thereof), appropriate adjustments
to value, built-in gain or loss, and other items so that items are
not omitted or taken into account more than once."
(25) Clause (ii) of section 382(l)(5)(A) of the 1986 Code is
amended by striking out "stock of controlling corporation" and
inserting in lieu thereof "stock of a controlling corporation".
(26) Clause (ii) of section 382(h)(3)(B) of the 1986 Code is
amended by striking out "there shall not" and inserting in lieu
thereof "except as provided in regulations, there shall not".
(27) Subparagraph (B) of section 382(1)(5) of the 1986 Code is
amended by striking out "the net operating loss deduction under
section 172(a) for any post-change year shall be determined" and
inserting in lieu thereof "the pre-change losses and excess
credits (within the meaning of section 383(a)(2)) which may be
carried to a post-change year shall be computed".
(28)(A) Clause (ii) of section 382(h)(3)(A) of the 1986 Code is
amended by striking out "determinations under clause (i)" and
inserting in lieu thereof "to the extent provided in regulations,
determinations under clause (i)".
(B) The amendment made by subparagraph (A) "26 USC 382 note"
shall apply in the case of ownership changes on or after June 21,
1988.
(29) Subclause (I) of section 382(1)(5)(F)(iii) of the 1986
Code is amended by striking out "section 368(a)(D)(ii)" and
inserting in lieu thereof "section 368(a)(3)(D)(ii)".
(e) AMENDMENTS RELATED TO SECTION 631 OF THE REFORM ACT. --
(1) Clause (ii) of section 336(d)(2)(B) of the 1986 Code is
amended to read as follows:
"(ii) CERTAIN ACQUISITIONS TREATED AS PART OF PLAN. -- For
purposes of clause (i), any property described in clause (i)(I)
acquired by the liquidated corporation after the date 2 years
before the date of the adoption of the plan of complete
liquidation shall, except as provided in regulations, be treated
as acquired as part of a plan described in clause (i)(II)."
(2) Paragraph (3) of section 336(d) of the 1986 Code is amended
by adding at the end thereof the following new sentence: "The
preceding sentence shall apply to any distribution to the
80-percent distribution only if subsection (a) or (b)(1) of
section 337 applies to such distribution."
(3) Subsection (e) of section 336 of the 1986 Code is amended
by striking out "such corporation may elect" and inserting in lieu
thereof "an election may be made".
(4) Subparagraph (B) of section 337(b)(2) of the 1986 Code is
amended --
(A) by striking out "or 511(b)(2)" in clause (i),
(B) by striking out "in an unrelated trade or business (as
defined in section 513)" in clause (i) and inserting in lieu
thereof "in an activity the income from which is subject to tax
under section 511(a)", and
(C) by striking out "an unrelated trade or business of such
organization" in clause (ii) and inserting in lieu thereof "an
activity referred to in clause (i)".
(5)(A) Subsection (d) of section 337 of the 1986 Code is
amended --
(i) by striking out "made to this subpart by the Tax Reform Act
of 1986" and inserting in lieu thereof "made by subtitle D of
title VI of the Tax Reform Act of 1986", and
(ii) by inserting "or through the use of a regulated investment
company, real estate investment trust, or tax-exempt entity" after
"subchapter)" in paragraph (1).
(B) The amendment made by subparagraph (A)(ii) "26 USC 337
note" shall not apply to any reorganization if before June 10,
1987 --
(i) the board of directors of a party to the reorganization
adopted a resolution to solicit shareholder approval for the
transaction, or
(ii) the shareholders or the board of directors of a party to
the reorganization approved the transaction.
(6) Subsection (b) of section 334 of the 1986 Code is amended
to read as follows:
"(b) LIQUIDATION OF SUBSIDIARY. --
"(1) IN GENERAL. -- If property is received by a corporate
distributee in a distribution in a complete liquidation to which
section 332(a) applies (or in a transfer described in section
337(b)(1)), the basis of such property in the hands of such
distributee shall be the same as it would be in the hands of the
transferor; except that, in any case in which gain or loss is
recognized by the liquidating corporation with respect to such
property, the basis of such property in the hands of such
distributee shall be the fair market value of the property at the
time of the distribution.
"(2) CORPORATE DISTRIBUTEE. -- For purposes of this
subsection, the term 'corporate distributee' means only the
corporation which meets the stock ownership requirements specified
in section 332(b)."
(7)(A) Subparagraph (B) of section 453(h)(1) of the 1986 Code
is amended by striking out "to one person" and inserting in lieu
thereof "to 1 person in 1 transaction".
(B) Subparagraph (E) of section 453(h)(1) of the 1986 Code is
amended by striking out "section 368(c)(1)" and inserting in lieu
thereof "section 368(c)".
(8)(A) Part VII of subchapter C of chapter 1 of the 1986 Code
is hereby repealed.
(B) Subsection (b) of section 311 of the 1986 Code is amended
by adding at the end thereof the following new paragraph:
"(3) SPECIAL RULE FOR CERTAIN DISTRIBUTIONS OF PARTNERSHIP OR
TRUST INTERESTS. -- If the property distributed consists of an
interest in a partnership or trust, the Secretary may by
regulations provide that the amount of the gain recognized under
paragraph (1) shall be computed without regard to any loss
attributable to property contributed to the partnership or trust
for the principal purpose of recognizing such loss on the
distribution."
(C) The table of parts for subchapter C of chapter 1 of the
1986 Code is amended by striking out the item relating to part
VII.
(9) Paragraph (1) of section 267(a) of the 1986 Code is amended
--
(A) by striking out "(other than a loss in case of a
distribution in corporate liquidation)", and
(B) by adding at the end thereof the following new sentence:
"The preceding sentence shall not apply to any loss of the
distributing corporation (or the distributee) in the case of a
distribution in complete liquidation."
(10) Paragraph (1) of section 301(b) of the 1986 Code is
amended to read as follows:
"(1) GENERAL RULE. -- For purposes of this section, the amount
of any distribution shall be the amount of money received, plus
the fair market value of the other property received."
(11) Subsection (d) of section 301 of the 1986 Code is amended
to read as follows:
"(d) BASIS. -- The basis of property received in a distribution to
which subsection (a) applies shall be the fair market value of such
property."
(12) Section 301 of the 1986 Code is amended by striking out
subsection (e) and by redesignating subsections (f) and (g) as
subsections (e) and (f), respectively.
(13)(A) Subsection (a) of section 367 of the 1986 Code is
amended by redesignating paragraph (5) as paragraph (6) and by
inserting after paragraph (4) the following new paragraph:
"(5) PARAGRAPHS (2) AND (3) NOT TO APPLY TO CERTAIN SECTION 361
TRANSACTIONS. -- Paragraphs (2) and (3) shall not apply in the
case of an exchange described in section 361. Subject to such
basis adjustments and such other conditions as shall be provided
in regulations, the preceding sentence shall not apply if the
transferor corporation is controlled (within the meaning of
section 368(c)) by 5 or fewer domestic corporations. For purposes
of the preceding sentence, all members of the same affiliated
group (within the meaning of section 1504) shall be treated as 1
corporation."
(B) The amendment made by subparagraph (A) "26 USC 367 note"
shall apply to exchanges on or after June 21, 1988, except that
such amendment shall not apply to any exchange pursuant to any
reorganization for which a plan of reorganization was adopted
before June 21, 1988.
(C) Section 367(e)(2) of the 1986 Code (as amended by the
Reform Act) shall not apply in the case of any corporation
completely liquidated before June 10, 1987, into a corporation
organized in a country which has an income tax treaty with the
United States.
(14)(A) Subsection (d) of section 1248 of the 1986 Code is
amended by striking out paragraph (2).
(B) Subparagraph (B) of section 1248(f)(1) of the 1986 Code is
amended to read as follows:
"(B) such domestic corporation distributes stock of such
foreign corporation in a distribution to which section 311(a),
337, or 361(c)(1) applies,".
(C) Paragraph (1) of section 1248(f) of the 1986 Code is
amended by striking out "distribution, sale, or exchange" in the
last sentence and inserting in lieu thereof "distribution".
(D) Subsection (f) of section 1248 of the 1986 Code is amended
by striking out paragraph (3) and by redesignating paragraph (4)
as paragraph (3).
(E) The subsection heading for section 1248(f) of the 1986 Code
is amended by striking out "SECTION 311, 36, OR 337 TRANSACTIONS"
and inserting in lieu thereof "NONRECOGNITION TRANSACTIONS".
(15) Paragraph (1) of section 995(c) of the 1986 Code is
amended by inserting "or" at the end of subparagraph (A), by
striking out ", or" at the end of subparagraph (B) and inserting
in lieu thereof a period, and by striking out subparagraph (C) and
the sentence following subparagraph (C).
(16) Subsection (d) of section 245 of the 1986 Code is hereby
repealed.
(17) Paragraph (14) of section 1223 of the 1986 Code is amended
to read as follows:
"(14) CROSS REFERENCE. --
"For special holding period provision relating to certain
partnership distributions, see section 735(b)."
(18) Clause (ii) of section 341(e)(1)(C) of the 1986 Code is
amended --
(A) by striking out "sale or exchange" the first place it
appears and inserting in lieu thereof "liquidating sale or
exchange", and
(B) by striking out ", gain or loss on which was not recognized
to such other corporation under section 337(a)."
(19) Subsection (l) of section 897 of the 1986 Code is hereby
repealed.
(20) Paragraph (7) of section 338(h) of the 1986 Code is hereby
repealed.
(21)(A) The heading of subsection (b) of section 336 of the
1986 Code is amended by striking out "IN EXCESS OF BASIS".
(B) The heading of paragraph (2) of section 311(b) of the 1986
Code is amended by striking out "IN EXCESS OF BASIS".
(22) Section 453B of the 1986 Code is amended by adding at the
end thereof the following new subsection:
"(h) CERTAIN LIQUIDATING DISTRIBUTIONS BY S CORPORATIONS. -- If --
"(1) an installment obligation is distributed by an S
corporation in a complete liquidation, and
(2) receipt of the obligation is not treated as payment for the
stock by reason of section 453(h)(1),
then, except for purposes of any tax imposed by subchapter S, no gain
or loss with respect to the distribution of the obligation shall be
recognized by the distributing corporation. Under regulations
prescribed by the Secretary, the character of the gain or loss to the
shareholder shall be determined in accordance with the principles of
section 1366(b)."
(f) AMENDMENTS RELATED TO SECTION 632 OF THE REFORM ACT. --
(1) Subsection (a) of section 1374 of the 1986 Code is amended
by striking out "a recognized built-in gain" and inserting in lieu
thereof "a net recognized built-in gain".
(2) Subsection (b) of section 1374 of the 1986 Code is amended
by striking out paragraphs (1) and (2) and inserting in lieu
thereof the following:
"(1) IN GENERAL. -- The amount of the tax imposed by
subsection (a) shall be computed by applying the highest rate of
tax specified in section 11(b) to the net recognized built-in gain
of the S corporation for the taxable year.
"(2) NET OPERATING LOSS CARRYFORWARDS FROM C YEARS ALLOWED. --
Notwithstanding section 1371(b)(1), any net operating loss
carryforward arising in a taxable year for which the corporation
was a C corporation shall be allowed for purposes of this section
as a deduction against the net recognized built-in gain of the S
corporation for the taxable year. For purposes of determining the
amount of any such loss which may be carried to subsequent taxable
years, the amount of the net recognized built-in gain shall be
treated as taxable income. Rules similar to the rules of the
preceding sentences of this paragraph shall apply in the case of a
capital loss carryforward arising in a taxable year for which the
corporation was a C corporation."
(3) Subparagraph (B) of section 1374(b)(4) of the 1986 Code is
amended to read as follows:
"(B) the amount of the net recognized built-in gain shall be
treated as the taxable income."
(4) Paragraph (2) of section 1374(c) of the 1986 Code is
amended by striking out "recognized built-in gains" each place it
appears and inserting in lieu thereof "net recognized built-in
gain".
(5)(A) Section 1374 of the 1986 Code is amended by striking out
all that follows paragraph (1) of subsection (d) and inserting in
lieu thereof the following:
"(2) NET RECOGNIZED BUILT-IN GAIN. --
"(A) IN GENERAL. -- The term 'net recognized built-in gain'
means, with respect to any taxable year in the recognition period,
the lesser of --
"(i) the amount which would be the taxable income of the S
corporation for such taxable year if (except as provided in
subsection (b)(2)) only recognized built-in gains and recognized
built-in losses were taken into account, or
"(ii) such corporation's taxable income for such taxable year
(determined as provided in section 1375(b)(1)(B)).
"(B) CARRYOVER. -- If, or any taxable year, the amount
referred to in clause (i) of subparagraph (A) exceeds the amount
referred to in clause (ii) of subparagraph (A), such excess shall
be treated as a recognized built-in gain in the succeeding taxable
year. The preceding sentence shall apply only in the case of a
corporation treated as an S corporation by reason of an election
made on or after March 31, 1988.
"(3) RECOGNIZED BUILT-IN GAIN. -- The term 'recognized
built-in gain' means any gain recognized during the recognition
period on the disposition of any asset except to the extent that
the S corporation establishes that --
"(A) such asset was not held by the S corporation as of the
beginning of the 1st taxable year for which it was an S
corporation, or
"(B) such gain exceeds the excess (if any) of --
"(i) the fair market value of such asset as of the beginning of
such 1st taxable year, over
"(ii) the adjusted basis of the asset as of such time.
"(4) RECOGNIZED BUILT-IN LOSSES. -- The term 'recognized
built-in loss' means any loss recognized during the recognition
period on the disposition of any asset to the extent that the S
corporation establishes that --
"(A) such asset was held by the S corporation as of the
beginning of the 1st taxable year referred to in paragraph (3),
and
"(B) such loss does not exceed the excess of --
"(i) the adjusted basis of such asset as of the beginning of
such 1st taxable year, over
"(ii) the fair market value of such asset as of such time.
"(5) TREATMENT OF CERTAIN BUILT-IN ITEMS. --
"(A) INCOME ITEMS. -- Any item of income which is properly
taken into account during the recognition period but which is
attributable to periods before the 1st taxable year for which the
corporation was an S corporation shall be treated as a recognized
built-in gain for the taxable year in which it is properly taken
into account.
"(B) DEDUCTION ITEMS. -- Any amount which is allowable as a
deduction during the recognition period but which is attributable
to periods before the 1st taxable year referred to in subparagraph
(A) shall be treated as a recognized built-in loss for the taxable
year for which it is allowable as a deduction.
"(C) ADJUSTMENT TO NET UNREALIZED BUILT-IN GAIN. -- The amount
of the net unrealized built-in gain shall be properly adjusted for
amounts treated as recognized built-in gains or losses under this
paragraph.
"(6) TREATMENT OF CERTAIN PROPERTY. -- If the adjusted basis
of any asset is determined (in whole or in part) by reference to
the adjusted basis of any other asset held by the S corporation as
of the beginning of the 1st taxable year referred to in paragraph
(3) --
"(A) such asset shall be treated as held by the S corporation
as of the beginning of such 1st taxable year, and
"(B) any determination under paragraph (3)(B) or (4)(B) with
respect to such asset shall be made by reference to the fair
market value and adjusted basis of such other asset as of the
beginning of such 1st taxable year.
"(7) RECOGNITION PERIOD. -- The term 'recognition period'
means the 10-year period beginning with the 1st day of the 1st
taxable year for which the corporation was an S corporation.
"(8) TREATMENT OF TRANSFER OF ASSETS FROM C CORPORATION TO S
CORPORATION. --
"(A) IN GENERAL. -- Except to the extent provided in
regulations, if --
"(i) an S corporation acquires any asset, and
"(ii) the S corporation's basis in such asset is determined (in
whole or in part) by reference to the basis of such asset (or for
any other property) in the hands of a C corporation,
then a tax is hereby imposed on any net recognized built-in
gain attributable to any such assets for any taxable year
beginning in the recognition period. The amount of such tax shall
be determined under the rules of this section as modified by
subparagraph (B).
"(B) MODIFICATIONS. -- For purposes of this paragraph, the
modifications of this subparagraph are as follows:
"(i) IN GENERAL. -- The preceding paragraphs of this
subsection shall be applied by taking into account the day on
which the assets were acquired by the S corporation in lieu of the
beginning of the 1st taxable year for which the corporation was an
S corporation.
"(ii) SUBSECTION (c)(1) NOT TO APPLY. -- Subsection (c)(1)
shall not apply.
"(9) REFERENCE TO 1ST TAXABLE YEAR. -- Any reference in this
section to the 1st taxable year for which the corporation was an S
corporation shall be treated as a reference to the 1st taxable
year for which the corporation was an S corporation pursuant to
its most recent election under section 1362.
"(e) REGULATIONS. -- The Secretary shall prescribe such regulations
as may be necessary to carry out the purposes of this section including
regulations providing for the appropriate treatment of successor
corporations."
(B) Subparagraph (B) of section 1375(b)(1) of the 1986 Code is
amended to read as follows:
"(B) LIMITATION. -- The amount of the excess net passive
income for any taxable year shall not exceed the amount of the
corporation's taxable income for such taxable year as determined
under section 63(a) --
"(i) without regard to the deductions allowed by part VIII of
subchapter B (other than the deduction allowed by section 248,
relating to organization expenditures), and
"(ii) without regard to the deduction under section 172."
(C) Subsection (b) of section 1375 of the 1986 Code is amended
by adding at the end thereof the following new paragraph:
"(4) COORDINATION WITH SECTION 1374. -- Notwithstanding
paragraph (3), the amount of passive investment income shall be
determined by not taking into account any recognized built-in gain
or loss of the S corporation for any taxable year in the
recognition period. Terms used in the preceding sentence shall
have the same respective meanings as when used in section 1374."
(D) Subsection (c) of section 1375 of the 1986 Code is amended
to read as follows:
"(c) CREDITS NOT ALLOWABLE. -- No credit shall be allowed under part
IV of subchapter A of this chapter (other than section 34) against the
tax imposed by subsection (a)."
(E) Paragraph (2) of section 1366(f) of the 1986 Code is
amended by striking out "as defined in section 1374(d)(2)" and
inserting in lieu thereof "within the meaning of section 1374".
(6) Paragraph (3) of section 1362(d) of the 1986 Code is
amended --
(A) by striking out clause (v) of subparagraph (D), and
(B) by adding at the end thereof the following new
subparagraph:
"(E) SPECIAL RULE FOR OPTIONS AND COMMODITY DEALINGS. --
"(i) IN GENERAL. -- In the case of any options dealer or
commodities dealer, passive investment income shall be determined
by not taking into account any gain or loss (in the normal course
of the taxpayer's activity of dealing in or trading section 1256
contracts) from any section 1256 contract or property related to
such a contract.
"(ii) DEFINITIONS. -- For purposes of this subparagraph --
"(I) OPTIONS DEALER. -- The term 'options dealer' has the
meaning given such term by section 1256(g)(8).
"(II) COMMODITIES DEALER. -- The term 'commodities dealer'
means a person who is actively engaged in trading section 1256
contracts and is registered with a domestic board of trade which
is designated as a contract market by the Commodities Futures
Trading Commission.
"(III) SECTION 1256 CONTRACT. -- The term 'section 1256
contract' has the meaning given to such term by section 1256(b)."
(7) The subsection (d) of section 1363 of the 1986 Code which
relates to distributions of appreciated property, and subsection
(e) of section 1363 of the 1986 Code, are hereby repealed.
(g) AMENDMENTS RELATED TO SECTION 633 OF THE REFORM ACT. --
(1) Subsection (b) of section 633 of the Reform Act "26 USC 336
note" is amended to read as follows:
"(b) BUILT-IN GAINS OF S CORPORATIONS. --
"(1) IN GENERAL. -- The amendments made by section 632 (other
than subsection (b) thereof) shall apply to taxable years
beginning after December 31, 1986, but only in cases where the
return for the taxable year is filed pursuant to an S election
made after December 31, 1986.
"(2) APPLICATION OF PRIOR LAW. -- In the case of any taxable
year of an S corporation which begins after December 31, 1986, and
to which the amendments made by section 632 (other than subsection
(b) thereof) do not apply, paragraph (1) of section 1374(b) of the
Internal Revenue Code of 1954 (as in effect on the date before the
date of the enactment of this Act) shall be applied as if it read
as follows:
"'(1) an amount equal to 34 percent of the amount by which the
net capital gain of the corporation for the taxable year exceeds
$25,000, or'".
(2) Subparagraph (B) of section 633(c)(1) of the Reform Act is
amended by striking out "50 percent or more" and inserting in lieu
thereof "more than 50 percent".
(3) Paragraph (1) of section 633(d) of the Reform Act is
amended --
(A) by striking out "this section" and inserting in lieu
thereof "this subtitle",
(B) by striking out "would be recognized and inserting in lieu
thereof "would be recognized by the liquidating corporation", and
(C) by adding at the end thereof the following new sentence:
"Section 333 of the Internal Revenue Code of 1954 (as in effect on
the day before the date of the enactment of this Act) shall
continue to apply to any complete liquidation described in the
preceding sentence.".
(4) Subparagraph (C) of section 633(d)(2) of the Reform Act is
amended to read as follows:
"(C) any gain on an asset acquired by the qualified corporation
if --
"(i) the basis of such asset in the hands of the qualified
corporation is determined (in whole or in part) by reference to
the basis of such asset in the hands of the person from whom
acquired, and
"(ii) a principal purpose for the transfer of such asset to the
qualified corporation was to secure the benefits of this
subsection."
(5)(A) Subparagraph (A) of section 633(d)(5) of the Reform Act
is amended by striking out "10 or fewer qualified persons" and
inserting in lieu thereof "a qualified group".
(B) Paragraph (6) of section 633(d) of the Reform Act "26 USC
336 note" is amended to read as follows:
"(6) DEFINITIONS AND SPECIAL RULES. -- For purposes of this
subsection --
"(A) QUALIFIED GROUP. --
"(i) IN GENERAL. -- Except as provided in clause (ii), the
term 'qualified group' means any group of 10 or fewer qualified
persons who at all times during the 5-year period ending on the
date of the adoption of the plan of complete liquidation (or, if
shorter, the period during which the corporation or any
predecessor was in existence) owned (or was treated as owning
under the rules of subparagraph (C)) more than 50 percent (by
value) of the stock in such corporation.
"(ii) 5-YEAR OWNERSHIP REQUIREMENT NOT TO APPLY IN CERTAIN
CASES. -- In the case of --
"(I) any complete liquidation pursuant to a plan of liquidation
adopted before March 31, 1988,
"(II) any distribution not in liquidation made before March 31,
1988,
"(III) an election to be an S corporation filed before March
31, 1988, or
"(IV) a transaction described in section 338 of the Internal
Revenue Code of 1986 where the acquisition date (within the
meaning of such section 338) is before March 31, 1988,
the term 'qualified group' means any group of 10 or fewer
qualified persons.
"(B) QUALIFIED PERSON. -- The term 'qualified person' means --
"(i) an individual,
"(ii) an estate, or
"(iii) any trust described in clause (ii) or clause (iii) of
section 1361(c)(2)(A) of the Internal Revenue Code of 1986.
"(C) ATTRIBUTION RULES. --
"(i) IN GENERAL. -- Any stock owned by a corporation, trust
(other than a trust referred to in subparagraph (B)(iii), or
partnership shall be treated as owned proportionately by its
shareholders, beneficiaries, or partners, and shall not be treated
as owned by such corporation, trust, or partnership. Stock
considered to be owned by a person by reason of the application of
the preceding sentence shall, for purposes of applying such
sentence, be treated as actually owned by such person.
"(ii) FAMILY MEMBERS. -- Stock owned (or treated as owned) by
members of the same family (within the meaning of section 318(a)(
1) of the Internal Revenue Code of 1986) shall be treated as owned
by 1 person, and shall be treated as owned by such person for any
period during which it was owned (or treated as owned) by any such
member.
"(iii) TREATMENT OF CERTAIN TRUSTS. -- Stock owned (or treated
as owned) by the estate of any decedent or by any trust referred
to in subparagraph (B)(iii) with respect to such decedent shall be
treated as owned by 1 person and shall be treated as owned by such
1 person for the period which it was owned (or treated as owned)
by such estate or any such trust or by the decedent.
"(D) SPECIAL HOLDING PERIOD RULES. -- Any property acquired by
reason of the death of an individual shall be treated as owned at
all times during which such property was owned (or treated as
owned) by the decedent.
"(E) CONTROLLED GROUP OF CORPORATIONS. -- All members of the
same controlled group (as defined in section 267(f)(1) of such
Code) shall be treated as 1 corporation for purposes of
determining whether any of such corporations met the requirement
of paragraph (5)(B) and for purposes of determining the applicable
percentage with respect to any of such corporations. For purposes
of the preceding sentence, an S corporation shall not be treated
as a member of a controlled group unless such corporation was a C
corporation for its taxable year which includes August 1, 1986, or
it was not described for such taxable year in paragraph (1) or (2)
of section 1374(c) of such Code (as in effect on the day before
the date of the enactment of this Act)."
(6) Subsection (d) of section 633 of the Reform Act "26 USC 336
note" is amended by adding at the end thereof the following new
paragraph:
"(9) APPLICATION TO NONLIQUIDATING DISTRIBUTIONS. -- The
provisions of this subsection shall also apply in the case of any
distribution (not in complete liquidation) made by a qualified
corporation before January 1, 1989, without regard to whether such
corporation is completely liquidated."
(7) Paragraph (8) of the section 633(d) of the Reform Act is
amended by striking out "becomes an S corporation for a taxable
year beginning before January 1, 1989" and inserting in lieu
thereof "makes an election to be an S corporation under section
1362 of such Code before January 1, 1989, without regard to
whether such corporation is completely liquidated".
(8) Section 633 of the Reform Act is amended by redesignating
the subsections following the first subsection (d) as subsections
(e), (f), and (g), respectively.
(9) Subsection (f)(2) of section 633 of the Reform Act (as so
redesignated) is amended by striking out "May 9, 1929" and
inserting in lieu thereof "May 9, 1929 (or any direct or indirect
subsidiary of such corporation)".
(10) Paragraph (3) of section 633(f) of the Reform Act (as so
redesignated) is amended by striking out "of such Code)" in the
last sentence thereof and inserting in lieu thereof "of such
Code".
(11) Subclause (I) of section 633(f)(4)(A)(i) of the Reform Act
(as so redesignated) is amended by striking out "binding on the
selling corporation to sell substantially all its assets" and
inserting in lieu thereof "to sell substantially all of the assets
of a selling corporation organized under the laws of Massachusetts
on October 20, 1976,".
(12) Subparagraph (A) of section 633(f)(5) of the Reform Act
(as so redesignated) is amended to read as follows:
"(A) a voting trust established not later than December 31,
1987, shall qualify as a trust permitted as a shareholder of an S
corporation and shall be treated as only 1 shareholder if the
holders of beneficial interests in such voting trust are --
"(i) employees or retirees of such corporation, or
"(ii) in the case of stock or voting trust certificates
acquired from an employee or retiree of such corporation, the
spouse, child, or estate of such employee or retiree or a trust
created by such employee or retiree which is described in section
1361(c)(2) of the Internal Revenue Code of 1986 (or treated as
described in such section by reason of section 1361(d) of such
Code), and".
(h) AMENDMENTS RELATED TO SECTION 641 OF THE REFORM ACT. --
(1) Paragraph (3) of section 1060(b) of the 1986 Code is
amended by striking out "the Secretary may find necessary" and
inserting in lieu thereof "the Secretary deems necessary".
(2) Section 1060 of the 1986 Code is amended by adding at the
end thereof the following new subsection:
"(d) TREATMENT OF CERTAIN PARTNERSHIP TRANSACTIONS. -- In the case
of a distribution of partnership property or a transfer of an interest
in a partnership --
"(1) the rules of subsection (a) shall apply but only for
purposes of determining the value of goodwill or going concern
value (or similar items) for purposes of applying section 755, and
"(2) if section 755 applies, such distribution or transfer (as
the case may be) shall be treated as an applicable asset
acquisition for purposes of subsection (b)."
(3)(A) Subparagraph (B) of section 6724(d)(1) of the 1986 Code
(defining information return) is amended by striking out "or" at
the end of clause (ix), by striking out the period at the end of
clause (x) and inserting in lieu thereof ", or", and by adding at
the end thereof the following new clause:
"(xi) section 1060(b) (relating to reporting requirements of
transferors and transferees in certain asset acquisitions)."
(B) Section 1060 of the 1986 Code is amended by adding at the
end thereof the following new subsection:
"(e) CROSS REFERENCE. --
"For provisions relating to penalties for failure to file a
return required by this section, see section 6721."
(i) AMENDMENTS RELATED TO SECTION 642 OF THE REFORM ACT. --
(1) Paragraph (1) of section 453(g) of the 1986 Code is amended
by striking out subparagraphs (A) and (B) and inserting in lieu
thereof the following:
"(A) subsection (a) shall not apply,
"(B) for purposes of this title --
"(i) except as provided in clause (ii), all payments to be
received shall be treated as received in the year of the
disposition, and
"(ii) in the case of any payments which are contingent as to
the amount but with respect to which the fair market value may not
be reasonably ascertained, the basis shall be recovered ratably,
and
"(C) the purchaser may not increase the basis of any property
acquired in such sale by any amount before the time such amount is
includible in the gross income of the seller."
(2)(A) Section 453(g) of the 1986 Code is amended by adding at
the end thereof the following new paragraph:
"(3) RELATED PERSONS. -- For purposes of this subsection, the
term 'related persons' has the meaning given to such term by
section 1239(b), except that such term shall include 2 or more
partnerships having a relationship to each other described in
section 707(b)(1)(B)."
(B) Section 453(g)(1) of the 1986 Code is amended by striking
out "(within the meaning of section 1239(b))".
(3) The heading of paragraph (2) of section 642(c) of the
Reform Act is amended by striking out "TRADITIONAL" and inserting
in lieu thereof "TRANSITIONAL".
(j) AMENDMENTS RELATED TO SECTION 643 OF THE REFORM ACT. --
(1)(A) Subsection (e) of section 171 of the 1986 Code is
amended to read as follows:
"(e) TREATMENT AS OFFSET TO INTEREST PAYMENTS. -- Except as provided
in regulations, in the case of any taxable bond --
"(1) the amount of any bond premium shall be allocated among
the interest payments on the bond under rules similar to the rules
of subsection (b)(3), and
"(2) in lieu of any deduction under subsection (a), the amount
of any premium so allocated to any interest payment shall be
applied against (and operate to reduce) the amount of such
interest payment.
For purposes of the preceding sentence, the term 'taxable bond' means
any bond the interest of which is not excludable from gross income."
(B) Paragraph (5) of section 1016(a) of the 1986 Code is
amended by striking out "allowable pursuant to section 171(a)(1)"
and inserting in lieu thereof "allowable pursuant to section 171(
a)(1) (or the amount applied to reduce interest payments under
section 171(e)(2))".
(C) The amendments made by this paragraph "26 USC 171 note"
shall apply in the case of obligations acquired after December 31,
1987; except that the taxpayer may elect to have such amendment
apply to obligations acquired after October 22, 1986.
(2) Paragraph (2) of section 643(b) of the Reform Act "26 USC
171 note" is amended by striking out "issued after" and inserting
in lieu thereof "acquired after".
(k) AMENDMENTS RELATED TO SECTION 646 OF THE REFORM ACT. --
(1) Paragraph (2) of section 646(b) of the Reform Act "26 USC
671 note" is amended to read as follows:
"(2) such entity is exclusively engaged in the leasing of
mineral property and activities incidental thereto, and".
(2) Paragraph (3) of section 646(b) of the Reform Act is
amended by inserting "as of October 22, 1986," after "publicly
traded".
(3) Subparagraph (A) of section 646(c)(1) of the Reform Act is
amended by inserting "before January 1, 1991" after "entity".
(4) Paragraph (2) of section 646(c) of the Reform Act is
amended to read as follows:
"(2) AGREEMENT. --
"(A) IN GENERAL. -- The agreement described in this paragraph
is a written agreement signed by the board of trustees of the
entity which provides that the entity will not acquire any
additional property other than property described in subparagraph
(B).
"(B) PERMISSIBLE ACQUISITIONS. -- Property is described in
this paragraph if it is --
"(i) surface rights to property the acquisition of which --
"(I) is necessary to mine mineral rights held on October 22,
1986, and
"(II) is required by a written binding agreement between the
entity and an unrelated person entered into on or before October
22, 1986,
"(ii) surface rights to property which are not described in
clause (i) and which --
"(I) are acquired in an exchange to which section 1031 applies,
and
"(II) are necessary to mine mineral rights held on October 22,
1986,
"(iii) tangible personal property incidental to the leasing of
mineral property and activities incidental thereto, or
"(iv) part of any required reserves of the entity."
(5) Paragraph (1) of section 646(d) of the Reform Act "26 USC
671 note" is amended by striking out subparagraph (B) and
inserting in lieu thereof:
"(B) for purposes of section 333 of such Code (as so in effect)
--
"(i) any person holding an income interest in such entity as of
such time shall be treated as a qualified electing shareholder,
and
"(ii) the earnings and profits, and the value of money or stock
or securities, of such entity shall be apportioned ratably among
persons described in clause (i).
The amendments made by subtitle D of this title and section
1804 of this Act shall not apply to any liquidation under this
paragraph."
(6)(A) Paragraph (2) of section 646(d) of the Reform Act is
amended to read as follows:
"(2) TERMINATION OF ELECTION. -- If an entity ceases to be
described in subsection (b) or violates any term of the agreement
described in subsection (c)(2), the entity shall, for purposes of
the Internal Revenue Code of 1986, be treated as a corporation for
the taxable year in which such cessation or violation occurs and
for all subsequent taxable years."
(B) Paragraph (3) of section 646(c) of the Reform Act is
amended to read as follows:
"(3) BEGINNING OF PERIOD FOR WHICH ELECTION IS IN EFFECT. --
The period during which an election is in effect under this
subsection shall begin on the 1st day of the 1st taxable year
beginning after the date of the enactment of this Act and
following the taxable year in which the election is made."
(7)(A) Subsection (e) of section 646 of the Reform Act is
amended to read as follows:
"(e) SPECIAL RULE FOR PERSONS HOLDING INCOME INTERESTS. -- In
applying subpart E of part I of subchapter J of chapter 1 of the
Internal Revenue Code of 1986 to any entity to which this section
applies --
"(1) a reversionary interest shall not be taken into account
until it comes into possession, and
"(2) all items of income, gain, loss, deduction, and credit
shall be allocated to persons holding income interests for the
period of the allocation."
(B) Section 646(d)(3) of the Reform Act "26 USC 671 note" is
amended by striking out "or by reason of subsection (e)".
(l) AMENDMENTS RELATED TO SECTION 651 OF THE REFORM ACT. --
(1)(A) Paragraph (6) of section 852(b) of the 1986 Code (as
added by section 651(b)(1)(A) of the Reform Act) is redesignated
as paragraph (7).
(B) Subsection (b) of section 855 of the 1986 Code is amended
by striking out "section 852(b)(6)" and inserting in lieu thereof
"section 852(b)(7)".
(2) Paragraph (2) of section 4982(e) of the 1986 Code is
amended to read as follows:
"(2) CAPITAL GAIN NET INCOME. --
"(A) IN GENERAL. -- Except as provided in subparagraph (B),
the term 'capital gain net income' has the meaning given such term
by section 1222(9) (determined by treating the 1-year period
ending on October 31 of any calendar year as the company's taxable
year).
"(B) REDUCTION BY NET ORDINARY LOSS FOR CALENDAR YEAR. -- The
amount determined under subparagraph (A) shall be reduced (but not
below the net capital gain) by the amount of the company's net
ordinary loss for the calendar year.
"(C) DEFINITIONS. -- For purposes of this paragraph --
"(i) NET CAPITAL GAIN. -- The term 'net capital gain' has the
meaning given such term by section 1222(11) (determined by
treating the 1-year period ending on October 31 of the calendar
year as the company's taxable year).
"(ii) NET ORDINARY LOSS. -- The net ordinary loss for the
calendar year is the amount which would be the net operating loss
of the company for the calendar year if the amount of such loss
were determined in the same manner as ordinary income is
determined under paragraph (1)."
(3) Paragraph (2) of section 852(c) of the 1986 Code is amended
to read as follows:
"(2) COORDINATION WITH TAX ON UNDISTRIBUTED INCOME. -- For
purposes of applying this chapter to distributions made by a
regulated investment company with respect to any calendar year,
the earnings and profits of such company shall be determined
without regard to any net capital loss (or net foreign currency
loss) attributable to transactions after October 31 of such year
and with such other adjustments as the Secretary may by
regulations prescribe. The preceding sentence shall apply --
"(A) only to the extent that the amount distributed by the
company with respect to the calendar year does not exceed the
required distribution for such calendar year (as determined under
section 4982 by substituting '100 percent' for each percentage set
forth in section 4982(b)(1)), and
"(B) except as provided in regulations, only if an election
under section 4982(e)(4) is not in effect with respect to such
company."
(4) Subparagraph (C) of section 852(b)(3) of the 1986 Code is
amended --
(A) by striking out "net capital loss" each place it appears in
the 3rd sentence and inserting in lieu thereof "net capital loss
or net long-term capital loss", and
(B) by striking out "regulated investment company taxable
income" in the last sentence and inserting in lieu thereof "the
taxable income of the regulated investment company".
(5) Subsection (e) of section 4982 of the 1986 Code is amended
by adding at the end thereof the following new paragraph:
"(5) TREATMENT OF FOREIGN CURRENCY GAINS AND LOSSES AFTER
OCTOBER 31 OF CALENDAR YEAR. -- Any foreign currency gain or loss
which is attributable to a section 988 transaction and which is
properly taken into account for the portion of the calendar year
after October 31 shall not be taken into account in determining
the amount of the ordinary income of the regulated investment
company for such calendar year but shall be taken into account in
determining the ordinary income of the investment company for the
following calendar year. In the case of any company making an
election under paragraph (4), the preceding sentence shall be
applied by substituting the last day of the company's taxable year
for October 31."
(6) Section 4982 of the 1986 Code is amended by adding at the
end thereof the following new subsection:
"(f) EXCEPTION FOR CERTAIN REGULATED INVESTMENT COMPANIES. -- This
section shall not apply to any regulated investment company for any
calendar year if at all times during such calendar year each shareholder
in such company was either --
"(1) a trust described in section 401(a) and exempt from tax
under section 501(a), or
"(2) a segregated asset account of a life insurance company
held in connection with variable contracts (as defined in section
817(d)).
For purposes of the preceding sentence, any shares attributable to an
investment in the regulated investment company (not exceeding $250,000)
made in connection with the organization of such company shall not be
taken into account."
(7) Subsection (b) of section 852 of the 1986 Code is amended
by adding at the end thereof the following new paragraph:
"(8) SPECIAL RULE FOR TREATMENT OF CERTAIN FOREIGN CURRENCY
LOSSES. -- To the extent provided in regulations, the taxable
income of a regulated investment company (other than a company to
which an election under section 4982(e)(4) applies) shall be
computed without regard to any net foreign currency loss
attributable to transactions after October 31 of such year, and
any such net foreign currency loss shall be treated as arising on
the 1st day of the following taxable year."
(8) Subsection (a) of section 852 of the 1986 Code is amended
by adding at the end thereof the following new sentence:
"The Secretary may waive the requirements of paragraph (1) for any
taxable year if the regulated investment company establishes to the
satisfaction of the Secretary that it was unable to meet such
requirements by reason of distributions previously made to meet the
requirements of section 4982."
(9) Effective with respect to dividends declared in 1988 and
subsequent calendar years, paragraph (7) of section 852(b) of the
1986 Code (as redesignated by paragraph (1)) is amended --
(A) by striking out "in December" and inserting in lieu thereof
"in October, November, or December",
(B) by striking out "in such month" and inserting in lieu
thereof "in such a month",
(C) by striking out "on such date" in subparagraphs (A) and (B)
and inserting in lieu thereof "on December 31 of such calendar
year", and
(D) by striking out "before February 1" and inserting in lieu
thereof "during January".
(10) Paragraph (1) of section 852(e) of the 1986 Code is
amended by striking out "subsection (a)(3)" and inserting in lieu
thereof "subsection (a)(2)".
(m) AMENDMENTS RELATED TO SECTION 652 OF THE REFORM ACT. --
(1) Paragraph (1) of section 851(a) of the 1986 Code is amended
to read as follows:
"(1) which, at all times during the taxable year --
"(A) is registered under the Investment Company Act of 1940, as
amended (15 U.S.C. 80a-1 to 80b-2) as a management company or unit
investment trust, or
"(B) has in effect an election under such Act to be treated as
a business development company, or".
(2) Paragraph (1) of section 851(e) of the 1986 Code is amended
by striking out "a registered management company or registered
business development company" and inserting in lieu thereof "a
management company or a business development company described in
subsection (a)(1)".
(n) AMENDMENTS RELATED TO SECTION 653 OF THE REFORM ACT. --
(1) Subsection (b) of section 851 of the 1986 Code is amended
by adding at the end thereof the following new sentence: "Income
derived from a partnership or trust shall be treated as described
in paragraph (2) only to the extent such income is attributable to
items of income of the partnership or trust (as the case may be)
which would be described in paragraph (2) if realized by the
regulated investment company in the same manner as realized by the
partnership or trust."
(2)(A) Paragraph (3) of section 851(b) of the 1986 Code is
amended to read as follows:
"(3) less than 30 percent of its gross income is derived from
the sale or disposition of any of the following which was held for
less than 3 months:
"(A) stock or securities (as defined in section 2(a)(36) of the
Investment Company Act of 1940, as amended),
"(B) options, futures, or forward contracts (other than
options, futures, or forward contracts on foreign currencies), or
"(C) foreign currencies (or options, futures, or forward
contracts on foreign currencies) but only if such currencies (or
options, futures, or forward contracts) are not directly related
to the company's principal business of investing in stock or
securities (or options and futures with respect to stocks or
securities), and".
(B) Subsection (b) of section 851 of the 1986 Code is amended
by striking out "which are not ancillary" in the material
following paragraph (4), and inserting in lieu thereof "which are
not directly related".
(C) Subparagraph (C) of section 851(b)(3) of the 1986 Code "26
USC 851 note" (as amended by subparagraph (A)), and the amendment
made by subparagraph (B), shall apply to taxable years beginning
after the date of the enactment of this Act.
(4) Clause (i) of section 851(g)(2)(A) ofa the 1986 Code
(defining designated hedge) is amended by striking out
"contractual option" and inserting in lieu thereof "contractual
obligation"
(5) Subsection (b) of section 851 of the 1986 Code is amended
by adding at the end thereof the following new sentence: "In the
case of the taxable year in which a regulated investment company
is completely liquidated, there shall not be taken into account
under paragraph (3) any gain from the sale, exchange, or
distribution of any property after the adoption of the plan of
complete liquidation."
"(o) AMENDMENTS RELATED TO SECTION 654 OF THE REFORM ACT. --
Subsection (q) of section 851 of the 1986 Code (as added by section 654
of the Reform Act) --
(1) is redesignated as subsection (h), and
(2) is amended by adding at the end thereof the following new
paragraph:
"(3) SPECIAL RULE FOR ABNORMAL REDEMPTIONS. --
"(A) IN GENERAL. -- Any fund treated as a separate corporation
under paragraph (1) shall not be disqualified under subsection
(b)(3) for any taxable year by reason of sales resulting from
abnormal redemptions on any day and occurring before the close of
the 5th business day after such day if --
"(i) the sum of the percentages determined under subparagraph
(B) for the abnormal redemptions on such day and for abnormal
redemptions on prior days during such taxable year exceeds 30
percent; and
"(ii) the regulated investment company of which such fund is a
part would meet the requirements of subsection (b)(3) for such
taxable year if all the funds which are part of such company were
treated as a single company.
"(B) ABNORMAL REDEMPTIONS. -- For purposes of subparagraph
(A), the term 'abnormal redemptions' means redemptions occurring
on any day if the net redemptions on such day exceed 1 percent of
the fund's net asset value.
"(C) DETERMINATION OF NET ASSET VALUE. -- For purposes of this
paragraph, net asset value for any day shall be determined as of
the close of the preceding day.
"(D) LIMITATION. -- For purposes of subparagraph (A), any sale
or other disposition of stock or securities held less than 3
months occurring during any day shall be deemed to result from
abnormal redemptions until the cumulative proceeds from such sales
or dispositions occurring during such day, plus the cumulative net
positive cash flow of the fund for preceding business days (if
any) following the day with abnormal redemptions, exceed the
amount of net redemptions on the day with abnormal redemptions."
(p) AMENDMENTS RELATED TO SECTION 662 OF THE REFORM ACT.
(1) Subclause (I) of section 856(c)(6)(D)(i) of the 1986 Code
(as added by section 662 of the Reform Act) is amended by striking
out "debt instrument" and inserting in lieu thereof "debt
instrument (within the meaning of section 1275(a)(1))".
(2) Notwithstanding section 669 of the Reform Act, "26 USC 856
note" the amendment made by section 662(c) of the Reform Act shall
apply to taxable years beginning after December 31, 1986, but only
in the case of obligations acquired after October 22, 1986.
(3) Subsection (c) of section 856 of the 1986 Code is amended
by adding at the end thereof the following new paragraph:
"(8) TREATMENT OF LIQUIDATING GAINS. -- In the case of the
taxable year in which a real estate investment trust is completely
liquidated, there shall not be taken into account under paragraph
(4) any gain from the sale, exchange, or distribution of any
property after the adoption of the plan of complete liquidation."
(4)(A) Paragraph (6) of section 856(c) of the 1986 Code is
amended by adding at the end thereof the following new
subparagraph:
"(G) TREATMENT OF CERTAIN INTEREST RATE AGREEMENTS. -- Except
to the extent provided by regulations, any --
"(i) payment to a real estate investment trust under a bona
fide interest rate swap or cap agreement entered into by the real
estate investment trust to hedge any variable rate indebtedness of
such trust incurred or to be incurred to acquire or carry real
estate assets, and
"(ii) any gain from the sale or other disposition of such
agreement,
shall be treated as income qualifying under paragraph (2) and
such agreement shall be treated as a security for purposes of
paragraph (4)(A)."
(B) The amendment made by subparagraph (A) "26 USC 856 note"
shall apply to taxable years ending after the date of the
enactment of this Act.
(5) Subclause (I) of section 856(c)(6)(D)(ii) of the 1986 Code
(as added by section 662 of the Reform Act) is amended by striking
out "stock in" and inserting in lieu thereof "stock (or
certificates of beneficial interests) in".
(q) AMENDMENTS RELATED TO SECTION 663 OF THE REFORM ACT. --
(1) Subparagraph (A) of section 856(d)(6) of the 1986 Code is
amended to read as follows:
"(A) IN GENERAL. -- If --
"(i) a real estate investment trust receives or accrues, with
respect to real or personal property, amounts from a tenant which
derives substantially all of its income with respect to such
property from the subleasing of substantially all of such
property, and
"(ii) a portion of the amount such tenant receives or accrues,
directly or indirectly, from subtenants consists of qualified
rents,
then the amounts which the trust receives or accrues from the
tenant shall not be excluded from the term 'rents from real
property' by reason of being based on the income or profits of
such tenant to the extent the amounts so receives or accrued are
attributable to qualified rents received or accrued by such
tenant."
(2) Subsection (f) of section 856 of the 1986 Code is amended
to read as follows:
"(f) INTEREST. --
"(1) IN GENERAL. -- For purposes of paragraphs (2)(B) and
(3)(B) of subsection (c), the term 'interest' does not include any
amount received or accrued, directly or indirectly, if the
determination of such amount depends in whole or in part on the
income or profits of any person except that --
"(A) any amount so received or accrued shall not be excluded
from the term 'interest' solely by reason of being based on a
fixed percentage or percentages of receipts or sales, and
"(B) where a real estate investment trust receives any amount
which would be excluded from the term 'interest' solely because
the debtor of the real estate investment trust receives or accrues
any amount the determination of which depends in whole or in part
on the income or profits of any person, only a proportionate part
(determined pursuant to regulations prescribed by the Secretary)
of the amount received or accrued by the real estate investment
trust from the debtor will be excluded from the term 'interest'.
"(2) SPECIAL RULE. -- If --
"(A) a real estate investment trust receives or accrues with
respect to an obligation secured by a mortgage on real property or
an interest in real property amounts from a debtor which derives
substantially all of its gross income with respect to such
property (not taking into account any gain on any disposition)
from the leasing or substantially all of its interests in such
property to tenants, and
"(B) a portion of the amount which such debtor receives or
accrues, directly or indirectly, from tenants consists of
qualified rents (as defined in subsection (d)(6)(B)),
then the amounts which the trust receives or accrues from such
debtor shall not be excluded from the term 'interest' by reason of
being based on the income or profits of such debtor to the extent
the amounts so received are attributable to qualified rents
received or accrued by such debtor"
(r) AMENDMENT RELATED TO SECTION 664 OF THE REFORM ACT. -- Clause
(i) of section 857(e)(2)(B) of the 1986 Code is amended by striking out
"as original issue discount on instruments" and inserting "with respect
to instruments"
(s) AMENDMENTS RELATED TO SECTION 668 OF THE REFORM ACT. --
(1) Paragraph (2) of section 4981(e) of the 1986 Code is
amended to read as follows:
"(2) CAPITAL GAIN NET INCOME. --
"(A) IN GENERAL. -- The term 'capital gain net income' has the
meaning given such term by section 1222(9) (determined by treating
the calendar year as the trust's taxable year).
"(B) REDUCTION FOR NET ORDINARY LOSS. -- The amount determined
under subparagraph (A) shall be reduced by the amount of the
trust's net ordinary loss for the taxable year.
"(C) NET ORDINARY LOSS. -- For purposes of this paragraph, the
net ordinary loss for the calendar year is the amount which would
be net operating loss of the trust for the calendar year if the
amount of such loss were determined in the same manner as ordinary
income is determined under paragraph (1)."
(2) Subparagraph (C) of section 857(b)(3) of the 1986 Code is
amended by striking out "real estate investment trust taxable
income" in the last sentence and inserting in lieu thereof "the
taxable income of the real estate investment trust".
(3) Subparagraph (A) of section 4981(c)(1) of the 1986 Code is
amended by striking out "such calendar year" and inserting in lieu
thereof "such calendar year (but computed without regard to that
portion of such deduction which is attributable to the amount
excluded under section 857(b)(2)(D))".
(4) Subsection (a) of section 857 of the 1986 Code is amended
by adding at the end thereof the following new sentence:
"The Secretary may waive the requirements of paragraph (1) for any
taxable year if the real estate investment trust establishes to the
satisfaction of the Secretary that it was unable to meet such
requirements by reason of distributions previously made to meet the
requirements of section 4981."
(5) Effective with respect to dividends declared in 1988 and
subsequent calendar years, paragraph (8) of section 857(b) of the
1986 Code is amended --
(A) by striking out "in December" and inserting in lieu thereof
"in October, November, or December",
(B) by striking out "in such month" and inserting in lieu
thereof "in such a month",
(C) by striking out "on such date" in subparagraphs (A) and (B)
and inserting in lieu thereof "on December 31 of such calendar
year", and
(D) by striking out "before February 1" and inserting in lieu
thereof "during January".
(t) AMENDMENTS RELATED TO SECTION 671 OF THE REFORM ACT. --
(1) Paragraph (1) of section 860C(e) of the 1986 Code is
amended to read as follows:
"(1) AMOUNTS TREATED AS ORDINARY. -- Any amount taken into
account under subsection (a) by any holder of a residual interest
in a REMIC shall be treated as ordinary income or ordinary loss,
as the case may be."
(2)(A) Paragraph (4) of section 860D(a) of the 1986 Code is
amended --
(i) by striking out "4th month ending after" and inserting in
lieu thereof "3rd month beginning after", and
(ii) by striking out "and each quarter ending thereafter" and
inserting in lieu thereof "and at all times thereafter".
(B) The amendment made by subparagraph (A)(ii) "26 USC 860D
note" shall take effect on January 1, 1988.
(3)(A) Clause (i) of section 860F(a)(2)(A) of the 1986 Code is
amended to read as follows:
"(i) the substitution of a qualified replacement mortgage for a
qualified mortgage (or the repurchase in lieu of substitution of a
defective obligation),".
(B)(i) Paragraph (2) of section 860F(a) of the 1986 Code is
amended by striking out the last sentence of subparagraph (A).
(ii) Subsection (a) of section 860F of the 1986 Code is amended
by adding at the end thereof the following new paragraph:
"(5) EXCEPTIONS. -- Notwithstanding subparagraphs (A) and (D)
of paragraph (1), the term 'prohibited transaction' shall not
include any disposition --
"(A) required to prevent default on a regular interest where
the threatened default resulted from a default on 1 or more
qualified mortgages, or
"(B) to facilitate a clean-up call (as defined in
regulations)."
(C) Subparagraph (D) of section 860F(a)(2) of the 1986 Code is
amended by striking out "described in subsection (b)".
(4) Subparagraph (A) of section 860F(b)(1) of the 1986 Code is
amended by striking out "the transfer of any property to a REMIC"
and inserting in lieu thereof "the transfer of any property to a
REMIC in exchange for regular or residual interests in such
REMIC".
(5)(A) Paragraph (1) of section 860G(a) of the 1986 Code is
amended to read as follows:
"(1) REGULAR INTEREST. -- The term 'regular interest' means
any interest in a REMIC which is issued on the startup day with
fixed terms and which is designated as a regular interest if --
"(A) such interest unconditionally entitles the holder to
receive a specified principal amount (or other similar amount),
and
"(B) interest payments (or other similar amount), if any, with
respect to such interest at or before maturity --
"(i) are payable based on a fixed rate (or to the extent
provided in regulations, at a variable rate), or
"(ii) consist of a specified portion of the interest payments
on qualified mortgages and such portion does not vary during the
period such interest is outstanding.
The interest shall not fail to meet the requirements of
subparagraph (A) merely because the timing (but not the amount) of
the principal payments (or other similar amounts) may be
contingent on the extent of prepayments on qualified mortgages and
the amount of income from permitted investments."
(B) Paragraph (2) of section 860G(a) of the 1986 Code is
amended to read as follows:
"(2) RESIDUAL INTEREST. -- The term 'residual interest' means
an interest in a REMIC which is issued on the startup day, which
is not a regular interest, and which is designated as a residual
interest."
(C) Paragraph (3) of section 860G(a) of the 1986 Code is
amended --
(i) by striking out "on or before the startup day" in
subparagraph (A)(i) and inserting in lieu thereof "on the startup
day in exchange for regular or residual interests in the REMIC",
(ii) by inserting "if, except as provided in regulations, such
purchase is pursuant to a fixed-price contract in effect on the
startup day" before the comma at the end of subparagraph (A)(ii),
and
(iii) by striking out "on or before the startup day" in
subparagraph (C) and inserting in lieu thereof "on the startup day
in exchange for regular or residual interests in the REMIC".
(D) Subparagraph (A) of section 860G(a)(4) of the 1986 Code is
amended to read as follows:
"(A) which would be a qualified mortgage if transferred on the
startup day in exchange for regular or residual interests in the
REMIC, and".
(E) Paragraph (9) of section 860G(a) of the 1986 Code is
amended to read as follows:
"(9) STARTUP DAY. -- The term 'startup day' means the day on
which the REMIC issues all of its regular and residual interests.
To the extent provided in regulations, all interests issued (and
all transfers to the REMIC) during any period (not exceeding 10
days) permitted in such regulations shall be treated as occurring
on the day during such period selected by the REMIC for purposes
of this paragraph."
(F) The amendments made by this paragraph "26 USC 860G note"
shall not apply to any REMIC where the startup day (as defined in
section 860G(a)(9) of the 1986 Code as in effect on the day before
the date of the enactment of this Act) is before July 1, 1987.
(6) Paragraph (3) of section 860G(a) of the 1986 Code is
amended --
(A) by striking out "directly or indirectly," in subparagraph
(A), and
(B) by adding at the end thereof the following new sentence:
"For purposes of this subparagraph, any obligation secured by
stock held by a person as a tenant-stockholder (as defined in
section 216) in a cooperative housing corporation (as so defined)
shall be treated as secured by an interest in real property."
(7) Subparagraph (B) of section 860G(a)(7) of the 1986 Code is
amended by inserting before the period at the end of the 1st
sentence the following: "or lower than expected returns on cash
flow investments".
(8)(A) Paragraph (8) of section 860G(a) of the 1986 Code is
amended --
(i) by striking out "section 856(e)" in subparagraph (A) and
inserting in lieu thereof "section 856(e) (without regard to
paragraph (5) thereof)", and
(ii) by striking out the last sentence and inserting in lieu
thereof the following:
"Solely for purposes of section 860D(a), the determination of
whether any property is foreclosure property shall be made without
regard to section 856(e)(4)."
(B) Section 860G of the 1986 Code is amended by redesignating
subsection (c) as subsection (d) and by inserting after subsection
(b) the following new subsection:
"(c) TAX ON INCOME FROM FORECLOSURE PROPERTY. --
"(1) IN GENERAL. -- A tax is hereby imposed for each taxable
year on the net income from foreclosure property of each REMIC.
Such tax shall be computed by multiplying the net income from
foreclosure property by the highest rate of tax specified in
section 11(b).
"(2) NET INCOME FROM FORECLOSURE PROPERTY. -- For purposes of
this part, the term 'net income from foreclosure property' means
the amount which would be the REMIC's net income from foreclosure
property under section 857(b)(4)(B) if the REMIC were a real
estate investment trust."
(C) Paragraph (1) of section 860C(b) of the 1986 Code is
amended by striking out "and" at the end of subparagraph (D) and
inserting in lieu thereof ", and", and by adding at the end
thereof the following new subparagraph:
"(E) the amount of the net income from foreclosure property (if
any) shall be reduced by the amount of the tax imposed by section
860G(c)."
(9)(A) Section 860G of the 1986 Code (as amended by paragraph
(8)) is amended by redesignating subsection (d) as subsection (e)
and by inserting after subsection (c) the following new
subsection:
"(d) TAX ON CONTRIBUTIONS AFTER STARTUP DATE. --
"(1) IN GENERAL. -- Except as provided in paragraph (2), if
any amount is contributed to a REMIC after the startup day, there
is hereby imposed a tax for the taxable year of the REMIC in which
the contribution is received equal to 100 percent of the amount of
such contribution.
"(2) EXCEPTIONS. -- Paragraph (1) shall not apply to any
contribution which is made in cash and is described in any of the
following subparagraphs:
"(A) Any contribution to facilitate a cleanup call (as defined
in regulations) or a qualified liquidation.
"(B) Any payment in the nature of a guarantee.
"(C) Any contribution during the 3-month period beginning on
the startup day.
"(D) Any contribution to a qualified reserve fund by any holder
of a residual interest in the REMIC.
"(E) Any other contribution permitted in regulations."
(B) The amendment made by subparagraph (A) "26 USC 860G note"
shall not apply to any REMIC where the startup day (as defined in
section 860G(a)(9) of the 1986 Code as in effect on the day before
the date of the enactment of this Act) is before July 1, 1987.
(10) Subsection (e) of section 860G of the 1986 Code (as
redesignated by paragraph (9)) is amended by striking out "and" at
the end of paragraph (2), by striking out the period at the end of
paragraph (3) and inserting in lieu thereof a comma, and by adding
at the end thereof the following new paragraphs:
"(4) providing appropriate rules for treatment of transfers of
qualified replacement mortgages to the REMIC where the transferor
holds any interest in the REMIC, and
"(5) providing that a mortgage will be treated as a qualified
replacement mortgage only if it is part of a bona fide replacement
(and not part of a swap of mortgages)."
(11) Paragraph (6) of section 856(c) of the 1986 Code is
amended by redesignating the last subparagraph as subparagraph (F)
and by striking out the subparagraph (D) added by section
671(b)(1) of the Reform Act and inserting in lieu thereof the
following:
"(E) A regular or residual interest in a REMIC shall be treated
as a real estate asset, and any amount includible in gross income
with respect to such an interest shall be treated as interest on
an obligation secured by a mortgage on real property; except
that, if less than 95 percent of the assets of such REMIC are real
estate assets (determined as if the real estate investment trust
held such assets) such real estate investment trust shall be
treated as holding directly (and as receiving directly) its
proportionate share of the assets and income of the REMIC. For
purposes of determining whether any interest in a REMIC qualifies
under the preceding sentence, any interest held by such REMIC in
another REMIC shall be treated as a real estate asset under
principles similar to the principles of the preceding sentence,
except that, if such REMIC's are part of a tiered structure, they
shall be treated as one REMIC for purposes of this subparagraph."
(12) Clause (xi) of section 7701(a)(19)(C) of the 1986 Code is
amended by striking out "are loans described" and inserting in
lieu thereof "are assets described".
(13) Subparagraph (B) of section 860E(c)(2) of the 1986 Code is
amended by striking out "issue price of residual interest" and
inserting in lieu thereof "issue price of the residual interest".
(14) Clause (ii) of section 860F(b)(1)(D) of the 1986 Code is
amended by striking out "the real estate mortgage pool" and
inserting in lieu thereof "the REMIC".
(15) Subsection (a) of section 860E of the 1986 Code is amended
by adding at the end thereof the following new paragraphs:
"(3) SPECIAL RULE FOR AFFILIATED GROUPS. -- All members of an
affiliated group filing a consolidated return shall be treated as
1 taxpayer for purposes of this subsection, except that paragraph
(2) shall be applied separately with respect to each corporation
which is a member of such group and to which section 593 applies.
"(4) TREATMENT OF CERTAIN SUBSIDIARIES. --
"(A) IN GENERAL. -- For purposes of this subsection, a
corporation to which section 593 applies and each qualified
subsidiary of such corporation shall be treated as a single
corporation to which section 593 applies.
"(B) QUALIFIED SUBSIDIARY. -- For purposes of this subsection,
the term 'qualified subsidiary' means any corporation --
"(i) all the stock of which, and substantially all the
indebtedness of which, is held directly by the corporation to
which section 593 applies, and
"(ii) which is organized and operated exclusively in connection
with the organization and operation of 1 or more REMIC's."
(16)(A) Subsection (a) of section 860D of the 1986 Code is
amended by striking out "and" at the end of paragraph (4), by
striking out the period at the end of paragraph (5) and inserting
in lieu thereof ", and", and by adding at the end thereof the
following new paragraph:
"(6) with respect to which there are reasonable arrangements
designed to ensure that --
"(A) residual interests in such entity are not held by
disqualified organizations (as defined in section 860E(e)(5)), and
"(B) information necessary for the application of section
860E(e) will be made available by the entity."
(B) Section 860E of the 1986 Code is amended by adding at the
end thereof the following new subsection:
"(e) TAX ON TRANSFERS OF RESIDUAL INTERESTS TO CERTAIN ORGANIZATIONS,
ETC. --
"(1) IN GENERAL. -- A tax is hereby imposed on any transfer of
a residual interest in a REMIC to a disqualified organization.
"(2) AMOUNT OF TAX. -- The amount of the tax imposed by
paragraph (1) on any transfer of a residual interest shall be
equal to the product of --
"(A) the amount (determined under regulations) equal to the
present value of the total anticipated excess inclusions with
respect to such interest for periods after such transfer,
multiplied by
"(B) the highest rate of tax specified in section 11(b)(1).
"(3) LIABILITY. -- The tax imposed by paragraph (1) on any
transfer shall be paid by the transferor; except that, where such
transfer is through an agent for a disqualified organization, such
tax shall be paid by such agent.
"(4) TRANSFEREE FURNISHES AFFIDAVIT. -- The person (otherwise
liable for any tax imposed by paragraph (1)) shall be relieved of
liability for the tax imposed by paragraph (1) with respect to any
transfer if --
"(A) the transferee furnishes to such person an affidavit that
the transferee is not a disqualified organization, and
"(B) as of the time of the transfer, such person does not have
actual knowledge that such affidavit is false.
"(5) DISQUALIFIED ORGANIZATION. -- For purposes of this
section, the term 'disqualified organization' means --
"(A) the United States, any State or political subdivision
thereof, any foreign government, any international organization,
or any agency or instrumentality of any of the foregoing,
"(B) any organization (other than a cooperative described in
section 521) which is exempt from tax imposed by this chapter
unless such organization is subject to the tax imposed by section
511, and
"(C) any organization described in section 1381(a)(2)(A).
For purposes of subparagraph (A), the rules of section 168(h)(
2)(D) (relating to treatment of certain taxable instrumentalities
shall apply; except that, in the case of the Federal Home Loan
Mortgage Corporation, clause (ii) of such section shall not apply.
"(6) TREATMENT OF PASS-THRU ENTRIES. --
"(A) IMPOSITION OF TAX. -- If, at any time during any taxable
year of a pass-thru entity, a disqualified organization is the
record holder of an interest in such entity, there is hereby
imposed on such entity for such taxable year a tax equal to the
product of --
"(i) the amount of excess inclusions for such taxable year
allocable to the interest held by such disqualified organization,
multiplied by
"(ii) the highest rate of tax specified in section 11(b)(1).
"(B) PASS-THRU ENTITY. -- For purposes of this paragraph, the
term 'pass-thru entity' means --
"(i) any regulated investment company, real estate investment
trust, or common trust fund,
"(ii) any partnership, trust, or estate, and
"(iii) any organization to which part I of subchapter T
applies.
Except as provided in regulations, a person holding an interest
in a pass-thru entity as a nominee for another person shall, with
respect to such interest, be treated as a pass-thru entity.
"(C) TAX TO BE DEDUCTIBLE. -- Any tax imposed by this
paragraph with respect to any excess inclusion of any pass-thru
entity for any taxable year shall, for purposes of this title
(other than this subsection), be applied against (and operate to
reduce) the amount included in gross income with respect to the
residual interest involved.
"(D) EXCEPTION WHERE HOLDER FURNISHES AFFIDAVIT. -- No tax
shall be imposed by subparagraph (A) with respect to any interest
in a pass-thru entity for any period if --
"(i) the record holder of such interest furnishes to such
pass-thru entity an affidavit that such record holder is not a
disqualified organization, and
"(ii) during such period, the pass-thru entity does not have
actual knowledge that such affidavit is false.
"(7) WAIVER. -- The Secretary may waive the tax imposed by
paragraph (1) on any transfer if --
"(A) within a reasonable time after discovery that the transfer
was subject to tax under paragraph (1), steps are taken so that
the interest is no longer held by the disqualified organization,
and
"(B) there is paid to the Secretary such amounts as the
Secretary may require.
"(8) ADMINISTRATIVE PROVISIONS. -- For purposes of subtitle F,
the taxes imposed by this subsection shall be treated as excise
taxes with respect to which the deficiency procedures of such
subtitle apply."
(C) Paragraph (2) of section 26(b) of the 1986 Code is amended
by striking out "and" at the end of subparagraph (J), by striking
out the period at the end of subparagraph (K) and inserting in
lieu thereof ", and", and by adding at the end thereof the
following new subparagraph:
"(L) section 860E(e) (relating to taxes with respect to certain
residual interests)."
(D)(i) The amendments made by subparagraph (A) "26 USC 860D
note" shall apply in the case of any REMIC where the start-up day
(as defined in section 860G(a)(9) of the 1986 Code, as in effect
on the day before the date of the enactment of this Act) is after
March 31, 1988; except that such amendments shall not apply in
the case of a REMIC formed pursuant to a binding contract in
effect on such date.
(ii) The amendments made by subparagraphs (B) and (C) "26 USC
860E note" (except to the extent they relate to paragraph (6) of
section 860E(e) of the 1986 Code as added by such amendments)
shall apply to transfers after March 31, 1988; except that such
amendments shall not apply to any transfer pursuant to a binding
written contract in effect on such date.
(iii) Except as provided in clause (iv), the amendments made by
subparagraphs (B) and (C) (to the extent they relate to paragraph
(6) of section 860E(e) of the 1986 Code as so added) shall apply
to excess inclusions for periods after March 31, 1988 but only to
the extent such inclusions are --
(I) allocable to an interest in a pass-thru entity acquired
after March 31, 1988, or
(II) allocable to an interest in a pass-thru entity acquired on
or before March 31, 1988, but attributable to a residual interest
acquired by the pass-thru entity after March 31, 1988.
For purposes of the preceding sentence, any interest in a
pass-thru entity (or residual interest) acquired after March 31,
1988, pursuant to a binding written contract in effect on such
date shall be treated as acquired before such date.
(iv) In the case of any real estate investment trust, regulated
investment company, common trust fund, or publicly traded
partnership, no tax shall be imposed under section 860E( e)(6) of
the 1986 Code (as added by the amendment made by subparagraph (B))
for any taxable year beginning before January 1, 1989.
(17) Subparagraph (B) of section 860E(c)(2) of the 1986 Code is
amended --
(A) by inserting "(adjusted for contributions)" after "residual
interest" the second place it appears, and
(B) by striking "decreased by" in clause (ii) and inserting in
lieu thereof "decreased (but not below zero) by".
(18)(A) Subsection (e) of section 860F of the 1986 Code is
amended by adding at the end thereof the following new sentences:
"Such return shall be filed by the REMIC. The determination of
who may sign such return shall be made without regard to the first
sentence of this subsection."
(B) Unless the REMIC otherwise elects, the amendment "26 USC
860F note" made by subparagraph (A) shall not apply to any REMIC
where the start-up day (as defined in section 860G(a)(9) of the
1986 Code as in effect on the day before the date of the enactment
of this Act), is before the date of the enactment of this Act.
(19) Subsection (a) of section 860D of the 1986 Code is amended
by adding at the end thereof the following new sentence:
"In the case of a qualified liquidation (as defined in section
860F(a)(4)(A)), paragraph (4) shall not apply during the
liquidation period (as defined in section 860F(a)(4)(B)."
(20) Subsection (a) of section 860A of the 1986 Code is amended
by striking out "this chapter" each place it appears and inserting
in lieu thereof "this subtitle".
(21) Paragraph (1) of section 860C(b) of the 1986 Code is
amended by striking out "and in the same manner" and inserting in
lieu thereof "and, except as provided in regulations, in the same
manner".
(22) The following sections of the 1986 Code are each amended
by striking out "real estate mortgage pool" and inserting in lieu
thereof "REMIC":
(A) Section 382(l)(4)(B)(ii).
(B) Section 860F(a)(2)(A)(iii).
(C) Section 860F(a)(2)(C).
(D) Section 860F(b)(1)(C)(ii).
(E) Section 860F(b)(1)(D)(ii).
(23) Subsection (d) of section 860E of the 1986 Code is amended
by adding at the end thereof the following new sentence:
"Rules similar to the rules of the preceding sentence shall
apply also in the case of regulated investment companies, common
trust funds, and organizations to which part I of subchapter T
applies."
(24) Subparagraph (C) of section 6049(d)(7) of the 1986 Code is
amended by striking out "the issue price" and inserting in lieu
thereof "the adjusted issue price".
(25)(A) Paragraph (19) of section 7701(a) of the 1986 Code is
amended by adding at the end thereof the following new sentence:
"For purposes of determining whether any interest in a REMIC
qualifies under clause (xi) any regular interest in another REMIC
held by such REMIC shall be treated as a loan described in a
preceding clause under principles similar to the principles of
clause (xi); except that, if such REMIC's are part of a tiered
structure, they shall be treated as 1 REMIC for purposes of clause
(xi)."
(B) Paragraph (4) of section 593(d) of the 1986 Code is amended
by adding at the end thereof the following new sentence: "For
purposes of determining whether any interest in a REMIC qualifies
under the preceding sentence, any interest in another REMIC held
by such REMIC shall be treated as a qualifying real property loan
under principles similar to the principles of the preceding
sentence, except that if such REMIC's are part of a tiered
structure, they shall be treated as 1 REMIC for purposes of this
paragraph."
(26) Section 860E of the 1986 Code is amended by adding at the
end thereof the following new subsection:
"(f) TREATMENT OF VARIABLE INSURANCE CONTRACTS. -- Except as
provided in regulations, with respect to any variable contract (as
defined in section 817), there shall be no adjustment in the reserve to
the extent of any excess inclusion."
(27) Subsection (a) of section 860E of the 1986 Code is amended
by adding at the end thereof the following new paragraph:
"(5) COORDINATION WITH SECTION 172. -- Any excess inclusion
for any taxable year shall not be taken into account --
"(A) in determining under section 172 the amount of any net
operating loss for such taxable year, and
"(B) in determining taxable income for such taxable year for
purposes of the 2nd sentence of section 172(b)(2)."
(u) AMENDMENTS RELATED TO SECTION 672 OF THE REFORM ACT. --
(1) Subparagraph (B) of section 163(e)(2) of the 1986 Code is
amended by striking out "paragraph (6)" and inserting in lieu
thereof "paragraph (7)".
(2) Subparagraph (B) of section 1278(a)(4) of the 1986 Code is
amended by striking out "section 1272(a)(6)" and inserting in lieu
thereof "section 1272(a)(7)".
(3) Section 1288(a) of the 1986 Code is amended by striking out
"paragraph (6)" each place it appears and inserting in lieu
thereof "paragraph (7)".
(4) Sections 1271(a)(2)(A)(ii) and 1275(a)(4)(B)(ii)(I) of the
1986 Code are each amended by striking out "subsection (a)(6)" and
inserting in lieu thereof "subsection (a)(7)".
(v) AMENDMENT RELATED TO SECTION 674 OF THE REFORM ACT. --
Subparagraph (A) of section 6049(d)(7) of the 1986 Code is amended by
inserting "(and such amounts shall be treated as paid when includible in
gross income under section 860B(b))" before the period at the end
thereof.
(w) AMENDMENTS RELATED TO SECTION 675 OF THE REFORM ACT. --
(1) Subsection (a) of section 675 of the Reform Act "26 USC
860A note" is amended to read as follows:
"(a) GENERAL RULE. -- Except as otherwise provided in this section,
the amendments made by this subtitle shall take effect on January 1,
1987."
(2) Section 675 of the Reform Act is amended by adding at the
end thereof the following new subsection:
"(d) STUDY. -- The Secretary of the Treasury or his delegate shall
conduct a study of the operation of the amendments "26 USC 860A note"
made by this part and their competitive impact on savings and loan
institutions and similar financial institutions. Not later than January
1, 1990, the Secretary shall submit a report of such study to the
Committee on Ways and Means of the House of Representatives and the
Committee on Finance of the Senate (together with such recommendations
as he may deem advisable)."
SEC. 1007. AMENDMENTS RELATED TO TITLE VII OF THE REFORM ACT.
(a) AMENDMENTS TO SECTION 55 OF THE 1986 CODE. --
(1) Paragraph (1) of section 55(c) of the 1986 Code is amended
by inserting before the period at the end of the first sentence
the following: "and the section 936 credit allowable under
section 27(b)".
(2) Paragraph (2) of section 55(b) of the 1986 Code is amended
by adding at the end thereof the following new sentence:
"If a taxpayer is subject to the regular tax, such taxpayer
shall be subject to the tax imposed by this section (and, if the
regular tax is determined by reference to an amount other than
taxable income, such amount shall be treated as the taxable income
of such taxpayer for purposes of the preceding sentence)."
(3) Effective with respect to taxable years ending after the
date of the enactment of this Act, paragraph (3) of section 55(d)
of the 1986 Code is amended by adding at the end thereof the
following new sentence: "In the case of a taxpayer described in
paragraph (1)(C)(i), alternative minimum taxable income shall be
increased by the lesser of (i) 25 percent of the excess of
alternative minimum taxable income (determined without regard to
this sentence) over $155,000, or (ii) $20,000.".
(b) AMENDMENTS TO SECTION 56 OF THE 1986 CODE. --
(1) Paragraph (3) of section 56(a) of the 1986 Code is amended
by adding at the end thereof the following new sentence: "For
purposes of the preceding sentence, in the case of a contract
described in section 460(e)(1), the percentage of the contract
completed shall be determined under section 460(b)(2) by using the
simplified procedures for allocation of costs prescribed under
section 460(b)(4)."
(2) Subparagraph (E) of section 56(b)(1) of the 1986 Code is
amended to read as follows:
"(E) STANDARD DEDUCTION AND DEDUCTION FOR PERSONAL EXEMPTIONS
NOT ALLOWED. -- The standard deduction under section 63(c), the
deduction for personal exemptions under section 151, and the
deduction under section 642(b) shall not be allowed."
(3) Subparagraph (C) of section 56(b)(1) of the 1986 Code is
amended by striking out "and" at the end of clause (ii), by
striking out the period at the end of clause (iii) and inserting
in lieu thereof a comma, and by adding at the end thereof the
following new clauses:
"(iv) in lieu of the exception under section 163(d)(3)(B)(i),
the term 'investment interest' shall not include any qualified
housing interest (as defined in subsection (e)), and
"(v) the adjustments of this section and sections 57 and 58
shall apply in determining net investment income under section
163(d)."
(4) Clause (iii) of section 56(b)(1)(C) of the 1986 Code is
amended --
(A) by striking out "specified activity bond" and inserting in
lieu thereof "specified private activity bond", and
(B) by striking out "section 56(a)(5)(B)" and inserting in lieu
thereof "section 57(a)(5)(B)".
(5) Subparagraph (A) of section 56(d)(2) of the 1986 Code is
amended --
(A) by striking out "(other than subsection (a)(6) thereof",
and
(B) by adding at the end thereof the following new sentence:
"An item of tax preference shall be taken into account under
clause (ii) only to the extent such item increased the amount of
the net operating loss for the taxable year under section 172(
c)."
(6)(A) Paragraph (1) of section 56(e) of the 1986 Code is
amended --
(i) by striking out "interest which is" and inserting in lieu
thereof "interest which is qualified residence interest (as
defined in section 163(h)(3)) and is", and
(ii) by striking out "section 163(h)(3)" in subparagraph (B)
and inserting in lieu thereof "section 163(h)(4)".
(B) Paragraph (3) of section 56(e) of the 1986 Code is amended
by striking out "interest paid or accrued" and inserting in lieu
thereof "interest which is qualified residence interest (as
defined in section 163(h)(3)) and is paid or accrued".
(7) The last sentence of section 56(f)(2)(B) of the 1986 Code
is amended by striking out "any such taxes" and inserting in lieu
thereof "any such taxes (otherwise eligible for the credit
provided by section 901 without regard to section 901(j))".
(8) Clause (iii) of section 56(f)(3)(A) of the 1986 Code is
amended by striking out "an income statement" and inserting in
lieu thereof "an income statement for a substantial nontax
purpose".
(9) Subparagraph (B) of section 56(f)(3) of the 1986 Code is
amended by striking out "paragraph (3)(A)" and inserting in lieu
thereof "this subsection".
(10) Subparagraph (C) of section 56(f)(3) of the 1986 Code is
amended by adding at the end thereof the following new sentence:
"If the taxpayer has 2 or more statements described in the clause
(or subclause) with the lowest number designation, the applicable
financial statement shall be the one of such statements specified
in regulations."
(11)(A) Subparagraph (F) of section 56(f)(2) of the 1986 Code
is amended to read as follows:
"(F) TREATMENT OF TAXES ON DIVIDENDS FROM 936 CORPORATIONS. --
"(i) IN GENERAL. -- For purposes of determining the
alternative minimum tax foreign tax credit, 50 percent of any
withholding tax or income tax paid to a possession of the United
States with respect to dividends received from a corporation
eligible for the credit provided by section 936 shall be treated
as a tax paid to a foreign country by the corporation receiving
the dividend.
"(ii) LIMITATION. -- If the aggregate amount of the dividends
referred to in clause (i) for any taxable year exceeds the excess
referred to in paragraph (1), the amount treated as a tax paid to
a foreign country under clause (i) shall not exceed the amount
which would be so treated without regard to this clause multiplied
by a fraction --
"(I) the numerator of which is the excess referred to in
paragraph (1), and
"(II) the denominator of which is the aggregate amount of such
dividends.
"(iii) TREATMENT OF TAXES IMPOSED ON 936 CORPORATION. -- For
purposes of this subparagraph, taxes paid by any corporation
eligible for the credit provided by section 936 to a possession of
the United States shall be treated as a withholding tax paid with
respect to any dividend paid by such corporation to the extent
such taxes would be treated as paid by the corporation receiving
the dividend under rules similar to the rules of section 902 (and
the amount of any such dividend shall be increased by the amount
so treated)."
(B) Clause (iii) of section 56(g)(4)(C) of the 1986 Code is
amended by striking out "clause (ii)(I)" and inserting in lieu
thereof "clause (i)".
(12) Clause (iii) of section 56(g)(4)(B) of the 1986 Code is
amended by adding at the end thereof the following new sentence:
"The preceding sentence shall not apply to any annuity contract
held under a plan described in section 403(a)."
(13) Paragraph (1) of section 56(c) of the 1986 Code is amended
--
(A) by striking out "ADJUSTED EARNINGS AND PROFITS" in the
paragraph heading and inserting in lieu thereof "ADJUSTED CURRENT
EARNINGS", and
(B) by striking out "ADJUSTED EARNINGS AND PROFITS" in the
heading of subparagraph (B) and inserting in lieu thereof
"ADJUSTED CURRENT EARNINGS".
(14)(A) Subsection (b) of section 56 of the 1986 Code is
amended by adding at the end thereof the following new paragraph:
"(3) TREATMENT OF INCENTIVE STOCK OPTIONS. -- Section 421
shall not apply to the transfer of stock acquired pursuant to the
exercise of an incentive stock option (as defined in section
422A). The adjusted basis of any stock so acquired shall be
determined on the basis of the treatment prescribed by the
preceding sentence."
(B) Paragraph (3) of section 57(a) of the 1986 Code is hereby
repealed.
(C) The amendments made by this paragraph "26 USC 56 note"
shall apply with respect to options exercised after December 31,
1987.
(15) Clause (i) of section 56(a)(1)(A) of the 1986 Code is
amended by striking out "REAL" in the heading and inserting in
lieu thereof "PERSONAL".
(16) The heading of paragraph (1) of section 56(b) of the 1986
Code is amended by striking out "ITEMIZED".
(17) Subparagraph (A) of section 56(g)(4) of the 1986 Code is
amended by adding at the end thereof the following new clauses:
"(vi) ELECTION TO HAVE CUMULATIVE LIMITATION. --
"(I) IN GENERAL. -- In the case of any property placed in
service during a taxable year to which an election under this
clause applies, in lieu of applying clause (i), the depreciation
deduction for such property for any taxable year shall be the
lesser of the accumulated 168(g) depreciation or the accumulated
book depreciation; reduced by the aggregate amount of the
depreciation deductions determined under this subclause with
respect to such property for prior taxable years.
"(II) ACCUMULATED 166(g) DEPRECIATION. -- For purposes of this
clause, the term 'accumulated section 168(g) depreciation' means
the aggregate amount of the depreciation deductions determined
under the alternative system of section 168(g) with respect to the
property for all periods before the close of the taxable year.
"(III) ACCUMULATED BOOK DEPRECIATION. -- For purposes of this
clause, the term 'accumulated book depreciation' means the
aggregate amount of the depreciation deductions determined under
the method used for book purposes with respect to the property for
all periods before the close of the taxable year.
"(IV) ELECTION. -- The taxpayer may make an election under
this clause for any taxable year beginning after 1989. Such an
election, once made with respect to any such taxable year, shall
apply to all property placed in service during such taxable year,
and shall be irrevocable.
"(V) SIMILAR RULES FOR PROPERTY DESCRIBED IN CLAUSE (i), (iii),
OR (iv). -- Rules similar to the rules of the preceding
provisions of this clause shall also apply in the case of property
to which clause (ii), (iii), or (iv) applies.
"(vii) SPECIAL RULE FOR CERTAIN PROPERTY. -- In the case of
any property described in paragraph (1), (2), (3), or (4) of
section 168(f), the amount of depreciation allowable for purposes
of the regular tax shall be treated as the amount allowable under
the alternative system of section 168(g)."
(18) Paragraph (4) of section 56(g) of the 1986 Code is amended
by adding at the end thereof the following new subparagraph:
"(I) ADJUSTED BASIS. -- The adjusted basis of any property
with respect to which an adjustment under this paragraph applies
shall be determined by applying the treatment prescribed in this
paragraph."
(19) Subsection (a) of section 56 of the 1986 Code is amended
by adding at the end thereof the following new paragraph:
"(8) SECTION 87 NOT APPLICABLE. -- Section 87 (relating to
alcohol fuel credit) shall not apply."
(c) AMENDMENTS TO SECTION 56 OF THE 1986 CODE. --
(1) Clause (iii) of section 57(a)(5)(C) of the 1986 Code is
amended by inserting "(whether a current or advance refunding)"
after "any refunding bond".
(2) Clause (i) of section 57(a)(5)(C) of the 1986 Code is
amended to read as follows:
"(i) IN GENERAL. -- For purposes of this part, the term
'specified private activity bond' means any private activity bond
(as defined in section 141) which is issued after August 7, 1986,
and the interest on which is not includible in gross income under
section 103."
(3) Subparagraph (A) of section 579a)(6) of the 1986 Code is
amended by inserting "or 642(c)" after "section 170".
(d) AMENDMENTS TO SECTION 58 OF THE 1986 CODE. --
(1) Paragraph (2) of section 58(a) of the 1986 Code is amended
--
(A) by striking out "(as modified by section 461(i)(4)(A))",
and
(B) by striking out "section 469(d), without regard to
paragraph (1)(B) thereof" and inserting in lieu thereof "section
469(c)".
(2) Paragraph (3) of section 58(a) of the 1986 Code is amended
by striking out "section 469(g)(1)(C)" and inserting in lieu
thereof "section 469(j)(2)".
(3) Subsection (a) of section 58 of the 1986 Code is amended by
adding at the end thereof the following new paragraph:
"(4) DETERMINATION OF LOSS. -- In determining the amount of
the loss from any tax shelter farm activity, the adjustments of
sections 56 and 57 shall apply."
(4) Subsection (b) of section 58 of the 1986 Code is amended by
striking out paragraphs (1), (2), and (3), and inserting in lieu
thereof the following:
"(1) the adjustments of sections 56 and 57 shall apply,
"(2) the provisions of section 469(m) (relating to phase-in of
disallowance) shall not apply, and
"(3) in lieu of applying section 469(j)(7), the passive
activity loss of a taxpayer shall be computed without regard to
qualified housing interest (as defined in section 56(e))."
(e) AMENDMENTS TO SECTION 59 OF THE 1986 CODE. --
(1) Paragraph (2) of section 59(e) of the 1986 Code is amended
by striking out "would have been allowable as a deduction" and
inserting in lieu thereof "would have been allowable as a
deduction (determined without regard to section 291)".
(2) Subsection (h) of section 59 of the 1986 Code is amended by
striking out "taxable year -- " and all that follows and inserting
in lieu thereof "taxable year with the adjustments of sections 56,
57, and 58."
(3) Paragraph (1) of section 59(a) of the 1986 Code is amended
by striking out "and" at the end of subparagraph (B), by striking
out the period at the end of subparagraph (C) and inserting in
lieu thereof ", and", and by adding at the end thereof the
following new subparagraph:
"(D) the determination of whether any income is high-taxed
income for purposes of section 904(d)(2) were made on the basis of
the applicable rate specified in section 55(b)(1)(A) in lieu of
the highest rate of tax specified in section 1 or 11 (whichever
applies)."
(4) Subsection (i) of section 59 of the 1986 Code is amended --
(A) by striking out "of this subtitle" and inserting in lieu
thereof "of this subtitle (other than this part)", and
(B) by striking out "by this title" and inserting in lieu
thereof "by this subtitle".
(f) TRANSITIONAL PROVISIONS. --
(1) "26 USC 55 note" In the case of the taxable year of an
estate or trust which begins before January 1, 1987, and ends on
or after such date, the items of tax preference apportioned to any
beneficiary of such estate or trust under section 58(c) of the
Internal Revenue Code of 1954 (as in effect on the day before the
date of the enactment of the Tax Reform Act of 1986) shall be
taken into account for purposes of determining the amount of the
tax imposed by section 55 of the Internal Revenue Code of 1986 (as
amended by the Tax Reform Act of 1986) on such beneficiary for
such beneficiary's taxable year in which such taxable year of the
estate or trust ends.
(2) The last sentence of subparagraph (B) of section 701(f)(6)
of the Reform Act "26 USC 55 note" is amended to read as follows:
"The aggregate amount of investment tax credits with respect to
the unit in Mississippi allowed solely by reason of being
described in this subparagraph shall not exceed $141,000,000."
(3) Subsection (f) of section 701 of the Reform Act is amended
by adding at the end thereof the following new paragraph:
"(7) AGREEMENT VESSEL DEPRECIATION ADJUSTMENT. --
"(A) For purposes of part VI of subchapter A of chapter 1 of
the Internal Revenue Code of 1986, in the case of a qualified
taxpayer, alternative minimum taxable income for the taxable year
shall be reduced by an amount equal to the agreement vessel
depreciation adjustment.
"(B) For purposes of this paragraph, the agreement vessel
depreciation adjustment shall be an amount equal to the
depreciation deduction that would have been allowable for such
year under section 167 of such Code with respect to agreement
vessels placed in service before January 1, 1987, if the basis of
such vessels had not been reduced under section 607 of the
Merchant Marine Act of 1936, as amended, and if depreciation with
respect to such vessel had been computed using the 25-year
straight-line method. The aggregate amount by which basis of a
qualified taxpayer is treated as not reduced by reason of this
subparagraph shall not exceed $100,000,000.
"(C) For purposes of this paragraph, the term 'qualified
taxpayer' means a parent corporation incorporated in the State of
Delaware on December 1, 1972, and engaged in water transportation,
and includes any other corporation which is a member of the
affiliated group of which the parent corporation is the common
parent. No taxpayer shall be treated as a qualified corporation
for any taxable year beginning after December 31, 1991."
(4)(A) If any property to which this paragraph (26 USC 57 note"
applies is placed in service in a taxable year which begins before
January 1, 1987, and ends on or after August 1, 1986, the item of
tax preference determined under section 57(a) of the Internal
Revenue Code of 1954 (as in effect on the day before the date of
the enactment of the Tax Reform Act of 1986) with respect to such
property shall be the excess of --
"(i) the amount allowable as a deduction for depreciation or
amortization for such taxable year, over
(ii) the amount which would be determined for such taxable year
under the rules of paragraph (1) or (5) (whichever is appropriate)
of section 56(a) of the Internal Revenue Code of 1954 (as amended
by the Tax Reform Act of 1986).
(B) This paragraph shall apply to any property --
(i) which is described in paragraph (4) or (12) of section 57(
a) of the Internal Revenue Code of 1954 (as so in effect), and
(ii) to which paragraph (1) or (5) of section 56(a) of the
Internal Revenue Code of 1986 would apply if the taxable year
referred to in subparagraph (A) began after December 31, 1986.
(5) "26 USC 59 note" In determining the amount of the
alternative minimum tax foreign tax credit under section 59 of the
1986 Code, there shall not be taken into account any taxes paid or
accrued in a taxable year beginning after December 31, 1986, which
are treated under section 904(c) of the 1986 Code as paid or
accrued in a taxable year beginning on or before December 31,
1986.
(g) MISCELLANEOUS AMENDMENTS. --
(1) Subparagraph (K) of section 26(b)(2) of the 1986 Code is
amended by striking out the comma at the end thereof and inserting
in lieu thereof").".
(2)(A) So much of section 38(c) as precedes paragraph (4)
thereof is amended to read as follows:
"(c) LIMITATION BASED ON AMOUNT OF TAX. --
"(1) IN GENERAL. -- The credit allowed under subsection (a)
for any taxable year shall not exceed the excess (if any) of the
taxpayer's net income tax over the greater of --
"(A) the tentative minimum tax for the taxable year, or
"(B) 25 percent of so much of the taxpayer's net regular tax
liability as exceeds $25,000.
For purposes of the preceding sentence, the term 'net income
tax' means the sum of the regular tax liability and the tax
imposed by section 55, reduced by the credits allowable under
subparts A and B of this part, and the term 'net regular tax
liability' means the regular tax liability reduced by the sum of
the credits allowable under subparts A and B of this part.
"(2) REGULAR INVESTMENT TAX CREDIT MAY OFFSET 25 PERCENT OF
MINIMUM TAX. --
"(A) IN GENERAL. -- In the case of a C corporation, the amount
determined under paragraph (1)(A) shall be reduced by the lesser
of --
"(i) the portion of the regular investment tax credit not used
against the normal limitation, or
"(ii) 25 percent of the taxpayer's tentative minimum tax for
the taxable year.
"(B) PORTION OF REGULAR INVESTMENT TAX CREDIT NOT USED AGAINST
NORMAL LIMIT. -- For purposes of subparagraph (A), the portion of
the regular investment tax credit for any taxable year not used
against the normal limitation is the excess (if any) of --
"(i) the portion of the credit under subsection (a) which is
attributable to the application of the regular percentage under
section 46, over
"(ii) the limitation of paragraph (1) (without regard to this
paragraph) reduced by the portion of the credit under subsection
(a) which is not so attributable.
"(C) LIMITATION. -- In no event shall this paragraph permit
the allowance of a credit which would result in a net chapter 1
tax less than an amount equal to 10 percent of the amount
determined under section 55(b)(1)(A) without regard to the
alternative tax net operating loss deduction. For purposes of the
preceding sentence, the term 'net chapter 1 tax' means the sum of
the regular tax liability for the taxable year and the tax imposed
by section 55 for the taxable year, reduced by the sum of the
credits allowable under this part for the taxable year (other than
under section 34)."
(B) Subsection (c) of section 38 of the 1986 Code is amended --
(i) by redesignating paragraph (4) as paragraph (3), and
(ii) by striking out "subparagraphs (A) and (B) of paragraph
(1)" each place it appears in such paragraph and inserting in lieu
thereof "subparagraph (B) of paragraph (1).
(3)(A) Subsection (c) of section 47 of the 1986 Code is amended
by striking out "or D" and inserting in lieu thereof "D, or G".
(B) Subparagraph (D) of section 42(j)(4) of the 1986 Code is
amended by striking out "or D" and inserting in lieu thereof "D,
or G".
(4) The last sentence of clause (ii) of section 53(d)(1)(B) of
the 1986 Code is amended by striking out "earnings and profits"
and inserting in lieu thereof "current earnings".
(5) Sections 173(b), 174(e)(2), and 263(c) of the 1986 Code are
each amended by striking out "section 59(d)" and inserting in lieu
thereof "section 59(e)".
(6) Section 511 of the 1986 Code is amended by striking out
subsection (d).
(7) Sections 616(e) and 617(j) of the 1986 Code are each
amended by striking out "section 58(i)" and inserting in lieu
thereof "section 59(e)".
(8) Paragraph (4) of section 701(c) of the Reform Act "26 USC
38" is amended by striking out "section 631(a)" and inserting in
lieu thereof "section 221(a)".
(9) Subparagraph (B) of section 1362(e)(5) of the 1986 Code is
amended by striking out "Subsection (d)(2)" and inserting in lieu
thereof "Subsection (d)".
(10) Subsection (a) of section 6154 of the 1986 Code (as in
effect before its repeal by the Revenue Act of 1987) is amended by
striking out "11, 59A" and inserting in lieu thereof "11, 55,
59A".
(11) Paragraph (1) of section 962(a) of the 1986 Code is
amended --
(A) by striking out "section 1" and inserting in lieu thereof
"sections 1 and 55", and
(B) by striking out "section 11" and inserting in lieu thereof
"sections 11 and 55".
(12) Subsection (h) of section 32 of the 1986 Code is amended
by striking out "for taxpayers other than corporations".
(13)(A) Subsection (d) of section 2 of the 1986 Code is amended
by striking out "the tax imposed by section 1" and inserting in
lieu thereof "the taxes imposed by sections 1 and 55".
(B) Subsection (d) of section 11 of the 1986 Code is amended by
striking out "the tax imposed by subsection (a)" and inserting in
lieu thereof "the taxes imposed by subsection (a) and section 55".
SEC. 1008. AMENDMENTS RELATED TO TITLE VIII OF THE REFORM ACT.
(a) AMENDMENTS RELATED TO SECTION 801 OF THE REFORM ACT. --
(1)(A) Subparagraph (B) of section 448(d)(2) of the 1986 Code
(defining qualified personal service corporation) is amended by
striking out "or indirectly" and inserting in lieu thereof "(or
indirectly through 1 or more partnerships, S corporations, or
qualified personal service corporations not described in paragraph
(2) or (3) of subsection (a))".
(B) Section 448(d) of the 1986 Code is amended by adding at the
end thereof the following new paragraph:
"(8) USE OF RELATED PARTIES, ETC. -- The Secretary shall
prescribe such regulations as may be necessary to prevent the use
of related parties, pass-thru entities, or intermediaries to avoid
the application of this section."
(2) Subparagraph (C) of section 448(d)(4) of the 1986 Code
(relating to special rules for application of paragraph (2)) is
amended by striking out "all such members" and inserting in lieu
thereof "such group".
(3) Paragraph (2) of section 461(i) of the 1986 Code is amended
to read as follows:
"(2) SPECIAL RULE FOR SPUDDING OF OIL OR GAS WELLS. --
"(A) IN GENERAL. -- In the case of a tax shelter, economic
performance with respect to amounts paid during the taxable year
for drilling an oil or gas well shall be treated as having
occurred within a taxable year if drilling of the well commences
before the close of the 90th day after the close of the taxable
year.
"(B) DEDUCTION LIMITED TO CASH BASIS. --
"(i) TAX SHELTER PARTNERSHIPS. -- In the case of a tax shelter
which is a partnership, in applying section 704(d) to a deduction
or loss for any taxable year attributable to an item which is
deductible by reason of subparagraph (A), the term 'cash basis'
shall be substituted for the term 'adjusted basis'.
"(ii) OTHER TAX SHELTERS. -- Under regulations prescribed by
the Secretary, in the case of a tax shelter other than a
partnership, the aggregate amount of the deductions allowable by
reason of subparagraph (A) for any taxable year shall be limited
in a manner similar to the limitation under clause (i).
"(C) CASH BASIS DEFINED. -- For purposes of subparagraph (B),
a partner's cash basis in a partnership shall be equal to the
adjusted basis of such partner's interest in the partnership,
determined without regard to --
"(i) any liability of the partnership, and
"(ii) any amount borrowed by the partner with respect to such
partnership which --
"(I) was arranged by the partnership or by any person who
participated in the organization, sale, or management of the
partnership (or any person related to such person within the
meaning of section 465(b)(3)(C)), or
"(II) was secured by any asset of the partnership."
(4) Section 464 of the 1986 Code (relating to limitations on
deductions for certain farming expenses) is amended by adding at
the end thereof the following new subsection:
"(g) TERMINATION. -- Except as provided in subsection (f),
subsections (a) and (b) shall not apply to any taxable year beginning
after December 31, 1986."
(5) Paragraph (4) of section 801(d) of the Reform Act is
amended by striking out "the completed contract method" and
inserting in lieu thereof "a method of accounting for long-term
contracts".
(6) Section 801(d) of the Reform Act "26 USC 448 note" is
amended by adding at the end thereof the following new paragraph:
"(5) SPECIAL RULE FOR PARAGRAPHS (2) AND (3). -- If any loan,
lease, contract, or evidence of any transaction to which paragraph
(2) or (3) applies is transferred after June 10, 1987, to a person
other than a related party (within the meaning of paragraph (2)),
paragraph (2) or (3) shall cease to apply on and after the date of
such transfer."
(7) Paragraph (3) of section 448(d) of the 1986 Code is amended
by adding at the end thereof the following new sentence: "An S
corporation shall not be treated as a tax shelter for purposes of
this section merely by reason of being required to file a notice
of exemption from registration with a State agency described in
section 461(i)(3)(A), but only if there is a requirement
applicable to all corporations offering securities for sale in the
State that to be exempt from such registration the corporation
must file such a notice."
(8) Subparagraph (C) of section 448(d)(4) of the 1986 Code is
amended by striking out "substantially all of" and inserting in
lieu thereof "90 percent or more of".
(9) Paragraph (3) of section 448(c) of the 1986 Code is amended
by adding at the end thereof the following new subparagraph:
"(D) TREATMENT OF PREDECESSORS. -- Any reference in this
subsection to an entity shall include a reference to any
predecessor of such entity."
(b) AMENDMENTS RELATED TO SECTION 803 OF THE REFORM ACT. --
(1) Paragraph (2) of section 263A(a) of the 1986 Code is
amended by adding at the end thereof the following new sentence:
"Any cost which (but for this subsection) could not be taken into
account in computing taxable income for any taxable year shall not
be treated as a cost described in this paragraph."
(2) Section 263A(c) of the 1986 Code (relating to general
exceptions) is amended --
(A) by striking out "263(c), 616(a), or 617(a)" and inserting
in lieu thereof "263(c), 263(i), 291(b)(2), 616, or 617", and
(B) by adding at the end thereof the following new paragraph:
"(6) COORDINATION WITH SECTION 59(e). -- Paragraphs (2) and
(3) shall apply to any amount allowable as a deduction under
section 59(e) for qualified expenditures described in
subparagraphs (B), (C), (D), and (E) of paragraph (2) thereof."
(3) Subparagraph (B) of section 263A(d)(2) of the 1986 Code
(relating to special rule for person with minority interest who
materially participates) is amended --
(A) by striking out "such grove, orchard, or vineyard" in
clause (i) and inserting in lieu thereof "the plants described in
subparagraph (A) at all times during the taxable year in which
such amounts were paid or incurred", and
(B) by striking out "such grove, orchard, or vineyard during
the 4-taxable year period beginning with the taxable year in which
the grove, orchard, or vineyard was lost or damaged" and inserting
in lieu thereof "the plants described in subparagraph (A) during
the taxable year in which such amounts were paid or incurred".
(4) Paragraph (3) of section 263A(f) of the 1986 Code (relating
to interest relating to property used to produce property) is
amended --
(A) by striking out "incurred or continued in connection with"
and inserting in lieu thereof "allocable (as determined under
paragraph (2))", and
(B) by inserting "(as so determined)" after "allocable".
(5) Section 447(b) of the 1986 Code is amended --
(A) by striking out "of" before "expenses", and
(B) by striking out "OF" before "EXPENSES" in the heading
thereof.
(6) Section 447(g)(1) of the 1986 Code is amended by striking
out "trade or business of farming" each place it appears and
inserting in lieu thereof "qualified farming trade or business".
(7) Paragraph (4)(A)(i) of section 803(d) of the Reform Act "26
USC 263A note" is amended by striking out "203" each place it
appears and inserting in lieu thereof "204".
(8) "26 USC 263A note" The allocation used in the regulations
prescribed under section 263A(h)(2) of the Internal Revenue Code
of 1986 for apportioning storage costs and related handling costs
shall be determined by dividing the amount of such costs by the
beginning inventory balances and the purchases during the year and
by multiplying the resulting allocation ratio by inventory amounts
determined in accordance with the provisions of the joint
explanatory statement of the committee of conference of the
conference report accompanying H.R. 3838 (H.R. Rept. No. 99-841,
Vol. II., 99th Cong., 2d Sess. II-306-307 (1986)).
(c) AMENDMENTS RELATED TO SECTION 804 OF THE REFORM ACT. --
(1) Paragraph (3) of section 460(b) of the 1986 Code is amended
--
(A) by striking out "subparagraph" and inserting in lieu
thereof "paragraph",
(B) by striking out "paragraph (1)" each place it appears in
subparagraph (B) and inserting in lieu thereof "subparagraph (A)",
and
(C) by striking out "paragraph (1)" in subparagraph (C) and
inserting in lieu thereof "subparagraph (B)".
(2)(A) Section 460(b) of the 1986 Code (relating to percentage
of completion method) is amended by adding at the end thereof the
following new paragraph:
"(4) SPECIAL RULES. --
"(A) SIMPLIFIED METHOD OF COST ALLOCATION. -- In the case of
any long-term contract, the Secretary may prescribe a simplified
procedure for allocation of costs to such contract in lieu of the
method of allocation under subsection (c).
"(B) LOOK-BACK METHOD NOT TO APPLY TO CERTAIN CONTRACTS. --
Paragraph (2)(B) and subsection (a)(2) shall not apply to any
contract --
"(i) the gross price of which (as of the completion of the
contract) does not exceed the lesser of --
"(I) $1,000,000, or
"(II) 1 percent of the average annual gross receipts of the
taxpayer for the 3 taxable years preceding the taxable year in
which the contract was completed, and
"(ii) which is completed within 2 years of the contract
commencement date.
For purposes of this subparagraph, rules similar to the rules
of subsections (e)(2) and (f)(3) shall apply."
(B) Section 460(b)(2) of the 1986 Code is amended by striking
out "In" and inserting in lieu thereof "Except as provided in
paragraph (4), in".
(3) Subparagraph (B) of section 804(d)(2) of the Reform Act "26
USC 460 note" is amended by striking out "section 263A(c)(5)" and
inserting in lieu thereof "section 460(c)(5)".
(4)(A) Paragraph (3) of section 460(b) of the 1986 Code is
amended by adding at the end thereof the following new sentences:
"For purposes of the preceding sentence, any amount received or
accrued after completion of the contract shall be taken into
account by discounting (using the Federal mid-term rate determined
under section 1274(d) as of the time such amount was received or
accrued) such amount to its value as of the completion of the
contract. The taxpayer may elect with respect to any contract to
have the preceding sentence not apply to such contract."
(B) Subparagraph (B) of section 460(b)(2) of the 1986 Code is
amended by striking out "completion of the contract" and inserting
in lieu thereof "completion of the contract (or, with respect to
any amount received or accrued after completion of the contract,
when such amount is so received or accrued)".
(d) AMENDMENT RELATED TO SECTION 805 OF THE REFORM ACT. --
(1) Section 166(d)(1)(A) of the 1986 Code is amended by
striking out "subsections (a) and (c)" and inserting in lieu
thereof "subsection (a)".
(2) Subsection (b) of section 805 of the Reform Act "26 USC
166" is amended by inserting ", as amended by section 901(d)(4),"
after "Section 166".
(3) Subsection (a) of section 582 of the 1986 Code is amended
by striking out "subsections (a), (b), and (c) of section 166" and
inserting in lieu thereof "subsections (a) and (b) of section
166".
(e) AMENDMENTS RELATED TO SECTION 806 OF THE REFORM ACT. --
(1)(A) Clause (i) of section 706(b)(1)(B) of the 1986 Code is
amended to read as follows:
"(i) the majority interest taxable year (as defined in
paragraph (4)),".
(B) Paragraph (4) of section 706(b) of the 1986 Code is amended
to read as follows:
"(4) MAJORITY INTEREST TAXABLE YEAR; LIMITATION ON REQUIRED
CHANGES. --
"(A) MAJORITY INTEREST TAXABLE YEAR DEFINED. -- For purposes
of paragraph (1)(B)(i) --
"(i) IN GENERAL. -- The term 'majority interest taxable year'
means the taxable year (if any) which, on each testing day,
constituted the taxable year of 1 or more partners having (on such
day) an aggregate interest in partnership profits and capital of
more than 50 percent.
"(ii) TESTING DAYS. -- The testing days shall be --
"(I) the 1st day of the partnership taxable year (determined
without regard to clause (i)), or
"(II) the days during such representative period as the
Secretary may prescribe.
"(B) FURTHER CHANGE NOT REQUIRED FOR 3 YEARS. -- Except as
provided in regulations necessary to prevent the avoidance of this
section, if, by reason of paragraph (1)(B)(i), the taxable year of
a partnership is changed, such partnership shall not be required
to change to another taxable year for either of the 2 taxable
years following the year of change."
(2) Clause (iii) of section 706(d)(1)(B) of the 1986 Code is
amended by striking out "or such other period as the Secretary may
prescribe in regulations" and inserting in lieu thereof "unless
the Secretary by regulations prescribes another period".
(3) Section 706(b) of the 1986 Code is amended by adding at the
end thereof the following new paragraph:
"(5) APPLICATION WITH OTHER SECTIONS. -- Except as provided in
regulations, for purposes of determining the taxable year to which
a partnership is required to change by reason of this subsection,
changes in taxable years of other persons required by this
subsection, section 441(i), section 584(h), section 645, or
section 1378(a) shall be taken into account."
(4) Paragraph (2) of section 441(i) of the 1986 Code (defining
personal service corporation) is amended by adding at the end
thereof the following:
"A corporation shall not be treated as a personal service
corporation unless more than 10 percent of the stock (by value) in
such corporation is held by employee-owners (within the meaning of
section 269A(b)(2), as modified by the preceding sentence). If a
corporation is a member of an affiliated group filing a
consolidated return, all members of such group shall be taken into
account in determining whether such corporation is a personal
service corporation."
(5)(A) Section 584 of the 1986 Code (relating to common trust
funds) is amended by adding at the end thereof the following new
subsection:
"(h) TAXABLE YEAR OF COMMON TRUST FUND. -- For purposes of this
subtitle, the taxable year of any common trust fund shall be the
calendar year."
(B) The amendment made by subparagraph (A) "26 USC 584 note"
shall take effect as if included in the amendments made by section
806 of the Reform Act, except that section 806(e)(1) shall be
applied by substituting "December 31, 1987" for "December 31,
1986". For purposes of section 806(e)(2) of the Reform Act --
(i) a participant in a common trust fund shall be treated in
the same manner as a partner, and
(ii) subparagraph (C) thereof shall be applied by substituting
"December 31, 1987" for "December 31, 1986" and as if it did not
contain the election to include all income in the short taxable
year.
(6) Section 806(c)(2) of the Reform Act "26 USC 267" is amended
by striking out "Section 267(a)" and inserting in lieu thereof
"Section 267(a)(2)".
(7) Subparagraph (C) of section 806(e)(2) of the Reform Act "26
USC 1378 note" is amended --
(A) by striking out "(including such short taxable year)", and
(B) by striking out "short taxable year" the second place it
appears and inserting in lieu thereof "the partner's or
shareholder's taxable year with or within which the partnership's
or S corporation's short taxable year ends".
(8) Section 806(e)(2) of the Reform Act is amended --
(A) by striking out "any taxable year" and inserting in lieu
thereof "the taxpayer's first taxable year beginning after
December 31, 1986", and
(B) by striking out "taxpayer" each place it appears and
inserting in lieu thereof "partnership, S corporation, or personal
service corporation".
(9) Nothing in section 806 of the Reform Act "26 USC 1378 note"
or in any legislative history relating thereto shall be construed
as requiring the Secretary of the Treasury or his delegate to
permit an automatic change of a taxable year.
(10) Subsection (e) of section 806 of the Reform Act "26 USC
1378 note" is amended by adding at the end thereof the following
new paragraph:
"(3) BASIS, ETC. RULES. --
"(A) BASIS RULE. -- The adjusted basis of any partner's
interest in a partnership or shareholder's stock in an S
corporation shall be determined as if all of the income to be
taken into account ratably in the 4 taxable years referred to in
paragraph (2)(C) were included in gross income for the 1st of such
taxable years.
"(B) TREATMENT OF DISPOSITIONS. -- If any interest in a
partnership or stock in an S corporation is disposed of before the
last taxable year in the spread period, all amounts which would be
included in the gross income of the partner or shareholder for
subsequent taxable years in the spread period under paragraph
(2)(C) and attributable to the interest or stock disposed of shall
be included in gross income for the taxable year in which the
disposition occurs. For purposes of the preceding sentence, the
term 'spread period' means the period consisting of the 4 taxable
years referred to in paragraph (2)( C)."
(f) AMENDMENTS RELATED TO SECTION 811 OF THE REFORM ACT. --
(1) Paragraph (4) of section 453C(b) of the 1986 Code is
amended --
(A) by striking out "at any time during" and inserting in lieu
thereof "as of the close of", and
(B) by striking out "as of the close of such taxable year in
lieu" and inserting in lieu thereof "as of the close of such
taxable year (determined by not taking into account any
indebtedness described in paragraph (3)(B)) in lieu"
(2) So much of paragraph (2) of section 453C(d) of the 1986
Code as precedes subparagraph (A) is amended to read as follows:
"(2) EXCESS ALLOCABLE INSTALLMENT INDEBTEDNESS. -- If the
allocable installment indebtedness for any taxable year exceeds
the amount which may be allocated under paragraph (1) to
applicable installment obligations arising in (and outstanding as
of the close of) such taxable year, such excess shall -- ".
(3) Subparagraph (A) of section 453C(e)(1) of the 1986 Code is
amended by adding at the end thereof the following new sentence:
"Such term also includes any obligation held by any person if
the basis of such obligation in the hands of such person is
determined (in whole or in part) by reference to the basis of such
obligation in the hands of another person and such obligation was
an applicable installment obligation in the hands of such other
person."
(4) Paragraph (2) of section 453C(e) of the 1986 Code (relating
to aggregation rules) is amended by striking out "For" and
inserting in lieu thereof "Except as provided in regulations,
for".
(5) Subparagraph (B) of section 453C(e)(4) of the 1986 Code is
amended by striking out "or (3)".
(6) Paragraph (4) of section 811(c) of the Reform Act "26 USC
453C note" is amended by striking out the second subparagraphs (D)
and (E).
(7) Paragraph (5) of section 811(c) of the Reform Act is
amended by striking out "October 23, 1985" each place it appears
and inserting in lieu thereof "October 23, 1984".
(8) Section 811(c) of the Reform Act is amended by adding at
the end thereof the following new paragraph:
10"(9) SPECIAL RULES. -- For purposes of section 453C of the
1986 Code (as added by subsection (a)) --
"(A) REVOLVING CREDIT PLANS, ETC. -- The term 'applicable
installment obligation' shall not include any obligation arising
out of any disposition or sale described in paragraph (1) or (2)
of section 453(k) of such Code (as added by section 812(a)).
"(B) CERTAIN DISPOSITIONS DEEMED MADE ON FIRST DAY OF TAXABLE
YEAR. -- In the case of a taxpayer's 1st taxable year ending
after December 31, 1986, dispositions after February 28, 1986, and
before the 1st day of such taxable year shall be treated as made
on such 1st day."
(9) For purposes of applying the amendments "26 USC 453C note"
made by this subsection and the amendments made by section 10202
of the Revenue Act of 1987, the provisions of this subsection
shall be treated as having been enacted immediately before the
enactment of the Revenue Act of 1987.
(g) AMENDMENTS RELATED TO SECTION 812 OF THE REFORM ACT. --
(1) Section 453 of the 1986 Code is amended by redesignating
the subsection (j) added by section 812 of the Reform Act as
subsection (k).
(2) Subsection (c) of section 453A of the 1986 Code (as in
effect on the date before the date of the enactment of the Revenue
Act of 1987) is amended by striking out "453(j)" and inserting in
lieu thereof "453(k)".
(3) Paragraph (1) of section 812(c) of the Reform Act "26 USC
453 note" is amended by striking out "paragraph (2)" and inserting
in lieu thereof "paragraphs (2) and (3)".
(4) Subsection (c) of section 812 of the Reform Act is amended
by redesignating paragraph (2) as paragraph (3) and inserting
after paragraph (1) the following new paragraph:
"(2) SALES OF STOCK, ETC. -- Section 453(k)(2) of the Internal
Revenue Code of 1986, as added by subsection (a), shall apply to
sales after December 31, 1986, in taxable years ending after such
date."
(5) Paragraph (3) of section 812(c) of the Reform Act (as so
redesignated) is amended by striking out subparagraphs (B) and (C)
and inserting in lieu thereof the following:
"(B) such change shall be treated as having been made with the
consent of the Secretary,
"(C) the period for taking into account adjustments under
section 481 of such Code by reason of such change shall be equal
to 4 years, and
"(D) except as provided in paragraph (4), the amount taken into
account in each of such 4 years shall be the applicable percentage
(determined in accordance with the following table) of the net
adjustment:
If the taxpayer's last taxable year beginning before January 1,
1987, was the taxpayer's 1st taxable year in which sales were made
under a revolving credit plan, all adjustments under section 481
of such Code shall be taken into account in the taxpayer's 1st
taxable year beginning after December 31, 1986."
(6) Subsection (c) of section 812 of the Reform Act is amended
by adding at the end thereof the following new paragraphs:
"(4) ACCELERATION OF ADJUSTMENTS WHERE CONTRACTION IN AMOUNT OF
INSTALLMENT OBLIGATIONS. --
"(A) IN GENERAL. -- If the percentage determined under
subparagraph (B) for any taxable year in the adjustment period
exceeds the percentage which would otherwise apply under paragraph
(3)(D) for such taxable year (determined after the application of
this paragraph for prior taxable years in the adjustment period)
--
"(i) the percentage determined under subparagraph (B) shall be
substituted for the applicable percentage which would otherwise
apply under paragraph (3)(D), and
"(ii) any increase in the applicable percentage by reason of
clause (i) shall be applied to reduce the applicable percentage
determined under paragraph (3)(D) for subsequent taxable years in
the adjustment period (beginning with the 1st of such subsequent
taxable years).
"(B) DETERMINATION OF PERCENTAGE. -- For purposes of
subparagraph (A), the percentage determined under this
subparagraph for any taxable year in the adjustment period is the
excess (if any) of --
"(i) the percentage determined by dividing the aggregate
contraction in revolving installment obligations by the aggregate
face amount of such obligations outstanding as of the close of the
taxpayer's last taxable year beginning before January 1, 1987,
over
"(ii) the sum of the applicable percentages under paragraph
(3)(D) (as modified by this paragraph) for prior taxable years in
the adjustment period.
"(C) AGGREGATE CONTRACTION IN REVOLVING INSTALLMENT
OBLIGATIONS. -- For purposes of subparagraph (B), the aggregate
contraction in revolving installment obligations is the amount by
which --
"(i) the aggregate face amount of the revolving installment
obligations outstanding as of the close of the taxpayer's last
taxable year beginning before January 1, 1987, exceeds
"(ii) the aggregate face amount of the revolving installment
obligations outstanding as of the close of the taxable year
involved.
"(D) REVOLVING INSTALLMENT OBLIGATIONS. -- For purposes of
this paragraph, the term 'revolving installment obligations' means
installment obligations arising under a revolving credit plan.
"(E) TREATMENT OF CERTAIN OBLIGATIONS DISPOSED OF ON OR BEFORE
OCTOBER 26, 1987. -- For purposes of subparagraphs (B)(i) and
(C)(i), in determining the aggregate face amount of revolving
installment obligations outstanding as of the close of the
taxpayer's last taxable year beginning before January 1, 1987,
there shall not be taken into account any obligation --
"(i) which was disposed of to an unrelated person on or before
October 26, 1987, or
"(ii) was disposed of to an unrelated person on or after such
date pursuant to a binding written contract in effect on October
26, 1987, and at all times thereafter before such disposition.
For purposes of the preceding sentence, the term 'unrelated
person' means any person who is not a related person (as defined
in section 453(g) of the Internal Revenue Code of 1986).
"(5) LIMITATION ON LOSSES FROM SALES OF OBLIGATIONS UNDER
REVOLVING CREDIT PLANS. -- If 1 or more obligations arising under
a revolving credit plan and taken into account under paragraph (3
are disposed of during the adjustment period, then,
notwithstanding any other provision of law --
"(A) no losses from such dispositions shall be recognized, and
"(B) the aggregate amount of the adjustment for taxable years
in the adjustment period (in reverse order of time) shall be
reduced by the amount of such losses.
"(6) ADJUSTMENT PERIOD. -- For purposes of paragraphs (4) and
(5), the adjustment period is the 4-year period under paragraph
(3)."
(h) AMENDMENT RELATED TO SECTION 821 OF THE REFORM ACT. -- Section
821(b)(3) of the Reform Act "26 USC 451 note" is amended by adding at
the end thereof the following new sentence: "The preceding sentence
shall also apply to any taxable year beginning after August 16, 1986,
and before January 1, 1987, if the taxpayer treated such income in the
same manner for the taxable year preceding such taxable year."
"(i) AMENDMENT RELATED TO SECTION 822 OF THE REFORM ACT. -- Paragraph
(1) of section 703(b) of the 1986 Code is amended by striking out "or
(d)(4)".
(j) AMENDMENTS RELATED TO SECTION 824 OF THE REFORM ACT. --
(1) Section 6501(o) of the 1986 Code which relates to cross
references is amended by striking out paragraph (3).
(2) Paragraph (4) of section 824(c) of the Reform Act "26 USC
118 note" is amended by striking out "an indemnity agreement" and
inserting in lieu thereof "an underwriting agreement".
SEC. 1009. AMENDMENTS RELATED TO TITLE IX OF THE REFORM ACT.
(a) AMENDMENTS RELATED TO SECTION 901 OF THE REFORM ACT. --
(1) Subparagraph (C) of section 46(e)(4) of the 1986 Code is
amended by adding at the end thereof the following new sentences:
"Notwithstanding the preceding provisions of this subparagraph,
any such election shall terminate effective with respect to the
1st taxable year of the organization making such election which
begins after 1986 and during which such organization (or any
successor organization) was not at any time the lessee under any
lease of regular investment tax credit property. For purposes of
the preceding sentence, the term 'regular investment tax credit
property' means any section 38 property if the regular percentage
applied to such property and the amount of qualified investment
with respect to such property would have been reduced under
paragraph (1) but for an election under this subparagraph."
(2)(A) Paragraph (5) of section 585(c) of the 1986 Code is
amended by adding at the end thereof the following new
subparagraph:
"(C) ELECTION MADE BY EACH MEMBER. -- In the case of a
parent-subsidiary controlled group, any election under this
section shall be made separately by each member of such group."
(B) Subclause (I) of section 585(c)(3)(A)(iii) of the 1986 Code
is amended by striking out "or such greater amount as the taxpayer
may designate" and inserting in lieu thereof "or such higher
percentage of such net amount as the taxpayer may elect".
(C) Clause (ii) of section 585(c)(3)(B) of the 1986 Code is
amended by striking out "designates an amount" and inserting in
lieu thereof "elects a higher percentage".
(3) Paragraph (4) of section 585(c) of the 1986 Code is amended
by adding at the end thereof the following new sentence:
"If the amount of the reserve referred to in subparagraph (B) as of
the close of any taxable year exceeds the outstanding balance (as of
such time) of the loans referred to in subparagraph (B), such excess
shall be included in gross income for such taxable year."
b) AMENDMENTS RELATED TO SECTION 902 OF THE REFORM ACT. --
(1) Paragraph (3) of section 902(f) of the Reform Act "26 USC
265 note" is amended --
(A) in subparagraph (F), by striking out "distribution company"
and inserting in lieu thereof "distribution facility",
(B) in subparagraph (L), by striking out "waterfront project"
and inserting in lieu thereof "2 Festival Market Place Projects at
Union Pier Terminal and 1 project at the Remount Road Container
Yard, State Pier No. 15 at North Charleston Terminal",
(C) in subparagraph (M), by striking out "Pontabla" and
inserting in lieu thereof "Pontalba",
(D) in subparagraph (P), by striking out "Birmingham, Alabama,"
and inserting in lieu thereof "Homewood, Alabama, the", and
(E) by adding at the end thereof the following new
subparagraphs:
"(T) Bellows Falls, Vermont -- building project.
"(U) East Broadway Project, Louisville, Kentucky.
"(V) O.K. Industries, Oklahoma."
(2) Paragraph (4) of section 902(f) of the Reform Act "26 USC
265 note" is amended by striking out "subparagraph" and inserting
in lieu thereof "paragraph".
(3)(A) Paragraph (3) of section 265(b) of the 1986 Code is
amended to read as follows:
"(3) EXCEPTION FOR CERTAIN TAX-EXEMPT OBLIGATIONS. --
"(A) IN GENERAL. -- Any qualified tax-exempt obligation
acquired after August 7, 1986, shall be treated for purposes of
paragraph (2) and section 291(e)(1)(B) as if it were acquired on
August 7, 1986.
"(B) QUALIFIED TAX-EXEMPT OBLIGATION. --
"(i) IN GENERAL. -- For purposes of subparagraph (A), the term
'qualified tax-exempt obligation' means a tax-exempt obligation --
"(I) which is issued after August 7, 1986, by a qualified small
issuer,
"(II) which is not a private activity bond (as defined in
section 141), and
"(III) which is designated by the issuer for purposes of this
paragraph.
"(ii) CERTAIN BONDS NOT TREATED AS PRIVATE ACTIVITY BONDS. --
For purposes of clause (i)(II), there shall not be treated as a
private activity bond --
"(I) any qualified 501(c)(3) bond (as defined in section 145),
or
"(II) any obligation issued to refund (or which is part of a
series of obligations issued to refund) an obligation issued
before August 8, 1986, which was not an industrial development
bond (as defined ini section 103(b)(2) as in effect on the day
before the date of the enactment of the Tax Reform Act of 1986) or
a private loan bond (as defined in section 103(o)(2)(A), as so in
effect, but without regard to any exemption from such definition
other than section 103(o)(2)(A)).
"(C) QUALIFIED SMALL ISSUER. --
"(i) IN GENERAL. -- For purposes of subparagraph (B), the term
'qualified small issuer' means, with respect to obligations issued
during any calendar year, any issuer if the reasonably anticipated
amount of tax-exempt obligations (other than obligations described
in clause (ii) which will be issued by such issuer during such
calendar year does not exceed $10,000,000.
"(ii) OBLIGATIONS NOT TAKEN INTO ACCOUNT IN DETERMINING STATUS
AS QUALIFIED SMALL ISSUER. -- For purposes of clause (i), an
obligation is described in this clause if such obligation is --
"(I) a private activity bond (other than a qualified 501(c)(3)
bond, as defined in section 145),
"(II) an obligation to which section 141(a) does not apply by
reason of section 1312, 1313, 1316(g), or 1317 of the Tax Reform
Act of 1986 and which would (if issued on August 15, 1986) have
been an industrial development bond (as defined in section 103(
b)(2) as in effect on the day before the date of the enactment of
such Act) or a private loan bond (as defined in section 103(o)(
2)(A), as so in effect, but without regard to any exception from
such definition other than section 103(o)(2)(A)), or
"(III) an obligation issued to refund (other than to advance
refund within the meaning of section 149(d)(5)) any obligation to
the extent the amount of the refunding obligation does not exceed
the outstanding amount of the refunded obligation.
"(iii) ALLOCATION OF AMOUNT OF ISSUE IN CERTAIN CASES. -- In
the case of an issue under which more than 1 governmental entity
receives benefits, if --
"(I) all governmental entities receiving benefits from such
issue irrevocably agree (before the date of issuance of the issue)
on an allocation of the amount of such issue for purposes of this
subparagraph, and
"(II) such allocation bears a reasonable relationship to the
respective benefits received by such entities,
then the amount of such issue so allocated to an entity (and
only such amount with respect to such issue) shall be taken into
account under clause (i) with respect to such entity.
"(D) LIMITATION ON AMOUNT OF OBLIGATIONS WHICH MAY BE
DESIGNATED. --
"(i) IN GENERAL. -- Not more than $10,000,000 of obligations
issued by an issuer during any calendar year may be designated by
such issuer for purposes of this paragraph.
"(ii) CERTAIN REFUNDINGS OF DESIGNATED OBLIGATIONS DEEMED
DESIGNATED. -- Except as provided in clause (iii), in the case of
a refunding (or series of refundings) of a qualified tax-exempt
obligation, the refunding obligations shall be treated as a
qualified tax-exempt obligation (and shall not be taken into
account under clause (i)) if --
"(I) the refunding obligation was not taken into account under
subparagraph (C) by reason of clause (ii)(III) thereof,
"(II) the average maturity date of the refunding obligations
issued as part of the issue of which such refunding obligation is
a part is not later than the average maturity date of the
obligations to be refunded by such issue, and
"(III) the refunding obligation has a maturity date which is
not later than the date which is 30 years after the date the
original qualified tax-exempt obligation was issued.
Subclause (II) shall not apply if the average maturity of the
issue of which the original qualified tax-exempt obligation was a
part (and of the issue of which the obligations to be refunded are
a part) is 3 years or less. For purposes of this clause, average
maturity shall be determined in accordance with section
147(b)(2)(A).
"(iii) CERTAIN OBLIGATIONS MAY NOT BE DESIGNATED OR DEEMED
DESIGNATED. -- No obligation issued as part of an issue may be
designated under this paragraph (or may be treated as designated
under clause (ii)) if --
"(I) any obligation issued as part of such issue is issued to
refund another obligation, and
"(II) the aggregate face amount of such issue exceeds
$10,000,000.
"(E) AGGREGATION OF ISSUERS. -- For purposes of subparagraphs
(C) and (D) --
"(i) an issuer and all entities which issue obligations on
behalf of such issuer shall be treated as 1 issuer,
"(ii) all obligations issued by a subordinate entity shall, for
purposes of applying subparagraphs (C) and (D) to each other
entity to which such entity is subordinate, be treated as issued
by such other entity, and
"(iii) an entity formed (or, to the extent provided by the
Secretary, availed of) to avoid the purposes of subparagraph (C)
or (D) and all entities benefiting thereby shall be treated as 1
issuer.
"(F) TREATMENT OF COMPOSITE ISSUES. -- In the case of an
obligation which is issued as part of a direct or indirect
composite issue, such obligation shall not be treated as a
qualified tax-exempt obligation unless --
"(i) the requirements of this paragraph are met with respect to
such composite issue (determined by treating such composite issue
as a single issue), and
"(ii) the requirements of this paragraph are met with respect
to each separate lot of obligations which are part of the issue
(determined by treating each such separate lot as a separate
issue)."
(B) "26 USC 265 note" In the case of any obligation issued
after August 7, 1986, and before January 1, 1987, the time for
making a designation with respect to such obligation under section
265(b)(3)(B)(iii) of the 1986 Code shall not expire before January
1, 1989.
(C) If --
(i) an obligation is issued on or after January 1, 1986, and on
or before August 7, 1986,
(ii) when such obligation was issued, the issuer made a
designation that it intended to qualify under section 802(e)(3) of
H.R. 3838 of the 99th Congress as passed by the House of
Representatives, and
(iii) the issuer makes an election under this subparagraph with
respect to such obligation,
for purposes of section 265(b)(3) of the 1986 Code, such
obligation shall be treated as issued on August 8, 1986.
(D)(i) Except as provided in clause (ii), the following
provisions of section 265(b)(3) of the 1986 Code (as amended by
this subparagraph (A)) shall apply to obligations issued after
June 30, 1987:
(I) subparagraph (C)(ii)(III),
(II) clauses (ii) and (iii) of subparagraph (D), and
(III) subparagraphs (E) and (F).
(ii) At the election of an issuer (made at such time and in
such manner as the Secretary of the Treasury or his delegate may
prescribe), the provisions referred to in clause (i) shall apply
to such issuer as if included in the amendments made by section
902(a) of the Tax Reform Act of 1986.
(4) Subparagraph (B) of section 291(e)(1) of the 1986 Code is
amended by redesignating the clause (iv) added by section 902(c)(
2) of the Reform Act as clause (v).
(5) Clause (i) of section 291(e)(1)(B) of the 1986 Code is
amended by striking out "section 582(a)(2)" and inserting in lieu
thereof "section 585(a)(2)".
(6) Paragraph (1) of section 902(e) of the Reform Act "26 USC
163" is amended by striking out "Section 163(h)(12)" and inserting
in lieu thereof "Section 163(i)(2) (as redesignated by section
511(b) of this Act)".
(7) Paragraph (4) of section 902(f) of the Reform Act "26 USC
265 note" is amended --
(A) by inserting "and qualified 501(c)(3) bonds designated by
such Governor for purposes of this paragraph," after "1987),", and
(B) by striking out "subparagraph" in the last sentence and
inserting in lieu thereof "paragraph".
(c) AMENDMENTS RELATED TO SECTION 903 OF THE REFORM ACT. --
(1) Paragraph (1) of section 172(b) of the 1986 Code is amended
by redesignating subparagraphs (L) and (M) as subparagraphs (K)
and (L), respectively.
(2) Subparagraph (A) of section 172(b)(1) of the 1986 Code is
amended by striking out "Except" and all that follows down through
"a net operating loss" and inserting in lieu thereof "Except as
otherwise provided in this paragraph, a net operating loss".
(3) Subparagraph (B) of section 172(b)(1) of the 1986 Code is
amended to read as follows:
"(B) Except as otherwise provided in this paragraph, a net
operating loss for any taxable year ending after December 31,
1975, shall be a net operating loss carryover to each of the 15
taxable years following the taxable year of the loss."
(d) AMENDMENTS RELATED TO SECTION 905 OF THE REFORM ACT. --
(1) Subsection (l) of section 165 of the 1986 Code is amended
by redesignating paragraph (6) as paragraph (7) and by striking
out paragraph (5) and inserting in lieu thereof the following:
"(5) ELECTION TO TREAT AS ORDINARY LOSS. --
"(A) IN GENERAL. -- In lieu of any election under paragraph
(1), the taxpayer may elect to treat the amount referred to in
paragraph (1) for the taxable year as an ordinary loss described
in subsection (c)(2) incurred during the taxable year.
"(B) LIMITATIONS. --
"(i) DEPOSIT MAY NOT BE FEDERALLY INSURED. -- No election may
be made under subparagraph (A) with respect to any loss on a
deposit in a qualified financial institution if part or all of
such deposit is insured under Federal law.
"(ii) DOLLAR LIMITATION. -- With respect to each financial
institution, the aggregate amount of losses attributable to
deposits in such financial institution to which an election under
subparagraph (A) may be made by the taxpayer for any taxable year
shall not exceed $20,000 ($10,000) in the case of a separate
return by a married individual). The limitation of the preceding
sentence shall be reduced by the amount of any insurance proceeds
under any State law which can reasonably be expected to be
received with respect to losses on deposits in such institution.
"(6) ELECTION. -- Any election by the taxpayer under this
subsection for any taxable year --
"(A) shall apply to all losses for such taxable year of the
taxpayer on deposits in the institution with respect to which such
election was made, and
"(B) may be revoked only with the consent of the Secretary."
(2) Paragraph (1) of section 905(c) of the Reform Act "26 USC
451 note" is amended to read as follows:
"(1) IN GENERAL. -- The amendment made by subsection (a) shall
apply to taxable years beginning after December 31, 1981, and,
except as provided in paragraph (2), the amendment made by
subsection (b) shall apply to taxable years beginning after
December 31, 1982."
(3) The subsection (f) of section 451 of the 1986 Code which
was added by section 905(b) of the 1986 Reform Act is redesignated
as subsection (g).
(4) If on the date of the enactment of this Act "26 USC 165
note" (or at any time before the date 1 year after such date of
enactment) credit or refund of any overpayment of tax attributable
to amendments made by section 905 of the Reform Act or by this
subsection (or the assessment of any underpayment of tax so
attributable) is barred by any law or rule of law --
(A) credit or refund of any such overpayment may nevertheless
be made if claim therefore is filed before the date 1 year after
such date of enactment, and
(B) assessment of any such underpayment may nevertheless be
made if made before the date 1 year after such date of enactment.
SEC. 1010. AMENDMENTS RELATED TO TITLE X OF THE REFORM ACT.
(a) AMENDMENTS RELATED TO SECTION 1011 OF THE REFORM ACT. --
(1) Paragraph (1) of section 813(a) of the 1986 Code (relating
to foreign life insurance companies) is amended by striking out
"the special life insurance company deduction and".
(2) Paragraph (1) of section 1011(d) of the Reform Act "26 USC
801 note" is amended --
(A) by striking out "any bond" and inserting in lieu thereof
"any market discount bond (as defined in section 1278 of the
Internal Revenue Code of 1986)",
(B) by striking out "28 percent" and inserting in lieu thereof
"31.6 percent", and
(C) by adding at the end thereof the following new sentence:
"The preceding sentence shall apply only if the tax determined
under the preceding sentence is less than the tax which would
otherwise be imposed."
(3) Paragraph (2) of section 1011(d) of the Reform Act is
amended to read as follows:
"(2) QUALIFIED LIFE INSURANCE COMPANY. -- For purposes of
paragraph (1), the term 'qualified life insurance company' means
any life insurance company subject to tax under part I of
subchapter L of chapter 1 of the Internal Revenue Code of 1986."
(b) AMENDMENTS RELATED TO SECTION 1012 OF THE REFORM ACT. --
(1) Clause (iv) of section 1012(c)(4)(C) of the Reform Act "26
USC 833 note" is amended to read as follows:
"(iv) dental benefit coverage provided by a Delta Dental Plans
Association organization through contracts with independent
professional service providers so long as the provision of such
coverage is the principal activity of such organization."
(2) Clause (ii) of section 1012(c)(4)(C) of the Reform Act is
amended by striking out "Association" and inserting in lieu
thereof "Plan".
(3) "26 USC 833 note" The Secretary of the Treasury or his
delegate may prescribe rules providing proper adjustments for
taxpayers which become subject to subchapter L of chapter 1 of the
1986 Code by reason of the amendments made by section 1012 of the
Reform Act with respect to short taxable years which begin during
1987 by reason of section 843 of such Code.
(4)(A) Paragraph (3) of section 501(m) of the 1986 Code is
amended by striking out "and" at the end of subparagraph (C), by
striking out the period at the end of subparagraph (D) and
inserting in lieu thereof ", and", and by adding at the end
thereof the following new subparagraph:
"(E) charitable gift annuities."
(B) Subsection (m) of section 501 of the 1986 Code is amended
by adding at the end thereof the following new paragraph:
"(5) CHARITABLE GIFT ANNUITY. -- For purposes of paragraph
(3)(E), the term 'charitable gift annuity' means an annuity if --
"(A) a portion of the amount paid in connection with the
issuance of the annuity is allowable as a deduction under section
170 or 2055, and
"(B) the annuity is described in section 514(c)(5) (determined
as if any amount paid in cash in connection with such issuance
were property)."
(c) AMENDMENTS RELATED TO SECTION 1021 OF THE REFORM ACT. --
(1)(A) Subparagraph (C) of section 832(b)(7) of the 1986 Code
(relating to special rules for determining premiums earned) is
amended by striking out "this part" and inserting in lieu thereof
"section 831(a)".
(B) The subparagraph heading for such subparagraph is amended
by striking out "NONLIFE INSURANCE COMPANY" and inserting in lieu
thereof "INSURANCE COMPANY TAXABLE UNDER SECTION 831(a)".
(2) Paragraph (7) of section 832(b) of the 1986 Code is amended
by adding at the end thereof the following new subparagraphs:
"(D) TREATMENT OF COMPANIES WHICH BECOME TAXABLE UNDER SECTION
831(a). --
"(i) EXCEPTION TO PHASE-IN FOR COMPANIES WHICH WERE NOT
TAXABLE, ETC., BEFORE 1987. -- Subparagraph (C) of paragraph (4)
shall not apply to any insurance company which, for each taxable
year beginning before January 1, 1987, was not subject to the tax
imposed by section 821(a) or 831(a) (as in effect on the day
before the date of the enactment of the Tax Reform Act of 1986) by
reason of being --
"(I) subject to tax under section 821(c) (as so in effect), or
"(II) described in section 501(c) (as so in effect) and exempt
from tax under section 501(a).
"(ii) PHASE-IN BEGINNING AT LATER DATE FOR COMPANIES NOT 1ST
TAXABLE UNDER SECTION 831(a) IN 1987. -- In the case of an
insurance company --
"(I) which was not subject to the tax imposed by section 831(
a) for its 1st taxable year beginning after December 31, 1986, by
reason of being subject to tax under section 831(b), or described
in section 501(c) and exempt from tax under section 501(a), and
"(II) which, for any taxable year beginning before January 1,
1987, was subject to the tax imposed by section 821(a) or 831(a)
(as in effect on the day before the date of the enactment of the
Tax Reform Act of 1986),
subparagraph (C) of paragraph (4) shall apply beginning with
the 1st taxable year beginning after December 31, 1986, for which
such company is subject to the tax imposed by section 831(a) and
shall be applied by substituting the last day of the preceding
taxable year for 'December 31, 1986' and the 1st day of the 7th
succeeding taxable year for 'January 1, 1993'.
"(E) TREATMENT OF CERTAIN RECIPROCAL INSURERS. -- In the case
of a reciprocal (within the meaning of section 835(a)) which
reports (as required by State law) on its annual statement
reserves on unearned premiums net of premium acquisition expenses
--
"(i) subparagraph (B) of paragraph (4) shall be applied by
treating unearned premiums as including an amount equal to such
expenses, and
"(ii) appropriate adjustments shall be made under subparagraph
(c) of paragraph (4) to reflect the amount by which --
"(I) such reserves at the close of the most recent taxable year
beginning before January 1, 1987, are greater or less than,
"(II) 80 percent of the sum of the amount under subclause (I)
plus such premium acquisition expenses,"
(3) Paragraph (5) of section 832(e) of the 1986 Code is amended
by striking out "and" at the end of subparagraph (A) and by
striking out the period at the end of subparagraph (B) and
inserting in lieu thereof a comma.
(d) AMENDMENTS RELATED TO SECTION 1022 OF THE REFORM ACT. --
(1) Section 832 of the 1986 Code (defining insurance company
taxable income) is amended by adding at the end thereof the
following new subsection:
"(g) DIVIDENDS WITHIN GROUP. -- In the case of an insurance company
subject to tax under section 831(a) filing or required to file a
consolidated return under section 1501 with respect to any affiliated
group for any taxable year, any determination under this part with
respect to any dividend paid by one member of such group to another
member of such group shall be made as if such group were not filing a
consolidated return."
(2) Subclause (II) of section 832(b)(5)(B)(ii) of the 1986 Code
(relating to losses incurred) is amended by inserting "(directly
or indirectly)" after "attributable".
(3) For purposes of section 832(b)(5)(C)(i) of the 1986 Code
"26 USC 832 note" any stock or obligation acquired on or after
August 8, 1986, by an insurance company subject to the tax imposed
by section 831 of the 1986 Code (hereinafter in this paragraph
referred to as the "acquiring company") from another insurance
company so subject (hereinafter in this paragraph referred to as
the "transferor company") shall be treated as acquired on the date
on which such stock or obligation was acquired by the transferor
company if --
(A) the transferor company acquired such stock or obligation
before August 8, 1986, and
(B) at all times after the date on which such stock or
obligation was acquired by the transferor company and before the
date of the acquisition by the acquiring company, the transferor
company and the acquiring company were members of the same
affiliated group filing a consolidated return.
For purposes of the preceding sentence, the date on which the
stock or obligation was acquired by the transferor company shall
be determined with regard to any prior application of the
preceding sentence. For purposes of this paragraph, if the
acquiring corporation or transferor corporation was a party to a
reorganization described in section 368(a)(1)(F) of the 1986 Code,
any reference to such corporation shall include a reference to any
predecessor thereof involved in such reorganization.
(e) AMENDMENTS RELATED TO SECTION 1023 OF THE REFORM ACT. --
(1) Subparagraph (B) of section 846(f)(6) of the 1986 Code
(relating to special rule for certain accident and health
insurance lines of business) is amended by striking out "paid
during the year" and inserting in lieu thereof "paid in the middle
of the year".
(2) Subsection (g) of section 846 of the 1986 Code is amended
by striking out "and" at the end of paragraph (1), by striking out
the period at the end of paragraph (2) and inserting in lieu
thereof ", and", and by adding at the end thereof the following
new paragraph:
"(3) regulations providing appropriate adjustments in the
application of this section to a taxpayer having a taxable year
which is not the calendar year."
(3) Subsection (e) of section 1023 of the Reform Act "26 USC
846 note" (relating to discounting of unpaid losses and certain
unpaid expenses) is amended by adding at the end thereof the
following new paragraph:
"(4) APPLICATION OF FRESH START TO COMPANIES WHICH BECOME
SUBJECT TO SECTION 831(a) TAX IN LATER TAXABLE YEAR. -- If --
"(A) an insurance company was not subject to tax under section
831(a) of the Internal Revenue Code of 1986 for its 1st taxable
year beginning after December 31, 1986, by reason of being --
"(i) subject to tax under section 831(b) of such Code, or
"(ii) described in section 501(c) of such Code and exempt from
tax under section 501(a) of such Code, and
"(B) such company becomes subject to tax under such section
831(a) for any later taxable year,
paragraph (2) and subparagraphs (A) and (C) of paragraph (3)
shall be applied by treating such later taxable year as its 1st
taxable year beginning after December 31, 1986, and by treating
the calendar year in which such later taxable year begins as 1987;
and paragraph (3)(B) shall not apply."
(f) AMENDMENTS RELATED TO SECTION 1024 OF THE REFORM ACT. --
(1) Subparagraph (A) of section 831(b)(2) of the 1986 Code
(relating to companies to which alternative tax applies) is
amended by adding at the end thereof the following new sentence:
"The election under clause (ii) shall apply to the taxable year
for which made and for all subsequent taxable years for which the
requirements of clause (i) are met. Such an election, once made,
may be revoked only with the consent of the Secretary."
(2) Subsection (a) of section 835 of the 1986 Code (relating to
election by reciprocal) is amended by striking out "section
821(a)" and inserting in lieu thereof "section 831(a)".
(3) Subsection (f) of section 835 of the 1986 Code is amended
by striking out "subsection (e)" and inserting in lieu thereof
"subsection (d)".
(4) Paragraph (6) of section 243(b) of the 1986 Code (relating
to special rules for insurance companies) is amended by striking
out "or 821".
(5) Subsection (c) of section 543 of the 1986 Code (relating to
gross income of insurance companies other than life or mutual) is
amended --
(A) by striking out "OR MUTUAL" in the heading and inserting in
lieu thereof "INSURANCE COMPANIES", AND
(B) by striking out "life or mutual" in the text and inserting
in lieu thereof "a life insurance company".
(6) Subsection (g) of section 816 of the 1986 Code (relating to
burial and funeral benefit insurance companies) is amended by
striking out "section 821 or".
(7) The table of sections for part II of subchapter L of
chapter 1 of the 1986 Code (relating to other insurance companies)
is amended by striking out the item relating to section 831 and
inserting in lieu thereof the following new item:
"Sec. 831. Tax on insurance companies other than life
insurance companies."
(8) Paragraph (1) of section 1024(d) of the Reform Act "26 USC
831 note" is amended by adding at the end thereof the following
new sentence: "In the case of a company taxable under section
831(b) of the Internal Revenue Code of 1986 (as amended by
subsection (a)), any amount included in gross income under this
paragraph shall be treated as gross investment income."
(9) Section 831(b) of the 1986 Code is amended by adding at the
end thereof the following new paragraph:
"(3) LIMITATION ON USE OF NET OPERATING LOSSES. -- For
purposes of this part, except as provided in section 844, a net
operating loss (as defined in section 172) shall not be carried --
"(A) to or from any taxable year for which the insurance
company is not subject to the tax imposed by subsection (a), or
"(B) to any taxable year if, between the taxable year from
which such loss is being carried and such taxable year, there is
an intervening taxable year for which the insurance company was
not subject to the tax imposed by subsection (a)".
(g) AMENDMENTS RELATED TO SECTION 1031 OF THE REFORM ACT. --
(1) Paragraph (1) of section 1031(a) of the Reform Act "26 USC
832 note" is amended by inserting "(whether made in a lump sum or
a series of substantially equal payments over a period of not more
than 6 years)" after "any initial payment".
(2) Paragraph (2) of section 1031(a) of the Reform Act is
amended by striking out "initial payment" each place it appears
and inserting in lieu thereof "initial payment referred to in
paragraph (1)".
(3) Paragraph (2) of section 1031(a) of the Reform Act is
amended by striking out "this title" each place it appears and
inserting in lieu thereof "the Internal Revenue Code of 1986".
(h) SPECIAL RULE FOR MUTUAL LIFE INSURANCE COMPANY. --
(1) IN GENERAL. -- Paragraph (2) of section 217(i) of the Tax
Reform Act "26 USC 816 note" of 1984 is amended to read as
follows:
"(2) EFFECT OF ELECTION ON SUBSIDIARIES OF ELECTING PARENT. --
For purposes of determining the amount of the small life insurance
company deduction of any controlled group which includes a mutual
company which made an election under paragraph (1), the taxable
income of such electing company shall be taken into account under
section 806(b)(2) of the Internal Revenue Code of 1954 (relating
to phaseout of small life insurance company deduction)."
(2) EFFECTIVE DATE. -- The amendment made by this subsection
"26 USC 816 note" shall apply to taxable years beginning after
December 31, 1986, and before January 1, 1992.
(3) REVENUE LOSS LIMITED. -- "26 USC 816 note" The decrease in
the amount of Federal revenue by reason of the amendment made by
this subsection shall not exceed $300,000 per taxable year.
(i) "26 USC 817 note" DELAY IN EFFECTIVE DATE FOR DIVERSIFICATION
REQUIREMENTS WITH RESPECT TO ACCOUNTS FOR CERTAIN IMMEDIATE ANNUITIES.
-- Section 817(h) of the 1986 Code shall not apply until January 1, 1989
with respect to a variable contract (as defined in section 817(d) of the
1986 Code) if --
(1) such contract provides for the payment of an immediate
annuity (as defined in section 72(u)(4) of the 1986 Code),
(2) such contract was outstanding on September 12, 1986, and
(3) the segregated asset account on which such contract is
based was, on September 12, 1986, wholly invested in deposits
insured by the Federal Deposit Insurance Corporation or the
Federal Savings and Loan Insurance Corporation.
(j) TREATMENT OF ALTERNATIVE MINIMUM TAX WITH RESPECT TO SHAREHOLDERS
SURPLUS ACCOUNT. --
(1) Paragraph (2) of section 815(c) of the 1986 Code (relating
to shareholder surplus account) is amended by adding at the end
thereof the following new sentence:
"If for any taxable year a tax is imposed by section 55, under
regulations proper adjustments shall be made for such year and all
subsequent taxable years in the amounts taken into account under
subparagraphs (A) and (B) of this paragraph and subparagraph (B)
of subsection (d)(3)."
(2) EFFECTIVE DATE. -- The amendment made by paragraph (1) "26
USC 815 note" shall apply to taxable years beginning after
December 31, 1986.
(k) TREATMENT OF CERTAIN ITEMS AS NOT INTEREST FOR SOURCE RULES, ETC.
-- Subsection (f) of section 818 of the 1986 Code is amended by adding
at the end thereof the following new paragraph:
"(3) ITEMS DESCRIBED IN SECTION 807(c) TREATED AS NOT INTEREST
FOR SOURCE RULES, ETC. -- For purposes of part I of subchapter N,
items described in any paragraph of section 807(c) shall be
treated as amounts which are not interest."
SEC. 1011. AMENDMENTS RELATED TO PARTS I AND II OF SUBTITLE A OF
TITLE XI OF THE REFORM ACT.
(a) AMENDMENT RELATED TO SECTION 1011 OF THE REFORM ACT. --
(1) Paragraph (4) of section 219(g) of the 1986 Code (relating
to special rule for married individuals filing separately) is
amended to read as follows:
"(4) SPECIAL RULE FOR MARRIED INDIVIDUALS FILING SEPARATELY AND
LIVING APART. -- A husband and wife who --
"(A) file separate returns for any taxable year, and
"(B) live apart at all times during such taxable year, shall
not be treated as married individuals for purposes of this
subsection.
(2)(A) Except as provided in subparagraph (B), "26 USC 219
note" the amendment made by paragraph (1) shall apply to taxable
years beginning after December 31, 1987.
(B) A taxpayer may elect to have the amendment made by
paragraph (1) apply to any taxable year beginning in 1987.
(b) AMENDMENTS RELATED TO SECTION 1102 OF THE REFORM ACT. --
(1) Sections 408(d)(2)(C) and 408(o)(4)(B)(iv) of the 1986 Code
are each amended by striking out "with or within which the taxable
year ends" and inserting in lieu thereof "in which the taxable
year begins".
(2)(A) Section 408(d)(4) of the 1986 Code (relating to excess
contributions returned before due date of return) is amended by
striking out "to the extent that such contribution exceeds the
amount allowable as a deduction under section 219".
(B) Section 408(d)(4) of the 1986 Code is amended --
(i) by striking out "excess" each place it appears, and
(ii) by striking out "EXCESS CONTRIBUTIONS" in the heading and
inserting in lieu thereof "CONTRIBUTIONS".
(3) Section 408(d)(5) and 4973(b) of the 1986 Code are each
amended by striking out all that follows "section 219" in the last
sentence thereof and inserting in lieu thereof "shall be computed
without regard to section 219(g).".
(4)(A) Section 6693(b) of the 1986 Code (relating to
overstatement of designated nondeductible contributions) is
amended to read as follows:
"(b) PENALTIES RELATING TO NONDEDUCTIBLE CONTRIBUTIONS. --
"(1) OVERSTATEMENT OF DESIGNATED NONDEDUCTIBLE CONTRIBUTIONS --
Any individual who --
"(A) is required to furnish information under section 408(o)(
4) as to the amount of designated nondeductible contributions made
for any taxable year, and
"(B) overstates the amount of such contributions made for such
taxable year,
shall pay a penalty of $100 for each such overstatement unless
it is shown that such overstatement is due to reasonable cause.
"(2) FAILURE TO FILE FORM. -- Any individual who fails to file
a form required to be filed by the Secretary under section
408(o)(4) shall pay a penalty of $50 for each such failure unless
it is shown that such failure is due to reasonable cause."
(B)(i) The heading for section 6693 of the 1986 Code is amended
by striking out "overstatement of" and inserting in lieu thereof
"penalties relating to".
(ii) The item relating to section 6693 in the table of sections
for subchapter B of chapter 68 is amended by striking out
"overstatement of" and inserting in lieu thereof "penalties
relating to".
(c) AMENDMENTS RELATED TO SECTION 1105 OF THE REFORM ACT. --
(1) Section 402(g)(2)(C) of the 1986 Code (relating to taxation
of distribution) is amended --
(A) by striking out "(and no tax shall be imposed under section
72(t))" in clause (i).
(B) by striking out "such excess deferral is made" in clause
(ii) and inserting in lieu thereof "such income is distributed",
and
(C) by inserting at the end thereof the following new flush
sentence:
"No tax shall be imposed under section 72(t) on any
distribution described in the preceding sentence."
(2) Section 402(g)(2) is amended by striking out "REQUIRED
DISTRIBUTION" in the heading thereof and inserting in lieu thereof
"DISTRIBUTION".
(3) Section 402(g)(2) of the 1986 Code is amended by adding at
the end thereof the following new subparagraph:
"(D) PARTIAL DISTRIBUTIONS. -- If a plan distributes only a
portion of any excess deferral and income allocable thereto, such
portion shall be treated as having been distributed ratably from
the excess deferral and the income."
(4) Section 402(g)(3) of the 1986 Code (defining elective
deferral) is amended by striking out "paragraph" and inserting in
lieu thereof "subsection".
(5)(A) Clause (iii) of section 402(g)(8)(A) of the 1986 Code
(relating to special rule for certain organizations) is amended by
inserting "(determined in the manner prescribed by the Secretary")
after "taxable years".
(B) Section 402(g)(8) of the 1986 Code is amended by adding at
the end thereof the following new subparagraph:
"(D) YEARS OF SERVICE. -- For purposes of this paragraph, the
term 'years of service' has the meaning given such term by section
403(b)."
(6)(A) Section 402(g) of the 1986 Code, as added by section
1852(b)(3)(A) of the Reform Act, is redesignated as subsection
(i).
(B) Section 402(g) of the 1986 Code, as added by section 1854(
f)(2) of the Reform Act, is redesignated as subsection (j).
(C) Section 1854(f)(4)(C) of the Reform Act "26 USC 402 note"
is amended by striking out "section 402(g)" and inserting in lieu
thereof "section 402(j)".
(7)(A) Section 401(a) of the 1986 Code is amended by adding at
the end thereof the following new paragraph:
"(30) LIMITATION ON ELECTIVE DEFERRALS. -- In the case of a
trust which is part of a plan under which elective deferrals
(within the meaning of section 402(g)(3)) may be made with respect
to any individual during a calendar year, such trust shall not
constitute a qualified trust under this subsection unless the plan
provides that the amount of such deferrals under such plan and all
other plans, contracts, or arrangements of an employer maintaining
such plan may not exceed the amount of the limitation in effect
under section 402(g)(1) for taxable years beginning in such
calendar year."
(B) Section 403(b)(1) of the 1986 Code is amended by striking
out "and" at the end of subparagraph (C), by inserting "and" at
the end of subparagraph (D), and by inserting after subparagraph
(D) the following new subparagraph:
"(E) in the case of a contract purchased under a plan which
provides a salary reduction agreement, the plan meets the
requirements of section 401(a)(30),".
(C) Subparagraph (A) of section 408(k)(6) of the 1986 Code, as
amended by subsection (f)(1), is amended by adding at the end
thereof the following new clause:
"(iv) LIMITATIONS ON ELECTIVE DEFERRALS. -- Clause (i) shall
not apply to a simplified employee pension unless the requirements
of section 401(a)(30) are met."
(D) Subparagraph (D) of section 501(c)(18) of the 1986 Code is
amended by striking out "and" at the end of clause (ii), by
striking out the period at the end of clause (iii) and inserting
in lieu thereof ", and", and by inserting after clause (iii) the
following new clause:
"(iv) the requirements of section 401(a)(30) are met."
(E)(i) Except as provided in clause (ii), "26 USC 401 note" the
amendments made by this paragraph shall apply to plan years
beginning after December 31, 1987.
(ii) In the case of a plan described in section 1105(c)(2) of
the Reform Act, the amendments made by this paragraph shall not
apply to contributions made pursuant to an agreement described in
such section for plan years beginning before the earlier of --
(I) the later of January 1, 1988, or the date on which the last
of such agreements terminates (determined without regard to any
extension thereof after February 28, 1986), or
(II) January 1, 1989.
(8) Section 1105(c)(2)(A) of the Reform Act "26 USC 402 note"
is amended by striking out "the last of such collective bargaining
agreements" and inserting in lieu thereof "such agreement".
(9) Section 1105(c) of the Reform Act is amended by adding at
the end thereof the following new paragraph:
"(6) REPORTING REQUIREMENTS. -- The amendments made by
subsection (b) shall apply to calendar years beginning after
December 31, 1986."
(10) "26 USC 402 note" Notwithstanding any other provision of
law, a plan may incorporate by reference the dollar limitations
under section 402(g) of the Internal Revenue Code of 1986.
(11) Section 402(g)(3) of the 1986 Code is amended by inserting
at the end thereof the following new sentence: "An employer
contribution shall not be treated as an elective deferral
described in subparagraph (C) if under the salary reduction
agreement such contribution is made pursuant to a one-time
irrevocable election made by the employee at the time of initial
eligibility to participate in the agreement or is made pursuant to
a similar arrangement specified in regulations."
(12) Subparagraph (A) of section 402(b)(12) of the 1986 Code is
amended by inserting after clause (ii) the following new sentence:
"For purposes of clause (i), a contribution shall be treated as
not made pursuant to a salary reduction agreement if under the
agreement it is made pursuant to a 1-time irrevocable election
made by the employee at the time of initial eligibility to
participate in the agreement or is made pursuant to a similar
arrangement specified in regulations."
(d) AMENDMENTS RELATED TO SECTION 1106 OF THE REFORM ACT. --
(1) Section 404(l) of the 1986 Code (relating to limitation on
amount of compensation which may be taken into account) is amended
by adding at the end thereof, the following new sentence: "For
purposes of clause (i), (ii), or (iii) of subsection (a)(1)( A),
and in computing the full funding limitation, any adjustment under
the preceding sentence shall not be taken into account for any
year before the year for which such adjustment first takes
effect.".
(2) Section 415(b)(5)(D) of the 1986 Code (relating to
application to changes in benefit structures) is amended by
striking out "this paragraph" and inserting in lieu thereof
"subparagraph (A)".
(3) Paragraph (2) of section 415(k) of the 1986 Code (relating
to contributions to provide cost-of-living protection under
defined benefit plans), as added by section 1106(c) of the Reform
Act, is amended --
(A) by striking out "to the arrangement" in subparagraph (C)(
ii) and inserting in lieu thereof "to such increase", and
(B) by striking out subparagraph (D) and inserting in lieu
thereof:
"(D) ARRANGEMENT ELECTIVE; TIME FOR ELECTION. -- An
arrangement meets the requirements of this subparagraph only if it
is elective, it is available under the same terms to all
participants, and it provides that such election may at least be
made in the year in which the participant --
"(i) attains the earliest retirement age under the defined
benefit plan (determined without regard to any requirement of
separation from service), or
"(ii) separates from service."
(4) Sections 401(a)(17) and 404(l) of the 1986 Code are each
amended by adding at the end thereof the following new sentence:
"In determining the compensation of an employee, the rules of
section 414(q)(6) shall apply, except that in applying such rules,
the term 'family' shall include only the spouse of the employee
and any lineal descendants of the employee who have not attained
age 19 before the close of the year."
(5) Paragraph (4) of section 1106(i) of the Reform Act "26 USC
415 note" is amended by striking the period at the end thereof and
inserting in lieu thereof "(determined as if the amendments made
by this section were in effect for such year).".
(6) Section 415(b)(5)(B) of the 1986 Code is amended by
inserting "and subsection (e)" after "paragraphs (1)(B) and (4)".
(7) Subparagraph (A) of section 415(c)(6) of the 1986 Code is
amended --
(A) by striking out "paragraph (c)(1)(A) (as adjusted for such
year pursuant to subsection (d)(1))", and inserting in lieu
thereof "paragraph (1)(A)"; and
(B) by striking out "paragraph (c)(1)(A) (as so adjusted)" and
inserting in lieu thereof "paragraph (1)(A)".
(8) Sections 414(q)(1)(D) and 416(i)(1)(A)(i) of the 1986 Code
are each amended by striking out "150 percent of the amount in
effect under section 415(c)(1)(A)" and inserting in lieu thereof
"50 percent of the amount in effect under section 415(b)(1)(A)".
(e) AMENDMENTS RELATED TO SECTION 1107 OF THE REFORM ACT. --
(1) Section 457(c)(2) of the 1986 Code is amended by striking
out "and paragraphs (2) and (3) of subsection (b)".
(2) Section 457(d)(1)(A) of the 1986 Code (relating to
distribution requirements) is amended to read as follows:
"(A) under the plan amounts will not be made available to
participants or beneficiaries earlier than --
"(i) the calendar year in which the participant attains age 70
1/2,
"(ii) when the participant is separated from service with the
employer, or
"(iii) when the participant is faced with an unforeseeable
emergency (determined in the manner prescribed by the Secretary in
regulations)."
(3) Paragraph (7) of section 401(k) of the 1986 Code (defining
rural electric cooperative plan) is amended to read as follows:
"(7) RURAL ELECTRIC COOPERATIVE PLAN. -- For purposes of this
subsection --
"(A) IN GENERAL. -- The term 'rural electric cooperative plan'
means any pension plan --
"(i) which is a defined contribution plan (as defined in
section 414(i)), and
"(ii) which is established and maintained by a rural electric
cooperative.
"(B) RURAL ELECTRIC COOPERATIVE DEFINED. -- For purposes of
subparagraph (A), the term 'rural electric cooperative' means --
"(i) any organization which --
"(I) is exempt from tax under this subtitle or which is a State
or local government or political subdivision thereof (or agency or
instrumentality thereof), and
"(II) is engaged primarily in providing electric service on a
mutual or cooperative basis,
"(ii) any organization described in paragraph (4) or (6) of
section 501(c) and at least 80 percent of the members of which are
organizations described in clause (i), and
"(iii) an organization which is a national association of
organizations described in clause (i) or (ii)."
(4) Section 414(o) of the 1986 Code is amended by inserting "or
any requirement under section 457" after "(n)(3)".
(5)(A) Paragraph (6) of section 818(a) of the 1986 Code
(defining pension plan contracts) is amended --
(i) by striking out "State" in subparagraph (A),
(ii) by inserting "or any organization (other than a
governmental unit) exempt from tax under this subtitle," after
"foregoing," in subparagraph (B),
(iii) by striking out "or" before "agency" in subparagraph (B),
and
(iv) by inserting ", or organization" after "instrumentality"
the second place it appears in subparagraph (B).
(B) The amendments made by this paragraph "26 USC 818 note"
shall apply to contracts issued after December 31, 1986.
(6) Section 1107(c)(3) of the Reform Act "26 USC 457 note" is
amended --
(A) by striking out "eligible" each place it appears, and
(B) by inserting at the end of subparagraph (B) the following
new sentence: "This subparagraph shall only apply to individuals
who were covered under the plan and agreement on August 16, 1986."
(7) Paragraph (5) of section 1107(c) of the Reform Act is
amended --
(A) by striking out "to employees on August 1, 1986, of",
(B) by striking out "a deferred compensation plan" in
subparagraph (A) and inserting in lieu thereof "to employees on
August 16, 1986,",
(C) by inserting "maintaining a deferred compensation plan"
after "Alabama" in subparagraph (A), and
(D) by striking out "a deferred compensation plan" in
subparagraph (B) and inserting in lieu thereof "to individuals
eligible to participate on August 16, 1986, in a deferred
compensation plan".
(8) Section 3121(v)(3)(A) of the 1986 Code is amended by
striking out "457(e)(1)" and inserting in lieu thereof "457(f)(
1)".
(9) Effective for years beginning after December 31, 1988,
paragraph (9) of section 457(e) of the 1986 Code is amended by
inserting "after separation from service and" before "within 60
days".
(10) Subclause (I) of section 457(d)(2)(B)(i) of the 1986 Code
is amended to read as follows:
"(I) the amounts payable with respect to the participant will
be paid at times specified by the Secretary which are not later
than the time determined under section 401(a)(9)(G) (relating to
incidental death benefits),".
(f) AMENDMENTS RELATED TO SECTION 1108 OF THE REFORM ACT. --
(1) Subparagraph (A) of section 408(k)(6) of the 1986 Code
(relating to salary reduction arrangements under simplified
employee pensions) is amended to read as follows:
"(A) ARRANGEMENTS WHICH QUALIFY. --
"(i) IN GENERAL. -- A simplified employee pension shall not
fail to meet the requirements of this subsection for a year merely
because, under the terms of the pension, an employee may elect to
have the employer make payments --
"(I) as elective employer contributions to the simplified
employee pension on behalf of the employee, or
"(II) to the employee directly in cash.
"(ii) 50 PERCENT OF ELIGIBLE EMPLOYEES MUST ELECT. -- Clause
(i) shall not apply to a simplified employee pension unless an
election described in clause (i)(I) is made or is in effect with
respect to not less than 50 percent of the employees of the
employer eligible to participate.
"(iii) REQUIREMENTS RELATING TO DEFERRAL PERCENTAGE. -- Clause
(i) shall not apply to a simplified employee pension for any year
unless the deferral percentage for such year of each highly
compensated employee eligible to participate is not more than the
product of --
"(I) the average of the deferral percentages for such year of
all employees (other than highly compensated employees) eligible
to participate, multiplied by
"(II) 1.25."
(2) Section 408(k)(6)(B) of the 1986 Code (relating to
exception where more than 25 employees) is amended by inserting
"who were eligible to participate (or would have been required to
be eligible to participate if a pension was maintained)" after "25
employees".
(3)(A) Section 408(k)(6)(D)(ii) of the 1986 Code (defining
deferral percentage) is amended by striking out "(within the
meaning of section 414(s))" and inserting in lieu thereof "(not in
excess of the first $200,000)".
(B) Subparagraph (B) of section 408(k)(7) of the 1986 Code
(defining compensation) is amended to read as follows:
"(B) COMPENSATION. -- Except as provided in paragraph (2)(C),
the term 'compensation' has the meaning given such term by section
414(s)."
(C) Subparagraph (C) of section 408(k)(3) of the 1986 Code is
amended by striking out "total" before "compensation".
(D) Section 408(k)(8) of the 1986 Code is amended by striking
out "paragraph (3)(C)" and inserting in lieu thereof "paragraphs
(3)(C) and (6)(D)(ii)".
(4) Section 408(k)(6) of the 1986 Code (relating to employee
may elect salary reduction arrangement) is amended by
redesignating subparagraph (F) as subparagraph (G) and by
inserting after subparagraph (E) the following new subparagraph:
"(F) EXCEPTION WHERE PENSION DOES NOT MEET REQUIREMENTS
NECESSARY TO INSURE DISTRIBUTION OF EXCESS CONTRIBUTIONS. -- This
paragraph shall not apply with respect to any year for which the
simplified employee pension does not meet such requirements as the
Secretary may prescribe as are necessary to insure that excess
contributions are distributed in accordance with subparagraph (C),
including --
"(i) reporting requirements, and
"(ii) requirements which, notwithstanding paragraph (4),
provide that contributions (and any income allocable thereto) may
not be withdrawn from a simplified employee pension until a
determination has been made that the requirements of subparagraph
(A)(iii) have been met with respect to such contributions."
(5) Section 408(d) of the 1986 Code (relating to tax treatment
of distributions) is amended by adding at the end thereof the
following new paragraph:
"(7) SPECIAL RULES FOR SIMPLIFIED EMPLOYEE PENSIONS. --
"(A) TRANSFER OR ROLLOVER OF CONTRIBUTIONS PROHIBITED UNTIL
DEFERRAL TEST MET. -- Notwithstanding any other provision of this
subsection or section 72(t), paragraph (1) and section 72( t)(1)
shall apply to the transfer or distribution from a simplified
employee pension of any contribution under a salary reduction
arrangement described in subsection (k)(6) (or any income
allocable thereto) before a determination as to whether the
requirements of subsection (k)(6)(A)(iii) are met with respect to
such contribution.
"(B) CERTAIN EXCLUSIONS TREATED AS DEDUCTIONS. -- For purposes
of paragraphs (4) and (5) and section 4973, any amount excludable
or excluded from gross income under section 402(h) shall be
treated as an amount allowable or allowed as a deduction under
section 219."
(6) Subparagraph (C) of section 404(h)(1) of the 1986 Code is
amended by inserting "(or during the taxable year in the case of a
taxable year described in subparagraph (A)(ii))" after "taxable
year" the second place it appears.
(7) Section 1108(h) of the Reform Act "26 USC 219 note" is
amended to read as follows:
"(h) EFFECTIVE DATES. --
"(1) IN GENERAL. -- Except as provided in paragraph (2), the
amendments made by this section shall apply to years beginning
after December 31, 1986.
"(2) INTEGRATION RULES. -- Subparagraphs (D) and (E) of
section 408(k)(3) of the Internal Revenue Code of 1954 (as in
effect before the amendments made by this section) shall continue
to apply for years beginning after December 31, 1986, and before
January 1, 1989, except that employer contributions under an
arrangement under section 408(k)(6) of the Internal Revenue Code
of 1986 (as added by this section) may not be integrated under
such subparagraphs."
(8) Section 209(e)(8) of the Social Security Act "42 USC 409"
is amended to read as follows:
"(8) under a simplified employee pension (as defined in section
408(k)(1) of such Code), other than any contributions described in
section 408(k)(6) of such Code,".
(9) Section 3401(a)(12)(C) of the 1986 Code is amended --
(A) by striking out "section 219" and inserting in lieu thereof
"section 402(h)(1) and (2)", and
(B) by striking out "a deduction" and inserting in lieu thereof
"an exclusion".
(10) Section 408(k)(8) of the 1986 Code is amended by inserting
", except that in the case of years beginning after 1988, the
$200,000 amount (as so adjusted) shall not exceed the amount in
effect under section 401(a)(17)" after "section 415( d)".
(g) AMENDMENTS RELATED TO SECTION 1111 OF THE REFORM ACT. --
(1)(A) Section 401(l)(2)(B) of the 1986 Code (defining
contribution percentages) is amended by inserting "by the
employer" after "contributed" each place it appears.
(B) Clause (ii) of section 401(l)(3)(A) of the 1986 Code is
amended by inserting "attributable to employer contributions"
after "benefits".
(2) Section 401(l)(5)(C) of the 1986 Code (defining average
annual compensation) is amended to read as follows:
"(C) AVERAGE ANNUAL COMPENSATION. -- The term 'average annual
compensation' means the participant's highest average annual
compensation for --
"(i) any period of at least 3 consecutive years, or
"(ii) if shorter, the participant's full period of service."
(3) Section 401(l)(5)(E) of the 1986 Code (defining covered
compensation) is amended --
(A) by striking out "age 65" each place it appears and
inserting in lieu thereof "the social security retirement age",
and
(B) by adding at the end thereof the following new clause:
"(iii) SOCIAL SECURITY RETIREMENT AGE. -- For purposes of this
subparagraph, the term 'social security retirement age' has the
meaning given such term by section 415(b)(8)."
(4) Section 1111(c)(3) of the Reform Act "26 USC 401 note" is
amended by striking out "benefits pursuant to, and individuals
covered by, any such agreement in ".
(h) AMENDMENTS RELATED TO SECTION 1112 OF THE REFORM ACT. --
(1) Section 410(b)(4)(B) of the 1986 Code (relating to
exclusion of employees not meeting age and service requirements)
is amended --
(A) by striking out "do not meet" and inserting in lieu thereof
"not meeting", and
(B) by striking out "and".
(2) Section 410(b)(6) of the 1986 Code (relating to definitions
and special rules) is amended by redesignating subparagraph (F) as
subparagraph (G) and by adding after subparagraph (E) the
following new subparagraph:
"(F) EMPLOYERS WITH ONLY HIGHLY COMPENSATED EMPLOYEES. -- A
plan maintained by an employer which has no employees other than
highly compensated employees for any year shall be treated as
meeting the requirements of this subsection for such year."
(3) Section 401(a)(26) of the 1986 Code (relating to additional
participation requirements) is amended by redesignating
subparagraph (F) as subparagraph (H) and by adding after
subparagraph (E) the following new subparagraphs:
"(F) SPECIAL RULE FOR CERTAIN DISPOSITIONS OR ACQUISITIONS. --
Rules similar to the rules of section 410(b)(6)(C) shall apply for
purposes of this paragraph.
"(G) SEPARATE LINES OF BUSINESS. -- At the election of the
employer and with the consent of the Secretary, this paragraph may
be applied separately with respect to each separate line of
business of the employer. For purposes of this paragraph, the
term 'separate line of business' has the meaning given such term
by section 414(r) (without regard to paragraph (7) thereof)."
(4) Section 402(b)(2) of the 1986 Code (relating to failure to
meet requirements of section 410(b)) is amended by striking out
subparagraphs (A) and (B) and inserting in lieu thereof the
following:
"(A) HIGHLY COMPENSATED EMPLOYEES. -- If 1 of the reasons a
trust is not exempt from tax under section 501(a) is the failure
of the plan of which it is a part to meet the requirements of
section 401(a)(26) or 410(b), then a highly compensted employee
shall, in lieu of the amount determined under paragraph (1),
include in gross income for the taxable year with or within which
the taxable year of the trust ends an amount equal to the vested
accrued benefit of such employee (other than the employee's
investment in the contract) as of the close of such taxable year
of the trust.
"(B) FAILURE TO MEET COVERAGE TESTS. -- If a trust is not
exempt from tax under section 501(a) for any taxable year solely
because such trust is part of a plan which fails to meet the
requirements of section 401(a)(26) or 410(b), paragraph (1) shall
not apply by reason of such failure to any employee who was not a
highly compensated employee during --
"(i) such taxable year, or
"(ii) any preceding period for which service was creditable to
such employee under the plan."
(5) Subsections (m)(4)(A) and (n)(3)(A) of section 414 of the
1986 Code are each amended by striking out "and (16)" and
inserting in lieu thereof "(16), (17), and (26)".
(6) Clause (iii) of section 1112(e)(3)(A) of the Reform Act "26
USC 401 note" is amended by striking out "a plan or merger" and
inserting in lieu thereof "the plan".
(7) Section 1112(e)(2) of the Reform Act is amended by striking
out "employees covered by such agreement in".
(8) Subsection (e) of section 1112 of the Reform Act is amended
by striking out paragraph (3)(C) and by adding at the end of such
subsection the following new paragraph:
"(4) SPECIAL RULE FOR PLANS WHICH MAY NOT TERMINATE. -- To the
extent provided in regulations prescribed by the Secretary of the
Treasury or his delegate, if a plan is prohibited from terminating
under title IV of the Employee Retirement Income Security Act of
1974 before the 1st year to which the amendment made by subsection
(b) would apply, the amendment made by subsection (b) shall only
apply to years after the 1st year in which the plan is able to
terminate."
(9) Subparagraph (B) of section 1112(e)(3) of the Reform Act is
amended to read as follows:
"(B) INTEREST RATE FOR DETERMINING ACCRUED BENEFIT OF HIGHLY
COMPENSATED EMPLOYEES FOR CERTAIN PURPOSES. -- In the case of a
termination, transfer, or distribution of assets of a plan
described in subparagraph (A)(ii) before the 1st year to which the
amendment made by subsection (b) applies --
"(i) AMOUNT ELIGIBLE FOR ROLLOVER, INCOME AVERAGING, OR
TAX-FREE TRANSFER. -- For purposes of determining any eligible
amount, the present value of the accrued benefit of any highly
compensated employee shall be determined by using an interest rate
not less than the highest of --
"(I) the applicable rate under the plan's method in effect
under the plan on August 16, 1986,
"(II) the highest rate (as of the date of the termination,
transfer, or distribution) determined under any of the methods
applicable under the plan at any time after August 16, 1986, and
before the termination, transfer, or distribution in calculating
the present value of the accrued benefit of an employee who is not
a highly compensated employee under the plan (or any other plan
used in determining whether the plan meets the requirements of
section 401 of the Internal Revenue Code of 1986), or
"(III) 5 percent.
"(ii) ELIGIBLE AMOUNT. -- For purposes of clause (i), the term
'eligible amount' means any amount with respect to a highly
compensated employee which --
"(I) may be rolled over under section 402(a)(5) of such Code,
"(II) is eligible for income averaging under section 402(e)(1)
of such Code, or capital gains treatment under section 402(a)(2)
or 403(a)(2) of such Code (as in effect before this Act), or
"(III) may be transferred to another plan without inclusion in
gross income.
"(iii) AMOUNTS SUBJECT TO EARLY WITHDRAWAL OR EXCESS
DISTRIBUTION TAX. -- For purposes of sections 72(t) and 4980A of
such Code, there shall not be taken into account the excess (if
any) of --
"(I) the amount distributed to a highly compensated employee by
reason of such termination or distribution, over
"(II) the amount determined by using the interest rate
applicable under clause (i).
"(iv) DISTRIBUTIONS OF ANNUITY CONTRACTS. -- If an annuity
contract purchased after August 16, 1986, is distributed to a
highly compensated employee in connection with such termination or
distribution, there shall be included in gross income for the
taxable year of such distribution an amount equal to the excess of
--
"(I) the purchase price of such contract, over
"(II) the present value of the benefits payable under such
contract determined by using the interest rate applicable under
clause (i).
Such excess shall not be taken into account for purposes of
sections 72(t) and 4980A of such Code.
"(v) HIGHLY COMPENSATED EMPLOYEE. -- For purposes of this
subparagraph, the term 'highly compensated employee' has the
meaning given such term by section 414(q) of such Code."
(10) Section 413(b) of the 1986 Code is amended by adding at
the end thereof the following new paragraph:
"(9) PLANS COVERING A PROFESSIONAL EMPLOYEE. -- Notwithstanding
subsection (a), in the case of a plan (and trust forming part
thereof) which covers any professional employee, paragraph (1)
shall be applied by substituting 'section 410(a)' for 'section
410', and paragraph (2) shall not apply."
(11) Section 410(b)(4) of the 1986 Code is amended by adding at
the end thereof the following new subparagraph:
"(C) REQUIREMENTS NOT TREATED AS BEING MET BEFORE ENTRY DATE.
-- An employee shall not be treated as meeting the age and service
requirements described in this paragraph until the first date on
which, under the plan, any employee with the same age and service
would be eligible to commence participation in the plan."
(i) AMENDMENTS RELATED TO SECTION 1114 OF THE REFORM ACT. --
(1) Paragraph (1) of section 414(q) of the 1986 Code (defining
highly compensated employee) is amended by adding at the end
thereof the following new flush sentence:
"The Secretary shall adjust the $75,000 and $50,000 amounts
under this paragraph at the same time and in the same manner as
under section 415(d)."
(2) Section 414(q)(6) of the 1986 Code is amended by adding at
the end thereof the following new subparagraph:
"(C) RULES TO APPLY TO OTHER PROVISIONS. --
"(i) IN GENERAL. -- Except as provided in regulations and in
clause (ii), the rules of subparagraph (A) shall be applied in
determining the compensation of (or any contributions or benefits
on behalf of) any employee for purposes of any section with
respect to which a highly compensated employee is defined by
reference to this subsection.
"(ii) EXCEPTION FOR DETERMINING INTEGRATION LEVELS. -- Clause
(i) shall not apply in determining the portion of the compensation
of a participant which is under the integration level for purposes
of section 401(l)."
(3)(A) Section 414(q)(8) of the 1986 Code (relating to excluded
employees) is amended --
(i) by inserting "and" at the end of subparagraph (D), by
striking ", and" at the end of subparagraph (E) and inserting in
lieu thereof a period, and by striking out subparagraph (F), and
(ii) by striking out "The" in the last sentence thereof and
inserting in lieu thereof "Except as provided by the Secretary,
the".
(B) Section 414(q) of the 1986 Code is amended by adding at the
end thereof the following new paragraph:
"(11) SPECIAL RULE FOR NONRESIDENT ALIENS. -- For purposes of
this subsection and subsection (r), employees who are nonresident
aliens and who receive no earned income (within the meaning of
section 911(d)(2)) from the employer which constitutes income from
sources within the United States (within the meaning of section
861(a)(3)) shall not be treated as employees."
(4)(A) Paragraph (8) of section 414(q) of the 1986 Code is
amended by inserting "or the number of officers taken into account
under paragraph (5)" after "paragraph (4)".
(B) Section 416(i)(1)(A) of the 1986 Code is amended by adding
at the end thereof the following new sentence: "For purposes of
determining the number of officers taken into account under clause
(i), employees described in section 414(q)(8) shall be excluded."
(5) Subparagraph (B) of section 408(k)(3) of the 1986 Code is
amended to read as follows:
"(B) SPECIAL RULES. -- For purposes of subparagraph (A), there
shall be excluded from consideration employees described in
subparagraph (A) or (C) of section 410(b)(3)."
(j) AMENDMENTS RELATED TO SECTION 1115 OF THE REFORM ACT. --
(1) So much of section 414(s) of the 1986 Code as precedes
paragraph (2) is amended to read as follows:
"(s) COMPENSATION. -- For purposes of any applicable provision --
"(1) IN GENERAL. -- Except as provided in this subsection, the
term 'compensation' has the meaning given such term by section
415(c)(3)."
(2) Section 414(s) of the 1986 Code is amended by striking out
paragraph (2), by redesignating paragraphs (3) and (4) as
paragraphs (2) and (3), respectively, and by adding at the end
thereof the following new paragraph:
"(4) APPLICABLE PROVISION. -- For purposes of this subsection,
the term 'applicable provision' means any provision which
specifically refers to this subsection."
(3)(A) Section 416(i)(1) of the 1986 Code (defining key
employee) is amended by adding at the end thereof the following
new subparagraph:
"(D) COMPENSATION. -- For purposes of this paragraph, the term
'compensation' has the meaning given such term by section
414(q)(7)."
(B) The amendment made by this paragraph "26 USC 416 note"
shall apply to years beginning after December 31, 1988.
(k) AMENDMENTS RELATED TO SECTION 1116 OF THE REFORM ACT. --
(1)(A) Subparagraph (B) of section 401(k)(2) of the 1986 Code
(relating to distributions from a cash or deferred arrangement) is
amended --
(i) by striking out subclauses (II), (III), and (IV) of clause
(i) and inserting in lieu thereof:
"(II) an event described in paragraph (10),", and
(ii) by redesignating subclauses (V) and (VI) as subclauses
(III) and (IV), respectively.
(B) Section 401(k) of the 1986 Code is amended by adding at the
end thereof the following new paragraph:
"(10) DISTRIBUTIONS UPON TERMINATION OF PLAN OR DISPOSITION OF
ASSETS OR SUBSIDIARY. --
"(A) IN GENERAL. -- The following events are described in this
paragraph:
"(i) TERMINATION. -- The termination of the plan without
establishment or maintenance of another defined contribution plan
(other than an employee stock ownership plan as defined in section
4975(e)(7)).
"(ii) DISPOSITION OF ASSETS. -- The disposition by a
corporation of substantially all of the assets (within the meaning
of section 409(d)(2)) used by such corporation in a trade or
business of such corporation, but only with respect to an employee
who continues employment with the corporation acquiring such
assets.
"(iii) DISPOSITION OF SUBSIDIARY. -- The disposition by a
corporation of such corporation's interest in a subsidiary (within
the meaning of section 409(d)(3)), but only with respect to an
employee who continues employment with such subsidiary.
"(B) DISTRIBUTIONS MUST BE LUMP SUM DISTRIBUTIONS. --
"(i) IN GENERAL. -- An event shall not be treated as described
in subparagraph (A) with respect to any employee unless the
employee receives a lump sum distribution by reason of the event.
"(ii) LUMP SUM DISTRIBUTION. -- For purposes of this
subparagraph, the term 'lump sum distribution' has the meaning
given such term by section 402(e)(4), without regard to clauses
(i), (ii), (iii), and (iv) of subparagraph (A), subparagraph (B),
or subparagraph (H) thereof.
"(C) TRANSFEROR CORPORATION MUST MAINTAIN PLAN. -- An event
shall not be treated as described in clause (ii) or (iii) of
subparagraph (A) unless the transferor corporation continues to
maintain the plan after the disposition."
(C)(i) Subparagraph (A)(i) of section 401(k)(10) of the 1986
Code "26 USC 401 note" (as added by subparagraph (B)) shall apply
to distributions after October 16, 1987.
(ii) Subparagraph (B) of section 401(k)(10) of the 1986 Code
(as added by subparagraph (B)) shall apply to distributions after
March 31, 1988.
(2) Subparagraph (B) of section 401(k)(2) of the 1986 Code is
amended --
(A) by inserting "amounts held by the trust which are
attributable to employer contributions made pursuant to the
employee's election" after "under which",
(B) by striking out "amounts held by the trust which are
attributable to employer contributions made pursuant to the
employee's election" in clause (i), and
(C) by striking out "amounts" in clause (ii).
(3)(A) Clause (ii) of section 401(k)(3)(A) of the 1986 Code is
amended by inserting "eligible" before "highly compensated
employees" each place it appears.
(B) Section 1116(b)(4) of the Reform Act "26 USC 401" is
amended by striking out "any" the first place it appears and
inserting in lieu thereof "an".
(4) Subparagraph (C) of section 401(k)(3) of the 1986 Code, as
added by section 1116(e) of the Reform Act, is redesignated as
subparagraph (D).
(5) Subclause (I) of section 401(k)(3)(D)(ii) of the 1986 Code,
as redesignated by paragraph (4), is amended by striking out
"meets" and inserting in lieu thereof "meet".
(6) Section 401(k)(4)(A) of the 1986 Code is amended by
striking out "provided by such employer".
(7) Section 401(k)(8) of the 1986 Code (relating to arrangement
not disqualified if excess contributions distributed) is amended
by redesignating subparagraph (E) as subparagraph (F) and by
inserting after subparagraph (D) the following new subparagraph:
"(E) TREATMENT OF MATCHING CONTRIBUTIONS FORFEITED BY REASON OF
EXCESS DEFERRAL OR CONTRIBUTION. -- For purposes of paragraph
(2)(C), a matching contribution (within the meaning of subsection
(m)) shall not be treated as forfeitable merely because such
contribution is forfeitable if the contribution to which the
matching contribution relates is treated as an excess contribution
under subparagraph (B), an excess deferral under section
402(g)(2)(A), or an excess aggregate contribution under section
401(m)(6)(B)."
(8) Subparagraph (B) of section 1116(f)(2) of the Reform Act
"26 USC 401 note" is amended by adding at the end thereof the
following new sentence: "If clause (i) or (ii) applies to any
arrangement adopted by a governmental unit, then any cash or
deferred arrangement adopted by such unit on or after the date
referred to in the applicable clause shall be treated as adopted
before such date."
(9) Section 401(k)(4)(B) of the 1986 Code is amended by adding
at the end thereof the following new sentence:
"This subparagraph shall not apply to a rural electric
cooperative plan."
(10) Clause (i) of section 1116(f)(2)(B) of the Reform Act "26
USC 401 note" is amended by striking out "(or political
subdivision thereof)" and inserting in lieu thereof "or political
subdivision thereof, or any agency or instrumentality thereof,".
(l) AMENDMENTS RELATED TO SECTION 1117 OF THE REFORM ACT. --
(1) Paragraph (1) of section 401(m) of the 1986 Code (relating
to nondiscrimination test for matching contributions and employee
contributions) is amended by striking out "A plan" and inserting
in lieu thereof "A defined contribution plan."
(2) Paragraph (3) of section 401(m) of the 1986 Code (relating
to requirements) is amended by adding at the end thereof the
following new sentence: "If matching contributions are taken into
account for purposes of subsection (k)(3)(A)(ii) for any plan
year, such contributions shall not be taken into account under
subparagraph (A) for such year."
(3) The last sentence of section 401(m)(2)(B) of the 1986 Code
is amended by striking out "such contributions" the first place it
appears and inserting in lieu thereof "contributions to which this
subsection applies".
(4) Section 401(m)(4)(A) of the 1986 Code (defining matching
contribution) is amended by striking out "the plan" each place it
appears and inserting in lieu thereof "a defined contribution
plan".
(5)(A) Section 401(m)(4)(B) of the 1986 Code (defining elective
deferral) is amended by striking out "section 402(g)(3)( A)" and
inserting in lieu thereof "section 402(g)(3)".
(B) The amendment made by this paragraph "26 USC 401 note"
shall take effect as if included in the amendments made by section
1120 of the Reform Act.
(6) Subparagraph (C) of section 401(m)(6) of the 1986 Code is
amended by striking out "EXCESS" in the subparagraph heading and
inserting in lieu thereof "EXCESS AGGREGATE".
(7) Section 401(m)(7)(A) of the 1986 Code (relating to
additional tax of section 72(t) not applicable) is amended by
striking out "paragraph (8)" and inserting in lieu thereof
"paragraph (6)".
(8) Section 4979(a)(1) of the 1986 Code (relating to tax on
certain excess contributions) is amended by striking out "a cash
or deferred arrangement which is part of".
(9) Section 4979(c) of the 1986 Code (defining excess
contributions) is amended --
(A) by striking out "403(b),", and
(B) by striking out "408(k)(8)(B)" and inserting in lieu
thereof "408(k)(6)(C)".
(10) Section 4979(d) of the 1986 Code (defining excess
aggregate contribution) is amended by adding at the end thereof
the following new sentence: "For purposes of determining excess
aggregate contributions under an annuity contract described in
section 403(b), such contract shall be treated as a plan described
in subsection (e)(1)."
(11) Paragraph (2) of section 4979(f) of the 1986 Code
(relating to inclusion in prior year) is amended to read as
follows:
"(2) YEAR OF INCLUSION. --
"(A) IN GENERAL. -- Except as provided in subparagraph (B),
any amount distributed as provided in paragraph (1) shall be
treated as received and earned by the recipient in his taxable
year for which such contribution was made.
"(B) DE MINIMIS DISTRIBUTIONS. -- If the total excess
contributions and excess aggregate contributions distributed to a
recipient under a plan for any plan year are less than $100, such
distributions (and any income allocable thereto) shall be treated
as earned and received by the recipient in his taxable year in
which such distributions were made."
(12) Subsection (d) of section 1117 of the Reform Act "26 USC
401 note" is amended by adding at the end thereof the following
new paragraph:
"(4) DISTRIBUTIONS BEFORE PLAN AMENDMENT. --
"(A) IN GENERAL. -- If a plan amendment is required to allow a
plan to make any distribution described in section 401(m)(6) of
the Internal Revenue Code of 1986, any such distribution which is
made before the close of the 1st plan year for which such
amendment is required to be in effect under section 1140 shall be
treated as made in accordance with the provisions of the plan.
"(B) DISTRIBUTIONS PURSUANT TO MODEL AMENDMENT. --
"(i) SECRETARY TO PRESCRIBE AMENDMENT. -- The Secretary of the
Treasury or his delegate shall prescribe an amendment which allows
a plan to make any distribution described in section 401( m)(6) of
the Internal Revenue Code of 1986.
"(ii) ADOPTION BY PLAN. -- If a plan adopts the amendment
prescribed under clause (i) and makes a distribution in accordance
with such amendment, such distribution shall be treated as made in
accordance with the provisions of the plan."
(m) AMENDMENTS RELATED TO SECTION 1120 OF THE REFORM ACT. --
(1)(A) Section 403(b)(10) of the 1986 Code (relating to
nondiscrimination requirements), as added by section 1120(b) of
the Reform Act, is redesignated as paragraph (12).
(B) Subparagraph (D) of section 403(b)(1) of the 1986 Code is
amended by striking out "paragraph (10)" and inserting in lieu
thereof "paragraph (12)".
(2) Clause (i) of section 403(b)(12)(A), as redesignated by
paragraph (1), is amended --
(A) by inserting "(17)," after "(5),", and
(B) by inserting ", section 401(m)," after "section 401(a)" the
first place it appears.
(3) Section 1120(c) of the Reform Act "26 USC 403 note" is
amended to read as follows:
"(c) EFFECTIVE DATES. --
"(1) IN GENERAL. -- Except as provided in paragraph (2), the
amendments made by this section shall apply to years beginning
after December 31, 1988.
"(2) COLLECTIVE BARGAINING AGREEMENTS. -- In the case of a
plan maintained pursuant to 1 or more collective bargaining
agreements between employee representatives and 1 or more
employers ratified before March 1, 1986, the amendments made by
this section shall not apply to plan years beginning before the
earlier of --
"(A) January 1, 1991, or
"(B) the later of --
"(i) January 1, 1989, or
"(ii) the date on which the last of such collective bargaining
agreements terminates (determined without regard to any extension
thereof after February 28, 1986)."
SEC. 1011A. AMENDMENTS RELATED TO PARTS III AND IV OF SUBTITLE A OF
TITLE XI OF THE REFORM ACT.
(a) AMENDMENTS RELATED TO SECTION 1121 OF THE REFORM ACT. --
(1) Subparagraph (F) of section 402(a)(5) of the 1986 Code
(relating to transfer treated as rollover contribution under
section 408) is amended by striking out "described in subparagraph
(A)" and inserting in lieu thereof "resulting in any portion of a
distribution being excluded from gross income under subparagraph
(A)".
(2)(A) Section 408(d)(3)(A) is amended by striking out the last
sentence thereof.
(B) The amendment made by subparagraph (A) "26 USC 408 note"
shall apply to rollover contributions made in taxable years
beginning after December 31, 1986.
(3) Section 1121(d) of the Reform Act "26 USC 401 note" is
amended by adding at the end thereof the following new paragraph:
"(5) PLANS MAY INCORPORATE SECTION 401(a)(9) REQUIREMENTS BY
REFERENCE. -- Notwithstanding any other provision of law, except
as provided in regulations prescribed by the Secretary of the
Treasury or his delegate, a plan may incorporate by reference the
requirements of section 401(a)(9) of the Internal Revenue Code of
1986."
(4) Section 1121(d)(3) of the Reform Act is amended by striking
out "plan years" and inserting in lieu thereof "years".
(5) Section 402(a)(5)(F)(ii) of the Internal Revenue Code of
1954 "26 USC 402 note" shall not apply to distributions after
October 22, 1986, and before the 1st taxable year beginning after
1986 which are attributable to benefits which accrued before
January 1, 1985.
(b) AMENDMENTS RELATED TO SECTION 1122 OF THE REFORM ACT. --
(1)(A) Section 72(f) of the 1986 Code (relating to special
rules for computing employees' contributions) is amended by
striking out "for purposes of subsections (d)(1) and (e)(7), the
consideration for the contract contributed by the employee,".
(B) Section 72(n) of the 1986 Code (relating to annuities under
retired serviceman's family protection plan or survivor benefit
plan) is amended by striking out "Subsections (b) and (d)" and
inserting in lieu thereof "Subsection (b)".
(C) Sections 406(e) and 407(e) of the 1986 Code are each
amended by striking out paragraph (1) and by redesignating
paragraphs (2), (3), and (4) as paragraphs (1), (2), and (3),
respectively.
(2)(A) Section 72 of the 1986 Code (relating to annuities and
certain proceeds of endowment and life insurance contracts) is
amended by adding after subsection (c) the following new
subsection:
"(d) TREATMENT OF EMPLOYEE CONTRIBUTIONS UNDER DEFINED CONTRIBUTION
PLANS AS SEPARATE CONTRACTS. -- For purposes of this section, employee
contributions (and any income allocable thereto) under a defined
contribution plan may be treated as a separate contract."
(B) Section 72(e) of the 1986 Code is amended by striking out
paragraph (9).
(3) Section 414(k)(2) of the 1986 Code (relating to certain
plans treated as defined contribution plans is amended by
inserting "72(d) (relating to treatment of employee contributions
as separate contract)," before "411(a)(7)(A)".
(4)(A) The amendment made by section 1122(e)(1) of the Reform
Act "26 USC 402 and note" is repealed and the Internal Revenue
Code of 1986 shall be applied and administered as if such
amendment had not been enacted.
(B) Subclause (I) of section 402(a)(5)(D)(i) of the 1986 Code
is amended by inserting "is payable as provided in clause (i),
(iii), or (iv) of subsection (e)(4)(A) (without regard to the
second sentence thereof) and" after "such distribution" the first
place it appears.
(C) Section 402(a)(5)(D)(i) of the 1986 Code is amended by
adding at the end thereof the following new sentence: "Any
distribution described in section 401(a)(28)(B)(ii) shall be
treated as meeting the requirements of subclauses (I) and (II)."
(D) Section 402(a)(5)(D)(iii) is amended by striking out
"10-YEAR" in the heading.
(E) Section 402(a)(5)(D)(i)(II) of the 1986 Code "26 USC 402
note" (as in effect after the amendment made by subparagraph (A))
shall not apply to distributions after December 31, 1986, and
before March 31, 1988.
(5) Clause (ii) of section 402(a)(6)(H) of the 1986 Code
(relating to special rule for frozen deposits) is amended by
adding at the end thereof the following new flush sentence:
"A deposit shall not be treated as a frozen deposit unless on
at least 1 day during the 60-day period described in paragraph
(5)(C) (without regard to this subparagraph) such deposit is
described in the preceding sentence."
(6) Clause (i) of section 402(e)(4)(B) of the 1986 Code is
amended by striking out "taxpayer" and inserting in lieu thereof
"employee".
(7) The last sentence of section 402(e)(4)(J) of the 1986 Code
(relating to unrealized appreciation on employer securities) is
amended to read as follows: "In accordance with rules prescribed
by the Secretary, a taxpayer may elect, on the return of tax on
which a distribution is required to be included, not to have this
subparagraph apply with respect to such distribution."
(8) Section 402 of the 1986 Code (relating to taxability of
beneficiary of employees' trust) is amended as follows:
(A) Subsection (a)(1) is amended by striking out "paragraphs
(2) and (4)" and inserting in lieu thereof "paragraph (4)".
(B) Subsection (a)(4) is amended by striking out "or (2)".
(C) Subsection (a)(6)(C) is amended by striking out "paragraph
(2) of subsection (a), and".
(D) Subsection (a)(6)(E)(ii) is amended by striking out
"paragraph (2) of subsection (a), and" and by striking out the
comma after "subsection (e)".
(E) Subsection (e)(1)(A) is amended by striking out "ordinary
income portion of a".
(F) Subsection (e)(4)(A) is amended --
(i) by striking out "Except for purposes of subsection (a)(2)
and section 403(a)(2), a" and inserting in lieu thereof "A", and
(ii) by striking out "subsection (a)(2) of this section, and
subsection (a)(2) of section 403,".
(G) Subparagraph (L) of subsection (e)(4) is hereby repealed.
(H) Subsection (e)(4)(M) is amended by striking out ",
subsection (a)(2) of this section, and section 403(a)(2)".
(I) Subsection (e)(5) is amended by striking out "and paragraph
(2) of subsection (a)".
(J) Subsection (e)(6)(C) is amended to read as follows:
"(C) SPECIAL LUMP-SUM TREATMENT. -- For purposes of this
paragraph, special lump sum treatment applies to any distribution,
if any portion of such distribution is taxed under this subsection
by reason of an election under paragraph (4)(B)."
(9)(A) Section 72(e)(7) of the 1986 Code is hereby repealed.
(B) Section 72(e)(5)(D) is amended by striking out "paragraphs
(7) and (8)" and inserting in lieu thereof "paragraph (8)".
(C) Section 72(e)(8)(A) is amended by striking out "(other than
paragraph (7))".
(D) Section 72(q)(2)(E) of the 1986 Code is amended by striking
out "(determined without regard to subsection (e)(7))".
(10) Section 402(e)(1)(B) of the 1986 Code (relating to amount
of tax on lump-sum distributions) is amended by adding at the end
thereof the following new flush sentence:
"For purposes of the preceding sentence, in determining the
amount of tax under section 1(c), section 1(g) shall be applied
without regard to paragraph (2)(B) thereof."
(11) Section 1122(h) of the Reform Act "26 USC 402 note" is
amended by adding at the end thereof the following new paragraph:
"(9) SPECIAL RULE FOR STATE PLANS. -- In the case of a plan
maintained by a State which on May 5, 1986, permitted withdrawal
by the employee of employee contributions (other than as an
annuity), section 72(e) of the Internal Revenue Code of 1986 shall
be applied --
"(A) without regard to the phrase 'before separation from
service' in paragraph (8)(D), and
"(B) by treating any amount received (other than as an annuity)
before or with the 1st annuity payment as having been received
before the annuity starting date."
(12) Subparagraph (B) of section 1122(h)(2) of the Reform Act
is amended by inserting ", except that section 72(b)(3) of the
Internal Revenue Code of 1986 (as added by such subsection) shall
apply to individuals whose annuity starting date is after July 1,
1986" after "1986".
(13) Sections 1122(h)(3)(C) and (h)(4)(C) of the Reform Act are
each amended by striking out "with respect to any other lump sum
distribution" and inserting in lieu thereof "for purposes of such
Code".
(14) Clause (i) of section 1122(h)(3)(C) of the Reform Act "26
USC 402 note" is amended --
(A) by striking out "individual" and inserting in lieu thereof
"employee", and
(B) by inserting "or by an individual, estate, or trust with
respect to such an employee" after "1986".
(15) Section 1122(h)(5) of the Reform Act is amended --
(A) by striking out "individual" and inserting in lieu thereof
"employee",
(B) by inserting "and by including in gross income the zero
bracket amount in effect under section 63(d) of such Code for such
years" after "1986" in the last sentence, and
(C) by adding at the end thereof the following new sentence:
"This paragraph shall also apply to an individual, estate, or
trust which receives a distribution with respect to an employee
described in this paragraph."
(16) Sections 406(c) and 407(c) of the 1986 Code are each
amended --
(A) by striking out "subsections (a)(2) and (e) of section 402,
and section 403(a)(2)" and inserting in lieu thereof "section
402(e)", and
(B) by striking out "OF CAPITAL GAIN PROVISIONS AND" in the
heading thereof.
(c) AMENDMENTS RELATED TO SECTION 1123 OF THE REFORM ACT. --
(1) Subparagraph (A) of section 72(t)(2) of the 1986 Code
(relating to subsection not to apply to certain distributions) is
amended by striking out "on account of early retirement under the
plan" in clause (v).
(2) Subparagraph (C) of section 72(t)(2) of the 1986 Code
(relating to certain plans) is amended to read as follows:
"(C) EXCEPTIONS FOR DISTRIBUTIONS FROM EMPLOYEE STOCK OWNERSHIP
PLANS. -- Any distribution made before January 1, 1990, to an
employee from an employee stock ownership plan (as defined in
section 4975(e)(7)) or a tax credit employee stock ownership plan
(as defined in section 409) if --
"(i) such distribution is attributable to assets which have
been invested in employer securities (within the meaning of
section 409(l)) at all times during the 5-plan-year period
preceding the plan in which the distribution is made, and
"(ii) at all times during such period the requirements of
sections 401(a)(28) and 409 (as in effect at such times) are met
with respect to such employer securities."
(3) Subparagraph (A) of section 72(t)(3) of the 1980 Code
(relating to certain exceptions not to apply to individual
retirement plans) is amended by striking out "and (C)" and
inserting in lieu thereof "(C), and (D)".
(4) Subparagraphs (D) and (G) of section 72(q)(2) of the 1986
Code are each amended by striking out the period at the end
thereof and inserting in lieu thereof a comma.
(5) Subparagraph (B) of section 72(q)(3) of the 1986 Code
(relating to change in substantially equal payments) is amended by
striking out "employee" each place it appears and inserting in
lieu thereof "taxpayer".
(6) Section 72(q)(2) of the 1986 Code (relating to subsection
not to apply to certain dispositions) is amended by inserting
after subparagraph (G) the following new subparagraph:
"(H) to which subsection (t) applies (without regard to
paragraph (2) thereof),".
(7) Subparagraph (D) of section 72(q)(2) and clause (iv) of
section 72(t)(2)(A) of the 1986 Code are each amended by inserting
"designated" before "beneficiary".
(8) Paragraph (2) of section 72(o) of the 1986 Code (relating
to additional tax if amount received before age 59 1/2) is hereby
repealed.
(9) Subparagraph (I) of section 402(e)(4) of the 1986 Code is
amended by striking out "clause (ii) of".
(10) Section 26(b)(2) of the 1986 Code is amended --
(A) by striking out ", (o)(2)," in subparagraph (C), and
(B) by striking out "408(f) (relating to additional tax on
income from certain retirement accounts)" in subparagraph (D) and
inserting in lieu thereof "72(t) (relating to 10-percent
additional tax on early distributions from qualified retirement
plans)".
(11) Section 1123(e)(2) of the Reform Act "26 USC 72 note" is
amended --
(A) by striking out "taxable", and
(B) by inserting ", but only with respect to distributions from
contracts described in section 403(b) of the Internal Revenue Code
of 1986 which are attributable to assets other than assets held as
of the close of the last year beginning before January 1, 1989"
after "1988".
(12) Section 1123(e) of the Reform Act is amended by adding at
the end thereof the following new paragraph:
"(5) SPECIAL RULE FOR DISTRIBUTIONS UNDER AN ANNUITY CONTRACT.
-- The amendments made by paragraphs (1), (2), and (3) of
subsection (b) shall not apply to any distribution under an
annuity contract if --
"(A) as of March 1, 1986, payments were being made under such
contract pursuant to a written election providing a specific
schedule for the distribution of the taxpayer's interest in such
contract, and
"(B) such distribution is made pursuant to such written
election".
(13) Section 72(t) of the 1986 Code "26 USC 72 note" shall
apply to any distribution without regard to whether such
distribution is made without the consent of the participant
pursuant to section 411(a)(11) or section 417(e) of the 1986 Code.
(d) AMENDMENTS RELATED TO SECTION 1124 OF THE REFORM ACT. --
(1) Section 1124(a) of the Reform Act "26 USC 402 note" is
amended to read as follows:
"(a) IN GENERAL. -- If an employee dies, separates from service, or
becomes disabled before 1987 and an individual, trust, or estate
receives a lump-sum distribution with respect to such employee after
December 31, 1986, and before March 16, 1987, on account of such death,
separation from service, or disability, then, for purposes of the
Internal Revenue Code of 1986, such individual, estate, or trust may
treat such distribution as if it were received in 1986."
(2) Section 1124(b) of the Reform Act is amended --
(A) by striking out "employee" each place it appears and
inserting in lieu thereof "individual, estate, or trust", and
(B) by inserting "with respect to an employee" after
"receives".
(3) Section 1124 of the Reform Act is amended by adding at the
end thereof the following new subsection:
"(c) LUMP SUM DISTRIBUTION. -- For purposes of this section, the
term 'lump sum distribution' has the meaning given such term by section
402(e)(4)(A) of the Internal Revenue Code of 1986, without regard to
subparagraph (B) or (H) of section 402(e)(4) of such Code."
(e) AMENDMENTS RELATED TO SECTION 1131 OF THE REFORM ACT. --
(1) Subsection (c) of section 4972 of the 1986 Code (defining
nondeductible contributions) is amended to read as follows:
"(c) NONDEDUCTIBLE CONTRIBUTIONS. -- For purposes of this section --
"(1) IN GENERAL. -- The term 'nondeductible contributions'
means, with respect to any qualified employer plan, the sum of --
"(A) the excess (if any) of --
"(i) the amount contributed for the taxable year by the
employer to or under such plan, over
"(ii) the amount allowable as a deduction under section 404 for
such contributions (determined without regard to subsection (e)
thereof), and
"(B) the amount determined under this subsection for the
preceding taxable year reduced by the sum of --
"(i) the portion of the amount so determined returned to the
employer during the taxable year, and
"(ii) the portion of the amount so determined deductible under
section 404 for the taxable year (determined without regard to
subsection (e) thereof).
"(2) ORDERING RULE FOR SECTION 404. -- For purposes of
paragraph (1), the amount allowable as a deduction under section
404 for any taxable year shall be treated as --
"(A) first from carryforwards to such taxable year from
preceding taxable years (in order of time), and
"(B) then from contributions made during such taxable year.
"(3) CONTRIBUTIONS WHICH MAY BE RETURNED TO EMPLOYER. -- In
determining the amount of nondeductible contributions for any
taxable year, there shall not be taken into account any
contribution for such taxable year which is distributed to the
employer in a distribution described in section 4980(c)(2)(B)(ii)
if such distribution is made on or before the last day on which a
contribution may be made for such taxable year under section 404(
a)(6).
"(4) PRE-1987 CONTRIBUTIONS. -- The term 'nondeductible
contribution' shall not include any contribution made for a
taxable year beginning before January 1, 1987."
(2) Paragraph (1) of section 4972(d) of the 1986 Code (defining
qualified employer plan) is amended to read as follows:
"(1) QUALIFIED EMPLOYER PLAN. --
"(A) IN GENERAL. -- The term 'qualified employer plan means --
"(i) any plan meeting the requirements of section 401(a) which
includes a trust exempt from tax under section 501(a),
"(ii) an annuity plan described in section 403(a), and
"(iii) any simplified employee pension (within the meaning of
section 408(k)).
"(B) EXEMPTION FOR GOVERNMENTAL AND TAX EXEMPT PLANS. -- The
term 'qualified employer plan' does not include a plan described
in subparagraph (A) or (B) of section 4980(c)(1)."
(3) Section 1131(d) of the Reform Act "26 USC 404 note" is
amended to read as follows:
"(d) EFFECTIVE DATES. --
"(1) IN GENERAL. -- Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
beginning after December 31, 1986.
"(2) SPECIAL RULES FOR COLLECTIVE BARGAINING AGREEMENTS. -- In
the case of a plan maintained pursuant to 1 or more collective
bargaining agreements between employee representatives and 1 or
more employers ratified before March 1, 1986, the amendments made
by this section shall not apply to contributions pursuant to any
such agreement for taxable years beginning before the earlier of
--
"(A) January 1, 1989, or
"(B) the date on which the last of such collective bargaining
agreements terminates (determined without regard to any extension
thereof after February 28, 1986)."
(4)(A) Subparagraph (A) of section 404(a)(7) of the 1986 Code
is amended --
(i) by striking out "provisions" and inserting in lieu thereof
"paragraphs", and
(ii) by inserting "or in connection with trusts or plans
described in 2 or more of such paragraphs" after "1 or more
defined benefit plans".
(B) Paragraph (3) of section 404(h) of the 1986 Code is amended
to read as follows:
"(3) COORDINATION WITH SUBSECTION (a)(7). -- For purposes of
subsection (a)(7), a simplified employee pension shall be treated
as if it were a separate stock bonus or profit-sharing trust."
(5) "26 USC 4972 note" In the case of any taxable year
beginning in 1987, the amount under section 4972(c)(1)(A)(ii) of
the 1986 Code for a plan to which title IV of the Employee
Retirement Income Security Act of 1974 applies shall be increased
by the amount (if any) by which, as of the close of the plan year
with or within which such taxable year begins --
(A) the liabilities of such plan (determined as if the plan had
terminated as of such time), exceed
(B) the assets of such plan.
(f) AMENDMENTS RELATED TO SECTION 1132 OF THE REFORM ACT. --
(1) Section 4980(c)(1)(A) of the 1986 Code (defining qualified
plan) is amended by striking out "this subtitle" and inserting in
lieu thereof "subtitle A".
(2) Section 4980(c)(3)(A) of the 1986 Code (relating to
exception for employee stock ownership plans) is amended --
(A) by inserting "or a tax credit employee stock ownership plan
(as described in section 409)" after "section 4975(e)(7)", and
(B) by inserting ", except to the extent necessary to meet the
requirements of section 401(a)(28)," after "must".
(3) Subparagraph (C) of section 4980(c)(3) of the 1986 Code is
amended --
(A) by striking out "(by reason of the limitations of section
415)", and
(B) by adding at the end thereof the following new sentence:
"The amount allocated in the year of transfer shall not be less
than the lesser of the maximum amount allowable under section 415
or 1/8 of the amount attributable to the securities acquired."
(4) Subparagraph (B) of section 1132(c)(2) of the Reform Act
"26 USC 4980 note" is amended by striking out "November 19, 1978"
and inserting in lieu thereof "September 19, 1978".
(5) Section 1132(c) of the Reform Act is amended by adding at
the end thereof the following new paragraph:
"(5) SPECIAL RULE FOR EMPLOYEE STOCK OWNERSHIP PLANS. --
Section 4980(c)(3) of the Internal Revenue Code of 1986 (as added
by subsection (a)) shall apply to reversions occurring after March
31, 1986."
(6) Section 4980(c)(3) of the 1986 Code is amended by adding at
the end thereof the following new subparagraphs:
"(F) NO CREDIT OR DEDUCTION ALLOWED. -- No credit or deduction
shall be allowed under chapter 1 for any amount transferred to an
employee stock ownership plan in a transfer to which this
paragraph applies.
"(G) AMOUNT TRANSFERRED TO INCLUDE INCOME THEREON, ETC. -- The
amount transferred shall not be treated as meeting the
requirements of subparagraphs (B) and (C) unless amounts
attributable to such amount also meet such requirements."
(7) Section 4980(c)(3)(C) of the 1986 Code is amended by adding
at the end thereof the following new sentence:
"In the case of dividends on securities held in the suspense
account, the requirements of this subparagraph are met only if the
dividends are allocated to accounts of participants or paid to
participants in proportion to their accounts, or used to repay
loans used to purchase employer securities."
(g) AMENDMENTS RELATED TO SECTION 1133 OF THE REFORM ACT. --
(1)(A) Section 4981A of the 1986 Code (as added by section 1133
of the Reform Act) is redesignated as section 4980A.
(B) The table of sections for chapter 43 of the 1986 Code is
amended by redesignating section 4981A as section 4980A.
(2) Paragraph (1) of section 4980A(c) of the 1986 Code (as
redesignated by paragraph (1)) is amended by striking out $112,500
(adjusted at the same time and in the same manner as under section
415(d))" and inserting in lieu thereof "the greater of --
"(A) $150,000, or
"(B) $112,500 (adjusted at the same time and in the same manner
as under section 415(d))."
(3) Section 4980A(c)(2) of the 1986 Code (relating to exclusion
of certain distributions), as redesignated by paragraph (1), is
amended --
(A) by striking out "employee's" in subparagraph (C) and
inserting in lieu thereof "individual's", and
(B) by adding after subparagraph (D) the following new
subparagraphs:
"(E) Any retirement distribution with respect to an individual
of an annuity contract the value of which is not includible in
gross income at the time of the distribution (other than
distributions under, or proceeds from the sale or exchange of,
such contract).
"(F) Any retirement distribution with respect to an individual
of --
"(i) excess deferrals (and income allocable thereto) under
section 402(g)(2)(A)(ii), or
"(ii) excess contributions (and income allocable thereto) under
section 401(k)(8) or 408(d)(4) or excess aggregate contributions
(and income allocable thereto) under section 401( m)(6)."
(4)(A) Section 4980A of the 1986 Code, as redesignated by
paragraph (1), is amended by adding at the end thereof the
following new subsection:
"(f) EXEMPTION OF ACCRUED BENEFITS IN EXCESS OF $562,500 ON AUGUST 1,
1986. -- For purposes of this section --
"(1) IN GENERAL. -- If an election is made with respect to an
eligible individual to have this subsection apply, the
individual's excess distributions and excess retirement
accumulation shall be computed without regard to any distributions
or interests attributable to the accrued benefit of the individual
as of August 1, 1986.
"(2) REDUCTION IN AMOUNTS WHICH MAY BE RECEIVED WITHOUT TAX.
-- If this subsection applies to any individual --
"(A) EXCESS DISTRIBUTIONS. -- Subsection (c)(1) shall be
applied --
"(i) without regard to subparagraph (A), and
"(ii) by reducing (but not below zero) the amount determined
under subparagraph (B) thereof by retirement distributions
attributable (as determined under rules prescribed by the
Secretary) to the individual's accrued benefit as of August 1,
1986.
"(B) EXCESS RETIREMENT ACCUMULATION. -- The amount determined
under subsection (d)(3)(B) (without regard to subsection (c)(1)(
A)) with respect to such individual shall be reduced (but not
below zero) by the present value of the individual's accrued
benefit as of August 1, 1986, which has not been distributed as of
the date of death.
"(3) ELIGIBLE INDIVIDUAL. -- For purposes of this subsection,
the term 'eligible individual' means any individual if, on August
1, 1986, the present value of such individual's interests in
qualified employer plans and individual retirement plans exceeded
$562,500.
"(4) CERTAIN AMOUNTS EXCLUDED. -- In determining an
individual's accrued benefit for purposes of this subsection,
there shall not be taken into account any portion of the accrued
benefit --
"(A) payable to an alternate payee pursuant to a qualified
domestic relations order (within the meaning of section 414(p)) if
includible in income of the alternate payee, or
"(B) attributable to the individual's investment in the
contract (as defined in section 72(f)).
"(5) ELECTION. -- An election under paragraph (1) shall be
made on an individual's return of tax imposed by chapter 1 or 11
for a taxable year beginning before January 1, 1989."
(B) Section 4980A(c) of the 1986 Code, as redesignated by
paragraph (1), is amended by striking out paragraph (5).
(5) Section 4980A(d) of the 1986 Code (relating to increase in
estate tax if individual dies with excess accumulation), as
redesignated by paragraph (1), is amended --
(A) by striking out "section 2010" in paragraph (2) and
inserting in lieu thereof "chapter 11", and
(B) by adding at the end thereof the following new paragraphs:
"(4) RULES FOR COMPUTING EXCESS RETIREMENT ACCUMULATION. -- The
excess retirement accumulation of an individual shall be computed
without regard to --
"(A) any community property law,
"(B) the value of --
"(i) amounts payable to an alternate payee pursuant to a
qualified domestic relations order (within the meaning of section
414(p)) if includible in income of the alternate payee, and
"(ii) the individual's investment in the contract (as defined
in section 72(f)), and
"(C) the excess (if any) of --
"(i) any interests which are payable immediately after death,
over
"(ii) the value of such interests immediately before death.
"(5) ELECTION BY SPOUSE TO HAVE EXCESS DISTRIBUTION RULE APPLY.
--
"(A) IN GENERAL. -- If the spouse of an individual is the
beneficiary of all of the interests described in paragraph (3)(
A), the spouse may elect --
"(i) not to have this subsection apply, and
"(ii) to have this section apply to such interests and any
retirement distribution attributable to such interests as if such
interests were the spouse's.
"(B) DE MINIMIS EXCEPTION. -- If 1 or more persons other than
the spouse are beneficiaries of a de minimis portion of the
interests described in paragraph (3)(A) --
"(i) the spouse shall not be treated as failing to meet the
requirements of subparagraph (A), and
"(ii) if the spouse makes the election under subparagraph (A),
this section shall not apply to such portion or any retirement
distribution attributable to such portion."
(6) Subparagraph (B) of section 4980A(d)(3) of the 1986 Code,
as redesignated by paragraph (1), is amended to read as follows:
"(B) the present value (as determined under rules prescribed by
the Secretary as of the valuation date prescribed in subparagraph
(A)) of a single life annuity with annual payments equal to the
limitation of subsection (c) (as in effect for the year in which
death occurs and as if the individual had not died)."
(7) Section 2013 of the 1986 Code (relating to credit for tax
on prior transfer) is amended by adding at the end thereof the
following new subsection:
"(g) TREATMENT OF ADDITIONAL TAX UNDER SECTION 4980A. -- For
purposes of this section, the estate tax paid shall not include any
portion of such tax attributable to section 4980A(d)."
(8) Paragraph (1) of section 1133(c) of the Reform Act "26 USC
4980A note" is amended by inserting ", other than a distribution
with respect to a decedent dying before January 1, 1987" after
"1986".
(9) Section 4980A(d)(3)(A) of the 1986 Code is amended by
inserting "(other than as a beneficiary, determined after
application of paragraph (5))" after "the individual's interests".
(10) Section 691(c)(1) of the 1986 Code is amended by adding at
the end thereof the following new subparagraph:
"(C) EXCESS RETIREMENT ACCUMULATION TAX. -- For purposes of
this subsection, no deduction shall be allowed for the portion of
the estate tax attributable to the increase in such tax under
section 4980A(d)."
(11) Section 2053(c)(1)(B) of the 1986 Code is amended by
adding at the end thereof the following new sentence: "This
subparagraph shall not apply to any increase in the tax imposed by
this chapter by reason of section 4980A(d)."
(12) Section 6018(a) of the 1986 Code is amended by adding at
the end thereof the following new paragraph:
"(5) RETURN REQUIRED IF EXCESS RETIREMENT ACCUMULATION TAX. --
The executor shall make a return with respect to the estate tax
imposed by subtitle B in any case where such tax is increased by
reason of section 4980A(d)."
(h) AMENDMENTS RELATED TO SECTION 1134 OF THE REFORM ACT. --
(1) Section 72(p)(3)(A) of the 1986 Code (relating to denial of
interest deductions in certain cases) is amended by inserting "to
which paragraph (1) does not apply by reason of paragraph (2)
during the period" after "loan".
(2) Subparagraph (B) of section 72(p)(3) of the 1986 Code is
amended to read as follows:
"(B) PERIOD TO WHICH SUBPARAGRAPH (A) APPLIES. -- For purposes
of subparagraph (A), the period described in this subparagraph is
the period --
"(i) on or after the 1st day on which the individual to whom
the loan is made is a key employee (as defined in section 416(
i)), or
"(ii) such loan is secured by amounts attributable to elective
deferrals described in subparagraph (A) or (C) of section 402(g)(
3)."
(i) AMENDMENTS RELATED TO SECTION 1135 OF THE REFORM ACT. --
(1) Subparagraph (A) of section 72(u)(1) of the 1986 Code
(relating to annuity contracts not held by natural persons) is
amended by inserting "(other than subchapter L)" after "subtitle".
(2) Subparagraph (D) of section 72(u)(3) of the 1986 Code
(relating to exceptions) is amended by striking out "until such
time as the employee separates from service" and inserting in lieu
thereof "until all amounts under such contract are distributed to
the employee for whom such contract was purchased or the
employee's beneficiary".
(3) Subparagraphs (D) and (E) of section 72(u)(3) of the 1986
Code (relating to exceptions) are each amended by striking out
"which".
(4) Paragraph (4) of section 72(u) of the 1986 Code is amended
by striking out "and" at the end of subparagraph (A), by striking
out the period at the end of subparagraph (B) and inserting in
lieu thereof ", and", and by adding at the end thereof the
following new subparagraph:
"(C) which provides for a series of substantially equal
periodic payments (to be made not less frequently than annually)
during the annuity period."
(j) AMENDMENTS RELATED TO SECTION 1136 OF THE REFORM ACT. --
(1) Section 401(a)(27) of the 1986 Code is amended by adding at
the end thereof the following new subparagraph:
"(B) PLAN MUST DESIGNATE TYPE. -- In the case of a plan which
is intended to be a money purchase pension plan or a
profit-sharing plan, a trust forming part of such plan shall not
constitute a qualified trust under this subsection unless the plan
designates such intent at such time and in such manner as the
Secretary may prescribe."
(2) Section 401(a)(27) of the 1986 Code is amended by striking
out "(27)" and inserting in lieu thereof:
"(27) DETERMINATIONS AS TO PROFIT-SHARING PLANS. --
"(A) CONTRIBUTIONS NEED NOT BE BASED ON PROFITS. -- ".
(k) AMENDMENT RELATED TO SECTION 1139 OF THE REFORM ACT. -- Clause
(i) of section 1139(d)(2)(A) of the Reform Act "26 USC 411 note" is
amended by striking out "before January" and inserting in lieu thereof
"after January".
(l) AMENDMENT RELATED TO SECTION 1145 OF THE REFORM ACT. --
Subparagraph (E) of section 401(a)(11) of the 1986 Code (relating to
cross reference) is redesignated as subparagraph (F).
(m) AMENDMENTS RELATED TO SECTION 1147 OF THE REFORM ACT. --
(1) Subparagraph (C) of section 7701(j)(1) of the 1986 Code
(relating to tax treatment of Federal Thrift Savings Fund) is
amended by inserting ", section 401(k)(4)(B)," after "Paragraph
(2)".
(2) Section 8440(a)(3) of title 5, United States Code, is
amended by inserting ", 401(k)(4)(B) of such Code," after
"subsection (b)".
SEC. 1011B. AMENDMENTS RELATED TO SUBTITLES B AND C OF TITLE XI OF
THE REFORM ACT.
(a) AMENDMENTS RELATED TO SECTION 1151 OF THE REFORM ACT. --
(1) Paragraph (2) of section 89(a) of the 1986 Code (relating
to year of inclusion) is amended to read as follows:
"(2) YEAR OF INCLUSION. --
"(A) IN GENERAL. -- Except as provided in subparagraph (B) --
"(i) any amount included in gross income under paragraph (1)
shall be taken into account for the taxable year of the employee
with or within which the plan year ends, and
"(ii) any deduction of the employer attributable to such amount
shall be allowable for the taxable year of the employer with or
within which the plan year ends.
"(B) ELECTION TO DELAY INCLUSION FOR 1 YEAR. -- If an employer
maintaining a plan with a plan year ending after September 30 and
on or before December 31 of a calendar year elects the application
of this subparagraph --
"(i) amounts included in gross income under paragraph (1) with
respect to employees of such employer shall be taken into account
for the taxable year of the employee following the taxable year
determined under subparagraph (A), but
"(ii) any deduction of the employer which is attributable to
such amounts shall be allowable for the taxable year with or
within which the plan year following the plan year in which the
excess benefits occurred ends."
(2) Paragraph (4) of section 89(b) of the 1986 Code (defining
nontaxable benefits) is amended by adding at the end thereof the
following new sentence: "Such term includes any group-term life
insurance the cost of which is includible in gross income under
section 79."
(3) Paragraph (1) of section 89(g) of the 1986 Code (relating
to the aggregation of comparable health plans) is amended by
adding at the end thereof the following new subparagraph:
"(C) EMPLOYEES COVERED BY MORE THAN 1 PLAN. -- The Secretary
may provide that 2 or more plans providing benefits to the same
participant shall be treated as 1 plan for purposes of applying
subsections (d)(1)(B), (d)(2), and (f)."
(4) Subparagraph (B) of section 89(g)(2) of the 1986 Code
(relating to sworn statements) is amended by adding at the end
thereof the following new sentence: "No statement shall be
required under clause (ii) with respect to any individual eligible
for coverage at no cost under a health plan which provides core
health benefits and with respect to whom the employee does not
elect any core health coverage from the employer."
(5) Subparagraph (D) of section 89(g)(2) of the 1986 Code is
amended by striking out "under such plan" and inserting in lieu
thereof "under such plans".
(6) Section 89(g) of the 1986 Code is amended by striking out
paragraph (6).
(7) Subparagraph (A) of section 89(h)(1) of the 1986 Code
(relating to excluded employees) is amended by inserting "(or 1st
day of a period of less than 31 days specified by the plan") after
"month".
(8) Section 89(j) of the 1986 Code (relating to other
definitions and special rules) is amended by adding at the end
thereof the following new paragraph:
"(12) EMPLOYERS WITH ONLY HIGHLY COMPENSATED EMPLOYEES. -- The
requirements of subsections (d) and (e) shall not apply to any
statutory employee benefit plan for any year for which the only
employees of the employer maintaining the plan are highly
compensated employees."
(9) Section 89(k) of the 1986 Code (relating to requirement
that plan be in writing) is amended by adding at the end thereof
the following new paragraph:
"(5) LOSS OF EXEMPTION FOR CERTAIN PLANS. -- If a plan
described in paragraph (2)(E) fails to meet the requirements of
paragraph (1), the organization which is part of such plan shall
not be exempt from tax under section 501(a)."
(10) Section 6652(k)(2)(B) of the 1986 Code (relating to amount
of additional tax) is amended by striking out "subsection (g)(3)"
and inserting in lieu thereof "subsection (g)(3)(C)(i)".
(11)(A) Subsection (a) of section 125 of the 1986 Code is
amended to read as follows:
"(a) GENERAL RULE. -- Except as provided in subsection (b), no
amount shall be included in the gross income of a participant in a
cafeteria plan solely because, under the plan, the participant may
choose among the benefits of the plan."
(B) Paragraph (1) of section 125(b) of the 1986 Code is amended
by striking out "A plan shall be treated as failing to meet the
requirements of this subsection" and inserting in lieu thereof "In
the case of a highly compensated employee, subsection (a) shall
not apply to any benefit attributable to a plan year".
(C) Paragraph (2) of section 125(b) of the 1986 Code is amended
by striking out "a plan shall be treated as failing to meet the
requirements of this subsection" and inserting in lieu thereof
"subsection (a) shall not apply to any plan year".
(12) Subparagraph (B) of section 125(c)(1) of the 1986 Code
(defining cafeteria plans) is amended to read as follows:
"(B) the participant may choose among 2 or more benefits
consisting of cash and qualified benefits."
(13)(A) Paragraph (1) of section 125(e) of the 1986 Code
(defining qualified benefits) is amended by inserting "and without
regard to section 89(a)" after "subsection (a)".
(B) The last sentence of section 125(b)(2) of the 1986 Code is
amended to read as follows: "For purposes of the preceding
sentence, qualified benefits shall not include benefits which
(without regard to this paragraph) are includible in gross
income."
(14) Subsection (d) of section 129 of the 1986 Code is amended
by redesignating paragraph (8) as paragraph (7).
(15) Paragraph (7) of section 129(d) of the 1986 Code (as so
redesignated) is amended --
(A) by inserting "under all plans of the employer" after
"employees" the 2nd and 3rd time it appears in subparagraph (A),
(B) by striking out "there shall be disregarded" in
subparagraph (B) and inserting in lieu thereof "a plan may
disregard", and
(C) by striking out "415(q)(7)" in subparagraph (B) and
inserting in lieu thereof "414(q)(7)".
(16) Section 414(m)(4) of the 1986 Code is amended by inserting
"and" at the end of subparagraph (A), by striking out the comma at
the end of subparagraph (B) and inserting in lieu thereof a
period, and by striking out subparagraphs (C) and (D).
(17) Paragraph (2) of section 414(t) of the 1986 Code is
amended by striking out "132," and inserting in lieu thereof "132,
162(i)(2), 162(k),".
(18) Paragraph (6) of section 129(e) of the 1986 Code is
amended by striking out "of subsection (d)" and inserting in lieu
thereof "of subsection (d) (other than paragraphs (4) and (7)
thereof)".
(19) Subparagraph (C) of section 414(n)(3) of the 1986 Code is
amended by striking out "132," and inserting in lieu thereof "132,
162(i)(2), 162(k),".
(20) Section 414(t)(1) of the 1986 Code (relating to
application of controlled group rules to certain employees) is
amended by striking out "of section 414" each place it appears.
(21) Section 89(j)(6) of the 1986 Code is amended by striking
out "described in subparagraph (A), (B), or (C) of subsection
(i)(2)".
(22)(A) Section 3121 of the 1986 Code (relating to definitions)
is amended by adding at the end thereof the following new
subsection:
"(x) BENEFITS PROVIDED UNDER CERTAIN EMPLOYEE BENEFIT PLANS. --
Notwithstanding any paragraph of subsection (a) (other than paragraph
(1)), the term 'wages' shall include any amount which is includible in
gross income by reason of section 89."
(B) Section 3231(e) of the 1986 Code (defining compensation) is
amended by adding at the end thereof the following new paragraph:
"(8) BENEFITS PROVIDED UNDER CERTAIN EMPLOYEE BENEFIT PLANS.
-- Notwithstanding any other paragraph of this subsection (other
than paragraph (2)), the term 'compensation' shall include any
amount which is includible in gross income by reason of section
89."
(C) Section 3306 of the 1986 Code (relating to definitions) is
amended by adding at the end thereof the following new subsection:
"(t) BENEFITS PROVIDED UNDER CERTAIN EMPLOYEE BENEFIT PLANS. --
Notwithstanding any paragraph of subsection (b) (other than paragraph
(1)), the term 'wages' shall include any amount which is includible in
gross income by reason of section 89."
(D) Section 3401 of the 1986 Code (relating to definitions) is
amended by adding at the end thereof the following new subsection:
"(g) BENEFITS PROVIDED UNDER CERTAIN EMPLOYEE BENEFIT PLANS. --
Notwithstanding any paragraph of subsection (a), the term 'wages' shall
include any amount which is includible in gross income by reason of
section 89."
(E) The third to last sentence of section 209 of the Social
Security Act "42 USC 409" is amended --
(i) by striking out the period at the end of clause (2) and
inserting in lieu thereof ", or", and
(ii) by inserting after clause (2) the following new clause:
"(3) Any amount required to be included in gross income under
section 89 of the Internal Revenue Code of 1986."
(F) The amendments made by this paragraph "26 USC 3121 note"
shall not apply to any individual who separated from service with
the employer before January 1, 1989.
(23)(A) Sections 3121(a)(5)(G) and 3306(b)(5)(G) of the 1986
Code are each amended by inserting "if such payment would not be
treated as wages without regard to such plan and it is reasonable
to believe that "if section 125 applied for purposes of this
section) section 125 would not treat any wages as constructively
received" after "section 125)".
(B) Section 209(e)(9) of the Social Security Act is amended by
inserting "if such payment would not be treated as wages without
regard to such plan and it is reasonable to believe that (if
section 125 applied for purposes of this section) section 125
would not treat any wages as constructively received" after
"1986)".
(24) Section 1151(h)(3) of the Reform Act "26 USC 6039B, 6039D"
is amended by striking out "Section 6039B(c)" and inserting in
lieu thereof "Section 6039D(c)".
(25) Paragraph (1) of section 1151(k) of the Reform Act "26 USC
89 note" is amended by adding at the end thereof the following new
sentence: "Notwithstanding the preceding sentence, the amendments
made by subsections (e)(1) and (i)(3)(C) shall, to the extent they
relate to sections 106, 162(i)(2), and 162(k) of the Internal
Revenue Code of 1986, apply to years beginning after 1986."
(26) Section 1151(k) of the Reform Act is amended by adding at
the end thereof the following new paragraph:
"(6) CERTAIN PLANS MAINTAINED BY EDUCATIONAL INSTITUTIONS. --
If an educational organization described in section 170(b)(1)(A)(
ii) of the Internal Revenue Code of 1986 makes an election under
this paragraph with respect to a plan described in section 125(
c)(2)(C) of such Code, the amendments made by this section shall
apply with respect to such plan for plan years beginning after the
date of the enactment of this Act."
(27)(A) Section 4976 of the 1986 Code is amended by
redesignating subsection (c) as subsection (d) and by inserting
after subsection (b) the following new subsection:
"(c) TAX ON FUNDED WELFARE BENEFIT FUNDS WHICH INCLUDE DISCRIMINATORY
EMPLOYEE BENEFIT PLAN. --
"(1) IN GENERAL. -- If --
"(A) an employer maintains a welfare benefit fund, and
"(B) a discriminatory employee benefit plan (within the meaning
of section 89) is part of such fund for such plan year,
there is hereby imposed on such employer for the taxable year
with or within which the plan year ends a tax in the amount
determined under paragraph (2).
"(2) AMOUNT OF TAX. -- The amount of the tax under paragraph
(1) shall be equal to the excess (if any) of --
"(A) the product of the highest rate of tax imposed by section
11, multiplied by the lesser of --
"(i) the aggregate excess benefits (as defined in section 89)
for such plan year, or
"(ii) the taxable income of the fund for such plan year, over
"(B) the amount of tax imposed by chapter 1 on such fund for
such plan year."
(B) Section 4976(b) of the 1986 Code is amended by adding at
the end thereof the following new paragraph:
"(5) LIMITATION IN CASE OF BENEFITS TO WHICH SECTION 89
APPLIES. -- If section 89 applies to any post-retirement medical
benefit or life insurance benefit provided by a fund, the amount
of the disqualified benefit under paragraph (1)(B) with respect to
such benefit shall not exceed the aggregate excess benefits
provided by the plan (as determined under section 89)."
(C) Section 505(a)(1) of the 1986 Code is amended by adding at
the end thereof the following new subsection: "This paragraph
shall not apply to any organization by reason of a failure to meet
the requirements of subsection (b) with respect to a benefit to
which section 89 applies."
(28) Section 89(h)(4) of the 1986 Code is amended by striking
out "subsection (h)(5)" and inserting in lieu thereof "subsection
(g)(5)".
(29) Section 89(k)(1) of the 1986 Code is amended by striking
out the last sentence and inserting in lieu thereof the following
new sentences:
"Such inclusion shall be coordinated (under regulations
prescribed by the Secretary) with any inclusion under subsection
(a) with respect to such plan. In the case of a statutory
employee benefit plan described in subsection (i)(1)(B), any
amount required to be included in gross income under this
subsection shall be included in the gross income of the
beneficiary."
(30) Section 129(d)(1)(B) of the 1986 Code is amended by
striking out "(6)" and inserting in lieu thereof "(7)".
(31)(A) Section 129(d) of the 1986 Code is amended --
(i) by striking out the last sentence of paragraph (3), and
(ii) by inserting at the end thereof the following new
paragraph:
"(8) EXCLUDED EMPLOYEES. -- For purposes of paragraphs (2),
(3), and (7), there shall be excluded from consideration employees
who are excluded from consideration under section 89( h)."
(B) Sections 117(d)(4), 120(c)(2), 127(b)(2), 132(h)(1), and
505(b)(2) of the 1986 Code are each amended --
(i) by striking out "may" the first place it appears and
inserting in lieu thereof "shall", and
(ii) by striking out "may be" the second place it appears and
inserting in lieu thereof "are".
(32) Section 505(b) of the 1986 Code is amended by adding at
the end thereof the following new paragraph:
"(7) $200,000 COMPENSATION LIMIT. -- A plan shall not be
treated as meeting the requirements of this subsection unless
under the plan the annual compensation of each employee taken into
account for any year does not exceed $200,000. The Secretary
shall adjust the $200,000 amount at the same time and in the same
manner as under section 415(d)."
(33) Section 3401(a) of the 1986 Code is amended by inserting
"or" at the end of paragraph (18), by striking out paragraph (19),
and by redesignating paragraph (20) as paragraph (19).
(34) Section 89(l)(2) of the 1986 Code is amended by striking
out "6652(l)" and inserting in lieu thereof "6652(k)".
(b) AMENDMENTS RELATED TO SECTION 1161 OF THE REFORM ACT. --
(1) Section 162(m) of teh 1986 Code (relating to special rules
for health insurance costs of self-employed individuals) is
amended by redesignating paragraph (4) as paragraph (5) and by
inserting after paragraph (3) the following new paragraph:
"(4) DEDUCTION NOT ALLOWED FOR SELF-EMPLOYMENT TAX PURPOSES.
-- The deduction allowable by reason of this subsection shall not
be taken into account in determining an individual's net earnings
from self-employment (within the meaning of section 1402(a)) for
purposes of chapter 2."
(2) Section 162(m) of the 1986 Code (relating to cross
reference) as redesignated by section 1161(a) of the Reform Act,
is redesignated as subsection (n).
(3) Section 162(m)(2)(A) of the 1986 Code is amended by
inserting: "derived by the taxpayer from the trade or business
with respect to which the plan providing the medical care coverage
is established" after "401(c))".
(4) Section 211(a) of the Social Security Act "42 USC 411" is
amended by inserting after paragraph (13) the following new
paragraph:
"(14) The deduction under section 162(m) (relating to health
insurance costs of self-employed individuals shall not be
allowed."
(c) AMENDMENTS RELATED TO SECTION 1163 OF THE REFORM ACT. --
(1) Paragraph (8) of section 129(e) of the 1986 Code (relating
to treatment of onsite facilities) is amended --
(A) by inserting "maintained by an employer" after "onsite
facility",
(B) by inserting "of dependent care assistance provided to an
employee" after "the amount",
(C) by inserting "of the facility by a dependent of the
employee" after "utilization" in subparagraph (A), and
(D) by inserting "with respect to such dependent" after
"provided" in subparagraph (B).
(2)(A) Paragraph (2) of section 129(a) of the 1986 Code is
amended to read as follows:
"(2) LIMITATION OF EXCLUSION. --
"(A) IN GENERAL. -- The amount which may be excluded under
paragraph (1) for dependent care assistance with respect to
dependent care services provided during a taxable year shall not
exceed $5,000 ($2,500 in the case of a separate return by a
married individual).
"(B) YEAR OF INCLUSION. -- The amount of any excess under
subparagraph (A) shall be included in gross income in the taxable
year in which the dependent care services were provided (even if
payment of dependent care assistance for such services occurs in a
subsequent taxable year).
"(C) MARITAL STATUS. -- For purposes of this paragraph,
marital status shall be determined under the rules of paragraphs
(3) and (4) of section 21(e)."
(B) Section 6051(a) of the 1986 Code is amended by striking out
the period at the end of paragraph (8) and inserting in lieu
thereof ", and", and by adding at the end thereof the following
new paragraph:
"(9) the total amount incurred for dependent care assistance
with respect to such employee under a dependent care assistance
program described in section 129(d)."
(C)(i) Except as provided in this subparagraph, "26 USC 129
note" the amendments made by this paragraph shall apply to taxable
years beginning after December 31, 1987.
(ii) A taxpayer may elect to have the amendment made by
subparagraph (A) apply to taxable years beginning in 1987.
(iii) In the case of a taxpayer not making an election under
clause (ii), any dependent care assistance provided in a taxable
year beginning in 1987 with respect to which reimbursement was not
received in such taxable year shall be treated as provided in the
taxpayer's first taxable year beginning after December 31, 1987.
(d) AMENDMENT RELATED TO SECTION 1164 OF THE REFORM ACT. -- Section
119(d)(2) of the 1986 Code is amended --
(1) by striking out "(as of the close of the calendar year in
which the taxable year begins)" in subparagraph (A)(i), and
(2) by adding at the end thereof the following:
"The appraised value under subparagraph (A)(i) shall be
determined as of the close of the calendar year in which the
taxable year begins, or, in the case of a rental period not
greater than 1 year, at any time during the calendar year in which
such period begins."
(e) AMENDMENTS RELATED TO SECTION 1166 OF THE REFORM ACT. -- Section
7701(a)(20) of the 1986 Code (defining employee) is amended --
(1) by striking out "106, and 125" and inserting in lieu
thereof "and 106", and
(2) by inserting "and for purposes of applying section 125 with
respect to cafeteria plans," before "the term".
(f) AMENDMENTS RELATED TO SECTION 1168 OF THE REFORM ACT. --
(1) Paragraph (1) of section 134(b) of the 1986 Code is amended
by striking out "or regulation thereunder" and inserting in lieu
thereof ", regulation, or administrative practice".
(2)(A) Section 134(b)(1) of the 1986 Code is amended by
inserting "(other than personal use of a vehicle)" after "in-kind
benefit".
(B) The amendment made by subparagraph (A) "26 USC 134 note"'
shall apply to taxable years beginning after December 31, 1986.
(3) Section 134(b)(3)(A) of the 1986 Code is amended by
striking out "under any provision of law or regulation described
in paragraph (1)".
(4) Section 1168(c) of the Reform Act "26 USC 134 note" is
amended by striking out "1986" and inserting in lieu thereof
"1984".
(g) AMENDMENTS RELATED TO SECTION 1172 OF THE REFORM ACT. --
(1) Section 1172(b)(1)(A) of the Reform Act "26 USC 409" is
amended by inserting "each place it appears" before the comma.
(2) Paragraphs (2) and (3) of section 409(n) of the 1986 Code
(relating to securities received in certain transactions) is
amended by inserting "or section 2057" after "section 1042" each
place it appears.
(3) Paragraph (1) of section 2057(b) of the 1986 Code (relating
to qualified sale) is amended by striking out "is".
(h) AMENDMENTS RELATED TO SECTION 1173 OF THE REFORM ACT. --
(1) Section 133 of the 1986 Code (relating to exclusion of
interest on securities acquisition loans) is amended by adding at
the end thereof the following new subsection:
"(e) PERIOD TO WHICH INTEREST EXCLUSION APPLIES. --
"(1) IN GENERAL. -- In the case of --
"(A) an original securities acquisition loan, and
"(B) any securities acquisition loan (or series of such loans)
used to refinance the original securities acquisiton loan,
subsection (a) shall apply only to interest accruing during the
excludable period with respect to the original securities
acquisition loan.
"(2) EXCLUDABLE PERIOD. -- For purposes of this subsection,
the term 'excludable period' means, with respect to any original
securities acquisition loan --
"(A) IN GENERAL. -- The 7-year period beginning on the date of
such loan.
"(B) LOANS DESCRIBED IN SUBSECTION (b)(1)(A). -- If the term
of an original securities acquisition loan described in subsection
(b)(1)(A) is greater than 7 years, the term of such loan. This
subparagraph shall not apply to a loan described in subsection
(b)(3)(B).
"(3) ORIGINAL SECURITIES ACQUISITION LOAN. -- For the purposes
of this subsection, the term 'original securities acquisition
loan' means a securities acquisition loan described in
subparagraph (A) or (B) of subsection (b)(1)."
(2)(A) Section 133(b) of the 1986 Code (defining securities
acquisition loan) is amended --
(i) by striking out "or are used to refinance such a loan," in
paragraph (1)(A),
(ii) by striking out ", except that this subparagraph shall not
apply to any loan the commitment period of which exceeds 7 years"
in paragraph (1)(B), and
(iii) by adding at the end thereof the following new paragraph:
"(5) TREATMENT OF REFINANCINGS. -- The term 'securities
acquisition loan' shall include any loan which --
"(A) is (or is part of a series of loans) used to refinance a
loan described in subparagraph (A) or (B) of paragraph (1), and
"(B) meets the requirements of paragraphs (2) and (3)."
(B) Subparagraph (B) of section 133(b)(3) of the 1986 Code is
amended to read as follows:
"(B) repayment terms providing for more rapid repayment of
principal or interest on such loan, but only if allocations under
the plan attributable to such repayment do not discriminate in
favor of highly compensated employees (within the meaning of
section 414(g))."
(3) Section 404(k) of the 1986 Code is amended --
(A) by inserting "(whether or not allocated to participants)"
after "employer securities" in paragraph (2)(C), and
(B) by adding at the end thereof the following new sentence:
"Paragraph (2)(C) shall not apply to dividends from employer
securities which are allocated to any participant unless the plan
provides that employer securities with a fair market value not
less than the amount of such dividends are allocated to such
participant for the year which (but for paragraph (2)(C)) such
dividends would have been allocated to such participant."
(4) Subparagraph (C) of section 852(b)(5) of the 1986 Code
(relating to interest on certain loans used to acquire employer
securities) is amended by striking out "paragraph" and inserting
in lieu thereof "section".
(5)(A) The amendments made by paragraphs (1) and (2) "26 USC
133 note" shall apply to --
(i) any loan used to acquire employer securities after July 18,
1984, and
(ii) loans made after July 18, 1984, which were used (or were
part of a series of loans used) to refinance any loan which --
(I) was used to acquire employer securities after May 23, 1984
(July 18, 1984, in the case of a loan described in section 133(
b)(3)(B) of the Internal Revenue Code of 1986), and
(II) met the requirements of section 133 (other than subsection
(b)(2) thereof) of such Code as in effect as of the later of the
date on which the loan was made, or July 19, 1984.
In no event shall such amendments apply to any loan described
in section 133(b)(1)(B) of such Code which is made before October
22, 1986 (or loan used, or part of a series of loans used, to
refinance such a loan).
(B) Subparagraph (B) of section 1173(c)(2) of the Reform Act
"26 USC 133 note" is amended to read as follows:
"(B) Section 133(b)(1)(A) of the Internal Revenue Code of 1986,
as amended by subsection (b)(2), shall apply to any loan used (or
part of a series of loans used) to refinance a loan which --
"(i) was used to acquire employer securities after May 23,
1984, and
"(ii) met the requirements of section 133 of the Internal
Revenue Code of 1986 as in effect as of the later of --
"(I) the date on which the loan was made, or
"(II) July 19, 1984."
(6) Section 404(k) of the 1986 Code is amended by striking out
"merely by reason of any distribution" in the third sentence and
inserting in lieu thereof "or as engaging in a prohibited
transaction for purposes of section 4975(d)(3) merely by reason of
any distribution or payment".
(i) AMENDMENTS RELATED TO SECTION 1174 OF THE REFORM ACT. --
(1) Clause (ii) of section 409(o)(1)(A) of the 1986 Code
(relating to distribution requirement) is amended by striking out
"such year" and inserting in lieu thereof "distribution is
required to begin under this clause".
(2) Section 1174(a)(2) of the Reform Act "26 USC 409 note" is
amended by striking out "plan terminations" and inserting in lieu
thereof "distributions".
(3) Section 409(o)(1)(A) of the 1986 Code is amended by
striking out "unless the participant otherwise elects" and
inserting in lieu thereof "if the participant and, if applicable
pursuant to sections 401(a)(11) and 417, with the consent of the
participant's spouse elects".
(j) AMENDMENTS RELATED TO SECTION 1175 OF THE REFORM ACT. --
(1) Subclause (II) of section 401(a)(28)(B) of the 1986 Code
(relating to method of meeting requirements) is amended by
inserting "and within 90 days after the period during which the
election may be made, the plan invests the portion of the
participant's account covered by the election in accordance with
such election" after "clause (i)".
(2) Clause (iv) of section 401(a)(28)(B) of the 1986 Code is
amended to read as follows:
"(iv) QUALIFIED ELECTION PERIOD. -- For purposes of this
subparagraph, the term 'qualified election period' means the
6-plan-year period beginning with the later of --
"(I) the 1st plan year in which the individual first became a
qualified participant, or
"(II) the 1st plan year beginning after December 31, 1986.
For purposes of the preceding sentence, an employer may elect
to treat an individual first becoming a qualified participant in
the 1st plan year beginning in 1987 as having become a participant
in the 1st plan year beginning in 1988."
(3) The last sentence of section 409(d) of the 1986 Code
(relating to employer securities must stay in the plan) is amended
by inserting "or to any distribution or reinvestment required
under section 401(a)(28)" after "section 401(a)(9)".
(4) Section 4978(d) of the 1986 Code (relating to section not
to apply to certain dispositions) is amended by adding at the end
thereof the following new paragraph:
"(4) DISPOSITIONS TO MEET DIVERSIFICATION REQUIREMENTS. -- This
section shall not apply to any disposition of qualified securities
which is required under section 401(a)(28)."
(5) Section 409(h) of the 1986 Code is amended by adding at the
end thereof the following new paragraph:
"(7) EXCEPTION WHERE EMPLOYEE ELECTED DIVERSIFICATION. --
Paragraph (1)(A) shall not apply with respect to the portion of
the participant's account which the employee elected to have
reinvested under section 401(a)(28)(B)."
(6) Section 401(a)(28)(B) of the 1986 Code is amended by adding
at the end thereof the following new clause:
"(v) COORDINATION WITH DISTRIBUTION RULES. -- Any distribution
required by this subparagraph shall not be taken into account in
determining whether --
"(I) a subsequent distribution is a lump-sum distribution under
section 402(e)(4)(A), or
"(II) section 402(a)(5)(D)(iii) applies to a subsequent
distribution."
(k) AMENDMENTS RELATED TO SECTION 1176 OF THE REFORM ACT. --
(1) Section 401(a)(22) of the 1986 Code is amended by striking
out "is not publicly traded" each place it appears and inserting
in lieu thereof "is not readily tradable on an established
market".
(2) Section 401(a)(22) of the 1986 Code is amended by adding at
the end thereof the following new sentence: "For purposes of the
preceding sentence, subsections (b), (c), (m), and (o) of section
414 shall not apply except for determining whether stock of the
employer is not readily tradable on an established market."
(3) Section 409(l)(4) of the 1986 Code (relating to nonvoting
common stock may be acquired in certain cases), as added by
section 1176(b) of the Reform Act, is redesignated as paragraph
(5).
(l) AMENDMENTS RELATED TO SECTION 1177 OF THE REFORM ACT. --
(1) Paragraph (2) of section 1177(b) of the Reform Act "26 USC
38 note" is amended by striking out "section 143(d)(3)(C)" and
inserting in lieu thereof "section 146(d)(3)(C)".
(2) Subsection (b) of section 1177 of the Reform Act is amended
by striking out "made by this subtitle" and inserting in lieu
thereof "made by section 1175".
(3) If any newspaper corporation described in section 1177(b)
of the Reform Act, "26 USC 38 note" as amended by this subsection,
pays in cash a dividend within 60 days after the date of the
enactment of this Act to the corporation's employee stock
ownership plans and if a corporate resolution declaring such
dividend was adopted before November 30, 1987, and such resolution
specifies that such dividend shall be contingent upon passage by
the Congress of technical corrections, then such dividend (to the
extent the aggregate amount so paid does not exceed $3,500,000)
shall be treated as if it had been declared and paid in 1987 for
all purposes of the Internal Revenue Code of 1986.
SEC. 1012. AMENDMENTS RELATED TO TITLE XII OF THE REFORM ACT.
(a) AMENDMENTS RELATED TO SECTION 1201 OF THE REFORM ACT. --
(1)(A) Subparagraph (C) of section 904(d)(2) of the 1986 Code
is amended to read as follows:
"(C) FINANCIAL SERVICES INCOME. --
"(i) IN GENERAL. -- Except as otherwise provided in this
subparagraph, the term 'financial services income' means any
income which is received or accrued by any person predominantly
engaged in the active conduct of a banking, insurance, financing,
or similar business, and which is --
"(I) described in clause (ii),
"(II) passive income (determined without regard to subclause
(I) of subparagraph (A)(iii)), or
"(III) export financing interest which (but for subparagraph
(B)(ii)) would be high withholding tax interest.
"(ii) GENERAL DESCRIPTION OF FINANCIAL SERVICES INCOME. --
Income is described in this clause if such income is --
"(I) derived in the active conduct of a banking, financing, or
similar business,
"(II) derived from the investment by an insurance company of
its unearned premiums or reserves ordinary and necessary for the
proper conduct of its insurance business, or
"(III) of a kind which would be insurance income as defined in
section 953(a) determined without regard to those provisions of
paragraph (1)(A) of such section which limit insurance income to
income from countries other than the country in which the
corporation was created or organized.
"(iii) EXCEPTIONS. -- The term 'financial services income'
does not include --
"(I) any high withholding tax interest,
"(II) any dividend from a noncontrolled section 902
corporation, and
"(III) any export financing interest not described in clause
(i)(III)."
(B) Clause (i) of section 864(d)(5)(A) of the 1986 Code is
amended by striking out "(C)(iii)" and inserting in lieu thereof
"(C)(iii)(III)".
(2) Subparagraph (D) of section 904(d)(2) of the 1986 Code is
amended by adding at the end thereof the following new sentence:
"Such term does not include any dividend from a noncontrolled
section 902 corporation and does not include any financial
services income."
(3) Paragraph (3) of section 904(d) of the 1986 Code is amended
by adding at the end thereof the following new subparagraph:
"(H) EXCEPTION FOR CERTAIN HIGH WITHHOLDING TAX INTEREST. --
This paragraph shall not apply to any amount which --
"(i) without regard to this paragraph, is high withholding tax
interest (including any amount treated as high withholding tax
interest under paragraph (2)(B)(iii)), and
"(ii) would (but for this subparagraph) be treated as financial
services income under this paragraph.
The amount to which this paragraph does not apply by reason of
the preceding sentence shall not exceed the interest or equivalent
income of the controlled foreign corporation taken into account in
determining financial services income without regard to this
subparagraph."
(4) Subparagraph (E) of section 904(d)(3) of the 1986 Code is
amended --
(A) by striking out the first sentence and inserting in lieu
thereof the following: "If a controlled foreign corporation meets
the requirements of section 954(b)(3)(A) (relating to de minimis
rule) for any taxable year, for purposes of this paragraph, none
of its foreign base company income (as defined in section 954(a)
without regard to section 954(b)(5)) and none of its gross
insurance income (as defined in section 954(b)(3)(C)) for such
taxable year shall be treated as income in a separate category,
except that this sentence shall not apply to any income which
(without regard to this sentence) would be treated as financial
services income.", and
(B) by striking out "income (other than high withholding tax
interest and dividends from a noncontrolled section 902
corporation)" and inserting in lieu thereof "passive income".
(5) Paragraph (2) of section 1201(e) of the Reform Act "26 USC
904 note" is amended by adding at the end thereof the following
new subparagraph:
"(J) TREATMENT OF AFFILIATED GROUP FILING CONSOLIDATED RETURN.
-- For purposes of this paragraph, all members of an affiliated
group of corporations filing a consolidated return shall be
treated as 1 corporation."
(6) Subparagraph (A) of section 904(d)(2) of the 1986 Code is
amended --
(A) by striking out "The term" in clause (ii) and inserting in
lieu thereof "Except as provided in clause (iii), the term", and
(B) by adding at the end thereof the following new clause:
"(iv) CLARIFICATION OF APPLICATION OF SECTION 864(d)(6). -- In
determining whether any income is of a kind which would be foreign
personal holding company income, the rules of section 864(d)(6)
shall apply only in the case of income of a controlled foreign
corporation."
(7) Subparagraph (F) of section 904(d)(3) of the 1986 Code is
amended to read as follows:
"(F) SEPARATE CATEGORY. -- For purposes of this paragraph --
"(i) IN GENERAL. -- Except as provided in clause (ii), the
term 'separate category' means any category of income described in
subparagraph (A), (B), (C), (D), or (E) of paragraph (1).
"(ii) COORDINATION WITH HIGH-TAXED INCOME PROVISIONS. --
"(I) In determining whether any income of a controlled foreign
corporation is in a separate category, subclause (III) of
paragraph (2)(A)(iii) shall not apply.
"(II) Any income of the taxpayer which is treated as income in
a separate category under this paragraph shall be so treated
notwithstanding any provision of paragraph (2); except that the
determination of whether any amount is high-taxed income shall be
made after the application of this paragraph."
(8) Clause (iii) of section 904(d)(2)(B) of the 1986 Code is
amended to read as follows:
"(iii) REGULATIONS. -- The Secretary may by regulations
provide that --
"(I) amounts (not otherwise high withholding tax interest)
shall be treated as high withholding tax interest where necessary
to prevent avoidance of the purposes of this subparagraph, and
"(II) a tax shall not be treated as a withholding tax or other
tax imposed on a gross basis if such tax is in the nature of a
prepayment of a tax imposed on a net basis."
(9) Clause (ii) of section 904(d)(2)(I) of the 1986 Code is
amended by striking out "except to the extent that" and all that
follows down through "and" at the end thereof and inserting in
lieu thereof the following:
"except that --
"(I) such taxes shall be treated as paid or accrued with
respect to shipping income to the extent the taxpayer establishes
to the satisfaction of the Secretary that such taxes were paid or
accrued with respect to such income,
"(II) in the case of a person described in subparagraph (C)(
i), such taxes shall be treated as paid or accrued with respect to
financial services income to the extent the taxpayer establishes
to the satisfaction of the Secretary that such taxes were paid or
accrued with respect to such income, and
"(III) such taxes shall be treated as paid or accrued with
respect to high withholding tax interest to the extent the
taxpayer establishes to the satisfaction of the Secretary that
such taxes were paid or accrued with respect to such income, and".
(10) Clause (i) of section 904(d)(2)(E) of the 1986 Code is
amended by striking out "during which it was a controlled foreign
corporation" and inserting in lieu thereof "during which it was a
controlled foreign corporation and except as provided in
regulations, the taxpayer was a United States shareholder in such
corporation".
(11) Subparagraph (E) of section 904(d)(1) of the 1986 Code is
amended by striking out "dividends" and inserting in lieu thereof
"in the case of a corporation, dividends".
(b) AMENDMENT RELATED TO SECTION 1202 OF THE REFORM ACT. --
(1) Paragraph (7) of section 902(c) of the 1986 Code is amended
--
(A) by striking out "secton 960" and inserting in lieu thereof
"section 960", and
(B) by striking out "this section" the second place it appears
and inserting in lieu thereof "this section and section 960".
(2) Paragraph (1) of section 902(c) of the 1986 Code is amended
by striking out "sections 964 and 986" and inserting in lieu
thereof "sections 964(a) and 986".
(3) For purposes of sections 902 and 960 of the 1986 Code, "26
USC 902 note" the increase in earnings and profits of any foreign
corporation under section 1023(e)(3)(C) of the Reform Act shall be
taken into account ratably over the 10-year period beginning with
the corporation's first taxable year beginning after December 31,
1986.
(4) Paragraph (3) of section 404A(d) of the 1986 Code is
amended by striking out "the amount determined" and inserting in
lieu thereof "except as provided in regulations, the amount
determined".
(c) AMENDMENT RELATED TO SECTION 1203 OF THE REFORM ACT. -- Paragraph
(6) of section 904(f) of the 1986 Code is amended by adding at the end
thereof the following new subparagraph:
"(F) DISPOSITIONS. -- If any separate limitation loss for any
taxable year is allocated against any separate limitation income
for such taxable year, except to the extent provided in
regulations, rules similar to the rules of paragraph (3) shall
apply to any disposition of property if gain from such disposition
would be in the income category with respect to which there was
such separate limitation loss."
(d) AMENDMENTS RELATED TO SECTION 1211 OF THE REFORM ACT. --
(1) Subsection (d) of section 865 of the 1986 Code is amended
by adding at the end thereof the following new paragraph:
"(4) COORDINATION WITH SUBSECTION (c). --
"(A) GAIN NOT IN EXCESS OF DEPRECIATION ADJUSTMENTS SOURCED
UNDER SUBSECTION (c). -- Notwithstanding paragraph (1), any gain
from the sale of an intangible shall be sourced under subsection
(c) to the extent such gain does not exceed the depreciation
adjustments with respect to such intangible.
"(B) SUBSECTION (c)(2) NOT TO APPLY TO INTANGIBLES. --
Paragraph (2) of subsection (c) shall not apply to any gain from
the sale of an intangible."
(2) Subparagraph (A) of section 865(e)(1) of the 1986 Code is
amended by striking out "(d), or (f)" and inserting in lieu
thereof "(d)(1)(B) or (3), or (f)".
(3)(A) Clause (ii) of section 865(g)(1)(A) of the 1986 Code is
amended by striking out "partnership,".
(B) Subsection (h) of section 865 of the 1986 Code is amended
by adding at the end thereof the following new paragraph:
"(5) TREATMENT OF PARTNERSHIPS. -- In the case of a
partnership, except as provided in regulations, this section shall
be applied at the partner level."
(4) Subsection (f) of section 865 of the 1986 Code is amended
to read as follows:
"(f) STOCK OF AFFILIATES. -- If --
"(1) a United States resident sells stock in an affiliate which
is a foreign corporation,
"(2) such sale occurs in a foreign country in which such
affiliate is engaged in the active conduct of a trade or business,
and
"(3) more than 50 percent of the gross income of such affiliate
for the 3-year period ending with the close of such affiliate's
taxable year immediately preceding the year in which the sale
occurred was derived from the active conduct of a trade or
business in such foreign country,
any gain from such sale shall be sourced outside the United States.
For purposes of paragraphs (2) and (3), the United States resident may
elect to treat an affiliate and all other corporations which are wholly
owned (directly or indirectly) by the affiliate as one corporation."
(5) Effective with respect to taxable years beginning after
December 31, 1987, subparagraph (B) of section 865(e)(2) of the
1986 Code is amended to read as follows:
"(B) EXCEPTION. -- Subparagraph (A) shall not apply to any
sale of inventory property which is sold for use, disposition, or
consumption outside the United States if an office or other fixed
place of business of the taxpayer in a foreign country materially
participated in the sale."
(6)(A) Subsection (g) of section 865 of the 1986 Code is
amended by adding at the end thereof the following new paragraph:
"(3) SPECIAL RULE FOR CERTAIN STOCK SALES BY RESIDENTS OF
PUERTO RICO. -- Paragraph (2) shall not apply to the sale by an
individual who was a bona fide resident of Puerto Rico during the
entire taxable year of stock in a corporation if --
"(A) such corporation is engaged in the active conduct of a
trade or business in Puerto Rico, and
"(B) more than 50 percent of its gross income for the 3-year
period ending with the close of such corporation's taxable year
immediately preceding the year in which such sale occurred was
derived from the active conduct of a trade or business in Puerto
Rico.
For purposes of the preceding sentence, the taxpayer may elect
to treat a corporation and all other corporations which are wholly
owned (directly or indirectly) by such corporation as one
corporation."
(B) Subsection (i) of section 865 of the 1986 Code is amended
by striking out "and" at the end of paragraph (1), by striking out
the period at the end of paragraph (2) and inserting in lieu
thereof ", and", and by adding at the end thereof the following
new paragraph:
"(3) providing that, subject to such conditions (which may
include provisions comparable to section 877) as may be provided
in such regulations, subsections (e)(1)(B) and (g)(2) shall not
apply for purposes of sections 931, 933, and 936."
(7) Subparagraph (B) of section 864(c)(4) of the 1986 Code is
amended by striking out "or" at the end of clause (i), by striking
out the period at the end of clause (ii) and inserting in lieu
thereof "; or", and by adding at the end thereof the following
new clause:
"(iii) is derived from the sale or exchange (outside the United
States) through such office or other fixed place of business of
personal property described in section 1221(1), except that this
clause shall not apply if the property is sold or exchanged for
use, consumption, or disposition outside the United States and an
office or other fixed place of business of the taxpayer in a
foreign country participated materially in such sale."
(8) Section 865 of the 1986 Code is amended by redesignating
subsections (h), (i), and (j) as subsections (i), (j), and (k),
respectively, and by inserting after subsection (g) the following
new subsection:
"(h) GREATMENT OF GAINS FROM SALE OF CERTAIN STOCK OR INTANGIBLES AND
FROM CERTAIN LIQUIDATIONS. --
"(1) IN GENERAL. -- In the case of gain to which this
subsection applies --
"(A) such gain shall be sourced outside the United States, but
"(B) subsections (a), (b), and (c) of section 904 and sections
902, 907, and 960 shall be applied separately with respect to such
gain.
"(2) GAIN TO WHICH SUBSECTION APPLIES. -- This subsection
shall apply to --
"(A) GAIN FROM SALE OF CERTAIN STOCK OR INTANGIBLES. -- Any
gain --
"(i) which is from the sale of stock in a foreign corporation
or an intangible (as defined in subsection (d)(2)) and which would
otherwise be sourced in the United States under this section,
"(ii) which, under a treaty obligation of the United States
(applied without regard to this section), would be sourced outside
the United States, and
"(iii) with respect to which the taxpayer chooses the benefits
of this subsection.
"(B) GAIN FROM LIQUIDATION IN POSSESSION. -- Any gain which is
derived from the receipt of any distribution in liquidation of a
corporation --
"(i) which is organized in a possession of the United States,
and
"(ii) more than 50 percent of the gross income of which during
the 3-taxable year period ending with the close of the taxable
year immediately preceding the taxable year in which the
distribution is received is from the active conduct of a trade or
business in such possession."
(9) Subparagraph (A) of section 865(e)(1) of the 1986 Code is
amended by striking out "outside the United States" the first
place it appears and inserting in lieu thereof "in a foreign
country".
(10) Subparagraph (B) of section 864(c)(4) of the 1986 Code is
amended --
(A) by striking out "(including any gain or loss realized on
the sale or exchange of such property)" in clause (i), and
(B) by striking out ", or gain or loss from the sale or
exchange of stock or notes, bonds, or other evidences of
indebtedness" in clause (ii).
(11) Clause (i) of section 865(g)(1)(A) of the 1986 Code is
amended to read as follows:
"(i) any individual who --
"(I) is a United States citizen or a resident alien and does
not have a tax home (as defined in section 911(d)(3)) in a foreign
country, or
"(II) is a nonresident alien and has a tax home (as so defined)
in the United States, and".
(12) Paragraph (2) of section 865(d) of the 1986 Code is
amended by inserting "franchise," after "trade brand,".
(e) AMENDMENTS RELATED TO SECTION 1212 OF THE REFORM ACT. --
(1)(A) Paragraph (3) of section 883(c) of the 1986 Code is
amended to read as follows:
"(3) SPECIAL RULES FOR PUBLICLY TRADED CORPORATIONS. --
"(A) EXCEPTION. -- Paragraph (1) shall not apply to any
corporation which is organized in a foreign country meeting the
requirements of paragraph (1) or (2) of subsection (a) (as the
case may be) and the stock of which is primarily and regularly
traded on an established securities market in such foreign
country, another foreign country meeting the requirements of such
paragraph, or the United States.
"(B) TREATMENT OF STOCK OWNED BY PUBLICLY TRADED CORPORATION.
-- Any stock in another corporation which is owned (directly or
indirectly) by a corporation meeting the requirements of
subparagraph (A) shall be treated as owned by individuals who are
residents of the foreign country in which the corporation meeting
the requirements of subparagraph (A) is organized."
(B) Paragraph (1) of section 883(c) of the 1986 Code is amended
--
(i) by striking out "Paragraphs (1) and (2) of subsection (a)"
and inserting in lieu thereof "Paragraph (1) or (2) of subsection
(a) (as the case may be)", and
(ii) by striking out "such paragraphs (1) and (2)" and
inserting in lieu thereof "such paragraph".
(2)(A) Paragraphs (1) and (2) of section 883(a) of the 1986
Code are each amended by striking out "to citizens of the United
States and".
(B) Paragraphs (1) and (2) of section 872(b) of the 1986 Code
are each amended by striking out "to citizens of the United States
and to corporations orgnized in the United States" and inserting
in lieu thereof "to individual residents of the United States".
(3)(A) The section heading for section 863 of the 1986 Code is
amended to read as follows:
"SEC. 863. SPECIAL RULES FOR DETERMINING SOURCE."
(B) The table of sections for part I of subchapter N of chapter
1 of the 1986 Code is amended by striking out the item relating to
section 863 and inserting in lieu thereof the following:
"Sec. 863. Special rules for determining source."
(4) Subsection (c) of section 862 is hereby repealed.
(5) Paragraphs (1) and (2) of section 872(b) of the 1986 Code
and paragraphs (1) and (2) of section 883(a) of the 1986 Code are
each amended by striking out "operation" and inserting in lieu
thereof "international operation".
(6) Paragraph (1) of section 887(b) of the 1986 Code is amended
--
(A) by striking out "under section 863(c)" and inserting in
lieu thereof "under section 863(c)(2)", and
(B) by adding at the end thereof the following new sentence:
"To the extent provided in regulations, such term does not include
any income of a kind to which an exemption under paragraph (1) or
(2) of section 883(a) would not apply."
(f) AMENDMENT RELATED TO SECTION 1213 OF THE REFORM ACT. -- Paragraph
(2) of section 863(e) of the 1986 Code is amended by striking out
"foreign country" each place it appears and inserting in lieu thereof
"foreign country (or possession of the United States)".
(g) AMENDMENTS RELATED TO SECTION 1214 OF THE REFORM ACT. --
(1)(A) Paragraph (1) of section 1214(d) of the Reform Act "26
USC 861 note" is amended to read as follows:
"(1) IN GENERAL. -- The amendments made by this section shall
apply to payments made in a taxable year of the payor beginning
after December 31, 1986."
(B) A taxpayer may elect not to have the amendment made by
subparagraph (A) apply and to have section 1214(d)(1) of the
Reform Act apply as in effect before such amendment. Such
election shall be made at such time and in such manner as the
Secretary of the Treasury or his delegate may prescribe.
(2) Subparagraph (B) of section 1214(d)(2) of the Reform Act is
amended by striking out "section 904(d)(2)(G)" and inserting in
lieu thereof "section 904(d)(2)(H)".
(3) Subparagraph (B) of section 861(c)(1) of the 1986 Code is
amended --
(A) by striking out "subchapter)" in clause (i) and inserting
in lieu thereof "subchapter) or, in the case of a corporation, is
attributable to income so derived by a subsidiary of such
corporation",
(B) by striking out "or chain of subsidiaries of such
corporation" in clause (ii), and
(C) by adding at the end thereof the following new sentence:
"For purposes of this subparagraph, the term 'subsidiary' means
any corporation in which the corporation referred to in this
subparagraph owns (directly or indirectly) stock meeting the
requirements of section 1504(a)(2) (determined by substituting '50
percent' for '80 percent' each place it appears)."
(4) Paragraph (1) of section 2105(b) of the 1986 Code is
amended by striking out "section 861(c), if any interest thereon
would be treated by reason of section 861(a)(1)(A) as income from
sources without the United States" and inserting in lieu thereof
"section 871(i)(3), if any interest thereon would not be subject
to tax by reason of section 871(i)(1)".
(5) Paragraph (2) of section 864(c) of the 1986 Code is amended
by striking out the last sentence.
(6) Paragraph (3) of section 907(c) of the 1986 Code is
amended:
(A) by striking out subparagraph (B) and redesignating
subparagraphs (C) and (D) as subparagraphs (B) and (C),
respectively, and
(B) by striking out "and dividends described in subparagraph
(B)".
(7) Subsection (a) of section 1442 of the 1986 Code is amended
--
(A) by striking out "and the references in" and inserting in
lieu thereof "the references in", and
(B) by inserting before the period at the end thereof the
following: ", and the reference in section 1441(c)(10) to section
871(i)(2) shall be treated as referring to section 881( d)".
(h) AMENDMENTS RELATED TO SECTION 1215 OF THE REFORM ACT. --
(1) Paragraph (4) of section 864(e) of the 1986 Code is amended
to read as follows:
"(4) BASIS OF STOCK IN NONAFFILIATED 10-PERCENT OWNED
CORPORATIONS ADJUSTED FOR EARNINGS AND PROFITS CHANGES. --
"(A) IN GENERAL. -- For purposes of allocating and
apportioning expenses on the basis of assets, the adjusted basis
of any stock in a nonaffiliated 10-percent owned corporation shall
be --
"(i) increased by the amount of the earnings and profits of
such corporation attributable to such stock and accumulated during
the period the taxpayer held such stock, or
"(ii) reduced (but not below zero) by any deficit in earnings
and profits of such corporation attributable to such stock for
such period.
"(B) NONAFFILIATED 10-PERCENT OWNED CORPORATION. -- For
purposes of this paragraph, the term 'nonaffiliated 10-percent
owned corporation' means any corporation if --
"(i) such corporation is not included in the taxpayer's
affiliated group, and
"(ii) members of such affiliated group own 10 percent or more
of the total combined voting power of all classes of stock of such
corporation entitled to vote.
"(C) EARNINGS AND PROFITS OF LOWER TIER CORPORATIONS TAKEN INTO
ACCOUNT. --
"(i) IN GENERAL. -- If, by reason of holding stock in a
nonaffiliated 10-percent owned cvorporation, the taxpayer is
treated under clause (iii) as owning stock in another corporation
with respect to which the stock ownership requirements of clause
(ii) are met, the adjustment under subparagraph (A) shall include
an adjustment for the amount of the earnings and profits (or
deficit therein) of such other corporation which are attributable
to the stock the taxpayer is so treated as owning and to the
period during which the taxpayer is treated as owning such stock.
"(ii) STOCK OWNERSHIP REQUIREMENTS. -- The stock ownership
requirements of this clause are met with respect to any
corporation if members of the taxpayer's affiliated group own
(directly or through the application of clause (iii)) 10 percent
or more of the total combined voting power of all classes of stock
of such corporation entitled to vote.
"(iii) STOCK OWNED THROUGH ENTITIES. -- For purposes of this
subparagraph, stock owned (directly or indirectly) by a
corporation, partnership, or trust shall be treated as being owned
proportionately by its shareholders, partners, or beneficiaries.
Stock considered to be owned by a person by reason of the
application of the preceding sentence, shall, for purposes of
applying such sentence, be treated as actually owned by such
person.
"(D) COORDINATION WITH SUBPART F, ETC. -- For purposes of this
paragraph, proper adjustment shall be made to the earnings and
profits included in gross income under section 951 or under any
other provision of this title and reflected in the adjusted basis
of the stock."
(2)(A) Paragraph (1) of section 864(e) of the 1986 Code is
amended by striking out "from sources outside the United States".
(B) Subsection (h) of section 936 of the 1986 Code is amended
by redesignating paragraph (7) as paragraph (8) and by inserting
after paragraph (6) the following new paragraph:
"(7) SECTION 864(e)(1) NOT TO APPLY. -- This subsection shall
be applied as if section 864(e)(1) (relating to treatment of
affiliated groups had not been enacted."
(C) The heading for part I of subchapter N of chapter 1 of the
1986 Code is amended to read as follows:
(D) The table of parts for subchapter N of chapter 1 of the
1986 Code is amended by striking out the item relating to part I
and inserting in lieu thereof the following:
"Part I. Source rules and other general rules relating to
foreign income."
(3) Paragraph (3) of section 864(e) of the 1986 Code is amended
by striking out the last sentence and inserting in lieu thereof
the following: "A similar rule shall apply in the case of the
portion of any dividend (other than a qualifying dividend as
defined in section 243(b)) equal to the deduction allowable under
section 243 or 245(a) with respect to such dividend and in the
case of a like portion of any stock the dividends on which would
be so deductible and would not be qualifying dividends (as so
defined)."
(4)(A) Paragraph (5) of section 864(e) of the 1986 Code is
amended by adding at the end thereof the following new
subparagraph:
"(D) TREATMENT OF BANK HOLDING COMPANIES. -- To the extent
provided in regulations --
"(i) a bank holding company (within the meaning of section 2(
a) of the Bank Holding Company Act of 1956), and
"(ii) any subsidiary of a financial institution described in
section 581 or 591 or of any bank holding company if such
subsidiary is predominantly engaged (directly or indirectly) in
the active conduct of a banking, financing, or similar business,
shall be treated as a corporation described in subparagraph
(C)."
(B) Subparagraph (B) of section 864(e)(5) of the 1986 Code is
amended by adding at the end thereof the following new sentence:
"This subparagraph shall not apply for purposes of paragraph (6)."
(5) Paragraph (6) of section 864(e) of the 1986 Code is amended
by striking out "directly allocable and apportioned" and inserting
in lieu thereof "directly allocable or apportioned".
(6)(A) Paragraph (7) of section 864(e) of the 1986 Code is
amended by striking out "and" at the end of subparagraph (B), by
striking out the period at the end of subparagraph (C) and
inserting in lieu thereof a comma, and by adding at the end
thereof the following new subparagraphs:
"(D) for direct allocation of interest expense in the case of
indebtedness resulting in a disallowance under section 246A,
"(E) for appropriate adjustments in the application of
paragraph (3) in the case of an insurance company, and
"(F) that this subsection shall not apply for purposes of any
provision of this subchapter to the extent the Secretary
determines that the application of this subsection for such
purposes would not be appropriate."
(B) Subsection (e) of section 864 of the 1986 Code is amended
by striking out "(except as provided in regulations)" in the
material preceding paragraph (1).
(7) Paragraph (2) of section 1215(c) of the Reform Act "26 USC
864 note" is amended to read as follows:
"(2) TRANSITIONAL RULES. --
"(A) GENERAL PHASE-IN. --
"(i) IN GENERAL. -- In the case of the 1st 3 taxable years of
the taxpayer beginning after December 31, 1986, the amendments
made by this section shall not apply to interest expenses paid or
accrued by the taxpayer during the taxable year with respect to an
aggregate amount of indebtedness which does not exceed the general
phase-in amount.
"(ii) GENERAL PHASE-IN AMOUNT. -- Except as provided in clause
(iii), the general phase-in amount for purposes of clause (i) is
the applicable percentage (determined under the following table)
of the aggregate amount of indebtedness of the taxpayer
outstanding on November 16, 1985:
"(iii) LOWER LIMIT WHERE TAXPAYER REDUCES INDEBTEDNESS. -- For
purposes of applying this subparagraph to interest expenses
attributable to any month, the general phase-in amount shall in no
event exceed the lowest amount of indebtedness of the taxpayer
outstanding as of the close of any preceding month beginning after
November 16, 1985. To the extent provided in regulations, the
average amount of indebtedness outstanding during any month shall
be used (in lieu of the amount outstanding as of the close of such
month) for purposes of the preceding sentence.
"(B) CONSOLIDATION RULE NOT TO APPLY TO CERTAIN INTEREST. --
"(i) IN GENERAL. -- In the case of the 1st 5 taxable years of
the taxpayer beginning after December 31, 1986 --
"(I) subparagraph (A) shall not apply for purposes of paragraph
(1) of section 864(e) of the Internal Revenue Code of 1986 (as
added by this section), but
"(II) such paragraph (1) shall not apply to interest expenses
paid or accrued by the taxpayer during the taxable year with
respect to an aggregate amount of indebtedness which does not
exceed the special phase-in amount.
"(ii) SPECIAL PHASE-IN AMOUNT. -- The special phase-in amount
for purposes of clause (i) is the sum of --
"(I) the general phase-in amount as determined for purposes of
subparagraph (A),
"(II) the 5-year phase-in amount, and
"(III) the 4-year phase-in amount.
For purposes of applying this subparagraph to interest expense
attributable to any month, the special phase-in amount shall in no
event exceed the limitation determined under subparagraph (A)(
iii).
"(iii) 5-YEAR PHASE-IN AMOUNT. -- The 5-year phase-in amount
is the lesser of --
"(I) the applicable percentage (determined under the following
table for purposes of this subclause) of the 5-year debt amount,
or
"(II) the applicable percentage (determined under the following
table for purposes of this subclause) of the 5-year debt amount
reduced by paydowns:
"(iv) 4-YEAR PHASE-IN AMOUNT. -- The 4-year phase-in amount is
the lesser of --
"(I) the applicable percentage (determined under the following
table for purposes of this subclause) of the 4-year debt amount,
or
"(II) the applicable percentage (determined under the following
table for purposes of this subclause) of the 4-year debt amount
reduced by paydowns to the extent such paydowns exceed the 5-year
debt amount:
"(v) 5-YEAR DEBT AMOUNT. -- The term '5-year debt amount'
means the excess (if any) of --
"(I) the amount of the outstanding indebtedness of the taxpayer
on May 29, 1985, over
"(II) the amount of the outstanding indebtedness of the
taxpayer as of the close of December 31, 1983.
The 5-year debt amount shall not exceed the aggregate amount of
indebtedness of the taxpayer outstanding on November 6, 1985.
"(vi) 4-YEAR DEBT AMOUNT. -- The term '4-year debt amount'
means the excess (if any) of --
"(I) the amount referred to in clause (v)(II), over
"(II) the amount of the outstanding indebtedness of the
taxpayer as of the close of December 31, 1982.
The 4-year debt amount shall not exceed the aggregate amount of
indebtedness of the taxpayer outstanding on November 16, 1985,
reduced by the 5-year debt amount.
"(vii) PAYDOWNS. -- For purposes of applying this subparagraph
to interest expenses attributable to any month, the term
'paydowns' means the excess (if any) of --
"(I) the aggregate amount of indebtedness of the taxpayer
outstanding on November 16, 1985, over
"(II) the lowest amount of indebtedness of the taxpayer
outstanding as of the close of any preceding month beginning after
November 16, 1985 (or, to the extent provided in regulations under
subparagraph (A)(iii), the average amount of indebtedness
outstanding during any such month).
"(C) COORDINATION OF SUBPARAGRAPHS (A) AND (B). -- In applying
subparagraph (B), there shall first be taken into account
indebtedness to which subparagraph (A) applies.
"(D) SPECIAL RULES. --
"(i) In the case of the 1st 9 taxable years of the taxpayer
beginning after December 31, 1986, the amendments made by this
section shall not apply to interest expenses paid or accrued by
the taxpayer during the taxable year with respect to an aggregate
amount of indebtedness which does not exceed the applicable
percentage (determined under the following table) of the
indebtedness described in clause (iii) or (iv):
"(ii) The provisions of this subparagraph shall apply in lieu
of the provisions of subparagraphs (A) and (B).
"(iii) INDEBTEDNESS OUTSTANDING ON MAY 29, 1985. --
Indebtedness is described in this clause if it is indebtedness
(which was outstanding on May 29, 1985) of a corporation
incorporated on June 13, 1917, which has its principal place of
business in Bartlesville, Oklahoma.
"(iv) INDEBTEDNESS OUTSTANDING ON MAY 29, 1985. -- Indebtedness
is described in this clause if it is indebtedness (which was
outstanding on May 29, 1985) of a member of an affiliated group
(as defined in section 1504(a)), the common parent of which was
incorporated on August 26, 1926, and has its principal place of
business in Harrison, New York.
"(E) TREATMENT OF AFFILIATED GROUP. -- For purposes of this
paragraph, all members of the same affiliated group of
corporations (as defined in section 864(e)(5)(A) of the Internal
Revenue Code of 1986, as added by this section) shall be treated
as 1 taxpayer whether or not such members filed a consolidated
return.
"(F) ELECTION TO HAVE PARAGRAPH NOT APPLY. -- A taxpayer may
elect (at such time and in such manner as the Secretary of the
Treasury or his delegate may prescribe) to have this paragraph not
apply. In the case of members of the same affiliated group (as so
defined), such an election may be made only if each member
consents to such election."
"(i) AMENDMENTS RELATED TO SECTION 1221 OF THE REFORM ACT. --
(1)(A) Subparagraph (C) of section 953(c)(3) of the 1986 Code
is amended by adding at the end thereof the following new
sentence:
"An election under this subparagraph made for any taxable year
shall not be effective if the corporation (or any predecessor
thereof) was a disqualified corporation for the taxable year for
which the election was made or for any prior taxable year
beginning after 1986."
(B) Clause (i) of section 953(c)(3)(D) of the 1986 Code is
amended to read as follows:
"(i) PERIOD DURING WHICH ELECTION IN EFFECT. --
"(I) IN GENERAL. -- Except as provided in subclause (II), any
election under subparagraph (C) shall apply to the taxable year
for which made and all subsequent taxable years unless revoked
with the consent of the Secretary.
"(II) TERMINATION. -- If a foreign corporation which made an
election under subparagraph (C) for any taxable year is a
disqualified corporation for any subsequent taxable year, such
election shall not apply to any taxable year beginning after such
subsequent taxable year."
(C) Paragraph (3) of section 953(c) of the 1986 Code is amended
by adding at the end thereof the following new subparagraph:
"(E) DISQUALIFIED CORPORATION. -- For purposes of this
paragraph the term 'disqualified corporation' means, with respect
to any taxable year, any foreign corporation which is a controlled
foreign corporation for an uninterrupted period of 30 days or more
during such taxable year (determined without regard to this
subsection) but only if a United States shareholder (determined
without regard to this subsection) owns (within the meaning of
section 958(a)) stock in such corporation at some time during such
taxable year."
(2)(A) Paragraph (1) of section 953(c) of the 1986 Code is
amended by striking out "and" at the end of subparagraph (A), by
striking out the period at the end of subparagraph (B) and
inserting in lieu thereof ", and", and by adding at the end
thereof the following new subparagraph:
"(C) the pro rata share referred to in section 951(a)(1)(A)(i)
shall be determined under paragraph (5) of this subsection."
(B) Subsection (c) of section 953 of the 1986 Code is amended
by redesignating paragraph (5) as paragraph (6) and by inserting
after paragraph (4) the following new paragraph:
"(5) DETERMINATION OF PRO RATA SHARE. --
"(A) IN GENERAL. -- The pro rata share determined under this
paragraph for any United States shareholder is the lesser of --
"(i) the amount which would be determined under paragraph (2)
of section 951(a) if --
"(I) only related person insurance income were taken into
account,
"(II) stock owned (within the meaning of section 958(a)) by
United States shareholders on the last day of the taxable year
were the only stock in the foreign corporation, and
"(III) only distributions received by United States
shareholders were taken into account under subparagraph (B) of
such paragraph (2), or
"(ii) the amount which would be determined under paragraph (2)
of section 951(a) if the entire earnings and profits of the
foreign corporation for the taxable year were subpart F income.
"(B) COORDINATION WITH OTHER PROVISIONS. -- The Secretary
shall prescribe regulations providing for such modifications to
the provisions of this subpart as may be necessary or appropriate
by reason of subparagraph (A)."
(3)(A) Paragraph (2) of section 953(c) of the 1986 Code is
amended by striking out "with respect to which the primary insured
is" and inserting in lieu thereof "with respect to which the
person (directly or indirectly) insured is".
(B) Subparagraph (A) of section 953(c)(3) of the 1986 Code is
amended --
(i) by striking out "persons who are the primary insured" and
inserting in lieu thereof "persons who are (directly or
indirectly) insured", and
(ii) by striking out "to any such primary insured" and
inserting in lieu thereof "to any such person".
(C) The amendments made by this paragraph "26 USC 953 note" to
the extent such amendments add the phrase "(directly or
indirectly)" shall apply only to taxable years beginning after
December 31, 1987.
(4)(A) Subsection (c) of section 953 of the 1986 Code (as
amended by paragraph (2)) is amended by redesignating paragraph
(6) as paragraph (7) and by inserting after paragraph (5) the
following new paragraph:
"(6) RELATED PERSON. -- For purposes of this subsection --
"(A) IN GENERAL. -- Except as provided in subparagraph (B),
the term 'related person' has the meaning given such term by
section 954(d)(3).
"(B) TREATMENT OF CERTAIN LIABILITY INSURANCE POLICIES. -- In
the case of any policy of insurance covering liability arising
from services performed as a director, officer, or employee of a
corporation or as a partner or employee of a partnership, the
person performing such services and the entity for which such
services are performed shall be treated as related persons."
(B) Paragraphs (2) and (3)(A) of section 953(c) of the 1986
Code are each amended by striking out "(within the meaning of
section 954(d)(3))".
(5) Paragraph (2) of section 953(c) of the 1986 Code is amended
by striking out "insurance income attributable" and inserting in
lieu thereof "insurance income (within the meaning of subsection
(a)) attributable".
(6) For purposes of applying section 952(c)(1)(A) "26 USC 952
note" of the 1986 Code, the earnings and profits of any
corporation shall be determined without regard to any increase in
earnings and profits under section 1023(e)(3)(C) of the Reform
Act.
(7) Subsection (b) of section 953 of the 1986 Code is amended
--
(A) by striking out paragraph (1) and redesignating paragraphs
(2), (3), and (4) as paragraphs (1), (2), and (3), respectively,
(B) by striking out subparagraph (A) of paragraph (1) (as so
redesignated) and inserting in lieu thereof the following:
"(A) The small life insurance company deduction.", and
(C) by striking out "(other than those taken into account under
paragraph (3))" in paragraph (3) (as so redesignated).
(8) Subparagraph (B) of section 953(c)(3) of the 1986 Code is
amended --
(A) by striking out "related person insurance income" and
inserting in lieu thereof "related person insurance income
(determined on a gross basis)", and
(B) by striking out "its insurance income" and inserting in
lieu thereof "its insurance income (as so determined)".
(9) Subclause (II) of section 953(c)(3)(C)(i) of the 1986 Code
is amended --
(A) by striking out "all benefits" and inserting in lieu
thereof "all benefits (other than with respect to section 884)",
and
(B) by striking out "under any income tax treaty" and inserting
in lieu thereof "granted by the United States under any treaty".
(10) Paragraph (7) of section 861(a) of the 1986 Code is
amended to read as follows:
"(7) Amounts received as underwriting income (as defined in
section 832(b)(3)) derived from the issuing (or reinsuring) of any
insurance or annuity contract --
"(A) in connection with property in, liability arising out of
an activity in, or in connection with the lives or health of
residents of, the United States, or
"(B) in connection with risks not described in subparagraph (A)
as a result of any arrangement whereby another corporation
receives a substantially equal amount of premiums or other
consideration in respect to issuing (or reinsuring) any insurance
or annuity contract in connection with property in, liability
arising out of activity in, or in connection with the lives or
health of residents of, the United States."
(11) Subparagraph (A) of section 955(a)(2) of the 1986 Code is
amended by striking out "beginning before 1987" and inserting in
lieu thereof "beginning before 1987 (to the extent such amount
exceeds the sum of the decreases in qualified investments
determined under this paragraph for prior taxable years beginning
after 1986)".
(12) Paragraphs (6) and (7) of section 954(b) of the 1986 Code
are each amended by striking out "(determined without regard to
the exclusion under paragraph (2) of this subsection)".
(13)(A) Subparagraph (C) of section 1121(g)(3) of the Reform
Act "26 USC 954 note" is amended --
(i) by striking out "July 9" and inserting in lieu thereof
"June 9", and
(ii) by striking out "March 31, 1982" and inserting in lieu
thereof "November 3, 1981".
(B) Subparagraph (D) of section 1221(g)(3) of the Reform Act is
amended --
(i) by striking out "as of August 16, 1986, under a reinsurance
contract in effect on such date" and inserting in lieu thereof
"under a reinsurance contract",
(ii) by striking out "the preceding sentence" and inserting in
lieu thereof "this subparagraph", and
(iii) by adding at the end thereof the following: "For
purposes of this paragraph, the amount of qualified reinsurance
income shall not exceed the amount of insurance income from
reinsurance contracts for calendar year 1986. In the case of
controlled foreign corporations described in subparagraph (C)(
ii), the preceding sentence shall not apply and the qualified
reinsurance income of any such corporation shall not exceed such
corporation's proportionate share of $27,000,000 (determined on
the basis of respective amounts of qualified reinsurance income
determined without regard to this subparagraph)."
(14)(A) Paragraph (3) of section 954(d) of the 1986 Code is
amended by striking out "50 percent or more" each place it appears
and inserting in lieu thereof "more than 50 percent".
(B) Clause (ii) of section 861(c)(2)(B) of the 1986 Code is
amended to read as follows:
"(ii) such section shall be applied by substituting '10 percent
or more' for 'more than 50 percent' each place it appears."
(15) Subsection (b) of section 951 of the 1986 Code is amended
by striking out "section 957(d)" and inserting in lieu thereof
"section 957(c)".
(16) Subsection (c) of section 952 of the 1986 Code is amended
by adding at the end thereof the following new paragraph:
"(3) SPECIAL RULE FOR DETERMINING EARNINGS AND PROFITS. -- For
purposes of this subsection, earnings and profits of any
controlled foreign corporation shall be determined without regard
to paragraphs (4), (5), and (6) of section 312(n). Under
regulations, the preceding sentence shall not apply to the extent
it would increase earnings and profits by an amount which was
previously distributed by the controlled foreign corporation."
(17) Subparagraph (A) of section 881(c)(4) of the 1986 Code is
amended by striking out clauses (ii), (iii), (iv), and (v) and
inserting in lieu thereof the following:
"(ii) Paragraph (4) of section 954(b) (relating to exception
for certain income subject to high foreign taxes).
"(iii) Clause (i) of section 954(c)(3)(A) (relating to certain
income received from related persons)."
(18) Subparagraph (B) of section 954(c)(1) of the 1986 Code is
amended by striking out "or" at the end of clause (i), by
redesignating clause (ii) as clause (iii), and by inserting after
clause (i) the following new clause:
"(ii) which is an interest in a trust, partnership, or REMIC,
or".
(19)(A) Subsection (a) of section 6046 of the 1986 Code is
amended by striking out "and" at the end of paragraph (2), by
redesignating paragraph (3) as paragraph (4), and by inserting
after paragraph (2) the following new paragraph:
"(3) each person (not described in paragraph (2)) who, at any
time after January 1, 1987, is treated as a United States
shareholder under section 953(c) with respect to a foreign
corporation, and".
(B) Subsection (b) of section 6046 of the 1986 Code is amended
by striking out "subsection (a)(2)" and inserting in lieu thereof
"paragraph (2) or (3) of subsection (a)".
(C) Subsection (a) of section 6046 of the 1986 Code is amended
by adding at the end thereof the following new sentence:
"In the case of a foreign corporation with respect to which any
person is treated as a United States shareholder under section 953(c),
paragraph (1) shall be treated as including a reference to each United
States person who is an officer or director of such corporation."
(20) Subparagraph (B) of section 954(c)(1) of the 1986 Code is
amended by striking out the last sentence and inserting in lieu
thereof the following:
"In the case of any regular dealer in property, gains and
losses from the sale or exchange of any such property or arising
out of bona fide hedging transactions reasonably necessary to the
conduct of the business of being a dealer in such property shall
not be taken into account under this subparagraph. Gains and
losses from the sale or exchange of any property which, in the
hands of the controlled foreign corporation, is property described
in section 1221(1) also shall not be taken into account under this
subparagraph."
(21) Subsection (c) of section 953 (as amended by this
subsection) is amended by striking out paragraph (7) and inserting
in lieu thereof the following:
"(7) COORDINATION WITH SECTION 1248. -- For purposes of
section 1248, if any person is (or would be but for paragraph (3))
treated under paragraph (1) as a United States shareholder with
respect to any foreign corporation which would be taxed under
subchapter L if it were a domestic corporation and which is (or
would be but for paragraph (3)) treated under paragraph (1) as a
controlled foreign corporation --
"(A) such person shall be treated as meeting the stock
ownership requirements of section 1248(a)(2) with respect to such
foreign corporation, and
"(B) such foreign corporation shall be treated as a controlled
foreign corporation.
"(8) REGULATIONS. -- The Secretary shall prescribe such
regulations as may be necessary to carry out the purposes of this
subsection, including --
"(A) regulations preventing the avoidance of this subsection
through cross insurance arrangements or otherwise, and
"(B) regulations which may provide that a person will not be
treated as a United States shareholder under paragraph (1) with
respect to any foreign corporation if neither such person (nor any
related person to such person) is (directly or indirectly) insured
under any policy of insurance or reinsurance issued by such
foreign corporation."
(22) Subclause (III) of section 952(c)(1)(B)(iii) of the 1986
Code is amended by striking out "insurance income" and inserting
in lieu thereof "insurance income or foreign personal holding
company income,".
(23) Clause (iii) of section 952(c)(1)(B) of the 1986 Code is
amended by redesignating subclauses (III) and (IV) as subclauses
(V) and (VI), respectively, and by inserting after subclause (II)
the following new subclauses:
10"(III) foreign base company sales income,
"(IV) foreign base company services income,".
(24) Clause (ii) of section 952(c)(1)(B) of the 1986 Code is
amended by adding at the end thereof the following new sentence:
"In determining the deficit attributable to qualified activities
described in clause (iii)(III) or (IV), deficits in earnings and
profits (to the extent not previously taken into account under
this section) for taxable years beginning after 1962 and before
1987 also shall be taken into account. In the case of the
qualified activity described in clause (iii)(II), the rule of the
preceding sentence shall apply, except that '1982' shall be
substituted for '1962'."
(25)(A) Paragraph (1) of section 952(c) of the 1986 Code is
amended by adding at the end thereof the following new
subparagraph:
"(C) CERTAIN DEFICITS OF MEMBER OF THE SAME CHAIN OF
CORPORATIONS MAY BE TAKEN INTO ACCOUNT. --
"(i) IN GENERAL. -- A controlled foreign corporation may elect
to reduce the amount of its subpart F income for any taxable year
which is attributable to any qualified activity by the amount of
any deficit in earnings and profits of a qualified chain member
for a taxable year ending with (or within) the taxable year of
such controlled foreign corporation to the extent such deficit is
attributable to such activity. To the extent any deficit reduces
subpart F income under the preceding sentence, such deficit shall
not be taken into account under subparagraph (B).
"(ii) QUALIFIED CHAIN MEMBER. -- For purposes of this
subparagraph, the term 'qualified chain member' means, with
respect to any controlled foreign corporation, any other
corporation which is created or organized under the laws of the
same foreign country as the controlled foreign corporation but
only if --
"(I) all the stock of such other corporation (other than
directors' qualifying shares) is owned at all times during the
taxable year in which the deficit arose (directly or through 1 or
more corporations other than the common parent) by such controlled
foreign corporation, or
"(II) all the stock of such controlled foreign corporation
(other than directors' qualifying shares) is owned at all times
during the taxable year in which the deficit arose (directly or
through 1 or more corporations other than the common parent) by
such other corporation.
"(iii) COORDINATION. -- This subparagraph shall be applied
after subparagraphs (A) and (B)."
(B) Subparagraph (B) of section 954(c)(3) of the 1986 Code is
amended by inserting before the period at the end thereof the
following: "or creates (or increases) a deficit which under
section 952(c) may reduce the subpart F income of the payor or
another controlled foreign corporation".
(j) AMENDMENT RELATED TO SECTION 1224 OF THE REFORM ACT. -- Paragraph
(2) of section 901(g) of the 1986 Code and section 936(d)(3)( B) of the
1986 Code are each amended by striking out "section 957(c)" and
inserting in lieu thereof "section 957(c) (as in effect on the day
before the date of the enactment of the Tax Reform Act of 1986)".
(k) AMENDMENT RELATED TO SECTION 1225 OF THE REFORM ACT. --
Subsection (c) of section 1225 of the Reform Act "26 USC 535 note" is
amended by striking out "March 1, 1986" and inserting in lieu thereof
"January 1, 1986".
(l) AMENDMENTS RELATED TO SECTION 1226 OF THE REFORM ACT. --
(1) Subsection (a) of section 246A of the 1986 Code is amended
by striking out the last sentence.
(2)(A) Paragraph (8) of section 245 of the 1986 Code is amended
to read as follows:
"(8) DISALLOWANCE OF FOREIGN TAX CREDIT. -- No credit shall be
allowed under section 901 for any taxes paid or accrued (or
treated as paid or accrued) with respect to the United
States-source portion of any dividend received by a corporation
from a qualified 10-percent-owned foreign corporation."
(B) Subsection (a) of section 245 of the 1986 Code is amended
by adding at the end thereof the following new paragraph:
"(10) COORDINATION WITH TREATIES. -- If --
"(A) any portion of a dividend received by a corporation from a
qualified 10-percent-owned foreign corporation would be treated as
from sources in the United States under paragraph (9),
"(B) under a treaty obligation of the United States (applied
without regard to this subsection), such portion would be treated
as arising from sources outside the United States, and
10"(C) the taxpayer chooses the benefits of this paragraph,
this subsection shall not apply to such dividend (but
subsections (a), (b), and (c) of section 904 and sections 902,
907, and 960 shall be applied separately with respect to such
portion of such dividend)."
(3) Subsection (a) of section 245 of the 1986 Code is amended
by adding at the end thereof the following new paragraph:
"(11) COORDINATION WITH SECTION 1248. -- For purposes of this
subsection, the term 'dividend' does not include any amount
treated as a dividend under section 1248."
(m) AMENDMENTS RELATED TO SECTION 1228 OF THE REFORM ACT. --
(1) Subsection (a) of section 1228 of the Reform Act "26 USC
897 note" is amended by striking out "and" at the end of paragraph
(3), and by striking out paragraph (4) and inserting in lieu
thereof the following:
"(4) the transfer, sale, exchange, or other disposition is part
of a single integrated plan, whereby the stock of the corporation
described in paragraph (1) becomes owned directly by the 2
corporations specifically referred to in subsection (b) or by such
2 corporations and by 1 or both of their jointly owned direct
subsidiaries,
"(5) within 20 days after such transfer, sale, exchange, or
other disposition, the person making such transfer, sale,
exchange, or other disposition notifies the Internal Revenue
Service of the transaction, the date of the transaction, the basis
of the stock involved, the holding period for such stock, and such
other information as the Internal Revenue Service may require, and
"(6) the integrated plan is completed before the date 4 years
after the date of the enactment of the Technical and Miscellaneous
Revenue Act of 1988.
In the case of any underpayment attributable to a failure to
meet any requirement of this subsection, the period during which
such underpayment may be assessed shall in no event expire before
the date 5 years after the date of the enactment of the Technical
and Miscellaneous Revenue Act of 1988."
(2) Subsection (c) of section 1228 of the Reform Act is hereby
repealed.
(n) AMENDMENTS RELATED TO SECTION 1231 OF THE REFORM ACT. --
(1) Subparagraph (A) of section 1231(g)(2) of the Reform Act
"26 USC 936 note" is amended by adding at the end thereof the
following new sentence: "In the case of any transfer (or license)
which is not to a foreign person, the preceding sentence shall be
applied by substituting 'August 16, 1986' for 'November 16,
1985'."
(2) Subparagraph (B) of section 1231(g)(2) of the Reform Act is
amended by striking out "was made" and inserting in lieu thereof
", if any, was made".
(3) Subsection (g) of section 1231 of the Reform Act "26 USC
936 note" is amended by adding at the end thereof the following
new paragraph:
"(5) TRANSITIONAL RULE FOR INCREASE IN GROSS INCOME TEST. --
"(A) IN GENERAL. -- If --
"(i) a corporation fails to meet the requirements of
subparagraph (B) of section 936(a)(2) of the Internal Revenue Code
of 1986 (as amended by subsection (d)(1)) for any taxable year
beginning in 1987 or 1988,
"(ii) such corporation would have met the requirements of such
subparagraph (B) if such subparagraph had been applied without
regard to the amendment made by subsection (d)(1), and
"(iii) 75 percent or more of the gross income of such
corporation for such taxable year (or, in the case of a taxable
year beginning in 1988, for the period consisting of such taxable
year and the preceding taxable year) was derived from the active
conduct of a trade or business within a possession of the United
States, such corporation shall nevertheless be treated as meeting
the requirements of such subparagraph (B) for such taxable year if
it elects to reduce the amount of the qualified possession source
investment income for the taxable year by the amount of the
shortfall determined under subparagraph (B) of this paragraph.
"(B) DETERMINATION OF SHORTFALL. -- The shortfall determined
under this subparagraph for any taxable year is an amount equal to
the excess of --
"(i) 75 percent of the gross income of the corporation for the
3-year period (or part thereof) referred to in section 936(a)(2)(
A) of such Code, over
"(ii) the amount of the gross income of such corporation for
such period (or part thereof) which was derived from the active
conduct of a trade or business within a possession of the United
States.
"(C) SPECIAL RULE. -- Any income attributable to the
investment of the amount not treated as qualified possession
source investment income under subparagraph (A) shall not be
treated as qualified possession source investment income for any
taxable year."
(4) Subparagraph (B) of section 1231(a)(1) of the Reform Act is
amended by striking out "at the end thereof" and inserting in lieu
thereof "at the end of the material relating to payment of cost
sharing".
(5)(A) Clause (ii) of section 936(d)(4)(A) of the 1986 Code is
amended to read as follows:
"(ii) in accordance with a specific authorization granted by
the Commissioner of Financial Institutions of Puerto Rico pursuant
to regulations issued by such Commissioner."
(B) Clauses (i) and (ii) of section 936(d)(4)(C) of the 1986
Code are each amended by striking out "the Secretary of the
Treasury of Puerto Rico" and inserting in lieu thereof "the
Commissioner of Financial Institutions of Puerto Rico".
(o) AMENDMENT RELATED TO SECTION 1234 OF THE REFORM ACT. --
Subsection (d) of section 6039E of the 1986 Code is amended by adding at
the end thereof the following new sentence:
"Nothing in the preceding sentence shall be construed to require the
disclosure of information which is subject to section 245A of the
Immigration and Nationality Act (as in effect on the date of the
enactment of this sentence)."
(p) AMENDMENTS RELATED TO SECTION 1235 OF THE REFORM ACT. --
(1) Paragraph (1) of section 1291(d) of the 1986 Code is
amended to read as follows:
"(1) IN GENERAL. -- This section shall not apply with respect
to any distribution paid by a passive foreign investment company,
or any disposition of stock in a passive foreign investment
company, if such company is a qualified electing fund for each of
its taxable years --
"(A) which begins after December 31, 1986, and for which such
company is a passive foreign investment company, and
"(B) which includes any portion of the taxpayer's holding
period".
(2) Subsection (c) of section 1296 of the 1986 Code is amended
by striking out "owns at least" and inserting in lieu thereof
"owns (directly or indirectly) at least".
(3) Paragraph (3) of section 1291(b) of the 1986 Code is
amended by striking out "and" at the end of subparagraph (D), by
striking out the period at the end of subparagraph (E) and
inserting in lieu thereof ", and", and by adding at the end
thereof the following new subparagraph:
"(F) proper adjustment shall be made for amounts not includible
in gross income by reason of section 551(d), 959(a), or 1293(c)."
(4) Paragraph (2) of section 1294(c) of the 1986 Code is
amended --
(A) by striking out "is disposed of" in subparagraph (A) and
inserting in lieu thereof "is transferred",
(B) by striking out "such disposition or cessation" each place
it appears and inserting in lieu thereof "such transfer or
cessation", and
(C) by striking out "DISPOSITIONS" in the paragraph heading and
inserting in lieu thereof "TRANSFERS".
(5) Paragraph (1) of section 1296(b) of the 1986 Code is
amended to read as follows:
"(1) IN GENERAL. -- Except as provided in paragraph (2), the
term 'passive income' means any income which is of a kind which
would be foreign personal holding company income as defined in
section 954(c)."
(6)(A) Subsection (f) of section 1291 of the 1986 Code is
amended to read as follows:
"(f) RECOGNITION OF GAIN. -- To the extent provided in regulations,
in the case of any transfer of stock in a passive foreign investment
company where (but for this subsection) there is not full recognition of
gain, the excess (if any) of --
"(1) the fair market value of such stock, over
"(2) its adjusted basis,
shall be treated as gain from the sale or exchange of such stock and
shall be recognized notwithstanding any provision of law. Proper
adjustment shall be made to the basis of any such stock for gain
recognized under the preceding sentence."
(B) Subsection (e) of section 1291 of the 1986 Code is amended
by striking out "Rules similar" and inserting in lieu thereof
"Except to the extent inconsistent with the regulations prescribed
under subsection (f), rules similar".
(7)(A) Paragraphs (4) and (5) of section 1291(a) of the 1986
Code are hereby repealed.
(B) Section 1291 of the 1986 Code is amended by adding at the
end thereof the following new subsection:
"(g) COORDINATION WITH FOREIGN TAX CREDIT RULES. --
"(1) IN GENERAL. -- If there are creditable foreign taxes with
respect to any distribution in respect of stock in a passive
foreign investment company --
"(A) the amount of such distribution shall be determined for
purposes of this section with regard to section 78,
"(B) the excess distribution taxes shall be allocated ratably
to each day in the taxpayer's holding period for the stock, and
"(C) to the extent --
"(i) that such excess distribution taxes are allocated to a
taxable year referred to in subsection (a)(1)(B), such taxes shall
be taken into account under section 901 for the current year, and
"(ii) that such excess distribution taxes are allocated to any
other taxable year, such taxes shall reduce (subject to the
principles of section 904(d) and not below zero) the increase in
tax determined under subsection (c)(2) for such taxable year by
reason of such distribution (but such taxes shall not be taken
into account under section 901).
"(2) DEFINITIONS. -- For purposes of this subsection --
"(A) CREDITABLE FOREIGN TAXES. -- The term 'creditable foreign
taxes' means, with respect to any distribution --
"(i) any foreign taxes deemed paid under section 902 with
respect to such distribution, and
"(ii) any withholding tax imposed with respect to such
distribution,
but only if the taxpayer chooses the benefits of section 901
and such taxes are creditable under section 901 (determined
without regard to paragraph (1)(C)(ii)).
"(B) EXCESS DISTRIBUTION TAXES. -- The term 'excess
distribution taxes' means, with respect to any distribution, the
portion of the creditable foreign taxes with respect to such
distribution which is attributable (on a pro rata basis) to the
portion of such distribution which is an excess distribution.
"(C) SECTION 1248 GAIN. -- The rules of this subsection also
shall apply in the case of any gain which but for this section
would be includible in gross income as a dividend under section
1248."
(8) Section 1294 of the 1986 Code is amended by adding at the
end thereof the following new subsection:
"(g) CROSS REFERENCE. --
"For provisions providing for interest for the period of the
extension under this section, see section 6601."
(9) Paragraph (2) of section 1291(e) of the 1986 Code is
amended by striking out "not" the second place it appears.
(10)(A) Subsection (a) of section 1297 of the 1986 Code is
amended by redesignating paragraph (4) as paragraph (5) and by
inserting after paragraph (3) the following new paragraph:
"(4) OPTIONS. -- To the extent provided in regulations, if any
person has an option to acquire stock, such stock shall be
considered as owned by such person. For purposes of this
pargraph, an option to acquire such an option, and each one of a
series of such options, shall be considered as an option to
acquire such stock."
(B) Paragraph (5) of section 1297(a) of the 1986 Code (as
redesignated by subparagraph (A)) is amended by striking out
"paragraph (2) or (3)" and inserting in lieu thereof '' "paragraph
(2), (3), or (4)".
(11) Paragraph (3) of section 904(d) of the 1986 Code is
amended by adding at the end thereof the following new
subparagraph:
"(I) LOOK-THRU APPLIES TO PASSIVE FOREIGN INVESTMENT COMPANY
INCLUSION. -- If --
"(i) a passive foreign investment company is a controlled
foreign corporation, and
"(ii) the taxpayer is a United States shareholder in such
controlled foreign corporation,
any amount included in gross income under section 1293 shall be
treated as income in a separate category to the extent such amount
is attributable to income in such category."
(12) Clause (ii) of section 1291(a)(1)(B) of the 1986 Code is
amended to read as follows:
"(ii) any period in the taxpayer's holding period before the
1st day of the 1st taxable year of the company which begins after
December 31, 1986, and for which it was a passive foreign
investment company, and".
(13) Subparagraph (A) of section 1291(b)(2) of the 1986 Code is
amended by adding at the end thereof the following new sentence:
"For purposes of clause (ii), any excess distribution received
during such 3-year period shall be taken into account only to the
extent it was included in gross income under subsection (a)(1)(
B)."
(14) Subparagraph (A) of section 1291(a)(3) of the 1986 Code is
amended by striking out "in the case of an excess distribution"
and inserting in lieu thereof "for purposes of applying this
section to an excess distribution".
(15) Subsection (b) of section 1293 of the 1986 Code is amended
by adding at the end thereof the following new sentence: "To the
extent provided in regulations, if the fund establishes to the
satisfaction of the Secretary that it uses a shorter period than
the taxable year to determine shareholders' interests in the
earnings of such fund, pro rata shares may be determined by using
such shorter period."
(16) Subparagraph (B) of section 1296(b)(2) of the 1986 Code is
amended by striking out "by a corporation which" and inserting in
lieu thereof "by a corporation which is predominantly engaged in
an insurance business and which".
(17) Paragraph (5) of section 1297(b) of the 1986 Code is
amended to read as follows:
"(5) APPLICATION OF PART WHERE HELD BY OTHER ENTITY. --
"(A) IN GENERAL. -- Under regulations, in any case in which a
United States person is treated as owning stock in a passive
foreign investment company by reason of subsection (a) --
"(i) any disposition by the United States person or the person
owning such stock which results in the United States person being
treated as no longer owning such stock, or
"(ii) any disposition of property in respect of such stock to
the person holding such stock,
shall be treated as a disposition to, the United States person
with respect to the stock in the passive foreign investment
company.
"(B) AMOUNT TREATED IN SAME MANNER AS PREVIOUSLY TAXED INCOME.
-- Rules similar to the rules of section 959(b) shall apply to any
amount described in subparagraph (A) and to any amount included in
gross income under section 1293(a) (or which would have been so
included but for section 951(f)) in respect of stock which the
taxpayer is treated as owning under subsection (a)."
(18) Subsection (e) of section 1293 of the 1986 Code is amended
by adding at the end thereof the following new paragraph:
"(3) DETERMINATION OF EARNINGS AND PROFITS. -- The earnings
and profits of any qualified electing fund shall be determined
without regard to paragraphs (4), (5), and (6) of section 312(n).
Under regulations, the preceding sentence shall not apply to the
extent it would increase earnings and profits by an amount which
was previously distributed by the qualified electing fund."
(19) Subsection (d) of section 1248 of the 1986 Code is amended
by adding at the end thereof the following new paragraph:
"(7) AMOUNTS INCLUDED IN GROSS INCOME UNDER SECTION 1293. --
Earnings and profits of the foreign corporation attributable to
any amount previously included in the gross income of such person
under section 1293 with respect to the stock sold or exchanged,
but only to the extent the inclusion of such amount did not result
in an exclusion of an amount under section 1293(c)."
(20) Paragraph (6) of section 1297(b) of the 1986 Code is
amended by striking out "If a" and inserting in lieu thereof
"Except as provided in regulations, if a".
(21) Section 1246 of the 1986 Code is amended by redesignating
the subsection relating to information with respect to certain
foreign investment companies as subsection (f), by redesignating
the subsection relating to coordination with section 1248 as
subsection (g), and by redesignating the subsection relating to
cross reference as subsection (h).
(22) Subparagraph (A) of section 1297(b)(3) of the 1986 Code is
amended to read as follows:
"(A) neither such corporation (nor any predecessor) was a
passive foreign investment company for any prior taxable year,".
(23) Subsection (c) of section 1293 of the 1986 Code is amended
by striking out "shall be treated as a distribution which is not a
dividend" and inserting in lieu thereof "shall be treated, for
purposes of this chapter, as a distribution which is not a
dividend; except that such distribution shall immediately reduce
earnings and profits".
(24) Subsection (b) of section 1297 of the 1986 Code is amended
by adding at the end thereof the following new paragraph:
"(8) TREATMENT OF CERTAIN FOREIGN CORPORATIONS OWNING STOCK IN
25-PERCENT OWNED DOMESTIC CORPORATION. --
"(A) IN GENERAL. -- If --
"(i) a foreign corporation is subject to the tax imposed by
section 531 (or waives any benefit under any treaty which would
otherwise prevent the imposition of such tax), and
"(ii) such foreign corporation owns at least 25 percent (by
value) of the stock of a domestic corporation,
for purposes of determining whether such foreign corporation is
a passive foreign investment company, any qulified stock held by
such domestic corporation shall be treated as an asset which does
not produce passive income (and is not held for the production of
passive income) and any amount included in gross income with
respect to such stock shall not be treated as passive income.
"(B) QUALIFIED STOCK. -- For purposes of subparagraph (A), the
term 'qualified stock' means any stock in a C corporation which is
a domestic corporation and which is not a regulated investment
company or real estate investment trust."
(25) Section 1294 of the 1986 Code is amended by adding at the
end thereof the following new subsection:
"(f) TREATMENT OF LOANS TO SHAREHOLDER. -- For purposes of this
section and section 1293, any loan by a qualified electing fund
(directly or indirectly) to a shareholder of such fund shall be treated
as a distribution to such shareholder.
(26)(A) Paragraph (2) of section 1296(b) of the 1986 Code is
amended by striking out "or" at the end of subparagraph (A), by
striking out the period at the end of subparagraph (B) and
inserting in lieu thereof ", or", and by adding at the end thereof
the following:
"(C) which is interest, a dividend, or a rent or royalty, which
is received or accrued from a related person (within the meaning
of section 954(d)(3)) to the extent such amount is properly
allocable (under regulations prescribed by the Secretary) to
income of such related person which is not passive income.
For purposes of subparagraph (C), the term 'related person' has
the meaning given such term by section 954(d)(3) determined by
substituting 'foreign corporation' for 'controlled foreign
corporation' each place it appears in section 954(d)(3)."
(B) The paragraph heading for paragraph (2) of section 1296(b)
of the 1986 Code is amended by striking out "EXCEPTION FOR CERTAIN
BANKS AND INSURANCE COMPANIES" and inserting in lieu thereof
"EXCEPTIONS".
(27) Subsection (a) of section 1296 of the 1986 Code is amended
by adding at the end thereof the following new sentences:
"A foreign corporation may elect to have the determination under
paragraph (2) based on the adjusted bases of its assets in lieu of their
value. Such an election, once made, may be revoked only with the
consent of the Secretary."
(28) Paragraph (2) of section 1291(d) of the 1986 Code is
amended by striking out subparagraph (B) and inserting in lieu
thereof the following:
"(B) ADDITIONAL ELECTION FOR SHAREHOLDER OF CONTROLLED FOREIGN
CORPORATIONS. --
"(i) IN GENERAL. -- If --
"(I) a passive foreign investment company becomes a qualified
electing fund for a taxable year which begins after December 31,
1986,
"(II) the taxpayer holds stock in such company on the first day
of such taxable year, and
"(III) such company is a controlled foreign corporation (as
defined in section 957(a)),
the taxpayer may elect to include in gross income as a dividend
received on such first day an amount equal to the portion of the
post-1986 earnings and profits of such company attributable (under
regulations prescribed by the Secretary) to the stock in such
company held by the taxpayer on such first day. The amount
treated as a dividend under the preceding sentence shall be
treated as an excess distribution and shall be allocated under
subsection (a)(1)(A) only to days during periods taken into
account in determining the post-1986 earnings and profits so
attributable.
"(ii) POST-1986 EARNINGS AND PROFITS. -- For purposes of
clause (i), the term 'post-1986 earnings and profits' means
earnings and profits which were accumulated in taxable years of
such company beginning after December 31, 1986, and during the
period or periods the stock was held by the taxpayer while the
company was a passive foreign investment company.
"(iii) COORDINATION WITH SECTION 959(e). -- For purposes of
section 959(e), any amount included in gross income under this
subparagraph shall be treated as included in gross income under
section 1248(a).
"(C) ADJUSTMENTS. -- In the case of any stock to which
subparagraph (A) or (B) applies --
"(i) the adjusted basis of such stock shall be increased by the
gain recognized under subparagraph (A) or the amount treated as a
dividend under subparagraph (B), as the case may be, and
"(ii) the taxpayer's holding period in such stock shall be
treated as beginning on the first day referred to in such
subparagraph."
(29)(A) Clause (ii) of section 904(d)(2)(A) of the 1986 Code is
amended by striking out "or section 1293" and inserting in lieu
thereof "or, except as provided in subparagraph (E)(iii) or
paragraph (3)(I), section 1293".
(B) Subparagraph (E) of section 904(d)(2) of the 1986 Code is
amended by adding at the end thereof the following new clause:
"(iii) TREATMENT OF INCLUSIONS UNDER SECTION 1293. -- If any
foreign corporation is a non-controlled section 902 corporation
with respect to the taxpayer, any inclusion under section 1293
with respect to such corporation shall be treated as a dividend
from such corporation."
(30) Clause (ii) of section 846(b)(2)(A) of the 1986 Code is
amended by striking out "section 542(c)(7)" and inserting in lieu
thereof "section 542(c)(7), 542(c)(10),".
(31) Paragraph (1) of section 1291(c) of the 1986 Code is
amended by adding at the end thereof the following new sentence:
"Any increase in the tax imposed by this chapter for the current
year under subsection (a) to the extent attributable to the amount
referred to in subparagraph (B) shall be treated as interest paid
under section 6601 on the due date for the current year."
(32) Section 1293 of the 1986 Code is amended by adding at the
end thereof the following new subsection:
"(g) OTHER SPECIAL RULES. --
"(1) EXCEPTION FOR CERTAIN INCOME. -- For purposes of
determining the amount included in the gross income of any person
under this section, the ordinary earnings and net capital gain of
a qualified electing fund shall not include any item of income
received by such fund if --
"(A) such fund is a controlled foreign corporation (as defined
in section 957(a)) and such person is a United States shareholder
(as defined in section 951(b)) in such fund, and
"(B) such person establishes to the satisfaction of the
Secretary that --
"(i) such income was subject to an effective rate of income tax
imposed by a foreign country greater than 90 percent of the
maximum rate of tax specified in section 11, or
"(ii) such income is --
"(I) from sources within the United States,
"(II) effectively connected with the conduct by the qualified
electing fund of a trade or business in the United States, and
"(III) not exempt from taxation (or subject to a reduced rate
of tax) pursuant to a treaty obligation of the United States.
"(2) PREVENTION OF DOUBLE INCLUSION. -- The Secretary shall
prescribe such adjustment to the provisions of this section as may
be necessary to prevent the same item of income of a qualified
electing fund from being included in the gross income of a United
States person more than once."
(33) Paragraph (3) of section 1291(b) of the 1986 Code (as
amended by paragraph (3)) is amended by striking out "and" at the
end of subparagraph (E), by striking out the period at the end of
paragraph (F) and inserting in lieu thereof ", and", and by adding
at the end thereof the following new subparagraph:
"(G) if a charitable deduction was allowable under section
642(c) to a trust for any distribution of its income, proper
adjustments shall be made for the deduction so allocable to the
extent allocable to distributions or gain in respect of stock in a
passive foreign investment company."
(34) Paragraph (2) of section 1294(c) of the 1986 Code is
amended by adding at the end thereof the following new sentence:
"To the extent provided in regulations, the preceding sentence
shall not apply in the case of a transfer in a transaction with
respect to which gain or loss is not recognized (in whole or in
part), and the transferee in such transaction shall succeed to the
treatment under this section of the transferor."
(35) Section 1297 of the 1986 Code is amended by redesignating
subsection (c) as subsection (d) and by inserting after subsection
(b) the following new subsection:
"(c) TREATMENT OF STOCK HELD BY POOLED INCOME FUND. -- If stock in a
passive foreign investment company is owned (or treated as owned under
subsection (a)) by a pooled income fund (as defined in section
642(c)(5)) and no portion of any gain from a disposition of such stock
may be allocated to income under the terms of the governing instrument
of such fund --
"(1) section 1291 shall not apply to any gain on a disposition
of such stock by such fund if (without regard to section 1291) a
deduction would be allowable with respect to such gain under
section 642(c)(3),
"(2) section 1293 shall not apply with respect to such stock,
and
"(3) in determining whether section 1291 applies to any
distribution in respect of such stock, subsection (d) of section
1291 shall not apply."
(36) Paragraph (1) of section 1297(b) of the 1986 Code is
amended by striking out "passive foreign investment corporation"
and inserting in lieu thereof "passive foreign investment
company".
(37)(A) Paragraph (2) of section 1295(b) of the 1986 Code is
amended by adding at the end thereof the following new sentence:
"To the extent provided in regulations, such an election may be
made later than as required by the preceding sentence in cases
where the company failed to make a timely election because it
reasonably believed it was not a passive foreign investment
company."
(B) The period during which an election under section 1295(b)
of the 1986 Code "26 USC 1295 note" may be made shall in no event
expire before the date 60 days after the date of enactment of this
Act.
(q) AMENDMENTS RELATED TO SECTION 1241 OF THE ACT. --
(1)(A) Subparagraph (B) of section 884(b)(2) of the 1986 Code
is amended to read as follows:
"(B) LIMITATION. --
"(i) IN GENERAL. -- The increase under subparagraph (A) for
any taxable year shall not exceed the accumulated effectively
connected earnings and profits as of the close of the preceding
taxable year.
"(ii) ACCUMULATED EFFECTIVELY CONNECTED EARNINGS AND PROFITS.
-- For purposes of clause (i), the term 'accumulated effectively
connected earnings and profits' means the excess of --
"(I) the aggregate effectively connected earnings and profits
for preceding taxable years beginning after December 31, 1986,
over
"(II) the aggregate dividend equivalent amounts determined for
such preceding taxable years."
(B) For purposes of applying section 884 of the 1986 Code, "26
USC 884 note" the earnings and profits of any corporation shall be
determined without regard to any increase in earnings and profits
under sections 1023(e)(3)(C) and 1021(e)(2)(C) of the Reform Act
or arising from section 823(b)(4)(C) of the 1986 Code.
(2)(A) Paragraph (1) of section 884(e) of the 1986 Code is
amended to read as follows:
"(1) LIMITATION ON TREATY EXEMPTION. -- No treaty between the
United States and a foreign country shall exempt any foreign
corporation from the tax imposed by subsection (a) (or reduce the
amount thereof) unless --
"(A) such treaty is an income tax treaty, and
"(B) such foreign corporation is a qualified resident of such
foreign country."
(B) Paragraph (3) of section 884(e) of the 1986 Code is amended
to read as follows:
"(3) COORDINATION WITH WITHHOLDING TAX. --
"(A) IN GENERAL. -- If a foreign corporation is subject to the
tax imposed by subsection (a) for any taxable year (determined
after the application of any treaty), no tax shall be imposed by
section 871(a), 881(a), 1441, or 1442 on any dividends paid by
such corporation out of its earnings and profits for such taxable
year.
"(B) LIMITATION ON CERTAIN TREATY BENEFITS. -- If --
"(i) any dividend described in section 861(a)(2)(B) is received
by a foreign corporation, and
"(ii) subparagraph (A) does not apply to such dividend,
rules similar to the rules of subparagraphs (A) and (B) of
subsection (f)(3) shall apply to such dividend."
(C) Subsection (f) of section 884 of the 1986 Code is amended
--
(i) by striking out the 2nd sentence of paragraph (1), and
(ii) by adding at the end thereof the following new paragraph:
"(3) COORDINATION WITH TREATIES. --
"(A) PAYOR MUST BE QUALIFIED RESIDENT. -- In the case of any
interest described in paragraph (1) which is paid or accrued by a
foreign corporation, no benefit under any treaty between the
United States and the foreign country of which such corporation is
a resident shall apply unless --
"(i) such treaty is an income tax treaty, and
"(ii) such foreign corporation is a qualified resident of such
foreign country.
10"(B) RECIPIENT MUST BE QUALIFIED RESIDENT. -- In the case
of any interest described in paragraph (1) which is received or
accrued by any corporation, no benefit under any treaty between
the United States and the foreign country of which such
corporation is a resident shall apply unless --
"(i) such treaty is an income tax treaty, and
"(ii) such foreign corporation is a qualified resident of such
foreign country."
(3) Paragraph (1) of section 884(f) of the 1986 Code is amended
--
(A) by striking out "sections 871, 881, 1441, and 1442" and
inserting in lieu thereof "this subtitle", and
(B) by adding at the end thereof the following new sentence:
"To the extent provided in regulations, subparagraph (A) shall
not apply to interest in excess of the amounts reasonably expected
to be deductible under section 882 in computing the effectively
connected taxable income of such foreign corporation."
(4) Paragraph (4) of section 884(e) of the 1986 Code is amended
by redesignating subparagraph (C) as subparagraph (D) and by
inserting after subparagraph (B) the following new subparagraph:
"(C) CORPORATIONS OWNED BY PUBLICLY TRADED DOMESTIC
CORPORATIONS. -- A foreign corporation which is a resident of a
foreign country shall be treated as a qualified resident of such
foreign country if --
"(i) such corporation is wholly owned (directly or indirectly)
by a domestic corporation, and
"(ii) the stock of such domestic corporation is primarily and
regularly traded on an established securities market in the United
States."
(5) Subparagraph (A) of section 884(e)(4) of the 1986 Code is
amended --
(A) by striking out "more than 50 percent" in clause (i) and
inserting in lieu thereof "50 percent or more", and
(B) by striking out "or the United States" in clause (ii) and
inserting in lieu thereof "or citizens or residents of the United
States".
(6) Subsection (e) of section 884 of the 1986 Code is amended
by adding at the end thereof the following new paragraph:
"(5) EXCEPTION FOR INTERNATIONAL ORGANIZATIONS. -- This
section shall not apply to an international organization (as
defined in section 7701(a)(18))."
(7) Subparagraph (B) of section 861(a)(2) of the 1986 Code is
amended by striking out "other than under section 884(d)(2)" each
place it appears and inserting in lieu thereof "other than income
described in section 884(d)(2)".
(8) Paragraph (2) of section 26(b) of the 1986 Code is amended
by striking out "and" at the end of subparagraph (J), by striking
out the period at the end of subparagraph (K) and inserting in
lieu thereof ", and", and by adding at the end thereof the
following new subparagraph:
"(L) section 884 (relating to branch profits tax)."
(9) Section 861 of the 1986 Code is amended by adding at the
end thereof the following new subsection:
"(f) CROSS REFERENCE. --
"For treatment of interest paid by the branch of a foreign
corporation, see section 884(f)."
(10) The paragraph (6) of section 906(b) of the 1986 Code which
was added by section 1241(c) of the Reform Act is redesignated as
paragraph (7).
(11) Subsection (c) of section 2104 of the 1986 Code is amended
by striking out "section 861(a)(1)(B), section 861(a)(1)( G), or
section 861(a)(1)(H)" and inserting in lieu thereof "subparagraph
(A), (C), or (D) of section 861(a)(1)".
(12) Subparagraph (A) of section 904(g)(9) of the 1986 Code is
amended by striking out "861(a)(1)(B)" and inserting in lieu
thereof "861(a)(1)(A)".
(13)(A) Paragraph (1) of section 4373 of the 1986 Code is
amended to read as follows:
"(1) EFFECTIVELY CONNECTED ITEMS. -- Any amount which is
effectively connected with the conduct of a trade or business
within the United States unless such amount is exempt from the
application of section 882(a) pursuant to a treaty obligation of
the United States."
(B) The amendment made by subparagraph (A) "26 USC 4373 note"
shall apply with respect to premiums paid after the date 30 days
after the date of the enactment of this Act.
(14) Paragraph (1) of section 884(f) of the 1986 Code is
amended by inserting "(or having gross income treated as
effectively connected with the conduct of a trade or business in
the United States)" after "United States" in the material
preceding subparagraph (A) thereof.
(15) Section 861(a)(2)(C) of the 1986 Code is amended by
striking out "section 243(d)" and inserting in lieu thereof
"section 243(e)".
(r) AMENDMENTS RELATED TO SECTION 1242 OF THE REFORM ACT. --
(1) Paragraph (7) of section 864(c) of the 1986 Code is amended
to read as follows:
"(7) TREATMENT OF CERTAIN PROPERTY TRANSACTIONS. -- For
purposes of this title, if --
10 "(A) any property ceases to be used or held for use in
connection with the conduct of a trade or business within the
United States, and
"(B) such property is disposed of within 10 years after such
cessation,
the determination of whether any income or gain attributable to
such disposition is taxable under section 871(b) or 882 (as the
case may be) shall be made as if such sale or exchange occurred
immediately before such cessation and without regard to the
requirement that the taxpayer be engaged in a trade or business
within the United States during the taxable year for which such
income or gain is taken into account."
(2) Paragraph (6) of section 864(c) of the 1986 Code is amended
to read as follows:
"(6) TREATMENT OF CERTAIN DEFERRED PAYMENTS, ETC. -- For
purposes of this title, in the case of any income or gain of a
nonresident alien individual or a foreign corporation which --
"(A) is taken into account for any taxable year, but
"(B) is attributable to a sale or exchange of property or the
performance of services (or any other transaction) in any other
taxable year,
the determination of whether such income or gain is taxable
under section 871(b) or 882 (as the case may be) shall be made as
if such income or gain were taken into account in such other
taxable year and without regard to the requirement that the
taxpayer be engaged in a trade or business within the United
States during the taxable year referred to in subparagraph (A)."
(s) AMENDMENTS RELATED TO SECTION 1246 OF THE REFORM ACT. --
(1)(A) Section 1446 of the 1986 Code is amended to read as
follows:
"SEC. 1446. WITHHOLDING TAX ON FOREIGN PARTNERS' SHARE OF
EFFECTIVELY CONNECTED INCOME.
"(a) GENERAL RULE. -- If --
"(1) a partnership has effectively connected taxable income for
any taxable year, and
"(2) any portion of such income is allocable under section 704
to a foreign partner,
such partnership shall pay a withholding tax under this section at
such time and in such manner as the Secretary shall by regulations
prescribe.
"(b) AMOUNT OF WITHHOLDING TAX. --
"(1) IN GENERAL. -- The amount of the withholding tax payable
by any partnership under subsection (a) shall be equal to the
applicable percentage of the effectively connected taxable income
of the partnership which is allocable under section 704 to foreign
partners.
"(2) APPLICABLE PERCENTAGE. -- For purposes of paragraph (1),
the term 'applicable percentage' means --
"(A) the highest rate of tax specified in section 1 in the case
of the portion of the effectively connected taxable income which
is allocable under section 704 to foreign partners who are not
corporations, and
"(B) the highest rate of tax specified in section 11(b) in the
case of the portion of the effectively connected taxable income
which is allocable under section 704 to foreign partners which are
corporations.
"(c) EFFECTIVELY CONNECTED TAXABLE INCOME. -- For purposes of this
section, the term 'effectively connected taxable income' means the
taxable income of the partnership which is effectively connected (or
treated as effectively connected) with the conduct of a trade or
business in the United States computed with the following adjustments:
"(1) Paragraph (1) of section 703(a) shall not apply.
"(2) The partnership shall be allowed a deduction for depletion
with respect to oil and gas wells but the amount of such deduction
shall be determined without regard to sections 613 and 613A.
"(3) There shall not be taken into account any item of income,
gain, loss, or deduction to the extent allocable under section 704
to any partner who is not a foreign partner.
"(d) TREATMENT OF FOREIGN PARTNERS. --
"(1) ALLOWANCE OF CREDIT. -- Each foreign partner of a
partnership shall be allowed a credit under section 33 for such
partner's share of the withholding tax paid by the partnership
under this section. Such credit shall be allowed for the
partner's taxable year in which (or with which) the partnership
taxable year (for which such tax was paid) ends.
"(2) CREDIT TREATED AS DISTRIBUTED TO TAXPAYER. -- A foreign
partner's share of any withholding tax paid by the partnership
under this section shall be treated as distributed to such partner
by such partnership on the last day of the partnership's taxable
year (for which such tax was paid).
"(e) FOREIGN PARTNER. -- For purposes of this section, the term
'foreign partner' means any partner who is not a United States person.
"(f) REGULATIONS. -- The Secretary shall prescribe such regulations
as may be necessary to carry out the purposes of this section, including
regulations providing for the application of this section in the case of
publicly traded partnerships."
(B) Paragraph (2) of section 6401(b) of the 1986 Code is
amended by striking out the last sentence and inserting in lieu
thereof the following: "The preceding sentence shall not apply to
any credit so allowed by reason of section 1446."
(C) The table of sections for subchapter A of chapter 3 of the
1986 Code is amended by striking out the item relating to section
1446 and inserting in lieu thereof the following:
"Sec. 1446. Withholding of tax on foreign partners' share of
effectively connected income."
(D) The amendments made by this paragraph "26 USC 1446 note"
shall apply to taxable years beginning after December 31, 1987.
No amount shall be required to be deducted and withheld under
section 1446 of the 1986 Code (as in effect before the amendment
made by subparagraph (A)).
(2)(A) Subsection (a) of section 872 of the 1986 Code is
amended by striking out "the case of a nonresident alien
individual" and inserting in lieu thereof "the case of a
nonresident alien individual, except where the context clearly
indicates otherwise".
(B) Subsection (b) of section 882 of the 1986 Code is amended
by striking out "the case of a foreign corporation" and inserting
in lieu thereof "the case of a foreign corporation, except where
the context clearly indicates otherwise".
(t) AMENDMENTS RELATED TO SECTION 1247 OF THE REFORM ACT. --
(1) Subparagraph (A) of section 892(a)(2) of the 1986 Code is
amended by striking out "or" at the end of clause (i), by striking
out the period at the end of clause (ii) and inserting in lieu
thereof ", or", and by adding at the end thereof the following new
clause:
"(iii) derived from the disposition of any interest in a
controlled commercial entity."
(2) Clause (ii) of section 892(a)(2)(A) of the 1986 Code is
amended to read as follows:
"(ii) received by a controlled commercial entity or received
(directly or indirectly) from a controlled commercial entity."
(3) Subsection (a) of section 892 of the 1986 Code is amended
by adding at the end thereof the following new paragraph:
"(3) TREATMENT AS RESIDENT. -- For purposes of this title, a
foreign government shall be treated as a corporate resident of its
country. A foreign government shall be so treated for purposes of
any income tax treaty obligation of the United States if such
government grants equivalent treatment to the Government of the
United States."
(4) Section 893 of the 1986 Code is amended by adding at the
end thereof the following new subsection:
"(c) LIMITATION ON EXCLUSION. -- Subsection (a) shall not apply to
--
"(1) any employee of a controlled commercial entity (as defined
in section 892(a)(2)(B)), or
"(2) any employee of a foreign government whose services are
primarily in connection with a commercial activity (whether within
or outside the United States) of the foreign government."
"(u) AMENDMENT RELATED TO SECTION 1249 OF THE REFORM ACT. --
Subsection (d) of section 1503 of the 1986 Code is amended by adding at
the end thereof the following new paragraphs:
"(3) TREATMENT OF LOSSES OF SEPARATE BUSINESS UNITS. -- To the
extent provided in regulations, any loss of a separate unit of a
domestic corporation shall be subject to the limitations of this
subsection in the same manner as if such unit were a wholly owned
subsidiary of such corporation.
"(4) INCOME ON ASSETS ACQUIRED AFTER THE LOSS. -- The
Secretary shall prescribe such regulations as may be necessary or
appropriate to prevent the avoidance of the purposes of this
subsection by contributing assets to the corporation with the dual
consolidated loss after such loss was sustained."
(v) AMENDMENTS RELATED TO SECTION 1261 OF THE REFORM ACT. --
(1)(A) So much of section 986 of the 1986 Code as precedes
subsection (c) thereof is amended to read as follows:
"SEC. 986. DETERMINATION OF FOREIGN TAXES AND FOREIGN CORPORATION'S
EARNINGS AND PROFITS.
"(a) FOREIGN TAXES. --
"(1) IN GENERAL. -- For purposes of determining the amount of
the foreign tax credit --
"(A) any foreign income taxes shall be translated into dollars
using the exchange rates as of the time such taxes were paid to
the foreign country or possession of the United States, and
"(B) any adjustment to the amount of foreign income taxes shall
be translated into dollars using --
"(i) except as provided in clause (ii), the exchange rate as of
the time when such adjustment is paid to the foreign country or
possession, or
"(ii) in the case of any refund or credit of foreign income
taxes, using the exchange rate as of the time of original payment
of such foreign income taxes.
"(2) FOREIGN INCOME TAXES. -- For purposes of paragraph (1),
'foreign income taxes' means any income, war profits, or excess
profits taxes paid to any foreign country or to any possession of
the United States.
"(b) EARNINGS AND PROFITS AND DISTRIBUTIONS. -- For purposes of
determining the tax under this subtitle --
"(1) of any shareholder of any foreign corporation, the
earnings and profits of such corporation shall be determined in
the corporation's functional currency, and
"(2) in the case of any United States person, the earnings and
profits determined under paragraph (1) (when distributed, deemed
distributed, or otherwise taken into account under this subtitle)
shall (if necessary) be translated into dollars using the
appropriate exchange rate."
(B) Section 987 of the 1986 Code is amended by inserting "and"
at the end of paragraph (2), by striking out ", and" at the end of
paragraph (3) and inserting in lieu thereof a period, and by
striking out paragraph (4).
(C) The table of sections for subpart J of part III of
subchapter N of chapter 1 is amended by striking out the item
relating to section 986 and inserting in lieu thereof the
following:
"Sec. 986. Determination of foreign taxes and foreign
corporation's earnings and profits."
(2)(A) Subsection (c) of section 988 of the 1986 Code is
amended by adding at the end thereof the following new paragraph:
"(5) SPECIAL RULES WHERE TAXPAYER TAKES OR MAKES DELIVERY. --
If the taxpayer takes or makes delivery in connection with any
section 988 transaction described in paragraph (1)(B)(iii), any
gain or loss (determined as if the taxpayer sold the contract,
option, or instrument on the date on which he took or made
delivery for its fair market value on such date) shall be
recognized in the same manner as if such contract, option, or
instrument were so sold."
(B) The amendment made by subparagraph (A) "26 USC 988 note"
shall not apply in any case in which the taxpayer takes or makes
delivery before June 11, 1987.
(3)(A) Subsection (b) of section 988 of the 1986 Code is
amended by adding at the end thereof the following new paragraph:
"(3) SPECIAL RULE FOR CERTAIN CONTRACTS, ETC. -- In the case
of any section 988 transaction described in subsection (c)(1)(B)(
iii), any gain or loss from such transaction shall be treated as
foreign currency gain or loss (as the case may be)."
(B) Subclause (II) of section 988(c)(1)(C)(i) of the 1986 Code
is amended to read as follows:
"(II) any gain or loss from such transaction shall be treated
as foreign currency gain or loss (as the case may be)."
(C) Paragraph (2) of section 988(c) of the 1986 Code is amended
by inserting "or" at the end of subparagraph (A), by striking out
", or" at the end of subparagraph (B) and inserting in lieu
thereof a period, and by striking out subparagraph (C).
(D) Paragraph (3) of section 988(c) of the 1986 Code is amended
to read as follows:
"(3) PAYMENT DATE. -- The term 'payment date' means the date
on which the payment is made or received."
(4) The first sentence of paragraph (1) of section 988(d) is
amended by striking out "this section" and inserting in lieu
thereof "this subtitle".
(5) Subsection (b) of section 989 of the 1986 Code is amended
--
(A) by striking out "951(a)" in paragraph (3) and inserting in
lieu thereof "951(a)(1)(A)", and
(B) by adding at the end thereof the following new sentence:
"For purposes of the preceding sentence, any amount included in
income under section 951(a)(1)(B) shall be treated as an actual
distribution made on the last day of the taxable year for which such
amount was so included."
(6) Clause (iii) of section 988(c)(1)(B) of the 1986 Code is
amended to read as follows:
"(iii) Entering into or acquiring any forward contract, futures
contract, option, or similar financial instrument unless such
instrument would be marked to market under section 1256 if held on
the last day of the taxable year."
(7) Subparagraph (B) of section 988(a)(3) of the 1986 Code is
amended by adding at the end thereof the following new clause:
"(iii) SPECIAL RULE FOR PARTNERSHIPS. -- To the extent
provided in regulations, in the case of a partnership, the
determination of residence shall be made at the partner level."
(8) Clause (i) of section 988(a)(3)(B) of the 1986 Code is
amended by adding at the end thereof the following new sentence:
"If an individual does not have a tax home (as so defined), the
residence of such individual shall be the United States if such
individual is a United States citizen or a resident alien and
shall be a country other than the United States if such individual
is not a United States citizen or a resident alien."
(9) Section 903 of the 1986 Code is amended by striking out
"this subpart" and inserting in lieu thereof "this part".
(w) AMENDMENTS RELATED TO SECTION 1274 OF THE REFORM ACT. --
(1) Subsection (e) of section 932 of the 1986 Code is amended
to read as follows:
"(e) SPECIAL RULE FOR APPLYING SECTION TO TAX IMPOSED IN VIRGIN
ISLANDS. -- In applying this section for purposes of determining income
tax liability incurred to the Virgin Islands, the provisions of this
section shall not be affected by the provisions of Federal law referred
to in section 934(a)."
(2) Paragraph (4) of section 932(c) of the 1986 Code is amended
to read as follows:
"(4) RESIDENTS OF THE VIRGIN ISLANDS. -- In the case of an
individual --
"(A) who is a bona fide resident of the Virgin Islands at the
close of the taxable year,
"(B) who, on his return of income tax to the Virgin Islands,
reports income from all sources and identifies the source of each
item shown on such return, and
"(C) who fully pays his tax liability referred to in section
934(a) to the Virgin Islands with respect to such income,
for purposes of calculating income tax liability to the United
States, gross income shall not include any amount included in
gross income on such return, and allocable deductions and credits
shall not be taken into account."
(3) Paragraph (2) of section 932(c) of the 1986 Code is amended
by striking out "his income tax return" and inserting in lieu
thereof "an income tax return".
(4) Subsection (c) of section 1274 of the Reform Act "26 USC
932 note" is amended by striking out "this title" and inserting in
lieu thereof "the Internal Revenue Code of 1986".
(x) AMENDMENT RELATED TO SECTION 1275 OF THE REFORM ACT. -- Section
1444 of the 1986 Code is amended by striking out "(as modified by
section 934A)".
(y) AMENDMENT RELATED TO SECTION 1276 OF THE REFORM ACT. --
Subsection (a) of section 7654 of the 1986 Code is amended by striking
out "an individual to which" and inserting in lieu thereof "an
individual to whom".
(z) AMENDMENT RELATED TO SECTION 1277 OF THE REFORM ACT. --
(1) Section 1277 of the Reform Act "26 USC 931 note" is amended
by adding at the end thereof the following new subsection:
"(f) EXEMPTION FROM WITHHOLDING. -- Notwithstanding subsection (b),
the modification of section 884 of the Internal Revenue Code of 1986 by
reason of the amendment to section 881 of such Code by section 1273(b)(
1) of this Act shall apply to taxable years beginning after December 31,
1986."
(2) Subsection (e) of section 1277 of the Reform Act is amended
by striking out "The preceding sentence" and inserting in lieu
thereof "Notwithstanding subsection (b), the preceding sentence".
(aa) COORDINATION WITH TREATIES. --
(1) TREATY OBLIGATIONS. --
(A) Subsection (d) of section 7852 of the 1986 Code is amended
to read as follows:
"(d) TREATY OBLIGATIONS. --
"(1) IN GENERAL. -- For purposes of determining the
relationship between a provision of a treaty and any law of the
United States affecting revenue, neither the treaty nor the law
shall have preferential status by reason of its being a treaty or
law.
"(2) SAVINGS CLAUSE FOR 1954 TREATIES. -- No provision of this
title (as in effect without regard to any amendment thereto
enacted after August 16, 1954) shall apply in any case where its
application would be contrary to any treaty obligation of the
United States in effect on August 16, 1954."
(B) Section 7852(d)(1) of the 1986 Code, "26 USC 7852 note" as
added by subparagraph (A), shall apply to any taxable period with
respect to which the time for assessment of any deficiency has not
expired by reason of any law or rule of law before the date of the
enactment of this Act.
(2) CERTAIN AMENDMENTS TO APPLY NOTWITHSTANDING TREATIES. --
The following amendments made by the Reform Act "26 USC 861 note"
shall apply notwithstanding any treaty obligation of the United
States in effect on the date of the enactment of the Reform Act:
(A) The amendments made by section 1201 of the Reform Act.
(B) The amendments made by title VII of the Reform Act to the
extent such amendments relate to the alternative minimum tax
foreign credit.
(3) "26 USC 861 note" CERTAIN AMENDMENTS NOT TO APPLY TO THE
EXTENT INCONSISTENT WITH TREATIES. -- The following amendments
made by the Reform Act shall not apply to the extent the
application of such amendments would be contrary to any treaty
obligation of the United States in effect on the date of the
enactment of the Reform Act:
(A) The amendments made by section 1211 of the Reform Act to
the extent --
(i) such amendments apply in the case of an individual treated
as a resident of a foreign country under a treaty obligation of
the United States as so in effect, or
(ii) such amendments relate to income of a nonresident from the
sale or exchange of inventory property which would otherwise be
sourced under section 865(e)(2) of the 1986 Code.
(B) The amendments made by section 1212(a) of the Reform Act;
except for purposes of determining the amount of the foreign tax
credit.
(C) The amendments made by subsections (b) and (c) of section
1212 of the Reform Act.
(D) The amendments made by section 1214 of the Reform Act;
except for purposes of determining the amount of the foreign tax
credit.
(E) The amendment made by section 1241(a) of the Reform Act to
the extent that, under a treaty obligation of the United States,
interest described in section 884(f)(1)(A) of the 1986 Code (as
added by such amendment) which is in excess of amounts deducted
would be treated as other than United States source.
(F) The amendment made by section 1241(b)(2)(A) of the Reform
Act.
(G) The amendment made by section 1241(a) of the Reform Act to
the extent such amendment relates to section 884(f)(1)(B) of the
1986 Code.
10 (H) The amendments made by section 1242 of the Reform Act to
the extent they relate to paragraph (7) of section 864(c) of the
1986 Code.
(I) The amendment made by section 1247(a) of the Reform Act.
(J) The amendments made by section 123 of the Reform Act.
(4) TREATMENT OF TECHNICAL CORRECTIONS. -- "26 USC 861 note"
For purposes of paragraphs (2) and (3), any amendment made by this
title shall be treated as if it had been included in the provision
of the Reform Act to which such amendment relates.
(5) REPORTING OF CERTAIN TREATY-BASED RETURN POSITIONS. --
(A) Subchapter B of chapter 61 of the 1986 Code is amended by
redesignating section 6114 as section 6115 and by inserting after
section 6113 the following new section:
"SEC. 6114. TREATY-BASED RETURN POSITIONS.
"(a) IN GENERAL. -- Each taxpayer who, with respect to any tax
imposed by this title, takes the position that a treaty of the United
States overrules (or otherwise modifies) an internal revenue law of the
United States shall disclose (in such manner as the Secretary may
prescribe) such position --
"(1) on the return of tax for such tax (or any statement
attached to such return), or
"(2) if no return of tax is required to be filed, in such form
as the Secretary may prescribe.
"(b) WAIVER AUTHORITY. -- The Secretary may by regulations waive the
requirements of subsection (a) with respect to classes of cases for
which the Secretary determines that the waiver will not impede the
assessment and collection of tax."
(B) Part I of subchapter B of chapter 68 of the 1986 Code is
amended by adding at the end thereof the following new section:
"SEC. 6712. FAILURE TO DISCLOSE TREATY-BASED RETURN POSITIONS.
"(a) GENERAL RULE. -- If a taxpayer fails to meet the requirements
of section 6114, there is hereby imposed a penalty equal to $1,000
($10,000 in the case of a C corporation) on each such failure.
"(b) AUTHORITY TO WAIVE. -- The Secretary may waive all or any part
of the penalty provided by this section on a showing by the taxpayer
that there was reasonable cause for the failure and that the taxpayer
acted in good faith.
"(c) PENALTY IN ADDITION TO OTHER PENALTIES. -- The penalty imposed
by this section shall be in addition to any other penalty imposed by
law."
(C)(i) The table of sections for subchapter B of chapter 61 of
the 1986 Code is amended by striking out the item relating to
section 6114 and inserting in lieu thereof the following:
"Sec. 6114. Treaty-based return positions.
"Sec. 6115. Cross reference."
(ii) The table of sections for part I of subchapter B of
chapter 68 of the 1986 Code is amended by adding at the end
thereof the following new item:
"Sec. 6712. Failure to disclose treaty-based return
positions."
(D) The amendments made by this paragraph "26 USC 6114 note"
shall apply to taxable periods the due date for filing returns for
which (without extension) occurs after December 31, 1988.
(6) Subsection (a) of section 894 of the 1986 Code is amended
to read as follows:
"(a) TREATY PROVISIONS. --
"(1) IN GENERAL. -- The provisions of this title shall be
applied to any taxpayer with due regard to any treaty obligation
of the United States which applies to such taxpayer.
"(2) CROSS REFERENCE. --
"For relationship between treaties and this title, see section
7852(d)."
(bb) MISCELLANEOUS FOREIGN TECHNICAL CORRECTIONS. --
(1) PROVISIONS RELATING TO FOREIGN PERSONAL HOLDING COMPANIES.
--
(A) Subsection (f) of section 551 of the 1986 Code is amended
--
(i) by amending paragraph (1) to read as follows:
"(1) a foreign partnership or an estate or trust which is a
foreign estate or trust, or", and
(ii) by striking out the last sentence and inserting in lieu
thereof the following: "In any case to which the preceding
sentence applies, the Secretary may by regulations provide that
rules similar to the rules of section 1297(b)(5) shall apply, and
provide for such other adjustments in the application of this
subchapter as may be necessary to carry out the purposes of this
subsection.
(B) Subsection (a) of section 551 of the 1986 Code is amended
by striking out "(other than estates or trusts the gross income of
which under this subtitle includes only income from sources within
the United States)" and inserting in lieu thereof "(other than
foreign estates or trusts)".
(C) Subsection (c) of section 552 of the 1986 Code is amended
to read as follows:
"(c) LOOK-THRU FOR CERTAIN DIVIDENDS AND INTEREST. --
"(1) IN GENERAL. -- For purposes of this part, any related
person dividend or interest shall be treated as foreign personal
holding company income only to the extent such dividend or
interest is attributable (determined under rules similar to the
rules of subparagraphs (C) and (D) of section 904(d)(3)) to income
of the related person which would be foreign personal holding
company income.
"(2) RELATED PERSON DIVIDEND OR INTEREST. -- For purposes of
paragraph (1), the term 'related person dividend or interest'
means any dividend or interest which --
"(A) is described in subparagraph (A) of section 954(c)(3), and
"(B) is received from a related person which is not a foreign
personal holding company (determined without regard to this
subsection).
For purposes of the preceding sentence, the term 'related
person' has the meaning given such term by section 954(d)(3)
(determined by substituting 'foreign personal holding company' for
'controlled foreign corporation' each place it appears)."
(D) The amendments made by this paragraph "26 USC 551 note"
shall apply to taxable years of foreign corporations beginning
after December 31, 1986.
(2) TREATMENT OF CERTAIN PAYMENTS OUTSIDE THE UNITED STATES.
--
(A) Subparagraph (A) of section 3405(d)(13) of the 1986 Code is
amended by striking out "the United States" and inserting in lieu
thereof "the United States and any possession of the United
States".
(B) Clause (i) of section 3405(d)(13)(B) of the 1986 Code is
amended to read as follows:
"(i) a United States citizen or a resident alien of the United
States, or".
(C) The heading of paragraph (13) of section 3405(d) of the
1986 Code is amended by striking out "UNITED STATES" and inserting
in lieu thereof "UNITED STATES OR ITS POSSESSIONS".
(D) The amendments made by this paragraph "26 USC 3405 note"
shall apply to distributions made after the date of the enactment
of this Act.
(3) CLARIFICATION OF DISCLOSURE UNDER CERTAIN AGREEMENTS. --
(A) Paragraph (4) of section 6103(k) of the 1986 Code is
amended --
(i) by striking out "or other convention" and inserting in lieu
thereof "or other convention or bilateral agreement", and
(ii) by striking out "such convention" and inserting in lieu
thereof "such convention or bilateral agreement".
(B) Subparagraph (A) of section 6103(b)(5) of the 1986 Code is
amended by striking out "the Commonwealth of the Northern Mariana
Islands, the Republic of the Marshall Islands, the Federated
States of Micronesia, and the Republic of Palau" and inserting in
lieu thereof "and the Commonwealth of the Northern Mariana
Islands".
(C) The amendments made by this paragraph "26 USC 6103 note"
shall take effect on the date of the enactment of the Tax Reform
Act of 1986.
(4) COORDINATION OF TREATIES WITH SECTION 904(g). --
(A) Subsection (g) of section 904 of the 1986 Code is amended
by redesignating paragraph (10) as paragraph (11) and by inserting
after paragraph (9) the following new paragraph:
"(10) COORDINATION WITH TREATIES. --
"(A) IN GENERAL. -- If --
"(i) any amount derived from a United States-owned foreign
corporation would be treated as derived from sources within the
United States under this subsection by reason of an item of income
of such United States-owned foreign corporation,
"(ii) under a treaty obligation of the United States (applied
without regard to this subsection and by treating any amount
included in gross income under section 951(a)(1) as a dividend),
such amount would be treated as arising from sources outside the
United States, and
"(iii) the taxpayer chooses the benefits of this paragraph,
this subsection shall not apply to such amount to the extent
attributable to such item of income (but subsections (a), (b), and
(c) of this section and sections 902, 907, and 960 shall be
applied separately with respect to such amount to the extent so
attributable).
"(B) SPECIAL RULE. -- Amounts included in gross income under
section 951(a)(1) shall be treated as a dividend under
subparagraph (A)(ii) only if dividends paid by each corporation
(the stock of which is taken into account in determining whether
the shareholder is a United States shareholder in the United
States-owned foreign corporation), if paid to the United States
shareholder, would be treated under a treaty obligation of the
United States as arising from sources outside the United States
(applied without regard to this subsection)."
(B) The amendment made by subparagraph (A) "26 USC 904 note"
shall take effect as if included in the amendment made by section
121 of the Tax Reform Act of 1984.
(5) TREATMENT OF ELECTION UNDER SECTION 338. --
(A) IN GENERAL. -- Subsection (h) of section 338 of the 1986
Code is amended by adding at the end thereof the following new
paragraph:
"(16) COORDINATION WITH FOREIGN TAX CREDIT PROVISIONS. --
Except as provided in regulations, this section shall not apply
for purposes of determining the source or character of any item
for purposes of subpart A of part III of subchapter N of this
chapter (relating to foreign tax credit). The preceding sentence
shall not apply to any gain to the extent such gain is includible
in gross income as a dividend under section 1248 (determined
without regard to any deemed sale under this section by a foreign
corporation)."
(B) EFFECTIVE DATE. -- "26 USC 338 note" The amendment made by
subparagraph (A) shall apply to qualified stock purchases (as
defined in section 338(d)(3) of the 1986 Code) after March 31,
1988, except that, in the case of an election under section 338(
h)(10) of the 1986 Code, such amendment shall apply to qualified
stock purchases (as so defined) after June 10, 1987.
(6) TREATMENT OF TAX-EXEMPT SHAREHOLDERS OF A DISC. --
(A) Section 995 of the 1986 Code is amended by adding at the
end
thereof the following new subsection:
"(g) TREATMENT OF TAX-EXEMPT SHAREHOLDERS. -- If any
organization described in subsection (a)(2) or (b)(2) of section
511 is a shareholder in a DISC --
"(1) any amount deemed distributed to such shareholder under
subsection (b),
"(2) any actual distribution to such shareholder which under
section 996 is treated as out of accumulated DISC income, and "(3)
any gain which is treated as a dividend under subsection (c),
shall be treated as derived from the conduct of an unrelated
trade or business (and the modifications of section 512(b) shall
not apply). The rules of the preceding sentence shall apply also
for purposes of determining any such shareholder's DISC-related
deferred tax liability under subsection (f)."
(B) The amendment made by subparagraph (A) "26 USC 995 note"
shall apply to taxable years beginning after December 31, 1987.
(7) TREATMENT OF CERTAIN AMOUNTS PREVIOUSLY TAXED UNDER SECTION
1248.
(A) IN GENERAL. -- Subsection (e) of section 959 of the 1986
Code is amended by striking out "such person under" and inserting
in lieu thereof "such person (or, in any case to which section
1248(e) applies, of the domestic corporation referred to in
section 1248(e)(2)) under".
(B) EFFECTIVE DATE. -- "26 USC 959 note" The amendment made by
subparagraph (A) shall apply in the case of transactions to which
section 1248(e) of the 1986 Code applies and which occur after
December 31, 1986.
(8) TREATMENT OF SHARED FSC'S. --
(A) IN GENERAL. -- Section 927 of the 1986 Code is amended by
adding at the end thereof the following new subsection:
"(g) TREATMENT OF SHARED FSC's. --
"(1) IN GENERAL. -- Except as provided in paragraph (2), each
separate account referred to in paragraph (3) maintained by a
shared FSC shall be treated as a separate corporation for purposes
of this subpart.
"(2) CERTAIN REQUIREMENTS APPLIED AT SHARED FSC LEVEL. --
Paragraph (1) shall not apply --
"(A) for purposes of --
"(i) subparagraphs (A), (B), (D), and (E) of section 922(a)(
1),
"(ii) paragraph (2) of section 922(a),
"(iii) subsections (b), (c), and (e) of section 924, and
"(iv) subsection (f) of this section, and
"(B) for such other purposes as the Secretary may by
regulations prescribed.
"(3) SHARED FSC. -- For purposes of this subsection, the term
'shared FSC' means any corporation if --
"(A) such corporation maintains a separate account for
transactions with each shareholder (and persons related to such
shareholder),
"(B) distributions to each shareholder are based on the amounts
in the separate account maintained with respect to such
shareholder, and
"(C) such corporation meets such other requirements as the
Secretary may by regulations prescribe."
(B) The amendment made by subparagraph (A) "26 USC 927 note"
shall apply as if included in the provision of the Tax Reform Act
of 1984 to which it relates.
(9) CLARIFICATION OF DIVIDENDS RECEIVED DEDUCTION FOR DIVIDENDS
FROM A FSC. --
(A) Subsection (c) of section 245 of the 1986 Code is amended
to read as follows:
"(c) CERTAIN DIVIDENDS RECEIVED FROM FSC. --
"(1) IN GENERAL. -- In the case of a domestic corporation,
there shall be allowed as a deduction an amount equal to --
"(A) 100 percent of any dividend received from another
corporation which is distributed out of earnings and profits
attributable to foreign trade income for a period during which
such other corporation was a FSC, and
"(B) 70 percent (80 percent in the case of dividends from a
20-percent owned corporation as defined in section 243(c)(2)) of
any dividend received from another corporation which is
distributed out of earnings and profits attributable to
effectively connected income received or accrued by such other
corporation while such other corporation was a FSC.
"(2) EXCEPTION FOR CERTAIN DIVIDENDS. -- Paragraph (1) shall
not apply to any dividend which is distributed out of earnings and
profits attributable to foreign trade income which --
"(A) is section 923(a)(2) nonexempt income (within the meaning
of section 927(d)(6)), or
"(B) would not, but for section 923(a)(4), be treated as exempt
foreign trade income.
"(3) NO DEDUCTION UNDER SUBSECTION (a) OR (b). -- No deduction
shall be allowable under subsection (a) or (b) with respect to any
dividend which is distributed out of earnings and profits of a
corporation accumulated while such corporation was a FSC.
"(4) DEFINITIONS. -- For purposes of this subsection --
"(A) FOREIGN TRADE INCOME; EXEMPT FOREIGN TRADE INCOME. -- The
terms 'foreign trade income' and 'exempt foreign trade income'
have the respective meanings given such terms by section 923.
"(B) EFFECTIVELY CONNECTED INCOME. -- The term 'effectively
connected income' means any income which is effectively connected
(or treated as effectively connected) with the conduct of a trade
or business in the United States and is subject to tax under this
chapter. Such term shall not include any foreign trade income."
(B) The amendment made by subparagraph (A) "26 USC 245 note"
shall apply as if included in the provision of the Tax Reform Act
of 1984 to which it relates.
SEC. 1013. AMENDMENTS RELATED TO TITLE XIII OF THE REFORM ACT.
(a) AMENDMENTS RELATED TO SECTION 1301 OF THE REFORM ACT. --
(1) Clause (iii) of section 142(d)(4)(B) of the 1986 Code is
amended by striking out "average rent" and inserting in lieu
thereof "average gross rent".
(2) Clause (iii) of section 143(a)(2)(A) of the 1986 Code is
amended by striking out "no bond which is part of such issue
meets" and inserting in lieu thereof "such issue does not meet".
(3) Paragraph (4) of section 143(b) of the 1986 Code is amended
by inserting "is part of an issue which" after "which".
(4)(A) Clause (ii) of section 144(a)(12)(A) of the 1986 Code is
amended by inserting "(or series of bonds)" before "issued to
refund".
(B)(i) Subclause (I) of section 144(a)(12)(A)(ii) of the 1986
Code is amended to read as follows:
"(I) the average maturity date of the issue of which the
refunding bond is a part is not later than the average maturity
date of the bonds to be refunded by such issue,".
(ii) Subparagraph (A) of section 144(a)(12) of the 1986 Code is
amended by adding at the end thereof the following new sentence:
"For purposes of clause (ii)(I), average maturity shall be
determined in accordance with section 147(b)(2)(A)."
(iii) "26 USC 144 note" A refunding bond issued before July 1,
1987, shall be treated as meeting the requirement of subclause (I)
of section 144(a)(12)(A)(ii) of the 1986 Code if such bond met the
requirement of such subclause as in effect before the amendments
made by this subparagraph.
(C) Clause (ii) of section 144(a)(12)(A) of the 1986 Code is
amended by adding "and" at the end of subclause (II), by striking
out subclause (III), and by redesignating subclause (IV) as
subclause (III).
(5) Subparagraph (B) of section 144(b)(1) of the 1986 Code is
amended --
(A) by striking out "to which part B of title IV of the Higher
Education Act of 1965 (relating to guaranteed student loans) does
not apply", and
(B) by striking out "of such Act" and inserting in lieu thereof
"of the Higher Education Act of 1965", and
(C) by striking out "eligible" and all that follows in such
subparagraph and inserting in lieu thereof the following:
"eligible. A program shall not be treated as described in this
subparagraph if such program is described in subparagraph (A).
A bond shall not be treated as a qualified student loan bond if
the issue of which such bond is a part meets the private business
tests of paragraphs (1) and (2) of section 141(b) (determined by
treating 501(c)(3) organizations as governmental units with
respect to their activities which do not constitute unrelated
trades or businesses, determined by applying section 513(a))."
(6) Subclause (I) of section 145(b)(2)(B)(ii) of the 1986 Code
is amended by striking out "103(b)" and inserting in lieu thereof
"103(b)(2)".
(7) Clause (i) of section 145(b)(2)(C) of the 1986 Code is
amended by striking out "subparagraph (B)(ii)" and inserting in
lieu thereof "subparagraph (B)".
(8) Paragraph (4) of section 145(b) of the 1986 Code is amended
by striking out "subparagraphs (C) and (D)" and inserting in lieu
thereof "subparagraphs (C), (D), and (E)".
(9) Subparagraph (A) of section 146(f)(5) of the 1986 Code (as
in effect before the amendments made by section 10631 of the
Revenue Act of 1987) is amended to read as follows:
"(A) the purpose of issuing exempt facility bonds described in
1 of the paragraphs of section 142(a),".
(10)(A) Paragraph (1) of section 146(k) of the 1986 Code is
amended by striking out "paragraph (2)" and inserting in lieu
thereof "paragraphs (2) and (3)".
(B) Subsection (k) of section 146 of the 1986 Code is amended
by adding at the end thereof the following new paragraph:
"(3) TREATMENT OF GOVERNMENTAL BONDS TO WHICH VOLUME CAP
ALLOCATED. -- Paragraph (1) shall not apply to any bond to which
volume cap is allocated under section 141(b)(5) --
"(A) for an output facility, or
"(B) for a facility of a type described in paragraph (4), (5),
(6), or (10) of section 142(a),
if the issuer establishes that the State's share of the private
business use (as defined by section 141(b)(6)) of the facility
will equal or exceed the State's share of the volume cap allocated
with respect to bonds issued to finance the facility."
(11) Subsection (e) of section 147 of the 1986 Code is amended
by striking out "treated as".
(12) Subsection (f) of section 147 of the 1986 Code (relating
to public approval requirement for private activity bonds) is
amended by adding at the end thereof the following new paragraph:
"(4) SPECIAL RULES FOR SCHOLARSHIP FUNDING BOND ISSUES AND
VOLUNTEER FIRE DEPARTMENT BOND ISSUES. --
"(A) SCHOLARSHIP FUNDING BONDS. -- In the case of a qualified
scholarship funding bond, any governmental unit which made a
request described in section 150(d)(2)(B) with respect to the
issuer of such bond shall be treated for purposes of paragraph (2)
of this subsection as the governmental unit on behalf of which
such bond was issued. Where more than one governmental unit
within a State has made a request described in section 150(
d)(2)(B), the State may also be treated for purposes of paragraph
(2) of this subsection as the governmental unit on behalf of which
such bond was issued.
"(B) VOLUNTEER FIRE DEPARTMENT BONDS. -- In the case of a bond
of a volunteer fire department which meets the requirements of
section 150(e), the political subdivision described in section
150(e)(2)(B) with respect to such department shall be treated for
purposes of paragraph (2) of this subsection as the governmental
unit on behalf of which such bond was issued."
(13)(A) Paragraph (1) of section 147(g) of the 1986 Code
(relating to restriction on issuance costs financed by issue) is
amended by striking out "aggregate face amount of the issue" and
inserting in lieu thereof "proceeds of the issue".
(B) Paragraph (2) of section 147(g) of the 1986 Code is amended
by striking out "aggregate authorized face amount of the issue
does not" and inserting in lieu thereof "proceeds of the issue do
not".
(C) The amendments made by this paragraph "26 USC 147 note"
shall apply to bonds issued after June 30, 1987.
(14) Paragraph (2) of section 148(d) of the 1986 Code (relating
to special rules for reasonably required reserve or replacement
fund) is amended by striking out "any fund described in paragraph
(1)" and inserting in lieu thereof "any reserve or replacement
fund".
(15) Paragraph (3) of section 148(f) of the 1986 Code is
amended by adding at the end thereof the following new sentence:
"A series of issues which are redeemed during a 6-month period (or
such longer period as the Secretary may prescribe) shall be
treated (at the election of the issuer) as 1 issue for purposes of
the preceding sentence if no bond which is part of any issue in
such series has a maturity of more than 270 days or is a private
activity bond."
(16)(A) Subclause (I) of section 148(f)(4)(B)(iii) of the 1986
Code (relating to safe harbor for determining when proceeds of tax
or revenue anticipation bonds are expended) is amended by striking
out "aggregate face amount of such issue" and inserting in lieu
thereof "proceeds of such issue".
(B) The amendment made by subparagraph (A) "26 USC 148 note"
shall apply to bonds issued after June 30, 1987.
(17)(A) Subparagraph (C) of section 148(f)(4) of the 1986 Code
is amended --
(i) by striking out the heading and inserting in lieu thereof:
"(C) EXCEPTION FOR GOVERNMENTAL UNITS ISSUING $5,000,000 OR
LESS OF BONDS. --
"(i) IN GENERAL. -- ",
(ii) by redesignating clauses (i) through (iv) as subclauses
(I) through (IV), respectively, and moving the margins of such
subclauses 2 ems to the right, and
(iii) by striking out the last sentence and inserting in lieu
thereof the following new clauses:
"(ii) AGGREGATION OF ISSUERS. -- For purposes of subclause
(IV) of clause (i) --
"(I) an issuer and all entities which issue bonds on behalf of
such issuer shall be treated as 1 issuer,
"(II) all bonds issued by a subordinate entity shall, for
purposes of applying such subclause to each other entity to which
such entity is subordinate, be treated as issued by such other
entity, and
"(III) an entity formed (or, to the extent provided by the
Secretary, availed of) to avoid the purposes of such subclause
(IV) and all other entities benefiting thereby shall be treated as
1 issuer.
"(iii) CERTAIN REFUNDING BONDS NOT TAKEN INTO ACCOUNT IN
DETERMINING SMALL ISSUER STATUS. -- There shall not be taken into
account under subclause (IV) of clause (i) any bond issued to
refund (other than to advance refund) any bond to the extent the
amount of the refunding bond does not exceed the outstanding
amount of the refunded bond.
"(iv) CERTAIN ISSUES ISSUED BY SUBORDINATE GOVERNMENTAL UNITS,
ETC., EXEMPT FROM REBATE REQUIREMENT. -- An issue issued by a
subordinate entity of a governmental unit with general taxing
powers shall be treated as described in clause (i)(I) if the
aggregate face amount of such issue does not exceed the lesser of
--
"(I) $5,000,000, or
"(II) the amount which, when added to the aggregate face amount
of other issues issued by such entity, does not exceed the portion
of the $5,000,000 limitation under clause (i)(IV) which such
governmental unit allocates to such entity.
For purposes of the preceding sentence, an entity which issues
bonds on behalf of a governmental unit with general taxing powers
shall be treated as a subordinate entity of such unit. An
allocation shall be taken into account under subclause (II) only
if it is irrevocable and made before the issuance date of such
issue and only to the extent that the limitation so allocated
bears a reasonable relationship to the benefits received by such
governmental unit from issues issued by such entity.
"(v) DETERMINATION OF WHETHER REFUNDING BONDS ELIGIBLE FOR
EXCEPTION FROM REBATE REQUIREMENT. -- If any portion of an issue
is issued to refund other bonds, such portion shall be treated as
a separate issue which does not meet the requirements of
paragraphs (2) and (3) by reason of this subparagraph unless --
"(I) the aggregate face amount of such issue does not exceed
$5,000,000,
"(II) each refunded bond was issued as part of an issue which
was treated as meeting the requirements of paragraphs (2) and (3)
by reason of this subparagraph,
"(III) the average maturity date of the refunding bonds issued
as part of such issue is not later than the average maturity date
of the bonds to be refunded by such issue, and
"(IV) no refunding bond has a maturity date which is later than
the date which is 30 years after the date the original bond was
issued.
Subclause (III) shall not apply if the average maturity of the
issue of which the original bond was a part (and of the issue of
which the bonds to be refunded are a part) is 3 years or less.
For purposes of this clause, average maturity shall be determined
in accordance with section 147(b)(2)(A).
"(vi) REFUNDINGS OF BONDS ISSUED UNDER LAW PRIOR TO TAX REFORM
ACT OF 1986. -- If section 141(a) did not apply to any refunded
bond, the issue of which such refunded bond was a part shall be
treated as meeting the requirements of subclause (II) of clause
(v) if --
"(I) such issue was issued by a governmental unit with general
taxing powers,
"(II) no bond issued as part of such issue was an industrial
development bond (as defined in section 103(b)(2), but without
regard to subparagraph (B) of section 103(b)(3)) or a private loan
bond (as defined in section 103(o)(2)(A), but without regard to
any exception from such definition other than section 103(o)(
2)(C)), and
"(III) the aggregate face amount of all tax-exempt bonds (other
than bonds described in subclause (II) issued by such unit during
the calendar year in which such issue was issued did not exceed
$5,000,000.
References in subclause (II) to section 103 shall be to such
section as in effect on the day before the date of the enactment
of the Tax Reform Act of 1986. Rules similar to the rules of
clauses (ii) and (iii) shall apply for purposes of subclause
(III). For purposes of subclause (II) of clause (i), bonds
described in subclause (II) of this clause to which section 141(
a) does not apply shall not be treated as private activity bonds."
(B) Subclause (IV) of section 148(f)(4)(C)(i) of the 1986 Code
(as redesignated by subparagraph (A)) is amended by striking out
"(and all subordinate entities thereof)".
(C)(i) Except as provided in clause (ii), "26 USC 148 note" the
amendments made by this paragraph shall apply to bonds issued
after June 30, 1987.
(ii) At the election of an issuer (made at such time and in
such manner as the Secretary of the Treasury or his delegate may
prescribe), the amendments made by this paragraph shall apply to
such issuer as if included in the amendments made by section
1301(a) of the Tax Reform Act of 1986.
(18) Clause (i) of section 148(f)(4)(D) of the 1986 Code is
amended --
(A) by inserting "for a program" before "described in section
144(b)(1)(A)",
(B) by striking out "such a program" and inserting in lieu
thereof "such program", and
(C) by adding at the end thereof the following: "Amounts
designated as interest on student loans shall not be taken into
account in determining whether the issuer is reimbursed for such
costs. Except as otherwise hereafter provided in regulations
prescribed by the Secretary, costs described in subclause (I) paid
from amounts earned as described in the first sentence of this
clause may also be taken into account in determining the yield on
the student loans under a program described in section
144(b)(1)(A)."
(19) Subparagraph (B) of section 148(f)(7) of the 1986 Code is
amended by striking out "due to reasonable cause and not" and
inserting in lieu thereof "not due".
(20) Clause (iii) of section 149(b)(3)(A) of the 1986 Code is
amended by striking out "with respect to any bond issued before
July 1, 1989".
(21) Subparagraph (A) of section 149(b)(4) of the 1986 Code is
amended by striking out "a qualified student loan bond, and a
qualified redevelopment bond" and inserting in lieu thereof "and a
qualified student loan bond".
(22) Paragraph (3) of section 149(e) of the 1986 Code (relating
to information reporting) is amended by striking out "there is
reasonable cause for the failure to file such statement in a
timely fashion" and inserting in lieu thereof "the failure to file
in a timely fashion is not due to willful neglect".
(23)(A) Subparagraph (B) of section 150(b)(4) of the 1986 Code
(relating to change in use of facilities financed with tax-exempt
private activity bonds) is amended by inserting before the period
"or a qualified small issue bond".
(B) The heading for paragraph (4) of section 150(b) of the 1986
Code is amended by inserting "AND SMALL ISSUE BONDS" after "EXEMPT
FACILITY BONDS".
(C) Subparagraph (A) of section 150(b)(1) of the 1986 Code is
amended by inserting "tax-exempt" before "qualified mortgage
bond".
(24)(A) Subsection (e) of section 150 of the 1986 Code is
amended by adding at the end thereof the following new paragraph:
"(3) TREATMENT AS PRIVATE ACTIVITY BONDS ONLY FOR CERTAIN
PURPOSES. -- Bonds which are part of an issue which meets the
requirements of paragraph (1) shall not be treated as private
activity bonds except for purposes of sections 147(f) and 149(
d)."
(B) The amendment made by subparagraph (A) "26 USC 150 note"
shall apply to bonds issued after October 21, 1988.
(25) Clause (ii) of section 1301(f)(2)(C) of the Reform Act "26
USC 25" is amended to read as follows:
"(ii) Clause (ii) of section 25(c)(2)(A) is amended by striking
out all that follows 'an amount of' and inserting in lieu thereof
'private activity bonds which it may otherwise issue during such
calendar year under section 146,'."
(26) Subsection (h) of section 25 of the 1986 Code (relating to
credit for interest on certain home mortgages) is amended by
striking out "1987" and inserting in lieu thereof "1988".
(27) The date contained in section 143(a)(1)(B) of the 1986
Code "26 USC 143 note" shall be treated as contained in section
103A(c)(1)(B) of the Internal Revenue Code of 1954, as in effect
on the day before the date of the enactment of the Reform Act, for
purposes of any bond issued to refund a bond to which such
103A(c)(1) applies.
(28)(A) Subparagraph (A) of section 146(i)(2) of the 1986 Code
is amended to read as follows:
"(A) the average maturity date of the qualified student loan
bonds to be refunded by the issue of which the refunding bond is a
part, or".
(B) Subparagraph (A) of section 146(i)(3) of the 1986 Code is
amended to read as follows:
"(A) the average maturity date of the qualified mortgage bonds
to be refunded by the issue of which the refunding bond is a part,
or".
(C) Subsection (i) of section 146 of the 1986 Code is amended
by redesignating paragraph (4) as paragraph (5) and by inserting
after paragraph (3) the following new paragraph:
"(4) AVERAGE MATURITY. -- For purposes of paragraphs (2) and
(3), average maturity shall be determined in accordance with
section 147(b)(2)(A)."
(29) Subparagraph (D) of section 147(f)(2) of the 1986 Code is
amended by striking out "the maturity date" and all that follows
and inserting in lieu thereof "the average maturity date of the
issue of which the refunding bond is a part is later than the
average maturity date of the bonds to be refunded by such issue.
For purposes of the preceding sentence, average maturity shall be
determined in accordance with subsection (b)(2)(A)."
(30) Subparagraph (A) of section 150(b)(1) of the 1986 Code is
amended by inserting before the period "and before the date such
residence is again the principal residence of at least 1 of the
mortgagors who received such financing".
(31) Subparagraph (A) of section 150(b)(2) of the 1986 Code is
amended by striking out "described paragraph" and inserting in
lieu thereof "described in paragraph".
(32) Paragraph (2) of section 150(b) of the 1986 Code is
amended by adding at the end thereof the following: "If the
provisions of prior law corresponding to section 142(d) apply to a
refunded bond, such provisions shall apply (in lieu of section
142(d)) to the refunding bond."
(33) Subsection (b) of section 150 of the 1986 Code is amended
by adding at the end thereof the following new paragraph:
"(6) SMALL ISSUE BONDS WHICH EXCEED CAPITAL EXPENDITURE
LIMITATION. -- In the case of any financing provided from the
proceeds of any bond which, when issued, purported to be a
qualified small issue bond, no deduction shall be allowed under
this chapter for interest on such financing which accrues during
the period such bond is not a qualified small issue bond."
(34)(A) Paragraph (7) of section 103(c) of the Internal Revenue
Code of 1954 (as in effect on the day before the date of the
enactment of the Tax Reform Act of 1986) is amended by striking
out "necessary" and inserting in lieu thereof "necessary".
(B) Subparagraph (A) "26 USC 103 note" shall apply to
obligations sold after May 2, 1978, and to which Treasury
regulation section 1.103-13 (1979) was provided to apply.
(35) VALIDATION OF SINKING FUND REGULATIONS. -- "26 USC 103
note"
(A) Treasury Regulation section 1.103-13(g) (1979) is hereby
enacted into positive law.
(B)(i) Except as provided in clause (ii), subparagraph (A)
shall apply to obligations sold after May 2, 1978, and to which
such regulation was provided to apply.
(ii) Treasury Regulation section 1.103-13(g) (1979) as enacted
into positive law by subparagraph (A) shall cease to apply to the
extent hereafter modified by the Secretary of the Treasury or his
delegate by regulations.
(36) Clause (i) of section 147(f)(2)(E) of the 1986 Code is
amended by adding at the end thereof the following new sentence:
"If the office of any elected official described in subclause
(II) is vacated and an individual is appointed by the chief
elected executive officer of the governmental unit and confirmed
by the elected legislative body of such unit (if any) to serve the
remaining term of the elected official, the individual so
appointed shall be treated as the elected official for such
remaining term."
(37) The table of sections for part III of subchapter B of
chapter 1 of the 1986 Code is amended by striking out the items
relating to sections 103 and 103A and inserting in lieu thereof
the following new item:
"Sec. 103. Interest on State and local bonds."
(38) Subparagraph (B) of section 141(b)(5) of the 1986 Code is
amended by striking out "which would cause bond" and inserting in
lieu thereof "which would cause a bond".
(39) Clause (ii) of section 142(b)(1)(B) of the 1986 Code is
amended by striking out "(as defined in 168(i)(3))" and inserting
in lieu thereof "(as defined in section 168(i)(3))".
(40) Subparagraph (B) of section 146(d)(4) of the 1986 Code is
amended by striking out "with respect a possession" and inserting
in lieu thereof "with respect to a possession".
(41) Clause (ii) of section 48(l)(11)(A) of the 1986 Code is
amended by striking out "an industrial development bond (within
the meaning of section 103(b)(2))" and inserting in lieu thereof
"a private activity bond (within the meaning of section 141)".
(42) Subsection (a) of section 7478 of the 1986 Code is amended
--
(A) by striking out "whether prospective obligations are
described in section 103(a)" in paragraph (1) and inserting in
lieu thereof "whether interest on prospective obligations will be
excludable from gross income under section 103(a)", and
(B) by striking out "whether such prospective obligations are
described in section 103(a)" and inserting in lieu thereof
"whether interest on such prospective obligations will be
excludable from gross income under section 103(a)".
(43)(A) Subsection (b) of section 148 of the 1986 Code
(defining higher yielding investments) is amended by adding at the
end thereof the following new paragraph:
"(3) ALTERNATIVE MINIMUM TAX BONDS TREATED AS INVESTMENT
PROPERTY IN CERTAIN CASES. --
"(A) IN GENERAL. -- Except as provided in subparagraph (B),
the term 'investment property' does not include any tax-exempt
bond.
"(B) EXCEPTION. -- With respect to an issue other than an
issue a part of which is a specified private activity bond (as
defined in section 57(a)(5)(C)), the term 'investment property'
includes a specified private activity bond (as so defined)."
(B) Paragraph (2) of section 148(b) of the 1986 Code (defining
investment property) is amended by striking the last sentence.
(C) The amendments made by this paragraph "26 USC 148 note"
shall apply to obligations issued after March 31, 1988.
(44) Subparagraph (B) of section 46(c)(5) of the 1986 Code is
amended --
(A) by striking out "INDUSTRIAL DEVELOPMENT BONDS" in the
heading and inserting in lieu thereof "PRIVATE ACTIVITY BONDS",
and
(B) by striking "an industrial development bond (within the
meaning of section 103(b)(2))" and inserting in lieu thereof "a
private activity bond (within the meaning of section 141)".
(b) AMENDMENTS RELATED TO SECTION 1311 OF THE REFORM ACT. --
(1) Section 1311 of the Reform Act "26 USC 141 note" is amended
by redesignating subsection (d) as subsection (f), and by
inserting after subsection (c) the following new subsections:
"(d) PUBLIC APPROVAL AND INFORMATION REPORTING. -- Sections 147(f)
and 149(e) of the 1986 Code shall apply to bonds issued after December
31, 1986.
"(e) REBATE REQUIREMENT FOR QUALIFIED SCHOLARSHIP FUNDING BONDS. --
Section 150(d) of the 1986 Code shall apply to payments made after
August 15, 1986."
(2) Paragraph (2) of section 1311(b) of the Reform Act
(relating to effective date for section 1301(f)) is amended by
inserting "with respect to non-issued bond amounts elected) after
"issued".
(c) AMENDMENTS RELATED TO SECTION 1313 OF THE REFORM ACT. --
(1) Clause (i) of section 1313(a)(1)(B) of the Reform Act is
amended by striking out "the proceeds" and inserting in lieu
thereof "the net proceeds".
(2)(A) Subparagraph (C) of section 1313(a)(3) of the Reform Act
is amended by striking out "section 148" and inserting in lieu
thereof "sections 143(g) and 148".
(B) The amendment made by subparagraph (A) "26 USC 141 note"
shall apply to bonds issued after June 30, 1987.
(3) Subparagraph (E) of section 1313(a)(3) of the Reform Act
"26 USC 141 note" is amended by striking out "of such Code".
(4) Paragraph (3) of section 1313(a) of the Reform Act is
amended by adding at the end thereof the following new sentence:
"In the case of a refunding bond described in paragraph (1) with
respect to a qualified bond described in paragraph (2)(B), the
requirements of section 1312(b)(1) which applied to such qualified
bond shall be treated as specified in this paragraph with respect
to such refunding bond."
(5) Subparagraph (A) of section 1313(a)(4) of the Reform Act is
amended by inserting "and by substituting 'September 1, 1986' for
'August 16, 1986'" before the comma at the end thereof.
(6) Paragraph (2) of section 1313(b) of the Reform Act is
amended by adding at the end thereof "For purposes of the
preceding sentence, the determination of whether a bond is
described in such subsection (o)(2)(A) shall be made without
regard to any exception other than section 103(o)(2)(C) of such
Code."
(7) Subparagraph (F) of section 1313(b)(3) of the Reform Act is
amended by striking out "of such Code".
(8) Paragraph (3) of section 1313(b) of the Reform Act is
amended by adding after subparagraph (F) the following new
subparagraph:
"(G) Except as provided in the last sentence of subsection
(c)(2) of this section, the requirements of section 145(b)
(relating to $150,000,000 limitation on bonds other than hospital
bonds)."
(9) Paragraph (5) of section 1313(b) of the Reform Act is
amended by striking out "are to be" and inserting in lieu thereof
"are or will be".
(10)(A) The heading for subsection (c) of section 1313 of the
Reform Act is amended by striking out "CURRENT" and inserting in
lieu thereof "CERTAIN".
(B) Paragraph (1) of section 1313(c) of the Reform Act is
amended --
(i) by striking out "apply to any bond" and inserting in lieu
thereof "apply to any bond (or series of bonds)", and
(ii) by striking out "law do not" and inserting in lieu thereof
"law did not".
(11)(A) Subparagraph (A) of section 1313(c)(1) of the Reform
Act is amended to read as follows:
"(A) the average maturity date of the issue of which the
refunding bond is a part is not later than the average maturity
date of the bonds to be refunded by such issue,".
(B) Paragraph (1) of section 1313(c) of the Reform Act is
amended by adding at the end thereof the following new sentence:
"For purposes of subparagraph (A), average maturity shall be
determined in accordance with section 147(b)(2)(A) of the 1986
Code."
(C) Paragraph (1) of section 1313(c) of the Reform Act is
amended by adding "and" at the end of subparagraph (B), by
striking out subparagraph (C), and by redesignating subparagraph
(D) as subparagraph (C).
(D) Subparagraph (B) of section 1313(c)(2) of the Reform Act is
amended by striking out "and (D)" and inserting in lieu thereof
"and (C)".
(E) "26 USC 141 note" A refunding bond issued before July 1,
1987, shall be treated as meeting the requirement of subparagraph
(A) of section 1313(c)(1) of the Reform Act if such bond met the
requirement of such subparagraph as in effect before the
amendments made by this paragraph.
(12)(A) Subparagraph (N) of section 103(b)(6) of the Internal
Revenue Code of 1954, as in effect on the day before the date of
the enactment of the Reform Act (relating to termination dates),
is amended by redesignating clauses (ii) and (iii) as clauses
(iii) and (iv), respectively, and by striking out clause (i) and
inserting in lieu thereof the following new clauses:
"(i) IN GENERAL. -- Except as provided in clause (ii), this
paragraph shall not apply to any obligation issued after December
31, 1986.
"(ii) CERTAIN REFUNDINGS. -- This paragraph shall apply to any
obligation (or series of obligations) issued to refund an
obligation issued on or before December 31, 1986, if --
"(I) the average maturity date of the issue of which the
refunding obligation is a part is not later than the average
maturity date of the obligations to be refunded by such issue,
"(II) the amount of the refunding obligation does not exceed
the outstanding amount of the refunded obligation, and
"(III) the proceeds of the refunding obligation are used to
redeem the refunded obligation not later than 90 days after the
date of the issuance of the refunding obligation.
For purposes of subclause (I), average maturity shall be
determined in accordance with subsection (b)(14)(B)(i)."
(B) The date applicable under section 144(a)(12)(B) of the 1986
Code "26 USC 144 note" shall be treated as contained in section
103(b)(6)(N)(iii) of the Internal Revenue Code of 1954, as in
effect on the day before the date of the enactment of the Reform
Act, for purposes of any bond issued to refund a bond to which
such section 103b)(6)(N)(iii) applies.
(13) Paragraph (2) of section 1313(c) of the Reform Act "26 USC
141 note" is amended --
(A) by striking out "apply to any bond" and inserting in lieu
thereof "apply to any bond (or series of bonds)",
(B) by striking out "subsection does not" and inserting in lieu
thereof "subsection did not", and
(C) by striking out "the proceeds" in subparagraph (A)(i) and
inserting in lieu thereof "the net proceeds".
(14)(A) Section 1313 of the Reform Act is amended by adding at
the end thereof the following new subsection:
"(d) MORTGAGE AND STUDENT LOAN TARGETING RULES TO APPLY TO LOANS MADE
MORE THAN 3 YEARS AFTER THE DATE OF THE ORIGINAL ISSUE. -- Subsections
(a)(3) and (b)(3) shall be treated as including the requirements of
subsections (e) and (f) of section 143 and paragraphs (3) and (4) of
section 144(b) of the 1986 Code with respect to bonds the proceeds of
which are used to finance loans made more than 3 years after the date of
the issuance of the original bond."
(B) The amendment made by subparagraph (A) "26 USC 141 note"
shall apply with respect to refunding bonds issued after October
16, 1987.
(15) A bond issued to refund an obligation described in section
"26 USC 103 note" 103(o)(3) of the Internal Revenue Code of 1954
(as in effect on the day before the date of the enactment of the
Tax Reform Act of 1986) shall not be treated as described in
section 144(b) of the 1986 Code unless it is described in section
144(b)(1)(A) of the 1986 Code.
(d) AMENDMENTS RELATED TO SECTION 1314 OF THE REFORM ACT. --
(1) Subsection (a) of section 1314 of the Reform Act "26 USC
141 note" is amended by adding at the end thereof the following:
"The preceding sentence shall not apply to the first advance
refunding after September 25, 1985, of a bond issued before
September 26, 1985."
(2) Subsection (f) of section 1314 of the Reform Act is amended
by striking out "December" and inserting in lieu thereof "August".
(3) Section 1314 of the Reform Act is amended by redesignating
subsection (g) as subsection (i) and by inserting after subsection
(f) the following new subsections:
"(g) TERMINATION OF MORTGAGE BOND POLICY STATEMENT REQUIREMENT. --
Paragraph (5) of section 103A(j) of the 1954 Code (relating to policy
statement) shall not apply to any bond issued after August 15, 1986, and
shall not apply to nonissued bond amounts elected under section 25 of
the 1986 Code after such date.
"(h) ARBITRAGE RESTRICTION ON INVESTMENTS IN INVESTMENT-TYPE
PROPERTY. -- In the case of a bond issued before August 16, 1986
(September 1, 1986 in the case of a bond described in section 1312(c)(
2)), section 103(c) of the 1954 Code shall be applied by treating the
reference to securities in paragraph (2) thereof as including a
reference to investment-type property but only for purposes of
determining whether any bond issued after October 16, 1987, to advance
refund such bond (or a bond which is part of a series of refundings of
such bond) is an arbitrage bond (within the meaning of section 148(a) of
the 1986 Code)."
(e) AMENDMENTS RELATED TO SECTION 1315 OF THE REFORM ACT. --
(1) Subsection (c) of section 1315 of the Reform Act is amended
--
(A) by inserting "for calendar year 1986" after "1954 Code"
each place it appears,
(B) by striking out "before August 16" each place it appears
and inserting in lieu thereof "on August 15", and
(C) by adding at the end thereof the following new sentence:
"The preceding sentence shall not apply to the extent section 1313(
b)(5) treats any bond as a private activity bond for purposes of section
146 of the 1986 Code."
(2)(A) Subsection (e) of section 1315 of the Reform Act is
amended by adding at the end thereof the following new sentence:
"The preceding sentence shall not apply to any bond which (if
issued on August 15, 1986) would have been an industrial
development bond (as defined in section 103(b)(2) of the 1954
Code)."
(B) The amendment made by subparagraph (A) "26 USC 141 note"
shall apply to bonds issued after June 10, 1987.
(f) AMENDMENTS RELATED TO SECTION 1316 OF THE REFORM ACT. --
(1)(A) Subsections (a)(1), (b)(1), (c)(1), and (f)(1) of
section 1316 of the Reform Act "26 USC 141 note" are each amended
by inserting "and as having a carryforward purpose described in
section 146(f)(5) of such Code" after "the 1986 Code".
(B) The amendment made by subparagraph (A) "26 USC 141 note"
shall apply only with respect to carryforwards of volume cap for
years after 1986.
(2) Subsection (c) of section 1316 of the Reform Act "26 USC
141 note" is amended by adding at the end thereof the following
new paragraph:
"(4) APPLICATION OF SECTION 147(b). -- A bond to which this
subsection applies (other than a refunding bond) shall be treated
as meeting the requirements of section 147(b) of the 1986 Code if
the average maturity (determined in accordance with section 147(
b)(2)(A) of such Code) of the issue of which such bond is a part
does not exceed 20 years. A bond issued to refund (or which is a
part of a series of bonds issued to refund) a bond described in
the preceding sentence shall be treated as meeting the
requirements of such section if the refunding bond has a maturity
date not later than the date which is 20 years after the date on
which the original bond was issued."
(3) Paragraph (1) of section 1316(e) of the Reform Act is
amended --
(A) by inserting "(and section 103(h)(2)(B)(ii) of the 1954
Code)" after "1986 Code" the first place it appears, and
(B) by inserting "(and section 103(b)(16) of the 1954 Code)"
after "1986 Code" in the last sentence.
(4) Paragraph (2) of section 1316(g) of the Reform Act is
amended --
(A) by striking out "described in the paragraph (3)" in
subparagraph (A) and inserting in lieu thereof "issued to provide
a facility described in paragraph (3)", and
(B) by striking out "which paragraph (3)" in subparagraph (C)
and inserting in lieu thereof "which such paragraph (3)".
(5) Paragraph (6) of section 1316(g) of the Reform Act is
amended by inserting "(and the provisions of section 1314)" after
"section 1301".
(6) Paragraph (7) of section 1316(g) of the Reform Act is
amended to read as follows:
"(7) In the case of a bond described in section 632(d) of the
Tax Reform Act of 1984 --
"(A) section 141 of the 1986 Code shall be applied without
regard to subsection (a)(2 and paragraphs (4) and (5) of
subsection (b),
"(B) paragraphs (1) and (2) of section 141(b) of the 1986 Code
shall be applied by substituting '25 percent' for '10 percent'
each place it appears, and
"(C) section 149(b) of the 1986 Code shall not apply.
This paragraph shall not apply to any bond issued after
December 31, 1990."
(7)(A) Subparagraph (A) of section 1316(g)(8) of the Reform Act
is amended by inserting "and as having a carryforward purpose
described in section 146(f)(5) of such Code" after "the 1986
Code".
(B) The amendment made by subparagraph (A) "26 USC 141 note"
shall apply only with respect to carryforwards of volume cap for
years after 1986.
(8) Paragraph (2) of section 1316(j) of the Reform Act is
amended to read as follows:
"(2) by adding at the end thereof the following new sentence:
'In the case of refunding obligations not to exceed $100,000,000
issued after October 21, 1986, by Dade County, Florida, for the
purpose of advance refunding its Aviation Revenue Bonds (Series
J), the first sentence of this paragraph shall be applied by
substituting "the date which is 1 year after the date of the
enactment of the Technical and Miscellaneous Revenue Act of 1988"
for "December 31, 1984" and the amendments made by section 1301 of
the Tax Reform Act of 1986 shall not apply.'"
(9) Paragraph (2) of section 1316(k) of the Reform Act "26 USC
141 note" is amended by striking out "$55,000,000 must be redeemed
no later than November 1, 1987" and inserting in lieu thereof "no
more than $55,000,000 shall be outstanding later than November 1,
1987".
(10) Section 1104 of the Mortgage Subsidy Bond Tax Act of 1980
is amended by adding at the end of subsection (r) the following
new sentence:
"Section 148(f) of the Internal Revenue Code of 1986 and the
amendments made by section 1301 of the Tax Reform Act of 1986 shall not
apply to any bonds described in paragraph (1) which may be issued as a
result of the amendments made by the Tax Reform Act of 1986."
(11) Subsection (l) of section 1316 of the Reform Act is hereby
repealed.
(g) AMENDMENTS RELATED TO SECTION 1317 OF THE REFORM ACT. --
(1) Subparagraph (J) of section 1317(2) of the Reform Act "26
USC 141 note" is amended by striking out "began construction in
1980" and inserting in lieu thereof ", a subsidiary of Sierra
Pacific Resources, began in 1980 work to design, finance,
construct, and operate".
(2) Subparagraph (C) of section 1317(3) of the Reform Act is
amended to read as follows:
"(C) A facility is described in this subparagraph if --
"(i) it is one or more stadiums to be used either by an
American League baseball team or a National Football League team
currently using a stadium in a city having a population in excess
of 2,500,000 and described in section 146(d)(3) of the 1986 Code,
"(ii) the bonds to be used to provide financing for one or more
such stadiums are issued by a political subdivision or a State
agency pursuant to a resolution approving an inducement resolution
adopted by a State agency on November 20, 1985, as it may be
amended (whether or not the beneficiaries of such issue or issues
are the beneficiaries (if any) specified in such inducement
resolution and whether or not the number of such stadiums and the
locations thereof are as specified in such inducement resolution)
or pursuant to P.A. 84-1470 of the State in which such city is
located (and by an agency created thereby), and
"(iii) such stadium or stadiums are located in the city
described in (i).
The aggregate face amount of bonds to which this subparagraph
applies shall not exceed $250,000,000. In the case of any
carryforward of volume cap for one or more stadiums described in
the first sentence of this subparagraph, such carryforward shall
be valid with respect to bonds issued for such stadiums
notwithstanding any other provision of the 1986 Code or the 1954
Code, and whether or not (i) there is a change in the number of
stadiums or the beneficiaries or sites of the stadium or stadiums
and (ii) the bonds are issued by either of the state agencies
described in the first sentence of this subparagraph."
(3)(A) Subparagraph (P) of section 1317(3) of the Reform Act is
amended --
(i) by striking out "approved" and inserting in lieu thereof
"authorized", and
(ii) by striking out "December 9, 1985" and inserting in lieu
thereof "December 2, 1985".
(B) Section 1317(3)(A) of the Reform Act is amended by striking
out "domed".
(C) Section 1317(3)(U) of the Reform Act is amended by deleting
"coliseum complex." and inserting in lieu thereof "coliseum
complex, or is a renovation of an existing stadium located in
Oakland, California, and used by an American League baseball
team."
(D) Section 1317(3)(W) of the Reform Act is amended by striking
out "$225,000,000" and inserting "$25,000,000".
(4) Paragraph (3) of section 1317 of the Reform Act is amended
by adding at the end thereof the following new subparagraph:
"(Z) A facility is described in this subparagraph if --
"(i) such facility was a redevelopment project that was
approved in concept by the city council sitting as the
redevelopment agency in October 1984, and
"(ii) $20,000,000 in funds for such facility was identified in
a 5-year budget approved by the city redevelopment agency on
October 25, 1984.
The aggregate face amount of bonds to which this subparagraph
applies shall not exceed $80,000,000."
(5) Paragraph (4) of section 1317 of the Reform Act is amended
--
(A) by striking out "1986. The bonds" and inserting in lieu
thereof "1986, and the bonds",
(B) by striking out "and" at the end the subparagraph (A), and
(C) by adding "and" at the end of subparagraph (B).
(6) Subparagraph (W) of section 1317(6) of the Reform Act is
amended to read as follows:
"(W) A project is described in this subparagraph if such
project is --
"(i) a part of the Kenosha Downtown Redevelopment project, and
"(ii) located in an area bounded --
"(I) on the east by the east wall of the Army Corps of
Engineers Confined Disposal Facility (extended),
"(II) on the north by 48th Street (extended),
"(III) on the west by the present Chicago & Northwestern
Railroad tracks, and
"(IV) on the south by the north line of Eichelman Park (60th
Street) (extended).
The aggregate face amount of bonds to which this subparagraph
applies shall not exceed $105,000,000."
(7) Paragraph (6) of section 1317 of the Reform Act is amended
by redesignating subparagraph (X) as subparagraph (Z) and by
inserting after subparagraph (W) the following new subparagraphs:
"(X) A project is described in this subparagraph if a
redevelopment plan for such project was approved by the city
council of Bell Gardens, California, on June 12, 1979. The
aggregate face amount of bonds to which this subparagraph applies
shall not exceed $10,000,000.
"(Y) Nothing in this paragraph shall be construed as having the
effect of exempting from tax interest on any bond issued after
June 10, 1987, if such interest would not have been exempt from
tax were such bond issued on August 15, 1986."
(8) The last sentence of subparagraph (A) of section 1317(7) of
the Reform Act is amended by inserting before the period "and
section 149(d)(2) of the 1986 Code shall not apply to bonds so
treated".
(9) Subparagraph (D) of section 1317(7) of the Reform Act is
amended to read as follows:
"(D) A facility is described in this subparagraph if --
"(i) it is a convention, trade, or spectator facility,
"(ii) a regional convention, trade, and spectator facilities
study committee was created before March 19, 1985, with respect to
such facility, and
"(iii) feasibility and preliminary design consultants were
hired on May 1, 1985, and October 31, 1985, with respect to such
facility.
The aggregate face amount of bonds to which this subparagraph
applies shall not exceed the excess of $175,000,000 over the
amount of bonds to which paragraph (48)(B) applies."
(10) Clause (ii) of section 1317(7)(G) of the Reform Act is
amended to read as follows:
"(ii) such facility's location was approved in Decembr 1985 by
a task force created jointly by the Governor of the State within
which such facility will be located and the mayor of the capital
city of such State, and".
(11) Subparagraph (J) of section 1317(7) of the Reform Act is
amended --
(A) by striking out "civic festival" in clause (i) and
inserting in lieu thereof "aquafestival",
(B) by striking out clause (ii) and inserting in lieu thereof
the following:
"(ii) a referendum was held on April 6, 1985, in which voters
permitted the city council to lease 130 acres of dedicated
parkland for the purpose of constructing such facility, and", and
(C) by striking out "$5,000,000" and inserting in lieu thereof
"$10,000,000".
(12) Subparagraph (E) of section 1317(9) of the Reform Act is
amended by striking out "March 5, 1985" and inserting in lieu
thereof "March 6, 1985".
(13) Clause (iii) of section 1317(9)(J) of the Reform Act is
amended by striking out all that precedes "by the governor" and
inserting in lieu thereof the following:
"(iii) such facility's location was approved in December 1985
by a task force created jointly".
(14) Subparagraph (A) of section 1317(11) of the Reform Act is
amended by striking out "and section 142(a)" and inserting in lieu
thereof "in section 142(a)".
(15) Subparagraph (C) of section 1317(11) of the Reform Act is
amended to read as follows:
"(C) A facility is described in this subparagraph if it is
described in section 1865(c)(2)(C) of this Act."
(16) Subparagraph (X) of section 1317(13) of the Reform Act is
amended by striking out the last sentence.
(17) Paragraph (13) of section 1317 of the Reform Act is
amended by adding at the end thereof the following new
subparagraphs:
"(AA) A residential rental property project is described in
this subparagraph if it is the Carriage Trace residential rental
project in Clinton, Tennessee. The aggregate face amount of bonds
to which this subparagraph applies shall not exceed $10,000,000.
"(BB) A residential rental property project is described in
this subparagraph if --
"(i) a ocntract to purchase such property was dated as of
August 9, 1985,
"(ii) there was an inducement resolution adopted on September
27, 1985, for the issuance of obligations to finance such
property,
"(iii) there was a State court final validation of such
financing on November 15, 1985, and
"(iv) the certificate of nonappeal from such validation was
available on December 15, 1985.
The aggregate face amount of bonds to which this subparagraph
applies shall not exceed $27,750,000."
(18) Paragraph (14) of section 1317 of the Reform Act is
amended by striking out "$90,000,000" and inserting in lieu
thereof "$130,000,000" and inserting "incorporated on February 20,
1985" before the period at the end of the 1st sentence.
(19) Subparagraph (B) of section 1317(15) of the Reform Act is
amended --
(A) by striking out all that follows "agreement with" in clause
(i) and inserting in lieu thereof "an underwriter to provide
planning and financial guidance for a possible bond issue, and",
and
(B) by striking out "certificates" in clause (ii) and inserting
in lieu thereof "bond issue"
(20) Paragraph (16) of section 1317 of the Reform Act is
amended by striking out the last sentence.
(21) Clause (i) of section 1317(19)(D) of the Reform Act is
amended by striking out "light rail transitway" and inserting in
lieu thereof "fixed guideway".
(22) Paragraph (20) of section 1317 of the Reform Act is
amended by striking out "Section 148(f)" and inserting in lieu
thereof "Subsections (c)(2) and (f) of section 148".
(23) Subparagraph (B) of section 1317(21) of the Reform Act is
amended --
(A) by striking out "Subsection (c)" and inserting in lieu
thereof "Subsections (c)(2)", and
(B) by striking out "103A(g)(5)(C)l" and inserting in lieu
thereof "103A(g)(5)(C)".
(24) Paragraph (22) of section 1317 of the Reform Act is
amended to read as follows:
"(22) DOWNTOWN REDEVELOPMENT PROJECT. -- Subsection (b) of
section 626 of the Tax Reform Act of 1984 is amended by adding at
the end thereof the following new paragraph:
"'(7) EXCEPTION FOR CERTAIN DOWNTOWN REDEVELOPMENT PROJECT. --
The amendments made by this section shall not apply to any
obligation which is issued as part of an issue 95 percent or more
of the proceeds of which are to be used to provide a project to
acquire and redevelop a downtown area if --
"'(A) on August 15, 1985, a downtown redevelopment authority
adopted a resolution to issue obligations for such project,
"'(B) before September 26, 1985, the city expended, or entered
into binding contracts to expend, more than $10,000,000 in
connection with such project, and
"'(C) the State supreme court issued a ruling regarding the
proposed financing structure for such project on December 11,
1985.
The aggregate face amount of obligations to which this
paragraph applies shall not exceed $85,000,000 and such
obligations must be issued before January 1, 1992.'"
(25) Subparagraph (A) of section 1317(24) of the Reform Act is
amended by adding at the end thereof the following: "The last
paragraph of this section shall not apply to the treatment under
the preceding sentence."
(26)(A) Clause (i) of section 1317(25)(A) of the Reform Act is
amended by striking out "3 counties" and inserting in lieu thereof
"1 or more of 3 counties".
(B) Clause (i) of section 1317(25)(B) of the Reform Act is
amended by adding at the end thereof the following new sentence:
"For purposes of applying section 146(k) of the 1986 Code, the
public utility facility described in subparagraph (A) shall be
treated as described in paragraph (2) of such section and such
paragraph shall be applied without regard to the requirement that
the issuer establish that a State's share of the use of a facility
(or its output) will equal or exceed the State's share of the
private activity bonds issued to finance the facility."
(27) Subparagraph (I) of section 1317(27) of the Reform Act is
amended by adding at the end thereof the following: "For purposes
of determining whether any bond to which this subparagraph applies
is a qualified small issue bond, there shall not be taken into
account under section 144(a) of the 1986 Code capital expenditures
with respect to any facility of the United States Government and
there shall not be taken into account any bond allocable to the
United States Government."
(28) Clause (i) of section 1317(29)(B) of the Reform Act is
amended by striking out all that follows "1993" and inserting in
lieu thereof ", by the State of Connecticut, and".
(29) Subparagraph (D) of section 1317(29) of the Reform Act is
amended by striking out "the net proceeds" and inserting in lieu
thereof "the proceeds".
(30) Section 1317(33)(A)(ii) of the Reform Act is amended --
(A) by striking out "on" and inserting in lieu thereof "dated"
each place it appears, and
(B) by inserting "dated on December 1, 1985" after "(Series
1985A and 1985B)" in subclause (III).
(31) Subparagraph (B) of section 1317(33) of the Reform Act is
amended --
(A) by striking out "and before August 7, 1988,", and
(B) by adding at the end thereof the following new sentence:
"The aggregate face amount of bonds to which this subparagraph
applies shall not exceed $90,000,000."
(32) Subparagraph (G) of section 1317(33) of the Reform Act is
amended by striking out "subparagraph (H)" and inserting in lieu
thereof "subparagraph (F)".
(33) Subparagraph (H) of section 1317(33) of the Reform Act is
amended --
(A) by striking out clause (ii) and inserting in lieu thereof
the following:
"(ii) the proceeds of the issue are to be used to finance
projects (to be determined by such university and the issuer)
which are similar to those projects intended to be financed by
bonds that were the subject of a request transmitted to Congress
on November 7, 1985", and
(B) by adding at the end thereof the following: "Bonds to
which this subparagraph applies shall be treated as qualified
501(c)(3) bonds if such bonds would not (if issued on August 15,
1986, be industrial development bonds (as defined in section 103(
b)(2) of the 1954 Code), and section 147(f) of the 1986 Code shall
not apply to the issue of which such bonds are a part. Bonds
issued to finance facilities described in this subparagraph shall
be treated as issued to finance such facilities notwithstanding
the fact that a period in excess of 1 year has expired since the
facilities were placed in service."
(34) Subparagraph (K) of section 1317(33) of the Reform Act is
amended --
(A) by striking out "the issue is" in clause (i) and inserting
in lieu thereof "the issue or issues are",
(B) by inserting "at least" before "900 units",
(C) by striking out "2,000 square feet" and inserting in lieu
thereof "245,000 square feet", and
(D) by striking out "$150,000,000" and inserting in lieu
thereof "$112,000,000".
(35) Paragraph (33) of section 1317 of the Reform Act is
amended by striking out subparagraphs (M), (N), and (O) and
inserting in lieu thereof the following new subparagraphs:
"(M) Proceeds of an issue are described in this subparagraph if
such issue is issued on behalf of the Society of the New York
Hospital to finance completion of a project commenced by such
hospital in 1981 for construction of a diagnostic and treatment
center or to refund bonds issued on behalf of such hospital in
connection with the construction of such diagnostic and treatment
center or to finance construction and renovation projects
associated with an inpatient psychiatric care facility. The
aggregate face amount of bonds to which this subparagraph applies
shall not exceed $150,000,000.
"(N) Any bond to which section 145(b) of the 1986 Code does not
apply by reason of this paragraph (other than subparagraph (A)
thereof) shall be taken into account in determining whether such
section applies to any later issue.
"(O) In the case of any refunding bond --
"(i) to which any subparagraph of this paragraph applies, and
"(ii) to which the last sentence of section 1313(c)(2) applies,
such bond shall be treated as having such subparagraph apply
and the refunding bond shall be treated for purposes of such
section as issued before January 1, 1986, and as not being an
advance refunding) unless the issuer elects the opposite result."
(36) Paragraph (36) of section 1317 of the Reform Act is
amended by striking out "$80,000,000" and inserting in lieu
thereof "$400,000,000".
(37) Paragraph (38) of section 1317 of the Reform Act is
amended by striking out "and sections 148 and 149".
(38) Paragraphs (39) and (40) of section 1317 of the Reform Act
are amended to read as follows:
"(39) CERTAIN BONDS TREATED AS QUALIFIED 501(c)(3) BONDS. -- A
bond issued as part of an issue shall be treated for purposes of
part IV of subchapter B of chapter 1 if the 1986 Code as a
qualified 501(c)(3) bond if --
"(A) such bond would not (if issued on August 15, 1986) be an
industrial development bond (as defined in section 103(b)(2) of
the 1954 Code), and
"(B) such issue was approved by city voters on January 19,
1985, for construction or renovation of facilities for the
cultural and performing arts.
The aggregate face amount of bonds to which this paragraph
applies shall not exceed $5,000,000.
"(40) CERTAIN LIBRARY BONDS. -- In the case of a bond issued
before January 1, 1986, by the City of Los Angeles Community
Redevelopment Agency to provide the library and related structures
associated with the City of Los Angeles Central Library Project,
the ownership and use of the land and facilities associated with
such project by persons which are not governmental units (or
payments from such persons) shall not adversely affect the
exclusion from gross income under section 103 of the 1954 Code of
interest on such bonds."
(39) Paragraph (41) of section 1317 of the Reform Act is
amended to read as follows:
"(41) CERTAIN REFUNDING OBLIGATIONS FOR CERTAIN POWER
FACILITIES. -- With respect to 2 net billed nuclear power
facilities located in the State of Washington on which
construction has been suspended, the requirements of section 147(
b) of the 1986 Code shall be treated as satisfied with respect to
refunding bonds issued before 1992 if --
"(A) each refunding bond has a maturity date not later than the
maturity date of the refunded bond, and
"(B) the facilities have not been placed in service as of the
date of issuance of the refunding bond.
The aggregate face amount of bonds to which this paragraph
applies shall not exceed $2,000,000,000. Section 146 of the 1986
Code and the last paragraph of this section shall not apply to
bonds to which this paragraph applies."
(40) Paragraph (43) of section 1317 of the Reform Act is
amended by inserting before the period "and the Internal Revenue
Code of 1986 shall be applied without regard to section 149(d)(
2)."
(41) Paragraph (44) of section 1317 of the Reform Act is
amended --
(A) by inserting after "1986 Code" the following: "and the
temporary period limitation of section 148(c)(2) of the 1986
Code",
(B) by striking out "$100,000,000" and inserting in lieu
thereof "$200,000,000", and
(C) by striking out "Hospitals Bond Pool" in the second item in
the table and inserting in lieu thereof "Hospital Equipment Loan
Council".
(42) Paragraph (48) of section 1317 of the Reform Act is
amended by striking out "either" in the material preceding
subparagraph (A) and inserting in lieu thereof "any".
(43) Subparagraph (B) of section 1317(48) of the Reform Act is
amended by striking out "subparagraph (O)" and inserting in lieu
thereof "paragraph (6)(U)".
(44) Paragraph (48) of section 1317 of the Reform Act is
amended by adding at the end thereof the following new
subparagraph:
"(C) A facility which is part of a project described in
paragraph (6)(O). The aggregate face amount of bonds to which
this subparagraph applies shall not exceed $20,000,000."
(45) Paragraph (49) of section 1317 of the Reform Act is
amended --
(A) by striking out "149(d)" and inserting in lieu thereof
"149(d)(2)", and
(B) by inserting "United States" before "Housing Act of 1937".
(46) Paragraph (50) of section 1317 of the Reform Act is
amended to read as follows:
"(50) TRANSITIONED BONDS SUBJECT TO CERTAIN RULES. -- In the
case of any bond to which any provision of this section applies,
except as otherwise expressly provided, sections 103 and 103A of
the 1954 Code shall be applied as if the requirements of sections
147(g), 148, and 149(d) of the 1986 Code were included in each
such section."
(47) Paragraph (51) of section 1317 of the Reform Act is
amended --
(A) by striking out "Section 141(a)" and inserting in lieu
thereof "Section 141(b)", and
(B) by striking out "141(a)(3)" and inserting in lieu thereof
"141(b)(3)".
(48) Paragraph (52) of section 1317 of the Reform Act is
amended by striking out "This section" and inserting in lieu
thereof "Except as otherwise provided in this section, this
section".
(49) The material preceding subparagraph (A) of section 1317(
2) of the Reform Act is amended by striking out "section 103(b)(
4)(C)" and inserting in lieu thereof "section 103(b)(4)(F)".
(50) Clause (ii) of section 1317(27)(H) of the Reform Act is
amended by striking out "November 14, 1985" and inserting in lieu
thereof "November 13, 1985".
(51) Subparagraph (I) of section 1317(33) of the Reform Act is
amended by striking out "November 11, 1985" and inserting in lieu
thereof "November 1, 1985".
(52) Subparagraph (J) of section 1317(3) of the Reform Act is
amended by striking out "October 29" in clause (iv) and inserting
in lieu thereof "November 5".
(h) AMENDMENTS RELATED TO SECTION 1318 OF THE REFORM ACT. -- Section
1318 of the Reform Act "26 USC 141 note" (relating to definitions, etc.,
relating to effective dates and transitional rules) is amended --
(1) by inserting "(a) DEFINITIONS. -- " before "For purposes
of this subtitle -- ", and
(2) by adding at the end thereof the following new subsections:
"(b) MINIMUM TAX TREATMENT. --
"(1) IN GENERAL. -- Any bond described in paragraph (2) shall
not be treated as a private activity bond for purposes of section
57 of the 1986 Code unless such bond would (if issued on August 7,
1986) be --
"(A) an industrial development bond (as defined in section
103(b)(2) of the 1954 Code), or
"(B) a private loan bond (as defined in section 103(o)(2)(A) of
the 1954 Code, without regard to any exception from such
definition other than section 103(o)(2)(C) of such Code).
"(2) BONDS DESCRIBED. -- For purposes of paragraph (1), a bond
is described in this paragraph if --
"(A) the amendments made by section 1301 do not apply to such
bond by reason of section 1312 or 1316(g),
"(B) any provision of section 1317 applies to such bond, or
"(C) the proceeds of such bond are used to refund any bond
referred to in subparagraph (A) or (B) (or any bond which is part
of a series of refundings of such a bond) if the requirements of
paragraphs (1), (2), and (3) of subsection (c) are met with
respect to the refunding bond.
"(c) CURRENT REFUNDINGS NOT TAKEN INTO ACCOUNT IN APPLYING AGGREGATE
LIMIT ON BONDS TO WHICH TRANSITIONAL RULES APPLY. -- The limitation on
the aggregate face amount of bonds to which any provision of section
1316(g) or 1317 applies shall not be reduced by the face amount of any
bond the proceeds of which are to be used exclusively to refund any bond
to which such provision applies (or any bond which is part of a series
of refundings of such bond) if --
"(1) the average maturity date of the issue of which the
refunding bond is a part is not later than the average maturity
date of the bonds to be refunded by such issue,
"(2) the amount of the refunding bond does not exceed the
outstanding amount of the refunded bond, and
"(3) the net proceeds of the refunding bond are used to redeem
the refunded bond not later than 90 days after the date of the
issuance of the refunding bond.
For purposes of paragraph (1), average maturity shall be determined
in accordance with section 147(b)(2)(A) of the 1986 Code. No limitation
in section 1316(g) or 1317 on the period during which bonds may be
issued under such section shall apply to any refunding bond which meets
the requirements of this subsection.
"(d) SPECIAL RULE PERMITTING CARRYFORWARD OF VOLUME CAP FOR CERTAIN
TRANSITIONED PROJECTS. -- A bond to which section 1312 or 1317 applies
shall be treated as having a carryforward purpose described in section
146(f)(5) of the 1986 Code, and the requirement of section 146(f)(2)(A)
of the 1986 Code shall be treated as met if such project is identified
with reasonable specificity. The preceding sentence shall not apply so
as to permit a carryforward with respect to any qualified small issue
bond."
(i) APPLICATION TO 501(c)(3) BONDS. -- In accordance with section
1302 of the Reform Act, "26 USC 501 note" each amendment and other
provision of this Act which applies to private activity bonds shall,
unless otherwise expressly provided, apply to qualified 501(c)(3) bonds.
SEC. 1014. AMENDMENTS RELATED TO TITLE XIV OF THE REFORM ACT.
(a) AMENDMENTS RELATED TO SECTION 1401 OF THE REFORM ACT. --
(1) Subsection (e) of section 672 of the 1986 Code is amended
to read as follows:
"(e) GRANTOR TREATED AS HOLDING ANY POWER OR INTEREST OF GRANTOR'S
SPOUSE. --
"(1) IN GENERAL. -- For purposes of this subpart, a grantor
shall be treated as holding any power or interest held by --
"(A) any individual who was the spouse of the grantor at the
time of the creation of such power or interest, or
"(B) any individual who became the spouse of the grantor after
the creation of such power or interest, but only with respect to
periods after such individual became the spouse of the grantor.
"(2) MARITAL STATUS. -- For purposes of paragraph (1)(A), an
individual legally separated from his spouse under a decree of
divorce or of separate maintenance shall not be considered as
married."
(2) Paragraph (3) of section 675 of the 1986 Code is amended by
adding at the end thereof the following new sentence: "For
periods during which an individual is the spouse of the grantor
(within the meaning of section 672(e)(2)), any reference in this
paragraph to the grantor shall be treated as including a reference
to such individual."
(3) Subsection (c) of section 674 of the 1986 Code is amended
by adding at the end thereof the following new sentence: "For
periods during which an individual is the spouse of the grantor
(within the meaning of section 672(e)(2)), any reference in this
subsection to the grantor shall be treated as including a
reference to such individual."
(b) AMENDMENT RELATED TO SECTION 1402 OF THE REFORM ACT. -- Section
673 of the 1986 Code is amended by adding at the end thereof the
following new subsections:
"(c) SPECIAL RULE FOR DETERMINING VALUE OF REVERSIONARY INTEREST. --
For purposes of subsection (a), the value of the grantor's reversionary
interest shall be determined by assuming the maximum exercise of
discretion in favor of the grantor.
"(d) POSTPONEMENT OF DATE SPECIFIED FOR REACQUISITION. -- Any
postponement of the date specified for the reacquisition of possession
or enjoyment of the reversionary interest shall be treated as a new
transfer in trust commencing with the date on which the postponement is
effective and terminating with the date prescribed by the postponement.
However, income for any period shall not be included in the income of
the grantor by reason of the preceding sentence if such income would not
be so includible in the absence of such postponement."
(c) AMENDMENTS RELATED TO SECTION 1403 OF THE REFORM ACT. -- "26 USC
645 note"
(1) If a beneficiary of a trust to which section 664 of the
1986 Code applies elects (at such time and in such manner as the
Secretary of the Treasury or his delegate may prescribe) to have
this paragraph apply, such beneficiary shall be entitled to the
benefits of section 1403(c)(2) of the Reform Act with respect to
amounts included in gross income under section 664(b) of the 1986
Code in the same manner as if such amounts were included in gross
income under section 652(a) of the 1986 Code.
(2) Any trust beneficiary may elect (at such time and in such
manner as the Secretary of the Treasury or his delegate may
prescribe) to waive the benefits of section 1403(c)(2) of the
Reform Act.
(3)(A) For purposes of determining the gross income of any
pass-thru entity, such pass-thru entity shall not be allowed the
benefits of section 806(e)(2)(C) (other than with respect to
income from a common trust fund) or 1403(c)(2) of the Reform Act
if such pass-thru entity is required to change its taxable year by
reason of the amendments made by section 806 or 1403 of the Reform
Act.
(B) For purposes of subparagraph (A), the term "pass-thru
entity" means any trust, partnership, S corporation, or common
trust fund.
(4) If any trust was required to change its taxable year by the
amendments made by section 1403 of the Reform Act, such change
shall be treated as initiated by such trust and approved by the
Secretary of the Treasury or his delegate.
(d) AMENDMENTS RELATED TO SECTION 1404 OF THE REFORM ACT. --
(1) Subsection (a) of section 1404 of the Reform Act is amended
--
(A) by striking out "subsection (k) of section 6654" and
inserting in lieu thereof "Subsection (l) of section 6654, as
amended by section 1841 of this Act", and
(B) by striking out "'(k) TRUSTS" and inserting in lieu thereof
"'(l) TRUSTS".
(2) Subsection (l) of section 6654 of the 1986 Code is amended
to read as follows:
"(l) ESTATES AND TRUSTS. --
"(1) IN GENERAL. -- Except as otherwise provided in this
subsection, this subsection shall apply to any estate or trust.
"(2) EXCEPTION FOR ESTATES AND CERTAIN TRUSTS. -- With respect
to any taxable year ending before the date 2 years after the date
of the decedent's death, this section shall not apply to --
"(A) the estate of such decedent, or
"(B) any trust --
"(i) all of which was treated (under subpart E of part I of
subchapter J of chapter 1) as owned by the decedent, and
"(ii) to which the residue of the decedent's estate will pass
under his will.
"(3) EXCEPTION FOR CHARITABLE TRUSTS AND PRIVATE FOUNDATIONS.
-- This section shall not apply to any trust which is subject to
the tax imposed by section 511 or which is a private foundation.
"(4) SPECIAL RULE FOR ANNUALIZATIONS. -- In the case of any
estate or trust to which this section applies, subsection (d)(2)(
B)(i) shall be applied by substituting 'ending before the date 1
month before the due date for the installment' for 'ending before
the due date for the installment'."
(3) Subsection (g) of section 643 of the 1986 Code is amended
--
(A) by striking out the last sentence of paragraph (1), and
(B) by amending paragraph (2) to read as follows:
"(2) TIME FOR MAKING ELECTION. -- An election under paragraph
(1) shall be made on or before the 65th day after the close of the
taxable year of the trust and in such manner as the Secretary may
prescribe."
(4) Subsection (g) of section 643 of the 1986 Code is amended
by adding at the end thereof the following new paragraph:
"(3) EXTENSION TO LAST YEAR OF ESTATE. -- In the case of a
taxable year reasonably expected to be the last taxable year of an
estate --
"(A) any reference in this subsection to a trust shall be
treated as including a reference to an estate, and
"(B) the fiduciary of the estate shall be treated as the
trustee."
(e) AMENDMENTS RELATED TO SECTION 1411 OF THE REFORM ACT. --
(1) Paragraph (3) of section 1(i) of the 1986 Code is amended
by adding at the end thereof the following new subparagraph:
"(C) COORDINATION WITH SECTION 644. -- If tax is imposed under
section 644(a)(1) with respect to the sale or exchange of any
property of which the parent was the transferor, for purposes of
applying subparagraph (A) to the taxable year of the parent in
which such sale or exchange occurs --
"(i) taxable income of the parent shall be increased by the
amount treated as included in gross income under section 644(a)(
2)(A)(i), and
"(ii) the amount described in subparagraph (A)(ii) shall be
increased by the amount of the excess referred to in section 644(
a)(2)(A)."
(2) The last sentence of subparagraph (A) of section 1(i)(3) of
the 1986 Code is amended by striking out "any deduction or credit"
and inserting in lieu thereof "any exclusion, deduction, or
credit".
(3) Subparagraph (A) of section 1(i)(4) of the 1986 Code is
amended --
(A) by striking out "gross income for the taxable year which is
not earned income" in clause (i) and inserting in lieu thereof
"adjusted gross income for the taxable year which is not
attributable to earned income",
(B) by striking out "his deduction" in clause (ii)(II) and
inserting in lieu thereof "his deductions",
(C) by striking out "the deductions allowed" in clause (ii)(
II) and inserting in lieu thereof "the itemized deductions
allowed", and
(D) by striking out "gross income" in clause (ii)(II) and
inserting in lieu thereof "adjusted gross income".
(4) Clause (iv) of section 6103(e)(1)(A) of the 1986 Code is
amended by striking out "section 1(j)" and inserting in lieu
thereof "section 1(i) or 59(j)".
(5)(A) Section 59 of the 1986 Code is amended by adding at the
end thereof the following new subsection:
"(j) TREATMENT OF UNEARNED INCOME OF MINOR CHILDREN. --
"(1) LIMITATION ON EXEMPTION AMOUNT. -- In the case of a child
to whom section 1(i) applies, the exemption amount for purposes of
section 55 shall not exceed the sum of --
"(A) such child's earned income (as defined in section 911(d)(
2)) for the taxable year, plus
"(B) $1,000.
"(2) LIMITATION BASED ON PARENTAL MINIMUM TAX. --
"(A) IN GENERAL. -- In the case of a child to whom section 1(
i) applies, the amount of the tax imposed by section 55 shall not
exceed such child's share of the allocable parental minimum tax.
"(B) ALLOCABLE PARENTAL MINIMUM TAX. -- For purposes of this
paragraph, the term 'allocable parental minimum tax' means the
excess of --
"(i) the tax which would be imposed by section 55 on the parent
if --
"(I) the amount of the parent's tentative minimum tax were
increased by the aggregate of the tentative minimum taxes of all
children of the parent to whom section 1(i) applies, and
"(II) the amount of the parent's regular tax were increased by
the aggregate of the regular taxes of all children of the parent
to whom section 1(i) applies, over
"(ii) the tax imposed by section 55 on the parent without
regard to this subparagraph.
"(C) CHILD SHARE. -- A child's share of any allocable parental
minimum tax shall be determined under rules similar to the rules
of section 1(i)(3)(B).
"(D) OTHERS RULES MADE APPLICABLE. -- For purposes of this
paragraph, rules similar to the rules of paragraphs (5) and (6) of
section 1(i) shall apply."
(B) The amendment made by subparagraph (A) "26 USC 59 note"
shall apply to taxable years beginning after December 31, 1988.
(6) Subparagraph (A) of section 1(i)(5) of the 1986 Code is
amended by striking out "custodial parent" and inserting in lieu
thereof "custodial parent (within the meaning of section 152(
e))".
(7) Paragraph (3) of section 1(i) of the 1986 Code is amended
by adding at the end thereof the following new subparagraph:
"(C) SPECIAL RULE WHERE PARENT HAS DIFFERENT TAXABLE YEAR. --
Except as provided in regulations, if the parent does not have the
same taxable year as the child, the allocable parental tax shall
be determined on the basis of the taxable year of the parent
ending in the child's taxable year."
(f) AMENDMENT RELATED TO SECTION 1421 OF THE REFORM ACT. --
Subsection (a) of section 1421 of the Reform Act "26 USC 2032A note" is
amended by striking out "within the time prescribed for filing such
return (including extensions thereof)".
(g) AMENDMENTS RELATED TO SECTION 1431 OF THE REFORM ACT. --
(1) Subsection (a) of section 2611 of the 1986 Code is amended
by striking out "generation-skipping transfers" and inserting in
lieu thereof "generation-skipping transfer".
(2) Subsection (b) of section 2611 of the 1986 Code is amended
by striking out paragraph (1) and by redesignating paragraphs (2)
and (3) as paragraphs (1) and (2), respectively.
(3)(A) Section 2642 of the 1986 Code is amended by adding at
the end thereof the following new subsection:
(e) SPECIAL RULES FOR CHARITABLE LEAD ANNUITY TRUSTS. --
"(1) IN GENERAL. -- For purposes of determining the inclusion
ratio for any charitable lead annuity trust, the applicable
fraction shall be a fraction --
"(A) the numerator of which is the adjusted GST exemption, and
"(B) the denominator of which is the value of all of the
property in such trust immediately after the termination of the
charitable lead annuity.
"(2) ADJUSTED GST EXEMPTION. -- For purposes of paragraph (1),
the adjusted GST exemption is an amount equal to the GST exemption
allocated to the trust increased by interest determined --
"(A) at the interest rate used in determining the amount of the
deduction under section 2055 or 2522 (as the case may be) for the
charitable lead annuity, and
"(B) for the actual period of the charitable lead annuity.
"(3) DEFINITIONS. -- For purposes of this subsection --
"(A) CHARITABLE LEAD ANNUITY TRUST. -- The term 'charitable
lead annuity trust' means any trust in which there is a charitable
lead annuity.
"(B) CHARITABLE LEAD ANNUITY. -- The term 'charitable lead
annuity' means any interest in the form of a guaranteed annuity
with respect to which a deduction was allowed under section 2055
or 2522 (as the case may be).
"(4) COORDINATION WITH SUBSECTION (d). -- Under regulations,
appropriate adjustments shall be made in the application of
subsection (d) to take into account the provisions of this
subsection."
(B) The amendment made by subparagraph (A) "26 USC 2642 note"
shall apply for purposes of determining the inclusion ratio with
respect to property transferred after October 13, 1987.
(4)(A) Section 2642 of the 1986 Code is amended by adding at
the end thereof the following new subsection:
"(f) SPECIAL RULES FOR CERTAIN INTER VIVOS TRANSFERS. -- Except as
provided in regulations --
"(1) IN GENERAL. -- For purposes of determining the inclusion
ratio, if --
"(A) an individual makes an inter vivos transfer of property,
and
"(B) the value of such property would be includible in the
gross estate of such individual under chapter 11 if such
individual died immediately after making such transfer (other than
by reason of section 2035),
any allocation of GST exemption to such property shall not be
made before the close of the estate tax inclusion period (and the
value of such property shall be detrmined under paragraph (2)).
If such transfer is a direct skip, such skip shall be treated as
occurring as of the close of the estate tax inclusion period.
"(2) VALUATION. -- In the case of any property to which
paragraph (1) applies, the value of such property shall be --
"(A) if such property is includible in the gross estate of the
transferor (other than by reason of section 2035), its value for
purposes of chapter 11, or
"(B) if subparagraph (A) does not apply, its value as of the
close of the estate tax inclusion period (or, if any allocation of
GST exemption to such property is not made on a timely filed gift
tax return for the calendar year in which such period ends, its
value as of the time such allocation is filed with the Secretary).
"(3) ESTATE TAX INCLUSION PERIOD. -- For purposes of this
subsection, the term 'estate tax inclusion period' means any
period after the transfer described in paragraph (1) during which
the value of the property involved in such transfer would be
includible in the gross estate of the transferor under chapter 11
if he died. Such period shall in no event extend beyond the
earlier of --
"(A) the date on which there is a generation-skipping transfer
with respect to such property, or
"(B) the date of the death of the transferor.
"(4) TREATMENT OF SPOUSE. -- Except as provided in
regulations, any reference in this subsection to an individual or
transferor shall be treated as including a reference to the spouse
of such individual or transferor.
"(5) COORDINATION WITH SUBSECTION (d). -- Under regulations,
appropriate adjustments shall be made in the application of
subsection (d) to take into account the provisions of this
subsection."
(B) Paragraph (2) of section 2642(a) of the 1986 Code is
amended by striking out the last sentence.
(C) Subparagraph (A) of section 2642(b)(2) of the 1986 Code is
amended by inserting before the period at the end thereof the
following: "; except that, if the requirements prescribed by the
Secretary respecting allocation of post-death changes in value are
not met, the value of such property shall be determined as of the
time of the distribution concerned."
(D) Subsection (b) of section 2642 of the 1986 Code is amended
by inserting "Except as provided in subsection (f) -- "
immediately after the subsection heading.
(E) Subparagraph (B) of section 2642(b)(2) of the 1986 Code is
amended --
(i) by striking out "at or after the death of the transferor"
and inserting in lieu thereof "to property transferred as a result
of the death of the transferor"; and
(ii) by striking out "AT OR AFTER DEATH" in the subparagraph
heading and inserting in lieu thereof "TO PROPERTY TRANSFERRED AT
DEATH".
(F) Paragraph (3) of section 2642(b) of the 1986 Code is
amended --
(i) by striking out "to any property is made during the life of
the transferor but is" and inserting in lieu thereof "to any
property not transferred as a result of the death of the
transferor is"; and
(ii) by striking out "INTER VIVOS ALLOCATIONS" in the
subparagraph heading and inserting in lieu thereof "ALLOCATIONS TO
INTER VIVOS TRANSFERS".
(5)(A) Paragraph (1) of section 2613(a) of the 1986 Code is
amended by striking out "a person assigned" and inserting in lieu
thereof "a natural person assigned".
(B) Subsection (c) of section 2612 of the 1986 Code is amended
by adding at the end thereof the following new paragraph:
"(3) LOOK-THRU RULES NOT TO APPLY. -- Solely for purposes of
determining whether any transfer to a trust is a direct skip, the
rules of section 2651(e)(2) shall not apply."
(6) Subsection (c) of section 2652 of the 1986 Code is amended
by adding at the end thereof the following new paragraph:
"(3) CERTAIN SUPPORT OBLIGATIONS DISREGARDED. -- The fact that
income or corpus of the trust may be used to satisfy an obligation
of support arising under State law shall be disregarded in
determining whether a person has an interest in the trust, if --
"(A) such use is discretionary, or
"(B) such use is pursuant to the provisions of any State law
substantially equivalent to the Uniform Gifts to Minors Act."
(7) Paragraph (2) of section 2612(c) of the 1986 Code is
amended by adding at the end thereof the following new sentence:
"If any transfer of property to a trust would be a direct skip but
for this paragraph, any generation assignment under this paragraph
shall apply also for purposes of applying this chapter to
transfers from the portion of the trust attributable to such
property."
(8) Paragraph (2) of section 2652(c) of the 1986 Code is
amended --
(A) by striking out "NOMINAL INTERESTS" in the paragraph
heading and inserting in lieu thereof "INTERESTS", and
(B) by striking out "the tax" and inserting in lieu thereof
"any tax".
(9) Paragraph (1) of section 2652(a) of the 1986 Code is
amended --
(A) by striking out "a transfer of a kind" each place it
appears and inserting in lieu thereof "any property", and
(B) by adding at the end thereof the following new sentence:
"An individual shall be treated as transferring any property with
respect to which such individual is the transferor."
(10) Section 2663 of the 1986 Code is amended by striking out
"and" at the end of paragraph (1), by striking out the period at
the end of paragraph (2) and inserting in lieu thereof ", and",
and by adding at the end thereof the following new paragraph:
"(3) regulations providing for such adjustments as may be
necessary to the application of this chapter in the case of any
arrangement which, although not a trust, is treated as a trus
under section 2652(b)."
(11) Paragraph (3) of section 2651(e) of the 1986 Code is
amended to read as follows:
"(3) TREATMENT OF CERTAIN CHARITABLE ORGANIZATIONS AND
GOVERNMENTAL ENTITIES. -- Any --
"(A) organization described in section 511(a)(2),
"(B) charitable trust described in section 511(b)(2), and
"(C) governmental entity,
shall be assigned to the transferor's generation."
(12) Paragraph (2) of section 2654(a) of the 1986 Code is
amended --
(A) by striking out "any increase" and inserting in lieu
thereof "any increase or decrease", and
(B) by striking out "such increase" and inserting in lieu
thereof "such increase or decrease (as the case may be)".
(13) Subsection (b) of section 2654 of the 1986 Code is amended
to read as follows:
"(b) CERTAIN TRUSTS TREATED AS SEPARATE TRUSTS. -- For purposes of
this chapter --
"(1) the portions of a trust attributable to transfers from
different transferors shall be treated as separate trusts, and
"(2) substantially separate and independent shares of different
beneficiaries in a trust shall be treated as separate trusts.
Except as provided in the preceding sentence, nothing in this chapter
shall be construed as authorizing a single trust to be treated as 2 or
more trusts."
(14) Paragraph (3) of section 2652(a) of the 1986 Code is
amended --
(A) by striking out "any property" in subparagraphs (A) and (B)
and inserting in lieu thereof "any trust", and
(B) by striking out "may elect to treat such property" and
inserting in lieu thereof "may elect to treat all of the property
in such trust".
(15) Paragraph (2) of section 2612(a) of the 1986 Code is
amended to read as follows:
"(2) CERTAIN PARTIAL TERMINATIONS TREATED AS TAXABLE. -- If,
upon the termination of an interest in property held in trust by
reason of the death of a lineal descendant of the transferor, a
specified portion of the trust's assets are distributed to 1 or
more skip persons (or 1 or more trusts for the exclusive benefit
of such persons), such termination shall constitute a taxable
termination with respect to such portion of the trust property."
(16) Paragraph (2) of section 2632(b) of the 1986 Code is
amended by striking out "paragraph (1)) with respect to a prior
direct skip" and inserting in lieu thereof "paragraph (1) with
respect to a prior direct skip)".
(17)(A) Subsection (c) of section 2642 of the 1986 Code is
amended to read as follows:
"(c) TREATMENT OF CERTAIN DIRECT SKIPS WHICH ARE NONTAXABLE GIFTS.
--
"(1) IN GENERAL. -- In the case of a direct skip which is a
nontaxable gift, the inclusion ratio shall be zero.
"(2) EXCEPTION FOR CERTAIN TRANSFERS IN TRUST. -- Paragraph
(1) shall not apply to any transfer to a trust for the benefit of
an individual unless --
"(A) during the life of such individual, no portion of the
corpus or income of the trust may be distributed to (or for the
benefit of) any person other than such individual, and
"(B) if such individual dies before the trust if terminated,
the assets of such trust will be includible in the gross estate of
such individual.
"(3) NONTAXABLE GIFT. -- For purpsoes of this subsection, the
term 'nontaxable gift' means any transfer of property to the
extent such transfer is not treated as a taxable gift by reason of
--
"(A) section 2503(b) (taking into account the application of
section 2513), or
"(B) section 2503(e)."
(B) Paragraph (1) of section 2642(d) of the 1986 Code is
amended by striking out "(other than a nontaxable gift)".
(C) The amendments "26 USC 2642 note" made by this paragraph
shall apply to transfers after March 31, 1988.
(18) Clause (i) of section 2642(d)(2)(B) of the 1986 Code is
amended to read as follows:
"(i) the value of the property involved in such transfer
reduced by the sum of --
"(I) any Federal estate tax or state death tax actually
recovered from the trust attributable to such property, and
"(II) any charitable deduction allowed under section 2055 or
2522 with respect to such property, and".
(19) Paragraph (2) of section 2651(b) of the 1986 Code is
amended by striking out "a spouse of the transferor" and inserting
in lieu thereof "a spouse (or former spouse) of the transferor".
(20) Section 2652 of the 1986 Code is amended by adding at the
end thereof the following new subsection:
"(d) EXECUTOR. -- For purposes of this chapter, the term 'executor'
has the meaning given such term by section 2203."
(h) AMENDMENTS RELATED TO SECTION 1433 OF THE REFORM ACT. --
(1) Subsection (a) of section 1433 of the Reform Act "26 USC
2601 note" is amended by striking out "this part" and inserting in
lieu thereof "this subtitle".
(2) Paragraph (2) of section 1433(b) of the Reform Act is
amended --
(A) by striking out "this part" in the material preceding
subparagraph (A) and inserting in lieu thereof "this subtitle",
(B) by inserting before the comma at the end of subparagraph
(A) the following: "(or out of income attributable to corpus so
added)", and
(C) by inserting "or revocable trust" after "a will" in
subparagraph (B).
(3)(A) Subsection (b) of section 1433 of the Reform Act is
amended by striking out paragraph (3) and inserting in lieu
thereof the following new paragraphs:
"(3) TREATMENT OF CERTAIN TRANSFERS TO GRANDCHILDREN. --
"(A) IN GENERAL. -- For purposes of chapter 13 of the Internal
Revenue Code of 1986, the term 'direct skip' shall not include any
transfer before January 1, 1990, from a transferor to a grandchild
of the transferor to the extent the aggregate transfers from such
transferor to such grandchild do not exceed $2,000,000.
"(B) TREATMENT OF TRANSFERS IN TRUST. -- For purposes of
subparagraph (A), a transfer in trust for the benefit of a
grandchild shall be treated as a transfer to such grandchild if
(and only if) --
"(i) during the life of the grandchild, no portion of the
corpus or income of the trust may be distributed to (or for the
benefit of) any person other than such grandchild,
"(ii) the assets of the trust will be includible in the gross
estate of the grandchild if the grandchild dies before the trust
is terminated, and
"(iii) all of the income of the trust for periods after the
grandchild has attained age 21 will be distributed to (or for the
benefit of) such grandchild not less frequently than annually.
"(C) COORDINATION WITH SECTION 2653(a) OF THE 1986 CODE. -- In
the case of any transfer which would be a generation-skipping
transfer but for subparagraph (A), the rules of section 2653(a) of
the Internal Revenue Code of 1986 shall apply as if such transfer
were a generation-skipping transfer.
"(D) COORDINATION WITH TAXABLE TERMINATIONS AND TAXABLE
DISTRIBUTIONS. -- For purposes of chapter 13 of the Internal
Revenue Code of 1986, the terms 'taxable termination' and 'taxable
distribution' shall not include any transfer which would be a
direct skip but for subparagraph (A).
"(4) DEFINITIONS. -- Terms used in this section shall have the
same respective meanings as when used in chapter 13 of the
Internal Revenue Code of 1986; except that section 2612(c)(2) of
such Code shall not apply in determining whether an individual is
a grandchild of the transferor."
(B) Clause (iii) of section 1443(b)(3)(B) of the Reform Act "26
USC 2601 note" (as amended by subparagraph (A)) shall apply only
to transfers after June 10, 1987.
(4) Subsection (d) of section 1433 of the Reform Act "26 USC
2601 note" is amended --
(A) by striking out "shall be treated as a direct skip" and
inserting in lieu thereof "shall be treated as a direct skip to
such grandchild",
(B) by striking out "would be a direct skip" in subparagraph
(B) and inserting in lieu thereof "would be a direct skip to a
grandchild", and
(C) by adding at the end thereof the following new sentence:
"Unless the grandchild otherwise directs by will, the estate of
such grandchild shall be entitled to recover from the person
receiving the property on the death of the grandchild any increase
in Federal estate tax on the estate of the grandchild by reason of
the preceding sentence."
(5) Subparagraph (C) of section 1433(b)(2) of the Reform Act
"26 USC 2601 note" shall not exempt any direct skip from the
amendments made by subtitle D of title XIV of the Reform Act if --
(A) such direct skip results from the application of section
2044 of the 1986 Code, and
(B) such direct skip is attributable to property transferred to
the trust after October 21, 1988.
SEC. 1015. AMENDMENTS RELATED TO TITLE XV OF THE REFORM ACT.
(a) AMENDMENT RELATED TO SECTION 1501 OF THE REFORM ACT. --
Subparagraph (B) of section 6724(d)(2) of the 1986 Code is amended by
striking out "6031(b)" and inserting in lieu thereof "6031(b) or (c)".
(b) AMENDMENTS RELATED TO SECTION 1503 OF THE REFORM ACT. --
(1) Subparagraph (A) of section 6013(b)(5) of the 1986 Code is
amended to read as follows:
"(A) COORDINATION WITH SECTION 6653. -- For purposes of
section 6653, where the sum of the amounts shown as tax on the
separate returns of each spouse is less than the amount shown as
tax on the joint return made under this subsection --
"(i) such sum shall be treated as the amount shown on the joint
return,
"(ii) any negligence (or disregard of rules or regulations) on
either separate return shall be treated as negligence (or such
disregard) on the joint return, and
"(iii) any fraud on either separate return shall be treated as
fraud on the joint return."
(2)(A) Paragraph (1) of section 6653(a) of the 1986 Code is
amended to read as follows:
"(1) IN GENERAL. -- If any part of any underpayment (as
defined in subsection (c)) of tax required to be shown on a return
is due to negligence (or disregard of rules or regulations), there
shall be added to the tax an amount equal to 5 percent of the
underpayment."
(B) Paragraph (1) of section 6653(b) of the 1986 Code is
amended to read as follows:
"(1) IN GENERAL. -- If any part of any underpayment (as
defined in subsection (c)) of tax required to be shown on a return
is due to fraud, there shall be added to the tax an amount equal
to 75 percent of the portion of the underpayment which is
attributable to fraud."
(C) Paragraph (2) of section 6601(e) of the 1986 Code is
amended by striking out "6659" each place it appears and inserting
in lieu thereof "6653, 6659".
(3) Subsection (g) of section 6653 of the 1986 Code is amended
by adding at the end thereof the following new sentence: "If any
penalty is imposed under subsection (a) by reason of the preceding
sentence, only the portion of the underpayment which is
attributable to the failure described in the preceding sentence
shall be taken into account in determining the amount of the
penalty under subsection (a)."
(4) The amendments made by this subsection "26 USC 6001 note"
(other than paragraph (3)) shall apply to returns the due date for
which (determined without regard to extensions) is after December
31, 1988.
(c) AMENDMENT RELATED TO SECTION 1504 OF THE REFORM ACT. -- The
repeal made by section 8002(c) of the Omnibus Budget Reconciliation Act
"26 USC 6661 note" of 1986 shall take effect as if the Tax Reform Act of
1986 had been enacted on the day before the date of the enactment of the
Omnibus Budget Reconciliation Act of 1986.
(d) AMENDMENTS RELATED TO SECTION 1511 OF THE REFORM ACT. -- Section
6621 of the 1986 Code is amended --
(1) by striking out "short-term Federal rate" each place it
appears in subsections (a) and (b)(1) and inserting in lieu
thereof "Federal short-term rate", and
(2) by striking out "SHORT-TERM FEDERAL RATE" in the heading of
subsection (b) and inserting in lieu thereof "FEDERAL SHORT-TERM
RATE".
(e) AMENDMENTS RELATED TO SECTION 1521 OF THE REFORM ACT. --
(1)(A) Paragraph (1) of section 6045(c) of the 1986m Code is
amended by adding at the end thereof the following new sentence:
"A person shall not be treated as a broker with respect to
activities consisting of managing a farm on behalf of another
person."
(B) The amendment "26 USC 6045 note" made by subparagraph (A)
shall take effect as if included in the amendments made by section
311(a)(1) of the Tax Equity and Fiscal Responsibility Act of 1982.
(2)(A) Subsection (e) of section 6045 of the 1986 Code is
amended by adding at the end thereof the following new paragraph:
"(3) PROHIBITION OF SEPARATE CHARGE FOR FILING RETURN. -- It
shall be unlawful for any real estate reporting person to
separately charge any customer for complying with any requirement
of paragraph (1)."
(B) The amendment made by subparagraph (A) shall take effect on
the date of the enactment of this Act. "26 USC 6045 note"
(3) Subsection (e) of section 6045 of the 1986 Code is amended
--
(A) by striking out "real estate broker" each place it appears
in the text and inserting in lieu thereof "real estate reporting
person", and
(B) by striking out "REAL ESTATE BROKER" in the heading of
paragraph (2) and inserting in lieu thereof "REAL ESTATE REPORTING
PERSON".
(f) AMENDMENT RELATED TO SECTION 1522 OF THE REFORM ACT. -- Section
6050M of the 1986 Code is amended by adding at the end thereof the
following new subsection:
"(e) EXCEPTION FOR CERTAIN CLASSIFIED OR CONFIDENTIAL CONTRACTS. --
"(1) IN GENERAL. -- Except as provided in paragraph (2), this
section shall not apply in the case of a contract described in
paragraph (3).
"(2) REPORTING REQUIREMENT. -- Each Federal executive agency
which has entered into a contract described in paragraph (3)
shall, upon a request of the Secretary which identifies a
particular person, acknowledge whether such person has entered
into such a contract with such agency and, if so, provide to the
Secretary --
"(A) the information required under this section with respect
to such person, and
"(B) such other information with respect to such person which
the Secretary and the head of such Federal executive agency agree
is appropriate.
"(3) DESCRIPTION OF CONTRACT. -- For purposes of this
subsection, a contract between a Federal executive agency and
another person is described in this paragraph if --
"(A) the fact of the existence of such contract or the subject
matter of such contract has been designated and clearly marked or
clearly represented, pursuant to the provisions of Federal law or
an Executive order, as requiring a specific degree of protection
against unauthorized disclosure for reasons of national security,
or
"(B) the head of such Federal executive agency (or his
designee) pursuant to regulations issued by such agency
determines, in writing, that filing the required return under this
section would interfere with the effective conduct of a
confidential law enforcement or foreign counter-intelligence
activity."
(g) AMENDMENTS RELATED TO SECTION 1523 OF THE REFORM ACT. -- Section
6676 of the 1986 Code is amended --
(1) by striking out "6049, or 6050N" in subsection (a)(3) and
inserting in lieu thereof "or 6049",
(2) by striking out "6049, or 6050N" in subsection (b)(1)(A)
and inserting in lieu thereof "or 6049", and
(3) by striking out ", DIVIDENDS, AND ROYALTIES" in the heading
for subsection (b) and inserting in lieu thereof "AND DIVIDEND".
(h) AMENDMENTS RELATED TO SECTION 1542 OF THE REFORM ACT. --
Subsection (h) of section 6154 of the 1986 Code (as in effect before its
repeal by the Revenue Act of 1987) is amended --
(1) by striking out "subject to the tax imposed by section
4940" in paragraph (1),
(2) by amending paragraph (2) to read as follows:
"(2) any tax imposed by section 511, and any tax imposed by
section 1 or 4940 on a private foundation, shall be treated as a
tax imposed by section 11, and", and
(3) by adding at the end thereof the following new sentence:
"In the case of an organization described in paragraph (1),
subsection (c) of section 6655 shall be applied by substituting '5th
month' for 'third month' and subsection (d)(3)(A) of section 6655 shall
be applied by substituting '2 months' for '3 months' in clause (i), by
substituting '4 months' for '5 months, in clause (ii), by substituting
'7 months' for '8 months' in clause (iii), and by substituting '10
months' for '11 months' in clause (iv)."
(i) AMENDMENT RELATED TO SECTION 1551 OF THE REFORM ACT. -- Clause
(iii) of section 7430(c)(2)(A) of the 1986 Code is amended to read as
follows:
"(iii) meets the requirements of the 1st sentence of section
2412(d)(1)(B) of title 28, United States Code (as in effect on
October 22, 1986) and meets the requirements of section 2412(d)(
2)() of such title 28 (as so in effect)."
(j) PROVISION RELATED TO SECTION 1556 OF THE REFORM ACT. -- "26 USC
7443A note" To the extent the salary recommendations submitted by the
President on January 5, 1987, are inconsistent with the provisions of
section 7443A(d)(1) of the 1986 Code, such recommendations shall not be
effective for any period.
(k) AMENDMENT RELATED TO SECTION 1557 OF THE REFORM ACT. --
(1) Subsection (d) of section 7447 of the 1986 Code is amended
by adding at the end thereof the following new sentence: "In
computing the rate of the retired pay under paragraph (1) of this
subsection for any individual who is entitled thereto, any period
during which such individual performs services under subsection
(c) on a substantially full-time basis shall be treated as a
period during which he has served as a judge."
(2) The amendment made by paragraph (1) "26 USC 7447 note"
shall apply for purposes of determining the amount of retired pay
for months beginning after the date of the enactment of this Act
regardless of when the services under section 7447(c) of the 1986
Code were performed.
(l) AMENDMENTS RELATED TO SECTION 1561 OF THE REFORM ACT. --
(1) Subsection (e)(2) of section 7609 of the 1986 Code is
amended --
(A) by inserting "or the summoned party's response to a summons
described in subsection (f)," after "the summons described in
subsection (c),", and
(B) by striking out "the summons is issued other" and inserting
in lieu thereof "the summons is issued".
(2) Subsection (i) of section 7609 of the 1986 Code is amended
--
(A) by striking out "the third-party recordkeeper" in paragraph
(4) and inserting in lieu thereof "the summoned party", and
(B) by inserting "AND SUMMONED PARTY" after "RECORDKEEPER" in
the subsection heading.
(3) The amendments made by this subsection shall take effect on
the date of the enactment of this Act. "26 USC 7609 note"
(m) AMENDMENT RELATED TO SECTION 1562 OF THE REFORM ACT. --
Subsection (d) of section 6212 of the 1986 Code is amended by adding at
the end thereof the following new sentence: "Nothing in this subsection
shall affect any suspension of the running of any period of limitations
during any period during which the rescinded notice was outstanding."
(n) AMENDMENT RELATED TO SECTION 1563 OF THE REFORM ACT. --
Subparagraph (B) of section 6404(e)(1) of the 1986 Code is amended --
(1) by inserting "error or" before "delay", and
(2) by inserting "erroneous or" before "dilatory".
(o) AMENDMENT RELATED TO SECTION 1565 OF THE REFORM ACT. -- Effective
with respect to levies made after December 31, 1988, paragraph (10) of
section 6334(a) of the 1986 Code is amended --
(1) in subparagraph (A) --
(A) by striking out "IV" and inserting in lieu thereof "III,
IV, V,", and
(B) by adding "or" at the end thereof,
(2) in subparagraph (C) by striking out "21," and inserting in
lieu thereof "13, 21, 23," and
(3) by striking out subparagraph (B) and redesignating
subparagraph (C) as subparagraph (B).
(p) AMENDMENT RELATED TO SECTION 1581 OF THE REFORM ACT. --
Subsection (c) of section 1581 of the Reform Act "26 USC 3402 note" is
amended by adding at the end thereof the following new sentence:
"The preceding sentence shall not apply if its application would
result in an increase in the number of withholding allowances for the
employee."
(q) GENERAL REQUIREMENT OF RETURN, STATEMENT, OR LIST. --
(1) Subsection (a) of section 6011 of the 1986 Code is amended
by striking out "for the collection thereof" and inserting in lieu
thereof "with respect to the collection thereof".
(2) The amendment made by paragraph (1) shall take effect on
the date of the enactment of this Act.
(r) CERTAIN REFUNDABLE CREDITS TO BE ASSESSED UNDER DEFICIENCY
PROCEDURES. --
(1) Subsection (a) of section 6201 of the 1986 Code is amended
by striking out paragraph (4).
(2) Paragraph (4) of section "26 USC 6011 note" 6211(b) is
amended to read as follows:
"(4) For purposes of subsection (a) --
"(A) any excess of the sum of the credits allowable under
sections 32 and 34 over the tax imposed by subtitle A (determined
without regard to such credits), and
"(B) any excess of the sum of such credits as shown by the
taxpayer on his return over the amount shown as the tax by the
taxpayer on such return (determined without regard to such
credits),
shall be taken into account as negative amounts of tax."
(3) Subsection (h) of section 6211 of the 1986 Code is amended
by striking out paragraph (3) and by redesignating paragraph (4)
as paragraph (3).
(4) The amendments made by this subsection "26 USC 6201 note"
shall apply to notices of deficiencies mailed after the date of
the enactment of this Act.
(s) NOTICE OF LIEN ON PERSONAL PROPERTY. --
(1) Subsection (f) of section 6323 of the 1986 Code is amended
--
(A) by inserting ", except that State law merely conforming to
or reenacting Federal law establishing a national filing system
does not constitute a second office for filing as designated by
the laws of such State" after "situated" in paragraph (1)(A)(ii),
and
(B) by adding at the end thereof the following new paragraph:
"(5) NATIONAL FILING SYSTEMS. -- The filing of a notice of
lien shall be governed solely by this title and shall not be
subject to any other Federal law establishing a place or places
for the filing of liens or encumbrances under a national filing
system."
(2) The amendments made by this subsection shall take effect on
the date of the enactment of this Act. "26 USC 6323 note"
(t) EFFECT OF HONORING LEVY. --
(1) Subsection (d) of section 6332 of the 1986 Code is amended
--
(A) by inserting "and any other person" after "delinquent
taxpayer", and
(B) by striking out the last sentence thereof.
(2) The amendment made by this subsection "26 USC 6332 note"
shall apply to levies issued after the date of the enactment of
this Act.
(u) COLLECTION AFTER COMMENCEMENT OF JUDICIAL PROCEEDINGS. --
(1) The last sentence of section 6502(a) of the 1986 Code is
amended to read as follows: "If a timely proceeding in court for
the collection of a tax is commenced, the period during which such
tax may be collected by levy shall be extended and shall not
expire until the liability for the tax (or a judgment against the
taxpayer arising from such liability) is satisfied or becomes
enforceable."
(2) The amendment made by this subsection "26 USC 6502 note"
shall apply to levies issued after the date of the enactment of
this Act.
SEC. 1016. AMENDMENTS RELATED TO TITLE XVI OF THE REFORM ACT.
(a) AMENDMENTS RELATED TO SECTION 1603 OF THE REFORM ACT. --
(1)(A) Subparagraph (A) of section 501(c)(25) of the 1986 Code
is amended by adding at the end thereof the following new
sentence:
"For purposes of clause (iii), the term 'real property' shall
not include any interest as a tenant in common (or similar
interest) and shall not include any indirect interest."
(B) The amendment made by subparagraph (A) shall apply with
respect to property acquired by the organization after June 10,
1987, except that such amendment "26 USC 501 note" shall not apply
to any property acquired after June 10, 1987, pursuant to a
binding written contract in effect on June 10, 1987, and at all
times thereafter before such acquisition.
(2) Subparagraph (D) of section 501(c)(25) of the 1986 Code is
amended by striking out so much of such subparagraph as precedes
clause (i) and inserting in lieu thereof the following:
"(D) A corporation or trust shall in no event be treated as
described in subparagraph (A) unless such corporation or trust
permits its shareholders or beneficiaries -- ".
(3)(A) Paragraph (25) of section 501(c) of the 1986 Code is
amended by adding at the end thereof the following new
subparagraph:
"(E)(i) For purposes of this title --
"(I) a corporation which is a qualified subsidiary shall not be
treated as a separate corporation, and
"(II) all assets, liabilities, and items of income, deduction,
and credit of a qualified subsidiary shall be treated as assets,
liabilities, and such items (as the case may be) of the
corporation or trust described in subparagraph (A).
"(ii) For purposes of this subparagraph, the term 'qualified
subsidiary' means any corporation if, at all times during the
period such corporation was in existence, 100 percent of the stock
of such corporation is held by the corporation or trust described
in subparagraph (A).
"(iii) For purposes of this subtitle, if any corporation which
was a qualified subsidiary ceases to meet the requirements of
clause (ii), such corporation shall be treated as a new
corporation acquiring all of its assets (and assuming all of its
liabilities) immediately before such cessation from the
corporation or trust described in subparagraph (A) in exchange for
its stock."
(B) Subparagraph (C) of section 501(c)(25) of the 1986 Code is
amended by inserting "or" at the end of clause (iii), by striking
out ", or" at the end of clause (iv) and inserting in lieu thereof
a period, and by striking out clause (v).
(4) Paragraph (25) of section 501(c) of the 1986 Code is
amended by adding at the end thereof the following new
subparagraph:
"(F) For purposes of subparagraph (A), the term 'real property'
includes any personal property which is leased under, or in
connection with, a lease of real property, but only if the rent
attributable to such personal property (determined under the rules
of section 856(d)(1)) for the taxable year does not exceed 15
percent of the total rent for the taxable year attributable to
both the real and personal property leased under, or in connection
with, such lease."
(5)(A) Paragraph (9) of section 514(c) of the 1986 Code is
amended by adding at the end thereof the following new
subparagraph:
"(E) SPECIAL RULES FOR ORGANIZATIONS DESCRIBED IN SECTION 501(
c)(25). --
"(i) IN GENERAL. -- In computing under section 512 the
unrelated business taxable income of a disqualified holder of an
interest in an organization described in section 501(c)(25), there
shall be taken into account --
"(I) as gross income derived from an unrelated trade or
business, such holder's pro rata share of the items of income
described in clause (ii)(I) of such organization, and
"(II) as deductions allowable in computing unrelated business
taxable income, such holder's pro rata share of the items of
deduction described in clause (ii)(II) of such organization.
Such amounts shall be taken into account for the taxable year
of the holder in which (or with which) the taxable year of such
organization ends.
"(ii) DESCRIPTION OF AMOUNTS. -- For purposes of clause (i) --
"(I) gross income is described in this clause to the extent
such income would (but for this paragraph) be treated under
subsection (a) as derived from an unrelated trade or business, and
"(II) any deduction is described in this clause to the extent
it would (but for this paragraph) be allowable under subsection
(a)(2) in computing unrelated business taxable income.
"(iii) DISQUALIFIED HOLDER. -- For purposes of this
subparagraph, the term 'disqualified holder' means any shareholder
(or beneficiary) which is not described in clause (i) or (ii) of
subparagraph (C)."
(B) The amendment made by subparagraph (A) "26 USC 514 note"
shall apply with respect to interests in the organization acquired
after June 10, 1987, except that such amendment shall not apply to
any such interest acquired after June 10, 1987, pursuant to a
binding written contract in effect on June 10, 1987, and at all
times thereafter before such acquisition.
(6) The last sentence of section 514(c)(9)(B) of the 1986 Code
is amended by striking out "clause (vi)" and inserting in lieu
thereof "this paragraph".
(b) REPEAL OF SECTION 1608 OF THE REFORM ACT. -- Section 1608 of the
Reform Act "26 USC 170 note" is hereby repealed.
SEC. 1017. AMENDMENTS RELATED TO TITLE XVII OF THE REFORM ACT.
(a) AMENDMENTS RELATED TO SECTION 1701 OF THE REFORM ACT. -- Clause
(i) of section 51(d)(12)(B) of the 1986 Code is amended by striking out
"subsection (a)(1)" and inserting in lieu thereof "subsection (a)".
(b) AMENDMENT RELATED TO SECTION 1702 OF THE REFORM ACT. --
Subsection (j) of section 6652 of the 1986 Code, as added by section
1702(b) of the Reform Act and as in effect before its repeal by the
Revenue Act of 1987, is amended by inserting "(and the corresponding
provision of section 4041(d)(1))" after "section 4041(a)(1)".
(c) AMENDMENTS RELATED TO SECTION 1702 OF THE REFORM ACT. --
(1)(A) Subsection (a) of section 4081 of the 1986 Code, as
amended by section 1703 of the Reform Act, is amended by
redesignating paragraph (2) as paragraph (3) and by striking out
paragraph (1) and inserting in lieu thereof the following new
paragraphs:
"(1) IN GENERAL. -- There is hereby imposed a tax at the rate
specified in paragraph (2) on the earlier of --
"(A) the removal, or
"(B) the sale,
of gasoline by the refiner or importer thereof or the terminal
operator.
"(2) RATES OF TAX. --
"(A) IN GENERAL. -- The rate of the tax imposed by this
section is the sum of --
"(i) the Highway Trust Fund financing rate, and
"(ii) the Leaking Underground Storage Tank Trust Fund financing
rate.
"(B) RATES. -- For purposes of subparagraph (A) --
"(i) the Highway Trust Fund financing rate is 9 cents a gallon,
and
"(ii) the Leaking Underground Storage Tank Trust Fund financing
rate is 0.1 cents a gallon."
(B) Subsections (b) and (c) of section 4081 of the 1986 Code,
as amended by section 1703 of the Reform Act, are each amended by
striking out "subsection (d)" and inserting in lieu thereof
"subsection (a)".
(C) Subsection (e) of section 4081 of the 1986 Code, as amended
by section 1703 of the Reform Act, is amended --
(i) by striking out "subsection (d)(2)(A)" in paragraph (1) and
inserting in lieu thereof "subsection (a)(2)", and
(ii) by striking out "subsection (d)(2)(B)" each place it
appears in paragraph (2) and inserting in lieu thereof "subsection
(a)(2)".
(D) Section 4081 of the 1986 Code, as amended by section 1703
of the Reform Act, is amended by striking out subsection (d) and
by redesignating subsection (e) as subsection (d).
(2) Subsection (b) of section 34 of the 1986 Code is amended by
striking out "section 6421(i) or 6427(j)" and inserting in lieu
thereof "section 6421(j) or 6427(k)".
(3) Sections 4041(b)(1)(C) and 6427(m)(3) of the 1986 Code are
each amended by striking out "section 6421(d)(2)" and inserting in
lieu thereof "section 6421(e)(2)".
(4) Paragraph (3) of section 4041(f) of the 1986 Code is
amended to read as follows:
"(3) TERMINATION. -- Except with respect to the taxes imposed
by subsection (d), paragraph (1) shall not apply on and after
October 1, 1993."
(5) The amendment made by section 10502(d)(4) of the Revenue
Act "26 USC 4221 note" of 1987 shall be treated as if included in
the amendments made by section 1703 of the Reform Act except that
the reference to section 4091 of the Internal Revenue Code of 1986
shall not apply to sales before April 1, 1988.
(6) Section 6421 of the 1986 Code is amended by redesignating
subsection (i) (relating to income tax credit in lieu of payment)
and subsection (j) (relating to cross references) as subsections
(j) and (k), respectively.
(7) Subsections (a) and (b)(1) of section 6421 of the 1986 Code
are each amended by striking out "subsection (i)" and inserting in
lieu thereof "subsection (j)".
(8) Paragraph (2) of section 6421(j) of the 1986 Code (as
redesignated by paragraph (6)) is amended by striking out
"subsection (c)(2)" and inserting in lieu thereof "subsection
(d)(2)".
(9) Sections 7210, 7603, 7604(b), 7604(c)(2), 7605(a), 7609(
c)(1), and 7610(c) of the 1986 Code are each amended by striking
out "6421(f)(2)" and inserting in lieu thereof "6421(g)(2)".
(10) Paragraph (2) of section 6427(k) of the 1986 Code is
amended by striking out "subsection" and all that follows and
inserting in lieu thereof "paragraph (2) or (3) of subsection
(i)."
(11) Paragraph (6) of section 6511(i) of the 1986 Code is
amended by striking out "section 6421(c)" and inserting in lieu
thereof "section 6421(d)".
(12) Subparagraph (G) of section 1703(e)(2) of the Reform Act
is amended by striking out all that follows "are amended" and
inserting in lieu thereof "by striking out '6427(i)(2)' and
inserting in lieu thereof '6427(j)(2)'."
(13) Paragraph (2) of section 1703(f) of the Reform Act "26 USC
4081 note" is amended by adding at the end thereof the following
new sentence: "All other provisions of law, including penalties,
applicable with respect to the taxes imposed by section 4081 of
the Internal Revenue Code of 1986 shall apply to the floor stocks
taxes imposed by this section."
(14) Paragraph (1) of section 4081(c) of the 1986 Code, as
amended by section 1703 of the Reform Act, is amended by striking
out "3 cents" and inserting in lieu thereof "3 1/3 cents".
(15) Subsection (d) of section 6421 of the 1986 Code is amended
by adding at the end thereof the following new paragraph:
"(3) APPLICATION TO SALES UNDER SUBSECTION (c). -- For
purposes of this subsection, gasoline shall be treated as used for
a purpose referred to in subsection (c) when it is sold for such a
purpose."
(16) Section 4222(d) of the 1986 Code is amended by striking
out "4803" and inserting in lieu thereof "4101".
SEC. 1018. AMENDMENTS RELATED TO TITLE XVIII OF THE REFORM ACT.
(a) AMENDMENT RELATED TO SECTION 1801 OF THE REFORM ACT. -- Clause
(iii) of section 1801(a)(2)(A) of the Reform Act "26 USC 168 note" is
amended to read as follows:
"(iii) a person became a partner in such partnership (or a
beneficiary in such trust) after its formation but before
September 26, 1985,".
(b) AMENDMENTS RELATED TO SECTION 1802 OF THE REFORM ACT. --
(1) The last sentence of section 31(g)(17)(L) of the Tax Reform
Act of 1984, as added by section 1802(a)(10)(G) of the Reform Act,
"26 USC 168 note" is amended --
(A) by striking out "Registry of Deeds" each place it appears
and inserting in lieu thereof "Register of Deed", and
(B) by striking out "May 7, 1985" and inserting in lieu thereof
"May 7, 1984".
(2) Subparagraph (E) of section 168(j)(9) of the 1986 Code (as
amended by section 1802(a)(2) of the Reform Act and as in effect
before the amendments made by section 201 of the Reform Act) is
amended --
(A) by striking out "this paragraph" in clauses (i) and (ii)(
I) and inserting in lieu thereof "this paragraph and paragraph
(8)", and
(B) by striking out clause (iii) and inserting in lieu thereof
the following:
"(iii) TAX-EXEMPT CONTROLLED ENTITY. --
"(I) IN GENERAL. -- The term 'tax-exempt controlled entity'
means any corporation (which is not a tax-exempt entity determined
without regard to this subparagraph and paragraph (4)( E)) if 50
percent or more (in value) of the stock in such corporation is
held by 1 or more tax-exempt entities (other than a foreign person
or entity).
"(II) ONLY 5-PERCENT SHAREHOLDERS TAKEN INTO ACCOUNT IN CASE OF
PUBLICLY TRADED STOCK. -- For purposes of subclause (I), in the
case of a corporation the stock of which is publicly traded on an
establishes securities market, stock held by a tax-exempt entity
shall not be taken into account unless such entity holds at least
5 percent (in value) of the stock in such corporation. For
purposes of this subclause, related entities (within the meaning
of paragraph (7)) shall be treated as 1 entity.
"(III) SECTION 318 TO APPLY. -- For purposes of this clause, a
tax-exempt entity shall be treated as holding stock which it holds
through application of section 318 (determined without regard to
the 50-percent limitation contained in subsection (a)( 2)(C)
thereof)."
(c) AMENDMENT RELATED TO SECTION 1803 OF THE REFORM ACT. --
(1) Subparagraph (A) of section 1803(a)(8) of the Reform Act
"26 USC 1281 note" is amended by striking out "September 27, 1985"
and inserting in lieu thereof "December 31, 1985".
(2) Subsection (c) of section 1278 of the 1986 Code is amended
by inserting before the period ", including regulations providing
proper adjustments in the case of a bond the principal of which
may be paid in 2 or more payments".
(3) Section 1278(b) of the 1986 Code is amended by adding at
the end thereof the following new paragraph:
"(4) BASIS ADJUSTMENT. -- The basis of any bond in the hands
of the taxpayer shall be increased by the amount included in gross
income pursuant to this subsection."
(d) AMENDMENTS RELATED TO SECTION 1804 OF THE REFORM ACT. --
(1) Paragraph (3) of section 1804(b) of the Reform Act "26 USC
311 note" is amended by striking out "Paragraph (3) of section 54"
and inserting "Paragraph (3) of section 54(d)".
(2) Clause (i) of section 54(d)(3)(D) of the Tax Reform Act of
1984 "26 USC 311 note" is amended by striking out "subtitle D of
title VI" and inserting "subtitle D of title VI of the Tax Reform
Act of 1986".
(3) Clause (ii) of section 54(d)(3)(D) of the Tax Reform Act of
1984 (as added by section 1804(b)(3) of the Tax Reform Act of
1986) is amended --
(A) by striking out "December 9, 1968," each place it appears
and inserting in lieu thereof "December 10, 1968,", and
(B) by striking out "October 5, 1981" and inserting in lieu
thereof "March 2, 1978,".
(4) Subsection (b) of section 312 of the 1986 Code is amended
by striking out "of any property" and inserting in lieu thereof
"of any property (other than an obligation of such corporation)".
(5)(A) Section 361 of the 1986 Code is amended to read as
follows:
"SEC. 361. NONRECOGNITION OF GAIN OR LOSS TO CORPORATIONS;
TREATMENT OF DISTRIBUTIONS.
"(a) GENERAL RULE. -- No gain or loss shall be recognized to a
corporation if such corporation is a party to a reorganization and
exchanges property, in pursuance of the plan of reorganization, solely
for stock or securities in another corporation a party to the
reorganization.
"(b) EXCHANGES NOT SOLELY IN KIND. --
"(1) GAIN. -- If subsection (a) would apply to an exchange but
for the fact that the property received in exchange consists not
only of stock or securities permitted by subsection (a) to be
received without the recognition of gain, but also of other
property or money, then --
"(A) PROPERTY DISTRIBUTED. -- If the corporation receiving
such other property or money distributes it in pursuance of the
plan of reorganization, no gain to the corporation shall be
recognized from the exchange, but
"(B) PROPERTY NOT DISTRIBUTED. -- If the corporation receiving
such other property or money does not distribute it in pursuance
of the plan of reorganization, the gain, if any, to the
corporation shall be recognized.
The amount of gain recognized under subparagraph (B) shall not
exceed the sum of the money and the fair market value of the other
property so received which is not so distributed.
"(2) LOSS. -- If subsection (a) would apply to an exchange but
for the fact that the property received in exchange consists not
only of property permitted by subsection (a) to be received
without the recognition of gain or loss, but also of other
property or money, then no loss from the exchange shall be
recognized.
"(3) TREATMENT OF TRANSFERS TO CREDITORS. -- For purposes of
paragraph (1), any transfer of the other property or money
received in the exchange by the corporation to its creditors in
connection with the reorganization shall be treated as a
distribution in pursuance of the plan of reorganization. The
Secretary may prescribe such regulations as may be necessary to
prevent avoidance of tax through abuse of the preceding sentence
or subsection (c)(3).
"(c) TREATMENT OF DISTRIBUTIONS. --
"(1) IN GENERAL. -- Except as provided in paragraph (2), no
gain or loss shall be recognized to a corporation a party to a
reorganization on the distribution to its shareholders of property
in pursuance of the plan of reorganization.
"(2) DISTRIBUTIONS OF APPRECIATED PROPERTY. --
"(A) IN GENERAL. -- If --
"(i) in a distribution referred to in paragraph (1), the
corporation distributes property other than qualified property,
and
"(ii) the fair market value of such property exceeds its
adjusted basis (in the hands of the distributing corporation),
then gain shall be recognized to the distributing corporation
as if such property were sold to the distributee at its fair
market value.
"(B) QUALIFIED PROPERTY. -- For purposes of this subsection,
the term 'qualified property' means --
"(i) any stock in (or right to acquire stock in) the
distributing corporation or obligation of the distributing
corporation, or
"(ii) any stock in (or right to acquire stock in) another
corporation which is a party to the reorganization or obligation
of another corporation which is such a party if such stock (or
right) or obligation is received by the distributing corporation
in the exchange.
"(C) TREATMENT OF LIABILITIES. -- If any property distributed
in the distribution referred to in paragraph (1) is subject to a
liability or the shareholder assumes a liability of the
distributing corporation in connection with the distribution,
then, for purposes of subparagraph (A), the fair market value of
such property shall be treated as not less than the amount of such
liability.
"(3) TREATMENT OF CERTAIN TRANSFERS TO CREDITORS. -- For
purposes of this subsection, any transfer of qualified property by
the corporation to its creditors in connection with the
reorganization shall be treated as a distribution to its
shareholders pursuant to the plan of reorganization.
"(4) COORDINATION WITH OTHER PROVISIONS. -- Section 311 and
subpart B of part II of this subchapter shall not apply to any
distribution referred to in paragraph (1)."
(B) Section 358 of the 1986 Code is amended by adding at the
end thereof the following new subsection:
"(f) DEFINITION OF NONRECOGNITION PROPERTY IN CASE OF SECTION 361
EXCHANGE. -- For purposes of this section, the property permitted to be
received under section 361 without the recognition of gain or loss shall
be treated as consisting only of stocks or securities in another
corporation a party to the reorganization."
(C) Section 355 of the 1986 Code is amended by adding at the
end thereof the following new subsection:
"(c) TAXABILITY OF CORPORATION ON DISTRIBUTION. -- Section 311 shall
apply to any distribution --
"(1) to which this section (or so much of section 356 as
relates to this section) applies, and
"(2) which is not in pursuance of a plan of reorganization, in
the same manner as if such distribution were a distribution to
which subpart A of part I applies; except that subsection (b) of
section 311 shall not apply to any distribution of stock or
securities in the controlled corporation."
(D) Subsection (c) of section 336 of the 1986 Code (as amended
by section 631 of the Reform Act) is amended to read as follows:
"(c) EXCEPTION FOR LIQUIDATIONS WHICH ARE PART OF A REORGANIZATION.
--
"For provision providing that this subpart does not apply to
distributions in pursuance of a plan of reorganization, see
section 361(c)(4)."
(E) Subsection (a) of section 311 of the 1986 Code is amended
by striking out "distribution, with respect to its stock," and
inserting in lieu thereof "distribution (not in complete
liquidation) with respect to its stock".
(F) The table of sections for subpart C of part III of
subchapter C of chapter 1 of the 1986 Code is amended by striking
out the item relating to section 361 and inserting in lieu thereof
the following new item:
"Sec. 361. Nonrecognition of gain or loss to corporations;
treatment of distributions."
(G) Effective with respect to transfers on or after June 21,
1988, section 351 of the 1986 Code is amended by redesignating
subsection (f) as subsection (g) and by inserting after subsection
(e) the following new subsection:
"(f) TREATMENT OF CONTROLLED CORPORATION. -- If --
"(1) property is transferred to a corporation (hereinafter in
this subsection referred to as the 'controlled corporation') in an
exchange with respect to which gain or loss is not recognized (in
whole or in part) to the transferor under this section, and
"(2) such exchange is not in pursuance of a plan of
reorganization,
section 311 shall apply to any transfer in such exchange by the
controlled corporation in the same manner as if such transfer were a
distribution to which subpart A of part I applies."
(6) Subparagraph (A) of section 280G(b)(5) of the 1986 Code is
amended --
(A) in clause (i) by striking out "section 1361(b))" and
inserting in lieu thereof "section 1361(b) but without regard to
paragraph (1)(C) thereof)", and
(B) by adding at the end thereof the following: "Stock
described in section 1504(a)(4) shall not be taken into account
under clause (ii)(I) if the payment does not adversely affect the
shareholder's redemption and liquidation rights."
(7) Subparagraph (B) of section 280G(b)(5) of the 1986 Code
(relating to shareholder approval requirements) is amended by
adding at the end thereof the following new sentence:
"The regulations prescribed under subsection (e) shall include
regulations providing for the application of this subparagraph in
the case of shareholders which are not individuals (including the
treatment of nonvoting interests in an entity which is a
shareholder) and where an entity holds a de minimis amount of
stock in the corporation."
(8) Paragraph (5) of section 280G(d) of the 1986 Code is
amended by striking out "officer or any member" and inserting in
lieu thereof "officer of any member".
(9) Paragraph (3) of section 338(e) of the 1986 Code is amended
by striking out "which meet the 80 percent requirements of
subparagraphs (A) and (B) of subsection (d)(3)" and inserting in
lieu thereof "which meet the requirements of section 1504(a)( 2)".
(10)(A) Paragraph (7) of section 1504(b) of the 1986 Code is
amended to read as follows:
"(7) A DISC (as defined in section 992(a)(1))."
(B) Section 1504 of the 1986 Code is amended by adding at the
end thereof the following new subsection:
"(f) SPECIAL RULE FOR CERTAIN AMOUNTS DERIVED FROM A CORPORATION
PREVIOUSLY TREATED AS A DISC. -- In determining the consolidated
taxable income of an affiliated group for any taxable year beginning
after December 31, 1984, a corporation which had been a DISC and which
would otherwise be a member of such group shall not be treated as such a
member with respect to --
"(1) any distribution (or deemed distribution) of accumulated
DISC income which was not treated as previously taxed income under
section 805(b)(2)(A) of the Tax Reform Act of 1984, and
"(2) any amount treated as received under section 805(b)(3) of
such Act."
(e) PROVISION RELATED TO SECTION 1806 OF THE REFORM ACT. -- "26 USC
643 note" If --
(1) on a return for the 1st taxable year of the trusts involved
beginning after March 1, 1984, 2 or more trusts were treated as a
single trust for purposes of the tax imposed by chapter 1 of the
Internal Revenue Code of 1954,
(2) such trusts would have been required to be so treated but
for the amendment made by section 1806(b) of the Reform Act, and
(3) such trusts did not accumulate any income during such
taxable year and did not make any accumulation distributions
during such taxable year,
then, notwithstanding the amendment made by section 1806(b) of the
Reform Act, such trusts shall be treated as one trust for purposes of
such taxable year.
(f) AMENDMENTS RELATED TO SECTION 1807 OF THE REFORM ACT. --
(1) Paragraphs (1)(A) and (2)(E) of section 468B(d) of the 1986
Code are each amended by striking out "the taxpayer" and inserting
in lieu thereof "the taxpayer (or any related person)".
(2) Subparagraph (A) of section 468B(d)(2) of the 1986 Code is
amended to read as follows:
"(A) which is established pursuant to a court order and which
extinguishes completely the taxpayer's tort liability with respect
to claims described in subparagraph (D),".
(3) Clause (i) of section 1807(a)(7)(C) of the Reform Act "26
USC 468B note" is amended to read as follows:
"(i) any portion of such fund which is established pursuant to
a court order and with qualified payments, which meets the
requirements of subparagraphs (C) and (D) of section 468B(d)(2) of
the (Internal Revenue Code of 1954 (as added by this paragraph),
and with respect to which an election is made under subparagraph
(F) thereof, shall be treated as a designated settlement fund for
purposes of section 468B of such Code,".
(4) Paragraph (2) of section 468B(b) of the 1986 Code is
amended --
(A) by striking out "the corporation," and inserting in lieu
thereof "a corporation.", and
(B) by striking out "no other" and inserting in lieu thereof
"No other".
(5)(A) Section 468B of the 1986 Code is amended by adding at
the end thereof the following new subsection:
"(g) CLARIFICATION OF TAXATION OF CERTAIN FUNDS. -- Nothing in any
provision of law shall be construed as providing that an escrow account,
settlement fund, or similar fund is not subject to current income tax.
The Secretary shall prescribe regulations providing for the taxation of
any such account or fund whether as a grantor trust or otherwise."
(B) Subparagraph (D) of section 1807(a)(7) of the Reform Act is
hereby repealed.
(g) AMENDMENTS RELATED TO SECTION 1810 OF THE REFORM ACT. --
(1) Paragraph (5) of section 1810(a) of the Reform Act "26 USC
904 note" is amended by striking out "section 125(b)(5)" each
place it appears and inserting in lieu thereof "section 121(b)(
5)".
(2) Section 133(d)(3)(B)(iii) of the Tax Reform Act of 1984, as
amended by section 1810(i)(2) of the Tax Reform Act, '26 USC 959
note" is amended by striking out "Tax Reform Act of 1985" and
inserting in lieu thereof "Tax Reform Act of 1986".
(3) Clause (iv) of section 7701(b)(5)(A) of the 1986 Code is
amended by striking out "section 274(k)(2)" and inserting in lieu
thereof "section 274(l)(1)(B)".
(h) AMENDMENT RELATED TO SECTION 1821 OF THE REFORM ACT. --
(1) Subsection (e) of section 812 of the 1986 Code (relating to
dividends from certain subsidiaries not included in gross
investment income) is amended to read as follows:
"(e) DIVIDENDS FROM CERTAIN SUBSIDIARIES NOT INCLUDED IN GROSS
INVESTMENT INCOME. --
"(1) IN GENERAL. -- For purposes of this section, the term
'gross investment income' shall not include any dividend received
by the life insurance company which is a 100 percent dividend.
"(2) 100 PERCENT DIVIDEND DEFINED. --
"(A) IN GENERAL. -- Except as provided in subparagraphs (B)
and (C), the term '100 percent dividend' means any dividend if the
percentage used for purposes of determining the deduction
allowable under section 243, 244, or 245(b) is 100 percent.
"(B) CERTAIN DIVIDENDS OUT OF TAX-EXEMPT INTEREST, ETC. -- The
term '100 percent dividend' does not include any distribution by a
corporation to the extent such distribution is out of tax-exempt
interest or out of dividends which are not 100 percent dividends
(determined with the application of this subparagraph).
"(C) CERTAIN DIVIDENDS RECEIVED BY FOREIGN CORPORATIONS. -- The
term '100 percent dividends' does not include any dividend
described in section 805(a)(4)(E) (relating to certain dividends
in the case of foreign corporations)."
(2) The amendment made by paragraph (1) "26 USC 812 note" shall
take effect as if included in the amendments made by section 211
of the Tax Reform Act of 1984.
(i) AMENDMENT RELATED TO SECTION 1822 OF THE REFORM ACT. -- Clause
(i) of section 216(b)(4)(C) of the Tax Reform Act of 1984 (relating to
section 818(c) elections made by certain acquired companies) is amended
"26 USC 801 note" by striking out "clause (i)" and inserting in lieu
thereof "subclause (I)".
(j) AMENDMENT RELATED TO SECTION 1825 OF THE REFORM ACT. -- Paragraph
(4) of section 1825(a) of the Reform Act (relating to amendments related
to section 221 of the Tax Reform Act of 1984) is amended by striking out
"Section 7702(e)(2)" and inserting in lieu thereof "Effective with
respect to contracts entered into after October 22, 1986, section
7702(e)(2)".
(k) AMENDMENTS RELATED TO SECTION 1826 OF THE REFORM ACT. --
(1) Paragraph (5) of section 72(s) of the 1986 Code is amended
by striking out "or" at the end of subparagraph (B), by striking
out the period at the end of subparagraph (C) and inserting in
lieu thereof ", or", and by adding at the end thereof the
following new subparagraph:
"(D) which is a qualified funding asset (as defined in section
130(d), but without regard to whether there is a qualified
assignment)."
(2) The paragraph heading of paragraph (5) of section 72(s) of
the 1986 Code is amended by striking out "ANNUITY CONTRACTS WHICH
ARE PART OF QUALIFIED PLANS" and inserting in lieu thereof
"CERTAIN ANNUITY CONTRACTS".
(l) AMENDMENTS RELATED TO SECTION 1842 OF THE REFORM ACT.
(1) Subsection (c) of section 425 of the 1986 Code is amended
by adding at the end thereof the following new paragraph:
"(4) TRANSFERS BETWEEN SPOUSES OR INCIDENT TO DIVORCE. -- In
the case of any transfer described in subsection (a) of section
1041 --
"(A) such transfer shall not be treated as a disposition for
purposes of this part, and
"(B) the same tax treatment under this part with respect to the
transferred property shall apply to the transferee as would have
applied to the transferor."
(2) Paragraph (1) of section 425(c) of the 1986 Code is amended
by striking out "paragraph (2) and (3)" and inserting in lieu
thereof "paragraphs (2), (3), and (4)".
(3) Effective with respect to transfers after June 21, 1988,
subsection (d) of section 1041 of the 1986 Code is amended --
(A) by striking out "Paragraph (1) of subsection (a)" and
inserting in lieu thereof "Subsection (a)", and
(B) by striking out "the spouse" and inserting in lieu thereof
"the spouse (or former spouse)".
(m) AMENDMENTS RELATED TO SECTION 1866 OF THE REFORM ACT. -- "26 USC
103 note"
(1) Section 1866 of the Reform Act is amended by striking out
"obligation issued to refund" and inserting in lieu thereof
"obligation (or series of obligations) issued to refund".
(2)(A) Paragraph (1) of section 1866 of the Reform Act is
amended to read as follows:
"(i) the average maturity of the issue of which the refunding
obligation is a part does not exceed the average maturity of the
obligations to be refunded by such issue,".
(B) Section 1866 of the Reform Act is amended by adding at the
end thereof the following new sentence: "For purposes of
paragraph (1), average maturity shall be determined in accordance
with subsection (b)(14)(B)(i) of such Code."
(3) Paragraph (4) of section 1866 of the Reform Act is amended
by striking out "30 days" and inserting in lieu thereof "90 days".
(4) Section 1866 of the Reform Act is amended by adding "and"
at the end of paragraph (2), by striking out paragraph (3), and by
redesignating paragraph (4) as paragraph (3).
(5) "26 USC 103 note" A refunding obligation issued before July
1, 1987, shall be treated as meeting the requirement of paragraph
(1) of section 1866 of the Reform Act if such obligation met the
requirement of such paragraph as enacted by the Reform Act.
(n) AMENDMENTS RELATED TO SECTION 1869 OF THE REFORM ACT. --
(1) Clause (ii) of section 1869(c)(3)(A) of the Reform Act is
amended by striking out "pursuant to the exercise of eminent
domain" and inserting in lieu thereof "(by a governmental unit
having the power to exercise eminent domain)".
(2) Subparagraph (C) of section 1869(c)(3) of the Reform Act is
amended by inserting "(or similar issues)" after "resulting from
the issue".
(o) AMENDMENTS RELATED TO SECTION 1875 OF THE REFORM ACT. --
(1) Clause (ii) of section 6230(a)(2)(A) of the 1986 Code is
amended by striking out "nonpartnership items" and inserting in
lieu thereof "nonpartnership items (other than by reason of
section 6231(b)(1)(C))".
(2) Subsection (g) of section 1246 of the 1986 Code (as
redesignated by this Act) is amended by striking out "1248(g)(3)"
and inserting in lieu thereof "1248(g)(2)".
(3) Subsection (f) of section 6229 of the 1986 Code is amended
by adding at the end thereof the following new sentence: "The
period described in the preceding sentence (including any
extension period under this sentence) may be extended with respect
to any partner by agreement entered into by the Secretary and such
partner."
(p) AMENDMENT RELATED TO SECTION 1878 OF THE REFORM ACT. -- Paragraph
(1) of section 852(e) of the 1986 Code is amended by striking out
"subsection (a)(3)" and inserting in lieu thereof "subsection (a)( 2)".
(q) AMENDMENTS RELATED TO SECTION 1879 OF THE REFORM ACT. --
(1) Subclause (II) of section 28(b)(2)(A)(ii) of the 1986 Code
is amended to read as follows:
"(II) before the date on which an application with respect to
such drug is approved under section 505(b) or 507 of such Act or,
if the drug is a biological product, before the date on which a
license for such drug is issued under section 351 of the Public
Health Service Act; and ".
(2) The last sentence of section 1361(d)(3) of the 1986 Code is
amended by striking out "treated as a separate trust under section
663(c)" and inserting in lieu thereof "within the meaning of
section 663(c)".
(3) Subsection (p) of section 1879 of the Reform Act "26 USC 83
note" is amended --
(A) by striking out "Subsection (a)" in paragraph (2) and
inserting "Paragraph (1)", and
(B) by striking out "subsection (a)" each place it appears in
paragraphs (2) and (3) and inserting in lieu thereof "paragraph
(1)".
(4)(A) Subsection (d) of section 1286 of the 1986 Code is
amended to read as follows:
"(d) SPECIAL RULES FOR TAX-EXEMPT OBLIGATIONS. --
"(1) IN GENERAL. -- In the case of any tax-exempt obligation
(as defined in section 1275(a)(3)) from which 1 or more coupons
have been stripped --
"(A) the amount of the original issue discount determined under
subsection (a) with respect to any stripped bond or stripped
coupon --
"(i) shall be treated as original issue discount on a
tax-exempt obligation to the extent such discount does not exceed
the tax-exempt portion of such discount, and
"(ii) shall be treated as original issue discount on an
obligation which is not a tax-exempt obligation to the extent such
discount exceeds the tax-exempt portion of such discount,
"(B) subsection (b)(1)(A) shall not apply, and
"(C) subsection (b)(2) shall be applied by increasing the basis
of the bond or coupon by the sum of --
"(i) the interest accrued but not paid before such bond or
coupon was disposed of (and not previously reflected in basis),
plus
"(ii) the amount included in gross income under subsection
(b)(1)(B).
"(2) TAX-EXEMPT PORTION. -- For purposes of paragraph (1), the
tax-exempt portion of the original issue discount determined under
subsection (a) is the excess of --
"(A) the amount referred to in subsection (a)(1), over
"(B) an issue price which would produce a yield to maturity as
of the purchase date equal to the lower of --
"(i) the coupon rate of interest on the obligation from which
the coupons were separated, or
"(ii) the yield to maturity (on the basis of the purchase
price) of the stripped obligation or coupon.
The purchaser of any stripped obligation or coupon may elect to
apply clause (i) by substituting 'original yield to maturity of'
for 'coupon rate of interest on'."
(B)(i) Except as provided in clause (ii), "26 USC 1286 note"
the amendment made by subparagraph (A) shall apply to any purchase
or sale after June 10, 1987, of any stripped tax-exempt obligation
or stripped coupon from such an obligation.
(ii) If --
(I) any person held any obligation or coupon in stripped form
on June 10, 1987, and
(II) such obligation or coupon was held by such person on such
date for sale in the ordinary course of such person's trade or
business,
the amendment made by subparagraph (A) shall not apply to any
sale of such obligation or coupon by such person and shall not
apply to any such obligation or coupon while held by another
person who purchased such obligation or coupon from the person
referred to in subclause (I).
(5) Clause (ii) of section 368(a)(2)(F) of the 1986 Code is
amended --
(A) by striking out the two parenthetical phrases in the first
sentence, and
(B) by adding at the end thereof the following new sentence:
"For purposes of this clause, a person holding stock in a
regulated investment company which meets the requirements of this
clause shall, except as provided in regulations, be treated as
holding its proportionate share of the assets held by such company
or trust."
(r) AMENDMENTS RELATED TO SECTION 1895 OF THE REFORM ACT. --
(1) Subsection (b) of section 1895 of the Reform Act "42 USC
1395ww and note" is amended by striking out paragraphs (1) and
(2).
(2)(A) Clause (ii) of section 3121(u)(2)(B) of the 1986 Code is
amended by striking out "or" at the end of subclause (IV), by
striking out the period at the end of subclause (V) and inserting
in lieu thereof ", or", and by inserting after subclause (V) the
following new subclause:
"(VI) by an individual in a position described in section
1402(c)(2)(E)."
(B) The amendment made by subparagraph (A) shall apply to
services performed after March 31, 1986.
(s) MISCELLANEOUS PROVISIONS. --
(1) Subsection (a) of section 8021 of the 1986 Code is amended
by striking out "6103(d)" and inserting in lieu thereof "6103(
f)".
(2)(A) Section 2503 of the 1986 Code is amended by adding at
the end thereof the following new subsection:
"(f) TREATMENT OF CERTAIN LOANS OF ARTWORKS. --
"(1) IN GENERAL. -- For purposes of this subtitle, any loan of
a qualified work of art shall not be treated as a transfer (and
the value of such qualified work of art shall be determined as if
such loan had not been made) if --
"(A) such loan is to an organization described in section 501(
c)(3) and exempt from tax under section 501(c) (other than a
private foundation), and
"(B) the use of such work by such organization is related to
the purpose or function constituting the basis for its exemption
under section 501.
"(2) DEFINITIONS. -- For purposes of this section --
"(A) QUALIFIED WORKS OF ART. -- The term 'qualified work of
art' means any archaeological, historic, or creative tangible
personal property.
"(B) PRIVATE FOUNDATION. -- The term 'private foundation' has
the meaning given such term by section 509, except that such term
shall not include any private operating foundation (as defined in
section 4942(j)(3))."
(B) The amendment made by subparagraph (A) "26 USC 2503 note"
shall apply to loans after July 31, 1969.
(3)(A) Subparagraph (B) of section 1563(d)(1) of the 1986 Code
is amended by striking out "subsection (e)(1)" and inserting in
lieu thereof "paragraphs (1), (2), and (3) of subsection (e)".
(B) The amendment made by subparagraph (A) "26 USC 1563 note"
shall apply to taxable years beginning after the date of the
enactment of this Act.
(t) ADDITIONAL AMENDMENTS RELATED TO PENSION PLANS. --
(1) AMENDMENTS RELATED TO SECTION 1826 OF THE REFORM ACT. --
(A) Section 72(s)(7) of the 1986 Code is amended by striking
out "primary annuity" and inserting in lieu thereof "primary
annuitant".
(B) Section 72(q)(2)(B) of the 1986 Code is amended by striking
out the last parenthesis.
(C) Section 419A(f)(5) of the 1986 Code is amended by striking
out "accounts" and inserting in lieu thereof "account".
(D) Section 1826(c) of the Reform Act "26 USC 72 note" is
amended by striking out "made" and inserting in lieu thereof
"commencing".
(2) AMENDMENTS RELATED TO SECTION 1851 OF THE REFORM ACT. --
(A) Section 1851(a) of the Reform Act "26 USC 419A" is amended
by striking out paragraph (4) thereof.
(B) Subclause (II) of section 512(a)(3)(E)(ii) of the 1986 Code
is amended, (i) by striking out "subclause (II)" and inserting in
lieu thereof "subclause (I)", and (ii) by striking out the comma
at the end thereof and inserting in lieu thereof a period.
(C) Section 419(a)(1) of the 1986 Code is amended by striking
out "subchapter" and inserting in lieu thereof "chapter".
(D) Subparagraph (B) of section 1851(a)(3) of the Reform Act
"26 USC 419A note" is amended by inserting ", section 505, and
section 4976(b)(1)(B)" after "section 419A".
(3) AMENDMENTS RELATED TO SECTION 1852 OF THE REFORM ACT. --
(A) Paragraph (4) of section 1852(a) of the Reform Act "26 USC
401 note" is amended by adding at the end thereof the following
new subparagraph:
"(C) An individual whose required beginning date would, but for
the amendment made by subparagraph (A), occur after December 31,
1986, but whose required beginning date after such amendment
occurs before January 1, 1987, shall be treated as if such
individual had become a 5-percent owner during the plan year
ending in 1986."
(B) Section 1852(h)(2) of the Reform Act "26 USC 415" is
amended by striking out "section 416(l)" and inserting in lieu
thereof "section 415(l)".
(C) Section 1852(h)(1) of the Reform Act "26 USC 401 note" is
amended by striking out "Subsection" and inserting in lieu thereof
"Effective for years beginning after December 31, 1985,
subsection".
(D) Subparagraph (E) of section 408(d)(3) of the 1986 Code is
amended by striking out "subparagraph" and inserting in lieu
thereof "paragraph".
(4) AMENDMENTS RELATED TO SECTION 1854 OF THE REFORM ACT. --
(A) Section 404(k) of the 1986 Code is amended by striking out
"avoidance" in the 4th sentence and inserting in lieu thereof
"evasion".
(B) Section 409(h)(2) of the 1986 Code (relating to plan may
distribute cash) is amended by striking out "section 409(o)" and
inserting in lieu thereof "paragraph (1)(B)".
(C) Subparagraph (C) of section 409(n)(3) of the 1986 Code
(defining nonallocation period) is amended to read as follows:
"(C) NONALLOCATION PERIOD. -- The term 'nonallocation period'
means the period beginning on the date of the sale of the
qualified securities and ending on the later of --
"(i) the date which is 10 years after the date of sale, or
"(ii) the date of the plan allocation attributable to the final
payment of acquisition indebtedness incurred in connection with
such sale."
(D) Subparagraph (A) of section 1042(c)(4) of the 1986 Code
(defining qualified replacement property) is amended by inserting
"(as in effect immediately before the Tax Reform Act of 1986)"
after "section 954(c)(3)".
(E) Clause (i) of section 1042(c)(4)(B) of the 1986 Code
(relating to operating corporation) is amended by striking out
"placement period" and inserting in lieu thereof "replacement
period".
(F) Section 1854(a)(3)(B) of the Reform Act is amended by
striking out "1042(b)(3)" and inserting in lieu thereof "1042(
b)".
(G) Subparagraph (C) of section 1854(a)(3) of the Reform Act
"26 USC 409 note" is amended to read as follows:
"(C)(i) Except as provided in clause (ii), the amendments made
by this paragraph shall apply to sales of securities after the
date of the enactment of this Act.
"(ii) A taxpayer or executor may elect to have section 1042(
b)(3) of the Internal Revenue Code of 1954 (as in effect before
the amendment made by subparagraph (B) apply to sales before the
date of the enactment of this Act as if such section included the
last sentence of section 409(n)(1) of the Internal Revenue Code of
1986 (as added by subparagraph (A))."
(H) Section 409(e)(5) of the 1986 Code is amended by striking
out "(2) or".
(5) AMENDMENT RELATED TO SECTION 1875 OF THE REFORM ACT. --
Section 1875(c)(7)(B) of the Reform Act "26 USC 404" is amended by
striking out "and section 405(c)".
(6) AMENDMENT RELATED TO SECTION 1879 OF THE REFORM ACT. --
Subparagraph (B) of section 125(c)(2) of the 1986 Code (relating
to exception for cash and deferred arrangements) is amended by
inserting "or rural electric cooperative plan (within the meaning
of section 401(k)(7))" after "stock bonus plan".
(7) AMENDMENTS RELATED TO SECTION 1895 OF THE REFORM ACT. --
(A) Section 106(b)(1) of the 1986 Code (relating to exception
for highly compensated individuals where plan fails to provide
certain continuation coverage) is amended --
(i) by striking out "any amount contributed by an employer" and
inserting in lieu thereof "any employer-provided coverage", and
(ii) by striking out "to a group" and inserting in lieu thereof
"under a group".
(B) Section 1895(d)(5)(A) of the Reform Act "26 USC 162" is
amended by striking out "section 162(k)(2)" and inserting in lieu
thereof "section 162(k)(5)".
(8) AMENDMENTS RELATED TO SECTION 1898 OF THE REFORM ACT. --
(A) Subparagraph (G) of section 402(a)(6) of the 1986 Code
(relating to treatment of potential future vesting), as added by
section 1898(a)(3) of the Reform Act, is redesignated as
subparagraph (I).
(B) Subparagraph (A) of section 411(a)(11) of the 1986 Code is
amended by striking out "vested" and inserting in lieu lieu
thereof "nonforfeitable".
(C) Section 402(f)(1) of the 1986 Code is amended by striking
out "a eligible" and inserting in lieu thereof "an eligible".
(D) Section 1899A of the Reform Act "26 USC 415" is amended by
striking out paragraph (13).
(E) Subparagraph (B) of section 414(p)(4) of the 1986 Code is
amended --
(i) by striking out "means earlier of" and inserting in lieu
thereof "means the earlier of", and
(ii) by striking out "in" each place it appears.
(F) Section 414(p)(10) of the 1986 Code (relating to waiver of
certain distribution requirements) is amended by inserting ",
403(b)," after "section 401".
(G) Section 414(p)(9) of the 1986 Code is amended by adding at
the end thereof the following new sentence: "For purposes of this
title, except as provided in regulations, any distribution from an
annuity contract under section 403(b) pursuant to a qualified
domestic relations order shall be treated in the same manner as a
distribution from a plan to which section 401(a)(13) applies."
(u) ADDITIONAL CLERICAL AMENDMENTS. --
(1) Paragraph (5) of section 104(b) of the Reform Act "26 USC
402" is amended by striking out "1222(b)" and inserting in lieu
thereof "1122(b)".
(2) The amendment made by section 122(c)(2) of the Reform Act
"26 USC 274 note" shall be applied as if it also struck out the
comma at the end of section 274(b)(1)(B) of the 1986 Code.
(3) Clause (i) of section 280F(b)(3)(B) of the 1986 Code is
amended by striking out "recovery deductions" and inserting in
lieu thereof "depreciation deductions".
(4) Subparagraph (A) of section 803(b)(3) of the Reform Act "26
USC 312" is amended by inserting closing quotation marks after
"section 189)" and by striking out the closing quotation marks
following "subparagraph (B)".
(5) Paragraph (1) of section 823(b) of the Reform Act "26 USC
461" is amended to read as follows:
"(1) Paragraph (5) of section 461(h), as amended by section
805(c)(5), is amended by striking out subparagraph (B) and by
redesignating subparagraph (C) as subparagraph (B)."
(6) The amendment made by section 1122(b)(2)(B)(iii) of the
Reform Act "26 USC 402 note" shall be applied as if it struck out
"Initial separate tax".
(7) The amendment made by section 1122(b)(2)(C) of the Reform
Act "26 USC 402 note" shall be applied as if it did not strike out
"the"
(8) Paragraph (2) of section 72(q)(2) of the 1986 Code is
amended by striking out the period at the end of subparagraph (D)
and inserting in lieu thereof a comma.
(9) Subparagraph (A) of section 417(e)(3) of the 1986 Code is
amended by striking out "subclause (II)" and inserting in lieu
thereof "clause (ii)".
(10) Subparagraph (A) of section 246(c)(1) of the 1986 Code is
amended by striking out "Which" and inserting in lieu thereof
"which".
(11) Subsection (a) of section 164 of the 1986 Code is amended
by striking out "the GST tax" and inserting in lieu thereof "The
GST tax".
(12) Subparagraph (B) of section 1851(a)(6) of the Reform Act
"26 USC 419A" is amended by striking out "Subsection (b)" and
inserting in lieu thereof "Subsection (a)".
(13)(A) Paragraph (1) of section 1878(e) of the Reform Act "26
USC 514" is amended by striking out "last sentence of section
514(c)(9)(B) (relating to exceptions)" and inserting in lieu
thereof "second to the last sentence of section 514(c)(9)(B) (as
amended by paragraph (3))".
(B) Paragraph (3) of section 1878(e) of the Reform Act is
amended by striking out "is amended" and inserting in lieu thereof
", and the last sentence of such section, are amended".
(14) Paragraph (23) of section 501(c) of the 1986 Code is
amended by striking out "any association" and inserting in lieu
thereof "Any association".
(15) Paragraph (1) of section 501(c) of the 1986 Code is
amended by striking out "any corporation organized" and inserting
in lieu thereof "Any corporation organized"
(16) The table of chapters for subtitle E of the 1986 Code is
amended by inserting "smokeless tobacco," after "cigarettes," in
the item relating to chapter 52.
(17) Paragraph (4) of section 3321(c) of the 1986 Code is
amended by adding a period at the end thereof.
(18) Paragraph (3) of section 521(b) of the Superfund Revenue
Act "26 USC 9506" of 1986 is amended by striking out "Paragraph
(1) of section 9506(b)" and inserting in lieu thereof "Subsection
(b) of section 9506".
(19) Paragraph (2) of section 5054(a) of the 1986 Code is
amended by adding a period at the end thereof.
(20) Paragraph (3) of section 9507(b) of the 1986 Code is
amended by striking out "Deep Water" each place it appears and
inserting in lieu thereof "Deepwater".
(21) Subparagraph (I) of section 231(d)(3) of the Reform Act
"26 USC 6511" is amended by striking out "section 6511(d)(6)" and
inserting in lieu thereof "section 6511(d)(4)".
(22) Subsection (a) of section 1016 of the 1986 Code is amended
by striking out all that follows paragraph (20) and inserting in
lieu thereof the following:
"(21) to the extent provided in section 48(q), in the case of
expenditures with respect to which a credit has been allowed under
section 38;
"(22) for amounts allowed as deductions under section 59(e)
(relating to optional 10-year writeoff of certain tax
preferences);
"(23) to the extent provided in section 1059 (relating to
reduction in basis for extraordinary dividends), and
"(24) in the case of qualified replacement property the
acquisition of which resulted under section 1042 in the
nonrecognition of any part of the gain realized on the sale or
exchange of any property, to the extent provided in section 1042(
d)."
(23) Paragraph (1) of section 7518(g) of the 1986 Code is
amended by striking out "not qualified withdrawal" and inserting
in lieu thereof "not a qualified withdrawal".
(24) The table of sections for part IV of subchapter P of
chapter 1 of the 1986 Code is amended by striking out the item
relating to section 1254 and inserting in lieu thereof the
following:
"Sec. 1254. Gain from disposition of interest in oil, gas,
geothermal, or other mineral properties."
(25) Paragraph (1) of section 453(f) of the 1986 Code is
amended by striking out "subsection (g)" and inserting in lieu
thereof "subsections (g)".
(26) Paragraph (8) of section 453(f) of the 1986 Code is
amended by striking out "payment to be" and inserting in lieu
thereof "payments to be".
(27) Subparagraph (B) of section 668(b)(1) of the Reform Act
"26 USC 858" is amended by striking out "section 856" and
inserting in lieu thereof "section 858".
(28) The second to the last sentence of section 857(b)(3)(C) of
the 1986 Code is amended by striking out "such capital loss such"
and inserting in lieu thereof "such capital loss shall".
(29) Subsection (a) of section 669 of the Reform Act '26 USC
856 note" is amended by striking out "this part" and inserting in
lieu thereof "this subtitle".
(30) The table of parts for subchapter M of chapter 1 of the
1986 Code is amended by adding at the end thereof the following
new item:
"Part IV. Real estate mortgage investment conduits."
(31) Subsection (c) of section 1277 of the 1986 Code is amended
by inserting a closing parenthesis after "section 585(a)( 2)".
(32) The table of parts for subchapter L of chapter 1 of the
1986 Code is amended by striking out the items relating to parts
II, III, and IV and inserting in lieu thereof the following:
"Part II. Other insurance companies.
"Part III. Provisions of general application."
(33) Paragraph (7) of section 6051(a) of the 1986 Code is
amended by adding a comma at the end thereof.
(34) Paragraph (14) of section 1114(b) of the Reform Act "26
USC 501" is amended --
(A) by striking out "section 501(c)(17)" and inserting in lieu
thereof "section 501(c)(17)(A)", and
(B) by striking out "duties consists" and inserting in lieu
thereof "duties consist".
(35) Subparagraph (C) of section 3121(v)(3) of the 1986 Code is
amended by striking out "Saving" and inserting in lieu thereof
"Savings".
(36) Paragraph (4) of section 6652(k) of the 1986 Code is
amended by striking out "or section 6678" and inserting in lieu
thereof "or part II of subchapter B of this chapter".
(37) The table of sections for part I of subchapter N of
chapter 1 of the 1986 Code is amended by adding at the end thereof
the following new item:
"Sec. 865. Source rules for personal property sales."
(38) The amendment made by section 1221(b)(3)(B) of the Reform
Act "26 USC 954 note" shall be construed as striking out paragraph
(3) of section 954(e) of the 1986 Code.
(39) The heading of section 861(a)(6) of the 1986 Code is
amended by striking out "personal property" and inserting in lieu
thereof "inventory property".
(40) Subsection (a) of section 1296 of the 1986 Code is amended
by inserting a comma after "this subpart".
(41) Subsection (b) of section 7703 of the 1986 Code is amended
by striking out "section 151(e)(3)" and inserting in lieu thereof
"section 151(c)(3)".
(42) Paragraph (3) of section 1404(c) of the Reform Act "26 USC
6601" is amended by striking out "section 6601" and inserting in
lieu thereof "section 6601(b)".
(43) Subsection (a) of section 2611 of the 1986 Code is amended
by striking out "mean" and inserting in lieu thereof "means".
(44) Subparagraph (D) of section 3406(h)(5) of the 1986 Code is
amended by adding a period at the end thereof.
(45) The table of sections for part III of subchapter C of
chapter 76 of the 1986 Code is amended by adding at the end
thereof the following new item:
"Sec. 7475. Practice fee."
(46) The paragraph added to section 1276(b) of the 1986 Code by
section 1803(a)(13)(A)(iii) of the Reform Act is amended --
(A) by inserting "(3)" before "SPECIAL" in the paragraph
heading,
(B) by inserting a 1 em dash after "PAYMENTS." in the heading,
and
(C) by adding a period at the end thereof.
(47) Subparagraph (C) of section 809(d)(4) of the 1986 Code is
amended by striking out "the Secretary -- " and inserting in lieu
thereof "The Secretary -- ".
(48) Subsection (f) of section 7872 of the 1986 Code is amended
by redesignating the paragraph (11) added by section 1854 of the
Reform Act as paragraph (12).
(49) Paragraph (5) of section 7611(i) of the 1986 Code is
amended by striking out "the title" and inserting in lieu thereof
"this title".
(50) Section 13303(a) of Public Law 99-272 is amended (in the
matter proposed to be inserted in section 3306(c) of the Internal
Revenue Code of 1954), "26 USC 3306" effective as of the date of
its enactment, by inserting a comma immediately after "1988".
(51) Subsection (f) of section 6511 of the 1986 Code is amended
--
(A) by striking out "chapter 42" in the text and inserting in
lieu thereof "section 4912, chapter 432,", and
(B) by striking out "CERTAIN CHAPTER 43 TAXES" in the
subsection heading and inserting in lieu thereof "SIMILAR TAXES".
(52) Section 2503(e)(2)(B) of the 1986 Code is amended by
striking out "section 213(e)" and inserting in lieu thereof
"section 213(d)".
SEC. 1019. "26 USC 1 note" EFFECTIVE DATE.
(a) GENERAL RULE. -- Except as otherwise provided in this title, any
amendment made by this title shall take effect as if included in the
provision of the Reform Act to which such amendment relates.
(b) WAIVER OF ESTIMATED TAX PENALTIES. -- No addition to tax shall
be made under section 6654 or 6655 of the 1986 Code for any period
before April 16, 1989 (March 16, 1989 in the case of a taxpayer subject
to section 6655 of the 1986 Code) with respect to any underpayment to
the extent such underpayment was created or increased by any provision
of this title or title II.
SEC. 2001. AMENDMENTS RELATED TO SUPERFUND REVENUE ACT OF 1986.
(a) AMENDMENTS RELATED TO SECTION 513 OF THE ACT. --
(1) Subsection (e) of section 4662 of the 1986 Code is amended
by redesignating paragraph (3) as paragraph (4) and by inserting
after paragraph (2) the following new paragraph:
"(3) REFUNDS DIRECTLY TO EXPORTER. -- The Secretary shall
provide, in regulations, the circumstances under which a credit or
refund (without interest) of the tax under section 4661 shall be
allowed or made to the person who exported the taxable chemical or
taxable substance, where --
"(A) the person who paid the tax waives his claim to the amount
of such credit or refund, and
"(B) the person exporting the taxable chemical or taxable
substance provides such information as the Secretary may require
in such regulations."
(2) Subparagraph (A) of section 4662(b)(10) of the 1986 Code is
amended by striking out "a mixture of" and inserting in lieu
thereof "one or more".
(b) AMENDMENTS RELATED TO SECTION 515 OF THE ACT. --
(1) Subparagraph (B) of section 4672(a)(2) of the 1986 Code is
amended by inserting "(or more than 50 percent of the value)"
after "more than 50 percent of the weight".
(2) Paragraph (2) of section 4672(a) of the 1986 Code is
amended by adding at the end thereof the following new sentence:
"If an importer or exporter of any substance requests that the
Secretary determine whether such substance be listed as a taxable
substance under paragraph (1) or be removed from such listing, the
Secretary shall make such determinations within 180 days after the
date the request was filed."
(3) Paragraph (4) of section 4672(a) of such Code is amended to
read as follows:
"(4) MODIFICATIONS TO LIST. -- The Secretary shall add to the
list under paragraph (3) substances which meet either the weight
or value tests of paragraph (2)(B) and may remove from such list
only substances which meet neither of such tests."
(c) AMENDMENTS RELATED TO SECTION 516 OF THE ACT. --
(1) Section 59A of the 1986 Code (relating to environmental
tax) is amended by redesignating subsections (c) and (d) as
subsections (d) and (e), respectively, and by inserting after
subsection (b) the following new subsection:
"(c) EXCEPTION FOR RIC's AND REIT's. -- The tax imposed by
subsection (a) shall not apply to --
"(1) a regulated investment company to which part I of
subchapter M applies, and
"(2) a real estate investment trust to which part II of
subchapter M applies."
(2) Paragraph (1) of section 882(a) of the 1986 Code is amended
by inserting "59A," after "55,".
(3)(A) Subparagraph (B) of section 56(f)(2) of the 1986 Code is
amended by adding at the end thereof the following new sentence:
"No adjustment shall be made under this subparagraph for the tax
imposed by section 59A."
(B) Paragraph (2) of section 59A(b) of the 1986 Code is amended
by inserting "(and the last sentence of section 56(f)(2)( B))"
before the period at the end thereof.
(d) AMENDMENTS RELATED TO SECTION 521 OF THE ACT. --
(1)(A) The amendments made by subsections "26 USC 4041 note"
(b)(3) and (d)(17) of section 10502 of the Revenue Act of 1987
shall be treated as if included in the amendments made by section
521 of the Superfund Revenue Act of 1986 except that the last
sentence of paragraphs (2) and (3) of section 4041(d) of the
Internal Revenue Code of 1986 (as amended by such subsection (b)(
3)) and the reference to section 4091 of such Code in section
9508(c)(2)(A) of such Code (as amended by such subsection (d)(1))
shall not apply to sales before April 1, 1988.
(B) Paragraph (2) of section 6416(b) of the 1986 Code is
amended by striking out "(or under paragraph (1)(A) or (2)(A) of
section 4041(a) or under paragraph (1)(A) or (2)(A) of section
4041(d) or under section 4051)" and inserting in lieu thereof "(or
under subsection (a) or (d) of section 4041 in respect of sales or
under section 4051)".
(2) Paragraph (3) of section 4041(c) of the 1986 Code is
amended by striking out "the rate at which" and inserting in lieu
thereof "the Highway Trust Fund financing rate at which".
(3)(A) Subparagraph (A) of section 4041(b)(1) of the 1986 Code
is amended by striking out "subsection (a)" and inserting in lieu
thereof "subsection (a) or (d)(1)".
(B) Subparagraph (B) of section 4041(b)(1) of the 1986 Code is
amended by inserting before the period "and by the corresponding
provision of subsection (d)(1)".
(C) Subsection (b) of section 4041 of the 1986 Code is amended
by striking out paragraph (3).
(D) Subparagraph (A) of section 4041(b)(2) of the 1986 Code is
amended to read as follows:
"(A) IN GENERAL. -- In the case of any qualified methanol or
ethanol fuel --
"(i) subsection (a)(2) shall be applied by substituting '3
cents' for '9 cents', and
"(ii) subsection (d)(1) shall be applied by substituting '0.05
cent' for '0.1 cent' with respect to the sales and uses to which
clause (i) applies."
(E) Subsection (f) of section 6421 of the 1986 Code is amended
by striking out all that follows paragraph (1) and inserting in
lieu thereof the following new paragraphs:
"(2) GASOLINE USED IN AVIATION. -- This section shall not
apply in respect of gasoline which is used as a fuel in an
aircraft --
"(A) in noncommercial aviation (as defined in section 4041(c)(
4)), or
"(B) in aviation which is not noncommercial aviation (as so
defined) with respect to the tax imposed by section 4081 at the
Leaking Underground Storage Tank Trust Fund financing rate.
"(3) LEAKING UNDERGROUND STORAGE TANK TRUST FUND TAX ON
GASOLINE USED IN TRAINS. -- This section shall not apply with
respect to the tax imposed by section 4081 at the Leaking
Underground Storage Tank Trust Fund financing rate on gasoline
used as a fuel in a train."
(F) The second sentence of section 6421(a) of the 1986 Code is
amended by striking out "paragraph (3) of subsection (e)" and
inserting in lieu thereof "paragraph (2) of subsection (f)".
(4)(A) Paragraph (1) of section 1703(f) of the Reform Act "26
USC 4081 note" (relating to floor stock taxes) is amended by
striking out "9 cents" and inserting in lieu thereof "9.1 cents".
(B) Paragraph (4) of section 1703(f) of the Reform Act is
amended to read as follows:
"(4) TRANSFER OF FLOOR STOCK TAX REVENUES TO TRUST FUNDS. --
For purposes of determining the amount transferred to any trust
fund, the tax imposed by this section shall be treated as imposed
by section 4081 of the Internal Revenue Code of 1986 --
"(A) at the Highway Trust Fund financing rate under such
section to the extent of 9 cents per gallon, and
"(B) at the Leaking Underground Storage Tank Trust Fund
financing rate under such section to the extent of 0.1 cent per
gallon."
(5)(A) Paragraph (1) of section 4081(c) of the 1986 Code, as
amended by section 1703 of the Reform Act, is amended by inserting
"and by substituting '1/9 cent' for '0.1 cent'" before "in the
case of the removal".
(B) The last sentence of section 4081(c)(2) of the 1986 Code,
as amended by such section 1703, is amended by striking out "5 2/
3 cents a gallon" and inserting in lieu thereof "reduced by the
amount of tax imposed (and not credited or refunded) on any prior
removal or sale of such fuel".
(6)(A) Paragraph (1) of section 4091(c) of the 1986 Code is
amended by adding at the end thereof the following new sentence:
"In the case of a sale described in subparagraph (B), the
Leaking Underground Storage Tank Trust Fund financing rate shall
be 1/9 cent per gallon."
(B) Paragraph (4) of section 4091(b) of the 1986 Code is
amended by inserting "except as provided in subsection (c)," after
"paragraph (1),".
(C) The last sentence of section 4091(c)(2) of the 1986 Code is
amended by striking out "5 cents a gallon" and inserting in lieu
thereof "reduced by the amount of tax imposed (and not credited or
refunded) on any prior sale of such fuel".
(D) The amendments made by this paragraph "26 USC 4091 note"
shall take effect as if included in the amendments made by section
10502 of the Revenue Act of 1987.
(7)(A) The amendment made by section "26 USC 6427 note" 10502(
c)(4) of the Revenue Act of 1987 shall be treated as if included
in the amendments made by section 1703 of the Reform Act except
that references to section 4091 of the Internal Revenue Code of
1986 shall not apply to sales before April 1, 1988.
(B) Subparagraph (A) of section 6427(f)(1) of the 1986 Code is
amended --
(i) by striking out "regular Highway Trust Fund financing rate"
each place it appears and inserting in lieu thereof "regular tax
rate", and
(ii) by striking out "incentive Highway Trust Fund financing
rate" and inserting in lieu thereof "incentive tax rate".
(C) Subparagraph (B) of section 6427(g)(1) of the 1986 Code is
amended to read as follows:
"(B) DEFINITIONS. -- For purposes of subparagraph (A) --
"(i) REGULAR TAX RATE. -- The term 'regular tax rate' means --
"(I) in the case of gasoline, the aggregate rate of tax imposed
by section 4081 determined without regard to subsection (c)
thereof, and
"(II) in the case of diesel fuel, the aggregate rate of tax
imposed by section 4091 on such fuel determined without regard to
subsection (c) thereof.
"(ii) INCENTIVE TAX RATE. -- The term 'incentive tax rate'
means --
"(I) in the case of gasoline, the aggregate rate of tax imposed
by section 4081 with respect to fuel described in subsection
(c)(1) thereof, and
"(II) in the case of diesel fuel, the aggregate rate of tax
imposed by section 4091 with respect to fuel described in
subsection (c)(1)(B) thereof."
(D) Paragraph (2) of section 6427(l) of the 1986 Code is
amended by inserting "under section 4041" after "exempt".
(E) The amendments made by this paragraph shall take effect as
if included in the amendments made by section 10502 of the Revenue
Act of 1987.
(e) EFFECTIVE DATE. -- "26 USC 56 note" Except as otherwise provided
in this section, the amendments made by this section shall take effect
as if included in the provision of the Superfund Revenue Act of 1986 to
which it relates.
SEC. 2002. AMENDMENTS RELATED TO HARBOR MAINTENANCE REVENUE ACT OF
1986.
(a) ORDER OF ENACTMENTS. --
(1) For purposes of section 4042 of the 1986 Code, "26 USC 4042
note" the amendment made by section 521(a)(3) of the Superfund
Revenue Act of 1986 shall be treated as enacted after the
amendment made by section 1404(a) of the Harbor Maintenance
Revenue Act of 1986.
(2) Paragraph (2) of section 4042(b) of the 1986 Code is
amended to read as follows:
"(2) RATES. -- For purposes of paragraph (1) --
"(A) The Inland Waterways Trust Fund financing rate is the rate
determined in accordance with the following table:
"(B) The Leaking Underground Storage Tank Trust Fund financing
rate is 0.1 cent per gallon."
(b) CARGO TRANSPORTED BETWEEN POSSESSIONS, ETC. -- Subparagraph (B)
of section 4462(b)(1) of the 1986 Code is amended to read as follows:
"(B) cargo loaded on a vessel in Alaska, Hawaii, or any
possession of the United States for transportation to the United
States mainland, Alaska, Hawaii, or such a possession for ultimate
use or consumption in the United States mainland, Alaska, Hawaii,
or such a possession,".
(c) DELAY IN DUE DATE FOR STUDY OF CARGO DIVERSION. -- Section 1407
of the Harbor Maintenance Revenue Act of 1986 "26 USC 4461 note" is
amended by striking out "1 year from the date of the enactment of this
Act" and inserting in lieu thereof "December 1, 1988".
(d) EFFECTIVE DATE. -- The amendments made by this section "26 USC
4042 note" shall take effect as if included in the provision of the
Harbor Maintenance Revenue Act of 1986 to which it relates.
SEC. 2003. AMENDMENTS RELATED TO OMNIBUS BUDGET RECONCILIATION ACT
OF 1986.
(a) AMENDMENT RELATED TO SECTION 1011 OF THE ACT. --
(1) Subparagraph (B) of section 501(c)(12) of the 1986 Code is
amended by striking out "or" at the end of clause (ii), by
striking out the period at the end of clause (iii), and inserting
in lieu thereof ", or", and by adding at the end thereof the
following new clause:
"(iv) from the prepayment of a loan under section 306A, 306B,
or 311 of the Rural Electrification Act of 1936 (as in effect on
January 1, 1987)."
(2) Subparagraph (C) of section 501(c)(12) of the 1986 Code is
amended to read as follows:
"(C) In the case of a mutual or cooperative electric company,
subparagraph (A) shall be applied without taking into account any
income received or accrued --
"(i) from qualified pole rentals, or
"(ii) from the prepayment of a loan under section 306A, 306B,
or 311 of the Rural Electrification Act of 1936 (as in effect on
January 1, 1987)."
(3) The amendments made by this subsection "26 USC 501 note"
shall apply to taxable years ending after the date of the
enactment of the Omnibus Budget Reconciliation Act of 1986.
(b) AMENDMENTS RELATED TO SECTION 8011 OF THE ACT. --
(1) The following provisions of the 1986 Code are each amended
by striking out "the 14th day after the date on which" and
inserting in lieu thereof "the 14th day after the last day of the
semimonthly period during which":
(A) Subparagraphs (A) and (B) of section 5061(d)(2).
(B) Paragraph (3) of section 5061(d).
(C) Clauses (i) and (ii) of section 5703(b)(2)(B).
(D) Subparagraph (C) of section 5703(b)(2).
(2) The amendments made by paragraph (1) "26 USC 5061 note"
shall take effect as if included in the amendments made by section
8011 of the Omnibus Budget Reconciliation Act of 1986.
(c) AMENDMENT RELATED TO SECTION 8041 OF THE ACT. --
(1) IN GENERAL. -- Paragraph (3) of section 901(j) of the 1986
Code is amended --
(A) by striking out "Section 275" and inserting in lieu thereof
"Sections 275 and 78", and
(B) by inserting ", ETC." after "DEDUCTION" in the paragraph
heading.
(2) EFFECTIVE DATE. -- The amendments made by paragraph (1)
"26 USC 901 note" shall take effect on January 1, 1987.
(d) AMENDMENT RELATED TO SECTION 9002 OF THE ACT. -- Paragraph (3)
of section 3509(d) of the 1986 Code is amended by striking out
"subsection (d)(3)" and inserting in lieu thereof "subsection (d)(4)".
SEC. 2004. AMENDMENTS RELATED TO THE REVENUE ACT OF 1987.
(a) AMENDMENT RELATED TO SECTION 10101 OF THE ACT. -- Section
10101(b) of the Revenue Act "26 USC 21 note" of 1987 is amended to read
as follows:
"(b) EFFECTIVE DATE. --
"(1) IN GENERAL. -- The amendment made by subsection (a) shall
apply to expenses paid in taxable years beginning after December
31, 1987.
"(2) SPECIAL RULE FOR CAFETERIA PLANS. -- For purposes of
section 125 of the Internal Revenue Code of 1986, a plan shall not
be treated as failing to be a cafeteria plan solely because under
the plan a participant elected before January 1, 1988, to receive
reimbursement under the plan for dependent care assistance for
periods after December 31, 1987, and such assistance included
reimbursement for expenses at a camp where the dependent stays
overnight."
(b) AMENDMENTS RELATED TO SECTION 10102 OF THE ACT. --
(1) Subsection (h) of section 163 of the 1986 Code is amended
by redesignating paragraph (6) as paragraph (5).
(2) Clause (ii) of section 56(b)(1)(C) of the 1986 Code is
amended by striking out "163(h)(6)" and inserting in lieu thereof
"163(h)(5)".
(3) Paragraph (1) of section 56(e) of the 1986 Code is amended
--
(A) by striking out "substantially rehabilitating" and
inserting in lieu thereof "substantially improving", and
(B) by striking out "or is paid" in subparagraph (A).
(c) AMENDMENT RELATED TO SECTION 10103. -- Paragraph (1) of section
10103(a) of the Revenue Act of 1987 "26 USC 219 note" is amended by
inserting "in a plan established for its employees by the United States"
after "participant".
(d) AMENDMENTS RELATED TO SECTION 10202 OF THE ACT. --
(1) Subparagraph (A) of section 453(l)(1) of the 1986 Code, is
amended by striking out "disposes of personal property" and
inserting in lieu thereof "disposes of personal property of the
same type".
(2) Section 453A of the 1986 Code is amended by adding at the
end thereof the following new subsection:
"(e) REGULATIONS. -- The Secretary shall prescribe such regulations
as may be necessary to carry out the purposes of this section, including
regulations --
"(1) disallowing the use of the installment method in whole or
in part for transactions in which the rules of this section
otherwise would be avoided through the use of related persons,
pass-thru entities, or intermediaries, and
"(2) providing that the sale of an interest in a partnership or
other pass-thru entity will be treated as a sale of the
proportionate share of the assets of the partnership of other
entity."
(3) Paragraph (3) of section 10202(e) of the Revenue Act of
1987 "26 USC 453 note" is amended by adding at the end thereof the
following new subparagraph:
"(C) CERTAIN DISPOSITIONS DEEMED MADE ON 1ST DAY OF TAXABLE
YEAR. -- If the taxpayer makes an election under subparagraph
(A), in the case of the taxpayer's 1st taxable year ending after
December 31, 1986 --
"(i) dispositions after August 16, 1986, and before the 1st day
of such taxable year shall be treated as made on such 1st day, and
"(ii) subsections (b)(2)(B) and (c)(4) of section 453A of such
Code shall be applied separately with respect to such dispositions
by substituting for '$5,000,000' the amount which bears the same
ratio to $5,000,000 as the number of days after August 16, 1986,
and before such 1st day bears to 365."
(4) Paragraph (2) of section 10202(e) of the Revenue Act of
1987 is amended by adding at the end thereof the following new
subparagraph:
"(C) CERTAIN RULES MADE APPLICABLE. -- For purposes of this
paragraph, rules similar to the rules of paragraphs (4) and (5) of
section 812(c) of the Tax Reform Act of 1986 (as added by the
Technical and Miscellaneous Revenue Act of 1988) shall apply."
(5) Subsection (k) of section 453 of the 1986 Code is amended
by striking out "and section 453A".
(6) Subparagraph (A) of section 10202(e)(2) of the Revenue Act
of 1987 is amended by striking out "section 453A of the Internal
Revenue Code of 1986" and inserting in lieu thereof "section 453(
l)(1) of the Internal Revenue Code of 1986 as added by this
section".
(7) Paragraph (2) of section 453A(b) of the 1986 Code is
amended by striking out "for purposes of this paragraph" and
inserting in lieu thereof "for purposes of this paragraph and
subsection (c)(4)".
(8) Paragraph (3) of section 453A(b) of the 1986 Code is
amended to read as follows:
"(3) EXCEPTION FOR FARM PROPERTY. -- An installment obligation
shall not be treated as described in paragraph (1) if it arises
from the disposition of any property used or produced in the trade
or business of farming (within the meaning of section 2032A(e)(4)
or (5)."
(e) AMENDMENTS RELATED TO SECTION 10206 OF THE ACT. --
(1)(A) Subsection (a) of section 444 of the 1986 Code is
amended by striking out "as provided in subsections (b) and (c)"
and inserting in lieu thereof "as otherwise provided in this
section".
(B) Paragraph (3) of section 444(d) of the 1986 Code is amended
to read as follows:
"(3) TIERED STRUCTURES, ETC. --
"(A) IN GENERAL. -- Except as otherwise provided in this
paragraph --
"(i) no election may be under subsection (a) with respect to
any entity which is part of a tiered structure, and
"(ii) an election under subsection (a) with respect to any
entity shall be terminated if such entity becomes part of a tiered
structure.
"(B) EXCEPTIONS FOR STRUCTURES CONSISTING OF CERTAIN ENTITIES
WITH SAME TAXABLE YEAR. -- Subparagraph (A) shall not apply to
any tiered structure which consists only of partnerships or S
corporations (or both) all of which have the same taxable year."
(C) Subparagraph (B) of section 444(d)(2) of the 1986 Code is
amended by striking out "under subparagraph (A)" and inserting in
lieu thereof "under subparagraph (A) or paragraph (3)(A)".
(2)(A) Section 444 of the 1986 Code is amended by redesignating
subsection (f) as subsection (g) and inserting after subsection
(e) the following new subsection:
"(f) PERSONAL SERVICE CORPORATION. -- For purposes of this
section, the term 'personal service corporation' has the meaning
given to such term by section 441(i)(2)."
(B) Subsection (f) of section 280H of the 1986 Code is amended
by adding at the end thereof the following new paragraph:
"(5) PERSONAL SERVICE CORPORATION. -- The term 'personal
service corporation' has the meaning given to such term by section
441(i)(2)."
(3) Paragraph (2) of section 280H(f) of the 1986 Code is
amended by striking out "section 296A(b)(2)" and inserting in lieu
thereof "section 269A(b)(2) (as modified by section 441(i)( 2))".
(4)(A) Paragraph (2) of section 7519(b) of the 1986 Code is
amended to read as follows:
"(2) the net required payment balance."
(B) Subsection (e) of section 7519 of the 1986 Code is amended
by adding at the end thereof the following new paragraph:
"(4) NET REQUIRED PAYMENT BALANCE. -- The term 'net required
payment balance' means the excess (if any) of --
"(A) the aggregate of the required payments under this section
for all preceding applicable election years, over
"(B) the aggregate amount allowable as a refund to the entity
under subsection (c) for all preceding applicable election years."
(5) Subsection (c) of section 7519 of the 1986 Code is amended
to read as follows:
"(c) REFUND OF PAYMENTS. --
"(1) IN GENERAL. -- If, for any applicable election year, the
amount determined under subsection (b)(2) exceeds the amount
determined under subsection (b)(1), the entity shall be entitled
to a refund of such excess for such year.
"(2) TERMINATION OF ELECTIONS, ETC. -- If --
"(A) an election under section 444 is terminated effective with
respect to any year, or
"(B) the entity is liquidated during any year, the entity shall
be entitled to a refund of the net required payment balance.
"(3) DATE ON WHICH REFUND PAYABLE. -- Any refund under this
subsection shall be payable on later of --
"(A) April 15 of the calendar year following --
"(i) in the case of the year referred to in paragraph (1), the
calendar year in which it begins,
"(ii) in the case of the year referred to in paragraph (2), the
calendar year in which it ends, or
"(B) the day 90 days after the day on which claim therefor is
filed with the Secretary."
(6) Subsection (g) of section 7519 of the 1986 Code is amended
by striking out "including regulations" and all that follows down
through the period at the end thereof and inserting in lieu
thereof
"including regulations providing for appropriate adjustments in the
application of this section and sections 280H and 444 in cases where --
"(1) 2 or more applicable election years begin in the same
calendar year, or
"(2) the base year is a taxable year of less than 12 months."
(7) Subparagraph (B) of section 7519(d)(2) of the 1986 Code is
amended by inserting before the period at the end thereof the
following: "(and such corporation shall be treated as an S
corporation for such taxable year for purposes of paragraph (3))".
(8) Subsection (d) of section 7519 of the 1986 Code is amended
by adding at the end thereof the following new paragraph:
"(5) TREATMENT OF GUARANTEED PAYMENTS. --
"(A) IN GENERAL. -- Any guaranteed payment by a partnership
shall not be treated as an applicable payment, and the amount of
the net income of the partnership shall be determined by not
taking such guaranteed payment into account.
"(B) GUARANTEED PAYMENT. -- For purposes of subparagraph (A),
the term 'guaranteed payment' means any payment referred to in
section 707(c)".
(9) Paragraph (4) of section 7519(d) of the 1986 Code is
amended by adding at the end thereof the following new sentence:
"Notwithstanding the preceding provisions of this paragraph, for
taxable years beginning after 1987, the applicable percentage for
any partnership or S corporation shall be 100 percent if more than
50 percent of such entity's net income for the short taxable year
which would have resulted if the entity had not made an election
under section 444 would have been allocated to partners or
shareholders who would not have been entitled to the benefits of
section 806(e)(2)(C) of the Tax Reform Act of 1986 with respect to
such income."
(10) Subparagraphs (A) and (B) of section 7519(d)(2) of the
1986 Code are each amended by striking out "(other than credits)"
and inserting in lieu thereof "(other than credits and tax-exempt
income)".
(11) Paragraph (4) of section 10206(d) of the Revenue Act of
1987 "26 USC 444 note" is amended by adding at the end thereof the
following new sentence: "The preceding sentence shall apply only
in the case of an election under section 444 of such Code made for
a taxable year beginning before 1989."
(12) Subparagraph (A) of section 444(d)(2) of the 1986 Code is
amended by inserting "or otherwise terminates such election"
before the period at the end of the first sentence thereof.
(13) Paragraph (4) of section 444(b) of the 1986 Code is
amended by striking out "the term" and inserting in lieu thereof
"except as provided in regulations, the term".
(14)(A) Paragraph (4) of section 280H(f) of the 1986 Code is
amended to read as follows:
"(4) ADJUSTED TAXABLE INCOME. -- The term 'adjusted taxable
income' means taxable income determined without regard to --
"(A) any amount paid to an employee-owner which is includible
in the gross income of such employee-owner, and
"(B) any net operating loss carryover to the extent such
carryover is attributable to amounts described in subparagraph
(A)."
(B) Subparagraph (A) of section 7519(d)(3) of the 1986 Code is
amended by striking out "or incurred".
(C) Subsections (c)(1)(A)(i) and (d)(1) of section 280H of the
1986 Code are each amended by striking out "or incurred".
(f) AMENDMENTS RELATED TO SECTION 10211 OF THE ACT. --
(1) Paragraph (4) of section 7704(e) of the 1986 Code is
amended by striking out "as may be required" and inserting in lieu
thereof "or to pay such amounts as may be required".
(2) Paragraph (2) of section 10211(c) of the Revenue Act of
1987 "22 USC 7704 note" is amended by adding at the end thereof
the following new subparagraph:
"(C) COORDINATION WITH PASSIVE-TYPE INCOME REQUIREMENTS. -- In
the case of an existing partnership, paragraph (1) of section
7704(c) of the Internal Revenue Code of 1986 (as added by this
section) shall be applied by substituting for 'December 31, 1987'
the earlier of --
"(i) December 31, 1997, or
"(ii) the day (if any) as of which such partnership ceases to
be treated as an existing partnership by reason of subparagraph
(B)."
(3) Paragraph (1) of section 7704(c) of the 1986 Code is
amended by adding at the end thereof the following new sentence:
"For purposes of the preceding sentence, a partnership shall not
be treated as being in existence during any period before the 1st
taxable year in which such partnership (or a predecessor) was a
publicly traded partnership."
(4) Paragraph (1) of section 7704(d) of the 1986 Code is
amended by adding at the end thereof the following new sentence:
"For purposes of subparagraph (E), the term 'mineral or natural
resource' means any product of a character with respect to which a
deduction for depletion is allowable under section 611; except
that such term shall not include any product described in
subparagraph (A) or (B) of section 613(b)(7)."
(5) Paragraph (3) of section 7704(d) of the 1986 Code is
amended to read as follows:
"(3) REAL PROPERTY RENT. -- The term 'real property rent'
means amounts which would qualify as rent from real property under
section 856(d) if --
"(A) such section were applied without regard to paragraph
(2)(C) thereof (relating to independent contractor requirements),
and
"(B) stock owned, directly or indirectly, by or for a partner
would not be considered as owned under section 318(a)(3)(A) by the
partnership unless 5 percent or more (by value) of the interests
in such partnership are owned, directly or indirectly, by or for
such partner."
(g) AMENDMENT RELATED TO SECTION 10212 OF THE ACT. -- Subsection (k)
of section 469 of the 1986 Code is amended by adding at the end thereof
the following new paragraph:
"(3) COORDINATION WITH SUBSECTION (g). -- For purposes of
subsection (g), a taxpayer shall not be treated as having disposed
of his entire interest in an activity of a publicly traded
partnership until he disposes of his entire interest in such
partnership.
(h) AMENDMENTS RELATED TO SECTION 10214 OF THE ACT. --
(1) Subparagraph (E) of section 514(c)(9) of the 1986 Code is
amended by adding at the end thereof the following new clause:
"(iii) REGULATIONS. -- The Secretary shall prescribe such
regulations as may be necessary to carry out the purposes of this
subparagraph, including regulations which may provide for
exclusion or segregation of items."
(2) Clause (i) of section 514(c)(9)(E) of the 1986 Code is
amended by striking out subclause (I) and by redesignating
subclauses (II) and (III) as subclauses (I) and (II),
respectively.
(i) AMENDMENTS RELATED TO SECTION 10221 OF THE ACT. --
(1) Paragraph (2) of section 10221(e) of the Revenue Act of
1987 "26 USC 243 note" is amended by striking out "amendments made
by subsection (b)" and inserting in lieu thereof "amendments made
by subsection (c)".
(2) Subsection (b) of section 244 of the 1986 Code is amended
by striking out "section 243(c)(4)" and inserting in lieu thereof
"section 243(d)(4)".
(j) AMENDMENTS RELATED TO SECTION 10222 OF THE ACT. --
(1)(A) Paragraph (1) of section 1503(e) of the 1986 Code is
amended by striking out so much of such paragraph as precedes
subparagraph (A) thereof and inserting in lieu thereof the
following:
"(1) IN GENERAL. -- Solely for purposes of determining gain or
loss on the disposition of intragroup stock and the amount of any
inclusion by reason of an excess loss account, in determining the
adjustments to the basis of such intragroup stock on account of
the earnings and profits of any member of an affiliated group for
any consolidated year (and in determining the amount in such
account) -- "
(B) Paragraph (2) of section 10222(a) of the Revenue Act of
1987 "26 USC 1503 note" is amended by adding at the end thereof
the following new subparagraph:
"(C) TREATMENT OF CERTAIN EXCESS LOSS ACCOUNTS. --
"(i) IN GENERAL. -- If --
"(I) any disposition on or before December 15, 1987, of stock
resulted in an inclusion of an excess loss account (or would have
so resulted if the amendments made by paragraph (1) had applied to
such disposition), and
"(II) there is an unrecaptured amount with respect to such
disposition,
the portion of such unrecaptured amount allocable to stock
disposed of in a disposition to which the amendment made by
paragraph (1) applies shall be taken into account as negative
basis. To the extent permitted by the Secretary of the Treasury
or his delegate, the preceding sentence shall not apply to the
extent the taxpayer elects to reduce its basis in indebtedness of
the corporation with respect to which there would have been an
excess loss account.
"(ii) SPECIAL RULES. -- For purposes of this subparagraph --
"(I) UNRECAPTURED AMOUNT. -- The term 'unrecaptured amount'
means the amount by which the inclusion referred to in clause
(i)(I) would have been increased if the amendment made by
paragraph (1) and applied to the disposition.
"(II) COORDINATION WITH BINDING CONTRACT EXCEPTION. -- A
disposition shall be treated as occurring on or before December
15, 1987, if the amendment made by paragraph (1) does not apply to
such disposition by reason of subparagraph (B)."
(2) Subsection (e) of section 1503 of the 1986 Code is amended
by adding at the end thereof the following new paragraph:
"(3) ADJUSTMENTS. -- Under regulations prescribed by the
Secretary, proper adjustments shall be made in the application of
paragraph (1) --
"(A) in the case of any property acquired by the corporation
before consolidation, for the difference between the adjusted
basis of such property for purposes of computing taxable income
and its adjusted basis for purposes of computing earnings and
profits, and
"(B) in the case of any property, for any basis adjustment
under section 48(q)."
(3)(A) Paragraph (2) of section 1503(e) of the 1986 Code is
amended by adding at the end thereof the following new
subparagraph:
"(C) APPLICATION OF SECTION 312(n)(7) NOT AFFECTED. -- The
reference in paragraph (1) to subsection (n) of section 312 shall
be treated as not including a reference to paragraph (7) of such
subsection."
(B) Subsection (e) of section 301 of the 1986 Code (as
redesignated by section 106(e)(12) of this Act) is amended by
redesignating paragraph (3) as paragraph (4) and by inserting
after paragraph (2) the following new paragraph:
"(3) APPLICATION OF SECTION 312(n)(7) NOT AFFECTED. -- The
reference in paragraph (1) to subsection (n) of section 312 shall
be treated as not including a reference to paragraph (7) of such
subsection."
(4) Subparagraph (B) of section 10222(b)(2) of the Revenue Act
of 1987 "26 USC 301 note" is amended to read as follows:
"(B) EXCEPTION. -- The amendment made by paragraph (1) shall
not apply for purposes of determining gain or loss on any
disposition of stock after December 15, 1987, and before January
1, 1989, if such disposition is pursuant to a written binding
contract, governmental order, letter of intent or preliminary
agreement, or stock acquisition agreement, in effect on or before
December 15, 1987."
(k) AMENDMENTS RELATED TO SECTION 10223 OF THE ACT. --
(1) Subparagraph (D) of section 355(b)(2) of the 1986 Code is
amended by striking out clauses (i) and (ii) and inserting in lieu
thereof the following:
"(i) was not acquired by any distributee corporation directly
(or through 1 or more corporations, whether through the
distributing corporation or otherwise) within the period described
in subparagraph (B) and was not acquired by the distributing
corporation directly (or through 1 or more corporations) within
such period, or
"(ii) was so acquired by any such corporation within such
period, but, in each case in which such control was so acquired,
it was so acquired, only by reason of transactions in which gain
or loss was not recognized in whole or in part, or only by reason
of such transactions combined with acquisitions before the
beginning of such period."
(2) Subparagraph (A) of section 304(b)(4) of the 1986 Code is
amended by striking out "stock of 1 member" and inserting in lieu
thereof "stock from 1 member".
(3) Paragraph (2) of section 10223(d) of the Revenue Act of
1987 "26 USC 304 note" is amended by adding at the end thereof the
following new subparagraph:
"(D) TREATMENT OF CERTAIN MEMBERS OF AFFILIATED GROUP. --
"(i) IN GENERAL. -- For purposes of subparagraph (A), all
corporations which were in existence on the designated date and
were members of the same affiliated group which included the
distributees on such date shall be treated as 1 distributee.
"(ii) LIMITATION TO STOCK HELD ON DESIGNATED DATE. -- Clause
(i) shall not exempt any distribution from the amendments made by
this section if such distribution is with respect to stock not
held by the distributee (determined without regard to clause (i))
on the designated date directly or indirectly through a
corporation which goes out of existence in the transaction.
"(iii) DESIGNATED DATE. -- For purposes of this subparagraph,
the term 'designated date' means the later of --
"(I) December 15, 1987, or
"(II) the date on which the acquisition meeting the
requirements of subparagraph (A) occurred."
(4) Subparagraph (B) of section 10223(d)(2) of the Revenue Act
of 1987 "26 USC 304 note" is amended --
(A) by striking out "before January 1, 1993" and inserting in
lieu thereof "on or before March 31, 1988", and
(B) by striking out "before January 1, 1989,".
(l) AMENDMENT RELATED TO SECTION 10224 OF THE ACT. -- Sections
1201(a) and 1561(a) of the 1986 Code, and section 904(b)(3)(D)(ii) of
the 1986 Code (as amended by section 106(b)(2) of this Act), are each
amended by striking out "section 11(b)" and inserting in lieu thereof
"section 11(b)(1)".
(m) AMENDMENTS RELATED TO SECTION 10226 OF THE ACT. --
(1)(A) Subsection (a) of section 384 of the 1986 Code is
amended to read as follows:
"(a) GENERAL RULE. -- If --
"(1)(A) a corporation acquires directly (or through 1 or more
other corporations) control of another corporation, or
"(B) the assets of a corporation are acquired by another
corporation in a reorganization described in subparagraph (A),
(C), or (D) of section 368(a)(1), and
"(2) either of such corporations is a gain corporation,
income for any recognition period taxable year (to the extent
attributable to recognized built-in gains) shall not be offset by any
preacquisition loss (other than a preacquisition loss of the gain
corporation)."
(B) Subsection (c) of section 384 of the 1986 Code is amended
by redesignating paragraph (4) as paragraph (8) and by inserting
after paragraph (3) the following new paragraphs:
"(4) GAIN CORPORATION. -- The term 'gain corporation' means
any corporation with a net unrealized built-in gain.
"(5) CONTROL. -- The term 'control' means ownership of stock
in a corporation which meets the requirements of section 1504(a)(
2).
"(6) TREATMENT OF MEMBERS OF SAME GROUP. -- Except as provided
in regulations and except for purposes of subsection (b), all
corporations which are members of the same affiliated group
immediately before the acquisition date shall be treated as 1
corporation. To the extent provided in regulations, section 1504
shall be applied without regard to subsection (b) thereof for
purposes of the preceding sentence.
"(7) TREATMENT OF PREDECESSORS AND SUCCESSORS. -- Any
reference in this section to a corporation shall include a
reference to any predecessor or successor thereof."
(C) Paragraph (2) of section 384(c) of the 1986 Code is amended
to read as follows:
"(2) ACQUISITION DATE. -- The term 'acquisition date' means
"(A) in any case described in subsection (a)(1)(A), the date on
which the acquisition of control occurs, or
"(B) in any case described in subsection (a)(1)(B), the date of
the transfer in the reorganization."
(D) Paragraph (1) of section 384(c) of the 1986 Code is amended
by striking out "subsection (a)(2)" and inserting in lieu thereof
"subsection (a)(1)(B)".
(2) Paragraph (2) of section 384(e) of the 1986 Code is amended
by striking out "the gain corporation" and inserting in lieu
thereof "a corporation".
(3) Subsection (b) of section 384 of the 1986 Code is amended
to read as follows:
"(b) EXCEPTION WHERE CORPORATIONS UNDER COMMON CONTROL. --
"(1) IN GENERAL. -- Subsection (a) shall not apply to the
preacquisition loss of any corporation if such corporation and the
gain corporation were members of the same controlled group at all
times during the 5-year period ending on the acquisition date.
"(2) CONTROLLED GROUP. -- For purposes of this subsection, the
term 'controlled group' means a controlled group of corporations
(as defined in section 1563(a)); except that --
"(A) 'more than 50 percent' shall be substituted for 'at least
80 percent' each place it appears,
"(B) the ownership requirements of section 1563(a) must be met
both with respect to voting power and value, and
"(C) the determination shall be made without regard to
subsection (a)(4) of section 1563.
"(3) SHORTER PERIOD WHERE CORPORATIONS NOT IN EXISTENCE FOR 5
YEARS. -- If either of the corporations referred to in paragraph
(1) was not in existence throughout the 5-year period referred to
in paragraph (1), the period during which such corporation was in
existence (or if both, the shorter of such periods) shall be
substituted for such 5-year period."
(4) Section 384 of the 1986 Code is amended by redesignating
subsection (e) as subsection (f) and by inserting after subsection
(d) the following new subsection:
"(e) ORDERING RULES FOR NET OPERATING LOSSES, ETC. --
"(1) CARRYOVER RULES. -- If any preacquisition loss may not
offset a recognized build-in gain by reason of this section, such
gain shall not be taken into account in determining under section
172(b)(2) the amount of such loss which may be carried to other
taxable years. A similar rule shall apply in the case of any
excess credit or net capital loss limited by reason of subsection
(d).
"(2) ORDERING RULE FOR LOSSES CARRIED FROM SAME TAXABLE YEAR.
-- In any case in which --
"(A) a preacquisition loss for any taxable year is subject to
limitation under subsection (a), and
"(B) a net operating loss from such taxable year is not subject
to such limitation,
taxable income shall be treated as having been offset 1st by
the loss subject to such limitation."
(5) "26 USC 384 note" In any case where the acquisition date
(as defined in section 384(c)(2) of the 1986 Code as amended by
this subsection) is before March 31, 1988, the acquiring
corporation may elect to have the amendments made by this
subsection not apply. Such an election shall be made in such
manner as the Secretary of the Treasury or his delegate shall
prescribe and shall be made not later than the later of the due
date (including extensions) for filing the return for the taxable
year of the acquiring corporation in which the acquisition date
occurs or the date 120 days after the date of the enactment of
this Act. Such an election, once made, shall be irrevocable.
(n) AMENDMENTS RELATED TO SECTION 10227 OF THE ACT. -- Paragraph (4)
of section 1363(d) of the 1986 Code (relating to recapture of LIFO
benefits) is amended by adding at the end thereof the following new
subparagraph:
"(D) NOT TREATED AS MEMBER OF AFFILIATED GROUP. -- Except as
provided in regulations, the corporation referred to in paragraph
(1) shall not be treated as a member of an affiliated group with
respect to the amount included in gross income under paragraph
(1)."
(o) AMENDMENTS RELATED TO SECTION 10228 OF THE ACT. --
(1)(A) Subsection (a) of section 5881 of the 1986 Code is
amended by striking out "gain realized by such person on such
receipt" and inserting in lieu thereof "gain or other income of
such person by reason of such receipt".
(B)(i) Subsection (b) of section 5881 of the 1986 Code is
amended by striking out "a corporation to directly or indirectly
acquire its stock" and inserting in lieu thereof "a corporation
(or any person acting in concert with such corporation) to
directly or indirectly acquire stock of such corporation".
(ii) The amendment made by clause (i) "26 USC 5881 note" shall
apply to transactions occurring on or after March 31, 1988.
(C) Subsection (d) of section 5881 of the 1986 Code is amended
--
(i) by striking out "the gain" and inserting in lieu thereof
"the gain or other income", and
(ii) by striking out "GAIN RECOGNIZED" in the subsection
heading and inserting in lieu thereof "AMOUNT RECOGNIZED".
(2) Section 5881 of the 1986 Code is amended by adding at the
end thereof the following new subsection:
"(e) ADMINISTRATIVE PROVISIONS. -- For purposes of the deficiency
procedures of subtitle F, any tax imposed by this section shall be
treated as a tax imposed by subtitle A."
(p) AMENDMENTS RELATED TO SECTION 10241 OF THE ACT. --
(1) Paragraph (1) of section 811(d) of the 1986 Code is amended
by striking out "the prevailing State assumed interest rate for
the contract" and inserting in lieu thereof "the greater of the
prevailing State assumed interest rate or applicable Federal
interest rate in effect under section 807 for the contract".
(2) Paragraph (2) of section 812(b) of the 1986 Code is amended
by striking out the last sentence and inserting in lieu thereof
the following:
"In any case where neither the prevailing State assumed interest rate
nor the applicable Federal interest rate is used, another appropriate
rate shall be used for purposes of subparagraph (A)."
(q) AMENDMENTS RELATED TO SECTION 10242 OF THE ACT. --
(1) Subsection (h) of section 816 of the 1986 Code is amended
by striking out "section 842(c)(1)(A)" and inserting in lieu
thereof "section 842(b)(2)(B)(i)".
(2)(A) Subparagraph (B) of section 842(b)(3) of the 1986 Code
is amended by striking out "held for the production of such
income".
(B) Subparagraph (B) of section 842(b)(4) of the 1986 Code is
amended by striking out "held for the production of investment
income".
(3) Subparagraph (d) of section 842 of the 1986 Code is amended
by striking out "and" at the end of paragraph (2), by striking out
the period at the end of paragraph (3) and inserting in lieu
thereof ", and", and by adding at the end thereof the following
new paragraph:
"(4) which may provide that, in the case of companies taxable
under part II of this subchapter, determinations under subsection
(b) will be made separately for categories of such companies
established in such regulations."
(r) AMENDMENT RELATED TO SECTION 10301 OF THE ACT. -- Paragraph (3)
of section 6655(g) of the 1986 Code is amended by striking the sentence
following subparagraph (C) and inserting in lieu thereof the following:
"In the case of any organization described in subparagraph (A),
subsection (b)(2)(A) shall be applied by substituting '5th month'
for '3rd month', and subsection (e)(2)(A) shall be applied by
substituting '2 months' for '3 months' and in clause (i)(I), by
substituting '4 months' for '5 months' in clause (i)(II), by
substituting '7 months' for '8 months' in clause (i)(III), and by
substituting '10 months' for '11 months' in clause (i)(IV)".
(s) AMENDMENTS RELATED TO SECTION 10502 OF THE ACT. --
(1) Section 4093 of the 1986 Code is amended by redesignating
subsections (d) and (e) as subsections (e) and (f), respectively,
and by inserting after subsection (c) the following new
subsection:
"(d) CERTAIN AVIATION FUEL SALES. -- Under regulations prescribed by
the Secretary, the Leaking Underground Storage Tank Trust Fund financing
rate under section 4091 shall not apply to aviation fuel sold for use or
used as supplies for vessels or aircraft (within the meaning of section
4221(d)(3))."
(2) Subparagraph (B) of section 6427(l)(3) of the 1986 Code
(relating to no refund of Leaking Underground Storage Tank Trust
Fund financing tax) is amended by inserting "(except as supplies
for vessels or aircraft within the meaning of section 4221(d)(
3))" after "aircraft".
(3) Section 6427 of the 1986 Code is amended by redesignating
the subsection (p) relating to gasoline used in noncommercial
aviation during period rate reduction in effect and subsection (q)
(relating to cross references) as subsections (q) and (r),
respectively.
(t) AMENDMENTS RELATED TO SECTION 10512 OF THE ACT. --
(1) Section 5276 of the 1986 Code is amended by adding at the
end thereof the following new subsection:
"(c) EXCEPTION FOR UNITED STATES. -- Subsection (a) shall not apply
to any permit issued to an agency or instrumentality of the United
States."
(2) Subsection (a) of section 5113 of the 1986 Code is amended
--
(A) by inserting "taxpaid wine bottling house," after "bonded
wine cellar," each place it appears, and
(B) by striking out "DISTILLED SPIRITS, PLANTS, BONDED WINE
CELLARS, OR BREWERIES" in the heading and inserting in lieu
thereof "CONTROLLED PREMISES".
(3) Section 5123 of the 1986 Code is amended by redesignating
subsection (c) as subsection (d) and by inserting after subsection
(b) the following new subsection:
"(c) COORDINATION OF TAXES UNDER SECTION 5121. -- No tax shall be
imposed by section 5121(a) with respect to a person's activities at any
place during a year if such person has paid the tax imposed by section
5121(b) with respect to such place for such year."
(4) Section 5113 of the 1986 Code is amended by adding at the
end thereof the following new subsection:
"(g) COORDINATION OF TAXES UNDER SECTION 5111. -- No tax shall be
imposed by section 5111(a) with respect to a person's activities at any
place during a year if such person has paid the tax imposed by section
5111(b) with respect to such place for such year."
(u) EFFECTIVE DATE. -- Except as otherwise provided in this section,
"26 USC 56 note" any amendment made by this section shall take effect as
if included in the provisions of the Revenue Act of 1987 to which such
amendment relates.
SEC. 2005. AMENDMENTS RELATED TO PENSION PROTECTION ACT AND FULL
FUNDING LIMITATIONS.
(a) AMENDMENT RELATED TO SECTION 9303. --
(1) Section 4972(c) of the 1986 Code is amended by
redesignating paragraph (4) as paragraph (5) and by inserting
after paragraph (3) the following new paragraph:
"(4) SPECIAL RULE FOR SELF-EMPLOYED INDIVIDUALS. -- For
purposes of paragraph (1), if --
"(A) the amount which is required to be contributed to a plan
under section 412 on behalf of an individual who is an employee
(within the meaning of section 401(c)(1)), exceeds
"(B) the earned income (within the meaning of section 404(a)(
8)) of such individual derived from the trade or business with
respect to which such plan is established,
such excess shall be treated as an amount allowable as a
deduction under section 404."
(2)(A) Subparagraph (C) of section 412(1)(3) of the 1986 Code
is amended --
(i) by striking out "October 17, 1987" in clause (i) and
inserting in lieu thereof "October 29, 1987", and
(ii) by striking out "October 16, 1987" in clause (iii) and
inserting in lieu thereof "October 28, 1987".
(B) Subparagraph (C) of section 302(d)(3) of the Employee
Retirement Income Security Act "29 USC 1082" of 1974 is amended --
(i) by striking out "October 17, 1987" in clause (i) and
inserting in lieu thereof "October 29, 1987", and
(ii) by striking out "October 16, 1987" in clause (iii) and
inserting in lieu thereof "October 28, 1987".
(b) AMENDMENTS RELATED TO SECTION 9307. --
(1) The last sentence of section 404(a)(1)(D) of the 1986 Code
is amended by striking out "For purposes of this subparagraph" and
inserting in lieu thereof "For purposes of determining whether a
plan has more than 100 participants".
(2) Section 404(a)(7)(A) of the 1986 Code is amended by adding
at the end thereof the following new sentence: "For purposes of
clause (ii), if paragraph (1)(D) applies to a defined benefit plan
for any plan year, the amount necessary to satisfy the minimum
funding standard provided by section 412 with respect to such plan
for such plan year shall not be less than the unfunded current
liability of such plan under section 412(l).".
(3) Section 404(a)(1)(D) of the 1986 Code is amended by
striking out "(without regard to any reduction by the credit
balance in the funding standard account)".
(c) AMENDMENTS RELATED TO SECTION 9301. --
(1) Section 414(l) of the 1986 Code is amended by adding at the
end thereof the following new paragraph:
"(2) ALLOCATION OF ASSETS IN PLAN SPIN-OFFS, ETC. --
"(A) IN GENERAL. -- In the case of a plan spin-off of a
defined benefit plan, a trust which forms part of --
"(i) the original plan, or
"(ii) any plan spun off from such plan,
shall not constitute a qualified trust under this section
unless the applicable percentage of excess assets are allocated to
each of such plans.
"(B) APPLICABLE PERCENTAGE. -- For purposes of subparagraph
(A), the term 'applicable percentage' means, with respect to each
of the plans described in clauses (i) and (ii) of subparagraph
(A), the percentage determined by dividing --
"(i) the excess (if any) of --
"(I) the amount determined under section 412(c)(7)(A)(i) with
respect to the plan, over
"(II) the amount of the assets required to be allocated to the
plan after the spin-off (without regard to this paragraph), by
"(ii) the sum of the excess amounts determined separately under
clause (i) for all such plans.
"(C) EXCESS ASSETS. -- For purposes of subparagraph (A), the
term 'excess assets' means an amount equal to the excess (if any)
of --
"(i) the fair market value of the assets of the original plan
immediately before the spin-off, over
"(ii) the amount of assets required to be allocated after the
spin-off to all plans (determined without regard to this
paragraph).
"(D) CERTAIN SPUN-OFF PLANS NOT TAKEN INTO ACCOUNT. --
"(i) IN GENERAL. -- A plan involved in a spin-off which is
described in clause (ii), (iii), or (iv) shall not be taken into
account for purposes of this paragraph, except that the amount
determined under subparagraph (C)(ii) shall be increased by the
amount of assets allocated to such plan.
"(ii) PLANS TRANSFERRED OUT OF CONTROLLED GROUPS. -- A plan is
described in this clause if, after such spin-off, such plan is
maintained by an employer who is not a member of the same
controlled group as the employer maintaining the original plan.
"(iii) PLANS TRANSFERRED OUT OF MULTIPLE EMPLOYER PLANS. -- A
plan as described in this clause if, after the spin-off, any
employer maintaining such plan (and any member of the same
controlled group as such employer) does not maintain any other
plan remaining after the spin-off which is also maintained by
another employer (or member of the same controlled group as such
other employer) which maintained the plan in existence before the
spin-off.
"(iv) TERMINATED PLANS. -- A plan is described in this clause
if, pursuant to the transaction involving the spin-off, the plan
is terminated.
"(v) CONTROLLED GROUP. -- For purposes of this subparagraph,
the term 'controlled group' means any group treated as a single
employer under subsection (b), (c), (m), or (o).
"(E) PARAGRAPH NOT TO APPLY TO MULTIEMPLOYER PLANS. -- This
paragraph does not apply to any multiemployer plans with respect
to any spin-off to the extent that participants either before or
after the spin-off are covered under a multiemployer plan to which
title IV of the Employee Retirement Income Security Act of 1974
applies.
"(F) APPLICATION TO SIMILAR TRANSACTION. -- Except as provided
by the Secretary, rules similar to the rules of this paragraph
shall apply to transactions similar to spin-offs."
(2) Section 414(l) of the 1986 Code is amended by striking out
the heading and inserting in lieu thereof:
"(l) MERGER AND CONSOLIDATIONS OF PLANS OR TRANSFERS OF PLAN ASSETS.
--
"(1) IN GENERAL. -- ".
(3)(A) Except as provided in subparagraph (B), "26 USC 414
note" the amendments made by this subsection shall apply with
respect to transactions occurring after July 26, 1988.
(B) The amendments made by this subsection shall not apply to
any transaction occurring after July 26, 1988, if on or before
such date the board of directors of the employer, approves such
transaction or the employer took similar binding action.
(d) OTHER PROVISIONS. --
(1) Subparagraph (C) of section 412(l)(3) of the 1986 Code is
amended --
(A) by striking out "October 17, 1987" in clause (i) and
inserting in lieu thereof "October 29, 1987", and
(B) by striking out "October 16, 1987" in clause (iii) and
inserting in lieu thereof "October 28, 1987".
(2) Subparagraph (B) of section 302(d)(3) of the Employee
Retirement Income Security Act "29 USC 1082" of 1974 is amended --
(A) by striking out "October 17, 1987" in clause (i) and
inserting in lieu thereof "October 29, 1987", and
(B) by striking out "October 16, 1987" in clause (iii) and
inserting in lieu thereof "October 28, 1987".
(e) EFFECTIVE DATE. -- The amendments made by this section "26 USC
404 note" shall take effect as if included in the amendments made by the
provisions of the Omnibus Budget Reconciliation Act of 1987 to which it
relates.
SEC. 2006. AMENDMENTS RELATED TO SECTION 9201 OF THE OMNIBUS BUDGET
RECONCILIATION ACT OF 1987.
(a) Subsection (c) of section 4132 of the 1986 Code (relating to
imposition of tax on certain vaccines) is amended by redesignating
paragraphs (1) and (2) as paragraphs (3) and (4), respectively, and by
inserting before paragraph (3) (as so redesignated) the following new
paragraphs:
"(1) CERTAIN USES TREATED AS SALES. -- Any manufacturer,
producer, or importer of a vaccine which uses such vaccine before
it is sold shall be liable for the tax imposed by section 4131 in
the same manner as if such vaccine were sold by such manufacturer,
producer, or importer.
"(2) TREATMENT OF VACCINES SHIPPED TO UNITED STATES
POSSESSIONS. -- Section 4221(a)(2) shall not apply to any vaccine
shipped to a possession of the United States."
(b) Subsection (a) of section 9510 of the 1986 Code is amended --
(1) by inserting "appropriated or" before "credited", and
(2) by inserting "this section or" before "section 9602(b)".
(c) The amendments made by this section "26 USC 4132 note" shall take
effect as if included in the amendments made by section 9201 of the
Omnibus Budget Reconciliation Act of 1987.
SEC. 3001. TAX-FREE PURCHASES OF CERTAIN FUELS.
(a) IN GENERAL. -- Subsection (c) of section 4093 of the 1986 Code
(relating to exceptions, special rule) is amended to read as follows:
4"(c) EXEMPTION FOR NONTAXABLE USES AND BUS USES. --
"(1) IN GENERAL. -- No tax shall be imposed by section 4091 on
fuel sold by a producer or importer for use by the purchaser in a
nontaxable use (as defined in section 6427(l)(2)) or a use
described in section 6427(b)(1).
"(2) EXCEPTIONS. --
"(A) CERTAIN LEAKING UNDERGROUND STORAGE TANK TRUST FUND TAXES.
-- In the case of fuel sold for use in --
"(i) a diesel-powered train, and
"(ii) an aircraft,
paragraph (1) shall not apply to so much of the tax imposed by
section 4091 as is attributable to the Leaking Underground Storage
Tank Trust Fund financing rate imposed by such section.
"(B) CERTAIN BUS USES. -- Paragraph (1) shall not apply to so
much of the tax imposed by section 4091 as is not refundable by
reason of the application of section 6427(b)(2)(A).
"(3) REGISTRATION REQUIRED. -- Except to the extent provided
by the Secretary, paragraph (1) shall not apply to any sale unless
--
"(A) both the seller and the purchaser are registered under
section 4101, and
"(B) the purchaser's name, address, and registration number
under such section are provided to the seller.
"(4) INFORMATION REPORTING. --
"(A) RETURNS BY PRODUCERS AND IMPORTERS. -- Each producer or
importer who makes a reduced-tax sale during the calendar year
shall make a return (at such time and in such form as the
Secretary may by regulations prescribe) showing with respect to
each such sale --
"(i) the name, address, and registration number under section
4101 of the purchaser,
"(ii) the amount of fuel sold, and
"(iii) such other information as the Secretary may require.
"(B) STATEMENTS TO PURCHASERS. -- Every person required to
make a return under subparagraph (A) shall furnish to each
purchaser whose name is required to be set forth on such return a
written statement showing the name and address of the person
required to make such return, the registration number under
section 4101 of such person, and the information required to be
shown on the return with respect to such purchaser. The written
statement required under the preceding sentence shall be furnished
to the purchaser on or before January 31 of the year following the
calendar year for which the return under subparagraph (A) is
required to be made.
"(C) RETURNS BY PURCHASERS. -- Each person who uses during the
calendar year fuel purchaser in a reduced-tax sale shall make a
return (at such time and in such form as the Secretary may by
regulations prescribe) showing --
"(i) whether such use was a nontaxable use (as defined in
section 6427(l)(2)) or a use described in section 6427(b)(1) and
the amount of fuel so used,
"(ii) the date of the sale of the fuel so used,
"(iii) the name, address, and registration number under section
4101 of the seller, and
"(iv) such other information as the Secretary may require.
"(D) REDUCED-TAX SALE. -- For purposes of this paragraph, the
term 'reduced tax sale' means any sale of taxable fuel on which
the amount of tax otherwise required to be paid under section 4091
is reduced by reason of paragraph (1) (other than sales described
in subsections (a) and (b) of this section)."
(b) PENALTY FOR FAILING TO PROVIDE INFORMATION. --
(1) Subparagraph (B) of section 6724(d)(1) of the 1986 Code
(defining information return) is amended by striking out "or" at
the end of clause (ix), by striking out the period at the end of
clause (x) and inserting in lieu thereof ", or", and by adding at
the end thereof the following new clause:
"(xi) subparagraph (A) or (C) of subsection (c)(4) , or
subsection (d), of section 4093 (relating to information reporting
with respect to tax on diesel and aviation fuels)."
(2) Paragraph (2) of section 6724(d) of the 1986 Code (defining
payee statement) is amended by striking out "or" at the end of
subparagraph (S), by striking out the period at the end of
subparagraph (T) and inserting in lieu thereof ", or", and by
adding at the end thereof the following new subparagraph:
"(U) section 4093(c)(4)(B) (relating to certain purchasers of
diesel and aviation fuels)."
(3)(A) The text of section 7232 of the 1986 Code is amended by
striking out "or lubricating oil" and inserting in lieu thereof ",
lubricating oil, diesel fuel, or aviation fuel".
(B) The heading for section 7232 of the 1986 Code is amended by
striking out "OR LUBRICATING OIL" and inserting in lieu thereof ",
LUBRICATING OIL, DIESEL FUEL, OR AVIATION FUEL".
(C) The table of sections for part II of subchapter A of
chapter 75 of the 1986 Code is amended by striking out "or
lubricating oil" in the item relating to section 7232 and
inserting in lieu thereof ", lubricating oil, diesel fuel, or
aviation fuel".
(c) EFFECTIVE DATE. -- "26 USC 4093 note"
(1) IN GENERAL. -- The amendments made by this section shall
take effect on January 1, 1989.
(2) REFUNDS WITH INTEREST FOR PRE-EFFECTIVE DATE PURCHASES. --
(A) IN GENERAL. -- In the case of fuel --
(i) which is purchased from a producer or importer during the
period beginning on April 1, 1988, and ending on December 31,
1988,
(ii) which is used (before the claim under this subparagraph is
filed) by any person in a nontaxable use (as defined in section
6427(l)(2) of the 1986 Code), and
(iii) with respect to which a claim is not permitted to be
filed for any quarter under section 6427(i) of the 1986 Code,
the Secretary of the Treasury or the Secretary's delegate shall
pay (with interest) to such person the amount of tax imposed on
such fuel under section 4091 of the 1986 Code (to the extent not
attributable to amounts described in section 6427(l)( 3) of the
1986 Code) if claim therefor is filed not later than June 30,
1989. Not more than 1 claim may be filed under the preceding
sentence and such claim shall not be taken into account under
section 6427(i) of the 1986 Code. Any claim for refund filed
under this paragraph shall be considered a claim for refund under
section 6427(l) of the 1986 Code.
(B) INTEREST. -- The amount of interest payable under
subparagraph (A) shall be determined under section 6611 of the
71986 Code except that the date of the overpayment with respect
to fuel purchased during any month shall be treated as being the
1st day of the succeeding month. No interest shall be paid under
this paragraph with respect to fuel used by any agency of the
United States.
(C) REGISTRATION PROCEDURES REQUIRED TO BE SPECIFIED. -- Not
later than the 30th day after the date of the enactment of this
Act, the Secretary of the Treasury or the Secretary's delegate
shall prescribe the procedures for complying with the requirements
of section 4093(c)(3) of the 1986 Code (as added by this section).
SEC. 3002. EXPEDITED REFUND FOR CERTAIN FUELS USED IN NONTAXABLE
USES.
(a) EXPEDITED REFUND. -- Section 6427(i) of the 1986 Code (relating
to time for filing claims; period covered) is amended by adding at the
end thereof the following new paragraph:
"(4) SPECIAL RULE FOR NONTAXABLE USES OF DIESEL FUEL AND
AVIATION FUEL TAXED UNDER SECTION 4091. --
"(A) IN GENERAL. -- If at the close of any of the 1st 3
quarters of the taxable year of any person, at least $750 is
payable under subsection (l) to such person with respect to fuel
used during such quarter or any prior quarter during the taxable
year (and for which no other claim has been filed), a claim may be
filed under subsection (l) with respect to such fuel.
"(B) TIME FOR FILING CLAIM. -- No claim filed under this
paragraph shall be allowed unless filed during the 1st quarter
following the last quarter included in the claim."
(b) ALLOWANCE OF PAYMENT. -- Paragraph (2) of section 6427(k) of the
1986 Code (relating to income tax credit in lieu of payment), as amended
by title I, is amended by striking out "paragraph (2) or (3)" and
inserting in lieu thereof "paragraph (2), (3), or (4)".
(c) CONFORMING AMENDMENTS. --
(1) Paragraph (1) of section 6427(i) of the 1986 Code is
amended by striking out "paragraph (2)" and inserting in lieu
thereof "paragraphs (2), (3), and (4)".
(2) Paragraph (2)(A) of section 6427(i) of the 1986 Code is
amended by striking out "(l),".
(d) EFFECTIVE DATE. -- The amendments made by this section "26 USC
6427 note" shall apply to fuel used after December 31, 1988.
SEC. 3003. MARINE RETAILERS TREATED AS PRODUCERS.
(a) IN GENERAL. -- Subparagraph (B) of section 4092(b)(1) of the
1986 Code (relating to certain persons treated as producers) is amended
by striking out the period at the end of clause (ii) and inserting in
lieu thereof ", or" and by adding at the end thereof the following:
"(iii) a retailer selling diesel fuel exclusively to purchasers
as supplies for commercial and noncommercial vessels.
To the extent provided in regulations, a retailer shall not be
treated as not described in clause (iii) by reason of selling de
minimis amounts of diesel fuel other than as supplies for
commercial and noncommercial vessels."
(b) EFFECTIVE DATE. -- The amendments made by this section "26 USC
4092 note" shall apply to sales after December 31, 1988.
SEC. 3011. FAILURE TO SATISFY CONTINUATION COVERAGE REQUIREMENTS OF
GROUP HEALTH PLANS.
(a) IN GENERAL. -- Chapter 43 of the 1986 Code (relating to
qualified pension, etc., plans) is amended by adding at the end thereof
the following new section:
"SEC. 4980B. FAILURE TO SATISFY CONTINUATION COVERAGE REQUIREMENTS
OF GROUP HEALTH PLANS.
"(a) GENERAL RULE. -- There is hereby imposed a tax on the failure
of a group health plan to meet the requirements of subsection (f) with
respect to any qualified beneficiary.
"(b) AMOUNT OF TAX. --
"(1) IN GENERAL. -- The amount of the tax imposed by
subsection (a) on any failure with respect to a qualified
beneficiary shall be $100 for each day in the noncompliance period
with respect to such failure.
"(2) NONCOMPLIANCE PERIOD. -- For purposes of this section,
the term 'noncompliance period' means, with respect to any
failure, the period --
"(A) beginning on the date such failure first occurs, and
"(B) ending on the earlier of --
"(i) the date such failure is corrected, or
"(ii) the date which is 6 months after the last day in the
period applicable to the qualified beneficiary under subsection
(f)(2)(B) (determined without regard to clause (iii) thereof).
If a person is liable for tax under subsection (e)(1)(B) by
reason of subsection (e)(2)(B) with respect to any failure, the
noncompliance period for such person with respect to such failure
shall not begin before the 45th day after the written request
described in subsection (e)(2)(B) is provided to such person.
"(3) MINIMUM TAX FOR NONCOMPLIANCE PERIOD WHERE FAILURE
DISCOVERED AFTER NOTICE OF EXAMINATION. -- Notwithstanding
paragraphs (1) and (2) of subsection (c) --
"(A) IN GENERAL. -- In the case of 1 or more failures with
respect to a qualified beneficiary --
"(i) which are not corrected before the date a notice of
examination of income tax liability is sent to the employer, and
"(ii) which occurred or continued during the period under
examination,
the amount of tax imposed by subsection (a) by reason of such
failures with respect to such beneficiary shall not be less than
the lesser of $2,500 or the amount of tax which would be imposed
by subsection (a) without regard to such paragraphs.
"(B) HIGHER MINIMUM TAX WHERE VIOLATIONS ARE MORE THAN DE
MINIMIS. -- To the extent violations by the employer (or the plan
in the case of a multiemployer plan) for any year are more than de
minimis, subparagraph (A) shall be applied by substituting
'$15,000' for '$2,500' with respect to the employer (or such
plan).
"(c) LIMITATIONS ON AMOUNT OF TAX. --
"(1) TAX NOT TO APPLY WHERE FAILURE NOT DISCOVERED EXERCISING
REASONABLE DILIGENCE. -- No tax shall be imposed by subsection
(a) on any failure during any period for which it is established
to the satisfaction of the Secretary that none of the persons
referred to in subsection (e) knew, or exercising reasonable
diligence would have known, that such failure existed.
"(2) TAX NOT TO APPLY TO FAILURES CORRECTED WITHIN 30 DAYS. --
No tax shall be imposed by subsection (a) on any failure if --
"(A) such failure was due to reasonable cause and not to
willful neglect, and
"(B) such failure is corrected during the 30-day period
beginning on the 1st date any of the persons referred to in
subsection (e) knew, or exercising reasonable diligence would have
known, that such failure existed.
"(3) $100 LIMIT ON AMOUNT OF TAX FOR FAILURES ON ANY DAY WITH
RESPECT TO A QUALIFIED BENEFICIARY. --
"(A) IN GENERAL. -- Except as provided in subparagraph (B),
the maximum amount of tax imposed by subsection (a) on failures on
any day during the noncompliance period with respect to a
qualified beneficiary shall be $100.
"(B) SPECIAL RULE WHERE MORE THAN 1 QUALIFIED BENEFICIARY. --
If there is more than 1 qualified beneficiary with respect to the
same qualifying event, the maximum amount of tax imposed by
subsection (a) on all failures on any day during the noncompliance
period with respect to such qualified beneficaries shall be $200.
"(4) OVERALL LIMITATION FOR UNINTENTIONAL FAILURES. -- In the
case of failures which are due to reasonable cause and not to
willful neglect --
"(A) SINGLE EMPLOYER PLANS. --
"(i) IN GENERAL. -- In the case of failures with respect to
plans other than multiemployer plans, the tax imposed by
subsection (a) for failures during the taxable year of the
employer shall not exceed the amount equal to the lesser of --
"(I) 10 percent of the aggregate amount paid or incurred by the
employer (or predecessor employer) during the preceding taxable
year for group health plans, or
"(II) $500,000.
"(ii) TAXABLE YEARS IN THE CASE OF CERTAIN CONTROLLED GROUPS.
-- For purposes of this subparagraph, if not all persons who are
treated as a single employer for purposes of this section have the
same taxable year, the taxable years taken into account shall be
determined under principles similar to the principles of section
1561.
"(B) MULTIEMPLOYER PLANS. --
"(i) IN GENERAL. -- In the case of failures with respect to a
multiemployer plan, the tax imposed by subsection (a) for failures
during the taxable year of the trust forming part of such plan
shall not exceed the amount equal to the lesser of --
"(I) 10 percent of the amount paid or incurred by such trust
during such taxable year to provide medical care (as defined in
section 213(d)) directly or through insurance, reimbursement, or
otherwise, or
"(II) $500,000.
For purposes of the preceding sentence, all plans of which the
same trust forms a part shall be treated as 1 plan.
"(ii) SPECIAL RULE FOR EMPLOYERS REQUIRED TO PAY TAX. -- If an
employer is assessed a tax imposed by subsection (a) by reason of
a failure with respect to a multiemployer plan, the limit shall be
determined under subparagraph (A) (and not under this
subparagraph) as if such plan were not a multiemployer plan.
"(C) SPECIAL RULE FOR PERSONS PROVIDING BENEFITS. -- In the
case of a person described in subsection (e)(1)(B) (and not
subsection (e)(1)(A)), the aggregate amount of tax imposed by
subsection (a) for failures during a taxable year with respect to
all plans shall not exceed $2,000,000.
"(5) WAIVER BY SECRETARY. -- In the case of a failure which is
due to reasonable cause and not to willful neglect, the Secretary
may waive part or all of the tax imposed by subsection (a) to the
extent that the payment of such tax would be excessive relative to
the failure involved.
"(d) TAX NOT TO APPLY TO CERTAIN PLANS. -- This section shall not
apply to --
"(1) any failure of a group health plan to meet the
requirements of subsection (f) if all employers maintaining such
plan normally employed fewer than 20 employees on a typical
business day during the preceding calendar year,
"(2) any governmental plan (within the meaning of section 414(
d)), or
"(3) any church plan (within the meaning of section 414(e)).
"(e) LIABILITY FOR TAX. --
"(1) IN GENERAL. -- Except as otherwise provided in this
subsection, the following shall be liable for the tax imposed by
subsection (a) on a failure:
"(A)(i) In the case of a plan other than a multiemployer plan,
the employer.
"(ii) In the case of a multiemployer plan, the plan.
"(B) Each person who is responsible (other than in a capacity
as an employee) for administering or providing benefits under the
plan and whose act or failure to act caused (in whole or in part)
the failure.
"(2) SPECIAL RULES FOR PERSONS DESCRIBED IN PARAGRAPH (1)(B).
--
"(A) NO LIABILITY UNLESS WRITTEN AGREEMENT. -- Except in the
case of liability resulting from the application of subparagraph
(B) of this paragraph, a person described in subparagraph (B) (and
not in subparagraph (A)) of paragraph (1) shall be liable for the
tax imposed by subsection (a) on any failure only if such person
assumed (under a legally enforceable written agreement)
responsibility for the performance of the act to which the failure
relates.
"(B) FAILURE TO COVER QUALIFIED BENEFICIARIES WHERE CURRENT
EMPLOYEES ARE COVERED. -- A person shall be treated as described
in paragraph (1)(B) with respect to a qualified beneficiary if --
"(i) such person provides coverage under a group health plan
for any similarly situated beneficiary under the plan with respect
to whom a qualifying event has not occurred, and
"(ii) the --
"(I) employer or plan administrator, or
"(II) in the case of a qualifying event described in
subparagraph (C) or (E) of subsection (f)(3) where the person
described in clause (i) is the plan administrator, the qualified
beneficiary,
submits to such person a written request that such person make
available to such qualified beneficiary the same coverage which
such person provides to the beneficiary referred to in clause (i).
"(f) CONTINUATION COVERAGE REQUIREMENTS OF GROUP HEALTH PLANS. --
"(1) IN GENERAL. -- A group health plan meets the requirements
of this subsection only if each qualified beneficiary who would
lose coverage under the plan as a result of a qualifying event is
entitled to elect, within the election period, continuation
coverage under the plan.
"(2) CONTINUATION COVERAGE. -- For purposes of paragraph (1),
the term 'continuation coverage' means coverage under the plan
which meets the following requirements:
"(A) TYPE OF BENEFIT COVERAGE.
-- The coverage must
consist of coverage which, as of the time the coverage is being
provided, is identical to the coverage provided under the plan to
similarly situated beneficiaries under the plan with respect to
whom a qualifying event has not occurred. If coverage under the
plan is modified for any group of similarly situated
beneficiaries, the coverage shall also be modified in the same
manner for all individuals who are qualified beneficiaries under
the plan pursuant to this subsection in connection with such
group.
"(B) PERIOD OF COVERAGE. -- The coverage must extend for at
least the period beginning on the date of the qualifying event and
ending not earlier than the earliest of the following:
"(i) MAXIMUM REQUIRED PERIOD. --
"(I) GENERAL RULE FOR TERMINATIONS AND REDUCED HOURS. -- In
the case of a qualifying event described in paragraph (3)(B),
except as provided in subclause (II), the date which is 18 months
after the date of the qualifying event.
"(II) SPECIAL RULE FOR MULTIPLE QUALIFYING EVENTS. -- If a
qualifying event (other than a qualifying event described in
paragraph (3)(F)) occurs during the 18 months after the date of a
qualifying event described in paragraph (3)(B), the date which is
36 months after the date of the qualifying event described in
paragraph (3)(B).
"(III) SPECIAL RULE FOR CERTAIN BANKRUPTCY PROCEEDINGS. -- In
the case of a qualifying event described in paragraph (3)(F)
(relating to bankruptcy proceedings), the date of the death of the
covered employee or qualified beneficiary (described in subsection
(g)(1)(D)(iii)), or in the case of the surviving spouse or
dependent children of the covered employee, 36 months after the
date of the death of the covered employee.
"(IV) GENERAL RULE FOR OTHER QUALIFYING EVENTS. -- In the case
of a qualifying event not described in paragraph (3)(B) or (3)(F),
the date which is 36 months after the date of the qualifying
event.
"(ii) END OF PLAN. -- The date on which the employer ceases to
provide any group health plan to any employee.
"(iii) FAILURE TO PAY PREMIUM. -- The date on which coverage
ceases under the plan by reason of a failure to make timely
payment of any premium required under the plan with respect to the
qualified beneficiary. The payment of any premium (other than any
payment referred to in the last sentence of subparagraph (C))
shall be considered to be timely if made within 30 days after the
date due or within such longer period as applies to or under the
plan.
"(iv) GROUP HEALTH PLAN COVERAGE OR MEDICARE ELIGIBILITY. --
The date on which the qualified beneficiary first becomes, after
the date of the election --
"(I) covered under any other group health plan (as an employee
or otherwise), or
"(II) in the case of a qualified beneficiary other than a
qualified beneficiary described in subsection (g)(1)(D) entitled
to benefits under title XVIII of the Social Security Act.
"(C) PREMIUM REQUIREMENTS. -- The plan may require payment of
a premium for any period of continuation coverage, except that
such premium --
"(i) shall not exceed 102 percent of the applicable premium for
such period, and
"(ii) may, at the election of the payor, be made in monthly
installments.
If an election is made after the qualifying event, the plan
shall permit payment for continuation coverage during the period
preceding the election to be made within 45 days of the date of
the election.
"(D) NO REQUIREMENT OF INSURABILITY. -- The coverage may not
be conditioned upon, or discriminate on the basis of lack of,
evidence of insurability.
"(E) CONVERSION OPTION. -- In the case of a qualified
beneficiary whose period of continuation coverage expires under
subparagraph (B)(i), the plan must, during the 180-day period
ending on such expiration date, provide to the qualified
beneficiary the option of enrollment under a conversion health
plan otherwise generally available under the plan.
"(3) QUALIFYING EVENT. -- For purposes of this subsection, the
term 'qualifying event' means, with respect to any covered
employee, any of the following events which, but for the
continuation coverage required under this subsection, would result
in the loss of coverage of a qualified beneficiary --
"(A) The death of the covered employee.
"(B) The termination (other than by reason of such employee's
gross misconduct), or reduction of hours, of the covered
employee's employment.
"(C) The divorce or legal separation of the covered employee
from the employee's spouse.
"(D) The covered employee becoming entitled to benefits under
title XVIII of the Social Security Act.
"(E) A dependent child ceasing to be a dependent child under
the generally applicable requirements of the plan.
"(F) A proceeding in a case under title 11, United States Code,
commencing on or after July 1, 1986, with respect to the employer
from whose employment the covered employee retired at any time.
In the case of an event described in subparagraph (F), a loss
of coverage includes a substantial elimination of coverage with
respect to a qualified beneficiary described in subsection (g)(
1)(D) within one year before or after the date of commencement of
the proceeding.
"(4) APPLICABLE PREMIUM. -- For purposes of this subsection --
"(A) IN GENERAL. -- The term 'applicable premium' means, with
respect to any period of continuation coverage of qualified
beneficiaries, the cost to the plan for such period of the
coverage for similarly situated beneficiaries with respect to whom
a qualifying event has not occurred (without regard to whether
such cost is paid by the employer or employee).
"(B) SPECIAL RULE FOR SELF-INSURED PLANS. -- To the extent
that a plan is a self-insured plan --
"(i) IN GENERAL. -- Except as provided in clause (ii), the
applicable premium for any period of continuation coverage of
qualified beneficiaries shall be equal to a reasonable estimate of
the cost of providing coverage for such period for similarly
situated beneficiaries which --
"(I) is determined on an actuarial basis, and
"(II) takes into account such factors as the Secretary may
prescribe in regulations.
"(ii) DETERMINATION ON BASIS OF PAST COST. -- If a plan
administrator elects to have this clause apply, the applicable
premium for any period of continuation coverage of qualified
beneficiaries shall be equal to --
"(I) the cost to the plan for similarly situated beneficiaries
for the same period occurring during the preceding determination
period under subparagraph (C), adjusted by
"(II) the percentage increase or decrease in the implicit price
deflator of the gross national product (calculated by the
Department of Commerce and published in the Survey of Current
Business) for the 12-month period ending on the last day of the
sixth month of such preceding determination period.
"(iii) CLAUSE (ii) NOT TO APPLY WHERE SIGNIFICANT CHANGE. -- A
plan administrator may not elect to have clause (ii) apply in any
case in which there is any significant difference between the
determination period and the preceding determination period, in
coverage under, or in employees covered by, the plan. The
determination under the preceding sentence for any determination
period shall be made at the same time as the determination under
subparagraph (C).
"(C) DETERMINATION PERIOD. -- The determination of any
applicable premium shall be made for a period of 12 months and
shall be made before the beginning of such period.
"(5) ELECTION. -- For purposes of this subsection --
"(A) ELECTION PERIOD. -- The term 'election period' means the
period which --
"(i) begins not later than the date on which coverage
terminates under the plan by reason of a qualifying event,
"(ii) is of at least 60 days' duration, and
"(iii) ends not earlier than 60 days after the later of --
"(I) the date described in clause (i), or
"(II) in the case of any qualified beneficiary who receives
notice under paragraph (6)(D), the date of such notice.
"(B) EFFECT OF ELECTION ON OTHER BENEFICIARIES. -- Except as
otherwise specified in an election, any election of continuation
coverage by a qualified beneficiary described in subparagraph
(A)(i) or (B) of subsection (g)(1) shall be deemed to include an
election of continuation coverage on behalf of any other qualified
beneficiary who would lose coverage under the plan by reason of
the qualifying event. If there is a choice among types of
coverage under the plan, each qualified beneficiary is entitled to
make a separate selection among such types of coverage.
"(6) NOTICE REQUIREMENT. -- In accordance with regulations
prescribed by the Secretary --
"(A) The group health plan shall provide, at the time of
commencement of coverage under the plan, written notice to each
covered employee and spouse of the employee (if any) of the rights
provided under this subsection.
"(B) The employer of an employee under a plan must notify the
plan administrator of a qualifying event described in subparagraph
(A), (B), (D), or (F) of paragraph (3) with respect to such
employee within 30 days of the date of the qualifying event.
"(C) Each covered employee or qualified beneficiary is
responsible for notifying the plan administrator of the occurrence
of any qualifying event described in subparagraph (C) or (E) of
paragraph (3) within 60 days after the date of the qualifying
event.
"(D) The plan administrator shall notify --
"(i) in the case of a qualifying event described in
subparagraph (A), (B), (D), or (F) of paragraph (3), any qualified
beneficiary with respect to such event, and
"(ii) in the case of a qualifying event described in
subparagraph (C) or (E) of paragraph (3) where the covered
employee notifies the plan administrator under subparagraph (C),
any qualified beneficiary with respect to such event,
of such beneficiary's rights under this subsection.
For purposes of subparagraph (D), any notification shall be
made within 14 days of the date on which the plan administrator is
notified under subparagraph (B) or (C), whichever is applicable,
and any such notification to an individual who is a qualified
beneficiary as the spouse of the covered employee shall be treated
as notification to all other qualified beneficiaries residing with
such spouse at the time such notification is made.
"(7) COVERED EMPLOYEE. -- For purposes of this subsection, the
term 'covered employee' means an individual who is (or was)
provided coverage under a group health plan by virtue of the
individual's employment or previous employment with an employer.
"(g) DEFINITIONS. -- For purposes of this section --
"(1) QUALIFIED BENEFICIARY. --
"(A) IN GENERAL. -- The term 'qualified beneficiary' means,
with respect to a covered employee under a group health plan, any
other individual who, on the day before the qualifying event for
that employee, is a beneficiary under the plan --
"(i) as the spouse of the covered employee, or
"(ii) as the dependent child of the employee.
"(B) SPECIAL RULE FOR TERMINATIONS AND REDUCED EMPLOYMENT. --
In the case of a qualifying event described in subsection (f)(3)(
B), the term 'qualified beneficiary' includes the covered
employee.
(C) EXCEPTION FOR NONRESIDENT ALIENS. -- Notwithstanding
subparagraphs (A) and (B), the term 'qualified beneficiary' does
not include an individual whose status as a covered employee is
attributable to a period in which such individual was a
nonresident alien who received no earned income (within the
meaning of section 911(d)(2)) from the employer which constituted
income from sources within the United States (within the meaning
of section 911(d)(2)) from the employer which constituted income
from sources within the United States (within the meaning of
section 861(a)(3)). If an individual is not a qualified
beneficiary pursuant to the previous sentence, a spouse or
dependent child of such individual shall not be considered a
qualified beneficiary by virtue of the relationship of the
individual.
"(D) SPECIAL RULE FOR RETIREES AND WIDOWS. -- In the case of a
qualifying event described in subsection (f)(3)(F), the term
'qualified beneficiary' includes a covered employee who had
retired on or before the date of substantial elimination of
coverage and any other individual who, on the day before such
qualifying event, is a beneficiary under the plan --
"(i) as the spouse of the covered employee,
"(ii) as the dependent child of the covered employee, or
"(iii) as the surviving spouse of the covered employee.
"(2) GROUP HEALTH PLAN. -- The term 'group health plan' has
the meaning given such term by section 162(i)".
"(3) PLAN ADMINISTRATOR. -- The term 'plan administrator' has
the meaning given the term 'administrator' by section 3(16)(A) of
the Employee Retirement Income Security Act of 1974.
"(4) CORRECTION. -- A failure of a group health plan to meet
the requirements of subsection (f) with respect to any qualified
beneficiary shall be treated as corrected if --
"(A) such failure is retroactively undone to the extent
possible, and
"(B) the qualified beneficiary is placed in a financial
position which is as good as such beneficiary would have been in
had such failure not occurred.
For purposes of applying subparagraph (B), the qualified
beneficiary shall be treated as if he had elected the most
favorable coverage in light of the expenses he incurred since the
failure first occurred.".
(b) TECHNICAL AMENDMENTS. --
(1) Section 106 of the 1986 Code (relating to contributions by
employer to accident and health plans is amended to read as
follows:
"SEC. 106. CONTRIBUTIONS BY EMPLOYER TO ACCIDENT AND HEALTH PLANS.
"Gross income of an employee does not include employer-provided
coverage under an accident or health plan."
(2) Subsection (i) of section 162 of the 1986 Code (relating to
group health plans) is amended by striking out paragraph (2) and
by redesignating paragraph (3) as paragraph (2).
(3) Section 162 of the 1986 Code is amended by striking out
subsection (k) and by redesignating --
(A) the subsection relating to stock redemption expenses as
subsection (k),
(B) the subsection relating to special rules for health
insurance costs of self-employed individuals as subsection (l),
and
(C) the subsection relating to cross references as subsection
(m).
(4) Subparagraph (C) of section 414(n)(3) of the 1986 Code, as
amended by section 111B(a) of this Act, is amended by striking out
"162(i)(2), 162(k)(2)," and by striking out "and 505" and
inserting in lieu thereof "505, and 4980B".
(5) Paragraph (2) of section 414(t) of the 1986 Code, as
amended by section 111B(a) of this Act, is amended by striking out
"162(i)(2), 162(k)(2)," and by striking out "or 505" and inserting
in lieu thereof "505, or 4980B".
(6) Paragraph (1) of section 607 of the Employee Retirement
Income Security Act "29 USC 1167" of 1974 is amended by striking
out "section 162(i)(3) of the Internal Revenue Code of 1954" and
inserting in lieu thereof "section 162(i)(2) of the Internal
Revenue Code of 1986.
(7) Paragraph (1) of section 2208 of the Public Health Service
Act "42 USC 300bb-8" is amended by striking out "section 162(i)(
3) of the Internal Revenue Code of 1954" and inserting in lieu
thereof "section 162(i)(2) of the Internal Revenue Code of 1986".
(c) CLERICAL AMENDMENT. -- The table of sections for chapter
43 of the 1986 Code is amended by adding at the end thereof the
following new item:
"Sec. 4980B. Failure to satisfy continuation coverage
requirements of group health plans."
(d) EFFECTIVE DATE. -- The amendments made by this section "26 USC
162 note" shall apply to taxable years beginning after December 31,
1988, but shall not apply to any plan for any plan year to which section
162(k) of the Internal Revenue Code of 1986 (as in effect on the day
before the date of the enactment of this Act) did not apply by reason of
section 10001(e)(2) of the Consolidated Omnibus Budget Reconciliation
Act of 1985.
SEC. 3021. MODIFICATIONS TO DISCRIMINATION RULES APPLICABLE TO
CERTAIN EMPLOYEE BENEFIT PLANS.
(a) MODIFICATIONS TO SECTION 89. --
(1) DETERMINATIONS BASED ON TESTING YEAR. --
(A) Section 89 of the 1986 Code (as amended by title I) is
amended by striking out "plan year" each place it appears and
inserting in lieu thereof "testing year".
(B) Subsection (j) of section 89 of the 1986 Code is amended by
adding at the end thereof the following new paragraph:
"(13) TESTING YEAR. -- The term 'testing year' means --
"(A) any 12-month period beginning with the calendar month
designated in the plan for purposes of this section, or
"(B) if there is no designation, the calendar year.
No period may be designated under subparagraph (A) unless the same
period is designated with respect to all other plans of the employer of
the same type. Any designation under subparagraph (A) may be changed
only with the consent of the Secretary."
(C) Subsection (c) of section 4976 of the 1986 Code (as added
by title I) is amended --
(1) by striking out "any plan year" in paragraph (1) and
inserting in lieu thereof "any testing year (as defined in section
89(j)(13))"; and
(ii) by striking out "such plan year" each place it appears in
paragraph (2)(A) and inserting in lieu thereof "such testing
year".
(2) TIME FOR TESTING. --
(A) IN GENERAL. -- Subsection (g) of section 89 is amended
by adding at the end thereof the following new paragraph:
"(6) TIME FOR TESTING. --
"(A) IN GENERAL. -- Except as otherwise provided in this
paragraph, the determination of whether any plan is a
discriminatory employee benefit plan for any testing year shall be
made on the basis of the facts as of the testing day.
"(B) ADJUSTMENT WHERE BENEFIT OF HIGHLY COMPENSATED EMPLOYEE
CHANGES. -- If the employer-provided benefit (actually provided
or made available) of a highly compensated employee changes during
the testing year by reason of any change in the terms of the plan
or the making of an election by such employee, the amount taken
into account as such employee's employer-provided benefit shall be
adjusted to take into account such change and the portion of the
testing year during which the changed benefit is provided (or made
available).
"(C) TREATMENT OF NON-HIGHLY COMPENSATED EMPLOYEES WHERE CHANGE
IN PLAN. -- Rules similar to the rules of subparagraph (B) shall
apply in the case of employees who are not highly compensated
employees and who are affected by any change in the terms of the
plan, except that the determination of such employees'
employer-provided benefits (actually provided or made available)
shall be determined as of the date after such change selected by
the employer and permitted under regulations prescribed by the
Secretary.
10"(D) TESTING DAY. -- For purposes of this paragraph, the
term 'testing day' means --
"(i) the day designated in the plan as the testing day for
purposes of this paragraph, or
"(ii) if there is no day so designated, the last day of the
testing year.
"(E) LIMITATIONS. --
"(i) DESIGNATION MUST BE CONSISTENT FOR ALL PLANS OF SAME TYPE.
-- No day may be designated under subparagraph (D)(i) with
respect to any plan unless the same day is so designated with
respect to all other plans of the employer of the same type.
"(ii) DESIGNATION BINDING. -- Any designation under
subparagraph (D)(i) shall apply to the testing year for which made
and all subsequent years unless revoked with the consent of the
Secretary.
"(F) SPECIAL RULE FOR MULTIPLE EMPLOYER PLAN. -- In the case
of a multiemployer plan or any other plan maintained by more than
1 employer, each employer may, subject to such rules as the
Secretary may prescribe, elect its own testing year under
paragraph (13) of subsection (j) and its own testing date under
this paragraph."
(B) DESIGNATIONS FOR 1989 NOT BINDING. -- "26 USC 89 note"
Any designation of a testing day for a year beginning in 1989
shall be disregarded in determining the day which may be
designated as the testing day for years beginning after 1989.
(3) SAMPLING. -- Subsection (g) of section 89 of the 1986 Code
is amended by adding at the end thereof the following new
paragraph:
"(7) SAMPLING. -- For purposes of determining whether a plan
is a discriminatory employee benefit plan (but not for purposes of
identifying the highly compensated employees who have a
discriminatory excess or the amount of any such excess),
determinations under this section may be made on the basis of a
statistically valid random sample. The preceding sentence shall
apply only if --
"(A) the sampling is conducted by an independent person in a
manner not inconsistent with regulations prescribed by the
Secretary, and
"(B) the statistical method and sample size result in a 95
percent probability that the results will have a margin of error
not greater than 3 percent."
(4) SPECIAL VALUATION RULE FOR MULTIEMPLOYER PLANS. --
Paragraph (3) of section 89(g) of the 1986 Code is amended by
adding at the end thereof the following new subparagraph:
"(E) SPECIAL RULE FOR MULTIEMPLOYER PLANS. --
"(i) IN GENERAL. -- Except as provided in regulations and
clause (ii), an employer may treat the contribution such employer
makes to a multiemployer plan on behalf of an employee as the
employer-provided benefit of such employee under such plan.
"(ii) ADJUSTMENT. -- If --
"(I) the allocation of plan benefits between highly compensated
employees and other employees under a multiemployer plan (or
within either of such groups) varies materially from the
allocation of employer contributions to such plan, or
"(II) the employer contributions relate to benefits of
different types,
the employer-provided benefit determined under clause (i) shall
be appropriately adjusted to take into account such material
variation or such employer contribution.
"(iii) EXCEPTION FOR PROFESSIONALS. -- This subparagraph shall
not apply to any employer maintaining a multiemployer plan if such
employer makes contributions to such plan on behalf of any
individual performing services in the field of health, law,
engineering, architecture, accounting, actuarial science,
financial services, or consulting or in such other field as the
Secretary may prescribe."
(5) EXCLUDED EMPLOYEE REQUIREMENTS. --
"(A) MULTIEMPLOYER PLANS. -- Subsection (h) of section 89 of
the 1986 Code is amended by adding at the end thereof the
following new paragraph:
"(6) SPECIAL RULE FOR MULTIEMPLOYER PLAN. -- Except as
provided in regulations, any multiemployer plan shall not be taken
into account in applying subparagraph (A), (B), (C), or (D) of
paragraph (1) with respect to other plans of the employer. For
purposes of this paragraph, a rule similar to the rule of
subsection (g)(3)(E)(iii) shall apply."
(B) STUDENTS. -- Paragraph (1) of section 89(h) of the 1986
Code is amended by adding after subparagraph (F) the following new
subparagraph:
"(G) Employees who are students if --
"(i) such students are performing services described in section
3121(b)(10), and
"(ii) core health coverage is made available to such students
by such employer."
(6) COMPARABILITY RULES. -- Paragraph (1) of section 89(g) of
the 1986 Code, as amended by section 111B(a)(3) is amended by
adding at the end thereof the following new subparagraphs:
"(D) SPECIAL RULES FOR APPLYING SUBSECTION (f). --
"(i) IN GENERAL. -- For purposes of applying subsection (f) --
"(I) except as provided in clause (ii), subparagraph (B) shall
be applied by substituting '90 percent' for '95 percent', and
"(II) a group of plans of the same type shall be treated as
comparable plans if the requirements of subparagraph (E) are met.
"(ii) ELECTION TO USE LOWER PERCENTAGE IN DETERMINING
COMPARABILITY. -- If an election by the employer under this
clause applies for the testing year --
"(I) subclause (I) of clause (i) shall not apply,
"(II) for purposes of applying subsection (f), subparagraph (B)
of this paragraph shall be applied by substituting '80 percent'
for '95 percent', and
"(III) subsection (f) shall be applied with respect to all
health plans maintained by the employer by substituting '90
percent' for '80 percent'.
"(E) PLANS TREATED AS COMPARABLE IF EMPLOYEE COST DIFFERENCE IS
$100 OR LESS. --
"(i) IN GENERAL. -- A group of plans of the same type shall be
treated as comparable with respect to a group of employees if --
"(I) such plans are available to all employees in the group on
the same terms, and
"(II) the difference in annual cost to employees between the
plans with the lowest and highest annual employee cost is not
greater than $100.
"(ii) COORDINATION WITH SUBPARAGRAPH (B). -- A plan not in the
group of plans described in clause (i) shall be treated as part of
such group if, under subparagraph (B) (without regard to clause
(iii) of this subparagraph), such plan is comparable to the plan
in such group with the largest employer-provided benefit.
"(iii) OTHER PLANS PROVIDING COMPARABLE BENEFITS. -- A plan
not in the group of plans described in clause (i) shall be treated
as part of such group with respect to an employee if --
"(I) in the case of an employee who is not a highly compensated
employee, such employee is eligible to participate in the plan in
such group with the largest employer-provided benefit (without
regard to clause (ii)),
"(II) in the case of an employee who is not a highly
compensated employee, the annual cost to such employee under such
plan is not lower than the lowest cost permitted within such
group, and
"(III) the employer-provided benefit under such plan is less
than the employer-provided benefit under the plan in such group
with the largest such benefit (without regard to clause (ii)).
"(iv) SEPARATE APPLICATION OF REQUIREMENTS. -- If an employer
elects the application of paragraph (2)(A)(ii), the amount under
clause (i) shall be allocated among plans covering spouses and
dependents and plans covering employees in such manner as the
employer specifies.
"(v) COST-OF-LIVING ADJUSTMENT. -- In the case of testing
years beginning after 1989, the $100 amount under clause (i) shall
be increased by the percentage (if any) by which --
"(I) the CPI for the calendar year preceding the year in which
the testing year begins, exceeds
"(II) the CPI for 1988.
For purposes of this clause, the CPI for any calendar year
shall be determined under section 1(f).".
"(7) OTHER COVERAGE. --
(A) Subparagraph (A) of section 89(g)(2) of the 1986 Code is
amended --
(i) by striking out "subsection (c)" each place it appears and
inserting in lieu thereof "subsection (e) or (f)", and
(ii) by adding at the end thereof the following new sentence:
"The provisions of the preceding sentence shall not apply for
purposes of applying subsection (f) unless the requirements of
subsection (f) would be met if such subsection were applied
without regard to the preceding sentence and on the basis of
eligibility to participate rather than coverage."
(B) Subparagraph (D) of section 89(g)(2) of the 1986 Code is
amended by adding at the end thereof the following sentence: "The
Secretary shall make such adjustments as are necessary in applying
the rules of the preceding sentence to subsection (f)."
(8) SWORN STATEMENTS. -- Paragraph (2) of section 89(g) of the
1986 Code is amended --
(A) by adding at the end thereof the following new
subparagraph:
"(E) SPECIAL RULE. -- No employee who is not a highly
compensated employee may be disregarded under subparagraph (A)(i)
with respect to any health plan of the employer unless under such
plan such employee is entitled, when the coverage under the other
health plan referred to in subparagraph (A)(i) ceases, to elect
coverage under the plan of the employer (whether or not an
election is otherwise available). Such election is to be on the
same terms as if such employee was making such election during a
subsequent open season. Rules similar to the rules of the
preceding sentences of this subparagraph shall apply in the case
of an employee treated as not having a spouse or dependents or
having a spouse or dependents covered by a health plan of another
employer providing core benefits."; and
(B) by striking out "and" at the end of subparagraph (B)(i), by
striking out the period at the end of subparagraph (B)(ii) and
inserting in lieu thereof ", and", and by adding at the end
thereof the following new clause:
"(iii) the health coverage (if any) received by the employee
from the employer."
(9) DEFINITION OF PLAN. -- Paragraph (11) of section 89(j) of
the 1986 Code is amended by striking out "Each option" and
inserting in lieu thereof "Except as provided in subsection (g)(
1), each option".
(10) MODIFICATION OF PENALTY. -- Subparagraph (B) of section
6652(k)(2) of the 1986 Code is amended to read as follows:
"(B) the amount which bears the same ratio to the
employer-provided benefit (within the meaning of section 89
without regard to subsection (g)(3)(C)(i) thereof) with respect to
the employee to whom such failure relates as the amount of such
benefit required to be but not shown on timely statements under
sections 6051(a) and 6051(d) bears to the amount required to be
shown."
(11) CAFETERIA PLANS. -- Subparagraph (D) of section 89(g)(3)
of the 1986 Code is amended to read as follows:
"(D) SALARY REDUCTIONS. --
"(i) IN GENERAL. -- Except for purposes of subsections (d)(
1)(A)(ii) and (j)(5), any salary reduction shall be treated as an
employer-provided benefit.
"(ii) SPECIAL RULE FOR SUBSECTION (d)(1)(a)(ii). --
Notwithstanding clause (i), any salary reduction under a cafeteria
plan (within the meaning of section 125) shall treated as an
employer-provided benefit for purposes of subsection (d)(
1)(A)(ii) if --
"(I) the percentage of employees who are not highly compensated
employees eligible to participate in the plan is not greater than
the percentage of highly compensated employees so eligible,
"(II) all employees eligible to participate in the plan are
eligible under the same terms and conditions, and
"(III) no highly compensated employee eligible under the plan
is eligible to participate in any other plan maintained by the
employer for any benefit of the same type unless the benefit is
available on the same terms and conditions to every employee who
is not a highly compensated employee eligible to participate in
the plan.
"(iii) REGULATIONS. -- Notwithstanding clause (i) or (ii), the
Secretary may by regulations provide that any salary reduction
shall or shall not be treated as an employer-provided benefit to
prevent avoidance of the purposes of this section."
(12) PART-TIME EMPLOYEES. -- Paragraph (5) of section 89(j) of
the 1986 Code is amended by striking out the last sentence
thereof.
(13) ACQUISITIONS AND DISPOSITIONS. --
10 (A) Clause (ii) of section 89(j)(8)(A) of the 1986 Code is
amended to read as follows:
"(ii) either --
"(I) the coverage under such plan is not significantly changed
during the transition period (other than by reason of the change
in members in such group), or
"(II) such plan meets such other requirements as the Secretary
may prescribe by regulation.".
(B) Subclause (II) of section 410(b)(6)(C)(i) of the 1986 Code
is amended by inserting "or such plan meets such other
requirements as the Secretary may prescribe by regulation" before
the end period.
(14) DEPENDENT CARE ASSISTANCE. -- Subparagraph (B) of section
129(d)(7) of the 1986 Code (as redesignated and amended by section
111B of this Act) is amended --
(A) by striking out "(within the meaning of section 414(q)(
7))", and
(B) by adding at the end thereof the following new sentence:
"For purposes of this subparagraph, the term 'compensation' has
the meaning given such term by section 414(q)(7), except that,
under rules prescribed by the Secretary, an employer may elect to
determine compensation on any other basis which does not
discriminate in favor of highly compensated employees.".
(15) REPORTING REQUIREMENTS. --
(A) Section 6039D(d) of the 1986 Code is amended --
(i) by adding at the end thereof the following new paragraph:
"(3) SPECIAL RULE FOR MULTIEMPLOYER PLANS. -- In the case of a
multiemployer plan, the plan shall be required to provide any
information required by this section which the Secretary
determines, on the basis of the agreement between the plan and
employer, is held by the plan (and not the employer)", and
(ii) by inserting "AND SPECIAL RULES" after "DEFINITIONS" in
the heading thereof.
(B) The amendments made by this paragraph "26 USC 6039D note"
shall apply to years beginning after 1984.
(b) MODIFICATION TO DEFINITIONS OF HIGHLY COMPENSATED AND
COMPENSATION AND TO SEPARATE LINE OF BUSINESS RULES. --
(1) DEFINITION OF HIGHLY COMPENSATED. -- Subsection (q) of
section 414 of the 1986 Code is amended by adding at the end
thereof the following new paragraph:
"(12) SIMPLIFIED METHOD FOR DETERMINING HIGHLY COMPENSATED
EMPLOYEES. --
"(A) IN GENERAL. -- If an election by the employer under this
paragraph applies to any year, in determining whether an employer
is a highly compensated employee for such year --
"(i) subparagraph (B) of paragraph (1) shall be applied by
substituting '$50,000' for '$75,000', and
"(ii) subparagraph (C) of paragraph (1) shall not apply.
"(B) REQUIREMENT FOR ELECTION. -- An election under this
paragraph shall not apply to any year unless --
"(i) at all times during such year, the employer maintained
significant business activities (and employed employees) in at
least 2 significantly separate geographic areas, and
"(ii) the employer satisfies such other conditions as the
Secretary may prescribe."
(2) LINE OF BUSINESS REQUIREMENTS. --
(A) SAFE HARBOR RULE. -- Paragraph (3) of section 414(r) of
the 1986 Code is amended to read as follows:
"(3) SAFE HARBOR RULE. --
"(A) IN GENERAL. -- The requirements of subparagraph (C) of
paragraph (2) shall not apply to any line of business if the
highly compensated employee percentage with respect to such line
of business is --
"(i) not less than one-half, and
"(ii) not more than twice,
the percentage which highly compensated employees are of all
employees of the employer. An employer shall be treated as
meeting the requirements of clause (i) if at least 10 percent of
all highly compensated employees of the employer perform services
solely for such line of business.
"(B) DETERMINATION MAY BE BASED ON PRECEDING YEAR. -- The
requirements of subparagraph (A) shall be treated as met with
respect to any line of business if such requirements were met with
respect to such line of business for the preceding year and if --
"(i) no more than a de minimis number of employees were shifted
to or from the line of business after the close of the preceding
year, or
"(ii) the employees shifted to or from the line of business
after the close of the preceding year contained a substantially
proportional number of highly compensated employees.".
(B) SEPARATE OPERATING UNITS. -- Section 89(g)(5) of the 1986
Code is amended by adding at the end thereof the following new
sentence: "In applying section 414(r)(7) for purposes of this
section, an operating unit shall be treated as in a separate
geographic area from another unit if such units are at least 35
miles apart.".
(3) COMPENSATION FOR GROUP-LIFE INSURANCE PLANS. --
(A) Paragraph (4) of section 89(j) of the 1986 Code is amended
by adding at the end thereof the following new subparagraph:
"(D) COMPENSATION. -- For purposes of applying this paragraph
--
"(i) IN GENERAL. -- Compensation shall be determined on any
basis determined by the employer which does not discriminate in
favor of highly compensated employees.
"(ii) SPECIAL RULES FOR 1989 AND 1990. -- In the case of
testing years beginning in 1989 or 1990, the employer may elect to
treat base compensation as compensation."
(B) Subparagraph (A) of section 89(j)(4) of the 1986 Code is
amended by striking out "(within the meaning of section 414(s))".
(c) TRANSITIONAL PROVISIONS FOR PURPOSES OF SECTION 89. -- 26 USC 89
note"
(1) TEMPORARY VALUATION RULES. -- In the case of testing years
beginning before the later of January 1, 1991, or the date 1 year
after the Secretary of the Treasury or his delegate first issues
such valuation rules as are necessary to apply the provisions of
section 89 of the 1986 Code to health plans (or if later the
effective date of such rules) --
(A) Section 89(g)(3)(B) of the 1986 Code shall not apply.
(B)(i) Except as provided in clause (ii), the value of coverage
under a health plan for purposes of section 89 of the 1986 Code
shall be determined in substantially the same manner as costs
under a health plan are determined under section 4980B(f)( 4) of
the 1986 Code.
(ii) For purposes of determining whether an employer meets the
requirements of subsections (d), (e), and (f) of section 89 of the
1986 Code, value under clause (i) may be determined under any
other reasonable method selected by the employer.
(2) FORMER EMPLOYEES. -- The amendments made by section 1151
of the Reform Act shall not apply to former employees who
separated from service with the employer before January 1, 1989
(and were not reemployed on or after such date), and such former
employees shall not be taken into account in determining whether
the requirements of section 89 of the 1986 Code are met with
respect to other former employees. The preceding sentence shall
not apply to the extent that --
(A) the value of employer-provided benefits provided to any
such former employee exceeds the value of such benefits which were
provided under the terms of the plan as in effect on December 31,
1988, or
(B) the employer-provided benefits provided to such former
employees are modified so as to discriminate in favor of such
former employees who are highly compensated employees.
Any excess value under the preceding sentence shall be
determined without regard to any increase required by Federal law,
regulation or rule or any increase which is the same for employees
separating on or before December 31, 1988, and employees
separating after such date and which does not discriminate in
favor of highly compensated employees who separated from service
after December 31, 1988.
(3) WRITTEN PLAN REQUIREMENT. -- The requirements of section
89(k)(1)(A) of the 1986 Code shall be treated as met with respect
to any testing year beginning in 1989, if --
(A) the plan is in writing before the close of such year,
(B) the employees had reasonable notice of the plan's essential
features on or before the beginning of such year, and
(C) the provisions of the written plan apply for the entire
year.
(4) RULES TO BE PRESCRIBED BEFORE NOVWEMBER 15, 1988. -- Not
later than November 15, 1988, the Secretary of the Treasury or his
delegate shall issue such rules as may be necessary to carry out
the provisions of section 89 of the 1986 Code.
(d) EFFECTIVE DATES. -- "26 USC 89 note"
(1) SUBSECTION (a). -- The amendments made by subsection (a)
shall take effect as if included in the amendments made by section
1151 of the Tax Reform Act of 1986; except that the amendment
made by subsection (a)(8) shall apply to testing years beginning
after December 31, 1989.
(2) SUBSECTION (b). The amendments made by subsection (b)
shall apply to years beginning after December 31, 1986.
SEC. 3031. ESTATE TAX VALUATION FREEZES.
(a) DEEMED GIFT. --
(1) IN GENERAL. -- Paragraph (4) of section 2036(c) of the
1986 Code is amended to read as follows:
"(4) TREATMENT OF CERTAIN TRANSFERS. --
"(A) IN GENERAL. -- For purposes of this subtitle, if, before
the death of the original transferor --
"(i) the original transferor transfers all (or any portion of)
the retained interest referred to in paragraph (1), or
"(ii) the original transferee transfers all (or any portion of)
the transferred property referred to in paragraph (1) to a person
who is not a member of the original transferor's family,
the original transferor shall be treated as having made a
transfer by gift of property to the original transferee equal to
the paragraph (1) inclusion (or proportionate amount thereof).
Proper adjustments shall be made in the amount treated as a gift
by reason of the preceding sentence to take into account prior
transfers to which this subparagraph applied and take into account
any right of recovery (whether or not exercised) under section
2207B.
"(B) COORDINATION WITH PARAGRAPH (1). -- In any case to which
subparagraph (A) applies, nothing in paragraph (1) or section
2035(d)(2) shall require the inclusion of the transferred property
(or proportionate amount thereof).
"(C) SPECIAL RULE WHERE PROPERTY RETRANSFERRED. -- In the case
of a transfer described in subparagraph (A)(ii) from the original
transferee to the original transferor, the paragraph (1) inclusion
(or proportion thereof) shall be reduced by the excess (if any) of
--
"(i) the fair market value of the property so transferred, over
"(ii) the amount of the consideration paid by the original
transferor in exchange for such property.
"(D) DEFINITIONS. -- For purposes of this paragraph --
"(i) ORIGINAL TRANSFEROR. -- The term 'original transferor'
means the person making the transfer referred to in paragraph (1).
"(ii) ORIGINAL TRANSFEREE. -- The term 'original transferee'
means the person to whom the transfer referred to in paragraph (1)
is made. Such term includes any member of the original
transferor's family to whom the property is subsequently
transferred.
"(iii) PARAGRAPH (1) INCLUSION. -- The term 'paragraph (1)
inclusion' means the amount which would have been included in the
gross estate of the original transferor under subsection (a) by
reason of paragraph (1) (determined without regard to sections
2032 and 2032A) if the original transferor died immediately before
the transfer referred to in subparagraph (A). The amount
determined under the preceding sentence shall be reduced by the
amount (if any) of the taxable gift resulting from the transfer
referred to in paragraph (1)(B).
"(iv) TRANSFERS TO INCLUDE TERMINATIONS, ETC. --
Terminations, lapses, and other changes in any interest in
property of the original transferor or original transferee shall
be treated as transfers.
"(E) CONTINUING INTEREST IN TRANSFERRED PROPERTY MAY NOT BE
RETAINED. -- A transfer (to which subparagraph (A) would
otherwise apply) shall not be taken into account under
subparagraph (A) if the original transferor or the original
transferee (as the case may be) retains a direct or indirect
continuing interest in the property transferred in such transfer."
(2) CROSS REFERENCE. -- Subsection (d) of section 2501 of the
1986 Code is amended by adding at the end thereof the following:
"(3) For treatment of certain transfers related to estate tax
valuation freezes as gifts to which this chapter applies, see
section 2036(c)(4)."
(b) TREATMENT OF CERTAIN GRANTOR RETAINED INCOME TRUSTS. --
Subsection (c) of section 2036 of the 1986 Code is amended by adding at
the end thereof the following new paragraph:
"(6) TREATMENT OF CERTAIN GRANTOR RETAINED INTEREST TRUSTS. --
"(A) IN GENERAL. -- For purposes of this subsection, any
retention of a qualified trust income interest shall be
disregarded and the property with respect to which such interest
exists shall be treated as held by the transferor while such
income interest continues.
"(B) QUALIFIED TRUST INCOME INTEREST. -- For purposes of
subparagraph (A), the term 'qualified trust income interest' means
any right to receive amounts determined solely by reference to the
income from property held in trust if --
"(i) such right is for a period not exceeding 10 years,
"(ii) the person holding such right transferred the property to
the trust, and
"(iii) such person is not a trustee of such trust."
(b) EXCEPTIONS. -- Subsection (c) of section 2036 of the 1986 Code
is amended by adding at the end thereof the following new paragraphs:
"(7) EXCEPTIONS. --
"(A) IN GENERAL. -- Paragraph (1) shall not apply to a
transaction solely by reason of 1 or more of the following:
"(i) The receipt (or retention) of qualified debt.
"(ii) Except as provided in regulations, the existence of an
agreement for the sale or lease of goods or other property to be
used in the enterprise or the providing of services and --
"(I) the agreement is an arm's length agreement for fair market
value, and
"(II) the agreement does not otherwise involve any change in
interests in the enterprise.
"(iii) An option or other agreement to buy or sell property at
the fair market value of such property as of the time the option
is (or the rights under the agreement are) exercised.
"(B) LIMITATIONS. --
"(i) SERVICES PERFORMED AFTER TRANSFER. -- In the case of
compensation for services performed after the transfer referred to
in paragraph (1)(B), clause (ii) of subparagraph (A) shall not
apply if such services were performed under an agreement providing
for the performance of services over a period greater than 3 years
after the date of the transfer. For purposes of the preceding
sentence, the term of any agreement includes any period for which
the agreement may be extended at the option of the service
provider.
"(ii) AMOUNTS MUST NOT BE CONTINGENT ON PROFITS, ETC. -- Clause
(ii) of subparagraph (A) shall not apply to any amount determined
(in whole or in part) by reference to gross receipts, income,
profits, or similar items of the enterprise.
"(C) QUALIFIED DEBT. -- For purposes of this paragraph, except
as provided in subparagraph (D), the term 'qualified debt' means
any indebtedness if --
"(i) such indebtedness --
"(I) unconditionally requires the payment of a sum certain in
money in 1 or more fixed payments on specified dates, and
"(II) has a fixed maturity date not more than 15 years from the
date of issue (or, in the case of indebtedness secured by real
property, not more than 30 years from the date of issue).
"(ii) the only other amount payable under such indebtedness is
interest determined at --
"(I) a fixed rate, or
"(II) a rate which bears a fixed relationship to a specified
market interest rate,
(iii) the interest payment dates are fixed,
"(iv) such indebtedness is not by its terms subordinated to the
claims of general creditors,
"(v) except in a case where such indebtedness is in default as
to interest or principal, such indebtedness does not grant voting
rights to the person to whom the debt is owed or place any
limitation on the exercise of voting rights by others, and
"(vi) such indebtedness --
"(I) is not (directly or indirectly) convertible into an
interest in the enterprise which would not be qualified debt, and
"(II) does not otherwise grant any right to acquire such an
interest.
The requirement of clause (i)(I) that the principal be payable
on 1 or more specified dates and the requirement of clause (i)(
II) shall not apply to indebtedness payable on demand if such
indebtedness is issued in return for cash to be used to meet
normal business needs of the enterprise.
(D) SPECIAL RULE FOR STARTUP DEBT. --
"(i) IN GENERAL. -- For purposes of this paragraph, the term
'qualified debt' includes any qualified startup debt.
"(ii) QUALIFIED STARTUP DEBT. -- For purposes of clause (i),
the term 'qualified startup debt' means any indebtedness if --
"(I) such indebtedness unconditionally requires the payment of
a sum certain in money,
"(II) such indebtedness was received in exchange for cash to be
used in any enterprise involving the active conduct of a trade or
business,
"(III) the person to whom the indebtedness is owed has not at
any time (whether before, on, or after the exchange referred to in
subclause (II)) transferred any property (including goodwill)
which was not cash to the enterprise or transferred customers or
other business opportunities to the enterprise.
"(IV) the person to whom the indebtedness is owed has not at
any time (whether before, on, or after the exchange referred to in
subclause (II)) held any interest in the enterprise (including an
interest as an officer, director, or employee) which was not
qualified startup debt,
"(V) any person who (but for subparagraph (A)(i)) would have
been an original transferee (as defined in paragraph (4)(C))
participates in the active management (as defined in section
2032A(e)(12)) of the enterprise, and
"(VI) such indebtedness meets the requirements of clauses (v)
and (vi) of subparagraph (C).
"(8) REGULATIONS. -- The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out the
purposes of this subsection, including such regulations as may be
necessary or appropriate to prevent avoidance of the purposes of
this subsection through distributions or otherwise."
(d) TREATMENT OF SPOUSE. -- Subparagraph (C) of section 2036(c)(3)
of the 1986 Code is amended by striking out "An individual" and
inserting in lieu thereof "Except as provided in regulations, an
individual".
(e) CLARIFICATION OF RETENTION TEST. -- Subparagraph (B) of section
2036(c)(1) of the 1986 Code is amended by striking out "while" and all
that follows down through the comma at the end of such subparagraph and
inserting in lieu thereof "while retaining an interest in the income of,
or rights in, the enterprise,".
(f) RIGHT OF RECOVERY. --
(1) IN GENERAL. -- Subchapter C of chapter 11 of the 1986 Code
is amended by inserting after section 2207A the following new
section:
"SEC. 2207B. RIGHT OF RECOVERY WHERE DECEDENT RETAINED INTEREST.
"(a) ESTATE TAX. --
"(1) IN GENERAL. -- If any part of the gross estate on which
tax has been paid consists of the value of property included in
the gross estate by reason of section 2036 (relating to transfers
with retained life estate), the decedent's estate shall be
entitled to recover from the person receiving the property the
amount which bears the same ratio to the total tax under this
chapter which has been paid as --
"(A) the value of such property, bears to
"(B) the taxable estate.
"(2) DECEDENT MAY OTHERWISE DIRECT BY WILL. -- Paragraph (1)
shall not apply if the decedent otherwise directs in a provision
of his will (or a revocable trust) specifically referring to this
section.
"(b) GIFT TAX. -- If for any calendar year tax is paid under chapter
12 with respect to any person by reason of property treated as
transferred by such person under section 2036(c)(4), such person shall
be entitled to recover from the original transferee (as defined in
section 2036(c)(4)(C)(ii)) the amount which bears the same ratio to the
total tax for such year under chapter 12 as --
"(1) the value of such property for purposes of chapter 12,
bears to
"(2) the total amount of the taxable gifts for such year.
"(c) MORE THAN ONE RECIPIENT. -- For purposes of this section, if
there is more than 1 person receiving the property, the right of
recovery shall be against each such person.
"(d) PENALTIES AND INTEREST. -- In the case of penalties and
interest attributable to the additional taxes described in subsections
(a) and (b), rules similar to the rules of subsections (a), (b), and (c)
shall apply.
"(e) NO RIGHT OF RECOVERY AGAINST CHARITABLE REMAINDER TRUSTS. -- No
person shall be entitled to recover any amount by reason of this section
from a trust to which section 664 applies (determined without regard to
this section)."
(2) CONFORMING AMENDMENT. -- The table of sections for
subchapter C of chapter 11 of the 1986 Code is amended by
inserting after the item relating to section 2207A the following
new item:
"Sec. 2207B. Right of recovery where decedent retained
interest."
(g) TREATMENT OF CONSIDERATION. --
(1) Paragraph (2) of section 2036(c) of the 1986 Code is
amended to read as follows:
"(2) SPECIAL RULES FOR CONSIDERATION FURNISHED BY FAMILY
MEMBERS. --
"(A) IN GENERAL. -- The exception contained in subsection (a)
for a bona fide sale shall not apply to a transfer described in
paragraph (1) if such transfer is to a member of the transferor's
family.
"(B) TREATMENT OF CONSIDERATION. --
(i) IN GENERAL. -- In the case of a transfer described in
paragraph (1), if --
"(I) a member of the transferor's family provides consideration
in money or money's worth for such member's interest in the
enterprise, and
"(II) it is established to the satisfaction of the Secretary
that such consideration originally belonged to such member and was
never received or acquired (directly or indirectly) by such member
from the transferor for less than full and adequate consideration
in money or money's worth,
paragraph (1) shall not apply to the applicable fraction of the
portion of the enterprise which would (but for this subparagraph)
have been included in the gross estate of the transferor by reason
of this subsection (determined without regard to any reduction
under paragraph (5) for the value of the retained interest).
"(ii) APPLICABLE FRACTION. -- For purposes of clause (i), the
applicable fraction is a fraction --
"(I) the numerator of which is the amount of the consideration
referred to in clause (i), and
"(II) the denominator of which is the value of the portion
referred to in clause (i) immediately after the transfer described
in paragraph (1).
"(iii) SECTION 2043 NOT TO APPLY. -- The provisions of this
subparagraph shall be in lieu of any adjustment under section
2043."
(2) Paragraph (5) of section 2036(c) of the 1986 Code is
amended to read as follows:
"(5) ADJUSTMENTS. -- Appropriate adjustments shall be made in
the amount included in the gross estate by reason of this
subsection for the value of the retained interest, extraordinary
distributions, and changes in the capital structure of the
enterprise after the transfer described in paragraph (1).
(h) EFFECTIVE DATE. -- "26 USC 2036 note"
(1) IN GENERAL. -- Except as provided in this subsection, any
amendment made by this section shall take effect as if included in
the provisions of the Revenue Act of 1987 to which such amendment
relates.
(2) SUBSECTION (a). -- The amendments made by subsection (a)
shall apply in cases where the transfer referred to in section
2036(c)(1)(B) of the 1986 Code is on or after June 21, 1988.
(3) SUBSECTION (f). -- If an amount is included in the gross
estate of a decedent under section 2036 of the 1986 Code other
than solely by reason of section 2036(c) of the 1986 Code, the
amendments made by subsection (f) shall apply to such amount only
with respect to property transferred after the date of the
enactment of this Act.
(4) CORRECTION PERIOD. -- If section 2036(c)(1) of the 1986
Code would (but for this paragraph) apply to any interest arising
from a transaction entered into during the period beginning after
December 17, 1987, and ending before January 1, 1990, such section
shall not apply to such interest if --
(A) during such period, such actions are taken as are necessary
to have such section 2036(c)(1) not apply to such transaction (and
any such interest), or
(B) the original transferor and his spouse on January 1, 1990
(or, if earlier, the date of the original transferor's death),
does not hold any interest in the enterprise involved.
(5) CLARIFICATION OF EFFECTIVE DATE. -- For purposes of
section 10402(b) of the Revenue Act of 1987, with respect to
property transferred on or before December 17, 1987 --
(A) any failure to exercise a right of conversion,
(B) any failure to pay dividends, and
(c) failures to exercise other rights specified in regulations,
shall not be treated as a subsequent transfer.
SEC. 3041. FEDERAL TAX TREATMENT OF INCOME DERIVED BY INDIANS FROM
EXERCISE OF FISHING RIGHTS SECURED BY TREATY, ETC.
(a) GENERAL RULES. -- Subchapter C of chapter 80 of the 1986 Code
(relating to provisions affecting more than one subtitle) is amended by
adding at the end thereof the following new section:
"SEC. 7873. INCOME DERIVED BY INDIANS FROM EXERCISE OF FISHING
RIGHTS.
"(a) IN GENERAL. --
"(1) INCOME AND SELF-EMPLOYMENT TAXES. -- No tax shall be
imposed by subtitle A on income derived --
"(A) by a member of an Indian tribe directly or through a
qualified Indian entity, or
"(B) by a qualified Indian entity,
from a fishing rights-related activity of such tribe.
"(2) EMPLOYMENT TAXES. -- No tax shall be imposed by subtitle
C on remuneration paid for services performed in a fishing
rights-related activity of an Indian tribe by a member of such
tribe for another member of such tribe or for a qualified Indian
entity.
"(b) DEFINITIONS. -- For purposes of this section --
"(1) FISHING RIGHTS-RELATED ACTIVITY. -- The term 'fishing
rights-related activity' means, with respect to an Indian tribe,
any activity directly related to harvesting, processing, or
transporting fish harvested in the exercise of a recognized
fishing right of such tribe or to selling such fish but only if
substantially all of such harvesting was performed by members of
such tribe.
"(2) RECOGNIZED FISHING RIGHTS. -- The term 'recognized
fishing rights' means, with respect to an Indian tribe, fishing
rights secured as of March 17, 1988, by a treaty between such
tribe and the United States or by an Executive order or an Act of
Congress.
"(3) QUALIFIED INDIAN ENTITY. --
"(A) IN GENERAL. -- The term 'qualified Indian entity' means,
with respect to an Indian tribe, any entity if --
"(i) such entity is engaged in a fishing rights-related
activity of such tribe,
"(ii) all of the equity interests in the entity are owned by
qualified Indian tribes, members of such tribes, or their spouses,
"(iii) except as provided in regulations, in the case of an
entity which engages to any extent in any substantial processing
or transporting of fish, 90 percent or more of the annual gross
receipts of the entity is derived from fishing rights-related
activities of one or more qualified Indian tribes each of which
owns at least 10 percent of the equity interests in the entity,
and
"(iv) substantially all of the management functions of the
entity are performed by members of qualified Indian tribes.
For purposes of clause (iii), equity interests owned by a
member (or the spouse of a member) of a qualified Indian tribe
shall be treated as owned by the tribe.
"(B) QUALIFIED INDIAN TRIBE. -- For purposes of subparagraph
(A), an Indian tribe is a qualified Indian tribe with respect to
an entity if such entity is engaged in a fishing rights-related
activity of such tribe.
"(c) SPECIAL RULES. --
"(1) DISTRIBUTIONS FROM QUALIFIED INDIAN ENTITY. -- For
purposes of this section, any distribution with respect to an
equity interest in a qualified Indian entity of an Indian tribe to
a member of such tribe shall be treated as derived by such member
from a fishing rights-related activity of such tribe to the extent
such distribution is attributable to income derived by such entity
from a fishing rights-related activity of such tribe.
"(2) DE MINIMIS UNRELATED AMOUNTS MAY BE EXCLUDED. -- If, but
for this paragraph, all but a de minimis amount --
10"(A) derived by a qualified Indian tribal entity, or by an
individual through such an entity, is entitled to the benefits of
paragraph (1) of subsection (a), or
"(B) paid to an individual for services is entitled to the
benefits of paragraph (2) of subsection (a),
then the entire amount shall be entitled to the benefits of
such paragraph."
(b) CLERICAL AMENDMENT. -- The table of sections for such subchapter
C is amended by adding at the end thereof the following new item:
"Sec. 7873. Income derived by Indians from exercise of fishing
rights."
SEC. 3042. STATE TAX TREATMENT OF INCOME DERIVED BY INDIANS FROM
EXERCISE OF FISHING RIGHTS SECURED BY TREATY, ETC.
Section 2079 of the Revised Statutes (25 U.S.C. 71) is amended by
adding at the end thereof the following new sentence: "Such treaties,
and any Executive orders and Acts of Congress under which the rights of
any Indian tribe to fish are secured, shall be construed to prohibit (in
addition to any other prohibition) the imposition under any law of a
State or political subdivision thereof of any tax on any income derived
from the exercise of rights to fish secured by such treaty, Executive
order, or Act of Congress if section 7873 of the Internal Revenue Code
of 1986 does not permit a like Federal tax to be imposed on such
income."
SEC. 3043. CONFORMING AMENDMENTS RELATING TO COVERAGE UNDER OLD-AGE,
SURVIVORS, AND DISABILITY INSURANCE PROGRAM.
(a) EXCLUSION FROM WAGES OF INCOME DERIVED BY INDIANS FROM EXERCISE
OF FISHING RIGHTS. -- Section 209 of the Social Security Act (42 U.S.
C. 409) is amended --
(1) in subsection (r), by striking out "or" at the end;
(2) in subsection (s), by striking out the period and inserting
in lieu thereof "; or"; and
(3) by inserting after subsection (s) the following new
subsection:
"(t) Remuneration consisting of income excluded from taxation
under section 7873 of the Internal Revenue Code of 1986 (relating
to income derived by Indians from exercise of fishing rights)."
(b) EXCLUSION FROM NET EARNINGS FROM SELF-EMPLOYMENT OF INCOME
DERIVED BY INDIANS FROM EXERCISE OF FISHING RIGHTS. -- Section 211(a)
of such Act (42 U.S.C. 411(a)) is amended --
(1) in paragraph (12), by striking out "and" at the end;
(2) in paragraph (13), by striking out the period and inserting
in lieu thereof "; and"; and
(3) by inserting after paragraph (13) the following new
paragraph:
(14) There shall be excluded income excluded from taxation
under section 7873 of the Internal Revenue Code of 1986 (relating
to income derived by Indians from exercise of fishing rights."
(c) CROSS-REFERENCES IN SECA AND FICA TO APPLICABLE INDIAN FISHING
RIGHTS PROVISIONS. --
(1) SECA. -- Subsection (a) of section 1402 of the 1986 Code
(relating to net earnings from self-employment) is amended by
striking out "and" at the end of paragraph (13), by striking out
the period at the end of paragraph (14) and inserting in lieu
thereof "; and", and by inserting after paragraph (14) the
following new paragraph:
"(15) in the case of a member of an Indian tribe, the special
rules of section 7873 (relating to income derived by Indians from
exercise of fishing rights shall apply."
10 (2) FICA. -- Subsection (a) of section 3121 of the 1986 Code
(relating to wages) is amended by striking out "or" at the end of
paragraph (19), by striking out the period at the end of paragraph
(20) and inserting in lieu thereof "; or", and by inserting after
paragraph (20) the following new paragraph:
"(21) in the case of a member of an Indian tribe, any
remuneration on which no tax is imposed by this chapter by reason
of section 7873 (relating to income derived by Indians from
exercise of fishing rights)."
SEC. 3044. "26 USC 7873 note" EFFECTIVE DATE; NO INFERENCE
CREATED.
(a) EFFECTIVE DATE. -- The amendments made by this subtitle shall
apply to all periods beginning before, on, or after the date of the
enactment of this Act.
(b) NO INFERENCE CREATED. -- Nothing in the amendments made by this
subtitle shall create any inference as to the existence or nonexistence
or scope of any exemption from tax for income derived from fishing
rights secured as of March 17, 1988, by any treaty, law, or Executive
Order.
SEC. 4001. EXTENSION AND MODIFICATION OF EXCLUSION FOR
EMPLOYER-PROVIDED EDUCATIONAL ASSISTANCE.
(a) EXTENSION. -- Subsection (d) of section 127 of the 1986 Code
(relating to educational assistance programs) is amended by striking out
"December 31, 1987" and inserting in lieu thereof "December 31, 1988".
(b) RESTRICTIONS RELATING TO EDUCATION AT THE GRADUATE LEVEL. --
(1) IN GENERAL. -- Paragraph (1) of section 127(c) of the 1986
Code is amended by adding at the end thereof the following new
sentence: "The term 'educational assistance' also does not
include any payment for, or the provision of any benefits with
respect to, any graduate level course of a kind normally taken by
an individual pursuing a program leading to a law, business,
medical, or other advanced academic or professional degree."
(2) SPECIAL RULE FOR TEACHING AND RESEARCH ASSISTANTS. --
Subsection (d) of section 117 of the 1986 Code is amended by
adding at the end thereof the following new paragraph:
"(5) SPECIAL RULES FOR TEACHING AND RESEARCH ASSISTANTS. -- In
the case of the education of an individual who is a graduate
student at an educational organization described in section 170(
b)(1)(A)(ii) and who is engaged in teaching or research activities
for such organization, paragraph (2) shall be applied as if it did
not contain the phrase '(below the graduate level)'."
(c) EFFECTIVE DATES. -- The amendments made by this section "26 USC
117 note" apply to taxable years beginning after December 31, 1987.
SEC. 4002. EXTENSION AND MODIFICATION OF EXCLUSION OF AMOUNTS
RECEIVED UNDER GROUP LEGAL SERVICES PLANS.
(a) EXTENSION. -- Section 120(e) of the 1986 Code is amended by
striking out "1987" and inserting in lieu thereof "1988".
(b) LIMITATION ON VALUE OF INSURANCE PROTECTION WHICH MAY BE EXCLUDED
--
(1) IN GENERAL. -- Section 120(a) of the 1986 Code is amended
by adding at the end thereof the following new sentence:
"No exclusion shall be allowed under this section with respect to an
individual for any taxable year to the extent that the value of
insurance (whether through an insurer or self-insurance) against legal
costs incurred by the individual (or his spouse or dependents) provided
under a qualified group legal services plan exceeds $70."
(2) CONFORMING AMENDMENT. -- Subparagraph (A) of section 125(
e)(2) of the 1986 Code is amended by inserting "or any insurance
under a qualified group legal services plan the value of which is
so includable only because it exceeds the limitation of section
120(a)" after "section 79".
(c) EFFECTIVE DATE. -- The amendments made by this section "26 USC
120 note" shall apply to taxable years ending after December 31, 1987.
SEC. 4003. CARRYOVER OF POST-1987 LOW-INCOME HOUSING CREDIT DOLLAR
AMOUNTS PERMITTED.
(a) IN GENERAL. -- Section 42(h)(1) of the 1986 Code (relating to
housing credit dollar amount may not be carried over, etc.), as amended
by section 1002(l)(14)(A) of this Act, is amended by adding at the end
thereof the following new subparagraph:
"(E) EXCEPTION WHERE 10 PERCENT OF COST INCURRED. --
"(i) IN GENERAL. -- An allocation meets the requirements of
this subparagraph if such allocation is made with respect to a
qualified building which is placed in service not later than the
close of the second calendar year following the calendar year in
which the allocation is made.
"(ii) QUALIFIED BUILDING. -- For purposes of clause (i), the
term 'qualified building' means any building which is part of a
project if the taxpayer's basis in such project (as of the close
of the calendar year in which the allocation is made) is more than
10 percent of the taxpayer's reasonably expected basis in such
project (as of the close of the second calendar year referred to
in clause (i)). Such term does not include any existing building
unless a credit is allowable under subsection (e) for
rehabilitation expenditures paid or incurred by the taxpayer with
respect to such building for a taxable year ending during the
second calendar year referred to in clause (i) or the prior
taxable year."
(b) CONFORMING AMENDMENTS. --
(1) Section 42(h)(1)(B) of the 1986 Code, as amended by section
1002 of this Act, is amended by striking out "(C) or (D)" and
inserting in lieu thereof "(C), (D), or (E)".
(2) Paragraph (3) of section 501(c) of the Reform Act "26 USC
469 note" is hereby repealed.
(3) Subsection (n) of section 42 of the 1986 Code, as amended
by title I of this Act, is amended to read as follows:
"(n) TERMINATION. -- The State housing credit ceiling under
subsection (h) shall be zero for any calendar year after 1989 and
subsection (h)(4) shall not apply to any building placed in service
after 1989."
(c) EFFECTIVE DATE. -- The amendments made by this section "26 USC
42 note" shall apply to amounts allocated in calendar years after 1987.
SEC. 4004. SIMPLIFICATION OF RULE WHERE PARTNERSHIP HOLDS QUALIFIED
LOW-INCOME BUILDING.
(a) IN GENERAL. -- Subparagraph (B) of section 42(j)(5) of the 1986
Code, as amended by title I of this Act, is amended to read as follows:
"(B) PARTNERSHIPS TO WHICH PARAGRAPH APPLIES. -- This
paragraph shall apply to any partnership which has 35 or more
partners unless the partnership elects not to have this paragraph
apply."
(b) EFFECTIVE DATES. -- "26 USC 42 note"
(1) IN GENERAL. -- The amendment made by subsection (a) shall
take effect as if included in the amendments made by section 252
of the Reform Act.
(2) PERIOD FOR ELECTION. -- The period for electing not to
have section 42(j)(5) of the 1986 Code apply to any partnership
shall not expire before the date which is 6 months after the date
of the enactment of this Act.
SEC. 4005. PROVISIONS RELATING TO MORTGAGE REVENUE BONDS AND
MORTGAGE CREDIT CERTIFICATES.
(a) EXTENSION OF AUTHORITY TO ISSUE BONDS AND CERTIFICATES. --
(1) Subparagraph (B) of section 143(a)(1) of the 1986 Code
(relating to termination) is amended by striking out "December 31,
1988" each place it appears and inserting in lieu thereof
"December 31, 1989".
(2) Subsection (h) of section 25 of the 1986 Code (relating to
credit for interest on certain home mortgages, as amended by
section 1013(a)(26) of this Act, is amended by striking out "1988"
and inserting in lieu thereof "1989".
(b) CALCULATION OF INCOME LIMITS FOR QUALIFIED MORTGAGE BOND
FINANCED HOMES IN HIGH HOUSING COST AREAS. -- Section 143(f) of
the 1986 Code (relating to income requirements) is amended by
adding at the end thereof the following new paragraph:
"(5) ADJUSTMENT OF INCOME REQUIREMENT BASED ON RELATION OF HIGH
HOUSING COSTS TO INCOME. --
"(A) IN GENERAL. -- If the residence (for which financing is
provided under the issue is located in a high housing cost area
and the limitation determined under this paragraph is greater than
the limitation otherwise applicable under paragraph (1), there
shall be substituted for the income limitation in paragraph (1), a
limitation equal to the percentage determined under subparagraph
(B) of the area median gross income for such area.
"(B) INCOME REQUIREMENTS FOR RESIDENCES IN HIGH HOUSING COST
AREA. -- The percentage determined under this subparagraph for a
residence located in a high housing cost area is the percentage
(not greater than 140 percent) equal to the product of --
"(I) 115 percent, and
"(II) the amount by which the housing cost/income ratio for
such area exceeds 0.2.
"(C) HIGH HOUSING COST AREAS. -- For purposes of this
paragraph, the term 'high housing cost area' means any statistical
area for which the housing cost/income ratio is greater than 1.2.
"(D) HOUSING COST/INCOME RATIO. -- For purposes of this
paragraph --
"(i) IN GENERAL. -- The term 'housing cost/income ratio'
means, with respect to any statistical area, the number determined
by dividing --
"(I) the applicable housing price ratio for such area, by
"(II) the ratio which the area median gross income for such
area bears to the median gross income for the United States.
"(ii) APPLICABLE HOUSING PRICE RATIO. -- For purposes of
clause (i), the applicable housing price ratio for any area is the
new housing price ratio or the existing housing price ratio,
whichever results in the housing cost/income ratio being closer to
1.
"(iii) NEW HOUSING PRICE RATIO. -- The new housing price ratio
for any area is the ratio which --
"(I) the average area purchase price (as defined in subsection
(e)(2)) for residences described in subsection (e)(3)(A) which are
located in such area bears to
"(II) the average purchase price (determined in accordance with
the principles of subsection (e)(2)) for residences so described
which are located in the United States.
"(iv) EXISTING HOUSING PRICE RATIO. -- The existing housing
price ratio for any area is the ratio determined in accordance
with clause (iii) but with respect to residences described in
subsection (e)(3)(B)."
(c) DETERMINATIONS OF FAMILY INCOME TO BE BASED ON FAMILY SIZE. --
Subsection (f) of section 143 of the 1986 Code (relating to income
requirements) is further amended by adding at the end thereof the
following new paragraph:
"(6) ADJUSTMENT TO INCOME REQUIREMENTS BASED ON FAMILY SIZE.
-- In the case of a mortgagor having a family of fewer than 3
individuals, the preceding provisions of this subsection shall be
applied by substituting --
"(A) '100 percent' for '115 percent' each place it appears, and
"(B) '120 percent' for '140 percent' each place it appears."
(d) QUALIFIED MORTGAGE BONDS SUBJECT TO ARBITRAGE REBATE RULES
APPLICABLE TO OTHER TAX-EXEMPT BONDS. --
(1) Paragraph (1) of section 143(g) of the 1986 Code (relating
to requirements related to arbitrage) is amended --
(A) by striking out "paragraphs (2) and (3) of this subsection"
and inserting in lieu thereof "paragraph (2) of this subsection
and, in the case of an issue described in subsection (b)(1), such
issue also meets the requirements of paragraph (3) of this
subsection", and
(B) by striking out "(other than subsection (f) thereof)".
(2) Paragraph (1) of section 148(f) of the 1986 Code is amended
by striking out "qualified mortgage bond or".
(e) LOANS PROVIDED THROUGH QUALIFIED MORTGAGE ISSUE MUST ORIGINATE
WITHIN 42 MONTHS OF DATE OF ISSUE. -- Paragraph (2) of section 143(a)
of the 1986 Code (defining qualified mortgage issue) is amended by
adding at the end thereof the following new subparagraph:
"(D) PROCEEDS MUST BE USED WITHIN 42 MONTHS OF DATE OF
ISSUANCE. --
"(i) IN GENERAL. -- Except as otherwise provided in this
subparagraph, an issue shall not meet the requirement of
subparagraph (A)(i) unless --
"(I) all proceeds of the issue required to be used to finance
owner-occupied residences are so used within the 42-month period
beginning on the date of issuance of the issue (or, in the case of
a refunding bond, within the 42-month period beginning on the date
of issuance of the original bond) or, to the extent not so used
within such period, are used within such period to redeem bonds
which are part of such issue, and
"(II) no portion of the proceeds of the issue are used to make
or finance any loan (other than a loan which is a nonpurpose
investment within the meaning of section 148(f)(6)(A)) after the
close of such period.
"(ii) EXCEPTION. -- Clause (i) (and clause (iv) of
subparagraph (A)) shall not be construed to require amounts of
less than $250,000 to be used to redeem bonds. The Secretary may
by regulation treat related issues as 1 issue for purposes of the
preceding sentence."
(f) REPAYMENTS OF FINANCING PROVIDED BY A QUALIFIED MORTGAGE ISSUE
MUST BE USED TO REDEEM BONDS. -- Subparagraph (A) of section 143(a)(2)
of the 1986 Code is amended by striking out "and" at the end of clause
(ii), by striking out the period at the end of clause (iii) and
inserting in lieu thereof ", and", and by adding at the end thereof the
following:
"(iv) except as provided in subparagraph (D)(ii), repayments of
principal on financing provided by the issue are used not later
than the close of the 1st semiannual period beginning after the
date the prepayment (or complete repayment) is received to redeem
bonds which are part of such issue.
Clause (iv) shall not apply to amounts received within 10 years
after the date of issuance of the issue (or, in the case of
refunding bond, the date of issuance of the original bond)."
(g) RECAPTURE OF PORTION OF FEDERAL SUBSIDY FROM USE OF MORTGAGE
BONDS AND MORTGAGE CREDIT CERTIFICATES. --
(1) IN GENERAL. -- Section 143 of the 1986 Code (relating to
mortgage revenue bonds) is amended by adding at the end thereof
the following new subsection:
"(m) RECAPTURE OF PORTION OF FEDERAL SUBSIDY FROM USE OF QUALIFIED
MORTGAGE BONDS AND MORTGAGE CREDIT CERTIFICATES. --
"(1) IN GENERAL. -- If, during the taxable year, any taxpayer
disposes of an interest in a residence with respect to which there
is or was any federally-subsidized indebtedness for the payment of
which the taxpayer was liable in whole or part, then the
taxpayer's tax imposed by this chapter for such taxable year shall
be increased by the recapture amount with respect to such
indebtedness.
"(2) EXCEPTIONS. -- Paragraph (1) shall not apply to --
"(A) any disposition by reason of death, and
"(B) any disposition which is more than 10 years after the
testing date.
"(3) FEDERALLY-SUBSIDIZED INDEBTEDNESS. -- For purposes of
this subsection --
"(A) IN GENERAL. -- The term 'federally-subsidized
indebtedness' means any indebtedness if --
"(i) financing for the indebtedness was provided in whole or
part from the proceeds of any tax-exempt qualified mortgage bond,
or
"(ii) any credit was allowed under section 25 (relating to
interest on certain home mortgages) to the taxpayer for interest
paid or incurred on such indebtedness.
"(B) EXCEPTION FOR HOME IMPROVEMENT LOANS. -- Such term shall
not include any indebtedness to the extent such indebtedness is
federally-subsidized indebtedness solely by reason of being a
qualified home improvement loan (as defined in subsection (k)(
4)).
"(4) RECAPTURE AMOUNT. -- For purposes of this subsection --
"(A) IN GENERAL. -- The recapture amount with respect to any
indebtedness is the amount equal to the product of --
"(i) the federally-subsidized amount with respect to the
indebtedness, and
"(ii) the holding period percentage.
"(B) FEDERALLY-SUBSIDIZED AMOUNT. -- The federally-subsidized
amount with respect to any indebtedness is the amount equal to
6.25 percent of the highest principal amount of the indebtedness
for which the taxpayer was liable.
"(C) HOLDING PERIOD PERCENTAGE. --
"(i) DISPOSITIONS DURING 1ST 5 YEARS. -- If the disposition of
the taxpayer's interest in the residence occurs during the 5-year
period beginning on the testing date, the holding period
percentage is the percentage determined by dividing the number of
full months during which the requirements of subparagraph (D) were
met by 60.
"(ii) DISPOSITIONS DURING 2D 5 YEARS. -- If the disposition of
the taxpayer's interest in the residence occurs during the 5-year
period following the 5-year period described in clause (i), the
holding period percentage is the percentage determined by dividing
--
"(I) the excess of 120 over the number of full months during
which such requirements were met by
"(II) 60.
"(iii) RETIREMENTS OF INDEBTEDNESS. -- If the
federally-subsidized indebtedness is completely repaid during any
month of the 10-year period beginning on the testing date, the
holding period percentage for succeeding months shall be
determined by reducing ratably over the remainder of such period
(or, if lesser, 5 years) the holding period percentage which would
have been determined under this subparagraph had the taxpayer
disposed of his interest in the residence on the date of the
repayment.
"(D) TESTING DATE. -- The term 'testing date' means the
earliest date on which all of the following requirements are met:
"(i) The indebtedness is federally-subsidized indebtedness.
"(ii) The taxpayer is liable in whole or part for payment of
the indebtedness.
"(5) REDUCTION OF RECAPTURE AMOUNT IF TAXPAYER MEETS CERTAIN
INCOME LIMITATIONS.
"(A) IN GENERAL. -- The recapture amount which would (but for
this paragraph) apply with respect to any disposition during a
taxable year shall be reduced (but not below zero) by 2 percent of
such amount for each $100 by which adjusted qualifying income
exceeds the modified adjusted gross income of the taxpayer for
such year.
"(B) ADJUSTED QUALIFYING INCOME. -- For purposes of this
paragraph, the term 'adjusted qualifying income' means the amount
equal to the sum of --
"(i) $5,000, plus
"(ii) the product of --
"(I) the highest family income which (as of the date the
financing was provided) would have met the requirement of
subsection (f) with respect to the residence, and
"(II) the percentage equal to the sum of 100 percent plus 5
percent for each full year during the period beginning on such
date and ending on the date of the disposition.
For purposes of clause (ii)(I), highest family income shall be
determined without regard to subsection (f)(3)(A) and on the basis
of the number of members of the taxpayer's family as of the date
of the disposition.
"(C) MODIFIED ADJUSTED GROSS INCOME. -- For purposes of this
paragraph, the term 'modified adjusted gross income' means
adjusted gross income --
"(i) increased by the amount of interest received or accrued by
the taxpayer during the taxable year which is excluded from gross
income under section 103, and
"(ii) decreased by the amount of gain (if any) included in
gross income of the taxpayer by reason of the disposition to which
this subsection applies.
"(6) LIMITATION ON RECAPTURE AMOUNT BASED ON GAIN REALIZED. --
"(A) IN GENERAL. -- In no event shall the recapture amount of
the taxpayer with respect to any indebtedness exceed 50 percent of
the gain (if any) on the disposition of the taxpayer's interest in
the residence. For purposes of the preceding sentence, gain shall
be taken into account whether or not recognized and the adjusted
basis of the taxpayer's interest in the residence shall be
determined without regard to sections 1033(b) and 1034(e) for
purposes of determining gain.
"(B) DISPOSITIONS OTHER THAN SALES, EXCHANGES, AND INVOLUNTARY
CONVERSIONS. -- In the case of a dispsition other than a sale,
exchange, or involuntary conversion, gain shall be determined as
if the interest had been sold for its fair market value.
"(C) INVOLUNTARY CONVERSIONS RESULTING FROM CASUALTIES. -- In
the case of property which (as a result of its destruction in
whole or in part by fire, storm, or other casualty) is
compulsorily or involuntarily converted, paragraph (1) shall not
apply to such conversion if the taxpayer purchases (during the
period specified in section 1033(a)(2)(B)) property for use as his
principal residence on the site of the converted property. For
purposes of subparagraph (A), the adjusted basis of the taxpayer
in the residence shall not be adjusted for any gain or loss on a
conversion to which this subparagraph applies.
"(7) ISSUER TO INFORM MORTGAGOR OF FEDERALLY-SUBSIDIZED AMOUNT
AND FAMILY INCOME LIMITS. -- The issuer of the issue which
provided the federally-subsidized indebtedness to the mortgagor
shall --
"(A) at the time of settlement, provide a written statement
informing the mortgagor of the potential recapture under this
subsection, and
"(B) not later than 90 days after the date such indebtedness is
provided, provide a written statement to the mortgagor specifying
--
"(i) the federally-subsidized amount with respect to such
indebtedness, and
"(ii) the amounts described in paragraph (5)(B)(ii) for each
category of family size for each year of the 10-year period
beginning on the date the financing was provided.
"(8) SPECIAL RULES. --
"(A) NO BASIS ADJUSTMENT. -- No adjustment shall be made to
the basis of any property for the increase in tax under this
subsection.
"(B) SPECIAL RULE WHERE 2 OR MORE PERSONS HOLD INTERESTS IN
RESIDENCE. -- Except as provided in subparagraph (C) and in
regulations prescribed by the Secretary, if 2 or more persons hold
interests in any residence and are jointly liable for the
federally-subsidized indebtedness, the recapture amount shall be
determined separately with respect to their respective interests
in the residence.
"(C) TRANSFERS TO SPOUSES AND FORMER SPOUSES. -- Paragraph (1)
shall not apply to any transfer on which no gain or loss is
recognized under section 1041. In any such case, the transferee
shall be treated under this subsection in the same manner as the
transferor would have been treated had such transfer not occurred.
"(D) REGULATIONS. -- The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out this
subsection, including regulations dealing with dispositions of
partial interests in a residence."
(2) ISSUER INFORMATION REQUIREMENT. --
(A) Subparagraph (A) of section 143(a)(2) of the 1986 Code is
amended by striking out "and (i)" and inserting in lieu thereof
"(i), and (m)(7)".
(B) Subparagraph (C) of section 143(a)(2) of the 1986 Code is
amended by striking out "and (h)" and inserting in lieu thereof ",
(h), and (m)(7)".
(3) BROKER REPORTING. -- Subsection (e) of section 6045 of the
1986 Code is amended by adding at the end thereof the following
new paragraph:
"(3) WHETHER SELLER'S FINANCING WAS FEDERALLY-SUBSIDIZED. -- In
the case of a real estate transaction involving a residence, the
real estate broker shall specify on the return under subsection
(a) and the statement under subsection (b) whether or not the
financing (if any) of the seller was federally-subsidized
indebtedness (as defined in section 143(m)(3))."
(4) NO CREDITS AGAINST TAX. -- Paragraph (2) of section 26(b)
of the 1986 Code (relating to limitation based on tax liability;
definition of tax liability), as amended by title I of this Act,
is amended by striking out "and" at the end of subparagraph (K),
by striking out the period at the end of subparagraph (l) and
inserting in lieu thereof ", and", and by adding at the end
thereof the following new subparagraph:
"(M) section 143(m) (relating to recapture of portion of
federal subsidy from use of mortgage bonds and mortgage credit
certificates)."
(5) RECAPTURE TAX NOT INCLUDED IN ESTIMATED TAXES. -- Paragraph
(1) of section 6654(f) of the 1986 Code (relating to failure by
individual to pay estimated income tax) is amended by inserting
"(other than any increase in such tax by reason of section
143(m))" after "chapter 1".
(6) AUTHORITY TO CHANGE PREPAYMENT ASSUMPTIONS FOR ARBITRAGE
RESTRICTIONS. -- Clause (iv) of section 143(g)(2)(B) of the 1986
Code is amended by adding at the end thereof the following new
sentence:
"The Secretary may by regulation adjust the mortgage prepayment
rate otherwise used in determining the effective rate of interest
to the extent the Secretary determines that such an adjustment is
appropriate by reason of the impact of subsection (m)."
(7) CROSS REFERENCE. -- Section 25 of the 1986 Code is amended
by adding at the end thereof the following new subsection:
"(j) RECAPTURE OF PORTION OF FEDERAL SUBSIDY FROM USE OF MORTGAGE
CREDIT CERTIFICATES. --
"For provisions increasing the tax imposed by this chapter to
recapture a portion of the Federal subsidy from the use of
mortgage credit certificates, see section 143(m)."
(h) EFFECTIVE DATES. -- "26 USC 143 note"
(1) IN GENERAL. -- Except as otherwise provided in this
subsection, the amendments made by this section shall apply to
bonds issued, and nonissued bond amounts elected, after December
31, 1988.
(2) SPECIAL RULES RELATING TO CERTAIN REQUIREMENTS AND
REFUNDING BONDS. -- In the case of a bond issued to refund (or
which is part of a series of bonds issued to refund) a bond issued
before January 1, 1989 --
(A) the amendments made by subsections (b) and (c) shall apply
to financing provided after the date of issuance of the refunding
issue, and
(B) the amendment made by subsection (f) shall apply to
payments (including on loans made before such date of issuance)
received on or after such date of issuance.
(3) SUBSECTION (g). --
(A) IN GENERAL. -- Except as provided in subparagraph (B), the
amendments made by subsection (g) shall apply to financing
provided, and mortgage credit certificates issued, after December
31, 1990.
(B) EXCEPTION. -- The amendments made by subsection (g) shall
not apply to financing provided pursuant to a binding contract
(entered into before June 23, 1988) with a homebuilder, lender, or
mortgagor if the bonds (the proceeds of which are used to provide
such financing) are issued --
(i) before June 23, 1988, or
(ii) before August 1, 1988, pursuant to a written application
(made before July 1, 1988) for State bond volume authority.
(i) STUDY OF RECAPTURE PROVISIONS. -- "26 USC 143 note" The
Comptroller General of the United States shall conduct a study of
section 143(m) of the 1986 Code (as added by this section) and of
alternatives to accomplish the purposes of such section. A report of
such study shall be submitted not later than July 1, 1990, to the
Committee on Ways and Means of the House of Representatives and the
Committee on Finance of the Senate.
SEC. 4006. EXTENSION OF CERTAIN BUSINESS ENERGY CREDITS.
Each of the following provisions in the table under section 46(b)(
2)(A) of the 1986 Code are amended by striking out "December 31, 1988"
and inserting in lieu thereof "December 31, 1989:
(1) the item relating to the 10 percent credit in clause
(viii).
(2) The item relating to the 10 percent credit in clause (ix).
(3) Clause (x).
SEC. 4007. EXTENSION OF CREDIT FOR INCREASING RESEARCH ACTIVITIES.
(a) EXTENSION. -- Subsection (h) of section 41 of the 1986 Code
(relating to credit for increasing research activities) is amended --
(1) by striking out "December 31, 1988" each place it appears
and inserting in lieu thereof "December 31, 1989", and
(2) by striking out "January 1, 1989" each place it appears and
inserting in lieu thereof "January 1, 1990".
(b) GAO STUDY. -- "26 USC 41 note"
(1) IN GENERAL. -- The Comptroller General of the United
States shall conduct a study of the credit provided by section 41
of the 1986 Code.
(2) REPORT. -- The report of the study under paragraph (1)
shall be submitted not later than December 31, 1989, to the
Committee on Ways and Means of the House of Representatives and
the Committee on Finance of the Senate.
SEC. 4008. DENIAL OF DEDUCTION FOR 50 PERCENT AMOUNTS ALLOWED AS A
RESEARCH CREDIT.
(a) IN GENERAL. -- Section 280C of the 1986 Code (relating to
certain expenses for which credits are allowable) is amended by adding
at the end thereof the following new subsection:
"(c) CREDIT FOR INCREASING RESEARCH ACTIVITIES. --
"(1) IN GENERAL. -- No deduction shall be allowed for that
portion of the qualified research expenses (as defined in section
41(b)) or basic research expenses (as defined in section 41(e)(2)
otherwise allowable as a deduction for the taxable year which is
equal to 50 percent of the amount of the credit determined for
such taxable year under section 41(a).
"(2) SIMILAR RULE WHERE TAXPAYER CAPITALIZES RATHER THAN
DEDUCTS EXPENSES. -- If --
"(A) 50 percent of the amount of the credit determined for the
taxable year under section 41(a)(1), exceeds
"(B) the amount allowable as a deduction for such taxable year
for qualified research expenses or basic research expenses
(determined without regard to paragraph (1)),
the amount chargeable to capital account for the taxable year
for such expenses shall be reduced by the amount of such excess.
"(3) CONTROLLED GROUPS. -- Paragraph (3) of subsection (b)
shall apply for purposes of this subsection."
(b) RESEARCH CREDIT TO BE ELECTIVE. --
(1) IN GENERAL. -- Section 41 of the 1986 Code is amended by
redesignating subsection (h) as subsection (i) and by inserting
after subsection (g) the following new subsection:
"(h) ELECTION TO HAVE RESEARCH CREDIT NOT APPLY. --
"(1) IN GENERAL. -- A taxpayer may elect to have this section
not apply for any taxable year.
"(2) TIME FOR MAKING ELECTION. -- An election under paragraph
(1) for any taxable year may be made (or revoked) at any time
before the expiration of the 3-year period beginning on the last
day prescribed by law for filing the return for such taxable year
(determined without regard to extensions).
"(3) MANNER OF MAKING ELECTION. -- An election under paragraph
(1) (or revocation thereof) shall be made in such manner as the
Secretary may by regulations prescribe."
(2) DEDUCTION FOR UNUSED RESEARCH CREDIT. --
(A) Subsection (c) of section 196 of the 1986 Code is amended
by striking out "and" at the end of paragraph (2), by striking out
the period at the end of paragraph (3) and inserting in lieu
thereof ", and", and by adding at the end thereof the following
new paragraph:
"(4) the research credit determined under section 41(a) for
taxable years beginning after December 31, 1988."
(B) Subsection (d) of section 196 of the 1986 Code is amended
to read as follows:
"(d) SPECIAL RULE FOR INVESTMENT TAX CREDIT AND RESEARCH CREDIT. --
Subsection (a) shall be applied by substituting an amount equal to 50
percent of for an amount equal to in the case of --
"(1) the investment credit determined under section 46(a)
(other than a credit to which section 48(q)(3) applies), and
"(2) the research credit determined under section 41(a)."
(c) TECHNICAL AMENDMENTS. --
(1) Paragraph (1) of section 28(b) of the 1986 Code is amended
by striking out "1988" and inserting in lieu thereof "1989".
(2) Subsection (n) of section 6501 of the 1986 Code is amended
by striking out "or 51(j)" and inserting in lieu thereof ", 41(
h), or 51(j)".
(d) EFFECTIVE DATE. -- The amendments made by this section "26 USC
41 note" shall apply to taxable years beginning after December 31, 1988.
SEC. 4009. "26 USC 81 note" ALLOCATION OF RESEARCH AND EXPERIMENTAL
EXPENDITURES.
(a) GENERAL RULE. -- For purposes of sections 861(b), 862(b), and
863(b) of the 1986 Code, qualified research and experimental
expenditures shall be allocated and apportioned as follows:
(1) Any qualified research and experimental expenditures
expended solely to meet legal requirements imposed by a political
entity with respect to the improvement or marketing of specific
products or processes for purposes not reasonably expected to
generate gross income (beyond de minimis amounts) outside the
jurisdiction of the politifal entity shall be allocated only to
gross income from sources within such jurisdiction.
(2) In the case of any qualified research and experimental
expenditures (not allocated under paragraph (1)) to the extent --
(A) that such expenditures are attributable to activities
conducted in the United States, 64 percent of such expenditures
shall be allocated and apportioned to income from sources within
the United States and deducted from such income in determining the
amount of taxable income from sources within the United States,
and
(B) that such expenditures are attributable to activities
conducted outside the United States, 64 percent of such
expenditures shall be allocated and apportioned to income from
sources outside the United States and deducted from such income in
determining the amount of taxable income from sources outside the
United States.
(3) The remaining portion of qualified research and
experimental expenditures (not allocated under paragraphs (1) and
(2)) shall be apportioned, at the annual election of the taxpayer,
on the basis of gross sales or gross income, except that, if the
taxpayer elects to apportion on the basis of gross income, the
amount apportioned to income from sources outside the United
States shall be at least 30 percent of the amount which would be
so apportioned on the basis of gross sales.
(b) QUALIFIED RESEARCH AND EXPERIMENTAL EXPENDITURES. -- For
purposes of this section, the term "qualified research and experimental
expenditures" means amounts which are research and experimental
expenditures within the meaning of section 174 of the 1986 Code. For
purposes of this subsection, rules similar to the rules of subsection
(c) of section 174 of the 1986 Code shall apply.
(c) SPECIAL RULES FOR EXPENDITURES ATTRIBUTABLE TO ACTIVITIES
CONDUCTED IN SPACE, ETC. --
(1) IN GENERAL. -- Any qualified research and experimental
expenditures described in paragraph (2) --
(A) if incurred by a United States person, shall be allocated
and apportioned under this section in the same manner as if they
were attributable to activities conducted in the United States,
and
(B) if incurred by a person other than a United States person,
shall be allocated and apportioned under this section in the same
manner as if they were attributable to activities conducted
outside the United States.
(2) DESCRIPTION OF EXPENDITURES. -- For purposes of paragraph
(1), qualified research and experimental expenditures are
described in this paragraph if such expenditures are attributable
to activities conducted --
(A) in space,
(B) on or under water not within the jurisdiction (as
recognized by the United States) of a foreign country, possession
of the United States, or the United States, or
(C) in Antarctica.
(d) AFFILIATED GROUP. --
(1) Except as provided in paragraph (2), the allocation and
apportionment required by subsection (a) shall be determined as if
all members of the affiliated group (as defined in subsection
(e)(5) of section 864 of the 1986 Code) were a single corporation.
(2) For purposes of the allocation and apportionment required
by subsection (a) --
(A) sales and gross income from products produced in whole or
in part in a possession by an electing corporation (within the
meaning of section 936(h)(5)(E) of the 1986 Code); and
(B) dividends from an electing corporation,
shall not be taken into account, except that this paragraph
shall not apply to sales of (and gross income and dividends
attributable to sales of) products with respect to which an
election under section 936(h)(5)(F) of the 1986 Code is not in
effect.
(3) The qualified research and experimental expenditures taken
into account for purposes of subsection (a) shall be adjusted to
reflect the amount of such expenditures included in computing the
cost-sharing amount (determined under section 936(h)(5)(C)(i)(I)
of the 1986 Code).
(4) The Secretary of the Treasury or his delegate may prescribe
such regulations as may be necessary to carry out the purposes of
this subsection, including regulations providing for the source of
gross income and the allocation and apportionment of deductions to
take into account the adjustments required by paragraph (3).
(5) Paragraph (6) of section 864(e) of the 1986 Code shall not
apply to qualified research and experimental expenditures.
(e) YEARS TO WHICH SECTION APPLIES. --
(1) IN GENERAL. -- Except as provided in this subsection, this
section shall apply to the taxpayer's 1st taxable year beginning
after August 1, 1987.
(2) REDUCTION IN AMOUNTS TO WHICH SECTION APPLIES. --
Notwithstanding paragraph (1), this section shall only apply to
that portion of the qualified research and experimental
expenditures for the taxable year referred to in paragraph (1)
which bears the same ratio to the total amount of such
expenditures as --
(A) the lesser of 4 months or the number of months in the
taxable year, bears to
(B) the number of months in the taxable year.
SEC. 4010. EXTENSION AND MODIFICATION OF TARGETED JOBS CREDIT.
(a) 2-YEAR EXTENSION. -- Paragraph (4) of section 51(c) of the 1986
Code (relating to termination) is amended by striking out "December 31,
1988" and inserting in lieu thereof "December 31, 1989".
(b) EXTENSION OF AUTHORIZATION. -- Paragraph (2) of section 261(f)
of the Economic Recovery Tax Act "26 USC 261 note" of 1981 is amended by
striking out "and 1988" and inserting in lieu thereof "1988, and 1989".
(c) ECONOMICALLY DISADVANTAGED YOUTH STATUS RESTRICTED TO INDIVIDUALS
UNDER AGE 23. --
(1) IN GENERAL. -- Subparagraph (B) of section 51(d)(3) of the
1986 Code is amended by striking out "age 25" and inserting in
lieu thereof "age 23".
(2) EFFECTIVE DATE. -- The amendment made by paragraph (1) "26
USC 51 note" shall apply to individuals who begin work for the
employer after December 31, 1988.
(d) REDUCTION IN PERCENTAGE OF CREDIT FOR SUMMER YOUTH EMPLOYEES. --
(1) IN GENERAL. -- Subparagraph (B) of section 51(d)(12) of
the 1986 Code is amended by striking out clause (i) and by
redesignating clauses (ii) and (iii) as clauses (i) and (ii).
(2) EFFECTIVE DATE. -- The amendment made by paragraph (1) "26
USC 51 note" shall apply to individuals who begin work for the
employer after December 31, 1988.
SEC. 4011. TREATMENT OF PUBLICLY OFFERED REGULATED INVESTMENT
COMPANIES UNDER 2-PERCENT FLOOR.
(a) IN GENERAL. -- Subsection (c) of section 67 of the 1986 Code, as
amended by section 1001(f) of this Act, is amended to read as follows:
"(c) DISALLOWANCE OF INDIRECT DEDUCTION THROUGH PASS-THRU ENTITY. --
"(1) IN GENERAL. -- The Secretary shall prescribe regulations
which prohibit the indirect deduction through pass-thru entities
of amounts which are not allowable as a deduction if paid or
incurred directly by an individual and which contain such
reporting requirements as may be necessary to carry out the
purposes of this subsection.
"(2) TREATMENT OF PUBLICLY OFFERED REGULATED INVESTMENT
COMPANIES. --
"(A) IN GENERAL. -- Paragraph (1) shall not apply with respect
to any publicly offered regulated investment company.
"(B) PUBLICLY OFFERED REGULATED INVESTMENT COMPANIES. -- For
purposes of this subsection --
"(i) IN GENERAL. -- The term 'publicly offered regulated
investment company' means a regulated investment company the
shares of which are --
"(I) continuously offered pursuant to a public offering (within
the meaning of section 4 of the Securities Act of 1933, as amended
(15 U.S.C. 77a to 77aa)),
"(II) regularly traded on an established securities market, or
"(III) held by or for no fewer than 500 persons at all times
during the taxable year.
"(ii) SECRETARY MAY REDUCE 500 PERSON REQUIREMENT. -- The
Secretary may by regulation decrease the minimum shareholder
requirement of clause (i)(III) in the case of regulated investment
companies which experience a loss of shareholders through net
redemptions of their shares.
"(3) TREATMENT OF CERTAIN OTHER ENTITIES. -- Paragraph (1)
shall not apply --
"(A) with respect to cooperatives and real estate investment
trusts, and
"(B) except as provided in regulations, with respect to estates
and trusts.
"(4) TERMINATION. -- This subsection shall not apply to any
taxable year beginning after December 31, 1989."
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) "26 USC
67 note" shall apply to taxable years beginning after December 31, 1987.
SEC. 4012. EXTENSION AND MODIFICATIONS OF PROVISIONS RELATING TO
FINANCIAL INSTITUTIONS.
(a) 1-YEAR EXTENSION. --
(1) REORGANIZATIONS. -- Paragraph (1) of section 904(c) of the
Reform Act "26 USC 368 note" is amended by striking out "December
31, 1988" and inserting in lieu thereof "December 31, 1989".
(2) FSLIC FINANCIAL ASSISTANCE. -- Paragraph (2)(A) of section
904(c) of the Reform Act "26 USC 597 note" is amended by striking
out "December 31, 1988" and inserting in lieu thereof "December
31, 1989".
(3) NET OPERATING LOSS RULES. -- The last sentence of section
382(l)(5)(F) of the 1986 Code is amended by striking out "December
31, 1988" and inserting in lieu thereof "December 31, 1989".
(b) APPLICATION OF CERTAIN PROVISIONS TO BANKS. --
(1) SPECIAL RULES FOR REORGANIZATIONS AND NET OPERATING LOSSES.
--
(A) Section 368(a)(3)(D) of the 1986 Code (as in effect before
the amendment made by section 904(a) of the Reform Act) is amended
by adding at the end thereof the following new clauses:
"(iv) In the case of a financial institution to which section
585 applies --
"(I) the term 'title 11 or similar case' means only a case in
which the applicable authority (which shall be treated as the
court in such case) makes the certification described in subclause
(II), and
"(II) clause (ii) shall apply to such institution, except that
for purposes of clause (ii)(III), the applicable authority must
certify that the grounds set forth in such clause (modified in
such manner as the Secretary determines necessary because such
institution is not an institution to which section 593 applies)
exist with respect to such transferor or will exist in the near
future in the absence of action by the applicable authority.
For purposes of this clause, the term 'applicable authority'
means the Comptroller of the Currency or the Federal Deposit
Insurance Corporation, or if neither has the supervisory authority
with respect to the transfer, the equivalent State authority.
"(v) For purposes of this subparagraph, in applying section
593, the determination as to whether a corporation is a domestic
building and loan association shall be made without regard to
section 7701(a)(19)(C)."
(B) Subclause (I) of section 382(l)(5)(F)(iii) of the 1986 Code
is amended by inserting "(as modified by section 368(a)(3)(
D)(iv))" after "section 368(a)(3)(D)(ii)".
(C)(i) The amendment made by subparagraph (A) "26 USC 368 note"
shall apply to acquisitions after the date of the enactment of
this Act and before January 1, 1990.
"(ii) The amendment made by subparagraph (B) '26 USC 382 note"
shall apply to any ownership change occurring after the date of
the enactment of this Act and before January 1, 1990.
(2) ASSISTANCE PAYMENTS. --
(A) Section 597(a) of the 1986 Code (as in effect before the
amendments made by section 904(b) of the Reform Act) is amended by
adding at the end thereof the following new sentence: "Gross
income of a bank does not include any amount of money or other
property received from the Federal Deposit Insurance Corporation
pursuant to sections 13(c), 15(c)(1), and 15(c)(2) of the Federal
Deposit Insurance Act (12 U.S.C. 1821(f) and 1823(c)(1) and (c)(
2)), regardless of whether any note or other instrument is issued
in exchange therefor."
(B) Section 597(b) of the 1986 Code, as amended by subsection
(c)(1), is amended by adding at the end thereof the following new
subsection:
"(d) DOMESTIC BUILDING AND LOAN ASSOCIATION. -- For
purposes of this section, the term 'domestic building and loan
association' has the meaning given such term by section 7701(a)(
19) without regard to subparagraph (C) thereof."
(C) Section 597(b) of the 1986 Code (as so in effect) is
amended by inserting "or bank" after "association".
(D)(i) The heading for section 597 of the 1986 Code (as so in
effect) is amended by inserting "or FDIC" after "FSLIC".
(ii) The item relating to section 597 in part II of subchapter
H of chapter 1 of the 1986 Code (as so in effect) is amended by
inserting "or FDIC" after "FSLIC".
(E) The amendments made by this paragraph "26 USC 597 note"
shall apply to any transfer --
(i) after the date of the enactment of this Act, and before
January 1, 1990, unless such transfer is pursuant to an
acquisition occurring on or before such date of enactment, and
(ii) after December 31, 1989, if such transfer is pursuant to
an acquisition occurring after such date of enactment and before
January 1, 1990.
(c) CERTAIN TAX ATTRIBUTES REDUCED BY 50 PERCENT OF FINANCIAL
ASSISTANCE OF FSLIC AND FDIC; APPLICATION OF SECTION 265. --
(1) REDUCTION IN TAX ATTRIBUTES. -- Section 597 of the 1986
Code is amended by adding at the end thereof the following new
subsection:
"(c) REDUCTION OF TAX ATTRIBUTES BY 50 PERCENT OF AMOUNTS EXCLUDABLE
UNDER SUBSECTION (a). --
"(1) IN GENERAL. -- 50 percent of any amount excludable under
subsection (a) for any taxable year shall be applied to reduce the
tax attributes of the taxpayer as provided in paragraph (2).
10"(2) TAX ATTRIBUTES REDUCED; ORDER OF REDUCTION. -- The
reduction referred to in paragraph (1) shall be made in the
following tax attributes in the following order:
10"(A) NOL. -- Any pre-assistance net operating loss for the
taxable year.
10"(B) INTEREST. -- The amount of any interest with respect to
which a deduction is allowable for the taxable year.
"(C) BUILT-IN PORTFOLIO LOSSES. -- Recognized built-in
portfolio losses for the taxable year.
10"(3) PRE-ASSISTANCE NET OPERATING LOSS. -- For purposes of
paragraph (2)(A) --
"(A) IN GENERAL. -- The pre-assistance net operating loss
shall be determined in the same manner as a pre-change loss under
section 382(d), except that --
"(i) the applicable financial institution shall be treated as
the old loss corporation, and
10"(ii) the determination date shall be substituted for the
change date.
"(B) ORDERING RULE. -- The reduction under paragraph (2)(A)
shall be made in the carryovers in the order in which carryovers
are taken into account under this chapter for the taxable year.
"(4) RECOGNIZED BUILT-IN PORTFOLIO LOSSES. -- For purposes of
paragraph (2)(C), recognized built-in portfolio losses shall be
determined in the same manner as recognized built-in losses under
section 382(h), except that --
"(A) the only assets taken into account shall be --
"(i) the loan portfolio,
"(ii) marketable securities (within the meaning of section
453(f)(2)), and
(iii) property described in section 595(a),
"(B) the rules of clauses (i) and (ii) of paragraph (3)(A)
shall apply,
(C) there shall be no limit on the number of years in the
recognition period, and
"(D) section 382(h) shall be applied without regard to
paragraph (3)(B) thereof.
"(5) DEFINITIONS AND SPECIAL RULES. -- For purposes of this
subsection --
"(A) APPLICABLE FINANCIAL INSTITUTION. -- The term 'applicable
financial institution' means the domestic building and loan
association or bank the financial condition of which was
determined by the Federal Savings and Loan Insurance Corporation
or the Federal Deposit Insurance Corporation to require the
financial assistance described in subsection (a).
"(B) DETERMINATION DATE. -- The term 'determination date'
means the date of the determination under subparagraph (A).
Except as provided by the Secretary, any subsequent revision or
modification of such determination shall be treated as made on the
original determination date.
"(C) TAXABLE ASSET ACQUISITIONS. --
"(i) IN GENERAL. -- In the case of any acquisition of the
assets of any applicable financial institution to which section
381 does not apply --
"(I) paragraph (1) shall not apply to any amounts excludable
under subsection (a) which are payments made at the time of the
acquisition to the person acquiring such assets, and
"(II) rights to receive future payments excludable under
subsection (a) in connection with the acquisition shall be treated
as provided in clause (ii).
"(ii) TREATMENT OF FUTURE PAYMENTS. --
"(I) IN GENERAL. -- Rights to receive future payments
described in clause (i)(II) shall be treated as assets to which
basis is allocated.
"(II) RECOVERY OF BASIS. -- Any basis allocated under
subclause (I) shall be recovered in such manner as the Secretary
may provide, but in no event shall the amount recovered for any
taxable year beginning before the taxable year in which the rights
expire exceed the aggregate payments received with respect to such
rights for all taxable years reduced by the amount of basis
recovered with respect to such rights in preceding taxable years.
"(III) APPLICATION OF PARAGRAPH (1). -- Paragraph (1) shall
apply to payments described in subclause (I) in a taxable year
only to the extent such payments exceed the amount of basis
recovered in such taxable year.
"(D) TREATMENT OF REPAYMENTS. -- If a taxpayer repays an
amount to which paragraph (1) applied in a preceding taxable year,
there shall be allowed as a deduction for the taxable year of
repayment an amount equal to the reduction in tax attributes under
paragraph (1) attributable to the amount repaid.
"(E) CARRYOVERS. -- If 50 percent of the amount excludable
under subsection (a) for any taxable year exceeds the amount of
the tax attributes described in paragraph (2) for such taxable
year, then, for purposes of this subsection, the amount excludable
under subsection (a) for the succeeding taxable year shall be
increased by an amount equal to twice the amount of such excess.
"(F) REGULATIONS. -- The Secretary shall prescribe such
regulations as may be necessary to carry out the provisions of
this subsection."
(2) APPLICATION OF SECTION 265. "26 USC 597 note" --
Subparagraph (B) of section 904(c)(2) of the Reform Act is amended
by striking out "Section 265(a)(1)" and inserting in lieu thereof
"Section 265".
(3) EFFECTIVE DATE. -- The amendments made by this subsection
"26 USC 597 note" shall apply to any transfer --
(A) after December 31, 1988, and before January 1, 1990, unless
such transfer is pursuant to an acquisition occurring before
January 1, 1989, and
(B) after December 31, 1989, if such transfer is pursuant to an
acquisition occurring after December 31, 1988, and before January
1, 1990.
In the case of a taxpayer to which the amendments made by
subsection (b)(1) apply, subparagraphs (A) and (B) shall be
applied by substituting "the date of the enactment of this Act"
for "December 31, 1988".
SEC. 5001. CORPORATE ESTIMATED TAX PAYMENTS.
(a) GENERAL RULE. -- Paragraph (1) of section 6655(e) of the 1986
Code (relating to annualization) is amended by striking out the last
sentence.
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) "26 USC
6655 note" shall apply to installments required to be made after
December 31, 1988.
SEC. 5011. LIMITATION ON UNREASONABLE MORTALITY AND OTHER EXPENSE
CHARGES UNDER SECTION 7702.
(a) GENERAL RULE. -- Subparagraph (B) of section 7702(c)(3) of the
1986 Code (relating to guideline premium requirements) is amended by
striking out clauses (i) and (ii) and inserting in lieu thereof the
following:
"(i) reasonable mortality charges which meet the requirements
(if any) prescribed in regulations and which (except as provided
in regulations) do not exceed the mortality charges specified in
the prevailing commissioners' standard tables (as defined in
section 807(d)(5)) as of the time the contract is issued,
"(ii) any reasonable charges (other than mortality charges)
which (on the basis of the company's experience, if any, with
respect to similar contracts) are reasonably expected to be
actually paid, and".
(b) SPECIAL RULES. -- Paragraph (3) of section 7702(c) of the 1986
Code is amended by adding at the end thereof the following new
subparagraph:
"(D) SPECIAL RULES FOR SUBPARAGRAPH (B)(ii). --
"(i) CHARGES NOT SPECIFIED IN THE CONTRACT. -- If any charge
is not specified in the contract, the amount taken into account
under subparagraph (B)(ii) for such charge shall be zero.
"(ii) NEW COMPANIES, ETC. -- If any company does not have
adequate experience for purposes of the determination under
subparagraph (B)(ii), to the extent provided in regulations, such
determination shall be made on the basis of the industry-wide
experience."
(c) INTERIM RULES. -- "26 USC 7702 note"
(1) REGULATIONS. -- Not later than January 1, 1990, the
Secretary of the Treasury (or his delegate) shall issue
regulations under section 7702(c)(3)(B)(i) of the 1986 Code (as
amended by subsection (a)).
(2) STANDARDS BEFORE REGULATIONS TAKE EFFECT. -- In the case
of any contract to which the amendments made by this section apply
and which is issued before the effective date of the regulations
required under paragraph (1), mortality charges which do not
differ materially from the charges actually expected to be imposed
by the company (taking into account any relevant characteristic of
the insured of which the company is aware) shall be treated as
meeting the requirements of clause (i) of section 7702(c)(3)(B) of
the 1986 Code (as amended by subsection (a)).
(d) EFFECTIVE DATE. -- The amendments made by this section "26 USC
7702 note" shall apply to contracts entered into on or after October 21,
1988.
SEC. 5012. TREATMENT OF MODIFIED ENDOWMENT CONTRACTS.
(a) DISTRIBUTION RULES. --
(1) IN GENERAL. -- Subsection (e) of section 72 of the 1986
Code (relating to amounts not received as annuities) is amended by
adding at the end thereof the following new paragraph:
"(10) TREATMENT OF MODIFIED ENDOWMENT CONTRACTS. --
"(A) IN GENERAL. -- Notwithstanding paragraph (5)(C), in the
case of any modified endowment contract (as defined in section
7702A) --
"(i) paragraphs (2)(B) and (4)(A) shall apply, and
(ii) in applying paragraph (4)(A), 'any person' shall be
substituted for 'an individual'.
"(B) TREATMENT OF CERTAIN BURIAL CONTRACTS. -- Notwithstanding
subparagraph (A), paragraph (4)(A) shall not apply to any
assignment (or pledge) of a modified endowment contract if such
assignment (or pledge) is solely to cover the payment of expenses
referred to in section 7702(e)(2)(C)(iii) and if the maximum death
benefit under such contract does not exceed $25,000."
(2) TECHNICAL AMENDMENT. -- Subparagraph (C) of section 72(
e)(5) of the 1986 Code is amended by striking out "Except to the
extent and inserting in lieu thereof "Except as provided in
paragraph (10) and except to the extent".
(b) ADDITIONAL TAX. --
(1) IN GENERAL. -- Section 72 of the 1986 Code (relating to
annuities; certain proceeds of endowment and life insurance
contracts) is amended by redesignating subsection (v) as
subsection (w) and by inserting after subsection (u) the following
new subsection:
"(v) 10-PERCENT ADDITIONAL TAX FOR TAXABLE DISTRIBUTIONS FROM
MODIFIED ENDOWMENT CONTRACTS. --
"(1) IMPOSITION OF ADDITIONAL TAX. -- If any taxpayer receives
any amount under a modified endowment contract (as defined in
section 7702A), the taxpayer's tax under this chapter for the
taxable year in which such amount is received shall be increased
by an amount equal to 10 percent of the portion of such amount
which is includible in gross income.
"(2) SUBSECTION NOT TO APPLY TO CERTAIN DISTRIBUTIONS. --
Paragraph (1) shall not apply to any distribution --
"(A) made on or after the date on which the taxpayer attains
age 59 1/2,
"(B) which is attributable to the taxpayer's becoming disabled
(within the meaning of subsection (m)(7)), or
"(C) which is part of a series of substantially equal periodic
payments (not less frequently than annually) made for the life (or
life expectancy) of the taxpayer or the joint lives (or joint life
expectancies) of such taxpayer and his beneficiary."
(2 TECHNICAL AMENDMENT. -- Subparagraph (C) of section 26(b)(
2) of the 1986 Code is amended by striking out "or (q)" and
inserting in lieu thereof "(q), or (v)".
(c) MODIFIED ENDOWMENT CONTRACT DEFINED. --
(1) IN GENERAL. -- Chapter 79 of the 1986 Code is amended by
inserting after section 7702 the following new section:
"SEC. 7702A. MODIFIED ENDOWMENT CONTRACT DEFINED.
"(a) GENERAL RULE. -- For purposes of section 72, the term 'modified
endowment contract' means any contract meeting the requirements of
section 7702 --
"(1) which --
"(A) is entered into on or after June 21, 1988, and
"(B) fails to meet the 7-pay test of subsection (b), or
"(2) which is received in exchange for a contract described in
paragraph (1).
"(b) 7-PAY TEST. -- For purposes of subsection (a), a contract fails
to meet the 7-pay test of this subsection if the accumulated amount paid
under the contract at any time during the 1st 7 contract years exceeds
the sum of the net level premiums which would have been paid on or
before such time if the contract provided for paid-up future benefits
after the payment of 7 level annual premiums.
"(c) COMPUTATIONAL RULES. -- 10"(1) IN GENERAL. -- Except as
provided in this subsection,
the determination under subsection (b) of the 7 level annual
premiums shall be made --
"(A) as of the time the contract is issued, and
"(B) by applying the rules of section 7702(b)(2) and of section
7702(e) (other than paragraph (2)(C) thereof), except that the
death benefit provided for the 1st contract year shall be deemed
to be provided until the maturity date without regard to any
scheduled reduction after the 1st 7 contract years.
"(2) REDUCTION IN BENEFITS DURING 1ST 7 YEARS. --
"(A) IN GENERAL. -- If there is a reduction in benefits under
the contract within the 1st 7 contract years, this section shall
be applied as if the contract had originally been issued at the
reduced benefit level.
"(B) REDUCTIONS ATTRIBUTABLE TO NONPAYMENT OF PREMIUMS. -- Any
reduction in benefits attributable to the nonpayment of premiums
due under the contract shall not be taken into account under
subparagraph (A) if the benefits are reinstated within 90 days
after the reduction in such benefits.
"(3) TREATMENT OF MATERIAL CHANGES. --
"(A) IN GENERAL. -- If there is a material change in the
benefits under (or in other terms of) the contract which was not
reflected in any previous determination under this section, for
purposes of this section --
"(i) such contract shall be treated as a new contract entered
into on the day on which such material change takes effect, and
"(ii) appropriate adjustments shall be made in determining
whether such contract meets the 7-pay test of subsection (b) to
take into account the cash surrender value under the contract.
10"(B) TREATMENT OF CERTAIN INCREASES IN FUTURE BENEFITS. --
For purposes of subparagraph (A), the term 'material change'
includes any increase in future benefits under the contract.
Such term shall not include --
"(i) any increase which is attributable to the payment of
premiums necessary to fund the lowest level of future benefits
payable in the 1st 7 contract years (determined after taking into
account death benefit increases described in subparagraph (A) or
(B) of section 7702(e)(2)) or to crediting of interest or other
earnings (including policyholder dividends) in respect of such
premiums, and
"(ii) to the extent provided in regulations, any cost-of-living
increase based on an established broad-based index if such
increase is funded ratably over the remaining life of the
contract.
"(4) SPECIAL RULE FOR CONTRACTS WITH DEATH BENEFITS UNDER
$10,000. -- In the case of a contract --
"(A) which provides an initial death benefit of $10,000 or
less, and
"(B) which requires at least 7 nondecreasing annual premium
payments,
each of the 7 level annual premiums determined under subsection
(b) (without regard to this paragraph) shall be increased by $75.
For purposes of this paragraph, the contract involved and all
contracts previously issued to the same insurer by the same
company shall be treated as one contract.
"(5) REGULATORY AUTHORITY FOR CERTAIN COLLECTION EXPENSES. --
The Secretary may by regulations prescribe rules for taking into
account expenses solely attributable to the collection of premiums
paid more frequently than annually.
"(d) DISTRIBUTIONS AFFECTED. -- If a contract fails to meet the
7-pay test of subsection (b), such contract shall be treated as failing
to meet such requirements only in the case of --
"(1) distributions during the contract year in which the
failure takes effect and during any subsequent contract year, and
"(2) under regulations prescribed by the Secretary,
distributions (not described in paragraph (1)) in anticipation of
such failure.
For purposes of the preceding sentence, any distribution which is
made within 2 years before the failure to meet the 7-pay test shall be
treated as made in anticipation of such failure.
"(e) DEFINITIONS. -- For purposes of this section --
"(1) AMOUNT PAID. --
"(A) IN GENERAL. -- The term 'amount paid' means --
"(i) the premiums paid under the contract, reduced by
"(ii) amounts to which section 72(e) applies (determined
without regard to paragraph (4)(A) thereof) but not including
amounts includible in gross income.
"(B) TREATMENT OF CERTAIN PREMIUMS RETURNED. -- If, in order
to comply with the requirements of subsection (b), any portion of
any premium paid during any contract year is returned by the
insurance company (with interest) within 60 days after the end of
such contract year, the amount so returned (excluding interest)
shall be deemed to reduce the sum of the premiums paid under the
contract during such contract year.
"(C) INTEREST RETURNED INCLUDIBLE IN GROSS INCOME. --
Notwithstanding the provisions of section 72(e), the amount of any
interest returned as provided in subparagraph (B) shall be
includible in the gross income of the recipient.
"(2) CONTRACT YEAR. -- The term 'contract year' means the
12-month period beginning with the 1st month for which the
contract is in effect, and each 12-month period beginning with the
corresponding month in subsequent calendar years.
"(3) OTHER TERMS. -- Except as otherwise provided in this
section, terms used in this section shall have the same meaning as
when used in section 7702."
(2) CLERICAL AMENDMENT. -- The table of sections for chapter
79 of the 1986 Code is amended by inserting after the item
relating to section 7702 the following new item:
"Sec. 7702A. Modified endowment contract defined."
(d) OTHER MODIFICATIONS. --
(1) TREATMENT OF LOANS. -- Subparagraph (A) of section 72(e)(
4) of the 1986 Code (relating to loans treated as distributions)
is amended by adding at the end thereof the following new
sentence: "The preceding sentence shall not apply for purposes of
determining investment in the contract, except that the investment
in the contract shall be increased by any amount included in gross
income by reason of the amount treated as received under the
preceding sentence."
(2) ANTI-ABUSE RULES. -- Subsection (e) of section 72 of the
1986 Code is amended by adding at the end thereof the following
new paragraph:
"(11) ANTI-ABUSE RULES. --
"(A) IN GENERAL. -- For purposes of determining the amount
includible in gross income under this subsection --
"(i) all modified endowment contracts issued by the same
company to the same policyholder during any 12-month period shall
be treated as 1 modified endowment contract, and
"(ii) all annuity contracts issued by the same company to the
same policyholder during any 12-month period shall be treated as 1
annuity contract.
"(B) REGULATORY AUTHORITY. -- The Secretary may by regulations
prescribe such additional rules as may be necessary or appropriate
to prevent avoidance of the purposes of this subsection through
serial purchases of contracts or otherwise."
(e) EFFECTIVE DATES. -- "26 USC 7702A note"
(1) IN GENERAL. -- Except as otherwise provided in this
subsection, the amendments made by this section shall apply to
contracts entered into on or after June 21, 1988.
(2) SPECIAL RULE WHERE DEATH BENEFIT INCREASES BY MORE THAN
$150,000. -- If the death benefit under the contract increases by
more than $150,000 over the death benefit under the contract in
effect on October 20, 1988, the rules of section 7702A(c)(3) of
the 1986 Code (as added by this section) shall apply in
determining whether such contract is issued on or after June 21,
1988. The preceding sentence shall not apply in the case of a
contract which, as of June 21, 1988, required at least 7 level
annual premium payments and under which the policyholder continues
to make level annual premium payments over the life of the
contract.
(3) CERTAIN OTHER MATERIAL CHANGES TAKEN INTO ACCOUNT. -- A
contract entered into before June 21, 1988, shall be treated as
entered into after such date if --
(A) on or after June 21, 1988, the death benefit under the
contract is increased (or a qualified additional benefit is
increased or added) and before June 21, 1988, the owner of the
contract did not have a unilateral right under the contract to
obtain such increase or addition without providing additional
evidence of insurability, or
(B) the contract is converted after June 20, 1988, from a term
life insurance contract to a life insurance contract providing
coverage other than term life insurance coverage without regard to
any right of the owner of the contract to such conversion.
(4) CERTAIN EXCHANGES PERMITTED. -- In the case of a modified
endowment contract which --
(A) required at least 7 annual level premium payments,
(B) is entered into after June 20, 1988, and before the date of
the enactment of this Act, and
(C) is exchanged within 3 months after such date of enactment
for a life insurance contract which meets the requirements of
section 7702A(b),
the contract which is received in exchange for such contract
shall not be treated as a modified endowment contract if the
taxpayer elects, notwithstanding section 1035 of the 1986 Code, to
recognize gain on such exchange.
(5) SPECIAL RULE FOR ANNUITY CONTRACTS. -- In the case of
annuity contracts, the amendments made by subsection (d) shall
apply to contracts entered into after October 21, 1988.
SEC. 5013. VALUATION OF GROUP-TERM LIFE INSURANCE.
(a) GENERAL RULE. -- Subsection (c) of section 79 of the
1986 Code (relating to the determination of the cost of insurance)
is amended by striking out the last sentence.
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) "26 USC
79 note" shall apply to taxable years beginning after December 31, 1988.
SEC. 5014. STUDY.
(a) GENERAL RULE. -- The Secretary of the Treasury and the
Comptroller General of the United States shall each conduct a study on
--
(1) the effectiveness of the revised tax treatment of life
insurance and annuity products in preventing the sale of life
insurance primarily for investment purposes, and
(2) the policy justification for, and the practical
implications of the present-law treatment of the earnings on the
cash surrender value of life insurance and annuity contracts in
light of the reforms made by the Tax Reform Act of 1986.
(b) REPORT. -- Not later than June 1, 1989, the Secretary of the
Treasury and the Comptroller General of the United States shall each
submit a report to the Committee on Ways and Means of the House of
Representatives and the Committee on Finance of the Senate on the study
conducted under subsection (a), together with such recommendations as
they may deem advisable.
SEC. 5021. "26 USC 1504 note" REPEAL OF RULES PERMITTING LOSS
TRANSFERS BY ALASKA NATIVE CORPORATIONS.
(a) GENERAL RULE. -- Nothing in section 60(b)(5) of the Tax Reform
Act of 1984 (as amended by section 1804(e)(4) of the Tax Reform Act of
1986) --
(1) shall allow any loss (or credit) of any corporation which
arises after April 26, 1988, to be used to offset the income (or
tax) of another corporation if such use would not be allowable
without regard to such section 60(b)(5) as so amended, or
(2) shall allow any loss (or credit) of any corporation which
arises on or before such date to be used to offset disqualified
income (or tax attributable to such income) of another corporation
if such use would not be allowable without regard to such section
60(b)(5) as so amended.
(b) EXCEPTION FOR EXISTING CONTRACTS. --
(1) IN GENERAL. -- Subsection (a) shall not apply to any loss
(or credit) of any corporation if --
(A) such corporation was in existence on April 26, 1988, and
(B) such loss (or credit) is used to offset income assigned (or
attributable to property contributed) pursuant to a binding
contract entered into before July 26, 1988.
(2) $40,000,000 LIMITATION. -- The aggregate amount of losses
(and the deduction equivalent of credits as determined in the same
manner as under section 469(j)(5) of the 1986 Code) to which
paragraph (1) applies with respect to any corporation shall not
exceed $40,000,000. For purposes of this paragraph, a Native
Corporation and all other corporations all of the stock of which
is owned directly by such corporation shall be treated as 1
corporation.
(3) SPECIAL RULE FOR CORPORATIONS UNDER TITLE 11. -- In the
case of a corporation which on April 26, 1988, was under the
jurisdiction of a Federal district court under title 11 of the
United States Code --
(A) paragraph (1)(B) shall be applied by substituting the date
1 year after the date of the enactment of this Act for "July 26,
1988",
(B) paragraph (1) shall not apply to any loss or credit which
arises on or after the date 1 year after the date of the enactment
of this Act, and
(C) paragraph (2) shall be applied by substituting $99,000,000"
for "$40,000,000".
(c) SPECIAL ADMINISTRATIVE RULES. --
(1) NOTICE TO NATIVE CORPORATIONS OF PROPOSED TAX ADJUSTMENTS.
-- Notwithstanding section 6103 of the 1986 Code, the Secretary of
the Treasury or his delegate shall notify a Native Corporation or
its designated representative of any proposed adjustment --
(A) of the tax liability of a taxpayer which has contracted
with the Native Corporation (or other corporation all of the stock
of which is owned directly by the Native Corporation) for the use
of losses of such Native Corporation (or such other corporation),
and
(B) which is attributable to an asserted overstatement of
losses by, or misassignment of income (or income attributable to
property contributed) to, an affiliated group of which the Native
Corporation (or such other corporation) is a member.
Such notice shall only include information with respect to the
transaction between the taxpayer and the Native Corporation.
(2) RIGHTS OF NATIVE CORPORATION. --
(A) IN GENERAL. -- If a Native Corporation receives a notice
under paragraph (1), the Native Corporation shall have the right
to --
(i) submit to the Secretary of the Treasury or his delegate a
written statement regarding the proposed adjustment, and
(ii) meet with the Secretary of the Treasury or his delegate
with respect to such proposed adjustment.
The Secretary of the Treasury or his delegate may discuss such
proposed adjustment with the Native Corporation or its designated
representative.
(B) EXTENSION OF STATUTE OF LIMITATIONS. -- Subparagraph (A)
shall not apply if the Secretary of the Treasury or his delegate
determines that an extension of the statute of limitations is
necessary to permit the participation described in subparagraph
(A) and the taxpayer and the Secretary or his delegate have not
agreed to such extension.
(3) JUDICIAL PROCEEDINGS. -- In the case of any proceeding in
a Federal court or the United States Tax Court involving a
proposed adjustment under paragraph (1), the Native Corporation,
subject to the rules of such court, may file an amicus brief
concerning such adjustment.
(4) FAILURES. -- For purposes of the 1986 Code, any failure by
the Secretary of the Treasury or his delegate to comply with the
provisions of this subsection shall not affect the validity of the
determination of the Internal Revenue Service of any adjustment of
tax liability of any taxpayer described in paragraph (1).
(d) DISQUALIFIED INCOME DEFINED. -- For purposes of subsection (a),
the term "disqualified income" means any income assigned (or
attributable to property contributed) after April 26, 1988, by a person
who is not a Native Corporation or a corporation all the stock of which
is owned directly by a Native Corproation.
(e) BASIS DETERMINATION. -- For purposes of determining basis for
Federal tax purposes, no provision in any law (whether enacted before,
on, or after the date of the enactment of this Act) shall affect the
date on which the transfer to the Native Corporation is made. The
preceding sentence shall apply to all taxable years whether beginning
before, on, or after such date of enactment.
SEC. 5031. VALUATION TABLES.
(a) GENERAL RULE. -- Chapter 77 of the 1986 Code (relating to
miscellaneous provisions) is amended by adding at the end thereof the
following new section:
"SEC. 7520. VALUATION TABLES.
"(a) GENERAL RULE. -- For purposes of this title, the value of any
annuity, any interest for life or a term of years, or any remainder or
reversionary interest shall be determined --
"(1) under tables prescribed by the Secretary, and
"(2) by using an interest rate (rounded to the nearest 2/10ths
of 1 percent) equal to 120 percent of the Federal midterm rate in
effect under section 1274(d)(1) for the month in which the
valuation date falls.
If an income, estate, or gift tax charitable contribution is
allowable for any part of the property transferred, the taxpayer may
elect to use such Federal midterm rate for either of the 2 months
preceding the month in which the valuation date falls for purposes of
paragraph (2). In the case of transfers of more than 1 interest in the
same property with respect to which the taxpayer may use the same rate
under paragraph (2), the taxpayer shall use the same rate with respect
to each such interest.
"(b) SECTION NOT TO APPLY FOR CERTAIN PURPOSES. -- This section
shall not apply for purposes of part I of subchapter D of chapter 1 or
any other provision specified in regulations.
"(c) TABLES. --
"(1) IN GENERAL. -- The tables prescribed by the Secretary for
purposes of subsection (a) shall contain valuation factors for a
series of interest rate categories.
"(2) INITIAL TABLE. -- Not later than the day 3 months after
the date of the enactment of this section, the Secretary shall
prescribe initial tables for purposes of subsection (a). Such
tables may be based on the same mortality experience as used for
purposes of section 2031 on the date of the enactment of this
section.
"(3) REVISION FOR RECENT MORTALITY CHARGES. -- Not later than
December 31, 1989, the Secretary shall revise the initial tables
prescribed for purposes of subsection (a) to take into account the
most recent mortality experience available as of the time of such
revision. Such tables shall be revised not less frequently than
once each 10 years thereafter to take into account the most recent
mortality experience available as of the time of the revision.
"(d) VALUATION DATE. -- For purposes of this section, the term
'valuation date' means the date as of which the valuation is made.
"(e) TABLES TO INCLUDE FORMULAS. -- For purposes of this section,
the term 'tables' includes formulas."
(b) CLERICAL AMENDMENT. -- The table of sections for chapter 77 of
the 1986 Code is amended by adding at the end thereof the following new
item:
"Sec. 7520. Valuation tables."
(c) EFFECTIVE DATE. -- The amendments made by this section "26 USC
7520 note" shall apply in cases where the date as of which the valuation
is to be made occurs on or after the 1st day of the 6th calendar month
beginning after the date of the enactment of this Act.
SEC. 5032. RATE SCHEDULE FOR TAX ON ESTATES OF NONRESIDENTS NOT
CITIZENS.
(a) GENERAL RULE. -- Subsection (b) of section 2101 of the 1986 Code
(relating to computation of tax) is amended by striking out "a tentative
tax computed in accordance with the rate schedule set forth in
subsection (d)" each place it appears and inserting in lieu thereof "a
tentative tax computed under section 2001(c)".
(b) AMOUNT OF UNIFIED CREDIT. --
(1) IN GENERAL. -- Subsection (c) of section 2102 of the 1986
Code is amended --
(A) by striking out "$3,600" in paragraphs (1) and (2)(A) and
inserting in lieu thereof "$13,000", and
(B) by striking out "$15,075" in paragraph (2)(B) and inserting
in lieu thereof "$46,800".
(2) COORDINATION WITH TREATIES, ETC. -- Paragraph (3) of
section 2102(c) of the 1986 Code is amended to read as follows:
"(3) SPECIAL RULES. --
"(A) COORDINATION WITH TREATIES. -- To the extent required
under any treaty obligation of the United States, the credit
allowed under this subsection shall be equal to the amount which
bears the same ratio to $192,800 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.
"(B) COORDINATION WITH GIFT TAX UNIFIED CREDIT. -- If a credit
has been allowed under section 2505 with respect to any gift made
by the decedent, each dollar amount contained in paragraph (1) or
(2) or subparagraph (A) of this paragraph (whichever applies)
shall be reduced by the amount so allowed."
(c) TECHNICAL AMENDMENT. -- Subsection (d) of section 2101 of the
1986 Code is hereby repealed.
(d) EFFECTIVE DATE. -- The amendments made by this section "26 USC
2101 note" shall apply to the estates of decedents dying after the date
of the enactment of this Act.
SEC. 5033. DISALLOWANCE OF MARITAL DEDUCTION WHERE SPOUSE IS NOT
CITIZEN OF UNITED STATES.
(a) ESTATE TAX. --
(1) IN GENERAL. -- Section 2056 of the 1986 Code is amended by
adding at the end thereof the following new subsection:
"(d) DISALLOWANCE OF MARITAL DEDUCTION WHERE SURVIVING SPOUSE NOT
UNITED STATES CITIZEN. --
"(1) IN GENERAL. -- Except as provided in paragraph (2), if
the surviving spouse of the decedent is not a citizen of the
United States --
"(A) no deduction shall be allowed under subsection (a), and
"(B) section 2040(b) shall not apply.
"(2) MARITAL DEDUCTION ALLOWED FOR CERTAIN TRANSFERS IN TRUST.
--
"(A) IN GENERAL. -- Paragraph (1) shall not apply to any
property passing to the surviving spouse in a qualified domestic
trust.
"(B) PROPERTY PASSING OUTSIDE OF PROBATE ESTATE. -- If any
property passes from the decedent to the surviving spouse of the
decedent outside of the decedent's probate estate, for purposes of
subparagraph (A), such property shall be treated as passing to
such spouse in a qualified domestic trust if such property is
transferred to such a trust before the day on which the return of
the tax imposed by section 2001 is made.
"(3) ALLOWANCE OF CREDIT TO CERTAIN SPOUSES. -- If --
"(A) property passes to the surviving spouse of the decedent
(hereinafter in this paragraph referred to as the 'first
decedent'),
"(B) without regard to this subsection, a deduction would be
allowable under subsection (a) with respect to such property, and
"(C) such surviving spouse dies and the estate of such
surviving spouse is subject to the tax imposed by section 2001,
the Federal estate tax paid (or treated as paid under section
2056A(b)(6)) by the first decedent with respect to such property
shall be allowed as a credit under section 2013 to the estate of
such surviving spouse and the amount of such credit shall be
determined under such section without regard to when the first
decedent died."
(2) TREATMENT OF QUALIFIED DOMESTIC TRUST. -- Part IV of
subchapter A of chapter 11 of the 1986 Code is amended by
inserting after section 2056 the following new section:
4"SEC. 2056A. QUALIFIED DOMESTIC TRUST.
"(a) QUALIFIED DOMESTIC TRUST DEFINED. -- For purposes of this
section and section 2056(d), the term 'qualified domestic trust' means,
with respect to any decedent, any trust if --
"(1) the trust instrument requires that all trustees of the
trust be individual citizens of the United States or domestic
corporations,
"(2) the surviving spouse of the decedent is entitled to all
the income from the property in such trust, payable annually or at
more frequent intervals,
"(3) such trust meets such requirements as the Secretary may by
regulations prescribe to ensure the collection of any tax imposed
by subsection (b), and
"(4) an election under this section by the executor of the
decedent applies to such trust.
"(b) TAX TREATMENT OF TRUST. --
"(1) IMPOSITION OF ESTATE TAX. -- There is hereby imposed an
estate tax on --
"(A) any distribution before the date of the death of the
surviving spouse from a qualified domestic trust other than a
distribution of income required under subsection (a)(2), and
"(B) the value of the property remaining in a qualified
domestic trust on the date of the death of the surviving spouse.
"(2) AMOUNT OF TAX. --
"(A) IN GENERAL. -- In the case of any taxable event, the
amount of the estate tax imposed by paragraph (1) shall be the
amount equal to --
"(i) the tax which would have been imposed under section 2001
on the estate of the decedent if the taxable estate of the
decedent had been increased by the sum of --
"(I) the amount involved in such taxable event, plus
"(II) the aggregate amount involved in previous taxable events
with respect to qualified domestic trusts of such decedent,
reduced by
"(ii) the tax which would have been imposed under section 2001
on the estate of the decedent if the taxable estate of the
decedent had been increased by the amount referred to in clause
(i)(II).
"(B) TENTATIVE TAX WHERE TAX OF DECEDENT NOT FINALLY
DETERMINED. --
"(i) IN GENERAL. -- If the tax imposed on the estate of the
decedent under section 2001 is not finally determined before the
taxable event, the amount of the tax imposed by paragraph (1) on
such event shall be determined by using the highest rate of tax in
effect under section 2001 as of the date of the decedent's death.
"(ii) REFUND OF EXCESS WHEN TAX FINALLY DETERMINED. -- If --
"(I) the amount of the tax determined under clause (i), exceeds
"(II) the tax determined under subparagraph (A) on the basis of
the final determination of the tax imposed by section 2001 on the
estate of the decedent,
such excess shall be allowed as a credit or refund if claim
therefore is filed not later than 1 year after the date of such
final determination.
"(3) TAX IMPOSED WHERE TRUST CEASES TO QUALIFY. -- If any
person other than an individual citizen of the United States or a
domestic corporation becomes a trustee of a qualified domestic
trust (or such trust ceases to meet the requirements of subsection
(a)(3)), the tax imposed by paragraph (1) shall apply as if the
surviving spouse died on the date on which such person became such
a trustee or the date of such cessation, as the case may be.
"(4) DUE DATE. -- The estate tax imposed by paragraph (1)
shall be due and payable on the 15th day of the 4th month
following the calendar year in which the taxable event occurs.
"(5) LIABILITY FOR TAX. -- Each trustee shall be personally
liable for the amount of the tax imposed by paragraph (1). Rules
similar to the rules of section 2204 shall apply for purposes of
the preceding sentence.
"(6) TREATMENT OF TAX. -- For purposes of section 2056(d), any
tax paid under paragraph (1) shall be treated as a tax paid under
section 2001 with respect to the estate of the decedent.
"(7) LIEN FOR TAX. -- For purposes of section 6324, any tax
imposed by paragraph (1) shall be treated as an estate tax imposed
under this chapter with respect to a decedent dying on the date of
the taxable event (and the property involved shall be treated as
the gross estate of such decedent).
"(8) TAXABLE EVENT. -- The term 'taxable event' means the
event resulting in tax being imposed under paragraph (1).
"(c) DEFINITIONS. -- For purposes of this section --
"(1) PROPERTY INCLUDES INTEREST THEREIN. -- The term
'property' includes an interest in property.
"(2) INCOME. -- The term 'income' has the meaning given to
such term by section 643(b).
"(d) ELECTION. -- An election under this section with respect to any
trust shall be made by the executor on the return of the tax imposed by
section 2001. Such an election, once made, shall be irrevocable."
(3) CLERICAL AMENDMENT. -- The table of sections for part IV
of subchapter A of chapter 1 of the 1986 Code is amended by
inserting after the item relating to section 2056 the following
new item:
"Sec. 2056A. Qualified domestic trusts."
(b) GIFT TAX. -- Section 2523 of the 1986 Code is amended by adding
at the end thereof the following new subsection:
"(i) DISALLOWANCE OF MARITAL DEDUCTION WHERE SPOUSE NOT CITIZEN. --
If the spouse of the donor is not a citizen of the United States --
"(1) no deduction shall be allowed under this section,
"(2) section 2503(b) shall be applied with respect to gifts
made by the donor to such spouse by substituting '$100,000' for
'$10,000', and
"(3) the principles of sections 2515 and 2515A (as such
sections were in effect before their repeal by the Economic
Recovery Tax Act of 1981) shall apply, except that the provisions
of such section 2515 providing for an election shall not apply."
(c) ESTATES OF NONRESIDENTS WHO ARE NOT CITIZENS BUT HAVE CITIZENS AS
SPOUSES. -- Subsection (a) of section 2106 of the 1986 Code is amended
by adding at the end thereof the following new paragraph:
"(3) MARITAL DEDUCTION ALLOWED WHERE SPOUSE IS CITIZEN. -- The
amount which would be deductible with respect to property situated
in the United States at the time of the decedent's death under the
principles of section 2056."
(d) EFFECTIVE DATE. --
(1) The amendments made by subsections (a) and (c) "26 USC 2056
note" shall apply to estates of the decedents dying after the date
of the enactment of this Act.
(2) The amendments made by subsection (b) "26 USC 2523 note"
shall apply to gifts on or after July 14, 1988.
SEC. 5041. LONG-TERM CONTRACT PROVISIONS.
(a) GENERAL RULE. -- Subsection (a) of section 460 of the 1986 Code
is amended --
(1) by striking out "70 percent" each place it appears
(including in the heading of paragraph (2)) and inserting in lieu
thereof "90 percent", and
(2) by striking out "30 percent" in paragraph (1)(B) and
inserting in lieu thereof "10 percent".
(b) SPECIAL RULES FOR RESIDENTIAL CONSTRUCTION CONTRACTS. --
(1) EXCEPTION FOR HOME CONSTRUCTION CONTRACTS. -- Paragraph
(1) of section 460(e) of the 1986 Code is amended to read as
follows:
"(1) IN GENERAL. -- Subsections (a), (b), and (c)(1) and (2)
shall not apply to --
"(A) any home construction contract, or
"(B) any other construction contract entered into by a taxpayer
--
"(i) who estimates (at the time such contract is entered into)
that such contract will be completed within the 2-year period
beginning on the contract commencement date of such contract, and
"(ii) whose average annual gross receipts for the 3 taxable
years preceding the taxable year in which such contract is entered
into do not exceed $10,000,000.
In the case of a home construction contract with respect to
which the requirements of clauses (i) and (ii) of subparagraph (B)
are not met, section 263A shall apply notwithstanding subsection
(c)(4) thereof."
(2) SPECIAL TREATMENT FOR OTHER RESIDENTIAL CONSTRUCTION
CONTRACTS. -- Subsection (e) of section 460 of the 1986 Code is
amended by adding at the end thereof the following new paragraph:
"(5) SPECIAL RULE FOR RESIDENTIAL CONSTRUCTION CONTRACTS WHICH
ARE NOT HOME CONSTRUCTION CONTRACTS. -- In the case of any
residential construction contract which is not a home construction
contract, subsection (a) shall be applied --
"(A) by substituting '70 percent' for '90 percent' each place
it appears, and
"(B) by substituting '30 percent' for '10 percent'."
(3) DEFINITIONS. -- Subsection (e) of section 460 of the 1986
Code is amended by adding at the end thereof the following new
paragraph:
"(6) DEFINITIONS RELATING TO RESIDENTIAL CONSTRUCTION
CONTRACTS. -- For purposes of this subsection --
"(A) HOME CONSTRUCTION CONTRACT. -- The term 'home
construction contract' means any construction contract if 80
percent or more of the estimated total contract costs (as of the
close of the taxable year in which the contract was entered into)
are reasonably expected to be attributable to the building,
construction, reconstruction, or rehabilitation of --
"(i) dwelling units contained in buildings containing 4 or
fewer dwelling units, and
"(ii) improvements to real property directly related to such
dwelling units and located on the site of such dwelling units.
For purposes of clause (i), each townhouse or rowhouse shall be
treated as a separate building.
"(B) RESIDENTIAL CONSTRUCTION CONTRACT. -- The term
'residential construction contract' means any contract which would
be described in subparagraph (A) if clause (i) of such
subparagraph reads as follows:
"'(i) dwelling units (as defined in section 167(k)), and'."
(4) CERTAIN HOME CONSTRUCTION CONTRACTS NOT SUBJECT TO MINIMUM
TAX. -- Paragraph (3) of section 56(a) of the 1986 Code is
amended by adding at the end thereof the following new sentence:
"The preceding sentence shall not apply to any home construction
contract (as defined in section 460(e)(6)) with respect to which
the requirements of clauses (i) and (ii) of section 460(e)(1)(B)
are met."
(c) REGULATORY AUTHORITY. -- Section 460 of the 1986 Code is amended
by adding at the end thereof the following new subsection:
"(h) REGULATIONS. -- The Secretary shall prescribe such regulations
as may be necessary or appropriate to carry out the purposes of this
section, including regulations to prevent the use of related parties,
pass-thru entities, intermediaries, options, or other similar
arrangements to avoid the application of this section."
(d) SIMPLIFIED LOOK-BACK METHOD FOR PASS-THRU ENTITIES. -- Subsection
(b) of section 460 of the 1986 Code is amended by adding at the end
thereof the following new paragraph:
"(5) SIMPLIFIED LOOK-BACK METHOD FOR PASS-THRU ENTITIES. --
"(A) IN GENERAL. -- In the case of a pass-thru entity --
"(i) the look-back method of paragraph (3) shall be applied at
the entity level,
"(ii) in determining overpayments and underpayments for
purposes of applying paragraph (3)(B) --
"(I) any increase in the income under the contract for any
taxable year by reason of the allocation under paragraph (3)(A)
shall be treated as giving rise to an underpayment determined by
applying the highest rate for such year to such increase, and
"(II) any decrease in such income for any taxable year by
reason of such allocation shall be treated as giving rise to an
overpayment determined by applying the highest rate for such year
to such decrease, and
"(iii) any interest required to be paid by the taxpayer under
paragraph (3) shall be paid by such entity (and any interest
entitled to be received by the taxpayer under paragraph (3) shall
be paid to such entity).
"(B) EXCEPTIONS. --
"(i) CLOSELY HELD PASS-THRU ENTITIES. -- This paragraph shall
not apply to any closely held pass-thru entity.
"(ii) FOREIGN CONTRACTS. -- This paragraph shall not apply to
any contract unless substantially all of the income from such
contract is from sources in the United States.
10"(C OTHER DEFINITIONS. -- For purposes of this paragraph --
"(i) HIGHEST RATE. -- The term 'highest rate' means --
"(I) the highest rate of tax specified in section 11, or
"(II) if at all times during the year involved more than 50
percent of the interests in the entity are held by individuals
directly or through 1 or more other pass-thru entities, the
highest rate of tax specified in section 1.
"(ii) PASS-THRU ENTITY. -- The term 'pass-thru entity' means
any --
"(I) partnership,
"(II) S corporation, or
(III) trust.
"(iii) CLOSELY HELD PASS-THRU ENTITY. -- The term 'closely
held pass-thru entity' means any pass-thru entity if, at any time
during any taxable year for which there is income under the
contract, 50 percent or more (by value) of the beneficial
interests in such entity are held (directly or indirectly) by or
for 5 or fewer persons. For purposes of the preceding sentence,
rules similar to the constructive ownership rules of section
1563(e) shall apply."
(e) EFFECTIVE DATES. -- "26 USC 460 note"
(1) SUBSECTIONS (a), (b), AND (c). --
(A) IN GENERAL. -- Except as otherwise provided in this
paragraph, the amendments made by subsections (a), (b), and (c)
shall apply to contracts entered into on or after June 21, 1988.
(B) BINDING BIDS. -- The amendments made by subsections (a),
(b), and (c) shall not apply to any contract resulting from the
acceptance of a bid made before June 21, 1988. The preceding
sentence shall apply only if the bid could not have been revoked
or altered at any time on or after June 21, 1988.
(C) SPECIAL RULE FOR CERTAIN SHIP CONTRACTS. -- The amendments
made by subsections (a), (b), and (c) shall not apply in the case
of a qualified ship contract (as defined in section 10203(b)(2)(B)
of the Revenue Act of 1987).
(2) SUBSECTION (d). -- The amendment made by subsection (d)
shall apply as if included in the amendments made by section 804
of the Reform Act; except that such amendment shall not apply to
any contract completed in a taxable year ending before the date of
the enactment of this Act, if the due date (determined with regard
to extensions) for the return for such year is before such date of
enactment.
(d) STUDY. -- The Secretary of the Treasury or his delegate shall
conduct a study of the revenue realization method of accounting for
long-term contracts and of improvements to the percentage of completion
method of accounting for such contracts. Not later than the date 6
months after the date of the enactment of this Act, the Secretary shall
submit a report on such study to the Committee on Ways and Means of the
House of Representatives and the Committee on Finance of the Senate.
SEC. 5051. TREATMENT OF CERTAIN POOLED FINANCING BONDS.
(a) IN GENERAL. -- Section 149 of the 1986 Code is amended by adding
at the end thereof the following new subsection: 4"(f) TREATMENT OF
CERTAIN POOLED FINANCING BONDS. --
"(1) IN GENERAL. -- Section 103(a) shall not apply to any
pooled financing bond unless, with respect to the issue of which
such bond is a part, the requirements of paragraphs (2) and (3)
are met.
10"(2) REASONABLE EXPECTATION REQUIREMENT. --
"(A) IN GENERAL. -- The requirements of this paragraph are met
with respect to an issue if the issuer reasonably expects that as
of the close of the 3-year period beginning on the date of
issuance of the issue, at least 95 percent of the net proceeds of
the issue (as of the close of such period) will have been used
directly or indirectly to make or finance loans to ultimate
borrowers.
"(B) CERTAIN FACTORS MAY NOT BE TAKEN INTO ACCOUNT IN
DETERMINING EXPECTATIONS. -- Expectations as to changes in
interest rates or in the provisions of this title (or in the
regulations or rulings thereunder) may not be taken into account
in determining whether expectations are reasonable for purposes of
this paragraph.
"(C) NET PROCEEDS. -- For purposes of subparagraph (A), the
term 'net proceeds' has the meaning given such term by section 150
but shall not include proceeds used to finance issuance costs and
shall not include proceeds necessary to pay interest (during such
period) on the bonds which are part of the issue.
"(D) REFUNDING BONDS. -- For purposes of subparagraph (A), in
the case of a refunding bond, the date of issuance taken into
account is the date of issuance of the original bond.
10"(3) COST OF ISSUANCE PAYMENT REQUIREMENTS. -- The
requirements of this paragraph are met with respect to an issue if
--
"(A) the payment of legal and underwriting costs associated
with the issuance of the issue is not contingent, and
"(B) at least 95 percent of the reasonably expected legal and
underwriting costs associated with the issuance of the issue are
paid not later than the 180th day after the date of the issuance
of the issue.
"(4) POOLED FINANCING BOND. -- For purposes of this subsection
--
"(A) IN GENERAL. -- The term 'pooled financing bond' means any
bond issued as part of an issue more than $5,000,000 of the
proceeds of which are reasonably expected (at the time of the
issuance of the bonds) to be used (or are intentionally used)
directly or indirectly to make or finance loans to 2 or more
ultimate borrowers.
"(B) EXCEPTIONS. -- Such term shall not include any bond if --
"(i) section 146 applies to the issue of which such bond is a
part (other than by reason of section 141(b)(5)) or would apply
but for section 146(i), or
"(ii) section 143(l)(3) applies to such issue.
"(5) DEFINITION OF LOAN; TREATMENT OF MIXED USE ISSUES. --
"(A) LOAN. -- For purposes of this subsection, the term 'loan'
does not include --
"(i) any loan which is a nonpurpose investment (within the
meaning of section 148(f)(6)(A), determined without regard to
section 148(b)(3)), and
"(ii) any use of proceeds by an agency of the issuer unless
such agency is a political subdivision or instrumentality of the
issuer.
"(B) PORTION OF ISSUE TO BE USED FOR LOANS TREATED AS SEPARATE
ISSUE. -- If only a portion of the proceeds of an issue is
reasonably expected (at the time of issuance of the bond) to be
used (or is intentionally used) as described in paragraph (4)(A),
such portion and the other portion of such issue shall be treated
as separate issues for purposes of determining whether such
portion meets the requirements of this subsection."
(b) EFFECTIVE DATE. -- "26 USC 149 NOTE"
(1) IN GENERAL. -- The amendment made by subsection (a) shall
apply to bonds issued after October 21, 1988.
(2) SPECIAL RULE FOR REFUNDING BONDS. -- In the case of a bond
issued to refund a bond issued before October 22, 1988 --
(A) if the 3-year period described in section 149(f)(2)(A) of
the 1986 Code would (but for this paragraph) expire on or before
October 22, 1989, such period shall expire on October 21, 1990,
and
(B) if such period expires after October 22, 1989, the portion
of the proceeds of the issue of which the refunded bond is a part
which is available (on the date of issuance of the refunding
issue) to provide loans shall be treated as proceeds of a separate
issue (issued after October 21, 1988) for purposes of applying
section 149(f) of the 1986 Code.
SEC. 5052. TREASURY REGULATIONS RELATING TO STUDENT LOAN BONDS.
If the Secretary of the Treasury or his delegate does not issue
regulations under section 625 of the Tax Reform Act of 1984 and section
148(g) of the Internal Revenue Code of 1986 before July 1, 1989, the
Secretary or his delegate shall before such date submit to the Committee
on Ways and Means of the House of Representatives and the Committee on
Finance of the Senate a report explaining why such regulations were not
issued.
SEC. 5053. RESTRICTIONS ON BONDS USED TO PROVIDE RESIDENTIAL RENTAL
PROPERTY FOR FAMILY UNITS.
(a) 501(c)(3) BONDS USED TO PROVIDE RESIDENTIAL RENTAL HOUSING FOR
FAMILY UNITS MUST MEET TARGETING REQUIREMENTS. -- Section 145 of the
1986 Code (defining qualified 501(c)(3) bond) is amended by
redesignating subsection (d) as subsection (e) and by inserting after
subsection (c) the following new subsection:
"(d) RESTRICTIONS ON BONDS USED TO PROVIDE RESIDENTIAL RENTAL HOUSING
FOR FAMILY UNITS. --
"(1) IN GENERAL. -- Except as otherwise provided in this
subsection, a bond which is part of an issue shall not be a
qualified 501(c)(3) bond if any portion of the net proceeds of the
issue are to be used directly or indirectly to provide residential
rental property for family units.
"(2) EXCEPTION FOR BONDS USED TO PROVIDE QUALIFIED RESIDENTIAL
RENTAL PROJECTS. -- Paragraph (1) shall not apply to any bond
issued as part of an issue if the portion of such issue which is
to be used as described in paragraph (1) is to be used to provide
--
"(A) a residential rental property for family units if the
first use of such property is pursuant to such issue,
"(B) qualified residential rental projects (as defined in
section 142(d)), or
"(C) property which is to be substantially rehabilitated in a
rehabilitation beginning within the 2-year period ending 1 year
after the date of the acquisition of such property.
"(3) SUBSTANTIAL REHABILITATION. --
"(A) IN GENERAL. -- Except as provided in subparagraph (B),
rules similar to the rules of section 48(g)(1)(C) shall apply in
determining for purposes of paragraph (2)(C) whether property is
substantially rehabilitated.
"(B) EXCEPTION. -- For purposes of subparagraph (A), clause
(ii) of section 48(g)(1)(C) shall not apply, but the Secretary may
extend the 24-month period in section 48(g)(1)(C)(i) where
appropriate due to circumstances not within the control of the
owner."
(b) RESIDENTIAL RENTAL PROJECT NOT LOCATED WITHIN JURISDICTION OF
ISSUER TREATED AS INVESTMENT PROPERTY. -- Paragraph (2) of section
148(b) of the 1986 Code (defining investment property) is amended by
striking out "or" at the end of subparagraph (C), by striking out the
period at the end of subparagraph (D) and inserting in lieu thereof ",
or", and by adding at the end thereof the following new subparagraph:
"(E) in the case of a bond other than a private activity bond,
any residential rental property for family units which is not
located within the jurisdiction of the issuer and which is not
acquired to implement a court ordered or approved housing
desegregation plan."
(c) EFFECTIVE DATE. -- "26 USC 145 note"
(1) IN GENERAL. -- The amendments made by this section shall
apply to obligations issued after October 21, 1988.
(2) EXCEPTION FOR CONSTRUCTION OR BINDING AGREEMENT. --
(A) The amendments made by this section shall not apply to
bonds (other than refunding bonds) with respect to a facility --
(i)(I) the original use of which begins with the taxpayer, and
the construction, reconstruction, or rehabilitation of which began
before July 14, 1988, and was completed on or after such date, or
(II) the original use of which begins with the taxpayer and
with respect to which a binding contract to incur significant
expenditures for construction, reconstruction, or rehabilitation
was entered into before July 14, 1988, and some of such
expenditures are incurred on or after such date, and
(ii) described in an inducement resolution or other comparable
preliminary approval adopted by an issuing authority (or by a
voter referendum) before July 14, 1988.
For purposes of the preceding sentence, the term "significant
expenditures" means expenditures greater than 10 percent of the
reasonably anticipated cost of the construction, reconstruction,
or rehabilitation of the facility involved.
(B) Subparagraph (A) shall not apply to any bond issued after
December 31, 1989, and shall not apply unless it is reasonably
expected (at the time of issuance of the bond) that the facility
will be placed in service before January 1, 1990.
(3) REFUNDINGS. -- The amendments made by this section shall
not apply to any bond issued to refund (or which is part of a
series of bonds issued to refund) a bond issued before July 15,
1988, if --
(A) the average maturity date of the issue of which the
refunding bond is a part is not later than the average maturity
date of the bonds to be refunded by such issue,
(B) the amount of the refunding bond does not exceed the
outstanding amount of the refunded bond, and
(C) the proceeds of the refunding bond are used to redeem the
refunded bond not later than 90 days after the date of the
issuance of the refunding bond.
For purposes of subparagraph (A), average maturity shall be
determined in accordance with section 147(b) of the 1986 Code.
SEC. 5061. IMPOSITION OF EXCISE TAX ON MANUFACTURE OR IMPORTATION OF
PIPE TOBACCO.
(a) IN GENERAL. -- Section 5701 of the 1986 Code (relating to rate
of tax on cigarettes, etc.) is amended by redesignating subsection (f)
as subsection (g) and by inserting after subsection (e) the following
new subsection:
"(f) PIPE TOBACCO. -- On pipe tobacco, manufactured in or imported
into the United States, there shall be imposed a tax of 45 cents per
pound (and a proportionate tax at the like rate on all fractional parts
of a pound)."
(b) PIPE TOBACCO DEFINED. -- Section 5702 of the 1986 Code (relating
to definitions) is amended by adding at the end thereof the following
new subsection:
"(o) PIPE TOBACCO. -- The term 'pipe tobacco' means any tobacco
which, because of its appearance, type, packaging, or labeling, is
suitable for use and likely to be offered to, or purchased by, consumers
as tobacco to be smoked in a pipe."
(c) TECHNICAL AMENDMENTS. --
(1) Subsection (c) of section 5702 of the 1986 Code (defining
tobacco products) is amended by striking out "and smokeless
tobacco" and inserting in lieu thereof "smokeless tobacco, and
pipe tobacco".
(2) Subsection (d) of section 5702 of the 1986 Code (defining
tobacco products) is amended by striking out "or smokeless
tobacco" and inserting in lieu thereof "smokeless tobacco, or pipe
tobacco".
(3) The chapter heading for chapter 52 of the 1986 Code is
amended to read as follows:
(4) The table of chapters for subtitle E is amended by striking
the item relating to chapter 52 and inserting in lieu thereof the
following new item:
"Chapter 52. Cigars, cigarettes, smokeless tobacco, pipe
tobacco, and cigarette papers and tubes".
(d) EFFECTIVE DATE. -- "26 USC 5701 note"
(1) IN GENERAL. -- The amendments made by this section shall
apply to pipe tobacco removed (within the meaning of section
5702(k) of the 1986 Code) after December 31, 1988.
(2) TRANSITIONAL RULE. -- Any person who --
(A) on the date of the enactment of this Act, is engaged in
business as a manufacturer of pipe tobacco, and
(B) before January 1, 1989, submits an application under
subchapter B of chapter 52 of the 1986 Code to engage in such
business,
may, notwithstanding such subchapter B, continue to engage in
such business pending final action on such application. Pending
such final action, all provisions of chapter 52 of the 1986 Code
shall apply to such applicant in the same manner and to the same
extent as if such applicant were a holder of a permit to
manufacture pipe tobacco under such chapter 52.
(e) FLOOR STOCKS TAX. --
(1) IMPOSITION OF TAX. -- On pipe tobacco manufactured in or
imported into the United States which is removed before January 1,
1989, and held on such date for sale by any person, there is
hereby imposed a tax of 45 cents per pound (and a proportionate
tax at the like rate on all fractional parts of a pound).
(2) LIABILITY FOR TAX AND METHOD OF PAYMENT. --
(A) LIABILITY FOR TAX. -- A person holding pipe tobacco on
January 1, 1989, to which the tax imposed by paragraph (1) applies
shall be liable for such tax.
(B) METHOD OF PAYMENT. -- The tax imposed by paragraph (1)
shall be treated as a tax imposed by section 5701 of the 1986 Code
and shall be due and payable on February 14, 1989, in the same
manner as the tax imposed by such section is payable with respect
to pipe tobacco removed on or after January 1, 1989.
(C) TREATMENT OF PIPE TOBACCO IN FOREIGN TRADE ZONES. --
Notwithstanding the Act of June 18, 1934 (48 Stat. 998, 19 U.S.C.
81a) or any other provision of law, pipe tobacco, which is located
in a foreign trade zone on January 1, 1989, shall be subject to
the tax imposed by paragraph (1) and shall be treated for purposes
of this subsection as held on such date for sale if --
(i) internal revenue taxes have been determined, or customs
duties liquidated, with respect to such pipe tobacco before such
date pursuant to a request made under the first proviso of section
3(a) of such Act, or
(ii) such pipe tobacco is held on such date under the
supervision of a customs officer pursuant to the second proviso of
such section 3(a).
Under regulations prescribed by the Secretary of the Treasury
or his delegate, provisions similar to sections 5706 and 5708 of
the 1986 Code shall apply to pipe tobacco with respect to which
tax is imposed by paragraph (1) by reason of this subparagraph.
(3) PIPE TOBACCO. -- For purposes of this subsection, the term
"pipe tobacco" shall have the meaning given to such term by
subsection (o) of section 5702 of the 1986 Code.
(4) EXCEPTION WHERE LIABILITY DOES NOT EXCEED $1,000. -- No
tax shall be imposed by paragraph (1) on any person if the tax
which would but for this paragraph be imposed on such person does
not exceed $1,000. For purposes of the preceding sentence, all
persons who are treated as a single taxpayer under section 5061(
e)(3) of the 1986 Code shall be treated as 1 person.
SEC. 5063. MODIFICATION OF DISTILLED SPIRITS TAX CREDIT FOR FLAVORS
CONTENT.
(a) IN GENERAL. -- Subparagraph (B) of section 5010(c)(2) of the
1986 Code (defining flavors content) is amended by striking out the
"and" at the end of clause (i), by redesignating clause (ii) as clause
(iii), and by inserting after clause (i) the following new clause:
"(ii) alcohol derived from flavors distilled at a distilled
spirits plant, and".
(b) EFFECTIVE DATE. -- The amendments made by this section "26 USC
5010 note" shall apply with respect to distilled spirits withdrawn from
bond after the date of the enactment of this Act.
SEC. 5071. INCREASE IN PENALTY FOR BAD CHECKS.
(a) GENERAL RULE. -- Section 6657 of the 1986 Code (relating to bad
checks) is amended --
(1) by striking out "1 percent" and inserting in lieu thereof
"2 percent",
(2) by striking out "$500" and inserting in lieu thereof
"$750", and
(3) by striking out "$5" and inserting in lieu thereof "$15".
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) "26 USC
6657 note" shall apply to checks or money orders received after the date
of the enactment of this Act.
SEC. 5072. TIME FOR PAYMENT OF TAX ON REVERSION OF PENSION PLAN
ASSETS.
(a) IN GENERAL. -- Section 4980(c) of the 1986 Code is amended by
adding at the end thereof the following new paragraph:
"(4) TIME FOR PAYMENT OF TAX. -- For purposes of subtitle F,
the time for payment of the tax imposed by subsection (a) shall be
the last day of the month following the month in which the
employer reversion occurs."
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) "26 USC
4980 note" shall apply to reversions after December 31, 1988.
SEC. 5073. DENIAL OF DEDUCTION FOR CERTAIN RESIDENTIAL TELEPHONE
SERVICE.
(a) GENERAL RULE. -- Section 262 of the 1986 Code (relating to
personal, living, and family expenses) is amended to read as follows:
"SEC. 262. PERSONAL, LIVING, AND FAMILY EXPENSES.
"(a) GENERAL RULE. -- Except as otherwise expressly provided in this
chapter, no deduction shall be allowed for personal, living, or family
expenses.
"(b) TREATMENT OF CERTAIN PHONE EXPENSES. -- "26 USC 262 note" For
purposes of subsection (a), in the case of an individual, any charge
(including taxes thereon) for basic local telephone service with respect
to the 1st telephone line provided to any residence of the taxpayer
shall be treated as a personal expense."
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) shall
apply to taxable years beginning after December 31, 1988.
SEC. 5074. PARTNERSHIP REPORTING OF UNRELATED BUSINESS TAXABLE
INCOME.
(a) IN GENERAL. -- Section 6031 of the 1986 Code is amended by
adding at the end thereof the following new subsection:
"(d) SEPARATE STATEMENT OF ITEMS OF UNRELATED BUSINESS TAXABLE
INCOME. -- In the case of any partnership regularly carrying on a trade
or business (within the meaning of section 512(c)(1)), the information
required under subsection (b) to be furnished to its partners shall
include such information as is necessary to enable each partner to
compute its distributive share of partnership income or loss from such
trade or business in accordance with section 512(a)(1), but without
regard to the modifications described in paragraphs (8) through (15) of
section 512(b)."
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) "26 USC
6031 note" shall apply to taxable years beginning after December 31,
1988.
SEC. 5075. OPTIONS SUBJECT TO WASH SALE RULES.
(a) IN GENERAL. -- Subsection (a) of section 1091 of the 1986 Code
(relating to losses from wash sales of stock or securities) is amended
by adding at the end thereof the following sentence: "For purposes of
this section, the term 'stock or securities' shall, except as provided
in regulations, include contracts or options to acquire or sell stock or
securities."
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) "26 USC
1091 note" shall apply with respect to any sale after the date of
enactment of this Act, in taxable years ending after such date.
SEC. 5076. INTEREST CHARGE ON INSTALLMENT SALES OF CERTAIN PROPERTY.
(a) GENERAL RULE. -- Paragraph (1) of section 453A(b) of the 1986
Code is amended to read as follows:
"(1) IN GENERAL. -- This section shall apply to any obligation
which arises from the disposition of any property under the
installment method, but only if the sales price of such property
exceeds $150,000."
(b) CLERICAL AMENDMENTS. --
(1) The section heading of section 453A of the 1986 Code is
amended by striking out "OF REAL PROPERTY".
(2) The table of sections of subpart B of part II of subchapter
A of chapter 1 of the 1986 Code is amended by striking out "of
real property" in the item relating to section 453A.
(c) EFFECTIVE DATE. -- "26 USC 453A note"
(1) IN GENERAL. -- Except as provided in paragraph (2), the
amendments made by this section shall apply to sales after
December 31, 1988.
(2) BINDING CONTRACT, ETC. -- The amendments made by this
section shall not apply to any sale on or before December 31,
1990, if --
(A) such sale is pursuant to a written binding contract in
effect on October 21, 1988, and at all times thereafter before
such sale,
(B) such sale is pursuant to a letter of intent in effect on
October 21, 1988, or
(C) there is a board of directors or shareholder approval for
such sale on or before October 21, 1988.
SEC. 5077. APPLICATION OF NET OPERATING LOSS RULES TO STOCK ACQUIRED
BY AN EMPLOYEE STOCK OWNERSHIP PLAN.
(a) IN GENERAL. -- Clause (ii) of section 382(l)(3)(C) of the 1986
Code is amended by striking "and" at the end of subclause (I), by
striking the period at the end of subclause (II) and inserting in lieu
thereof ", and", and by adding at the end thereof the following:
"(III) immediately after the acquisition the plan has a number
of participants which is not less than 50 percent of the average
number of employees of the loss corporation during the 3-year
period ending with such acquisition.
for purposes of subclause (III), except as provided in
regulations, all members of an affiliated group which includes the
loss corporation and which files a consolidated return shall be
treated as 1 loss corporation."
(b) EFFECTIVE DATE. -- "26 USC 382 note"
(1) IN GENERAL. -- The amendment made by subsection (a) shall
apply to acquisition after December 31, 1988.
(2) EXCEPTION. -- The amendment made by subsection (a) shall
not apply to acquisitions after December 31, 1988, pursuant to a
binding written contract entered into on or before October 21,
1988.
SEC. 6001. TREATMENT OF CERTAIN AMOUNTS PAID TO OR FOR THE BENEFIT
OF AN INSTITUTION OF HIGHER EDUCATION.
(a) IN GENERAL. -- Section 170 of the 1986 Code is amended by
redesignating subsection (m) as subsection (n) and by inserting after
subsection (l) the following new subsection:
"(m) TREATMENT OF CERTAIN AMOUNTS PAID TO OR FOR THE BENEFIT OF
INSTITUTIONS OF HIGHER EDUCATION. --
"(1) IN GENERAL. -- For purposes of this section, 80 percent
of any amount described in paragraph (2) shall be treated as a
charitable contribution.
"(2) AMOUNT DESCRIBED. -- For purposes of paragraph (1), an
amount is described in this paragraph if --
"(A) the amount is paid by the taxpayer to or for the benefit
of an educational organization --
"(i) which is described in subsection (b)(1)(A)(ii), and
"(ii) which is an institution of higher education (as defined
in section 3304(f)), and
"(B) such amount would be allowable as a deduction under this
section but for the fact that the taxpayer receives (directly or
indirectly) as a result of paying such amount the right to
purchase tickets for seating at an athletic event in an athletic
stadium of such institution.
If any portion of a payment is for the purchase of such
tickets, such portion and the remaining portion (if any) of such
payment shall be treated as separate amounts for purposes of this
subsection."
(b) EFFECTIVE DATE. -- "26 USC 170 note"
(1) IN GENERAL. -- The amendment made by this section shall
apply to taxable years beginning after December 31, 1983.
(2) WAIVER OF STATUTE OF LIMITATIONS. -- If on the date of the
enactment of this Act (or at any time within 1 year after such
date of enactment) refund or credit of any overpayment of tax
resulting from the application of section 170(m) of the 1986 Code
(as added by subsection (a)) is barred by any law or rule of law,
refund or credit of such overpayment shall, nevertheless, be made
or allowed if claim therefore is filed before the date 1 year
after the date of the enactment of this Act.
SEC. 6002. NONRECOGNITION OF GAIN WHERE 1 SPOUSE DIES BEFORE
OCCUPYING NEW RESIDENCE.
(a) IN GENERAL. -- Subsection (g) of section 1034 of the 1986 Code
(relating to rollover of gain on sale of principal residence) is amended
by adding at the end thereof the following: "For purposes of this
subsection, except to the extent provided in regulations, in the case of
an individual who dies after the date of the sale of the old residence
and is married on the date of death, consent to the application of
paragraph (2) by such individual's spouse and use of the new residence
as the principal residence of such spouse shall be treated as consent
and use by such individual."
(b) EFFECTIVE DATE. -- The amendment made by paragraph (1) "26 USC
1034 note" shall apply to sales and exchanges of old residences within
the meaning of section 1034 of the 1986 Code) after December 31, 1984,
in taxable years ending after such date.
SEC. 6003. MEALS ON CERTAIN VESSELS AND OFFSHORE OIL PLATFORMS
EXEMPT FROM 80 PERCENT LIMITATION ON DEDUCTION FOR MEALS.
(a) IN GENERAL. -- Paragraph (2) of section 274(n) of the 1986 Code
(relating to only 80 percent of meal and entertainment expenses allowed
as deduction), as amended by title I of this Act, is amended by striking
out "or" at the end of subparagraph (D), by striking out the period at
the end of subparagraph (E) and inserting in lieu thereof ", or", and by
adding at the end thereof the following new subparagraph:
"(F) such expense is for food or beverages --
"(i) required by Federal law to be provided to crew members of
a commercial vessel,
"(ii), provided to crew members of a commercial vessel --
"(I) which is operating on the Great Lakes, the Saint Lawrence
Seaway, or any inland waterway of the United States, and
"(II) which is of a kind which would be required by Federal law
to provide food and beverages to crew members if it were operated
at sea,
"(iii) provided on an oil or gas platform or drilling rig if
the platform or rig is located offshore, or
"(iv) provided on an oil or gas platform or drilling rig, or at
a support camp which is in proximity and integral to such platform
or rig, if the platform or rig is located in the United States
north of 54 degrees north latitude.
Clauses (i) and (ii) of subparagraph (F) shall not apply to
vessels primarily engaged in providing luxury water transportation
(determined under the principles of subsection (m))."
(b) EFFECTIVE DATES. -- "26 USC 274 note"
(1) Clauses (i) and (ii) of section 274(n)(2)(F) of the 1986
Code, as added by subsection (a), shall apply to taxable years
beginning after December 31, 1988.
(2) Clauses (iii) and (iv) of section 274(n)(2)(F) of the 1986
Code, as added by subsection (a), shall apply to taxable years
beginning after December 31, 1987.
SEC. 6004. TREATMENT OF CERTAIN INNOCENT SPOUSES.
Subsection (c) of section 424 of the Tax Reform Act "26 USC 6013
note" of 1984 (relating to innocent spouse relieved of liability in
certain cases) is amended by adding at the end thereof the following new
paragraph:
"(3) TRANSITIONAL RULE. -- If --
"(A) a joint return under section 6013 of the Internal Revenue
Code of 1954 was filed before January 1, 1985,
"(B) on such return there is an understatement (as defined in
section 6661(b)(2)(A) of such Code) which is attributable to
disallowed deductions attributable to activities of one spouse,
"(C) the amount of such disallowed deductions exceeds the
taxable income shown on such return,
"(D) without regard to any determination before October 21,
1988, the other spouse establishes that in signing the return he
or she did not know, and had no reason to know, that there was
such an understatement, and
"(E) the marriage between such spouses terminated and
immediately after such termination the net worth of the other
spouse was less than $10,000,
notwithstanding any law or rule of law (including res
judicata), the other spouse shall be relieved of liability for tax
(including interest penalties and other amounts) for such taxable
year to the extent such liability is attributable to such
understatement, and, to the extent the liability so attributable
has been collected from such other spouse, it shall be refunded or
credited to such other spouse. No credit or refund shall be made
under the preceding sentence unless claim therefor has been
submitted to the Secretary of the Treasury or his delegate before
the date 1 year after the date of the enactment of this paragraph,
and no interest on such credit or refund shall be allowed for any
period before such date of enactment.".
SEC. 6005. "20 USC 1113b note" INTERIM TREATMENT OF CERTAIN AMOUNTS
AWARDED TO CHRISTA McAULIFFE FELLOWS.
(a) IN GENERAL. -- In the case of an individual who is a Christa
McAuliffe Fellow (as defined in section 561(b) of the Higher Education
Act of 1965) and is awarded a fellowship pursuant to section 561 of such
Act, for purposes of the 1986 Code, gross income shall not include any
amount of such fellowship award --
(1) which is expended for a project approved by the Secretary
of Education pursuant to section 563(b) of such Act, and
(2) which is not expended directly or indirectly for the
personal use or benefit of such individual.
(b) EFFECTIVE DATE. -- Subsection (a) shall apply to amounts
received before July 1, 1990, in taxable years beginning before such
date.
SEC. 6006. ELECTION TO CLAIM CERTAIN UNEARNED INCOME OF CHILD ON
PARENT'S RETURN.
(a) IN GENERAL. -- Subsection (i) of section 1 of the 1986 Code
(relating to persons required to make returns of income) is amended by
adding at the end thereof the following new paragraph:
"(7) ELECTION TO CLAIM CERTAIN UNEARNED INCOME OF CHILD ON
PARENT'S RETURN. --
"(A) IN GENERAL. -- If --
"(i) any child to whom this subsection applies has gross income
for the taxable year only from interest and dividends (including
Alaska Permanent Fund dividends),
"(ii) such gross income is more than $500 and less than $5,000,
"(iii) no estimated tax payments for such year are made in the
name and TIN of such child, and no amount has been deducted and
withheld under section 3406, and
"(iv) the parent of such child (as determined under paragraph
(5)) elects the application of subparagraph (B),
such child shall be treated as having no gross income for such
year and shall not be required to file a return under section
6012.
"(B) INCOME INCLUDED ON PARENT'S RETURN. -- In the case of a
parent making the election under this paragraph --
"(i) the gross income of each child to whom such election
applies (to the extent the gross income of such child exceeds
$1,000) shall be included in such parent's gross income for the
taxable year,
"(ii) the tax imposed by this section for such year with with
respect to such parent shall be the amount equal to the sum of --
"(I) the amount determined under this section after the
application of clause (i), plus
"(II) for each such child, the lesser of $75 or 15 percent of
the excess of the gross income of such child over $500, and
"(iii) any interest which is an item of tax preference under
section 57(a)(5) of the child shall be treated as an item of tax
preference of such parent (and not of such child).
"(C) REGULATIONS. -- The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out the
purposes of this paragraph."
(b) EFFECTIVE DATE. -- The amendment made by this section "26 USC 1
note" shall apply to taxable years beginning after December 31, 1988.
SEC. 6007. JURY DUTY PAY REMITTED TO AN INDIVIDUAL'S EMPLOYER
ALLOWED AS A DEDUCTION IN COMPUTING GROSS INCOME.
(a) IN GENERAL. -- Part VII of subchapter B of chapter 1 of the 1986
Code (relating to additional itemized deductions for individuals) is
amended by redesignating section 220 as section 221 and by inserting
after section 219 the following new section:
"SEC. 220. JURY DUTY PAY REMITTED TO EMPLOYER.
"If --
"(1) an individual receives payment for the discharge of jury
duty, and
"(2) the employer of such individual requires the individual to
remit any portion of such payment to the employer in exchange for
payment by the employer of compensation for the period the
individual was performing jury duty,
then there shall be allowed as a deduction the amount so remitted.".
(b) DEDUCTION ALLOWED IN ARRIVING AT ADJUSTED GROSS INCOME. --
Subsection (a) of section 62 of the 1986 Code (defining adjusted gross
income) is amended by inserting after paragraph (12) the following new
paragraph:
"(13) JURY DUTY PAY REMITTED TO EMPLOYER. -- The deduction
allowed by section 220.".
(c) CLERICAL AMENDMENT. -- The table of sections for part VII of
subchapter B of chapter 1 of the 1986 Code is amended by striking out
the item relating to section 220 and inserting in lieu thereof the
following new items:
"Sec. 220. Jury duty pay remitted to employer.
"Sec. 221. Cross references.".
(d) EFFECTIVE DATE. -- The amendments made by this section "26 USC
62 note" shall apply as if included in the amendments made by section
132 of the Tax Reform Act of 1986.
SEC. 6008. "26 USC 162 note" BUSINESS USE OF AUTOMOBILES BY RURAL
MAIL CARRIERS.
(a) GENERAL RULE. -- In the case of any employee of the United
States Postal Service who performs services involving the collection and
delivery of mail on a rural route, such employee shall be permitted to
compute the amount allowable as a deduction under chapter 1 of the
Internal Revenue Code of 1986 for the use of an automobile in performing
such services by using a standard mileage rate for all miles of such use
equal to 150 percent of the basic standard rate.
(b) SUBSECTION (a) NOT TO APPLY IF EMPLOYEE CLAIMS DEPRECIATION
DEDUCTIONS FOR AUTOMOBILE. -- Subsection (a) shall not apply with
respect to any automobile if, for any taxable year beginning after
December 31, 1987, the taxpayer claimed depreciation deductions for such
automobile.
(c) BASIC STANDARD RATE. -- For purposes of this section, the term
"basic standard rate" means the standard mileage rate which is
prescribed by the Secretary of the Treasury or his delegate for
computing the amount of the deduction for the business use of an
automobile and which --
(1) is in effect at the time of the use referred to in
subsection (a),
(2) applies to an automobile which is not fully depreciated,
and
(3) applies to the first 15,000 miles (or such other number as
the Secretary of the Treasury or his delegate may hereafter
prescribe) of business use during the taxable year.
(d) EFFECTIVE DATE. -- The provisions of this section shall apply to
taxable years beginning after December 31, 1987.
SEC. 6009. EXCLUSION FROM GROSS INCOME FOR INCOME FROM UNITED STATES
SAVINGS BONDS USED TO PAY TUITION AND FEES.
(a) IN GENERAL. -- Part III of subchapter B of chapter 1 of the 1986
Code (relating to items specifically excluded from gross income) is
amended by redesignating section 135 as section 136 and by inserting
after section 134 the following new section:
"SEC. 135. INCOME FROM UNITED STATES SAVINGS BONDS USED TO PAY
HIGHER EDUCATION TUITION AND FEES.
"(a() GENERAL RULE. -- In the case of an individual who pays
qualified higher education expenses during the taxable year, no amount
shall be includible in gross income by reason of the redemption during
such year of any qualified United States savings bond.
"(b) LIMITATIONS. --
"(1) LIMITATION WHERE REDEMPTION PROCEEDS EXCEED HIGHER
EDUCATION EXPENSES. --
"(A) IN GENERAL. -- If --
"(i) the aggregate proceeds of qualified United States savings
bonds redeemed by the taxpayer during the taxable year exceed
"(ii) the qualified higher education expenses paid by the
taxpayer during such taxable year,
the amount excludable from gross income under subsection (a)
shall not exceed the applicable fraction of the amount excludable
from gross income under subsection (a) without regard to this
subsection.
"(B) APPLICABLE FRACTION. -- For purposes of subparagraph (A),
the term 'applicable fraction' means the fraction the numerator of
which is the amount described in subparagraph (A)( ii) and the
denominator of which is the amount described in subparagraph
(A)(i).
"(2) LIMITATION BASED ON MODIFIED ADJUSTED GROSS INCOME. --
"(A) IN GENERAL. -- If the modified adjusted gross income of
the taxpayer for the taxable year exceeds $40,000 ($60,000 in the
case of a joint return), the amount which would (but for this
paragraph) be excludable from gross income under subsection (a)
shall be reduced (but not below zero) by the amount which bears
the same ratio to the amount which would be so excludable as such
excess bears to $15,000 ($30,000 in the case of a joint return).
"(B) INFLATION ADJUSTMENT. -- In the case of any taxable year
beginning in a calendar year after 1990, each dollar amount
contained in subparagraph (A) shall be increased by an amount
equal to --
"(i) such dollar amount multiplied by
"(ii) the cost-of-living adjustment under section 1(f)(3) for
the calendar year in which the taxable year begins, determined by
substituting 'calendar year 1989' for 'calendar year 1987' in
subparagraph (B) thereof.
"(C) ROUNDING. -- If any amount as adjusted under subparagraph
(A) or (B) is not a multiple of $50, such amount shall be rounded
to the nearest multiple of $50 (or if such amount is a multiple of
$25, such amount shall be rounded to the next highest multiple of
$50).
"(c) DEFINITIONS. -- For purposes of this section --
"(1) QUALIFIED UNITED STATES SAVINGS BOND. -- The term
'qualified United States savings bond' means any United States
savings bond issued --
"(A) after December 31, 1989,
"(B) to an individual who has attained age 24 before the date
of issuance, and
"(C) at discount under section 3105 of title 31, United States
Code.
"(2) QUALIFIED HIGHER EDUCATION EXPENSES. --
"(A) IN GENERAL. -- The term 'qualified higher education
expenses' means tuition and fees required for the enrollment or
attendance of --
"(i) the taxpayer,
"(ii) the taxpayer's spouse, or
"(iii) any dependent of the taxpayer with respect to whom the
taxpayer is allowed a deduction under section 151,
at an eligible educational institution.
"(B) EXCEPTION FOR EDUCATION INVOLVING SPORTS, ETC. -- Such
term shall not include expenses with respect to any course or
other education involving sports, games, or hobbies other than as
part of a degree program.
"(3) ELIGIBLE EDUCATIONAL INSTITUTION. -- The term 'eligible
educational institution' means --
"(A) an institution described in section 1201(a) or
subparagraph (C) or (D) of section 481(a)(1) of the Higher
Education Act of 1965 (as in effect on October 21, 1988), and
"(B) an area vocational education school (as defined in
subparagraph (C) or (D) of section 521(3) of the Carl D. Perkins
Vocational Education Act) which is in any State (as defined in
section 521(27) of such Act), as such sections are in effect on
October 21, 1988.
"(4) MODIFIED ADJUSTED GROSS INCOME. -- The term 'modified
adjusted gross income' means the adjusted gross income of the
taxpayer for the taxable year determined --
"(A) without regard to this section and sections 911, 931, and
933, and
"(B) after the application of sections 86, 469, and 219.
"(d) SPECIAL RULES. --
"(1) ADJUSTMENT FOR CERTAIN SCHOLARSHIPS AND VETERANS BENEFITS.
-- The amount of qualified higher education expenses otherwise
taken into account under subsection (a) respect to the education
of an individual shall be reduced (before the application of
subsection (b)) by the sum of the amounts received with respect to
such individual for the taxable year as --
"(A) a qualified scholarship which under section 117 is not
includable in gross income,
"(B) an educational assistance allowance under chapter 30, 31,
32, 34, or 35 of title 38, United States Code, or
"(C) a payment (other than a gift, bequest, devise, or
inheritance within the meaning of section 102(a)) for educational
expenses, or attributable to attendance at an eligible educational
institution, which is exempt from income taxation by any law of
the United States.
"(2) NO EXCLUSION FOR MARRIED INDIVIDUALS FILING SEPARATE
RETURNS. -- If the taxpayer is a married individual (within the
meaning of section 7703), this section shall apply only if the
taxpayer and his spouse file a joint return for the taxable year.
"(3) REGULATIONS. -- The Secretary may prescribe such
regulations as may be necessary or appropriate to carry out this
section, including regulations requiring record keeping and
information reporting."
(b) PROMOTION OF PUBLIC AWARENESS OF PROGRAM. -- "26 USC 135 note"
The Secretary of the Treasury or his delegate shall take such actions as
may be necessary to make the general public aware of the program
established by this section.
(c) TECHNICAL AMENDMENTS. --
(1) Subparagraph (A) of section 86(b)(2) of the 1986 Code is
amended by inserting "135," before "911".
(2) Clause (i) of section 219(g)(3)(A) of the 1986 Code is
amended by striking "section 911" and inserting "sections 135 and
911".
(3) Subparagraph (D) of section 469(i)(3) of the 1986 Code is
amended by redesignating clauses (ii) and (iii) as clauses (iii)
and (iv), respectively, and by inserting after clause (i) the
following new clause:
"(ii) the amount excludable from gross income under section
135,".
(4) The table of sections for part III of subchapter B of
chapter 1 of the 1986 Code is amended by striking the last item
and inserting the following new items:
"Sec. 135. Income from United States savings bonds used to pay
higher education tuition and fees.
"Sec. 136. Cross references to other Acts."
(d) EFFECTIVE DATE. -- The amendments made by this section "26 USC
86 note" shall apply to taxable years beginning after December 31, 1989.
(e) PARENTAL ASSISTANCE WITH TUITION STAMP STUDY. -- "26 USC 135
note" The Secretary of the Treasury or his delegate, after consultation
with the Secretary of Education or his delegate, shall conduct a study
of the feasibility of using stamps or similar programs to encourage and
facilitate savings by parents towards the purchase of Series EE bonds
eligible for the exclusion provided under the amendments made by this
section. Not later than December 31, 1989, the Secretary of the
Treasury or his delegate shall submit the results of such study,
together with any recommendations deemed appropriate, to the Committee
on Ways and Means of the House of Representatives and the Committee on
Finance of the Senate.
SEC. 6010. MODIFICATION OF ADDITIONAL EXEMPTION FOR STUDENT
DEPENDENTS.
(a) IN GENERAL. -- Clause (ii) of section 151(c)(1)(B) of the 1986
Code (relating to additional exemption for dependents) is amended by
inserting "who has not attained the age of 24 at the close of such
calendar year" before the period.
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) "26 USC
151 note" shall apply to taxable years beginning after December 31,
1988.
SEC. 6011. PRINCIPAL RESIDENCE CAPITAL GAINS EXCLUSION.
(a) IN GENERAL. -- Subsection (d) of section 121 of the Internal
Revenue Code of 1986 (relating to one-time exclusion of gain from sale
of principal residence by individual who has attained age 55) is amended
by adding at the end thereof the following new paragraph:
"(9) DETERMINATION OF USE DURING PERIODS OF OUT-OF-RESIDENCE
CARE. -- In the case of a taxpayer who --
"(A) becomes physically or mentally incapable of self-care, and
"(B) owns property and uses such property as the taxpayer's
principal residence during the 5-year period described in
subsection (a)(2) for periods aggregating at least 1 year,
then the taxpayer shall be treated as using such property as
the taxpayer's principal residence during any time during such
5-year period in which the taxpayer owns the property and resides
in any facility (including a nursing home) licensed by a State or
political subdivision to care for an individual in the taxpayer's
condition."
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) "26 USC
121 note" shall apply with respect to any sale or exchange after
September 30, 1988, in taxable years ending after such date.
SEC. 6026. AMENDMENTS TO UNIFORM CAPITALIZATION RULES.
(a) TREATMENT OF CERTAIN PRODUCERS OF CREATIVE PROPERTY. -- Section
263A of the 1986 Code is amended by redesignating subsection (h) as
subsection (i) and by inserting after subsection (g) the following new
subsection:
"(h) EXEMPTION FOR FREE LANCE AUTHORS, PHOTOGRAPHERS, AND ARTISTS.
--
"(1) IN GENERAL. -- Nothing in this section shall require the
capitalization of any qualified creative expense.
"(2) QUALIFIED CREATIVE EXPENSE. -- For purposes of this
subsection, the term 'qualified creative expense' means any
expense --
"(A) which is paid or incurred by an individual in the trade or
business of such individual (other than as an employee) of being a
writer, photographer, or artist, and
"(B) which, without regard to this section, would be allowable
as a deduction for the taxable year.
Such term does not include any expense related to printing,
photographic plates, motion picture films, video tapes, or similar
items.
"(3) DEFINITIONS. -- For purposes of this subsection --
"(A) WRITER. -- The term 'writer' means any individual if the
personal efforts of such individual create (or may reasonably be
expected to create) a literary manuscript, musical composition
(including any accompanying words), or dance score.
"(B) PHOTOGRAPHER. -- The term 'photographer' means any
individual if the personal efforts of such individual create (or
may reasonably be expected to create) a photograph or photographic
negative or transparency.
"(C) ARTIST. --
"(i) IN GENERAL. -- The term 'artist' means any individual if
the personal efforts of such individual create (or may reasonably
be expected to create) a picture, painting, sculpture, statue,
etching, drawing, cartoon, graphic design, or original print
edition.
"(ii) CRITERIA. -- In determining whether any expense is paid
or incurred in the trade or business of being an artist, the
following criteria shall be taken into account:
"(I) The originality and uniqueness of the item created (or to
be created).
"(II) The predominance of aesthetic value over utilitarian
value of the item created (or to be created).
"(D) TREATMENT OF CERTAIN PERSONAL SERVICE CORPORATIONS. --
"(i) IN GENERAL. -- In the case of a personal service
corporation, this subsection shall apply to any expense of such
corporation which directly relates to the activities of the
qualified employee-owner in the same manner as if such expense
were incurred by such employee-owner.
"(ii) QUALIFIED EMPLOYEE-OWNER. -- The term 'qualified
employee-owner' means any individual who is an employee-owner of
the personal service corporation and who is a writer,
photographer, or artist, but only if substantially all of the
stock of such corporation is owned by such individual and members
of his family (as defined in section 267(c)(4)).
"(iii) PERSONAL SERVICE CORPORATION. -- For purposes of this
subparagraph, the term 'personal service corporation' means any
personal service corporation (as defined in section 269A(b))."
(b) TREATMENT OF ANIMALS PRODUCED IN FARMING BUSINESS. --
(1) IN GENERAL. -- Subparagraph (A) of section 263A(d)(1) of
the 1986 Code (relating to exception for farming businesses) is
amended to read as follows:
"(A) IN GENERAL. -- This section shall not apply to any of the
following which is produced by the taxpayer in a farming business:
"(i) Any animal.
"(ii) Any plant which has a preproductive period of 2 years or
less."
(2) CONFORMING AMENDMENTS. --
(A) The heading of paragraph (1) of section 263A(d) of the 1986
Code is amended to read as follows:
"(1) SECTION NOT TO APPLY TO CERTAIN PROPERTY. -- ".
(B) Subsections (d)(3) and (e) of section 263A of the 1986 Code
are each amended by striking out "or animal" each place it
appears.
(c) TREATMENT OF PISTACHIO TREES. -- Subparagraph (B) of section
263A(d)(3) of the 1986 Code (relating to certain persons not eligible)
is amended to read as follows:
"(B) CERTAIN PERSONS NOT ELIGIBLE. -- No election may be made
under this paragraph by a corporation, partnership, or tax
shelter, if such corporation, partnership, or tax shelter is
required to use an accrual method of accounting under section 447
or 448(a)(3)."
(d) EFFECTIVE DATES. -- "26 USC 263A note"
(1) IN GENERAL. -- Except as otherwise provided in this
paragraph, the amendments made by this section shall take effect
as if included in the amendments made by section 803 of the Tax
Reform Act of 1986.
(2) SUBSECTION (b). --
(A) IN GENERAL. -- The amendments made by subsection (b) shall
apply to costs incurred after December 31, 1988, in taxable years
ending after such date.
(B) REVOCATION OF ELECTION. -- If the taxpayer made an
election under section 263A(d)(3) of the 1986 Code for a taxable
year beginning before January 1, 1989, such taxpayer may, without
the consent of the Secretary of the Treasury or his delegate,
revoke such election effective for the taxpayer's 1st taxable year
beginning after December 31, 1988.
SEC. 6027. TREATMENT OF SINGLE PURPOSE AGRICULTURAL OR HORTICULTURAL
STRUCTURES.
(a) IN GENERAL. -- Paragraph (3) of section 168(e) of the 1986 Code
(relating to classification of property) is amended by redesignating
subparagraphs (D) and (E) as subparagraphs (E) and (F), respectively,
and by inserting after subparagraph (C) the following new subparagraph:
"(D) 10-YEAR PROPERTY. -- The term '10-year property' includes
any single purpose agricultural or horticultural structure (within
the meaning of section 48(p))."
(b) TECHNICAL AMENDMENTS. --
(1) Subparagraph (C) of section 168(e)(3) of the 1986 Code is
amended by adding "and" at the end of clause (i), by striking out
clause (ii), and by redesignating clause (iii) as clause (ii).
(2) The table contained in subparagraph (B) of section 168(g)(
3) of the 1986 Code is amended by striking out all that follows
the item relating to subparagraph (C)(i) and inserting in lieu
thereof the following new items:
"(D) ............................ 15
"(E)(i) ......................... 24
"(E)(ii) ........................ 24
"(F) ............................ 50".
(c) EFFECTIVE DATE. -- "26 USC 168 note"
(1) IN GENERAL. -- Except as provided in paragraph (2), the
amendments made by this section shall apply to property placed in
service after December 31, 1988.
(2) EXCEPTION. -- The amendments made by this section shall
not apply to any property if such property is placed in service
before January 1, 1990, and if such property --
(A) is constructed, reconstructed, or acquired by the taxpayer
pursuant to a written contract which was binding on July 14, 1988,
or
(B) is constructed or reconstructed by the taxpayer and such
construction or reconstruction began by July 14, 1988.
SEC. 6028. TREATMENT OF PROPERTY USED IN A FARMING BUSINESS.
(a) IN GENERAL. -- Paragraph (2) of section 168(b) of the 1986 Code
(as amended by title I) is amended by striking out "or" at the end of
subparagraph (A), by redesignating subparagraph (B) as subparagraph (C),
and by inserting after subparagraph (A) the following new subparagraph:
"(B) any property used in a farming business (within the
meaning of section 263A(e)(4)), or".
(b) EFFECTIVE DATE. -- "26 USC 168 note"
(1) IN GENERAL. -- Except as provided in paragraph (2), the
amendments made by this section shall apply to property placed in
service after December 31, 1988.
(2) EXCEPTION. -- The amendments made by this section shall
not apply to any property if such property is placed in service
before July 1, 1989, and if such property --
(A) is constructed, reconstructed, or acquired by the taxpayer
pursuant to a written contract which was binding on July 14, 1988,
or
(B) is constructed or reconstructed by the taxpayer and such
construction or reconstruction began by July 14, 1988.
SEC. 6029. TREATMENT OF CERTAIN TREES.
(a) IN GENERAL. -- Subparagraph (D) of section 168(e)(3) of the 1986
Code (relating to classification of certain property), as amended by
section 6027 of this Act, is amended to read as follows:
"(D) 10-YEAR PROPERTY. -- The term '10-year property' includes
--
"(i) any single purpose agricultural or horticultural structure
(within the meaning of section 48(p)), and
"(ii) any tree or vine bearing fruit or nuts."
(b) ONLY STRAIGHT-LINE DEPRECIATION ALLOWED. -- Paragraph (3) of
section 168(b) of the 1986 Code is amended by adding at the end thereof
the following new subparagraph:
"(D) Property described in subsection (e)(3)(D)(ii)."
(c) CLASS LIFE DETERMINATION. -- The table contained in subparagraph
(B) of section 168(g)(3) of the 1986 Code, as amended by section 6027 of
this Act, is amended by striking out the item relating to subparagraph
(D) and inserting in lieu thereof the following new item:
"(D)(i) ......................... 15
"(D)(ii) ........................ 20".
(d) EFFECTIVE DATE. -- The amendments made by this section "26 USC
168 note" shall apply to property placed in service after December 31,
1988.
SEC. 6030. ONE-YEAR DEFERRAL OF PROCEEDS FROM LIVESTOCK SOLD ON
ACCOUNT OF DROUGHT.
(a) IN GENERAL. -- Paragraph (1) of section 451(e) of the 1986 Code
(relating to special rule for proceeds from livestock sold on account of
drought) is amended by striking out "(other than livestock described in
section 1231(b)(3))".
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) "26 USC
451 note" shall apply to sales or exchanges occurring after December 31,
1987.
SEC. 6031. "26 USC 453A note" CERTAIN REPLEDGES PERMITTED.
(a) GENERAL RULE. -- Section 453A(d) of the 1986 Code (relating to
pledges, etc., of installment obligations) shall not apply to any pledge
after December 17, 1987, of an installment obligation to secure any
indebtedness if such indebtedness is incurred to refinance indebtedness
which was outstanding on December 17, 1987, and which was secured on
such date and all times thereafter before such refinancing by a pledge
of such installment obligation.
(b) LIMITATION. -- Subsection (a) shall not apply to the extent that
the principal amount of the indebtedness resulting from the refinancing
exceeds the principal amount of the refinanced indebtedness immediately
before the refinancing.
(c) CERTAIN REFINANCINGS PERMITTED. -- For purposes of subsection
(a), if --
(1) a refinancing is attributable to the calling of
indebtedness by the creditor, and
(2) such refinancing is not with the creditor under the
refinanced indebtedness or a person related to such creditor,
such refinancing shall, to the extent the refinanced indebtedness
qualifies under subsections (a) and (b), be treated as a continuation of
such refinanced indebtedness.
SEC. 6032. TREATMENT OF INDIRECT HOLDINGS THROUGH TRUSTS UNDER
SECTION 448 OF THE 1986 CODE.
(a) GENERAL RULE. -- Paragraph (2) of section 448(d) of the 1986
Code (defining qualified personal service corporation) is amended by
adding at the end thereof the following new sentence:
"To the extent provided in regulations which shall be
prescribed by the Secretary, indirect holdings through a trust
shall be taken into account under subparagraph (B)."
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) "26 USC
448 note" shall apply to taxable years beginning after December 31,
1986.
SEC. 6033. DISASTER ASSISTANCE ACT PAYMENTS INCLUDED IN SPECIAL RULE
FOR TAXABLE YEAR OF INCLUSION.
(a) DISASTER ASSISTANCE PAYMENTS. -- The second sentence of section
451(d) of the 1986 Code (relating to special rule for crop insurance
proceeds or disaster payments) is amended by inserting "or title II of
the Disaster Assistance Act of 1988," after "the Agricultural Act of
1949, as amended,".
(b) EFFECTIVE DATE. -- The amendment made by paragraph (1) "26 USC
451 note" shall apply to payments received before, on, or after the date
of enactment of this Act.
SEC. 6051. PROVISIONS RELATING TO BENEFITS UNDER DISCRIMINATORY
PLANS.
(a) PROVISIONS NOT TO APPLY TO CHURCH PLANS. -- Section 89(i) of the
1986 Code is amended by adding at the end thereof the following new
paragraph:
"(4) CHURCH PLANS. -- The term 'statutory employee benefit
plan' shall not include a plan maintained by a church for church
employees. For purposes of this paragraph, the term 'church' has
the meaning given such term by section 3121(w)(3)(A), including a
qualified church-controlled organization (as defined in section
3121(w)(3)(B))."
(b) CAFETERIA PLANS MAINTAINED BY EDUCATIONAL INSTITUTIONS. --
Section 125(c)(2)(C) of the 1986 Code is amended by adding at the end
thereof the following new sentence: "In applying section 89 to a plan
described in this subparagraph, contributions under the plan shall be
tested as of the time the contributions were made."
(c) EFFECTIVE DATE. -- The amendments made by this section "26 USC
89 note" shall take effect as if included in the amendments made by
section 1151 of the Reform Act.
SEC. 6052. MODIFICATIONS OF DISCRIMINATION RULES APPLICABLE TO
CERTAIN ANNUITY CONTRACTS.
(a) EXCLUDED EMPLOYEES. --
(1) IN GENERAL. -- The last sentence of section 403(b)(12)(A)
of the 1986 Code is amended to read as follows: "Subject to the
conditions applicable under section 410(b)(4), there may be
excluded for purposes of this subparagraph employees who are
students performing services described in section 3121(b)(10) and
employees who normally work less than 20 hours per week."
(2) EFFECTIVE DATE. -- The amendment made by paragraph (1) "26
USC 403 note" shall take effect as if included in the amendment
made by section 1120(b) of the Reform Act.
(b) SAMPLING. -- "26 USC 403 note" In the case of plan years
beginning in 1989, 1990, or 1991, determinations as to whether a plan
meets the requirements of section 403(b)(12) of the 1986 Code may be
made on the basis of a statistically valid random sample. The preceding
sentence shall apply only if --
(1) the sampling is conducted by an independent person in a
manner not inconsistent with regulations prescribed by the
Secretary, and
(2) the statistical method and sample size result in a 95
percent probability that the results will have a margin of error
not greater than 3 percent.
SEC. 6053. REQUIRED DISTRIBUTION BEGINNING DATE FOR GOVERNMENTAL AND
CHURCH PLANS.
(a) IN GENERAL. -- Section 401(a)(9)(C) of the 1986 Code is amended
by adding at the end thereof the following new sentence: "In the case
of a governmental plan or church plan (as defined in section 89(i)(4)),
the required beginning date shall be the later of the date determined
under the preceding sentence or April 1 of the calendar year following
the calendar year in which the employee retires."
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) "26 USC
401 note" shall take effect as if included in the amendments made by
section 1121 of the Reform Act.
SEC. 6054. SECTION 415 LIMITATION FOR STATE AND LOCAL PLANS.
(a) MODIFIED LIMITATIONS. -- Section 415(b) of the 1986 Code is
amended by adding at the end thereof the following new paragraph:
"(10) SPECIAL RULE FOR STATE AND LOCAL GOVERNMENT PLANS. --
"(A) LIMITATION TO EQUAL ACCRUED BENEFIT. -- In the case of a
plan maintained for its employees by any State or political
subdivision thereof, or by any agency or instrumentality of the
foregoing, the limitation with respect to a qualified participant
under this subsection shall not be less than the accrued benefit
of the participant under the plan (determined without regard to
any amendment of the plan made after October 14, 1987).
"(B) QUALIFIED PARTICIPANT. -- For purposes of this paragraph,
the term 'qualified participant' means a participant who first
became a participant in the plan maintained by the employer before
January 1, 1990.
"(C) ELECTION. -- This paragraph shall not apply to any plan
unless each employer maintaining the plan elects before the close
of the 1st plan year beginning after December 31, 1989, to have
this subsection (other than pragraph (2)(G)) applied without
regard to paragraph (2)(F)."
(b) EFFECTIVE DATES. -- "26 USC 415 note"
(1) IN GENERAL. -- Except as provided in this subsection, the
amendment made by this subsection apply to years beginning after
December 31, 1982.
(2) ELECTION. -- Section 415(b)(10)(C) of the 1986 Code (as
added by subsection (a)) shall not apply to any year beginning
before January 1, 1990.
SEC. 6055. MINIMUM PARTICIPATION STANDARDS.
(a) IN GENERAL. -- Section 401(a)(26) of the 1986 Code, as amended
by this Act, is amended by redesignating subparagraph (H) as
subparagraph (I) and by inserting after subparagraph (G) the following
new subparagraph:
"(H) SPECIAL RULE FOR CERTAIN POLICE OR FIREFIGHTERS. --
"(i) IN GENERAL. -- An employer may elect to have this
paragraph applied separately with respect to any classification of
qualified public safety employees for whom a separate plan is
maintained.
"(ii) QUALIFIED PUBLIC SAFETY EMPLOYEE. -- For purposes of
this subparagraph, the term 'qualified public safety employee'
means any employee of any police department or fire department
organized and operated by a State or political subdivision if the
employee provides police protection, firefighting services, or
emergency medical services for any area within the jurisdiction of
such State or political subdivision."
(b) EFFECTIVE DATE. -- The amendment made by this section "26 USC
401 note" shall take effect as if included in the amendments made by
section 1112(b) of the Reform Act.
SEC. 6056. STUDY OF EFFECT OF MINIMUM PARTICIPATION RULE ON
EMPLOYERS REQUIRED TO PROVIDE CERTAIN RETIREMENT BENEFITS.
(a) STUDY. -- The Secretary of the Treasury or his delegate shall
conduct a study on the application of section 401(a)(26) of the Internal
Revenue Code of 1986 to Government contractors who --
(1) are required by Federal law to provide certain employees
specified retirement benefits, and
(2) establish a separate plan for such employees while
maintaining a separate plan for employees who are not entitled to
such benefits.
Such study shall consider the Federal requirements with respect to
employee benefits for employees of Government contractors, whether a
special minimum participation rule should apply to such employees, and
methods by which plans may be modified to satisfy minimum participation
requirements.
(b) REPORT. -- The Secretary of the Treasury or his delegate shall
report the results of the study under subsection (a) to the Committee on
Finance of the Senate and the Committee on Ways and Means of the House
of Representatives not later than September 1, 1989.
SEC. 6057. PROHIBITION ON COLLECTIBLES NOT TO INCLUDE STATE COINS.
(a) IN GENERAL. -- Paragraph (3) of section 408(m) of the 1986 Code
is amended to read as follows:
"(3) EXCEPTION FOR CERTAIN COINS. -- In the case of an
individual retirement account, paragraph (2) shall not apply to --
"(A) any gold coin described in paragraph (7), (8), (9), or
(10) of section 5112(a) of title 31,
"(B) any silver coin described in section 5112(e) of title 31,
or
"(C) any coin issued under the laws of any State."
(b) EFFECTIVE DATE. -- The amendments made by subsection (a) "26 USC
408 note" shall apply to acquisitions after the date of the enactment of
this Act.
SEC. 6058. APPLICATION OF FUNDING RULES TO MULTIPLE EMPLOYER PLANS.
(a) IN GENERAL. -- Paragraph (4) of section 413(c) of the 1986 Code
is amended to read as follows:
"(4) FUNDING. --
"(A) IN GENERAL. -- In the case of a plan established after
December 31, 1988, each employer shall be treated as maintaining a
separate plan for purposes of section 412 unless such plan uses a
method for determining required contributions which provides that
any employer contributes not less than the amount which would be
required if such employer maintained a separate plan.
"(B) OTHER PLANS. -- In the case of a plan not described in
subparagraph (A), the requirements of section 412 shall be
determined as if all participants in the plan were employed by a
single employer unless the plan administrator elects not later
than the close of the first plan year of the plan beginning after
the date of enactment of the Technical and Miscellaneous Revenue
Act of 1988 to have the provisions of subparagraph (A) apply. An
election under the preceding sentence shall take effect for the
plan year in which made and, once made, may be revoked only with
the consent of the Secretary."
(b) DEDUCTION LIMITATIONS. -- Paragraph (6) of section 413(c) of the
1986 Code is amended to read as follows:
"(6) DEDUCTION LIMITATIONS. --
"(A) IN GENERAL. -- In the case of a plan established after
December 31, 1988, each applicable limitation provided by section
404(a) shall be determined as if each employer were maintaining a
separate plan.
"(B) OTHER PLANS. --
"(i) IN GENERAL. -- In the case of a plan not described in
subparagraph (A), each applicable limitation provided by section
404(a) shall be determined as if all participants in the plan were
employed by a single employer, except that if an election is made
under paragraph (4)(B), subparagraph (A) shall apply to such plan.
"(ii) SPECIAL RULE. -- If this subparagraph applies, the
amounts contributed to or under the plan by each employer who
maintains the plan (for the portion of the taxable year included
within a plan year) shall be considered not to exceed any such
limitation if the anticipated employer contributions for such plan
year (determined in a reasonable manner not inconsistent with
regulations prescribed by the Secretary) do not exceed such
limitation. If such anticipated contributions exceed such a
limitation, the portion of each such employer's contributions
which is not deductible under section 404 shall be determined in
accordance with regulations prescribed by the Secretary."
(c) CONFORMING AMENDMENT. -- Section 413(c) of the 1986 Code is
amended by striking out the last sentence and by inserting after
paragraph (6) the following new paragraph:
"(7) ALLOCTIONS. --
"(A) IN GENERAL. -- Except as provided in subparagraph (B),
allocations of amounts under paragraphs (4), (5), and (6) among
the employers maintaining the plan shall not be inconsistent with
regulations prescribed for this purpose by the Secretary.
"(B) ASSET AND LIABILITIES OF PLAN. -- For purposes of
applying paragraphs (4)(A) and (6)(A), the assets and liabilities
of each plan shall be treated as the assets and liabilities which
would be allocated to a plan maintained by the employer if the
employer withdrew from the multiple employer plan."
(d) EFFECTIVE DATE. -- Except as provided in paragraph (2), "26 USC
413 note" the amendments made by this section shall apply to plan years
beginning after the date of the enactment of this Act.
SEC. 6059. APPLICATION OF SECTION 415 LIMITATIONS TO POLICE AND
FIREFIGHTERS.
(a) IN GENERAL. -- Clause (ii) of section 415(b)(2)(H) of the 1986
Code is amended by striking out "20 years" and inserting in lieu thereof
"15 years".
(b) EFFECTIVE DATE. -- The amendment made by this section "26 USC
415 note" shall apply as if included in the amendments made by section
1106(b)(2) of the Reform Act.
SEC. 6060. EXCISE TAX ON DISPOSITION OF STOCK BY AN ESOP NOT TO
APPLY TO CERTAIN FORCED DISPOSITIONS.
(a) IN GENERAL. -- Subsection (e) of section 4978A of the 1986 Code
is amended by adding at the end thereof the following new paragraph:
"(4) FORCED DISPOSITION OCCURRING BY OPERATION OF A STATE LAW.
-- Any forced disposition of qualified employer securities by the
employee stock ownership plan of a corporation occurring by
operation of a State law shall not be treated as a disposition.
This paragraph shall only apply to securities which, at the time
such securities were purchased by the employee stock ownership
plan, were regularly traded on an established securities market."
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) "26 USC
4978 note" shall take effect as if included in the amendment made by
section 10413 of the Revenue Act of 1987.
SEC. 6061. "26 USC 133 note" LOANS TO ACQUIRE EMPLOYER SECURITIES.
Notwithstanding the last sentence of section 113B(h)(5)(A) of this
Act, the amendments made by paragraphs (1) and (2) of section 11B(h) of
this Act shall not apply to any loan used to refinance a loan described
in section 133(b)(1)(A) of the 1986 Code which is made before October
22, 1986, if the terms of the refinanced loan do not extend the total
commitment period beyond the later of --
(1) the term of the original securities acquisition loan, or
(2) the amortization period used to determine the regular
payments (prior to any final or balloon payment) applicable to the
original securities acquisition loan.
SEC. 6062. EFFECTIVE DATE OF SECTION 415 LIMITATIONS OF COLLECTIVELY
BARGAINED AGREEMENTS.
(a) IN GENERAL. -- Paragraph (2) of section 1106(i) of the Reform
Act "26 USC 415 note" is amended to read as follows:
"(2) COLLECTIVE BARGAINING AGREEMENTS. -- In the case of a
plan in effect before March 1, 1986, pursuant to 1 or more
collective bargaining agreements between employee representatives
and 1 or more employers, the amendments made by this section
(other than subsection (d)) shall not apply to contributions or
benefits pursuant to such agreement in years beginning before
October 1, 1991."
(b) EFFECTIVE DATE. -- The amendment made by this section "26 USC
415 note" shall take effect as if included in the provisions of section
1106 of the Reform Act.
SEC. 6063. "26 USC 125 note" TREATMENT OF PRE-1989 ELECTIONS FOR
DEPENDENT CARE ASSISTANCE UNDER CAFETERIA PLANS.
For purposes of section 125 of the 1986 Code, a plan shall not be
treated as failing to be a cafeteria plan solely because under the plan
a participant elected before January 1, 1989, to receive reimbursement
under the plan for dependent care assistance for periods after December
31, 1988, and such assistance is includible in gross income under the
provisions of the Family Support Act of 1988.
SEC. 6064. MODIFICATIONS TO SECTION 457.
(a) CODIFICATION OF EXCEPTION FOR CERTAIN PLANS. --
(1) Subsection (e) of section 457 of the 1986 Code (as amended
by section 1107 of the Reform Act) is amended by adding at the end
thereof the following new paragraph:
"(11) CERTAIN PLANS EXCEPTED. -- Any bona fide vacation leave,
sick leave, compensatory time, severance pay, disability pay, or
death benefit plan shall be treated as a plan not providing for
the deferral of compensation."
(2) Subsection (d) of section 457 of the 1986 Code (as in
effect on the day before the date of the enactment of the Reform
Act) is amended by adding at the end thereof the following new
paragraph:
"(10) CERTAIN PLANS EXCEPTED. -- Any bona fide vacation leave,
sick leave, compensatory time, severance pay, disability pay, or
death benefit plan shall be treated as a plan not providing for
the deferral of compensation."
(b) TREATMENT OF NONELECTIVE DEFERRED COMPENSATION OF NONEMPLOYEES.
--
(1) Subsection (e) of section 457 of the 1986 Code (as amended
by section 1107 of the Reform Act) is amended by adding at the end
thereof the following new paragraph:
"(12) EXCEPTION FOR NONELECTIVE DEFERRED COMPENSATION OF
NONEMPLOYEES. --
"(A) IN GENERAL. -- This action shall not apply to nonelective
deferred compensation attributable to services not performed as an
employee.
"(B) NONELECTIVE DEFERRED COMPENSATION. -- For purposes of
subparagraph (A), deferred compensation shall be treated as
nonelective only if all individuals (other than those who have not
satisfied any applicable initial service requirement) with the
same relationship to the payor are covered under the same plan
with no individual variations or options under the plan."
(2) Subsection (d) of section 457 of the 1986 Code (as in
effect on the day before the date of the enactment of the Reform
Act) is amended by adding at the end thereof the following new
paragraph:
"(11) EXCEPTION FOR NONELECTIVE DEFERRED COMPENSATION OF
NONEMPLOYEES. --
"(A) IN GENERAL. -- This section shall not apply to
nonelective deferred compensation attributable to services not
performed as an employee.
"(B) NONELECTIVE DEFERRED COMPENSATION. -- For purposes of
subparagraph (a), deferred compensation shall be treated as
nonelective only if all individuals (other than those who have not
satisfied any applicable initial service requirement) with the
same relationship to the payor are covered under the same plan
with no individual variations or options under the plan."
(c) SECTION NOT TO APPLY TO CHURCH PLANS. -- Section 457(e) of the
1986 Code (as amended by section 1107 of the Reform Act) is amended by
adding at the end thereof the following new paragraph:
"(13) EXCEPTION FOR CHURCH PLANS. -- The term 'eligible
deferred compensation plan' shall not include a plan maintained by
a church for church employees. For purposes of this paragraph,
the term 'church' has the meaning given such term by section
3121(w)(3)(A), including a qualified church-controlled
organization (as defined in section 3121(w)(3)(B))."
(d) EFFECTIVE DATE. -- "26 USC 457 note"
(1) IN GENERAL. -- The amendments made by this section shall
apply to taxable years beginning after December 31, 1987.
(2) EXCEPTION FOR CERTAIN COLLECTIVELY BARGAINED PLANS. --
(A) IN GENERAL. -- Section 457 of the 1986 Code (as in effect
before and after the amendments made by section 1107 of the Reform
Act) shall not apply to nonelective deferred compensation provided
under a plan in existence on December 31, 1987, and maintained
pursuant to a collective bargaining agreement.
(B) NONELECTIVE PLAN. -- For purposes of this paragraph, a
nonelective plan is a plan which covers a broad group of employees
and under which the covered employees earn nonelective deferred
comcpensation under a definite, fixed and uniform benefit formula.
(C) TERMINATION. -- This paragraph shall cease to apply to a
plan as of the effective date of the first material modification
of the plan agreed to after December 31, 1987.
(3) TREATMENT OF CERTAIN NONELECTIVE DEFERRED COMPENSATION. --
Section 457 of the 1986 Code shall not apply to amounts deferred
under a nonelective deferred compensation plan maintained by an
eligible employer described in section 457(e)(1)(A) of the 1986
Code (as in effect after the Reform Act) --
(A) if such amounts were deferred from periods before July 14,
1988, or
(B) if --
(i) such amounts are deferred from periods on or after such
date pursuant to an agreement which --
(I) was in writing on such date, and
(II) on such date provides for a deferral for each taxable year
covered by the agreement of a fixed amount or of an amount
determined pursuant to a fixed formula, and
(ii) the individual with respect to whom the deferral is made
was covered under such agreement on such date.
Subparagraph (B) shall not apply to any taxable year ending
after the date on which any modification of the amount or formula
described in subparagraph (B)(i)(II) agreed to in writing before
January 1, 1989, is effective. The preceding sentence shall not
apply to a modification agreed to in writing before January 1,
1989, which does not increase any benefit of a participant.
Amounts described in the first sentence of this paragraph shall be
taken into account for purposes of applying section 457 of the
1986 Code to other amounts deferred under any eligible deferred
compensation plan.
(4) STUDY. -- The Secretary of the Treasury or his delegate
shall conduct a study on the tax treatment of deferred
compensation paid by State and local governments and tax-exempt
organizations (including deferred compensation paid to independent
contractors). Not later than January 1, 1990, the Secretary shall
submit to the Committee on Ways and Means of the House of
Representatives and the Committee on Finance of the Senate a
report on the study conducted under this paragraph together with
such recommendations as he may deem advisable.
SEC. 6065. "26 USC 401 note" EXCEPTION FOR GOVERNMENTAL PLANS.
In the case of plan years beginning before January 1, 1993, section
401(a)(26) of the 1986 Code shall not apply to any governmental plan
(within the meaning of section 414(d) of such Code) with respect to
employees who were participants in such plan on July 14, 1988.
SEC. 6066. AIR TRANSPORTATION OF CARGO AND OF PASSENGERS TREATED AS
SAME SERVICE FOR PURPOSES OF FRINGE BENEFITS INCLUSION.
(a) IN GENERAL. -- Subsection (h) of section 132 of the 1986 Code is
amended by adding at the end thereof the following new paragraph:
"(8) AIR CARGO. -- For purposes of subsection (b), the
transportation of cargo by air and the transportation of
passengers by air shall be treated as the same service."
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) "26 USC
132 note" shall apply to transportation furnished after December 31,
1987, in taxable years ending after such date.
SEC. 6067. SPECIAL RULE FOR APPLYING SPIN-OFF RULES TO BRIDGE BANKS.
(a) IN GENERAL. -- Section 414(l)(2) of the 1986 Code is amended by
adding at the end thereof the following new subparagraph:
"(G) SPECIAL RULES FOR BRIDGE BANKS. -- For purposes of this
paragraph, in the case of a bridge bank established under section
11(i) of the Federal Deposit Insurance Act (12 U.S.C. 1821(i)) --
"(i) such bank shall be treated as a member of any controlled
group which includes any insured bank (as defined in section 3(h)
of such Act (12 U.S.C. 1813(h))) --
"(I) which maintains a defined benefit plan,
"(II) which is closed by the appropriate bank regulatory
authorities, and
"(III) any asset and liabilities of which are received by the
bridge bank, and
"(ii) the requirements of this paragraph shall not be treated
as met with respect to such plan unless during the 180-day period
beginning on the date such insured bank is closed --
"(I) the bridge bank has the right to require the plan to
transfer (subject to the provisions of this paragraph) not more
than 50 percent of the excess assets (as defined in subparagraph
(C)) to a defined benefit plan maintained by the bridge bank with
respect to participants or former participants (including retirees
and beneficiaries) in the original plan employed by the bridge
bank or formerly employed by the closed bank, and
"(II) no other merger, spin-off, termination, or similar
transaction involving the portion of the excess assets described
in subclause (I) may occur without the prior written consent of
the bridge bank."
(b) STUDY. -- "26 USC 414 note" The Secretary of the Treasury or his
delegate, in consultation with the Federal Deposit Insurance
Corporation, shall conduct a study with respect to the proper method of
allocating assets in the case of a transaction to which the amendment
made by this subsection applies. The Secretary of the Treasury shall
not later than January 1, 1990, report the results of such study to the
Committee on Ways and Means of the House of Representatives and to the
Committee on Finance of the Senate.
(c) EFFECTIVE DATE. -- The amendment made by this section "26 USC
414 note" shall take effect as if included in the amendments made by
section 205(c) of this Act.
SEC. 6068. INCOME AVERAGING ALLOWED TO LUMP-SUM DISTRIBUTIONS OF
ALTERNATE PAYEES.
(a) IN GENERAL. -- Section 402(e)(4) of the 1986 Code is amended by
adding at the end thereof the following new subparagraph:
"(O) LUMP-SUM DISTRIBUTIONS OF ALTERNATE PAYEES. -- If any
distribution or payment of the balance to the credit of an
employee would be treated as a lump-sum distribution, then, for
purposes of this subsection, the payment under a qualified
domestic relations order (within the meaning of section 414(p)) of
the balance to the credit of an alternate payee who is the spouse
or former spouse of the employee shall be treated as a lump-sum
distribution. For purposes of this subparagraph, the balance to
the credit of the alternate payee shall not include any amount
payable to the employee."
(b) EFFECTIVE DATE. -- The amendment made by this section "26 USC
402 note" shall apply to taxable years ending after December 31, 1984.
SEC. 6069. INCREASE IN EMPLOYER REVERSION TAX.
(a) IN GENERAL. -- Section 4980(a) of the 1986 Code is amended by
striking out "10 percent" and inserting in lieu thereof "15 percent".
(b) EFFECTIVE DATE. -- "26 USC 4980 note"
(1) IN GENERAL. -- The amendment made by subsection (a) shall
apply to reversions occurring on or after October 21, 1988.
(2) EXCEPTION. -- The amendment made by subsection (a) shall
not apply to any reversion on or after October 21, 1988, pursuant
to a plan termination if --
(A) with respect to plans subject to title IV of the Employee
Retirement Income Security Act of 1974, a notice of intent to
terminate required under such title was provided to participants
(or if no participants, to the Pension Benefit Guaranty
Corporation) before October 21, 1988,
(B) with respect to plans subject to title I of such Act, a
notice of intent to reduce future accruals required under section
204(h) of such Act was provided to participants in connection with
the termination before October 21, 1988,
(C) with respect to plans not subject to title I or IV of such
Act, the Board of Directors of the employer approved the
termination or the employer took other binding action before
October 21, 1988, or
(D) such plan termination was directed by a final order of a
court of competent jurisdiction entered before October 21, 1988,
and notice of such order was provided to participants before such
date.
SEC. 6070. "26 USC 89 note" DEFINITION OF PART-TIME EMPLOYEE FOR
PURPOSES OF SECTION 89.
For purposes of section 89(f) of the 1986 Code, in the case of a plan
maintained by an employer which employs fewer than 10 employees on a
normal working day during a plan year, section 89(h)(1)(B) of such Code
shall be applied --
(1) by substituting "35 hours" for "17 1/2 hours" in the case
of a plan year beginning in 1989, and
(2) by substituting "25 hours" for "17 1/2 hours" in the case
of plan years beginning in 1990.
All persons treated as 1 employer for purposes of subsection (b),
(c), (m), (n), or (o) of section 414 of the 1986 Code shall be treated
as 1 employer for purposes of the preceding sentence.
SEC. 6071. RURAL TELEPHONE COOPERATIVES PERMITTED TO HAVE QUALIFIED
CASH OR DEFERRED ARRANGEMENTS.
(a) IN GENERAL. -- Paragraphs (1) and (2) of section 401(k) of the
1986 Code (relating to cash or deferred arrangements) are each amended
by striking out "or a rural electric cooperative plan" and inserting in
lieu thereof "or a rural cooperative plan".
(b) RURAL COOPERATIVE PLAN DEFINED. --
(1) Paragraph (7) of section 401(k) of the 1986 Code (as
amended by title I) is amended to read as follows:
"(7) RURAL COOPERATIVE PLAN. -- For purposes of this
subsection --
"(A) IN GENERAL. -- The term 'rural cooperative plan' means
any pension plan --
"(i) which is a defined contribution plan (as defined in
section 414(i)), and
"(ii) which is established and maintained by a rural
cooperative.
"(B) RURAL COOPERATIVE DEFINED. -- For purposes of
subparagraph (A), the term 'rural cooperative' means --
"(i) any organization which --
"(I) is exempt from tax under this subtitle or which is a State
or local government or political subdivision thereof (or agency or
instrumentality thereof), and
"(II) is engaged primarily in providing electric service on a
mutual or cooperative basis,
"(ii) any organization described in paragraph (4) or (6) of
section 501(c) and at least 80 percent of the members of which are
organizations described in clause (i),
"(iii) a cooperative telephone company described in section
501(c)(12), and
"(iv) an organization which is a national association of
organizations described in clause (i), (ii), or (iii)."
(2) Subparagraph (B) of section 401(k)(4) of the 1986 Code (as
amended by title I) is amended by striking out "rural electric
plan" and inserting in lieu thereof "rural cooperative plan".
(c) AMENDMENTS TO SECTION 457. -- Section 457 of the 1986 Code (as
amended by section 1107 of the Reform Act) is amended by striking out
"rural electric cooperative plan" in subsection (c)(2) and inserting in
lieu thereof "rural cooperative plan".
(d) EFFECTIVE DATE. -- The amendments made by this section "26 USC
401 note" shall apply to taxable years beginning after the date of the
enactment of this Act.
SEC. 6072. STUDY OF TREATMENT OF CERTAIN TECHNICAL PERSONNEL.
The Secretary of the Treasury or his delegate shall conduct a study
of the treatment provided by section 1706 of the Reform Act (relating to
treatment of certain technical personnel). The report of such study
shall be submitted not later than September 1, 1989, to the Committee on
Ways and Means of the House of Representatives and the Committee on
Finance of the Senate.
SEC. 6076. "26 USC 801 note" TREATMENT OF CERTAIN WORKERS'
COMPENSATION FUNDS.
(a) TREATMENT FOR TAXABLE YEARS BEGINNING BEFORE 1987. -- In the
case of any taxable year beginning before January 1, 1987, a deficiency
shall not be assessed against (and if assessed, shall not be collected
from) any qualified group self-insurers' fund to the extent such
deficiency is attributable to the timing of policyholder dividend
deductions.
(b) QUALIFIED GROUP SELF-INSURERS' FUND. -- For purposes of this
section, the term "qualified group self-insurers' fund" means any group
of 2 or more employers which has been in existence for not less than 2
years, and who enter into agreements to pool their liabilities under the
State workers' disability compensation laws for the purpose of
qualifying as a self-insurer under such laws, if --
(1) the group has received a certificate of approval from,
7 and is subject to regulation by, the State board or agency that
is responsible for administering the State workers' disability
compensation laws,
(2) each employer who is a member of the group, by written
agreement, is jointly and severally bound to assume and discharge,
by payment, any lawful judgment or award entered by a court of
competent jurisdiction or by the State agency responsible for
administering the State workers' disability compensation laws
against a member of the group,
(3) the group is prohibited by State law or regulation from
using the monies collected for a purpose other than to pay, or to
reserve against, claims under the State workers' disability
compensation laws and expenses,
(4) the group is prohibited by State law or regulation from
taking projected investment income into account in determining
members' premiums,
(5) the group is required by State law or regulation to submit
to the State board or agency that is responsible for administering
the State workers' disability compensation laws an audited
financial statement,
(6) the group's investments are limited by State law or
regulation to bonds, notes, or other evidences of indebtedness
issued, assumed or guaranteed by the United States of America, or
by an agency or instrumentality thereof, certificates of deposit
in a federally insured bank, shares or savings deposits in a
federally insured savings and loan association or credit union,
and certificates of deposit issued by a commercial bank duly
chartered under State law, and other investments which are
approved by the State board or agency that is responsible for
administering the State workers' disability compensation laws, and
(7) the group exclusively covers workers' compensation
liability, is not a commercial insurance carrier or company
licensed by the State board, agency, or commissioner responsible
for regulating and licensing insurance carriers and companies;
and is not subject to filing under the regulatory statements of
the National Association of Insurance Commissioners.
SEC. 6077. SPECIAL ESTIMATED TAX PAYMENTS.
(a) GENERAL RULE. -- Part III of subchapter L of chapter 1
of the 1986 Code (relating to provisions of general application)
is amended by adding at the end thereof the following new section:
"SEC. 847. SPECIAL ESTIMATED TAX PAYMENTS.
"In the case of taxable years beginning after December 31, 1987, of
an insurance company required to discount unpaid losses (as defined in
section 846) --
"(1) ADDITIONAL DEDUCTION. -- There shall be allowed as a
deduction for the taxable year, if separate estimated tax payments
are made as required by paragraph (2), an amount not to exceed the
excess of --
"(A) the amount of the undiscounted, unpaid losses (as defined
in section 846(b)) attributable to losses incurred after December
31, 1986, over
"(B) the amount of the related discounted, unpaid losses
determined under section 846,
to the extent such amount was not deducted under this paragraph
in a preceding taxable year. Section 6655 shall be applied to any
taxable year without regard to the deduction allowed under the
preceding sentence.
"(2) SPECIAL ESTIMATED TAX PAYMENTS. -- The deduction under
paragraph (1) shall be allowed only to the extent that special
estimated tax payments are made in an amount equal to the tax
benefit attributable to such deduction, on or before the date that
any taxes (determined without regard to this section) for the
taxable year for which the deduction is allowed are due to be
paid. If a deduction would be allowed but for the fact that
special estimated tax payments were not timely made, such
deduction shall be allowed to the extent such payments are made
within a reasonable time, as determined by the Secretary, if all
interest and penalties, computed as if this sentence did not
apply, are paid. If amounts are included in gross income under
paragraph (5) or (6) for any taxable year and an additional tax is
due for such year (or any other year) as a result of such
inclusion, an amount of special estimated tax payments equal to
such additional tax shall be applied against such additional tax.
If, after any such payment is so applied, there is an adjustment
reducing the amount of such additional tax, in lieu of any credit
or refund for such reduction, a special estimated tax payment
shall be treated as made in an amount equal to the amount
otherwise allowable as a credit or refund. To the extent that a
special estimated tax payment is not used to offset additional tax
due for any of the first 15 taxable years beginning after the year
for which the payment was made, such special estimated tax payment
shall be treated as an estimated tax payment made under section
6655 for the 16th year after the year for which the payment was
made.
"(3) SPECIAL LOSS DISCOUNT ACCOUNT. -- Each company which is
allowed a deduction under paragraph (1) shall, for purposes of
this part, establish and maintain a special loss discount account.
"(4) ADDITIONS TO SPECIAL LOSS DISCOUNT ACCOUNT. -- There
shall be added to the special loss discount account for each
taxable year an amount equal to the amount allowed as a deduction
for the taxable year under paragraph (1).
"(5) SUBTRACTIONS FROM SPECIAL LOSS DISCOUNT ACCOUNT AND
INCLUSION IN GROSS INCOME. -- After applying paragraph (4), there
shall be subtracted for the taxable year from the special loss
discount account and included in gross income:
"(A) The excess (if any) of the amount in the special loss
discount account with respect to losses incurred in each taxable
year over the amount of the excess referred to in paragraph (1)
with respect to losses incurred in that year, and
10"(B) Any amount improperly subtracted from the special loss
discount account under subparagraph (A) to the extent special
estimated tax payments were used with respect to such amount.
"(6) RULES IN THE CASE OF LIQUIDATION OR TERMINATION OF
TAXPAYER'S INSURANCE BUSINESS. --
"(A) IN GENERAL. -- If a company liquidates or otherwise
terminates its insurance business and does not transfer or
distribute such business in an acquisition of assets referred to
in section 381(a), the entire amount remaining in such special
loss discount account shall be subtracted and included in gross
income. Except in the case where a company transfers or
distributes its insurance business in an acquisition of assets,
referred to in section 381(a), if the company is not subject to
the tax imposed by section 801 or section 831 for any taxable
year, the entire amount in the account at the close of the
preceding taxable year shall be subtracted from the account in
such preceding taxable year and included in gross income.
"(B) ELIMINATION OF BALANCE OF PAYMENTS. -- In any case to
which subparagraph (A) applies, any special estimated tax payment
remaining after the credit attributable to the inclusion under
subparagraph (A) shall be voided.
"(7) MODIFICATION OF THE AMOUNT OF SPECIAL ESTIMATED TAX
PAYMENTS IN THE EVENT OF SUBSEQUENT MARGINAL RATE REDUCTION OR
INCREASE. -- In the event of a reduction in any tax rate provided
under section 11 for any tax year after the enactment of this
section, the Secretary shall prescribe regulations providing for a
reduction in the amount of any special estimated tax payments made
for years before the effective date of such section 11 rate
reductions. Such reduction in the amount of such payments shall
reduce the amount of such payments to the amount that they would
have been if the special deduction permitted under paragraph (1)
had occurred during a year that the lower marginal rate under
section 11 applied. Similar rules shall be applied in the event
of a marginal rate increase.
"(8) TAX BENEFIT DETERMINATION. -- The tax benefit
attributable to the deduction under paragraph (1) shall be
determined under regulations prescribed by the Secretary, by
taking into account tax benefits that would arise from the
carryback of any net operating loss for the year, as well as
current year tax benefits. Tax benefits for the current year and
carryback years shall include those that would arise from the
filing of a consolidated return with another insurance company
required to determine discounted, unpaid losses under section 846
without regard to the limitations on consolidation contained in
section 1503(c).
"(9) REGULATIONS. -- The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out the
purposes of this section, including regulations --
"(A) providing for the separate application of this section
with respect to each accident year, and
"(B) such adjustments in the application of this section as may
be necessary to take into account the tax imposed by section 55."
(b) CLERICAL AMENDMENT. -- The table of sections for part III of
subchapter L of chapter 1 of the 1986 Code is amended by adding at the
end thereof the following new item:
"Sec. 847. Special estimated tax payments."
(c) EFFECTIVE DATE. -- The amendments made by this section "26 USC
847 note" shall apply to taxable years beginning after December 31,
1987.
SEC. 6078. CHURCH SELF-FUNDED DEATH BENEFIT PLANS TREATED AS LIFE
INSURANCE.
(a) IN GENERAL. -- Section 7702 of the 1986 Code (defining life
insurance contract) is amended by redesignating subsection (j) as
subsection (k) and by inserting after subsection (i) the following new
subsection:
"(j) CERTAIN CHURCH SELF-FUNDED DEATH BENEFIT PLANS TREATED AS LIFE
INSURANCE. --
"(1) IN GENERAL. -- In determining whether any plan or
arrangement described in paragraph (2) is a life insurance
contract, the requirement of subsection (a) that the contract be a
life insurance contract under applicable law shall not apply.
"(2) DESCRIPTION. -- For purposes of this subsection, a plan
or arrangement is described in this paragraph if --
"(A) such plan or arrangement provides for the payment of
benefits by reason of the death of the individuals covered under
such plan or arrangement, and
"(B) such plan or arrangement is provided by a church for the
benefit of its employees and their beneficiaries, directly or
through an organization described in section 414(e)(3)(A) or an
organization described in section 414(e)(3)(B)(ii).
"(3) DEFINITIONS. -- For purposes of this subsection --
"(A) CHURCH. -- The term 'church' means a church or a
convention or association of churches.
"(B) EMPLOYEE. -- The term 'employee' includes an employee
described in section 414(e)(3)(B)."
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) "26 USC
7702 note" shall take effect as if included in the amendment made by
section 221(a) of the Tax Reform Act of 1984.
SEC. 6079. TREATMENT OF STRUCTURED SETTLEMENTS.
(a) TREATMENT UNDER MINIMUM TAX. --
(1) The last sentence of section 56(g)(4)(B)(iii) of the 1986
Code (as amended by title I) is amended to read as follows: "The
preceding sentence shall not apply to any annuity contract which
is held under a plan described in section 403(a) or which is
described in section 72(u)(3)(C)."
(2) EFFECTIVE DATE. -- The amendment made by paragraph (1) "26
USC 56 note" shall take effect as if included in the amendments
made by section 701 of the Reform Act.
(b) CERTAIN CREDITOR RIGHTS PERMITTED. --
(1) IN GENERAL. -- Subsection (c) of section 130 of the 1986
Code (relating to certain personal injury liability assignments)
is amended --
(A) by striking out subparagraph (C) of paragraph (2) and
redesignating subparagraphs (D) and (E) of paragraph (2) as
subparagraphs (C) and (D), respectively, and
(B) by adding at the end thereof the following new sentence:
"The determination for purposes of this chapter of when the
receipient is treated as having received any payment with respect to
which there has been a qualified assignment shall be made without regard
to any provision of such assignment which grants the recipient rights as
a creditor greater than those of a general creditor."
(2) EFFECTIVE DATE. -- The amendment made by paragraph (1) "26
USC 130 note" shall apply to assignments after the date of the
enactment of this Act.
SEC. 6080. VARIABLE CONTRACTS INVESTED IN GOVERNMENT SECURITIES
PERMITTED.
(a) IN GENERAL. -- Subsection (h) of section 817 of the 1986 Code
(relating to treatment of certain nondiversified contracts) is amended
by adding at the end thereof the following new paragraph: 10"(6)
GOVERNMENT SECURITIES FUNDS. -- In determining whether
a segregated asset account is adequately diversified for purposes
of paragraph (1), each United States Government agency or
instrumentality shall be treated as a separate issuer."
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) "26 USC
817 note" shall apply to taxable years beginning after December 31,
1987.
SEC. 6101. AUTHORITY TO PRESCRIBE TOLERANCES FOR THE VOLUME OF WINE
IN BOTTLES FOR PURPOSES OF THE EXCISE TAX ON WINE.
(a) IN GENERAL. -- Section 5041 of the 1986 Code (relating to
imposition and rate of tax on wine is amended by redesignating
subsection (d) as subsection (e) and by inserting after subsection (c)
the following new subsection: 4"(d) TOLERANCDES. -- Where the
Secretary finds that the revenue will not be endangered thereby, he may
by regulation prescribe tolerances (but not greater than 1/2 of 1
percent) for bottles and other containers, and, if such tolerances are
prescribed, no assessment shall be made and no tax shall be collected
for any excess in any case where the contents of a bottle or other
container are within the limit of the applicable tolerance prescribed."
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) "26 USC
5041 note" shall apply to wine removed after December 31, 1988.
SEC. 6102. WHOLESALE DISTRIBUTORS TO ADMINISTER CLAIMS FOR REFUND OF
GASOLINE TAX.
(a) IN GENERAL. -- Subsection (a) of section 6416 of the 1986 Code
(relating to certain taxes and services) is amended by adding at the end
thereof the following new paragraph:
"(4) WHOLESALE DISTRIBUTORS TO ADMINISTER CREDITS AND REFUNDS
OF GASOLINE TAX. --
"(A) IN GENERAL. -- For purposes of this subsection, a
wholesale distributor who purchases any product on which tax
imposed by section 4081 has been paid and who sells the product to
its ultimate purchaser shall be treated as the person (and the
only person) who paid such tax.
"(B) WHOLESALE DISTRIBUTOR. -- For purposes of subparagraph
(A), the term 'wholesale distributor' has the meaning given such
term by section 4092(b)(2) (determined by substituting 'any
product taxable under section 4081' for 'a taxable fuel'
therein)."
(b) EFFECTIVE DATE. -- The amendment made by this section "26 USC
6416 note" shall apply to fuel sold by wholesale distributors (as
defined in section 6416(a)(4)(B) of the 1986 Code, as added by this
section) after September 30, 1988.
SEC. 6103. AUTHORITY TO EXEMPT ARTICLES FROM EXCISE TAX ON HEAVY
TRUCKS AND TRAILERS WHERE BENEFIT ACCRUES TO UNITED STATES.
(a) IN GENERAL. -- Section 4293 of the 1986 Code is amended by
inserting "section 4051," after "section 4041,".
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) "26 USC
4293 note" shall take effect on the date of the enactment of this Act.
SEC. 6104. APPLICATION OF REDUCED GASOLINE TAX RATE TO BLENDERS.
(a) IN GENERAL. -- Paragraph (1) of section 4081(c) of the 1986 Code
(relating to gasoline mixed with alcohol at refinery, etc.) is amended
by adding after the 1st sentence the following new sentence: "Subject
to such terms and conditions as the Secretary may prescribe (including
the application of section 4101), the treatment under the preceding
sentence also shall apply to use in producing gasohol after the time of
such removal or sale.".
(b) EFFECTIVE DATE. -- The amendment made by this section "26 USC
4081 note" shall take effect on October 1, 1989.
SEC. 6105. CERTAIN EDUCATIONAL INSTITUTIONS EXEMPT FROM USER FEES ON
PERMITS FOR INDUSTRIAL USE OF SPECIALLY DENATURED DISTILLED SPIRITS.
(a) IN GENERAL. -- Section 5276 of the 1986 Code (relating to
occupational tax) is amended by adding at the end thereof the following
new subsection:
"(c) EXEMPTION FOR CERTAIN EDUCATIONAL INSTITUTIONS. -- Subsection
(a) shall not apply with respect to any scientific university, college
of learning, or institution of scientific research which --
"(1) is issued a permit under section 5271(a)(2), and
"(2) with respect to any calendar year during which such permit
is in effect, procures less than 25 gallons of specially denatured
distilled spirits for experimental or research use but not for
consumption (other than organoleptic tests) or sale."
(b) CONFORMING AMENDMENT. -- Section 5276(a) of the 1986 Code is
amended by striking out "A permit" and inserting in lieu thereof "Except
as provided in subsection (c), a permit".
(c) EFFECTIVE DATE. -- The amendments made by this section "26 USC
5276 note" shall take effect on July 1, 1989.
SEC. 6106. SMALL PRODUCERS EXEMPT FROM OCCUPATIONAL TAX ON DISTILLED
SPIRITS PLANTS.
(a) IN GENERAL. -- Section 5081 of the 1986 Code (relating to
imposition and rate of occupational tax) is amended by adding at the end
thereof the following new subsection:
"(c) EXEMPTION FOR SMALL PRODUCERS. -- Subsection (a) shall not
apply with respect to any taxpayer who is a proprietor of an eligible
distilled spirits plant (as defined in section 5181(c)(4))."
(b) CONFORMING AMENDMENT. -- Paragraph (1) of section 5081(b) of the
1986 Code (relating to reduced rates for small proprietors) is amended
by inserting "not described in subsection (c)" after "taxpayer".
(c) EFFECTIVE DATE. -- The amendments made by this section "26 USC
5081 note" shall take effect on July 1, 1989.
SEC. 6107. QUARTERLY PAYMENT OF ARCHERY EXCISE TAX.
(a) IN GENERAL. -- Subsection (d) of section 6302 of the 1986 Code
(relating to mode or time of collection) is amended to read as follows:
"(d) TIME FOR PAYMENT OF MANUFACTURERS' EXCISE TAX ON SPORTING GOODS.
-- The taxes imposed by subsections (a) and (b) of section 4161
(relating to taxes on sporting goods) shall be due and payable on the
date for filing the return for such taxes."
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) "26 USC
6302 note" shall apply with respect to articles sold by the
manufacturer, producer, or importer after December 31, 1988.
SEC. 6108. EXTENSION OF TIME FOR ENACTING AUTHORIZING LEGISLATION
RELATING TO THE OIL SPILL LIABILITY TRUST FUND.
Subparagraph (B) of section 4611(f)(2) of the 1986 Code (defining
qualified authorizing legislation) is amended by striking out "September
1, 1987" and inserting in lieu thereof "December 31, 1990".
SEC. 6109. DONATED CARGO EXEMPT FROM HARBOR MAINTENANCE TAX.
(a) GENERAL RULE. -- Section 4462 of the 1986 Code (relating to
definitions and special rules) is amended by redesignating subsection
(h) as subsection (i) and by inserting after subsection (g) the
following new subsection:
"(h) EXEMPTION FOR HUMANITARIAN AND DEVELOPMENT ASSISTANCE CARGOS.
-- No tax shall be imposed under this subchapter on any nonprofit
organization or cooperative for cargo which is owned or financed by such
nonprofit organization or cooperative and which is certified by the
United States Customs Service as intended for use in humanitarian or
development assistance overseas."
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) "26 USC
4462 note" shall take effect on April 1, 1987.
SEC. 6110. RELAY CARGO.
(a) IN GENERAL. -- Subsection (g) of section 4462 of the 1986 Code
is amended by adding at the end thereof the following new paragraph:
"(3) RELAY CARGO. -- Only 1 tax shall be imposed under section
4461(a) on cargo (moving under a single bill of lading) which is
unloaded from one vessel and loaded onto another vessel at any
port in the United States for relay to or from any port in Alaska,
Hawaii, or any possession of the United States. For purposes of
this paragraph, the term 'cargo' does not include any item not
treated as cargo under subsection (b)(2)."
(b) EFFECTIVE DATE. -- The amendment "26 USC 4462 note" made by this
section shall take effect on the date of the enactment of this Act.
SEC. 6111. CLARIFICATION OF MEANING OF MANUFACTURE UNDER TRUCK
EXCISE TAX.
(a) IN GENERAL. -- Paragraph (1) of section 4052(a) of the 1986 Code
(defining first retail sale) is amended by striking out "manufacture,
production" and inserting in lieu thereof "production, manufacture".
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) '26 USC
4052 note" shall take effect on January 1, 1988.
SEC. 6126. "26 USC 1502 note" DUAL RESIDENT COMPANIES.
(a) GENERAL RULE. -- In the case of a transaction which --
(1) involves the transfer after the date of the enactment of
this Act by a domestic corporation, with respect to which there is
a qualified excess loss account, of its assets and liabilities to
a foreign corporation in exchange for all of the stock of such
foreign corporation, followed by the complete liquidation of the
domestic corporation into the common parent, and
(2) qualifies, pursuant to Revenue Ruling 87-27, as a
reorganization which is described in section 368(a)(1)(F) of the
1986 Code,
then, solely for purposes of applying Treasury Regulation section
1.1502-19 to such qualified excess loss account, such foreign
corporation shall be treated as a domestic corporation in determining
whether such foreign corporation is a member of the affiliated group of
the common parent.
(b) TREATMENT OF INCOME OF NEW FOREIGN CORPORATION. --
(1) IN GENERAL. -- In any cae to which subsection (a) applies,
for purposes of the 1986 Code --
(A) the source and character of any item of income of the
foreign corporation referred to in subsection (a) shall be
determined as if such foreign corporation were a domestic
corporation,
(B) the net amount of any such income shall be treated as
subpart F income (without regard to section 952(c) of the 1986
Code), and
(C) the amount in the qualified excess loss account referred to
in subsection (a) shall --
(i) be reduced by the net amount of any such income, and
(ii) be increased by the amount of any such income distributed
directly or indirectly to the common parent described in
subsection (a).
(2) LIMITATION. -- Paragraph (1) shall apply to any item of
income only to the extent that the net amount of such income does
not exceed the amount in the qualified excess loss account after
being reduced udner paragraph (1)(C) for prior income.
(3) BASIS ADJUSTMENTS NOT APPLICABLE. -- To the extent
paragraph (1) applies to any item of income, there shall be no
increase in basis under section 961(a) of such Code on account of
such income (and there shall be no reduction in basis under
section 961(b) of such Code on account of an exclusion
attributable to the inclusion of such income).
(4) RECOGNITION OF GAIN. -- For purposes of paragraph (1), if
the foreign corporation referred to in subsection (a) transfers
any property acquired by such foreign corporation in the
transaction referred to in subsection (a) (or transfers any other
property the basis of which is determined in whole or in part by
reference to the basis of property so acquired) and (but for this
paragraph) there is not full recognition of gain on such transfer,
the excess (if any) of --
(A) the fair market value of the property transferred, over
(B) its adjusted basis,
shall be treated as gain from the sale or exchange of such
property and shall be recognized notwithstanding any other
provision of law. Proper adjustment shall be made to the basis of
any such property for gain recognized under the preceding
sentence.
(c) DEFINITIONS. -- For purposes of this section --
(1) COMMON PARENT. -- The term 'common parent' means the
common parent of the affiliated group which included the domestic
corporation referred to in subsection (a)(1).
(2) QUALIFIED EXCESS LOSS ACCOUNT. -- The term "qualified
excess loss account" means any excess loss account (within the
meaning of the consolidated return regulations) to the extent such
account is attributable --
(A) to taxable years beginning before January 1, 1988, and
(B) to periods during which the domestic corporation was
subject to an income tax of a foreign country on its income on a
residence basis or without regard to whether such income is from
sources in or outside of such foreign country.
The amount of such account shall be determined as of
immediately after the transaction referred to in subsection (a)
and without, except as provided in subsection (b), diminution for
any future adjustment.
(3) NET AMOUNT. -- The net amount of any item of income is the
amount of such income reduced by allocable deductions as
determined under the rules of section 954(b)(5) of the 1986 Code.
(4) SECOND SAME COUNTRY CORPORATION MAY BE TREATED AS
DOMESTIC CORPORATION IN CERTAIN CASES. -- If --
(A) another foreign corporation acquires from the common parent
stock of the foreign corporation referred to in subsection (a)
after the transaction referred to in subsection (a),
(B) both of such foreign corporations are subject to the income
tax of the same foreign country on a residence basis, and
(C) such common parent complies with such reporting
requirements as the Secretary of the Treasury or his delegate may
prescribe for purposes of this paragraph,
such other foreign corporation shall be treated as a domestic
corporation in determining whether the foreign corporation
referred to in subsection (a) is a member of the affiliated group
referred to in subsection (a) (and the rules of subsection (b)
shall apply (i) to any gain of such other foreign corporation on
any disposition of such stock, and (ii) to any other income of
such other foreign corporation except to the extent it establishes
to the satisfaction of the Secretary of the Treasury or his
delegate that such income is not attributable to property acquired
from the foreign corporation referred to in subsection (a)).
SEC. 6127. ELECTION TO BE TREATED AS QUALIFIED ELECTING FUND TO BE
MADE BY TAXPAYER.
(a) GENERAL RULE. -- Section 1295 of the 1986 Code (defining
qualified electing fund) is amended to read as follows:
"SEC. 1295. QUALIFIED ELECTING FUND.
"(a) GENERAL RULE. -- For purposes of this part, any passive foreign
investment company shall be treated as a qualified electing fund with
respect to the taxpayer if --
"(1) an election by the taxpayer under subsection (b) applies
to such company for the taxable year, and
"(2) such company complies with such requirements as the
Secretary may prescribe for purposes of --
"(A) determining the ordinary earnings and net capital gain of
such company, and
"(B) otherwise carrying out the purposes of this subpart.
"(b) ELECTION. --
"(1) IN GENERAL. -- A taxpayer may make an election under this
subsection with respect to any passive foreign investment company
for any taxable year of the taxpayer. Such an election, once made
with respect to any company, shall apply to all subsequent taxable
years of the taxpayer with respect to such company unless revoked
by the taxpayer with the consent of the Secretary.
"(2) WHEN MADE. -- An election under this subsection may be
made for any taxable year at any time on or before the due date
(determined with regard to extensions) for filing the return of
the tax imposed by this chapter for such taxable year. To the
extent provided in regulations, such an election may be made later
than as required in the preceding sentence where the taxpayer
fails to make a timely election because the taxpayer reasonably
believed that the company was not a passive foreign investment
company."
(b) CONFORMING AMENDMENTS. --
(1) Paragraph (1) of section 1291(d) of the 1986 Code (as
amended by title I) is amended by striking out "for each" in the
material preceding subparagraph (A) and inserting in lieu thereof
"with respect to the taxpayer for each".
(2) Subparagraphs (A)(i) and (B)(i) of section 1291(d)(2) of
the 1986 Code (as amended by title I) are each amended by striking
out "for a taxable year" and inserting in lieu thereof "with
respect to the taxpayer for a taxable year".
(c) EFFECTIVE DATE. -- "26 USC 1295 note"
(1) IN GENERAL. -- The amendments made by this section shall
take effect as if included in the amendments made by section 1235
of the Reform Act.
(2) TIME FOR MAKING ELECTION. -- The period during which an
election under section 1295(b) of the 1986 Code may be made shall
in no event expire before the date 60 days after the date of the
enactment of this Act.
SEC. 6128. TREATMENT OF CERTAIN UNITED STATES AFFILIATE OBLIGATIONS.
(a) GENERAL RULE. -- Subparagraph (B) of section 127(g)(3) of the
Tax Reform Act "26 USC 871 note" of 1984 is amended by inserting before
the period at the end thereof the following: "as such principles are
applied in Revenue Ruling 86-6, except that the maximum debt-to-equity
ratio described in such Revenue Rulings shall be increased from 5-to-1
to 25-to-1".
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) "26 USC
871 note" shall apply to taxable years ending after the date of the
enactment of this Act.
SEC. 6129. TREATMENT OF CERTAIN INSURANCE BRANCHES OF FOREIGN
CORPORATIONS.
(a) GENERAL RULE. -- Section 964 of the 1986 Code (relating to
miscellaneous provisions) is amended by adding at the end thereof the
following new subsection:
"(d) TREATMENT OF CERTAIN BRANCHES. --
"(1) IN GENERAL. -- For purposes of this chapter, section
6038, section 6046, and such other provisions as may be specified
in regulations --
"(A) a qualified insurance branch of a controlled foreign
corporation shall be treated as a separate foreign corporation
created under the laws of the foreign country with respect to
which such branch qualifies under paragraph (2), and
"(B) except as provided in regulations, any amount directly or
indirectly transferred or credited from such branch to one or more
other accounts of such controlled foreign corporation shall be
treated as a dividend paid to such controlled foreign corporation.
"(2) QUALIFIED INSURANCE BRANCH. -- For purposes of paragraph
(1), the term 'qualified insurance branch' means any branch of a
controlled foreign corporation which is licensed and predominantly
engaged on a permanent basis in the active conduct of an insurance
business in a foreign country if --
"(A) separate books and accounts are maintained for such
branch,
"(B) the principal place of business of such branch is in such
foreign country,
"(C) such branch would be taxable under subchapter L if it were
a separate domestic corporation, and
"(D) an election under this paragraph applies to such branch.
An election under this paragraph shall apply to the taxable
year for which made and all subsequent taxable years unless
revoked with the consent of the Secretary.
"(3) REGULATIONS. -- The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out the
purposes of this subsection."
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) "26 USC
964 note" shall apply to taxable years of foreign corporations beginning
after December 31, 1988.
SEC. 6130. TREATMENT OF CERTAIN INSTRUMENTS UNDER FOREIGN CURRENCY
RULES.
(a) GENERAL RULE. -- Clause (iii) of section 988(c)(1)(B) of the
1986 Code (as amended by title I) is amended by striking out "unless
such instrument would be marked to market under section 1256 if held on
the last day of the taxable year".
(b) SPECIAL RULES. -- Paragraph (1) of section 988(c) of the 1986
Code is amended by adding at the end thereof the following new
subparagraphs:
"(D) EXCEPTION FOR CERTAIN INSTRUMENTS MARKED TO MARKET. --
"(i) IN GENERAL. -- Clause (iii) of subparagraph (B) shall not
apply to any regulated futures contract or nonequity option which
would be marked to market under section 1256 if held on the last
day of the taxable year.
"(ii) ELECTION OUT. --
"(I) IN GENERAL. -- The taxpayer may elect to have clause (i)
not apply to such taxpayer. Such an election shall apply to
contracts held at any time during the taxable year for which such
election is made or any succeeding taxable year unless such
election is revoked with the consent of the Secretary.
"(II) TIME FOR MAKING ELECTION. -- Except as provided in
regulations, an election under subclause (I) for any taxable year
shall be made on or before the 1st day of such taxable year (or,
if later, on or before the 1st day during such year on which the
taxpayer holds a contract described in clause (i)).
"(III) SPECIAL RULE FOR PARTNERSHIPS, ETC. -- In the case of a
partnership, an election under subclause (I) shall be made by each
partner separately. A similar rule shall apply in the case of an
S corporation.
"(iii) TREATMENT OF CERTAIN PARTNERSHIPS. -- This subparagraph
shall not apply to any income or loss of a partnership for any
taxable year if such partnership made an election under
subparagraph (E)(iii)(V) for such year or any preceding year.
"(E) SPECIAL RULES FOR CERTAIN FUNDS. --
"(i) IN GENERAL. -- In the case of a qualified fund, clause
(iii) of subparagraph (B) shall not apply to any instrument which
would be marked to market under section 1256 if held on the last
day of the taxable year (determined after the application of
clause (iv)).
"(ii) SPECIAL RULE WHERE ELECTING PARTNERSHIP DOES NOT QUALIFY.
-- If any partnership made an election under clause (iii)(V) for
any taxable year and such partnership has a net loss for such year
or any succeeding year from instruments referred to in clause (i),
the rules of clauses (i) and (iv) shall apply to any such loss
year whether or not such partnership is a qualified fund for such
year.
"(iii) QUALIFIED FUND DEFINED. -- For purposes of this
subparagraph, the term 'qualified fund' means any partnership if
--
10"(I) at all times during the taxable year (and during each
preceding taxable year to which an election under subclause (V)
applied), such partnership has at least 20 partners and no single
partner owns more than 20 percent of the interests in the capital
or profits of the partnership,
"(II) the principal activity of such partnership for such
taxable year (and each such preceding taxable year) consists of
buying and selling options, futures, or forwards with respect to
commodities,
"(III) at least 90 percent of the gross income of the
partnership for the taxable year (and for each such preceding
taxable year) consisted of income or gains described in
subparagraph (A), (B), or (G) of section 7704(d)(1) or gain from
the sale or disposition of capital assets held for the production
of interest or dividends,
"(IV) no more than a de minimis amount of the gross income of
the partnership for the taxable year (and each such preceding
taxable year) was derived from buying and selling commodities, and
"(V) an election under this subclause applies to the taxable
year.
An election under subclause (V) for any taxable year shall be
made on or before the 1st day of such taxable year (or, if later,
on or before the 1st day during such year on which the partnership
holds an instrument referred to in clause (i)). Any such election
shall apply to the taxable year for which made and all succeeding
taxable years unless revoked with the consent of the Secretary.
"(iv) TREATMENT OF CERTAIN CURRENCY CONTRACTS. --
"(I) IN GENERAL. -- Except as provided in regulations, in the
case of a qualified fund, any bank forward contract, any foreign
currency futures contract traded on a foreign exchange, or to the
extent provided in regulations any similar instrument, which is
not otherwise a section 1256 contract shall be treated as a
section 1256 contract for purposes of section 1256.
"(II) GAINS AND LOSSES TREATED AS SHORT TERM. -- In the case
of any instrument treated as a section 1256 contract under
subclause (I), subparagraph (A) of section 1256(a)(3) shall be
applied by substituting '100 percent' for '40 percent' (and
subparagraph (B) of such section shall not apply).
"(v) SPECIAL RULES FOR CLAUSE (iii)(I). --
"(I) CERTAIN GENERAL PARTNERS. -- The interest of a general
partner in the partnership shall not be treated as failing to meet
the 20-percent ownership requirements of clause (iii)(I) for any
taxable year of the partnership if, for the taxable year of the
partner in which such partnership taxable year ends, such partner
(and each corporation filing a consolidated return with such
partner) had no ordinary income or loss from a section 988
transaction which is foreign currency gain or loss (as the case
may be).
"(II) TREATMENT OF INCENTIVE COMPENSATION. -- For purposes of
clause (iii)(I), any income allocable to a general partner as
incentive compensation based on profits rather than capital shall
not be taken into account in determining such partner's interest
in the profits of the partnership.
"(III) TREATMENT OF TAX-EXEMPT PARTNERS. -- Except as provided
in regulations, the interest of a partner in the partnership shall
not be treated as failing to meet the 20-percent ownership
requirements of clause (iii)(I) if none of the income of such
partner from such partnership is subject to tax under this chapter
(whether directly or through 1 or more pass-thru entities).
"(IV) LOOK-THRU RULE. -- In determining whether the
requirements of clause (iii)(I) are met with respect to any
partnership, except to the extent provided in regulations, any
interest in such partnership held by another partnership shall be
treated as held proportionately by the partners in such other
partnership.
"(iv) OTHER SPECIAL RULES. -- For purposes of this
subparagraph --
"(I) RELATED PERSONS. -- Interests in the partnership held by
persons related to each other (within the meaning of sections
267(b) and 707(b)) shall be treated as held by 1 person.
"(II) PREDECESSORS. -- References to any partnership shall
include a reference to any predecessor thereof.
"(III) INADVERTENT TERMINATIONS. -- Rules similar to the rules
of section 7704(e) shall apply.
"(IV) TREATMENT OF CERTAIN DEBT INSTRUMENTS. -- For purposes
of clause (iii)(IV), any debt instrument which is a section 988
transaction shall be treated as a commodity."
(c) AMENDMENT OF SECTION 1092(b). -- Paragraph (2) of section 1092(
b) of the 1986 Code is amended by adding at the end thereof the
following new subparagraph:
"(D) TIMING AND CHARACTER AUTHORITY. -- The regulations
prescribed under paragraph (1) shall include regulations relating
to the timing and character of gains and losses in case of
straddles where at least 1 position is ordinary and at least 1
position is capital."
(d) EFFECTIVE DATE. -- "26 USC 988 note"
(1) IN GENERAL. -- The amendments made by this section shall
apply with respect to forward contracts, future contracts,
options, and similar instruments entered into or acquired after
October 21, 1988.
(2) TIME FOR MAKING ELECTION. -- The time for making any
election under subparagraph (D) or (E) of section 988(c)(1) of the
1986 Code shall not expire before the date 30 days after the date
of the enactment of this Act.
(3) TRANSITIONAL RULES. --
(A) The requirements of subclause (IV) of section 988(c)(1)(
E)(iii) of the 1986 Code (as added by subsection (b)) shall not
apply to periods before the date of the enactment of this Act.
(B) In the case of any partner in an existing partnership, the
20-percent ownership requirements of subclause (I) of such section
988(c)(1)(E)(iii) shall be treated as met during any period during
which such partner does not own a percentage interest in the
capital or profits of such partnership greater than 33 1/3 percent
(or, if lower, the lowest such percentage interest of such partner
during any prior period after October 21, 1988, during which such
partnership is in existence). For purposes of the preceding
sentence, the term "existing partnership" means any partnership if
--
(i) such partnership was in existence on October 21, 1988, and
principally engaged on such date in buying and selling options,
futures, or forwards with respect to commodities, or
(ii) a registration statement was filed with respect to such
partnership with the Securities and Exchange Commission on or
before such date and such registration statement indicated that
the principal activity of such partnership will consist of buying
and selling instruments referred to in clause (i).
SEC. 6131. TREATMENT OF INSURANCE COMPANIES UNDER CHAIN DEFICIT
RULE.
(a) IN GENERAL. -- Subparagraph (B) of section 952(c)(1) of the 1986
Code is amended by adding at the end thereof the following new clause:
"(vii) SPECIAL RULES FOR INSURANCE INCOME. --
"(I) IN GENERAL. -- An election may be made under this clause
to have section 953(a) applied for purposes of this title without
regard to the same country exception under paragraph (1)(A)
thereof. Such election, once made, may be revoked only with the
consent of the Secretary.
"II) SPECIAL RULES FOR AFFILIATED GROUPS. -- In the case of an
affiliated group of corporations (within the meaning of section
1504 but without regard to section 1504(b)(3) and by substituting
'more than 50 percent' for 'at least 80 percent' each place it
appears), no election may be made under subclause (I) for any
controlled foreign corporation unless such election is made for
all other controlled foreign corporations who are members of such
group and who were created or organized under the laws of the same
country as such controlled foreign corporation. For purposes of
clause (v), in determining whether any controlled corporation
described in the preceding sentence is a qualified insurance
company, all such corporations shall be treated as 1 corporation."
(b) EFFECTIVE DATE. -- The amendment made by this section "26 USC
952 note" shall take effect as if included in the amendments made by
section 1221(f) of the Reform Act.
SEC. 6132. VIRGIN ISLANDS TREATED AS QUALIFIED BASIN COUNTRY.
(a) IN GENERAL. -- Subparagraph (B) of section 936(d)(4) of the 1986
Code is amended by inserting "and the Virgin Islands" after "section
274(h)(6)(A)".
(b) EFFECTIVE DATE. -- The amendment made by this section "26 USC
936 note" shall apply to investments made after the date of the
enactment of this Act.
SEC. 6133. TREATMENT OF CERTAIN UNITED STATES OBLIGATIONS HELD BY
POSSESSION BANKS.
(a) IN GENERAL. -- Subsection (e) of section 882 of the 1986 Code is
amended -- (10) by inserting "which is not portfolio interest (as
defined
in section 881(c)(2))" before "shall", and
(2) by striking out the last sentence thereof.
(b) EXCLUSION FROM BRANCH PROFITS TAX. -- Paragraph (2) of section
884(d) of the 1986 Code is amended by striking out "or" at the end of
subparagraph (C), by striking out the period at the end of subparagraph
(D) and inserting in lieu thereof ", or" and by inserting after
subparagraph (D) the following new subparagraph:
"(E) income treated as effectively connected with the conduct
of a trade or business within the United States under section
882(e)."
(c) EFFECTIVE DATE. -- The amendments made by this subsection "26
USC 882 note" shall apply to taxable years beginning after December 31,
1988.
SEC. 6134. TREATMENT OF CERTAIN GAMBLING WINNINGS RECEIVED BY
NONRESIDENT ALIENS.
(a) EXEMPTION FROM TAX. --
(1) Section 871 of the 1986 Code (relating to tax on
nonresident alien individuals) is amended by redesignating
subsection (j) as subsection (k) and by inserting after subsection
(i) the following new subsection:
"(j) EXEMPTION FOR CERTAIN GAMBLING WINNINGS. -- No tax shall be
imposed under paragraph (1)(A) of subsection (a) on the proceeds from a
wager placed in any of the following games: blackjack, baccarat, craps,
roulette, or any big-6 wheel. The preceding sentence shall not apply in
any case where the Secretary determines by regulation that the
collection of the tax is administratively feasible."
(2) Subsection (c) of section 1441 of the 1986 Code is amended
by adding at the end thereof the following new paragraph:
"(11) CERTAIN GAMBLING WINNINGS. -- No tax shall be required
to be deducted and withheld under subsection (a) from any amount
exempt from the tax imposed by section 871(a)(1)(A) by reason of
section 871(j)."
(b) EFFECTIVE DATE. -- The amendments made by subsection (a) "26 USC
871 note" shall take effect on the date of the enactment of this Act.
SEC. 6135. ELECTION TO BE TREATED AS DOMESTIC CORPORATION.
(a) IN GENERAL. -- Section 953 of the 1986 Code is amended by adding
at the end thereof the following new subsection:
"(d) ELECTION BY FOREIGN INSURANCE COMPANY TO BE TREATED AS DOMESTIC
CORPORATION. --
"(1) IN GENERAL. -- If --
"(A) a foreign corporation is a controlled foreign corporation
(as defined in section 957(a) by substituting '25 percent or more'
for 'more than 50 percent' and by using the definition of United
States shareholder under 953(c)(1)(A)),
"(B) such foreign corporation would qualify under part I or II
of subchapter L for the taxable year if it were a domestic
corporation,
"(C) such foreign corporation meets such requirements as the
Secretary shall prescribe to ensure that the taxes imposed by this
chapter on such foreign corporation are paid, and
"(D) such foreign corporation makes an election to have this
paragraph apply and waives all benefits to such corporation
granted by the United States under any treaty,
for purposes of this title, such corporation shall be treated
as a domestic corporation.
"(2) PERIOD DURING WHICH ELECTION IS IN EFFECT. --
"(A) IN GENERAL. -- Except as provided in subparagraph (B), an
election under paragraph (1) shall apply to the taxable year for
which made and all subsequent taxable years unless revoked with
the consent of the Secretary.
"(B) TERMINATION. -- If a corporation which made an election
under paragraph (1) for any taxable year fails to meet the
requirements of subparagraphs (A), (B), and (C), of paragraph (1)
for any subsequent taxable year, such election shall not apply to
any taxable year beginning after such subsequent taxable year.
"(3) TREATMENT OF LOSSES. -- If any corporation treated as a
domestic corporation under this subsection is treated as a member
of an affiliated group for purposes of chapter 6 (relating to
consolidated returns), any loss of such corporation shall be
treated as a dual consolidated loss (as defined in section 1503(
d)).
"(4) EFFECT OF ELECTION. --
"(A) IN GENERAL. -- For purposes of section 367, any foreign
corporation making an election under paragraph (1) shall be
treated as transferring (as of the 1st day of the 1st taxable year
to which such election applies) all of its assets to a domestic
corporation in connection with an exchange to which section 354
applies.
"(B) EXCEPTION FOR PRE-1988 EARNINGS AND PROFIT. --
"(i) IN GENERAL. -- Earnings and profits of the foreign
corporation accumulated in taxable years beginning before January
1, 1988, shall not be included in the gross income of the persons
holding stock in such corporation by reason of subparagraph (A).
"(ii) TREATMENT OF DISTRIBUTIONS. -- For purposes of this
title, any distribution made by a corporation to which an election
under paragraph (1) applies out of earnings and profits
accumulated in taxable years beginning before January 1, 1988,
shall be treated as a distribution made by a foreign corporation.
"(iii) CERTAIN RULES TO CONTINUE TO APPLY TO PRE-1988 EARNINGS.
-- The provisions specified in clause (iv) shall be applied
without regard to paragraph (1), except that, in the case of a
corporation to which an election under paragraph (1) applies, only
earnings and profits accumulated in taxable years beginning before
January 1, 1988, shall be taken into account.
"(iv) SPECIFIED PROVISIONS. -- The provisions specified in
this clause are:
"(I) Section 1248 (relating to gain from certain sales or
exchanges of stock in certain foreign corporations).
"(II) Subpart F of part III of subchapter N to the extent such
subpart relates to earnings invested in United States property or
amounts referred to in clause (ii) or (iii) of section 951(a)(1)(
A).
"(III) Section 884 to the extent the foreign corporation
reinvested 1987 earnings and profits in United States assets.
"(5) EFFECT OF TERMINATION. -- For purpsoes of section 367, if
--
"(A) an election is made by a corporation under paragraph (1)
for any taxable year, and
"(B) such election ceases to apply for any subsequent taxable
year,
such corporation shall be treated as a domestic corporation
transferring (as of the 1st day of such subseqauent taxable year)
all of its property to a foreign corporation in connection with an
exchange to which section 354 applies.
"(6) ADDITIONAL TAX ON CORPORATION MAKING ELECTION. --
"(A) IN GENERAL. -- If a corporation makes an election under
paragraph (1), the amount of tax imposed by this chapter for the
1st taxable year to which such election applies shall be increased
by the amount determined under subparagraph (B).
"(B) AMOUNT OF TAX. -- The amount of tax determined under this
paragraph shall be equal to the lesser of --
"(i) 3/4 of 1 percent of the aggregate amount of capital and
accumulated surplus of the corporation as of December 31, 1987, or
"(ii) $1,500,000."
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) "26 USC
953 note" shall apply to taxable years beginning after December 31,
1987.
SEC. 6136. "26 USC 1681 note" TAX EXEMPTION FOR ENJEBI COMMUNITY
TRUST FUND.
(a) IN GENERAL. -- Any earnings on, and distributions from, the
Enjebi Community Trust Fund created under section 103 of the Compact of
Free Association Act of 1985 shall be exempt from all Federal, State, or
local taxation.
(b) EFFECTIVE DATE. -- The provisions of subsection (a) shall apply
to all taxable years whether beginning before, on, or after the date of
the enactment of this Act.
SEC. 6137. APPLICATION OF SECTION 912 TO JUDICIAL EMPLOYEES.
(a) IN GENERAL. -- Section 912(2) of the 1986 Code is amended by
inserting "(or in the case of judicial officers or employees of the
United States, in accordance with rules similar to such regulations)"
after "President".
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) "26 USC
912 note" shall apply to allowances received after October 12, 1987, in
taxable years ending after such date.
SEC. 6138. STUDY OF DEFINITION OF UNITED STATES RESIDENT.
(a) IN GENERAL. -- The Secretary of the Treasury or his delegate
shall conduct a study of section 7701(b) of the Internal Revenue Code of
1986, relating to the determination as to whether a person is a United
States resident for purposes of Federal tax laws. Such study shall
include an examination of --
(1) the effect such determination has on Federal tax
administration and investment flows between the United States and
other countries,
(2) the coordination of such determination with any treaty
obligations of the United States,
(3) how such determination compares with the way such
determination is made by our major trading partners, and
(4) any estimated revenue gain or loss which would result from
modifying such determination.
(b) REPORT. -- The Secretary of the Treasury or his delegate shall
report before May 1, 1989, the results of the study conducted under
subsection (a) to the Committee on Finance of the Senate and the
Committee on Ways and Means of the House of Representatives.
SEC. 6139. SUNSET OF TREATY PROVISIONS.
(a) IN GENERAL. -- No provisions of the Tax Convention with the
United Kingdom (on behalf of Bermuda) or the Tax Convention with
Barbados, whether entered into on, before, or after the date of
enactment of this Act shall prevent application of any provision of the
Internal Revenue Code of 1986 imposing insurance excise taxes. In the
case of a treaty entered into after the date of enactment of this Act,
the preceding sentence shall not apply if such treaty by specific
reference to this section of this Act clearly expresses the intent to
override the provisions of this section.
(b) SPECIAL RULE FOR CERTAIN TREATIES. -- In the case of any treaty
in effect on December 31, 1989, subsection (a) shall not apply to any
premium allocable to insurance coverage for periods before January 1,
1990.
SEC. 6140. "26 USC 1424c note" TREATMENT OF CERTAIN AWARDS BY THE
DISTRICT COURT OF GUAM.
For purposes of the internal revenue laws of the United States and
Guam, gross income shall not include any amount received pursuant to any
claim over which the District Court of Guam has jurisdiction by reason
of section 204 of Public Law 95-134 (commonly referred to as the Omnibus
Territories Act of 1977). This section shall be effective for taxable
years beginning after December 31, 1985.
SEC. 6151. TREATMENT OF CERTAIN RENTS UNDER SECTION 2032A.
(a) GENERAL RULE. -- Subparagraph (A) of section 2032A(b)(5) of the
1986 Code (relating to special rules for surviving spouse) is amended by
adding at the end thereof the following new sentence: "For purposes of
subsection (c), such surviving spouse shall not be treated as failing to
use such property in a qualified use solely because such spouse rents
such property to a member of such spouse's family on a net cash basis."
(b) EFFECTIVE DATE. -- "26 USC 2032A note"
(1) IN GENERAL. -- The amendment made by subsection (a) shall
apply with respect to rentals occurring after December 31, 1976.
(2) WAIVER OF STATUTE OF LIMITATIONS. -- If on the date of the
enactment of this Act (or at any time within 1 year after such
date of enactment) refund or credit of any overpayment of tax
resulting from the application of the amendment made by subsection
(a) is barred by any law or rule of law, refund or credit of such
overpayment shall, nevertheless, be made or allowed if claim
therefore is filed before the date 1 year after the date of the
enactment of this Act.
SEC. 6152. CLARIFICATION OF TREATMENT OF JOINT AND SURVIVOR
ANNUITIES UNDER QTIP RULES.
(a) ESTATE TAX. -- Paragraph (7) of section 2056(b) of the 1986 Code
is amended by adding at the end thereof the following new subparagraph:
"(C) TREATMENT OF SURVIVOR ANNUITIES. -- In the case of an
annuity where only the surviving spouse has the right to receive
payments before the death of such surviving spouse --
"(i) the interest of such surviving spouse shall be treated as
a qualifying income interest for life, and
"(ii) the executor shall be treated as having made an election
under this subsection with respect to such annuity unless the
executor otherwise elects on the return of tax imposed by section
2001.
An election under clause (ii), once made, shall be
irrevocable."
(g) GIFT TAX. -- Subsection (f) of section 2523 of the 1986 Code is
amended by adding at the end thereof the following new paragraph:
"(6) TREATMENT OF JOINT AND SURVIVOR ANNUITIES. -- In the case
of a joint and survivor annuity where only the donor spouse and
donee spouse have the right to receive payments before the death
of the last spouse to die --
"(A) the donee spouse's interest shall be treated as a
qualifying income interest for life,
"(B) the donor spouse shall be treated as having made an
election under this subsection with respect to such annuity unless
the donor spouse otherwise elects on or before the date specified
in paragraph (4)(A),
"(C) paragraph (5) and section 2519 shall not apply to the
donor spouse's interest in the annuity, and
"(D) if the donee spouse dies before the donor spouse, no
amount shall be includible in the gross estate of the donee spouse
under section 2044 with respect to such annuity.
An election under subparagraph (B), once made, shall be
irrevocable."
(c) EFFECTIVE DATES. -- "26 USC 2056 note"
(1) IN GENERAL. -- Except as otherwise provided in this
subsection --
(A) the amendment made by subsection (a) shall apply with
respect to decedents dying after December 31, 1981, and
(B) the amendment made by subsection (b) shall apply to
transfers after December 31, 1981.
(2) NOT TO APPLY TO EXTENT INCONSISTENT WITH PRIOR RETURN. --
In the case of any estate or gift tax return filed before the date
of the enactment of this Act, the amendments made by this section
shall not apply to the extent such amendments would be
inconsistent with the treatment of the annuity on such return
unless the executor or donor (as the case may be) otherwise elects
under this paragraph before the day 2 years after the date of the
enactment of this Act.
(3) EXTENSION OF TIME FOR ELECTION OUT. -- The time for making
an election under section 2056(b)(7)(C)(ii) or 2523(f)(6)( B) of
the 1986 Code (as added by this subsection) shall not expire
before the day 3 years after the date of the enactment of this Act
(and, if such election is made within the time permitted under
this paragraph, the requirement of such section 2056(b)(7)( C)(ii)
that it be made on the return shall not apply).
SEC. 6176. CLARIFICATION OF SMALL ISSUE BOND DEFINITION OF
MANUFACTURING FACILITY.
(a) IN GENERAL. -- Subparagraph (C) of section 144(a)(12) of the
1986 Code (defining manufacturing facility) is amended by adding at the
end thereof the following new sentence: "For purposes of the 1st
sentence of this subparagraph, the term 'manufacturing facility'
includes facilities which are directly related and ancillary to a
manufacturing facility (determined without regard to this sentence) if
--
"(i) such facilities are located on the same site as the
manufacturing facility, and
"(ii) not more than 25 percent of the net proceeds of the issue
are used to provide such facilities."
(b) EFFECTIVE DATE. -- "26 USC 144 note"
(1) IN GENERAL. -- The amendment made by subsection (a) shall
apply to bonds issued after the date of the enactment of this Act.
(2) REFUNDINGS. -- The amendment made by subsection (a) shall
not apply to any bond issued to refund (or which is part of a
series of bonds issued to refund) a bond issued on or before the
date of the enactment of this Act if --
(A) the average maturity date of the issue of which the
refunding bond is a part is not later than the average maturity
date of the bonds to be refunded by such issue, and
(B) the amount of the refunding bond does not exceed the
outstanding amount of the refunded bond.
For purposes of subparagraph (A), average maturity shall be
determined in accordance with section 147(b) of the 1986 Code.
SEC. 6177. RULES APPLICABLE TO TAX AND REVENUE ANTICIPATION BONDS.
(a) CHANGE IN PERIOD USED TO DETERMINE CUMULATIVE CASH FLOW DEFICIT.
-- Subclause (III) of section 148(f)(4)(B)(iii) of the 1986 Code
(relating to safe harbor for determining when proceeds of tax and
revenue anticipation bonds are expended) is amended by striking out the
"earliest of the maturity date of the issue, the date 6 months after
such date of issuance," and inserting in lieu thereof "the earlier of
the date 6 months after such date of issuance."
(b) DUE DATE FOR LAST INSTALLMENT OF ARBITRAGE REBATE. -- Paragraph
(3) of section 148(f) of the 1986 Code is amended by adding at the end
thereof the following new sentence: "In the case of a tax and revenue
anticipation bond, the last installment shall not be required to be made
before the date 8 months after the date of issuance of the issue of
which the bond is a part."
(c) EFFECTIVE DATE. -- The amendments made by this section "26 USC
148 note" shall apply to bonds issued after the date of the enactment of
this Act.
SEC. 6178. AMENDMENT TO MORTGAGE BOND PURCHASE PRICE REGULATIONS.
The Secretary of the Treasury or his delegate shall amend the
regulations relating to mortgage bond purchase price requirements, with
respect to any lease with a remaining term of at least 35 years and a
specified ground rent for at least the first 10 years of such term but
not for the entire term, to provide for a capitalized value of such
lease equal to the present value of the current ground rent projected
over the remaining term of the lease and discounted at 3 percent or such
other discount rate as the Secretary establishes. If such amendment is
not made before the date of the enactment of this Act, such regulations
shall be considered to include such amendment with respect to bonds
issued after such date.
SEC. 6179. "26 USC 141 note" APPLICATION OF SECURITY INTEREST TEST
TO BOND FINANCING OF HAZARDOUS WASTE CLEAN-UP ACTIVITIES.
Before January 1, 1989, the Secretary of the Treasury or his delegate
shall issue guidance concerning the application of the private security
or payment test under section 141(b)(2) of the Internal Revenue Code of
1986 to tax-exempt bond financing by State and local governments of
hazardous waste clean-up activities conducted by such governments where
some of the activities occur on privately owned land.
SEC. 6180. TAX-EXEMPT FINANCING FOR CERTAIN RAIL FACILITIES.
(a) IN GENERAL. -- Subsection (a) of section 142 of the 1986 Code
(relating to exempt facility bonds) is amended --
(1) by striking out "or at the end of paragraph (9),
(2) by striking out the period at the end of paragraph (10 and
inserting in lieu thereof ", or", and
(3) by adding at the end thereof the following new paragraph:
"(11) high-speed intercity rail facilities."
(b) DEFINITION AND SPECIAL RULES FOR HIGH-SPEED INTERCITY RAIL
FACILITIES. --
(1) IN GENERAL. -- Section 142 of the 1986 Code is amended by
adding at the end thereof the following new subsection:
"(i) HIGH-SPEED INTERCITY RAIL FACILITIES. --
"(1) For purposes of subsection (a)(11), the term 'high-speed
intercity rail facilities' means any facility (not including
rolling stock) for the fixed guideway rail transportation of
passengers and their baggage between metropolitan statistical
areas (within the meaning of section 143(k)(2)(B)) using vehicles
that are reasonably expected to operate at speeds in excess of 150
miles per hour between scheduled stops, but only if such facility
will be made available to members of the general public as
passengers.
"(2) ELECTION BY NONGOVERNMENTAL OWNERS. -- A facility shall
be treated as described in subsection (a)(11) only if any owner of
such facility which is not a governmental unit irrevocably elects
not to claim --
"(A) any deduction under section 167 or 168, and
"(B) any credit under this subtitle,
with respect to the property to be financed by the net proceeds
of the issue.
"(3) USE OF PROCEEDS. -- A bond issued as part of an issue
described in subsection (a)(11) shall not be considered an exempt
facility bond unless any proceeds not used within a 3-year period
of the date of the issuance of such bond are used (not later than
6 months after the close of such period) to redeem bonds which are
part of such issue."
(2) USE OF FACILITIES. -- Subsection (c) of section 142 of the
1986 Code (relating to special rules for airport, docks and
wharves, and mass commuting facilities) is amended --
(A) by striking out "paragraph (1), (2, or (3) of subsection
(a)" each place it appears in paragraphs (1) and (2) thereof and
inserting in lieu thereof "paragraph (1), (2), (3) or (11) of
subsection (a)", and
(B) by striking out "AND MASS COMMUTING FACILITIES" in the
heading thereof and inserting in lieu thereof "MASS COMMUTING
FACILITIES AND HIGH-SPEED INTERCITY RAIL FACILITIES".
(3) PARTIAL EXCLUSION FROM VOLUME CAP. -- Subsection (g) of
section 146 of the 1986 Code (relating to an exception for certain
bonds) is amended --
(A) by striking out "and" at the end of paragraph (2),
(B) by striking out the period at the end of paragraph (3) and
inserting in lieu thereof ", and", and
(C) by adding at the end thereof the following new paragraph:
"(3) 75 percent of any exempt facility bond issued as part of
an issue described in paragraph (11) of section 142(a) (relating
to high-speed intercity rail facilities)."
(4) LIMITATION REMOVED ON USE OF BOND PROCEEDS FOR LAND
ACQUISITION. -- Paragraph (3) of section 147(c) of the 1986 Code
(relating to limitation on use for land acquisition) is amended by
inserting "high-speed intercity rail facility" after "mass
commuting facility" each place it appears.
(5) SPECIAL RULE FOR PUBLIC APPROVAL. -- Paragraph (3) of
section 147(f) of the 1986 Code (relating to public approval
required for private activity bonds) is amended --
(A) by inserting "or high-speed intercity rail facilities"
after "airport" each place it appears, and
(B) by inserting "OR HIGH-SPEED INTERCITY RAIL FACILITIES"
after "AIRPORTS" in the heading thereof.
(c) EFFECTIVE DATE. -- The amendments made by this section "26 USC
142 note" shall apply to bonds issued after the date of enactment of
this Act.
SEC. 6181. RULES RELATING TO REBATE ON EARNINGS ON BONA FIDE DEBT
SERVICE FUND.
(a) NO REBATE WHERE EARNINGS DO NOT EXCEED $100,000. -- Clause (ii)
of section 148(f)(4)(A) of the 1986 Code is amended by striking "unless
the issuer otherwise elects,".
(b) $100,000 LIMIT NOT TO APPLY TO CERTAIN ISSUES. -- Subparagraph
(A) of section 148(f)(4) of the 1986 Code is amended by adding at the
end thereof the following new sentence:
"In the case of an issue no bond of which is a private activity
bond, clause (ii) shall be applied without regard to the dollar
limitation therein if the average maturity of the issue
(determined in accordance with section 147(b)(2)(A)) is at least 5
years and the rates of interest on bonds which are part of the
issue do not vary during the term of the issue."
(c) EFFECTIVE DATE; SPECIAL RULES. -- "26 USC 148 note"
(1) IN GENERAL. -- The amendments made by this section shall
apply to bonds issued after the date of the enactment of this Act.
(2) ELECTION FOR OUTSTANDING BONDS. -- Any issue of bonds
other than private activity bonds outstanding as of the date of
the enactment of this Act shall be allowed a 1-time election to
apply the amendments made by subsection (b) to amounts deposited
after such date in bona fide service funds of such bonds.
(3) DEFINITION OF PRIVATE ACTIVITY BOND. -- For purposes of
this section and the last sentence of section 148(f)(4)(A) of the
1986 Code (as added by subsection (b)), the term 'private activity
bond' shall include any qualified 501(c)(3) bond (as defined under
section 145 of the 1986 Code).
SEC. 6182. BONDS ISSUED BY VOLUNTEER FIRE DEPARTMENTS.
(a) OVERLAPPING AREAS. -- Paragraph (2) of section 150(e) of the
1986 Code (relating to bonds of certain volunteer fire departments) is
amended by adding at the end thereof the following new sentence:
"For purposes of subparagraph (A), other firefighting services
provided in an area shall be disregarded in determining whether an
organization is a qualified volunteer fire department if such
other firefighting services are provided by a qualified volunteer
fire department (determined with the application of this sentence)
and such organization and the provider of such other services have
been continuously providing firefighting services to such area
since January 1, 1981."
(b) ACQUISITION OF LAND PERMITTED. -- Subparagraph (B) of
section 150(e)(1) of the 1986 Code is amended by inserting
"(including land which is functionally related and subordinate
therefo)" after "a firehouse".
(c) EFFECTIVE DATE. -- The amendments made by this section "26 USC
150 note" shall apply to bonds issued after the date of the enactment of
this Act.
SEC. 6183. DISREGARD OF POOLED FINANCINGS IN DETERMINATION OF
QUALIFICATION FOR SMALL ISSUER EXCEPTION.
(a) GENERAL. -- Clause (ii) of section 148(f)(4)(C) of the 1986 Code
(as amended by title I of this Act) is amended by redesignating
subclauses (II) and (III) as subclauses (III) and (IV), respectively,
and by inserting after subclause (I) the following new subclause:
"(II) all bonds issued by a governmental unit on behalf of
other governmental units with general taxing powers not
subordinate to such unit shall, for purposes of applying such
subclause to such unit, be treated as not issued by such unit,".
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) "26 USC
148 note" shall apply to bonds issued after December 31, 1988.
SEC. 6201. "26 USC 513 note" CERTAIN GAMES OF CHANCE NOT TREATED AS
UNRELATED TRADE OR BUSINESS.
Section 1834 of the Reform Act is amended by adding at the end
thereof the following new sentence: "The amendment made by this section
shall apply to games of chance conducted after October 22, 1986, in
taxable years ending after such date".
SEC. 6202. PURCHASE OF INSURANCE BY COOPERATIVE HOSPITAL SERVICE
ORGANIZATIONS.
(a) IN GENERAL. -- Subparagraph (A) of section 501(e)(1) of the 1986
Code is amended by inserting "(including the purchasing of insurance on
a group basis)" after "purchasing".
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) "26 USC
501 note" shall apply to purchases before, on, or after the date of the
enactment of this Act.
SEC. 6203. "26 USC 501 note" CANCELLATION OF CERTAIN DEBTS
ORIGINATED BY OR GUARANTEED BY THE UNITED STATES NOT TAKEN INTO ACCOUNT
IN DETERMINING TAX EXEMPT STATUS OF CERTAIN ORGANIZATIONS.
Subparagraph (A) of section 501(c)(12) of the 1986 Code shall be
applied without taking into account any income attributable to the
cancellation of any loan originally made or guaranteed by the United
States (or any agency or instrumentality thereof) if such cancellation
occurs after 1986 and before 1990.
SEC. 6204. "26 USC 4940 note" DETERMINATION OF OPERATING FOUNDATION
STATUS FOR CERTAIN PURPOSES.
For purposes of section 302(c)(3) of the Deficit Reduction Act of
1984, a private foundation which constituted an operating foundation (as
defined in section 4942(j)(3) of the Internal Revenue Code of 1986) for
its last taxable year ending before January 1, 1983, shall be treated as
constituting an operating foundation as of January 1, 1983.
SEC. 6226. "26 USC 1 note" SHORT TITLE.
This subtitle may be cited as the "Omnibus Taxpayer Bill of Rights".
SEC. 6227. "26 USC 7801 note" DISCLOSURE OF RIGHTS OF TAXPAYERS.
(a) IN GENERAL. -- The Secretary of the Treasury shall, as soon as
practicable, but not later than 180 days after the date of the enactment
of this Act, prepare a statement which sets forth in simple and
nontechnical terms --
(1) the rights of a taxpayer and the obligations of the
Internal Revenue Service (hereinafter in this section referred to
as the "Service") during an audit;
(2) the procedures by which a taxpayer may appeal any adverse
decision of the Service (including administrative and judicial
appeals);
(3) the procedures for prosecuting refund claims and filing of
taxpayer complaints; and
(4) the procedures which the Service may use in enforcing the
internal revenue laws (including assessment, jeopardy assessment,
levy and distraint, and enforcement of liens).
(b) TRANSMISSION TO COMMITTEES OF CONGRESS. -- The Secretary of the
Treasury shall transmit drafts of the statement required under
subsection (a) (or proposed revisions of any such statement) to the
Committee on Ways and Means of the House of Representatives, the
Committee on Finance of the Senate, and the Joint Committee on Taxation
on the same day.
(c) DISTRIBUTION. -- The statement prepared in accordance with
subsections (a) and (b) shall be distributed by the Secretary of the
Treasury to all taxpayers the Secretary contacts with respect to the
determination or collection of any tax (other than by providing tax
forms). The Secretary shall take such actions as the Secretary deems
necessary to ensure that such distribution does not result in multiple
statements being sent to any one taxpayer.
SEC. 6228. PROCEDURES INVOLVING TAXPAYER INTERVIEWS.
(a) IN GENERAL. -- Chapter 77 of the 1986 Code (relating to
miscellaneous provisions) is amended by adding at the end thereof the
following new section:
"SEC. 7520. PROCEDURES INVOLVING TAXPAYER INTERVIEWS.
"(a) RECORDING OF INTERVIEWS. --
"(1) RECORDING BY TAXPAYER. -- Any officer or employee of the
Internal Revenue Service in connection with any in-person
interview with any taxpayer relating to the determination or
collection of any tax shall, upon advance request of such
taxpayer, allow the taxpayer to make an audio recording of such
interview at the taxpayer's own expense and with the taxpayer's
own equipment.
"(2) RECORDING BY IRS OFFICER OR EMPLOYEE. -- An officer or
employee of the Internal Revenue Service may record any interview
described in paragraph (1) if such officer or employee --
"(A) informs the taxpayer of such recording prior to the
interview, and
"(B) upon request of the taxpayer, provides the taxpayer with a
transcript or copy of such recording but only if the taxpayer
provides reimbursement for the cost of the transcription and
reproduction of such transcript or copy.
"(b) SAFEGUARDS. --
"(1) EXPLANATIONS OF PROCESSES. -- An officer or employee of
the Internal Revenue Service shall before or at an initial
interview provide to the taxpayer --
"(A) in the case of an in-person interview with the taxpayer
relating to the determination of any tax, an explanation of the
audit process and the taxpayer's rights under such process, or
"(B) in the case of an in-person interview with the taxpayer
relating to the collection of any tax, an explanation of the
collection process and the taxpayer's rights under such process.
"(2) RIGHT OF CONSULTATION. -- If the taxpayer clearly states
to an officer or employee of the Internal Revenue Service at any
time during any interview (other than an interview initiated by an
administrative summons issued under subchapter A of chapter 78)
that the taxpayer wishes to consult with an attorney, certified
public accountant, enrolled agent, enrolled actuary, or any other
person permitted to represent the taxpayer before the Internal
Revenue Service, such officer or employee shall suspend such
interview regardless of whether the taxpayer may have answered one
or more questions.
"(c) REPRESENTATIVES HOLDING POWER OF ATTORNEY. -- Any attorney,
certified public accountant, enrolled agent, enrolled actuary, or any
other person permitted to represent the taxpayer before the Internal
Revenue Service who is not disbarred or suspended from practice before
the Internal Revenue Service and who has a written power of attorney
executed by the taxpayer may be authorized by such taxpayer to represent
the taxpayer in any interview described in subsection (a). An officer or
employee of the Internal Revenue Service may not require a taxpayer to
accompany the representative in the absence of an administrative summons
issued to the taxpayer under subchapter A of chapter 78. Such an
officer or employee, with the consent of the immediate supervisor of
such officer or employee, may notify the taxpayer directly that such
officer or employee believes such representative is responsible for
unreasonable delay or hindrance of an Internal Revenue Service
examination or investigation of the taxpayer.
"(d) SECTION NOT TO APPLY TO CERTAIN INVESTIGATIONS. -- This section
shall not apply to criminal investigations or investigations relating to
the integrity of any officer or employee of the Internal Revenue
Service."
(b) "26 USE 7605 note" REGULATIONS WITH RESPECT TO TIME AND PLACE OF
EXAMINATION. -- The Secretary of the Treasury or the Secretary's
delegate shall issue regulations to implement subsection (a) of section
7605 of the 1986 Code (relating to time and place of examination) within
1 year after the date of the enactment of this Act.
(c) CLERICAL AMENDMENT. -- The table of sections for chapter 77 of
the 1986 Code is amended by adding at the end thereof the following new
item:
"Sec. 7520. Procedures involving taxpayer interviews."
(d) EFFECTIVE DATE. -- The amendments made by subsection (a) "26 USC
7520 note" and (c) shall apply to interviews conducted on or after the
date which is 90 days after the date of the enactment of this Act.
SEC. 6229. TAXPAYERS MAY RELY ON WRITTEN ADVICE OF INTERNAL REVENUE
SERVICE.
(a) IN GENERAL. -- Section 6404 of the 1986 Code (relating to
abatements) is amended by adding at the end thereof the following new
subsection:
"(f) ABATEMENT OF ANY PENALTY OR ADDITION TO TAX ATTRIBUTABLE TO
ERRONEOUS WRITTEN ADVICE BY THE INTERNAL REVENUE SERVICE. --
"(1) IN GENERAL. -- The Secretary shall abate any portion of
any penalty or addition to tax attributable to erroneous advice
furnished to the taxpayer in writing by an officer or employee of
the Internal Revenue Service, acting in such officer's or
employee's official capacity.
"(2) LIMITATIONS. -- Paragraph (1) shall apply only if --
"(A) the written advice was reasonably relied upon by the
taxpayer and was in response to a specific written request of the
taxpayer, and
10"(B) the portion of the penalty or addition to tax did not
result from a failure by the taxpayer to provide adequate or
accurate information.
"(3) INITIAL REGULATIONS. -- Within 180 days after the date of
the enactment of this subsection, the Secretary shall prescribe
such initial regulations as may be necessary to carry out this
subsection.
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) "26 USC
6404 note" shall apply with respect to advice requested on or after
January 1, 1989.
SEC. 6230. TAXPAYER ASSISTANCE ORDERS.
(a) IN GENERAL. -- Subchapter A of chapter 80 of the 1986 Code
(relating to general rules for application of the internal revenue laws)
is amended by adding at the end thereof the following new section:
"SEC. 7811. TAXPAYER ASSISTANCE ORDERS.
"(a) AUTHORITY TO ISSUE. -- Upon application filed by a taxpayer
with the Office of Ombudsman (in such form, manner, and at such time as
the Secretary shall by regulations prescribe), the Ombudsman may issue a
Taxpayer Assistance Order if, in the determination of the Ombudsman, the
taxpayer is suffering or about to suffer a significant hardship as a
result of the manner in which the internal revenue laws are being
administered by the Secretary.
"(b) TERMS OF A TAXPAYER ASSISTANCE ORDER. -- The terms of a
Taxpayer Assistance Order may require the Secretary --
"(1) to release property of the taxpayer levied upon, or
"(2) to cease any action, or refrain from taking any action,
with respect to the taxpayer under --
"(A) chapter 64 (relating to collection),
"(B) subchapter B of chapter 70 (relating to bankruptcy and
receiverships,
"(C) chapter 78 (relating to discovery of liability and
enforcement of title), or
"(D) any other provision of law which is specifically described
by the Ombudsman in such order.
"(c) AUTHORITY TO MODIFY OR RESCIND. -- Any Taxpayer Assistance
Order issued by the Ombudsman under this section may be modified or
rescinded only by the Ombudsman, a district director, a service center
director, a compliance center director, a regional director of appeals,
or any superior of any such person. 4"(d) SUSPENSION OF RUNNING OF
PERIOD OF LIMITATION. -- The running of any period of limitation with
respect to any action described in subsection (b) shall be suspended for
--
"(1) the period beginning on the date of the taxpayer's
application under subsection (a) and ending on the date of the
Ombudsman's decision with respect to such application, and
"(2) any period specified by the Ombudsman in a Taxpayer
Assistance Order issued pursuant to such application.
"(e) INDEPENDENT ACTION OF OMBUDSMAN. -- Nothing in this section
shall prevent the Ombudsman from taking any action in the absence of an
application under subsection (a).
"(f) OMBUDSMAN. -- For purposes of this section, the term
'Ombudsman' includes any designee of the Ombudsman."
(b) CLERICAL AMENDMENT. -- The table of sections for subchapter A of
chapter 80 of the 1986 Code is amended by adding at the end thereof the
following new item:
"Sec. 7811. Taxpayer Assistance Orders."
(c) ISSUANCE OF REGULATIONS. -- "26 USC 7811 note" The Secretary of
the Treasury or the Secretary's delegate shall issue such regulations as
the Secretary deems necessary within 90 days of the date of the
enactment of this Act in order to carry out the purposes of section 7811
of the 1986 Code (as added by this section) and to ensure taxpayers
uniform access to administrative procedures.
(d) EFFECTIVE DATE. -- The amendments made by this section "26 USC
7811 note" shall take effect on January 1, 1989.
SEC. 6231. "26 USC 7803 note" BASIS FOR EVALUATION OF INTERNAL
REVENUE SERVICE EMPLOYEES.
(a) IN GENERAL. -- The Internal Revenue Service shall not use
records of tax enforcement results --
(1) to evaluate employees directly involved in collection
activities and their immediate supervisors, or
(2) to impose or suggest production quotas or goals with
respect to individuals described in clause (i).
(b) APPLICATION OF IRS POLICY STATEMENT. -- The Internal Revenue
Service shall not be treated as failing to meet the requirements of
subsection (a) if the Service follows the policy statement of the
Service regarding employee evaluation (as in effect on the date of the
enactment of this Act) in a manner which does not violate subsection
(a).
(c) CERTIFICATION. -- Each district director shall certify quarterly
by letter to the Commissioner of Internal Revenue that tax enforcement
results are not used in a manner prohibited by subsection (a).
(d) EFFECTIVE DATE. -- The provisions of this section shall apply to
evaluations conducted on or after January 1, 1989.
SEC. 6232. PROCEDURES RELATING TO INTERNAL REVENUE SERVICE
REGULATIONS.
(a) IN GENERAL. -- Section 7805 of the 1986 Code (relating to rules
and regulations) is amended by adding at the end thereof the following
new subsections:
"(e) TEMPORARY REGULATIONS. --
"(1) ISSUANCE. -- Any temporary regulation issued by the
Secretary shall also be issued as a proposed regulation.
"(2) 3-YEAR DURATION. -- Any temporary regulation shall expire
within 3 years after the date of issuance of such regulation.
"(f) IMPACT OF REGULATIONS ON SMALL BUSINESS REVIEWED. -- After the
publication of any proposed regulation by the Secretary and before the
promulgation of any final regulation by the Secretary which does not
supersede a proposed regulation, the Secretary shall submit such
regulation to the Administrator of the Small Business Administration for
comment on the impact of such regulation on small business. The
Administrator shall have 4 weeks from the date of submission to
respond."
(b) EFFECTIVE DATE. -- The amendments made by this section "26 USC
7805 note" shall apply to any regulation issued after the date which is
10 days after the date of the enactment of this Act.
SEC. 6233. CONTENT OF TAX DUE, DEFICIENCY, AND OTHER NOTICES.
(a) IN GENERAL. -- Chapter 77 of the 1986 Code (relating to
miscellaneous provisions) is further amended by adding at the end
thereof the following new section:
"SEC. 7521. CONTENT OF TAX DUE, DEFICIENCY, AND OTHER NOTICES. 4"(
a) GENERAL RULE. -- Any notice to which this section applies shall
describe the basis for, and identify the amounts (if any) of, the tax
due, interest, additional amounts, additions to the tax, and assessable
penalties included in such notice. An inadequate description under the
preceding sentence shall not invalidate such notice.
"(b) NOTICES TO WHICH SECTION APPLIES. -- This section shall apply
to --
"(1) any tax due notice or deficiency notice described in
section 6155, 6212, or 6303,
"(2) any notice generated out of any information return
matching program, and
10"(3) the 1st letter of proposed deficiency which allows the
taxpayer an opportunity for administrative review in the Internal
Revenue Service Office of Appeals."
(b) CLERICAL AMENDMENT. -- The table of sections for chapter 77 of
the 1986 Code is further amended by adding at the end thereof the
following new item:
"Sec. 7521. Content of tax due, deficiency, and other
notices."
(c) EFFECTIVE DATE. -- The amendments made by this section "26 USC
7521 note" shall apply to mailings made on or after January 1, 1990.
(d) REPORT. -- Not later than July 1, 1989, the Secretary of the
Treasury or his delegate shall submit a report to the Committee on Ways
and Means of the House of Representatives and the Committee on Finance
of the Senate on the steps taken to carry out the amendments made by
this section.
SEC. 6234. INSTALLMENT PAYMENT OF TAX LIABILITY.
(a) IN GENERAL. -- Subchapter A of chapter 62 of the 1986 Code
(relating to place and due date for payment of tax) is amended by adding
at the end thereof the following new section:
"SEC. 6159. AGREEMENTS FOR PAYMENT OF TAX LIABILITY IN INSTALLMENTS.
"(a) AUTHORIZATION OF AGREEMENTS. -- The Secretary is authorized to
enter into written agreements with any taxpayer under which such
taxpayer is allowed to satisfy liability for payment of any tax in
installment payments if the Secretary determines that such agreement
will facilitate collection of such liability.
"(b) EXTENT TO WHICH AGREEMENTS REMAIN IN EFFECT. --
"(1) IN GENERAL. -- Except as otherwise provided in this
subsection, any agreement entered into by the Secretary under
subsection (a) shall remain in effect for the term of the
agreement.
"(2) INADEQUATE INFORMATION OR JEOPARDY. -- The Secretary may
terminate any agreement entered into by the Secretary under
subsection (a) if --
"(A) information which the taxpayer provided to the Secretary
prior to the date such agreement was entered into was inaccurate
or incomplete, or
"(B) the Secretary believes that collection of any tax to which
an agreement under this section relates is in jeopardy.
"(3) SUBSEQUENT CHANGE IN FINANCIAL CONDITIONS. --
"(A) IN GENERAL. -- If the Secretary makes a determination
that the financial condition of a taxpayer with whom the Secretary
has entered into an agreement under subsection (a) has
significantly changed, the Secretary may alter, modify, or
terminate such agreement.
"(B) NOTICE. -- Action may be taken by the Secretary under
subparagraph (A) only if --
"(i) notice of such determination is provided to the taxpayer
no later than 30 days prior to the date of such action, and
"(ii) such notice includes the reasons why the Secretary
believes a significant change in the financial condition of the
taxpayer has occurred.
"(4) FAILURE TO PAY AN INSTALLMENT OR ANY OTHER TAX LIABILITY
WHEN DUE OR TO PROVIDE REQUESTED FINANCIAL INFORMATION. -- The
Secretary may alter, modify, or terminate an agreement entered
into by the Secretary under subsection (a) in the case of the
failure of the taxpayer --
"(A) to pay any installment at the time such installment
payment is due, under such agreement,
"(B) to pay any other tax liability at the time such liability
is due, or
"(C) to provide a financial condition update as requested by
the Secretary."
(b) CONFORMING AMENDMENTS. --
(1) Paragraph (1) of section 6601(b) of the 1986 Code (relating
to last day prescribed for payment) is amended by inserting "or
any installment agreement entered into under section 6159" after
"time for payment".
(2) The table of sections for subchapter A of chapter 62 of the
1986 Code is amended by adding at the end thereof the following
new item:
"Sec. 6159. Agreements for payment of tax liability in
installments."
(c) EFFECTIVE DATE. -- The amendments made by this section "26 USC
6159 note" shall apply to agreements entered into after the date of the
enactment of this Act.
SEC. 6235. ASSISTANT COMMISSIONER FOR TAXPAYER SERVICES.
(a) IN GENERAL. -- Section 7802 of the 1986 Code (relating to
Commissioner of Revenue; Assistant Commissioner (Employee Plans and
Exempt Organizations is amended by adding at the end thereof the
following new subsection:
"(c) ASSISTANT COMMISSIONER (TAXPAYER SERVICES). -- There is
established within the Internal Revenue Service an office to be known as
the 'Office for Taxpayer Services' to be under the supervision and
direction of an Assistant Commissioner of the Internal Revenue. The
Assistant Commissioner shall be responsible for taxpayer services such
as telephone, walk-in, and taxpayer educational services, and the design
and production of tax and informational forms."
(b) ANNUAL REPORTS TO CONGRESS. -- "26 USC 7802 note" The Assistant
Commissioner (Taxpayer Services) and the Taxpayer Ombudsman for the
Internal Revenue Service shall jointly make an annual report regarding
the quality of taxpayer services provided. Such report shall be made to
the Committee on Finance of the Senate and the Committee on Ways and
Means of the House of Representatives.
(c) EFFECTIVE DATE. -- The amendment made by subsection (a) "26 USC
7802 note" shall take effect on the date 180 days after the date of the
enactment of this Act.
SEC. 6236. LEVY AND DISTRAINT.
(a) NOTICE. -- Section 6331(d) of the 1986 Code (relating to levy
and distraint) is amended --
(1) by striking out "10 days" in paragraph (2) and inserting in
lieu thereof "30 days",
(2) by striking out "10-DAY REQUIREMENT" in the heading of
paragraph (2) and inserting in lieu thereof "30-DAY REQUIREMENT",
and
(3) by adding at the end thereof the following new paragraph:
"(4) INFORMATION INCLUDED WITH NOTICE. -- The notice required
under paragraph (1) shall include a brief statement which sets
forth in simple and nontechnical terms --
"(A) the provisions of this title relating to levy and sale of
property,
"(B) the procedures applicable to the levy and sale of property
under this title,
"(C) the administrative appeals available to the taxpayer with
respect to such levy and sale and the procedures relating to such
appeals,
"(D) the alternatives available to taxpayers which could
prevent levy on the property (including installment agreements
under section 6159),
"(E) the provisions of this title relating to redemption of
property and release of liens on property, and
"(F) the procedures applicable to the redemption of property
and the release of a lien on property under this title."
(b) EFFECT OF LEVY ON SALARY AND WAGES. --
(1) IN GENERAL. -- Subsection (e) of section 6331 of the 1986
Code (relating to levy and distraint) is amended to read as
follows:
"(e) CONTINUING LEVY ON SALARY AND WAGES. -- The effect of a levy on
salary or wages payable to or received by a taxpayer shall be continuous
from the date such levy is first made until such levy is released under
section 6343."
(2) CROSS REFERENCE. -- Section 6331(f) of the 1986 Code
(relating to cross references is amended by adding at the end
thereof the following new paragraph:
"(3) For release and notice of release of levy, see section
6343."
(c) INCREASE IN AMOUNTS OF CERTAIN PROPERTY EXEMPT FROM LEVY. --
(1) FUEL, PROVISIONS, FURNITURE, PERSONAL EFFECTS. -- Paragraph
(2) of section 6334(a) of the 1986 Code (relating to property
exempt from levy) is amended by striking out "$1,500" and
inserting in lieu thereof "$1,650 ($1,550 in the case of levies
issued during 1989)".
(2) BOOKS AND TOOLS. -- Paragraph (3) of section 6334(a) of
the 1986 Code is amended by striking out "$1,000" and inserting in
lieu thereof "$1,100 ($1,050 in the case of levies issued during
1989)".
(3) WAGES, SALARY, AND OTHER INCOME. --
(A) INCREASE IN AMOUNT EXEMPT. -- Paragraph (1) of section
6334(d) of the 1986 Code (relating to exempt income of wages,
salary, or other income) is amended to read as follows:
"(1) INDIVIDUALS ON WEEKLY BASIS. -- In the case of an
individual who is paid or receives all of his wages, salary, and
other income on a weekly basis, the amount of the wages, salary,
and other income payable to or received by him during any week
which is exempt from levy under subsection (a)(9) shall be the
exempt amount."
"(B) EXEMPT AMOUNT DEFINED. -- Subsection (d) of section 6334
of the 1986 Code (relating to property exempt from levy) is
amended by redesignating paragraph (2) as paragraph (3) and by
inserting after paragraph (1) the following new paragraph:
"(2) EXEMPT AMOUNT. -- For purposes of paragraph (1), the term
'exempt amount' means an amount equal to --
"(A) the sum of --
"(i) the standard deduction, and
"(ii) the aggregate amount of the deductions for personal
exemptions allowed the taxpayer under section 151 in the taxable
year in which such levy occurs, divided by
"(B) 52.
Unless the taxpayer submits to the Secretary a written and
properly verified statement specifying the facts necessary to
determine the proper amount under subparagraph (A), subparagraph
(A) shall be applied as if the taxpayer were a married individual
filing a separate return with only 1 personal exemption."
(4) ADDITIONAL PROPERTY EXEMPT FROM LEVY. --
(A) IN GENERAL. -- Subsection (a) of section 6334 of the 1986
Code (relating to property exempt from levy) is amended by adding
at the end thereof the following new paragraphs:
"(11) CERTAIN PUBLIC ASSISTANCE PAYMENTS. -- Any amount
payable to an individual as a recipient of public assistance under
--
"(A) title IV (relating to aid to families with dependent
children) or title XVI (relating to supplemental security income
for the aged, blind, and disabled) of the Social Security Act, or
"(B) State or local government public assistance or public
welfare programs for which eligibility is determined by a needs or
income test.
"(12) ASSISTANCE UNDER JOB TRAINING PARTNERSHIP ACT. -- Any
amount payable to a participant under the Job Training Partnership
Act (29 U.S.C. 1501 et seq.) from funds appropriated pursuant to
such Act.
"(13) PRINCIPAL RESIDENCE EXEMPT IN ABSENCE OF CERTAIN APPROVAL
OR JEOPARDY. -- Except to the extent provided in subsection (e),
the principal residence of the taxpayer (within the meaning of
section 1034)."
(B) LEVY PERMITTED ON PRINCIPAL RESIDENCE IN CASE OF JEOPARDY
OR APPROVAL BY CERTAIN OFFICIALS. -- Section 6334 of the 1986
Code is amended by adding at the end thereof the following new
subsection:
"(e) LEVY ALLOWED ON PRINCIPAL RESIDENCE IN CASE OF JEOPARDY OR
CERTAIN APPROVAL. -- Property described in subsection (a)(13) shall not
be exempt from levy if --
"(1) a district director or assistant district director of the
Internal Revenue Service personally approves (in writing) the levy
of such property, or
"(2) the Secretary finds that the collection of tax is in
jeopardy."
(d) UNECONOMICAL LEVY; LEVY ON APPEARANCE DATE OF SUMMONS. --
Section 6331 of the 1986 Code (relating to levy and distraint) is
amended by redesignating subsection (f) as subsection (h) and by
inserting after subsection (e) the following new subsections:
"(f) UNECONOMICAL LEVY. -- No levy may be made on any property if
the amount of the expenses which the Secretary estimates (at the time of
levy) would be incurred by the Secretary with respect to the levy and
sale of such property exceeds the fair market value of such property at
the time of levy.
"(g) LEVY ON APPEARANCE DATE OF SUMMONS. --
"(1) IN GENERAL. -- No levy may be made on the property of any
person on any day on which such person (or officer or employee of
such person) is required to appear in response to a summons issued
by the Secretary for the purpose of collecting any underpayment of
tax.
"(2) NO APPLICATION IN CASE OF JEOPARDY. -- This subsection
shall not apply if the Secretary finds that the collection of tax
is in jeopardy."
(e) SURRENDER OF BANK ACCOUNTS SUBJECT TO LEVY ONLY AFTER 21 DAYS.
--
(1) IN GENERAL. -- Section 6332 of the 1986 Code (relating to
surrender of property subject to levy), as amended by title I of
this Act is amended by redesignating subsections (c), (d), and (e)
as subsections (d), (e), and (f), respectively, and by inserting
after subsection (b) the following new subsection:
"(c) SPECIAL RULE FOR BANKS. -- Any bank (as defined in section
408(n)) shall surrender (subject to an attachment or execution under
judicial process) any deposits (including interest thereon) in such bank
only after 21 days after service of levy."
(2) CONFORMING AMENDMENTS. --
(A) Subsection (a) of section 6332 of the 1986 Code is amended
by striking out "subsection (b)" and inserting in lieu thereof
"subsections (b) and (c)",
(B) Subsection (e) of section 6332 of the 1986 Code, as
redesignated by paragraph (1), is amended by striking out
"subsection (c)(1)" and inserting in lieu thereof "subsection
(d)(1)".
(f) RELEASE OF LEVY. -- Subsection (a) of section 6343 of the 1986
Code (relating to release of levy) is amended to read as follows:
"(a) RELEASE OF LEVY AND NOTICE OF RELEASE. --
"(1) IN GENERAL. -- Under regulations prescribed by the
Secretary, the Secretary shall release the levy upon all, or part
of, the property or rights to property levied upon and shall
promptly notify the person upon whom such levy was made (if any)
that such levy has been released if --
"(A) the liability for which such levy was made is satisfied or
becomes unenforceable by reason of lapse of time,
"(B) release of such levy will facilitate the collection of
such liability,
"(C) the taxpayer has entered into an agreement under section
6159 to satisfy such liability by means of installment payments,
unless such agreement provides otherwise,
"(D) the Secretary has determined that such levy is creating an
economic hardship due to the financial condition of the taxpayer,
or
"(E) the fair market value of the property exceeds such
liability and release of the levy on a part of such property could
be made without hindering the collection of such liability.
For purposes of subparagraph (C), the Secretary is not required
to release such levy if such release would jeopardize the secured
creditor status of the Secretary.
"(2) EXPEDITED DETERMINATION ON CERTAIN BUSINESS PROPERTY. --
In the case of any tangible personal property essential in
carrying on the trade or business of the taxpayer, the Secretary
shall provide for an expedited determination under paragraph (1)
if levy on such tangible personal property would prevent the
taxpayer from carrying on such trade or business.
"(3) SUBSEQUENT LEVY. -- The release of levy on any property
under paragraph (1) shall not prevent any subsequent levy on such
property."
(g) RIGHT OF TAXPAYER TO REQUEST THAT SEIZED PROPERTY BE SOLD WITHIN
60 DAYS. -- Section 6335 of the 1986 Code (relating to sale of seized
property) is amended by redesignating subsection (f) as subsection (g)
and by inserting after subsection (e) the following new subsection:
"(f) RIGHT TO REQUEST SALE OF SEIZED PROPERTY WITHIN 60 DAYS. -- The
owner of any property seized by levy may request that the Secretary sell
such property within 60 days after such request (or within such longer
period as may be specified by the owner). The Secretary shall comply
with such request unless the Secretary determines (and notifies the
owner within such period) that such compliance would not be in the best
interests of the United States."
(h) EFFECTIVE DATE. -- "26 USC 6331 note"
(1) IN GENERAL. -- The amendments made by this section (other
than subsection (g)) shall apply to levies issued on or after July
1, 1989.
(2) Subsection (g). -- The amendment made by subsection (g)
shall apply to requests made on or after January 1, 1989.
SEC. 6237. REVIEW OF JEOPARDY LEVY AND ASSESSMENT PROCEDURES.
"(a) IN GENERAL. -- Subsection (a)(1) of section 7429 of the 1986
Code (relating to review of jeopardy assessment procedures) is amended
--
(1) by inserting "or levy is made under section 6331(a) less
than 30 days after notice and demand for payment is made under
section 6331(a)," after "6862,", and
(2) by inserting "or levy" after "such assessment".
(b) ADMINISTRATIVE DETERMINATIONS. -- Paragraph (3) of section
7429(a) of the 1986 Code (relating to redetermination by the Secretary)
is amended to read as follows:
"(3) REDETERMINATION BY SECRETARY. -- After a request for
review is made under paragraph (2), the Secretary shall determine
--
"(A) whether or not --
"(i) the making of the assessment under section 6851, 6861, or
6862, as the case may be, is reasonable under the circumstances,
and
"(ii) the amount so assessed or demanded as a result of the
action taken under section 6851, 6861, or 6862 is appropriate
under the circumstances, or
"(B) whether or not the levy described in subsection (a)(1) is
reasonable under the circumstances."
(c) TAX COURT REVIEW JURISDICTION. -- Subsection (b) of section 7429
of the 1986 Code is amended to read as follows:
"(b) JUDICIAL REVIEW. --
"(1) PROCEEDINGS PERMITTED. -- Within 90 days after the
earlier of --
"(A) the day the Secretary notifies the taxpayer of the
Secretary's determination described in subsection (a)(3), or
"(B) the 16th day after the request described in subsection
(a)(2) was made,
the taxpayer may bring a civil action against the United States
for a determination under this subsection in the court with
jurisdiction determined under paragraph (2).
"(2) JURISDICTION FOR DETERMINATION. --
"(A) IN GENERAL. -- Except as provided in subparagraph (B),
the district courts of the United States shall have exclusive
jurisdiction over any civil action for a determination under this
subsection.
"(B) TAX COURT. -- If a petition for a redetermination of a
deficiency under section 6213(a) has been timely filed with the
Tax Court before the making of an assessment or levy that is
subject to the review procedures of this section, and 1 or more of
the taxes and taxable periods before the Tax Court because of such
petition is also included in the written statement that is
provided to the taxpayer under subsection (a), then the Tax Court
also shall have jurisdiction over any civil action for a
determination under this subsection with respect to all the taxes
and taxable periods included in such written statement.
"(3) DETERMINATION BY COURT. -- Within 20 days after a
proceeding is commenced under paragraph (1), the court shall
determine --
"(A) whether or not --
"(i) the making of the assessment under section 6851, 6861, or
6862, as the case may be, is reasonable under the circumstances,
and
"(ii) the amount so assessed or demanded as a result of the
action taken under section 6851, 6861, or 6862 is appropriate
under the circumstances, or
"(B) whether or not the levy described in subsection (a)(1) is
reasonable under the circumstances.
If the court determines that proper service was not made on the
United States or on the Secretary, as may be appropriate, within 5
days after the date of the commencement of the proceeding, then
the running of the 20-day period set forth in the preceding
sentence shall not begin before the day on which proper service
was made on the United States or on the Secretary, as may be
appropriate.
"(4) ORDER OF COURT. -- If the court determines that the
making of such levy is unreasonable, that the making of such
assessment is unreasonable, or that the amount assessed or
demanded is inappropriate, then the court may order the Secretary
to release such levy, to abate such assessment, to redetermine (in
whole or in part) the amount assessed or demanded, or to take such
other action as the court finds appropriate."
(d) VENUE. -- Section 7429(e) of the 1986 Code (relating to
venue) is amended to read as follows:
"(e) VENUE. --
"(1) DISTRICT COURT. -- A civil action in a district court
under subsection (b) shall be commenced only in the judicial
district described in section 1402(a)(1) or (2) of title 28,
United States Code.
"(2) TRANSFER OF ACTIONS. -- If a civil action is filed under
subsection (b) with the Tax Court and such court finds that there
is want of jurisdiction because of the jurisdiction provisions of
subsection (b)(2), then the Tax Court shall, if such court
determines it is in the interest of justice, transfer the civil
action to the district court in which the action could have been
brought at the time such action was filed. Any civil action so
transferred shall proceed as if such action had been filed in the
district court to which such action had been filed in the district
court to which such action is transferred on the date on which
such action was actually filed in the Tax Court from which such
action is transferred."
(e) CONFORMING AMENDMENTS. --
(1) Section 7429(c) of the 1986 Code (relating to extension of
20-day period where taxpayer so requests) and section 7429(f)
(relating to finality of determination) are amended by striking
out "district" each place it appears.
(2) Section 7429(g) of the 1986 Code (relating to burden of
proof) is amended --
(A) by inserting "the making of a levy described in subsection
(a)(1) or" after "whether" in paragraph (1),
(B) by striking out "TERMINATION" in the heading of paragraph
(1) and inserting in lieu thereof "LEVY, TERMINATION,", and
(C) by striking out "an action" and inserting in lieu thereof
"a proceeding" in paragraphs (1) and (2).
(3) The heading of section 7429 of the 1986 Code is amended by
inserting "LEVY OR" after "JEOPARDY".
(4) The table of sections for subchapter B of chapter 76 of the
1986 Code is amended by inserting "levy or" after "jeopardy" in
the item relating to section 7429.
(f) EFFECTIVE DATE. -- The amendments made by this section "26 USC
7429 note" shall apply to jeopardy levies issued and assessments made on
or after July 1, 1989.
SEC. 6238. ADMINISTRATIVE APPEAL OF LIENS.
(a) ESTABLISHMENT OF ADMINISTRATIVE APPEAL FOR DISPUTED LIENS. --
Subchapter C of chapter 64 of the 1986 Code (relating to lien for taxes)
is amended by redesignating section 6326 as section 6327 and inserting
after section 6325 the following new section:
"SEC. 6326. ADMINISTRATIVE APPEAL OF LIENS.
"(a) IN GENERAL. -- In such form and at such time as the Secretary
shall prescribe by regulations, any person shall be allowed to appeal to
the Secretary after the filing of a notice of a lien under this
subchapter on the property or the rights to property of such person for
a release of such lien alleging an error in the filing of the notice of
such lien.
"(b) CERTIFICATE OF RELEASE. -- If the Secretary determines that the
filing of the notice of any lien was erroneous, the Secretary shall
expeditiously (and, to the extent practicable, within 14 days after such
determination) issue a certificate of release of such lien and shall
include in such certificate a statement that such filing was erroneous."
(b) REGULATIONS. -- "26 USC 6326 note" The Secretary of the Treasury
or the Secretary's delegate shall prescribe the regulations necessary to
implement the administrative appeal provided for in the amendment made
by subsection (a) within 180 days after the date of the enactment of
this Act.
(c) CLERICAL AMENDMENT. -- The table of sections for subchapter C of
chapter 64 of the 1986 Code is amended by striking out the item relating
to section 6326 and inserting in lieu thereof the following:
"Sec. 6326. Administrative appeal of liens.
"Sec. 6327. Cross references."
(d) EFFECTIVE DATE. -- The amendments made by this section "26 USC
6326 note" shall take effect on the date which is 60 days after the date
regulations are issued under subsection (b).
SEC. 6239. AWARDING OF COSTS AND CERTAIN FEES IN ADMINISTRATIVE AND
COURT PROCEEDINGS.
(a) IN GENERAL. -- Section 7430 of the 1986 Code is amended to read
as follows:
"SEC. 7430. AWARDING OF COSTS AND CERTAIN FEES.
"(a) IN GENERAL. -- In any administrative or court proceeding which
is brought by or against the United States in connection with the
determination, collection, or refund of any tax, interest, or penalty
under this title, the prevailing party may be awarded a judgment or a
settlement for --
"(1) reasonable administrative costs incurred in connection
with such administrative proceeding within the Internal Revenue
Service, and
"(2) reasonable litigation costs incurred in connection with
such court proceeding.
"(b) LIMITATIONS. --
"(1) REQUIREMENT THAT ADMINISTRATIVE REMEDIES BE EXHAUSTED. --
A judgment for reasonable litigation costs shall not be awarded
under subsection (a) in any court proceeding unless the court
determines that the prevailing party has exhausted the
administrative remedies available to such party within the
Internal Revenue Service.
"(2) ONLY COSTS ALLOCABLE TO THE UNITED STATES. -- An award
under subsection (a) shall be made only for reasonable litigation
and administrative costs which are allocable to the United States
and not to any other party.
"(3) EXCLUSION OF DECLARATORY JUDGMENT PROCEEDINGS. --
"(A) IN GENERAL. -- No award for reasonable litigation costs
may be made under subsection (a) with respect to any declaratory
judgment proceeding.
"(B) EXCEPTION FOR SECTION 501(c)(3) DETERMINATION REVOCATION
PROCEEDINGS. -- Subparagraph (A) shall not apply to any
proceeding which involves the revocation of a determination that
the organization is described in section 501(c)(3).
"(4) COSTS DENIED WHERE PARTY PREVAILING PROTRACTS PROCEEDINGS.
-- No award for reasonable litigation and administrative costs
may be made under subsection (a) with respect to any portion of
the administrative or court proceeding during which the prevailing
party has unreasonably protracted such proceeding.
"(c) DEFINITIONS. -- For purposes of this section --
"(1) REASONABLE LITIGATION COSTS. -- The term 'reasonable
litigation costs' includes --
"(A) reasonable court costs, and
"(B) based upon prevailing market rates for the kind or quality
of services furnished --
"(i) the reasonable expenses of expert witnesses in connection
with a court proceeding, except that no expert witness shall be
compensated at a rate in excess of the highest rate of
compensation for expert witnesses paid by the United States,
"(ii) the reasonable cost of any study, analysis, engineering
report, test, or project which is found by the court to be
necessary for the preparation of the party's case, and
"(iii) reasonable fees paid or incurred for the services of
attorneys in connection with the court proceeding, except that
such fees shall not be in excess of $75 per hour unless the court
determines that an increase in the cost of living or a special
factor, such as the limited availability of qualified attorneys
for such proceeding, justifies a higher rate.
"(2) REASONABLE ADMINISTRATIVE COSTS. -- The term 'reasonable
administrative costs' means --
"(A) any administrative fees or similar charges imposed by the
Internal Revenue Service, and
"(B) expenses, costs, and fees described in paragraph (1)(B),
except that any determination made by the court under clause (ii)
or (iii) thereof shall be made by the Internal Revenue Service in
cases where the determination under paragraph (4)(B) of the
awarding of reasonable administrative costs is made by the
Internal Revenue Service.
Such term shall only include costs incurred on or after the
earlier of (i) the date of the receipt by the taxpayer of the
notice of the decision of the Internal Revenue Service Office of
Appeals, or (ii) the date of the notice of deficiency.
"(3) ATTORNEY'S FEES. -- For purposes of paragraphs (1) and
(2), fees for the services of an individual (whether or not an
attorney) who is authorized to practice before the Tax Court or
before the Internal Revenue Service shall be treated as fees for
the services of an attorney.
"(4) PREVAILING PARTY. --
"(A) IN GENERAL. -- The term 'prevailing party' means any
party in any proceeding to which subsection (a) applies (other
than the United States or any creditor of the taxpayer involved)
--
"(i) which establishes that the position of the United States
in the proceeding was not substantially justified,
"(ii) which --
"(I) has substantially prevailed with respect to the amount in
controversy, or
"(II) has substantially prevailed with respect to the most
significant issue or set of issues presented, and
"(iii) which meets the requirements of the 1st sentence of
section 2412(d)(1)(B) of title 28, United States Code (as in
effect on October 22, 1986) except to the extent differing
procedures are established by rule of court and meets the
requirements of section 2412(d)(2)(B) of such title 28 (as so in
effect).
"(B) DETERMINATION AS TO PREVAILING PARTY. -- Any
determination under subparagraph (A) as to whether a party is a
prevailing party shall be made by agreement of the parties or --
"(i) in the case where the final determination with respect to
the tax, interest, or penalty is made at the administrative level,
by the Internal Revenue Service, or
"(ii) in the case where such final determination is made by a
court, the court.
"(5) ADMINISTRATIVE PROCEEDINGS. -- The term 'administrative
proceeding' means any procedure or other action before the
Internal Revenue Service.
"(6) COURT PROCEEDINGS. -- The term 'court proceeding' means
any civil action brought in a court of the United States
(including the Tax Court and the United States Claims Court).
"(7) POSITION OF UNITED STATES. -- The term 'position of the
United States' means --
"(A) the position taken by the United States in a judicial
proceeding to which subsection (a) applies, and
"(B) the position taken in an administrative proceeding to
which subsection (a) applies as of the earlier of --
"(i) the date of the receipt by the taxpayer of the notice of
the decision of the Internal Revenue Service Office of Appeals, or
"(ii) the date of the notice of deficiency.
"(d) SPECIAL RULES FOR PAYMENT OF COSTS. --
"(1) REASONABLE ADMINISTRATIVE COSTS. -- An award for
reasonable administrative costs shall be payable out of funds
appropriated under section 1304 of title 31, United States Code.
"(2) REASONABLE LITIGATION COSTS. -- An award for reasonable
litigation costs shall be payable in the case of the Tax Court in
the same manner as such an award by a district court.
"(e) MULTIPLE ACTIONS. -- For purposes of this section, in the case
of --
"(1) multiple actions which could have been joined or
consolidated, or
"(2) a case or cases involving a return or returns of the same
taxpayer (including joint returns of married individuals) which
could have been joined in a single court proceeding in the same
court,
such actions or cases shall be treated as 1 court proceeding
regardless of whether such joinder or consolidation actually occurs,
unless the court in which such action is brought determines, in its
discretion, that it would be inappropriate to treat such actions or
cases as joined or consolidated.
"(f) RIGHT OF APPEAL. --
"(1) COURT PROCEEDINGS. -- An order granting or denying (in
whole or in part) an award for reasonable litigation or
administrative costs under subsection (a) in a court proceeding,
may be incorporated as a part of the decision or judgment in the
court proceeding and shall be subject to appeal in the same manner
as the decision or judgment.
"(2) ADMINISTRATIVE PROCEEDINGS. -- A decision granting or
denying (in whole or in part) an award for reasonable
administrative costs under subsection (a) by the Internal Revenue
Service shall be subject to appeal to the Tax Court under rules
similar to the rules under section 7463 (without regard to the
amount in dispute)."
(b) CONFORMING AMENDMENT. -- Section 504 of title 5, United States
Code, is amended by adding at the end thereof the following new
subsection:
"(f) No award may be made under this section for costs, fees, or
other expenses which may be awarded under section 7430 of the he
Internal Revenue Code of 1986."
(c) CLERICAL AMENDMENT. -- The table of sections for subchapter B of
chapter 76 of the 1986 Code is amended by striking out "court" in the
item relating to section 7430.
(d) EFFECTIVE DATE. -- The amendments made by this section "26 USC
7430 note" shall apply to proceedings commencing after the date of the
enactment of this Act.
SEC. 6240. CIVIL CAUSE OF ACTION FOR DAMAGES SUSTAINED DUE TO
FAILURE TO RELEASE LIEN.
(a) IN GENERAL. -- Subchapter B of chapter 76 of the 1986 Code
(relating to proceedings by taxpayers and third parties) is amended by
redesignating section 7432 as section 7433 and by inserting after
section 7431 the following new section:
"SEC. 7432. CIVIL DAMAGES FOR FAILURE TO RELEASE LIEN.
"(a) IN GENERAL. -- If any officer or employee of the Internal
Revenue Service knowingly, or by reason of negligence, fails to release
a lien under section 6325 on property of the taxpayer, such taxpayer may
bring a civil action for damages against the United States in a district
court of the United States.
"(b) DAMAGES. -- In any action brought under subsection (a), upon a
finding of liability on the part of the defendant, the defendant shall
be liable to the plaintiff in an amount equal to the sum of --
"(1) actual, direct economic damages sustained by the plaintiff
which, but for the actions of the defendant, would not have been
sustained, plus
"(2) the costs of the action.
"(c) PAYMENT AUTHORITY. -- Claims pursuant to this section shall be
payable out of funds appropriated under section 1304 of title 31, United
States Code.
"(d) LIMITATIONS. --
"(1) REQUIREMENT THAT ADMINISTRATIVE REMEDIES BE EXHAUSTED. --
A judgment for damages shall not be awarded under subsection (b)
unless the court determines that the plaintiff has exhausted the
administrative remedies available to such plaintiff within the
Internal Revenue Service.
"(2) MITIGATION OF DAMAGES. -- The amount of damages awarded
under subsection (b)(1) shall be reduced by the amount of such
damages which could have reasonably been mitigated by the
plaintiff.
"(3) PERIOD FOR BRINGING ACTION. -- Notwithstanding any other
provision of law, an action to enforce liability created under
this section may be brought without regard to the amount in
controversy and may be brought only within 2 years after the date
the right of action accrues.
"(e) NOTICE OF FAILURE TO RELEASE LIEN. -- The Secretary shall by
regulation prescribe reasonable procedures for a taxpayer to notify the
Secretary of the failure to release a lien under section 6325 on
property of the taxpayer."
"(b) CLERICAL AMENDMENT. -- The table of sections for subchapter B
of chapter 76 of the 1986 Code is amended by striking out the item
relating to section 7432 and inserting in lieu thereof the following new
items:
"Sec. 7432. Civil damages for failure to release lien.
"Sec. 7433. Cross references."
(c) EFFECTIVE DATE. -- The amendments made by this section "26 USC
7432 note" shall apply to notices provided by the taxpayer of the
failure to release a lien, and damages arising, after December 31, 1988.
SEC. 6241. CIVIL CAUSE OF ACTION FOR DAMAGES SUSTAINED DUE TO
CERTAIN UNAUTHORIZED ACTIONS BY INTERNAL REVENUE SERVICE.
(a) IN GENERAL. -- Subchapter B of chapter 76 of the 1986 Code
(relating to proceedings by taxpayers and third parties) is further
amended by redesignating section 7433 as section 7434 and by inserting
after section 7432 the following new section:
"SEC. 7433. CIVIL DAMAGES FOR CERTAIN UNAUTHORIZED COLLECTION
ACTIONS.
"(a) IN GENERAL. -- If, in connection with any collection of Federal
tax with respect to a taxpayer, any officer or employee of the Internal
Revenue Service recklessly or intentionally disregards any provision of
this title, or any regulation promulgated under this title, such
taxpayer may bring a civil action for damages against the United States
in a district court of the United States. Except as provided in section
7432, such civil action shall be the exclusive remedy for recovering
damages resulting from such actions.
"(b) DAMAGES. -- In any action brought under subsection (a), upon a
finding of liability on the part of the defendant, the defendant shall
be liable to the plaintiff in an amount equal to the lesser of $100,000
or the sum of --
"(1) actual, direct economic damages sustained by the plaintiff
as a proximate result of the reckless or intentional actions of
the officer or employee, and
"(2) the costs of the action.
"(c) PAYMENT AUTHORITY. -- Claims pursuant to this section shall be
payable out of funds appropriated under section 1304 of title 31, United
States Code.
"(d) LIMITATIONS. --
"(1) REQUIREMENT THAT ADMINISTRATIVE REMEDIES BE EXHAUSTED. --
A judgment for damages shall not be awarded under subsection (b)
unless the court determines that the plaintiff has exhausted the
administrative remedies available to such plaintiff within the
Internal Revenue Service.
"(2) MITIGATION OF DAMAGES. -- The amount of damages awarded
under subsection (b)(1) shall be reduced by the amount of such
damages which could have reasonably been mitigated by the
plaintiff.
"(3) PERIOD FOR BRINGING ACTION. -- Notwithstanding any other
provision of law, an action to enforce liability created under
this section may be brought without regard to the amount in
controversy and may be brought only within 2 years after the date
the right of action accrues."
(b) DAMAGES FOR FRIVOLOUS OR GROUNDLESS CLAIMS. --
(1) IN GENERAL. -- Section 6673 of the 1986 Code (relating to
damages assessable for instituting proceedings before the Tax
Court primarily for delay, etc.) is amended by inserting "(a) IN
GENERAL. -- " before "Whenever" and by adding at the end thereof
the following new subsection:
"(b) CLAIMS UNDER SECTION 7433. -- Whenever it appears to the court
that the taxpayer's position in proceedings before the court instituted
or maintained by such taxpayer under section 7433 is frivolous or
groundless, damages in an amount not in excess of $10,000 shall be
awarded to the United States by the court in the court's decision.
Damages to awarded shall be assessed at the same time as the decision
and shall be paid upon notice and demand from the Secretary."
(2) CLERICAL AMENDMENT. -- The heading for section 6673 of the
1986 Code is amended by striking out "TAX".
(c) CLERICAL AMENDMENT. -- The table of sections for subchapter B of
chapter 76 of the 1986 Code is further amended by striking out the item
relating to section 7433 and inserting in lieu thereof the following new
items:
"Sec. 7433. Civil damages for certain unauthorized collection
actions.
"Sec. 7434. Cross references."
(d) EFFECTIVE DATE. -- The amendments made by this section "26 USC
6673 note" shall apply to actions by officers or employees of the
Internal Revenue Service after the date of the enactment of this Act.
SEC. 6242. ASSESSABLE PENALTY FOR IMPROPER DISCLOSURE OR USE OF
INFORMATION BY PREPARERS OF RETURNS.
(a) IN GENERAL. -- Part I of subchapter B of chapter 67 of the 1986
Code (relating to assessable penalties) is amended by adding at the end
thereof the following new section:
"SEC. 6712. DISCLOSURE OR USE OF INFORMATION BY PREPARERS OF
RETURNS.
"(a) IMPOSITION OF PENALTY. -- If any person who is engaged in the
business of preparing, or providing services in connection with the
preparation of, returns of tax imposed by chapter 1, or any person who
for compensation prepares any such return for any other person, and who
--
"(1) discloses any information furnished to him for, or in
connection with, the preparation of any such return, or
"(2) uses any such information for any purpose other than to
prepare, or assist in preparing, any such return,
shall pay a penalty of $250 for each such disclosure or use, but the
total amount imposed under this subsection on such a person for any
calendar year shall not exceed $10,000.
"(b) EXCEPTIONS. -- The rules of section 7216(b) shall apply for
purposes of this section.
"(c) DEFICIENCY PROCEDURES NOT TO APPLY. -- Subchapter B of chapter
63 (relating to deficiency procedures for income, estate, gift, and
certain excise taxes) shall not apply in respect of the assessment or
collection of any penalty imposed by this section."
(b) CRIMINAL PENALTY TO APPLY ONLY WHERE KNOWING OR RECKLESS
DISCLOSURE OR USE. -- The material preceding paragraph (1) of section
7216(a) of the 1986 Code is amended by striking out "and who -- " and
inserting in lieu thereof "and who knowingly or recklessly -- ".
(c) CLERICAL AMENDMENT. -- The table of sections for part I of
subchapter B of chapter 68 of the 1986 Code is amended by adding at the
end thereof the following new item:
"Sec. 6712. Disclosure or use of information by preparers of
returns."
(d) EFFECTIVE DATE. -- The amendments made by this section "26 USC
6712 note" shall apply to disclosures or uses after December 31, 1988.
SEC. 6243. JURISDICTION TO RESTRAIN CERTAIN PREMATURE ASSESSMENTS.
(a) IN GENERAL. -- Section 6213(a) of the 1986 Code (relating to
time for filing petition and restriction on assessment) is amended by
striking out the period at the end of the last sentence and inserting in
lieu thereof ", including the Tax Court. The Tax Court shall have no
jurisdiction to enjoin any action or proceeding under this subsection
unless a timely petition for a redetermination of the deficiency has
been filed and then only in respect of the deficiency that is the
subject of such petition."
(b) APPEAL OF ORDER RESTRAINING ASSESSMENT, ETC. -- Section 7482(a)
of the 1986 Code (relating to jurisdiction on appeal) is amended by
adding at the end thereof the following new paragraph:
"(3) CERTAIN ORDERS ENTERED UNDER SECTION 6213(a). -- An order
of the Tax Court which is entered under authority of section
6213(a) and which resolves a proceeding to restrain assessment or
collection shall be treated as a decision of the Tax Court for
purposes of this section and shall be subject to the same review
by the United States Court of Appeals as a similar order of a
district court."
(c) EFFECTIVE DATE. -- The amendments made by this section "26 USC
6213 note" shall apply to orders entered after the date of the enactment
of this Act.
SEC. 6244. JURISDICTION TO ENFORCE OVERPAYMENT DETERMINATIONS.
(a) IN GENERAL. -- Section 6512(b) of the 1986 Code (relating to
overpayment determined by the Tax Court) is amended by striking out
"paragraph (2)" and inserting in lieu thereof "paragraph (3)" in
paragraph (1), by redesignating paragraph (2) as paragraph (3), and by
inserting the following new paragraph after paragraph (1):
"(2) JURISDICTION TO ENFORCE. -- If, after 120 days after a
decision of the Tax Court has become final, the Secretary has
failed to refund the overpayment determined by the Tax Court,
together with the interest thereon as provided in subchapter B of
chapter 67, then the Tax Court, upon motion by the taxpayer, shall
have jurisdiction to order the refund of such overpayment and
interest."
(b) AMENDMENTS ADDING CROSS REFERENCES. --
(1) Section 6214(e) of the 1986 Code is amended by striking out
"REFERENCE. -- " and inserting in lieu thereof REFERENCES. -- "
in the heading, by designating the undesignated paragraph as
paragraph (1), and by adding at the end thereof the following new
paragraph:
"(2) For provision giving Tax Court jurisdiction to order a
refund of an overpayment and to award sanctions, see section
6512(b)(2)."
(2) Section 6512(c) of the 1986 Code is amended by striking out
"REFERENCE. -- " and inserting in lieu thereof "REFERENCES. -- "
in the heading, by designating the undesignated paragraph as
paragraph (1), and by adding at the end thereof the following new
paragraph:
"(2) For provision giving the Tax Court jurisdiction to award
reasonable litigation costs in proceedings to enforce an
overpayment determined by such court, see section 7430."
(c) EFFECTIVE DATE. -- The amendments made by this section "26 USC
6214 note" shall apply to overpayments determined by the Tax Court which
have not yet been refunded by the 90th day after the date of the
enactment of this Act.
SEC. 6245. JURISDICTION TO REVIEW CERTAIN SALES OF SEIZED PROPERTY.
(a) JURISDICTION TO REVIEW CERTAIN SALES OF PROPERTY. -- Section
6863(b)(3) of the 1986 Code (relating to stay of sale of seized property
pending Tax Court decision) is amended by adding at the end thereof the
following new subparagraph:
"(C) REVIEW BY TAX COURT. -- If, but for the application of
subparagraph (B), a sale would be prohibited by subparagraph (A)(
iii), then the Tax Court shall have jurisdiction to review the
Secretary's determination under subparagraph (B) that the property
may be sold. Such review may be commenced upon motion by either
the Secretary or the taxpayer. An order of the Tax Court
disposing of a motion under this paragraph shall be reviewable in
the same manner as a decision of the Tax Court."
(b) EFFECTIVE DATE. -- The amendments made by this section "26 USC
6863 note" shall take effect on the 90th day after the date of the
enactment of this Act.
SEC. 6246. JURISDICTION TO REDETERMINE INTEREST ON DEFICIENCIES.
(a) IN GENERAL. -- Section 7481 of the 1986 Code (relating to date
when Tax Court decision becomes final) is amended by adding at the end
thereof the following new subsection:
"(c) JURISDICTION OVER INTEREST DETERMINATIONS. -- Notwithstanding
subsection (a), if --
"(1) an assessment has been made by the Secretary under section
6215 which includes interest as imposed by this title,
"(2) the taxpayer has paid the entire amount of the deficiency
plus interest claimed by the Secretary, and
"(3) within 1 year after the date the decision of the Tax Court
becomes final under subsection (a), the taxpayer files a petition
in the Tax Court for a determination that the amount of interest
claimed by the Secretary exceeds the amount of interest imposed by
this title,
then the Tax Court may reopen the case solely to determine whether
the taxpayer has made an overpayment of such interest and the amount of
any such overpayment. If the Tax Court determines under this subsection
that the taxpayer has made an overpayment of interest, then that
determination shall be treated under section 6512(b)(1) as a
determination of an overpayment of tax. An order of the Tax Court
redetermining the interest due, when entered upon the records of the
court, shall be reviewable in the same manner as a decision of the Tax
Court."
(b) CONFORMING AMENDMENTS. --
(1) Section 6512(a) of the 1986 Code (relating to effect of
petition to Tax Court) is amended by inserting after "section
6213(a)" the following: "(or 7481(c) with respect to a
determination of statutory interest)".
(2) Subsection (a) of section 7481 of the 1986 Code is amended
by striking out "subsection (b)" and inserting in lieu thereof
"subsections (b) and (c)".
(c) EFFECTIVE DATE. -- The amendments made by this section "26 USC
6512 note" shall apply to assessments of deficiencies redetermined by
the Tax Court made after the date of the enactment of this Act.
SEC. 6247. JURISDICTION TO MODIFY DECISIONS IN CERTAIN ESTATE TAX
CASES.
(a) IN GENERAL. -- Section 7481 of the 1986 Code (relating to date
when Tax Court decision becomes final), as amended by section 783(a), is
further amended by adding at the end thereof the following new
subsection:
"(d) DECISIONS RELATING TO ESTATE TAX EXTENDED UNDER SECTION 6166.
-- If with respect to a decedent's estate subject to a decision of the
Tax Court --
"(1) the time for payment of an amount of tax imposed by
chapter 11 is extended under section 6166, and
"(2) there is treated as an administrative expense under
section 2053 either --
"(A) any amount of interest which a decedent's estate pays on
any portion of the tax imposed by section 2001 on such estate for
which the time of payment is extended under section 6166, or
"(B) interest on any estate, succession, legacy, or inheritance
tax imposed by a State on such estate during the period of the
extension of time for payment under section 6166,
then, upon a motion by the petitioner in such case in which such time
for payment of tax has been extended under section 6166, the Tax Court
may reopen the case solely to modify the Court's decision to reflect
such estate's entitlement to a deduction for such administration
expenses under section 2053 and may hold further trial solely with
respect to the claim for such deduction if, within the discretion of the
Tax Court, such a hearing is deemed necessary. An order of the Tax
Court disposing of a motion under this subsection shall be reviewable in
the same manner as a decision of the Tax Court, but only with respect to
the matters determined in such order."
(b) CONFORMING AMENDMENTS. --
(1) Section 6512(a) of the 1986 Code (relating to effect of
petition to Tax Court), as amended by this part, is further
amended by striking out "interest)" and inserting in lieu thereof
"interest or section 7481(d) solely with respect to a
determination of estate tax by the Tax Court)".
(2) Subsection (a) of section 7481 of the 1986 Code, as amended
by this part, is further amended by striking out "subsections (b)
and (c)" and inserting in lieu thereof "subsections (b), (c), and
(d)".
(c) EFFECTIVE DATE. -- The amendments made by this section "26 USC
6512 note" shall be effective with respect to Tax Court cases for which
the decision is not final on the date of the enactment of this Act.
SEC. 6251. EXCHANGE OF INFORMATION.
Clause (i) of section 6103(b)(5)(B) of the 1986 Code (defining State)
is amended by striking out "2,000,000" and inserting in lieu thereof
"250,000".
SEC. 6252. PROVISIONS RELATING TO PREVIOUSLY REQUIRED STUDIES.
(a) REPEAL OF REQUIREMENT FOR CERTAIN STUDIES. --
(1) PIK STUDY. -- Section 6 of the Payment-in-Kind Tax
Treatment Act "26 USC 61 note" of 1983 is hereby repealed.
(2) ACCOUNTING METHODS FOR INVENTORY. -- Section 238 of the
Economic Recovery Act "26 USC 471 note" of 1981 is hereby
repealed.
(b) CHANGES IN DUE DATES FOR CERTAIN PERIODIC STUDIES. --
(1) REPORTS ON POSSESSIONS CORPORATIONS. -- "26 USC 936 note"
Effective for reports for calendar years after 1982, subsection
(a) of section 441 of the Tax Reform Act of 1984 is amended by
striking out "shall," and all that follows through "setting forth"
and inserting in lieu thereof "shall, during 1988 and each fourth
calendar year thereafter, submit a report to the Congress (using
the most recent information available) setting forth".
(2) REPORTS ON FSC PROVISIONS. --
(A) Subsection (a) of section 804 of the Tax Reform Act of 1984
"26 USC 921 note" is amended by striking out "shall," and all that
follows through "setting forth" and inserting in lieu thereof
"shall, during 1990 and each fourth calendar year thereafter,
submit a report to the Congress (using the most recent information
available) setting forth".
(B) The amendment made by subparagraph (A) "26 USC 921 note"
shall take effect as if included in the amendments made by section
804(a) of the Tax Reform Act of 1984.
SEC. 6253. REPEAL OF SECRETARIAL AUTHORITY TO PRESCRIBE CLASS LIVES.
Paragraph (1) of section 168(i) of the 1986 Code is amended to read
as follows:
"(1) CLASS LIFE. -- Except as provided in this section, the
term 'class life' means the class life (if any) which would be
applicable with respect to any property as of January 1, 1986,
under subsection (m) of section 167 (determined without regard to
paragraph (4) and as if the taxpayer had made an election under
such subsection). The Secretary, through an office established in
the Treasury, shall monitor and analyze actual experience with
respect to all depreciable assets."
SEC. 6254. AMENDMENTS RELATED TO CRUDE OIL WINDFALL PROFIT TAX ACT
"26 USC 4997 note" OF 1980.
The reporting requirements of section 4997 of former chapter 45 of
subtitle D of the Internal Revenue Code of 1986, and the related
regulations thereunder, are repealed: Provided, That this repeal is
effective only for crude oil removed after December 31, 1987, for which
no tax is due or withheld under former chapter 45 of subtitle D of the
Internal Revenue Code of 1986.
SEC. 6276. AUTHORITY TO PAY REFUNDS TO CERTAIN FIDUCIARIES OF
INSOLVENT MEMBERS OF AFFILIATED GROUPS.
Section 6402 of the 1986 Code (relating to authority to make credits
or refunds) is amended by adding at the end thereof the following new
subsection:
"(i) REFUNDS TO CERTAIN FIDUCIARIES OF INSOLVENT MEMBERS OF
AFFILIATED GROUPS. -- Notwithstanding any other provision of law, in
the case of an insolvent corporation which is a member of an affiliated
group of corporations filing a consolidated return for any taxable year
and which is subject to a statutory or court-appointed fiduciary, the
Secretary may by regulation provide that any refund for such taxable
year may be paid on behalf of such insolvent corporation to such
fiduciary to the extent that the Secretary determines that the refund is
attributable to losses or credits of such insolvent corporation."
SEC. 6277. APPLICATION OF NET OPERATING LOSS LIMITATIONS TO
BANKRUPTCY REORGANIZATIONS.
(a) TIME FOR DETERMINING WHETHER OWNERSHIP CHANGE OCCURS. -- Section
621(f)(5) of the Tax Reform Act "26 USC 382 note" of 1986 is amended by
adding at the end thereof the following new sentence: "The
determination as to whether an ownership change has occurred during the
period beginning January 1, 1987, and ending on the final settlement of
any reorganization or proceeding described in the preceding sentence
shall be redetermined as of the time of such final settlement."
(b) ELECTION TO HAVE NEW RULES APPLY. -- Section 621(f)(5) of the
Tax Reform Act "26 USC 382 note" of 1986 is amended by striking out "In"
and inserting in lieu thereof "Unless the taxpayer elects not to have
the provisions of this paragraph apply, in".
(c) EFFECTIVE DATE. -- The amendments made by this section "26 USC
382 note" shall take effect as if included in section 621(f)(5) of the
Tax Reform Act of 1986.
SEC. 6278. APPLICATION OF SECTION 7503 OF 1986 CODE FOR PURPOSES OF
SECTION 10222(b) OF REVENUE ACT "26 USC 7503 note" OF 1987.
Section 7503 of the 1986 Code shall apply for purposes of determining
whether any disposition meets the requirements of section 10222(b)(2)(B)
of the Revenue Act of 1987. If any disposition meets the requirements
of such section by reason of the preceding sentence, for all purposes of
the 1986 Code, such disposition shall be deemed to have occurred on
December 31, 1988.
SEC. 6279. INTEREST EARNED BY BROKERS OR DEALERS NOT TAKEN INTO
ACCOUNT AS PERSONAL HOLDING COMPANY INCOME.
(a) IN GENERAL. -- Paragraph (1) of section 543(a) of the 1986 Code
is amended by striking out "and" at the end of subparagraph (B), by
striking out the period at the end of subparagraph (C) and inserting in
lieu thereof ", and" and by adding at the end thereof the following new
subparagraph:
"(D) interest received by a broker or dealer (within the
meaning of section 3(a)(4) or (5) of the Securities and Exchange
Act of 1934) in connection with --
"(i) any securities or money market instruments held as
property described in section 1221(1),
"(ii) margin accounts, or
"(iii) any financing for a customer secured by securities or
money market instruments".
(b) EFFECTIVE DATE. -- The amendments made by this section "26 USC
543 note" shall apply to interest received after the date of the
enactment of this Act, in taxable years ending after such date.
SEC. 6280. "26 USC 543 note" TREATMENT OF CERTAIN BANK HOLDING
COMPANIES.
(a) GENERAL RULE. -- For purposes of subtitle A of the 1986 Code,
the term "personal holding company income" shall not include any
dividend received by a qualified bank holding company from a 25-percent
owned bank during any taxable year ending in 1989 or 1990.
(b) $3,000,000 LIMITATION. -- The aggregate amount excluded from the
personal holding company income of any qualified bank holding company
under subsection (a) for the taxable year shall not exceed $3,000,000.
(c) QUALIFIED BANK HOLDING COMPANY. -- For purposes of this section,
the term "qualified bank holding company" means any bank holding company
(as defined in section 2(a) of the Bank Holding Company Act of 1956) if
80 percent or more (by value) of the assets of such company at all times
during the taxable year consist of stock in 1 or more 25-percent owned
banks.
(d) 25-PERCENT OWNED BANK. -- For purposes of this section, the term
"25-percent owned bank" means any bank (as defined in section 581 of the
1986 Code) if at least 25 percent of the stock of such bank (by vote and
value) is owned by the bank holding company.
SEC. 6281. "26 USC 170 note" AUTHORITY TO WAIVE APPRAISAL
REQUIREMENT FOR CERTAIN CHARITABLE CONTRIBUTIONS OF PROPERTY.
Notwithstanding paragraph (2) of section 155(a) of the Tax Reform Act
of 1984, the Secretary of the Treasury or his delegate may in the
regulations prescribed pursuant to such section waive the requirement of
a qualified appraisal in the case of a qualified contribution (within
the meaning of section 170(e)(3)(A) of the 1986 Code) of property
described in section 1221(1) with a claimed value in excess of $5,000.
SEC. 6282. DISTRIBUTIONS BY COOPERATIVE HOUSING CORPORATIONS.
(a) IN GENERAL. -- Section 216 of the 1986 Code is amended by adding
at the end thereof the following new subsection:
"(e) DISTRIBUTIONS BY COOPERATIVE HOUSING ASSOCIATIONS. -- Except as
provided in regulations, no gain or loss shall be recognized on the
distribution by a cooperative housing association of a dwelling unit to
a stockholder in such corporation if such distribution is in exchange
for the stockholder's stock in such corporation and such exchange
qualified for nonrecognition of gain under section 1034(f)."
(b) EFFECTIVE DATE. -- The amendment made by this section "26 USC
216 note" shall take effect as if included in the amendments made by
section 631 of the Tax Reform Act of 1986.
SEC. 6301. REPEAL OF LIMIT ON LONG-TERM BONDS.
The last sentence of section 3102(a) of title 31, United States Code,
is hereby repealed.
SEC. 6302. ONE-YEAR EXTENSION OF CREDIT FOR PRODUCING FUEL FROM A
NONCONVENTIONAL SOURCE.
Clauses (i) and (ii) of section 29(f)(1)(A) of the 1986 Code
(relating to application of section) are each amended by striking out
"January 1, 1990" and inserting in lieu thereof "January 1, 1991".
SEC. 6303. CERTAIN DISCHARGE OF DEBT INCOME NOT INCLUDED IN ADJUSTED
BOOK INCOME.
(a) GENERAL RULE. -- Paragraph (2) of section 56(f) of the 1986 Code
(defining adjusted net book income) is amended by redesignating
subparagraph (I) as subparagraph (J) and by inserting after subparagraph
(H) the following new subparagraph:
"(I) EXCLUSION OF CERTAIN INCOME FROM TRANSFER OF STOCK FOR
DEBT. -- In determining adjusted net book income, there shall not
be taken into account any income resulting from the transfer of
stock by the corporation issuing such stock to a creditor in
satisfaction of its indebtedness. The preceding sentence shall
apply only in the case of a debtor in a title 11 case as defined
in section 108(d)(2)) or to the extent the debtor is insolvent (as
defined in section 108(d)(3))."
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) "26 USC
56 note" shall apply to taxable years beginning after December 31, 1986.
SEC. 6304. NONCONVENTIONAL FUELS CREDIT.
(a) IN GENERAL. -- Section 53(d)(1)(B) of the 1986 Code (relating to
credit not allowed for exclusion preferences) is amended by adding at
the end thereof the following new clause:
"(iii) SPECIAL RULE. -- The adjusted net minimum tax for the
taxable year shall be increased by the amount of the credit not
allowed under section 29 (relating to credit for producing fuel
from a nonconventional source) solely by reason of the application
of section 29(b)(5)(B)."
(b) EFFECTIVE DATE. -- The amendment made by this section "26 USC 53
note" shall take effect as if included in the amendments made by section
701 of the Tax Reform Act of 1986.
SEC. 6305. "26 USC 3121 note" TREATMENT OF CERTAIN FAMILY SERVICES
PROVIDERS.
(a) IN GENERAL. -- A State may treat a person who renders dependent
care or similar services as other than an employee employment tax
purposes for the applicable period if all of the following conditions
are satisfied with respect to such person for such applicable period:
(i) The person does not provide any dependent care or similar
services in any facility owned or operated by the State.
(ii) The person is compensated by the State for such services,
directly or indirectly, out of funds provided pursuant to chapter
7 of title 42 of the United States Code, or the provisions and
amendments made by the Family Security Act of 1988.
(iii) The State does not treat the person, with respect to the
provision of dependent care or similar services, as an employee
for employment tax purposes.
(iv) The State files all Federal income tax returns (including
information returns) required to be filed with respect to such
person on a basis consistent with the State's treatment of such
person as other than an employee beginning on the date of the
enactment of this section.
(v) No more than ten percent of the State's employees are
provided with insurance under title II of the Social Security Act
pursuant to voluntary agreements with the Secretary of Health and
Human Services under section 218 of such title.
(b) STATE. -- For purposes of this section, the term "State" shall
mean the government of the United States, District of Columbia, any
State or political subdivision thereof, and any agency or
instrumentality of any of the foregoing.
(c) EMPLOYMENT TAX. -- For purposes of this section, the term
"employment tax" means any tax imposed by subtitle C of the Internal
Revenue Code of 1986.
(d) APPLICABLE PERIOD. -- For purposes of this section, the term
"applicable period" means the period beginning on January 1, 1984 and
ending on December 31, 1990.
"(e) REPORT. -- The Secretary of the Treasury shall report to the
Senate Committee on Finance and the House Committee on Ways and means on
the text status of day care providers compensated pursuant to the
program described in this section no later than December 31, 1989.
SEC. 7001. "26 USC 367 note" SHORT TITLE.
This title may be cited as the "Railroad Unemployment Insurance and
Retirement Improvement Act of 1988".
SEC. 7002. REFERENCES TO RAILROAD UNEMPLOYMENT INSURANCE ACT.
Except as otherwise expressly provided, whenever in this title an
amendment or repeal is expressed in terms of an amendment to, or repeal
of, a section or provision, the reference shall be considered to be made
to a section or other provision of the Railroad Unemployment Insurance
Act.
SEC. 7101. AMENDMENTS RELATING TO DEFINITION OF "COMPENSATION".
(a) IN GENERAL. -- Section 1(i) is amended -- "45 USC 351"
(1) by inserting "(1) IN GENERAL. -- " after "(i)";
(2) by striking out ": Provided, however, That in computing"
and all that follows through "1983, shall be recognized." and
inserting in lieu thereof ", except that in computing the
compensation paid to any employee, no part of any month's
compensation in excess of the monthly compensation base (as
defined in subdivision (2)) for any month shall be recognized.";
and
(3) by adding at the end thereof the following new subdivision:
"(2) MONTHLY COMPENSATION BASE. --
"(A) IN GENERAL. -- For purposes of subdivision (1), the term
'monthly compensation base' means the amount --
"(i) of $400 for calendar months before January 1, 1984,
"(ii) of $600 for calendar months after December 31, 1983 and
before January 1, 1989; and
"(iii) computed under subparagraph (B) for months after
December 31, 1988.
"(B) COMPUTATION. --
"(i) IN GENERAL. -- The amount of the monthly compensation
base for each calendar year beginning after December 31, 1988, is
the greater of --
"(I) $600; or
"(II) the amount, as rounded under clause (iii) if applicable,
computed under the formula:
"(ii) MEANING OF SYMBOLS. -- For the purpose of the formula in
clause (i) --
"(I) 'B' is the dollar amount of the monthly compensation base;
and
"(II) 'A' is the amount of the applicable base with respect to
tier 1 taxes, for the calendar year for which the monthly
compensation base is being computed, as determined under section
3231(e)(2) of the Internal Revenue Code of 1986.
"(iii) ROUNDING RULE. -- If the monthly compensation base
computed under this formula is not a multiple of $5, it shall be
rounded to the nearest multiple of $5, with such rounding being
upward in the event the amount computed is equidistant between two
multiples of $5.".
(b) CONFORMING AMENDMENT WITH RESPECT TO SUBSIDIARY REMUNERATION
RULE. -- Section 1(k) "45 USC 351" is amended by striking out "$1,500"
and inserting in lieu thereof "an amount that is equal to 2.5 times the
monthly compensation base for months in such base year as computed under
section 1(i) of this Act".
(c) CONFORMING AMENDMENT WITH RESPECT TO LIMITATION ON TAKING ACCOUNT
OF MONEY REMUNERATION. -- Section 2(c) "45 USC 352" is amended by
striking out "not in excess of $775 in any month shall be taken into
account:" and inserting in lieu thereof "shall be taken into account
that is not in excess of $775 in any month before 1989 and, in any month
in a base year after 1988, is not in excess of an amount that bears the
same ratio to $775 as the monthly compensation base for that year as
computed under section 1(i) of this Act bears to $600:".
(d) CONFORMING AMENDMENTS WITH RESPECT TO REQUIRED COMPENSATION
AMOUNT. -- Section 4(a-2)(i)(A) "45 USC 354" is amended by striking out
the semicolon at the end and inserting in lieu thereof "and before 1989
or, if any part of such compensation is paid in a calendar year after
1988, not less than an amount that is equal to 2.5 times the monthly
compensation base for months in such calendar year, as computed under
section 1(i) of this Act;".
(e) DUTY OF BOARD TO MAKE CERTAIN COMPUTATIONS. -- Section 12 "45
USC 362" is amended by adding at the end the following new subsection:
"(r) DUTY OF BOARD TO MAKE CERTAIN COMPUTATIONS. --
"(1) COMPENSATION BASE. -- On or before December 1, 1988, and
on or before December 1 of each year thereafter, the Board shall
compute --
"(A) in accordance with section 1(i), the monthly compensation
base which shall be applicable with respect to months in the next
succeeding calendar year; and
"(B) the amounts described in section 1(k), section 2(c),
section 3, and section 4(a-2)(i)(A) that are related to changes in
the monthly compensation base.
"(2) MAXIMUM DAILY BENEFIT RATE. -- On or before June 1, 1989,
and on or before June 1 of each year thereafter, the Board shall
compute in accordance with section 2(a)(3) the maximum daily
benefit rate which shall be applicable with respect to days of
unemployment and days of sickness in registration periods
beginning after June 30 of that year.
"(3) NOTICE IN FEDERAL REGISTER AND TO EMPLOYERS. -- Not later
than 10 days after each computation made under this subsection,
the Board shall publish notice in the Federal Register and shall
notify each employer and employee representative of the amount so
computed.".
(f) EFFECTIVE DATE. -- The amendments made by this section "45 USC
351 note" shall take effect upon the date of the enactment of this Act.
SEC. 7102. CONTRIBUTION ADJUSTMENTS.
(a) EMPLOYER CONTRIBUTIONS AND EXPERIENCE RATING. -- Section 8
"45 USC 358" is amended by striking out "(a) Every employer" and
all that follows through the end of subsection (a) and isnerting in lieu
thereof the following:
"(a) EMPLOYER CONTRIBUTION. --
"(1) IN GENERAL. --
"(A) GENERAL RULE. --
"(i) CONTRIBUTION RATE GENERALLY. -- Every employer shall pay
a contribution, with respect to having employees in his service,
equal to the percentage determined under subparagraph (B), (C), or
(D), whichever is applicable, of so much of the compensation paid
in any calendar month by such employer to any employee as is not
in excess of the monthly compensation base for that month as
computed under section 1(i).
"(ii) MULTIPLE EMPLOYER LIMITATION. -- If compensation is paid
to an employee by more than one employer in any calendar month --
"(I) the contributions required by this subsection shall not
apply to any amount of the aggregate compensation paid to such
employee by all such employers in such calendar month which is in
excess of such monthly compensation base, and
"(II) each employer (other than a subordinate unit of a
national-railway-labor-organization employer) shall be liable for
that portion of the contribution with respect to such compensation
paid by all such employers which the compensation paid by him to
such employee bears to the total compensation paid in such month
by all such employers to such employee.
In the event that the compensation paid by such employers to
the employee in such month is less than such monthly compensation
base, each subordinate unit of a
national-railway-labor-organization employer shall be liable for
such portion of any additional contribution as the compensation
paid by such employer to such employee in such month bears to the
total compensation paid by all such employers to such employee in
such month.
"(B) TRANSITIONAL RULE. --
"(i) 1ST, 2D, AND 3D CALENDAR YEARS. -- Except as provided in
clause (vi), with respect to compensation paid in calendar years
1988, 1989, and 1990, the contribution rate shall be 8 percent.
10"(ii) 4TH CALENDAR YEAR. -- With respect to compensation
paid in calendar year 1991, the contribution rate shall be the
smaller of --
"(I) the maximum contribution limit computed under paragraph
(20); or
"(II) the percentage computed pursuant to the following
formula:
"(iii) 5TH CALENDAR YEAR. -- With respect to compensation paid
in calendar year 1992, the contribution rate shall be the smaller
of --
"(I) the maximum contribution limit computed under paragraph
(20); or
"(II) the percentage computed pursuant to the following
formula:
"(iv) MEANING OF SYMBOLS. -- For purposes of the formulas in
clauses (ii) and (iii) --
"(I) 'R' is the applicable contribution rate expressed as a
percentage for months in the calendar year;
"(II) 'A' is the contribution rate determined under clause (i);
"(III) 'B' is the percentage rate for the employer, as
determined under subparagraph (C), for calendar year 1991, and
"(IV) 'C' is the percentage rate for the employer, as
determined under subparagraph (C), for calendar year 1992.
"(v) SPECIAL RULE FOR CERTAIN COMPUTATIONS. -- For purposes of
computing B and C in such formulas --
"(I) the percentage rate computed under subparagraph (C), if
more than the maximum contribution limit computed under paragraph
(20) shall not be reduced to that limit; and
"(II) any computations which under subparagraph (C) are to be
made on the basis of a 4-quarter or a 12-quarter period ending on
a given June 30 shall be made on the basis of a period beginning
on January 1, 1990, and ending on that June 30, and the amount so
computed shall be increased to an amount that bears the same ratio
to the amount so computed as 4 or 12, as appropriate, bears to the
number of calendar quarters in the period on which the computation
was based.
"(vi) SPECIAL TRANSITION RULE FOR PUBLIC COMMUTER RAILROADS.
-- With respect to each of calendar years 1989 and 1990, the
contribution of an employer which on the date of the enactment of
the Railroad Unemployment Insurance and Retirement Improvement Act
of 1988 is a publicly funded and publicly operated carrier
providing rail commuter service shall be equal to the amount of
benefits attributable to such carrier, plus an amount equal to
0.65 percent of the total compensation paid by that employer in
that year on which that employer's contribution would be based
under clause (i) if such employer's contribution were determined
under that clause.
"(C) EXPERIENCE-RATED CONTRIBUTIONS. -- With respect to
compensation paid in a calendar year that begins after December
31, 1992, the contribution rate for each employer shall be
determined as follows:
"(i) STEP 1. -- Compute the employer's benefit ratio as of the
preceding June 30 to 4 decimal points in accordance with paragraph
(2).
"(ii) STEP 2. -- Subtract the employer's reserve ratio as of
the preceding June 30 as computed to 4 decimal points in
accordance with paragraph (4).
"(iii) STEP 3. -- Subtract the pooled credit ratio for the
calendar year, if any, as computed to 4 decimal points in
accordance with paragraph (12).
10"(iv) STEP 4. -- Multiply by 100 the total arrived at under
the steps set forth in clauses (i) through (iii) so as to obtain a
percentage rate, which shall be rounded to the nearest 100th of 1
percent. If the total arrived at under such steps is 0 or less
than 0, the percentage rate as so computed shall be 0.
"(iv) STEP 5. -- Add 0.65 to the percentage rate arrived at
under clause (iv), representing the portion of the employer's
contribution which is to be deposited to the credit of the fund
under subsection (i).
"(vi) STEP 6. -- Add the surcharge rate for the calendar year,
if any, as computed under paragraph (14).
"(vii) STEP 7. -- Add the pooled charge ratio for the calendar
year, if any, as computed to 4 decimal points under paragraph (13)
and multiplied by 100.
10"(viii) STEP 8. -- Reduce the percentage rate computed in
accordance with the preceding steps to the maximum contribution
limit computed under paragraph (20), if such rate is higher than
such limit. The rate computed in accordance with the preceding
steps, after any reduction under this clause, is the contribution
rate.
"(D) NEW-EMPLOYER CONTRIBUTION RATES. -- Notwithstanding
subparagraphs (B) and (C), the contribution rate applicable to a
new employer who does not become subject to this Act until after
December 31, 1989, shall be determined as follows:
"(i) 1ST CALENDAR YEAR. -- With respect to compensation paid
in calendar months before the end of the first full calendar year
in which the employer is subject to this Act, the contribution
rate shall be the average contribution rate paid by all employers
during the 3 calendar years preceding the calendar year before the
calendar year in which the compensation is paid. The average
contribution rate shall be determined --
"(I) by dividing the aggregate contributions paid by all
employers under this subsection in those 3 calendar years by the
aggregate compensation with respect to which such contributions
were paid; and
"(II) by multiplying the resulting ratio as computed to 4
decimal points by 100.
10"(ii) 2D CALENDAR YEAR. -- With respect to compensation paid
in calendar months in the next calendar year, the contribution
rate shall be the smaller of --
"(I) the maximum contribution limit computed under paragraph
(20); or
"(II) the percentage rate computed pursuant to the following
formula:
"(iii) 3D CALENDAR YEAR. -- With respect to compensation paid
in calendar months in the third full calendar year in which the
employer is subject to the coverage of this Act, the contribution
rate shall be the smaller of --
10"(I) the maximum contribution limit computed under
paragraph (20); or
"(II) the percentage rate computed pursuant to the following
formula:
"(iv) SUBSEQUENT CALENDAR YEARS. -- With respect to all
calendar months in calendar years subsequent to that calendar
year, the contribution rate shall be determined under subparagraph
(C).
10"(v) MEANING OF SYMBOLS. -- For purposes of the formulas in
clauses (ii) and (iii) --
"(I) 'R' is the applicable contribution rate expressed as a
percentage for months in the calendar year;
"(II) 'A1' is the contribution rate determined under clause (i)
for such employer's first full calendar year;
"(III) 'A2' is the contribution rate which would have been
determined under clause (i) if the employer's second calendar year
had been its first full calendar year;
10"(IV) 'A3' is the contribution rate which would have been
determined under clause (i) if the employer's third calendar year
had been such employer's first full calendar year;
"(V) 'B' is the contribution rate for the employer as
determined under subparagraph (C) for the employer's second full
calendar year; and
10"(VI) 'C' is the contribution rate for the employer as
determined under subparagraph (C) for the employer's third full
calendar year.
"(vi) SPECIAL RULE FOR CERTAIN COMPUTATIONS. -- For purposes
of computing B and C in such formulas --
"(I) the percentage rate computed under subparagraph (C), shall
not be reduced under clause (viii) of that subparagraph; and
10"(II) any computations which under subparagraph (C) are to be
made on the basis of a 4-quarter or 12-quarter period ending on a
given June 30 shall be made on the basis of a period commencing
with the first day of the first calendar quarter that begins after
the date on which the employer first commenced paying compensation
subject to this Act and ending on that June 30, and the amount so
computed shall be increased to an amount that bears the same ratio
to the amount so computed as 4 or 12, as appropriate, bears to the
number of calendar quarters in the period on which the computation
was based.
"(2) BENEFIT RATIO. -- An employer's benefit ratio as of any
given June 30 shall be determined by dividing all benefits charged
to the employer under paragraph (15) during the 12 calendar
quarters ending on such June 30 by the employer's 3-year
compensation base as of such June 30 as computed under paragraph
(3).
"(3) 3-YEAR COMPENSATION BASE. -- An employer's 3-year
compensation base as of any given June 30 is the aggregate
compensation with respect to which contributions were paid by the
employer under this subsection in the 12 calendar quarters ending
on such June 30.
"(4) RESERVE RATIO. -- An employer's reserve ratio as of any
given June 30 shall be computed by dividing the employer's reserve
balance as of such June 30, as computed under paragraph (6), by
that employer's 1-year compensation base as of such June 30, as
computed under paragraph (5). The employer's reserve ratio may be
either a positive or a negative figure, depending upon whether the
employer's reserve balance is a positive or negative figure.
"(5) 1-YEAR COMPENSATION BASE. -- An employer's 1-year
compensation base as of any given June 30 is the aggregate
compensation with respect to which contributions were paid by the
employer under this subsection in the 4 calendar quarters ending
on such June 30.
"(6) RESERVE BALANCE. -- An employer's reserve balance as of
any given June 30 shall be determined by subtracting the
employer's cumulative benefit balance as of such June 30, computed
under paragraph (7), from the employer's net cumulative
contribution balance as of such June 30, computed under paragraph
(8). An employer's reserve balance may be either positive or
negative, depending upon whether or not that employer's net
cumulative contribution balance exceeds the employer's cumulative
benefit balance.
"(7) CUMULATIVE BENEFIT BALANCE. -- An employer's cumulative
benefit balance as of any given June 30 shall be determined by
adding --
"(A) the net amount of the benefits charged to the employer
under paragraph (15) on or after January 1, 1990; and
10"(B) the cumulative amount of the employer's unallocated
charges for the same period, if any, as computed under paragraph
(9).
"(8) NET CUMULATIVE CONTRIBUTION BALANCE. -- An employer's net
cumulative contribution balance as of any given June 30 shall be
determined as follows:
"(A) STEP 1. -- Compute the sum of
"(i) all contributions paid by the employer pursuant to this
subsection;
"(ii) that portion of the tax imposed under section 3321(a) of
the Internal Revenue Code of 1986 that is attributable to the
surtax rate under section 516(b) of the Railroad Unemployment
Insurance and Retirement Improvement Act of 1988; and
"(iii) any taxes paid by the employer pursuant to section
3321(a) of the Internal Revenue Code of 1986 (after the
outstanding balance of loans made under section 10(d) before
October 1, 1985, plus interest, have been paid;
on or after January 1, 1990.
"(B) STEP 2. -- Subtract an amount equal to the amount of such
contributions deposited to the credit of the fund under subsection
(i).
"(C) STEP 3. -- Add an amount equal to the aggregate amount by
which such contributions were reduced in prior calendar years as a
result of pooled credits, if any, under paragraph (1)(C)( iii).
"(9) UNALLOCATED CHARGE. -- An employer's unallocated charge
as of any given June 30 is the amount that as of such June 30
bears the same ratio to the system unallocated charge balance,
computed under paragraph (10), as the employer's 1-year
compensation base, computed under paragraph (5), bears to the
system compensation base computed under paragraph (11).
"(10) SYSTEM UNALLOCATED CHARGE BALANCE. -- The system
unallocated charge balance as of any given June 30 shall be
determined as follows:
"(A) STEP 1. -- Compute the aggregate amount of all interest
paid by the account on loans from the Railroad Retirement Account
after September 30, 1985, pursuant to section 10(d), during the 4
calendar quarters ending on that June 30.
"(B) STEP 2. -- Add the aggregate amount of any additions to
the system unallocated charge balance specified in paragraphs (15)
and (16), during that period.
"(C) STEP 3. -- Add the aggregate amount of any other
expenditures by the account during that period not chargeable to
any individual employer under paragraph (15) or to the fund under
section 11.
"(D) STEP 4. -- Subtract the aggregate amount of all income to
the account, under section 10(a)(iv) or section 10(a)(vii), during
that period.
10"(E) STEP 5. -- Subtract the aggregate amount of all
transfers to the account, pursuant to section 11(d), during that
period.
10"(F) STEP 6. -- Subtract the aggregate amount of all other
income and receipts of the account, during that period, which are
not assigned to individual employer balances.
"(G) STEP 7. -- Subtract the net cumulative contribution
balance of each employer whose balance has been cancelled pursuant
to paragraph (16), during that period, calculated as of the date
of such cancellation.
"(11) SYSTEM COMPENSATION BASE. -- The system compensation
base as of any given June 30 shall be determined by adding
together the amounts of the 1-year compensation bases of all
employers and employee representatives subject to this Act,
computed in accordance with paragraph (5), as of such June 30.
"(12) POOLED CREDIT RATIO. -- The pooled credit ratio, if any,
for a calendar year shall be determined as follows:
"(A) STEP 1. -- Compute the balance to the credit of the
account as of the close of business on the preceding June 30,
including any amounts in the account attributable to loans made
under section 10(d) before October 1, 1985, but disregarding the
obligation to repay such loans and interest thereon. In
determining such balance as of June 30 of any year, so much of the
balance to the credit of the railroad unemployment insurance
administration fund as of the close of business on such date as is
in excess of $6,000,000 shall be deemed to be part of the balance
to the credit of such account. There will be a pooled credit
ratio for the calendar year only if that balance is in excess of
the greater of $250,000,000 or of the amount that bears the same
ratio to $250,000,000 as the system compensation base as of that
June 30 bears to the system compensation base as of June 30, 1991,
as computed in accordance with paragraph (11).
10"(B) STEP 2. -- If there is such an excess amount, divide
that excess amount by the system compensation base as of the June
30 preceding the calendar year. The result is the pooled credit
ratio for the calendar year.
"(13) POOLED CHARGE RATIO. -- The pooled charge ratio, if any,
for a calendar year shall be determined as follows:
"(A) STEP 1. -- With respect to each employer whose
contribution rate for that calendar year as computed through step
6 under paragraph (1)(C) was greater than the maximum contribution
limit computed under paragraph (20), multiply the employer's
1-year compensation base as of the preceding June 30, as computed
in accordance with paragraph (5), by the difference between --
"(i) the percentage rate determined under subparagraph (B),
(C), or (D) of paragraph (1) before the reduction to the maximum
contribution limit; and
"(ii) the maximum contribution limit.
10"(B) STEP 2. -- Add the amounts arrived at under step 1 so
as to obtain an aggregate amount for all such employers.
"(C) STEP 3. -- For each employer whose contribution rate as
computed through step 3 under paragraph (1)(C) was less than 0,
the percentage rate by which such employer's rate was raised in
order to bring that rate to 0 shall be multiplied by that
employer's 1-year compensation base as of the preceding June 30.
Subtract the total of the amounts computed under the preceding
sentence for all employers from the amount arrived at in step 2.
"(D) STEP 4. -- Divide the aggregate amount arrived at under
step 3 by the system compensation base as of the preceding June 30
as computed under paragraph (11) minus the one-year compensation
base of those employers whose rates computed through step 6 of
paragraph (1)(C) exceeded the maximum contribution rate computed
under paragraph (20). The result is the pooled charge ratio for
the calendar year.
"(14) SURCHARGE RATE. -- The surcharge rate for a calendar
year, if any, shall be determined as follows:
"(A) STEP 1. -- Compute the balance to the credit of the
account as of the close of business on the preceding June 30,
including any amounts in the account attributable to loans made
under section 10(d) before October 1, 1985, but disregarding the
obligation to repay such loans and interest thereon. In
determining such balance as of June 30 of any year, so much of the
balance to the credit of the railroad unemployment insurance
administration fund as of the close of business on such date as is
in excess of $6,000,000 shall be deemed to be part of the balance
to the credit of such account. There will be a surcharge rate for
the calendar year only if that balance is less than the greater of
$100,000,000 or of the amount that bears the same ratio to
$100,000,000 as the system compensation base as of that June 30
bears to the system compensation base as of June 30, 1991, as
computed in accordance with paragraph (11).
"(B) STEP 2. -- (i) If the balance to the credit of the
account is less than the greater of the amounts referred to in the
2nd sentence of step 1 but is equal to or more than the greater of
$50,000,000 or of the amount that bears the same ratio to
$50,000,000 as the system compensation base as of that June 30
bears to the system compensation base as of June 30, 1991, then
the surcharge rate for the calendar year shall be 1.5 percent.
"(ii) If the balance to the credit of the account is less than
the greater of the amounts referred to in the clause (i), but
greater than or equal to zero, then the surcharge rate for the
calendar year shall be 2.5 percent.
"(iii) If the balance to the credit of the account is less than
zero, the surcharge rate for the calendar year shall be 3.5
percent.
"(15) CHARGEABLE BENEFITS. --
"(A) IN GENERAL. -- Beginning January 1, 1990, all benefits
paid to an employee for days of unemployment or days of sickness
shall be charged to that employee's base year employer by adding
amounts equal to the amounts of such benefits to the employer's
cumulative benefit balance except that benefits paid by reason of
strikes or work stoppages growing out of labor disputes shall not
be added to the employer's cumulative benefit balance but instead
shall be added to the system unallocated charge balance.
"(B) ADJUSTMENTS. -- A sum equal to each amount realized in
recovery for overpayment, erroneous payment, or reimbursement of
benefits and credited to the account pursuant to section 10(a)(v)
or 10(a)(viii) shall be subtracted from the cumulative benefit
balances of the employers of the employees to whom such an amount
was paid as a benefit in the proportion to the amount by which
each such employer's cumulative benefit balance was increased as a
result of the payment of the benefit.
"(C) MULTIPLE EMPLOYERS. --
"(i) IN GENERAL. -- All benefits paid to an employee who had
more than 1 base-year employer shall be charged to the cumulative
benefit balances of the employee's base year employers --
"(I) in reverse chronological order of the employee's
employment with each such employer in the base year if the
employer at the time of the claim was the last base year employer,
and the amount charged to each employer shall not exceed the
compensation paid by that employer to be employee in the base
year; and
"(II) in all other cases, in the same ratio as the compensation
paid to such employee by the employer bears to the total of such
compensation paid to such employees by all such employers in the
base year.
"(ii) SPECIAL RULE FOR EMPLOYER WITH CANCELLED BALANCES. -- All
benefits chargeable under this subparagraph to an employer for
which the Board has cancelled balances under paragraph (16) shall
be added to the system unallocated charge balance.
"(16) DEFUNCT EMPLOYER. -- Whenever the Board determines,
pursuant to such regulations as the Board may prescribe, that an
employer has permanently ceased to pay compensation with respect
to which contributions are payable pursuant to this subsection,
the Board shall, effective on the date of the Board's
determination, transfer the employer's net cumulative benefit
balance as an addition to, the system unallocated charge balance
and cancel all other accumulations of the employer.
"(17) INDIVIDUAL EMPLOYER RECORD. --
"(A) IN GENERAL. -- As of January 1, 1990, the Board shall
commence maintaining an individual employer record with respect to
each employer, and the records necessary to determine pooled
charges, pooled credits and unallocated charge balances for the
system. Whenever a new employer begins paying compensation with
respect to which contributions are payable pursuant to this
subsection, the Board shall establish and maintain an individual
employer record for such employer.
"(B) DEFINITION. -- As used in this paragraph, the term
'individual employer record' means a record of an individual
employer's benefit ratio, reserve ratio, 1-year compensation base,
3-year compensation base, unallocated charge, reserve balance, net
cumulative contribution balance, and cumulative benefit balance.
10"(18) JOINT EMPLOYER RECORDS. -- Pursuant to regulations
prescribed by the Board, the Board may allow 2 or more employers,
upon application, to establish and maintain, or to discontinue, a
joint individual employer record for such employers as though such
joint record constituted a single employer's individual employer
record.
"(19) MERGERS, CONSOLIDATIONS, OR OTHER CHANGES IN EMPLOYER
IDENTITY. --
"(A) WITH OTHER EMPLOYERS. -- In the event of a merger,
consolidation, unification, or reorganization in which an employer
combines with another employer and the combination entails no
partitioning of the property of the employer, the individual
employer records of the 2 employers shall be combined into a joint
individual employer record if the parties request such joint
treatment pursuant to paragraph (18) or if the Board otherwise
determines, pursuant to regulations prescribed by the Board, that
such joint treatment is desirable.
"(B) WITH NONEMPLOYERS. -- In the event of a merger,
consolidation, unification, or reorganization in which an employer
combines with another entity that is not an employer, the
employer's individual employer record shall attach to the combined
entity.
"(C) SALE OF ASSETS. -- In the event property of an employer
is sold or transferred to another employer or other entity, or is
partitioned among 2 or more employers or other entities, the
cumulative benefit balance, net cumulative contribution balance,
1-year compensation base, and 3-year compensation base of the
employer shall be prorated among the employers which receive the
property, including any entities which become employers by virtue
of such transfer or partition, in such equitable manner as the
Board by regulation shall prescribe.
"(D) REINCORPORATION. -- The cumulative benefit balance, net
cumulative contribution balance, 1-year compoenstion base, and
3-year compensation base of an employer that reincorporates or
otherwise alters its corporate entity in a transaction not
involving a merger, consolidation, or unification shall attach to
the reincorporated or altered entity.
"(E) ABANDONMENT. -- If an employer abandons property or
discontinues service but continues to operate as an employer, the
employer's individual employer record shall continue to be
calculated as provided in this subsection without retroactive
adjustment.
"(20) MAXIMUM CONTRIBUTION LIMIT. -- The maximum contribution
limit with respect to a calendar year is 12 percent, unless a 3.5
percent surcharge under paragraph (14) is in effect with respect
to that calendar year. If such a surcharge is in effect the
maximum contribution limit with respect to that calendar year is
12.5 percent.
"(21) SPECIAL RULES FOR CERTAIN COMPUTATIONS UNDER PARAGRAPH
(1)(C). -- (A) Any computation that is to be made under paragraph
(1)(C) on the basis of a 12-quarter period ending on a given June
30 shall be made on the basis of a period --
"(i) beginning on the later of --
"(I) January 1, 1990;
"(II) the first day of the first calendar quarter that begins
after the date on which the employer first began to pay
compensation subject to this Act; or
"(III) July 1 of the third calendar year preceding that June
30; and
"(ii) ending on that June 30.
"(B) The amount computed under subparagraph (A) shall be
increased to an amount that bears the same ratio to the amount so
computed as 12 bears to the number of calendar quarters on which
the computation is based.".
(b) EMPLOYEE REPRESENTATIVE CONTRIBUTION. -- Subsection (b) of
section 8 "45 USC 358" is amended to read as follows:
"(b) EMPLOYEE REPRESENTATIVE CONTRIBUTION. -- Each employee
representative shall pay a contribution with respect to so much of the
compensation paid to him for services performed as an employee
representative as is not in excess of the monthly compensation base
computed in accordance with section 1(i), at a rate which shall be
determined under subsection (a) in the same manner and with the same
effect as if the employee organization by which such employee
representative is employer were an employer as defined in this Act.".
(c) EXTENSION OF REMEDIES. -- Section 8(h) is amended by adding at
the end the following: "The remedies available under the first sentence
of this subsection for an employer or employee representative who
contests the amount of contributions payable by him shall also apply
with respect to a contention that the contribution rate determined by
the Board under subsection (a) or (b) to be applicable to such employer
or employee representative is inaccurate or otherwise improper.".
(d) BOARD PROCLAMATION OF BALANCE. -- Section 8 is amended --
(1) by redesignating subsections (c) through (h) as subsections
(f) through (k), respectively; and
(2) by inserting after subsection (b) the following new
subsections: "(c) BOARD PROCLAMATION OF BALANCE. --
"(1) IN GENERAL. -- Not later than October 15, 1990, and
October 15 of each year thereafter the Board shall proclaim --
"(A) the balance to the credit of the account as of the
preceding June 30 for purposes of paragraphs (12) and (14) of
subsection (a);
"(B) the balance of any advances to the account under section
10(d) after September 30, 1985, that has not been repaid with
interest as provided in such section as of September 30 of that
year;
"(C) the system compensation base as of that June 30 as
computed in accordance with paragraph (11) of that subsection;
"(D) the system unallocated charge balance as of that June 30,
as computed in accordance with paragraph (10) of that subsection;
and
"(E) the pooled credit ratio, the pooled charge ratio, and the
surcharge rate, if any, as determined under paragraph (12), (13),
or (14) of that subsection and applicable in the following
calendar year.
"(2) PUBLICATION OF NOTICE. -- As soon as is practicable after
such proclamation, the Board shall publish notice in the Federal
Register of the amounts so determined and proclaimed.
"(d) NOTIFICATIONS BY BOARD. -- (1) Not later than the last day of
any calendar quarter that begins after March 31, 1990, the Board shall
notify each employer and employee representative of its net cumulative
contribution balance and cumulative benefit balance as of the end of the
preceding calendar quarter, as computed in accordance with paragraphs
(7) and (8) of subsection (a) as of the last day of such preceding
calendar quarter rather than as of a given June 30 if such last day is
not a June 30.
"(2) Not later than October 15, 1990, and October 15 of each year
thereafter, the Board shall notify each employer and employee
representative of its benefit ratio, reserve ratio, 1-year compensation
base, 3-year compensation base, unallocated charge, and reserve balance
as of the preceding June 30 as computed in accordance with paragraphs
(2), (3), (4), (5), (6), and (9) of subsection (a), and of the
contribution rate applicable to the employer or employee representative
in the following calendar year as computed under paragraphs (1)(B), (C),
or (D) of that subsection. 4"(e) INFORMATION TO VERIFY ACCURACY TO BE
MADE AVAILABLE. -- Notwithstanding any other provision of law, upon
request by an employer or employee representative, the Board shall make
available to such employer or employee representative any information
available to the Board which may be necessary to verify the accuracy of
a contribution rate determined by the Board to be applicable to such
employer or employee representative, or of any component of that
contribution rate including the accuracy of the employer's individual
employer record, upon payment by such employer or employee
representative to the Board of the cost incurred by the Board in making
such information available. The amounts so paid to the Board shall be
credited to and deposited in the fund.".
(e) EFFECTIVE DATE. -- The amendments made by this section "45 USC
358 note" shall take effect upon the date of the enactment of this Act.
SEC. 7103. ADMINISTRATIVE EXPENSES.
(a) CHANGE IN PERCENTAGE TO BE DEPOSITED IN FUND. -- Section 8(i),
as to redesignated by section 512(d), "45 USC 358" is amended by
striking out "0.5" and inserting in lieu thereof "0.65".
(b) CONFORMING AMENDMENTS. -- (1) Section 10(a) "45 USC 360" is
amended by striking out "0.5" and inserting in lieu thereof "0.65".
(2) Section 11(a) "45 USC 361" is amended by striking out "0.5" and
inserting in lieu thereof "0.65".
(c) EFFECTIVE DATE. -- The amendments made by this section "45 USC
358 note" shall apply with respect to compensation paid in months
beginning after September 30, 1988.
SEC. 7104. NOTIFICATION TO EMPLOYER.
(a) IN CONNECTION WITH CLAIM. -- Section 5(b) "45 USC 355" is
amended by adding at the end thereof the following: "When a claim for
benefits is filed with the Board, the Board shall provide notice of such
claim to the claimant's base-year employer or employers and afford such
employer or employers an opportunity to submit information relevent to
the claim before making an initial determination on the claim. When the
Board initially determines to pay benefits to a claimant under this Act,
the Board shall provide notice of such determination to the claimant's
base-year employer or employers.".
(b) IN CONNECTION WITH ADMINISTRATIVE REVIEW. -- Section 5(c) is
amended --
(1) by inserting "(1)" after "(c)";
(2) by inserting at the end of the first paragraph the
following: "In any such case the Board or the person or reviewing
body so established or assigned shall, by publication or
otherwise, notify all parties properly interested of their right
to participate in the hearing and of the time and place of the
hearing.";
(3) by inserting "(2)" at the beginning of the second
paragraph;
(4) by inserting after the second paragraph the following:
"(3) Any base-year employer of a claimand whose claim for benefits
has been granted in whole or in part, either in an initial determination
with respect thereto or in a determination after a hearing pursuant to
paragraph (1), and who contends that the determination is erroneous for
a reason or reasons other than a reason that is reviewable under
paragraph (4), may appeal to the Board for review of such determination.
Despite such an appeal, the benefits awarded shall be paid to such
claimant, subject to recovery by the Board if and to the extent found on
the appeal to have been erroneously awarded. The Board shall take such
action as is appropriate to recover the amount of such benefits
including if feasible adjustment in subsequent payments pursuant to the
first two paragraphs of section 2( d) of this Act. Upon an appeal, the
Board shall review the determination appealed from and for such review
may designate one of its officers or employees to receive evidence and
report to the Board thereof together with recommendations. In any such
case the Board or the person so designated shall, by publication or
otherwise, notify all parties properly interested of their right to
participate in the proceeding and, if a hearing is to be held, of the
time and place of the hearing. At the request of any party properly
interested the Board shall provide for a hearing, and may provide for a
hearing on its own motion. The Board shall prescribe regulations
governing the appeals provided for in this paragraph and for decisions
upon such appeal.";
(5) by inserting "(4)" at the beginning of the third paragraph;
(6) by inserting "(5)" at the beginning of the fourth
paragraph;
(7) by striking out "two" in the first sentence of the fourth
paragraph and inserting in lieu thereof "three";
(8) by inserting before the final paragraph the following:
"(6) For purposes of this subsection and subsections (d) and (f), any
base-year employer of the claimant is a properly interested party.";
and
(9) by inserting "(7)" at the beginning of the final paragraph.
(c) IN CONNECTION WITH JUDICIAL REVIEW. -- Section 5(f) is amended
--
(1) by inserting after "member," in the first sentence "or any
base-year employer of the claimant,"; and
(2) by inserting after the second sentence the following: "A
copy of such petition also shall forthwith be served upon any
other properly interested party, and such party shall be a party
to the review proceeding.".
(d) CONFORMING AMENDMENTS WITH RESPECT TO LIMITATION ON
ADMINISTRATIVE DISCLOSURE. -- Section 12(d) "45 USC 362" is amended --
(1) by striking out "and" where it appears before "(iii)"; and
(2) by striking out the period at the end of the first sentence
and inserting in lieu thereof the following: "; and (iv) the
Board shall disclose to any base-year employer of a claimant for
benefits any information, including information as to the
claimant's identity, that is necessary or appropriate to notify
such employer of the claim for benefits or to full and fair
participation by such employer in an appeal, hearing, or other
proceeding relative to the claim pursuant to section 5 of this
Act.".
(e) CONFORMING AMENDMENT WITH RESPECT TO COURT PROCEEDINGS
LIMITATION. -- Section 12(n) is amended by striking out "court" in the
proviso to the second paragraph.
(f) EFFECTIVE DATE. -- The amendments made by this section "45 USC
355 note" shall take effect on January 1, 1990.
SEC. 7105. "45 USC 369" ANNUAL REPORT.
On or before July 1 of 1989, and of each calendar year thereafter,
the Railroad Retirement Board shall submit to the Congress a report on
the financial status of the railroad unemployment insurance system under
various economic and employment assumptions. Such report shall include
any recommendation for financing changes which might be advisable,
including any adjustment the Railroad Retirement Board recommends
regarding the rates of employer contributions.
SEC. 7106. AMENDMENTS RELATING TO RAILROAD UNEMPLOYMENT REPAYMENT
TAX.
(a) IN GENERAL. -- Chapter 23A of the 1986 Code (relating to
railroad unemployment repayment tax) is amended to read as follows:
"Sec. 3321. Imposition of tax.
"Sec. 3322. Definitions.
"SEC. 3321. IMPOSITION OF TAX.
"(a) IN GENERAL. -- There is hereby imposed on every rail employer
for each calendar month an excise tax, with respect to having
individuals in his employ, equal to 4 percent of the total rail wages
paid by him during such month.
"(b) TAX ON EMPLOYER REPRESENTATIVES. --
"(1) IN GENERAL. -- There is hereby imposed on the income of
each employee representative a tax equal to 4 percent of the rail
wages paid to him during the calendar month.
"(2) DETERMINATION OF WAGES. -- The rail wages of an employee
representative for purposes of paragraph (1) shall be determined
in the same manner and with the same effect as if the employee
organization by which such employee representative is employed
were a rail employer.
"(c) TERMINATION IF LOANS TO RAILROAD UNEMPLOYMENT FUND REPAID. --
The tax imposed by this section shall not apply to rail wages paid on or
after the 1st day of any calendar month if, as of such 1st day, there is
--
"(1) no balance of transfers made before October 1, 1985, to
the railroad unemployment insurance account under section 10(d) of
the Railroad Unemployment Insurance Act, and
"(2) no unpaid interest on such transfers.
"SEC. 3322. DEFINITIONS.
"(a) RAIL EMPLOYER. -- For purposes of this chapter, the term 'rail
employer' means any person who is an employer as defined in section 1 of
the Railroad Unemployment Insurance Act.
"(b) RAIL WAGES. -- For purposes of this chapter, the term 'rail
wages' means, with respect to any calendar month, so much of the
remuneration paid during such month which is subject to contributions
under section 8(a) of the Railroad Unemployment Insurance Act.
"(c) EMPLOYEE REPRESENTATIVE. -- For purposes of this chapter, the
term 'employee representative' has the meaning given such term by
section 1 of the Railroad Unemployment Insurance Act.
"(d) CERTAIN RULES MADE APPLICABLE. -- For purposes of this chapter,
rules similar to the rules of section 3307 and 3308 shall apply."
(b) CONTINUATION OF SURTAX RATE THROUGH 1990. "26 USC 3321 note"
(1) IN GENERAL. -- In the case of any calendar month beginning
before January 1, 1991 --
(A) there shall be substituted for "4 percent" in subsections
(a) and (b) of section 3321 of the 1986 Code the percentage equal
to the sum of --
(i) 4 percent, plus
(ii) the surtax rate (if any) for such calendar month, and
(B) subsection (c) of such section shall not apply to so much
of the tax imposed by such section as is attributable to the
surtax rate.
(2) SURTAX RATE. -- For purposes of paragraph (1), the surtax
rate shall be --
(A) 3.5 percent for each month during a calendar year if, as of
September 30, of the preceding calendar year, there was a balance
of transfers (or unpaid interest thereon) made after September 30,
1985, to the railroad unemployment insurance account under section
10(d) of the Railroad Unemployment Insurance Act, and
(B) zero for any other calendar month.
(c) TECHNICAL AND CONFORMING AMENDMENTS. --
(1) Subsection (d) of section 6157 of the 1986 Code (relating
to quarterly payment of railroad unemployment repayment tax) is
hereby repealed.
(2) Paragraph (2) of section 6201(b) of the 1986 Code (relating
to amount not to be assessed) is amended by striking out "or tax
imposed by section 3321".
(3) Section 6317 of the 1986 Code (relating to payments of
Federal unemployment tax for calendar quarter) is amended --
(A) by striking out "or tax imposed by section 3321", and
(B) by striking out "and 23A, as the case may be,".
(4) Subsection (e) of section 6513 of the 1986 Code (relating
to payments of Federal unemployment tax) is amended by striking
out the last sentence.
(5) Subsection (i) of section 6601 of the 1986 Code (relating
to exception as to Federal unemployment tax) is amended by
striking out "or 3321".
(6) Subparagraph (A) of section 232(a)(2) of the Railroad
Retirement Revenue Act "45 USC 231n note" of 1983 is amended by
striking out "is attributable to the basic rate under section
3321(c)(1)(A) of the Internal Revenue Code of 1954" and inserting
in lieu thereof "is not attributable to the surtax rate under
section 516(b) of the Railroad Unemployment Insurance and
Retirement Improvement Act of 1988".
(7) Subparagraph (B) of section 232(a)(2) of such Act is
amended by striking out "section 3321(c)(1)(B) of such Code" and
inserting in lieu thereof "section 516(b) of such Act".
(d) EFFECTIVE DATE. -- The amendments made by this section, "45 USC
3321 note" and the provisions of subsection (b), shall apply to
remuneration paid after December 31, 1988.
SEC. 7107. "45 USC 352 note" GAO STUDY OF FRAUD AND PAYMENT ERRORS.
The Comptroller General shall study the frequency of fraud and
payment errors in the railroad unemployment compensation program. Not
later than 1 year after the date of the enactment of this Act, the
Comptroller General shall report to Congress the results of such study.
Such report shall include --
(1) estimates of rates and amounts of annual losses due to
fraud and overpayment;
(2) comparisons of such rates with the rates of losses in other
Federal programs which experience such losses;
(3) recommendations for legislative measures that could be
taken to reduce the losses in the railroad unemployment
compensation program arising from fraud and payment errors; and
(4) such other matters relating to such fraud and payment
errors as the Comptroller General determines are appropriate.
SEC. 7108. ONE-YEAR EXTENSION OF TIME LIMIT FOR FILING REPORT BY
COMMISSION ON RAILROAD RETIREMENT REFORM.
Section 9033(f) of the Omnibus Budget Reconciliation Act of 1987 (101
Stat. 1330-298) "45 USC 231n note" is amended by striking "October 1,
1989" and inserting "October 1, 1990".
SEC. 7201. WAITING PERIOD FOR BENEFITS AND BENEFIT INCREASES.
(a) IN GENERAL. -- Section 2(a) "45 USC 352" is amended --
(1) by inserting "(1)" after "(a)";
(2) by striking out "Benefits" the first place it appears and
all that follows through the end of the first paragraph, and
inserting in lieu thereof the following:
"(A)(i) Except as otherwise provided in this subparagraph, benefits
shall be payable to any qualified employee for each day of unemployment
in excess of 4 during any registration period.
"(ii) No benefits shall be payable for days of unemployment during
the first registration period within a benefit year in which the
employee has more than 4 days of unemployment.
"(iii) In any case in which the Board finds that an employee's
unemployment was due to a stoppage of work because of a strike in the
establishment, premises, or enterprise at which such employee was last
employed, no benefits shall be payable for the first 14 days of
unemployment due to such stoppage of work. However, for subsequent days
of unemployment due to such stoppage of work, benefits shall be payable
to days in excess of 4 during any registration period.
"(B)(i) Except as otherwise provided in this subparagraph, benefits
shall be payable to any qualified employee for each day of sickness
after the 4th consecutive day of sickness in a period of continuing
sickness but excluding 4 days of sickness in any registration period.
"(ii) No benefits shall be payable for days of sickness in the first
registration period within a benefit year in which the employee has both
4 consecutive days of sickness and more than 4 days of sickness.
"(iii) For the purposes of this subparagraph, a period of continuing
sickness nmeans (I) a period of consecutive days of sickness, whether
from one or more causes, or (II) a period of successive days of sickness
due to a single cause without interruption of more than 90 consecutive
days which are not days of sickness.";
(3) by inserting "(2)" at the beginning of the second
paragraph;
(4) by striking out "and" after "shall not exceed $24 per day
of such unemployment or sickness" in the second paragraph and
inserting in lieu thereof a comma;
(5) by inserting "but before July 1, 1988," after "June 30,
1976," in the second paragraph;
(6) by striking out the period at the end of the first sentence
of the second paragraph and isnerting in lieu thereof ", that for
registration periods beginning after June 30, 1988, but before
July 1, 1989, such amount shall not exceed $30 per day of
unemployment or sickness, and that for registration periods
beginning after June 30, 1989, such amount shall not exceed the
maximum daily benefit rate provided in paragraph (3) of this
subsection.";
(7) by inserting after the second paragraph the following new
paragraph:
"(3)(A) The maximum daily benefit rate which the Board is required to
compute under section 12(r)(2) shall be the amount computed pursuant to
the following formula, but shall be not less than $30:
"(B) For purposes of such formula --
"(i) 'BR' represents the maximum daily benefit rate; and
"(ii) 'A' represents the amount obtained by dividing the amount
of the 'applicable base' with respect to tier 1 taxes as
determined under section 3231(e)(2) of the Internal Revenue Code
of 1986 for the calendar year in which the benefit year begins by
60, with this quotient being rounded down to the nearest multiple
of $100.
"(C) If the maximum daily benefit rate computed under such formula is
not a multiple of $1, it shall be rounded to the nearest multiple of $1,
with such rounding being upward in the event the amount computed is
equidistant between two multiples of $1."; and
(8) by inserting "(4)" at the beginning of the last paragraph.
(b) EFFECTIVE DATE. -- (1) Except as provided in paragraph (2), "45
USC 352 note" the amendments made by this subsection (a) shall take
effect on the date of the enactment of this Act.
(2) The amendments made by paragraph (2) of subsection (a) shall
apply with respect to registration periods beginning after June 30,
1988.
SEC. 7202. QUALIFYING CONDITION.
(a) IN GENERAL. -- Section 3 "45 USC 353" is amended --
(1) by inserting "with respect to the base year" after "his
compensation"; and
(2) by striking "$1,500 with respect to the base year" and
inserting in lieu thereof "2.5 times the monthly compensation base
for months in such base year as computed under section 1(i) of
this Act".
(b) EFFECTIVE DATE. -- The amendments made by this section "45 USC
353 note" shall take effect on the date of the enactment of this Act.
SEC. 7203. INCREASE IN MAXIMUM PERMITTED SUBSIDIARY REMUNERATION.
(a) IN GENERAL. -- The second paragraph of section 1(k) "45 USC 351"
is amended by striking out "$10" and inserting "$15" in lieu thereof.
(b) EFFECTIVE DATE. -- The amendment made by this section "45 USC
351 note" shall take effect on July 1, 1988.
SEC. 7301. ADDITIONAL LUMP SUM PAYMENT IN CERTAIN CASES.
Section 6 of the Railroad Retirement Act "45 USC 231e" of 1974 is
amended by adding at the end thereof the following new subsection:
"(e)(1) Every individual who will have completed ten years of service
at the time of his retirement or death, who will have received
compensation in the nature of separation or severance pay on or after
January 1, 1985, and who would have been credited with additional months
of service pursuant to section 3(i)(4) of this Act except for the fact
that such individual was not in an employment relation to one or more
employers nor an employee representative in such months, shall, at the
time his annuity under section 2(a)(1) of this Act begins to accrue, be
entitled to a lump sum in the amount provided under subdivision (2) of
this subsection. If the full amount of a lump sum under this subsection
cannot be determinmed at the time an individual's annuity under section
2(a)(1) begins to accrue, such lump sum shall be payable at such time
thereafter as such amount can be determined. If an individual otherwise
eligible for a lump sum under this section dies before he becomes
entitled to an annuity under section 2(a)(1), or before he receives
payment of such lump sum, such lump sum shall be available to the
person, if any, who is determined by the Board to be such individual's
widow or widower and who will not have died before receiving payment of
such lump sum. If there be no such widow or widower, such lump sum
shall be payable to the children, grandchildren, parents, brothers and
sisters, or the estate of the deceased individual in the same manner as
if such lump sum were a lump sum payable under subsection (c)(1) of this
section.
"(2) The lump sum provided under subdivision (l) of this subsection
shall be in an amount equal to the product of (A) the compensation
attributable to the additional months of service which would have been
credited to the individual due to the receipt of payments in the nature
of separation or severance pay pursuant to section 3(i)(4) of this Act
if such individual had remained in an employment relation to one or more
employers or had continued to be an employee representative and (B) the
rate of tax, or rates of tax, imposed on the compensation described in
clause (A) of this subdivision by section 3201(b) of the Internal
Revenue Code of 1986.".
SEC. 7302. DELETION OF LAST PERSON SERVICE AS A DISQUALIFICATION.
(a) IN GENERAL. -- Section 2(e) of the Railroad Retirement Act of
1974 "45 USC 231a" is amended --
(1)(A) in subdivision (1), by striking out "any person, whether
or not"; and
(B) by striking out "(but with the" and all that follows
through "political subdivision of a State";
(2) in subdivision (2), by striking out "and of the person, or
persons, by whom he was last employed"; and
(3) in subdivision (3), by striking out "or to the last person,
or persons, by whom he was employed prior to the date on which the
annuity under subsection (a)(1) began to accrue".
(b) DEDUCTION FOR WORK. -- Section 2(f) of such Act is amended by
adding at the end thereof the following new subdivision:
"(6)(A) Except as provided in subparagraph (B) --
"(i) that portion of the annuity for any month of an individual
as is computed under section 3(b) and as adjusted under section
3(g), plus any supplemental amount for such month under section
3(e), and that portion of the annuity for any month of a spouse as
is computed under section 4(b) and as adjusted under section 4(d),
shall each be subject to a deduction of $1 for each $2 of
compensation received by such individual from compensated service
rendered in such month to the last person, or persons, by whom
such individual was employed before the date on which the annuity
of such individual under subsection (a)(1) began to accrue; and
"(ii) that portion of the annuity for any month of a spouse as
is computed under section 4(b) and as adjusted under section 4(d)
shall be subject to a deduction of $1 for each $2 of compensation
received by such spouse from compensated service rendered in such
month to the last person, or persons, by whom such spouse was
employed before the date on which the annuity of such spouse under
subsection (c)(1) began to accrue.
"(B) Any deductions imposed by this subdivision for any month shall
not exceed 50 percent of the annuity amount for such month to which such
deductions apply.".
(c) EFFECTIVE DATE. -- The amendments made by this section "45 USC
231a note" shall apply to annuities payable under the Railroad
Retirement Act of 1974 for months beginning after the date of enactment
of this Act.
SEC. 7303. EARNINGS OF DISABILITY ANNUITANTS.
(a) IN GENERAL. -- Section 2(e)(4) of the Railroad Retirement Act of
1974 "45 USC 231a" is amended --
(1) by striking out "$200 in earnings" and inserting in lieu
thereof "$400 in earnings (after deduction of disability related
work expenses)";
(2) by striking out "$2,400" each place it appears and
inserting in lieu thereof "$4,800 (after deduction of disability
related work expenses)";
(3) by striking out "$200" each place it appears and inserting
in lieu thereof "$400"; and
(4) by striking out "$100" and inserting in lieu thereof
"$200".
(b) EFFECTIVE DATE. -- The amendments made by this section "45 USC
231a note" shall apply with respect to months in calendar years
beginning after December 31, 1988.
SEC. 7304. ALLOWANCE OF CREDIT FOR MILITARY SERVICE.
(a) IN GENERAL. -- Section 1(g)(2) of the Railroad Retirement Act of
1974 "45 USC 231" is amended by adding at the end thereof the following:
"For purposes of section 3(i)(2) of this Act, the period beginning on
June 15, 1948, and ending on December 15, 1950, shall be deemed to be a
war service period with respect to any individual who without
intervening employment not covered by this Act rendered service as an
employee to an employer under this Act in the year such individual was
released from active military service or in the year immediately
following such year.".
(b) EFFECTIVE DATE. -- The amendment made by this section "45 USC
231 note" shall apply with respect to annuities accruing in months after
the date of enactment of this Act.
SEC. 8001. INTERIM DISABILITY BENEFITS IN CASES OF DELAYED FINAL
DECISIONS.
(a) DISABILITY BENEFITS UNDER TITLE II. -- Section 223 of the Social
Security Act (42 U.S.C. 423) is amended --
(1) by redesignating subsection (h) as subsection (i); and
(2) by inserting after subsection (g) the following new
subsection:
"(h)(1) In any case in which an administrative law judge has
determined after a hearing as provided under section 205(b) that an
individual is entitled to disability insurance benefits or child's,
widow's, or widower's insurance benefits based on disability and the
Secretary has not issued his final decision in such case within 110 days
after the date of the administrative law judge's determination, such
benefits shall be currently paid for the months during the period
beginning with the month preceding the month in which such 110-day
period expires and ending with the month preceding the month in which
such final decision is issued.
"(2) For purposes of paragraph (1), in determining whether the
110-day period referred to in paragraph (1) has elapsed, any period of
time for which the action or inaction of such individual or such
individual's representative without good cause results in the delay in
the issuance of the Secretary's final decision shall not be taken into
account to the extent that such period of time exceeds 20 calendar days.
"(3) Any benefits currently paid under this title pursuant to this
subsection (for the months described in paragraph (1)) shall not be
considered overpayments for any purpose of this title (unless payment of
such benefits was fraudulently obtained), and such benefits shall not be
treated as past-due benefits for purposes of section 206(b)( 1).".
(b) BENEFITS UNDER TITLE XVI. -- Section 1631(a) of such Act (42 U.
S.C. 1383(a)) is amended by adding at the end the following new
paragraph:
"(8)(A) In the case in which an administrative law judge has
determined after a hearing as provided in subsection (c) that an
individual is entitled to benefits based on disability or blindness
under this title and the Secretary has not issued his final decision in
such case within 110 days after the date of the administrative law
judge's determination, such benefits shall be currently paid for the
months during the period beginning with the month in which such 110-day
period expires and ending with the month in which such final decision is
issued.
"(B) For purposes of subparagraph (A), in determining whether the
110-day period referred to in subparagraph (A) has elapsed, any period
of time for which the action or inaction of such individual or such
individual's representative without good cause results in the delay in
the issuance of the Secretary's final decision shall not be taken into
account to the extent that such period of time exceeds 20 calendar days.
"(C) Any benefits currently paid under this title pursuant to this
paragraph (for the months described in subparagraph (A)) shall not be
considered overpayments for any purpose of this title, unless payment of
such benefits was fraudulently obtained.".
(c) EFFECTIVE DATE. -- The amendments made by this section "42 USC
423 note" shall apply to determinations by administrative law judges of
entitlement to benefits made after 180 days after the date of the
enactment of this Act.
SEC. 8002. APPLICATION OF EARNINGS TEST IN YEAR OF INDIVIDUAL'S
DEATH.
(a) YEAR IN WHICH INDIVIDUAL WOULD HAVE ATTAINED RETIREMENT AGE BUT
FOR THE INDIVIDUAL'S DEATH IN SUCH YEAR TREATED AS A YEAR THROUGHOUT
WHICH THE EARNINGS TEST FOR INDIVIDUALS WHO HAVE ATTAINED RETIREMENT AGE
IS APPLICABLE. -- Paragraph (3) of section 203(f) of the Social
Security Act (42 U.S.C. 403(f)(3)) is amended by inserting "(or, but for
the individual's death, would have attained)" after "who has attained".
(b) ELIMINATION OF THE SHORT TAXABLE YEAR IN THE YEAR OF DEATH FOR
PURPOSES OF THE EARNINGS TEST. -- Paragraph (3) of section 203(f) of
such Act is further amended --
(1) by inserting after the first sentence the following new
sentence: "For purposes of the preceding sentence,
notwithstanding section 211(e), the number of months in the
taxable year in which an individual dies shall be 12."; and
(2) in the last sentence, by striking "preceding sentence" and
inserting "first sentence of this paragraph".
(c) EFFECTIVE DATE. -- The amendments made by this section shall
apply to deaths after the date of the enactment of this Act.
SEC. 8003. "42 USC 403 note" PHASEOUT OF REDUCTION IN WINDFALL
BENEFITS.
(a) IN GENERAL. -- Section 215(a)(7)(D) of the Social Security Act
(42 U.S.C. 415(a)(7)(D)) is amended --
(1) by striking "more than 25 years of coverage" in the second
sentence and inserting "more than 20 years of coverage"; and
(2) by striking "shall (if such percent is smaller than the
percent specified in whichever of the following clauses applies)
be deemed to be -- " and inserting "shall (if such percent is
smaller than the applicable percent specified in the following
table) be deemed to be the applicable period specified in the
following table."; and
(3) by striking clauses (i) through (iv) and inserting the
following table:
(b) EFFECTIVE DATE. -- The amendments made by subsection (a) "42 USC
415 note" shall apply to benefits payable for months after December
1988.
SEC. 8004. DENIAL OF BENEFITS TO INDIVIDUALS DEPORTED OR ORDERED
DEPORTED ON THE BASIS OF ASSOCIATIONS WITH THE NAZI GOVERNMENT OF
GERMANY DURING WORLD WAR II.
(a) IN GENERAL. -- Section 202(n)(1) of the Social Security Act (42
U.S.C. 402(n)(1)) is amended by striking "or (18)" in the matter
preceding subparagraph (A) and isnerting "(18), or (19)".
(b) TIME OF DEPORTATION. -- Section 202(n) of such Act is further
amended by adding at the end the following new paragraph: 10"(3) For
purposes of paragraphs (1) and (2) of this subsection, an individual
against whom a final order of deportation has been issued under
paragraph (19) of section 241(a) of the Immigration and Nationality Act
(relating to persecution of others on account of race, religion,
national origin, or political opinion, under the direction of or in
association with the Nazi government of Germany or its allies) shall be
considered to have been deported under such paragraph (19) as of the
date on which such order became final.".
(c) EFFECTIVE DATE. -- The amendments made by this section "42 USC
402 note" shall apply only in the case of deportations occurring, and
final orders of deportation issued, on or after the date of enactment of
this Act, and only to benefits for months beginning (and deaths
occurring) on or after such date.
SEC. 8005. MODIFICATIONS IN THE TERM OF OFFICE OF PUBLIC MEMBERS OF
THE BOARD OF TRUSTEES OF THE SOCIAL SECURITY TRUST FUNDS.
(a) IN GENERAL. -- Sections 201(c), 1817(b), and 1841(b) of the
Social Security Act (42 U.S.C. 401(c), 1395i(b), 1395t(b)(i)) are each
amended by inserting after the first sentence the following: "A member
of the Board of Trustees serving as a member of the public and nominated
and confirmed to fill a vacancy occurring during a term shall be
nominated and confirmed only for the remainder of such term. An
individual nominated and confirmed as a member of the public may serve
in such position after the expiration of such member's term until the
earlier of the time at which the member's successor takes office or the
time at which a report of the Board is first issued under paragraph (2)
after the expiration of the member's term.".
(b) EFFECTIVE DATE. -- The amendments made by this section "42 USC
401 note" shall apply to members of the Boards of Trustees of the
Federal Old-Age and Survivors Insurance Trust Fund and the Federal
Disability Insurance Trust Fund, of the Federal Hospital Insurance Trust
Fund, and of the Federal Supplementary Medical Insurance Trust Fund
serving on such Boards of Trustees as members of the public on or after
the date of the enactment of this Act.
SEC. 8006. CONTINUATION OF DISABILITY BENEFITS DURING APPEAL.
Subsection (g) of section 223 of the Social Security Act (42 U.S.C.
423(g)) is amended --
(1) in paragraph (1)(iii), by striking "June 1989" and
inserting "June 1990"; and
(2) in paragraph (3)(B), by striking "January 1, 1989" and
inserting "January 1, 1990".
SEC. 8007. EXEMPTION FROM SOCIAL SECURITY FOR EMPLOYERS AND
EMPLOYEES WHO ARE BOTH MEMBERS OF CERTAIN RELIGIOUS FAITHS.
(a) EXEMPTION FROM COVERAGE UNDER SOCIAL SECURITY. --
(1) IN GENERAL. -- Subchapter C of chapter 21 of the Internal
Revenue Code of 1986 (general provisions under Federal Insurance
Contributions Act) is amended by redesignating section 3127 as
section 3128, and by inserting after section 3126 the following
new section:
"SEC. 3127. EXEMPTION FOR EMPLOYERS AND THEIR EMPLOYEES WHERE BOTH
ARE MEMBERS OF RELIGIOUS FAITHS OPPOSED TO PARTICIPATION IN SOCIAL
SECURITY ACT PROGRAMS.
"(a) IN GENERAL. -- Notwithstanding any other provision of this
chapter (and under regulations prescribed to carry out this section), in
any case where --
"(1) an employer is a member of a recognized religious sect or
division thereof described in section 1402(g)(1) and an adherent
of established tenets or teachings of such sect or division as
described in such section, and has filed and had approved under
subsection (b) an application (in such form and manner, and with
such official, as may be prescribed by such regulations) for an
exemption from the taxes imposed by section 3111, and
"(2) an employee of such employer who is also a member of such
a religious sect or division and an adherent of its established
tenets or teachings has filed and had approved under subsection
(b) an identical application for exemption from the taxes imposed
by section 3101,
such employer shall be exempt from the taxes imposed by section 3111
with respect to wages paid to each of his employees who meets the
requirements of paragraph (2) and each such employee shall be exempt
from the taxes imposed by section 3101 with respect to such wages paid
to him by such employer.
"(b) APPROVAL OF APPLICATION. -- An application for exemption filed
by an employer under subsection (a)(1) or by an employee under
subsection (a)(2) shall be approved only if --
"(1) such application contains or is accompanied by the
evidence described in section 1402(g)(1)(A) and a waiver described
in section 1402(g)(1)(B),
"(2) the Secretary of Health and Human Services makes the
findings (with respect to such sect or division) described in
section 1402(g)(1)(C), (D), and (E), and
"(3) no benefit or other payment referred to in section 1402(
g)(1)(B) became payable (or, but for section 203 or 222(b) of the
Social Security Act, would have become payable) to the individual
filing the application at or before the time of such filing.
"(c) EFFECTIVE PERIOD OF EXEMPTION. -- An exemption granted under
this section to any employer with respect to wages paid to any of his
employees, or granted to any such employee, shall apply with respect to
wages paid by such employer during the period --
"(1) commencing with the first day of the first calendar
quarter, after the quarter in which such application is filed,
throughout which such employer or employee meets the applicable
requirements specified in subsections (a) and (b), and
"(2) ending with the last day of the calendar quarter preceding
the first calendar quarter thereafter in which (A) such employer
or the employee involved ceases to meet the applicable
requirements of subsection (a), or (B) the sect or division
thereof of which such employer or employee is a member is found by
the Secretary of Health and Human Services to have ceased to meet
the requirements of subsection (b)(2).".
(2) CLERICAL AMENDMENT. -- The table of sections for such
subchapter C of such Code is amended by striking the last item and
inserting the following:
"Sec. 3127 Exemption for employers and their employees where
both are members of religious faiths opposed to participation in
Social Security Act programs.
"Sec. 3128. Short title.".
(b) CONFORMING EXEMPTION FROM ELIGIBILITY FOR BENEFITS. -- Section
202(v) of the Social Security Act (42 U.S.C. 402(v)) is amended --
(1) by inserting "(1)" after "(v)";
(2) by inserting "and subject to paragraph (3)," after
"title,";
(3) by striking "waiver; except that" and all that follows and
inserting "waiver."; and
(4) by adding at the end the following new paragraphs:
"(2) Notwithstanding any other provision of this title, and subject
to paragraph (3), in the case of any individual who files a waiver
pursuant to section 3127 of the Internal Revenue Code of 1986 and is
granted a tax exemption thereunder, no benefits or other payments shall
be payable under this title to him, no payments shall be made on his
behalf under part A of title XVIII, and no benefits or other payments
under this title shall be payable on the basis of his wages and
self-employment income to any other person, after the filing of such
waiver. 4"(3) If, after an exemption referred to in paragraph (1) or (2)
is granted to an individual, such exemption ceases to be effective, the
waiver referred to in such paragraph shall cease to be applicable in the
case of benefits and other payments under this title and part A of title
XVIII to the extent based on --
"(A) his wages for and after the calendar year following the
calendar year in which occurs the failure to meet the requirements
of section 1402(g) or 3127 on which the cessation of such
exemption is based, and
"(B) his self-employment income for and after the taxable year
in which occurs such failure.".
(c) CONFORMING AMENDMENTS REMOVING TIME LIMIT ON SECA EXEMPTION
APPLICATIONS. -- Section 1402(g) of the Internal Revenue Code of 1986
is amended --
(1) by striking paragraphs (2) and (4); and
(2) by redesignating paragraphs (3) and (5) as paragraphs (2)
and (3), respectively.
(d) EFFECTIVE DATES. -- The amendments made by subsection (a) "26
USC 1402 note" shall apply to wages paid after December 31, 1988. The
amendments made by subsection (b) shall apply to benefits paid for (and
items and services furnished in) months after December 1988. The
amendments made by subsection (c) shall apply to applications for
exemptions filed on or after the date of the enactment of this Act.
SEC. 8008. BLOOD DONOR LOCATOR SERVICE.
(a) EXPLICIT AUTHORIZATION OF USE OF SOCIAL SECURITY ACCOUNT NUMBERS
TO ASSIST IN IDENTIFICATION OF BLOOD DONORS. -- Section 205(c)(2) of
the Social Security Act (42 U.S.C. 405(c)(2 is amended --
(1) by redesignating subparagraph (D) as subparagraph (E); and
(2) by inserting after subparagraph (C) the following new
subparagraph:
"(D)(i) It is the policy of the United States that --
"(I) any State (or any political subdivision of a State) and
any authorized blood donation facility may utilize the social
security account numbers issued by the Secretary for the purpose
of identifying blood donors, and
"(II) any State (or political subdivision of a State) may
require any individual who donates blood within such State (or
political subdivision) to furnish to such State (or political
subdivision), to any agency thereof having related administrative
responsibility, or to any authorized blood donation facility the
social security account number (or numbers, if the donor has more
than one such number) issued to the donor by the Secretary.
"(ii) If and to the extent that any provision of Federal law enacted
before the date of the enactment of this subparagraph is inconsistent
with the policy set forth in clause (i), such provision shall, on and
after such date, be null, void, and of no effect.
"(iii) For purposes of this subparagraph --
"(I) the term 'authorized blood donation facility' means an
entity described in section 1141(h)(1)(B), and
"(II) the term 'State' includes the District of Columbia, the
Commonwealth of Puerto Rico, the Virgin Islands, Guam, the
Commonwealth of the Northern Marianas, and the Trust Territory of
the Pacific Islands.".
(b) ESTABLISHMENT OF BLOOD DONOR LOCATOR SERVICE. --
(1) IN GENERAL. -- Part A of title XI of such Act (42 U.S.C.
1301 et seq.) is amended by adding at the end the following new
section:
"SEC. 1141. "42 USC 1320b-11" (a) IN GENERAL. -- The Secretary
shall establish and conduct a Blood Donor Locator Service, under the
direction of the Commissioner of Social Security, which shall be used to
obtain and transmit to any authorized person (as defined in subsection
(h)(1)) the most recent mailing address of any blood donor who, as
indicated by the donated blood or products derived therefrom or by the
history of the subsequent use of such blood or blood products, has or
may have the virus for acquired immune deficiency syndrome, in order to
inform such donor of the possible need for medical care and treatment.
"(b) PROVISION OF ADDRESS INFORMATION. -- Whenever the Secretary
receives a request, filed by an authorized person (as defined in
subsection (h)(1)), for the mailing address of a donor described in
subsection (a) and the Secretary is reasonably satisfied that the
requirements of this section have been met with respect to such request,
the Secretary shall promptly undertake to provide the requested address
information from --
"(1) the files and records maintained by the Social Security
Administration, and
"(2) such files and records obtained pursuant to section 6103(
m)(6) of the Internal Revenue Code of 1986 as the Secretary
considers necessary to comply with such request.
"(c) MANNER AND FORM OF REQUESTS. -- A request for address
information under this section shall be filed in such manner and form as
the Secretary shall by regulation prescribe, shall include the blood
donor's social security account number, and shall be accompanied or
supported by such documents as the Secretary may determine to be
necessary.
"(d) PROCEDURES AND SAFEGUARDS. -- Any authorized person shall, as a
condition for receiving address information from the Blood Donor Locator
Service --
"(1) establish and maintain, to the satisfaction of the
Secretary, a system for standardizing records with respect to any
request, the reason for such request, and the date of such request
made by or of it and any disclosure of address information made by
or to it,
"(2) establish and maintain, to the satisfaction of the
Secretary, a secure area or place in which such address
information and all related blood donor records shall be stored,
"(3) restrict, to the satisfaction of the Secretary, access to
the address information and related blood donor records only to
persons whose duties or responsibilities require access and to
whom disclosure may be made under the provisions of this section,
"(4) provide such other safeguards which the Secretary
determines (and which the Secretary prescribes in regulations to
be necessary or appropriate to protect the confidentiality of the
address information and related blood donor records,
"(5) furnish a report to the Secretary, at such time and
containing such information as the Secretary may prescribe, which
describes the procedures established and utilized by the
authorized person for ensuring the confidentiality of address
information and related blood donor records required under this
subsection, and
"(6) destroy such address information and related blood donor
records, upon completion of their use in providing the
notification for which the information was obtained, so as to make
such information and records undisclosable.
If the Secretary determines that any authorized person has failed to,
or does not, meet the requirements of this subsection, the Secretary
may, after any proceedings for review established under subsection (f),
take such actions as are necessary to ensure such requirements are met,
including refusing to disclose address information to such authorized
person until the Secretary determines that such requirements have been
or will be met. In the case of any authorized person who discloses any
address information received pursuant to this section or any related
blood donor records to any agent, this subsection shall apply to such
authorized person and each such agent (except that, in the case of an
agent, any report to the Secretary or other action with respect to the
Secretary shall be made or taken through such authorized person). The
Secretary shall destroy all related blood donor records in the
possession of the Department of Health and Human Services upon
completion of their use in transmitting mailing addresses as required
under subsection (a), so as to make such records undisclosable.
"(e) ARRANGEMENTS WITH STATE AGENCIES AND AUTHORIZED PERSONS. -- The
Secretary, in carrying out the Secretary's duties and functions under
this section, shall enter into arrangements --
"(1) with State agencies to accept and to transmit to the
Secretary requests for address information under this section and
to accept and to transmit such information to authorized
persons, and
"(2) with State agencies and authorized persons otherwise to
cooperate with the Secretary in carrying out the purposes of this
section.
"(f) PROCEDURES FOR ADMINISTRATIVE REVIEW. -- The Secretary shall by
regulation prescribe procedures which provide for administrative review
of any determination that any authorized person has failed to meet the
requirements of this section.
"(g) UNAUTHORIZED DISCLOSURE OF INFORMATION. -- Paragraphs (1), (2),
and (3) of section 7213(a) of the Internal Revenue Code of 1986 shall
apply with respect to the unauthorized willful disclosure to any person
of address information or related blood donor records acquired or
maintained by or under the Secretary, or pursuant to this section by any
authorized person, or of information derived from any such address
information or related blood donor records, in the same manner and to
the same extent as such paragraphs apply with respect to unauthorized
disclosures of return and return information described in such
paragraphs. Paragraph (4) of section 7213(a) of such Code shall apply
with respect to the willful offer of any item of material value in
exchange for any such address information or related blood donor record
in the same manner and to the same extent as such paragraph applies with
respect to offers (in exchange for any return or return information)
described in such paragraph.
(h) DEFINITIONS. -- For purposes of this section --
"(1) AUTHORIZED PERSON. -- The term 'authorized person' means
--
"(A) any agency of a State (or of a political subdivision of a
State) which has duties or authority under State law relating to
the public health or otherwise has the duty or authority under
State law to regulate blood donations, and
"(B) any entity engaged in the acceptance of blood donations
which is licensed or registered by the Food and Drug
Administration in connection with the acceptance of such blood
donations, and which, in accordance with such regulations as may
be prescribed by the Secretary, provides for --
"(i) the confidentiality of any address information received
pursuant to this section and related blood donor records,
"(ii) blood donor notification procedures for individuals with
respect to whom such information is requested and a finding has
been made that they have or may have the virus for acquired immune
deficiency syndrome, and
"(iii) counseling services for such individuals who have been
found to have such virus.
"(2) RELATED BLOOD DONOR RECORD. -- The term 'related blood
donor record' means any record, list, or compilation which
indicates, directly or indirectly, the identity of any individual
with respect to whom a request for address information has been
made pursuant to this section.
"(3) STATE. -- The term 'State' includes the District of
Columbia, the Commonwealth of Puerto Rico, the Virgin Islands,
Guam, the Commonwealth of the Northern Marianas, and the Trust
Territory of the Pacific Islands.".
(2) "42 USC 1320b-11 note" TIME LIMIT FOR ESTABLISHMENT OF
BLOOD DONOR LOCATOR SERVICE. -- The Secretary of Health and Human
Services shall establish the Blood Donor Locator Service pursuant
to section 1141 of the Social Security Act not later than 180 days
after the date of the enactment of this Act.
(c) DISCLOSURE OF TAXPAYER ADDRESSES TO BLOOD DONOR LOCATOR SERVICE.
--
(1) IN GENERAL. -- Subsection (m) of section 6103 of the
Internal Revenue Code of 1986 (relating to disclosure of taxpayer
identity information) is amended by adding at the end the
following new paragraph:
"(6) BLOOD DONOR LOCATOR SERVICE. --
"(A) IN GENERAL. -- Upon written request pursuant to section
1141 of the Social Security Act, the Secretary shall disclose the
mailing address of taxpayers to officers and employees of the
Blood Donor Service in the Department of Health and Human
Services.
"(B) RESTRICTION ON DISCLOSURE. -- The Secretary shall
disclose return information under subparagraph (A) only for
purposes of, and to the extent necessary in, assisting under the
Blood Donor Locator Service authorized persons (as defined in
section 1141(h)(1) of the Social Security Act) in locating blood
donors who, as indicated by donated blood or products derived
therefrom or by the history of the subsequent use of such blood or
blood products, have or may have the virus for acquired immune
deficiency syndrome, in order to inform such donors of the
possible need for medical care and treatment.
"(C) SAFEGUARDS. -- The Secretary shall destroy all related
blood donor records (as defined in section 1141(h)(2) of the
Social Security Act) in the possession of the Department of the
Treasury upon completion of their use in making the disclosure
required under subparagraph (A), so as to make such records
undisclosable.".
(2) SAFEGUARDS. --
(A) IN GENERAL. -- Paragraph (4) of section 6103(p) of such
Code (relating to safeguards is amended --
(i) in subparagraph (F) --
(I) by striking "manner; and" at the end of clause (i) and
inserting in "manner,";
(II) by adding "and" at the end of clause (ii)(III); and
(III) by inserting after clause (ii)(III) the following new
clause:
"(iii) in the case of the Department of Health and Human
Services for purposes of subsection (m)(6), destroy all such
return information upon completion of its use in providing the
notification for which the information was obtained, so as to make
such information undisclosable;";
(ii) in the last sentence, by striking "subsection (m)(2) or
(4)" and inserting "subsection (m)(2), (4) or (6)"; and
(iii) by adding at the end the following new sentence: For
purposes of applying this paragraph in any case to which
subsection (m)(6) applies, the term 'return information' includes
related blood donor records (as defined in section 1141(h)(2) of
the Social Security Act).".
(B) CONFORMING AMENDMENT. -- Paragraph (2) of section 7213(a)
of such Code (relating to unauthorized disclosure of returns and
return information) is amended by striking "(m)(2) or (4)" and
inserting "(m)(2), (4), or (6)".
SEC. 8009. REQUIREMENT OF SOCIAL SECURITY ACCOUNT NUMBER AS A
CONDITION FOR RECEIPT OF SOCIAL SECURITY BENEFITS.
(a) IN GENERAL. -- Section 205(c)(2) of the Social Security Act (42
U.S.C. 405(c)(2)) is amended --
(1) in subparagraph (B)(i) in the matter preceding subclause
(I), by inserting "and subparagraph (B)" after "subparagraph (A)";
(2) by redesignating subparagraph (E) (as redesignated by
section 8008(a)(1)) as subparagraph (F); and
(3) by inserting after subparagraph (D) (as added by section
8008(a(2)) the following new subparagraph:
"(E) The Secretary shall require, as a condition for receipt of
benefits under this title, that an individual furnish satisfactory proof
of a social security account number assigned to such individual by the
Secretary or, in the case of an individual to whom no such number has
been assigned, that such individual make proper application for
assignment of such a number.".
(b) EFFECTIVE DATE. -- The amendments made by this section "42 USC
405 note" shall apply to benefits entitlement to which commences after
the sixth month following the month in which this Act is enacted.
SEC. 8010. SUBSTITUTION OF CERTIFICATE OF ELECTION FOR APPLICATION
TO ESTABLISH ENTITLEMENT FOR CERTAIN REDUCED WIDOW'S AND WIDOWER'S
BENEFITS.
(a) WIDOW'S INSURANCE BENEFITS. -- Section 202(e) of the Social
Security Act (42 U.S.C. 402(e)) is amended --
(1) by redesignating paragraph (1)(C)(ii) as paragraph (1)(C)(
iii);
(2) by striking paragraph (1)(C)(i) and inserting the
following:
"(C)(i) has filed application for widow's insurance benefits,
"(ii) was entitled to wife's insurance benefits, on the basis
of the wages and self-employment income of such individual, for
the month preceding the month in which such individual died, and
--
"(I) has attained retirement age (as defined in section 216(
l)),
"(II) is not entitled to benefits under subsection (a) or
section 223, or
"(III) has in effect a certificate (described in paragraph (8))
filed by her with the Secretary, in accordance with regulations
prescribed byh the Secretary, in which she elects to receive
widow's insurance benefits (subject to reduction as provided in
subsection (q)), or"; and
(3) by adding at the end the following new paragraph:
"(8) Any certificate filed pursuant to paragraph (1)(C)(ii)(III)
shall be effective for purposes of this subsection --
"(A) for the month in which it is filed and for any month
thereafter, and
10"(B) for months, in the period designated by the individual
filing such certificate, of one or more consecutive months (not
exceeding 12) immediately preceding the month in which such
certificate is filed;
except that such certificate shall not be effective for any month
before the month in which she attains age 62.".
(b) WIDOWER'S INSURANCE BENEFITS. -- Section 202(f) of such Act (42
U.S.C. 402(f)) is amended --
(1) by redesignating paragraph (1)(C)(ii) as paragraph (1)(C)(
iii);
(2) by striking paragraph (1)(C)(i) and inserting the
following:
"(C)(i) has filed application for widower's insurance benefits,
"(ii) was entitled to husband's insurance benefits, on the
basis of the wages and self-employment income of such individual,
for the month preceding the month in which such individual died,
and --
"(I) has attained retirement age (as defined in section 216(
l)),
"(II) is not entitled to benefits under subsection (a) or
section 223, or
"(III) has in effect a certificate (described in paragraph (8))
filed by him with the Secretary, in accordance with regulations
prescribed by the Secretary, in which he elects to receive
widower's insurance benefits (subject to reduction as provided in
subsection (q)), or"; and
(3) by adding at the end the following new paragraph:
"(8) Any certificate filed pursuant to paragraph (1)(C)(ii)(III)
shall be effective for purposes of this subsection --
"(A) for the month in which it is filed and for any month
thereafter, and
"(B) for months, in the period designated by the individual
filing such certificate, of one or more consecutive months (not
exceeding 12) immediately preceding the month in which such
certificate is filed;
except that such certificate shall not be effective for any month
before the month in which he attains age 62.".
(c) EFFECTIVE DATE. -- The amendments made by this section "42 USC
402 note" shall apply to benefits payable under section 202(e) or
section 202(f) of the Social Security Act on the basis of the wages and
self-employment income of an individual who dies after the month in
which this Act is enacted.
SEC. 8011. CALCULATION OF THE WINDFALL BENEFIT GUARANTEE AMOUNT
BASED ON PENSION AMOUNTS PAYABLE IN THE FIRST MONTH OF CONCURRENT
ENTITLEMENT RATHER THAN CONCURRENT ELIGIBILITY.
(a) IN GENERAL. -- Section 215(a)(7) of the Social Security Act (42
U.S.C. 415(a)(7)) is amended --
(1) in subparagraph (A), by striking "with respect to the
initial month in which the individual becomes eligible for such
benefits";
(2) in the second sentence of subparagraph (B)(i), by striking
"eligibility for old-age or disability insurance benefits" and
inserting "concurrent entitlement to such monthly periodic payment
and old-age or disability insurance benefits"; and
(3) in subparagraph (C), by striking clause (iii) and
redesignating clause (iv) as clause (iii).
(b) CONFORMING AMENDMENT. -- Section 215(d)(5)(ii) of such Act (42
U.S.C. 415(d)(5)(ii)) is amended by striking "his or her eligibility for
old-age or disability insurance benefits" and inserting "such concurrent
entitlement".
(c) EFFECTIVE DATE. -- The amendments made by this section "42 USC
415 note" shall apply to benefits based on applications filed after the
month in which this Act is enacted.
SEC. 8012. CONSOLIDATION OF REPORTS ON CONTINUING DISABILITY
REVIEWS.
(a) IN GENERAL. -- Section 221(i)(3) of the Social Security Act (42
U.S.C. 421(i)(3)) is amended by striking "semiannually" and inserting
"annually".
(b) EFFECTIVE DATE. -- The amendment made by this section "42 USC
421 note" shall apply to reports required to be submitted after the date
of the enactment of this Act.
SEC. 8013. EXCLUSION OF EMPLOYEES SEPARATED FROM EMPLOYMENT BEFORE
JANUARY 1, 1989, FROM RULE INCLUDING AS WAGES TAXABLE UNDER FICA CERTAIN
PAYMENTS FOR GROUP-TERM LIFE INSURANCE.
(a) IN GENERAL. -- Subsection (b) of section 9003 of the Omnibus
Budget Reconciliation Act "26 USC 3121 note" of 1987 (101 Stat.
1330-287) is amended by striking "December 31, 1987." and inserting
"December 31, 1987, except that such amendments shall not apply with
respect to payments by the employer (or a successor of such employer)
for group-term life insurance for such employer's former employees who
separated from employment with the employer on or before December 31,
1988, to the extent that such payments are not for coverage for any such
employee for any period for which such employee is employed by such
employer (or a successor of such employer) after the date of such
separation.".
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) "26 USC
3121 note" shall apply as if such amendment had been included or
reflected in section 9003(b) of the Omnibus Budget Reconciliation Act of
1987 at the time of its enactment.
SEC. 8014. CLARIFICATION OF APPLICABILITY OF GOVERNMENT PENSION
OFFSET TO CERTAIN FEDERAL EMPLOYEES.
(a) CLARIFICATION OF TREATMENT OF FOREIGN SERVICE RETIREES. --
Subsections (b)(4)(A)(ii)(II), (c)(2)(A)(ii)(II), (e)(7)(A)(ii)(II),
(f)(2)(A)(ii)(II), and (g)(4)(A)(ii)(II) of section 202 of the Social
Security Act (42 U.S.C. 402(b)(4)(A)(ii)(II), (c)(2)(A)(ii)(II), (e)(
7))A)(ii)(II), (f)(2)(A)(ii)(II), (g)(4)(A)(ii)(II)) are each amended by
striking "chapter 84 of title 5, United States Code." and inserting "the
Federal Employees' Retirement System provided in chapter 84 of title 5,
United States Code, or the Foreign Service Pension System provided in
subchapter II of chapter 8 of title I of the Foreign Service Act of
1980".
(b) "42 USC 402 note" TREATMENT OF EMPLOYEES WHOSE FEDERAL EMPLOYMENT
TERMINATED AFTER MAKING AN ELECTION INTO SOCIAL SECURITY COVERAGE BUT
BEFORE THE EFFECTIVE DATE OF THE ELECTION. -- Subsections (b)(4)(A)(i),
(c)(2)(A)(ii), (e)(7)(A)(i), (f)(2)(A)(i), and (g)(4)(A)( i) of section
202 of the Social Security Act (42 U.S.C. 402(b)(4)(A)( i),
(c)(2)(A)(i), (e)(7)(A)(i), (f)(2)(A)(i), (g)(4)(A)(i)) shall not apply
with respect to monthly periodic benefits of any individual based solely
on service which was performed while in the service of the Federal
Government if --
(1) such person made, before January 1, 1988, an election
pursuant to law to become subject to the Federal Employees'
Retirement System provided in chapter 84 of title 5, United States
Code, or the Foreign Service Pension System provided in subchapter
II of chapter 8 of title I of the Foreign Service Act of 1980 (or
such person made such an election on or after January 1, 1988, and
before July 1, 1988, pursuant to regulations of the Office of
Personnel Management relating to belated elections and correction
of administrative errors (5 CFR 846.204) as in effect on the date
of the enactment of this Act), and
(2) such service terminated before the date on which such
election became effective.
(c) EFFECTIVE DATE. -- The preceding provisions of this section "42
USC 402 note" (including the amendments made by subsection (a)) shall
apply as if they had been included or reflected in the provisions of
section 9007 of the Omnibus Budget Reconciliation Act of 1987 (101 Stat.
1330-289) at the time of its enactment.
SEC. 8015. AMENDMENTS TO RULES GOVERNINIG SOCIAL SECURITY COVERAGE
OF FEDERAL EMPLOYMENT.
(a) CLARIFICATION OF AUTHORITY TO MAKE DETERMINATIONS CONCERNING THE
SOCIAL SECURITY COVERAGE OF FEDERAL EMPLOYEES. --
(1) AMENDMENTS TO THE SOCIAL SECURITY ACT. -- Section 205(p)(
1) of the Social Security Act (42 U.S.C. 405(p)(1)) is amended --
(A) by striking "whether an individual has performed such
service, the periods of such service," in the first sentence;
(B) by striking "which constitute wages under the provisions of
section 209" in the first sentence;
(C) by striking "wages were" in the first sentence and
inserting "remuneration was"; and
(D) by adding at the end the following new sentence: "Nothing
in this paragraph shall be construed to affect the Secretary's
authority to determine under sections 209 and 210 whether any such
service constitutes employment, the periods of such employment,
and whether remuneration paid for any such service constitutes
wages.".
(2) AMENDMENTS TO FICA. -- Section 3122 of the Internal
Revenue Code of 1986 (relating to Federal service) is amended --
(A) by striking "the determination whether an individual has
performed service which constitutes employment as defined in
section 3121(b)," in the first sentence;
(B) by striking "which constitutes wages as defined in section
3121(a)" in the first sentence; and
(C) by inserting after the first sentence the following new
sentence: "Nothing in this paragraph shall be construed to affect
the Secretary's authority to determine under subsections (a) and
(b) of section 3121 whether any such service constitutes
employment, the periods of such employment, and whether
remuneration paid for any such service constitutes wages.".
(3) EFFECTIVE DATE. -- "26 USC 3122 note" The amendments made
by paragraphs (1) and (2) shall apply to determinations relating
to service commenced in any position on or after the date of the
enactment of this Act.
(b) CLARIFICATION OF TREATMENT OF SERVICE COVERED UNDER THE FOREIGN
SERVICE PENSION SYSTEM. --
(1) AMENDMENT TO THE SOCIAL SECURITY ACT. -- Subparagraph (H)
of section 210(a)(5) of the Social Security Act (42 U.S.C. 410(
a)(5)(H)) is amended to read as follows:
"(H) service performed by an individual --
"(i) on or after the effective date of an election by such
individual, under section 301 of the Federal Employees' Retirement
System Act of 1986 or section 307 of the Central Intelligence
Agency Retirement Act of 1964 for Certain Employees, to become
subject to the Federal Employees' Retirement System provided in
chapter 84 of title 5, United States Code, or
"(ii) on or after the effective date of an election by such
individual, under regulations issued under section 860 of the
Foreign Service Act of 1980, to become subject to the Foreign
Service Pension System provided in subchapter II of chapter 8 of
title I of such Act;".
(2) AMENDMENT TO FICA. -- Subparagraph (H) of section 3121(
b)(5) of the Internal Revenue Code of 1986 (relating to
employment) is amended to read as follows:
"(H) service performed by an individual --
"(i) on or after the effective date of an election by such
individual, under section 301 of the Federal Employees' Retirement
System Act of 1986 or section 307 of the Central Intelligence
Agency Retirement Act of 1964 for Certain Employees, to become
subject to the Federal Employees' Retirement System provided in
chapter 84 of title 5, United States Code, or
"(ii) on or after the effective date of an election by such
individual, under regulations issued under section 860 of the
Foreign Service Act of 1980, to become subject to the Foreign
Service Pension System provided in subchapter II of chapter 8 of
title I of such Act;".
(3) EFFECTIVE DATE. -- The amendments made by this subsection
"26 USC 3121 note" shall apply as if such amendments had been
included or reflected in section 304 of the Federal Employees'
Retirement System Act of 1986 (100 Stat. 606) at the time of its
enactment.
(c) CONTINUATION OF SOCIAL SECURITY COVERAGE OF FEDERAL SERVICE AFTER
ANY INITIAL COVERAGE OF SUCH SERVICE. --
(1) AMENDMENT TO THE SOCIAL SECURITY ACT. -- Paragraph (5) of
section 210(a) of the Social Security Act (42 U.S.C. 410(a)(5)) is
amended, in the matter following subparagraph (B)(ii), by
inserting after "with respect to" the following: "any such
service performed on or after any date on which such individual
performs".
(2) AMENDMENT TO FICA. -- Paragraph (5) of section 3121(b) of
the Internal Revenue Code of 1986 (relating to employment) is
amended, in the matter following subparagraph (B)(ii), by
inserting after "with respect to" the following: "any such
service performed on or after any date on which such individual
performs".
(3) EFFECTIVE DATE. -- The amendments made by this subsection
"26 USC 3121 note" shall apply to any individual only upon the
performance by such individual of service described in
subparagraph (C), (D), (E), (F), (G), or (H) of section 210(a)(5)
of the Social Security Act (42 U.S.C. 410(a)(5)) on or after the
date of the enactment of this Act.
SEC. 8016. TECHNICAL CORRECTIONS IN OASDI PROVISIONS.
(a) TECHNICAL CORRECTIONS. -- (1) Section 205(c)(2)(C)(iii) of the
Social Security Act "42 USC 405" is amended by striking "the Social
Security Act" and inserting "this Act".
(2) Section 211(a)(7) of such Act (as amended by section 9023(b)(1)
of Public Law 100-203) "42 USC 411" is amended by inserting "of the
Internal Revenue Code of 1986" before the semicolon at the end.
(3)(A) Subsection (d) of section 3121 of the Internal Revenue Code of
1986 (as amended by section 9002(b)(2) of Public Law 99-509) is amended
--
(i) by redesignating paragraph (3) as paragraph (4), by
striking "; or" at the end of such paragraph and inserting a
period, and by moving such paragraph (as so redesignated and
amended) to the end of the subsection; and
"(ii) by redesignating paragraph (4) as paragraph (3), and by
striking the period at the end and inserting "; or".
(B) Section 3306(i) of such Code (as amended by section 9002(b)(2) of
Public Law 99-509) is amended by striking "paragraph (3) and
subparagraphs (B) and (C) of paragraph (4)" and inserting "paragraph (4)
and subparagraphs (B) and (C) of paragraph (3)".
(4) Section 13303(c)(2) "26 USC 3121" of Public Law 99-272 is amended
--
(A) by striking "312(b)" and inserting "3121(b)";
(B) by striking "is amended" and inserting ", and paragraph
(20) of section 210(a) of the Social Security Act, "42 USC 410"
are each amended"; and
(C) "26 USC 3121; 42 USC 410" by striking "after 'service'"
and inserting "before 'performed'".
(5) Section 9006(b)(1) of Public Law 1100-203 "26 USC 3111 note" is
amended by striking "3111(a)" and inserting "3111".
(b) EFFECTIVE DATE. -- (1) Except as provided in paragraph (2), "26
USC 311 note" the amendments made by this section shall be effective on
the date of the enactment of this Act.
(2) Any amendment made by this section to a provision of a particular
Public Law which is referred to by its number, or to a provision of the
Social Security Act or the Internal Revenue Code of 1986 as added or
amended by a provision of a particular Public Law which is so referred
to, shall be effective as though it had been included or reflected in
the relevant provisions of that Public Law at the time of its enactment.
SEC. 8017. CERTAIN CASH WAGES PAID TO SEASONAL AGRICULTURAL LABORERS
EXCLUDED FROM OASDI COVERAGE.
(a) SOCIAL SECURITY ACT AMENDMENT. -- Paragraph (2) of section 209(
h) of the Social Security Act "42 USC 409" is amended by read as
follows:
"(2) Cash remuneration paid by an employer in any calendar year
to an employee for agricultural labor unless --
"(A) the cash remuneration paid in such year by the employer to
the employee for such labor is $150 or more, or
"(B) the employer's expenditures for agricultural labor in such
year equal or exceed $2,500,
except that subparagraph (B) shall not apply in determining
whether remuneration paid to an employee constitutes 'wages' under
this section if such employee (i) is employed as a hand harvest
laborer and is paid on a piece rate basis in an operation which
has been, and is customarily and generally recognized as having
been, paid on a piece rate basis in the region of employment, (ii)
commutes daily from his permanent residence to the farm on which
he is so employed, and (iii) has been employed in agriculture less
than 13 weeks during the preceding calendar year;".
(b) FICA AMENDMENT. -- Subparagraph (B) of section 3121(a)(8) of the
1986 Code (relating to wages) is amended to read as follows:
"(B) cash remuneration paid by an employer in any calendar year
to an employee for agricultural labor unless --
"(i) the cash remuneration paid in such year by the employer to
the employee for such labor is $150 or more, or
"(ii) the employer's expenditures for agricultural labor in
such year equal or exceed $2,500,
except that clause (ii) shall not apply in determining whether
remuneration paid to an employee constitutes 'wages' under this
section if such employee (I) is employed as a hand harvest laborer
and is paid on a piece rate basis in an operation which has been,
and is customarily and generally recognized as having been, paid
on a piece rate basis in the region of employment, (II) commutes
daily from his permanent residence to the farm on which he is so
employed, and (III) has been employed in agriculture less than 13
weeks during the preceding calendar year;".
(c) EFFECTIVE DATE. -- The amendments made by this section "26 USC
3121 note" shall take effect as if included in the amendments made by
section 9002 of the Omnibus Budget Reconciliation Act of 1987.
SEC. 8018. "26 USC 3121 note" CERTAIN EMPLOYER PENSION CONTRIBUTIONS
NOT INCLUDED IN FICA WAGE BASE.
In the case of any State (within the meaning of section 3121(e)(1) of
the Internal Revenue Code of 1986) or political subdivision thereof
which received a letter ruling of the Internal Revenue Service issued
after December 31, 1983, and before the date of the enactment of this
Act maintaining that any amount treated as an employer contribution
under section 414(h)(2) of the Internal Revenue Code of 1986 is excluded
from the definition of "wages" for purposes of tax liability under
section 3121(v)(1)(B) of such Code, such State or political subdivision
shall be relieved of any liability for taxes under such section
3121(v)(1)(B) which, in good faith reliance on such letter ruling, were
not paid and which would otherwise have been required to be paid (but
for this section) on or after the earlier of the date of the enactment
of this Act or the date of the receipt of a notice of revocation from
the Internal Revenue Service of such letter ruling.
SEC. 8019. REPORTS REGARDING CERTAIN DISABILITY-RELATED BENEFITS.
(a) ELIGIBILITY FOR BENEFITS. -- Not later than 180 days after the
date of the enactment of this Act, the Secretary of Health and Human
Services shall submit to the Committee on Ways and Means of the House of
Representatives and the Committee on Finance of the Senate a report
providing information on --
(1) the number of individuals with the complex related to
acquired immune deficiency syndrome (hereinafter in this section
referred to as "AIDS-related complex") who have made application
for disability-related benefits under titles II and XVI of the
Social Security Act during fiscal years 1988, 1987, and, to the
extent feasible, 1986;
(2) the number of such applications approved, denied (by reason
of denial), and reversed upon appeal;
(3) the rates of allowance and denial of such applications by
State and region, to the extent feasible;
(4) the criteria, guidelines, or other information used to
determine eligibility (including copies of the documents setting
forth such criteria, guidelines, and information) including
information about any changes in criteria that are under
consideration;
(5) the total costs of disability-related benefits provided to
individuals with AIDS-related complex during fiscal years 1988,
1987, and to the extent feasible, 1986; and
(6) to the extent available, the projected number of such
applications that will likely be approved and denied and the
estimated costs of such benefits for the next 3 fiscal years.
(b) COORDINATION OF FEDERAL AND STATE DISABILITY PROGRAMS. -- Not
later than 180 days after the date of the enactment of this Act, the
Secretary of Health and Human Services shall submit to the Committee on
Ways and Means of the House of Representatives and the Committee on
Finance of the Senate a report describing what arrangements, if any, now
exist to provide for coordination between the Social Security
Administration and State disability agencies with respect to the
provision of disability-related benefits under titles II and XVI of the
Social Security Act and State disability insurance programs to
individuals with acquired immune deficiency syndrome or AIDS-related
complex and to make such individuals applying for any such benefits
aware of the full range of Federal and State disability-related benefits
for which such individuals may be eligible.
SEC. 8101. EXTENSION OF PROHIBITION AGAINST IMPLEMENTATION OF
CERTAIN PROPOSED REGULATIONS.
Section 9118 of the Omnibus Budget Reconciliation Act of 1987 (42 U.
S.C. 1383c) is amended by striking "October 1, 1988" and inserting
"September 30, 1989".
SEC. 8102. REVIEW OF POLICY GOVERNING USE OF AFDC FUNDS TO MEET
EMERGENCY NEEDS OF FAMILIES ELIGIBLE FOR AFDC THROUGH EMERGENCY
ASSISTANCE OR SPECIAL NEEDS PAYMENTS; REPORT TO CONGRESS.
(a) REVIEW OF POLICY. -- The Secretary of Health and Human Services
shall review the policies in effect, as of the date of the enactment of
this section, with respect to the use by States of amounts paid to such
States under the program of aid to families with dependent children
under part A of title IV of the Social Security Act, in the form of
payments of aid to meet special needs or emergency assistance under
section 406(e) of such Act to meet emergency needs of families who are
eligible for such aid.
(b) REPORT TO CONGRESS. -- Not later than July 1, 1989, the
Secretary of Health and Human Services shall submit to the Congress a
report containing recommendations for legislative and regulatory changes
designed to --
(1) improve the ability of the program of aid to families with
dependent children under part A of title IV of the Social Security
Act to respond to emergency needs of families who are eligible for
such aid; and
(2) eliminate the use of funds provided to States under such
program to pay for the provision of shelter in commercial or
similar transient facilities.
SEC. 8103. DISREGARD OF CERTAIN HOUSING ASSISTANCE PAYMENTS IN
DETERMINING INCOME AND RESOURCES UNDER SSI PROGRAM.
(a) INCOME. -- Section 1612(b) of the Social Security Act "42 USC
1382a" is amended --
(1) by striking "and" after the semicolon at the end of
paragraph (12);
(2) by striking the period at the end of paragraph (13) and
inserting "; and"; and
(3) by adding after paragraph (13) the following new paragraph:
10"(14) assistance paid, with respect to the dwelling unit
occupied by such individual (or such individual and spouse), under
the United States Housing Act of 1937, the National Housing Act,
section 101 of the Housing and Urban Development Act of 1965,
title V of the Housing Act of 1949, or section 202(h) of the
Housing Act of 1959.".
(b) RESOURCES. -- Section 1613(a) of such Act "42 USC 1382b" is
amended --
(1) by striking "and" after the semicolon at the end of
paragraph (6);
(2) by striking the period at the end of paragraph (7) and
inserting "; and"; and
(3) by inserting after paragraph (7) the following new
paragraph:
"(8) the value of assistance referred to in section 1612(b)(
14), paid with respect to the dwelling unit occupied by such
individual (or such individual and spouse).".
(c) EFFECTIVE DATE. -- The amendments made by this section "42 USC
1382a note" shall be effective as though they had been included in
section 162 of the Housing and Community Development Act of 1987 at the
time of its enactment.
SEC. 8104. FOSTER CARE INDEPENDENT LIVING INITIATIVES.
(a) EXTENSION OF INDEPENDENT LIVING PROGRAM. -- Section 477 of the
Social Security Act (42 U.S.C. 677) is amended --
(1) by striking "1987 and 1988" in subsections (a) and (e)(1)
and inserting "1987, 1988, and 1989";
(2) by striking "for fiscal year 1988" and all that follows in
subsection (c) and inserting "for the fiscal year 1988 or 1989,
such description and assurances must be submitted prior to
February 1 of such fiscal year.";
(3) by striking "Not later than March 1, 1988" in subsection
(g)(1) and inserting "Not later than the first January 1 following
the end of each fiscal year";
(4) by inserting "during such fiscal year" in subsection (g)(
1) after "carried out";
(5) by striking "(2) Not later than July 1, 1988," in
subsection (g)(2) and inserting the following:
"(2)(A) Not later than July 1, 1988, the Secretary shall submit an
interim report on the activities carried out under this section.
"(B) Not later than March 1, 1989,"; and
(6) by striking "fiscal year 1987" in subsection (g)(2) and
inserting "fiscal years 1987 and 1988".
(b) PERMISSION TO EXPEND UNOBLIGATED FUNDS APPROPRIATED FOR 1987 IN
1989. -- Subsection (f) of section 477 of such Act (42 U.S.C. 677(f))
is amended by inserting after and below paragraph (3) the following:
"Notwithstanding paragraph (3), payments made to a State under this
section for the fiscal year 1987 and unobligated may be expended by such
State in the fiscal year 1989.".
(c) INCLUSION IN INDEPENDENT LIVING PROGRAM OF NON-AFDC FOSTER CARE
CHILDREN. -- Subsection (a) of section 477 of such Act (42 U.S.C. 677(
a)) is amended --
(1) by inserting "(1)" before "Payments";
(2) by striking "children" and all that follows through "age
16," and inserting "children described in paragraph (2) who have
attained age 16"; and
(3) by adding at the end the following new paragraph:
"(2) A program established and carried out under paragraph (1) --
"(A) shall be designed to assist children with respect to whom
foster care maintenance payments are being made by the State under
this part, and
"(B) may at the option of the State also include any or all
other children in foster care under the responsibility of the
State.".
(d) INCLUSION IN INDEPENDENT LIVING PROGRAM OF CERTAIN FORMER FOSTER
CARE CHILDREN. -- Paragraph (2) of section 477(a) of the Social
Security Act (42 U.S.C. 677(a)(2)) (as added by subsection (c) of this
section) is further amended --
(1) by striking "and" in subparagraph (A);
(2) by striking the period at the end of subparagraph (B) and
inserting ", and"; and
(3) by adding at the end the following new subparagraph:
"(C) may at the option of the State also include any child to
whom foster care maintenance payments were previously made by a
State under this part and those payments were discontinued on or
after the date such child attained age 16, and any child who
previously was in foster care described in subparagraph (B) and
for whom such care was discontinued on or after the date such
child attained age 16, but such child may not be so included after
the end of the 6-month period beginning on the date of
discontinuance of such payments or care; and a written
transitional independent living plan of the type described in
subsection (d)(6) shall be developed for such child as a part of
such program.".
(e) DETERMINATION OF SERVICES NEEDED FOR TRANSITION TO INDEPENDENT
LIVING. -- Subparagraph (C) of section 475(5) of such Act (42 U.S.C.
675(5)(C)) is amended by inserting "and, in the case of a child who has
attained age 16, the services needed to assist the child to make the
transition from foster care to independent living" before the semicolon.
(f) LIMITATION ON USE OF FUNDS. -- Paragraph (3) of section 477(e)
of such Act (42 U.S.C. 677(e)(3)) is amended by adding at the end the
following: "Amounts payable under this section may not be used for the
provision of room or board.".
(g) EFFECTIVE DATES. -- (1) The amendments made by subsections "42
USC 677 note" (a), (b), and (e) shall take effect on October 1, 1988.
(2) The amendments made by subsections (c), (d), and (f) shall
take effect on the date of the enactment of this Act.
SEC. 8105. TECHNICAL CORRECTIONS TO FAMILY SUPPORT ACT OF 1988.
Effective on the date of the enactment of the Family Support Act of
1988 --
(1) section 401(c)(1) of such Act "42 USC 607" is amended by
inserting "(as amended by paragraph (4)(B) of this subsection)"
before "is amended -- ";
(2) section 401(c)(4)(B) of such Act is amended by striking
"(as amended by paragraph (1) of this subsection)";
(3) Section 202(b) of such Act "42 USC 607" is amended by
striking paragraph (10);
(4) Section 111(e)(1) of such Act "42 USC 666" is amended by
striking "before" and inserting in lieu thereof "after";
(5) section 407(b)(1)(B)(iii)(I) of the Social Security Act (as
amended by section 202(b)(8)(A) of the Family Support Act of 1988
and redesignated as section 401(b)(1) of that Act "42 USC 607" is
amended by striking "409(a)(19)(A)" and inserting in lieu thereof
"402(a)(19)(A);
(6) section 469 of the Social Security Act (as added by section
129 of the Family Support Act "42 USC 669" of 1988) is amended --
(A) by striking "of title IV of the Social Security Act"; and
(B) by striking "of title IV of such Act"; and
(7) section 418 of the Social Security Act (as added by section
603(a) of the Family Support Act of 1988) is redesignated as
section 417. "42 USC 617"
SEC. 8201. DELAY IN REPORTING DATE FOR NATIONAL COMMISSION ON
CHILDREN.
Section 1139 of the Social Security Act (42 U.S.C. 1320b-9) is
amended --
(1) by striking "September 30, 1988" in subsection (d) and
inserting "March 31, 1990";
(2) by striking "March 31, 1989" in subsection (d) and
inserting "September 30, 1990";
(3) by striking "March 31, 1989" in subsection (e)(1)(A) and
inserting "September 30, 1990";
(4) by striking "March 31, 1989" in subsection (e)(4)(B) and
inserting September 30, 1990"; and
(5) by inserting "for each of fiscal years 1989 and 1990" after
"section" in subsection (j).
SEC. 8301. SELF-EMPLOYMENT DEMONSTRATION PROJECT.
Section 9152(g) of the Omnibus Budget Reconciliation Act of 1987
(Public Law 100-203) "26 USC 3304 note" is amended --
(1) in paragraph (1), by striking "two" in the first sentence
and inserting "three"; and
(2) in paragraph (2), by striking "four" and inserting "six".
SEC. 8401. EXTENSION OF DISPROPORTIONATE SHARE PROVISIONS.
Paragraphs (2)(C)(iv), (3)(C)(ii)(I), (3)(C)(ii)(II), (5)(B)(ii)(I),
(5)(B)(ii)(II), and (5)(F)(i) of section 1886(d) of the Social Security
Act (42 U.S.C. 1395ww(d)) are each amended by striking "1990" and
inserting "1995".
SEC. 8402. MAINTENANCE OF BAD DEBT COLLECTION POLICY.
Effective as of the date of the enactment of the Omnibus Budget
Reconciliation Act "42 USC 1395f note" of 1987, section 4008(c) of such
Act is amended by inserting after "reasonable collection effort" the
following: ", including criteria for indigency determination
procedures, for record keeping, and for determining whether to refer a
claim to an external collection agency".
SEC. 8403. APPLICATION OF WAGE INDICES IN CASE OF AREAS AFFECTED BY
SECTION 4005(A)(1) OF OBRA OF 1987.
(a) COMPUTATION OF INDICES FOR FISCAL YEARS 1990 AND 1991. -- Section
1886(d)(8) of the Social Security Act (42 U.S.C. 1395ww(d)(8)) is
amended --
(1) in subparagraph (C) --
(A) by striking "subparagraph (B)" each place it appears and
inserting "subparagraphs (B) and (C)", and
(B) by redesignating such subparagraph as subparagraph (D);
and
(2) by inserting after subparagraph (B) the following new
subparagraph:
"(C)(i) If the application of subparagraph (B), by treating hospitals
located in a rural county or counties as being located in an urban area,
reduces the wage index for that urban area (as applied under this
subsection), the Secretary shall calculate and apply such wage index
under this subsection separately to hospitals located in such urban area
(excluding all the hospitals so treated) and to the hospitals so treated
(as if each affected rural county were a separate urban area). If the
application of subparagraph (B), by treating the hospitals located in a
rural county or counties as not being located in the rural area in a
State, reduces the wage index for that rural area (as applied under this
subsection), the Secretary shall calculate and apply such wage index
under this subsection as if the hospitals so treated had not been
excluded from calculation of the wage index for that rural area.
"(ii) Clause (i) shall only apply to discharges occurring on or
after October 1, 1989, and before October 1, 1991.".
(b) HHS REPORT ON ADJUSTMENT OF HOSPITAL WAGE INDICES FOR FISCAL YEAR
1989. --
(1) The Secretary of Health and Human Services shall report to
the Congress, not later than 60 days after the date of the
enactment of this Act, on alternative methods for reimbursement
under section 1886(d) of the Social Security Act to hospitals
located in affected areas described in paragraph (2) for hospital
discharges occurring in fiscal year 1989 that would result in
aggregate payments under title XVIII of such Act to hospitals in
such areas in an amount no less than would have been paid without
the enactment of the amendments made by section 4005(a)(1) of the
Omnibus Budget Reconciliation Act of 1987. In reporting
concerning alternative methods, the Secretary shall consider both
legislative and administrative actions that would result in an
aggregate increase in payments under such title and legislative
and administrative actions that would not result in such an
aggregate increase.
(2) An affected area described in this paragraph is an area for
which the area wage index for fiscal year 1989 (described in
section 1886(d)(3)(E) of the Social Security Act) was reduced
below the amount otherwise applicable as a result of the
amendments made by section 4005(a)(1) of the Omnibus Budget
Reconciliation Act of 1987.
(c) PROPAC STUDY AND REPORT. -- The Prospective Payment Assessment
Commission shall study and make a report to Congress within 9 months
after the date of the enactment of this Act on the appropriate payment
for hospitals affected by subparagraphs (B) and (C) of section 1886(d)(
8) of the Social Security Act (as amended by subsection (a) of this
section) and the appropriate treatment of the wage and wage-related
costs of such hospitals in computing area wage indices.
SEC. 8404. DEMONSTRATION PROJECTS WITH RESPECT TO CHRONIC
VENTILATOR-DEPENDENT UNITS IN HOSPITALS.
(a) IN GENERAL. -- Section 429(a) of the Medicare Catastrophic
Coverage Act "42 USC 1395b-1 note" of 1988 is amended by striking "up
to" each place it appears and inserting "at least".
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) "42 USC
1395b-1 note" shall take effect as if included in the Medicare
Catastrophic Coverage Act of 1988.
SEC. 8405. "42 USC 1395ww note" ELECTION OF PERSONNEL POLICY FOR
PROPAC EMPLOYEES.
With respect to employees of the Prospective Payment Assessment
Commission hired before December 22, 1987, such employees shall have the
option to elect within 60 days of the date of enactment of this Act to
be covered under either the personnel policy in effect with respect to
such employees before December 22, 1987, or under the employees coverage
provided under the last sentence of section 11886(e)(6)(D) of the Social
Security Act.
SEC. 8411. "42 USC 1395b-1 note" TREATMENT OF CERTAIN NURSING
EDUCATION PROGRAMS.
(a) DEMONSTRATION OF JOINT NURSING GRADUATE EDUCATION PROGRAMS. --
(1) The Secretary of Health and Human Services shall provide
for demonstration programs under this subsection in each of 5
hospitals for cost reporting periods beginning on or after July 1,
1989, and before July 1, 1994.
(2) Under each demonstration project, subject to paragraph (4),
the reasonable costs incurred by a hospital pursuant to a written
agreement with an educational institution for the activities
described in paragraph (3) conducted as part of an approved
educational program that --
(A) involves a substantial clinical component (as determined by
the Secretary), and
(B) leads to a master's or doctoral degree in nursing,
shall be allowable as reasonable costs under title XVIII of the
Social Security Act and reimbursed under such title on the same
basis as if they were allowable direct costs of a
hospital-operated approved educational program (other than an
approved graduate medical education program).
(3) The activities described in this paragraph are the
activities for which the reasonable costs of conducting such
activities are allowable under title XVIII of the Social Security
Act if conducted under a hospital-operated approved educational
program (other than an approved graduate medical education
program), but only to the extent such activities are directly
related to the operation of the educational program conducted
pursuant to the written agreement between the hospital and the
educational institution.
(4) The amount paid under a demonstration program under this
subsection to a hospital for a cost reporting period may not
exceed $200,000.
(5) The Secretary shall report to Congress, by not later than
January 1, 1995, on the demonstration programs conducted under
this subsection and on the supply and characteristics of nurses
trained under such programs.
(b) JOINT UNDERGRADUATE EDUCATION PROGRAM. -- In the case of a
hospital which (1) was paid under a waiver under section 402 of the
Social Security Amendments of 1967 and section 222 of the Social
Security Amendments of 1972, which waiver expired on September 30, 1985,
and (2) during its cost reporting period beginning in fiscal year 1985
and for each subsequent cost reporting period, has been and is
associated with, and has incurred and incurs substantial costs with
respect to, a nursing college with which it has shared and shares common
directors, educational activities of the nursing college shall be
considered to be educational activities operated directly by such
hospital for purposes of title XVIII of the Social Security Act, and
shall be allowable as reasonable costs under such title and reimbursed
under such title on the same basis as if they were allowable direct
costs of a hospital-operated approved educational program (other than an
approved graduate medical education program), for hospital cost
reporting periods beginning in fiscal years 1989, 1990, and 1991.
SEC. 8412. ELIMINATION OF WAIVERS OF 50:50 RULE FOR HMO ENROLLMENT.
(a) IN GENERAL. --
(1) Section 1876(f) of the Social Security Act (42 U.S.C.
1395mm(f)), as amended by section 4018(a) of the Omnibus Budget
Reconciliation Act of 1987, is amended by striking paragraph (3)
and by redesignating paragraph (4) as paragraph (3).
(2) Subsection (c) of section 4018 of the Omnibus Budget
Reconciliation Act "101 Stat. 1330-66" of 1987 is repealed.
(b) EFFECTIVE DATE. -- The amendments made by subsection (a) "42 USC
1395mm note" shall not apply to contracts in effect on the date of the
enactment of this Act or extensions (not exceeding 90 days) thereof.
SEC. 8413. INCREASE IN AUTHORIZATION FOR THE PATIENT OUTCOME
ASSESSMENT RESEARCH PROGRAM.
Section 1875(c)(3) of the Social Security Act (42 U.S.C. 1395ll(c)(
3)) is amended to read as follows:
"(3)(A) For purposes of carrying out the research program, there are
authorized to be appropriated --
"(i) from the Federal Hospital Insurance Trust Fund two-thirds
of the amount specified in paragraph (B), and
"(ii) from the Federal Supplementary Medical Insurance Trust
Fund one-third of the amount specified in subparagraph (B).
4"(B) The amount specified in this subparagraph is --
"(i) $7,500,000 for fiscal year 1988,
"(ii) $10,000,000 for fiscal year 1989,
"(iii) $20,000,000 for fiscal year 1990, and
"(iv) $30,000,000 for fiscal year 1991.".
SEC. 8414. DELAY IN REPORTING DEADLINE FOR THE UNITED STATES
BIPARTISAN COMMISSION ON COMPREHENSIVE HEALTH CARE.
Section 406 of the Medicare Catastrophic Coverage Act "42 USC 1395b
note" of 1988 is amended by striking "date of the enactment of this Act"
each place it appears and inserting "effective date of the first Act
providing appropriations for the Commission".
SEC. 8421. TRIP FEES FOR CLINICAL LABORATORIES.
(a) IN GENERAL. -- Section 1833(h)(3) of the Social Security Act (42
U.S.C. 1395l(h)(3)) "42 USC 1395l" is amended by adding at the end the
following new sentence: "In establishing a fee to cover the
transportation and personnel expenses for trained personnel to travel to
the location of an individual to collect a sample, the Secretary shall
provide a method for computing the fee based on the number of miles
traveled and the personnel costs associated with the collection of each
individual sample, but the Secretary shall only be required to apply
such method in the case of tests furnished during the period beginning
on April 1, 1989, and ending on December 31, 1990, by a laboratory that
establishes to the satisfaction of the Secretary (based on data for the
12-month period ending June 30, 1988) that (i) the laboratory is
dependent upon payments under this title for at least 80 percent of its
collected revenues for clinical diagnostic laboratory tests, (ii) at
least 85 percent of its gross revenues for such tests are attributable
to tests performed with respect to individuals who are homebound or who
are residents in a nursing facility, and (iii) the laboratory provided
such tests for residents in nursing facilities representing at least 20
percent of the number of such facilities in the State in which the
laboratory is located.".
(b) BUDGET NEUTRALITY. -- "42 USC 1395l note" The Secretary of
Health and Human Services shall adjust the fees for transportation and
personnel established under section 1833(h)(3)(B) of the Social Security
Act for tests not covered under the amendment made by subsection (a) in
such manner that the total cost of fees under such section is the same
as would have been the case without such amendment.
(c) STUDY. -- The Secretary of Health and Human Services shall study
reimbursement for specimen collection and transportation and personnel
costs under section 1833(h)(3) of the Social Security Act and shall
report to the Committee on Ways and Means and Energy and Commerce of the
House of Representatives and the Committee on Finance of the Senate by
May 1, 1989. The study shall --
(1) survey carrier policies regarding such reimbursement,
(2) report on concerns expressed by clinical diagnostic
laboratories concerning such reimbursement, and
(3) make recommendations to assure that such reimbursement is
reasonable, covers the costs involved, and assures adequate access
to clinical laboratory services for nursing facility residents.
SEC. 8422. BUDGET NEUTRALITY ADJUSTMENT FOR CERTIFIED REGISTERED
NURSE ANESTHETISTS.
(a) IN GENERAL. -- Section 1833(l)(3)(B) of the Social Security Act
(42 U.S.C. 1395l(l)(3)(B)) is amended by inserting "plus applicable
coinsurance" after "would have been paid".
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) "42 USC
1395l note" shall become effective as if included in the amendment made
by section 9320(e)(2) of the Omnibus Budget Reconciliation Act of 1986.
SEC. 8423. COVERAGE OF PSYCHOLOGISTS' SERVICES WHEN PROVIDED
OFF-SITE AS PART OF A TREATMENT PLAN.
(a) IN GENERAL. -- Section 1861(ii) of the Social Security Act (42
U.S.C. 1395x(ii)) is amended --
(1) by inserting "on-site" before "at a community mental health
center", and
(2) by inserting ", and such services that are necessarily
furnished off-site (other than at an off-site office of such
psychologist) as part of a treatment plan because of the inability
of the individual furnished such services to travel to the center
by reason of physical or mental impairment, because of
institutionalization, or because of similar circumstances of the
individual," after "Public Health Service Act)".
(b) EFFECTIVE DATE. -- The amendments made by subsection (a) "42 USC
1395x note" shall be effective with respect to services furnished on or
after January 1, 1989.
SEC. 8424. NONAPPLICATION OF CERTAIN REQUIREMENTS TO PHYSICAL
THERAPISTS.
(a) IN GENERAL. -- Section 1861(p) of the Social Security Act "42
U.S.C. 1395x(p)) is amended by adding at the end the following new
sentence: "Nothing in this subsection shall be construed as requiring,
with respect to outpatients who are not entitled to benefits under this
title, a physical therapist to provide outpatient physical therapy
services only to outpatients who are under the care of a physician or
pursuant to a plan of care established by a physician.".
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) "42 USC
1395x note" shall become effective with respect to services provided
after December 31, 1988.
SEC. 8425. FUNCTIONS OF PHYSICIAN PAYMENT REVIEW COMMISSION.
(a) ADDITIONAL FUNCTION. -- Section 1845(b)(2) of the Social
Security Act (42 U.S.C. 1395w-1(b)(2)) is amended --
(1) by striking "and" at the end of subparagraph (G),
(2) by striking the period at the end of subparagraph (H) and
inserting "; and", and
(3) by adding at the end the following new subparagraph:
"(I) consider policies for moderating the rate of increase in
expenditures under this part and the rate of increase in
utilization of services under this part.".
(b) EFFECTIVE DATE. -- The amendments made by subsection (a) "42 USC
1395w-1 note" shall take effect on the date of the enactment of this Act
and shall first apply to recommendations submitted in 1989.
SEC. 8426. MORATORIUM ON LABORATORY PAYMENT DEMONSTRATION EXTENDED.
Section 9204(a) of the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended by section 9339(e) of the Omnibus Budget
Reconciliation Act of 1986 and section 4085(c) of the Omnibus Budget
Reconciliation Act "42 USC 1395ww note" of 1987, is amended by striking
"January 1, 1989" and inserting "January 1, 1990".
SEC. 8427. PAYMENT FOR MEDICAL ESCORT OR MEDICAL ATTENDANT ON
COMMERCIAL AIRLINER ALLOWED.
(a) IN GENERAL. -- "42 USC 1395x note" The Secretary of Health and
Human Services shall provide that in cases where (as of the date of the
enactment of this Act) transportation on a commercial airliner is
covered under section 1861(s)(7) of the Social Security Act, the
Secretary shall also provide for payment for medically necessary
services of a medical escort or medical attendant.
(b) EFFECTIVE PERIOD. -- Subsection (a) shall apply to payment for
services furnished during the 5-year period beginning on July 1, 1989.
SEC. 8431. DELAY IN ISSUANCE OF FINAL REGULATIONS CONCERNING THE USE
OF VOLUNTARY CONTRIBUTIONS AND PROVIDER-PAID TAXES BY STATES TO RECEIVE
FEDERAL MATCHING FUNDS.
The Secretary of Health and Human Services shall not issue any final
regulation prior to May 1, 1989, changing the treatment of voluntary
contributions or provider-paid taxes utilized by States to receive
Federal matching funds under title XIX of the Social Security Act.
SEC. 8432. MEDICAID LONG-TERM CARE WAIVER PROGRAM.
(a) MODIFICATION OF FORMULA. -- Section 1915(d)(5)(B) of the Social
Security Act (42 U.S.C. 1396n(5)(B)) is amended by adding at the end the
following new clause:
"(iv) If there is enacted after December 22, 1987, an Act which
amends this title and which results in an increase in the aggregate
amount of medical assistance under this title for nursing facility
services and home and community-based services for individuals who have
attained the age of 65 years, the Secretary, at the request of a State
with a waiver under this subsection for a waiver year or years and in
close consultation with the State, shall adjust the projected amount
computed under this subparagraph for the waiver year or years to take
into account such increase.".
(b) TECHNICAL MODIFICATIONS. -- Clauses (i) and (ii) of section
1915(d)(5)(B) of such Act (42 U.S.C. 1396n(d)(5)(B)) are amended --
(1) by inserting "(rounded to the nearest quarter of a year)"
after "the number of years" each place it appears,
(2) by striking "before the waiver year" each place it appears
and inserting "at the end of the waiver year",
(3) by striking "between the base year and the waiver year",
and
(4) by inserting "(rounded to the nearest quarter of a year)"
after "for each year" each place it appears.
(c) EFFECTIVE DATE. -- The amendments made by this section "42 USC
1396n note" shall apply to waiver years beginning during or after fiscal
year 1989.
SEC. 8433. EXTENSION OF TIME PERIOD FOR SUBMISSION OF CORRECTION AND
REDUCTION PLANS FOR CERTAIN INTERMEDIATE CARE FACILITIES FOR THE
MENTALLY RETARDED.
(a) IN GENERAL. -- Section 1922 of the Social Security Act (42 U.S.
C. 1396r-3) is amended --
(1) in subsection (a), by striking "residents" and inserting
"residents (including failure to provide active treatment)";
(2) in subsection (c)(5), by inserting ", and to provide active
treatment for," after "health and safety of"; and
(3) in subsection (f), by striking "within 3 years after the
effective date of final regulations implementing this section" and
inserting "by January 1, 1990".
(b) EFFECTIVE DATE. -- The amendments made by subsection (a) "42 USC
1396r-3" shall become effective on the date of the enactment of this
Act, and shall apply to any proceeding where there has not yet been a
final determination by the Secretary (as defined for purposes of
judicial review) as of the date of the enactment of this Act.
SEC. 8434. CORRECTION RELATING TO MEDICARE BUY-IN.
(a) IN GENERAL. -- Section 1905(p)(1) of the Social Security Act (42
U.S.C. 1396d(p)(1)) is amended by striking subparagraph (B) and
redesignating subparagraphs (C) and (D) as subparagraphs (B) and (C),
respectively.
(b) CONFORMING AMENDMENTS. --
(1) Section 1902(a)(10) of such Act (42 U.S.C. 1396a(a)(10)) is
amended, in the subdivision (VIII) following subparagraph (E), by
inserting "who is only entitled to medical assistance because the
individual is such a beneficiary" after "1905(p)(1)".
(2) Section 1902(m)(4)(A) of such Act (42 U.S.C. 1396a(m)(4)(
A)) is amended by striking "1905(p)(1)(C)" and inserting "1905(
p)(1)(B)".
(3) Section 1905(a) of such Act (42 U.S.C. 1396d(a)) is
amended, in the matter before clause (i), by striking "in the case
of a qualified medicare beneficiary" and inserting "in the case of
medicare cost-sharing with respect to a qualified medicare
beneficiary".
(4) Section 1905(p)(2)(A) of such Act (42 U.S.C. 1396(p)(2)(
A)), as amended by section 608(d)(14) of the Family Support Act of
1988, is amended by striking "(1)(C)" and inserting "(1)(B)".
(c) EFFECTIVE DATE. -- The amendment made by this section "42 USC
1396a note" shall be effective as if included in the enactment of
section 301 of the Medicare Catastrophic Coverage Act of 1988.
SEC. 8435. CLARIFICATION OF FEDERAL FINANCIAL PARTICIPATION FOR
CASE-MANAGEMENT SERVICES.
The Secretary of Health and Human Services may not fail or refuse to
approve an amendment to a State plan under title XIX of the Social
Security Act "42 USC 1396a note" that provides for coverage of
case-management services described in section 1915(g)(2) of such Act, or
to deny payment to a State for such services under section 1903(a)( 1)
of such Act on the basis that a State is required to provide such
services under State law or on the basis that the State had paid or is
paying for such services from non-Federal funds before or after April 7,
1986. Nothing in this section shall be construed as requiring the
Secretary to make payment to a State under section 1903(a)(1) of such
Act for such case-management services which are provided without charge
to the users of such services.
SEC. 8436. DETERMINATION OF PREMIUM AMOUNTS FOR EXTENDED MEDICAL
ASSISTANCE.
(a) TAKING INTO ACCOUNT CHILD CARE COSTS. -- Section 1925(d)(5)(C)
of the Social Security Act, as inserted by section 303(a)(1) of the
Family Support Act "42 USC 1396r-6" of 1988, is amended by inserting
"(less the average monthly costs for such child care as is necessary for
the employment of the caretaker relative" after "gross monthly
earnings".
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) "42 USC
1396r-6 note" shall be effective as if included in the enactment of the
Family Support Act of 1988.
SEC. 8437. CLARIFICATION OF WAIVER FOR HOME AND COMMUNITY-BASED
SERVICES FOR INDIVIDUALS WHO WOULD OTHERWISE REQUIRE HOSPITAL OR
FACILITY CARE.
(a) IN GENERAL. -- Section 1915(c)(7)(A) of the Social Security Act
(42 U.S.C. 1396n(c)(7)(A)) is amended --
(1) by striking "who are inpatients in hospitals," and
inserting "who are inpatients in, or who would require the level
of care provided in, hospitals,"; and
(2) by striking "who are inpatients of those respective
facilities." and inserting "who are inpatients in, or who would
require the level of care provided in, those respective
facilities.".
(b) EFFECTIVE DATE. -- The amendment made by subsection (a) "42 USC
1396n note" shall apply with respect to waiver applications submitted
before, on, or after the date of the enactment of this Act.
SEC. 9001. TRADE TECHNICAL AMENDMENTS.
(a) IN GENERAL.
(1) Section 121 of the Trade Act of 1974 (19 U.S.C. 2131) is
amended by striking out "(d) There are" and inserting in lieu
thereof "There are".
(2)(A) Paragraph (6) of section 203(e) of the Trade Act of 1974
(19 U.S.C. 2253(e)) is amended --
(i) by striking out "(A) the application" in subparagraph (B)
and inserting in lieu thereof "(i) the application", and
(ii) by striking out "(B) the designation" in subparagraph (B)
and inserting in lieu thereof "(ii) the designation".
(B) Paragraph (2) of section 1214(j) of the Omnibus Trade and
Competitiveness Act "19 USC 2253" of 1988 is amended --
(i) by striking out "Section 203(f)" and inserting in lieu
thereof "Paragraph (6) of section 203(e)",
(ii) by striking out "in paragraph (1)" and inserting in lieu
thereof "in subparagraph (A)(i)", and
(iii) by striking out "in paragraph (3)" and inserting in lieu
thereof "in subparagraph (B)(i)";
(3) Section 1215 of the Omnibus Trade and Competitiveness Act
"19 USC 2138" of 1988 is amended by striking out "1212(j)(1)" and
inserting in lieu thereof "1214(j)(1)".
(4) Section 771B of the Tariff Act "19 USC 1677-2" of 1930 is
amended to read as follows:
"SEC. 771B. CALCULATION OF SUBSIDIES ON CERTAIN PROCESSED
AGRICULTURAL PRODUCTS.
"In the case of an agricultural product processed from a raw
agricultural product in which --
"(1) the demand for the prior stage product is substantially
dependent on the demand for the latter stage product, and
"(2) the processing operation adds only limited value to the
raw commodity,
subsidies found to be provided to either producers or processors of
the product shall be deemed to be provided with respect to the
manufacture, production, or exportation of the processed product.".
(5) Paragraph (19) of section 771 of the Tariff Act of 1930 (19
U.S.C. 1677), as added by section 1335 of the Omnibus Trade and
Competitiveness Act of 1988, is redesignated as paragraph (20).
(6) Subsection (e) of section 1337 of the Omnibus Trade and
Competitiveness Act "19 USC 1671 note" of 1988 is amended by
striking out "1321(b)" and inserting in lieu thereof "1322".
(7) Paragraph (6) of section 1342(a) of the Omnibus Trade and
Competitiveness Act "19 USC 1337" of 1988 is amended by striking
out "by paragraph (5)(B)" and inserting in lieu thereof "by
paragraph (5)(A)".
(8) Section 204 of the Trade Act "19 USC 2254" of 1974 is
amended by redesignating subsections (d) and (e) as subsections
(c) and (d), respectively.
(9) Subsection (d) of section 701 of the Tariff Act of 1930 (19
U.S.C. 1671) is amended by redesignating the subsection (d)
relating to a cross reference as subsection (f).
(10) Subsection (a) of section 162 of the Trade Act of 1974 (19
U.S.C. 2212(a)) is amended --
(A) by striking out "chapter 1 or", and
(B) by inserting "or under section 1102 of the Omnibus Trade
and Competitiveness Act of 1988" after "or 124".
(11) Item 735.24 of the Tariff Schedules of the United States
is amended by striking out "5.52% ad val." and inserting in lieu
thereof "4.64% ad val.".
(12) Subparagraph (B) of section 337(n)(2) of the Tariff Act of
1930 (19 U.S.C. 1337(n)(2)(B)) is amended by striking out "under
subsection (h)" and inserting in lieu thereof "under subsection
(j)".
(13) Subsection (g) of section 1214 of the Omnibus Trade and
Competitiveness Act "19 USC 58c" of 1988 is amended to read as
follows:
"(g) COBRA OF 1985. -- Section 13031 of the Consolidated Omnibus
Budget Reconciliation Act of 1985 (19 U.S.C. 58c) is amended --
"(1) by striking out 'schedule 8 of the Tariff Schedules of the
United States except item 806.30 or 807.00' in subsection
(a)(9)(A) and inserting in lieu thereof 'chapter 98 of the
Harmonized Tariff Schedule of the United States, except subheading
9802.00.60 or 9802.00.80';
"(2) by striking out 'General Headnote 3(e)(vi) or (vii)' in
subsection (a)(9)(C) and inserting in lieu thereof 'general note
3(c)(v)';
"(3) by striking out 'Schedules' in subsection (a)(9)(C) and
inserting in lieu thereof 'Schedule';
"(4) by striking out 'item 806.30' wherever it appears in
subsection (b)(8)(A) and inserting in lieu thereof 'subparagraph
9802.00.60';
"(5) by striking out 'item 807.00' wherever it appears in
subsection (b)(8)(A) and inserting in lieu thereof 'subparagraph
9802.00.80'; and
"(6) by striking out 'headnote 2 of the General Headnotes and
Rules of Interpretation of the Tariff Schedules of the United
States' in subsection (c)(3) and inserting in lieu thereof
'general note 2 of the Harmonized Tariff Schedule of the United
States'.".
(14) Subparagraph (D) of section 1214(q)(2) of the Omnibus
Trade and Competitiveness Act "19 USC 2703" of 1988 is amended --
(A) by striking out "TSUS" in clause (iv) and inserting in lieu
thereof "TSUS;",
(B) by striking out "HTS" in clause (iv) and inserting in lieu
thereof "HTS; and", and
(C) by striking out "subparagraph (E)" in clause (vi) and
inserting in lieu thereof "subparagraph (D)".
(15) Section 330(c)(3)(A)(i) of the Tariff Act of 1930 (19 U.
S.C. 1330(c)(3)(A)(i)) is amended by striking out "most recently
appointed to" and inserting in lieu thereof "with the shortest
period of service on".
(16) Subsection (g) of section 332 of the Tariff Act of 1930
(19 U.S.C. 1332(g)) is amended by striking out "report to
Congress. on the first" and inserting in lieu thereof "report to
Congress on the first".
(17) Subsection (i) of section 1121 of the Omnibus Trade and
Competitiveness Act of 1988 is amended by striking out "subsection
(c) apply" and inserting in lieu thereof "subsection (f) apply".
(18) Subsection (b) of section 1902 of the Omnibus Trade and
Competitiveness Act "19 USC 1507 note" of 1988 (102 Stat. 1313) is
amended by striking out "1987" and inserting in lieu thereof
"1988".
(19) Item 909.35 of the Appendix to the Tariff Schedules of the
United States is amended by striking out "3.0% ad val. (I)".
(20) Subparagraph (B) of section 236(a)(6) of the Trade Act of
1974 (19 U.S.C. 2296(a)(6)(B)) is amended by striking out "in
subparagraph (A) or (B) of paragraph (1)" and inserting in lieu
thereof "in clause (i) or (ii) of subparagraph (A)".
(21) Subsection (g) of section 1430 of the Omnibus Trade and
Competitiveness Act "19 USC 2397 note" of 1988 (102 Stat. 1257) is
amended by striking out "apply to with" and inserting in lieu
thereof "apply with".
(b) EFFECTIVE DATE. -- The amendments made by this section "19 USC
58c note" shall be applied as if such amendments took effect on August
23, 1988.
SEC. 9002. FOREIGN TRADE ZONES.
Section 3 of the Act of June 18, 1934 (48 Stat. 999, chapter 590; 19
U.S.C. 81c) is amended by adding at the end thereof the following new
subsection:
"(d) In regard to the calculation of relative values in the
operations of petroleum refineries in a foreign trade zone, the time of
separation is defined as the entire manufacturing period. The price of
products required for computing relative values shall be the average per
unit value of each product for the manufacturing period. Definition and
attribution of products to feedstocks for petroleum manufacturing may be
either in accordance with Industry Standards of Potential Production on
a Practical Operating Basis as verified and adopted by the Secretary of
the Treasury (known as producibility) or such other inventory control
method as approved by the Secretary of the Treasury that protects the
revenue.".
SEC. 9003. REPORT ON SMALL BUSINESS INNOVATION RESEARCH PROGRAM.
Section 6 of the Small Business Innovation Development Act of 1982
(15 U.S.C. 638, note) is amended --
(1) by striking out the last sentence of subsection (a), as
added by section 8008 of the Omnibus Trade and Competitiveness Act
of 1988 (Public Law 100-418), and
(2) by adding at the end thereof the following new subsection:
"(c) Not later than July 1, 1989, the Comptroller General shall
transmit to the appropriate committees of the House of Representatives
and the Senate recommendations as to the advisability of amending the
Small Business Innovation Research program to --
"(1) increase each agency's share of research and development
expenditures devoted to it by 0.25 percent per year, until it is 3
percent of the total extramural research and development funds and
targeting a portion of the increment at products with
commercialization or export potential;
"(2) make the Small Business Innovation Research program
permanent with a formal congressional review every 10 years,
beginning in 1993;
"(3) allocate a modest but appropriate share of each agency's
Small Business Innovation Research fund for administrative
purposes for effective management, quality maintenance, and the
elimination of program delays; and
"(4) include within the Small Business Innovation and Research
program all agencies expending between $20,000,000 and
$100,000,000 in extramural research and development funds
annually.".
SEC. 9004. EXTENSION OF CERTAIN EXISTING SUSPENSIONS OF DUTY AND
DUTY REDUCTIONS.
(a) EXTENSIONS UNTIL JANUARY 1, 1993. -- Each of the following items
of the Appendix to the Tariff Schedules of the United States are amended
by striking out the date in the effective date column and inserting in
lieu thereof "12/31/92":
(1) Item 903.29 (relating to fresh, chilled, or frozen brussels
sprouts).
(2) Item 906.30 (relating to 3,5,6-trichlorosalicylic acid).
(3) Item 906.32 (m-Aminophenol).
(4) Item 906.38 (p-acetaminobenzenesulfonyl chloride).
(5) Item 906.51 (carboxylic acid disolvate).
(6) Item 906.53 (relating to dicyclomine hydrochloride and
mepenzolate bromide).
(7) Item 906.54 (relating to desipramine hydrochloride).
(8) Item 906.99 (relating to rifampin).
(9) Item 907.03 (relating to m-xylenediamine).
(10) Item 907.04 (relating to 1,2-bis(aminomethyl)
cyclohexane).
(11) Item 907.06 (relating to 4,4'bis(a,a-dimethylbenzyl)
diphenylamine).
(12) Item 907.08 (relating to 4-chloro-3-methylphenol).
(13) Item 907.16 (relating to uncompounded allyl resins).
(14) Item 907.18 (relating to certain forms of amiodarone).
(15) Item 907.25 (relating to terfenadine).
(16) Item 907.42 (relating to clomiphene citrate).
(17) Item 907.51 (relating to certain yttrium materials and
compounds).
(18) Item 907.65 (relating to tartaric acid).
(19) Item 907.66 (relating to potassium salts: Antimony
tartrate).
(20) Item 907.68 (relating to cream of tartar).
(21) Item 907.69 (relating to sodium tartrate).
(22) Item 907.76 (relating to lactulose).
(23) Item 910.00 (relating to diamond tool and drill blanks).
(24) Item 911.50 (relating to unwrought lead).
(25) Item 912.13 (relating to certain power-driven flat
knitting machines and parts thereof).
(b) OTHER EXTENSIONS. --
(1) Item 907.00 (relating to p-hydroxybenzoic acid) is amended
by striking out "9/30/85" and inserting in lieu thereof "12/31/
88".
(2) Item 907.22 (relating to caffeine) is amended by striking
out "On or before 12/31/87" and inserting in lieu thereof "On or
before the earlier of 12/31/92 or the date on which the rate of
duty imposed by the European Communities on articles described in
item 437.02 exceeds the rate of duty imposed by the United States
on such articles that was in effect on 6/30/88"
SEC. 10001. SHORT TITLE.
This title "16 USC 429b note" may be cited as the "Manassas National
Battlefield Park Amendments of 1988".
SEC. 10002. ADDITION TO MANASSAS NATIONAL BATTLEFIELD PARK.
The first section of the Act entitled "An act to preserve within
Manassas National Battlefield Park, Virginia, the most important
historic properties relating to the battle of Manassas, and for other
purposes", approved April 17, 1954 (16 U.S.C. 429b), is amended --
(1) by inserting "(a)" after "That"; and
(2) by adding at the end thereof the following:
4"(b)(1) In addition to subsection (a), the boundaries of the park shall
include the area, comprising approximately 600 acres, which is south of
U.S. Route 29, north of Interstate Route 66, east of Route 705, and west
of Route 622. Such area shall hereafter in this Act be referred to as
the 'Addition'.
"(2)(A) Notwithstanding any other provisions of law, effective on the
date of enactment of the Manassas National Battlefield Park Amendments
of 1988, there is hereby vested in the United States all right, title,
and interest in and to, and the right to immediate possession of, all
the real property within the Addition.
"(B) The United States shall pay just compensation to the owners of
any property taken pursuant to this paragraph and the full faith and
credit of the United States is hereby pledged to the payment of any
judgment entered against the United States with respect to the taking of
such property. Payment shall be in the amount of the agreed negotiated
value of such property or the valuation of such property awarded by
judgment and shall be made from the permanent judgment appropriation
established pursuant to 31 U.S.C. 1304. Such payment shall include
interest on the value of such property which shall be compounded
quarterly and computed at the rate applicable for the period involved,
as determined by the Secretary of the Treasury on the basis of the
current average market yield on outstanding marketable obligations of
the United States of comparable maturities from the date of enactment of
the Manassas National Battlefield Park Amendments of 1988 to the last
day of the month preceding the date on which payment is made. 4"(C) In
the absence of a negotiated settlement, or an action by the owner,
within 1 year after the date of enactment of the Manassas National
Battlefield Park Amendments of 1988, the Secretary may initiate a
proceeding at anytime seeking in a court of competent jurisdiction a
determination of just compensation with respect to the taking of such
property.
"(3) Not later than 6 months after the date of enactment of the
Manassas National Battlefield Park Amendments of 1988, the Secretary
shall publish in the Federal Register a detailed description and map
depicting the boundaries of the Addition. The map shall be on file and
available for public inspection in the offices of the National Park
Service, Department of the Interior.
"(c) The Secretary shall not allow any unauthorized use of the
Addition after the enactment of the Manassas National Battlefield Park
Amendments of 1988, except that the Secretary may permit the orderly
termination of all operations on the Addition and the removal of
equipment, facilities, and personal property from the Addition.".
SEC. 10003. VISUAL PROTECTION.
Section 2(a) of the Act entitled "An Act to preserve within Manassas
National Battlefield Park, Virginia, the most important historic
properties relating to the battle of Manassas, and for other purposes",
approved April 17, 1954 (16 U.S.C. 419b-1), is amended --
(1) by inserting "(1)" after "(a)"; and
(2) by adding at the end thereof the following:
"(2) The Secretary shall cooperate with the Commonwealth of Virginia,
the political subdivisions thereof, and other parties as designated by
the Commonwealth or its political subdivisions in order to promote and
achieve scenic preservation of views from within the park through zoning
and such other means as the parties determine feasible.".
SEC. 10004. "16 USC 429b note" HIGHWAY RELOCATION.
(a) STUDY. -- The Secretary of the Interior (hereafter in this
section referred to as the "Secretary"), in consultation and consensus
with the Commonwealth of Virginia, the Federal Highway Administration,
and Prince William County, shall conduct a study regarding the
relocation of highways (known as routes 29 and 234) in, and in the
vicinity of, the Manassas National Battlefield Park (hereinafter in this
section referred to as the "park"). The study shall include an
assessment of the available alternatives, together with cost estimates
and recommendations regarding preferred options. The study shall
specifically consider and develop plans for the closing of those public
highways (known as routes 29 and 234) that transect the park and shall
include analysis of the timing and method of such closures and of means
to provide alternative routes for traffic now transecting the park. The
Secretary shall provide for extensive public involvement in the
preparation of the study.
(b) DETERMINATION. -- Within 1 year after the enactment of this Act,
the Secretary shall complete the study under subsection (a). The study
shall determine when and how the highways (known as routes 29 and 234)
should be closed.
(c) ASSISTANCE. -- The Secretary shall provide funds to the
appropriate construction agency for the construction and improvement of
the highways to be used for the rerouting of traffic now utilizing
highways (known as routes 29 and 234) to be closed pursuant to
subsection (b) if the construction and improvement of such alternatives
are deemed by the Secretary to be in the interest of protecting the
integrity of the park. Not more than 75 percent of the costs of such
construction and improvement shall be provided by the Secretary and at
least 25 percent shall be provided by State or local governments from
any source other than Federal funds. Such construction and improvement
shall be approved by the Secretary of Transportation.
(d) AUTHORIZATION. -- There is authorized to be appropriated to the
Secretary not to exceed $30,000,000 to prepare the study required by
subsection (a) and to provide the funding described in subsection (c).
Approved November 10, 1988.
LEGISLATIVE HISTORY -- H.R. 4333 (S. 2238):
HOUSE REPORTS: No. 100-795 (Comm. on Ways and Means) and No.
100-1104 (Comm. of Conference).
SENATE REPORTS: No. 100-445 accompanying S. 2238 (Comm. on Finance).
CONGRESSIONAL RECORD, Vol. 134 (1988): Aug. 4, considered and passed
House. Oct. 6, 7, S. 2238 considered in Senate. Oct. 11, H.R. 4333
considered and passed Senate, amended. Oct. 21, House and Senate agreed
to conference report.