[105th Congress Public Law 206]
[From the U.S. Government Printing Office]
<DOC>
[DOCID: f:publ206.105]
[[Page 112 STAT. 685]]
Public Law 105-206
105th Congress
An Act
To amend the Internal Revenue Code of 1986 to restructure and reform the
Internal Revenue Service, and for other purposes. <<NOTE: July 22,
1998 - [H.R. 2676]>>
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress <<NOTE: Internal Revenue Service
Restructuring and Reform Act of 1998.>> assembled,
SECTION 1. SHORT TITLE; <<NOTE: 26 USC 1 note.>> AMENDMENT OF 1986 CODE;
WAIVER OF ESTIMATED TAX PENALTIES; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Internal
Revenue Service Restructuring and Reform Act of 1998''.
(b) Amendment of 1986 Code.--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 the
Internal Revenue Code of 1986.
(c) Waiver <<NOTE: 26 USC 6654 note.>> of Estimated Tax Penalties.--
No addition to tax shall be made under section 6654 or 6655 of the
Internal Revenue Code of 1986 with respect to any underpayment of an
installment required to be paid on or before the 30th day after the date
of the enactment of this Act to the extent such underpayment was created
or increased by any provision of this Act.
(d) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; amendment of 1986 Code; waiver of estimated tax
penalties; table of contents.
TITLE I--REORGANIZATION OF STRUCTURE AND MANAGEMENT OF THE INTERNAL
REVENUE SERVICE
Subtitle A--Reorganization of the Internal Revenue Service
Sec. 1001. Reorganization of the Internal Revenue Service.
Sec. 1002. Internal Revenue Service mission to focus on taxpayers'
needs.
Subtitle B--Executive Branch Governance and Senior Management
Sec. 1101. Internal Revenue Service Oversight Board.
Sec. 1102. Commissioner of Internal Revenue; other officials.
Sec. 1103. Treasury Inspector General for Tax Administration.
Sec. 1104. Other personnel.
Sec. 1105. Prohibition on executive branch influence over taxpayer
audits and other investigations.
Subtitle C--Personnel Flexibilities
Sec. 1201. Improvements in personnel flexibilities.
Sec. 1202. Voluntary separation incentive payments.
Sec. 1203. Termination of employment for misconduct.
Sec. 1204. Basis for evaluation of Internal Revenue Service employees.
Sec. 1205. Employee training program.
TITLE II--ELECTRONIC FILING
Sec. 2001. Electronic filing of tax and information returns.
[[Page 112 STAT. 686]]
Sec. 2002. Due date for certain information returns.
Sec. 2003. Paperless electronic filing.
Sec. 2004. Return-free tax system.
Sec. 2005. Access to account information.
TITLE III--TAXPAYER PROTECTION AND RIGHTS
Sec. 3000. Short title.
Subtitle A--Burden of Proof
Sec. 3001. Burden of proof.
Subtitle B--Proceedings by Taxpayers
Sec. 3101. Expansion of authority to award costs and certain fees.
Sec. 3102. Civil damages for collection actions.
Sec. 3103. Increase in size of cases permitted on small case calendar.
Sec. 3104. Actions for refund with respect to certain estates which have
elected the installment method of payment.
Sec. 3105. Administrative appeal of adverse Internal Revenue Service
determination of tax-exempt status of bond issue.
Sec. 3106. Civil action for release of erroneous lien.
Subtitle C--Relief for Innocent Spouses and for Taxpayers Unable To
Manage Their Financial Affairs Due to Disabilities
Sec. 3201. Relief from joint and several liability on joint return.
Sec. 3202. Suspension of statute of limitations on filing refund claims
during
periods of disability.
Subtitle D--Provisions Relating to Interest and Penalties
Sec. 3301. Elimination of interest rate differential on overlapping
periods of interest on tax overpayments and underpayments.
Sec. 3302. Increase in overpayment rate payable to taxpayers other than
corporations.
Sec. 3303. Mitigation of penalty on individual's failure to pay for
months during
period of installment agreement.
Sec. 3304. Mitigation of failure to deposit penalty.
Sec. 3305. Suspension of interest and certain penalties where Secretary
fails to
contact individual taxpayer.
Sec. 3306. Procedural requirements for imposition of penalties and
additions to tax.
Sec. 3307. Personal delivery of notice of penalty under section 6672.
Sec. 3308. Notice of interest charges.
Sec. 3309. Abatement of interest on underpayments by taxpayers in
Presidentially declared disaster areas.
Subtitle E--Protections for Taxpayers Subject to Audit or Collection
Activities
Part I--Due Process
Sec. 3401. Due process in Internal Revenue Service collection actions.
Part II--Examination Activities
Sec. 3411. Confidentiality privileges relating to taxpayer
communications.
Sec. 3412. Limitation on financial status audit techniques.
Sec. 3413. Software trade secrets protection.
Sec. 3414. Threat of audit prohibited to coerce tip reporting
alternative commitment agreements.
Sec. 3415. Taxpayers allowed motion to quash all third-party summonses.
Sec. 3416. Service of summonses to third-party recordkeepers permitted
by mail.
Sec. 3417. Notice of Internal Revenue Service contact of third parties.
Part III--Collection Activities
subpart a--approval process
Sec. 3421. Approval process for liens, levies, and seizures.
subpart b--liens and levies
Sec. 3431. Modifications to certain levy exemption amounts.
Sec. 3432. Release of levy upon agreement that amount is uncollectible.
Sec. 3433. Levy prohibited during pendency of refund proceedings.
Sec. 3434. Approval required for jeopardy and termination assessments
and
jeopardy levies.
Sec. 3435. Increase in amount of certain property on which lien not
valid.
[[Page 112 STAT. 687]]
Sec. 3436. Waiver of early withdrawal tax for Internal Revenue Service
levies on employer-sponsored retirement plans or IRAs.
subpart c--seizures
Sec. 3441. Prohibition of sales of seized property at less than minimum
bid.
Sec. 3442. Accounting of sales of seized property.
Sec. 3443. Uniform asset disposal mechanism.
Sec. 3444. Codification of Internal Revenue Service administrative
procedures for seizure of taxpayer's property.
Sec. 3445. Procedures for seizure of residences and businesses.
Part IV--Provisions Relating to Examination and Collection Activities
Sec. 3461. Procedures relating to extensions of statute of limitations
by agreement.
Sec. 3462. Offers-in-compromise.
Sec. 3463. Notice of deficiency to specify deadlines for filing Tax
Court petition.
Sec. 3464. Refund or credit of overpayments before final determination.
Sec. 3465. Internal Revenue Service procedures relating to appeals of
examinations and collections.
Sec. 3466. Application of certain fair debt collection procedures.
Sec. 3467. Guaranteed availability of installment agreements.
Sec. 3468. Prohibition on requests to taxpayers to give up rights to
bring actions.
Subtitle F--Disclosures to Taxpayers
Sec. 3501. Explanation of joint and several liability.
Sec. 3502. Explanation of taxpayers' rights in interviews with the
Internal Revenue Service.
Sec. 3503. Disclosure of criteria for examination selection.
Sec. 3504. Explanations of appeals and collection process.
Sec. 3505. Explanation of reason for refund disallowance.
Sec. 3506. Statements regarding installment agreements.
Sec. 3507. Notification of change in tax matters partner.
Sec. 3508. Disclosure to taxpayers.
Sec. 3509. Disclosure of Chief Counsel advice.
Subtitle G--Low-Income Taxpayer Clinics
Sec. 3601. Low-income taxpayer clinics.
Subtitle H--Other Matters
Sec. 3701. Cataloging complaints.
Sec. 3702. Archive of records of Internal Revenue Service.
Sec. 3703. Payment of taxes.
Sec. 3704. Clarification of authority of Secretary relating to the
making of elections.
Sec. 3705. Internal Revenue Service employee contacts.
Sec. 3706. Use of pseudonyms by Internal Revenue Service employees.
Sec. 3707. Illegal tax protester designation.
Sec. 3708. Provision of confidential information to Congress by
whistleblowers.
Sec. 3709. Listing of local Internal Revenue Service telephone numbers
and addresses.
Sec. 3710. Identification of return preparers.
Sec. 3711. Offset of past-due, legally enforceable State income tax
obligations against overpayments.
Sec. 3712. Reporting requirements in connection with education tax
credit.
Subtitle I--Studies
Sec. 3801. Administration of penalties and interest.
Sec. 3802. Confidentiality of tax return information.
Sec. 3803. Study of noncompliance with internal revenue laws by
taxpayers.
Sec. 3804. Study of payments made for detection of underpayments and
fraud.
TITLE IV--CONGRESSIONAL ACCOUNTABILITY FOR THE INTERNAL REVENUE SERVICE
Subtitle A--Oversight
Sec. 4001. Expansion of duties of the Joint Committee on Taxation.
Sec. 4002. Coordinated oversight reports.
Subtitle B--Century Date Change
Sec. 4011. Century date change.
Subtitle C--Tax Law Complexity
Sec. 4021. Role of the Internal Revenue Service.
[[Page 112 STAT. 688]]
Sec. 4022. Tax law complexity analysis.
TITLE V--ADDITIONAL PROVISIONS
Sec. 5001. Lower capital gains rates to apply to property held more than
1 year.
Sec. 5002. Clarification of exclusion of meals for certain employees.
Sec. 5003. Clarification of designation of normal trade relations.
TITLE VI--TECHNICAL CORRECTIONS
Sec. 6001. Short title; coordination with other titles.
Sec. 6002. Definitions.
Sec. 6003. Amendments related to title I of 1997 Act.
Sec. 6004. Amendments related to title II of 1997 Act.
Sec. 6005. Amendments related to title III of 1997 Act.
Sec. 6006. Amendment related to title IV of 1997 Act.
Sec. 6007. Amendments related to title V of 1997 Act.
Sec. 6008. Amendments related to title VII of 1997 Act.
Sec. 6009. Amendments related to title IX of 1997 Act.
Sec. 6010. Amendments related to title X of 1997 Act.
Sec. 6011. Amendments related to title XI of 1997 Act.
Sec. 6012. Amendments related to title XII of 1997 Act.
Sec. 6013. Amendments related to title XIII of 1997 Act.
Sec. 6014. Amendments related to title XIV of 1997 Act.
Sec. 6015. Amendments related to title XV of 1997 Act.
Sec. 6016. Amendments related to title XVI of 1997 Act.
Sec. 6017. Amendment related to Transportation Equity Act for the 21st
Century.
Sec. 6018. Amendments related to Small Business Job Protection Act of
1996.
Sec. 6019. Amendments related to Taxpayer Bill of Rights 2.
Sec. 6020. Amendment related to Omnibus Budget Reconciliation Act of
1993.
Sec. 6021. Amendment related to Revenue Reconciliation Act of 1990.
Sec. 6022. Amendment related to Tax Reform Act of 1986.
Sec. 6023. Miscellaneous clerical and deadwood changes.
Sec. 6024. Effective date.
TITLE VII--REVENUE PROVISIONS
Sec. 7001. Clarification of deduction for deferred compensation.
Sec. 7002. Termination of exception for certain real estate investment
trusts from the treatment of stapled entities.
Sec. 7003. Certain customer receivables ineligible for mark to market
treatment.
Sec. 7004. Modification of AGI limit for conversions to Roth IRAs.
TITLE VIII--IDENTIFICATION OF LIMITED TAX BENEFITS SUBJECT TO LINE ITEM
VETO
Sec. 8001. Identification of limited tax benefits subject to line item
veto.
TITLE IX--TECHNICAL CORRECTIONS TO TRANSPORTATION EQUITY ACT FOR THE
21ST CENTURY
Sec. 9001. Short title.
Sec. 9002. Authorization and program subtitle.
Sec. 9003. Restorations to general provisions subtitle.
Sec. 9004. Restorations to program streamlining and flexibility
subtitle.
Sec. 9005. Restorations to safety subtitle.
Sec. 9006. Elimination of duplicate provisions.
Sec. 9007. Highway finance.
Sec. 9008. High priority projects technical corrections.
Sec. 9009. Federal Transit Administration programs.
Sec. 9010. Motor carrier safety technical correction.
Sec. 9011. Restorations to research title.
Sec. 9012. Automobile safety and information.
Sec. 9013. Technical corrections regarding subtitle A of title VIII.
Sec. 9014. Corrections to veterans subtitle.
Sec. 9015. Technical corrections regarding title IX.
Sec. 9016. Effective date.
[[Page 112 STAT. 689]]
TITLE I--REORGANIZATION OF STRUCTURE AND MANAGEMENT OF THE INTERNAL
REVENUE SERVICE
Subtitle A--Reorganization of the Internal Revenue Service
SEC. 1001. REORGANIZATION OF THE INTERNAL REVENUE SERVICE. <<NOTE: 26
USC 7801 note.>>
(a) In General.--The Commissioner of Internal Revenue shall develop
and implement a plan to reorganize the Internal Revenue Service. The
plan shall--
(1) supersede any organization or reorganization of the
Internal Revenue Service based on any statute or reorganization
plan applicable on the effective date of this section;
(2) eliminate or substantially modify the existing
organization of the Internal Revenue Service which is based on a
national, regional, and district structure;
(3) establish organizational units serving particular groups
of taxpayers with similar needs; and
(4) ensure an independent appeals function within the
Internal Revenue Service, including the prohibition in the plan
of ex parte communications between appeals officers and other
Internal Revenue Service employees to the extent that such
communications appear to compromise the independence of the
appeals officers.
(b) Savings Provisions.--
(1) Preservation of specific tax rights and remedies.--
Nothing in the plan developed and implemented under subsection
(a) shall be considered to impair any right or remedy, including
trial by jury, to recover any internal revenue tax alleged to
have been erroneously or illegally assessed or collected, or any
penalty claimed to have been collected without authority, or any
sum alleged to have been excessive or in any manner wrongfully
collected under the internal revenue laws. For the purpose of
any action to recover any such tax, penalty, or sum, all
statutes, rules, and regulations referring to the collector of
internal revenue, the principal officer for the internal revenue
district, or the Secretary, shall be deemed to refer to the
officer whose act or acts referred to in the preceding sentence
gave rise to such action. The venue of any such action shall be
the same as under existing law.
(2) Continuing effect of legal documents.--All orders,
determinations, rules, regulations, permits, agreements, grants,
contracts, certificates, licenses, registrations, privileges,
and other administrative actions--
(A) which have been issued, made, granted, or
allowed to become effective by the President, any
Federal agency or official thereof, or by a court of
competent jurisdiction, in the performance of any
function transferred or affected by the reorganization
of the Internal Revenue Service or any other
administrative unit of the Department of the Treasury
under this section; and
(B) which are in effect at the time this section
takes effect, or were final before the effective date of
this section
[[Page 112 STAT. 690]]
and are to become effective on or after the effective
date of this section,
shall continue in effect according to their terms until
modified, terminated, superseded, set aside, or revoked in
accordance with law by the President, the Secretary of the
Treasury, the Commissioner of Internal Revenue, or other
authorized official, a court of competent jurisdiction, or by
operation of law.
(3) Proceedings not affected.--The provisions of this
section shall not affect any proceedings, including notices of
proposed rulemaking, or any application for any license, permit,
certificate, or financial assistance pending before the
Department of the Treasury (or any administrative unit of the
Department, including the Internal Revenue Service) at the time
this section takes effect, with respect to functions transferred
or affected by the reorganization under this section but such
proceedings and applications shall continue. Orders shall be
issued in such proceedings, appeals shall be taken therefrom,
and payments shall be made pursuant to such orders, as if this
section had not been enacted, and orders issued in any such
proceedings shall continue in effect until modified, terminated,
superseded, or revoked by a duly authorized official, by a court
of competent jurisdiction, or by operation of law. Nothing in
this paragraph shall be deemed to prohibit the discontinuance or
modification of any such proceeding under the same terms and
conditions and to the same extent that such proceeding could
have been discontinued or modified if this section had not been
enacted.
(4) Suits not affected.--The provisions of this section
shall not affect suits commenced before the effective date of
this section, and in all such suits, proceedings shall be had,
appeals taken, and judgments rendered in the same manner and
with the same effect as if this section had not been enacted.
(5) Nonabatement of actions.--No suit, action, or other
proceeding commenced by or against the Department of the
Treasury (or any administrative unit of the Department,
including the Internal Revenue Service), or by or against any
individual in the official capacity of such individual as an
officer of the Department of the Treasury, shall abate by reason
of the enactment of this section.
(6) Administrative actions relating to promulgation of
regulations.--Any administrative action relating to the
preparation or promulgation of a regulation by the Department of
the Treasury (or any administrative unit of the Department,
including the Internal Revenue Service) relating to a function
transferred or affected by the reorganization under this section
may be continued by the Department of the Treasury through any
appropriate administrative unit of the Department, including the
Internal Revenue Service with the same effect as if this section
had not been enacted.
(c) Effective Date.--This section shall take effect on the date of
the enactment of this Act.
SEC. 1002. <<NOTE: 26 USC 7801 note.>> INTERNAL REVENUE SERVICE MISSION
TO FOCUS ON TAXPAYERS' NEEDS.
The Internal Revenue Service shall review and restate its mission to
place a greater emphasis on serving the public and meeting taxpayers'
needs.
[[Page 112 STAT. 691]]
Subtitle B--Executive Branch Governance and Senior Management
SEC. 1101. INTERNAL REVENUE SERVICE OVERSIGHT BOARD.
(a) In General.--Section 7802 (relating to the Commissioner of
Internal Revenue) is amended to read as follows:
``SEC. 7802. INTERNAL REVENUE SERVICE OVERSIGHT BOARD.
``(a) Establishment.--There is established within the Department of
the Treasury the Internal Revenue Service Oversight Board (hereafter in
this subchapter referred to as the `Oversight Board').
``(b) Membership.--
``(1) Composition.--The <<NOTE: President.>> Oversight Board
shall be composed of nine members, as follows:
``(A) six members shall be individuals who are not
otherwise Federal officers or employees and who are
appointed by the President, by and with the advice and
consent of the Senate.
``(B) one member shall be the Secretary of the
Treasury or, if the Secretary so designates, the Deputy
Secretary of the Treasury.
``(C) one member shall be the Commissioner of
Internal Revenue.
``(D) one member shall be an individual who is a
full-time Federal employee or a representative of
employees and who is appointed by the President, by and
with the advice and consent of the Senate.
``(2) Qualifications and terms.--
``(A) Qualifications.--Members of the Oversight
Board described in paragraph (1)(A) shall be appointed
without regard to political affiliation and solely on
the basis of their professional experience and expertise
in one or more of the following areas:
``(i) Management of large service
organizations.
``(ii) Customer service.
``(iii) Federal tax laws, including tax
administration and compliance.
``(iv) Information technology.
``(v) Organization development.
``(vi) The needs and concerns of taxpayers.
``(vii) The needs and concerns of small
businesses.
In the aggregate, the members of the Oversight Board
described in paragraph (1)(A) should collectively bring
to bear expertise in all of the areas described in the
preceding sentence.
``(B) Terms.--Each member who is described in
subparagraph (A) or (D) of paragraph (1) shall be
appointed for a term of 5 years, except that of the
members first appointed under paragraph (1)(A)--
``(i) two members shall be appointed for a
term of 3 years,
``(ii) two members shall be appointed for a
term of 4 years; and
``(iii) two members shall be appointed for a
term of 5 years.
[[Page 112 STAT. 692]]
``(C) Reappointment.--An individual who is described
in subparagraph (A) or (D) of paragraph (1) may be
appointed to no more than two 5-year terms on the
Oversight Board.
``(D) Vacancy.--Any vacancy on the Oversight Board
shall be filled in the same manner as the original
appointment. Any member appointed to fill a vacancy
occurring before the expiration of the term for which
the member's predecessor was appointed shall be
appointed for the remainder of that term.
``(3) Ethical considerations.--
``(A) Financial disclosure.--During the entire
period that an individual appointed under subparagraph
(A) or (D) of paragraph (1) is a member of the Oversight
Board, such individual shall be treated as serving as an
officer or employee referred to in section 101(f ) of
the Ethics in Government Act of 1978 for purposes of
title I of such Act, except that section 101(d) of such
Act shall apply without regard to the number of days of
service in the position.
``(B) Restrictions on post-employment.--For purposes
of section 207(c) of title 18, United States Code, an
individual appointed under subparagraph (A) or (D) of
paragraph (1) shall be treated as an employee referred
to in section 207(c)(2)(A)(i) of such title during the
entire period the individual is a member of the Board,
except that subsections (c)(2)(B) and (f ) of section
207 of such title shall not apply.
``(C) Members who are special government
employees.--If an individual appointed under
subparagraph (A) or (D) of paragraph (1) is a special
Government employee, the following additional rules
apply for purposes of chapter 11 of title 18, United
States Code:
``(i) Restriction on representation.--In
addition to any restriction under section 205(c)
of title 18, United States Code, except as
provided in subsections (d) through (i) of section
205 of such title, such individual (except in the
proper discharge of official duties) shall not,
with or without compensation, represent anyone to
or before any officer or employee of--
``(I) the Oversight Board or the
Internal Revenue Service on any matter;
``(II) the Department of the
Treasury on any matter involving the
internal revenue laws or involving the
management or operations of the Internal
Revenue Service; or
``(III) the Department of Justice
with respect to litigation involving a
matter described in subclause (I) or
(II).
``(ii) Compensation for services provided by
another.--For purposes of section 203 of such
title--
``(I) such individual shall not be
subject to the restrictions of
subsection (a)(1) thereof for sharing in
compensation earned by another for
representations on matters covered by
such section, and
[[Page 112 STAT. 693]]
``(II) a person shall not be subject
to the restrictions of subsection (a)(2)
thereof for sharing such compensation
with such individual.
``(D) Waiver.--The President may, only at the time
the President nominates the member of the Oversight
Board described in paragraph (1)(D), waive for the term
of the member any appropriate provision of chapter 11 of
title 18, United States Code, to the extent such waiver
is necessary to allow such member to participate in the
decisions of the Board while continuing to serve as a
full-time Federal employee or a representative of
employees. Any such waiver shall not be effective unless
a written intent of waiver to exempt such member (and
actual waiver language) is submitted to the Senate with
the nomination of such member.
``(4) Quorum.--Five members of the Oversight Board shall
constitute a quorum. A majority of members present and voting
shall be required for the Oversight Board to take action.
``(5) Removal.--
``(A) In general.--Any member of the Oversight Board
appointed under subparagraph (A) or (D) of paragraph (1)
may be removed at the will of the President.
``(B) Secretary and commissioner.--An individual
described in subparagraph (B) or (C) of paragraph (1)
shall be removed upon termination of service in the
office described in such subparagraph.
``(6) Claims.--
``(A) In general.--Members of the Oversight Board
who are described in subparagraph (A) or (D) of
paragraph (1) shall have no personal liability under
Federal law with respect to any claim arising out of or
resulting from an act or omission by such member within
the scope of service as a member.
``(B) Effect on other law.--This paragraph shall not
be construed--
``(i) to affect any other immunities and
protections that may be available to such member
under applicable law with respect to such
transactions;
``(ii) to affect any other right or remedy
against the United States under applicable law; or
``(iii) to limit or alter in any way the
immunities that are available under applicable law
for Federal officers and employees.
``(c) General Responsibilities.--
``(1) Oversight.--
``(A) In general.--The Oversight Board shall oversee
the Internal Revenue Service in its administration,
management, conduct, direction, and supervision of the
execution and application of the internal revenue laws
or related statutes and tax conventions to which the
United States is a party.
``(B) Mission of irs.--As part of its oversight
functions described in subparagraph (A), the Oversight
Board shall ensure that the organization and operation
of the Internal Revenue Service allows it to carry out
its mission.
[[Page 112 STAT. 694]]
``(C) Confidentiality.--The Oversight Board shall
ensure that appropriate confidentiality is maintained in
the exercise of its duties.
``(2) Exceptions.--The Oversight Board shall have no
responsibilities or authority with respect to--
``(A) the development and formulation of Federal tax
policy relating to existing or proposed internal revenue
laws, related statutes, and tax conventions,
``(B) specific law enforcement activities of the
Internal Revenue Service, including specific compliance
activities such as examinations, collection activities,
and criminal investigations,
``(C) specific procurement activities of the
Internal Revenue Service, or
``(D) except as provided in subsection (d)(3),
specific personnel actions.
``(d) Specific Responsibilities.--The Oversight Board shall have the
following specific responsibilities:
``(1) Strategic plans.--To review and approve strategic
plans of the Internal Revenue Service, including the
establishment of--
``(A) mission and objectives, and standards of
performance relative to either, and
``(B) annual and long-range strategic plans.
``(2) Operational plans.--To review the operational
functions of the Internal Revenue Service, including--
``(A) plans for modernization of the tax system,
``(B) plans for outsourcing or managed competition,
and
``(C) plans for training and education.
``(3) Management.--To--
``(A) recommend to the President candidates for
appointment as the Commissioner of Internal Revenue and
recommend to the President the removal of the
Commissioner;
``(B) review the Commissioner's selection,
evaluation, and compensation of Internal Revenue Service
senior executives who have program management
responsibility over significant functions of the
Internal Revenue Service; and
``(C) review and approve the Commissioner's plans
for any major reorganization of the Internal Revenue
Service.
``(4) Budget.--To--
``(A) review and approve the budget request of the
Internal Revenue Service prepared by the Commissioner;
``(B) submit such budget request to the Secretary of
the Treasury; and
``(C) ensure that the budget request supports the
annual and long-range strategic plans.
``(5) Taxpayer protection.--To ensure the proper treatment
of taxpayers by the employees of the Internal Revenue Service.
The Secretary shall submit the budget request referred to in paragraph
(4)(B) for any fiscal year to the President who shall submit such
request, without revision, to Congress together with the President's
annual budget request for the Internal Revenue Service for such fiscal
year.
``(e) Board Personnel Matters.--
[[Page 112 STAT. 695]]
``(1) Compensation of members.--
``(A) In general.--Each member of the Oversight
Board who--
``(i) is described in subsection (b)(1)(A); or
``(ii) is described in subsection (b)(1)(D)
and is not otherwise a Federal officer or
employee,
shall be compensated at a rate of $30,000 per year. All
other members shall serve without compensation for such
service.
``(B) Chairperson.--In lieu of the amount specified
in subparagraph (A), the Chairperson of the Oversight
Board shall be compensated at a rate of $50,000 per
year.
``(2) Travel expenses.--
``(A) In general.--The members of the Oversight
Board shall be allowed travel expenses, including per
diem in lieu of subsistence, at rates authorized for
employees of agencies under subchapter I of chapter 57
of title 5, United States Code, to attend meetings of
the Oversight Board and, with the advance approval of
the Chairperson of the Oversight Board, while otherwise
away from their homes or regular places of business for
purposes of duties as a member of the Oversight Board.
``(B) Report.--The Oversight Board shall include in
its annual report under subsection (f )(3)(A)
information with respect to the travel expenses allowed
for members of the Oversight Board under this paragraph.
``(3) Staff.--
``(A) In general.--The Chairperson of the Oversight
Board may appoint and terminate any personnel that may
be necessary to enable the Board to perform its duties.
``(B) Detail of government employees.--Upon request
of the Chairperson of the Oversight Board, a Federal
agency shall detail a Federal Government employee to the
Oversight Board without reimbursement. Such detail shall
be without interruption or loss of civil service status
or privilege.
``(4) Procurement of temporary and intermittent services.--
The Chairperson of the Oversight Board may procure temporary and
intermittent services under section 3109(b) of title 5, United
States Code.
``(f ) Administrative Matters.--
``(1) Chair.--
``(A) Term.--The members of the Oversight Board
shall elect for a 2-year term a chairperson from among
the members appointed under subsection (b)(1)(A).
``(B) Powers.--Except as otherwise provided by a
majority vote of the Oversight Board, the powers of the
Chairperson shall include--
``(i) establishing committees;
``(ii) setting meeting places and times;
``(iii) establishing meeting agendas; and
``(iv) developing rules for the conduct of
business.
``(2) Meetings.--The Oversight Board shall meet at least
quarterly and at such other times as the Chairperson determines
appropriate.
``(3) Reports.--
[[Page 112 STAT. 696]]
``(A) Annual.--The Oversight Board shall each year
report with respect to the conduct of its
responsibilities under this title to the President, the
Committees on Ways and Means, Government Reform and
Oversight, and Appropriations of the House of
Representatives and the Committees on Finance,
Governmental Affairs, and Appropriations of the Senate.
``(B) Additional report.--Upon a determination by
the Oversight Board under subsection (c)(1)(B) that the
organization and operation of the Internal Revenue
Service are not allowing it to carry out its mission,
the Oversight Board shall report such determination to
the Committee on Ways and Means of the House of
Representatives and the Committee on Finance of the
Senate.''.
(b) Restriction on Disclosure of Return Information to Oversight
Board Members.--Section 6103(h) (relating to disclosure to certain
Federal officers and employees for purposes of tax administration, etc.)
is amended by adding at the end the following new paragraph:
``(5) Internal revenue service oversight board.--
``(A) In general.--Notwithstanding paragraph (1),
and except as provided in subparagraph (B), no return or
return information may be disclosed to any member of the
Oversight Board described in subparagraph (A) or (D) of
section 7802(b)(1) or to any employee or detailee of
such Board by reason of their service with the Board.
Any request for information not permitted to be
disclosed under the preceding sentence, and any contact
relating to a specific taxpayer, made by any such
individual to an officer or employee of the Internal
Revenue Service shall be reported by such officer or
employee to the Secretary, the Treasury Inspector
General for Tax Administration, and the Joint Committee
on Taxation.
``(B) Exception for reports to the board.--If--
``(i) the Commissioner or the Treasury
Inspector General for Tax Administration prepares
any report or other matter for the Oversight Board
in order to assist the Board in carrying out its
duties; and
``(ii) the Commissioner or such Inspector
General determines it is necessary to include any
return or return information in such report or
other matter to enable the Board to carry out such
duties,
such return or return information (other than
information regarding taxpayer identity) may be
disclosed to members, employees, or detailees of the
Board solely for the purpose of carrying out such
duties.''.
(c) Conforming Amendments.--
(1) Section 4946(c) (relating to definitions and special
rules for chapter 42) is amended by striking ``or'' at the end
of paragraph (5), by striking the period at the end of paragraph
(6) and inserting ``, or'', and by adding at the end the
following new paragraph:
``(7) a member of the Internal Revenue Service Oversight
Board.''.
[[Page 112 STAT. 697]]
(2) The table of sections for subchapter A of chapter 80 is
amended by striking the item relating to section 7802 and
inserting the following new item:
``Sec. 7802. Internal Revenue Service Oversight
Board.''.
(d) Effective <<NOTE: 26 USC 7802 note.>> Date.--
(1) In general.--The amendments made by this section shall
take effect on the date of the enactment of this Act.
(2) Initial <<NOTE: President. Deadline.>> nominations to
internal revenue service oversight board.--The President shall
submit the initial nominations under section 7802 of the
Internal Revenue Code of 1986, as added by this section, to the
Senate not later than 6 months after the date of the enactment
of this Act.
(3) Effect on actions prior to appointment of oversight
board.--Nothing in this section shall be construed to invalidate
the actions and authority of the Internal Revenue Service prior
to the appointment of the members of the Internal Revenue
Service Oversight Board.
SEC. 1102. COMMISSIONER OF INTERNAL REVENUE; OTHER OFFICIALS.
(a) In General.--Section 7803 (relating to other personnel) is
amended to read as follows:
``SEC. 7803. COMMISSIONER OF INTERNAL REVENUE; OTHER OFFICIALS.
``(a) Commissioner of Internal Revenue.--
``(1) Appointment.--
<<NOTE: President.>> ``(A) In general.--There shall
be in the Department of the Treasury a Commissioner of
Internal Revenue who shall be appointed by the
President, by and with the advice and consent of the
Senate, to a 5-year term. Such appointment shall be made
from individuals who, among other qualifications, have a
demonstrated ability in management.
``(B) Vacancy.--Any individual appointed to fill a
vacancy in the position of Commissioner occurring before
the expiration of the term for which such individual's
predecessor was appointed shall be appointed only for
the remainder of that term.
``(C) Removal.--The Commissioner may be removed at
the will of the President.
``(D) Reappointment.--The Commissioner may be
appointed to more than one 5-year term.
``(2) Duties.--The Commissioner shall have such duties and
powers as the Secretary may prescribe, including the power to--
``(A) administer, manage, conduct, direct, and
supervise the execution and application of the internal
revenue laws or related statutes and tax conventions to
which the United States is a party; and
``(B) recommend to the President a candidate for
appointment as Chief Counsel for the Internal Revenue
Service when a vacancy occurs, and recommend to the
President the removal of such Chief Counsel.
If the Secretary determines not to delegate a power specified in
subparagraph (A) or (B), such determination may not take effect
until 30 days after the Secretary notifies the Committees on
Ways and Means, Government Reform and Oversight, and
Appropriations of the House of Representatives and the
[[Page 112 STAT. 698]]
Committees on Finance, Governmental Affairs, and Appropriations
of the Senate.
``(3) Consultation with board.--The Commissioner shall
consult with the Oversight Board on all matters set forth in
paragraphs (2) and (3) (other than paragraph (3)(A)) of section
7802(d).
``(b) Chief <<NOTE: President.>> Counsel for the Internal Revenue
Service.--
``(1) Appointment.--There shall be in the Department of the
Treasury a Chief Counsel for the Internal Revenue Service who
shall be appointed by the President, by and with the consent of
the Senate.
``(2) Duties.--The Chief Counsel shall be the chief law
officer for the Internal Revenue Service and shall perform such
duties as may be prescribed by the Secretary, including the
duty--
``(A) to be legal advisor to the Commissioner and
the Commissioner's officers and employees;
``(B) to furnish legal opinions for the preparation
and review of rulings and memoranda of technical advice;
``(C) to prepare, review, and assist in the
preparation of proposed legislation, treaties,
regulations, and Executive orders relating to laws which
affect the Internal Revenue Service;
``(D) to represent the Commissioner in cases before
the Tax Court; and
``(E) to determine which civil actions should be
litigated under the laws relating to the Internal
Revenue Service and prepare recommendations for the
Department of Justice regarding the commencement of such
actions.
If the Secretary determines not to delegate a power specified in
subparagraph (A), (B), (C), (D), or (E), such determination may
not take effect until 30 days after the Secretary notifies the
Committees on Ways and Means, Government Reform and Oversight,
and Appropriations of the House of Representatives and the
Committees on Finance, Governmental Affairs, and Appropriations
of the Senate.
``(3) Persons to whom chief counsel reports.--The Chief
Counsel shall report directly to the Commissioner of Internal
Revenue, except that--
``(A) the Chief Counsel shall report to both the
Commissioner and the General Counsel for the Department
of the Treasury with respect to--
``(i) legal advice or interpretation of the
tax law not relating solely to tax policy;
``(ii) tax litigation; and
``(B) the Chief Counsel shall report to the General
Counsel with respect to legal advice or interpretation
of the tax law relating solely to tax policy.
If there is any disagreement between the Commissioner and the
General Counsel with respect to any matter jointly referred to
them under subparagraph (A), such matter shall be submitted to
the Secretary or Deputy Secretary for resolution.
``(4) Chief counsel personnel.--All personnel in the Office
of Chief Counsel shall report to the Chief Counsel.
``(c) Office of the Taxpayer Advocate.--
``(1) Establishment.--
[[Page 112 STAT. 699]]
``(A) In general.--There is established in the
Internal Revenue Service an office to be known as the
`Office of the Taxpayer Advocate'.
``(B) National taxpayer advocate.--
``(i) In general.--The Office of the Taxpayer
Advocate shall be under the supervision and
direction of an official to be known as the
`National Taxpayer Advocate'. The National
Taxpayer Advocate shall report directly to the
Commissioner of Internal Revenue and shall be
entitled to compensation at the same rate as the
highest rate of basic pay established for the
Senior Executive Service under section 5382 of
title 5, United States Code, or, if the Secretary
of the Treasury so determines, at a rate fixed
under section 9503 of such title.
``(ii) Appointment.--The National Taxpayer
Advocate shall be appointed by the Secretary of
the Treasury after consultation with the
Commissioner of Internal Revenue and the Oversight
Board and without regard to the provisions of
title 5, United States Code, relating to
appointments in the competitive service or the
Senior Executive Service.
``(iii) Qualifications.--An individual
appointed under clause (ii) shall have--
``(I) a background in customer
service as well as tax law; and
``(II) experience in representing
individual taxpayers.
``(iv) Restriction on employment.--An
individual may be appointed as the National
Taxpayer Advocate only if such individual was not
an officer or employee of the Internal Revenue
Service during the 2-year period ending with such
appointment and such individual agrees not to
accept any employment with the Internal Revenue
Service for at least 5 years after ceasing to be
the National Taxpayer Advocate. Service as an
officer or employee of the Office of the Taxpayer
Advocate shall not be taken into account in
applying this clause.
``(2) Functions of office.--
``(A) In general.--It shall be the function of the
Office of the Taxpayer Advocate to--
``(i) assist taxpayers in resolving problems
with the Internal Revenue Service;
``(ii) identify areas in which taxpayers have
problems in dealings with the Internal Revenue
Service;
``(iii) to the extent possible, propose
changes in the administrative practices of the
Internal Revenue Service to mitigate problems
identified under clause (ii); and
``(iv) identify potential legislative changes
which may be appropriate to mitigate such
problems.
``(B) Annual reports.--
<<NOTE: Deadline.>> ``(i) Objectives.--Not
later than June 30 of each calendar year, the
National Taxpayer Advocate shall report to the
Committee on Ways and Means of the House of
Representatives and the Committee on
[[Page 112 STAT. 700]]
Finance of the Senate on the objectives of the
Office of the Taxpayer Advocate for the fiscal
year beginning in such calendar year. Any such
report shall contain full and substantive
analysis, in addition to statistical information.
<<NOTE: Deadline.>> ``(ii) Activities.--Not
later than December 31 of each calendar year, the
National Taxpayer Advocate shall report to the
Committee on Ways and Means of the House of
Representatives and the Committee on Finance of
the Senate on the activities of the Office of the
Taxpayer Advocate during the fiscal year ending
during such calendar year. Any such report shall
contain full and substantive analysis, in addition
to statistical information, and shall--
``(I) identify the initiatives the
Office of the Taxpayer Advocate has
taken on improving taxpayer services and
Internal Revenue Service responsiveness;
``(II) contain recommendations
received from individuals with the
authority to issue Taxpayer Assistance
Orders under section 7811;
``(III) contain a summary of at
least 20 of the most serious problems
encountered by taxpayers, including a
description of the nature of such
problems;
``(IV) contain an inventory of the
items described in subclauses (I), (II),
and (III) for which action has been
taken and the result of such action;
``(V) contain an inventory of the
items described in subclauses (I), (II),
and (III) for which action remains to be
completed and the period during which
each item has remained on such
inventory;
``(VI) contain an inventory of the
items described in subclauses (I), (II),
and (III) for which no action has been
taken, the period during which each item
has remained on such inventory, the
reasons for the inaction, and identify
any Internal Revenue Service official
who is responsible for such inaction;
``(VII) identify any Taxpayer
Assistance Order which was not honored
by the Internal Revenue Service in a
timely manner, as specified under
section 7811(b);
``(VIII) contain recommendations for
such administrative and legislative
action as may be appropriate to resolve
problems encountered by taxpayers;
``(IX) identify areas of the tax law
that impose significant compliance
burdens on taxpayers or the Internal
Revenue Service, including specific
recommendations for remedying these
problems;
``(X) identify the 10 most litigated
issues for each category of taxpayers,
including recommendations for mitigating
such disputes; and
``(XI) include such other
information as the National Taxpayer
Advocate may deem advisable.
[[Page 112 STAT. 701]]
``(iii) Report to be submitted directly.--Each
report required under this subparagraph shall be
provided directly to the committees described in
clause (i) without any prior review or comment
from the Commissioner, the Secretary of the
Treasury, the Oversight Board, any other officer
or employee of the Department of the Treasury, or
the Office of Management and Budget.
``(iv) Coordination with report of treasury
inspector general for tax administration.--To the
extent that information required to be reported
under clause (ii) is also required to be reported
under paragraph (1) or (2) of subsection (d) by
the Treasury Inspector General for Tax
Administration, the National Taxpayer Advocate
shall not contain such information in the report
submitted under such clause.
``(C) Other responsibilities.--The National Taxpayer
Advocate shall--
``(i) monitor the coverage and geographic
allocation of local offices of taxpayer advocates;
``(ii) develop guidance to be distributed to
all Internal Revenue Service officers and
employees outlining the criteria for referral of
taxpayer inquiries to local offices of taxpayer
advocates;
``(iii) ensure that the local telephone number
for each local office of the taxpayer advocate is
published and available to taxpayers served by the
office; and
``(iv) in conjunction with the Commissioner,
develop career paths for local taxpayer advocates
choosing to make a career in the Office of the
Taxpayer Advocate.
``(D) Personnel actions.--
``(i) In general.--The National Taxpayer
Advocate shall have the responsibility and
authority to--
``(I) appoint local taxpayer
advocates and make available at least 1
such advocate for each State; and
``(II) evaluate and take personnel
actions (including dismissal) with
respect to any employee of any local
office of a taxpayer advocate described
in subclause (I).
``(ii) Consultation.--The National Taxpayer
Advocate may consult with the appropriate
supervisory personnel of the Internal Revenue
Service in carrying out the National Taxpayer
Advocate's responsibilities under this
subparagraph.
<<NOTE: Procedures.>> ``(3) Responsibilities of
commissioner.--The Commissioner shall establish procedures
requiring a formal response to all recommendations submitted to
the Commissioner by the National Taxpayer Advocate within 3
months after submission to the Commissioner.
``(4) Operation of local offices.--
``(A) In general.--Each local taxpayer advocate--
``(i) shall report to the National Taxpayer
Advocate or delegate thereof;
``(ii) may consult with the appropriate
supervisory personnel of the Internal Revenue
Service regarding
[[Page 112 STAT. 702]]
the daily operation of the local office of the
taxpayer advocate;
``(iii) <<NOTE: Notification.>> shall, at the
initial meeting with any taxpayer seeking the
assistance of a local office of the taxpayer
advocate, notify such taxpayer that the taxpayer
advocate offices operate independently of any
other Internal Revenue Service office and report
directly to Congress through the National Taxpayer
Advocate; and
``(iv) may, at the taxpayer advocate's
discretion, not disclose to the Internal Revenue
Service contact with, or information provided by,
such taxpayer.
``(B) Maintenance of independent communications.--
Each local office of the taxpayer advocate shall
maintain a separate phone, facsimile, and other
electronic communication access, and a separate post
office address.
``(d) Additional Duties of the Treasury Inspector General for Tax
Administration.--
``(1) Annual reporting.--The Treasury Inspector General for
Tax Administration shall include in one of the semiannual
reports under section 5 of the Inspector General Act of 1978--
``(A) an evaluation of the compliance of the
Internal Revenue Service with--
``(i) restrictions under section 1204 of the
Internal Revenue Service Restructuring and Reform
Act of 1998 on the use of enforcement statistics
to evaluate Internal Revenue Service employees;
``(ii) restrictions under section 7521 on
directly contacting taxpayers who have indicated
that they prefer their representatives be
contacted;
``(iii) required procedures under section 6320
upon the filing of a notice of a lien;
``(iv) required procedures under subchapter D
of chapter 64 for seizure of property for
collection of taxes, including required procedures
under section 6330 regarding levies; and
``(v) restrictions under section 3707 of the
Internal Revenue Service Restructuring and Reform
Act of 1998 on designation of taxpayers;
``(B) a review and a certification of whether or not
the Secretary is complying with the requirements of
section 6103(e)(8) to disclose information to an
individual filing a joint return on collection activity
involving the other individual filing the return;
``(C) information regarding extensions of the
statute of limitations for assessment and collection of
tax under section 6501 and the provision of notice to
taxpayers regarding requests for such extension;
``(D) an evaluation of the adequacy and security of
the technology of the Internal Revenue Service;
``(E) any termination or mitigation under section
1203 of the Internal Revenue Service Restructuring and
Reform Act of 1998;
``(F) information regarding improper denial of
requests for information from the Internal Revenue
Service identified under paragraph (3)(A); and
[[Page 112 STAT. 703]]
``(G) information regarding any administrative or
civil actions with respect to violations of the fair
debt collection provisions of section 6304, including--
``(i) a summary of such actions initiated
since the date of the last report; and
``(ii) a summary of any judgments or awards
granted as a result of such actions.
``(2) Semiannual reports.--
``(A) In general.--The Treasury Inspector General
for Tax Administration shall include in each semiannual
report under section 5 of the Inspector General Act of
1978--
``(i) the number of taxpayer complaints during
the reporting period;
``(ii) the number of employee misconduct and
taxpayer abuse allegations received by the
Internal Revenue Service or the Inspector General
during the period from taxpayers, Internal Revenue
Service employees, and other sources;
``(iii) a summary of the status of such
complaints and allegations; and
``(iv) a summary of the disposition of such
complaints and allegations, including the outcome
of any Department of Justice action and any monies
paid as a settlement of such complaints and
allegations.
``(B) <<NOTE: Applicability.>> Clauses (iii) and
(iv) of subparagraph (A) shall only apply to complaints
and allegations of serious employee misconduct.
``(3) Other responsibilities.--The Treasury Inspector
General for Tax Administration shall--
``(A) conduct periodic audits of a statistically
valid sample of the total number of determinations made
by the Internal Revenue Service to deny written requests
to disclose information to taxpayers on the basis of
section 6103 of this title or section 552(b)(7) of title
5, United States Code; and
``(B) <<NOTE: Communications and tele-
communication.>> establish and maintain a toll-free
telephone number for taxpayers to use to confidentially
register complaints of misconduct by Internal Revenue
Service employees and incorporate the telephone number
in the statement required by section 6227 of the Omnibus
Taxpayer Bill of Rights (Internal Revenue Service
Publication No. 1).''.
(b) Notice of Right To Contact Office Included in Notice of
Deficiency.--Section 6212(a) (relating to notice of deficiency) is
amended by adding at the end the following new sentence: ``Such notice
shall include a notice to the taxpayer of the taxpayer's right to
contact a local office of the taxpayer advocate and the location and
phone number of the appropriate office.''.
(c) Expansion of Authority To Issue Taxpayer Assistance Orders.--
Section 7811(a) (relating to taxpayer assistance orders) is amended to
read as follows:
``(a) Authority To Issue.--
<<NOTE: Regulations.>> ``(1) In general.--Upon application
filed by a taxpayer with the Office of the Taxpayer Advocate (in
such form, manner, and at such time as the Secretary shall by
regulations prescribe), the National Taxpayer Advocate may issue
a Taxpayer Assistance Order if--
[[Page 112 STAT. 704]]
``(A) the National Taxpayer Advocate determines 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; or
``(B) the taxpayer meets such other requirements as
are set forth in regulations prescribed by the
Secretary.
``(2) Determination of hardship.--For purposes of
paragraph (1), a significant hardship shall include--
``(A) an immediate threat of adverse action;
``(B) a delay of more than 30 days in resolving
taxpayer account problems;
``(C) the incurring by the taxpayer of significant
costs (including fees for professional representation)
if relief is not granted; or
``(D) irreparable injury to, or a long-term adverse
impact on, the taxpayer if relief is not granted.
``(3) Standard where administrative guidance not
followed.--In cases where any Internal Revenue Service employee
is not following applicable published administrative guidance
(including the Internal Revenue Manual), the National Taxpayer
Advocate shall construe the factors taken into account in
determining whether to issue a taxpayer assistance order in the
manner most favorable to the taxpayer.''.
(d) Conforming Amendments Relating to National
Taxpayer Advocate.--
(1) The following provisions are each amended by striking
``Taxpayer Advocate'' each place it appears and inserting
``National Taxpayer Advocate'':
(A) Section 6323( j)(1)(D) (relating to withdrawal
of notice in certain circumstances).
(B) Section 6343(d)(2)(D) (relating to return of
property in certain cases).
(C) Section 7811(b)(2)(D) (relating to terms of a
Taxpayer Assistance Order).
(D) Section 7811(c) (relating to authority to modify
or rescind).
(E) Section 7811(d)(2) (relating to suspension of
running of period of limitation).
(F) Section 7811(e) (relating to independent action
of Taxpayer Advocate).
(G) Section 7811(f ) (relating to Taxpayer
Advocate).
(2) Section 7811(d)(1) (relating to suspension of running of
period of limitation) is amended by striking ``Taxpayer
Advocate's'' and inserting ``National Taxpayer Advocate's''.
(3) The headings of subsections (e) and (f ) of section 7811
are each amended by striking ``Taxpayer Advocate'' and inserting
``National Taxpayer Advocate''.
(e) Additional Conforming Amendments.--
(1) The table of sections for subchapter A of chapter 80 is
amended by striking the item relating to section 7803 and
inserting the following new item:
``Sec. 7803. Commissioner of Internal Revenue; other
officials.''.
(2) Section 5109 of title 5, United States Code, is amended
by striking subsection (b) and redesignating subsection (c) as
subsection (b).
[[Page 112 STAT. 705]]
(3) Section 7611(f )(1) (relating to restrictions on church
tax inquiries and examinations) is amended by striking
``Assistant Commissioner for Employee Plans and Exempt
Organizations of the Internal Revenue Service'' and inserting
``Secretary''.
<<NOTE: 26 USC 7803 note.>> (f ) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall take effect on the date of
the enactment of this Act.
(2) Chief counsel.--Section 7803(b)(3) of the Internal
Revenue Code of 1986, as added by this section, shall take
effect on the date that is 90 days after the date of the
enactment of this Act.
(3) National taxpayer advocate.--Notwithstanding
section 7803(c)(1)(B)(iv) of such Code, as added by this
section, in appointing the first National Taxpayer Advocate
after
the date of the enactment of this Act, the Secretary of the
Treasury--
(A) shall not appoint any individual who was an
officer or employee of the Internal Revenue Service at
any time during the 2-year period ending on the date of
appointment; and
(B) need not consult with the Internal Revenue
Service Oversight Board if the Oversight Board has not
been appointed.
(4) Current officers.--
(A) In the case of an individual serving as
Commissioner of Internal Revenue on the date of the
enactment of this Act who was appointed to such position
before such date, the 5-year term required by section
7803(a)(1) of such Code, as added by this section, shall
begin as of the date of such appointment.
(B) Clauses (ii), (iii), and (iv) of section
7803(c)(1)(B) of such Code, as added by this section,
shall not apply to the individual serving as Taxpayer
Advocate on the date of the enactment of this Act.
SEC. 1103. TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION.
(a) Establishment of Two Inspectors General in the Department of the
Treasury.--Section 2 of the Inspector General Act of 1978 (5 U.S.C.
App.) is amended by striking the matter following paragraph (3) and
inserting the following:
``there is established--
``(A) in each of such establishments an office of
Inspector General, subject to subparagraph (B); and
``(B) in the establishment of the Department of the
Treasury--
``(i) an Office of Inspector General of the
Department of the Treasury; and
``(ii) an Office of Treasury Inspector General
for Tax Administration.''.
(b) Amendments to Section 8D of the Inspector General Act of 1978.--
(1) Limitation on authority of inspector general.--Section
8D(a) of the Inspector General Act of 1978 (5 U.S.C.
[[Page 112 STAT. 706]]
App.) is amended by adding at the end the following new
paragraph:
``(4) The Secretary of the Treasury may not exercise any
power under paragraph (1) or (2) with respect to the Treasury
Inspector General for Tax Administration.''.
(2) Duties of inspector general of the department of the
treasury; relationship to the treasury inspector general for tax
administration.--Section 8D(b) of such Act is <<NOTE: 5 USC
app.>> amended--
(A) by inserting ``(1)'' after ``(b)''; and
(B) by adding at the end the following new
paragraphs:
``(2) The Inspector General of the Department of the
Treasury shall exercise all duties and responsibilities of an
Inspector General for the Department of the Treasury other than
the duties and responsibilities exercised by the Treasury
Inspector General for Tax Administration.
``(3) <<NOTE: Procedures.>> The Secretary of the Treasury
shall establish procedures under which the Inspector General of
the Department of the Treasury and the Treasury Inspector
General for Tax Administration will--
``(A) determine how audits and investigations are
allocated in cases of overlapping jurisdiction; and
``(B) provide for coordination, cooperation, and
efficiency in the conduct of such audits and
investigations.''.
(3) Access to returns and return information.--
Section 8D(e) of such Act <<NOTE: 5 USC app.>> is amended--
(A) in paragraph (1), by striking ``Inspector
General'' and inserting ``Treasury Inspector General for
Tax Administration'';
(B) in paragraph (2), by striking all beginning with
``(2)'' through subparagraph (B);
(C)(i) by redesignating subparagraph (C) of
paragraph (2) as paragraph (2) of such subsection; and
(ii) in such redesignated paragraph (2), by striking
``Inspector General'' and inserting ``Treasury Inspector
General for Tax Administration''; and
(D)(i) by redesignating subparagraph (D) of such
paragraph as paragraph (3) of such subsection; and
(ii) in such redesignated paragraph (3), by striking
``Inspector General'' and inserting ``Treasury Inspector
General for Tax Administration''.
(4) Effect on certain final decisions of the
secretary.--Section 8D(f ) of such Act is amended by striking
``Inspector General'' and inserting ``Inspector General of the
Department of the Treasury or the Treasury Inspector General for
Tax Administration''.
(5) Repeal of limitation on reports to the attorney
general.--Section 8D of such Act is amended by striking
subsection (g).
(6) Transmission of reports.--Section 8D(h) of such Act is
amended--
(A) by striking ``(h)'' and inserting ``(g)(1)'';
(B) by striking ``and the Committees on Government
Operations and Ways and Means of the House of
Representatives'' and inserting ``and the Committees on
Government Reform and Oversight and Ways and Means of
the House of Representatives''; and
[[Page 112 STAT. 707]]
(C) by adding at the end the following new
paragraph:
``(2) Any report made by the Treasury Inspector General for Tax
Administration that is required to be transmitted by the Secretary of
the Treasury to the appropriate committees or subcommittees of Congress
under section 5(d) shall also be transmitted, within the 7-day period
specified under such subsection, to the Internal Revenue Service
Oversight Board and the Commissioner of Internal Revenue.''.
(7) Treasury inspector general for tax administration.--
Section 8D of the Act <<NOTE: 5 USC app.>> is amended by adding
at the end the following new subsections:
``(h) The Treasury Inspector General for Tax Administration shall
exercise all duties and responsibilities of an Inspector General of an
establishment with respect to the Department of the Treasury and the
Secretary of the Treasury on all matters relating to the Internal
Revenue Service. The Treasury Inspector General for Tax Administration
shall have sole authority under this Act to conduct an audit or
investigation of the Internal Revenue Service Oversight Board and the
Chief Counsel for the Internal Revenue Service.
``(i) In addition to the requirements of the first sentence of
section 3(a), the Treasury Inspector General for Tax Administration
should have demonstrated ability to lead a large and complex
organization.
``( j) An individual appointed to the position of Treasury Inspector
General for Tax Administration, the Assistant Inspector General for
Auditing of the Office of the Treasury Inspector General for Tax
Administration under section 3(d)(1), the Assistant Inspector General
for Investigations of the Office of the Treasury Inspector General for
Tax Administration under section 3(d)(2), or any position of Deputy
Inspector General of the Office of the Treasury Inspector General for
Tax Administration may not be an employee of the Internal Revenue
Service--
``(1) during the 2-year period preceding the date of
appointment to such position; or
``(2) during the 5-year period following the date such
individual ends service in such position.
``(k)(1) In addition to the duties and responsibilities exercised by
an inspector general of an establishment, the Treasury Inspector General
for Tax Administration--
``(A) shall have the duty to enforce criminal provisions
under section 7608(b) of the Internal Revenue Code of 1986;
``(B) in addition to the functions authorized under section
7608(b)(2) of such Code, may carry firearms;
``(C) shall be responsible for protecting the Internal
Revenue Service against external attempts to corrupt or threaten
employees of the Internal Revenue Service, but shall not be
responsible for the conducting of background checks and the
providing of physical security; and
``(D) may designate any employee in the Office of the
Treasury Inspector General for Tax Administration to enforce
such laws and perform such functions referred to under
subparagraphs (A), (B), and (C).
``(2)(A) In performing a law enforcement function under paragraph
(1), the Treasury Inspector General for Tax Administration shall report
any reasonable grounds to believe there has been a violation of Federal
criminal law to the Attorney General at
[[Page 112 STAT. 708]]
an appropriate time as determined by the Treasury Inspector General for
Tax Administration, notwithstanding section 4(d).
``(B) In the administration of section 5(d) and subsection (g)(2) of
this section, the Secretary of the Treasury may transmit the required
report with respect to the Treasury Inspector General for Tax
Administration at an appropriate time as determined by the Secretary, if
the problem, abuse, or deficiency relates to--
``(i) the performance of a law enforcement function under
paragraph (1); and
``(ii) sensitive information concerning matters under
subsection (a)(1)(A) through (F).
``(3) Nothing in this subsection shall be construed to affect the
authority of any other person to carry out or enforce any provision
specified in paragraph (1).
``(l)(1) The Commissioner of Internal Revenue or the Internal
Revenue Service Oversight Board may request, in writing, the Treasury
Inspector General for Tax Administration to conduct an audit or
investigation relating to the Internal Revenue Service. If the Treasury
Inspector General for Tax Administration determines not to conduct such
audit or investigation, the Inspector General shall timely provide a
written explanation for such determination to the person making the
request.
``(2)(A) <<NOTE: Reports.>> Any final report of an audit conducted
by the Treasury Inspector General for Tax Administration shall be timely
submitted by the Inspector General to the Commissioner of Internal
Revenue and the Internal Revenue Service Oversight Board.
``(B) <<NOTE: Records.>> The Treasury Inspector General for Tax
Administration shall periodically submit to the Commissioner and Board a
list of investigations for which a final report has been completed by
the Inspector General and shall provide a copy of any such report upon
request of the Commissioner or Board.
``(C) <<NOTE: Applicability.>> This paragraph applies regardless of
whether the applicable audit or investigation is requested under
paragraph (1).''.
(c) Transfer of Functions.--
(1) In general.--Section 9(a)(1) of the Inspector General
Act of 1978 (5 U.S.C. App.) is amended in subparagraph (L)--
(A) by inserting ``(i)'' after ``(L)'';
(B) by inserting ``and'' after the semicolon; and
(C) by adding at the end the following new clause:
``(ii) <<NOTE: Effective date.>> of the
Treasury Inspector General for Tax Administration,
effective 180 days after the date of the enactment
of the Internal Revenue Service Restructuring and
Reform Act of 1998, the Office of Chief Inspector
of the Internal Revenue Service;''.
(2) Termination <<NOTE: Effective date. 5 USC app.>> of
office of chief inspector.--Effective upon the transfer of
functions under the amendment made by paragraph (1), the Office
of Chief Inspector of the Internal Revenue Service is
terminated.
(3) Retention <<NOTE: 5 USC app.>> of certain internal audit
personnel.--In making the transfer under the amendment made by
paragraph (1), the Commissioner of Internal Revenue shall
designate and retain an appropriate number (not in excess of
300) of internal audit full-time equivalent employee positions
necessary for management relating to the Internal Revenue
Service.
(4) Additional <<NOTE: Effective date. 5 USC
app.>> personnel transfers.--Effective 180 days after the date
of the enactment of this Act, the Secretary
[[Page 112 STAT. 709]]
of the Treasury shall transfer 21 full-time equivalent positions
from the Office of the Inspector General of the Department of
the Treasury to the Office of the Treasury Inspector General for
Tax Administration.
(d) Audits <<NOTE: 31 USC 3521 note.>> and Reports of Agency
Financial Statements.--Subject to section 3521(g) of title 31, United
States Code--
(1) the Inspector General of the Department of the Treasury
shall, subject to paragraph (2)--
(A) audit each financial statement in accordance
with section 3521(e) of such title; and
(B) prepare and submit each report required under
section 3521(f ) of such title; and
(2) the Treasury Inspector General for Tax Administration
shall--
(A) audit that portion of each financial statement
referred to under paragraph (1)(A) that relates to
custodial and administrative accounts of the Internal
Revenue
Service; and
(B) prepare that portion of each report referred to
under paragraph (1)(B) that relates to custodial and
administrative accounts of the Internal Revenue Service.
(e) Technical and Conforming Amendments.--
(1) Transfer of functions.--Section 8D(b) of the Inspector
General Act of 1978 (5 U.S.C. App.) is amended by striking ``and
the internal audits and internal investigations performed by the
Office of Assistant Commissioner (Inspection) of the Internal
Revenue Service''.
(2) Amendments relating to references to the inspector
general of the department of the treasury.--
(A) Limitation on authority.--Section 8D(a) of the
Inspector General Act of 1978 (5 U.S.C. App.) is
amended--
(i) in the first sentence of paragraph (1), by
inserting ``of the Department of the Treasury''
after ``Inspector General'';
(ii) in paragraph (2), by inserting ``of the
Department of the Treasury'' after ``prohibit the
Inspector General''; and
(iii) in paragraph (3)--
(I) in the first sentence, by
inserting ``of the Department of the
Treasury'' after ``notify the Inspector
General''; and
(II) in the second sentence, by
inserting ``of the Department of the
Treasury'' after ``notice, the Inspector
General''.
(B) Duties.--Section 8D(b) of such Act is amended in
the second sentence by inserting ``of the Department of
the Treasury'' after ``Inspector General''.
(C) Audits and investigations.--Section 8D (c) and
(d) of such Act are amended by inserting ``of the
Department of the Treasury'' after ``Inspector General''
each place it appears.
(3) References.--The second section 8G of the Inspector
General Act of 1978 (relating to rule of construction of special
provisions) is amended--
(A) by striking ``Sec. 8G'' and inserting ``Sec.
8H'';
(B) by striking ``or 8E'' and inserting ``8E or
8F''; and
[[Page 112 STAT. 710]]
(C) by striking ``section 8F(a)'' and inserting
``section 8G(a)''.
(4) Amendment to internal revenue code of 1986.--Section
7608(b)(1) is amended by striking ``or of the Internal Security
Division''.
SEC. 1104. OTHER PERSONNEL.
(a) In General.--Section 7804 (relating to the effect of
reorganization plans) is amended to read as follows:
``SEC. 7804. OTHER PERSONNEL.
``(a) Appointment and Supervision.--Unless otherwise prescribed by
the Secretary, the Commissioner of Internal Revenue is authorized to
employ such number of persons as the Commissioner deems proper for the
administration and enforcement of the internal revenue laws, and the
Commissioner shall issue all necessary directions, instructions, orders,
and rules applicable to such persons.
``(b) Posts of Duty of Employees in Field Service or Traveling.--
Unless otherwise prescribed by the Secretary--
``(1) Designation of post of duty.--The Commissioner shall
determine and designate the posts of duty of all such persons
engaged in field work or traveling on official business outside
of the District of Columbia.
``(2) Detail of personnel from field service.--The
Commissioner may order any such person engaged in field work to
duty in the District of Columbia, for such periods as the
Commissioner may prescribe, and to any designated post of duty
outside the District of Columbia upon the completion of such
duty.
``(c) Delinquent Internal Revenue Officers and Employees.--If any
officer or employee of the Treasury Department acting in connection with
the internal revenue laws fails to account for and pay over any amount
of money or property collected or received by him in connection with the
internal revenue laws, the Secretary shall issue notice and demand to
such officer or employee for payment of the amount which he failed to
account for and pay over, and, upon failure to pay the amount demanded
within the time specified in such notice, the amount so demanded shall
be deemed imposed upon such officer or employee and assessed upon the
date of such notice and demand, and the provisions of chapter 64 and all
other provisions of law relating to the collection of assessed taxes
shall be applicable in respect of such amount.''.
(b) Conforming Amendments.--
(1) Subsection (b) of section 6344 is amended by striking
``section 7803(d)'' and inserting ``section 7804(c)''.
(2) The table of sections for subchapter A of chapter 80 is
amended by striking the item relating to section 7804 and
inserting the following new item:
``Sec. 7804. Other personnel.''.
(c) Effective <<NOTE: 26 USC 7804 note.>> Date.--The amendments made
by this section shall take effect on the date of the enactment of this
Act.
[[Page 112 STAT. 711]]
SEC. 1105. PROHIBITION ON EXECUTIVE BRANCH INFLUENCE OVER TAXPAYER
AUDITS AND OTHER INVESTIGATIONS.
(a) In General.--Part I of subchapter A of chapter 75 (relating to
crimes, other offenses, and forfeitures) is amended by adding after
section 7216 the following new section:
``SEC. 7217. PROHIBITION ON EXECUTIVE BRANCH INFLUENCE OVER TAXPAYER
AUDITS AND OTHER INVESTIGATIONS.
``(a) Prohibition.--It shall be unlawful for any applicable person
to request, directly or indirectly, any officer or employee of the
Internal Revenue Service to conduct or terminate an audit or other
investigation of any particular taxpayer with respect to the tax
liability of such taxpayer.
``(b) Reporting Requirement.--Any officer or employee of the
Internal Revenue Service receiving any request prohibited by subsection
(a) shall report the receipt of such request to the Treasury Inspector
General for Tax Administration.
``(c) Exceptions.--Subsection (a) shall not apply to any written
request made--
``(1) to an applicable person by or on behalf of the
taxpayer and forwarded by such applicable person to the Internal
Revenue Service;
``(2) by an applicable person for disclosure of return or
return information under section 6103 if such request is made in
accordance with the requirements of such section; or
``(3) by the Secretary of the Treasury as a consequence of
the implementation of a change in tax policy.
``(d) Penalty.--Any person who willfully violates subsection (a) or
fails to report under subsection (b) shall be punished upon conviction
by a fine in any amount not exceeding $5,000, or imprisonment of not
more than 5 years, or both, together with the costs of prosecution.
``(e) Applicable Person.--For purposes of this section, the term
`applicable person' means--
``(1) the President, the Vice President, any employee of the
executive office of the President, and any employee of the
executive office of the Vice President; and
``(2) any individual (other than the Attorney General of the
United States) serving in a position specified in section 5312
of title 5, United States Code.''.
(b) Clerical Amendment.--The table of sections for part I of
subchapter A of chapter 75 is amended by adding after the item relating
to section 7216 the following new item:
``Sec. 7217. Prohibition on executive branch influence
over taxpayer audits and other
investigations.''.
(c) Effective <<NOTE: 26 USC 7217 note.>> Date.--The amendments made
by this section shall apply to requests made after the date of the
enactment of this Act.
Subtitle C--Personnel Flexibilities
SEC. 1201. IMPROVEMENTS IN PERSONNEL FLEXIBILITIES.
(a) In General.--Part III of title 5, United States Code, is amended
by adding at the end the following new subpart:
[[Page 112 STAT. 712]]
``Subpart I--Miscellaneous
``CHAPTER 95--PERSONNEL FLEXIBILITIES RELATING TO THE INTERNAL REVENUE
SERVICE
``Sec.
``9501. Internal Revenue Service personnel flexibilities.
``9502. Pay authority for critical positions.
``9503. Streamlined critical pay authority.
``9504. Recruitment, retention, relocation incentives, and relocation
expenses.
``9505. Performance awards for senior executives.
``9506. Limited appointments to career reserved Senior Executive Service
positions.
``9507. Streamlined demonstration project authority.
``9508. General workforce performance management system.
``9509. General workforce classification and pay.
``9510. General workforce staffing.
``Sec. 9501. Internal Revenue Service personnel flexibilities
``(a) Any flexibilities provided by sections 9502 through 9510 of
this chapter shall be exercised in a manner consistent with--
``(1) chapter 23 (relating to merit system principles and
prohibited personnel practices);
``(2) provisions relating to preference eligibles;
``(3) except as otherwise specifically provided, section
5307 (relating to the aggregate limitation on pay);
``(4) except as otherwise specifically provided, chapter 71
(relating to labor-management relations); and
``(5) subject to subsections (b) and (c) of section 1104, as
though such authorities were delegated to the Secretary of the
Treasury under section 1104(a)(2).
``(b) The Secretary of the Treasury shall provide the Office of
Personnel Management with any information that Office requires in
carrying out its responsibilities under this section.
``(c) Employees within a unit to which a labor organization is
accorded exclusive recognition under chapter 71 shall not be subject to
any flexibility provided by sections 9507 through 9510 of this chapter
unless the exclusive representative and the Internal Revenue Service
have entered into a written agreement which specifically provides for
the exercise of that flexibility. Such written agreement may be imposed
by the Federal Services Impasses Panel under section 7119.
``Sec. 9502. Pay authority for critical positions
``(a) When the Secretary of the Treasury seeks a grant of authority
under section 5377 for critical pay for 1 or more positions at the
Internal Revenue Service, the Office of Management and Budget may fix
the rate of basic pay, notwithstanding sections 5377(d)(2) and 5307, at
any rate up to the salary set in accordance with section 104 of title 3.
``(b) Notwithstanding section 5307, no allowance, differential,
bonus, award, or similar cash payment may be paid to any employee
receiving critical pay at a rate fixed under subsection (a), in any
calendar year if, or to the extent that, the employee's total annual
compensation will exceed the maximum amount of total annual compensation
payable at the salary set in accordance with section 104 of title 3.
``Sec. 9503. Streamlined critical pay authority
``(a) Notwithstanding section 9502, and without regard to the
provisions of this title governing appointments in the competitive
[[Page 112 STAT. 713]]
service or the Senior Executive Service and chapters 51 and 53 (relating
to classification and pay rates), the Secretary of the Treasury may, for
a period of 10 years after the date of enactment of this section,
establish, fix the compensation of, and appoint individuals to,
designated critical administrative, technical, and professional
positions needed to carry out the functions of the Internal Revenue
Service, if--
``(1) the positions--
``(A) require expertise of an extremely high level
in an administrative, technical, or professional field;
and
``(B) are critical to the Internal Revenue Service's
successful accomplishment of an important mission;
``(2) exercise of the authority is necessary to recruit or
retain an individual exceptionally well qualified for the
position;
``(3) the number of such positions does not exceed 40 at any
one time;
``(4) designation of such positions are approved by the
Secretary of the Treasury;
``(5) the terms of such appointments are limited to no more
than 4 years;
``(6) appointees to such positions were not Internal Revenue
Service employees prior to June 1, 1998;
``(7) total annual compensation for any appointee to such
positions does not exceed the highest total annual compensation
payable at the rate determined under section 104 of title 3; and
``(8) all such positions are excluded from the collective
bargaining unit.
``(b) Individuals appointed under this section shall not be
considered to be employees for purposes of subchapter II of chapter 75.
``Sec. 9504. Recruitment, retention, relocation incentives, and
relocation expenses
``(a) For a period of 10 years after the date of enactment of this
section and subject to approval by the Office of Personnel Management,
the Secretary of the Treasury may provide for variations from sections
5753 and 5754 governing payment of recruitment, relocation, and
retention incentives.
``(b) For a period of 10 years after the date of enactment of this
section, the Secretary of the Treasury may pay from appropriations made
to the Internal Revenue Service allowable relocation expenses under
section 5724a for employees transferred or reemployed and allowable
travel and transportation expenses under section 5723 for new
appointees, for any new appointee appointed to a position for which pay
is fixed under section 9502 or 9503 after June 1, 1998.
``Sec. 9505. Performance awards for senior executives
``(a) For a period of 10 years after the date of enactment of this
section, Internal Revenue Service senior executives who have program
management responsibility over significant functions of the Internal
Revenue Service may be paid a performance bonus without regard to the
limitation in section 5384(b)(2) if the Secretary of the Treasury finds
such award warranted based on the executive's performance.
[[Page 112 STAT. 714]]
``(b) In evaluating an executive's performance for purposes of an
award under this section, the Secretary of the Treasury shall take into
account the executive's contributions toward the successful
accomplishment of goals and objectives established under the Government
Performance and Results Act of 1993, division E of the Clinger-Cohen Act
of 1996 (Public Law 104-106; 110 Stat. 679), Revenue Procedure 64-22 (as
in effect on July 30, 1997), taxpayer service surveys, and other
performance metrics or plans established in consultation with the
Internal Revenue Service Oversight Board.
``(c) Any award in excess of 20 percent of an executive's rate of
basic pay shall be approved by the Secretary of the Treasury.
``(d) Notwithstanding section 5384(b)(3), the Secretary of the
Treasury shall determine the aggregate amount of performance awards
available to be paid during any fiscal year under this section and
section 5384 to career senior executives in the Internal Revenue
Service. Such amount may not exceed an amount equal to 5 percent of the
aggregate amount of basic pay paid to career senior executives in the
Internal Revenue Service during the preceding fiscal year. The Internal
Revenue Service shall not be included in the determination under section
5384(b)(3) of the aggregate amount of performance awards payable to
career senior executives in the Department of the Treasury other than
the Internal Revenue Service.
``(e) Notwithstanding section 5307, a performance bonus award may
not be paid to an executive in a calendar year if, or to the extent
that, the executive's total annual compensation will exceed the maximum
amount of total annual compensation payable at the rate determined under
section 104 of title 3.
``Sec. 9506. Limited appointments to career reserved Senior Executive
Service positions
``(a) In the application of section 3132, a `career reserved
position' in the Internal Revenue Service means a position designated
under section 3132(b) which may be filled only by--
``(1) a career appointee; or
``(2) a limited emergency appointee or a limited term
appointee--
``(A) who, immediately upon entering the career
reserved position, was serving under a career or career-
conditional appointment outside the Senior Executive
Service; or
``(B) whose limited emergency or limited term
appointment is approved in advance by the Office of
Personnel Management.
``(b)(1) The number of positions described under subsection (a)
which are filled by an appointee as described under paragraph (2) of
such subsection may not exceed 10 percent of the total number of Senior
Executive Service positions in the Internal Revenue Service.
``(2) Notwithstanding section 3132--
``(A) the term of an appointee described under subsection
(a)(2) may be for any period not to exceed 3 years; and
``(B) such an appointee may serve--
``(i) two such terms; or
``(ii) two such terms in addition to any unexpired
term applicable at the time of appointment.
[[Page 112 STAT. 715]]
``Sec. 9507. Streamlined demonstration project authority
``(a) The exercise of any of the flexibilities under sections 9502
through 9510 shall not affect the authority of the Secretary of the
Treasury to implement for the Internal Revenue Service a demonstration
project subject to chapter 47, as provided in subsection (b).
``(b) In applying section 4703 to a demonstration project described
in section 4701(a)(4) which involves the Internal Revenue Service--
``(1) section 4703(b)(1) shall be deemed to read as follows:
`` `(1) develop a plan for such project which describes its
purpose, the employees to be covered, the project itself, its
anticipated outcomes, and the method of evaluating the
project;';
``(2) section 4703(b)(3) shall not apply;
``(3) the 180-day notification period in section 4703(b)(4)
shall be deemed to be a notification period of 30 days;
``(4) section 4703(b)(6) shall be deemed to read as follows:
`` `(6) provides each House of Congress with the final
version of the plan.';
``(5) section 4703(c)(1) shall be deemed to read as follows:
`` `(1) subchapter V of chapter 63 or subpart G of part III
of this title;';
``(6) the requirements of paragraphs (1)(A) and (2) of
section 4703(d) shall not apply; and
``(7) notwithstanding section 4703(d)(1)(B), based on an
evaluation as provided in section 4703(h), the Office of
Personnel Management and the Secretary of the Treasury, except
as otherwise provided by this subsection, may waive the
termination date of a demonstration project under section
4703(d).
``(c) <<NOTE: Deadline. Federal Register, publication.>> At least 90
days before waiving the termination date under subsection (b)(7), the
Office of Personnel Management shall publish in the Federal Register a
notice of its intention to waive the termination date and shall inform
in writing both Houses of Congress of its intention.
``Sec. 9508. General workforce performance management system
``(a) In lieu of a performance appraisal system established under
section 4302, the Secretary of the Treasury shall, within 1 year after
the date of enactment of this section, establish for the Internal
Revenue Service a performance management system that--
``(1) maintains individual accountability by--
``(A) establishing one or more retention standards
for each employee related to the work of the employee
and expressed in terms of individual performance, and
communicating such retention standards to employees;
``(B) making periodic determinations of whether each
employee meets or does not meet the employee's
established retention standards; and
``(C) taking actions, in accordance with applicable
laws and regulations, with respect to any employee whose
performance does not meet established retention
standards, including denying any increases in basic pay,
promotions, and credit for performance under section
3502, and taking one or more of the following actions:
``(i) Reassignment.
[[Page 112 STAT. 716]]
``(ii) An action under chapter 43 or chapter
75 of this title.
``(iii) Any other appropriate action to
resolve the performance problem; and
``(2) except as provided under section 1204 of the Internal
Revenue Service Restructuring and Reform Act of 1998,
strengthens the system's effectiveness by--
``(A) establishing goals or objectives for
individual, group, or organizational performance (or any
combination thereof ), consistent with the Internal
Revenue Service's performance planning procedures,
including those established under the Government
Performance and Results Act of 1993, division E of the
Clinger-Cohen Act of 1996 (Public Law 104-106; 110 Stat.
679), Revenue Procedure 64-22 (as in effect on July 30,
1997), and taxpayer service surveys, and communicating
such goals or objectives to employees;
``(B) using such goals and objectives to make
performance distinctions among employees or groups of
employees; and
``(C) using performance assessments as a basis for
granting employee awards, adjusting an employee's rate
of basic pay, and other appropriate personnel actions,
in accordance with applicable laws and regulations.
``(b)(1) For purposes of subsection (a)(2), the term `performance
assessment' means a determination of whether or not retention standards
established under subsection (a)(1)(A) are met, and any additional
performance determination made on the basis of performance goals and
objectives established under subsection (a)(2)(A).
``(2) For purposes of this title, the term `unacceptable
performance' with respect to an employee of the Internal Revenue Service
covered by a performance management system established under this
section means performance of the employee which fails to meet a
retention standard established under this section.
``(c)(1) The Secretary of the Treasury may establish an awards
program designed to provide incentives for and recognition of
organizational, group, and individual achievements by providing for
granting awards to employees who, as individuals or members of a group,
contribute to meeting the performance goals and objectives established
under this chapter by such means as a superior individual or group
accomplishment, a documented productivity gain, or sustained superior
performance.
``(2) A cash award under subchapter I of chapter 45 may be granted
to an employee of the Internal Revenue Service without the need for any
approval under section 4502(b).
``(d)(1) In applying sections 4303(b)(1)(A) and 7513(b)(1) to
employees of the Internal Revenue Service, `30 days' may be deemed to be
`15 days'.
``(2) Notwithstanding the second sentence of section 5335(c), an
employee of the Internal Revenue Service shall not have a right to
appeal the denial of a periodic step increase under section 5335 to the
Merit Systems Protection Board.
``Sec. 9509. General workforce classification and pay
``(a) For purposes of this section, the term `broad-banded system'
means a system for grouping positions for pay, job evaluation, and other
purposes that is different from the system established
[[Page 112 STAT. 717]]
under chapter 51 and subchapter III of chapter 53 as a result of
combining grades and related ranges of rates of pay in one or more
occupational series.
``(b)(1)(A) <<NOTE: Regulations.>> The Secretary of the Treasury
may, subject to criteria to be prescribed by the Office of Personnel
Management, establish one or more broad-banded systems covering all or
any portion of the Internal Revenue Service workforce.
``(B) With the approval of the Office of Personnel Management, a
broad-banded system established under this section may either include or
consist of positions that otherwise would be subject to subchapter IV of
chapter 53 or section 5376.
``(2) The Office of Personnel Management may require the
Secretary of the Treasury to submit information relating to broad-banded
systems at the Internal Revenue Service.
``(3) Except as otherwise provided under this section, employees
under a broad-banded system shall continue to be subject to the laws and
regulations covering employees under the pay system that otherwise would
apply to such employees.
``(4) <<NOTE: Regulations.>> The criteria to be prescribed by the
Office of Personnel Management shall, at a minimum--
``(A) ensure that the structure of any broad-banded system
maintains the principle of equal pay for substantially equal
work;
``(B) establish the minimum and maximum number of grades
that may be combined into pay bands;
``(C) establish requirements for setting minimum and maximum
rates of pay in a pay band;
``(D) establish requirements for adjusting the pay of an
employee within a pay band;
``(E) establish requirements for setting the pay of a
supervisory employee whose position is in a pay band or who
supervises employees whose positions are in pay bands; and
``(F) establish requirements and methodologies for setting
the pay of an employee upon conversion to a broad-banded system,
initial appointment, change of position or type of appointment
(including promotion, demotion, transfer, reassignment,
reinstatement, placement in another pay band, or movement to a
different geographic location), and movement between a broad-
banded system and another pay system.
``(c) With the approval of the Office of Personnel Management and in
accordance with a plan for implementation submitted by the Secretary of
the Treasury, the Secretary may, with respect to Internal Revenue
Service employees who are covered by a broad-banded system established
under this section, provide for variations from the provisions of
subchapter VI of chapter 53.
``Sec. 9510. General workforce staffing
``(a)(1) Except as otherwise provided by this section, an employee
of the Internal Revenue Service may be selected for a permanent
appointment in the competitive service in the Internal Revenue Service
through internal competitive promotion procedures if--
``(A) the employee has completed, in the competitive
service, 2 years of current continuous service under a term
appointment or any combination of term appointments;
[[Page 112 STAT. 718]]
``(B) such term appointment or appointments were made under
competitive procedures prescribed for permanent appointments;
``(C) the employee's performance under such term appointment
or appointments met established retention standards, or, if not
covered by a performance management system established under
section 9508, was rated at the fully successful level or higher
(or equivalent thereof ); and
``(D) the vacancy announcement for the term appointment from
which the conversion is made stated that there was a potential
for subsequent conversion to a permanent appointment.
``(2) An appointment under this section may be made only to a
position in the same line of work as a position to which the employee
received a term appointment under competitive procedures.
``(b)(1) Notwithstanding subchapter I of chapter 33, the Secretary
of the Treasury may establish category rating systems for evaluating
applicants for Internal Revenue Service positions in the competitive
service under which qualified candidates are divided into two or more
quality categories on the basis of relative degrees of merit, rather
than assigned individual numerical ratings.
``(2) Each applicant who meets the minimum qualification
requirements for the position to be filled shall be assigned to an
appropriate category based on an evaluation of the applicant's
knowledge, skills, and abilities relative to those needed for successful
performance in the position to be filled.
``(3) Within each quality category established under paragraph (1),
preference eligibles shall be listed ahead of individuals who are not
preference eligibles. For other than scientific and professional
positions at or higher than GS-9 (or equivalent), preference eligibles
who have a compensable service-connected disability of 10 percent or
more, and who meet the minimum qualification standards, shall be listed
in the highest quality category.
``(4) An appointing authority may select any applicant from the
highest quality category or, if fewer than three candidates
have been assigned to the highest quality category, from a merged
category consisting of the highest and second highest quality
categories.
``(5) Notwithstanding paragraph (4), the appointing authority may
not pass over a preference eligible in the same or higher category from
which selection is made unless the requirements of section 3317(b) or
3318(b), as applicable, are satisfied.
``(c) The Secretary of the Treasury may detail employees among the
offices of the Internal Revenue Service without regard to the 120-day
limitation in section 3341(b).
``(d) Notwithstanding any other provision of law, the Secretary of
the Treasury may establish a probationary period under section 3321 of
up to 3 years for Internal Revenue Service positions if the Secretary of
the Treasury determines that the nature of the work is such that a
shorter period is insufficient to demonstrate complete proficiency in
the position.
``(e) Nothing in this section exempts the Secretary of the
Treasury from--
``(1) any employment priority established under direction of
the President for the placement of surplus or displaced
employees; or
[[Page 112 STAT. 719]]
``(2) any obligation under a court order or decree relating
to the employment practices of the Internal Revenue Service or
the Department of the Treasury.''.
(b) Clerical Amendment.--The table of sections for part III of title
5, United States Code, is amended by adding at the end the following new
items:
``Subpart I--Miscellaneous
``95. Personnel flexibilities relating to the Internal Revenue
Service..........................................................9501''.
SEC. 1202. VOLUNTARY SEPARATION <<NOTE: 5 USC 5597 note.>> INCENTIVE
PAYMENTS.
(a) Definition.--In this section, the term ``employee'' means an
employee (as defined by section 2105 of title 5, United States Code) who
is employed by the Internal Revenue Service serving under an appointment
without time limitation, and has been currently employed for a
continuous period of at least 3 years, but does not include--
(1) a reemployed annuitant under subchapter III of chapter
83 or chapter 84 of title 5, United States Code, or another
retirement system;
(2) an employee having a disability on the basis of which
such employee is or would be eligible for disability retirement
under the applicable retirement system referred to in paragraph
(1);
(3) an employee who is in receipt of a specific notice of
involuntary separation for misconduct or unacceptable
performance;
(4) an employee who, upon completing an additional period of
service as referred to in section 3(b)(2)(B)(ii) of the Federal
Workforce Restructuring Act of 1994 (5 U.S.C. 5597 note), would
qualify for a voluntary separation incentive payment under
section 3 of such Act;
(5) an employee who has previously received any voluntary
separation incentive payment by the Federal Government under
this section or any other authority and has not repaid such
payment;
(6) an employee covered by statutory reemployment rights who
is on transfer to another organization; or
(7) any employee who, during the 24-month period preceding
the date of separation, has received a recruitment or relocation
bonus under section 5753 of title 5, United States Code, or who,
within the 12-month period preceding the date of separation,
received a retention allowance under section 5754 of title 5,
United States Code.
(b) Authority To Provide Voluntary Separation Incentive Payments.--
(1) In general.--The Commissioner of Internal Revenue may
pay voluntary separation incentive payments under this section
to any employee to the extent necessary to carry out the plan to
reorganize the Internal Revenue Service under section 1001.
(2) Amount and treatment of payments.--A voluntary
separation incentive payment--
(A) shall be paid in a lump sum after the employee's
separation;
(B) shall be paid from appropriations or funds
available for the payment of the basic pay of the
employees;
(C) shall be equal to the lesser of--
[[Page 112 STAT. 720]]
(i) an amount equal to the amount the employee
would be entitled to receive under section 5595(c)
of title 5, United States Code; or
(ii) an amount determined by an agency head
not to exceed $25,000;
(D) may not be made except in the case of any
qualifying employee who voluntarily separates (whether
by retirement or resignation) before January 1, 2003;
(E) shall not be a basis for payment, and shall not
be included in the computation, of any other type of
Government benefit; and
(F) shall not be taken into account in determining
the amount of any severance pay to which the employee
may be entitled under section 5595 of title 5, United
States Code, based on any other separation.
(c) Additional Internal Revenue Service Contributions to the
Retirement Fund.--
(1) In general.--In addition to any other payments which it
is required to make under subchapter III of chapter 83 of title
5, United States Code, the Internal Revenue Service shall remit
to the Office of Personnel Management for deposit in the
Treasury of the United States to the credit of the Civil Service
Retirement and Disability Fund an amount equal to 15 percent of
the final basic pay of each employee who is covered under
subchapter III of chapter 83 or chapter 84 of title 5, United
States Code, to whom a voluntary separation incentive has been
paid under this section.
(2) Definition.--In paragraph (1), the term ``final basic
pay'', with respect to an employee, means the total amount of
basic pay which would be payable for a year of service by such
employee, computed using the employee's final rate of basic pay,
and, if last serving on other than a full-time basis, with
appropriate adjustment therefor.
(d) Effect of Subsequent Employment With the Government.--An
individual who has received a voluntary separation incentive payment
under this section and accepts any employment for compensation with the
Government of the United States, or who works for any agency of the
United States Government through a personal services contract, within 5
years after the date of the separation on which the payment is based
shall be required to pay, prior to the individual's first day of
employment, the entire amount of the incentive payment to the Internal
Revenue Service.
(e) Effect on Internal Revenue Service Employment
Levels.--
(1) Intended effect.--Voluntary separations under this
section are not intended to necessarily reduce the total number
of full-time equivalent positions in the Internal Revenue
Service.
(2) Use of voluntary separations.--The Internal Revenue
Service may redeploy or use the full-time equivalent positions
vacated by voluntary separations under this section to make
other positions available to more critical locations or more
critical occupations.
SEC. 1203. TERMINATION OF EMPLOYMENT FOR <<NOTE: 26 USC 7804
note.>> MISCONDUCT.
(a) In General.--Subject to subsection (c), the Commissioner of
Internal Revenue shall terminate the employment of any
[[Page 112 STAT. 721]]
employee of the Internal Revenue Service if there is a final
administrative or judicial determination that such employee committed
any act or omission described under subsection (b) in the performance of
the employee's official duties. Such termination shall be a removal for
cause on charges of misconduct.
(b) Acts or Omissions.--The acts or omissions referred to under
subsection (a) are--
(1) willful failure to obtain the required approval
signatures on documents authorizing the seizure of a taxpayer's
home, personal belongings, or business assets;
(2) providing a false statement under oath with respect to a
material matter involving a taxpayer or taxpayer representative;
(3) with respect to a taxpayer, taxpayer representative, or
other employee of the Internal Revenue Service, the violation
of--
(A) any right under the Constitution of the United
States; or
(B) any civil right established under--
(i) title VI or VII of the Civil Rights Act of
1964;
(ii) title IX of the Education Amendments of
1972;
(iii) the Age Discrimination in Employment Act
of 1967;
(iv) the Age Discrimination Act of 1975;
(v) section 501 or 504 of the Rehabilitation
Act of 1973; or
(vi) title I of the Americans with
Disabilities Act of 1990;
(4) falsifying or destroying documents to conceal mistakes
made by any employee with respect to a matter involving a
taxpayer or taxpayer representative;
(5) assault or battery on a taxpayer, taxpayer
representative, or other employee of the Internal Revenue
Service, but only if there is a criminal conviction, or a final
judgment by a court in a civil case, with respect to the assault
or battery;
(6) violations of the Internal Revenue Code of 1986,
Department of Treasury regulations, or policies of the Internal
Revenue Service (including the Internal Revenue Manual) for the
purpose of retaliating against, or harassing, a taxpayer,
taxpayer representative, or other employee of the Internal
Revenue Service;
(7) willful misuse of the provisions of section 6103 of the
Internal Revenue Code of 1986 for the purpose of concealing
information from a congressional inquiry;
(8) willful failure to file any return of tax required under
the Internal Revenue Code of 1986 on or before the date
prescribed therefor (including any extensions), unless such
failure is due to reasonable cause and not to willful neglect;
(9) willful understatement of Federal tax liability, unless
such understatement is due to reasonable cause and not to
willful neglect; and
(10) threatening to audit a taxpayer for the purpose of
extracting personal gain or benefit.
(c) Determination of Commissioner.--
(1) In general.--The Commissioner of Internal Revenue may
take a personnel action other than termination for an act or
omission under subsection (a).
[[Page 112 STAT. 722]]
(2) Discretion.--The exercise of authority under paragraph
(1) shall be at the sole discretion of the Commissioner of
Internal Revenue and may not be delegated to any other officer.
The Commissioner of Internal Revenue, in his sole discretion,
may establish a procedure which will be used to determine
whether an individual should be referred to the Commissioner of
Internal Revenue for a determination by the Commissioner under
paragraph (1).
(3) No appeal.--Any determination of the Commissioner of
Internal Revenue under this subsection may not be appealed in
any administrative or judicial proceeding.
(d) Definition.--For purposes of the provisions described in clauses
(i), (ii), and (iv) of subsection (b)(3)(B), references to a program or
activity receiving Federal financial assistance or an education program
or activity receiving Federal financial assistance shall include any
program or activity conducted by the Internal Revenue Service for a
taxpayer.
SEC. 1204. <<NOTE: 26 USC 7804 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; or
(2) to impose or suggest production quotas or goals with
respect to such employees.
(b) Taxpayer Service.--The Internal Revenue Service shall use the
fair and equitable treatment of taxpayers by employees as one of the
standards for evaluating employee performance.
(c) Certification.--Each appropriate supervisor shall certify
quarterly by letter to the Commissioner of Internal Revenue whether or
not tax enforcement results are being used in a manner prohibited by
subsection (a).
(d) Technical and Conforming Amendment.--Section 6231 of the
Technical and Miscellaneous Revenue Act of 1988 (Public Law 100-647; 102
Stat. 3734) <<NOTE: 26 USC 7803 note.>> is repealed.
(e) Effective <<NOTE: Applicability.>> Date.--This section shall
apply to evaluations conducted on or after the date of the enactment of
this Act.
SEC. 1205. EMPLOYEE TRAINING <<NOTE: 26 USC 7804.>> PROGRAM.
(a) In General.--Not <<NOTE: Deadline.>> later than 180 days after
the date of the enactment of this Act, the Commissioner of Internal
Revenue shall implement an employee training program and shall submit an
employee training plan to the Committee on Finance of the Senate and the
Committee on Ways and Means of the House of Representatives.
(b) Contents.--The plan submitted under subsection (a) shall--
(1) detail a comprehensive employee training program to
ensure adequate customer service training;
(2) detail a schedule for training and the fiscal years
during which the training will occur;
(3) detail the funding of the program and relevant
information to demonstrate the priority and commitment of
resources to the plan;
(4) review the organizational design of customer service;
(5) provide for the implementation of a performance
development system; and
[[Page 112 STAT. 723]]
(6) provide for at least 16 hours of conflict management
training during fiscal year 1999 for employees conducting
collection activities.
TITLE II--ELECTRONIC FILING
SEC. 2001. ELECTRONIC FILING OF TAX AND INFORMATION RETURNS.
<<NOTE: 26 USC 6011 note.>> (a) In General.--It is the policy of
Congress that--
(1) paperless filing should be the preferred and most
convenient means of filing Federal tax and information returns;
(2) it should be the goal of the Internal Revenue Service to
have at least 80 percent of all such returns filed
electronically by the year 2007; and
(3) the Internal Revenue Service should cooperate with and
encourage the private sector by encouraging competition to
increase electronic filing of such returns.
<<NOTE: 26 USC 6011 note.>> (b) Strategic Plan.--
<<NOTE: Deadline.>> (1) In general.--Not later than 180
days after the date of the enactment of this Act, the Secretary
of the Treasury or the Secretary's delegate (hereafter in this
section referred to as the ``Secretary'') shall establish a plan
to eliminate barriers, provide incentives, and use competitive
market forces to increase electronic filing gradually over the
next 10 years while maintaining processing times for paper
returns at 40 days. To the extent practicable, such plan shall
provide that all returns prepared electronically for taxable
years beginning after 2001 shall be filed electronically.
(2) Electronic commerce advisory group.--To ensure that the
Secretary receives input from the private sector in the
development and implementation of the plan required by paragraph
(1), the Secretary shall convene an electronic commerce advisory
group to include representatives from the small business
community and from the tax practitioner, preparer, and
computerized tax processor communities and other representatives
from the electronic filing industry.
(c) Promotion of Electronic Filing and Incentives.--
Section 6011 is amended by redesignating subsection (f ) as subsection
(g) and by inserting after subsection (e) the following new subsection:
``(f ) Promotion of Electronic Filing.--
``(1) In general.--The Secretary is authorized to promote
the benefits of and encourage the use of electronic tax
administration programs, as they become available, through the
use of mass communications and other means.
``(2) Incentives.--The Secretary may implement procedures to
provide for the payment of appropriate incentives for
electronically filed returns.''.
<<NOTE: Deadline. 26 USC 6011 note.>> (d) Annual Reports.--Not
later than June 30 of each calendar year after 1998, the Chairperson of
the Internal Revenue Service Oversight Board, the Secretary of the
Treasury, and the Chairperson of the electronic commerce advisory group
established under subsection (b)(2) shall report to the Committees on
Ways and Means, Appropriations, Government Reform and Oversight, and
Small Business of the House of Representatives and the Committees on
Finance, Appropriations, Governmental Affairs, and Small Business of the
Senate on--
[[Page 112 STAT. 724]]
(1) the progress of the Internal Revenue Service in meeting
the goal of receiving electronically 80 percent of tax and
information returns by 2007;
(2) the status of the plan required by subsection (b);
(3) the legislative changes necessary to assist the Internal
Revenue Service in meeting such goal; and
(4) the effects on small businesses and the self-employed of
electronically filing tax and information returns.
SEC. 2002. DUE DATE FOR CERTAIN INFORMATION RETURNS.
(a) Information Returns Filed Electronically.--Section 6071
(relating to time for filing returns and other documents) is amended by
redesignating subsection (b) as subsection (c) and by inserting after
subsection (a) the following new subsection:
``(b) Electronically Filed Information Returns.--Returns made under
subparts B and C of part III of this subchapter which are filed
electronically shall be filed on or before March 31 of the year
following the calendar year to which such returns relate.''.
(b) Study Relating to Time For Providing Notice to
Recipients.--
(1) In general.--The Secretary of the Treasury shall conduct
a study evaluating the effect of extending the deadline for
providing statements to persons with respect to whom information
is required to be furnished under subparts B and C of part III
of subchapter A of chapter 61 of the Internal Revenue Code of
1986 (other than section 6051 of such Code) from January 31 to
February 15 of the year in which the return to which the
statement relates is required to be filed.
<<NOTE: Deadline.>> (2) Report.--Not later than June 30,
1999, the Secretary of the Treasury shall submit a report on the
study under paragraph (1) to the Committee on Ways and Means of
the House of Representatives and the Committee on Finance of the
Senate.
<<NOTE: Applicability. 26 USC 6071 note.>> (c) Effective Date.--The
amendment made by subsection (a) shall apply to returns required to be
filed after December 31, 1999.
SEC. 2003. PAPERLESS ELECTRONIC FILING.
(a) In General.--Section 6061 (relating to signing of returns and
other documents) is amended--
(1) by striking ``Except as otherwise provided by'' and
inserting the following:
``(a) General Rule.--Except as otherwise provided by subsection (b)
and''; and
(2) by adding at the end the following new subsection:
``(b) Electronic Signatures.--
<<NOTE: Procedures.>> ``(1) In general.--The Secretary
shall develop procedures for the acceptance of signatures in
digital or other electronic form. Until such time as such
procedures are in place, the Secretary may--
``(A) waive the requirement of a signature for; or
``(B) provide for alternative methods of signing or
subscribing,
a particular type or class of return, declaration, statement, or
other document required or permitted to be made or written under
internal revenue laws and regulations.
[[Page 112 STAT. 725]]
``(2) Treatment of alternative methods.--Notwithstanding any
other provision of law, any return, declaration, statement, or
other document filed and verified, signed, or subscribed under
any method adopted under paragraph (1)(B) shall be treated for
all purposes (both civil and criminal, including penalties for
perjury) in the same manner as though signed or subscribed.
``(3) Published guidance.--The Secretary shall publish
guidance as appropriate to define and implement any waiver of
the signature requirements or any method adopted under paragraph
(1).''.
(b) Acknowledgment of Electronic Filing.--Section 7502(c) is amended
to read as follows:
``(c) Registered and Certified Mailing; Electronic
Filing.--
``(1) Registered mail.--For purposes of this section, if any
return, claim, statement, or other document, or payment, is sent
by United States registered mail--
``(A) such registration shall be prima facie
evidence that the return, claim, statement, or other
document was delivered to the agency, officer, or office
to which addressed; and
``(B) the date of registration shall be deemed the
postmark date.
<<NOTE: Regulations.>> ``(2) Certified mail; electronic
filing.--The Secretary is authorized to provide by regulations
the extent to which the provisions of paragraph (1) with respect
to prima facie evidence of delivery and the postmark date shall
apply to certified mail and electronic filing.''.
<<NOTE: 26 USC 6011 note.>> (c) Establishment of Procedures for
Other Information.--In the case of taxable periods beginning after
December 31, 1999, the Secretary of the Treasury or the Secretary's
delegate shall, to the extent practicable, establish procedures to
accept, in
electronic form, any other information, statements, elections, or
schedules, from taxpayers filing returns electronically, so that such
taxpayers will not be required to file any paper.
<<NOTE: Procedures. 26 USC 7805 note.>> (d) Internet
Availability.--In the case of taxable periods beginning after December
31, 1998, the Secretary of the Treasury or the Secretary's delegate
shall establish procedures for all tax forms, instructions, and
publications created in the most recent 5-year period to be made
available electronically on the Internet in a searchable database at
approximately the same time such records are available to the public in
paper form. In addition, in the case of taxable periods beginning after
December 31, 1998, the Secretary of the Treasury or the Secretary's
delegate shall, to the extent practicable, establish procedures for
other taxpayer guidance to be made available electronically on the
Internet in a searchable database at approximately the same time such
guidance is available to the public in paper form.
<<NOTE: 26 USC 6103 note.>> (e) Procedures for Authorizing
Disclosure Electronically.--The Secretary shall establish procedures for
any taxpayer to authorize, on an electronically filed return, the
Secretary to disclose information under section 6103(c) of the Internal
Revenue Code of 1986 to the preparer of the return.
<<NOTE: 26 USC 6061 note.>> (f ) Effective Date.--The amendments
made by this section shall take effect on the date of the enactment of
this Act.
[[Page 112 STAT. 726]]
SEC. 2004. RETURN-FREE TAX <<NOTE: 26 USC 6012 note.>> SYSTEM.
<<NOTE: Procedures.>> (a) In General.--The Secretary of the
Treasury or the Secretary's delegate shall develop procedures for the
implementation of a return-free tax system under which appropriate
individuals would be permitted to comply with the Internal Revenue Code
of 1986 without making the return required under section 6012 of such
Code for taxable years beginning after 2007.
<<NOTE: Deadline.>> (b) Report.--Not later than June 30 of each
calendar year after 1999, the Secretary shall report to the Committee on
Ways and Means of the House of Representatives and the Committee on
Finance of the Senate on--
(1) what additional resources the Internal Revenue Service
would need to implement such a system;
(2) the changes to the Internal Revenue Code of 1986 that
could enhance the use of such a system;
(3) the procedures developed pursuant to subsection (a); and
(4) the number and classes of taxpayers that would be
permitted to use the procedures developed pursuant to subsection
(a).
SEC. 2005. ACCESS TO ACCOUNT <<NOTE: Deadlines. 26 USC 6103
note.>> INFORMATION.
(a) In General.--Not <<NOTE: Procedures.>> later than December 31,
2006, the Secretary of the Treasury or the Secretary's delegate shall
develop procedures under which a taxpayer filing returns electronically
(and their designees under section 6103(c) of the Internal Revenue Code
of 1986) would be able to review the taxpayer's account electronically,
but only if all necessary safeguards to ensure the privacy of such
account information are in place.
(b) Report.--Not later than December 31, 2003, the Secretary of the
Treasury shall report on the progress the Secretary is making on the
development of procedures under subsection (a) to the Committee on Ways
and Means of the House of Representatives and the Committee on Finance
of the Senate.
TITLE III--TAXPAYER <<NOTE: Taxpayer Bill of Rights 3.>> PROTECTION AND
RIGHTS
SEC. 3000. SHORT <<NOTE: 26 USC 1 note.>> TITLE.
This title may be cited as the ``Taxpayer Bill of Rights 3''.
Subtitle A--Burden of Proof
SEC. 3001. BURDEN OF PROOF.
(a) In General.--Chapter 76 (relating to judicial proceedings) is
amended by adding at the end the following new subchapter:
``Subchapter E--Burden of Proof
``Sec. 7491. Burden of proof.
``SEC. 7491. BURDEN OF PROOF.
``(a) Burden Shifts Where Taxpayer Produces Credible Evidence.--
[[Page 112 STAT. 727]]
``(1) General rule.--If, in any court proceeding, a taxpayer
introduces credible evidence with respect to any factual issue
relevant to ascertaining the liability of the taxpayer for any
tax imposed by subtitle A or B, the Secretary shall have the
burden of proof with respect to such issue.
<<NOTE: Applicability.>> ``(2) Limitations.--Paragraph (1)
shall apply with respect to an issue only if--
``(A) the taxpayer has complied with the
requirements under this title to substantiate any item;
``(B) the taxpayer has maintained all records
required under this title and has cooperated with
reasonable requests by the Secretary for witnesses,
information, documents, meetings, and interviews; and
``(C) in the case of a partnership, corporation, or
trust, the taxpayer is described in section
7430(c)(4)(A)(ii).
``(3) Coordination.--Paragraph (1) shall not apply to any
issue if any other provision of this title provides for a
specific burden of proof with respect to such issue.
``(b) Use of Statistical Information on Unrelated Taxpayers.--In the
case of an individual taxpayer, the Secretary shall have the burden of
proof in any court proceeding with respect to any item of income which
was reconstructed by the Secretary solely through the use of statistical
information on unrelated taxpayers.
``(c) Penalties.--Notwithstanding any other provision of this title,
the Secretary shall have the burden of production in any court
proceeding with respect to the liability of any individual for any
penalty, addition to tax, or additional amount imposed by this title.''.
(b) Conforming Amendment.--The table of subchapters for chapter 76
is amended by adding at the end the following new item:
``Subchapter E. Burden of proof.''.
<<NOTE: Applicability. 26 USC 7491 note.>> (c) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to court proceedings arising in connection with
examinations commencing after the date of the enactment of this
Act.
(2) Taxable periods or events after date of enactment.--In
any case in which there is no examination, such amendments shall
apply to court proceedings arising in connection with taxable
periods or events beginning or occurring after such date of
enactment.
Subtitle B--Proceedings by <<NOTE: Courts.>> Taxpayers
SEC. 3101. EXPANSION OF AUTHORITY TO AWARD COSTS AND CERTAIN FEES.
(a) Increase in Attorney's Fees.--
(1) Increase in hourly amount.--Clause (iii) of section
7430(c)(1)(B) (relating to reasonable litigation costs) is
amended by striking ``$110'' and inserting ``$125''.
(2) Award of higher attorney's fees based on complexity of
issues.--Clause (iii) of section 7430(c)(1)(B) (relating to the
award of costs and certain fees) is amended by inserting
[[Page 112 STAT. 728]]
``the difficulty of the issues presented in the case, or the
local availability of tax expertise,'' before ``justifies a
higher rate''.
(b) Award of Administrative Costs Incurred After 30-Day Letter.--
Paragraph (2) of section 7430(c) is amended by striking the last
sentence and inserting the following new flush sentence:
``Such term shall only include costs incurred on or after
whichever of the following is the earliest: (i) the date of the
receipt by the taxpayer of the notice of the decision of the
Internal Revenue Service Office of Appeals; (ii) the date of the
notice of deficiency; or (iii) the date on which the first
letter of proposed deficiency which allows the taxpayer an
opportunity for administrative review in the Internal Revenue
Service Office of Appeals is sent.''.
(c) Award of Fees for Certain Additional Services.--
Paragraph (3) of section 7430(c) is amended to read as follows:
``(3) Attorneys fees.--
``(A) In general.--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.
``(B) Pro bono services.--The court may award
reasonable attorneys fees under subsection (a) in excess
of the attorneys fees paid or incurred if such fees are
less than the reasonable attorneys fees because an
individual is representing the prevailing party for no
fee or for a fee which (taking into account all the
facts and circumstances) is no more than a nominal
fee. <<NOTE: Applicability.>> This subparagraph shall
apply only if such award is paid to such individual or
such individual's employer.''.
(d) Determination of Whether Position of United States Is
Substantially Justified.--Subparagraph (B) of section 7430(c)(4) is
amended by redesignating clause (iii) as clause (iv) and by inserting
after clause (ii) the following new clause:
``(iii) Effect of losing on substantially
similar issues.--In determining for purposes of
clause (i) whether the position of the United
States was substantially justified, the court
shall take into account whether the United States
has lost in courts of appeal for other circuits on
substantially similar issues.''.
(e) Taxpayer Treated as Prevailing if Judgment Is Less Than
Taxpayer's Offer.--
(1) In general.--Section 7430(c)(4) (defining prevailing
party) is amended by adding at the end the following new
subparagraph:
``(E) Special rules where judgment less than
taxpayer's offer.--
``(i) In general.--A party to a court
proceeding meeting the requirements of
subparagraph (A)(ii) shall be treated as the
prevailing party if the liability of the taxpayer
pursuant to the judgment in the proceeding
(determined without regard to interest) is equal
to or less than the liability of the taxpayer
which would have been so determined if the United
States had accepted a qualified offer of the party
under subsection (g).
[[Page 112 STAT. 729]]
``(ii) Exceptions.--This subparagraph shall
not apply to--
``(I) any judgment issued pursuant
to a settlement; or
``(II) any proceeding in which the
amount of tax liability is not in issue,
including any declaratory judgment
proceeding, any proceeding to enforce or
quash any summons issued pursuant to
this title, and any action to restrain
disclosure under section 6110(f ).
``(iii)
Special <<NOTE: Applicability.>> rules.--If this
subparagraph applies to any court proceeding--
``(I) the determination under clause
(i) shall be made by reference to the
last qualified offer made with respect
to the tax liability at issue in the
proceeding; and
``(II) reasonable administrative and
litigation costs shall only include
costs incurred on and after the date of
such offer.
``(iv) Coordination.--This subparagraph shall
not apply to a party which is a prevailing party
under any other provision of this paragraph.''.
(2) Qualified offer.--Section 7430 is amended by adding at
the end the following new subsection:
``(g) Qualified Offer.--For purposes of subsection (c)(4)--
``(1) In general.--The term `qualified offer' means a
written offer which--
``(A) is made by the taxpayer to the United States
during the qualified offer period;
``(B) specifies the offered amount of the taxpayer's
liability (determined without regard to interest);
``(C) is designated at the time it is made as a
qualified offer for purposes of this section; and
``(D) remains open during the period beginning on
the date it is made and ending on the earliest of the
date the offer is rejected, the date the trial begins,
or the 90th day after the date the offer is made.
``(2) Qualified offer period.--For purposes of this
subsection, the term `qualified offer period' means the period--
``(A) beginning on the date on which the first
letter of proposed deficiency which allows the taxpayer
an opportunity for administrative review in the Internal
Revenue Service Office of Appeals is sent, and
``(B) ending on the date which is 30 days before the
date the case is first set for trial.''.
(f ) Award of Attorneys Fees in Unauthorized Inspection and
Disclosure Cases.--Section 7431(c) (relating to damages) is amended by
striking the period at the end of paragraph (2) and inserting ``,
plus'', and by adding at the end the following new paragraph:
``(3) in the case of a plaintiff which is described in
section 7430(c)(4)(A)(ii), reasonable attorneys fees, except
that if the defendant is the United States, reasonable attorneys
fees may be awarded only if the plaintiff is the prevailing
party (as determined under section 7430(c)(4)).''.
(g) Effective Date.--The amendments made
by <<NOTE: Applicability. 26 USC 7430 note.>> this section shall apply
to costs incurred (and, in the case of the amendment
[[Page 112 STAT. 730]]
made by subsection (c), services performed) more than 180 days after the
date of the enactment of this Act.
SEC. 3102. CIVIL DAMAGES FOR COLLECTION ACTIONS.
(a) Extension to Negligence Actions.--
(1) In general.--Section 7433 (relating to civil damages for
certain unauthorized collection actions) is amended--
(A) in subsection (a), by inserting ``, or by reason
of negligence,'' after ``recklessly or intentionally'';
and
(B) in subsection (b)--
(i) in the matter preceding paragraph (1), by
inserting ``($100,000, in the case of
negligence)'' after ``$1,000,000''; and
(ii) in paragraph (1), by inserting ``or
negligent'' after ``reckless or intentional''.
(2) Requirement that administrative remedies be exhausted.--
Paragraph (1) of section 7433(d) is amended to read as follows:
``(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.''.
(b) Damages Allowed in Civil Actions by Persons Other Than
Taxpayers.--Section 7426 is amended by redesignating subsection (h) as
subsection (i) and by adding after subsection (g) the following new
subsection:
``(h) Recovery of Damages Permitted in Certain Cases.--
``(1) In general.--Notwithstanding subsection (b), if, in
any action brought under this section, there is a finding that
any officer or employee of the Internal Revenue Service
recklessly or intentionally, or by reason of negligence,
disregarded any provision of this title the defendant shall be
liable to the plaintiff in an amount equal to the lesser of
$1,000,000 ($100,000 in the case of negligence) or the sum of--
``(A) actual, direct economic damages sustained by
the plaintiff as a proximate result of the reckless or
intentional or negligent disregard of any provision of
this title by the officer or employee (reduced by any
amount of such damages awarded under subsection (b));
and
``(B) the costs of the action.
<<NOTE: Applicability.>> ``(2) Requirement that
administrative remedies be exhausted; mitigation; period.--The
rules of section 7433(d) shall apply for purposes of this
subsection.
``(3) Payment authority.--Claims pursuant to this section
shall be payable out of funds appropriated under section 1304 of
title 31, United States Code.''.
(c) Civil Damages for IRS Violations of Bankruptcy
Procedures.--
(1) In general.--Section 7433 (relating to civil damages for
certain unauthorized collection actions) is amended by adding at
the end the following new subsection:
``(e) Actions for Violations of Certain Bankruptcy
Procedures.--
``(1) 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 willfully violates any provision
[[Page 112 STAT. 731]]
of section 362 (relating to automatic stay) or 524 (relating to
effect of discharge) of title 11, United States Code (or any
successor provision), or any regulation promulgated under such
provision, such taxpayer may petition the bankruptcy court to
recover damages against the United States.
``(2) Remedy to be exclusive.--
``(A) In general.--Except as provided in
subparagraph (B), notwithstanding section 105 of such
title 11, such petition shall be the exclusive remedy
for recovering damages resulting from such actions.
``(B) Certain other actions permitted.--Subparagraph
(A) shall not apply to an action under section 362(h) of
such title 11 for a violation of a stay provided by
section 362 of such title; except that--
``(i) administrative and litigation costs in
connection with such an action may only be awarded
under section 7430; and
``(ii) administrative costs may be awarded
only if incurred on or after the date that the
bankruptcy petition is filed.''.
(2) Conforming amendment.--Subsection (b) of section 7433 is
amended by inserting ``or petition filed under subsection (e)''
after ``subsection (a)''.
<<NOTE: Applicability. 26 USC 7426 note.>> (d) Effective Date.--The
amendments made by this section shall apply to actions of officers or
employees of the Internal Revenue Service after the date of the
enactment of this Act.
SEC. 3103. INCREASE IN SIZE OF CASES PERMITTED ON SMALL CASE CALENDAR.
(a) In General.--Section 7463 (relating to disputes involving
$10,000 or less) is amended by striking ``$10,000'' each place it
appears (including the section heading) and inserting ``$50,000''.
(b) Conforming Amendments.--
(1) Sections 7436(c)(1) and 7443A(b)(3) are each amended by
striking ``$10,000'' and inserting ``$50,000''.
(2) The table of sections for part II of subchapter C of
chapter 76 is amended by striking ``$10,000'' in the item
relating to section 7463 and inserting ``$50,000''.
(c) Effective Date.--The <<NOTE: Applicability. 26 USC 7436
note.>> amendments made by this section shall apply to proceedings
commenced after the date of the enactment of this Act.
SEC. 3104. ACTIONS FOR REFUND WITH RESPECT TO CERTAIN ESTATES WHICH HAVE
ELECTED THE INSTALLMENT METHOD OF PAYMENT.
(a) In General.--Section 7422 is amended by redesignating subsection
( j) as subsection (k) and by inserting after subsection (i) the
following new subsection:
``( j) Special Rule for Actions With Respect to Estates for Which an
Election Under Section 6166 Is Made.--
``(1) In general.--The district courts of the United States
and the United States Court of Federal Claims shall not fail to
have jurisdiction over any action brought by the representative
of an estate to which this subsection applies to determine the
correct amount of the estate tax liability of such estate (or
for any refund with respect thereto) solely because the full
amount of such liability has not been paid by reason of an
election under section 6166 with respect to such estate.
[[Page 112 STAT. 732]]
``(2) Estates to which subsection applies.--This subsection
shall apply to any estate if, as of the date the action is
filed--
``(A) no portion of the installments payable under
section 6166 have been accelerated;
``(B) all such installments the due date for which
is on or before the date the action is filed have been
paid;
``(C) there is no case pending in the Tax Court with
respect to the tax imposed by section 2001 on the estate
and, if a notice of deficiency under section 6212 with
respect to such tax has been issued, the time for filing
a petition with the Tax Court with respect to such
notice has expired; and
``(D) no proceeding for declaratory judgment under
section 7479 is pending.
``(3) Prohibition on collection of disallowed liability.--If
the court redetermines under paragraph (1) the estate tax
liability of an estate, no part of such liability which is
disallowed by a decision of such court which has become final
may be collected by the Secretary, and amounts paid in excess of
the installments determined by the court as currently due and
payable shall be refunded.''.
(b) Extension of Time To File Refund Suit.--Section 7479 (relating
to declaratory judgments relating to eligibility of estate with respect
to installment payments under section 6166) is amended by adding at the
end the following new subsection:
``(c) Extension of Time To File Refund Suit.--The 2-year period in
section 6532(a)(1) for filing suit for refund after disallowance of a
claim shall be suspended during the 90-day period after the mailing of
the notice referred to in subsection (b)(3) and, if a pleading has been
filed with the Tax Court under this section, until the decision of the
Tax Court has become final.''.
(c) Effective Date.--The <<NOTE: Applicability. 26 USC 7422
note.>> amendments made by this section shall apply to any claim for
refund filed after the date of the enactment of this Act.
SEC. 3105. ADMINISTRATIVE APPEAL OF ADVERSE INTERNAL REVENUE SERVICE
DETERMINATION OF TAX-EXEMPT STATUS OF BOND ISSUE.
The Internal Revenue Service shall amend its administrative
procedures to provide that if, upon examination, the Internal Revenue
Service proposes to an issuer that interest on previously issued
obligations of such issuer is not excludable from gross income under
section 103(a) of the Internal Revenue Code of 1986, the issuer of such
obligations shall have an administrative appeal of right to a senior
officer of the Internal Revenue Service Office of Appeals.
SEC. 3106. CIVIL ACTION FOR RELEASE OF ERRONEOUS LIEN.
(a) Right of Substitution of Value.--Subsection (b) of section 6325
(relating to release of lien or discharge of property) is amended by
adding at the end the following new paragraph:
``(4) Right of substitution of value.--
``(A) In general.--At the request of the owner of
any property subject to any lien imposed by this
chapter, the Secretary shall issue a certificate of
discharge of such property if such owner--
``(i) deposits with the Secretary an amount of
money equal to the value of the interest of the
United
[[Page 112 STAT. 733]]
States (as determined by the Secretary) in the
property; or
``(ii) furnishes a bond acceptable to the
Secretary in a like amount.
``(B) Refund of deposit with interest and release of
bond.--The Secretary shall refund the amount so
deposited (and shall pay interest at the overpayment
rate under section 6621), and shall release such bond,
to the extent that the Secretary determines that--
``(i) the unsatisfied liability giving rise to
the lien can be satisfied from a source other than
such property; or
``(ii) the value of the interest of the United
States in the property is less than the
Secretary's prior determination of such value.
``(C) Use of deposit, etc., if action to contest
lien not filed.--If no action is filed under section
7426(a)(4) within the period prescribed therefor, the
Secretary shall, within 60 days after the expiration of
such period--
``(i) apply the amount deposited, or collect
on such bond, to the extent necessary to satisfy
the unsatisfied liability secured by the lien; and
``(ii) refund (with interest as described in
subparagraph (B)) any portion of the amount
deposited which is not used to satisfy such
liability.
``(D) Exception.--Subparagraph (A) shall not apply
if the owner of the property is the person whose
unsatisfied liability gave rise to the lien.''.
(b) Civil Action To Release Erroneous Lien.--
(1) In general.--Subsection (a) of section 7426 (relating to
civil actions by persons other than taxpayers) is amended by
adding at the end the following new paragraph:
``(4) Substitution of value.--If a certificate of discharge
is issued to any person under section 6325(b)(4) with respect to
any property, such person may, within 120 days after the day on
which such certificate is issued, bring a civil action against
the United States in a district court of the United States for a
determination of whether the value of the interest of the United
States (if any) in such property is less than the value
determined by the Secretary. No other action may be brought by
such person for such a determination.''.
(2) Form of relief.--
(A) In general.--Subsection (b) of section 7426 is
amended by adding at the end the following new
paragraph:
``(5) Substitution of value.--If the court determines that
the Secretary's determination of the value of the interest of
the United States in the property for purposes of section
6325(b)(4) exceeds the actual value of such interest, the court
shall grant a judgment ordering a refund of the amount
deposited, and a release of the bond, to the extent that the
aggregate of the amounts thereof exceeds such value determined
by the court.''.
(B) Interest allowed on refund of deposit.--
Subsection (g) of section 7426 is amended by striking
``and'' at the end of paragraph (1), by striking the
period at the end of paragraph (2) and inserting ``;
and'', and by adding at the end the following new
paragraph:
[[Page 112 STAT. 734]]
``(3) in the case of a judgment pursuant to subsection
(b)(5) which orders a refund of any amount, from the date the
Secretary received such amount to the date of payment of such
judgment.''.
(3) Suspension of running of statute of limitation.--
Subsection (f ) of section 6503 is amended to read as follows:
``(f ) Wrongful Seizure of or Lien on Property of Third Party.--
``(1) Wrongful seizure.--The running of the period under
section 6502 shall be suspended for a period equal to the period
from the date property (including money) of a third party is
wrongfully seized or received by the Secretary to the date the
Secretary returns property pursuant to section 6343(b) or the
date on which a judgment secured pursuant to section 7426 with
respect to such property becomes final, and for 30 days
thereafter. The running of such period shall be suspended under
this paragraph only with respect to the amount of such
assessment equal to the amount of money or the value of specific
property returned.
``(2) Wrongful lien.--In the case of any assessment for
which a lien was made on any property, the running of the period
under section 6502 shall be suspended for a period equal to the
period beginning on the date any person becomes entitled to a
certificate under section 6325(b)(4) with respect to such
property and ending on the date which is 30 days after the
earlier of--
``(A) the earliest date on which the Secretary no
longer holds any amount as a deposit or bond provided
under section 6325(b)(4) by reason of such deposit or
bond being used to satisfy the unpaid tax or being
refunded or released; or
``(B) the date that the judgment secured under
section 7426(b)(5) becomes final.
The running of such period shall be suspended under this
paragraph only with respect to the amount of such assessment
equal to the value of the interest of the United States in the
property plus interest, penalties, additions to the tax, and
additional amounts attributable thereto.''.
(c) Effective Date.--The <<NOTE: 26 USC 6325 note.>> amendments made
by this section shall take effect on the date of the enactment of this
Act.
Subtitle C--Relief for Innocent Spouses and for Taxpayers Unable To
Manage Their Financial Affairs Due to Disabilities
SEC. 3201. RELIEF FROM JOINT AND SEVERAL LIABILITY ON JOINT RETURN.
(a) In General.--Subpart B of part II of subchapter A of chapter 61
is amended by inserting after section 6014 the following new section:
``SEC. 6015. RELIEF FROM JOINT AND SEVERAL LIABILITY ON JOINT RETURN.
``(a) In General.--Notwithstanding section 6013(d)(3)--
[[Page 112 STAT. 735]]
``(1) an individual who has made a joint return may elect to
seek relief under the procedures prescribed under subsection
(b); and
``(2) if such individual is eligible to elect the
application of subsection (c), such individual may, in addition
to any election under paragraph (1), elect to limit such
individual's liability for any deficiency with respect to such
joint return in the manner prescribed under subsection (c).
Any determination under this section shall be made without regard to
community property laws.
``(b) Procedures For Relief From Liability Applicable to All Joint
Filers.--
``(1) In general.--Under procedures prescribed by the
Secretary, if--
``(A) a joint return has been made for a taxable
year;
``(B) on such return there is an understatement of
tax attributable to erroneous items of one individual
filing the joint return;
``(C) the other individual filing the joint return
establishes that in signing the return he or she did not
know, and had no reason to know, that there was such
understatement;
``(D) taking into account all the facts and
circumstances, it is inequitable to hold the other
individual liable for the deficiency in tax for such
taxable year attributable to such understatement; and
``(E) <<NOTE: Deadline.>> the other individual
elects (in such form as the Secretary may prescribe) the
benefits of this subsection not later than the date
which is 2 years after the date the Secretary has begun
collection activities with respect to the individual
making the election,
then the other individual 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.
``(2) Apportionment of relief.--If an individual who, but
for paragraph (1)(C), would be relieved of liability under
paragraph (1), establishes that in signing the return such
individual did not know, and had no reason to know, the extent
of such understatement, then such individual shall be relieved
of liability for tax (including interest, penalties, and other
amounts) for such taxable year to the extent that such liability
is attributable to the portion of such understatement of which
such individual did not know and had no reason to know.
``(3) Understatement.--For purposes of this subsection, the
term `understatement' has the meaning given to such term by
section 6662(d)(2)(A).
``(c) Procedures To Limit Liability for Taxpayers No Longer Married
or Taxpayers Legally Separated or Not
Living Together.--
``(1) In general.--Except as provided in this subsection, if
an individual who has made a joint return for any taxable year
elects the application of this subsection, the individual's
liability for any deficiency which is assessed with respect to
the return shall not exceed the portion of such deficiency
properly allocable to the individual under subsection (d).
[[Page 112 STAT. 736]]
``(2) Burden of proof.--Except as provided in subparagraph
(A)(ii) or (C) of paragraph (3), each individual who elects the
application of this subsection shall have the burden of proof
with respect to establishing the portion of any deficiency
allocable to such individual.
``(3) Election.--
``(A) Individuals eligible to make election.--
``(i) In general.--An individual shall only be
eligible to elect the application of this
subsection if--
``(I) at the time such election is
filed, such individual is no longer
married to, or is legally separated
from, the individual with whom such
individual filed the joint return to
which the election relates; or
``(II) such individual was not a
member of the same household as the
individual with whom such joint return
was filed at any time during the 12-
month period ending on the date such
election is filed.
``(ii) Certain taxpayers ineligible to
elect.--If the Secretary demonstrates that assets
were transferred between individuals filing a
joint return as part of a fraudulent scheme by
such individuals, an election under this
subsection by either individual shall be invalid
(and section 6013(d)(3) shall apply to the joint
return).
``(B) Time for election.--
An <<NOTE: Deadline.>> election under this subsection
for any taxable year shall be made not later than 2
years after the date on which the Secretary has begun
collection activities with respect to the individual
making the election.
``(C) Election not valid with respect to certain
deficiencies.--If the Secretary demonstrates that an
individual making an election under this subsection had
actual knowledge, at the time such individual signed the
return, of any item giving rise to a deficiency (or
portion thereof) which is not allocable to such
individual under subsection (d), such election shall not
apply to such deficiency (or portion). This subparagraph
shall not apply where the individual with actual
knowledge establishes that such individual signed the
return under duress.
``(4) Liability increased by reason of transfers of property
to avoid tax.--
``(A) In general.--Notwithstanding any other
provision of this subsection, the portion of the
deficiency for which the individual electing the
application of this subsection is liable (without regard
to this paragraph) shall be increased by the value of
any disqualified asset transferred to the individual.
``(B) Disqualified asset.--For purposes of this
paragraph--
``(i) In general.--The term `disqualified
asset' means any property or right to property
transferred to an individual making the election
under this subsection with respect to a joint
return by the other
[[Page 112 STAT. 737]]
purpose of the transfer was the avoidance of tax
or payment of tax.
``(ii) Presumption.--
``(I) In general.--For purposes of
clause (i), except as provided in
subclause (II), any transfer which is
made after the date which is 1 year
before the date on which the first
letter of proposed deficiency which
allows the taxpayer an opportunity for
administrative review in the Internal
Revenue Service Office of Appeals is
sent shall be presumed to have as its
principal purpose the avoidance of tax
or payment of tax.
``(II) Exceptions.--Subclause (I)
shall not apply to any transfer pursuant
to a decree of divorce or separate
maintenance or a written instrument
incident to such a decree or to any
transfer which an individual establishes
did not have as its principal purpose
the avoidance of tax or payment of tax.
``(d) Allocation of Deficiency.--For purposes of sub-
section (c)--
``(1) In general.--The portion of any deficiency on a joint
return allocated to an individual shall be the amount which
bears the same ratio to such deficiency as the net amount of
items taken into account in computing the deficiency and
allocable to the individual under paragraph (3) bears to the net
amount of all items taken into account in computing the
deficiency.
``(2) Separate treatment of certain items.--If a deficiency
(or portion thereof) is attributable to--
``(A) the disallowance of a credit; or
``(B) any tax (other than tax imposed by section 1
or 55) required to be included with the joint return;
and such item is allocated to one individual under paragraph
(3), such deficiency (or portion) shall be allocated to such
individual. Any such item shall not be taken into account under
paragraph (1).
``(3) Allocation of items giving rise to the deficiency.--
For purposes of this subsection--
``(A) In general.--Except as provided in paragraphs
(4) and (5), any item giving rise to a deficiency on a
joint return shall be allocated to individuals filing
the return in the same manner as it would have been
allocated if the individuals had filed separate returns
for the taxable year.
<<NOTE: Regulations.>> ``(B) Exception where other
spouse benefits.--Under rules prescribed by the
Secretary, an item otherwise allocable to an individual
under subparagraph (A) shall be allocated to the other
individual filing the joint return to the extent the
item gave rise to a tax benefit on the joint return to
the other individual.
``(C) Exception for fraud.--The Secretary may
provide for an allocation of any item in a manner not
prescribed by subparagraph (A) if the Secretary
establishes that such allocation is appropriate due to
fraud of one or both individuals.
[[Page 112 STAT. 738]]
``(4) Limitations on separate returns disregarded.--If an
item of deduction or credit is disallowed in its entirety solely
because a separate return is filed, such disallowance shall be
disregarded and the item shall be computed as if a joint return
had been filed and then allocated between the spouses
appropriately. <<NOTE: Applicability.>> A similar rule shall
apply for purposes of section 86.
``(5) Child's liability.--If the liability of a child of a
taxpayer is included on a joint return, such liability shall be
disregarded in computing the separate liability of either spouse
and such liability shall be allocated appropriately between the
spouses.
``(e) Petition for Review by Tax Court.--
``(1) In general.--In the case of an individual who elects
to have subsection (b) or (c) apply--
``(A) In general.--The individual may petition the
Tax Court (and the Tax Court shall have jurisdiction) to
determine the appropriate relief available to the
individual under this section if such petition is filed
during the 90-day period beginning on the date on which
the Secretary mails by certified or registered mail a
notice to such individual of the Secretary's
determination of relief available to the individual.
Notwithstanding the preceding sentence, an individual
may file such petition at any time after the date which
is 6 months after the date such election is filed with
the Secretary and before the close of such 90-day
period.
``(B) Restrictions applicable to collection of
assessment.--
``(i) In general.--Except as otherwise
provided in section 6851 or 6861, no levy or
proceeding in court shall be made, begun, or
prosecuted against the individual making an
election under subsection (b) or (c) for
collection of any assessment to which such
election relates until the expiration of the 90-
day period described in subparagraph (A), or, if a
petition has been filed with the Tax Court, until
the decision of the Tax Court has become
final. <<NOTE: Applicability.>> Rules similar to
the rules of section 7485 shall apply with respect
to the collection of such assessment.
``(ii) Authority to enjoin collection
actions.--Notwithstanding the provisions of
section 7421(a), the beginning of such levy or
proceeding during the time the prohibition under
clause (i) is in force may be enjoined by a
proceeding in the proper court, including the Tax
Court. The Tax Court shall have no jurisdiction
under this subparagraph to enjoin any action or
proceeding unless a timely petition has been filed
under subparagraph (A) and then only in respect of
the amount of the assessment to which the election
under subsection (b) or (c) relates.
``(2) Suspension of running of period of limitations.--The
running of the period of limitations in section 6502 on the
collection of the assessment to which the petition under
paragraph (1)(A) relates shall be suspended for the period
during which the Secretary is prohibited by paragraph (1)(B)
from
[[Page 112 STAT. 739]]
collecting by levy or a proceeding in court and for 60 days
thereafter.
``(3) Applicable rules.--
``(A) Allowance of credit or refund.--Except as
provided in subparagraph (B), notwithstanding any other
law or rule of law (other than section 6512(b), 7121, or
7122), credit or refund shall be allowed or made to the
extent attributable to the application of this section.
``(B) Res judicata.--In the case of any election
under subsection (b) or (c), if a decision of the Tax
Court in any prior proceeding for the same taxable year
has become final, such decision shall be conclusive
except with respect to the qualification of the
individual for relief which was not an issue in such
proceeding. The exception contained in the preceding
sentence shall not apply if the Tax Court determines
that the individual participated meaningfully in such
prior proceeding.
``(C) Limitation on tax court jurisdiction.--If a
suit for refund is begun by either individual filing the
joint return pursuant to section 6532--
``(i) the Tax Court shall lose jurisdiction of
the individual's action under this section to
whatever extent jurisdiction is acquired by the
district court or the United States Court of
Federal Claims over the taxable years that are the
subject of the suit for refund; and
``(ii) the court acquiring jurisdiction shall
have jurisdiction over the petition filed under
this subsection.
``(4) Notice <<NOTE: Regulations.>> to other spouse.--The
Tax Court shall establish rules which provide the individual
filing a joint return but not making the election under
subsection (b) or (c) with adequate notice and an opportunity to
become a party to a proceeding under either such subsection.
``(f ) Equitable Relief.--Under procedures prescribed by the
Secretary, if--
``(1) taking into account all the facts and circumstances,
it is inequitable to hold the individual liable for any unpaid
tax or any deficiency (or any portion of either); and
``(2) relief is not available to such individual under
subsection (b) or (c),
the Secretary may relieve such individual of such liability.
``(g) Regulations.--The Secretary shall prescribe such regulations
as are necessary to carry out the provisions of this section,
including--
``(1) regulations providing methods for allocation of items
other than the methods under subsection (d)(3); and
``(2) regulations providing the opportunity for an
individual to have notice of, and an opportunity to participate
in, any administrative proceeding with respect to an election
made under subsection (b) or (c) by the other individual filing
the joint return.''.
(b) Equitable Relief for Individuals Not Filing Joint Return.--
Section 66(c) (relating to spouse relieved of liability in certain other
cases) is amended by adding at the end the following new
sentence: <<NOTE: Procedures.>> ``Under procedures prescribed by the
Secretary, if, taking into account all the facts and circumstances, it
is inequitable
[[Page 112 STAT. 740]]
to hold the individual liable for any unpaid tax or any deficiency (or
any portion of either) attributable to any item for which relief is not
available under the preceding sentence, the Secretary may relieve such
individual of such liability.''.
<<NOTE: Deadline. 26 USC 6015 note.>> (c) Separate Form for
Applying for Spousal Relief.--Not later than 180 days after the date of
the enactment of this Act, the Secretary of the Treasury shall develop a
separate form with instructions for use by taxpayers in applying for
relief under section 6015(a) of the Internal Revenue Code of 1986, as
added by this section.
<<NOTE: 26 USC 6013 note.>> (d) Separate Notice to Each Filer.--The
Secretary of the Treasury shall, wherever practicable, send any notice
relating to a joint return under section 6013 of the Internal Revenue
Code of 1986 separately to each individual filing the joint return.
(e) Conforming Amendments.--
(1) Section 6013 is amended by striking subsection (e).
(2) Subparagraph (A) of section 6230(c)(5) is amended by
striking ``section 6013(e)'' and inserting ``section 6015''.
(3) Section 7421(a) is amended by inserting ``6015(d),''
after ``sections''.
(f ) Clerical Amendment.--The table of sections for subpart B of
part II of subchapter A of chapter 61 is amended by inserting after the
item relating to section 6014 the following new item:
``Sec. 6015. Relief from joint and several liability on
joint return.''.
(g) Effective <<NOTE: 26 USC 6015 note.>> Dates.--
(1) In general.--Except <<NOTE: Applicability.>> as provided
in paragraph (2), the amendments made by this section shall
apply to any liability for tax arising after the date of the
enactment of this Act and any liability for tax arising on or
before such date but remaining unpaid as of such date.
(2) 2-year period.--The 2-year period under subsection
(b)(1)(E) or (c)(3)(B) of section 6015 of the Internal Revenue
Code of 1986 shall not expire before the date which is 2 years
after the date of the first collection activity after the date
of the enactment of this Act.
SEC. 3202. SUSPENSION OF STATUTE OF LIMITATIONS ON FILING REFUND CLAIMS
DURING PERIODS OF DISABILITY.
(a) In General.--Section 6511 (relating to limitations on credit or
refund) is amended by redesignating subsection (h) as subsection (i) and
by inserting after subsection (g) the following new subsection:
``(h) Running of Periods of Limitation Suspended While Taxpayer Is
Unable To Manage Financial Affairs Due to Disability.--
``(1) In general.--In the case of an individual, the running
of the periods specified in subsections (a), (b), and (c) shall
be suspended during any period of such individual's life that
such individual is financially disabled.
``(2) Financially disabled.--
``(A) In general.--For purposes of paragraph (1), an
individual is financially disabled if such individual is
unable to manage his financial affairs by reason of a
medically determinable physical or mental impairment of
the individual which can be expected to result in death
or which has lasted or can be expected to last for a
continuous period of not less than 12 months. An
individual shall not be considered to have such an
impairment unless proof
[[Page 112 STAT. 741]]
of the existence thereof is furnished in such form and
manner as the Secretary may require.
``(B) Exception where individual has guardian,
etc.--An individual shall not be treated as financially
disabled during any period that such individual's spouse
or any other person is authorized to act on behalf of
such individual in financial matters.''.
<<NOTE: Applicability. 26 USC 6511 note.>> (b) Effective Date.--The
amendment made by subsection (a) shall apply to periods of disability
before, on, or after the date of the enactment of this Act but shall not
apply to any claim for credit or refund which (without regard to such
amendment) is barred by the operation of any law or rule of law
(including res judicata) as of the date of the enactment of this Act.
Subtitle D--Provisions Relating to Interest and Penalties
SEC. 3301. ELIMINATION OF INTEREST RATE DIFFERENTIAL ON OVERLAPPING
PERIODS OF INTEREST ON TAX OVERPAYMENTS AND UNDERPAYMENTS.
(a) In General.--Section 6621 (relating to determination of rate of
interest) is amended by adding at the end the following new subsection:
``(d) Elimination of Interest on Overlapping Periods of Tax
Overpayments and Underpayments.--To the extent that, for any period,
interest is payable under subchapter A and allowable under subchapter B
on equivalent underpayments and overpayments by the same taxpayer of tax
imposed by this title, the net rate of interest under this section on
such amounts shall be zero for such period.''.
(b) Conforming Amendment.--Subsection (f ) of section 6601 (relating
to satisfaction by credits) is amended by adding at the end the
following new sentence: ``The preceding sentence shall not apply to the
extent that section 6621(d) applies.''.
<<NOTE: Applicability. 26 USC 6601 note.>> (c) Effective Dates.--
(1) In general.--Except as provided under paragraph (2), the
amendments made by this section shall apply to interest for
periods beginning after the date of the enactment of this Act.
(2) Special rule.--The amendments made by this section shall
apply to interest for periods beginning before the date of the
enactment of this Act if the taxpayer--
(A) reasonably identifies and establishes periods of
such tax overpayments and underpayments for which the
zero rate applies; and
(B) <<NOTE: Deadline.>> not later than December 31,
1999, requests the Secretary of the Treasury to apply
section 6621(d) of the Internal Revenue Code of 1986, as
added by subsection (a), to such periods.
SEC. 3302. INCREASE IN OVERPAYMENT RATE PAYABLE TO TAXPAYERS OTHER THAN
CORPORATIONS.
(a) In General.--Subparagraph (B) of section 6621(a)(1)
(defining overpayment rate) is amended to read as follows:
``(B) 3 percentage points (2 percentage points in
the case of a corporation).''.
[[Page 112 STAT. 742]]
<<NOTE: Applicability. 26 USC 6621 note.>> (b) Effective Date.--The
amendment made by this section shall apply to interest for the second
and succeeding calendar quarters beginning after the date of the
enactment of this Act.
SEC. 3303. MITIGATION OF PENALTY ON INDIVIDUAL'S FAILURE TO PAY FOR
MONTHS DURING PERIOD OF INSTALLMENT AGREEMENT.
(a) In General.--Section 6651 (relating to failure to file tax
return or to pay tax) is amended by adding at the end the following new
subsection:
``(h) Limitation on Penalty on Individual's Failure To Pay for
Months During Period of Installment Agreement.--In the case of an
individual who files a return of tax on or before the due date for the
return (including extensions), paragraphs (2) and (3) of subsection (a)
shall each be applied by substituting `0.25' for `0.5' each place it
appears for purposes of determining the addition to tax for any month
during which an installment agreement under section 6159 is in effect
for the payment of such tax.''.
(b) Effective Date.--The <<NOTE: Applicability. 26 USC 6651
note.>> amendment made by this section shall apply for purposes of
determining additions to the tax for months beginning after December 31,
1999.
SEC. 3304. MITIGATION OF FAILURE TO DEPOSIT PENALTY.
(a) Taxpayer May Designate Periods to Which Deposits Apply.--Section
6656 (relating to underpayment of deposits) is amended by adding at the
end the following new subsection:
``(e) Designation of Periods to Which Deposits Apply.--
``(1) In general.--A person may, with respect to any deposit
of tax to be reported on such person's return for a specified
tax period, designate the period or periods within such
specified tax period to which the deposit is to be applied for
purposes of this section.
``(2) Time for making designation.--A person may make a
designation under paragraph (1) only during the 90-day period
beginning on the date of a notice that a penalty under
subsection (a) has been imposed for the specified tax period to
which the deposit relates.''.
(b) Expansion of Exemption for First-Time Deposits.--
(1) In general.--Paragraph (2) of section 6656(c) (relating
to exemption for first-time depositors of employment taxes) is
amended to read as follows:
``(2) such failure--
``(A) occurs during the first quarter that such
person was required to deposit any employment tax; or
``(B) if such person is required to change the
frequency of deposits of any employment tax, relates to
the first deposit to which such change applies, and''.
(c) Periods Apply to Current Liabilities Unless Designated
Otherwise.--Paragraph (1) of section 6656(e) (as added by subsection (a)
of this section) is amended to read as follows:
``(e) Designation of Periods to Which Deposits Apply.--
``(1) In general.--A deposit made under this section shall
be applied to the most recent period or periods within the
specified tax period to which the deposit relates, unless the
person making such deposit designates a different period or
periods to which such deposit is to be applied.''.
<<NOTE: Applicability. 26 USC 6656 note.>> (d) Effective Date.--
[[Page 112 STAT. 743]]
(1) In general.--The amendments made by this section shall
apply to deposits required to be made after the 180th day after
the date of the enactment of this Act.
(2) Application to current liabilities.--The amendment made
by subsection (c) shall apply to deposits required to be made
after December 31, 2001.
SEC. 3305. SUSPENSION OF INTEREST AND CERTAIN PENALTIES WHERE SECRETARY
FAILS TO CONTACT INDIVIDUAL TAXPAYER.
(a) In General.--Section 6404 (relating to abatements) is amended by
redesignating subsection (g) as subsection (h) and by inserting after
subsection (f ) the following new subsection:
``(g) Suspension of Interest and Certain Penalties Where Secretary
Fails To Contact Taxpayer.--
``(1) Suspension.--
``(A) In general.--In the case of an individual who
files a return of tax imposed by subtitle A for a
taxable year on or before the due date for the return
(including extensions), if the Secretary does not
provide a notice to the taxpayer specifically stating
the taxpayer's liability and the basis for the liability
before the close of the 1-year period (18-month period
in the case of taxable years beginning before January 1,
2004) beginning on the later of--
``(i) the date on which the return is filed;
or
``(ii) the due date of the return without
regard to extensions,
the Secretary shall suspend the imposition of any
interest, penalty, addition to tax, or additional amount
with respect to any failure relating to the return which
is computed by reference to the period of time the
failure continues to exist and which is properly
allocable to the suspension period.
``(B) Separate application.--This paragraph shall be
applied separately with respect to each item or
adjustment.
``(2) Exceptions.--Paragraph (1) shall not apply to--
``(A) any penalty imposed by section 6651;
``(B) any interest, penalty, addition to tax, or
additional amount in a case involving fraud;
``(C) any interest, penalty, addition to tax, or
additional amount with respect to any tax liability
shown on the return; or
``(D) any criminal penalty.
``(3) Suspension period.--For purposes of this subsection,
the term `suspension period' means the period--
``(A) beginning on the day after the close of the 1-
year period (18-month period in the case of taxable
years beginning before January 1, 2004) under paragraph
(1); and
``(B) ending on the date which is 21 days after the
date on which notice described in paragraph (1)(A) is
provided by the Secretary.''.
(b) Effective Date.--The <<NOTE: Applicability. 26 USC 6404
note.>> amendments made by this section shall apply to taxable years
ending after the date of the enactment of this Act.
[[Page 112 STAT. 744]]
SEC. 3306. PROCEDURAL REQUIREMENTS FOR IMPOSITION OF
PENALTIES AND ADDITIONS TO TAX.
(a) In General.--Chapter 68 (relating to additions to the tax,
additional amounts, and assessable penalties) is amended by adding at
the end the following new subchapter:
``Subchapter C--Procedural Requirements
``Sec. 6751. Procedural requirements.
``SEC. 6751. PROCEDURAL REQUIREMENTS.
``(a) Computation of Penalty Included in Notice.--The
Secretary shall include with each notice of penalty under this title
information with respect to the name of the penalty, the section of this
title under which the penalty is imposed, and a computation of the
penalty.
``(b) Approval of Assessment.--
``(1) In general.--No penalty under this title shall be
assessed unless the initial determination of such assessment is
personally approved (in writing) by the immediate supervisor of
the individual making such determination or such higher level
official as the Secretary may designate.
``(2) Exceptions.--Paragraph (1) shall not apply to--
``(A) any addition to tax under section 6651, 6654,
or 6655; or
``(B) any other penalty automatically calculated
through electronic means.
``(c) Penalties.--For purposes of this section, the term `penalty'
includes any addition to tax or any additional amount.''.
(b) Conforming Amendment.--The table of subchapters for chapter 68
is amended by adding at the end the following new item:
``Subchapter C. Procedural requirements.''.
(c) Effective Date.--The <<NOTE: Applicability. 26 USC 6751
note.>> amendments made by this section shall apply to notices issued,
and penalties assessed, after December 31, 2000.
SEC. 3307. PERSONAL DELIVERY OF NOTICE OF PENALTY UNDER
SECTION 6672.
(a) In General.--Paragraph (1) of section 6672(b) (relating to
failure to collect and pay over tax, or attempt to evade or defeat tax)
is amended by inserting ``or in person'' after ``section 6212(b)''.
(b) Conforming Amendments.--
(1) Paragraph (2) of section 6672(b) is amended by inserting
``(or, in the case of such a notice delivered in person, such
delivery)'' after ``paragraph (1)''.
(2) Paragraph (3) of section 6672(b) is amended by inserting
``or delivered in person'' after ``mailed'' each place it
appears.
(c) Effective Date.--The <<NOTE: 26 USC 6672 note.>> amendments made
by this section shall take effect on the date of the enactment of this
Act.
SEC. 3308. NOTICE OF INTEREST CHARGES.
(a) In General.--Chapter 67 (relating to interest) is amended by
adding at the end the following new subchapter:
[[Page 112 STAT. 745]]
``Subchapter D--Notice requirements
``Sec. 6631. Notice requirements.
``SEC. 6631. NOTICE REQUIREMENTS.
``The Secretary shall include with each notice to an individual
taxpayer which includes an amount of interest required to be paid by
such taxpayer under this title information with respect to the section
of this title under which the interest is imposed and a computation of
the interest.''.
(b) Conforming Amendment.--The table of subchapters for chapter 67
is amended by adding at the end the following new item:
``Subchapter D. Notice requirements.''.
(c) Effective Date.--The <<NOTE: Applicability. 26 USC 6631
note.>> amendments made by this section shall apply to notices issued
after December 31, 2000.
SEC. 3309. ABATEMENT OF INTEREST ON UNDERPAYMENTS BY
TAXPAYERS IN PRESIDENTIALLY DECLARED DISASTER AREAS.
(a) In General.--Section 6404 (relating to abatements), as amended
by section 3305, is amended by redesignating subsection (h) as
subsection (i) and by inserting after subsection (g) the following new
subsection:
``(h) Abatement of Interest on Underpayments by
Taxpayers in Presidentially Declared Disaster Areas.--
``(1) In general.--If the Secretary extends for any period
the time for filing income tax returns under section 6081 and
the time for paying income tax with respect to such returns
under section 6161 for any taxpayer located in a Presidentially
declared disaster area, the Secretary shall abate for such
period the assessment of any interest prescribed under section
6601 on such income tax.
``(2) Presidentially declared disaster area.--For
purposes of paragraph (1), the term `Presidentially declared
disaster area' means, with respect to any taxpayer, any area
which the President has determined warrants assistance by the
Federal Government under the Disaster Relief and Emergency
Assistance Act.''.
(b) Effective Date.--The <<NOTE: Applicability. 26 USC 6404
note.>> amendment made by this section shall apply to disasters declared
after December 31, 1997, with respect to taxable years beginning after
December 31, 1997.
(c) Emergency <<NOTE: 26 USC 6404 note.>> Designation.--
(1) For the purposes of section 252(e) of the Balanced
Budget and Emergency Deficit Control Act, Congress designates
the provisions of this section as an emergency requirement.
(2) The amendments made by subsections (a) and (b) of this
section shall only take effect upon the transmittal by the
President to the Congress of a message designating the
provisions of subsections (a) and (b) as an emergency
requirement pursuant to section 252(e) of the Balanced Budget
and Emergency Deficit Control Act.
[[Page 112 STAT. 746]]
Subtitle E--Protections for Taxpayers Subject to Audit or Collection
Activities
PART I--DUE PROCESS
SEC. 3401. DUE PROCESS IN INTERNAL REVENUE SERVICE COLLECTION ACTIONS.
(a) Notice and Opportunity for Hearing Upon Filing of Notice of
Lien.--Subchapter C of chapter 64 (relating to lien for taxes) is
amended by inserting before the table of sections the following:
``Part I. Due process for liens.
``Part II. Liens.
``PART I--DUE PROCESS FOR LIENS
``Sec. 6320. Notice and opportunity for hearing upon
filing of notice of lien.
``SEC. 6320. NOTICE AND OPPORTUNITY FOR HEARING UPON FILING OF NOTICE OF
LIEN.
``(a) Requirement of Notice.--
``(1) In general.--The Secretary shall notify in writing the
person described in section 6321 of the filing of a notice of
lien under section 6323.
``(2) Time and method for notice.--The notice required under
paragraph (1) shall be--
``(A) given in person;
``(B) left at the dwelling or usual place of
business of such person; or
``(C) sent by certified or registered mail to such
person's last known address,
not more than 5 business days after the day of the filing of the
notice of lien.
``(3) Information included with notice.--The notice required
under paragraph (1) shall include in simple and nontechnical
terms--
``(A) the amount of unpaid tax;
``(B) the right of the person to request a hearing
during the 30-day period beginning on the day after the
5-day period described in paragraph (2);
``(C) the administrative appeals available to the
taxpayer with respect to such lien and the procedures
relating to such appeals; and
``(D) the provisions of this title and procedures
relating to the release of liens on property.
``(b) Right to Fair Hearing.--
``(1) In general.--If the person requests a hearing under
subsection (a)(3)(B), such hearing shall be held by the Internal
Revenue Service Office of Appeals.
``(2) One hearing per period.--A person shall be entitled to
only one hearing under this section with respect to the taxable
period to which the unpaid tax specified in subsection (a)(3)(A)
relates.
``(3) Impartial officer.--The hearing under this subsection
shall be conducted by an officer or employee who has
[[Page 112 STAT. 747]]
had no prior involvement with respect to the unpaid tax
specified in subsection (a)(3)(A) before the first hearing under
this section or section 6330. A taxpayer may waive the
requirement of this paragraph.
``(4) Coordination with section 6330.--To the extent
practicable, a hearing under this section shall be held in
conjunction with a hearing under section 6330.
``(c) Conduct of Hearing; <<NOTE: Applicability.>> Review;
Suspensions.--For purposes of this section, subsections (c), (d) (other
than paragraph (2)(B) thereof), and (e) of section 6330 shall apply.
``PART II--LIENS''.
(b) Notice and Opportunity for Hearing Before Levy.--Subchapter D of
chapter 64 (relating to seizure of property for collection of taxes) is
amended by inserting before the table of sections the following:
``Part I. Due process for collections.
``Part II. Levy.
``PART I--DUE PROCESS FOR COLLECTIONS
``Sec. 6330. Notice and opportunity for hearing before
levy.
``SEC. 6330. NOTICE AND OPPORTUNITY FOR HEARING BEFORE LEVY.
``(a) Requirement of Notice Before Levy.--
``(1) In general.--No levy may be made on any property or
right to property of any person unless the Secretary has
notified such person in writing of their right to a hearing
under this section before such levy is made. Such notice shall
be required only once for the taxable period to which the unpaid
tax specified in paragraph (3)(A) relates.
``(2) Time and method for notice.--The notice required under
paragraph (1) shall be--
``(A) given in person;
``(B) left at the dwelling or usual place of
business of such person; or
``(C) sent by certified or registered mail, return
receipt requested, to such person's last known address;
not less than 30 days before the day of the first levy with
respect to the amount of the unpaid tax for the taxable period.
``(3) Information included with notice.--The notice required
under paragraph (1) shall include in simple and nontechnical
terms--
``(A) the amount of unpaid tax;
``(B) the right of the person to request a hearing
during the 30-day period under paragraph (2); and
``(C) the proposed action by the Secretary and the
rights of the person with respect to such action,
including a brief statement which sets forth--
``(i) the provisions of this title relating to
levy and sale of property;
``(ii) the procedures applicable to the levy
and sale of property under this title;
``(iii) the administrative appeals available
to the taxpayer with respect to such levy and sale
and the procedures relating to such appeals;
[[Page 112 STAT. 748]]
``(iv) the alternatives available to taxpayers
which could prevent levy on property (including
installment agreements under section 6159); and
``(v) the provisions of this title and
procedures relating to redemption of property and
release of liens on property.
``(b) Right to Fair Hearing.--
``(1) In general.--If the person requests a hearing under
subsection (a)(3)(B), such hearing shall be held by the Internal
Revenue Service Office of Appeals.
``(2) One hearing per period.--A person shall be entitled to
only one hearing under this section with respect to the taxable
period to which the unpaid tax specified in subsection (a)(3)(A)
relates.
``(3) Impartial officer.--The hearing under this subsection
shall be conducted by an officer or employee who has had no
prior involvement with respect to the unpaid tax specified in
subsection (a)(3)(A) before the first hearing under this section
or section 6320. A taxpayer may waive the requirement of this
paragraph.
``(c) Matters Considered at Hearing.--In the case of any hearing
conducted under this section--
``(1) Requirement of investigation.--The appeals officer
shall at the hearing obtain verification from the Secretary that
the requirements of any applicable law or administrative
procedure have been met.
``(2) Issues at hearing.--
``(A) In general.--The person may raise at the
hearing any relevant issue relating to the unpaid tax or
the proposed levy, including--
``(i) appropriate spousal defenses;
``(ii) challenges to the appropriateness of
collection actions; and
``(iii) offers of collection alternatives,
which may include the posting of a bond, the
substitution of other assets, an installment
agreement, or an offer-in-compromise.
``(B) Underlying liability.--The person may also
raise at the hearing challenges to the existence or
amount of the underlying tax liability for any tax
period if the person did not receive any statutory
notice of deficiency for such tax liability or did not
otherwise have an opportunity to dispute such tax
liability.
``(3) Basis for the determination.--The determination by an
appeals officer under this subsection shall take into
consideration--
``(A) the verification presented under paragraph
(1);
``(B) the issues raised under paragraph (2); and
``(C) whether any proposed collection action
balances the need for the efficient collection of taxes
with the legitimate concern of the person that any
collection action be no more intrusive than necessary.
``(4) Certain issues precluded.--An issue may not be raised
at the hearing if--
``(A) the issue was raised and considered at a
previous hearing under section 6320 or in any other
previous administrative or judicial proceeding; and
[[Page 112 STAT. 749]]
``(B) the person seeking to raise the issue
participated meaningfully in such hearing or proceeding.
This paragraph shall not apply to any issue with respect to
which subsection (d)(2)(B) applies.
``(d) Proceeding After Hearing.--
``(1) Judicial review of determination.--The person may,
within 30 days of a determination under this section, appeal
such determination--
``(A) to the Tax Court (and the Tax Court shall have
jurisdiction to hear such matter); or
``(B) if the Tax Court does not have jurisdiction of
the underlying tax liability, to a district court of the
United States.
If a court determines that the appeal was to an incorrect court,
a person shall have 30 days after the court determination to
file such appeal with the correct court.
``(2) Jurisdiction retained at irs office of appeals.--The
Internal Revenue Service Office of Appeals shall retain
jurisdiction with respect to any determination made under this
section, including subsequent hearings requested by the person
who requested the original hearing on issues regarding--
``(A) collection actions taken or proposed with
respect to such determination; and
``(B) after the person has exhausted all
administrative remedies, a change in circumstances with
respect to such person which affects such determination.
``(e) Suspension of Collections and Statute of Limitations.--
``(1) In general.--Except as provided in paragraph (2), if a
hearing is requested under subsection (a)(3)(B), the levy
actions which are the subject of the requested hearing and the
running of any period of limitations under section 6502
(relating to collection after assessment), section 6531
(relating to criminal prosecutions), or section 6532 (relating
to other suits) shall be suspended for the period during which
such hearing, and appeals therein, are pending. In no event
shall any such period expire before the 90th day after the day
on which there is a final determination in such hearing.
``(2) Levy upon appeal.--Paragraph (1) shall not apply to a
levy action while an appeal is pending if the underlying tax
liability is not at issue in the appeal and the court determines
that the Secretary has shown good cause not to suspend the levy.
``(f ) Jeopardy and State Refund Collection.--If--
``(1) the Secretary has made a finding under the last
sentence of section 6331(a) that the collection of tax is in
jeopardy; or
``(2) the Secretary has served a levy on a State to collect
a Federal tax liability from a State tax refund,
this section shall not apply, except that the taxpayer shall be given
the opportunity for the hearing described in this section within a
reasonable period of time after the levy.
``PART II--LEVY''.
(c) Review by Special Trial Judges Allowed.--
[[Page 112 STAT. 750]]
(1) In general.--Section 7443(b) (relating to proceedings
which may be assigned to special trial judges) is amended by
striking ``and'' at the end of paragraph (3), by redesignating
paragraph (4) as paragraph (5), and by inserting after paragraph
(3) the following new paragraph:
``(4) any proceeding under section 6320 or 6330, and''.
(2) Authority to make decisions.--Section 7443(c) (relating
to authority to make court decisions) is amended by striking
``or (3)'' and inserting ``(3), or (4)''.
(d) Effective Date.--The <<NOTE: Applicability. 26 USC 6320
note.>> amendments made by this section shall apply to collection
actions initiated after the date which is 180 days after the date of the
enactment of this Act.
PART II--EXAMINATION ACTIVITIES
SEC. 3411. CONFIDENTIALITY PRIVILEGES RELATING TO TAXPAYER
COMMUNICATIONS.
(a) In General.--Chapter 77 (relating to miscellaneous provisions)
is amended by adding at the end the following new section:
``SEC. 7525. CONFIDENTIALITY PRIVILEGES RELATING TO TAXPAYER
COMMUNICATIONS.
``(a) Uniform Application to Taxpayer Communications With Federally
Authorized Practitioners.--
``(1) General rule.--With respect to tax advice, the same
common law protections of confidentiality which apply to a
communication between a taxpayer and an attorney shall also
apply to a communication between a taxpayer and any federally
authorized tax practitioner to the extent the communication
would be considered a privileged communication if it were
between a taxpayer and an attorney.
``(2) Limitations.--Paragraph (1) may only be asserted in--
``(A) any noncriminal tax matter before the Internal
Revenue Service; and
``(B) any noncriminal tax proceeding in Federal
court brought by or against the United States.
``(3) Definitions.--For purposes of this subsection--
``(A) Federally authorized tax practitioner.--The
term `federally authorized tax practitioner' means any
individual who is authorized under Federal law to
practice before the Internal Revenue Service if such
practice is subject to Federal regulation under section
330 of title 31, United States Code.
``(B) Tax advice.--The term `tax advice' means
advice given by an individual with respect to a matter
which is within the scope of the individual's authority
to practice described in subparagraph (A).
``(b) Section Not To Apply to Communications Regarding Corporate Tax
Shelters.--The privilege under subsection (a) shall not apply to any
written communication between a federally authorized tax practitioner
and a director, shareholder, officer, or employee, agent, or
representative of a corporation in connection with the promotion of the
direct or indirect participation of such corporation in any tax shelter
(as defined in section 6662(d)(2)(C)(iii)).''.
[[Page 112 STAT. 751]]
(b) Conforming Amendment.--The table of sections for such chapter 77
is amended by adding at the end the following new item:
``Sec. 7525. Confidentiality privileges relating to
taxpayer communications.''.
(c) Effective Date.--The <<NOTE: Applicability. 26 USC 7525
note.>> amendments made by this section shall apply to communications
made on or after the date of the enactment of this Act.
SEC. 3412. LIMITATION ON FINANCIAL STATUS AUDIT TECHNIQUES.
Section 7602 (relating to examination of books and witnesses) is
amended by adding at the end the following new subsection:
``(d) Limitation on Examination on Unreported Income.--The Secretary
shall not use financial status or economic reality examination
techniques to determine the existence of unreported income of any
taxpayer unless the Secretary has a reasonable indication that there is
a likelihood of such unreported income.''.
SEC. 3413. SOFTWARE TRADE SECRETS PROTECTION.
(a) In General.--Subchapter A of chapter 78 (relating to examination
and inspection) is amended by redesignating section 7612 as section 7613
and by inserting after 7611 the following new section:
``SEC. 7612. SPECIAL PROCEDURES FOR SUMMONSES FOR COMPUTER SOFTWARE.
``(a) General Rule.--For purposes of this title--
``(1) except as provided in subsection (b), no summons may
be issued under this title, and the Secretary may not begin any
action under section 7604 to enforce any summons to produce or
analyze any tax-related computer software source code; and
``(2) any software and related materials which are provided
to the Secretary under this title shall be subject to the
safeguards under subsection (c).
``(b) Circumstances Under Which Computer Software Source Code May Be
Provided.--
``(1) In general.--Subsection (a)(1) shall not apply to any
portion, item, or component of tax-related computer software
source code if--
``(A) the Secretary is unable to otherwise
reasonably ascertain the correctness of any item on a
return from--
``(i) the taxpayer's books, papers, records,
or other data; or
``(ii) the computer software executable code
(and any modifications thereof) to which such
source code relates and any associated data which,
when executed, produces the output to ascertain
the correctness of the item;
``(B) the Secretary identifies with reasonable
specificity the portion, item, or component of such
source code needed to verify the correctness of such
item on the return; and
``(C) the Secretary determines that the need for the
portion, item, or component of such source code with
respect to such item outweighs the risks of unauthorized
disclosure of trade secrets.
``(2) Exceptions.--Subsection (a)(1) shall not apply to--
[[Page 112 STAT. 752]]
``(A) any inquiry into any offense connected with
the administration or enforcement of the internal
revenue laws;
``(B) any tax-related computer software source code
acquired or developed by the taxpayer or a related
person primarily for internal use by the taxpayer or
such person rather than for commercial distribution;
``(C) any communications between the owner of the
tax-related computer software source code and the
taxpayer or related persons; or
``(D) any tax-related computer software source code
which is required to be provided or made available
pursuant to any other provision of this title.
``(3) Cooperation required.--For purposes of paragraph (1),
the Secretary shall be treated as meeting the requirements of
subparagraphs (A) and (B) of such paragraph if--
``(A) the Secretary determines that it is not
feasible to determine the correctness of an item without
access to the computer software executable code and
associated data described in paragraph (1)(A)(ii);
``(B) the Secretary makes a formal request to the
taxpayer for such code and data and to the owner of the
computer software source code for such executable code;
and
``(C) such code and data is not provided within 180
days of such request.
``(4) Right <<NOTE: Courts.>> to contest summons.--In any
proceeding brought under section 7604 to enforce a summons
issued under the authority of this subsection, the court shall,
at the request of any party, hold a hearing to determine whether
the applicable requirements of this subsection have been met.
``(c) Safeguards To Ensure Protection of Trade Secrets and Other
Confidential Information.--
``(1) Entry of protective order.--In any court proceeding to
enforce a summons for any portion of software, the court may
receive evidence and issue any order necessary to prevent the
disclosure of trade secrets or other confidential information
with respect to such software, including requiring that any
information be placed under seal to be opened only as directed
by the court.
``(2) Protection of software.--Notwithstanding any other
provision of this section, and in addition to any protections
ordered pursuant to paragraph (1), in the case of software that
comes into the possession or control of the Secretary in the
course of any examination with respect to any taxpayer--
``(A) the software may be used only in connection
with the examination of such taxpayer's return, any
appeal by the taxpayer to the Internal Revenue Service
Office of Appeals, any judicial proceeding (and any
appeals therefrom), and any inquiry into any offense
connected with the administration or enforcement of the
internal revenue laws;
``(B) the Secretary shall provide, in advance, to
the taxpayer and the owner of the software a written
list of the names of all individuals who will analyze or
otherwise have access to the software;
``(C) the software shall be maintained in a secure
area or place, and, in the case of computer software
source
[[Page 112 STAT. 753]]
code, shall not be removed from the owner's place of
business unless the owner permits, or a court orders,
such removal;
``(D) the software may not be copied except as
necessary to perform such analysis, and the Secretary
shall number all copies made and certify in writing that
no other copies have been (or will be) made;
``(E) at the end of the period during which the
software may be used under subparagraph (A)--
``(i) the software and all copies thereof
shall be returned to the person from whom they
were obtained and any copies thereof made under
subparagraph (D) on the hard drive of a machine or
other mass storage device shall be permanently
deleted; and
``(ii) the Secretary shall obtain from any
person who analyzes or otherwise had access to
such software a written certification under
penalty of perjury that all copies and related
materials have been returned and that no copies
were made of them;
``(F) the software may not be decompiled or
disassembled;
``(G) the Secretary shall provide to the taxpayer
and the owner of any interest in such software, as the
case may be, a written agreement, between the Secretary
and any person who is not an officer or employee of the
United States and who will analyze or otherwise have
access to such software, which provides that such person
agrees not to--
``(i) disclose such software to any person
other than persons to whom such information could
be disclosed for tax administration purposes under
section 6103; or
``(ii) participate for 2 years in the
development of software which is intended for a
similar purpose as the software examined; and
``(H) the software shall be treated as return
information for purposes of section 6103.
For purposes of subparagraph (C), the owner shall make available
any necessary equipment or materials for analysis of computer
software source code required to be conducted on the owner's
premises. The owner of any interest in the software shall be
considered a party to any agreement described in subparagraph
(G).
``(d) Definitions.--For purposes of this section--
``(1) Software.--The term `software' includes computer
software source code and computer software executable code.
``(2) Computer software source code.--The term `computer
software source code' means--
``(A) the code written by a programmer using a
programming language which is comprehensible to
appropriately trained persons and is not capable of
directly being used to give instructions to a computer;
``(B) related programmers' notes, design documents,
memoranda, and similar documentation; and
``(C) related customer communications.
``(3) Computer software executable code.--The term `computer
software executable code' means--
[[Page 112 STAT. 754]]
``(A) any object code, machine code, or other code
readable by a computer when loaded into its memory and
used directly by such computer to execute instructions;
and
``(B) any related user manuals.
``(4) Owner.--The term `owner' shall, with respect to any
software, include the developer of the software.
``(5) Related person.--A person shall be treated as related
to another person if such persons are related persons under
section 267 or 707(b).
``(6) Tax-related computer software source code.--The term
`tax-related computer software source code' means the computer
source code for any computer software program intended for
accounting, tax return preparation or compliance, or tax
planning.''.
(b) Unauthorized Disclosure of Software.--Section 7213 (relating to
unauthorized disclosure of information) is amended by redesignating
subsection (d) as subsection (e) and by inserting after subsection (c)
the following new subsection:
``(d) Disclosure of Software.--Any person who willfully divulges or
makes known software (as defined in section 7612(d)(1)) to any person in
violation of section 7612 shall be guilty of a felony and, upon
conviction thereof, shall be fined not more than $5,000, or imprisoned
not more than 5 years, or both, together with the costs of
prosecution.''.
(c) Application of Special Procedures for Third-Party Summonses.--
Paragraph (2) of section 7603(b), as amended by section 3416(a), is
amended by striking ``and'' at the end of subparagraph (H), by striking
a period at the end of subparagraph (I) and inserting ``, and'', and by
adding at the end the following new subparagraph:
``(J) any owner or developer of a computer software
source code (as defined in section 7612(d)(2)).
Subparagraph <<NOTE: Applicability.>> (J) shall apply only with
respect to a summons requiring the production of the source code
referred to in subparagraph (J) or the program and data
described in section 7612(b)(1)(A)(ii) to which such source code
relates.''.
(d) Conforming Amendment.--The table of sections for subchapter A of
chapter 78 is amended by striking the item relating to section 7612 and
by inserting the following new item:
``Sec. 7612. Special procedures for summonses for
computer software.
``Sec. 7613. Cross references.''.
(e) Effective <<NOTE: Applicability. 26 USC 7612 note.>> Date.--
(1) In general.--The amendments made by this section shall
apply to summonses issued, and software acquired, after the date
of the enactment of this Act.
(2) Software protection.--In the case of any software
acquired on or before such date of enactment, the requirements
of section 7612(a)(2) of the Internal Revenue Code of 1986 (as
added by such amendments) shall apply after the 90th day after
such date. The preceding sentence shall not apply to the
requirement under section 7612(c)(2)(G)(ii) of such Code (as so
added).
[[Page 112 STAT. 755]]
SEC. 3414. <<NOTE: 26 USC 6053 note.>> THREAT OF AUDIT PROHIBITED TO
COERCE TIP REPORTING ALTERNATIVE COMMITMENT AGREEMENTS.
The Secretary of the Treasury or the Secretary's delegate shall
instruct employees of the Internal Revenue Service that they may not
threaten to audit any taxpayer in an attempt to coerce the taxpayer into
entering into a Tip Reporting Alternative Commitment Agreement.
SEC. 3415. TAXPAYERS ALLOWED MOTION TO QUASH ALL THIRD-PARTY SUMMONSES.
(a) In General.--Paragraph (1) of section 7609(a) (relating to
summonses to which section applies) is amended by striking so much of
such paragraph as precedes ``notice of the summons'' and inserting the
following:
``(1) In general.--If any summons to which this section
applies requires the giving of testimony on or relating to, the
production of any portion of records made or kept on or relating
to, or the production of any computer software source code (as
defined in 7612(d)(2)) with respect to, any person (other than
the person summoned) who is identified in the summons, then''.
(b) Coordination With Other Authority.--Section 7609 (relating to
special procedures for third-party summonses) is amended by adding at
the end the following new subsection:
``( j) Use of Summons Not Required.--Nothing in this section shall
be construed to limit the Secretary's ability to obtain information,
other than by summons, through formal or informal procedures authorized
by sections 7601 and 7602.''.
(c) Conforming Amendments.--
(1) Subsection (a) of section 7609 is amended by striking
paragraphs (3) and (4), by redesignating paragraph (5) as
paragraph (3), and by striking in paragraph (3) (as so
redesignated) ``subsection (c)(2)(B)'' and inserting
``subsection (c)(2)(D)''.
(2) Subsection (c) of section 7609 is amended to read as
follows:
``(c) Summons to Which Section Applies.--
``(1) In general.--Except as provided in paragraph (2), this
section shall apply to any summons issued under paragraph (2) of
section 7602(a) or under section 6420(e)(2), 6421(g)(2), 6427(
j)(2), or 7612.
``(2) Exceptions.--This section shall not apply to any
summons--
``(A) served on the person with respect to whose
liability the summons is issued, or any officer or
employee of such person;
``(B) issued to determine whether or not records of
the business transactions or affairs of an identified
person have been made or kept;
``(C) issued solely to determine the identity of any
person having a numbered account (or similar
arrangement) with a bank or other institution described
in section 7603(b)(2)(A);
``(D) issued in aid of the collection of--
``(i) an assessment made or judgment rendered
against the person with respect to whose liability
the summons is issued; or
[[Page 112 STAT. 756]]
``(ii) the liability at law or in equity of
any transferee or fiduciary of any person referred
to in clause (i);
``(E)(i) issued by a criminal investigator of the
Internal Revenue Service in connection with the
investigation of an offense connected with the
administration or enforcement of the internal revenue
laws; and
``(ii) served on any person who is not a third-party
recordkeeper (as defined in section 7603(b)); or
``(F) described in subsection (f ) or (g).
``(3) Records.--For purposes of this section, the term
`records' includes books, papers, and other data.''.
(3) Paragraph (2) of section 7609(e) is amended by striking
``third-party recordkeeper's'' and all that follows through
``subsection (f )'' and inserting ``summoned party's response to
the summons''.
(4) Subsection (f ) of section 7609 is amended--
(A) by striking ``described in subsection (c)'' and
inserting ``described in subsection (c)(1)''; and
(B) by inserting ``or testimony'' after ``records''
in paragraph (3).
(5) Subsection (g) of section 7609 is amended by striking
``In the case of any summons described in subsection (c), the
provisions of subsections (a)(1) and (b) shall not apply if ''
and inserting ``A summons is described in this subsection if ''.
(6)(A) Subsection (i) of section 7609 is amended by striking
``Third-Party Recordkeeper and'' in the subsection heading.
(B) Paragraph (1) of section 7609(i) is amended by striking
``described in subsection (c), the third-party recordkeeper''
and inserting ``to which this section applies for the production
of records, the summoned party''.
(C) Paragraph (2) of section 7609(i) is amended--
(i) by striking ``recordkeeper'' in the heading and
inserting ``summoned party''; and
(ii) by striking ``the third-party recordkeeper''
and inserting ``the summoned party''.
(D) Paragraph (3) of section 7609(i) is amended to read as
follows:
``(3) Protection for summoned party who discloses.--Any
summoned party, or agent or employee thereof, making a
disclosure of records or testimony pursuant to this section in
good faith reliance on the certificate of the Secretary or an
order of a court requiring production of records or the giving
of such testimony shall not be liable to any customer or other
person for such disclosure.''.
(d) Effective Date.--The <<NOTE: Applicability. 26 USC 7609
note.>> amendments made by this section shall apply to summonses served
after the date of the enactment of this Act.
SEC. 3416. SERVICE OF SUMMONSES TO THIRD-PARTY RECORDKEEPERS PERMITTED
BY MAIL.
(a) In General.--Section 7603 (relating to service of summons) is
amended by striking ``A summons issued'' and inserting ``(a) In
General.--A summons issued'' and by adding at the end the following new
subsection:
``(b) Service by Mail to Third-Party Recordkeepers.--
[[Page 112 STAT. 757]]
``(1) In general.--A summons referred to in subsection (a)
for the production of books, papers, records, or other data by a
third-party recordkeeper may also be served by certified or
registered mail to the last known address of such recordkeeper.
``(2) Third-party recordkeeper.--For purposes of paragraph
(1), the term `third-party recordkeeper' means--
``(A) any mutual savings bank, cooperative bank,
domestic building and loan association, or other savings
institution chartered and supervised as a savings and
loan or similar association under Federal or State law,
any bank (as defined in section 581), or any credit
union (within the meaning of section 501(c)(14)(A));
``(B) any consumer reporting agency (as defined
under section 603(f ) of the Fair Credit Reporting Act
(15 U.S.C. 1681a(f )));
``(C) any person extending credit through the use of
credit cards or similar devices;
``(D) any broker (as defined in section 3(a)(4) of
the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)(4)));
``(E) any attorney;
``(F) any accountant;
``(G) any barter exchange (as defined in section
6045(c)(3));
``(H) any regulated investment company (as defined
in section 851) and any agent of such regulated
investment company when acting as an agent thereof, and
``(I) any enrolled agent.''.
(b) Effective Date.--The <<NOTE: Applicability. 26 USC 7603
note.>> amendment made by this section shall apply to summonses served
after the date of the enactment of this Act.
SEC. 3417. NOTICE OF INTERNAL REVENUE SERVICE CONTACT OF THIRD PARTIES.
(a) In General.--Section 7602 (relating to examination of books and
witnesses), as amended by section 3412, 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) Notice of Contact of Third Parties.--
``(1) General notice.--An officer or employee of the
Internal Revenue Service may not contact any person other than
the taxpayer with respect to the determination or collection of
the tax liability of such taxpayer without providing reasonable
notice in advance to the taxpayer that contacts with persons
other than the taxpayer may be made.
``(2) Notice <<NOTE: Records.>> of specific contacts.--The
Secretary shall periodically provide to a taxpayer a record of
persons contacted during such period by the Secretary with
respect to the determination or collection of the tax liability
of such taxpayer. Such record shall also be provided upon
request of the taxpayer.
``(3) Exceptions.--This subsection shall not apply--
``(A) to any contact which the taxpayer has
authorized;
``(B) if the Secretary determines for good cause
shown that such notice would jeopardize collection of
any tax or such notice may involve reprisal against any
person; or
[[Page 112 STAT. 758]]
``(C) with respect to any pending criminal
investigation.''.
(b) Effective Date.--The <<NOTE: Applicability. 26 USC 7602
note.>> amendments made by subsection (a) shall apply to contacts made
after the 180th day after the date of the enactment of this Act.
PART III--COLLECTION ACTIVITIES
Subpart A--Approval Process
SEC. 3421. APPROVAL PROCESS FOR LIENS, LEVIES, AND <<NOTE: 26 USC 6301
note.>> SEIZURES.
(a) In General.--The <<NOTE: Procedures.>> Commissioner of Internal
Revenue shall develop and implement procedures under which--
(1) a determination by an employee to file a notice of lien
or levy with respect to, or to levy or seize, any property or
right to property would, where appropriate, be required to be
reviewed by a supervisor of the employee before the action was
taken; and
(2) appropriate disciplinary action would be taken against
the employee or supervisor where the procedures under paragraph
(1) were not followed.
(b) Review Process.--The review process under subsection (a)(1) may
include a certification that the employee has--
(1) reviewed the taxpayer's information;
(2) verified that a balance is due; and
(3) affirmed that the action proposed to be taken is
appropriate given the taxpayer's circumstances, considering the
amount due and the value of the property or right to property.
(c) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), this
section shall take effect on the date of the enactment of this
Act.
(2) Automated collection <<NOTE: Applicability.>> system
actions.--In the case of any action under an automated
collection system, this section shall apply to actions initiated
after December 31, 2000.
Subpart B--Liens and Levies
SEC. 3431. MODIFICATIONS TO CERTAIN LEVY EXEMPTION AMOUNTS.
(a) Fuel, Etc.--Section 6334(a)(2) (relating to fuel, provisions,
furniture, and personal effects) is amended by striking ``$2,500'' and
inserting ``$6,250''.
(b) Books, Etc.--Section 6334(a)(3) (relating to books and tools of
a trade, business, or profession) is amended by striking ``$1,250'' and
inserting ``$3,125''.
(c) Conforming Amendment.--Section 6334(g)(1) (relating to inflation
adjustment) is amended--
(1) by striking ``1997'' and inserting ``1999''; and
(2) by striking ``1996'' in subparagraph (B) and inserting
``1998''.
(d) Effective Date.--The <<NOTE: 26 USC 6334 note.>> amendments made
by this section shall take effect with respect to levies issued after
the date of the enactment of this Act.
[[Page 112 STAT. 759]]
SEC. 3432. RELEASE OF LEVY UPON AGREEMENT THAT AMOUNT IS UNCOLLECTIBLE.
(a) In General.--Section 6343 (relating to authority to release levy
and return property) is amended by adding at the end the following new
subsection:
``(e) Release of Levy Upon Agreement That Amount is not
Collectible.--In the case of a levy on the salary or wages payable to or
received by the taxpayer, upon agreement with the taxpayer that the tax
is not collectible, the Secretary shall release such levy as soon as
practicable.''.
<<NOTE: Applicability. 26 USC 6343 note.>> (b) Effective Date.--The
amendment made by this section shall apply to levies imposed after
December 31, 1999.
SEC. 3433. LEVY PROHIBITED DURING PENDENCY OF REFUND PROCEEDINGS.
(a) In General.--Section 6331 (relating to levy and distraint) is
amended by redesignating subsection (i) as subsection ( j) and by
inserting after subsection (h) the following new subsection:
``(i) No Levy During Pendency of Proceedings for Refund of Divisible
Tax.--
``(1) In general.--No levy may be made under subsection (a)
on the property or rights to property of any person with respect
to any unpaid divisible tax during the pendency of any
proceeding brought by such person in a proper Federal trial
court for the recovery of any portion of such divisible tax
which was paid by such person if--
``(A) the decision in such proceeding would be res
judicata with respect to such unpaid tax; or
``(B) such person would be collaterally estopped
from contesting such unpaid tax by reason of such
proceeding.
``(2) Divisible tax.--For purposes of paragraph (1), the
term `divisible tax' means--
``(A) any tax imposed by subtitle C; and
``(B) the penalty imposed by section 6672 with
respect to any such tax.
``(3) Exceptions.--
``(A) Certain unpaid taxes.--This subsection shall
not apply with respect to any unpaid tax if--
``(i) the taxpayer files a written notice with
the Secretary which waives the restriction imposed
by this subsection on levy with respect to such
tax; or
``(ii) the Secretary finds that the collection
of such tax is in jeopardy.
``(B) Certain levies.--This subsection shall not
apply to--
``(i) any levy to carry out an offset under
section 6402; and
``(ii) any levy which was first made before
the date that the applicable proceeding under this
subsection commenced.
``(4) Limitation on collection activity; authority to enjoin
collection.--
``(A) Limitation on collection.--No proceeding in
court for the collection of any unpaid tax to which
paragraph (1) applies shall be begun by the Secretary
during the pendency of a proceeding under such
paragraph. This subparagraph shall not apply to--
[[Page 112 STAT. 760]]
``(i) any counterclaim in a proceeding under
such paragraph; or
``(ii) any proceeding relating to a proceeding
under such paragraph.
``(B) Authority to enjoin.--Notwithstanding section
7421(a), a levy or collection proceeding prohibited by
this subsection may be enjoined (during the period such
prohibition is in force) by the court in which the
proceeding under paragraph (1) is brought.
``(5) Suspension of statute of limitations on collection.--
The period of limitations under section 6502 shall be suspended
for the period during which the Secretary is prohibited under
this subsection from making a levy.
``(6) Pendency of proceeding.--For purposes of this
subsection, a proceeding is pending beginning on the date such
proceeding commences and ending on the date that a final order
or judgment from which an appeal may be taken is entered in such
proceeding.''.
<<NOTE: 26 USC 6331 note.>> (b) Effective Date.--The amendment made
by this section shall apply to unpaid tax attributable to taxable
periods beginning after December 31, 1998.
SEC. 3434. APPROVAL REQUIRED FOR JEOPARDY AND TERMINATION ASSESSMENTS
AND JEOPARDY LEVIES.
(a) In General.--Paragraph (1) of section 7429(a) (relating to
review of jeopardy levy or assessment procedures) is amended to read as
follows:
``(1) Administrative review.--
``(A) Prior approval required.--No assessment may be
made under section 6851(a), 6852(a), 6861(a), or 6862,
and no levy may be made under section 6331(a) less than
30 days after notice and demand for payment is made,
unless the Chief Counsel for the Internal Revenue
Service (or such Counsel's delegate) personally approves
(in writing) such assessment or levy.
``(B) Information to taxpayer.--Within 5 days after
the day on which such an assessment or levy is made, the
Secretary shall provide the taxpayer with a written
statement of the information upon which the Secretary
relied in making such assessment or levy.''.
<<NOTE: Applicability. 26 USC 7429 note.>> (b) Effective Date.--The
amendment made by this section shall apply to taxes assessed and levies
made after the date of the enactment of this Act.
SEC. 3435. INCREASE IN AMOUNT OF CERTAIN PROPERTY ON WHICH LIEN NOT
VALID.
(a) Certain Property.--
(1) In general.--Subsection (b) of section 6323 (relating to
validity and priority against certain persons) is amended--
(A) by striking ``$250'' in paragraph (4) (relating
to personal property purchased in casual sale) and
inserting ``$1,000''; and
(B) by striking ``$1,000'' in paragraph (7)
(relating to residential property subject to a
mechanic's lien for certain repairs and improvements)
and inserting ``$5,000''.
(2) Inflation adjustment.--Subsection (i) of section 6323
(relating to special rules) is amended by adding at the end the
following new paragraph:
[[Page 112 STAT. 761]]
``(4) Cost-of-living adjustment.--In the case of notices of
liens imposed by section 6321 which are filed in any calendar
year after 1998, each of the dollar amounts under paragraph (4)
or (7) of subsection (b) shall be increased by an amount equal
to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined under
section 1(f )(3) for the calendar year, determined by
substituting `calendar year 1996' for `calendar year
1992' in subparagraph (B) thereof.
If any amount as adjusted under the preceding sentence is not a
multiple of $10, such amount shall be rounded to the nearest
multiple of $10.''.
(b) Expansion of Treatment of Passbook Loans.--Paragraph (10) of
section 6323(b) is amended--
(1) by striking ``Passbook loans'' in the heading and
inserting ``Deposit-secured loans'';
(2) by striking ``, evidenced by a passbook,''; and
(3) by striking all that follows ``secured by such account''
and inserting a period.
<<NOTE: 26 USC 6323 note.>> (c) Effective Date.--The amendments
made by this section shall take effect on the date of the enactment of
this Act.
SEC. 3436. WAIVER OF EARLY WITHDRAWAL TAX FOR INTERNAL REVENUE SERVICE
LEVIES ON EMPLOYER-SPONSORED RETIREMENT PLANS OR IRAs.
(a) In General.--Section 72(t)(2)(A) (relating to subsection not to
apply to certain distributions) is amended by striking ``or'' at the end
of clauses (iv) and (v), by striking the period at the end of clause
(vi) and inserting ``, or'', and by adding at the end the following new
clause:
``(vii) made on account of a levy under
section 6331 on the qualified retirement plan.''.
<<NOTE: Applicability. 26 USC 72 note.>> (b) Effective Date.--The
amendments made by this section shall apply to distributions after
December 31, 1999.
Subpart C--Seizures
SEC. 3441. PROHIBITION OF SALES OF SEIZED PROPERTY AT LESS THAN MINIMUM
BID.
(a) In General.--Section 6335(e)(1)(A)(i) (relating to
determinations relating to minimum price) is amended by striking ``a
minimum price for which such property shall be sold'' and inserting ``a
minimum price below which such property shall not be sold''.
(b) Reference to Penalty for Violation.--Section 6335(e) is amended
by adding at the end the following new paragraph:
``(4) Cross reference.--
``For provision providing for civil damages for
violation of paragraph (1)(A)(i), see section 7433.''.
<<NOTE: Applicability. 26 USC 6335 note.>> (c) Effective Date.--The
amendments made by this section shall apply to sales made after the date
of the enactment of this Act.
SEC. 3442. ACCOUNTING OF SALES OF SEIZED PROPERTY.
(a) In General.--Section 6340 (relating to records of sale) is
amended--
(1) in subsection (a)--
[[Page 112 STAT. 762]]
(A) by striking ``real''; and
(B) by inserting ``or certificate of sale of
personal
property'' after ``deed''; and
(2) by adding at the end the following new subsection:
``(c) Accounting to Taxpayer.--The taxpayer with respect to whose
liability the sale was conducted or who redeemed the property shall be
furnished--
``(1) the record under subsection (a) (other than the names
of the purchasers);
``(2) the amount from such sale applied to the taxpayer's
liability; and
``(3) the remaining balance of such liability.''.
<<NOTE: Applicability. 26 USC 6340 note.>> (b) Effective Date.--The
amendments made by this section shall apply to seizures occurring after
the date of the enactment of this Act.
SEC. 3443. <<NOTE: 26 USC 6335 note.>> UNIFORM ASSET DISPOSAL MECHANISM.
Not <<NOTE: Deadline.>> later than the date which is 2 years after
the date of the enactment of this Act, the Secretary of the Treasury or
the Secretary's delegate shall implement a uniform asset disposal
mechanism for sales under section 6335 of the Internal Revenue Code of
1986. The mechanism should be designed to remove any participation in
such sales by revenue officers of the Internal Revenue Service and
should consider the use of outsourcing.
SEC. 3444. CODIFICATION OF INTERNAL REVENUE SERVICE ADMINISTRATIVE
PROCEDURES FOR SEIZURE OF TAXPAYER'S PROPERTY.
(a) In General.--Section 6331 (relating to levy and distraint), as
amended by section 3433, is amended by redesignating subsection ( j) as
subsection (k) and by inserting after subsection (i) the following new
subsection:
``( j) No Levy Before Investigation of Status of Property.--
``(1) In general.--For purposes of applying the provisions
of this subchapter, no levy may be made on any property or right
to property which is to be sold under section 6335 until a
thorough investigation of the status of such property has been
completed.
``(2) Elements in investigation.--For purposes of paragraph
(1), an investigation of the status of any property shall
include--
``(A) a verification of the taxpayer's liability;
``(B) the completion of an analysis under sub-
section (f );
``(C) the determination that the equity in such
property is sufficient to yield net proceeds from the
sale of such property to apply to such liability; and
``(D) a thorough consideration of alternative
collection methods.''.
<<NOTE: 26 USC 6331 note.>> (b) Effective Date.--The amendments
made by this section shall take effect on the date of the enactment of
this Act.
SEC. 3445. PROCEDURES FOR SEIZURE OF RESIDENCES AND BUSINESSES.
(a) In General.--Section 6334(a)(13) (relating to property exempt
from levy) is amended to read as follows:
[[Page 112 STAT. 763]]
``(13) Residences exempt in small deficiency cases and
principal residences and certain business assets exempt in
absence of certain approval or jeopardy.--
``(A) Residences in small deficiency cases.--If the
amount of the levy does not exceed $5,000--
``(i) any real property used as a residence by
the taxpayer; or
``(ii) any real property of the taxpayer
(other than real property which is rented) used by
any other individual as a residence.
``(B) Principal residences and certain business
assets.--Except to the extent provided in subsection
(e)--
``(i) the principal residence of the taxpayer
(within the meaning of section 121); and
``(ii) tangible personal property or real
property (other than real property which is
rented) used in the trade or business of an
individual taxpayer.''.
(b) Levy Allowed in Certain Circumstances.--Section 6334(e) is
amended to read as follows:
``(e) Levy Allowed on Principal Residences and Certain Business
Assets in Certain Circumstances.--
``(1) Principal residences.--
``(A) Approval required.--A principal residence
shall not be exempt from levy if a judge or magistrate
of a district court of the United States approves (in
writing) the levy of such residence.
``(B) Jurisdiction.--The district courts of the
United States shall have exclusive jurisdiction to
approve a levy under subparagraph (A).
``(2) Certain business assets.--Property (other than a
principal residence) described in subsection (a)(13)(B) shall
not be exempt from levy if--
``(A) a district director or assistant district
director of the Internal Revenue Service personally
approves (in writing) the levy of such property; or
``(B) the Secretary finds that the collection of tax
is in jeopardy.
An official may not approve a levy under subparagraph (A) unless
the official determines that the taxpayer's other assets subject
to collection are insufficient to pay the amount due, together
with expenses of the proceedings.''.
<<NOTE: 26 USC 6334 note.>> (c) State Fish and Wildlife Permits.--
(1) In general.--With respect to permits issued by a State
and required under State law for the harvest of fish or wildlife
in the trade or business of an individual taxpayer, the term
``other assets'' as used in section 6334(e)(2) of the Internal
Revenue Code of 1986 shall include future income which may be
derived by such taxpayer from the commercial sale of fish or
wildlife under such permit.
(2) Construction.--Paragraph (1) shall not be construed to
invalidate or in any way prejudice any assertion that the
privilege embodied in permits described in paragraph (1) is not
property or a right to property under the Internal Revenue Code
of 1986.
<<NOTE: 26 USC 6334 note.>> (d) Effective Date.--The amendments
made by this section shall take effect on the date of the enactment of
this Act.
[[Page 112 STAT. 764]]
PART IV--PROVISIONS RELATING TO EXAMINATION AND COLLECTION ACTIVITIES
SEC. 3461. PROCEDURES RELATING TO EXTENSIONS OF STATUTE OF LIMITATIONS
BY AGREEMENT.
(a) Authority To Extend 10-Year Collection Period After
Assessment.--Section 6502(a) (relating to length of period after
collection) is amended--
(1) by striking paragraph (2) and inserting:
``(2) if--
``(A) there is an installment agreement between the
taxpayer and the Secretary, prior to the date which is
90 days after the expiration of any period for
collection agreed upon in writing by the Secretary and
the taxpayer at the time the installment agreement was
entered into; or
``(B) there is a release of levy under section 6343
after such 10-year period, prior to the expiration of
any period for collection agreed upon in writing by the
Secretary and the taxpayer before such release.''; and
(2) by striking the first sentence in the matter following
paragraph (2).
(b) Notice to Taxpayer of Right To Refuse or Limit
Extension.--Paragraph (4) of section 6501(c) (relating to the period for
limitations on assessment and collection) is amended--
(1) by striking ``Where'' and inserting the following:
``(A) In general.--Where''; and
(2) by adding at the end the following new subparagraph:
``(B) Notice to taxpayer of right to refuse or limit
extension.--The Secretary shall notify the taxpayer of
the taxpayer's right to refuse to extend the period of
limitations, or to limit such extension to particular
issues or to a particular period of time, on each
occasion when the taxpayer is requested to provide such
consent.''.
<<NOTE: 26 USC 6501 note.>> (c) Effective Date.--
<<NOTE: Applicability.>> (1) In general.--The amendments
made by this section shall apply to requests to extend the
period of limitations made after December 31, 1999.
<<NOTE: Expiration date.>> (2) Prior request.--If, in any
request to extend the period of limitations made on or before
December 31, 1999, a taxpayer agreed to extend such period
beyond the 10-year period referred to in section 6502(a) of the
Internal Revenue Code of 1986, such extension shall expire on
the latest of--
(A) the last day of such 10-year period;
(B) December 31, 2002; or
(C) in the case of an extension in connection with
an installment agreement, the 90th day after the end of
the period of such extension.
SEC. 3462. OFFERS-IN-COMPROMISE.
(a) Standards for Evaluation of Offers-in-Compromise.--Section 7122
(relating to offers-in-compromise) is amended by
adding at the end the following new subsection:
<<NOTE: Guidelines.>> ``(c) Standards for Evaluation of Offers.--
``(1) In general.--The Secretary shall prescribe guidelines
for officers and employees of the Internal Revenue Service
[[Page 112 STAT. 765]]
to determine whether an offer-in-compromise is adequate and
should be accepted to resolve a dispute.
``(2) Allowances for basic living expenses.--
<<NOTE: Publication.>> ``(A) In general.--In
prescribing guidelines under paragraph (1), the
Secretary shall develop and publish schedules of
national and local allowances designed to provide that
taxpayers entering into a compromise have an adequate
means to provide for basic living expenses.
``(B) Use of schedules.--The guidelines shall
provide that officers and employees of the Internal
Revenue Service shall determine, on the basis of the
facts and circumstances of each taxpayer, whether the
use of the schedules published under subparagraph (A) is
appropriate and shall not use the schedules to the
extent such use would result in the taxpayer not having
adequate means to provide for basic living expenses.
``(3) Special rules relating to treatment of offers.--The
guidelines under paragraph (1) shall provide that--
``(A) an officer or employee of the Internal Revenue
Service shall not reject an offer-in-compromise from a
low-income taxpayer solely on the basis of the amount of
the offer; and
``(B) in the case of an offer-in-compromise which
relates only to issues of liability of the taxpayer--
``(i) such offer shall not be rejected solely
because the Secretary is unable to locate the
taxpayer's return or return information for
verification of such liability; and
``(ii) the taxpayer shall not be required to
provide a financial statement.''.
(b) Levy Prohibited While Offer-in-Compromise Pending or Installment
Agreement Pending or in Effect.--Section 6331 (relating to levy and
distraint), as amended by sections 3433 and 3444, is amended by
redesignating subsection (k) as subsection (l) and by inserting after
subsection ( j) the following new subsection:
``(k) No Levy While Certain Offers Pending or Installment Agreement
Pending or in Effect.--
``(1) Offer-in-compromise pending.--No levy may be made
under subsection (a) on the property or rights to property of
any person with respect to any unpaid tax--
``(A) during the period that an offer-in-compromise
by such person under section 7122 of such unpaid tax is
pending with the Secretary; and
``(B) if such offer is rejected by the Secretary,
during the 30 days thereafter (and, if an appeal of such
rejection is filed within such 30 days, during the
period that such appeal is pending).
For purposes of subparagraph (A), an offer is pending beginning
on the date the Secretary accepts such offer for processing.
``(2) Installment agreements.--No levy may be made under
subsection (a) on the property or rights to property of any
person with respect to any unpaid tax--
``(A) during the period that an offer by such person
for an installment agreement under section 6159 for
payment of such unpaid tax is pending with the
Secretary;
``(B) if such offer is rejected by the Secretary,
during the 30 days thereafter (and, if an appeal of such
rejection
[[Page 112 STAT. 766]]
is filed within such 30 days, during the period that
such appeal is pending);
``(C) during the period that such an installment
agreement for payment of such unpaid tax is in effect;
and
``(D) if such agreement is terminated by the
Secretary, during the 30 days thereafter (and, if an
appeal of such termination is filed within such 30 days,
during the period that such appeal is pending).
``(3) Certain rules to apply.--Rules similar to the rules of
paragraphs (3), (4), and (5) of subsection (i) shall apply for
purposes of this subsection.''.
(c) Review of Rejections of Offers-in-Compromise and Installment
Agreements.--
(1) In general.--Section 7122 (relating to compromises), as
amended by subsection (a), is amended by adding at the end the
following new subsection:
<<NOTE: Procedures.>> ``(d) Administrative Review.--The Secretary
shall establish procedures--
``(1) for an independent administrative review of any
rejection of a proposed offer-in-compromise or installment
agreement made by a taxpayer under this section or section 6159
before such rejection is communicated to the taxpayer; and
``(2) which allow a taxpayer to appeal any rejection of such
offer or agreement to the Internal Revenue Service Office of
Appeals.''.
(2) Conforming amendment.--Section 6159 (relating to
installment agreements) is amended by adding at the end the
following new subsection:
``(d) Cross Reference.--
``For rights to administrative review and appeal, see
section 7122(d).''.
<<NOTE: 26 USC 7122 note.>> (d) Preparation of Statement Relating
to Offers-in-
Compromise.--The Secretary of the Treasury shall prepare a statement
which sets forth in simple, nontechnical terms the rights of a taxpayer
and the obligations of the Internal Revenue Service relating to offers-
in-compromise. Such statement shall--
(1) advise taxpayers who have entered into a compromise of
the advantages of promptly notifying the Internal Revenue
Service of any change of address or marital status;
(2) provide notice to taxpayers that in the case of a
compromise terminated due to the actions of one spouse or former
spouse, the Internal Revenue Service will, upon application,
reinstate such compromise with the spouse or former spouse who
remains in compliance with such compromise; and
(3) provide notice to the taxpayer that the taxpayer may
appeal the rejection of an offer-in-compromise to the Internal
Revenue Service Office of Appeals.
<<NOTE: Applicability. 26 USC 6331 note.>> (e) Effective Dates.--
(1) In general.--The amendments made by this section shall
apply to proposed offers-in-compromise and installment
agreements submitted after the date of the enactment of this
Act.
(2) Suspension of collection by levy.--The amendment made by
subsection (b) shall apply to offers-in-compromise pending on or
made after December 31, 1999.
[[Page 112 STAT. 767]]
SEC. 3463. NOTICE OF DEFICIENCY TO SPECIFY DEADLINES FOR
FILING TAX COURT PETITION.
<<NOTE: 26 USC 6212 note.>> (a) In General.--The Secretary of the
Treasury or the
Secretary's delegate shall include on each notice of deficiency under
section 6212 of the Internal Revenue Code of 1986 the date determined by
such Secretary (or delegate) as the last day on which the taxpayer may
file a petition with the Tax Court.
(b) Later Filing Deadlines Specified on Notice of Deficiency To Be
Binding.--Subsection (a) of section 6213 (relating to restrictions
applicable to deficiencies; petition to Tax Court) is amended by adding
at the end the following new sentence: ``Any petition filed with the Tax
Court on or before the last date specified for filing such petition by
the Secretary in the notice of deficiency shall be treated as timely
filed.''.
<<NOTE: Applicability. 26 USC 6213 note.>> (c) Effective Date.--
Subsection (a) and the amendment made by subsection (b) shall apply to
notices mailed after December 31, 1998.
SEC. 3464. REFUND OR CREDIT OF OVERPAYMENTS BEFORE FINAL DETERMINATION.
(a) Tax Court Proceedings.--Subsection (a) of section 6213 is
amended--
(1) by striking ``, including the Tax Court.'' and inserting
``, including the Tax Court, and a refund may be ordered by such
court of any amount collected within the period during which the
Secretary is prohibited from collecting by levy or through a
proceeding in court under the provisions of this subsection.'';
and
(2) by striking ``to enjoin any action or proceeding'' and
inserting ``to enjoin any action or proceeding or order any
refund''.
(b) Other Proceedings.--Subsection (a) of section 6512 is amended by
striking the period at the end of paragraph (4) and inserting ``, and'',
and by inserting after paragraph (4) the following new paragraphs:
``(5) As to any amount collected within the period during
which the Secretary is prohibited from making the assessment or
from collecting by levy or through a proceeding in court under
the provisions of section 6213(a); and
``(6) As to overpayments the Secretary is authorized to
refund or credit pending appeal as provided in subsection
(b).''.
(c) Refund or Credit Pending Appeal.--Paragraph (1) of section
6512(b) is amended by adding at the end the following new sentence: ``If
a notice of appeal in respect of the decision of the Tax Court is filed
under section 7483, the Secretary is authorized to refund or credit the
overpayment determined by the Tax Court to the extent the overpayment is
not contested on appeal.''.
<<NOTE: 26 USC 6213 note.>> (d) Effective Date.--The amendments
made by this section shall take effect on the date of the enactment of
this Act.
SEC. 3465. INTERNAL REVENUE SERVICE PROCEDURES RELATING TO APPEALS OF
EXAMINATIONS AND COLLECTIONS.
(a) Dispute Resolution Procedures.--
(1) In general.--Chapter 74 (relating to closing agreements
and compromises) is amended by redesignating section
[[Page 112 STAT. 768]]
7123 as section 7124 and by inserting after section 7122 the
following new section:
``SEC. 7123. APPEALS DISPUTE RESOLUTION PROCEDURES.
``(a) Early Referral to Appeals Procedures.--The Secretary shall
prescribe procedures by which any taxpayer may request early referral of
1 or more unresolved issues from the examination or collection division
to the Internal Revenue Service Office of Appeals.
``(b) Alternative Dispute Resolution Procedures.--
``(1) Mediation.--The Secretary shall prescribe procedures
under which a taxpayer or the Internal Revenue Service Office of
Appeals may request non-binding mediation on any issue
unresolved at the conclusion of--
``(A) appeals procedures; or
``(B) unsuccessful attempts to enter into a closing
agreement under section 7121 or a compromise under
section 7122.
``(2) Arbitration.--The Secretary shall establish a pilot
program under which a taxpayer and the Internal Revenue Service
Office of Appeals may jointly request binding arbitration on any
issue unresolved at the conclusion of--
``(A) appeals procedures; or
``(B) unsuccessful attempts to enter into a closing
agreement under section 7121 or a compromise under
section 7122.''.
(2) Conforming amendment.--The table of sections for chapter
74 is amended by striking the item relating to section 7123 and
inserting the following new items:
``Sec. 7123. Appeals dispute resolution procedures.
``Sec. 7124. Cross references.''.
(b) Appeals Officers in Each State.--The Commissioner of Internal
Revenue shall ensure that an appeals officer is regularly available
within each State.
(c) Appeals Videoconferencing Alternative for Rural Areas.--The
Commissioner of Internal Revenue shall consider the use of the
videoconferencing of appeals conferences between appeals officers and
taxpayers seeking appeals in rural or remote areas.
SEC. 3466. APPLICATION OF CERTAIN FAIR DEBT COLLECTION PROCEDURES.
(a) In General.--Subchapter A of chapter 64 (relating to collection)
is amended by inserting after section 6303 the following new section:
``SEC. 6304. FAIR TAX COLLECTION PRACTICES.
``(a) Communication With the Taxpayer.--Without the prior consent of
the taxpayer given directly to the Secretary or the express permission
of a court of competent jurisdiction, the Secretary may not communicate
with a taxpayer in connection with the collection of any unpaid tax--
``(1) at any unusual time or place or a time or place known
or which should be known to be inconvenient to the taxpayer;
``(2) if the Secretary knows the taxpayer is represented by
any person authorized to practice before the Internal Revenue
Service with respect to such unpaid tax and has knowledge of, or
can readily ascertain, such person's name and address,
[[Page 112 STAT. 769]]
unless such person fails to respond within a reasonable period
of time to a communication from the Secretary or unless such
person consents to direct communication with the taxpayer; or
``(3) at the taxpayer's place of employment if the Secretary
knows or has reason to know that the taxpayer's employer
prohibits the taxpayer from receiving such communication.
In the absence of knowledge of circumstances to the contrary, the
Secretary shall assume that the convenient time for communicating with a
taxpayer is after 8 a.m. and before 9 p.m., local time at the taxpayer's
location.
``(b) Prohibition of Harassment and Abuse.--The Secretary may not
engage in any conduct the natural consequence of which is to harass,
oppress, or abuse any person in connection with the collection of any
unpaid tax. Without limiting the general application of the foregoing,
the following conduct is a violation of this subsection:
``(1) The use or threat of use of violence or other criminal
means to harm the physical person, reputation, or property of
any person.
``(2) The use of obscene or profane language or language the
natural consequence of which is to abuse the hearer or reader.
``(3) Causing a telephone to ring or engaging any person in
telephone conversation repeatedly or continuously with intent to
annoy, abuse, or harass any person at the called number.
``(4) Except as provided under rules similar to the rules in
section 804 of the Fair Debt Collection Practices Act (15 U.S.C.
1692b), the placement of telephone calls without meaningful
disclosure of the caller's identity.
``(c) Civil Action for Violations of Section.--
``For civil action for violations of this section, see
section 7433.''.
(b) Clerical Amendment.--The table of sections for subchapter A of
chapter 64 is amended by inserting after the item relating to section
6303 the following new item:
``Sec. 6304. Fair tax collection practices.''.
<<NOTE: 26 USC 6304 note.>> (c) Effective Date.--The amendments
made by this section shall take effect on the date of the enactment of
this Act.
SEC. 3467. GUARANTEED AVAILABILITY OF INSTALLMENT AGREEMENTS.
(a) In General.--Section 6159 (relating to agreements for payment of
tax liability in installments) is amended by redesignating subsection
(c) as subsection (d) and by inserting after subsection (b) the
following new subsection:
``(c) Secretary Required To Enter Into Installment Agreements in
Certain Cases.--In the case of a liability for tax of an individual
under subtitle A, the Secretary shall enter into an agreement to accept
the payment of such tax in installments if, as of the date the
individual offers to enter into the agreement--
``(1) the aggregate amount of such liability (determined
without regard to interest, penalties, additions to the tax, and
additional amounts) does not exceed $10,000;
[[Page 112 STAT. 770]]
``(2) the taxpayer (and, if such liability relates to a
joint return, the taxpayer's spouse) has not, during any of the
preceding 5 taxable years--
``(A) failed to file any return of tax imposed by
sub-
title A;
``(B) failed to pay any tax required to be shown on
any such return; or
``(C) entered into an installment agreement under
this section for payment of any tax imposed by subtitle
A,
``(3) the Secretary determines that the taxpayer is
financially unable to pay such liability in full when due (and
the taxpayer submits such information as the Secretary may
require to make such determination);
``(4) the agreement requires full payment of such liability
within 3 years; and
``(5) the taxpayer agrees to comply with the provisions of
this title for the period such agreement is in effect.''.
<<NOTE: 26 USC 6159 note.>> (b) Effective Date.--The amendment made
by this section shall take effect on the date of the enactment of this
Act.
SEC. 3468. <<NOTE: 26 USC 7421 note.>> PROHIBITION ON REQUESTS TO
TAXPAYERS TO GIVE UP RIGHTS TO BRING ACTIONS.
(a) Prohibition.--No officer or employee of the United States may
request a taxpayer to waive the taxpayer's right to bring a civil action
against the United States or any officer or employee of the United
States for any action taken in connection with the internal revenue
laws.
(b) Exceptions.--Subsection (a) shall not apply in any case where--
(1) a taxpayer waives the right described in subsection (a)
knowingly and voluntarily; or
(2) the request by the officer or employee is made in person
and the taxpayer's attorney or other federally authorized tax
practitioner (within the meaning of section 7525(a)(3)(A) of the
Internal Revenue Code of 1986) is present, or the request is
made in writing to the taxpayer's attorney or other
representative.
Subtitle F--Disclosures to Taxpayers
SEC. 3501. <<NOTE: Procedures. 26 USC 7801 note.>> EXPLANATION OF JOINT
AND SEVERAL LIABILITY.
<<NOTE: Deadline.>> (a) In General.--The Secretary of the Treasury
or the
Secretary's delegate shall, as soon as practicable, but not later than
180 days after the date of the enactment of this Act, establish
procedures to clearly alert married taxpayers of their joint and several
liabilities on all appropriate publications and instructions.
(b) Right To Limit Liability.--The procedures under subsection (a)
shall include requirements that notice of an individual's right to
relief under section 6015 of the Internal Revenue Code of 1986 shall be
included in the statement required by section 6227 of the Omnibus
Taxpayer Bill of Rights (Internal Revenue Service Publication No. 1) and
in any collection-related notices.
SEC. 3502. <<NOTE: 26 USC 7801 note.>> EXPLANATION OF TAXPAYERS' RIGHTS
IN INTERVIEWS WITH THE INTERNAL REVENUE SERVICE.
The <<NOTE: Deadline.>> Secretary of the Treasury or the Secretary's
delegate shall, as soon as practicable, but not later than 180 days
after the date
[[Page 112 STAT. 771]]
of the enactment of this Act, revise the statement required by section
6227 of the Omnibus Taxpayer Bill of Rights (Internal Revenue Service
Publication No. 1) to more clearly inform taxpayers of their rights--
(1) to be represented at interviews with the Internal
Revenue Service by any person authorized to practice before the
Internal Revenue Service; and
(2) to suspend an interview pursuant to section 7521(b)(2)
of the Internal Revenue Code of 1986.
SEC. 3503. <<NOTE: 26 USC 7801 note.>> DISCLOSURE OF CRITERIA FOR
EXAMINATION SELECTION.
<<NOTE: Deadline.>> (a) In General.--The Secretary of the Treasury
or the Secretary's delegate shall, as soon as practicable, but not later
than 180 days after the date of the enactment of this Act, incorporate
into the statement required by section 6227 of the Omnibus Taxpayer Bill
of Rights (Internal Revenue Service Publication No. 1) a statement which
sets forth in simple and nontechnical terms the criteria and procedures
for selecting taxpayers for examination. Such statement shall not
include any information the disclosure of which would be detrimental to
law enforcement, but shall specify the general procedures used by the
Internal Revenue Service, including whether taxpayers are selected for
examination on the basis of information available in the media or on the
basis of information provided to the Internal Revenue Service by
informants.
(b) Transmission to Committees of Congress.--The
Secretary shall transmit drafts of the statement required under
subsection (a) (or proposed revisions to any such statement) to the
Committee on Ways and Means of the House of Representatives and the
Committee on Finance of the Senate on the same day.
SEC. 3504. <<NOTE: 26 USC 6212 note.>> EXPLANATIONS OF APPEALS AND
COLLECTION PROCESS.
The <<NOTE: Deadline.>> Secretary of the Treasury or the Secretary's
delegate shall, as soon as practicable, but not later than 180 days
after the date of the enactment of this Act, include with any first
letter of proposed deficiency which allows the taxpayer an opportunity
for administrative review in the Internal Revenue Service Office of
Appeals an explanation of the entire process from examination through
collection with respect to such proposed deficiency, including the
assistance available to the taxpayer from the National Taxpayer Advocate
at various points in the process.
SEC. 3505. EXPLANATION OF REASON FOR REFUND DISALLOWANCE.
(a) In General.--Section 6402 (relating to authority to make credits
or refunds) is amended by adding at the end the following new
subsection:
``( j) Explanation of Reason for Refund Disallowance.--In the case
of a disallowance of a claim for refund, the Secretary shall provide the
taxpayer with an explanation for such disallowance.''.
<<NOTE: Applicability. 26 USC 6402 note.>> (b) Effective Date.--The
amendment made by this section shall apply to disallowances after the
180th day after the date of the enactment of this Act.
SEC. 3506. <<NOTE: 26 USC 6159 note.>> STATEMENTS REGARDING INSTALLMENT
AGREEMENTS.
The <<NOTE: Deadline.>> Secretary of the Treasury or the Secretary's
delegate shall, beginning not later than July 1, 2000, provide each
taxpayer who has an installment agreement in effect under section 6159
of the Internal Revenue Code of 1986 an annual statement setting forth
[[Page 112 STAT. 772]]
the initial balance at the beginning of the year, the payments made
during the year, and the remaining balance as of the end of the year.
SEC. 3507. NOTIFICATION OF CHANGE IN TAX MATTERS PARTNER.
<<NOTE: Deadline.>> (a) In General.--Section 6231(a)(7) (defining
tax matters partner) is amended by adding at the end the following new
sentence: ``The Secretary shall, within 30 days of selecting a tax
matters partner under the preceding sentence, notify all partners
required to receive notice under section 6223(a) of the name and address
of the person selected.''.
<<NOTE: Applicability. 26 USC 6231 note.>> (b) Effective Date.--The
amendment made by this section shall apply to selections of tax matters
partners made by the Secretary of the Treasury after the date of the
enactment of this Act.
SEC. 3508. <<NOTE: 26 USC 7801 note.>> DISCLOSURE TO TAXPAYERS.
The Secretary of the Treasury or the Secretary's delegate shall
ensure that any instructions booklet accompanying an individual Federal
income tax return form (including forms 1040, 1040A, 1040EZ, and any
similar or successor forms) shall include, in clear language, in
conspicuous print, and in a conspicuous place, a concise description of
the conditions under which return information may be disclosed to any
party outside the Internal Revenue Service, including disclosure to any
State or agency, body, or commission (or legal representative) thereof.
SEC. 3509. DISCLOSURE OF CHIEF COUNSEL ADVICE.
(a) In General.--Section 6110(b)(1) (defining written determination)
is amended by striking ``or technical advice memorandum'' and inserting
``technical advice memorandum, or Chief Counsel advice''.
(b) Chief Counsel Advice.--Section 6110 (relating to public
inspection of written determinations) is amended by redesignating
subsections (i), ( j), (k), and (l) as subsections ( j), (k), (l), and
(m), respectively, and by inserting after subsection (h) the following
new subsection:
``(i) Special Rules for Disclosure of Chief Counsel Advice.--
``(1) Chief counsel advice defined.--
``(A) In general.--For purposes of this section, the
term `Chief Counsel advice' means written advice or
instruction, under whatever name or designation,
prepared by any national office component of the Office
of Chief Counsel which--
``(i) is issued to field or service center
employees of the Service or regional or district
employees of the Office of Chief Counsel; and
``(ii) conveys--
``(I) any legal interpretation of a
revenue
provision;
``(II) any Internal Revenue Service
or Office of Chief Counsel position or
policy concerning a revenue provision;
or
``(III) any legal interpretation of
State law, foreign law, or other Federal
law relating to the assessment or
collection of any liability under a
revenue provision.
[[Page 112 STAT. 773]]
``(B) Revenue provision defined.--For purposes of
subparagraph (A), the term `revenue provision' means any
existing or former internal revenue law, regulation,
revenue ruling, revenue procedure, other published or
unpublished guidance, or tax treaty, either in general
or as applied to specific taxpayers or groups of
specific taxpayers.
``(2) Additional documents treated as chief counsel
advice.--The Secretary may by regulation provide that this
section shall apply to any advice or instruction prepared and
issued by the Office of Chief Counsel which is not described in
paragraph (1).
``(3) Deletions for chief counsel advice.--In the case of
Chief Counsel advice open to public inspection pursuant to this
section--
``(A) paragraphs (2) through (7) of subsection (c)
shall not apply, but
``(B) the Secretary may make deletions of material
in accordance with subsections (b) and (c) of section
552 of title 5, United States Code, except that in
applying subsection (b)(3) of such section, no statutory
provision of this title shall be taken into account.
``(4) Notice of intention to disclose.--
``(A) Nontaxpayer-specific chief counsel advice.--In
the case of Chief Counsel advice which is written
without reference to a specific taxpayer or group of
specific taxpayers--
``(i) subsection (f )(1) shall not apply; and
``(ii) <<NOTE: Deadline.>> the Secretary
shall, within 60 days after the issuance of the
Chief Counsel advice, complete any deletions
described in subsection (c)(1) or paragraph
(3) <<NOTE: Public information.>> and make the
Chief Counsel advice, as so edited, open for
public inspection.
``(B) Taxpayer-specific <<NOTE: Deadline.>> chief
counsel advice.--In the case of Chief Counsel advice
which is written with respect to a specific taxpayer or
group of specific taxpayers, the Secretary shall, within
60 days after the issuance of the Chief Counsel advice,
mail the notice required by subsection (f )(1) to each
such taxpayer. The notice shall include a copy of the
Chief Counsel advice on which is indicated the
information that the Secretary proposes to delete
pursuant to subsection (c)(1). The Secretary may also
delete from the copy of the text of the Chief Counsel
advice any of the information described in paragraph
(3), and shall delete the names, addresses, and other
identifying details of taxpayers other than the person
to whom the advice pertains, except that the Secretary
shall not delete from the copy of the Chief Counsel
advice that is furnished to the taxpayer any information
of which that taxpayer was the source.''.
(c) Conforming Amendments.--
(1) Section 6110(f )(1) is amended by striking ``The
Secretary'' and inserting ``Except as otherwise provided by
subsection (i), the Secretary''.
(2) Paragraphs (1)(B) and (2) of section 6110( j)(1), as
redesignated by this section, are amended by striking
``subsection (g)'' each place it appears and inserting
``subsection (g) or (i)(4)(B)''.
[[Page 112 STAT. 774]]
(3) Section 6110(k)(1)(B), as so redesignated, is amended by
striking ``subsection (c)'' and inserting ``subsection (c)(1) or
(i)(3)''.
<<NOTE: 26 USC 6110 note.>> (d) Effective Dates.--
<<NOTE: Applicability.>> (1) In general.--Except as
otherwise provided in this subsection, the amendments made by
this section shall apply to any Chief Counsel advice issued more
than 90 days after the date of the enactment of this Act.
<<NOTE: Applicability.>> (2) Transition rules.--The
amendments made by this section shall apply to any Chief Counsel
advice issued after December 31, 1985, and before the 91st day
after the date of the enactment of this Act by the offices of
the associate chief counsel for domestic, employee benefits and
exempt organizations, and international, except that any such
Chief Counsel advice shall be treated as made available on a
timely basis if such advice is made available for public
inspection not later than the following dates:
(A) One year after the date of the enactment of this
Act, in the case of all litigation guideline memoranda,
service center advice, tax litigation bulletins,
criminal tax bulletins, and general litigation
bulletins.
(B) Eighteen months after such date of enactment, in
the case of field service advice and technical
assistance to the field issued on or after January 1,
1994.
(C) Three years after such date of enactment, in the
case of field service advice and technical assistance to
the field issued on or after January 1, 1992, and before
January 1, 1994.
(D) Six years after such date of enactment, in the
case of any other Chief Counsel advice issued after
December 31, 1985.
<<NOTE: Public information.>> (3) Documents treated as
chief counsel advice.--If the Secretary of the Treasury by
regulation provides pursuant to section 6110(i)(2) of the
Internal Revenue Code of 1986, as added by this section, that
any additional advice or instruction issued by the Office of
Chief Counsel shall be treated as Chief Counsel advice, such
additional advice or instruction shall be made available for
public inspection pursuant to section 6110 of such Code, as
amended by this section, only in accordance with the effective
date set forth in such regulation.
(4) Chief counsel advice to be available electronically.--
The Internal Revenue Service shall make any Chief Counsel advice
issued more than 90 days after the date of the enactment of this
Act and made available for public inspection pursuant to section
6110 of such Code, as amended by this section, also available by
computer telecommunications within 1 year after issuance.
Subtitle G--Low-Income Taxpayer Clinics
SEC. 3601. LOW-INCOME TAXPAYER CLINICS.
(a) In General.--Chapter 77 (relating to miscellaneous provisions),
as amended by section 3411, is amended by adding at the end the
following new section:
[[Page 112 STAT. 775]]
``SEC. 7526. LOW-INCOME TAXPAYER CLINICS.
``(a) In General.--The Secretary may, subject to the availability of
appropriated funds, make grants to provide matching funds for the
development, expansion, or continuation of qualified low-income taxpayer
clinics.
``(b) Definitions.--For purposes of this section--
``(1) Qualified low-income taxpayer clinic.--
``(A) In general.--The term `qualified low-income
taxpayer clinic' means a clinic that--
``(i) does not charge more than a nominal fee
for its services (except for reimbursement of
actual costs incurred); and
``(ii)(I) represents low-income taxpayers in
controversies with the Internal Revenue Service;
or
``(II) operates programs to inform individuals
for whom English is a second language about their
rights and responsibilities under this title.
``(B) Representation of low-income taxpayers.--A
clinic meets the requirements of subparagraph (A)(ii)(I)
if--
``(i) at least 90 percent of the taxpayers
represented by the clinic have incomes which do
not exceed 250 percent of the poverty level, as
determined in accordance with criteria established
by the Director of the Office of Management and
Budget; and
``(ii) the amount in controversy for any
taxable year generally does not exceed the amount
specified in section 7463.
``(2) Clinic.--The term `clinic' includes--
``(A) a clinical program at an accredited law,
business, or accounting school in which students
represent low-income taxpayers in controversies arising
under this title; and
``(B) an organization described in section 501(c)
and exempt from tax under section 501(a) which satisfies
the requirements of paragraph (1) through representation
of taxpayers or referral of taxpayers to qualified
representatives.
``(3) Qualified representative.--The term `qualified
representative' means any individual (whether or not an
attorney) who is authorized to practice before the Internal
Revenue Service or the applicable court.
``(c) Special Rules and Limitations.--
``(1) Aggregate limitation.--Unless otherwise provided by
specific appropriation, the Secretary shall not allocate more
than $6,000,000 per year (exclusive of costs of administering
the program) to grants under this section.
``(2) Limitation on annual grants to a clinic.--The
aggregate amount of grants which may be made under this section
to a clinic for a year shall not exceed $100,000.
``(3) Multi-year grants.--Upon application of a qualified
low-income taxpayer clinic, the Secretary is authorized to award
a multi-year grant not to exceed 3 years.
``(4) Criteria for awards.--In determining whether to make a
grant under this section, the Secretary shall consider--
[[Page 112 STAT. 776]]
``(A) the numbers of taxpayers who will be served by
the clinic, including the number of taxpayers in the
geographical area for whom English is a second language;
``(B) the existence of other low-income taxpayer
clinics serving the same population;
``(C) the quality of the program offered by the low-
income taxpayer clinic, including the qualifications of
its administrators and qualified representatives, and
its record, if any, in providing service to low-income
taxpayers; and
``(D) alternative funding sources available to the
clinic, including amounts received from other grants and
contributions, and the endowment and resources of the
institution sponsoring the clinic.
``(5) Requirement of matching funds.--A low-income taxpayer
clinic must provide matching funds on a dollar-for-dollar basis
for all grants provided under this section. Matching funds may
include--
``(A) the salary (including fringe benefits) of
individuals performing services for the clinic; and
``(B) the cost of equipment used in the clinic.
Indirect expenses, including general overhead of the institution
sponsoring the clinic, shall not be counted as matching
funds.''.
(b) Clerical Amendment.--The table of sections for chapter 77, as
amended by section 3411, is amended by adding at the end the following
new item:
``Sec. 7526. Low-income taxpayer clinics.''.
<<NOTE: 26 USC 7526 note.>> (c) Effective Date.--The amendments
made by this section shall take effect on the date of the enactment of
this Act.
Subtitle H--Other Matters
SEC. 3701. <<NOTE: 26 USC 7804 note.>> CATALOGING COMPLAINTS.
In collecting data for the report required under section 1211 of the
Taxpayer Bill of Rights 2 (Public Law 104-168), the Secretary of the
Treasury or the Secretary's delegate shall, not later than January 1,
2000, maintain records of taxpayer complaints of misconduct by Internal
Revenue Service employees on an individual employee basis.
SEC. 3702. ARCHIVE OF RECORDS OF INTERNAL REVENUE SERVICE.
(a) In General.--Subsection (l) of section 6103 (relating to
confidentiality and disclosure of returns and return information) is
amended by adding at the end the following new paragraph:
``(17) Disclosure to national archives and records
administration.--The Secretary shall, upon written request from
the Archivist of the United States, disclose or authorize the
disclosure of returns and return information to officers and
employees of the National Archives and Records Administration
for purposes of, and only to the extent necessary in, the
appraisal of records for destruction or retention. No such
officer or employee shall, except to the extent authorized by
subsection (f ), (i)(7), or (p), disclose any return or return
information disclosed under the preceding sentence to any person
other than to the Secretary, or to another officer or employee
of the National Archives and Records Administration
[[Page 112 STAT. 777]]
whose official duties require such disclosure for purposes of
such appraisal.''.
(b) Conforming Amendments.--Section 6103(p) is amended--
(1) in paragraph (3)(A), by striking ``or (16)'' and
inserting ``(16), or (17)'';
(2) in paragraph (4), by striking ``or (14)'' and inserting
``, (14), or (17)'' in the matter preceding subparagraph (A);
and
(3) in paragraph (4)(F)(ii), by striking ``or (15)'' and
inserting ``, (15), or (17)''.
<<NOTE: Applicability. 26 USC 6103 note.>> (c) Effective Date.--The
amendments made by this section shall apply to requests made by the
Archivist of the United States after the date of the enactment of this
Act.
SEC. 3703. <<NOTE: Regulations. 26 USC 6311 note.>> PAYMENT OF TAXES.
The Secretary of the Treasury or the Secretary's delegate shall
establish such rules, regulations, and procedures as are necessary to
allow payment of taxes by check or money order made payable to the
United States Treasury.
SEC. 3704. CLARIFICATION OF AUTHORITY OF SECRETARY RELATING TO THE
MAKING OF ELECTIONS.
Subsection (d) of section 7805 is amended by striking ``by
regulations or forms''.
SEC. 3705. <<NOTE: 26 USC 7801 note.>> INTERNAL REVENUE SERVICE EMPLOYEE
CONTACTS.
(a) Notice.--The Secretary of the Treasury or the Secretary's
delegate shall provide that--
(1) any manually generated correspondence received by a
taxpayer from the Internal Revenue Service shall include in a
prominent manner the name, telephone number, and unique
identifying number of an Internal Revenue Service employee the
taxpayer may contact with respect to the correspondence;
(2) any other correspondence or notice received by a
taxpayer from the Internal Revenue Service shall include in a
prominent manner a telephone number that the taxpayer may
contact; and
(3) an Internal Revenue Service employee shall give a
taxpayer during a telephone or personal contact the employee's
name and unique identifying number.
<<NOTE: Procedures.>> (b) Single Contact.--The Secretary of the
Treasury or the Secretary's delegate shall develop a procedure under
which, to the extent practicable and if advantageous to the taxpayer,
one Internal Revenue Service employee shall be assigned to handle a
taxpayer's matter until it is resolved.
(c) Telephone Helpline in Spanish.--The Secretary of the Treasury or
the Secretary's delegate shall provide, in appropriate circumstances,
that taxpayer questions on telephone helplines of the Internal Revenue
Service are answered in Spanish.
(d) Other Telephone Helpline Options.--The Secretary of the Treasury
or the Secretary's delegate shall provide, in appropriate circumstances,
on telephone helplines of the Internal Revenue Service an option for any
taxpayer to talk to an Internal Revenue Service employee during normal
business hours. The person shall direct phone questions of the taxpayer
to other Internal Revenue Service personnel who can provide assistance
to the taxpayer.
(e) Effective Dates.--
[[Page 112 STAT. 778]]
(1) In general.--Except as otherwise provided in this
subsection, this section shall take effect 60 days after the
date of the enactment of this Act.
(2) Subsection (c).--Subsection (c) shall take effect on
January 1, 2000.
(3) Subsection (d).--Subsection (d) shall take effect on
January 1, 2000.
(4) Unique identifying number.--Any requirement under this
section to provide a unique identifying number shall take effect
6 months after the date of the enactment of this Act.
SEC. 3706. <<NOTE: 26 USC 7804 note.>> USE OF PSEUDONYMS BY INTERNAL
REVENUE SERVICE EMPLOYEES.
(a) In General.--Any employee of the Internal Revenue Service may
use a pseudonym only if--
(1) adequate justification for the use of a pseudonym is
provided by the employee, including protection of personal
safety; and
(2) such use is approved by the employee's supervisor before
the pseudonym is used.
<<NOTE: Applicability.>> (b) Effective Date.--Subsection (a) shall
apply to requests made after the date of the enactment of this Act.
SEC. 3707. <<NOTE: 26 USC 6651 note.>> ILLEGAL TAX PROTESTER
DESIGNATION.
(a) Prohibition.--The officers and employees of the Internal Revenue
Service--
(1) shall not designate taxpayers as illegal tax protesters
(or any similar designation); and
(2) in the case of any such designation made on or before
the date of the enactment of this Act--
(A) shall remove such designation from the
individual master file; and
(B) shall disregard any such designation not located
in the individual master file.
(b) Designation of Nonfilers Allowed.--An officer or employee of the
Internal Revenue Service may designate any appropriate taxpayer as a
nonfiler, but shall remove such designation once the taxpayer has filed
income tax returns for 2 consecutive taxable years and paid all taxes
shown on such returns.
(c) Effective Date.--The provisions of this section shall take
effect on the date of the enactment of this Act, except that the removal
of any designation under subsection (a)(2)(A) shall not be required to
begin before January 1, 1999.
SEC. 3708. PROVISION OF CONFIDENTIAL INFORMATION TO CONGRESS BY
WHISTLEBLOWERS.
(a) In General.--Section 6103(f ) (relating to disclosure to
committees of Congress) is amended by adding at the end the following
new paragraph:
``(5) Disclosure by whistleblower.--Any person who otherwise
has or had access to any return or return information under this
section may disclose such return or return
information to a committee referred to in paragraph (1) or any
individual authorized to receive or inspect information under
paragraph (4)(A) if such person believes such return or return
information may relate to possible misconduct,
maladministration, or taxpayer abuse.''.
[[Page 112 STAT. 779]]
<<NOTE: 26 USC 6103 note.>> (b) Effective Date.--The amendment made
by this section shall take effect on the date of the enactment of this
Act.
SEC. 3709. <<NOTE: 26 USC 7801 note.>> LISTING OF LOCAL INTERNAL REVENUE
SERVICE TELEPHONE NUMBERS AND ADDRESSES.
The Secretary of the Treasury or the Secretary's delegate shall, as
soon as practicable, provide that the local telephone numbers and
addresses of Internal Revenue Service offices located in any particular
area be listed in a telephone book for that area.
SEC. 3710. IDENTIFICATION OF RETURN PREPARERS.
(a) In General.--The last sentence of section 6109(a) (relating to
identifying numbers) is amended by striking ``For purposes of this
subsection'' and inserting ``For purposes of paragraphs (1), (2), and
(3)''.
<<NOTE: 26 USC 6109 note.>> (b) Effective Date.--The amendment made
by this section shall take effect on the date of the enactment of this
Act.
SEC. 3711. OFFSET OF PAST-DUE, LEGALLY ENFORCEABLE STATE INCOME TAX
OBLIGATIONS AGAINST OVERPAYMENTS.
(a) In General.--Section 6402 (relating to authority to make credits
or refunds), as amended by section 3505, is amended by redesignating
subsections (e) through ( j) as subsections (f ) through (k),
respectively, and by inserting after subsection (d) the following new
subsection:
``(e) Collection of Past-Due, Legally Enforceable State Income Tax
Obligations.--
<<NOTE: Notification.>> ``(1) In general.--Upon receiving
notice from any State that a named person owes a past-due,
legally enforceable State income tax obligation to such State,
the Secretary shall, under such conditions as may be prescribed
by the Secretary--
``(A) reduce the amount of any overpayment payable
to such person by the amount of such State income tax
obligation;
``(B) pay the amount by which such overpayment is
reduced under subparagraph (A) to such State and notify
such State of such person's name, taxpayer
identification number, address, and the amount
collected; and
``(C) notify the person making such overpayment that
the overpayment has been reduced by an amount necessary
to satisfy a past-due, legally enforceable State income
tax obligation.
If an offset is made pursuant to a joint return, the notice
under subparagraph (B) shall include the names, taxpayer
identification numbers, and addresses of each person filing such
return.
<<NOTE: Applicability.>> ``(2) Offset permitted only
against residents of state seeking offset.--Paragraph (1) shall
apply to an overpayment by any person for a taxable year only if
the address shown on the Federal return for such taxable year of
the overpayment is an address within the State seeking the
offset.
``(3) Priorities for offset.--Any overpayment by a person
shall be reduced pursuant to this subsection--
``(A) after such overpayment is reduced pursuant
to--
``(i) subsection (a) with respect to any
liability for any internal revenue tax on the part
of the person who made the overpayment;
[[Page 112 STAT. 780]]
``(ii) subsection (c) with respect to past-due
support; and
``(iii) subsection (d) with respect to any
past-due, legally enforceable debt owed to a
Federal agency; and
``(B) before such overpayment is credited to the
future liability for any Federal internal revenue tax of
such person pursuant to subsection (b).
If the Secretary receives notice from one or more agencies of
the State of more than one debt subject to paragraph (1) that is
owed by such person to such an agency, any overpayment by such
person shall be applied against such debts in the order in which
such debts accrued.
``(4) Notice; consideration of evidence.--No State may take
action under this subsection until such State--
``(A) notifies by certified mail with return receipt
the person owing the past-due State income tax liability
that the State proposes to take action pursuant to this
section;
``(B) gives such person at least 60 days to present
evidence that all or part of such liability is not past-
due or not legally enforceable;
``(C) considers any evidence presented by such
person and determines that an amount of such debt is
past-due and legally enforceable; and
``(D) satisfies such other conditions as the
Secretary may prescribe to ensure that the determination
made under subparagraph (C) is valid and that the State
has made reasonable efforts to obtain payment of such
State income tax obligation.
``(5) Past-due, legally enforceable state income tax
obligation.--For purposes of this subsection, the term `past-
due, legally enforceable State income tax obligation' means a
debt--
``(A)(i) which resulted from--
``(I) a judgment rendered by a court of
competent jurisdiction which has determined an
amount of State income tax to be due; or
``(II) a determination after an administrative
hearing which has determined an amount of State
income tax to be due; and
``(ii) which is no longer subject to judicial
review; or
``(B) which resulted from a State income tax which
has been assessed but not collected, the time for
redetermination of which has expired, and which has not
been delinquent for more than 10 years.
For purposes of this paragraph, the term `State income tax'
includes any local income tax administered by the chief tax
administration agency of the State.
``(6) Regulations.--The Secretary shall issue regulations
prescribing the time and manner in which States must submit
notices of past-due, legally enforceable State income tax
obligations and the necessary information that must be contained
in or accompany such notices. The regulations shall specify the
types of State income taxes and the minimum amount of debt to
which the reduction procedure established by paragraph (1) may
be applied. The regulations may require States to pay a fee to
reimburse the Secretary for the cost of applying such procedure.
Any fee paid to the Secretary pursuant to
[[Page 112 STAT. 781]]
the preceding sentence shall be used to reimburse appropriations
which bore all or part of the cost of applying such procedure.
``(7) Erroneous payment to state.--Any State receiving
notice from the Secretary that an erroneous payment has been
made to such State under paragraph (1) shall pay promptly to the
Secretary, in accordance with such regulations as the Secretary
may prescribe, an amount equal to the amount of such erroneous
payment (without regard to whether any other amounts payable to
such State under such paragraph have been paid to such
State).''.
(b) Disclosure of Certain Information to States Requesting Refund
Offsets for Past-Due, Legally Enforceable State Income Tax
Obligations.--
(1) Paragraph (10) of section 6103(l) is amended by striking
``(c) or (d)'' each place it appears and inserting ``(c), (d),
or (e)''.
(2) The heading for paragraph (10) is amended by striking
``section 6402 (c) or 6402 (d)'' and inserting ``subsection (c),
(d), or (e) of section 6402''.
(c) Conforming Amendments.--
(1) Subsection (a) of section 6402 is amended by striking
``(c) and (d)'' and inserting ``(c), (d), and (e)''.
(2) Paragraph (2) of section 6402(d) is amended by striking
``and before such overpayment'' and inserting ``and before such
overpayment is reduced pursuant to subsection (e) and before
such overpayment''.
(3) Subsection (f ) of section 6402, as redesignated by
subsection (a), is amended--
(A) by striking ``(c) or (d)'' and inserting ``(c),
(d), or (e)''; and
(B) by striking ``Federal agency'' and inserting
``Federal agency or State''.
(4) Subsection (h) of section 6402, as redesignated by
subsection (a), is amended by striking ``subsection (c)'' and
inserting ``subsection (c) or (e)''.
<<NOTE: Applicability. 26 USC 6103 note.>> (d) Effective Date.--The
amendments made by this section (other than subsection (d)) shall apply
to refunds payable under section 6402 of the Internal Revenue Code of
1986 after December 31, 1999.
SEC. 3712. REPORTING REQUIREMENTS IN CONNECTION WITH
EDUCATION TAX CREDIT.
(a) Amounts to be Reported.--Subparagraph (C) of section 6050S(b)(2)
is amended--
(1) 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 of any grant received by
such individual for payment of costs of attendance
and processed by the person making such return
during such calendar year,'';
(2) in clause (iii) (as so redesignated), by inserting ``by
the person making such return'' after ``year''; and
(3) in clause (iv) (as so redesignated), by inserting
``and'' at the end.
(b) Conforming Amendments.--
[[Page 112 STAT. 782]]
(1) Paragraph (2) of section 6050S(d) is amended by striking
``aggregate''.
(2) Subsection (e) of section 6050S is amended by inserting
``(without regard to subsection (g)(2) thereof)'' after
``section 25A''.
<<NOTE: Applicability. 26 USC 6050S note.>> (c) Effective Date.--
The amendments made by this section shall apply to returns required to
be filed with respect to taxable years beginning after December 31,
1998.
Subtitle I--Studies
SEC. 3801. <<NOTE: 26 USC 6601 note.>> ADMINISTRATION OF PENALTIES AND
INTEREST.
The Joint Committee on Taxation and the Secretary of the Treasury
shall each conduct a separate study--
(1) reviewing the administration and implementation by the
Internal Revenue Service of the interest and penalty provisions
of the Internal Revenue Code of 1986 (including the penalty
reform provisions of the Omnibus Budget Reconciliation Act of
1989); and
(2) making any legislative and administrative
recommendations the Committee or the Secretary deems appropriate
to simplify penalty or interest administration and reduce
taxpayer burden.
Such <<NOTE: Deadline.>> studies shall be submitted to the Committee on
Ways and Means of the House of Representatives and the Committee on
Finance of the Senate not later than 1 year after the date of the
enactment of this Act.
SEC. 3802. <<NOTE: 26 USC 6103 note.>> CONFIDENTIALITY OF TAX RETURN
INFORMATION.
The <<NOTE: Reports. Deadline.>> Joint Committee on Taxation and the
Secretary of the Treasury shall each conduct a separate study of the
scope and use of provisions regarding taxpayer confidentiality, and
shall report the findings of such study, together with such
recommendations as the Committee or the Secretary deems appropriate, to
the Congress not later than 18 months after the date of the enactment of
this Act. Such study shall examine--
(1) the present protections for taxpayer privacy;
(2) any need for third parties to use tax return
information;
(3) whether greater levels of voluntary compliance may be
achieved by allowing the public to know who is legally required
to file tax returns, but does not file tax returns;
(4) the interrelationship of the taxpayer confidentiality
provisions in the Internal Revenue Code of 1986 with such
provisions in other Federal law, including section 552a of title
5, United States Code (commonly known as the ``Freedom of
Information Act'');
(5) the impact on taxpayer privacy of the sharing of income
tax return information for purposes of enforcement of State and
local tax laws other than income tax laws, and including the
impact on the taxpayer privacy intended to be protected at the
Federal, State, and local levels under Public Law 105-35, the
Taxpayer Browsing Protection Act of 1997; and
(6) whether the public interest would be served by greater
disclosure of information relating to tax exempt organizations
described in section 501 of the Internal Revenue Code of 1986.
[[Page 112 STAT. 783]]
SEC. 3803. <<NOTE: 26 USC 7801 note.>> STUDY OF NONCOMPLIANCE WITH
INTERNAL REVENUE LAWS BY TAXPAYERS.
Not <<NOTE: Deadline.>> later than 1 year after the date of the
enactment of this Act, the Secretary of the Treasury and the
Commissioner of Internal Revenue shall jointly conduct a study, in
consultation with the Joint Committee on Taxation, of the noncompliance
with internal revenue laws by taxpayers (including willful noncompliance
and noncompliance due to tax law complexity or other factors) and report
the findings of such study to Congress.
SEC. 3804. <<NOTE: 26 USC 7623 note.>> STUDY OF PAYMENTS MADE FOR
DETECTION OF UNDERPAYMENTS AND FRAUD.
Not <<NOTE: Deadline. Reports.>> later than 1 year after the date of
the enactment of this Act, the Secretary of the Treasury shall conduct a
study and report to Congress on the use of section 7623 of the Internal
Revenue Code of 1986 including--
(1) an analysis of the present use of such section and the
results of such use; and
(2) any legislative or administrative recommendations
regarding the provisions of such section and its application.
TITLE IV--CONGRESSIONAL ACCOUNTABILITY FOR THE INTERNAL REVENUE SERVICE
Subtitle A--Oversight
SEC. 4001. EXPANSION OF DUTIES OF THE JOINT COMMITTEE ON
TAXATION.
(a) In General.--Section 8021 (relating to the powers of the Joint
Committee on Taxation) is amended by adding at the end the following new
subsections:
``(e) Investigations.--The Joint Committee shall review all requests
(other than requests by the chairman or ranking member of a committee or
subcommittee) for investigations of the Internal Revenue Service by the
General Accounting Office, and approve such requests when appropriate,
with a view towards eliminating overlapping investigations, ensuring
that the General Accounting Office has the capacity to handle the
investigation, and ensuring that investigations focus on areas of
primary importance to tax administration.
``(f ) Relating to Joint Reviews.--
``(1) In general.--The Chief of Staff, and the staff of the
Joint Committee, shall provide such assistance as is required
for joint reviews described in paragraph (2).
<<NOTE: Deadline.>> ``(2) Joint reviews.--Before June 1 of
each calendar year after 1998 and before 2004, there shall be a
joint review of the strategic plans and budget for the Internal
Revenue Service and such other matters as the Chairman of the
Joint Committee deems appropriate. Such joint review shall be
held at the call of the Chairman of the Joint Committee and
shall include two members of the majority and one member of the
minority from each of the Committees on Finance, Appropriations,
and Governmental Affairs of the Senate, and the Committees on
[[Page 112 STAT. 784]]
Ways and Means, Appropriations, and Government Reform and
Oversight of the House of Representatives.''.
<<NOTE: 26 USC 8021 note.>> (b) Effective Dates.--
(1) <<NOTE: Applicability.>> Subsection (e) of section 8021
of the Internal Revenue Code of 1986, as added by subsection (a)
of this section, shall apply to requests made after the date of
the enactment of this Act.
(2) Subsection (f ) of such section shall take effect on the
date of the enactment of this Act.
SEC. 4002. COORDINATED OVERSIGHT REPORTS.
(a) In General.--Paragraph (3) of section 8022 (relating to the
duties of the Joint Committee on Taxation) is amended to read as
follows:
``(3) Reports.--
``(A) To report, from time to time, to the Committee
on Finance and the Committee on Ways and Means, and, in
its discretion, to the Senate or House of
Representatives, or both, the results of its
investigations, together with such recommendations as it
may deem advisable.
``(B) Subject to amounts specifically appropriated
to carry out this subparagraph, to report, at least once
each Congress, to the Committee on Finance and the
Committee on Ways and Means on the overall state of the
Federal tax system, together with recommendations with
respect to possible simplification proposals and other
matters relating to the administration of the Federal
tax system as it may deem advisable.
``(C) <<NOTE: Deadline.>> To report, for each
calendar year after 1998 and before 2004, to the
Committees on Finance, Appropriations, and Governmental
Affairs of the Senate, and to the Committees on Ways and
Means, Appropriations, and Government Reform and
Oversight of the House of Representatives, with respect
to--
``(i) strategic and business plans for the
Internal Revenue Service;
``(ii) progress of the Internal Revenue
Service in meeting its objectives;
``(iii) the budget for the Internal Revenue
Service and whether it supports its objectives;
``(iv) progress of the Internal Revenue
Service in improving taxpayer service and
compliance;
``(v) progress of the Internal Revenue Service
on technology modernization; and
``(vi) the annual filing season.''.
<<NOTE: 26 USC 8022 note.>> (b) Effective Date.--The amendment made
by this section shall take effect on the date of the enactment of this
Act.
Subtitle B--Century Date Change
SEC. 4011. CENTURY DATE CHANGE.
It is the sense of the Congress that--
(1) the Internal Revenue Service should place a high
priority on resolving the century date change computing
problems; and
[[Page 112 STAT. 785]]
(2) the Internal Revenue Service efforts to resolve the
century date change computing problems should be funded fully to
provide for certain resolution of such problems.
Subtitle C--Tax Law Complexity
SEC. 4021. ROLE OF THE INTERNAL REVENUE SERVICE.
It is the sense of the Congress that the Internal Revenue Service
should provide Congress with an independent view of tax administration,
and that during the legislative process, the tax writing committees of
Congress should hear from front-line technical experts at the Internal
Revenue Service with respect to the administrability of pending
amendments to the Internal Revenue Code of 1986.
SEC. 4022. TAX LAW COMPLEXITY ANALYSIS.
(a) Commissioner <<NOTE: 26 USC 7801 note.>> Study.--
(1) In general.--The Commissioner of Internal Revenue shall
conduct each year after 1998 an analysis of the sources of
complexity in administration of the Federal tax laws. Such
analysis may include an analysis of--
(A) questions frequently asked by taxpayers with
respect to return filing;
(B) common errors made by taxpayers in filling out
their returns;
(C) areas of law which frequently result in
disagreements between taxpayers and the Internal Revenue
Service;
(D) major areas of law in which there is no (or
incomplete) published guidance or in which the law is
uncertain;
(E) areas in which revenue officers make frequent
errors interpreting or applying the law;
(F) the impact of recent legislation on complexity;
and
(G) forms supplied by the Internal Revenue Service,
including the time it takes for taxpayers to complete
and review forms, the number of taxpayers who use each
form, and how recent legislation has affected the time
it takes to complete and review forms.
<<NOTE: Deadline.>> (2) Report.--The Commissioner shall not
later than March 1 of each year report the results of the
analysis conducted under paragraph (1) for the preceding year to
the Committee on Ways and Means of the House of Representatives
and the Committee on Finance of the Senate. The report shall
include any recommendations--
(A) for reducing the complexity of the
administration of Federal tax laws; and
(B) for repeal or modification of any provision the
Commissioner believes adds undue and unnecessary
complexity to the administration of the Federal tax
laws.
<<NOTE: 26 USC 8022 note.>> (b) Analysis to Accompany Certain
Legislation.--
(1) In general.--The Joint Committee on Taxation, in
consultation with the Internal Revenue Service and the
Department of the Treasury, shall include a tax complexity
analysis in each report for legislation, or provide such
analysis to members of the committee reporting the legislation
as soon as practicable after the report is filed, if--
[[Page 112 STAT. 786]]
(A) such legislation is reported by the Committee on
Finance in the Senate, the Committee on Ways and Means
of the House of Representatives, or any committee of
conference; and
(B) such legislation includes a provision which
would directly or indirectly amend the Internal Revenue
Code of 1986 and which has widespread applicability to
individuals or small businesses.
(2) Tax complexity analysis.--For purposes of this
subsection, the term ``tax complexity analysis'' means, with
respect to any legislation, a report on the complexity and
administrative difficulties of each provision described in
paragraph (1)(B) which--
(A) includes--
(i) an estimate of the number of taxpayers
affected by the provision; and
(ii) if applicable, the income level of
taxpayers affected by the provision; and
(B) should include (if determinable)--
(i) the extent to which tax forms supplied by
the Internal Revenue Service would require
revision and whether any new forms would be
required;
(ii) the extent to which taxpayers would be
required to keep additional records;
(iii) the estimated cost to taxpayers to
comply with the provision;
(iv) the extent to which enactment of the
provision would require the Internal Revenue
Service to develop or modify regulatory guidance;
(v) the extent to which the provision may
result in disagreements between taxpayers and the
Internal Revenue Service; and
(vi) any expected impact on the Internal
Revenue Service from the provision (including the
impact on internal training, revision of the
Internal Revenue Manual, reprogramming of
computers, and the extent to which the Internal
Revenue Service would be required to divert or
redirect resources in response to the provision).
(3) Legislation subject to point of order in house of
representatives.--
(A) Legislation reported by committee on ways and
means.--Clause 2(l) of rule XI of the Rules of the House
of Representatives is amended by adding at the end the
following new subparagraph:
``(8) The report of the Committee on Ways and Means on any bill or
joint resolution containing any provision amending the Internal Revenue
Code of 1986 shall include a Tax Complexity Analysis prepared by the
Joint Committee on Taxation in accordance with section 4022(b) of the
Internal Revenue Service Restructuring and Reform Act of 1998 unless the
Committee on Ways and Means causes to have such Analysis printed in the
Congressional Record prior to the consideration of the bill or joint
resolution.''.
(B) Conference reports.--Rule XXVIII of the Rules of
the House of Representatives is amended by adding at the
end the following new clause:
[[Page 112 STAT. 787]]
``7. It shall not be in order to consider the report of a committee
of conference which contains any provision amending the Internal Revenue
Code of 1986 unless--
``(a) the accompanying joint explanatory statement contains
a Tax Complexity Analysis prepared by the Joint Committee on
Taxation in accordance with section 4022(b) of the Internal
Revenue Service Restructuring and Reform Act of 1998; or
``(b) such Analysis is printed in the Congressional Record
prior to the consideration of the report.''.
(C) Rules of house of representatives.--This
paragraph is enacted by the House of Representatives--
(i) as an exercise of the rulemaking power of
the House of Representatives, and as such it is
deemed a part of the Rules of the House, and it
supersedes other rules only to the extent that it
is inconsistent therewith; and
(ii) with full recognition of the
constitutional right of the House to change its
rules at any time, in the same manner and to the
same extent as in the case of any other rule of
the House.
<<NOTE: Applicability.>> (4) Effective date.--This
subsection shall apply to legislation considered on and after
January 1, 1999.
TITLE V--ADDITIONAL PROVISIONS
SEC. 5001. LOWER CAPITAL GAINS RATES TO APPLY TO PROPERTY HELD MORE THAN
1 YEAR.
(a) General Rule.--
(1) Paragraph (5) of section 1(h) is amended to read as
follows:
``(5) 28-percent rate gain.--For purposes of this
subsection, the term `28-percent rate gain' means the excess (if
any) of--
``(A) the sum of--
``(i) collectibles gain; and
``(ii) section 1202 gain, over
``(B) the sum of--
``(i) collectibles loss;
``(ii) the net short-term capital loss; and
``(iii) the amount of long-term capital loss
carried under section 1212(b)(1)(B) to the taxable
year.''.
(2) Subparagraph (A) of section 1(h)(6) is amended by
striking ``18 months'' and inserting ``1 year''.
(3) Clauses (i) and (ii) of section 1(h)(7)(A) are amended
to read as follows:
``(i) the amount of long-term capital gain
(not otherwise treated as ordinary income) which
would be treated as ordinary income if section
1250(b)(1) included all depreciation and the
applicable percentage under section 1250(a) were
100 percent, over
``(ii) the excess (if any) of--
``(I) the amount described in
paragraph (5)(B); over
``(II) the amount described in
paragraph (5)(A).''.
[[Page 112 STAT. 788]]
(4) So much of paragraph (13) of section 1(h) as precedes
subparagraph (C) is amended to read as follows:
``(13) Special rules.--
``(A) Determination of 28-percent rate gain.--In
applying paragraph (5)--
``(i) the amount determined under subparagraph
(A) of paragraph (5) shall include long-term
capital gain (not otherwise described in such
subparagraph)--
``(I) which is properly taken into
account for the portion of the taxable
year before May 7, 1997; or
``(II) from property held not more
than 18 months which is properly taken
into account for the portion of the
taxable year after July 28, 1997, and
before January 1, 1998;
``(ii) the amount determined under
subparagraph (B) of paragraph (5) shall include
long-term capital loss (not otherwise described in
such subparagraph)--
``(I) which is properly taken into
account for the portion of the taxable
year before May 7, 1997; or
``(II) from property held not more
than 18 months which is properly taken
into account for the portion of the
taxable year after July 28, 1997, and
before January 1, 1998; and
<<NOTE: Applicability.>> ``(iii) subparagraph
(B) of paragraph (5) (as in effect immediately
before the enactment of this clause) shall apply
to amounts properly taken into account before
January 1, 1998.
``(B) Determination of unrecaptured section 1250
gain.--The amount determined under paragraph (7)(A)
shall not include gain--
``(i) which is properly taken into account for
the portion of the taxable year before May 7,
1997; or
``(ii) from property held not more than 18
months which is properly taken into account for
the portion of the taxable year after July 28,
1997, and before January 1, 1998.''.
(5) Paragraphs (11) and (12) of section 1223, and section
1235(a), are each amended by striking ``18 months'' each place
it appears and inserting ``1 year''.
<<NOTE: 26 USC 1 note.>> (b) Effective Dates.--
<<NOTE: Applicability.>> (1) In general.--Except as
provided in paragraph (2), the amendments made by this section
shall apply to taxable years ending after December 31, 1997.
(2) Subsection (a)(5).--The amendments made by subsection
(a)(5) shall take effect on January 1, 1998.
SEC. 5002. CLARIFICATION OF EXCLUSION OF MEALS FOR CERTAIN EMPLOYEES.
(a) In General.--Subsection (b) of section 119 (relating to meals or
lodging furnished for the convenience of the employer) is amended by
adding at the end the following new paragraph:
``(4) Meals furnished to employees on business premises
where meals of most employees are otherwise excludable.--All
meals furnished on the business premises of an employer to such
employer's employees shall be treated
[[Page 112 STAT. 789]]
as furnished for the convenience of the employer if, without
regard to this paragraph, more than half of the employees to
whom such meals are furnished on such premises are furnished
such meals for the convenience of the employer.''.
<<NOTE: Applicability. 26 USC 119 note.>> (b) Effective Date.--The
amendment made by subsection (a) shall apply to taxable years beginning
before, on, or after the date of the enactment of this Act.
SEC. 5003. CLARIFICATION OF DESIGNATION OF NORMAL TRADE
RELATIONS.
<<NOTE: 19 USC 2481 note.>> (a) Findings and Policy.--
(1) Findings.--The Congress makes the following findings:
(A) Since the 18th century, the principle of
nondiscrimination among countries with which the United
States has trade relations, commonly referred to as
``most-favored-nation'' treatment, has been a
cornerstone of United States trade policy.
(B) Although the principle remains firmly in place
as a fundamental concept in United States trade
relations, the term ``most-favored-nation'' is a
misnomer which has led to public misunderstanding.
(C) It is neither the purpose nor the effect of the
most-favored-nation principle to treat any country as
``most favored''. To the contrary, the principle
reflects the intention to confer on a country the same
trade benefits that are conferred on any other country,
that is, the intention not to discriminate among trading
partners.
(D) The term ``normal trade relations'' is a more
accurate description of the principle of
nondiscrimination as it applies to the tariffs
applicable generally to imports from United States
trading partners, that is, the general rates of duty set
forth in column 1 of the Harmonized Tariff Schedule of
the United States.
(2) Policy.--It is the sense of the Congress that--
(A) the language used in United States laws,
treaties, agreements, executive orders, directives, and
regulations should more clearly and accurately reflect
the underlying principles of United States trade policy;
and
(B) accordingly, the term ``normal trade relations''
should, where appropriate, be substituted for the term
``most-favored-nation''.
(b) Change in Terminology.--
(1) Trade expansion act of 1962.--The heading for section
251 of the Trade Expansion Act of 1962 (19 U.S.C. 1881) is
amended to read as follows: ``normal trade relations''.
(2) Trade act of 1974.--(A) Section 402 of the Trade Act of
1974 (19 U.S.C. 2432) is amended by striking ``(most-favored-
nation treatment)'' each place it appears and inserting
``(normal trade relations)''.
(B) Section 601(9) of the Trade Act of 1974 (19 U.S.C.
2481(9)) is amended by striking ``most-favored-nation
treatment'' and inserting ``trade treatment based on normal
trade relations (known under international law as most-favored-
nation treatment)''.
(3) CFTA.--Section 302(a)(3)(C) of the United States Canada
Free-Trade Agreement Implementation Act of 1988 (19 U.S.C. 2112
note) is amended by striking ``the most-favored-
[[Page 112 STAT. 790]]
nation rate of duty'' each place it appears and inserting ``the
general subcolumn of the column 1 rate of duty set forth in the
Harmonized Tariff Schedule of the United States''.
(4) NAFTA.--Section 202(n) of the North American Free Trade
Agreement Implementation Act (19 U.S.C. 3332(n)) is amended by
striking ``most-favored-nation''.
(5) Uruguay round agreements act.--Section 135(a)(2) of the
Uruguay Round Agreements Act (19 U.S.C. 3555(a)(2)) is amended
by striking ``most-favored-nation'' and inserting ``normal trade
relations''.
(6) SEED act.--Section 2(c)(11) of the Support for East
European Democracy (SEED) Act of 1989 (22 U.S.C. 5401(c)(11)) is
amended--
(A) by striking ``(commonly referred to as `most
favored nation status')''; and
(B) by striking ``Most favored nation trade status''
in the heading and inserting ``Normal trade relations''.
(7) United States-Hong Kong Policy Act of 1992.--Section
103(4) of the United States-Hong Kong Policy Act of 1992 (22
U.S.C. 5713(4)) is amended by striking ``(commonly referred to
as `most-favored-nation status')''.
<<NOTE: 19 USC 2481 note.>> (c) Savings Provisions.--Nothing in
this section shall affect the meaning of any provision of law, Executive
order, Presidential proclamation, rule, regulation, delegation of
authority, other document, or treaty or other international agreement of
the United States relating to the principle of ``most-favored-nation''
(or ``most favored nation'') treatment. Any Executive order,
Presidential proclamation, rule, regulation, delegation of authority,
other document, or treaty or other international agreement of the United
States that has been issued, made, granted, or allowed to become
effective and that is in effect on the effective date of this Act, or
was to become effective on or after the effective date of this Act,
shall continue in effect according to its terms until modified,
terminated, superseded, set aside, or revoked in accordance with law.
TITLE VI--TECHNICAL <<NOTE: Tax Technical Corrections Act of
1998.>> CORRECTIONS
SEC. 6001. SHORT TITLE; COORDINATION WITH OTHER TITLES.
<<NOTE: 26 USC 1 note.>> (a) Short Title.--This title may be cited
as the ``Tax Technical Corrections Act of 1998''.
<<NOTE: 26 USC 1 note.>> (b) Coordination With Other Titles.--For
purposes of applying the amendments made by any title of this Act other
than this title, the provisions of this title shall be treated as having
been enacted immediately before the provisions of such other titles.
SEC. 6002. DEFINITIONS.
For purposes of this title--
(1) 1986 code.--The term ``1986 Code'' means the Internal
Revenue Code of 1986.
(2) 1997 act.--The term ``1997 Act'' means the Taxpayer
Relief Act of 1997.
SEC. 6003. AMENDMENTS RELATED TO TITLE I OF 1997 ACT.
(a) Amendments Related to Section 101(a) of 1997 Act.--
(1) Subsection (d) of section 24 of the 1986 Code is
amended--
[[Page 112 STAT. 791]]
(A) by striking paragraphs (3) and (4);
(B) by redesignating paragraph (5) as paragraph (3);
and
(C) by striking paragraphs (1) and (2) and inserting
the following new paragraphs:
``(1) In general.--In the case of a taxpayer with three or
more qualifying children for any taxable year, the aggregate
credits allowed under subpart C shall be increased by the lesser
of--
``(A) the credit which would be allowed under this
section without regard to this subsection and the
limitation under section 26(a); or
``(B) the amount by which the aggregate amount of
credits allowed by this subpart (without regard to this
subsection) would increase if the limitation imposed by
section 26(a) were increased by the excess (if any) of--
``(i) the taxpayer's Social Security taxes for
the taxable year, over
``(ii) the credit allowed under section 32
(determined without regard to subsection (n)) for
the taxable year.
The amount of the credit allowed under this subsection shall not
be treated as a credit allowed under this subpart and shall
reduce the amount of credit otherwise allowable under subsection
(a) without regard to section 26(a).
``(2) Reduction of credit to taxpayer subject to alternative
minimum tax.--The credit determined under this subsection for
the taxable year shall be reduced by the excess (if any) of--
``(A) the amount of tax imposed by section 55
(relating to alternative minimum tax) with respect to
such taxpayer for such taxable year, over
``(B) the amount of the reduction under section
32(h) with respect to such taxpayer for such taxable
year.''.
(2) Paragraph (3) of section 24(d) of the 1986 Code (as
redesignated by paragraph (1)) is amended by striking
``paragraph (3)'' and inserting ``paragraph (1)''.
(b) Amendments Related to Section 101(b) of 1997 Act.--
(1) The subsection (m) of section 32 of the 1986 Code added
by section 101(b) of the 1997 Act is amended to read as follows:
``(n) Supplemental Child Credit.--
``(1) In general.--In the case of a taxpayer with respect to
whom a credit is allowed under section 24(a) for the taxable
year, the credit otherwise allowable under this section shall be
increased by the lesser of--
``(A) the excess of--
``(i) the credits allowed under subpart A
(determined after the application of section 26
and without regard to this subsection), over
``(ii) the credits which would be allowed
under subpart A after the application of section
26, determined without regard to section 24 and
this subsection; or
``(B) the excess of--
[[Page 112 STAT. 792]]
``(i) the sum of the credits allowed under
this part (determined without regard to sections
31, 33, and 34 and this subsection), over
``(ii) the sum of the regular tax and the
Social Security taxes (as defined in section
24(d)).
The credit determined under this subsection shall be allowed
without regard to any other provision of this section, including
subsection (d).
``(2) Coordination with other credits.--The amount of the
credit under this subsection shall reduce the amount of the
credits otherwise allowable under subpart A for the taxable year
(determined after the application of section 26), but the amount
of the credit under this subsection (and such reduction) shall
not be taken into account in determining the amount of any other
credit allowable under this part.''.
SEC. 6004. AMENDMENTS RELATED TO TITLE II OF 1997 ACT.
(a) Amendments Related to Section 201 of 1997 Act.--
(1) The item relating to section 25A in the table of
sections for subpart A of part IV of subchapter A of chapter 1
of the 1986 Code is amended to read as follows:
``Sec. 25A. Hope and Lifetime Learning credits.''.
(2) Subsection (a) of section 6050S of the 1986 Code is
amended to read as follows:
``(a) In General.--Any person--
``(1) which is an eligible educational institution--
``(A) which receives payments for qualified tuition
and related expenses with respect to any individual for
any calendar year; or
``(B) which makes reimbursements or refunds (or
similar amounts) to any individual of qualified tuition
and related expenses;
``(2) which is engaged in a trade or business of making
payments to any individual under an insurance arrangement as
reimbursements or refunds (or similar amounts) of qualified
tuition and related expenses; or
``(3) except as provided in regulations, which is engaged in
a trade or business and, in the course of which, receives from
any individual interest aggregating $600 or more for any
calendar year on one or more qualified education loans,
shall make the return described in subsection (b) with respect to the
individual at such time as the Secretary may by regulations
prescribe.''.
(3) Subparagraph <<NOTE: 26 USC 6724.>> (A) of section
201(c)(2) of the 1997 Act is amended to read as follows:
``(A) Subparagraph (B) of section 6724(d)(1)
(relating to definitions) is amended by redesignating
clauses (x) through (xv) as clauses (xi) through (xvi),
respectively, and by inserting after clause (ix) the
following new clause:
`` `(x) section 6050S (relating to returns
relating to payments for qualified tuition and
related expenses),' ''.
(b) Amendments Related to Section 202 of 1997 Act.--
(1) Paragraph (1) of section 221(e) of the 1986 Code is
amended by inserting ``by the taxpayer solely'' after
``incurred'' the first place it appears.
[[Page 112 STAT. 793]]
(2) Subsection (d) of section 221 of the 1986 Code
is amended by adding at the end the following new
sentence: ``Such 60 months shall be determined in the
manner prescribed by the Secretary in the case of
multiple loans which are refinanced by, or serviced as,
a single loan and in the case of loans incurred before
the date of the enactment of this section.''.
(c) Amendments Related to Section 211 of 1997 Act.--
(1) Paragraph (3) of section 135(c) of the 1986 Code is
amended to read as follows:
``(3) Eligible educational institution.--The term `eligible
educational institution' has the meaning given such term by
section 529(e)(5).''.
(2) Subparagraph (A) of section 529(c)(3) of the 1986 Code
is amended by striking ``section 72(b)'' and inserting ``section
72''.
(3) Paragraph (2) of section 529(e) of the 1986 Code is
amended to read as follows:
``(2) Member of family.--The term `member of the family'
means, with respect to any designated beneficiary--
``(A) the spouse of such beneficiary;
``(B) an individual who bears a relationship to such
beneficiary which is described in paragraphs (1) through
(8) of section 152(a); and
``(C) the spouse of any individual described in
subparagraph (B).''.
(d) Amendments Related to Section 213 of 1997 Act.--
(1) Section 530(b)(1) of the 1986 Code (defining education
individual retirement account) is amended by inserting ``an
individual who is'' before ``the designated beneficiary'' in the
material preceding subparagraph (A).
(2)(A) Section 530(b)(1)(E) of the 1986 Code (defining
education individual retirement account) is amended to read as
follows:
``(E) Except as provided in subsection (d)(7), any
balance to the credit of the designated beneficiary on
the date on which the beneficiary attains age 30 shall
be distributed within 30 days after such date to the
beneficiary or, if the beneficiary dies before attaining
age 30, shall be distributed within 30 days after the
date of death of such beneficiary.''.
(B) Paragraph (7) of section 530(d) of the 1986 Code is
amended by inserting at the end the following new sentence: ``In
applying the preceding sentence, members of the family (as so
defined) of the designated beneficiary shall be treated in the
same manner as the spouse under such paragraph (8).''.
(C) Subsection (d) of section 530 of the 1986 Code is
amended by adding at the end the following new paragraph:
``(8) Deemed distribution on required distribution date.--In
any case in which a distribution is required under subsection
(b)(1)(E), any balance to the credit of a designated beneficiary
as of the close of the 30-day period referred to in such
subsection for making such distribution shall be deemed
distributed at the close of such period.''.
(3)(A) Paragraph (1) of section 530(d) of the 1986 Code is
amended by striking ``section 72(b)'' and inserting ``section
72''.
[[Page 112 STAT. 794]]
(B) Subsection (e) of section 72 of the 1986 Code is amended
by inserting after paragraph (8) the following new paragraph:
<<NOTE: Applicability.>> ``(9) Extension of paragraph
(2)(b) to qualified state tuition programs and educational
individual retirement accounts.--Notwithstanding any other
provision of this subsection, paragraph (2)(B) shall apply to
amounts received under a qualified State tuition program (as
defined in section 529(b)) or under an education individual
retirement account (as defined in section 530(b)). The rule of
paragraph (8)(B) shall apply for purposes of this paragraph.''.
(4) Paragraph (2) of section 135(d) of the 1986 Code is
amended to read as follows:
``(2) Coordination with other higher education benefits.--
The amount of the qualified higher education expenses otherwise
taken into account under subsection (a) with respect to the
education of an individual shall be reduced (before the
application of subsection (b)) by--
``(A) the amount of such expenses which are taken
into account in determining the credit allowable to the
taxpayer or any other person under section 25A with
respect to such expenses; and
``(B) the amount of such expenses which are taken
into account in determining the exclusion under section
530(d)(2).''.
(5) Section 530(d)(2) of the 1986 Code (relating to
distributions for qualified higher education expenses) is
amended by adding at the end the following new subparagraph:
``(D) Disallowance of excluded amounts as credit or
deduction.--No deduction or credit shall be allowed to
the taxpayer under any other section of this chapter for
any qualified education expenses to the extent taken
into account in determining the amount of the exclusion
under this paragraph.''.
(6) Section 530(d)(4)(B) of the 1986 Code (relating to
exceptions) is amended by striking ``or'' at the end of clause
(ii), by striking the period at the end of clause (iii) and
inserting ``; or'', and by adding at the end the following new
clause:
``(iv) an amount which is includible in gross
income solely because the taxpayer elected under
paragraph (2)(C) to waive the application of
paragraph (2) for the taxable year.''.
(7) So much of section 530(d)(4)(C) of the 1986 Code as
precedes clause (ii) thereof is amended to read as follows:
``(C) Contributions returned before due date of
return.--Subparagraph (A) shall not apply to the
distribution of any contribution made during a taxable
year on behalf of the designated beneficiary if--
``(i) such distribution is made on or before
the day prescribed by law (including extensions of
time) for filing the beneficiary's return of tax
for the taxable year or, if the beneficiary is not
required to file such a return, the 15th day of
the 4th month of the taxable year following the
taxable year; and''.
(8)(A) Paragraph (5) of section 530(d) of the 1986 Code is
amended by striking the first sentence and inserting the
following new sentence: ``Paragraph (1) shall not apply to any
[[Page 112 STAT. 795]]
amount paid or distributed from an education individual
retirement account to the extent that the amount received is
paid, not later than the 60th day after the date of such payment
or distribution, into another education individual retirement
account for the benefit of the same beneficiary or a member of
the family (within the meaning of section 529(e)(2)) of such
beneficiary who has not attained age 30 as of such date.''.
(B) Paragraph (6) of section 530(d) of the 1986 Code is
amended by inserting before the period ``and has not attained
age 30 as of the date of such change''.
(9) Subparagraph (C) of section 135(c)(2) of the 1986 Code
is amended--
(A) by inserting ``and education individual
retirement accounts'' in the heading after ``program'';
and
(B) by striking ``section 529(c)(3)(A)'' and
inserting
``section 72''.
(10)(A) Paragraph (1) of section 4973(e) of the 1986 Code is
amended to read as follows:
``(1) In general.--In the case of education individual
retirement accounts maintained for the benefit of any one
beneficiary, the term `excess contributions' means the sum of--
``(A) the amount by which the amount contributed for
the taxable year to such accounts exceeds $500 (or, if
less, the sum of the maximum amounts permitted to be
contributed under section 530(c) by the contributors to
such accounts for such year);
``(B) if any amount is contributed (other than a
contribution described in section 530(b)(2)(B)) during
such year to a qualified State tuition program for the
benefit of such beneficiary, any amount contributed to
such accounts for such taxable year; and
``(C) the amount determined under this subsection
for the preceding taxable year, reduced by the sum of--
``(i) the distributions out of the accounts
for the taxable year (other than rollover
distributions); and
``(ii) the excess (if any) of the maximum
amount which may be contributed to the accounts
for the taxable year over the amount contributed
to the accounts for the taxable year.''.
(B) Paragraph (2) of section 4973(e) of the 1986 Code is
amended by striking subparagraph (B) and by redesignating
subparagraph (C) as subparagraph (B).
(e) Amendments Related to Section 224 of 1997 Act.--
(1) Clauses (vi) and (vii) of section 170(e)(6)(B) of the
1986 Code are each amended by striking ``entity's'' and
inserting ``donee's''.
(2) Clause (iv) of section 170(e)(6)(B) of the 1986 Code is
amended by striking ``organization or entity'' and inserting
``donee''.
(3) Subclause (I) of section 170(e)(6)(C)(ii) of the 1986
Code is amended by striking ``an entity'' and inserting ``a
donee''.
(4) Section 170(e)(6)(F) of the 1986 Code (relating to
termination) is amended by striking ``1999'' and inserting
``2000''.
(f ) Amendments Related to Section 225 of 1997 Act.--
(1) The last sentence of section 108(f )(2) of the 1986 Code
is amended to read as follows:
[[Page 112 STAT. 796]]
``The term `student loan' includes any loan made by an
educational organization described in section 170(b)(1)(A)(ii)
or by an organization exempt from tax under section 501(a) to
refinance a loan to an individual to assist the individual in
attending any such educational organization but only if the
refinancing loan is pursuant to a program of the refinancing
organization which is designed as described in subparagraph
(D)(ii).''.
(2) Section 108(f )(3) of the 1986 Code is amended by
striking ``(or by an organization described in paragraph (2)(E)
from funds provided by an organization described in paragraph
(2)(D))''.
(g) Amendments Related to Section 226 of 1997 Act.--
<<NOTE: 26 USC 1397D, 1397F.>> (1) Section 226(a) of the
1997 Act is amended by striking ``section 1397E'' and inserting
``section 1397D''.
(2) Section 1397E(d)(4)(B) of the 1986 Code is amended by
striking ``local education agency as defined'' and inserting
``local educational agency as defined''.
(3) Section 1397E is amended by adding at the end the
following new subsection:
``(h) Credit Treated as Allowed Under Part IV of Subchapter A.--For
purposes of subtitle F, the credit allowed by this section shall be
treated as a credit allowable under part IV of subchapter A of this
chapter.''.
(4) Subsection (g) of section 1397E of the 1986 Code is
amended by inserting ``(determined without regard to subsection
(c))'' after ``section''.
(5) Subparagraph (D) of section 42( j)(4) of the 1986 Code
is amended by striking ``subpart A, B, D, or G of this part''
and inserting ``this chapter''.
(6) Paragraph (4) of section 49(b) of the 1986 Code is
amended by striking ``subpart A, B, D, or G'' and inserting
``this chapter''.
(7) Subparagraph (C) of section 50(a)(5) of the 1986 Code is
amended by striking ``subpart A, B, D, or G'' and inserting
``this chapter''.
SEC. 6005. AMENDMENTS RELATED TO TITLE III OF 1997 ACT.
(a) Amendments Related to Section 301 of 1997 Act.--
(1) Section 219(g) of the 1986 Code is amended--
(A) by inserting ``or the individual's spouse''
after ``individual'' in paragraph (1); and
(B) by striking paragraph (7) and inserting:
``(7) Special rule for spouses who are not active
participants.--If this subsection applies to an individual for
any taxable year solely because their spouse is an active
participant, then, in applying this subsection to the individual
(but not their spouse)--
``(A) the applicable dollar amount under paragraph
(3)(B)(i) shall be $150,000; and
``(B) the amount applicable under paragraph
(2)(A)(ii) shall be $10,000.''.
(2) Paragraph <<NOTE: 26 USC 219.>> (2) of section 301(a) of
the 1997 Act is amended by inserting ``after `$10,000' '' before
the period.
(b) Amendments Related to Section 302 of 1997 Act.--
(1) Section 408A(c)(3)(A) of the 1986 Code is amended by
striking ``shall be reduced'' and inserting ``shall not exceed
[[Page 112 STAT. 797]]
an amount equal to the amount determined under paragraph (2)(A)
for such taxable year, reduced''.
(2) Section 408A(c)(3) of the 1986 Code (relating to limits
based on modified adjusted gross income) is amended--
(A) by inserting ``or a married individual filing a
separate return'' after ``joint return'' in subparagraph
(A)(ii),
(B) in subparagraph (B)--
(i) by inserting ``, for the taxable year of
the distribution to which such contribution
relates'' after ``if ''; and
(ii) by striking ``for such taxable year'' in
clause (i), and
(C) by striking ``and the deduction under section
219 shall be taken into account'' in subparagraph
(C)(i).
(3)(A) Section 408A(d)(2) of the 1986 Code (defining
qualified distribution) is amended by striking subparagraph (B)
and inserting the following new subparagraph:
``(B) Distributions within nonexclusion period.--A
payment or distribution from a Roth IRA shall not be
treated as a qualified distribution under subparagraph
(A) if such payment or distribution is made within the
5-taxable year period beginning with the first taxable
year for which the individual made a contribution to a
Roth IRA (or such individual's spouse made a
contribution to a Roth IRA) established for such
individual.''.
(B) Section 408A(d)(2) of the 1986 Code is amended by adding
at the end the following new subparagraph:
``(C) Distributions of excess contributions and
earnings.--The term `qualified distribution' shall not
include any distribution of any contribution described
in section 408(d)(4) and any net income allocable to the
contribution.''.
(4) Section 408A(d)(3) of the 1986 Code (relating to
rollovers from IRAs other than Roth IRAs) is amended--
(A) by striking clause (iii) of subparagraph (A) and
inserting:
``(iii) unless the taxpayer elects not to have
this clause apply for any taxable year, any amount
required to be included in gross income for such
taxable year by reason of this paragraph for any
distribution before January 1, 1999, shall be so
included ratably over the 4-taxable year period
beginning with such taxable year.
Any election under clause (iii) for any distributions
during a taxable year may not be changed after the due
date for such taxable year.''; and
(B) by adding at the end the following new
subparagraph:
``(F) Special rules for contributions to which
4-year averaging applies.--In the case of a qualified
rollover contribution to a Roth IRA of a distribution to
which subparagraph (A)(iii) applied, the following rules
shall apply:
``(i) Acceleration of inclusion.--
``(I) In general.--The amount
required to be included in gross income
for each of the first 3
[[Page 112 STAT. 798]]
taxable years in the 4-year period under
subparagraph (A)(iii) shall be increased
by the aggregate distributions from Roth
IRAs for such taxable year which are
allocable under paragraph (4) to the
portion of such qualified rollover
contribution required to be included in
gross income under subparagraph (A)(i).
``(II) Limitation on aggregate
amount included.--The amount required to
be included in gross income for any
taxable year under subparagraph (A)(iii)
shall not exceed the aggregate amount
required to be included in gross income
under subparagraph (A)(iii) for all
taxable years in the 4-year period
(without regard to subclause (I))
reduced by amounts included for all
preceding taxable years.
``(ii) Death of distributee.--
``(I) In general.--If the individual
required to include amounts in gross
income under such subparagraph dies
before all of such amounts are included,
all remaining amounts shall be included
in gross income for the taxable year
which includes the date of death.
``(II) Special rule for surviving
spouse.--If the spouse of the individual
described in subclause (I) acquires the
individual's entire interest in any Roth
IRA to which such qualified rollover
contribution is properly allocable, the
spouse may elect to treat the remaining
amounts described in subclause (I) as
includible in the spouse's gross income
in the taxable years of the spouse
ending with or within the taxable years
of such individual in which such amounts
would otherwise have been includible.
Any such election may not be made or
changed after the due date for the
spouse's taxable year which includes the
date of death.
``(G) Special rule for applying section 72.--
``(i) In general.--If--
``(I) any portion of a distribution
from a Roth IRA is properly allocable to
a qualified rollover contribution
described in this paragraph; and
``(II) such distribution is made
within the 5-taxable year period
beginning with the taxable year in which
such contribution was made,
then section 72(t) shall be applied as if such
portion were includible in gross income.
``(ii) Limitation.--Clause (i) shall apply
only to the extent of the amount of the qualified
rollover contribution includible in gross income
under subparagraph (A)(i).''.
(5)(A) Section 408A(d)(4) of the 1986 Code is amended to
read as follows:
``(4) Aggregation and ordering rules.--
``(A) Aggregation rules.--Section 408(d)(2) shall be
applied separately with respect to Roth IRAs and other
individual retirement plans.
[[Page 112 STAT. 799]]
``(B) Ordering rules.--For purposes of applying this
section and section 72 to any distribution from a Roth
IRA, such distribution shall be treated as made--
``(i) from contributions to the extent that
the amount of such distribution, when added to all
previous distributions from the Roth IRA, does not
exceed the aggregate contributions to the Roth
IRA; and
``(ii) from such contributions in the
following order:
``(I) Contributions other than
qualified rollover contributions to
which paragraph (3) applies.
``(II) Qualified rollover
contributions to which paragraph (3)
applies on a first-in, first-out basis.
Any distribution allocated to a qualified rollover
contribution under clause (ii)(II) shall be allocated
first to the portion of such contribution required to be
included in gross income.''.
(B) Section 408A(d)(1) of the 1986 Code is amended to read
as follows:
``(1) Exclusion.--Any qualified distribution from a Roth IRA
shall not be includible in gross income.''.
(6)(A) Section 408A(d) of the 1986 Code (relating to
distribution rules) is amended by adding at the end the
following new paragraph:
``(6) Taxpayer may make adjustments before due date.--
``(A) In general.--Except as provided by the
Secretary, if, on or before the due date for any taxable
year, a taxpayer transfers in a trustee-to-trustee
transfer any contribution to an individual retirement
plan made during such taxable year from such plan to any
other individual retirement plan, then, for purposes of
this chapter, such contribution shall be treated as
having been made to the transferee plan (and not the
transferor plan).
``(B) Special rules.--
``(i) Transfer of earnings.--Subparagraph (A)
shall not apply to the transfer of any
contribution unless such transfer is accompanied
by any net income allocable to such contribution.
``(ii) No deduction.--Subparagraph (A) shall
apply to the transfer of any contribution only to
the extent no deduction was allowed with respect
to the contribution to the transferor plan.''.
(B) Section 408A(d)(3) of the 1986 Code, as amended by this
subsection, is amended by striking subparagraph (D) and by
redesignating subparagraphs (E), (F), and (G) as subparagraphs
(D), (E), and (F), respectively.
(7) Section 408A(d) of the 1986 Code, as amended by
paragraph (6), is amended by adding at the end the following new
paragraph:
``(7) Due date.--For purposes of this subsection, the due
date for any taxable year is the date prescribed by law
(including extensions of time) for filing the taxpayer's return
for such taxable year.''.
(8)(A) Section 4973(f ) of the 1986 Code is amended--
(i) by striking ``such accounts'' in paragraph
(1)(A) and inserting ``Roth IRAs''; and
[[Page 112 STAT. 800]]
(ii) by striking ``to the accounts'' in paragraph
(2)(B) and inserting ``by the individual to all
individual retirement plans''.
(B) Section 4973(b) of the 1986 Code is amended--
(i) by inserting ``a contribution to a Roth IRA or''
after ``other than'' in paragraph (1)(A); and
(ii) by inserting ``(including the amount
contributed to a Roth IRA)'' after ``annuities'' in
paragraph (2)(C).
<<NOTE: 26 USC 4973.>> (C) Section 302(b) of the 1997 Act
is amended by striking ``Section 4973(b)'' and inserting
``Section 4973''.
(9) Section 408A of the 1986 Code is amended by adding at
the end the following new subsection:
``(f ) Individual Retirement Plan.--For purposes of this
section--
``(1) a simplified employee pension or a simple retirement
account may not be designated as a Roth IRA; and
``(2) contributions to any such pension or account shall not
be taken into account for purposes of subsection (c)(2)(B).''.
(c) Amendments Related to Section 303 of 1997 Act.--
(1) Section 72(t)(8)(E) of the 1986 Code is amended--
(A) by striking ``120 days'' and inserting ``120th
day''; and
(B) by striking ``60 days'' and inserting ``60th
day''.
(2)(A) Section 402(c)(4) of the 1986 Code is amended by
striking ``and'' at the end of subparagraph (A), by striking the
period at the end of subparagraph (B) and inserting ``, and'',
by inserting at the end the following new subparagraph:
``(C) any hardship distribution described in section
401(k)(2)(B)(i)(IV).''.
(B) Section 403(b)(8)(B) of the 1986 Code is amended by
inserting ``(including paragraph (4)(C) thereof)'' after
``section 402(c)''.
(C) <<NOTE: Applicability. 26 USC 402 note.>> The amendments
made by this paragraph shall apply to distributions after
December 31, 1998.
(d) Amendments Related to Section 311 of 1997 Act.--
(1) Subsection (h) of section 1 of the 1986 Code (relating
to maximum capital gains rate) is amended to read as follows:
``(h) Maximum Capital Gains Rate.--
``(1) In general.--If a taxpayer has a net capital gain for
any taxable year, the tax imposed by this section for such
taxable year shall not exceed the sum of--
``(A) a tax computed at the rates and in the same
manner as if this subsection had not been enacted on the
greater of--
``(i) taxable income reduced by the net
capital
gain; or
``(ii) the lesser of--
``(I) the amount of taxable income
taxed at a rate below 28 percent; or
``(II) taxable income reduced by the
adjusted net capital
gain;
``(B) 10 percent of so much of the adjusted net
capital gain (or, if less, taxable income) as does not
exceed the excess (if any) of--
[[Page 112 STAT. 801]]
``(i) the amount of taxable income which would
(without regard to this paragraph) be taxed at a
rate below 28 percent, over
``(ii) the taxable income reduced by the
adjusted net capital gain;
``(C) 20 percent of the adjusted net capital gain
(or, if less, taxable income) in excess of the amount on
which a tax is determined under subparagraph (B);
``(D) 25 percent of the excess (if any) of--
``(i) the unrecaptured section 1250 gain (or,
if less, the net capital gain), over
``(ii) the excess (if any) of--
``(I) the sum of the amount on which
tax is determined under subparagraph (A)
plus the net capital gain, over
``(II) taxable income; and
``(E) 28 percent of the amount of taxable income in
excess of the sum of the amounts on which tax is
determined under the preceding subparagraphs of this
paragraph.
``(2) Reduced capital gain rates for qualified 5-year
gain.--
``(A) Reduction in 10-percent rate.--In the case of
any taxable year beginning after December 31, 2000, the
rate under paragraph (1)(B) shall be 8 percent with
respect to so much of the amount to which the 10-percent
rate would otherwise apply as does not exceed qualified
5-year gain, and 10 percent with respect to the
remainder of such amount.
``(B) Reduction in 20-percent rate.--The rate under
paragraph (1)(C) shall be 18 percent with respect to so
much of the amount to which the 20-percent rate would
otherwise apply as does not exceed the lesser of--
``(i) the excess of qualified 5-year gain over
the amount of such gain taken into account under
subparagraph (A) of this paragraph; or
``(ii) the amount of qualified 5-year gain
(determined by taking into account only property
the holding period for which begins after December
31, 2000),
and 20 percent with respect to the remainder of such
amount. For purposes of determining under the preceding
sentence whether the holding period of property begins
after December 31, 2000, the holding period of property
acquired pursuant to the exercise of an option (or other
right or obligation to acquire property) shall include
the period such option (or other right or obligation)
was held.
``(3) Net capital gain taken into account as investment
income.--For purposes of this subsection, the net capital gain
for any taxable year shall be reduced (but not below zero) by
the amount which the taxpayer takes into account as investment
income under section 163(d)(4)(B)(iii).
``(4) Adjusted net capital gain.--For purposes of this
subsection, the term `adjusted net capital gain' means net
capital gain reduced (but not below zero) by the sum of--
``(A) unrecaptured section 1250 gain; and
``(B) 28-percent rate gain.
[[Page 112 STAT. 802]]
``(5) 28-percent rate gain.--For purposes of this
subsection--
``(A) In general.--The term `28-percent rate gain'
means the excess (if any) of--
``(i) the sum of--
``(I) the aggregate long-term
capital gain from property held for more
than 1 year but not more than 18 months;
``(II) collectibles gain; and
``(III) section 1202 gain, over
``(ii) the sum of--
``(I) the aggregate long-term
capital loss (not described in subclause
(IV)) from property referred to in
clause (i)(I);
``(II) collectibles loss;
``(III) the net short-term capital
loss; and
``(IV) the amount of long-term
capital loss carried under section
1212(b)(1)(B) to the taxable year.
<<NOTE: Applicability.>> ``(B) Special rules.--
``(i) Short sale gains and holding periods.--
Rules similar to the rules of section 1233(b)
shall apply where the substantially identical
property has been held more than 1 year but not
more than 18 months; except that, for purposes of
such rules--
``(I) section 1233(b)(1) shall be
applied by substituting `18 months' for
`1 year' each place it appears; and
``(II) the holding period of such
property shall be treated as being 1
year on the day before the earlier of
the date of the closing of the short
sale or the date such property is
disposed of.
``(ii) Long-term losses.--Section 1233(d)
shall be applied separately by substituting `18
months' for `1 year' each place it appears.
``(iii) Options.--A rule similar to the rule
of section 1092(f ) shall apply where the stock
was held for more than 18 months.
``(iv) Section 1256 contracts.--Amounts
treated as long-term capital gain or loss under
section 1256(a)(3) shall be treated as
attributable to property held for more than 18
months.
``(6) Collectibles gain and loss.--For purposes of this
subsection--
``(A) In general.--The terms `collectibles gain' and
`collectibles loss' mean gain or loss (respectively)
from the sale or exchange of a collectible (as defined
in section 408(m) without regard to paragraph (3)
thereof) which is a capital asset held for more than 18
months but only to the extent such gain is taken into
account in computing gross income and such loss is taken
into account in computing taxable income.
``(B) Partnerships, etc.--For purposes of
subparagraph (A), any gain from the sale of an interest
in a partnership, S corporation, or trust which is
attributable to unrealized appreciation in the value of
collectibles shall be treated as gain from the sale or
exchange of a collectible.
[[Page 112 STAT. 803]]
Rules <<NOTE: Applicability.>> similar to the rules of
section 751 shall apply for purposes of the preceding
sentence.
``(7) Unrecaptured section 1250 gain.--For purposes of this
subsection--
``(A) In general.--The term `unrecaptured section
1250 gain' means the excess (if any) of--
``(i) the amount of long-term capital gain
(not
otherwise treated as ordinary income) which would
be treated as ordinary income if--
``(I) section 1250(b)(1) included
all depreciation and the applicable
percentage under section 1250(a) were
100 percent, and
``(II) only gain from property held
for more than 18 months were taken into
account, over
``(ii) the excess (if any) of--
``(I) the amount described in
paragraph (5)(A)(ii), over
``(II) the amount described in
paragraph (5)(A)(i).
``(B) Limitation with respect to section 1231
property.--The amount described in subparagraph (A)(i)
from sales, exchanges, and conversions described in
section 1231(a)(3)(A) for any taxable year shall not
exceed the net section 1231 gain (as defined in section
1231(c)(3)) for such year.
``(8) Section 1202 gain.--For purposes of this subsection,
the term `section 1202 gain' means an amount equal to the gain
excluded from gross income under section 1202(a).
``(9) Qualified 5-year gain.--For purposes of this
subsection, the term `qualified 5-year gain' means the aggregate
long-term capital gain from property held for more than 5 years.
The determination under the preceding sentence shall be made
without regard to collectibles gain, gain described in paragraph
(7)(A)(i), and section 1202 gain.
``(10) Coordination with recapture of net ordinary losses
under section 1231.--If any amount is treated as ordinary income
under section 1231(c), such amount shall be allocated among the
separate categories of net section 1231 gain (as defined in
section 1231(c)(3)) in such manner as the Secretary may by forms
or regulations prescribe.
``(11) Regulations.--The Secretary may prescribe such
regulations as are appropriate (including regulations requiring
reporting) to apply this subsection in the case of sales and
exchanges by pass-thru entities and of interests in such
entities.
``(12) Pass-thru entity defined.--For purposes of this
subsection, the term `pass-thru entity' means--
``(A) a regulated investment company;
``(B) a real estate investment trust;
``(C) an S corporation;
``(D) a partnership;
``(E) an estate or trust;
``(F) a common trust fund;
``(G) a foreign investment company which is
described in section 1246(b)(1) and for which an
election is in effect under section 1247; and
``(H) a qualified electing fund (as defined in
section 1295).
[[Page 112 STAT. 804]]
``(13) Special rules for periods during 1997.--
``(A) Determination of 28-percent rate gain.--In
applying paragraph (5)--
``(i) the amount determined under subclause
(I) of paragraph (5)(A)(i) shall include long-term
capital gain (not otherwise described in paragraph
(5)(A)(i)) which is properly taken into account
for the portion of the taxable year before May 7,
1997;
``(ii) the amounts determined under subclause
(I) of paragraph (5)(A)(ii) shall include long-
term capital loss (not otherwise described in
paragraph (5)(A)(ii)) which is properly taken into
account for the portion of the taxable year before
May 7, 1997; and
``(iii) <<NOTE: Applicability.>> clauses
(i)(I) and (ii)(I) of paragraph (5)(A) shall be
applied by not taking into account any gain and
loss on property held for more than 1 year but not
more than 18 months which is properly taken into
account for the portion of the taxable year after
May 6, 1997, and before July 29, 1997.
``(B) Other special rules.--
``(i) Determination of unrecaptured section
1250 gain not to include pre-may 7, 1997 gain.--
The amount determined under paragraph (7)(A)(i)
shall not include gain properly taken into account
for the portion of the taxable year before May 7,
1997.
<<NOTE: Applicability.>> ``(ii) Other
transitional rules for 18-month holding period.--
Paragraphs (6)(A) and (7)(A)(i)(II) shall be
applied by substituting `1 year' for `18 months'
with respect to gain properly taken into account
for the portion of the taxable year after May 6,
1997, and before July 29, 1997.
<<NOTE: Applicability.>> ``(C) Special rules for
pass-thru entities.--In applying this paragraph with
respect to any pass-thru entity, the determination of
when gains and loss are properly taken into account
shall be made at the entity level.''.
(2) Paragraph (3) of section 55(b) of the 1986 Code is
amended to read as follows:
``(3) Maximum rate of tax on net capital gain of
noncorporate taxpayers.--The amount determined under the first
sentence of paragraph (1)(A)(i) shall not exceed the sum of--
``(A) the amount determined under such first
sentence computed at the rates and in the same manner as
if this paragraph had not been enacted on the taxable
excess reduced by the lesser of--
``(i) the net capital gain; or
``(ii) the sum of--
``(I) the adjusted net capital gain,
plus
``(II) the unrecaptured section 1250
gain, plus
``(B) 10 percent of so much of the adjusted net
capital gain (or, if less, taxable excess) as does not
exceed the amount on which a tax is determined under
section 1(h)(1)(B), plus
``(C) 20 percent of the adjusted net capital gain
(or, if less, taxable excess) in excess of the amount on
which tax is determined under subparagraph (B), plus
[[Page 112 STAT. 805]]
``(D) 25 percent of the amount of taxable excess in
excess of the sum of the amounts on which tax is
determined under the preceding subparagraphs of this
paragraph.
In <<NOTE: Applicability.>> the case of taxable years beginning
after December 31, 2000, rules similar to the rules of section
1(h)(2) shall apply for purposes of subparagraphs (B) and (C).
Terms used in this paragraph which are also used in section 1(h)
shall have the respective meanings given such terms by section
1(h) but computed with the adjustments under this part.''.
<<NOTE: Applicability.>> (3) Section 57(a)(7) of the 1986
Code is amended by adding at the end the following new sentence:
``In the case of stock the holding period of which begins after
December 31, 2000 (determined with the application of the last
sentence of section 1(h)(2)(B)), the preceding sentence shall be
applied by substituting `28 percent' for `42 percent'.''.
(4) Paragraphs (11) and (12) of section 1223, and section
1235(a), of the 1986 Code are each amended by striking ``1
year'' each place it appears and inserting ``18 months''.
(e) Amendments Related to Section 312 of 1997 Act.--
(1) Paragraph (2) of section 121(b) of the 1986 Code is
amended to read as follows:
``(2) Special rules for joint returns.--In the case of a
husband and wife who make a joint return for the taxable year of
the sale or exchange of the property--
``(A) <<NOTE: Applicability.>> $500,000 Limitation
for certain joint returns.--Paragraph (1) shall be
applied by substituting `$500,000' for `$250,000' if--
``(i) either spouse meets the ownership
requirements of subsection (a) with respect to
such property;
``(ii) both spouses meet the use requirements
of subsection (a) with respect to such property;
and
``(iii) neither spouse is ineligible for the
benefits of subsection (a) with respect to such
property by reason of paragraph (3).
``(B) Other joint returns.--If such spouses do not
meet the requirements of subparagraph (A), the
limitation under paragraph (1) shall be the sum of the
limitations under paragraph (1) to which each spouse
would be entitled if such spouses had not been married.
For purposes of the preceding sentence, each spouse
shall be treated as owning the property during the
period that either spouse owned the property.''.
(2) Section 121(c)(1) of the 1986 Code is amended to read as
follows:
``(1) In general.--In the case of a sale or exchange to
which this subsection applies, the ownership and use
requirements of subsection (a), and subsection (b)(3), shall not
apply; but the dollar limitation under paragraph (1) or (2) of
subsection (b), whichever is applicable, shall be equal to--
``(A) the amount which bears the same ratio to such
limitation (determined without regard to this paragraph)
as
``(B)(i) the shorter of--
``(I) the aggregate periods, during the 5-year
period ending on the date of such sale or
exchange, such
[[Page 112 STAT. 806]]
property has been owned and used by the taxpayer
as the taxpayer's principal residence; or
``(II) the period after the date of the most
recent prior sale or exchange by the taxpayer to
which subsection (a) applied and before the date
of such sale or exchange, bears to
``(ii) 2 years.''.
(3) Section <<NOTE: 26 USC 121 note.>> 312(d)(2) of the 1997
Act (relating to sales before date of the enactment) is amended
by inserting ``on or'' before ``before'' each place it appears
in the text and heading.
(f ) Amendments Related to Section 313 of 1997 Act.--
(1) Subsection (a) of section 1045 of such Code is amended--
(A) by striking ``an individual'' and inserting ``a
taxpayer other than a corporation''; and
(B) by striking ``such individual'' and inserting
``such taxpayer''.
(2) Subsection (b) of section 1045 of the 1986 Code is
amended by adding at the end the following new paragraph:
``(5) Certain rules to apply.--Rules similar to the rules of
subsections (f ), (g), (h), (i), ( j), and (k) of section 1202
shall apply.''.
SEC. 6006. AMENDMENT RELATED TO TITLE IV OF 1997 ACT.
(a) Amendment Related to Section 401 of 1997 Act.--Paragraph (1) of
section 55(e) of the 1986 Code is amended to read as follows:
``(1) In general.--
``(A) $7,500,000 gross receipts test.--The tentative
minimum tax of a corporation shall be zero for any
taxable year if the corporation's average annual gross
receipts for all 3-taxable-year periods ending before
such taxable year does not exceed $7,500,000. For
purposes of the preceding sentence, only taxable years
beginning after December 31, 1993, shall be taken into
account.
<<NOTE: Applicability.>> ``(B) $5,000,000 gross
receipts test for first 3-year period.--Subparagraph (A)
shall be applied by substituting `$5,000,000' for
`$7,500,000' for the first 3-taxable-year period (or
portion thereof) of the corporation which is taken into
account under subparagraph (A).
``(C) First taxable year corporation in existence.--
If such taxable year is the first taxable year that such
corporation is in existence, the tentative minimum tax
of such corporation for such year shall be zero.
<<NOTE: Applicability.>> ``(D) Special rules.--For
purposes of this paragraph, the rules of paragraphs (2)
and (3) of section 448(c) shall apply.''.
(b) Amendment Related to Section 402 of 1997 Act.--
Subsection (c) of section 168 of the 1986 Code is amended--
(1) by striking paragraph (2), and
(2) by striking the portion of such subsection preceding the
table in paragraph (1) and inserting the following:
``(c) Applicable Recovery Period.--For purposes of this section, the
applicable recovery period shall be determined in accordance with the
following table:''.
SEC. 6007. AMENDMENTS RELATED TO TITLE V OF 1997 ACT.
(a) Amendments Related to Section 501 of 1997 Act.--
[[Page 112 STAT. 807]]
(1) Subsection (c) of section 2631 of the 1986 Code is
amended to read as follows:
``(c) Inflation Adjustment.--
``(1) In general.--In the case of any calendar year after
1998, the $1,000,000 amount contained in subsection (a) shall be
increased by an amount equal to--
``(A) $1,000,000, multiplied by
``(B) the cost-of-living adjustment determined under
section 1(f )(3) for such calendar year by substituting
`calendar year 1997' for `calendar year 1992' in
subparagraph (B) thereof.
If any amount as adjusted under the preceding sentence is not a
multiple of $10,000, such amount shall be rounded to the next
lowest multiple of $10,000.
<<NOTE: Applicability.>> ``(2) Allocation of increase.--Any
increase under paragraph (1) for any calendar year shall apply
only to generation-skipping transfers made during or after such
calendar year; except that no such increase for calendar years
after the calendar year in which the transferor dies shall apply
to transfers by such transferor.''.
<<NOTE: 26 USC 2001 note.>> (2) Subsection (f ) of section
501 of the 1997 Act is amended by inserting ``(other than the
amendment made by subsection (d))'' after ``this section''.
(b) Amendments Related to Section 502 of 1997 Act.--
(1)(A) Section 2033A of the 1986 Code is hereby moved to the
end of part IV of subchapter A of chapter 11 of the 1986 Code
and redesignated as section 2057.
(B) So much of such section 2057 (as so redesignated) as
precedes subsection (b) thereof is amended to read as follows:
``SEC. 2057. FAMILY-OWNED BUSINESS INTERESTS.
``(a) General Rule.--
``(1) Allowance of deduction.--For purposes of the tax
imposed by section 2001, in the case of an estate of a decedent
to which this section applies, the value of the taxable estate
shall be determined by deducting from the value of the gross
estate the adjusted value of the qualified family-owned business
interests of the decedent which are described in subsection
(b)(2).
``(2) Maximum deduction.--The deduction allowed by this
section shall not exceed $675,000.
``(3) Coordination with unified credit.--
``(A) In general.--Except as provided in
subparagraph (B), if this section applies to an estate,
the applicable exclusion amount under section 2010 shall
be $625,000.
``(B) Increase in unified credit if deduction is
less than $675,000.--If the deduction allowed by this
section is less than $675,000, the amount of the
applicable exclusion amount under section 2010 shall be
increased (but not above the amount which would apply to
the estate without regard to this section) by the excess
of $675,000 over the amount of the deduction allowed.''.
(C) Subparagraph (A) of section 2057(b)(2) of the 1986 Code
(as so redesignated) is amended by striking ``(without regard to
this section)''.
[[Page 112 STAT. 808]]
(D) Subsection (c) of section 2057 of the 1986 Code (as so
redesignated) is amended by striking ``(determined without
regard to this section)''.
(E) The table of sections for part III of subchapter A of
chapter 11 of the 1986 Code is amended by striking the item
relating to section 2033A.
(F) The table of sections for part IV of such subchapter is
amended by adding at the end the following new item:
``Sec. 2057. Family-owned business interests.''.
(2) Section 2057(b)(3) of the 1986 Code (as so redesignated)
is amended to read as follows:
``(3) Includible gifts of interests.--The amount of the
gifts of qualified family-owned business interests determined
under this paragraph is the sum of--
``(A) the amount of such gifts from the decedent to
members of the decedent's family taken into account
under section 2001(b)(1)(B), plus
``(B) the amount of such gifts otherwise excluded
under section 2503(b),
to the extent such interests are continuously held by members of
such family (other than the decedent's spouse) between the date
of the gift and the date of the decedent's death.''.
(3)(A) Section 2057(e)(2)(C) of the 1986 Code (as so
redesignated) is amended by striking ``(as defined in section
543(a))'' and inserting ``(as defined in section 543(a) without
regard to paragraph (2)(B) thereof) if such trade or business
were a corporation''.
(B) Clause (ii) of section 2057(e)(2)(D) of the 1986 Code
(as so redesignated) is amended by striking ``income of which is
described in section 543(a) or'' and inserting ``personal
holding company income (as defined in subparagraph (C)) or
income described''.
(C) Paragraph (2) of section 2057(e) of the 1986 Code (as so
redesignated) is amended by adding at the end the following new
flush sentence:
``In the case of a lease of property on a net cash basis by the
decedent to a member of the decedent's family, income from such
lease shall not be treated as personal holding company income
for purposes of subparagraph (C), and such property shall not be
treated as an asset described in subparagraph (D)(ii), if such
income and property would not be so treated if the lessor had
engaged directly in the activities engaged in by the lessee with
respect to such property.''.
(4) Paragraph (2) of section 2057(f ) of the 1986 Code (as
so redesignated) is amended--
(A) by striking ``(as determined under rules similar
to the rules of section 2032A(c)(2)(B))''; and
(B) by adding at the end the following new
subparagraph:
``(C) Adjusted tax difference.--For purposes of
subparagraph (A)--
``(i) In general.--The adjusted tax difference
attributable to a qualified family-owned business
interest is the amount which bears the same ratio
to the adjusted tax difference with respect to the
estate (determined under clause (ii)) as the value
of such
[[Page 112 STAT. 809]]
interest bears to the value of all qualified
family-owned business interests described in
subsection (b)(2).
``(ii) Adjusted tax difference with respect to
the estate.--For purposes of clause (i), the term
`adjusted tax difference with respect to the
estate' means the excess of what would have been
the estate tax liability but for the election
under this section over the estate tax liability.
For purposes of this clause, the term `estate tax
liability' means the tax imposed by section 2001
reduced by the credits allowable against such
tax.''.
(5)(A) Paragraph (1) of section 2057(e) of the 1986 Code (as
so redesignated) is amended by adding at the end the following
new flush sentence:
``For purposes of the preceding sentence, a decedent shall be
treated as engaged in a trade or business if any member of the
decedent's family is engaged in such trade or business.''.
(B) Subsection (f ) of section 2057 of the 1986 Code (as so
redesignated) is amended by adding at the end the following new
paragraph:
``(3) Use in trade or business by family members.--A
qualified heir shall not be treated as disposing of an interest
described in subsection (e)(1)(A) by reason of ceasing to be
engaged in a trade or business so long as the property to which
such interest relates is used in a trade or business by any
member of such individual's family.''.
(6) Paragraph (1) of section 2057(g) of the 1986 Code (as so
redesignated) is amended by striking ``or (M)''.
(7) Paragraph (3) of section 2057(i) of the 1986 Code (as so
redesignated) is amended by redesignating subparagraphs (L),
(M), and (N) as subparagraphs (N), (O), and (P), respectively,
and by inserting after subparagraph (K) the following new
subparagraphs:
``(L) Section 2032A(g) (relating to application to
interests in partnerships, corporations, and trusts).
``(M) Subsections (h) and (i) of section 2032A.''.
(c) Amendments Related to Section 503 of the 1997 Act.--
(1) Clause (iii) of section 6166(b)(7)(A) of the 1986 Code
is amended to read as follows:
``(iii) for purposes of applying section 6601(
j), the 2-percent portion (as defined in such
section) shall be treated as being zero.''.
(2) Clause (iii) of section 6166(b)(8)(A) of the 1986 Code
is amended to read as follows:
``(iii) 2-percent interest rate not to
apply.--For purposes of applying section 6601( j),
the 2-percent portion (as defined in such section)
shall be treated as being zero.''.
(d) Amendment Related to Section 505 of the 1997 Act.--Paragraphs
(1) and (2) of section 7479(a) of the 1986 Code are each amended by
striking ``an estate,'' and inserting ``an estate (or with respect to
any property included therein),''.
(e) Amendments Related to Section 506 of the 1997 Act.--
(1) Paragraph <<NOTE: 26 USC 2001 note.>> (1) of section
506(e) of the 1997 Act is
amended by striking ``and (c)'' and inserting ``, (c), and
(d)''.
(2)(A) Paragraph (9) of section 6501(c) of the 1986 Code is
amended by striking the last sentence.
[[Page 112 STAT. 810]]
(B) Subsection (f ) of section 2001 of the 1986 Code is
amended to read as follows:
``(f ) Valuation of Gifts.--
``(1) In general--If the time has expired under section 6501
within which a tax may be assessed under chapter 12 (or under
corresponding provisions of prior laws) on--
``(A) the transfer of property by gift made during a
preceding calendar period (as defined in section
2502(b)); or
``(B) an increase in taxable gifts required under
section 2701(d),
the value thereof shall, for purposes of computing the tax under
this chapter, be the value as finally determined for purposes of
chapter 12.
``(2) Final determination.--For purposes of paragraph (1), a
value shall be treated as finally determined for purposes of
chapter 12 if--
``(A) the value is shown on a return under such
chapter and such value is not contested by the Secretary
before the expiration of the time referred to in
paragraph (1) with respect to such return;
``(B) in a case not described in subparagraph (A),
the value is specified by the Secretary and such value
is not timely contested by the taxpayer; or
``(C) the value is determined by a court or pursuant
to a settlement agreement with the Secretary.''.
(B) Subsection (c) of section 2504 of the 1986 Code is
amended to read as follows:
``(c) Valuation of Gifts.--If the time has expired under section
6501 within which a tax may be assessed under this chapter 12 (or under
corresponding provisions of prior laws) on--
``(1) the transfer of property by gift made during a
preceding calendar period (as defined in section 2502(b)); or
``(2) an increase in taxable gifts required under section
2701(d),
the value thereof shall, for purposes of computing the tax under this
chapter, be the value as finally determined (within the meaning of
section 2001(f )(2)) for purposes of this chapter.''.
(f ) Amendments Related to Section 507 of 1997 Act.--
(1) Paragraph (3) of section 1(g) of the 1986 Code is
amended by striking subparagraph (C) and by redesignating
subparagraph (D) as subparagraph (C).
(2) Section 641 of the 1986 Code is amended by striking
subsection (c) and by redesignating subsection (d) as subsection
(c).
(3) Paragraph (4) of section 1361(e) of the 1986 Code is
amended by striking ``section 641(d)'' and inserting ``section
641(c)''.
(4) Subparagraph (A) of section 6103(e)(1) of the 1986 Code
is amended by striking clause (ii) and by redesignating clauses
(iii) and (iv) as clauses (ii) and (iii), respectively.
(g) Amendments Related to Section 508 of 1997 Act.--
(1) Subsection (c) of section 2031 of the 1986 Code is
amended by redesignating paragraph (9) as paragraph (10) and by
inserting after paragraph (8) the following new paragraph:
[[Page 112 STAT. 811]]
``(9) Treatment of easements granted after death.--In any
case in which the qualified conservation easement is granted
after the date of the decedent's death and on or before the due
date (including extensions) for filing the return of tax imposed
by section 2001, the deduction under section 2055(f ) with
respect to such easement shall be allowed to the estate but only
if no charitable deduction is allowed under chapter 1 to any
person with respect to the grant of such easement.''.
(2) The first sentence of paragraph (6) of section 2031(c)
of the 1986 Code is amended by striking all that follows ``shall
be made'' and inserting ``on or before the due date (including
extensions) for filing the return of tax imposed by section 2001
and shall be made on such return.''.
SEC. 6008. AMENDMENTS RELATED TO TITLE VII OF 1997 ACT.
(a) Amendment Related to Section 1400 of 1986 Code.--Section
1400(b)(2)(B) of the 1986 Code is amended by inserting ``as determined
on the basis of the 1990 census'' after ``percent''.
(b) Amendment Related to Section 1400A of 1986 Code.--Subsection (a)
of section 1400A of the 1986 Code is amended by inserting before the
period ``and section 1394(b)(3)(B)(iii) shall be applied without regard
to the employee residency requirement''.
(c) Amendments Related to Section 1400B of 1986 Code.--
(1) Section 1400B(b) of the 1986 Code is amended by
inserting after paragraph (4) the following new paragraph:
``(5) Treatment of dc zone termination.--The termination of
the designation of the DC Zone shall be disregarded for purposes
of determining whether any property is a DC Zone asset.''.
(2) Paragraph (6) of section 1400B(b) of the 1986 Code is
amended by striking ``(4)(A)(ii)'' and inserting ``(4)(A)(i) or
(ii)''.
(3) Section 1400B(c) of the 1986 Code is amended by
striking ``entity which is an''.
(4) Section 1400B(d)(2) of the 1986 Code is amended by
inserting ``as determined on the basis of the 1990 census''
after ``percent''.
(d) Amendments Related to Section 1400C of 1986 Code.--
(1) Paragraph (1) of section 1400C(b) of the 1986 Code is
amended by inserting ``and subsection (d)'' after ``this
subsection''.
(2) Paragraph (1) of section 1400C(c) of the 1986 Code is
amended to read as follows:
``(1) In general.--The term `first-time homebuyer' means any
individual if such individual (and if married, such individual's
spouse) had no present ownership interest in a principal
residence in the District of Columbia during the 1-year period
ending on the date of the purchase of the principal residence to
which this section applies.''.
(3) Subparagraph (B) of section 1400C(e)(2) of the 1986 Code
is amended by inserting before the period ``on the date the
taxpayer first occupies such residence''.
(4) Paragraph (3) of section 1400C(e) of the 1986 Code is
amended by striking all that follows ``principal residence'' and
inserting ``on the date such residence is purchased.''.
[[Page 112 STAT. 812]]
(5) Subsection (i) of section 1400C of the 1986 Code is
amended to read as follows:
``(i) Application of Section.--This section shall apply to
property purchased after August 4, 1997, and before January 1, 2001.''.
(6) Subsection (c) of section 23 of the 1986 Code is amended
by inserting ``and section 1400C'' after ``other than this
section''.
(7) Subparagraph (C) of section 25(e)(1) of the 1986 Code is
amended by striking ``section 23'' and inserting ``sections 23
and 1400C''.
SEC. 6009. AMENDMENTS RELATED TO TITLE IX OF 1997 ACT.
(a) Amendment Related to Section 908 of 1997 Act.--
Paragraph (6) of section 5041(b) of the 1986 Code is amended by
inserting ``which is a still wine'' after ``hard cider''.
(b) Amendment Related to Section 964 of 1997 Act.--
(1) In general.--Subparagraph (C) of section 7704(g)(3) of
the 1986 Code is amended by striking the period at the end and
inserting ``and shall be paid by the
partnership. <<NOTE: Applicability.>> Section 6655 shall be
applied to such partnership with respect to such tax in the same
manner as if the partnership were a corporation, such tax were
imposed by section 11, and references in such section to taxable
income were references to the gross income referred to in
subparagraph (A).''.
<<NOTE: Applicability. 26 USC 7704 note.>> (2) Effective
date.--The second sentence of section 7704(g)(3)(C) of the 1986
Code (as added by paragraph (1)) shall apply to taxable years
beginning after the date of the enactment of this Act.
(c) Amendment Related to Section 971 of 1997 Act.--Clause (ii) of
section 280F(a)(1)(C) is amended by striking ``subparagraph (A)'' and
inserting ``subparagraphs (A) and (B)''.
(d) Amendment Related to Section 976 of 1997 Act.--Section
6103(d)(5) of the 1986 Code is amended by striking ``section 967 of the
Taxpayer Relief Act of 1997.'' and inserting ``section 976 of the
Taxpayer Relief Act of 1997. Subsections (a)(2) and (p)(4) and sections
7213 and 7213A shall not apply with respect to disclosures or
inspections made pursuant to this paragraph.''.
(e) Amendment Related to Section 977 of 1997 Act.--Paragraph (2) of
section 977(e) of the 1997 <<NOTE: 26 USC 172 note.>> Act is amended to
read as follows:
``(2) Non-amtrak state.--The term `non-Amtrak State' means
any State which is not receiving intercity passenger rail
service from the Corporation as of the date of the enactment of
this Act.''.
SEC. 6010. AMENDMENTS RELATED TO TITLE X OF 1997 ACT.
(a) Amendments Related to Section 1001 of 1997 Act.--
(1) Paragraph (2) of section 1259(b) of the 1986 Code is
amended--
(A) by striking ``debt'' each place it appears in
clauses (i), (ii), and (iii) of subparagraph (A) and
inserting ``position'';
(B) by striking ``and'' at the end of subparagraph
(A); and
(C) by redesignating subparagraph (B) as
subparagraph (C) and by inserting after subparagraph (A)
the following new subparagraph:
[[Page 112 STAT. 813]]
``(B) any hedge with respect to a position described
in subparagraph (A), and''.
(2) Section 1259(d)(1) of the 1986 Code is amended by
inserting ``(including cash)'' after ``property''.
(3) Subparagraph (D) of section 475(f )(1) of the 1986 Code
is amended by adding at the end the following new sentence:
``Subsection (d)(3) shall not apply under the preceding sentence
for purposes of applying sections 1402 and 7704.''.
(4) Subparagraph (C) of section 1001(d)(3) of the 1997
Act <<NOTE: 26 USC 475 note.>> is amended by striking ``within
the 30-day period beginning on'' and inserting ``before the
close of the 30th day after''.
(b) Amendment Related to Section 1011 of 1997 Act.--Paragraph (1) of
section 1059(g) of the 1986 Code is amended by striking ``and in the
case of stock held by pass-thru entities'' and inserting ``, in the case
of stock held by pass-thru entities, and in the case of consolidated
groups''.
(c) Amendments Related to Section 1012 of 1997 Act.--
(1) Paragraph (1) of section 1012(d) of the 1997
Act <<NOTE: 26 USC 351 note.>> is amended by striking ``1997,
pursuant'' and inserting ``1997; except that the amendment made
by subsection (a) shall apply to such distributions only if
pursuant''.
(2) Subparagraph (A) of section 355(e)(3) of the 1986 Code
is amended--
(A) by striking ``shall not be treated as described
in'' and inserting ``shall not be taken into account in
applying''; and
(B) by striking clause (iv) and inserting the
following new clause:
``(iv) The acquisition of stock in the
distributing corporation or any controlled
corporation to the extent that the percentage of
stock owned directly or indirectly in such
corporation by each person owning stock in such
corporation immediately before the acquisition
does not decrease.''.
(3)(A) Subsection (c) of section 351 of the 1986 Code is
amended to read as follows:
``(c) Special Rules Where Distribution to Shareholders.--
``(1) In general.--In determining control for purposes of
this section, the fact that any corporate transferor distributes
part or all of the stock in the corporation which it receives in
the exchange to its shareholders shall not be taken into
account.
``(2) Special rule for section 355.--If the requirements of
section 355 (or so much of section 356 as relates to section
355) are met with respect to a distribution described in
paragraph (1), then, solely for purposes of determining the tax
treatment of the transfers of property to the controlled
corporation by the distributing corporation, the fact that the
shareholders of the distributing corporation dispose of part or
all of the distributed stock shall not be taken into account in
determining control for purposes of this section.''.
(B) Clause (ii) of section 368(a)(2)(H) of the 1986 Code is
amended to read as follows:
``(ii) in the case of a transaction with
respect to which the requirements of section 355
(or so much of section 356 as relates to section
355) are met, the
[[Page 112 STAT. 814]]
fact that the shareholders of the distributing
corporation dispose of part or all of the
distributed stock shall not be taken into
account.''.
(d) Amendments Related to Section 1013 of 1997 Act.--
(1) Paragraph (5) of section 304(b) of the 1986 Code is
amended by striking subparagraph (B) and by redesignating
subparagraph (C) as subparagraph (B).
(2) Subsection (b) of section 304 of the 1986 Code is
amended by adding at the end the following new paragraph:
<<NOTE: Regulations.>> ``(6) Avoidance of multiple
inclusions, etc.--In the case of any acquisition to which
subsection (a) applies in which the acquiring corporation or the
issuing corporation is a foreign corporation, the Secretary
shall prescribe such regulations as are appropriate in order to
eliminate a multiple inclusion of any item in income by reason
of this subpart and to provide appropriate basis adjustments
(including modifications to the application of sections 959 and
961).''.
(e) Amendments Related to Section 1014 of 1997 Act.--
(1) Paragraph (1) of section 351(g) of the 1986 Code is
amended by adding ``and'' at the end of subparagraph (A) and by
striking subparagraphs (B) and (C) and inserting the following
new subparagraph:
``(B) if (and only if) the transferor receives stock
other than nonqualified preferred stock--
``(i) subsection (b) shall apply to such
transferor; and
``(ii) such nonqualified preferred stock shall
be treated as other property for purposes of
applying subsection (b).''.
(2) Clause (ii) of section 354(a)(2)(C) of 1986 Code is
amended by adding at the end the following new subclause:
``(III) Extension of statute of
limitations.--The statutory period for
the assessment of any deficiency
attributable to a corporation failing to
be a family-owned corporation shall not
expire before the expiration of 3 years
after the date the Secretary is notified
by the corporation (in such manner as
the Secretary may prescribe) of such
failure, and such deficiency may be
assessed before the expiration of such
3-year period notwithstanding the
provisions of any other law or rule of
law which would otherwise prevent such
assessment.''.
(f ) Amendment Related to Section 1024 of 1997 Act.--Section
6331(h)(1) of the 1986 Code is amended by striking ``The effect of a
levy'' and inserting ``If the Secretary approves a levy under this
subsection, the effect of such levy''.
(g) Amendments Related to Section 1031 of 1997 Act.--
(1) Subsection (l) of section 4041 of the 1986 Code is
amended by striking ``subsection (e) or (f )'' and inserting
``subsection (f ) or (g)''.
(2) Subsection (b) of section 9502 of the 1986 Code is
amended by moving the sentence added at the end of paragraph (1)
to the end of such subsection.
(3) Subsection (c) of section 6421 of the 1986 Code is
amended--
(A) by striking ``(2)(A)'' and inserting ``(2)'';
and
[[Page 112 STAT. 815]]
(B) by adding at the end the following sentence:
``Subsection (a) shall not apply to gasoline to which
this subsection applies.''.
(h) Amendments Related to Section 1032 of 1997 Act.--
(1) Section 1032(a) of the 1997 Act <<NOTE: 26 USC
4083.>> is amended by striking ``Subsection (a) of section
4083'' and inserting ``Paragraph (1) of section 4083(a)''.
<<NOTE: 26 USC 7232.>> (2) Section 1032(e)(12)(A) of the
1997 Act shall be applied as if ``gasoline, diesel fuel,'' were
the material proposed to be stricken.
(3) Paragraph (1) of section 4082(d) of the 1986 Code is
amended to read as follows:
<<NOTE: Regulations.>> ``(1) Aviation-grade kerosene.--
Subsection (a)(2) shall not apply to aviation-grade kerosene (as
determined under regulations prescribed by the Secretary) which
the Secretary determines is destined for use as a fuel in an
aircraft.''.
(4) Paragraph (3) of section 4082(d) of the 1986 Code is
amended by striking ``a removal, entry, or sale of kerosene to''
and inserting ``kerosene received by''.
(5) Paragraph (1) of section 4101(e) of the 1986 Code is
amended by striking ``dyed diesel fuel and kerosene'' and
inserting ``such fuel in a dyed form''.
(i) Amendment Related to Section 1034 of 1997 Act.--Paragraph (3) of
section 4251(d) of the 1986 Code is amended by striking ``other similar
arrangement'' and inserting ``any other similar arrangement''.
( j) Amendments Related to Section 1041 of 1997 Act.--
(1) Subparagraph (A) of section 512(b)(13) of the 1986 Code
is amended by inserting ``or accrues'' after ``receives''.
(2) Subclause (I) of section 512(b)(13)(B)(i) of the 1986
Code is amended by striking ``(as defined in section
513A(a)(5)(A))''.
(3) Paragraph (2) of section 1041(b) of the 1997
Act <<NOTE: 26 USC 512 note.>> is amended to read as follows:
``(2) Binding contracts.--The amendments made by this
section shall not apply to any amount received or accrued during
the first 2 taxable years beginning on or after the date of the
enactment of this Act if such amount is received or accrued
pursuant to a written binding contract in effect on June 8,
1997, and at all times thereafter before such amount is received
or accrued. The preceding sentence shall not apply to any amount
which would (but for the exercise of an option to accelerate
payment of such amount) be received or accrued after such 2
taxable years.''.
(k) Amendments Related to Section 1053 of 1997 Act.--
(1) Section 853 of the 1986 Code is amended by redesignating
subsection (e) as subsection (f ) and by inserting after
subsection (d) the following new subsection:
``(e) Treatment of Taxes Not Allowed as a Credit Under Section
901(k).--This section shall not apply to any tax with respect to which
the regulated investment company is not allowed a credit under section
901 by reason of section 901(k).''.
(2) Subsection (c) of section 853 of the 1986 Code is
amended by striking the last sentence.
(3) Subparagraph (A) of section 901(k)(4) of the 1986 Code
is amended by striking ``securities business'' and inserting
``business as a securities dealer''.
[[Page 112 STAT. 816]]
(l) Amendment Related to Section 1055 of 1997 Act.--Section
6611(g)(1) of the 1986 Code is amended by striking ``(e), and (h)'' and
inserting ``and (e)''.
(m) Amendment Related to Section 1061 of 1997 Act.--Subsection (c)
of section 751 of the 1986 Code is amended by striking ``731'' each
place it appears and inserting ``731, 732,''.
(n) Amendment Related to Section 1083 of 1997 Act.--Section
1083(a)(2) of the 1997 Act <<NOTE: 26 USC 39.>> is amended--
(1) by striking ``21'' and inserting ``20''; and
(2) by striking ``22'' and inserting ``21''.
(o) Amendments Related to Section 1084 of 1997 Act.--
(1) Paragraph (3) of section 264(a) of the 1986 Code is
amended by striking ``subsection (c)'' and inserting
``subsection (d)''.
(2) Paragraph (4) of section 264(a) of the 1986 Code is
amended by striking ``subsection (d)'' and inserting
``subsection (e)''.
(3)(A) Paragraph (4) of section 264(f ) of the 1986 Code is
amended by adding at the end the following new subparagraph:
``(E) Master contracts.--If coverage for each
insured under a master contract is treated as a separate
contract for purposes of sections 817(h), 7702, and
7702A, coverage for each such insured shall be treated
as a separate contract for purposes of subparagraph (A).
For purposes of the preceding sentence, the term `master
contract' shall not include any group life insurance
contract (as defined in section 848(e)(2)).''.
(B) The second sentence of section 1084(d) of the 1997
Act <<NOTE: 26 USC 101 note.>> is amended by striking ``but''
and all that follows and inserting ``except that, in the case of
a master contract (within the meaning of section 264(f )(4)(E)
of the Internal Revenue Code of 1986), the addition of covered
lives shall be treated as a new contract only with respect to
such additional covered lives.''.
(4)(A) Clause (iv) of section 264(f )(5)(A) of the 1986 Code
is amended by striking the second sentence.
(B) Subparagraph (B) of section 6724(d)(1) of the 1986 Code
is amended by striking ``or'' at the end of clause (xv), by
striking the period at the end of clause (xvi) and inserting ``;
or'', and by adding at the end the following new clause:
``(xvii) section 264(f )(5)(A)(iv) (relating
to reporting with respect to certain life
insurance and annuity contracts).''.
(C) Paragraph (2) of section 6724(d) of the 1986 Code is
amended by striking ``or'' at the end of subparagraph (Y), by
striking the period at the end of subparagraph (Z) and inserting
``or'', and by adding at the end the following new subparagraph:
``(AA) section 264(f )(5)(A)(iv) (relating to
reporting with respect to certain life insurance and
annuity contracts).''.
(5) Subparagraph (A) of section 264(f )(8) of the 1986 Code
is amended by striking ``subsection (d)(5)(B)'' and inserting
``subsection (e)(5)(B)''.
(p) Amendments Related to Section 1085 of 1997 Act.--
(1) Paragraph (5) of section 32(c) of the 1986 Code is
amended--
[[Page 112 STAT. 817]]
(A) by inserting before the period at the end of
subparagraph (A) ``and increased by the amounts
described in subparagraph (C)'';
(B) by adding ``or'' at the end of clause (iii) of
subparagraph (B); and
(C) by striking all that follows subclause (II) of
subparagraph (B)(iv) and inserting the following:
``(III) other trades or businesses.
For purposes of clause (iv), there shall not be
taken into account items which are attributable to
a trade or business which consists of the
performance of services by the taxpayer as an
employee.
``(C) Certain amounts included.--An amount is
described in this subparagraph if it is--
``(i) interest received or accrued during the
taxable year which is exempt from tax imposed by
this chapter; or
``(ii) amounts received as a pension or
annuity, and any distributions or payments
received from an individual retirement plan, by
the taxpayer during the taxable year to the extent
not included in gross income.
Clause (ii) shall not include any amount which is not
includible in gross income by reason of a trustee-to-
trustee transfer or a rollover distribution.''.
(2) Clause (v) of section 32(c)(2)(B) of the 1986 Code is
amended by inserting ``shall be taken into account'' before ``,
but only''.
(3) The text of paragraph (3) of section 1085(a) of the 1997
Act <<NOTE: 26 USC 6213.>> is amended to read as follows:
``Paragraph (2) of section 6213(g) (relating to the definition
of mathematical or clerical errors) is amended by striking
``and'' at the end of subparagraph (I), by striking the period
at the end of subparagraph (J) and inserting ``, and'', and by
inserting after subparagraph (J) the following new subparagraph:
``(K) an omission of information required by section
32(k)(2) (relating to taxpayers making improper prior
claims of earned income credit).''.
(q) Amendment Related to Section 1088 of 1997 Act.--Section
1088(b)(2)(C) of the 1997 Act <<NOTE: 26 USC 453C note.>> is amended by
inserting ``more than 1 year'' before ``after''.
(r) Amendment Related to Section 1089 of 1997 Act.--Paragraphs
(1)(C) and (2)(C) of section 664(d) of the 1986 Code are each amended by
adding ``, and'' at the end.
SEC. 6011. AMENDMENTS RELATED TO TITLE XI OF 1997 ACT.
(a) Amendment Related to Section 1103 of 1997 Act.--Paragraph (3) of
section 59(a) added by section 1103 of the 1997 Act is redesignated as
paragraph (4).
(b) Amendments Related to Section 1121 of 1997 Act.--
(1) Subsection (e) of section 1297 of the 1986 Code is
amended by adding at the end the following new paragraph:
``(4) Treatment of holders of options.--Paragraph (1) shall
not apply to stock treated as owned by a person by reason of
section 1298(a)(4) (relating to the treatment of a person that
has an option to acquire stock as owning such stock) unless such
person establishes that such stock is owned (within the meaning
of section 958(a)) by a United States
[[Page 112 STAT. 818]]
shareholder (as defined in section 951(b)) who is not exempt
from tax under this chapter.''.
(2) Section 1298(a)(2)(B) of the 1986 Code is amended by
adding at the end the following new sentence: ``Section 1297(e)
shall not apply in determining whether a corporation is a
passive foreign investment company for purposes of this
subparagraph.''.
(c) Amendments Related to Section 1122 of 1997 Act.--
(1) Section 672(f )(3)(B) of the 1986 Code is amended by
striking ``section 1296'' and inserting ``section 1297''.
(2) Paragraph (1) of section 1291(d) of the 1986 Code is
amended by adding at the end the following new sentence: ``In
the case of stock which is marked to market under section 475 or
any other provision of this chapter, this section shall not
apply, except that rules similar to the rules of section 1296(
j) shall apply.''.
(3) Subsection (d) of section 1296 of the 1986 Code is
amended by adding at the end the following new sentence: ``In
the case of a regulated investment company which elected to mark
to market the stock held by such company as of the last day of
the taxable year preceding such company's first taxable year for
which such company elects the application of this section, the
amount referred to in paragraph (1) shall include amounts
included in gross income under such mark to market with respect
to such stock for prior taxable years.''.
(d) Amendment Related to Section 1123 of 1997 Act.--Subsection (e)
of section 1297 of the 1986 Code added by section 1123 of the 1997 Act
is redesignated as subsection (f ).
(e) Amendments Related to Section 1131 of 1997 Act.--
(1) Section 991 of the 1986 Code is amended by striking
``except for the tax imposed by chapter 5''.
(2) Section 6013 of the 1986 Code is amended by striking
``chapters 1 and 5'' each place it appears in paragraphs (1)(A)
and (5) of subsection (g) and in subsection (h)(1) and inserting
``chapter 1''.
(f ) Amendment Related to Section 1142 of 1997 Act.--
(1) Paragraph (2) of section 6038(a) of the 1986 Code is
amended by striking ``by regulations''.
(2) Paragraph (3) of section 6038(a) of the 1986 Code is
amended by striking ``such information'' and all that follows
through the period and inserting ``the Secretary has prescribed
the furnishing of such information on or before the first day of
such annual accounting period.''.
(3) Paragraph (4) of section 6038(e) of the 1986 Code is
amended by striking ``corporation'' and inserting ``foreign
business entity'' each place it appears.
(g) Amendment Related to Section 1144 of 1997 Act.--Paragraphs (1)
and (2) of section 1144(c) of the 1997 Act <<NOTE: 26 USC 6038B.>> are
each amended by striking ``6038B(b)'' and inserting ``6038B(c) (as
redesignated by subsection (b))''.
SEC. 6012. AMENDMENTS RELATED TO TITLE XII OF 1997 ACT.
(a) Amendment Related to Section 1204 of 1997 Act.--The last
sentence of section 162(a) of the 1986 Code is amended by striking
``investigate'' and all that follows and inserting ``investigate or
prosecute, or provide support services for the investigation or
prosecution of, a Federal crime.''.
[[Page 112 STAT. 819]]
(b) Amendments Related to Section 1205 of 1997 Act.--
(1) Section 6311(e)(1) of the 1986 Code is amended by
striking ``section 6103(k)(8)'' and inserting ``section
6103(k)(9)''.
(2) Paragraph (8) of section 6103(k) of the 1986 Code (as
added by section 1205(c)(1) of the 1997 Act) is redesignated as
paragraph (9).
(3) Subsection (g) of section 7431 of the 1986 Code added by
section 1205 of the 1997 Act is redesignated as subsection (h)
and is amended by striking ``(8)'' in the heading and inserting
``(9)''.
<<NOTE: 26 USC 6103.>> (4) Section 1205(c)(3) of the 1997
Act shall be applied as if it read as follows:
``(3) Section 6103(p)(3)(A), as amended by section
1026(b)(1)(A) of the 1997 Act, is amended by striking ``or (8)''
and inserting ``(8), or (9)''.
(5) Section 1213(b) of the 1997 Act <<NOTE: 26 USC
6724.>> is amended by striking ``section 6724(d)(1)(A)'' and
inserting ``section 6724(d)(1)''.
(c) Amendment Related to Section 1221 of 1997 Act.--Paragraph (2) of
section 774(d) of the 1986 Code is amended by inserting before the
period ``or 857(b)(3)(D)''.
(d) Amendment Related to Section 1223 of 1997 Act.--Subsection (c)
of section 6724 of the 1986 Code is amended by inserting before the
period ``(more than 100 information returns in the case of a partnership
having more than 100 partners)''.
(e) Amendment Related to Section 1226 of 1997 Act.--Section 1226 of
the 1997 Act <<NOTE: 26 USC 6011 note.>> is amended by striking ``ending
on or'' and inserting ``beginning''.
(f ) Amendment Related to Section 1231 of 1997 Act.--Subsection (c)
of section 6211 of the 1986 Code is amended--
(1) by striking ``Subchapter C'' in the heading and
inserting ``Subchapters C and D''; and
(2) by striking ``subchapter C'' in the text and inserting
``subchapters C and D''.
(g) Amendment Related to Section 1256 of 1997 Act.--Subparagraph (A)
of section 857(d)(3) of the 1986 Code is amended by striking ``earliest
accumulated earnings and profits (other than earnings and profits to
which subsection (a)(2)(A) applies)'' and inserting ``earliest earnings
and profits accumulated in any taxable year to which the provisions of
this part did not apply''.
(h) Amendment Related to Section 1285 of 1997 Act.--Section 7430(b)
of the 1986 Code is amended by redesignating paragraph (5) as paragraph
(4).
SEC. 6013. AMENDMENTS RELATED TO TITLE XIII OF 1997 ACT.
(a) Amendments Related to Section 1305 of 1997 Act.--
(1) Section 646 of the 1986 Code is redesignated as section
645.
(2) The item relating to section 646 in the table of
sections for subpart A of part I of subchapter J of chapter 1 of
the 1986 Code is amended by striking ``Sec. 646'' and inserting
``Sec. 645''.
(3) Paragraph (1) of section 2652(b) of the 1986 Code is
amended by striking ``section 646'' and inserting ``section
645''.
(4)(A) Paragraph (1) of section 2652(b) of the 1986 Code is
amended by striking the second sentence.
(B) Subsection (b) of section 2654 of the 1986 Code is
amended by adding at the end the following new sentence:
[[Page 112 STAT. 820]]
``For purposes of this subsection, a trust shall be treated as
part of an estate during any period that the trust is so treated
under section 645.''.
(b) Amendments Related to Section 1309 of 1997 Act.--
(1) Subsection (b) of section 685 of the 1986 Code is
amended by adding at the end the following new flush sentence:
``A trust shall not fail to be treated as meeting the requirement of
paragraph (6) by reason of the death of an individual but only during
the 60-day period beginning on the date of such death.''.
(2) Subsection (f ) of section 685 of the 1986 Code is
amended by inserting before the period at the end ``and of
trusts terminated during the year''.
SEC. 6014. AMENDMENTS RELATED TO TITLE XIV OF 1997 ACT.
(a) Amendments Related to Section 1421 of 1997 Act.--
(1) Paragraph (1) of section 5054(a) of the 1986 Code is
amended--
(A) by inserting ``, or imported into the United
States and transferred to a brewery free of tax under
section 5418,'' after ``produced in the United States''
in the text; and
(B) by inserting ``; certain imported beer'' after
``produced in the united states'' in the heading.
(2) Paragraph (2) of section 5054(a) of the 1986 Code is
amended by inserting ``and not transferred to a brewery free of
tax under section 5418'' after ``United States''.
(3) Section 5056 of the 1986 Code is amended by striking
``produced in the United States'' each place it appears and
inserting ``removed for consumption or sale''.
(b) Amendments Related to Section 1422 of 1997 Act.--
(1) Paragraph (2) of section 5043(a) of the 1986 Code is
amended by inserting ``which are not transferred to a bonded
wine cellar free of tax under section 5364'' after ``foreign
wines''.
(2) Subsection (a) of section 5044 of the 1986 Code is
amended by striking ``produced in the United States'' and
inserting ``removed from a bonded wine cellar''.
(3) Section 5364 of the 1986 Code is amended by striking
``Wine imported or brought into'' and inserting ``Natural wine
(as defined in section 5381) imported or brought into''.
(c) Amendment Related to Section 1434 of 1997 Act.--Paragraph (2) of
section 4052(f ) of the 1986 Code is amended by striking ``this
section'' and inserting ``such section''.
(d) Amendment Related to Section 1436 of 1997 Act.--Paragraph (2) of
section 4091(a) of the 1986 Code is amended by inserting ``or on which
tax has been credited or refunded'' after ``such paragraph''.
(e) Amendment Related to Section 1453 of 1997 Act.--Subparagraph (D)
of section 7430(c)(4) of the 1986 Code is amended by striking
``subparagraph (A)(iii)'' and inserting ``subparagraph (A)(ii)''.
SEC. 6015. AMENDMENTS RELATED TO TITLE XV OF 1997 ACT.
(a) Amendment Related to Section 1501 of 1997 Act.--Paragraph (8) of
section 408(p) of the 1986 Code added by section 1501(b) of the 1997 Act
is redesignated as paragraph (9).
(b) Amendment Related to Section 1505 of 1997 Act.--Section
1505(d)(2) of the 1997 Act <<NOTE: 26 USC 401 note.>> is amended by
striking ``(b)(12)'' and inserting ``(b)(12)(A)(i)''.
[[Page 112 STAT. 821]]
(c) Amendments Related to Section 1529 of 1997 Act.--
(1) Section 1529(a) of the 1997 Act <<NOTE: 26 USC
1529.>> is amended to read as follows:
``(a) General Rule.--Amounts to which this section applies which are
received by an individual (or the survivors of the individual) as a
result of hypertension or heart disease of the individual shall be
excludable from gross income under section 104(a)(1) of the Internal
Revenue Code of 1986.''.
(2) Section 1529(b)(1)(B) of the 1997 Act is amended to read
as follows:
``(B) under--
``(i) a State law (as amended on May 19, 1992)
which irrebuttably presumed that heart disease and
hypertension are work-related illnesses but only
for employees hired before July 1, 1992; or
``(ii) any other statute, ordinance, labor
agreement, or similar provision as a disability
pension payment or in the nature of a disability
pension payment attributable to employment as a
police officer or fireman, but only if the
individual is referred to in the State law
described in clause (i); and''.
(d) Amendment Related to Section 1530 of 1997 Act.--Subparagraph (C)
of section 404(a)(9) of the 1986 Code (as added by section 1530 of the
1997 Act) is redesignated as subparagraph (D) and is amended by striking
``A qualified'' and inserting ``Qualified gratuitous transfers.--A
qualified''.
(e) Amendment Related to Section 1531 of 1997 Act.--Subsection (f )
of section 9811 of the 1986 Code (as added by section 1531 of the 1997
Act) is redesignated as subsection (e).
SEC. 6016. AMENDMENTS RELATED TO TITLE XVI OF 1997 ACT.
(a) Amendments Related to Section 1601(d) of 1997 Act.--
(1) Amendments related to section 1601(d)(1)--
(A) Section 408(p)(2)(D)(i) of the 1986 Code is
amended by striking ``or (B)'' in the last sentence.
(B) Section 408(p) of the 1986 Code is amended by
adding at the end the following new paragraph:
``(10) Special rules for acquisitions, dispositions, and
similar transactions.--
``(A) In general.--An employer which fails to meet
any applicable requirement by reason of an acquisition,
disposition, or similar transaction shall not be treated
as failing to meet such requirement during the
transition period if--
``(i) the employer satisfies requirements
similar to the requirements of section
410(b)(6)(C)(i)(II); and
``(ii) the qualified salary reduction
arrangement maintained by the employer would
satisfy the requirements of this subsection after
the transaction if the employer which maintained
the arrangement before the transaction had
remained a separate employer.
``(B) Applicable requirement.--For purposes of this
paragraph, the term `applicable requirement' means--
``(i) the requirement under paragraph
(2)(A)(i) that an employer be an eligible
employer;
``(ii) the requirement under paragraph (2)(D)
that an arrangement be the only plan of an
employer; and
[[Page 112 STAT. 822]]
``(iii) the participation requirements under
paragraph (4).
``(C) Transition period.--For purposes of this
paragraph, the term `transition period' means the period
beginning on the date of any transaction described in
subparagraph (A) and ending on the last day of the
second calendar year following the calendar year in
which such transaction occurs.''.
(C) Section 408(p)(2) of the 1986 Code is amended--
(i) by striking ``the preceding sentence shall
apply only in accordance with rules similar to the
rules of section 410(b)(6)(C)(i)'' in the last
sentence of subparagraph (C)(i)(II) and inserting
``the preceding sentence shall not apply''; and
(ii) by striking clause (iii) of subparagraph
(D).
(2) Amendment to section 1601 (d)(4).--Section 1601(d)(4)(A)
of the 1997 Act <<NOTE: 26 USC 403 note.>> is amended--
(A) by striking ``Section 403(b)(11)'' and inserting
``Paragraphs (7)(A)(ii) and (11) of section 403(b)'';
and
(B) by striking ``403(b)(1)'' in clause (ii) and
inserting ``403(b)(10)''.
(b) Amendment Related to Section 1601(f )(4) of 1997 Act.--
Subsection (d) of section 6427 of the 1986 Code is amended--
(1) by striking ``Helicopters'' in the heading and inserting
``Other Aircraft Uses''; and
(2) by inserting ``or a fixed-wing aircraft'' after
``helicopter''.
SEC. 6017. AMENDMENT RELATED TO TRANSPORTATION EQUITY ACT FOR THE 21ST
CENTURY.
(a) In General.--Subparagraph (B) of section 6427(i)(2) of the 1986
Code is amended to read as follows:
``(B) Time for filing claim.--No claim filed under
this paragraph shall be allowed unless filed during the
first quarter following the last quarter included in the
claim.''.
<<NOTE: 26 USC 6427 note.>> (b) Effective Date.--The amendment made
by subsection (a) shall take effect as if included in the amendments
made by section 9009 of the Transportation Equity Act for the 21st
Century.
SEC. 6018. AMENDMENTS RELATED TO SMALL BUSINESS JOB PROTECTION ACT OF
1996.
(a) Amendment Related to Section 1116.--Subparagraph (C) of section
1116(b)(2) of the Small Business Job Protection Act of 1996 <<NOTE: 110
Stat. 1764.>> is amended by striking ``chapter 68'' and inserting
``chapter 61''.
(b) Amendment Related to Section 1421.--Section 408(d)(7) of the
1986 Code is amended--
(1) by inserting ``or 402(k)'' after ``section 402(h)'' in
subparagraph (B) thereof; and
(2) by inserting ``or simple retirement accounts'' after
``pensions'' in the heading thereof.
(c) Amendment Related to Section 1431.--Subparagraph (E) of section
1431(c)(1) of the Small Business Job Protection Act of 1996 <<NOTE: 26
USC 414.>> is amended to read as follows:
``(E) Section 414(q)(5), as redesignated by subparagraph
(A), is amended by striking `under paragraph (4) or the number
of officers taken into account under paragraph (5)' ''.
[[Page 112 STAT. 823]]
(d) Amendment Related to Section 1604.--Paragraph (3) of section
1604(b) of such Act <<NOTE: 26 USC 167 note.>> is amended--
(1) by striking ``such Code'' and inserting ``the Internal
Revenue Code of 1986''; and
(2) by striking ``such date of enactment'' and inserting
``the date of the enactment of this Act''.
(e) Amendment Related to Section 1609.--Paragraph (1) of section
1609(h) of such Act <<NOTE: 26 USC 4091 note.>> is amended by striking
``paragraph (3)(A)(i)'' and inserting ``paragraph (3)(A)''.
(f ) Amendments Related to Section 1807.--
(1) Subparagraph (A) of section 23(b)(2) of the 1986 Code
(relating to income limitation on credit for adoption expenses)
is amended by inserting ``(determined without regard to
subsection (c))'' after ``for any taxable year''.
(2) Paragraph (3) of section 1807(c) of the Small Business
Job Protection Act of 1996 <<NOTE: 26 USC 219.>> is amended by
striking ``Clause (i)'' and inserting ``Clause (ii)''.
<<NOTE: 26 USC 679.>> (g) Amendment Related to Section 1903.--
Subsection (b) of section 1903 of such Act shall be applied as if ``or''
in the material proposed to be stricken were capitalized.
<<NOTE: 26 USC 23 note.>> (h) Effective Date.--The amendments made
by this section shall take effect as if included in the provisions of
the Small Business Job Protection Act of 1996 to which they relate.
SEC. 6019. AMENDMENTS RELATED TO TAXPAYER BILL OF RIGHTS 2.
(a) In General.--Subsection (b) of section 6104 of the 1986 Code is
amended by adding at the end the following new sentence: ``In the case
of an organization described in section 501(d), this subsection shall
not apply to copies referred to in section 6031(b) with respect to such
organization.''.
(b) Public Inspection.--Subparagraph (C) of section 6104(e)(1) of
the 1986 Code is amended by adding at the end the following new
sentence: ``In the case of an organization described in section 501(d),
subparagraph (A) shall not require the disclosure of the copies referred
to in section 6031(b) with respect to such organization.''.
(c) Disclosure to Authorized Representatives of the
Taxpayer.--Paragraph (6) of section 6103(e) of the 1986 Code is amended
by striking ``or (5)'' and inserting ``(5), (8), or (9)''.
<<NOTE: 26 USC 6103 note.>> (d) Effective Date.--The amendments
made by this section shall take effect on the date of the enactment of
this Act.
SEC. 6020. AMENDMENT RELATED TO OMNIBUS BUDGET RECONCILIATION ACT OF
1993.
(a) In General.--Section 196(c) of the 1986 Code is amended by
striking ``and'' at the end of paragraph (6), by striking the period at
the end of paragraph (7), and insert ``, and'', and by adding at the end
the following new paragraph:
``(8) the employer Social Security credit determined under
section 45B(a).''.
<<NOTE: 26 USC 196 note.>> (b) Effective Date.--The amendment made
by this section shall take effect as if included in the amendments made
by section 13443 of the Revenue Reconciliation Act of 1993.
SEC. 6021. AMENDMENT RELATED TO REVENUE RECONCILIATION ACT OF 1990.
(a) Identification Requirement for Individuals Eligible for Earned
Income Credit.--Subparagraph (F) of section 32(c)(1)
[[Page 112 STAT. 824]]
of the 1986 Code is amended by striking ``The term `eligible individual'
does not include any individual who does not include on the return of
tax for the taxable year--'' and inserting ``No credit shall be allowed
under this section to an eligible individual who does not include on the
return of tax for the taxable year--''.
(b) Identification Requirement for Qualifying Children Under Earned
Income Credit.--
(1) In general.--Clause (i) of section 32(c)(3)(D) of the
1986 Code is amended to read as follows:
``(i) In general.--A qualifying child shall
not be taken into account under subsection (b)
unless the taxpayer includes the name, age, and
TIN of the qualifying child on the return of tax
for the taxable year.''.
(2) Individuals who do not include tin, etc., of any
qualifying child.--Paragraph (1) of section 32(c) of the 1986
Code is amended by adding at the end the following new
subparagraph:
``(G) Individuals who do not include tin, etc., of
any qualifying child.--No credit shall be allowed under
this section to any eligible individual who has one or
more qualifying children if no qualifying child of such
individual is taken into account under subsection (b) by
reason of paragraph (3)(D).''.
(3) Conforming amendment.--Subparagraph (A) of section
32(c)(3) is amended by inserting ``and'' at the end of clause
(ii), by striking ``, and'' at the end of clause (iii) and
inserting a period, and by striking clause (iv).
<<NOTE: 26 USC 32 note.>> (c) Effective Dates.--
(1) Eligible individuals.--The amendment made by subsection
(a) shall take effect as if included in the amendments made by
section 451 of the Personal Responsibility and Work Opportunity
Reconciliation Act of 1996.
(2) Qualifying children.--The amendments made by subsection
(b) shall take effect as if included in the amendments made by
section 11111 of Revenue Reconciliation Act of 1990.
SEC. 6022. AMENDMENT RELATED TO TAX REFORM ACT OF 1986.
(a) In General.--Section 6401(b)(1) of the 1986 Code is
amended by striking ``and D'' and inserting ``D, and G''.
<<NOTE: 26 USC 6401 note.>> (b) Effective Date.--The amendment made
by subsection (a) shall take effect as if included in the amendments
made by section 701(b) of the Tax Reform Act of 1986.
SEC. 6023. MISCELLANEOUS CLERICAL AND DEADWOOD CHANGES.
(1) The heading for subparagraph (B) of section 45A(b)(1) of
the 1986 Code is amended by striking ``targeted jobs credit''
and inserting ``work opportunity credit''.
(2) The subsection heading for section 59(b) of the 1986
Code is amended by striking ``Section 936 Credit'' and inserting
``Credits Under Section 30A or 936''.
(3) Subsection (n) of section 72 of the 1986 Code is amended
by inserting ``(as in effect on the day before the date of the
enactment of the Small Business Job Protection Act of 1996)''
after ``section 101(b)(2)(D)''.
(4) Subparagraph (A) of section 72(t)(3) of the 1986 Code is
amended by striking ``(A)(v),'' and inserting ``(A)(v)''.
[[Page 112 STAT. 825]]
(5) Clause (ii) of section 142(f )(3)(A) of the 1986 Code is
amended by striking ``1997, ('' and inserting ``1997 (''.
(6) The last sentence of paragraph (3) of section 501(n) of
the 1986 Code is amended by striking ``subparagraph (C)(ii)''
and inserting ``subparagraph (E)(ii)''.
(7) Subsection (o) of section 501 of the 1986 Code is
amended by striking ``section 1853(e)'' and inserting ``section
1855(d)''.
(8) The heading for subclause (II) of section
512(b)(17)(B)(ii) of the 1986 Code is amended by striking
``Rule'' and inserting ``rule''.
(9) Clause (ii) of section 543(d)(5)(A) of the 1986 Code is
amended by striking ``section 563(c)'' and inserting ``section
563(d)''.
(10) Subparagraph (B) of section 871(f )(2) of the 1986 Code
is amended by striking ``(19 U.S.C. 2462)'' and inserting ``19
U.S.C. 2461 et seq.)''.
(11) Paragraph (2) of section 1017(a) of the 1986 Code is
amended by striking ``(b)(2)(D)'' and inserting ``(b)(2)(E)''.
(12) Subparagraph (D) of section 1250(d)(4) of the 1986 Code
is amended by striking ``the last sentence of section 1033(b)''
and inserting ``section 1033(b)(2)''.
(13) Paragraph (5) of section 3121(a) of the 1986 Code is
amended--
(A) by striking the semicolon at the end of
subparagraph (F) and inserting a comma;
(B) by striking ``or'' at the end of subparagraph
(G); and
(C) by striking the period at the end of
subparagraph (I) and inserting a semicolon.
(14) Paragraph (19) of section 3401(a) of the 1986 Code is
amended by inserting ``for'' before ``any benefit provided to''.
(15) Paragraph (21) of section 3401(a) of the 1986 Code is
amended by inserting ``for'' before ``any payment made''.
(16) Sections 4092(b) and 6427(q)(2) of the 1986 Code are
each amended by striking ``section 4041(c)(4)'' and inserting
``section 4041(c)(2)''.
(17) Sections 4221(c) and 4222(d) of the 1986 Code are each
amended by striking ``4053(a)(6)'' and inserting ``4053(6)''.
(18)(A) The heading of section 4973 of the 1986 Code is
amended to read as follows:
``SEC. 4973. TAX ON EXCESS CONTRIBUTIONS TO CERTAIN TAX-FAVORED ACCOUNTS
AND ANNUITIES.''.
(B) The item relating to section 4973 in the table of
sections for chapter 43 of the 1986 Code is amended to read as
follows:
``Sec. 4973. Tax on excess contributions to certain tax-
favored accounts and annuities.''.
(19) Section 4975 of the 1986 Code is amended--
(A) in subsection (c)(3) by striking ``exempt for
the tax'' and inserting ``exempt from the tax''; and
(B) in subsection (i) by striking ``Secretary of
Treasury'' and inserting ``Secretary of the Treasury''.
(20) Paragraph (1) of section 6039(a) of the 1986 Code is
amended by inserting ``to any person'' after ``transfers''.
[[Page 112 STAT. 826]]
(21) Subparagraph (A) of section 6050R(b)(2) of the 1986
Code is amended by striking the semicolon at the end thereof and
inserting a comma.
(22) Subparagraph (A) of section 6103(h)(4) of the 1986 Code
is amended by inserting ``if '' before ``the taxpayer is a party
to''.
(23) Paragraph (5) of section 6416(b) of the 1986 Code is
amended by striking ``section 4216(e)(1)'' each place it appears
and inserting ``section 4216(d)(1)''.
(24)(A) Section 6421 of the 1986 Code is amended by
redesignating subsections ( j) and (k) as subsections (i) and (
j), respectively.
(B) Subsection (b) of section 34 of the 1986 Code is amended
by striking ``section 6421( j)'' and inserting ``section
6421(i)''.
(C) Subsections (a) and (b) of section 6421 of the 1986 Code
are each amended by striking ``subsection ( j)'' and inserting
``subsection (i)''.
(25) Paragraph (3) of section 6427(f ) of the 1986 Code is
amended by striking ``, (e),''.
(26)(A) Section 6427 of the 1986 Code, as amended by
paragraph (16), is amended by redesignating subsections (n),
(p), (q), and (r) as subsections (m), (n), (o), and (p),
respectively.
(B) Paragraphs (1) and (2)(A) of section 6427(i) of the 1986
Code are each amended by striking ``(q)'' and inserting ``(o)''.
(27) Subsection (m) of section 6501 of the 1986 Code is
amended by striking ``election under'' and all that follows
through ``(or any'' and inserting ``election under section
30(d)(4), 40(f ), 43, 45B, 45C(d)(4), or 51( j) (or any''.
(28) The paragraph heading of paragraph (2) of section
7702B(e) of the 1986 Code is amended by inserting ``section''
after ``Application of''.
(29) Paragraph (3) of section 7434(b) of the 1986 Code is
amended by striking ``attorneys fees'' and inserting
``attorneys' fees''.
(30) Subparagraph (B) of section 7872(f )(2) of the 1986
Code is amended by striking ``foregone'' and inserting
``forgone''.
(31) Subsection (e) of section 9502 of the 1986 Code is
amended to read as follows:
``(e) Certain Taxes on Alcohol Mixtures To Remain in General Fund.--
For purposes of this section, the amounts which would (but for this
subsection) be required to be appropriated
under subparagraphs (A), (C), and (D) of subsection (b)(1) shall be
reduced by--
``(1) 0.6 cent per gallon in the case of taxes imposed on
any mixture at least 10 percent of which is alcohol (as defined
in section 4081(c)(3)) if any portion of such alcohol is
ethanol; and
``(2) 0.67 cent per gallon in the case of fuel used in
producing a mixture described in paragraph (1).''.
<<NOTE: Effective date. 26 USC 34 note.>> (32) The
amendments made by this section shall take effect on the date of
the enactment of this Act.
SEC. 6024. <<NOTE: 26 USC 1 note.>> EFFECTIVE DATE.
Except as otherwise provided in this title, the amendments made by
this title shall take effect as if included in the provisions of the
Taxpayer Relief Act of 1997 to which they relate.
[[Page 112 STAT. 827]]
TITLE VII--REVENUE PROVISIONS
SEC. 7001. CLARIFICATION OF DEDUCTION FOR DEFERRED COMPENSATION.
(a) In General.--Section 404(a) (relating to deduction for
contributions of an employer to an employee's trust or annuity plan and
compensation under a deferred-payment plan) is amended by adding at the
end the following new paragraph:
``(11) Determinations relating to deferred compensation.--
For purposes of determining under this section--
``(A) whether compensation of an employee is
deferred compensation; and
``(B) when deferred compensation is paid,
no amount shall be treated as received by the employee, or paid,
until it is actually received by the employee.''.
<<NOTE: 26 USC 404 note.>> (b) Effective Date.--
<<NOTE: Applicability.>> (1) In general.--The amendment
made by subsection (a) shall apply to taxable years ending after
the date of the enactment of this Act.
(2) Change in method of accounting.--In the case of any
taxpayer required by the amendment made by subsection (a) to
change its method of accounting for its first taxable year
ending after the date of the enactment of this Act--
(A) such change shall be treated as initiated by the
taxpayer,
(B) such change shall be treated as made with the
consent of the Secretary of the Treasury; and
(C) the net amount of the adjustments required to be
taken into account by the taxpayer under section 481 of
the Internal Revenue Code of 1986 shall be taken into
account ratably over the 3-taxable year period beginning
with such first taxable year.
SEC. 7002. <<NOTE: 26 USC 269B note.>> TERMINATION OF EXCEPTION FOR
CERTAIN REAL ESTATE INVESTMENT TRUSTS FROM THE TREATMENT OF
STAPLED ENTITIES.
<<NOTE: Applicability.>> (a) In General.--Notwithstanding paragraph
(3) of section 136(c) of the Tax Reform Act of 1984 (relating to stapled
stock; stapled entities), the REIT gross income provisions shall be
applied by treating the activities and gross income of members of the
stapled REIT group properly allocable to any nonqualified real property
interest held by the exempt REIT or any stapled entity which is a member
of such group (or treated under subsection (c) as held by such REIT or
stapled entity) as the activities and gross income of the exempt REIT in
the same manner as if the exempt REIT and such group were one entity.
(b) Nonqualified Real Property Interest.--For purposes of this
section--
(1) In general.--The term ``nonqualified real property
interest'' means, with respect to any exempt REIT, any interest
in real property acquired after March 26, 1998, by the exempt
REIT or any stapled entity.
(2) Exception for binding contracts, etc.--Such term shall
not include any interest in real property acquired after March
26, 1998, by the exempt REIT or any stapled entity if--
[[Page 112 STAT. 828]]
(A) the acquisition is pursuant to a written
agreement (including a put option, buy-sell agreement,
and an agreement relating to a third party default)
which was binding on such date and at all times
thereafter on such REIT or stapled entity; or
(B) the acquisition is described on or before such
date in a public announcement or in a filing with the
Securities and Exchange Commission.
(3) Improvements and leases.--
(A) In general.--Except as otherwise provided in
this paragraph, the term ``nonqualified real property
interest'' shall not include--
(i) any improvement to land owned or leased by
the exempt REIT or any member of the stapled REIT
group; and
(ii) any repair to, or improvement of, any
improvement owned or leased by the exempt REIT or
any member of the stapled REIT group,
if such ownership or leasehold interest is a qualified
real property interest.
(B) Leases.--The term ``nonqualified real property
interest'' shall not include--
(i) any lease of a qualified real property
interest if such lease is not otherwise such an
interest; or
(ii) any renewal of a lease which is a
qualified real property interest,
but only if the rent on any lease referred to in clause
(i) or any renewal referred to in clause (ii) does not
exceed an arm's length rate.
(C) Termination where change in use.--
(i) In general.--Subparagraph (A) shall not
apply to any improvement placed in service after
December 31, 1999, which is part of a change in
the use of the property to which such improvement
relates unless the cost of such improvement does
not exceed 200 percent of--
(I) the cost of such property; or
(II) if such property is substituted
basis property (as defined in section
7701(a)(42) of the Internal Revenue Code
of 1986), the fair market value of the
property at the time of acquisition.
(ii) Binding contracts.--For purposes of
clause (i), an improvement shall be treated as
placed in service before January 1, 2000, if such
improvement is placed in service before January 1,
2004, pursuant to a binding contract in effect on
December 31, 1999, and at all times thereafter.
(4) Exception for permitted transfers, etc.--The term
``nonqualified real property interest'' shall not include any
interest in real property acquired solely as a result of a
direct or indirect contribution, distribution, or other transfer
of such interest from the exempt REIT or any member of the
stapled REIT group to such REIT or any such member, but only to
the extent the aggregate of the interests of the exempt REIT and
all stapled entities in such interest in real property
(determined in accordance with subsection (c)(1)) is not
increased by reason of the transfer.
[[Page 112 STAT. 829]]
(5) Treatment of entities which are not stapled, etc. on
march 26, 1998.--Notwithstanding any other provision of this
section, all interests in real property held by an exempt REIT
or any stapled entity with respect to such REIT (or treated
under subsection (c) as held by such REIT or stapled entity)
shall be treated as nonqualified real property interests
unless--
(A) such stapled entity was a stapled entity with
respect to such REIT as of March 26, 1998, and at all
times thereafter; and
(B) as of March 26, 1998, and at all times
thereafter, such REIT was a real estate investment
trust.
(6) Qualified real property interest.--The term ``qualified
real property interest'' means any interest in real property
other than a nonqualified real property interest.
(c) Treatment of Property Held by 10-Percent Sub-
sidiaries.--For purposes of this section--
(1) In general.--Any exempt REIT and any stapled entity
shall be treated as holding their proportionate shares of each
interest in real property held by any 10-percent subsidiary
entity of the exempt REIT or stapled entity, as the case may be.
(2) Property held by 10-percent subsidiaries treated as
nonqualified.--
(A) In general.--Except as provided in subparagraph
(B), any interest in real property held by a 10-percent
subsidiary entity of an exempt REIT or stapled entity
shall be treated as a nonqualified real property
interest.
(B) Exception for interests in real property held on
march 26, 1998, etc.--In the case of an entity which was
a 10-percent subsidiary entity of an exempt REIT or
stapled entity on March 26, 1998, and at all times
thereafter, an interest in real property held by such
subsidiary entity shall be treated as a qualified real
property interest if such interest would be so treated
if held or acquired directly by the exempt REIT or the
stapled entity.
(3) Reduction in qualified real property interests if
increase in ownership of subsidiary.--If, after March 26, 1998,
an exempt REIT or stapled entity increases its ownership
interest in a subsidiary entity to which paragraph (2)(B)
applies above its ownership interest in such subsidiary entity
as of such date, the additional portion of each interest in real
property which is treated as held by the exempt REIT or stapled
entity by reason of such increased ownership shall be treated as
a nonqualified real property interest.
(4) Special rules for determining ownership.--For
purposes of this subsection--
(A) percentage ownership of an entity shall be
determined in accordance with subsection (e)(4);
(B) interests in the entity which are acquired by an
exempt REIT or a member of the stapled REIT group in any
acquisition described in an agreement, announcement, or
filing described in subsection (b)(2) shall be treated
as acquired on March 26, 1998; and
(C) except as provided in guidance prescribed by the
Secretary, any change in proportionate ownership which
is attributable solely to fluctuations in the relative
fair
[[Page 112 STAT. 830]]
market values of different classes of stock shall not be
taken into account.
(5) Treatment of 60-percent partnerships.--
(A) In general.--If, as of March 26, 1998--
(i) an exempt REIT or stapled entity held
directly or indirectly at least 60 percent of the
capital or profits interest in a partnership; and
(ii) 90 percent or more of the capital
interests and 90 percent or more of the profits
interests in such partnership (other than
interests held directly or indirectly by the
exempt REIT or stapled entity) are, or will be,
redeemable or exchangeable for consideration the
amount of which is determined by reference to the
value of shares of stock in the exempt REIT or
stapled entity (or both),
paragraph (3) shall not apply to such partnership, and
such REIT or entity shall be treated for all purposes of
this section as holding all of the capital and profits
interests in such partnership.
(B) Limitation to one partnership.--If, as of
January 1, 1999, more than one partnership owned by any
exempt REIT or stapled entity meets the requirements of
subparagraph (A), only the largest such partnership on
such date (determined by aggregate asset bases) shall be
treated as meeting such requirements.
(C) Mirror entity.--For purposes of subparagraph
(A), an interest in a partnership formed after March 26,
1998, shall be treated as held by an exempt REIT or
stapled entity on March 26, 1998, if such partnership is
formed to mirror the stapling of an exempt REIT and a
stapled entity in connection with an acquisition agreed
to or announced on or before March 26, 1998.
(d) Treatment of Property Secured by Mortgage Held by Exempt REIT or
Member of Stapled REIT Group.--
(1) In general.--In the case of any nonqualified obligation
held by an exempt REIT or any member of the stapled REIT group,
the REIT gross income provisions shall be applied by treating
the exempt REIT as having impermissible tenant
service income equal to--
(A) the interest income from such obligation which
is properly allocable to the property described in
paragraph (2); and
(B) the income of any member of the stapled REIT
group from services described in paragraph (2) with
respect to such property.
If the income referred to in subparagraph (A) or (B) is of a 10-
percent subsidiary entity, only the portion of such income which
is properly allocable to the exempt REIT's or the stapled
entity's interest in the subsidiary entity shall be taken into
account.
(2) Nonqualified obligation.--Except as otherwise provided
in this subsection, the term ``nonqualified obligation'' means
any obligation secured by a mortgage on an interest in real
property if the income of any member of the stapled REIT group
for services furnished with respect to such property
[[Page 112 STAT. 831]]
would be impermissible tenant service income were such property
held by the exempt REIT and such services furnished by the
exempt REIT.
(3) Exception for certain market rate obligations.--Such
term shall not include any obligation--
(A) payments under which would be treated as
interest if received by a REIT; and
(B) the rate of interest on which does not exceed an
arm's length rate.
(4) Exception for existing obligations.--Such term shall not
include any obligation--
(A) which is secured on March 26, 1998, by an
interest in real property; and
(B) which is held on such date by the exempt REIT or
any entity which is a member of the stapled REIT group
on such date and at all times thereafter,
but only so long as such obligation is secured by such interest,
and the interest payable on such obligation is not changed to a
rate which exceeds an arm's length rate unless such change is
pursuant to the terms of the obligation in effect on March 26,
1998. The preceding sentence shall not cease to apply by reason
of the refinancing of the obligation if (immediately after the
refinancing) the principal amount of the obligation resulting
from the refinancing does not exceed the principal amount of the
refinanced obligation (immediately before the refinancing) and
the interest payable on such refinanced obligation does not
exceed an arm's length rate.
<<NOTE: Applicability.>> (5) Treatment of entities which
are not stapled, etc. on march 26, 1998.--A rule similar to the
rule of subsection (b)(5) shall apply for purposes of this
subsection.
<<NOTE: Applicability.>> (6) Increase in amount of
nonqualified obligations if increase in ownership of
subsidiary.--A rule similar to the rule of subsection (c)(3)
shall apply for purposes of this subsection.
(7) Coordination with subsection (a).--This subsection shall
not apply to the portion of any interest in real property that
the exempt REIT or stapled entity holds or is treated as holding
under this section without regard to this subsection.
(e) Definitions.--For purposes of this section--
(1) REIT gross income provisions.--The term ``REIT gross
income provisions'' means--
(A) paragraphs (2), (3), and (6) of section 856(c)
of the Internal Revenue Code of 1986; and
(B) section 857(b)(5) of such Code.
(2) Exempt reit.--The term ``exempt REIT'' means a real
estate investment trust to which section 269B of the Internal
Revenue Code of 1986 does not apply by reason of paragraph (3)
of section 136(c) of the Tax Reform Act of 1984.
(3) Stapled reit group.--The term ``stapled REIT group''
means, with respect to an exempt REIT, the group consisting of--
(A) all entities which are stapled entities with
respect to the exempt REIT; and
(B) all entities which are 10-percent subsidiary
entities of the exempt REIT or any such stapled entity.
(4) 10-percent subsidiary entity.--
[[Page 112 STAT. 832]]
(A) In general.--The term ``10-percent subsidiary
entity'' means, with respect to any exempt REIT or
stapled entity, any entity in which the exempt REIT or
stapled entity (as the case may be) directly or
indirectly holds at least a 10-percent interest.
(B) Exception for certain c corporation subsidiaries
of reits.--A corporation which would, but for this
subparagraph, be treated as a 10-percent subsidiary of
an exempt REIT shall not be so treated if such
corporation is taxable under section 11 of the Internal
Revenue Code of 1986.
(C) 10-percent interest.--The term ``10-percent
interest'' means--
(i) in the case of an interest in a
corporation, ownership of 10 percent (by vote or
value) of the stock in such corporation;
(ii) in the case of an interest in a
partnership, ownership of 10 percent of the
capital or profits interest in the partnership;
and
(iii) in any other case, ownership of 10
percent of the beneficial interests in the entity.
(5) Other definitions.--Terms used in this section which are
used in section 269B or section 856 of such Code shall have the
respective meanings given such terms by such section.
(f ) Guidance.--The Secretary may prescribe such guidance as may be
necessary or appropriate to carry out the purposes of this section,
including guidance to prevent the avoidance of such purposes and to
prevent the double counting of income.
<<NOTE: Applicability.>> (g) Effective Date.--This section shall
apply to taxable years ending after March 26, 1998.
SEC. 7003. CERTAIN CUSTOMER RECEIVABLES INELIGIBLE FOR MARK TO MARKET
TREATMENT.
(a) Certain Receivables Not Eligible for Mark to Market.--Section
475(c) (relating to definitions) is amended by adding at the end the
following new paragraph:
``(4) Special rules for certain receivables.--
``(A) In general.--Paragraph (2)(C) shall not
include any nonfinancial customer paper.
``(B) Nonfinancial customer paper.--For purposes of
subparagraph (A), the term `nonfinancial customer paper'
means any receivable which--
``(i) is a note, bond, debenture, or other
evidence of indebtedness;
``(ii) arises out of the sale of nonfinancial
goods or services by a person the principal
activity of which is the selling or providing of
nonfinancial goods or services; and
``(iii) is held by such person (or a person
who bears a relationship to such person described
in section 267(b) or 707(b)) at all times since
issue.''.
(b) Regulations.--Section 475(g) is amended by striking ``and'' at
the end of paragraph (1), by striking the period at the end of paragraph
(2) and inserting ``, and'', and by adding at the end the following new
paragraph:
``(3) to prevent the use by taxpayers of subsection (c)(4)
to avoid the application of this section to a receivable that
[[Page 112 STAT. 833]]
is inventory in the hands of the taxpayer (or a person who bears
a relationship to the taxpayer described in sections 267(b) of
707(b)).''.
<<NOTE: 26 USC 475 note.>> (c) Effective Date.--
<<NOTE: Applicability.>> (1) In general.--The amendments
made by this section shall apply to taxable years ending after
the date of the enactment of this Act.
(2) Change in method of accounting.--In the case of any
taxpayer required by the amendments made by this section to
change its method of accounting for its first taxable year
ending after the date of the enactment of this Act--
(A) such change shall be treated as initiated by the
taxpayer;
(B) such change shall be treated as made with the
consent of the Secretary of the Treasury; and
(C) the net amount of the adjustments required to be
taken into account by the taxpayer under section 481 of
the Internal Revenue Code of 1986 shall be taken into
account ratably over the 4-taxable-year period beginning
with such first taxable year.
SEC. 7004. MODIFICATION OF AGI LIMIT FOR CONVERSIONS TO ROTH IRAs.
(a) In General.--Section 408A(c)(3)(C)(i) (relating to limits based
on modified adjusted gross income) is amended to read as follows:
``(i) adjusted gross income shall be
determined in the same manner as under section
219(g)(3), except that--
``(I) any amount included in gross
income under subsection (d)(3) shall not
be taken into account; and
``(II) any amount included in gross
income by reason of a required
distribution under a provision described
in paragraph (5) shall not be taken into
account for purposes of subparagraph
(B)(i).''.
<<NOTE: Applicability. 26 USC 408A note.>> (b) Effective Date.--The
amendment made by this section shall apply to taxable years beginning
after December 31, 2004.
TITLE VIII--IDENTIFICATION OF LIMITED TAX BENEFITS SUBJECT TO LINE ITEM
VETO
SEC. 8001. IDENTIFICATION OF LIMITED TAX BENEFITS SUBJECT TO LINE ITEM
VETO.
Section 1021(a)(3) of the Congressional Budget and Impoundment
Control Act of 1974 shall only apply to--
(1) section 3105 (relating to administrative appeal of
adverse IRS determination of tax-exempt status of bond issue);
and
(2) section 3445(c) (relating to State fish and wildlife
permits).
[[Page 112 STAT. 834]]
TITLE <<NOTE: TEA 21 Restoration Act. Grants. Inter-
governmental relations. Loans.>> IX--TECHNICAL CORRECTIONS TO
TRANSPORTATION EQUITY ACT FOR THE 21ST CENTURY
SEC. 9001. <<NOTE: 23 USC 101 note.>> SHORT TITLE.
This title may be cited as the ``TEA 21 Restoration Act''.
SEC. 9002. AUTHORIZATION AND PROGRAM SUBTITLE.
(a) Authorization of Appropriations.--Section 1101(a) of the
Transportation Equity Act for the 21st Century <<NOTE: Ante, p.
111.>> is amended--
(1) in paragraph (13)--
(A) by striking ``$1,025,695,000'' and inserting
``$1,029,583,500'';
(B) by striking ``$1,398,675,000'' and inserting
``$1,403,977,500'';
(C) by striking ``$1,678,410,000'' the first place
it appears and inserting ``$1,684,773,000'';
(D) by striking ``$1,678,410,000'' the second place
it appears and inserting ``$1,684,773,000'';
(E) by striking ``$1,771,655,000'' the first place
it appears and inserting ``$1,778,371,500''; and
(F) by striking ``$1,771,655,000'' the second place
it appears and inserting ``$1,778,371,500''; and
(2) in paragraph (14)--
(A) by striking ``1998'' and inserting ``1999''; and
(B) by inserting before ``$5,000,000'' the
following: ``$10,000,000 for fiscal year 1998 and''.
(b) Obligation Limitations.--
(1) General limitation.--Section 1102(a) of such
Act <<NOTE: Ante, p. 115.>> is amended--
(A) in paragraph (2) by striking ``$25,431,000,000''
and inserting ``$25,511,000,000'';
(B) in paragraph (3) by striking ``$26,155,000,000''
and inserting ``$26,245,000,000'';
(C) in paragraph (4) by striking ``$26,651,000,000''
and inserting ``$26,761,000,000'';
(D) in paragraph (5) by striking ``$27,235,000,000''
and inserting ``$27,355,000,000''; and
(E) in paragraph (6) by striking ``$27,681,000,000''
and inserting ``$27,811,000,000''.
(2) Transportation research programs.--Section 1102(e) of
such Act is amended--
(A) by striking ``3'' and inserting ``5'';
(B) by striking ``VI'' and inserting ``V''; and
(C) by inserting before the period at the end the
following: ``; except that obligation authority made
available for such programs under such limitations shall
remain available for a period of 3 fiscal years''.
(3) Redistribution of certain authorized funds.--
Section 1102(f ) of such Act is amended by striking ``(other
than the program under section 160 of title 23, United States
Code)''.
(c) Apportionments.--Section 1103 of such Act <<NOTE: Ante, p.
118.>> is amended--
(1) in subsection (l) by adding at the end the following:
[[Page 112 STAT. 835]]
``(5) Section 150 of such title, and the item relating to
such section in the analysis for chapter 1 of such title, are
repealed.'';
(2) in subsection (n) by inserting ``of title 23, United
States Code'' after ``206''; and
(3) by adding at the end the following:
``(o) Technical Adjustments.--Section 104 of title 23, United States
Code, is amended--
``(1) in subsection (a)(1) (as amended by subsection (a) of
this section) by striking `under section 103';
``(2) in subsection (b) (as amended by subsection (b) of
this section)--
``(A) in paragraph (1)(A) by striking `1999 through
2003' and inserting `1998 through 2002'; and
``(B) in paragraph (4)(B)(i) by striking `on lanes
on Interstate System' and all that follows through `in
each State' and inserting `on Interstate System routes
open to traffic in each State'; and
``(3) in subsection (e)(2) (as added by subsection (d)(6) of
this section) by striking `104, 144, or 157' and inserting `104,
105, or 144'.''.
(d) Minimum Guarantee.--Section 1104 of such Act <<NOTE: Ante, p.
127.>> is amended by adding at the end the following:
``(c) Technical Adjustments.--Section 105 of title 23, United States
Code (as amended by subsection (a) of this section), is
amended--
``(1) in subsection (a) by adding at the end the following:
`The minimum amount allocated to a State under this section for
a fiscal year shall be $1,000,000.';
``(2) in subsection (c)(1) by striking `50 percent of';
``(3) in subsection (c)(1)(A) by inserting `(other than
metropolitan planning, minimum guarantee, high priority
projects, Appalachian development highway system, and
recreational trails programs)' after `subsection (a)';
``(4) in subsection (c)(1)(B) by striking `all States' and
inserting `each State';
``(5) in subsection (c)(2)--
``(A) by striking `apportion' and inserting
`administer'; and
``(B) by striking `apportioned' and inserting
`administered'; and
``(6) in subsection (f )--
``(A) by inserting `percentage' before `return' each
place it appears;
``(B) in paragraph (2) by striking `for the
preceding fiscal year was equal to or less than' and
inserting `in the table in subsection (b) was equal to';
and
``(C) in paragraph (3)--
``(i) by inserting `proportionately' before
`adjust';
``(ii) by striking `set forth'; and
``(iii) by striking `do not exceed' and
inserting `is equal to'.''.
(e) Revenue Aligned Budget Authority.--Section 1105 of such
Act <<NOTE: Ante, p. 130.>> is amended by adding at the end the
following:
``(c) Technical Corrections.--Section 110 of such title (as amended
by subsection (a)) is amended--
``(1) by striking subsection (a) and inserting the
following:
[[Page 112 STAT. 836]]
`(a) In General.--
`(1) Allocation.--On October 15 of fiscal year 2000 and each
fiscal year thereafter, the Secretary shall allocate for such
fiscal year an amount of funds equal to the amount determined
pursuant to section 251(b)(1)(B)(ii)(I)(cc) of the Balanced
Budget and Emergency Deficit Control Act of 1985 (2 U.S.C
901(b)(2)(B)(ii)(I)(cc)) if the amount determined pursuant to
such section for such fiscal year is greater than zero.
`(2) Reduction.--If the amount determined pursuant to
section 251(b)(1)(B)(ii)(I)(cc) of the Balanced Budget and
Emergency Deficit Control Act of 1985 (2 U.S.C
901(b)(2)(B)(ii)(I)(cc)) for fiscal year 2000 or any fiscal year
thereafter is less than zero, the Secretary on October 1 of the
succeeding fiscal year shall reduce proportionately the amount
of sums authorized to be appropriated from the Highway Trust
Fund (other than the Mass Transit Account) to carry out each of
the Federal-aid highway and highway safety construction programs
(other than emergency relief) by an aggregate amount equal to
the amount determined pursuant to such section.';
``(2) in subsections (b)(2) and (b)(4) by striking
`subsection (a)' and inserting `subsection (a)(1)'; and
``(3) in subsection (c) by striking `Maintenance program,
the' and inserting `and'.''.
(f ) Interstate Maintenance Program.--Section 1107 of such
Act <<NOTE: Ante, p. 137.>> is amended by adding at the end the
following:
``(d) Technical Amendments.--Section 119 of such title (as amended
by subsection (a)) is amended--
``(1) in subsection (b)--
``(A) by striking `104(b)(5)(B)' and inserting
`104(b)(4)'; and
``(B) by striking `104(b)(5)(A)' each place it
appears and inserting `104(b)(5)(A) (as in effect on the
date before the date of enactment of the Transportation
Equity Act for the 21st Century)'; and
``(2) in subsection (c) by striking `104(b)(5)(B)' each
place it appears and inserting `104(b)(4)'.''.
(g) Congestion Mitigation and Air Quality Improvement Program.--
Section 1110(d)(2) of such Act <<NOTE: Ante, p. 142.>> is amended--
(1) by striking ``149(c)'' and inserting ``149(e)''; and
(2) by striking ``that reduce'' and inserting ``reduce''.
(h) Highway Use Tax Evasion Projects.--Section 1114 of such
Act <<NOTE: Ante, p. 152.>> is amended by adding at the end the
following:
``(c) Technical Adjustments.--Section 143 of title 23, United States
Code (as amended by subsection (a) of this section), is
amended--
``(1) in subsection (c)(1) by striking `April 1' and
inserting `August 1';
``(2) in subsection (c)(3) by inserting `priority' after
`Funding'; and
``(3) in subsection (c)(3) by inserting `and prior to
funding any other activity under this section,' after
`2003,'.''.
(i) Federal Lands Highways Program.--Section 1115 of the
Transportation Equity Act for the 21st Century <<NOTE: Ante, p.
154.>> is amended by adding at the end the following:
``(f ) Conforming Amendments.--
``(1) Federal share.--Subsections ( j) and (k) of section
120 of title 23, United States Code (as added by subsection
[[Page 112 STAT. 837]]
(a) of this section), are redesignated as subsections (k) and
(l), respectively.
``(2) Reservation of funds.--Section 202(d)(4)(B) of such
title (as added by subsection (b)(4) of this section) is amended
by striking `to, apply sodium acetate/formate de-icer to,' and
inserting `, sodium acetate/formate, or other environmentally
acceptable, minimally corrosive anti-icing and de-icing
compositions'.
``(3) Elimination of duplicative provision.--Section 144(g)
of such title is amended by striking paragraph (4).''.
( j) Woodrow Wilson Memorial Bridge Correction.--Section 1116 of
such Act <<NOTE: Ante, p. 158.>> is amended by adding at the end the
following:
``(e) Technical Correction.--Sections 404(5) and 407(c)(2)(C)(iii)
of such Act (as amended by subsections (a)(2) and (b)(2), respectively)
are amended by striking `the record of decision' each place it appears
and inserting `a record of decision'.''.
(k) Technical Correction.--Section 1117 of such Act <<NOTE: Ante, p.
160.>> is amended in subsections (a) and (b) by striking ``section 102''
each place it appears and inserting ``section 1101(a)(6)''.
SEC. 9003. RESTORATIONS TO GENERAL PROVISIONS SUBTITLE.
(a) In General.--Subtitle B of title I of the Transportation Equity
Act for the 21st Century <<NOTE: Ante, p. 164.>> is amended by adding at
the end the following:
``SEC. 1224. NATIONAL HISTORIC COVERED BRIDGE PRESERVATION.
``(a) Historic Covered Bridge Defined.--In this section, the term
`historic covered bridge' means a covered bridge that is listed or
eligible for listing on the National Register of Historic Places.
``(b) Historic Covered Bridge Preservation.--Subject to the
availability of appropriations under subsection (d), the Secretary
shall--
``(1) collect and disseminate information concerning
historic covered bridges;
``(2) foster educational programs relating to the history
and construction techniques of historic covered bridges;
``(3) conduct research on the history of historic covered
bridges; and
``(4) conduct research, and study techniques, on protecting
historic covered bridges from rot, fire, natural disasters, or
weight-related damage.
``(c) Direct Federal Assistance.--
``(1) In general.--Subject to the availability of
appropriations, the Secretary shall make a grant to a State that
submits an application to the Secretary that demonstrates a need
for assistance in carrying out 1 or more historic covered bridge
projects described in paragraph (2).
``(2) Types of project.--A grant under paragraph (1) may be
made for a project--
``(A) to rehabilitate or repair a historic covered
bridge; and
``(B) to preserve a historic covered bridge,
including through--
``(i) installation of a fire protection
system, including a fireproofing or fire detection
system and sprinklers;
``(ii) installation of a system to prevent
vandalism and arson; or
[[Page 112 STAT. 838]]
``(iii) relocation of a bridge to a
preservation site.
``(3) Authenticity.--A grant under paragraph (1) may be made
for a project only if--
``(A) to the maximum extent practicable, the
project--
``(i) is carried out in the most historically
appropriate manner; and
``(ii) preserves the existing structure of the
historic covered bridge; and
``(B) the project provides for the replacement of
wooden components with wooden components, unless the use
of wood is impracticable for safety reasons.
``(4) Federal share.--The Federal share of the cost of a
project carried out with a grant under this subsection shall be
80 percent.
``(d) Funding.--There is authorized to be appropriated to carry out
this section $10,000,000 for each of fiscal years 1999 through 2003.
Such funds shall remain available until expended.
``SEC. 1225. <<NOTE: District of Columbia.>> SUBSTITUTE PROJECT.
``(a) Approval of Project.--Notwithstanding any other provision of
law, upon the request of the Mayor of the District of Columbia, the
Secretary may approve substitute highway and transit projects under
section 103(e)(4) of title 23, United States Code (as in effect on the
day before the date of enactment of this Act), in lieu of construction
of the Barney Circle Freeway project in the District of Columbia, as
identified in the 1991 Interstate Cost Estimate.
``(b) Eligibility for Federal Assistance.--Upon approval of any
substitute project or projects under subsection (a)--
``(1) the cost of construction of the Barney Circle Freeway
Modification project shall not be eligible for funds authorized
under section 108(b) of the Federal-Aid Highway Act of 1956; and
``(2) substitute projects approved pursuant to this section
shall be funded from interstate construction funds apportioned
or allocated to the District of Columbia that are not expended
and not subject to lapse on the date of enactment of this Act.
``(c) Federal Share.--The Federal share payable on account of a
project or activity approved under this section shall be 85 percent of
the cost thereof; except that the exception set forth in section
120(b)(2) of title 23, United States Code, shall apply.
``(d) Limitation on Eligibility.--Any substitute project approved
pursuant to subsection (a) (for which the Secretary finds that
sufficient Federal funds are available) must be under contract for
construction, or construction must have commenced, before the last day
of the 4-year period beginning on the date of enactment of this Act. If
the substitute project is not under contract for construction, or
construction has not commenced, by such last day, the Secretary shall
withdraw approval of the substitute project.
``SEC. 1226. FISCAL, ADMINISTRATIVE, AND OTHER AMENDMENTS.
``(a) Advanced Construction.--Section 115 of title 23, United States
Code, is amended--
``(1) in subsection (b)--
``(A) by moving the text of paragraph (1) (including
subparagraphs (A) and (B)) 2 ems to the left;
[[Page 112 STAT. 839]]
``(B) by striking `Projects' and all that follows
through `When a State' and inserting `Projects.--When a
State';
``(C) by striking paragraphs (2) and (3);
``(D) by striking `(A) prior' and inserting `(1)
prior'; and
``(E) by striking `(B) the project' and inserting
`(2) the project';
``(2) by striking subsection (c); and
``(3) by redesignating subsection (d) as subsection (c).
``(b) Availability of Funds.--Section 118 of such title is amended--
``(1) in the subsection heading of subsection (b) by
striking `; Discretionary Projects'; and
``(2) by striking subsection (e) and inserting the
following:
`(e) Effect of Release of Funds.--Any Federal-aid highway funds
released by the final payment on a project, or by the modification of
the project agreement, shall be credited to the same program funding
category previously apportioned to the State and shall be immediately
available for expenditure.'.''.
``(c) Advances to States.--Section 124 of such title is
amended--
``(1) by striking `(a)' the first place it appears; and
``(2) by striking subsection (b).
``(d) Diversion.--Section 126 of such title, and the item relating
to such section in the analysis for chapter 1 of such title, are
repealed.''.
(b) Conforming Amendment.--The table of contents contained in
section 1(b) of such Act is amended by inserting after the item relating
to section 1222 the following:
``Sec. 1223. Transportation assistance for Olympic cities.
``Sec. 1224. National historic covered bridge preservation.
``Sec. 1225. Substitute project.
``Sec. 1226. Fiscal, administrative, and other amendments.''.
(c) Metropolitan Planning Technical Adjustment.--Section 1203 of
such Act <<NOTE: Ante, p. 170.>> is amended by adding at the end the
following:
``(o) Technical Adjustment.--Section 134(h)(5)(A) of title 23,
United States Code (as amended by subsection (h) of this section), is
amended by striking `for implementation'.''.
(d) Amendments to Prior Surface Transportation Laws.--Section 1211
of such Act <<NOTE: Ante, p. 188.>> is amended--
(1) in subsection (i)(3)(E) by striking ``subparagraph (D)''
and inserting ``subparagraph (C)'';
(2) in subsection (i) by adding at the end the following:
``(4) Technical amendments.--Section 1105(e)(5)(B)(i) of
such Act (as amended by paragraph (3) of this subsection) is
amended--
``(A) by striking `subsection (c)(18)(B)(i)' and
inserting `subsection (c)(18)(D)(i)';
``(B) by striking `subsection (c)(18)(B)(ii)' and
inserting `subsection (c)(18)(D)(ii)'; and
``(C) by adding at the end the following: `The
portion of the route referred to in subsection (c)(36)
is designated as Interstate Route I-86.'.'';
(3) by striking subsection ( j);
(4) in subsection (k)--
(A) by striking ``along'' in paragraph (1) and
inserting ``from''; and
[[Page 112 STAT. 840]]
(B) by adding at the end the following:
``(4) Texas state highway 99.--Texas State Highway 99 (also
known as `Grand Parkway') shall be considered as one option in
the I-69 route studies performed by the Texas Department of
Transportation for the designation of I-69 Bypass in Houston,
Texas.''; and
(5) by redesignating subsections (g) through (i) and (k)
through (n) as subsections (f ) through (h) and (i) through (l),
respectively.
(e) Miscellaneous.--Section 1212 of such Act <<NOTE: Ante, p.
193.>> is amended--
(1) in the second sentence of subsection (q)(1) by striking
``advance curriculum'' and inserting ``advanced curriculum'';
(2) in subsection (r)--
(A) by redesignating paragraph (2) as paragraph (3);
and
(B) by inserting after paragraph (1) the following:
``(2) Authorization of appropriations.--There are authorized
to be appropriated from the Highway Trust Fund (other than the
Mass Transit Account) to carry out paragraph (1) $2,000,000 for
fiscal year 1999 and $2,500,000 for fiscal year 2000.'';
(3) in subsection (s)--
(A) by redesignating paragraph (2) as paragraph (3);
and
(B) by inserting after paragraph (1) the following:
``(2) Authorization of appropriations.--There is authorized
to be appropriated from the Highway Trust Fund (other than the
Mass Transit Account) to carry out paragraph (1) $23,000,000 for
fiscal year 1999.'';
(4) in subsection (u)--
(A) by inserting ``the Secretary shall approve,
and'' before ``the Commonwealth'';
(B) by inserting a comma after ``with''; and
(C) by inserting ``(as redefined by this Act)''
after ``80''; and
(5) by redesignating subsections (k) through (z) as
subsections (e) through (t), respectively.
(f ) Puerto Rico Highway Program.--Section 1214(r) of the
Transportation Equity Act for the 21st Century <<NOTE: Ante, p.
204.>> is amended by adding at the end the following:
``(3) Treatment of funds.--Amounts made available to carry
out this subsection for a fiscal year shall be administered as
follows:
``(A) For purposes of this subsection, such amounts
shall be treated as being apportioned to Puerto Rico
under sections 104(b), 144, and 206 of title 23, United
States Code, for each program funded under such sections
in an amount determined by multiplying--
``(i) the aggregate of such amounts for the
fiscal year; by
``(ii) the ratio that--
``(I) the amount of funds
apportioned to Puerto Rico for each such
program for fiscal year 1997; bears to
``(II) the total amount of funds
apportioned to Puerto Rico for all such
programs for fiscal year 1997.
[[Page 112 STAT. 841]]
``(B) The amounts treated as being apportioned to
Puerto Rico under each section referred to in
subparagraph (A) shall be deemed to be required to be
apportioned to Puerto Rico under such section for
purposes of the imposition of any penalty provisions in
titles 23 and 49, United States Code.
``(C) Subject to subparagraph (B), nothing in this
subsection shall be construed as affecting any
allocation under section 105 of title 23, United States
Code, and any apportionment under sections 104 and 144
of such title.''.
(g) Designated Transportation Enhancement Activities.--Section 1215
of such Act-- <<NOTE: Ante, p. 209.>>
(1) is amended in each of subsections (d), (e), (f ),
and (g)--
(A) by redesignating paragraph (2) as paragraph (3);
and
(B) by inserting after paragraph (1) the following:
``(2) Authorization of appropriations.--There are authorized
to be appropriated from the Highway Trust Fund (other than the
Mass Transit Account) to carry out paragraph (1) the amounts
specified in such paragraph for the fiscal years specified in
such paragraph.''; and
(2) in subsection (d)(1) by inserting ``on Route 50'' after
``measures''.
(h) Eligibility.--Section 1217 of such Act <<NOTE: Ante, p.
214.>> is amended--
(1) in subsection (d) by striking ``104(b)(4)'' and
inserting ``104(b)(5)(A)'';
(2) in subsection (i) by striking ``120(l)(1)'' and
inserting ``120( j)(1)''; and
(3) in subsection ( j) by adding at the end the following:
``$3,000,000 of the amounts made available for item 164 of the
table contained in section 1602 shall be made available on
October 1, 1998, to the Pennsylvania Turnpike Commission to
carry out this subsection.''.
(i) Magnetic Levitation Transportation Technology Deployment
Program.--Section 1218 of such Act <<NOTE: Ante, p. 216.>> is amended by
adding at the end the following:
``(c) Technical Amendments.--Section 322 of title 23, United States
Code (as added by subsection (a) of this section), is
amended--
``(1) in subsection (a)(3) by striking `or under 50 miles
per hour';
``(2) in subsection (d)--
``(A) in paragraph (1) by striking `or low-speed';
and
``(B) in paragraph (2)--
``(i) in subparagraph (A) by striking
`(h)(1)(A)' and inserting `(h)(1)'; and
``(ii) in subparagraph (B) by striking
`(h)(4)' and inserting `(h)(3)';
``(3) in subsection (h)(1)(B)(i) by inserting `(other than
subsection (i))' after `this section'; and
``(4) by adding at the end the following:
`(i) Low-Speed Project.--
`(1) In general.--Notwithstanding any other provision of
this section, of the funds made available by subsection
(h)(1)(A) to carry out this section, $5,000,000 shall be made
available
[[Page 112 STAT. 842]]
to the Secretary to make grants for the research and development
of low-speed superconductivity magnetic levitation technology
for public transportation purposes in urban areas to demonstrate
energy efficiency, congestion mitigation, and safety benefits.
`(2) Noncontract authority authorization of
appropriations.--
`(A) In general.--There are authorized to be
appropriated from the Highway Trust Fund (other than the
Mass Transit Account) to carry out this subsection such
sums as are necessary for each of fiscal years 2000
through 2003.
`(B) Availability.--Notwithstanding section 118(a),
funds made available under subparagraph (A)--
`(i) shall not be available in advance of an
annual appropriation; and
`(ii) shall remain available until
expended.'.''.
( j) Transportation Assistance for Olympic Cities.--Section 1223(f )
of such Act <<NOTE: Ante, p. 224.>> is amended by inserting before the
period at the end the following: ``or Special Olympics International''.
SEC. 9004. RESTORATIONS TO PROGRAM STREAMLINING AND FLEXIBILITY
SUBTITLE.
(a) In General.--Subtitle C of title I of the Transportation Equity
Act for the 21st Century <<NOTE: Ante, p. 225.>> is amended by adding at
the end the following:
``SEC. 1311. DISCRETIONARY GRANT SELECTION CRITERIA AND
PROCESS.
``(a) Establishment of Criteria.--The Secretary shall establish
criteria for all discretionary programs funded from the Highway Trust
Fund (other than the Mass Transit Account). To the extent practicable,
such criteria shall conform to the Executive Order No. 12893 (relating
to infrastructure investment).
``(b) Selection Process.--
<<NOTE: Publication.>> ``(1) Limitation on acceptance of
applications.--Before accepting applications for grants under
any discretionary program for which funds are authorized to be
appropriated from the Highway Trust Fund (other than the Mass
Transit Account) by this Act (including the amendments made by
this Act), the Secretary shall publish the criteria established
under subsection (a). Such publication shall identify all
statutory criteria and any criteria established by regulation
that will apply to the program.
<<NOTE: Records.>> ``(2) Explanation.--Not less often than
quarterly, the Secretary shall submit to the Committee on
Environment and Public Works of the Senate and the Committee on
Transportation and Infrastructure of the House of
Representatives a list of the projects selected under
discretionary programs funded from the Highway Trust Fund (other
than the Mass Transit Account) and an explanation of how the
projects were selected based on the criteria established under
subsection (a).
<<NOTE: Applicability.>> ``(c) Minimum Covered Programs.--At a
minimum, the criteria established under subsection (a) and the selection
process established by subsection (b) shall apply to the following
programs:
``(1) The intelligent transportation system deployment
program under title V.
[[Page 112 STAT. 843]]
``(2) The national corridor planning and development
program.
``(3) The coordinated border infrastructure and safety
program.
``(4) The construction of ferry boats and ferry terminal
facilities.
``(5) The national scenic byways program.
``(6) The Interstate discretionary program.
``(7) The discretionary bridge program.''.
(b) Conforming Amendments.--The table of contents contained in
section 1(b) of such Act <<NOTE: Ante, p. 107.>> is amended--
(1) by striking the following:
``Sec. 1309. Major investment study integration.''.
and inserting the following:
``Sec. 1308. Major investment study integration.'';
and
(2) by inserting after the item relating to section 1310 the
following:
``Sec. 1311. Discretionary grant selection criteria and process.''.
(c) Review Process.--Section 1309 of the Transportation Equity Act
for the 21st Century <<NOTE: Ante, p. 232.>> is amended--
(1) in subsection (a)(1) by inserting after ``highway
construction'' the following: ``and mass transit'';
(2) in subsection (d) by inserting after ``Code,'' the
following: ``or chapter 53 of title 49, United States Code,'';
and
(3) in subsection (e)(1)--
(A) by inserting ``or recipient'' after ``a State'';
(B) by inserting after ``provide funds'' the
following: ``for a highway project''; and
(C) by inserting after ``Code,'' the following: ``or
for a mass transit project made available under chapter
53 of title 49, United States Code,''.
SEC. 9005. RESTORATIONS TO SAFETY SUBTITLE.
(a) In General.--Subtitle D of title I of the Transportation Equity
Act for the 21st Century <<NOTE: Ante, p. 235.>> is amended by adding at
the end the following:
``SEC. 1405. OPEN CONTAINER LAWS.
``(a) Establishment.--Chapter 1 of title 23, United States Code, is
amended by inserting after section 153 the following:
`Sec. 154. Open container requirements
`(a) Definitions.--In this section, the following definitions apply:
`(1) Alcoholic beverage.--The term ``alcoholic beverage''
has the meaning given the term in section 158(c).
`(2) Motor vehicle.--The term ``motor vehicle'' means a
vehicle driven or drawn by mechanical power and manufactured
primarily for use on public highways, but does not include a
vehicle operated exclusively on a rail or rails.
`(3) Open alcoholic beverage container.--The term ``open
alcoholic beverage container'' means any bottle, can, or other
receptacle--
`(A) that contains any amount of alcoholic beverage;
and
[[Page 112 STAT. 844]]
`(B)(i) that is open or has a broken seal; or
`(ii) the contents of which are partially removed.
<<NOTE: Regulation.>> `(4) Passenger area.--The term
``passenger area'' shall have the meaning given the term by the
Secretary by regulation.
`(b) Open Container Laws.--
`(1) In general.--For the purposes of this section, each
State shall have in effect a law that prohibits the possession
of any open alcoholic beverage container, or the consumption of
any alcoholic beverage, in the passenger area of any motor
vehicle (including possession or consumption by the driver of
the vehicle) located on a public highway, or the right-of-way of
a public highway, in the State.
`(2) Motor vehicles designed to transport many passengers.--
For the purposes of this section, if a State has in effect a law
that makes unlawful the possession of any open alcoholic
beverage container by the driver (but not by a passenger)--
`(A) in the passenger area of a motor vehicle
designed, maintained, or used primarily for the
transportation of persons for compensation; or
`(B) in the living quarters of a house coach or
house trailer,
the State shall be deemed to have in effect a law described in
this subsection with respect to such a motor vehicle for each
fiscal year during which the law is in effect.
`(c) Transfer of Funds.--
<<NOTE: Effective dates.>> `(1) Fiscal years 2001 and
2002.--On October 1, 2000, and October 1, 2001, if a State has
not enacted or is not enforcing an open container law described
in subsection (b), the Secretary shall transfer an amount equal
to 1\1/2\ percent of the funds apportioned to the State on that
date under each of paragraphs (1), (3), and (4) of section
104(b) to the apportionment of the State under section 402--
`(A) to be used for alcohol-impaired driving
countermeasures; or
`(B) to be directed to State and local law
enforcement agencies for enforcement of laws prohibiting
driving while intoxicated or driving under the influence
and other related laws (including regulations),
including the purchase of equipment, the training of
officers, and the use of additional personnel for
specific alcohol-impaired driving countermeasures,
dedicated to enforcement of the laws (including
regulations).
<<NOTE: Effective date.>> `(2) Fiscal year 2003 and fiscal
years thereafter.--On October 1, 2002, and each October 1
thereafter, if a State has not enacted or is not enforcing an
open container law described in subsection (b), the Secretary
shall transfer an amount equal to 3 percent of the funds
apportioned to the State on that date under each of paragraphs
(1), (3), and (4) of section 104(b) to the apportionment of the
State under section 402 to be used or directed as described in
subparagraph (A) or (B) of paragraph (1).
`(3) Use for hazard elimination program.--A State may elect
to use all or a portion of the funds transferred under paragraph
(1) or (2) for activities eligible under section 152.
[[Page 112 STAT. 845]]
`(4) Federal share.--The Federal share of the cost of a
project carried out with funds transferred under paragraph (1)
or (2), or used under paragraph (3), shall be 100 percent.
`(5) Derivation of amount to be transferred.--The amount to
be transferred under paragraph (1) or (2) may be derived from
one or more of the following:
`(A) The apportionment of the State under section
104(b)(1).
`(B) The apportionment of the State under section
104(b)(3).
`(C) The apportionment of the State under section
104(b)(4).
`(6) Transfer of obligation authority.--
`(A) In general.--If the Secretary transfers under
this subsection any funds to the apportionment of a
State under section 402 for a fiscal year, the Secretary
shall transfer an amount, determined under subparagraph
(B), of obligation authority distributed for the fiscal
year to the State for Federal-aid highways and highway
safety construction programs for carrying out projects
under section 402.
`(B) Amount.--The amount of obligation authority
referred to in subparagraph (A) shall be determined by
multiplying--
`(i) the amount of funds transferred under
subparagraph (A) to the apportionment of the State
under section 402 for the fiscal year, by
`(ii) the ratio that--
`(I) the amount of obligation
authority
distributed for the fiscal year to the
State for Federal-aid highways and
highway safety construction programs,
bears to
`(II) the total of the sums
apportioned to the State for Federal-aid
highways and highway safety construction
programs (excluding sums not subject to
any obligation limitation) for the
fiscal year.
`(7) Limitation on applicability of obligation
limitation.--Notwithstanding any other provision of law, no
limitation on the total of obligations for highway safety
programs under section 402 shall apply to funds transferred
under this subsection to the apportionment of a State under such
section.'.
``(b) Conforming Amendment.--The analysis for chapter 1 of such
title is amended by inserting after the item relating to section 153 the
following:
`154. Open container requirements.'.
``SEC. 1406. MINIMUM PENALTIES FOR REPEAT OFFENDERS FOR DRIVING WHILE
INTOXICATED OR DRIVING UNDER THE INFLUENCE.
``(a) In General.--Chapter 1 of title 23, United States Code, is
amended by adding at the end the following:
`Sec. 164. Minimum penalties for repeat offenders for driving while
intoxicated or driving under the influence
`(a) Definitions.--In this section, the following definitions apply:
[[Page 112 STAT. 846]]
`(1) Alcohol concentration.--The term ``alcohol
concentration'' means grams of alcohol per 100 milliliters of
blood or grams of alcohol per 210 liters of breath.
`(2) Driving while intoxicated; driving under the
influence.--The terms ``driving while intoxicated'' and
``driving under the influence'' mean driving or being in actual
physical control of a motor vehicle while having an alcohol
concentration above the permitted limit as established by each
State.
`(3) License suspension.--The term ``license suspension''
means the suspension of all driving privileges.
`(4) Motor vehicle.--The term ``motor vehicle'' means a
vehicle driven or drawn by mechanical power and manufactured
primarily for use on public highways, but does not include a
vehicle operated solely on a rail line or a commercial vehicle.
`(5) Repeat intoxicated driver law.--The term ``repeat
intoxicated driver law'' means a State law that provides, as a
minimum penalty, that an individual convicted of a second or
subsequent offense for driving while intoxicated or driving
under the influence after a previous conviction for that offense
shall--
`(A) receive a driver's license suspension for not
less than 1 year;
`(B) be subject to the impoundment or immobilization
of each of the individual's motor vehicles or the
installation of an ignition interlock system on each of
the motor vehicles;
`(C) receive an assessment of the individual's
degree of abuse of alcohol and treatment as appropriate;
and
`(D) receive--
`(i) in the case of the second offense--
`(I) an assignment of not less than
30 days of community service; or
`(II) not less than 5 days of
imprisonment; and
`(ii) in the case of the third or subsequent
offense--
`(I) an assignment of not less than
60 days of community service; or
`(II) not less than 10 days of
imprisonment.
`(b) Transfer of Funds.--
<<NOTE: Effective dates.>> `(1) Fiscal years 2001 and
2002.--On October 1, 2000, and October 1, 2001, if a State has
not enacted or is not enforcing a repeat intoxicated driver law,
the Secretary shall transfer an amount equal to 1\1/2\ percent
of the funds apportioned to the State on that date under each of
paragraphs (1), (3), and (4) of section 104(b) to the
apportionment of the State under section 402--
`(A) to be used for alcohol-impaired driving
countermeasures; or
`(B) to be directed to State and local law
enforcement agencies for enforcement of laws prohibiting
driving while intoxicated or driving under the influence
and other related laws (including regulations),
including the purchase of equipment, the training of
officers, and the use of additional personnel for
specific alcohol-impaired driving countermeasures,
dedicated to enforcement of the laws (including
regulations).
[[Page 112 STAT. 847]]
<<NOTE: Effective date.>> `(2) Fiscal year 2003 and fiscal
years thereafter.--On October 1, 2002, and each October 1
thereafter, if a State has not enacted or is not enforcing a
repeat intoxicated driver law, the Secretary shall transfer an
amount equal to 3 percent of the funds apportioned to the State
on that date under each of paragraphs (1), (3), and (4) of
section 104(b) to the apportionment of the State under section
402 to be used or directed as described in subparagraph (A) or
(B) of paragraph (1).
`(3) Use for hazard elimination program.--A State may elect
to use all or a portion of the funds transferred under paragraph
(1) or (2) for activities eligible under section 152.
`(4) Federal share.--The Federal share of the cost of a
project carried out with funds transferred under paragraph (1)
or (2), or used under paragraph (3), shall be 100 percent.
`(5) Derivation of amount to be transferred.--The amount to
be transferred under paragraph (1) or (2) may be derived from
one or more of the following:
`(A) The apportionment of the State under section
104(b)(1).
`(B) The apportionment of the State under section
104(b)(3).
`(C) The apportionment of the State under section
104(b)(4).
`(6) Transfer of obligation authority.--
`(A) In general.--If the Secretary transfers under
this subsection any funds to the apportionment of a
State under section 402 for a fiscal year, the Secretary
shall transfer an amount, determined under subparagraph
(B), of obligation authority distributed for the fiscal
year to the State for Federal-aid highways and highway
safety construction programs for carrying out projects
under section 402.
`(B) Amount.--The amount of obligation authority
referred to in subparagraph (A) shall be determined by
multiplying--
`(i) the amount of funds transferred under
subparagraph (A) to the apportionment of the State
under section 402 for the fiscal year, by
`(ii) the ratio that--
`(I) the amount of obligation
authority
distributed for the fiscal year to the
State for Federal-aid highways and
highway safety construction programs,
bears to
`(II) the total of the sums
apportioned to the State for Federal-aid
highways and highway safety construction
programs (excluding sums not subject to
any obligation limitation) for the
fiscal year.
`(7) Limitation on applicability of obligation
limitation.--Notwithstanding any other provision of law, no
limitation on the total of obligations for highway safety
programs under section 402 shall apply to funds transferred
under this subsection to the apportionment of a State under such
section.'.
[[Page 112 STAT. 848]]
``(b) Conforming Amendment.--The analysis for chapter 1 of such
title is amended by adding at the end the following:
`164. Minimum penalties for repeat offenders for driving while
intoxicated or driving under the influence.'.''.
(b) Conforming Amendment.--The table of contents contained in
section 1(b) of such Act <<NOTE: Ante, p. 107.>> is amended by inserting
after the item relating to section 1403 the following:
``Sec. 1404. Safety incentives to prevent operation of motor vehicles by
intoxicated persons.
``Sec. 1405. Open container laws.
``Sec. 1406. Minimum penalties for repeat offenders for driving while
intoxicated or driving under the influence.''.
(c) Roadside Safety Technologies.--Section 1402(a)(2) of such
Act <<NOTE: Ante, p. 236.>> is amended by striking ``directive'' and
inserting ``redirective''.
SEC. 9006. ELIMINATION OF DUPLICATE PROVISIONS.
(a) San Mateo County, California.--Section 1113 of the
Transportation Equity Act for the 21st Century <<NOTE: Ante, p.
151.>> is amended--
(1) by striking subsection (c); and
(2) by redesignating subsection (d) as subsection (c).
(b) Value Pricing Pilot Program.--Section 1216(a) of such
Act <<NOTE: Ante, p. 211.>> is amended by adding at the end the
following:
``(8) Conforming amendments.--
``(A) Section 1012(b)(6) of such Act (as amended by
paragraph (5) of this subsection) is amended by striking
`146(c)' and inserting `102(a)'.
``(B) Section 1012(b)(8) of such Act (as added by
paragraph (7) of this subsection) is amended--
``(i) in subparagraph (C) by striking `under
this subsection' and inserting `to carry out this
subsection';
``(ii) in subparagraph (D)--
``(I) by striking `under this
paragraph' and inserting `to carry out
this subsection'; and
``(II) by striking `by this
paragraph' and inserting `to carry out
this subsection';
``(iii) by striking subparagraph (A); and
``(iv) by redesignating subparagraphs (B),
(C), and (D) as subparagraphs (A), (B), and (C),
respectively.''.
(c) National Defense Highways Outside the United States.--Section
1214(e) of such Act <<NOTE: Ante, p. 204.>> is amended to read as
follows:
``(e) Minnesota Transportation History Network.--
``(1) In general.--The Secretary shall award a grant to the
Minnesota Historical Society for the establishment of the
Minnesota Transportation History Network to include major
exhibits, interpretive programs at national historic landmark
sites, and outreach programs with county and local historical
organizations.
``(2) Coordination.--In carrying out subsection (a), the
Secretary shall coordinate with officials of the Minnesota
Historical Society.
``(3) Authorization of appropriations.--There is authorized
to be appropriated out of the Highway Trust Fund (other than the
Mass Transit Account) $1,000,000 for each of fiscal years 1998
through 2003 to carry out this subsection.
``(4) Applicability of title 23.--Funds authorized by this
subsection shall be available for obligation in the same manner
[[Page 112 STAT. 849]]
as if such funds were apportioned under chapter 1 of title 23,
United States Code; except that such funds shall remain
available until expended.''.
(d) Entrance Paving at Ninigret National Wildlife
Refuge.--Section 1214(i) of such Act <<NOTE: Ante, p. 204.>> is amended
by striking ``$750,000'' each place it appears and inserting
``$75,000''.
SEC. 9007. HIGHWAY FINANCE.
(a) In General.--Section 1503 of the Transportation Equity Act for
the 21st Century <<NOTE: Ante, p. 241.>> is amended by adding at the end
the following:
``(c) Technical Amendments.--Section 188 of title 23, United States
Code (as added by subsection (a) of this section), is
amended--
``(1) in subsection (a)(2) by striking `1998' and inserting
`1999'; and
``(2) in subsection (c)--
``(A) by striking `1998' and inserting `1999'; and
``(B) by striking the table and inserting the
following:
Maximum amount
`Fiscal year: of credit:
1999...................................................$1,600,000,000
2000...................................................$1,800,000,000
2001...................................................$2,200,000,000
2002...................................................$2,400,000,000
2003..............................................$2,600,000,000.'.''.
(b) Conforming Amendments.--The table of contents contained in
section 1(b) of the Transportation Equity Act for the 21st
Century <<NOTE: Ante, p. 107.>> is amended--
(1) in the item relating to section 1119 by striking ``and
safety''; and
(2) by striking the items relating to subtitle E of title I
and inserting the following:
``Subtitle E--Finance
``Chapter 1--Transportation Infrastructure Finance and Innovation
``Sec. 1501. Short title.
``Sec. 1502. Findings.
``Sec. 1503. Establishment of program.
``Sec. 1504. Duties of the Secretary.
``Chapter 2--State Infrastructure Bank Pilot Program
``Sec. 1511. State infrastructure bank pilot program.''.
SEC. 9008. HIGH PRIORITY PROJECTS TECHNICAL CORRECTIONS.
The table contained in section 1602 of the Transportation Equity Act
for the 21st Century <<NOTE: Ante, p. 256.>> is amended--
(1) in item 1 by striking ``1.275'' and inserting ``1.7'';
(2) in item 82 by striking ``30.675'' and inserting
``32.4'';
(3) in item 107 by striking ``1.125'' and inserting
``1.44'';
(4) in item 121 by striking ``10.5'' and inserting ``5.0'';
(5) in item 140 by inserting ``-VFHS Center'' after
``Park'';
(6) in item 151 by striking ``5.666'' and inserting
``8.666'';
(7) in item 164--
(A) by inserting ``, and $3,000,000 for the period
of fiscal years 1998 and 1999 shall be made available to
carry out section 1217( j)'' after ``Pennsylvania''; and
(B) by striking ``25'' and inserting ``24.78'';
(8) by striking item 166 and inserting the following:
[[Page 112 STAT. 850]]
``166 Michigan Improve Tenth Street, 1.8'';
. Port Huron............
------------------------------------------------------------------------
(9) by striking item 242 and inserting the following:
``242 Minnesota Construct Third Street 1.0'';
. North, CSAH 81, Waite
Park and St. Cloud....
------------------------------------------------------------------------
(10) by striking item 250 and inserting the following:
``250. Indiana Reconstruct Old 1.35'';
Merridan Corridor
from Pennsylvania
Avenue to Gilford
Road.................
------------------------------------------------------------------------
(11) in item 255 by striking ``2.25'' and inserting ``3.0'';
(12) in item 263 by striking ``Upgrade Highway 99 between
State Highway 70 and Lincoln Road, Sutter County'' and inserting
``Upgrade Highway 99, Sutter County'';
(13) in item 288 by striking ``3.75'' and inserting ``5.0'';
(14) in item 290 by striking ``3.5'' and inserting ``3.0'';
(15) in item 345 by striking ``8'' and inserting ``19.4'';
(16) in item 418 by striking ``2'' and inserting ``2.5'';
(17) in item 421 by striking ``11'' and inserting ``6'';
(18) in item 508 by striking ``1.8'' and inserting ``2.4'';
(19) by striking item 525 and inserting the following:
``525 Alaska Construct Bradfield 1'';
. Canal Road............
------------------------------------------------------------------------
(20) in item 540 by striking ``1.5'' and inserting ``2.0'';
(21) in item 576 by striking ``0.52275'' and inserting
``0.69275'';
(22) in item 588 by striking ``2.5'' and inserting ``3.0'';
(23) in item 591 by striking ``10'' and inserting ``5'';
(24) in item 635 by striking ``1.875'' and inserting
``2.15'';
(25) in item 669 by striking ``3'' and inserting ``3.5'';
(26) in item 702 by striking ``10.5'' and inserting ``10'';
(27) in item 746 by inserting ``, and for the purchase of
the Block House in Scott County, Virginia'' after ``Forest'';
(28) in item 755 by striking ``1.125'' and inserting
``1.5'';
(29) in item 769 by striking ``Construct new I-95
interchange with Highway 99W, Tehama County'' and inserting
``Construct new I-5 interchange with Highway 99W, Tehama
County'';
(30) in item 770 by striking ``1.35'' and inserting ``1.0'';
(31) in item 789 by striking ``2.0625'' and inserting
``1.0'';
(32) in item 803 by striking ``Tomahark'' and inserting
``Tomahawk'';
(33) in item 836 by striking ``Construct'' and all that
follows through ``for'' and inserting ``To the National Park
Service for construction of the'';
(34) in item 854 by striking ``0.75'' and inserting ``1'';
(35) in item 863 by striking ``9'' and inserting ``4.75'';
(36) in item 887 by striking ``0.75'' and inserting
``3.21'';
(37) in item 891 by striking ``19.5'' and inserting
``25.0'';
(38) in item 902 by striking ``10.5'' and inserting
``14.0'';
(39) by striking item 1065 and inserting the following:
[[Page 112 STAT. 851]]
``1065. Texas Construct a 4-lane 5'';
divided highway on
Artcraft Road from I-
10 to Route 375 in El
Paso.................
------------------------------------------------------------------------
(40) in item 1192 by striking ``24.97725'' and inserting
``24.55725'';
(41) in item 1200 by striking ``Upgrade (all weather) on
U.S. 2, U.S. 41, and M 35'' and inserting ``Upgrade (all
weather) on Delta County's reroute of U.S. 2, U.S. 41, and M
35'';
(42) in item 1245 by striking ``3'' and inserting ``3.5'';
(43) in item 1271 by striking ``Spur'' and all that follows
through ``U.S. 59'' and inserting ``rail-grade separations
(Rosenberg Bypass) at U.S. 59(S)'';
(44) in item 1278 by striking ``28.18'' and inserting
``22.0'';
(45) in item 1288 by inserting ``30'' after ``U.S.'';
(46) in item 1338 by striking ``5.5'' and inserting ``3.5'';
(47) in item 1383 by striking ``0.525'' and inserting
``0.35'';
(48) in item 1395 by striking ``Construct'' and all that
follows through ``Road'' and inserting ``Upgrade Route 219
between Meyersdale and Somerset'';
(49) in item 1468 by striking ``Reconstruct'' and all that
follows through ``U.S. 23'' and inserting ``Conduct engineering
and design and improve I-94 in Calhoun and Jackson
Counties'';
(50) in item 1474--
(A) by striking ``in Euclid'' and inserting ``and
London Road in Cleveland''; and
(B) by striking ``3.75'' and inserting ``8.0'';
(51) in item 1535 by striking ``Stanford'' and inserting
``Stamford'';
(52) in item 1538 by striking ``and Winchester'' and
inserting ``, Winchester, and Torrington'';
(53) by striking item 1546 and inserting the following:
``1546. Michigan Construct Bridge-to- 0.450'';
Bay bike path, St.
Clair County.........
------------------------------------------------------------------------
(54) by striking item 1549 and inserting the following:
``1549. New York Center for Advanced 0.6'';
Simulation and
Technology at Dowling
College..............
------------------------------------------------------------------------
(55) in item 1663 by striking ``26.5'' and inserting
``27.5'';
(56) in item 1703 by striking ``I-80'' and inserting
``I-180'';
(57) in item 1726 by striking ``I-179'' and inserting
``I-79'';
(58) by striking item 1770 and inserting the following:
``1770. Virginia Operate and conduct 6.025'';
research on the
`Smart Road' in
Blacksburg...........
------------------------------------------------------------------------
(59) in item 1810 by striking ``Construct Rio Rancho
Highway'' and inserting ``Northwest Albuquerque/Rio Rancho high
priority roads'';
[[Page 112 STAT. 852]]
(60) in item 1815 by striking ``High'' and all that follows
through ``projects'' and inserting ``Highway and bridge projects
that Delaware provides for by law'';
(61) in item 1844 by striking ``Prepare'' and inserting
``Repair'';
(62) by striking item 1850 and inserting the following:
``1850. Missouri Resurface and maintain 5'';
roads located in
Missouri State parks.
------------------------------------------------------------------------
(63) in item 661 by striking ``SR 800'' and inserting
``SR 78'';
(64) in item 1704 by inserting ``, Pittsburgh,'' after
``Road'';
(65) in item 1710 by inserting ``, Bethlehem'' after
``site''; and
(66) in item 1626 by striking ``1'' and inserting ``2''.
SEC. 9009. FEDERAL TRANSIT ADMINISTRATION PROGRAMS.
(a) Definitions.--Section 3003 of the Federal Transit Act of
1998 <<NOTE: Ante, p. 338.>> is amended--
(1) by inserting ``(a) In General.--'' before ``Section
5302''; and
(2) by adding at the end the following:
``(b) Conforming Amendments.--Section 5302 (as amended by subsection
(a) of this section) is amended in subsection (a)(1)(G)(i) by striking
`daycare and' and inserting `daycare or '.''.
(b) Metropolitan Planning.--Section 3004 of the Federal Transit Act
of 1998 <<NOTE: Ante, p. 341.>> is amended--
(1) in subsection (b)--
(A) in paragraph (1) by striking subparagraph (A)
and inserting the following:
``(A) by striking `general local government
representing ' and inserting `general purpose local
government that together represent'; and'';
(B) in paragraph (3) by striking ``and'' at the end;
(C) in paragraph (4) by striking subparagraph (A)
and inserting the following:
``(A) by striking `general local government
representing ' and inserting `general purpose local
government that together represent'; and'';
(D) by redesignating paragraph (4) as paragraph (5);
and
(E) by inserting after paragraph (3) the following:
``(4) in paragraph (4)(A) by striking `(3)' and inserting
`(5)'; and'';
(2) in subsection (d) by striking the closing quotation
marks and the final period at the end and inserting the
following:
``(5) Coordination.--If a project is located within the
boundaries of more than one metropolitan planning organization,
the metropolitan planning organizations shall coordinate plans
regarding the project.
``(6) Lake tahoe region.--
``(A) Definition.--In this paragraph, the term `Lake
Tahoe region' has the meaning given the term `region' in
subdivision (a) of article II of the Tahoe Regional
Planning Compact, as set forth in the first section of
Public Law 96-551 (94 Stat. 3234).
[[Page 112 STAT. 853]]
``(B) Transportation planning process.--The
Secretary shall--
``(i) establish with the Federal land
management agencies that have jurisdiction over
land in the Lake Tahoe region a transportation
planning process for the region; and
``(ii) coordinate the transportation planning
process with the planning process required of
State and local governments under this chapter and
sections 134 and 135 of title 23, United States
Code.
<<NOTE: California. Nevada.>> ``(C) Interstate
compact.--
``(i) In general.--Subject to clause (ii) and
notwithstanding subsection (b), to carry out the
transportation planning process required by this
section, the consent of Congress is granted to the
States of California and Nevada to designate a
metropolitan planning organization for the Lake
Tahoe region, by agreement between the Governors
of the States of California and Nevada and units
of general purpose local government that together
represent at least 75 percent of the affected
population (including the central city or cities
(as defined by the Bureau of the Census)), or in
accordance with procedures established by
applicable State or local law.
``(ii) Involvement of federal land management
agencies.--
``(I) Representation.--The policy
board of a metropolitan planning
organization designated under clause (i)
shall include a representative of each
Federal land management agency that has
jurisdiction over land in the Lake Tahoe
region.
``(II) Funding.--In addition to
funds made available to the metropolitan
planning organization under other
provisions of this chapter and under
title 23, not more than 1 percent of the
funds allocated under section 202 of
title 23 may be used to carry out the
transportation planning process for the
Lake Tahoe region under this
subparagraph.
``(D) Activities.--Highway projects included in
transportation plans developed under this paragraph--
``(i) shall be selected for funding in a
manner that facilitates the participation of the
Federal land management agencies that have
jurisdiction over land in the Lake Tahoe region;
and
``(ii) may, in accordance with chapter 2 of
title 23, be funded using funds allocated under
section 202 of title 23, United States Code.'';
and
(3) by adding at the end the following:
``(f ) Technical Adjustments.--Section 5303(f ) is amended--
``(1) in paragraph (1) (as amended by subsection (e)(1) of
this subsection)--
``(A) in subparagraph (C) by striking `and' at the
end;
``(B) in subparagraph (D) by striking the period at
the end and inserting `; and'; and
``(C) by adding at the end the following:
[[Page 112 STAT. 854]]
`(E) the financial plan may include, for illustrative
purposes, additional projects that would be included in the
adopted long-range plan if reasonable additional resources
beyond those identified in the financial plan were available,
except that, for the purpose of developing the long-range plan,
the metropolitan planning organization and the State shall
cooperatively develop estimates of funds that will be available
to support plan implementation.'; and
``(2) by adding at the end the following:
`(6) Selection of projects from illustrative list.--Notwithstanding
paragraph (1)(E), a State or metropolitan planning organization shall
not be required to select any project from the illustrative list of
additional projects included in the financial plan under paragraph
(1)(B).'.''.
(c) Metropolitan Transportation Improvement Program.--Section 3005
of the Federal Transit Act of 1998 <<NOTE: Ante, p. 345.>> is amended--
(1) in the section heading by inserting ``metropolitan''
before ``transportation''; and
(2) by adding at the end the following:
``(d) Technical Adjustments.--Section 5304 is amended--
``(1) in subsection (a) (as amended by subsection (a) of
this section)--
``(A) by striking `In cooperation with' and
inserting the following:
`(1) In general.--In cooperation with'; and
``(B) by adding at the end the following:
`(2) Funding estimate.--For the purpose of developing the
transportation improvement program, the metropolitan planning
organization, public transit agency, and the State shall
cooperatively develop estimates of funds that are reasonably
expected to be available to support program implementation.';
``(2) in subsection (b)(2)--
``(A) in subparagraph (B) by striking `and' at the
end; and
``(B) in subparagraph (C) (as added by subsection
(b) of this section) by striking `strategies which may
include' and inserting the following: `strategies; and
`(D) may include'; and
``(3) in subsection (c) by striking paragraph (4) (as
amended by subsection (c) of this section) and inserting the
following:
`(4) Selection of projects from illustrative list.--
`(A) In general.--Notwithstanding subsection
(b)(2)(D), a State or metropolitan planning organization
shall not be required to select any project from the
illustrative list of additional projects included in the
financial plan under subsection (b)(2)(D).
`(B) Action by secretary.--Action by the Secretary
shall be required for a State or metropolitan planning
organization to select any project from the illustrative
list of additional projects included in the plan under
subsection (b)(2) for inclusion in an approved
transportation improvement plan.'.''.
(d) Transportation Management Areas.--Section 3006(d) of the Federal
Transit Act of 1998 <<NOTE: Ante, p. 346.>> is amended to read as
follows:
``(d) Project Selection.--Section 5305(d)(1) is amended to read as
follows: `(1)(A) All federally funded projects carried out
[[Page 112 STAT. 855]]
within the boundaries of a transportation management area under title 23
(excluding projects carried out on the National Highway System and
projects carried out under the bridge and interstate maintenance
program) or under this chapter shall be selected from the approved
transportation improvement program by the metropolitan planning
organization designated for the area in consultation with the State and
any affected public transit operator.
`(B) Projects carried out within the boundaries of a transportation
management area on the National Highway System and projects carried out
within such boundaries under the bridge program or the interstate
maintenance program shall be selected from the approved transportation
improvement program by the State in cooperation with the metropolitan
planning organization designated for the area.'.''.
(e) Urbanized Area Formula Grants.--Section 3007 of the Federal
Transit Act of 1998 <<NOTE: Ante, p. 347.>> is amended by adding at the
end the following:
``(h) Technical Adjustments.--
``(1) General authority.--Section 5307(b) (as amended by
subsection (c)(1)(B) of this section) is amended by adding at
the end the following: `The Secretary may make grants under this
section from funds made available for fiscal year 1998 to
finance the operating costs of equipment and facilities for use
in mass transportation in an urbanized area with a population of
at least 200,000.'.
``(2) Report.--Section 5307(k)(3) (as amended by subsection
(f ) of this section) is amended by inserting `preceding' before
`fiscal year'.''.
(f ) Clean Fuels Formula Grant Program.--Section 3008 of the Federal
Transit Act of 1998 <<NOTE: Ante, p. 348.>> is amended by adding at the
end the following:
``(c) Technical Adjustments.--Section 5308(e)(2) (as added by
subsection (a) of this section) is amended by striking `$50,000,000' and
inserting `35 percent'.''.
(g) Capital Investment Grants and Loans.--Section 3009 of the
Federal Transit Act of 1998 <<NOTE: Ante, p. 352.>> is amended by adding
at the end the following:
``(k) Technical Adjustments.--
``(1) Criteria.--Section 5309(e) (as amended by subsection
(e) of this section) is amended--
``(A) in paragraph (3)(C) by striking `urban' and
inserting `suburban';
``(B) in the second sentence of paragraph (6) by
striking `or not' and all that follows through `, based'
and inserting `or ``not recommended'', based'; and
``(C) in the last sentence of paragraph (6) by
inserting `of the' before `criteria established'.
``(2) Letters of intent and full funding grant agreements.--
Section 5309(g) (as amended by subsection (f ) of this section)
is amended in paragraph (4) by striking `5338(a)' and all that
follows through `2003' and inserting `5338(b) of this title for
new fixed guideway systems and extensions to existing fixed
guideway systems and the amount appropriated under section
5338(h)(5) or an amount equivalent to the last 2 fiscal years of
funding authorized under section 5338(b) for new fixed guideway
systems and extensions to existing fixed guideway systems'.
[[Page 112 STAT. 856]]
``(3) Allocating amounts.--Section 5309(m) (as amended by
subsection (g) of this section) is amended--
``(A) in paragraph (1) by inserting `(b)' after
`5338';
``(B) by striking paragraph (2) and inserting the
following:
`(2) New fixed guideway grants.--
`(A) Limitation on amounts available for activities
other than final design and construction.--Not more than
8 percent of the amounts made available in each fiscal
year by paragraph (1)(B) shall be available for
activities other than final design and construction.
`(B) Funding for ferry boat systems.--
`(i) Amounts under (1)(b).--Of the amounts
made available under paragraph (1)(B), $10,400,000
shall be available in each of fiscal years 1999
through 2003 for capital projects in Alaska or
Hawaii, for new fixed guideway systems and
extensions to existing fixed guideway systems that
are ferry boats or ferry terminal facilities, or
that are approaches to ferry terminal facilities.
`(ii) Amounts under 5338(h)(5).--Of the
amounts appropriated under section 5338(h)(5),
$3,600,000 shall be available in each of fiscal
years 1999 through 2003 for capital projects in
Alaska or Hawaii, for new fixed guideway systems
and extensions to existing fixed guideway systems
that are ferry boats or ferry terminal facilities,
or that are approaches to ferry terminal
facilities.';
``(C) by redesignating paragraph (4) as paragraph
(3)(C);
``(D) in paragraph (3) by adding at the end the
following:
`(D) Other than urbanized areas.--Of amounts made
available by paragraph (1)(C), not less than 5.5 percent
shall be available in each fiscal year for other than
urbanized areas.';
``(E) by striking paragraph (5); and
``(F) by inserting after paragraph (3) the
following:
`(4) Eligibility for assistance for multiple projects.--A
person applying for or receiving assistance for a project
described in subparagraph (A), (B), or (C) of paragraph (1) may
receive assistance for a project described in any other of such
subparagraphs.'.''.
(h) References to Full Funding Grant Agreements.--
Section 3009(h)(3) of the Federal Transit Act of 1998 <<NOTE: Ante, p.
352.>> is amended--
(1) by striking ``and'' at the end of subparagraph (A)(ii);
(2) by striking the period at the end of subparagraph (B)
and inserting a semicolon; and
(3) by adding at the end the following:
``(C) in section 5328(a)(4) by striking `section
5309(m)(2) of this title' and inserting `5309(o)(1)';
and
``(D) in section 5309(n)(2) by striking `in a way'
and inserting `in a manner'.''.
(i) Dollar Value of Mobility Improvements.--Section 3010(b)(2) of
the Federal Transit Act of 1998 <<NOTE: Ante, p. 357.>> is amended by
striking ``Secretary'' and inserting ``Comptroller General''.
[[Page 112 STAT. 857]]
( j) Intelligent Transportation System Applications.--
Section 3012 of the Federal Transit Act of 1998 <<NOTE: Ante, p.
358.>> is amended by moving paragraph (3) of subsection (a) to the end
of subsection (b) and by redesignating such paragraph (3) as paragraph
(4).
(k) Advanced Technology Pilot Project.--Section 3015 of the Federal
Transit Act of 1998 <<NOTE: Ante, p. 359.>> is amended--
(1) in subsection (c)(2) by adding at the end the following:
``Financial assistance made available under this subsection and
projects assisted with the assistance shall be subject to
section 5333(a) of title 49, United States Code.''; and
(2) by adding at the end the following:
``(d) Training and Curriculum Development.--
``(1) In general.--Any funds made available by section
5338(e)(2)(C)(iii) of title 49, United States Code, shall be
available in equal amounts for transportation research,
training, and curriculum development at institutions identified
in subparagraphs (E) and (F) of section 5505( j)(3) of such
title.
``(2) Special rule.--If the institutions identified in
paragraph (1) are selected pursuant to 5505(i)(3)(B) of such
title in fiscal year 2002 or 2003, the funds made available to
carry out this subsection shall be available to those
institutions to carry out the activities required pursuant to
section 5505(i)(3)(B) of such title for that fiscal year.''.
(l) National Transit Institute.--Section 3017(a) of the
Federal Transit Act of 1998 <<NOTE: Ante, p. 361.>> is amended to read
as follows:
``(a) In General.--Section 5315 is amended--
``(1) in the section heading by striking `mass
transportation' and inserting `transit';
``(2) in subsection (a)--
``(A) by striking `mass transportation' in the first
sentence and inserting `transit';
``(B) in paragraph (5) by inserting `and
architectural design' before the semicolon at the end;
``(C) in paragraph (7) by striking `carrying out'
and inserting `delivering';
``(D) in paragraph (11) by inserting `, construction
management, insurance, and risk management' before the
semicolon at the end;
``(E) in paragraph (13) by striking `and' at the
end;
``(F) in paragraph (14) by striking the period at
the end and inserting a semicolon; and
``(G) by adding at the end the following:
`(15) innovative finance; and
`(16) workplace safety.'.''.
(m) Pilot Program.--Section 3021(a) of the Federal Transit Act of
1998 <<NOTE: Ante, p. 363.>> is amended by inserting ``single-State''
before ``pilot program''.
(n) Architectural, Engineering, and Design Contracts.--Section 3022
of the Federal Transit Act of 1998 <<NOTE: Ante, p. 363.>> is amended by
adding at the end the following:
``(b) Conforming Amendment.--Section 5325(b) (as redesignated by
subsection (a)(2) of this section) is amended--
``(1) by inserting `or requirement' after `A contract'; and
``(2) by inserting before the last sentence the following:
`When awarding such contracts, recipients of assistance under
this chapter shall maximize efficiencies of administration by
accepting nondisputed audits conducted by other governmental
[[Page 112 STAT. 858]]
agencies, as provided in subparagraphs (C) through (F) of
section 112(b)(2) of title 23, United States Code.'.''.
(o) Conforming Amendment.--Section 3027 of the Federal Transit Act
of 1998 <<NOTE: Ante, p. 366.>> is amended--
(1) in subsection (c) by striking ``600,000'' each place it
appears and inserting ``900,000''; and
(2) by adding at the end the following:
``(d) Conforming Amendment.--The item relating to section 5336 in
the table of sections for chapter 53 is amended by striking `block
grants' and inserting `formula grants'.''.
(p) Apportionment for Fixed Guideway Modernization.--Section 3028 of
the Federal Transit Act of 1998 <<NOTE: Ante, p. 366.>> is amended by
adding at the end the following:
``(c) Conforming Amendments.--Section 5337(a) (as amended by
subsection (a) of this section) is amended--
``(1) in paragraph (2)(B) by striking `(e)' and inserting
`(e)(1)';
``(2) in paragraph (3)(D)--
``(A) by striking `(ii)'; and
``(B) by striking `(e)' and inserting `(e)(1)';
``(3) in paragraph (4) by striking `(e)' and inserting
`(e)(1)';
``(4) in paragraph (5)(A) by striking `(e)' and inserting
`(e)(2)';
``(5) in paragraph (5)(B) by striking `(e)' and inserting
`(e)(2)';
``(6) in paragraph (6) by striking `(e)' each place it
appears and inserting `(e)(2)'; and
``(7) in paragraph (7) by striking `(e)' each place it
appears and inserting `(e)(2)'.''.
(q) Authorizations.--Section 3029 of the Federal Transit Act of
1998 <<NOTE: Ante, p. 368.>> is amended by adding at the end the
following:
``(c) Technical Adjustments.--Section 5338 (as amended by subsection
(a) of this section) is amended--
``(1) in subsection (c)(2)(A)(i) by striking `$43,200,000'
and inserting `$42,200,000';
``(2) in subsection (c)(2)(A)(ii) by striking `$46,400,000'
and inserting `$48,400,000';
``(3) in subsection (c)(2)(A)(iii) by striking `$51,200,000'
and inserting `$50,200,000';
``(4) in subsection (c)(2)(A)(iv) by striking `$52,800,000'
and inserting `$53,800,000';
``(5) in subsection (c)(2)(A)(v) by striking `$57,600,000'
and inserting `$58,600,000';
``(6) in subsection (d)(2)(C)(iii) by inserting before the
semicolon `, including not more than $1,000,000 shall be
available to carry out section 5315(a)(16)';
``(7) in subsection (e)--
``(A) by striking `5317(b)' each place it appears
and inserting `5505';
``(B) in paragraph (1) by striking `There are' and
inserting `Subject to paragraph (2)(C), there are';
``(C) in paragraph (2)--
``(i) in subparagraph (A) by striking `There
shall' and inserting `Subject to subparagraph (C),
there shall';
``(ii) in subparagraph (B) by striking `In
addition' and inserting `Subject to subparagraph
(C), in addition'; and
[[Page 112 STAT. 859]]
``(iii) by adding at the end the following:
`(C) Funding of centers.--
`(i) Of the amounts made available under
subparagraph (A) and paragraph (1) for each fiscal
year--
`(I) $2,000,000 shall be available
for the center identified in section
5505( j)(4)(A); and
`(II) $2,000,000 shall be available
for the center identified in section
5505( j)(4)(F).
`(ii) For each of fiscal years 1998 through
2001, of the amounts made available under this
paragraph and paragraph (1)--
`(I) $400,000 shall be available
from amounts made available under
subparagraph (A) of this paragraph and
under paragraph (1) for each of the
centers identified in subparagraphs (E)
and (F) of section 5505( j)(3); and
`(II) $350,000 shall be available
from amounts made available under
subparagraph (B) of this paragraph and
under paragraph (1) for each of the
centers identified in subparagraphs (E)
and (F) of section 5505( j)(3).
`(iii) Any amounts made available under this
paragraph or paragraph (1) for any fiscal year
that remain after distribution under clauses (i)
and (ii), shall be available for the purposes
identified in section 3015(d) of the Federal
Transit Act of 1998.'; and
``(D) by adding at the end the following:
`(3) Special rule.--Nothing in this subsection shall be
construed to limit the transportation research conducted by the
centers funded by this section.';
``(8) in subsection (g)(2) by striking `(c)(2)(B),' and all
that follows through `(f )(2)(B),' and inserting `(c)(1),
(c)(2)(B), (d)(1), (d)(2)(B), (e)(1), (e)(2)(B), (f )(1), (f
)(2)(B),';
``(9) in subsection (h) by inserting `under the
Transportation Discretionary Spending Guarantee for the Mass
Transit Category' after `through (f )'; and
``(10) in subsection (h)(5) by striking subparagraphs (A)
through (E) and inserting the following:
`(A) for fiscal year 1999 $400,000,000;
`(B) for fiscal year 2000 $410,000,000;
`(C) for fiscal year 2001 $420,000,000;
`(D) for fiscal year 2002 $430,000,000; and
`(E) for fiscal year 2003 $430,000,000;'.''.
(r) Projects for Fixed Guideway Systems.--Section 3030 of the
Federal Transit Act of 1998 <<NOTE: Ante, p. 373.>> is amended--
(1) in subsection (a)--
(A) in paragraph (8) by inserting ``North-'' before
``South'';
(B) in paragraph (42) by striking ``Maryland'' and
inserting ``Baltimore'';
(C) in paragraph (103) by striking ``busway'' and
inserting ``Boulevard transitway'';
(D) in paragraph (106) by inserting ``CTA'' before
``Douglas'';
(E) by striking paragraph (108) and inserting the
following:
``(108) Greater Albuquerque Mass Transit Project.''; and
[[Page 112 STAT. 860]]
(F) by adding at the end the following:
``(109) Hartford City Light Rail Connection to Central
Business District.
``(110) Providence-Boston Commuter Rail.
``(111) New York-St. George's Ferry Intermodal Terminal.
``(112) New York-Midtown West Ferry Terminal.
``(113) Pinellas County-Mobility Initiative Project.
``(114) Atlanta-MARTA Extension (S. De Kalb-Lindbergh).'';
(2) in subsection (b)--
(A) by striking paragraph (2) and inserting the
following:
``(2) Sioux City-Light Rail.'';
(B) by striking paragraph (40) and inserting the
following:
``(40) Santa Fe-El Dorado Rail Link.'';
(C) by striking paragraph (44) and inserting the
following:
``(44) Albuquerque-High Capacity Corridor.'';
(D) by striking paragraph (53) and inserting the
following:
``(53) San Jacinto-Branch Line (Riverside County).''; and
(E) by adding at the end the following:
``(69) Chicago-Northwest Rail Transit Corridor.
``(70) Vermont-Burlington-Essex Commuter Rail.''; and
(3) in subsection (c)--
(A) in paragraph (1)(A)--
(i) in the matter preceding clause (i) by
inserting ``(even if the project is not listed in
subsection (a) or (b))'' before the colon;
(ii) by striking clause (ii) and inserting the
following:
``(ii) San Diego Mission Valley and Mid-Coast
Corridor, $325,000,000.'';
(iii) by striking clause (v) and inserting the
following:
``(v) Hartford City Light Rail Connection to
Central Business District, $33,000,000.'';
(iv) by striking clause (xxiii) and inserting
the following:
``(xxiii) Kansas City--I-35 Commuter Rail,
$30,000,000.'';
(v) in clause (xxxii) by striking ``Whitehall
Ferry Terminal'' and inserting ``Staten Island
Ferry-Whitehall Intermodal Terminal'';
(vi) by striking clause (xxxv) and inserting
the following:
``(xxxv) New York-Midtown West Ferry Terminal,
$16,300,000.'';
(vii) in clause (xxxix) by striking
``Allegheny County'' and inserting ``Pittsburgh'';
(viii) by striking clause (xvi) and inserting
the following:
``(xvi) Northeast Indianapolis Corridor,
$10,000,000.'';
(ix) by striking clause (xxix) and inserting
the following:
[[Page 112 STAT. 861]]
``(xxix) Greater Albuquerque Mass Transit
Project, $90,000,000.'';
(x) by striking clause (xliii) and inserting
the
following:
``(xliii) Providence-Boston Commuter Rail,
$10,000,000.''; and
(xi) by striking clause (li) and inserting the
following:
``(li) Dallas-Ft. Worth RAILTRAN (Phase-II),
$12,000,000.'';
(B) by striking the heading for subsection (c)(2)
and inserting ``Additional amounts''; and
(C) in paragraph (3) by inserting after the first
sentence the following: ``The project shall also be
exempted from all requirements relating to criteria for
grants and loans for fixed guideway systems under
section 5309(e) of such title and from regulations
required under that section.''.
(s) New Jersey Urban Core Project.--Section 3030(e) of the Federal
Transit Act of 1998 <<NOTE: Ante, p. 373.>> is amended by adding at the
end the following:
``(4) Technical adjustment.--Section 3031(d) of the
Intermodal Surface Transportation Efficiency Act of 1991 (as
amended by paragraph (3)(B) of this subsection) is amended--
``(A) by striking `of the West Shore Line' and
inserting `or the West Shore Line'; and
``(B) by striking `directly connected to' and all
that follows through `Newark International Airport' the
first place it appears.''.
(t) Baltimore-Washington Transportation Improvements.--Section 3030
of the Federal Transit Act of 1998 is amended by adding at the end the
following:
``(h) Technical Adjustment.--Section 3035(nn) of the Intermodal
Surface Transportation Efficiency Act of 1991 (105 Stat. 2134) (as
amended by subsection (g)(1)(C) of this section) is amended by inserting
after `expenditure of' the following: `section 5309 funds to the
aggregate expenditure of'.''.
(u) Bus Projects.--Section 3031 of the Federal Transit Act of
1998 <<NOTE: Ante, p. 381.>> is amended--
(1) in the table contained in subsection (a)--
(A) by striking item 64;
(B) in item 69 by striking ``Rensslear'' each place
it appears and inserting ``Rensselaer'';
(C) in item 103 by striking ``facilities and''; and
(D) by striking item 150;
(2) by striking the heading for subsection (b) and inserting
``Additional Amounts'';
(3) in subsection (b) by inserting after ``2000'' the first
place it appears ``with funds made available under section
5338(h)(6) of such title''; and
(4) in item 2 of the table contained in subsection (b) by
striking ``Rensslear'' each place it appears and inserting
``Rensselaer''.
(v) Contracting Out Study.--Section 3032 of the Federal Transit Act
of 1998 <<NOTE: Ante, p. 385.>> is amended--
(1) in subsection (a) by striking ``3'' and inserting ``6'';
[[Page 112 STAT. 862]]
(2) in subsection (d) by striking ``the Mass Transit Account
of the Highway Trust Fund'' and inserting ``funds made available
under section 5338(f )(2) of title 49, United States Code,'';
(3) in subsection (d) by striking ``1998'' and inserting
``1999''; and
(4) in subsection (e) by striking ``subsection (c)'' and
inserting ``subsection (d)''.
(w) Job Access and Reverse Commute Grants.--Section 3037 of the
Federal Transit Act of 1998 <<NOTE: Ante, p. 387.>> is amended--
(1) in subsection (b)(4)(A)--
(A) by inserting ``designated recipients under
section 5307(a)(2) of title 49, United States Code,''
after ``from among''; and
(B) by inserting a comma after ``and agencies'';
(2) in subsection (b)(4)(B)--
(A) by striking ``at least'' and inserting ``less
than'';
(B) by inserting ``designated recipients under
section 5307(a)(2) of title 49, United States Code,''
after ``from among''; and
(C) by inserting ``and agencies,'' after
``authorities'';
(3) in subsection (f )(2)--
(A) by striking ``(including bicycling)''; and
(B) by inserting ``(including bicycling)'' after
``additional services'';
(4) in subsection (h)(2)(B) by striking ``403(a)(5)(C)(ii)''
and inserting ``403(a)(5)(C)(vi)'';
(5) in the heading for subsection (l)(1)(C) by striking
``from the general fund'';
(6) in subsection (l)(1)(C) by inserting ``under the
Transportation Discretionary Spending Guarantee for the Mass
Transit Category'' after ``(B)''; and
(7) in subsection (l)(3)(B) by striking ``at least'' and
inserting ``less than''.
(x) Rural Transportation Accessibility Incentive
Program.--Section 3038 of the Federal Transit Act of 1998 <<NOTE: Ante,
p. 392.>> is amended--
(1) in subsection (a)(1)(A) by inserting before the
semicolon ``or connecting 1 or more rural communities with an
urban area not in close proximity'';
(2) in subsection (g)(1)--
(A) by inserting ``over-the-road buses used
substantially or exclusively in'' after ``operators of
''; and
(B) by inserting at the end the following:
``Such sums shall remain available until expended.''; and
(3) in subsection (g)(2)--
(A) by striking ``each of ''; and
(B) by adding at the end the following: ``Such sums
shall remain available until expended.''.
(y) Study of Transit Needs in National Parks and Related Public
Lands.--Section 3039(b) of the <<NOTE: Ante, p. 393.>> Federal Transit
Act of 1998 is amended--
(1) in paragraph (1) by striking ``in order to carry'' and
inserting ``assist in carrying''; and
(2) by adding at the end the following:
``(3) Definition.--For purposes of this subsection, the term
`Federal land management agencies' means the National Park
[[Page 112 STAT. 863]]
Service, the United States Fish and Wildlife Service, and the
Bureau of Land Management.''.
(z) Obligation Ceiling.--Section 3040 of the Federal Transit Act of
1998 <<NOTE: Ante, p. 394.>> is amended--
(1) by striking paragraph (2) and inserting the following:
``(2) $5,797,000,000 in fiscal year 2000;''; and
(2) in paragraph (4) by striking ``$6,746,000,000'' and
inserting ``$6,747,000,000''.
SEC. 9010. MOTOR CARRIER SAFETY TECHNICAL CORRECTION.
Section 4011 of the Transportation Equity Act for the 21st
Century <<NOTE: Ante, p. 394.>> is amended by adding at the end the
following:
``(h) Technical Amendments.--Section 31314 (as amended by subsection
(g) of this section) is amended--
``(1) in subsections (a) and (b) by striking `(3), and (5)'
each place it appears and inserting `(3), and (4)'; and
``(2) by striking subsection (d).''.
SEC. 9011. RESTORATIONS TO RESEARCH TITLE.
(a) University Transportation Research Funding.--Section
5001(a)(7) <<NOTE: Ante, p. 419.>> of the Transportation Equity Act for
the 21st Century is amended--
(1) by striking ``$31,150,000'' each place it appears and
inserting ``$25,650,000'';
(2) by striking ``$32,750,000'' each place it appears and
inserting ``$27,250,000''; and
(3) by striking ``$32,000,000'' each place it appears and
inserting ``$26,500,000''.
(b) Obligation Ceiling.--Section 5002 of such Act <<NOTE: Ante, p.
421.>> is amended by striking ``$403,150,000'' and all that follows
through ``$468,000,000'' and inserting ``$397,650,000 for fiscal year
1998, $403,650,000 for fiscal year 1999, $422,450,000 for fiscal year
2000, $437,250,000 for fiscal year 2001, $447,500,000 for fiscal year
2002, and $462,500,000''.
(c) Use of Funds for ITS.--Section 5210 of the Transportation Equity
Act for the 21st Century <<NOTE: Ante, p. 461.>> is amended by adding at
the end the following:
``(d) Use of Innovative Financing.--
``(1) In general.--The Secretary may use up to 25 percent of
the funds made available to carry out this subtitle to make
available loans, lines of credit, and loan guarantees for
projects that are eligible for assistance under this subtitle
and that have significant intelligent transportation system
elements.
``(2) Consistency with other law.--Credit assistance
described in paragraph (1) shall be made available in a manner
consistent with the Transportation Infrastructure Finance and
Innovation Act of 1998.''.
(d) University Transportation Research.--Section 5110 of such
Act <<NOTE: Ante, p. 441.>> is amended by adding at the end the
following:
``(d) Technical Adjustments.--Section 5505 of title 49, United
States Code (as added by subsection (a) of this section), is
amended--
``(1) in subsection (g)(2) by striking `section 5506,' and
inserting `section 508 of title 23, United States Code,';
``(2) in subsection (i)--
``(A) by inserting `Subject to section 5338(e):'
after `(i) Number and Amount of Grants.--'; and
[[Page 112 STAT. 864]]
``(B) by striking `institutions' each place it
appears and inserting `institutions or groups of
institutions'; and
``(3) in subsection ( j)(4)(B) by striking `on behalf of'
and all that follows before the period and inserting `on behalf
of a consortium which may also include West Virginia University
Institute of Technology, the College of West Virginia, and
Bluefield State College'.''.
(e) Technical Corrections.--Section 5115 of such Act <<NOTE: Ante,
p. 446.>> is amended--
(1) in subsection (a) by striking ``Director'' and inserting
``Director of the Bureau of Transportation Statistics'';
(2) in subsection (b) by striking ``Bureau'' and inserting
``Bureau of Transportation Statistics,''; and
(3) in subsection (c) by striking ``paragraph (1)'' and
inserting ``subsection (a)''.
(f ) Corrections to Certain Oklahoma Projects.--Section 5116 of such
Act <<NOTE: Ante, p. 446.>> is amended--
(1) in subsection (e)(2) by striking ``$1,000,000 for fiscal
year 1999, $1,000,000 for fiscal year 2000, and $500,000 for
fiscal year 2001'' and inserting ``$1,000,000 for fiscal year
1999, $1,000,000 for fiscal year 2000, $1,000,000 for fiscal
year 2001, and $500,000 for fiscal year 2002''; and
(2) in subsection (f )(2) by striking ``$1,000,000 for
fiscal year 1999, $1,000,000 for fiscal year 2000, $1,000,000
for fiscal year 2001, and $500,000 for fiscal year 2002'' and
inserting ``$1,000,000 for fiscal year 1999, $1,000,000 for
fiscal year 2000, and $500,000 for fiscal year 2001''.
(g) Intelligent Transportation Infrastructure Reference.--Section
5117(b)(3)(B)(ii) of such Act <<NOTE: Ante, p. 448.>> is amended by
striking ``local departments of transportation'' and inserting ``the
Department of Transportation''.
(h) Fundamental Properties of Asphalts and Modified Asphalts.--
Section 5117(b)(5)(B) of such Act is amended--
(1) by striking ``1999'' and inserting ``1998''; and
(2) by striking ``$3,000,000 per fiscal year'' and inserting
``$1,000,000 for fiscal year 1998 and $3,000,000 for each of
fiscal years 1999 through 2003''.
SEC. 9012. AUTOMOBILE SAFETY AND INFORMATION.
(a) Reference.--Section 7104 of the Transportation Equity Act for
the 21st Century <<NOTE: Ante, p. 466.>> is amended by adding at the end
the following:
``(c) Conforming Amendment.--Section 30105(a) of title 49, United
States Code (as amended by subsection (a) of this section), is amended
by inserting after `Secretary' the following: `for the National Highway
Traffic Safety Administration'.''.
(b) Clean Vessel Act Funding.--Section 7403 <<NOTE: Ante, p.
485.>> of such Act is amended--
(1) by inserting ``(a) In General.--'' before ``Section
4(b)''; and
(2) by adding at the end the following:
``(b) Technical Amendment.--Section 4(b)(3)(B) of the 1950 Act (as
amended by subsection (a) of this section) is amended by striking
`6404(d)' and inserting `7404(d)'.''.
(c) Boating Infrastructure.--Section 7404(b) of such
Act <<NOTE: Ante, p. 486.>> is amended by striking ``6402'' and
inserting ``7402''.
[[Page 112 STAT. 865]]
SEC. 9013. TECHNICAL CORRECTIONS REGARDING SUBTITLE A OF TITLE VIII.
(a) Amendment to Offsetting Adjustment for Discretionary Spending
Limit.--Section 8101(b) of the Transportation Equity Act for the 21st
Century <<NOTE: Ante, p. 488.>> is amended--
(1) in paragraph (1) by striking ``$25,173,000,000'' and
inserting ``$25,144,000,000''; and
(2) in paragraph (2) by striking ``$26,045,000,000'' and
inserting ``$26,009,000,000''.
(b) Amendments for Highway Category.--Section 8101 of the
Transportation Equity Act for the 21st Century is amended by adding at
the end the following:
``(f ) Technical Amendments.--Section 250(c)(4)(C) of the
Balanced Budget and Emergency Deficit Control Act of 1985 (as amended by
subsection (c) of this Act) is amended--
``(1) by striking `Century and' and inserting `Century or';
``(2) by striking `as amended by this section,' and
inserting `as amended by the Transportation Equity Act for the
21st Century,'; and
``(3) by adding at the end the following new flush sentence:
`Such term also refers to the Washington Metropolitan Transit
Authority account (69-1128-0-1-401) only for fiscal year 1999
only for appropriations provided pursuant to authorizations
contained in section 14 of Public Law 96-184 and Public Law 101-
551.'.''.
(c) Technical Amendment.--Section 8102 of the Transportation Equity
Act for the 21st Century <<NOTE: Ante, p. 492.>> is amended by inserting
before the period at the end the following: ``or from section 1102 of
this Act''.
SEC. 9014. CORRECTIONS TO VETERANS SUBTITLE.
(a) Tobacco-Related Illnesses in Veterans.--Section 8202 of the
Transportation Equity Act for the 21st Century <<NOTE: Ante, p.
492.>> is amended to read as follows (and the amendments made by that
section as originally enacted shall be treated for all purposes as not
having been made):
``SEC. 8202. TREATMENT OF TOBACCO-RELATED ILLNESSES OF
VETERANS.
``(a) In General.--(1) Chapter 11 of title 38, United States Code,
is amended by inserting after section 1102 the following new section:
`Sec. 1103. Special provisions relating to claims based upon effects of
tobacco products
`(a) Notwithstanding any other provision of law, a veteran's
disability or death shall not be considered to have resulted from
personal injury suffered or disease contracted in the line of duty in
the active military, naval, or air service for purposes of this title on
the basis that it resulted from injury or disease attributable to the
use of tobacco products by the veteran during the veteran's service.
`(b) Nothing in subsection (a) shall be construed as precluding the
establishment of service connection for disability or death from a
disease or injury which is otherwise shown to have been incurred or
aggravated in active military, naval, or air service or which became
manifest to the requisite degree of disability during any
[[Page 112 STAT. 866]]
applicable presumptive period specified in section 1112 or 1116 of this
title.'.
``(2) The table of sections at the beginning of such chapter is
amended by inserting after the item relating to section 1102 the
following new item:
`1103. Special provisions relating to claims based upon effects of
tobacco products.'.
<<NOTE: Applicability.>> ``(b) Effective Date.--Section 1103 of
title 38, United States Code, as added by subsection (a), shall apply
with respect to claims received by the Secretary of Veterans Affairs
after the date of the enactment of this Act.''.
(b) GI Bill Educational Assistance for Survivors and Dependents of
Veterans.--Subtitle B of title VIII of the Transportation Equity Act for
the 21st Century <<NOTE: Ante, p. 492.>> is amended by adding at the end
the following new section:
``SEC. 8210. TWENTY PERCENT INCREASE IN RATES OF SURVIVORS AND
DEPENDENTS EDUCATIONAL ASSISTANCE.
``(a) Survivors and Dependents Educational Assistance.--Section 3532
of title 38, United States Code, is amended--
``(1) in subsection (a)(1)--
``(A) by striking out `$404' and inserting in lieu
thereof `$485';
``(B) by striking out `$304' and inserting in lieu
thereof `$365'; and
``(C) by striking out `$202' and inserting in lieu
thereof `$242';
``(2) in subsection (a)(2), by striking out `$404' and
inserting in lieu thereof `$485';
``(3) in subsection (b), by striking out `$404' and
inserting in lieu thereof `$485'; and
``(4) in subsection (c)(2)--
``(A) by striking out `$327' and inserting in lieu
thereof `$392';
``(B) by striking out `$245' and inserting in lieu
thereof `$294'; and
``(C) by striking out `$163' and inserting in lieu
thereof `$196'.
``(b) Correspondence Course.--Section 3534(b) of such title is
amended by striking out `$404' and inserting in lieu thereof `$485'.
``(c) Special Restorative Training.--Section 3542(a) of such title
is amended--
``(1) by striking out `$404' and inserting in lieu thereof
`$485';
``(2) by striking out `$127' each place it appears and
inserting in lieu thereof `$152'; and
``(3) by striking out `$13.46' and inserting in lieu thereof
`$16.16'.
``(d) Apprenticeship Training.--Section 3687(b)(2) of such title is
amended--
``(1) by striking out `$294' and inserting in lieu thereof
`$353';
``(2) by striking out `$220' and inserting in lieu thereof
`$264';
``(3) by striking out `$146' and inserting in lieu thereof
`$175'; and
``(4) by striking out `$73' and inserting in lieu thereof
`$88'.
[[Page 112 STAT. 867]]
<<NOTE: Applicability.>> ``(e) Effective Date.--The amendments made
by this section shall take effect on October 1, 1998, and shall apply
with respect to educational assistance allowances paid for months after
September 1998.''.
SEC. 9015. TECHNICAL CORRECTIONS REGARDING TITLE IX.
(a) Highway Trust Fund.--Subsection (f ) of section 9002 of the
Transportation Equity Act for the 21st Century <<NOTE: Ante, p.
499.>> is amended by adding at the end the following new paragraphs:
``(4) The last sentence of section 9503(c)(1), as amended by
subsection (d), is amended by striking `the date of enactment of
the Transportation Equity Act for the 21st Century' and
inserting `the date of the enactment of the TEA 21 Restoration
Act'.
``(5) Paragraph (3) of section 9503(e), as amended by
subsection (d), is amended by striking `the date of enactment of
the Transportation Equity Act for the 21st Century' and
inserting `the date of the enactment of the TEA 21 Restoration
Act'.''.
(b) Boat Safety Account and Sport Fish Restoration Account.--Section
9005 of the Transportation Equity Act for the 21st Century <<NOTE: Ante,
p. 504.>> is amended by adding at the end the following new subsection:
``(f ) Clerical Amendments.--
``(1) Subparagraph (A) of section 9504(b)(2), as amended by
subsection (b)(1), is amended by striking `the date of the
enactment of the Transportation Equity Act for the 21st Century'
and inserting `the date of the enactment of the TEA 21
Restoration Act'.
``(2) Subparagraph (B) of section 9504(b)(2), as added by
subsection (b)(3), is amended by striking `such Act' and
inserting `the TEA 21 Restoration Act'.
``(3) Subparagraph (C) of section 9504(b)(2), as amended by
subsection (b)(2) and redesignated by subsection (b)(3), is
amended by striking `the date of the enactment of the
Transportation Equity Act for the 21st Century' and inserting
`the date of the enactment of the TEA 21 Restoration Act'.
``(4) Subsection (c) of section 9504, as amended by
subsection (c)(2), is amended by striking `the date of enactment
of the Transportation Equity Act for the 21st Century' and
inserting `the date of the enactment of the TEA 21 Restoration
Act'.''.
[[Page 112 STAT. 868]]
SEC. 9016. <<NOTE: 23 USC 101 note.>> EFFECTIVE DATE.
This title and the amendments made by this title shall take effect
simultaneously with the enactment of the Transportation Equity Act for
the 21st Century. For purposes of all Federal laws, the amendments made
by this title shall be treated as being included in the Transportation
Equity Act for the 21st Century at the time of the enactment of such
Act, and the provisions of such Act (including the amendments made by
such Act) (as in effect on the day before the date of enactment of this
Act) that are amended by this title shall be treated as not being
enacted.
Approved July 22, 1998.
LEGISLATIVE HISTORY--H.R. 2676:
---------------------------------------------------------------------------
HOUSE REPORTS: Nos. 105-364, Pt. 1 (Comm. on Ways and Means) and 105-599
(Comm. of Conference).
SENATE REPORTS: No. 105-174 (Comm. on Finance).
CONGRESSIONAL RECORD:
Vol. 143 (1997):
Nov. 5, considered and passed House.
Vol. 144 (1998):
May 4-7, considered and passed
Senate, amended.
June 25, House agreed to conference
report.
July 7-9, Senate considered and
agreed to conference report.
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 34 (1998):
July 22, Presidential remarks.
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